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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
March 31, 1999
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(Date of earliest event reported)
FLOW INTERNATIONAL CORPORATION
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(Exact name of Registrant as specified in its charter)
Washington O-12448 91-1104842
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Identification
incorporation) Number) Number)
23500 - 64th Avenue South, Kent, Washington 98032
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(Address of principal executive offices, zip code)
Registrant's telephone number, including area code:
(253) 850-3500
Total number of pages: 3
Page on which exhibit index appears: 2
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ITEM 5. Other Events
On April 1, 1999 Flow International Corporation and Asea Brown Boveri AB
("ABB") announced Flow had completed the acquisition of ABB Pressure Systems AB.
ABB Pressure Systems, based in Vasteras, Sweden, was a wholly-owned subsidiary
of ABB AB of Stockholm, Sweden and supplies large, bulk ultrahigh-pressure
systems to the food industry and isostatic press systems to the automotive and
aerospace markets.
ITEM 7. Exhibits
2.1 Amended and Restated Stock Purchase Agreement dated March 31, 1999
between Asea Brown Boveri AB and Gigantissimo 2131 AB, under change of name
to Flow International FPS AB
2.2 Asset Purchase Agreement dated March 31, 1999 between Asea Brown
Boveri AB and Flow Holdings GmbH (SAGL) Limited Liability Company
2.3 Amended and Restated Stock Purchase Agreement dated March 31, 1999 among
ABB Industrial Systems, Inc., Flow International Corporation, and ABB Autoclave
Systems Inc.
20.1 Press Release dated April 1, 1999
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: April 12, 1999 FLOW INTERNATIONAL CORPORATION
By:
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John S. Leness
General Counsel and Corporate Secretary
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EXHIBIT 2.1
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
THIS AMENDED AND RESTATED STOCK PURCHASE AGREEMENT ("AGREEMENT"), is
entered into this _____ day of March, 1999 ("EFFECTIVE DATE"), by and between
Asea Brown Boveri AB, a Swedish company ("ABB"), and Gigantissimo 2131 AB, under
change of name to Flow International FPS AB, (556564-6113) a Swedish company
("BUYER").
RECITALS
A. ABB owns all the issued and outstanding stock of ABB Pressure
Systems AB, a Swedish company with the registration number 556064-1770.
B. ABB wishes to sell and Buyer wishes to buy the Company Shares
pursuant to the terms and conditions set forth herein.
C. ABB and Buyer entered into a Stock Purchase Agreement dated March
15, 1999 ("FIRST AGREEMENT") which provided pursuant to Section 7.16 that the
parties would amend and restate the First Agreement as may be necessary to
incorporate the changes resulting from the acquisition of certain intellectual
property rights pursuant to the Intellectual Property Asset Purchase Agreement
and the acquisition of the stock of ABB Autoclave Systems Inc. held by ABB
Industrial Systems, Inc. pursuant to the Pressure Systems Stock Purchase
Agreement.
INTENDING TO BE LEGALLY BOUND, and in consideration of the premises and
the mutual representations, warranties, covenants and agreements contained
herein, Buyer and ABB hereby agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, capitalized terms shall have the
following meanings:
"ABB" means Asea Brown Boveri AB, a Swedish company with the registration
number 556029-7029 whose principal office is located at Kopparbergsvagen 2,
SE-721 83 Vasteras, Sweden.
"ABB DISCLOSURE SCHEDULE" shall mean a schedule of disclosures to this
Agreement that is delivered by ABB to Buyer prior to the execution of this
Agreement.
"ABB GROUP" means ABB Asea Brown Boveri Ltd., a Swiss company whose
principal office is located in Zurich, Switzerland and its Affiliates.
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"AFFILIATE"--a Person (i) which directly or indirectly through one or
more intermediaries controls, or is controlled by, or is under common control
with, another Person, or (ii) which beneficially owns or holds 50% or more of
any class of the voting stock of another Person, or (iii) 50% or more of the
voting stock (or in the case of a Person which is not a corporation, 50% or more
of the equity interest) of which is beneficially owned or held by another
Person. The term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"AGREEMENT" means this Amended and Restated Stock Purchase Agreement.
"BUSINESS CONDITION" shall have the meaning given in Section 3.1.
"BUYER" means Flow International FPS AB, a Swedish company.
"BUYER REQUIRED STATUTORY APPROVALS" shall have the meaning given in
Section 4.2.
"CHARTER DOCUMENTS" shall have the meaning given in Section 3.1.
"CLAIM NOTICE" means a written notice in reasonable detail of the facts
and circumstances that form the basis of an indemnification claim hereunder and
setting forth an estimated amount of the potential Losses, if possible, and the
sections of this Agreement upon which the claim for indemnification for such
Losses is based.
"CLOSING" means the closing of the Transaction.
"CLOSING DATE" means the date of the Closing.
"COMPANY" means ABB Pressure Systems AB, a Swedish company with the
registration number 556064-1770.
"COMPANY FINANCIAL STATEMENTS" shall have the meaning given in Section
3.5.
"COMPANY INTELLECTUAL PROPERTY" shall have the meaning given in Section
3.12.
"COMPANY REQUIRED STATUTORY APPROVALS" shall have the meaning given in
Section 3.3.
"COMPANY SHARES" means the issued and outstanding shares of capital stock
of Company.
"COMPANY VOTING DEBT" shall have the meaning given in Section 3.2.
"COMPETITIVE ACTIVITY" shall have the meaning given in Section 6.1.
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"COMPETITIVE SEGMENT" shall have the meaning given in Section 6.1.
"CONFIDENTIAL INFORMATION" shall have the meaning given in Section 11.8.
"CONSENT" means a consent, approval, Order, or authorization of, or
registration, declaration, or filing with, or exemption by a Governmental
Entity.
"COUNTERNOTICE" means a written objection to a claim or payment setting
forth the basis for disputing such claim or payment.
"END PERIOD DATE" shall have the meaning given in Section 3.5.
"ENVIRONMENTAL LAWS" shall have the meaning given in Section 3.17.
"EXHIBIT(s)" means the exhibits(s) attached to this Agreement.
"FIRST AGREEMENT" means the Stock Purchase Agreement dated March 15, 1999
by and among ABB and Buyer.
"GAAP" means generally accepted accounting principles in Sweden,
consistently applied.
"GOVERNMENTAL ENTITY" means a court, administrative agency, or commission
or other governmental authority or instrumentality, whether domestic or foreign.
"INTELLECTUAL PROPERTY ASSET PURCHASE AGREEMENT" shall have the meaning
given in Section 2.4(x).
"KEY EMPLOYEES" means those employees set forth on SCHEDULE 6.2.
"KNOWLEDGE" in reference to Company means that the following, employees
of the Company, Rolf Hogland, Gun Wiren, Ewa Wrethander, Stefan Sehlstedt, Sture
Olsson, Gunnar Lindback, Roger Thunholm, and/or Torsten Frodin who have reviewed
the specific representation and warranty and the related ABB Disclosure Schedule
to which such knowledge statement is made, and, in so doing, have exercised
reasonable due diligence, and based upon the foregoing, such persons are not
aware and have no reasonable basis to believe that there are any inaccuracies in
such specific representation and warranty and related ABB Disclosure Schedule
with respect to which such knowledge statement is made.
"LEASED PREMISES" shall have the meaning given in Section 3.16.
"LIENS" means any mortgage, deed of trust, security interest, retention
of title or lease for security purposes, pledge, charge, encumbrance, equity,
claim, easement, right of way, covenant,
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condition or restriction, leasehold interest or any right of any kind of any
other Person in or with respect to any property of Company.
"LOSSES" shall mean direct and actual losses, damages, liabilities,
claims, judgments, settlements, fines, costs, and expenses (including reasonable
attorneys' fees) of any kind, net of any insurance proceeds, but excluding all
indirect and/or consequential damages of any kind, e.g. loss of profit and loss
of production costs connected with interruption of operations.
"MBL" shall have the meaning given in Section 3.10.
"1998 FINANCIALS" shall have the meaning given in Section 3.5.
"ORDER" means a decree, judgment, injunction, ruling, or other order of a
Governmental Entity having jurisdiction, whether temporary, preliminary, or
permanent.
"PATENTS" shall have the meaning given in 3.12(c).
"PAYMENT CERTIFICATE" shall mean a written claim for payment of Losses,
in reasonable detail and specifying the amount of such Losses.
"PERMITS" shall have the meaning given in Section 3.17.
"PERSON" means an individual, partnership, corporation, trust or
unincorporated organization, or a Governmental Agency.
"PLAN" shall mean an employee bonus, profit sharing, retirement, stock
purchase, stock option, recapitalization, insurance, medical, life, disability,
severance, or other benefit plan.
"PRESSURE SYSTEMS STOCK PURCHASE AGREEMENT" shall have the meaning given
in Section 2.4(ix).
"PURCHASE PRICE" shall have the meaning given in Section 2.1.
"RETURNS" means all returns, information statements, declarations,
reports, statements and other documents required to be filed in respect of
Taxes, and any claims for refunds of Taxes, including any amendments or
supplements to any of the foregoing. The term "Return" means any one of the
foregoing Returns.
"SCHEDULE(s)" means the schedule(s) attached to this Agreement.
"SUBSIDIARY" shall have the meaning given in Section 3.1.
"TAX" or "TAXES" means any income, corporation, gross receipts, profits,
gains, capital stock, capital duty, franchise, withholding, social security,
insurance, pension, unemployment, disability, property, wealth, welfare, stamp,
excise, occupation, sales, use, value added,
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alternative minimum, estimated or other similar tax or obligation (including any
fee, assessment or other charge in the nature of or in lieu of any tax) imposed
by any governmental entity (whether national, local, municipal or otherwise) or
political subdivision thereof, and any interest, penalties, additions to tax or
additional amounts in respect of the foregoing, and including any transferee or
secondary liability in respect of any tax (whether imposed by law, contractual
agreement or otherwise) and any liability in respect of any tax as a result of
being a member of any affiliated, consolidated, combined, unitary or similar
group.
"TAX PERIOD" means, with respect to any tax, the period for which the Tax
is reported as provided under applicable tax law.
"TRANSACTION" shall mean the purchase of the Company Shares by Buyer
pursuant to the terms of this Agreement.
"TRANSACTION AGREEMENTS" shall have the meaning given in Section 9.7.
"THRESHOLD AMOUNT" shall have the meaning given in Section 9.6.
"VIOLATION" shall have the meaning given in Section 3.4.
ARTICLE II
PURCHASE OF COMPANY SHARES
2.1 PURCHASE OF SHARES. In consideration for the sale, assignment and
transfer of the Company Shares and the representations, warranties, and
covenants contained herein, Buyer agrees to pay to ABB Seven Million US Dollars
(US$7,000,000) ("PURCHASE PRICE"). The Purchase Price shall be paid at Closing
by wire transfer of immediately available funds without set off for
counterclaims and shall be paid to ABB. In the event Buyer fails to make such
payment, ABB shall not be obliged to consummate the Transaction or the Closing
and may terminate this Agreement by giving five (5) days notice to Buyer.
2.2 CLOSING AND EFFECTIVE DATE. The Closing shall take place on March
31,1999 (the "CLOSING DATE" or "CLOSING"), at the offices of Asea Brown Boveri
AB in Vasteras, Sweden, unless another date or place is agreed to in writing by
the parties hereto. The transfer of the Company Shares to Buyer shall be
effective as of the Closing Date.
2.3 DELIVERY OF CERTIFICATES. At the Closing, ABB shall surrender the
certificates representing the Company Shares to Buyer, together with such duly
executed documentation necessary to effect a transfer of such Company Shares,
duly endorsed to Buyer.
2.4 CLOSING DATE DELIVERIES.
(a) On the Closing Date, ABB shall deliver and cause Company to
deliver to Buyer the following validly executed instruments:
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(i) Certified copy of resolutions of the Board of Directors of
ABB authorizing the execution and performance of this Agreement and the
Transaction contemplated hereby;
(ii) Officer's Certificate of ABB and Company, dated as of the
Closing Date, in form and substance reasonably satisfactory to Buyer, certifying
that no amendments to the Charter Documents of Company since the date of this
Agreement;
(iii) The closing certificate required by Sections 8.2.1 and
8.2.2;
(iv) Resignations of the members of the Board of Directors
appointed by the shareholder of Company and any individual authorized to sign on
behalf of the Company who is not employed by the Company on a full-time basis;
(v) The Lease Agreement required by Section 8.2.6;
(vi) The Services Agreement required by Section 8.2.5;
(vii) The reimbursement amount provided for in Section 7.8 and
calculated as set forth in Section 2.5;
(viii) The payment to Buyer of any intercompany debt owed Buyer as
set forth on SCHEDULE 8.1.4 and calculated as set forth in Section 2.5;
(ix) The Stock Purchase Agreement by and among ABB Industrial
Systems, Inc., an Ohio corporation, Flow International Corporation, a Washington
corporation or an entity to be formed by Flow International Corporation and ABB
Autoclave Systems Inc., a Delaware corporation, in the form set forth in EXHIBIT
2.4(a) ("PRESSURE SYSTEMS STOCK PURCHASE AGREEMENT");
(x) The Asset Purchase Agreement by and among an ABB entity or
entities which own the intellectual property rights used in Company's business
and an entity to be designated or formed by Flow International Corporation,
substantially in the form set forth in EXHIBIT 2.4(b) ("INTELLECTUAL PROPERTY
ASSET PURCHASE AGREEMENT"); and
(xi) Such other instruments or documents necessary to consummate
the Transaction, all satisfactory in form and substance to Buyer.
(b) On the Closing Date, Buyer shall deliver to ABB the following
validly executed instruments:
(i) Seven Million US Dollars ($7,000,000) payable to ABB or
such parties designated by ABB by wire transfer of immediately available funds;
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(ii) Certified copy of resolutions of the Board of Directors of
Buyer authorizing the execution and performance of this Agreement and the
Transaction contemplated hereby;
(iii) The closing certificate required by Sections 8.3.1 and
8.3.2;
(iv) The Lease Agreement required by Section 8.2.6;
(v) The Services Agreement required by Section 8.2.5;
(vi) The payment to ABB of any intercompany debt owed ABB as set
forth on SCHEDULE 8.1.4 and calculated as set forth in Section 2.5;
(vii) The Pressure Systems Stock Purchase Agreement;
(viii) The Intellectual Property Asset Purchase Agreement; and
(ix) Such other instruments or documents necessary to consummate
the Transaction, all satisfactory in form and substance to ABB.
2.5 PRE-CLOSING DATE DELIVERIES. No greater than five (5) days and no
less than three (3) days prior to the Closing, ABB shall provide Buyer with a
final accounting of the reimbursement amount provided for in Section 7.8 and the
intercompany debt provided for in Section 8.1.4 with sufficient detail to allow
Buyer to verify the amounts. Buyer and ABB shall agree to the amounts of such
accounting.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ABB
Except as disclosed in this Agreement, the Schedules, the Exhibits or in
the disclosure schedules delivered by ABB to Buyer prior to the execution of
this Agreement (the "ABB DISCLOSURE SCHEDULE"), ABB represents and warrants to
Buyer as follows:
3.1 ORGANIZATION, STANDING, AND POWER. Company is a corporation
duly organized and validly existing under the laws of Sweden. Company has
all legal requisite power and authority to carry on its business as now being
conducted, and is duly qualified, validly existing and in good standing (in
such jurisdictions in which good standing is applicable) to do business in
each jurisdiction in which a failure to so qualify would have a material
adverse effect on the Business Condition (as hereinafter defined) of Company.
As used in this Agreement, "BUSINESS CONDITION" with respect to any entity
shall mean the business, financial condition, results of operations or
assets. In this Agreement, a "SUBSIDIARY" of any corporation or other entity
means a corporation, partnership, limited liability company, or other entity
of which such corporation or entity directly or indirectly owns or controls
voting securities or other interests that are sufficient to elect a majority
of the Board of Directors or other managers of such corporation, partnership,
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limited liability company or other entity. Company has no Subsidiary. ABB
has delivered to Buyer complete and correct copies of the articles, and/or
other primary charter and organizational documents ("CHARTER DOCUMENTS") of
Company, in each case, as amended to the date hereof. The minutes of the
shareholders and Board of Directors meetings from January 1, 1995, and the
stock records of Company, complete and correct copies of which have been
delivered to Buyer, contain correct and complete records of all material
proceedings and actions actually taken at all meetings of, or effected by
written consent of, the shareholder of Company and its Board of Directors and
issuances and subsequent transfers, repurchases, and cancellations of
Company's capital stock. The registration certificate issued by the Patent
and Registration Authority attached as SCHEDULE 3.1 contains a complete and
correct list of all individuals authorized to sign on behalf of the Company
and all members of the Board of Directors of Company.
3.2 CAPITAL STRUCTURE.
(a) The authorized capital stock of Company consists solely
of 10,000,000 SEK divided into 100,000 shares with a par value of 100 SEK each
("COMPANY SHARES"). All of the outstanding Company Shares are held by ABB.
There is no preferred stock of Company. All Company Shares have been duly
authorized and validly issued, are fully paid and nonassessable, and were issued
in compliance with applicable securities laws and regulations. ABB is the
lawful owner of all of the Company Shares and has valid title thereto, free and
clear of all Liens and encumbrances, surety interests, restrictions on transfer
(other than restrictions under securities laws), claims, and equities of every
kind.
(b) All outstanding Company Shares are not subject to any preemptive
rights, or to any agreement to which ABB or Company is a party or by which ABB
or Company may be bound. There are no options, warrants, calls, conversion
rights, commitments, agreements, contracts, understandings, restrictions,
arrangements or rights of any character to which ABB or Company is a party or by
which ABB or Company may be bound obligating ABB or Company to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of the capital
stock of Company, or obligating ABB or Company to grant, extend, or enter into
any such option, warrant, call, conversion right, conversion payment,
commitment, agreement, contract, understanding, restriction, arrangement or
right. Neither ABB nor Company has outstanding any bonds, debentures, notes, or
other indebtedness the holders of which, (i) have the right to vote (or
convertible or exercisable into securities having the right to vote) with
holders of Company Shares on any matter ("COMPANY VOTING DEBT"), or (ii) are or
will become entitled to receive any payment as a result of the execution of this
Agreement or the completion of the transactions contemplated hereby.
3.3 AUTHORITY. ABB has all requisite corporate power and authority to
enter into this Agreement and, subject to the Company's Required Statutory
Approvals, to consummate the transactions contemplated hereby. As used in this
Agreement "COMPANY'S REQUIRED STATUTORY APPROVALS" means such filings,
authorizations, Orders and approvals as may be required under federal or foreign
laws, or securities laws. The execution and delivery by ABB of this Agreement
and the consummation of the transactions contemplated hereby have, subject to
MBL to be fulfilled prior to Closing, been duly authorized by all necessary
corporate action on the part of
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Company and ABB. This Agreement has been duly executed and delivered by ABB and
constitutes a valid and binding obligation of ABB enforceable in accordance with
its terms, except that such enforceability may be subject to (i) bankruptcy,
insolvency, reorganization, or other similar laws relating to enforcement of
creditors' rights generally and (ii) general equitable principles, including the
availability of specific performance, injunctive relief and other equitable
remedies.
3.4 COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS.
(a) Company holds, and at all times since January 1, 1995, has held,
all licenses, permits, and authorizations from all Governmental Entities
necessary for the lawful conduct of its business pursuant to all applicable
statutes, laws, ordinances, rules, and regulations of all such authorities
having jurisdiction over it or any part of its operations, excepting, however,
when such failure to hold would not have a material adverse effect on Company's
Business Condition. To Company's Knowledge, there are no material violations or
claimed material violations of any license, permit, or authorization or any
statute, law, ordinance, rule or regulation applicable to Company. Subject to
the satisfaction of the conditions set forth in Section 8, neither the execution
and delivery of this Agreement and all other agreements contemplated hereby by
ABB nor the consummation of the transactions contemplated hereby and thereby
will conflict with or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation, increase or acceleration of any material obligation or to loss of
a material benefit under, or the creation of a lien, pledge, security interest,
charge, or other encumbrance on the assets or contracts of Company or the
Company Shares (any such conflict, violation, default, right, loss or creation
being referred to herein as a "VIOLATION") pursuant to, (i) any provision of the
Charter Documents of Company or the comparable governing instruments, or
(ii) any loan or credit agreement, note, bond, mortgage, indenture, contract,
lease, or other agreement or instrument, permit, concession, franchise, license,
Order, statute, law, ordinance, rule or regulation applicable to Company or its
respective properties or assets, other than, in the case of (ii), any such
Violation which individually or in the aggregate would not have a material
adverse effect on the Business Condition of Company.
(b) No Consent is required by or with respect to Company or ABB in
connection with the execution and delivery of this Agreement and all other
agreements contemplated hereby by ABB or the consummation by ABB of the
transactions contemplated hereby.
3.5 FINANCIAL STATEMENTS. ABB has caused Company to deliver to Buyer
the audited balance sheets and statements of income of Company, as of and for
the years ended December 31, 1996, 1997 and 1998. The financial statements as
described above are the "COMPANY FINANCIAL STATEMENTS" and are attached as
SCHEDULE 3.5(a). The balance sheet and statements of income as of the year
ended December 31, 1998 ("END PERIOD DATE") is the "1998 FINANCIALS." The
Company Financial Statements, (a) have been prepared in accordance with GAAP
throughout the periods indicated, (b) fairly present the financial position of
Company, as of the respective dates indicated and the results of its operations
for the respective periods indicated, and (c) were prepared from the books and
records of Company, which books and records are complete and correct and to the
extent required by GAAP accurately reflect in all material respects the
transactions of and other events applicable to Company. The budget and
forecasted results for Company for the 1999 calendar year dated February 26,
1999 which have been delivered to Buyer and attached hereto as SCHEDULE 3.5(b),
have been prepared with reasonable care and there is no reasonable basis to
assume that such budget and forecasted results are not accurate. To the
Knowledge of Company, there are no liabilities or obligations (whether absolute,
accrued or contingent) except, (i) liabilities that are accrued or reserved
against in the 1998 Financials, or (ii) additional liabilities reserved against
since the End Period Date that
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(x) have arisen in the ordinary course of business; and (y) are accrued or
reserved against on the books and records of Company; notwithstanding the
foregoing or any other provision to the contrary in this Agreement, ABB is not
representing or warranting that the reserves in the Company Financial Statements
for the cost of the Company's warranty obligations is adequate.
3.6 ACCOUNTS RECEIVABLE. All accounts receivable of Company accounted
for in the 1998 Financials and the period of time from the End Period Date to
the Closing Date are not subject to counterclaims or setoffs and are fully
collectible within sixty (60) days of the date of Closing without any cost
whatsoever to Buyer or Company in collection efforts therefor, except in the
case of accounts receivable shown on the 1998 Financials, to the extent of the
appropriate reserves set forth on the 1998 Financials, and, in the case of
accounts receivable arising since the date of the 1998 Financials, to a
reasonable allowance for bad debt which does not reflect a rate of bad debt more
than that reflected by the reserve for bad debt on the 1998 Financials.
3.7 INVENTORIES. The values at which the spare parts inventories not
related to current works in progress are shown on the 1998 Financials have been
determined in accordance with GAAP and the normal valuation policy of Company.
Said spare parts inventories consist only of items of quality and quantity
commercially usable and salable in the ordinary course of business, except for
any items of obsolete material or material below standard quality, all of which
have been written down to realizable market value, or for which adequate
reserves have been provided, and the present quantities of such spare parts
inventory are reasonable in the present circumstances of its business.
3.8 ABSENCE OF CERTAIN CHANGES AND EVENTS. Since December 31, 1998,
except as set forth in SCHEDULE 3.8 there has not been:
(a) Any change (or any development or combination of developments of which,
to the Company's Knowledge, is reasonably likely to result in such a change) in
Company's Business Condition, other than changes in the ordinary course of
business which in the aggregate have not been and will not have a material
adverse effect on Company's Business Condition; or, without limiting the
foregoing, any disposition, loss of or damage to any of the properties of
Company, whether or not insured, amounting to more than US$25,000 in the
aggregate;
(b) Any declaration, payment, or setting aside of any dividend or
other distribution (including tax distributions) to or for any of the
shareholders of Company of any Company Shares or cash or payment obligations or
any payment of fees or costs to any third party, including management fees,
administrative fees, royalties or license fees;
(c) Any termination, modification, or rescission of, or waiver by
Company of rights under, any existing contract having or likely to have a
material adverse effect on Company's Business Condition;
(d) Capital expenditure or transaction by Company exceeding US$50,000;
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(e) Entering into or assumption of any material contract or obligation
by Company, except in the ordinary course of business (none of which to the
Knowledge of Company would have a material adverse effect on the Business
Condition of Company);
(f) Revaluation by Company of any of its assets or change in
accounting methods or practices;
(g) Granting of stock options, restricted stock awards, stock bonuses,
stock appreciation rights and similar equity based awards relating to the
capital stock of the Company;
(h) Except for annual adjustments and increases pursuant to existing
collective bargaining agreements, none of which exceed five percent (5%) per
year, increase in the salary or other compensation payable or to become payable
by Company to any of its officers, directors or employees, or the declaration,
payment or commitment or obligation of any kind for the payment of a bonus or
other additional salary or compensation to any such individual;
(i) Labor dispute with respect to the officers or employees of
Company; or
(j) Any mortgage, pledge, imposition of any security interest, claim,
encumbrance, or other restriction on any of the assets, tangible or intangible,
of Company having or likely to have a material adverse effect on Company's
Business Condition.
3.9 TAXES.
(a) All Returns required to be filed by or on behalf of Company or its
predecessors on or prior to the date hereof have been properly completed and
filed on a timely basis and in correct form in all material respects. As of the
time of filing, the foregoing Returns correctly reflected the facts regarding
the income, business, assets, operations, activities, status or other matters of
Company or any other information required to be shown thereon. To the Knowledge
of Company, there is no investigation or other proceeding pending, threatened or
expected to be commenced by any taxing authority for any jurisdiction in which
Company files or Company's predecessor has or should have filed Returns and no
issue or claim has been raised by any taxing authority which, by application of
similar principles, reasonably could be expected to result in a proposed
deficiency except as set forth on SCHEDULE 3.9(a). To the Knowledge of Company,
there is no investigation or other proceeding pending, threatened or expected to
be commenced by any taxing authority for any jurisdiction in which Company does
not file tax returns that may lead to an assertion that Company is or may be
subject to a given Tax liability in such jurisdiction, and, to Company's
Knowledge, there is no meritorious basis for such an investigation or other
proceeding that would result in such an assessment. The Returns, reports, work
papers and other tax data provided to Buyer or its accounting firm are true and
correct.
(b) With respect to all amounts in respect of Taxes imposed upon
Company, or for which Company is or could be liable with respect to all taxable
periods (or portions thereof) ending on or before the Closing Date, all
applicable tax laws and agreements have been fully complied with, and all such
amounts required to be paid by Company on or before the date
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hereof have been paid. All amounts required to be deducted from moneys paid to
employees for the purposes of social security, insurance, pensions and the like
have been deducted and have been accounted for to the appropriate authority or
person and there is no dispute on any issue with respect to the foregoing. No
issues have been raised (and are currently pending) by any taxing authority in
connection with any Returns of Company except as set forth in SCHEDULE 3.9(b).
No waivers of statutes of limitation with respect to such Returns have been
given by or requested from Company. There are no outstanding rulings or requests
for rulings that are, or if issued would be, binding on Company. All
deficiencies asserted or assessments made as a result of any examinations which
have been communicated to Company have been fully paid, or are fully reflected
as a liability in the financial statements of Company, or are being contested
and an adequate reserve therefor has been established and is fully reflected in
the financial statements of Company. There are no Liens for Taxes upon the
assets of Company. For purposes of this Section, Liens shall not include
Company's existing reserve for Taxes on its books and records.
(c) Company does not have and has not had a permanent establishment in
any foreign country, including the United States as defined in any applicable
Tax treaty or convention between Sweden and such foreign country and is not
subject to any foreign Taxes.
(d) The unpaid Taxes of Company do not exceed the reserve for Tax
liability set forth or included in Company's most recent balance sheet as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of Company.
(e) Each asset with respect to which Company claims depreciation,
amortization or similar expense for Tax purposes is owned for Tax purposes by
Company.
3.10 EMPLOYEES. SCHEDULE 3.10 lists (a) the names and salaries of all
key employees of Company (b) all claims, strikes, and dismissals and/or
resignations of Company employees after December 31, 1997, (c) all collective
bargaining agreements, deferred compensation agreements, pension, profit
sharing, severance pay or retirement plans, agreements or arrangements presently
in force with respect to any of the employees or former employees to which
Company is a party and which constitute a payment or other obligation of Company
in excess of US$100 per employee per month. Full reservations have been made in
the 1998 Financials for all present and/or future liabilities in respect of
pensions and other payments related to compensations to be paid to employees.
The consummation of the Transaction will not entitle any Company employee to
severance pay, unemployment compensation or any other payment or accelerate the
time of payment or vesting of or increase the amount of compensation due to any
Company employee. To Company's Knowledge, there is no cause to assume that any
key employee of Company will leave his/her employment within 6 months after the
Closing Date for reasons attributable to this Agreement. To Company's
Knowledge, there is no cause to assume that any labor strike or other work force
disturbance will occur in Company within 6 months after the Closing Date.
Company has not, to Company's Knowledge, violated any labor legislation,
regulation or agreement in any relevant jurisdiction including the Swedish
"lagen (1976:580) om medbestammande i arbetslivet" ("MBL"). Company is not a
party to any pending, or to Company's Knowledge, threatened, labor dispute or
claims by any former or
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current Company employees. ABB and the members of the Board of Directors of
Company have no claims for compensation of any nature whatsoever.
3.11 CERTAIN AGREEMENTS. Neither the execution and delivery of this
Agreement and all other agreements contemplated hereby, nor the consummation of
the transactions contemplated hereby will: (i) result in any payment by Company
becoming due to any director, employee, or independent contractor of Company
under any Plan, agreement, or otherwise, (ii) increase any benefits otherwise
payable under any Plan or agreement, or (iii) result in the acceleration of the
time of payment or vesting of any such benefits.
3.12 TECHNOLOGY AND INTELLECTUAL PROPERTY RIGHTS. All trademarks,
trade names, service marks, copyrights and any renewal rights therefor
(excluding any right of whatever kind relating to "ABB", "BBC", "Asea" or "Brown
Boveri", including any such name spelled in upper or lower case or any
combination thereof, or any names confusingly similar thereto or any combination
of such names), software, schematics, manufacturing processes, know-how,
applications for any of the foregoing, that are in (including in the development
of) any product, technology or process (i) currently being or formerly (but not
prior to January 1, 1995) manufactured, developed or marketed by Company with
respect to the business of Company, or (ii) previously (but not prior to January
1, 1995) or currently under development for possible future manufacturing,
development, marketing or other use by Company with respect to the business of
Company and set forth in SCHEDULE 3.12 will hereinafter be referred to as the
"COMPANY INTELLECTUAL PROPERTY."
(a) SCHEDULE 3.12(a) lists: (i) all trademarks and any applications
and registrations for any of the foregoing included in the Company Intellectual
Property, together with a list of all of Company's currently manufactured
products and currently published software products, (ii) all material written
licenses, sublicenses and other agreements to which Company is a party and
pursuant to which Company or any other person is authorized to use any of the
Company Intellectual Property, and (iii) all material development agreements
entered into by Company.
(b) Except as set forth in SCHEDULE 3.12(b), the Company Intellectual
Property consists solely of items and rights which are: (i) owned by Company,
(ii) in the public domain, or (iii) to Company's Knowledge, rightfully used by
Company and its successors pursuant to a license, and, with respect to Company
Intellectual Property owned by Company, Company owns the entire right, title and
interest in and to such Company Intellectual Property free and clear of any
Liens. To Company's Knowledge, no Company Intellectual Property is being used
which requires a license without such license. To Company's Knowledge, Company
has all rights in the Company Intellectual Property necessary to carry out
Company's current, former (but not prior to January 1, 1995), and anticipated
future (up to the Closing) activities.
(c) To Company's Knowledge, the Company Intellectual Property does not
infringe on any proprietary right of any Person. No claims (i) challenging the
validity, effectiveness, or ownership by Company of any of the Company
Intellectual Property, or (ii) to the effect that the Company Intellectual
Property infringes or will infringe on any intellectual property or other
proprietary right of any person have been asserted or, to the Knowledge of
Company, are
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threatened by any person nor to the Knowledge of Company are there any valid
grounds for any bona fide claim of any such kind. All trademarks held by
Company are valid and enforceable, and all trademark applications with respect
to the Company Intellectual Property are pending and all applicable
administrative actions, including the payment of fees and filing of applicable
documentation, have been taken, all without challenge of any kind; and no aspect
thereof is subject to any outstanding order, ruling, decree, judgment or
stipulation by or with any governmental authority or arbitrator. To the
Knowledge of Company, there is no material unauthorized use, infringement or
misappropriation of any of the Company Intellectual Property by any third party,
employee or former employee.
(d) Company has provided to Buyer all written assignments from all
parties who have created any portion of, or otherwise have any rights in or to,
the Company Intellectual Property or other rights to Company.
3.13 PERSONAL PROPERTY. Company has good and marketable title, free
and clear of all Liens and encumbrances to all inventory, receivables,
furniture, machinery, equipment, and other personal property, tangible or
otherwise, reflected on the balance sheet included in the 1998 Financials or
used in Company's business as of the date of such balance sheet even if not
reflected thereon, except for acquisitions and dispositions since the End Period
Date in the ordinary course of business. SCHEDULE 3.13 lists all personal
property having a depreciated book value of US$10,000 or more, which are used by
Company in the conduct of its business and all such equipment and property, in
the aggregate, is in good operating condition and repair, reasonable wear and
tear excepted.
3.14 MAJOR CONTRACTS.
(a) SCHEDULE 3.14 sets forth a complete and accurate list of any
contract, including contracts containing penalty clauses, to which Company is a
party other than:
(i) purchase or sale contracts for the purchase or sale of
supplies or inventory entered into in the ordinary course of business of
Company, which do not commit Company for a period of more than six (6)
months or involve commitments for sale or purchase in excess of US$25,000
per contract;
(ii) contracts under which, to the Knowledge of Company, no
party thereto has any remaining obligation and contracts included or
listed in another Schedule; or
(iii) contracts entered into in the ordinary course of business,
no one of which involves obligations by or to Company of US$25,000 or
more and which, in the aggregate, do not involve obligations by Company
of more than US$50,000.
(b) Except as set forth on SCHEDULE 3.14, the contracts are, and upon
assumption of the Company Shares by Buyer shall remain, in full force and effect
and are valid and enforceable in accordance with their respective terms, except
as the same may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting creditors'
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rights generally and by general equitable principles. To the Knowledge of
Company, no event has occurred and no condition exists which constitutes, or
with notice or lapse of time or both would constitute, a material default by
Company, or to the Knowledge of Company, by any other party to such contracts.
Company is not a party to any contract containing stated provisions for material
price redeterminations or revisions, except for liquidated damages provisions
resulting in price reductions due to delivery delays.
3.15 ASSETS SUFFICIENT TO OPERATE BUSINESS. To the Knowledge of
Company, the assets, Company Intellectual Property, agreements and instruments
being acquired pursuant to the Transaction Agreements include all assets,
Company Intellectual Property, agreements and instruments of Company, used in or
intended for use in the Company's business and are sufficient to operate
Company's business as it is presently being conducted.
3.16 REAL PROPERTY. All leases and subleases as to which Company is a
party and any amendments or modifications thereof are listed on SCHEDULE 3.16
(each a "LEASED PREMISES") are valid, in full force and effect and enforceable,
and there are no existing defaults, and Company has not received or given notice
of default or claimed default with respect to any Lease, nor is there any event
that with notice or lapse of time, or both, would constitute a default
thereunder. The Leased Property is not the subject of any official complaint or
notice of violation of any applicable zoning, building or environmental
protection code, and no such violation, to the Knowledge of Company exists.
3.17 ENVIRONMENTAL MATTERS.
(a) Company has obtained all environmental approvals, environmental
permits and consents necessary for its operations ("PERMITS"). Except as set
forth in SCHEDULE 3.17(a), Company's operations at any time have in all material
respects been carried out in full compliance with all relevant laws,
regulations, rules or orders applicable to health, safety and the environment
("ENVIRONMENTAL LAWS") and the Permits. All Permits are valid and in full force
and effect and there are, to Company's Knowledge, no facts or circumstances
likely will lead to Permits in any part to be revoked, suspended, amended,
varied, withdrawn or not renewed where the same would have a material adverse
effect on the business of Company or incur any material liability or cost on
Company.
(b) No real property leased, owned or used by Company at any time have
been used, by Company or, to Company's Knowledge, any previous owner, tenant,
occupant or used in a manner that have led or will lead to any liabilities for
Company under Environmental Laws or the Permits relating to cleaning up or
remediation work of contaminated property or in any other way that would,
individually or in the aggregate, have a material adverse effect on the Business
Condition of Company.
(c) None of the present or, to Company's Knowledge, former operations
of Company have led or is likely to lead to any liabilities under Environmental
Law or Permits relating to claims by any employee or third party for personal
injury or damage of any kind.
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(d) There are no actions, claims, complaints, investigations or other
proceedings under Environmental Laws or Permits outstanding, being taken, made
pending or to Company's Knowledge, threatened in connection with the operations
of Company.
3.18 LITIGATION AND OTHER PROCEEDINGS. Neither Company nor any of its
officers, directors, or employees is a party to any pending or, to the Knowledge
of Company, threatened action, suit, labor dispute (including any union
representation proceeding), proceeding, investigation, or discrimination claim
in or by any court or governmental board, commission, agency, Governmental
Entity, department, or officer, or any arbitrator, arising from the actions or
omissions of Company or, in the case of an individual, from acts in his or her
capacity as an officer, director, or employee of Company, which individually or
in the aggregate would have a material adverse effect on the Business Condition
of Company. Company is not subject to any order, writ, judgment, decree, or
injunction that has or will have a material adverse effect on Company's Business
Condition.
3.19 PRODUCT LIABILITY. Each product manufactured, sold or distributed
by Company is in material compliance with all applicable laws and regulations
governing its manufacture and sale. Except as set forth in SCHEDULE 3.19, since
December 31, 1995, there is no existing liability, claim or obligation arising
from or alleged to arise from any actual or alleged injury to persons or
property as a result of the ownership, possession or use of any product
manufactured, sold or distributed by Company, nor, to the Knowledge of Company,
are there any reasonable basis for such claims.
3.20 WARRANTIES. To the Knowledge of Company, SCHEDULE 3.20 sets forth
all outstanding material warranties given by Company with respect to Company's
products. ABB is not warranting that Company will not incur warranty costs in
excess of the amount reserved for in the 1998 Financials.
3.21 CERTAIN TRANSACTIONS. Except for (a) relationships with Company
as an officer, director, or employee thereof (and compensation by Company in
consideration of such services) and (b) relationships with Company as
stockholders, no directors, officers, or shareholders of Company, or any member
of any of their families, is presently a party to, or was a party to during the
year preceding the date of this Agreement, any transaction with Company. None
of Company's officers or directors has any interest in any property, real or
personal, tangible or intangible, including inventions, copyrights, trademarks,
or trade names, used in or pertaining to the business of Company, or any
supplier, distributor, or customer of Company, except for the normal rights of a
stockholder, and except for rights under existing employee benefit plans.
3.22 GUARANTIES AND SURETYSHIPS. Company has no powers of attorney
outstanding (other than those issued in the ordinary course of business),
Company has no obligations or liabilities (absolute or contingent) as guarantor,
surety, cosigner, endorser, co-maker, indemnitor, or otherwise respecting the
obligations or liabilities of any person, corporation, partnership, joint
venture, association, organization, or other entity.
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3.23 CERTAIN PAYMENTS. Neither Company, nor to the Knowledge of
Company, any person or other entity acting on behalf of Company has, directly or
indirectly, on behalf of or with respect to Company: (a) made an unreported
political contribution, (b) made or received any payment which was not legal to
make or receive, (c) engaged in any material transaction or made or received any
material payment which was not properly recorded on the books of Company, or
(d) created or used any "off-book" bank or cash account or "slush fund".
Neither Company, nor, to the Knowledge of the Company, any director, officer,
employee, or agent of Company has been or is the subject of any investigation by
any Governmental Entity in connection with any such payment, provision of
services, or contribution.
3.24 INSURANCE. SCHEDULE 3.24 lists all policies of liability and
other forms of insurance and surety insuring Company and its operations, and
summaries of such policies describing the type of coverage, amount of
deductibles and the name of the insurer. All policies listed are in full force
and effect and all product liability polices are occurrence based policies. ABB
has not failed to give notice or to present any claim under any such policy in a
timely manner. ABB confirms that the amount of its product liability coverage
is not less than US$100,000,000.
3.25 BOOKS AND RECORDS. All records of Company, including all customer,
Company Intellectual Property, supplier, accounting, personnel and computer
records, are maintained with reasonable completeness and accuracy.
3.26 BROKERS AND FINDERS. Neither ABB nor Company has retained any
broker, finder, or investment banker in connection with this Agreement or any of
the transactions contemplated by this Agreement, nor does or will ABB or Company
owe any fee or other amount to any broker, finder, or investment banker in
connection with this Agreement or the transactions contemplated by this
Agreement.
3.27 DISCLOSURE. Neither the representations or warranties made by ABB
in this Agreement, nor the ABB Disclosure Schedule or any other certificate
executed and delivered by ABB pursuant to this Agreement, when taken together,
contains any untrue statement of a material fact, or to the Knowledge of Company
omits to state a material fact necessary to make the statements or facts
contained herein or therein not misleading in light of the circumstances under
which they were furnished. To the Knowledge of Company, there are no fact or
facts pertaining to Company or its businesses which could have a material
adverse effect on the Business Condition of Company and which have not been
disclosed to Buyer by Company in writing.
3.28 RELIANCE. The foregoing representations and warranties are made
by ABB with the knowledge and expectation that Buyer is placing reliance
thereon.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to ABB as follows:
4.1 ORGANIZATION; STANDING AND POWER. Buyer is a corporation duly
organized, and validly existing under the laws of Sweden, has all requisite
power and authority to own, lease, and operate its properties and to carry on
its businesses as now being conducted, and is duly qualified and in good
standing to do business in each jurisdiction in which a failure so to qualify
would have a material adverse effect on the Business Condition of Buyer.
4.2 AUTHORITY. Buyer has, or shall have prior to the Closing, all
requisite corporate power and authority to enter into this Agreement and,
subject to the Buyer's Required Statutory Approvals, to consummate the
transactions contemplated hereby. As used in this Agreement "BUYER'S REQUIRED
STATUTORY APPROVALS" means such filings, authorizations, Orders and approvals as
may be required under federal or foreign laws, or securities laws. The
execution and delivery by Buyer of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Buyer including the approval of the Board of
Directors of Buyer. This Agreement has been duly executed and delivered by
Buyer and constitutes a valid and binding obligation of Buyer enforceable in
accordance with its terms, except that such enforceability may be subject to
(i) bankruptcy, insolvency, reorganization, or other similar laws relating to
enforcement of creditors' rights generally and (ii) general equitable
principles, including the availability of specific performance, injunctive
relief and other equitable remedies.
4.3 COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS.
(a) Buyer holds, and at all times has held, all licenses, permits, and
authorizations from all Governmental Entities necessary for the lawful conduct
of its business pursuant to all applicable statutes, laws, ordinances, rules,
and regulations of all such authorities having jurisdiction over it or any part
of its operations, excepting, however, when such failure to hold would not have
a material adverse effect on the Business Condition of Buyer. There are no
material violations or claimed material violations of any such license, permit,
or authorization or any such statute, law, ordinance, rule or regulation.
Subject to the satisfaction of the conditions set forth in Section 8, neither
the execution and delivery of this Agreement and all other agreements
contemplated hereby by Buyer nor the consummation of the transactions
contemplated hereby and thereby will conflict with or result in any violation
of, or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation, or acceleration of any obligation
or to loss of a material benefit under, or the creation of a lien, pledge,
security interest, charge, or other encumbrance on the assets or contracts of
Buyer pursuant to, (i) any provision of the Articles of Incorporation or Bylaws
of Buyer, or (ii) any loan or credit agreement, note, bond, mortgage, indenture,
contract, lease, or other agreement or instrument, permit, concession,
franchise, license, Order, statute, law, ordinance, rule or regulation
applicable to Buyer or its respective properties or assets, other than, in the
case of (ii), any such violation which individually or in the aggregate would
not have a material adverse effect on the Business Condition of Buyer.
(b) No Consent by any Governmental Entity, except for Buyer's Required
Statutory Approvals, is required by or with respect to Buyer in connection with
the execution and delivery
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of this Agreement and all other agreements contemplated hereby by Buyer or the
consummation by Buyer of the transactions contemplated hereby.
4.4 BROKERS AND FINDERS. Neither Buyer, nor any of its directors,
officers, or employees has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions or
similar payments in connection with the transactions contemplated by this
Agreement.
4.5 RELIANCE. The foregoing representations and warranties are made
by Buyer with the knowledge and expectation that ABB are placing reliance
thereon.
ARTICLE V
COVENANTS
During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Closing Date, ABB
agrees, or shall procure Company to cause or not to cause as the case may be,
(except as expressly contemplated by this Agreement or with Buyer's prior
written consent, which will not be unreasonably withheld or delayed), and with
respect to Sections 5.2, 5.3 and 5.4, Buyer agrees, that:
5.1 CONDUCT OF BUSINESS.
5.1.1 ORDINARY COURSE. Company shall carry on its business in the
usual, regular, and ordinary course in substantially the same manner as
heretofore conducted and, to the extent consistent with such business, use all
reasonable efforts consistent with past practice and policies to preserve intact
its present business organization, keep available the services of its present
officers, consultants, and employees, and preserve its relationships with
customers, suppliers, distributors and others having business dealings with it.
Company shall promptly notify Buyer of any event or occurrence or emergency not
in the ordinary course of business of Company that is material and adverse to
the Business Condition of Company. Company shall not:
(a) Grant any severance or termination pay to any officer or
director or, except in the ordinary course of business consistent with past
practices to any employee of Company;
(b) Commence a lawsuit other than: (i) for the routine
collection of bills; (ii) in such cases where Company in good faith determines
that failure to commence suit would result in a material impairment of a
valuable aspect of Company's business, provided Company consults with Buyer
prior to filing such suit; or (iii) for a breach of this Agreement;
(c) Enter into any contract, commitment, or transaction not in
the usual and ordinary course of its business, enter into any contract,
commitment, or transaction in the usual and ordinary course of business
involving an amount exceeding US$50,000 individually, or
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US$100,000 in the aggregate, or modify, amend, cancel, or terminate, unless in
the ordinary course of business, any of its existing contracts;
(d) Make any capital expenditures in excess of US$25,000 for
any single item or US$50,000 in the aggregate, or enter into any leases of
capital equipment or property under which the annual lease charge is in excess
of US$10,000; or
(e) Sell or dispose of any capital assets with a net book value
in excess of US$5,000 individually, or US$25,000 in the aggregate.
5.1.2 DIVIDENDS; CHANGES IN STOCK. Except as provided in SCHEDULE
5.1.2, Company shall not: (i) declare or pay any dividends on or make other
distributions (whether in cash, stock, or property) in respect to any of its
capital stock; (ii) split, combine, or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock; (iii) repurchase or
otherwise acquire, directly or indirectly, any shares of its capital stock; or
(iv) propose any of the foregoing.
5.1.3 ISSUANCE OF SECURITIES. Company shall not issue, deliver,
or sell, or authorize, propose, or agree or commit to the issuance, delivery, or
sale of any shares of its capital stock of any class, any securities convertible
into its capital stock or, any options, warrants, calls, conversion rights,
commitments, agreements, contracts, understandings, restrictions, arrangements
or rights of any character obligating it to issue any such shares, Voting Debt,
or other convertible securities.
5.1.4 GOVERNING DOCUMENTS. Company shall not amend its Charter
Documents or similar governing documents.
5.1.5 NO ACQUISITIONS. Company shall not acquire or agree to
acquire by merging or consolidating with, or by purchasing a substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association, or other business organization or division thereof or
otherwise acquire or agree to acquire any assets that are material, individually
or in the aggregate, to the Business Condition of Company.
5.1.6 NO DISPOSITIONS. Company shall not sell, lease, license,
transfer, mortgage, encumber, or otherwise dispose of any of its assets or
cancel, release, or assign any indebtedness or claim, except in the ordinary
course of business or in amounts which are not material, individually or in the
aggregate, to the Business Condition of Company.
5.1.7 INDEBTEDNESS. Company shall not incur any indebtedness for
borrowed money by way of direct loan, sale of debt securities, purchase money
obligation, conditional sale, guarantee, or otherwise, except in the ordinary
course of business or in amounts that are not material, individually or in the
aggregate, to the Business Condition of Company.
5.1.8 PLANS; EMPLOYEES. Company shall not adopt or amend in any
material respect any Plan, or pay any pension or retirement allowance not
required by any existing Plan.
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Except as set forth in SCHEDULE 5.1.8, Company shall not enter into any
employment contracts, pay any special bonuses or special remuneration to
officers, directors, or employees, or increase the salaries, wage rates, or
fringe benefits of its officers or employees other than pursuant to scheduled
reviews under Company's normal compensation review cycle, in all cases
consistent with Company's existing policies and past practice.
5.1.9 CLAIMS. Company shall not settle any claim, action, or
proceeding, except in the ordinary course of business or in amounts that are not
material, individually or in the aggregate, to the Business Condition of
Company.
5.1.10 AGREEMENT. Company shall not agree to take any of the
actions prohibited by this Section 5.1.
5.2 BREACH OF REPRESENTATION AND WARRANTIES. Neither Buyer, ABB, nor
Company shall take any action that would cause or constitute a breach of any of
the representations and warranties set forth in this Agreement or that would
cause any of such representations and warranties to be inaccurate in any
material respect. In the event of, and promptly after becoming aware of, the
occurrence of or the pending or threatened occurrence of any event that would
cause or constitute such a breach or inaccuracy, the party giving such
representation will give detailed notice thereof to the other parties and will
use its reasonable efforts to prevent or promptly remedy such breach or
inaccuracy.
5.3 CONSENTS. Buyer, ABB and Company will promptly apply for or
otherwise seek, and use reasonable efforts to obtain, all consents and
approvals, and make all filings, required with respect to Buyer, ABB or Company,
as applicable, for the consummation of the Transaction, except such consents and
approvals as Buyer and ABB agree that Buyer or ABB or Company shall not seek to
obtain.
5.4 REASONABLE EFFORTS. Buyer, ABB and Company will use reasonable
efforts to effectuate the transactions contemplated hereby and to fulfill and
cause to be fulfilled the conditions to closing under this Agreement, provided
that Buyer, ABB and Company shall in no event be required to agree to the
imposition of, or comply with, any condition, obligation, or restriction on
Buyer, ABB or Company of the type referred to in Section 8.1.3 hereof.
ARTICLE VI
NONCOMPETITION AND NONSOLICITATION
6.1 NONCOMPETITION. For a period of three (3) years after the Closing
Date, neither ABB nor the ABB Group shall, directly or indirectly, engage in
the development, manufacture, marketing or sale of isostatic presses for
pressures higher than 15,000 PSI for forming, densification or microbiological
reduction in the territory in which Company as of the Closing Date conducts its
business ("COMPETITIVE ACTIVITY"), (i) provided however, this restriction shall
not preclude or prevent ABB or the ABB Group from completing existing projects
for Company or for ABB Autoclave Systems, Inc. or for doing further work for
either entity as requested by
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either entity, and (ii) provided further, that this restriction shall not
preclude ABB or the ABB Group from engaging in the marketing and sale of
isostatic presses for pressures higher than 15,000 PSI where such marketing
and sale is not a significant part of the industrial or full service project
to be performed by ABB and/or the ABB Group, if ABB or the ABB Group, with
respect to each such project, grants to Buyer a right of first offer to
supply such isostatic presses related to such project. In the event ABB or
the ABB Group declines to accept Buyer's offer, ABB or the ABB Group shall
not purchase the isostatic presses from a third party on price and terms more
favorable to such third party than was offered by Buyer. For example, if
Buyer offers to sell such presses to ABB or the ABB Group for US$20,000,000
and ABB or the ABB Group declines such offer, ABB or the ABB Group may
purchase such presses from a third party vendor for US$18,000,000 provided
that the terms and conditions of such purchase are substantially similar to
those offered by Buyer. Notwithstanding anything to the contrary contained
herein, except as specifically provided in the foregoing sentence, ABB shall
be in breach of this section if ABB engages in the Competitive Activity,
either by itself or through any entity in which holds any direct or indirect
interest, irrespective of whether such entity is an Affiliate, including a
partnership, a corporation, association or other entity of which it is a
shareholder, director, officer, investor, manager, member, or in which it has
a financial interest, or as an employee of any entity. However, this Section
shall not prevent ABB from owning as a passive investment, up to 5% of a
class of equity securities issued by any publicly traded company, including a
competitor of Company that is registered under the Securities Exchange Act of
1934 or subject to Section 15(d) of such Act or that is registered under the
applicable securities laws which govern the operations of a national stock
exchange. The parties agree that the terms of this noncompetition provision
are necessary for the reasonable and proper protection of the business of
Buyer and that each and every restraint contained herein is reasonable. ABB
acknowledges and agrees that any violation of this provision may have an
immediate adverse and unfair effect on the business as conducted by Buyer and
that Buyer would not have entered into this Agreement in the absence of such
noncompetition provision. With respect to each and every breach or violation
of this covenant by ABB or the ABB Group, whether directly or indirectly, ABB
shall pay to Buyer a penalty of One Hundred Thousand US Dollars (US$100,000)
and, if the breach continues longer than one (1) month, One Hundred Thousand
US Dollars (US$100,000) for each month or partial month during which such
breach continues.
ABB or the ABB Group may acquire an interest in a business division
which engages in the Competitive Activity ("COMPETITIVE SEGMENT") as part of
an overall acquisition of a business which does not, as its core business,
engage in the Competitive Activity, provided that ABB and/or the ABB Group
complies with the following procedures. Promptly upon the closing of the
acquisition, ABB and/or the ABB Group shall notify Buyer of the acquisition
and grant Buyer a right of first offer to acquire the Competitive Segment and
shall provide Buyer with such information as is actually available to ABB and
as Buyer may reasonably request regarding the operations and financial
condition of the Competitive Segment. Buyer shall inform ABB or the ABB
Group whether it wishes to purchase the Competitive Segment within sixty (60)
days of such notice. If Buyer declines to purchase the Competitive Segment
or Buyer and ABB or the ABB Group cannot agree to the terms of the purchase
by Buyer within an additional sixty (60) day period, then ABB and/or the ABB
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Group shall within eighteen (18) months of the date of the closing of such
acquisition of the Competitive Segment by ABB and/or the ABB Group divest
itself of any interest in the Competitive Segment.
6.2 NONSOLICITATION. To the fullest extent allowed by law, for a
period of two (2) years after the Closing Date, neither ABB or the ABB Group,
shall solicit, attempt to solicit (directly or indirectly) or hire any Key
Employees of Company listed on SCHEDULE 6.2 from Company. With respect to each
and every breach or violation of this covenant by ABB or the ABB Group, ABB
shall pay to Buyer a penalty of One Hundred Thousand US Dollars (US$100,000)
and, if the breach continues longer than one (1) month, One Hundred Thousand US
Dollars (US$100,000) for each month or partial month during which such breach
continues.
ARTICLE VII
ADDITIONAL AGREEMENTS
In addition to the foregoing, Buyer and ABB each agree and ABB shall
cause Company to take the following actions after the execution of this
Agreement.
7.1 ACCESS TO INFORMATION. Company shall, subject to applicable law,
and subject to the reasonable protection of any business secrets of Company,
provide Buyer with information regarding its operations and ongoing business. No
information or knowledge obtained in any investigation pursuant to this
Section 7.1 shall affect or be deemed to modify any representation or warranty
contained herein or the conditions to the obligations of the parties to
consummate the Transaction, provided however, such information shall promptly be
brought to ABB's attention.
7.2 EXPENSES. Whether or not the Transaction is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby and thereby shall be paid by the party
incurring such expense.
7.3 ADDITIONAL AGREEMENTS. In case at any time after the Closing Date
any further action is reasonably necessary or desirable to carry out the
purposes of this Agreement or to vest Buyer with full title to all properties,
assets, rights, approvals, immunities, and franchises, the proper officers and
directors of each party to this Agreement shall take all such necessary action.
7.4 PUBLIC ANNOUNCEMENTS. Buyer and ABB, shall, as applicable cause
that Company shall cooperate with each other in releasing information concerning
this Agreement and the Transaction. Where practicable each of the parties shall
furnish to the other drafts of all releases prior to publication. Nothing
contained herein shall prevent either party at any time from furnishing any
information to any Governmental Entity or from issuing any release when it
believes it is legally required to do so, provided such party gives the other
party prompt notice of such Order, if applicable, and complies with any
protective order (or equivalent) imposed on such disclosure.
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7.5 COOPERATION AGREEMENT. ABB shall use its reasonable best efforts
to transfer the cooperation agreement by and between Dr. Burggraf GmbH and ABB
Industritechnik AG and the employment agreement by and between Dr. Rovere and
ABB Industria SpA to Company.
7.6 TRADEMARKS.
(a) Buyer shall procure that "ABB", "BBC", "Asea", "Brown Boveri"
(including any such name spelt in upper or lower case or any combination
thereof) or any names which are confusingly similar thereto or any combination
of any such names, shall immediately after the Closing be deleted from the
corporate name of Company and Company shall alter its corporate name to a name
which does not include any of such names.
(b) Buyer undertakes to ABB that Buyer and its Affiliates from time to
time shall, no later than 45 days after the Closing, cease using in any manner
whatever any of the names "ABB", "BBC", "Asea", "Brown Boveri" (including any
such name spelt in upper or lower case or any combination thereof) or any names
which are confusingly similar thereto or any combination of any such names or
any names which are confusingly similar thereto in connection with any activity
or business carried on by it.
(c) Buyer shall further procure that within 60 days after the Closing,
Company and each Affiliate of Company shall cease to use in any manner whatever
any trade or product name or any trademark or service mark incorporating the
name "ABB", "BBC", Asea", "Brown Boveri" (including any such name spelt in upper
or lower case or any combination thereof) or any names which are confusingly
similar thereto or any combination and in particular shall remove any reference
to any such name from all stationery, product literature, promotional items,
packaging, business cards, buildings, vehicles or uniforms and from all
advertising effected by Company concerned.
7.7 CORRESPONDENCE. All correspondence, notices, information, orders
or inquires relating to the Company which are received by ABB or the ABB Group
after the Closing shall, once ABB becomes aware of such correspondence, notices,
information, orders or inquires, be forwarded to Company free of charge.
7.8 ABB GROUP AGREEMENTS. It is understood that the name license
agreement, trademark license agreement, headquarter service agreement and other
similar agreements, including any financial agreements, entered into between the
ABB Group companies, concerning, i.e., the use of the name "ABB", other services
and the corporate fee system will automatically terminate with respect to
Company as at Closing. Fees paid for the full calendar year 1999 shall prior to
Closing be reimbursed to Company at Closing to the extent such fee is related to
any time after Closing.
7.9 RELEASES.
(a) ABB shall proceed as follows, at all times with diligence and
care:
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(i) ABB shall procure that Company will be released in full
from any possible obligations under any suretyships, guarantees and similar
commitments given by it in respect of any activity in the ABB Group other than
its business (it being understood and agreed that each such release shall be in
form and substance reasonably satisfactory to Buyer).
(ii) In the event such suretyships, guarantees or similar
commitments exist, until ABB has procured each and every release required
pursuant to paragraph (a)(i) above, ABB shall promptly indemnify Company against
any liability it may incur under any suretyship, guarantee or similar commitment
referred to in such paragraph.
(b) Buyer shall as soon as possible cause Company to proceed as
follows, at all times with diligence and care:
(i) Company shall procure that ABB and any other company in the
ABB Group be released in full from their respective obligations under any
suretyships, guarantees and similar commitments, including liabilities relating
to pensions, including FPG, given in respect of Company (it being understood
and agreed that each such release shall be in form and substance reasonably
satisfactory to ABB and/or the relevant company in the ABB Group).
(ii) Until Company has procured each and every release required
pursuant to paragraph (b)(i) above, Company or Buyer as the case may be shall
promptly indemnify ABB and each such other company in the ABB Group against any
liability any of them may incur under any suretyship, guarantee or similar
commitment referred to in such paragraph which are directly due to the actions
of Buyer or Company after the Closing.
7.10 UPGRADE OF SCALA SOFTWARE. ABB shall bear the cost for upgrading
the Scala software in order to reasonably satisfy Buyer's requirements for
making the Scala software Year 2000 Compliant. ABB shall have no further
liability for Year 2000 compliance, including noncompliance claims regarding the
Scala software or otherwise.
7.11 GUARANTY. Flow International Corporation, the sole shareholder of
Buyer, agrees to guaranty Buyer's obligations under this Agreement with a
Guaranty substantially in the form set forth in EXHIBIT 7.11.
7.12 QUINTUS WOOD PRESS. ABB Credit shall continue its leasing
contract with respect to the wood press purchased by Dala Trautveckling AB and
shall waive the change in control provision contained in such contract.
7.13 HEDGING AGREEMENTS. No later than five (5) days following the
execution of this Agreement, ABB shall provide Buyer with a list of all hedging
agreements relating to Company's business stating the foreign exchange amount
and contracted SEK rate. ABB shall use its reasonable best efforts to cooperate
with Buyer in terminating such agreements and assisting Buyer in instituting
replacement hedging agreements.
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7.14 COMPUTER LEASES. ABB Credit shall continue its computer lease
agreements with certain Company employees on the original terms and conditions
of such lease agreements.
7.15 HYUNDAI LOGISTICS COMPANY. In the event Buyer after the Closing
receives DM74.000 or a portion thereof from Hyundai Logistics Company as a
repayment of a bond paid by Company, Buyer shall remit such amount to ABB.
7.16 ASSISTANCE REGARDING TAX DISPUTES. Buyer shall cause Company to
assist ABB as reasonably requested by ABB by providing ABB with such documents
Buyer may have which are requested by ABB and with such other assistance as ABB
requests in resolving the tax dispute regarding ABB Metallurgy AB. ABB shall
pay all of Company's reasonable costs related to such assistance, including the
costs of any Company employees or agents who provide such assistance. In no
event shall such assistance unreasonably impact the operations of Company and in
no event shall the provision of such assistance reduce or impact ABB's
indemnification obligations pursuant to Section 9.2 herein.
7.17 SPP REIMBURSEMENT. In the event Company after Closing receives a
refund or repayment amount from SPP with respect to pension payments made prior
to Closing for individuals who no longer were employees of Company at the
Closing Date, then Company shall pay said amount to ABB. If such payment is not
a one-time cash payment or other than a cash refund or repayment from SPP, then
the parties shall mutually agree as to the form, timing and amount of such
payment to ABB.
7.18 ABB FLAKT INDOOR CLIMATE AB CHARGES. ABB shall assist Buyer in
the reinstitution of the ABB Flakt Indoor Climate AB Charges certificates
described in Section 8.2.7 and pay to Buyer any fees and reasonable costs
related to such reinstitution.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE TRANSACTION.
The respective obligation of each party to effect the Transaction shall be
subject to the satisfaction prior to or at the Closing Date of the following
conditions:
8.1.1 CONSENTS. All Consents legally required for the
consummation of the Transaction shall have been filed, occurred, or been
obtained, other than such Consents, the failure of which to obtain would not
have a material adverse effect on the consummation of the Transaction
contemplated hereby or on the Business Condition of Buyer or Company.
8.1.2 NO RESTRAINTS. No statute, rule, regulation, or Order
shall have been enacted, entered, promulgated, or enforced by any Governmental
Entity of competent jurisdiction that enjoins or prohibits the consummation of
the Transaction and that is then in effect.
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8.1.3 NO BURDENSOME CONDITION. There shall not be any statute,
rule, regulation, or Order enacted, entered, enforced, or deemed applicable to
the Transaction by any Governmental Entity which, in connection with the grant
of any Required Statutory Approval, imposes any restriction, condition or
obligation upon Buyer or Company which would have a material adverse effect on
the economic or business benefits of the transactions contemplated by this
Agreement.
8.1.4 INTERCOMPANY DEBT. The payment by ABB or Company, as
the case may be, of the intercompany debt as set forth in SCHEDULE 8.1.4.
8.1.5 EXECUTION OF OTHER TRANSACTION DOCUMENTS. The Pressure
Systems Stock Purchase Agreement and the Intellectual Property Asset Purchase
Agreement shall have been executed by the appropriate parties.
8.2 CONDITIONS OF OBLIGATIONS OF BUYER. The obligations of Buyer to
effect the Transaction are subject to the satisfaction of the following
conditions, unless waived by Buyer in writing:
8.2.1 REPRESENTATIONS AND WARRANTIES OF ABB. The representations
and warranties of ABB set forth in this Agreement shall be true and correct as
of the date of this Agreement and as of the Closing Date as though made on and
as of the Closing Date, except: (i) as otherwise contemplated by this
Agreement, or (ii) in respects that do not have a material adverse effect on the
Business Condition of Company. Buyer shall have received a certificate signed
on behalf of Company by an authorized officer to such effect on the Closing
Date.
8.2.2 PERFORMANCE OF OBLIGATIONS OF ABB AND COMPANY. ABB and
Company shall have performed all agreements and covenants required to be
performed by them under this Agreement prior to the Closing Date, except for
breaches that do not have a material adverse effect on the Business Condition of
Company. Buyer shall have received a certificate signed on behalf of Company by
an officer of Company to such effect.
8.2.3 NO MATERIALLY ADVERSE CHANGE. No materially adverse change
on the Business Condition of Company shall have occurred between the date of
this Agreement and the Closing.
8.2.4 SERVICES AGREEMENT. Company and ABB or the appropriate
entity in the ABB Group shall have entered into a Services Agreement with
respect to the services of sales personnel, and support services, including,
office services, insurance and health services in the form of EXHIBIT 8.2.4.
Buyer shall have received documentation reasonably satisfactory to Buyer
regarding the termination of the existing service agreements.
8.2.5 LEASE AGREEMENTS. Company and the lessor of the real
property leases located at Fregatten 15, Seglargartan 2, Vasteras, Sweden; and
Finnslatten 1, Lugna Gatan, Vasteras, Sweden shall have entered into lease
agreements in the form of EXHIBIT 8.2.5,
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providing for, among other things, a term of not less than three (3) years and a
rental rate not less favorable than market rates.
8.2.6 NET BOOK VALUE. Company's net book value at December 31,
1998, after taking into account all dividends or distributions paid to ABB
pursuant to SCHEDULE 5.1.2 shall equal or exceed US$2,000,000. Net book value
means the sum of the restricted equity and unrestricted equity categories and
seventy-two percent (72%) of the untaxed reserves on Company's December 31, 1998
balance sheet. The exchange rate for such calculation shall be eight (8) SEK
per one (1) US dollar.
8.2.7 ABB FLAKT INDOOR CLIMATE AB CHARGES. ABB shall have
provided to Buyer the five certificates evidencing the ABB Flakt Indoor Climate
AB floating charges in the aggregate amount of 57,000,000 SEK or evidence that
Company has initiated the process of reinstituting such certificates
8.2.8 APPROVAL OF LABOR UNIONS. The approval, if necessary, of
labor unions with respect to the Transaction.
8.2.9 PAYMENT TO CHINA NATIONAL AERO TECHNOLOGY INTERNATIONAL
SUPPLY CORP. ABB shall have provided Company with all amounts due China
National Aero Technology International Supply Corp. ("CHINA AERO") pursuant to
the agreement entered into by China Aero and Company; Company shall have paid
all such amounts due to China Aero; and ABB and Company shall have provided
Buyer with a certificate that such payment has been paid in full for all amounts
due under the agreement and that said payment was made as described above.
8.3 CONDITIONS OF OBLIGATIONS OF ABB. The obligation of ABB to effect
the Transaction is subject to the satisfaction of the following conditions
unless waived by ABB in writing:
8.3.1 REPRESENTATIONS AND WARRANTIES OF BUYER. The
representations and warranties of Buyer set forth in this Agreement shall be
true and correct as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date, except: (i) as otherwise
contemplated by this Agreement, or (ii) in respects that do not have a material
adverse effect on the Business Condition of Buyer or on the benefits of the
transactions provided for in this Agreement. ABB shall have received a
certificate signed on behalf of Buyer by an authorized officer of Buyer to such
effect on the Closing Date.
8.3.2 PERFORMANCE OF OBLIGATIONS OF BUYER. Buyer shall have
performed all agreements and covenants required to be performed by them under
this Agreement prior to the Closing Date except for breaches that do not have a
material adverse effect on the Business Condition of Buyer or on the benefits of
the transactions provided for in this Agreement, and ABB shall have received a
certificate signed on behalf of Buyer by an authorized officer of Buyer to such
effect.
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ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION BY ABB. Subject to Sections 9.6, 9.7, and 9.8,
ABB shall defend, indemnify, and hold Buyer and its Affiliates harmless from and
against, and reimburse Buyer with respect to, any and all Losses incurred by
Buyer, or Company or any of Company's Affiliates, employees, officers, directors
and agents by reason of or arising out of or in connection with (i) any breach,
or any third party claim that if true, would constitute a breach, by ABB of any
representation or warranty of ABB contained in this Agreement or in any
certificate delivered to Buyer pursuant to the provisions of this Agreement
and/or (ii) the failure, partial or total, of Company or ABB to perform any
agreement or covenant required by this Agreement to be performed by it. Neither
ABB nor any of its Affiliates shall make any claim against Company, its
employees, officers, directors and agents after the Closing Date for any breach
of representation, warranty or covenant under this Agreement or seek
contribution or indemnification from Company, its employees, officers, directors
and agents with respect to any such breach.
9.2 INDEMNIFICATION BY ABB FOR SPECIFIC LOSSES. Irrespective of any
disclosure regarding Tax claims contained herein, ABB shall defend, indemnify,
and hold Buyer and its Affiliates harmless from and against, and reimburse Buyer
with respect to, any and all Losses incurred by Buyer, or Company or any of
Company's Affiliates, employees, officers, directors and agents by reason of or
arising out of or in connection with any Tax Losses of Company (for any claims
arising from or relating to any act or event occurring prior to Closing).
Irrespective of any disclosure regarding product liability claims contained
herein, ABB shall defend, indemnify, and hold Buyer and its Affiliates harmless
from and against, and reimburse Buyer with respect to, any and all Losses
incurred by Buyer, or Company or any of Company's Affiliates, employees,
officers, directors and agents by reason of or arising out of or in connection
with any Losses of Company attributable to product liability claims to the full
amount of ABB's product liability insurance coverage, including deductibles.
Irrespective of any disclosure regarding the failure to notify and/or receive
consents from parties to contracts with the former ABB Pressure Systems AB
regarding the transfer of such agreements to ABB Flakt Indoor Climate AB, ABB,
shall defend, indemnify, and hold Buyer and its Affiliates harmless from and
against, and reimburse Buyer with respect to, any and all Losses incurred by
Buyer, or Company or any of Company's Affiliates, employees, officers, directors
and agents by reason of or arising out of or in connection with such failure
("FLAKT CONTRACT CLAIMS"). The foregoing obligations of ABB shall not be
subject to any limitation of liability contained in Sections 9.6 (except as
specifically set forth for Tax claims) and 9.7.
9.3 INDEMNIFICATION BY BUYER. Subject to Sections 9.6 and 9.7, Buyer
shall defend, indemnify, and hold ABB and its employees, officers, directors,
and agents harmless from and against, and reimburse ABB with respect to, any and
all Losses incurred by ABB by reason of or arising out of or in connection with:
(i) any breach, or any third party claim that if true, would constitute a breach
by Buyer of any representation or warranty of Buyer contained in this
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Agreement or in any certificate delivered to ABB pursuant to the provisions of
this Agreement and/or (ii) the failure, partial or total, of Buyer (or Company
after the Closing) to perform any agreement or covenant required by this
Agreement to be performed by it.
9.4 NOTICE OF CLAIMS. All claims for indemnification under this
Agreement shall be resolved in accordance with the following procedures:
(a) If an indemnified party becomes aware of a Loss, it shall,
as soon as reasonably practical, deliver a Claim Notice to the indemnifying
party for such Losses. If an indemnified party receives notice of a third-party
claim for which it intends to seek indemnification hereunder, it shall give the
indemnifying party prompt written notice of such claim, so that the indemnifying
party's defense of such claim under Section 9.5 hereunder may be timely
instituted.
(b) When Losses are actually incurred or paid by an indemnified
party or on an indemnified party's behalf or otherwise fixed or determined, the
indemnified party shall as soon as reasonably practical, deliver a Payment
Certificate to the indemnifying party for such Losses. If a Claim Notice or
Payment Certificate refers to any claim, action, suit, or proceeding made or
brought by a third party, the Claim Notice or Payment Certificate shall include
copies of the claim, any process served, and all legal proceedings with respect
thereto.
(c) If, after receiving a Payment Certificate, the indemnifying
party desires to dispute such claim or the amount claimed in the Payment
Certificate, it shall deliver to the indemnified party a Counternotice as to
such claim or amount. Such Counternotice shall be delivered within thirty (30)
days after the date the Payment Certificate to which it relates is received by
the indemnifying party. If no such Counternotice is received within the
aforementioned 30-day period, the indemnifying party shall have waived any
further objection to the Payment Certificate or the Losses described in it, and
the indemnified party shall be entitled to prompt payment for such Losses from
the indemnifying party.
(d) If, within thirty (30) days after receipt by the
indemnified party of the Counternotice to a Payment Certificate, the parties
shall not have reached agreement as to the claim or amount in question, the
claim for indemnification shall be decided in accordance with the provisions of
Section 11.10.
(e) In the event the indemnified party is required to take
action to comply with any requirements imposed by law, to minimize its damages,
to avoid a forfeiture or penalty, or to avoid missing a deadline, the
indemnified party shall be indemnified for its Losses to the full amount set
forth in this Agreement. The indemnified party shall not be penalized for
protecting the indemnifying party's obligations.
9.5 DEFENSE OF THIRD PARTY CLAIMS. The indemnifying party under this
Article IX shall have the right to conduct and control, through counsel of its
own choosing, any third-party claim, action, or suit or compromise or settlement
thereof. The indemnified party may, at its election, participate in the defense
of any such claim, action, or suit through counsel of its
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choosing, but the fees and expenses of such counsel shall be at the expense
of the indemnified party. If the indemnifying party does not assume the
defense of any such third-party action, claim, or suit, then the indemnified
party may defend, through counsel of its own choosing, such action, claim, or
suit and may settle such action, claim, or suit and recover from the
indemnifying party the amount of such settlement or of any judgment and the
costs and expenses of such defense; provided, however, that the indemnifying
party shall not be liable to pay any such settlement unless the indemnified
party shall have given the indemnifying party written notice of the terms of
the proposed settlement and the indemnifying party shall have failed, within
twenty (20) days of receipt of such notice, to undertake the defense of such
action, claim, or suit. The indemnifying party shall not compromise or
settle any third-party action, claim, or suit which includes any term that
shall require any act or forbearance by the indemnified party from all
liability in respect of such claim, action, or suit without the prior written
consent of the indemnified party, which consent shall not be unreasonably
withheld or delayed. Assumption by an indemnifying party of control of any
such defense, compromise, or settlement shall not be deemed a waiver by it of
its right to challenge its obligation to indemnify the indemnified party.
ABB and the parties hereto shall cause that Company shall cooperate in all
reasonable respects with each other in connection with the defense,
negotiation, or settlement of any legal proceeding, claim, or demand referred
to in this Section 9.5. Buyer and its Affiliates shall cause Company to take
reasonable actions to mitigate Losses of Company with respect to any claim
for which Buyer is seeking indemnification. Failure to so mitigate or the
assumption of the defense by indemnified party as provided above shall not
constitute a waiver of its right to seek indemnification. The indemnifying
party and its authorized representatives shall be given reasonable access to
the indemnified party's documents and records and to its employees to enable
the indemnifying party to examine such documents and records and employees as
reasonably necessary in connection with such defense. Subject to the
confidentiality provisions contained herein, the indemnifying party may make
copies of such books and records as reasonably necessary in connection with
such defense. The reasonable costs of the indemnified party in complying
with the foregoing shall be paid by the indemnifying party.
9.6 TIME LIMIT. The provisions of this Article IX shall apply only to
Losses that are incurred or relate to asserted claims, demands, or liabilities
for which a Claim Notice is given within eighteen (18) months of the Closing
Date; except for Tax Losses for which notice shall be given no later than two
(2) months from the date the matter to which the claim relates has been subject
to a final, non-appealable decision by a court of competent jurisdiction; Losses
with respect to breaches of Section 3.12 which shall survive for a period of
three (3) years from the Closing Date and Section 3.17 which shall survive for a
period of ten (10) years from the Closing Date; product liability claims which
shall continue as long as ABB has product liability insurance (subject to
applicable statute of limitations); and Losses related to any Flakt Contract
Claims which shall survive for the applicable statute of limitations; after
which applicable time ABB shall have no liability whateverkind whether for
breach of any representation, warranty or covenant or other provision herein,
provided, however, that the indemnification obligations for such claims for
which a Claim Notice is given within the time period set forth above shall
continue until the final resolution of each such claim.
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9.7 LIMITATIONS. Except for any Losses related to or arising from
breaches of any representations or warranties regarding accounts receivable or
Taxes, the covenants of ABB regarding product liability claims coverage under
this Agreement, and any Losses with respect to any Flakt Contract Claims, none
of which shall be subject to any Threshold Amount, the indemnified party shall
be entitled to indemnification only if the total aggregate Losses under the
Transaction Agreements exceed Two Hundred Fifteen Thousand US Dollars
(US$215,000) (the "THRESHOLD AMOUNT"). Once the Threshold Amount has been
exceeded, the indemnified party shall be entitled to indemnification for all
amounts above the Threshold Amount. Except for any Losses related to or arising
from breaches of any representations or warranties regarding accounts receivable
or Taxes, the covenant of ABB regarding product liability claims coverage
contained in any of this Agreement, and any Losses with respect to any Flakt
Contract Claims, none of which shall be subject to any limitation of liability,
the total aggregate amount which the indemnified parties under the Transaction
Agreements shall be entitled to be indemnified under the Transaction Agreements
will not exceed thirty percent (30%) of the total aggregate purchase price
pursuant to the Transaction Agreements. Any payment by ABB pursuant to any
claim shall constitute a reduction of the Purchase Price. Buyer at its option
may direct ABB to make the indemnity payment to Company. The sole remedy of
Buyer and ABB for breaches of this Agreement shall be claims made in accordance
with and subject to the limitations of this Article IX. This Agreement, the
Pressure Systems Stock Purchase Agreement and the Intellectual Property Asset
Purchase Agreement are the "TRANSACTION AGREEMENTS".
9.8 OTHER LIMITATIONS. ABB shall not be liable under this Agreement
for any Losses: (a) to the extent that an applicable reserve for the applicable
Loss was provided for in the 1998 Financials; (b) with respect to any warranty,
representation, indemnity, covenant, or undertaking in connection with the
Transaction except where the same is expressly contained in this Agreement
(Buyer hereby confirms that it has not relied and will not rely on any warranty,
representation, indemnity, covenant, or undertaking of any person which is not
expressly contained in this Agreement); or (c) resulting from a change in
accounting or in taxation policy or practice of Buyer or Company including the
method of submission of taxation returns introduced following the Closing.
Claims under this Agreement by Buyer may only be made by Buyer or its successors
or assigns. If any Loss of Company is a tax deductible item, the amounts
payable to Company with respect to the indemnification obligations of ABB
hereunder shall be reduced to the extent that Company can actually benefit from
such tax savings within a reasonable period of time. As to non-third party
claims and claims which do not involve the noncompetition or nonsolicitation
provisions contained herein, any breach of this Agreement by ABB which is
capable of remedy shall not entitle Buyer to compensation unless ABB is given
written notice of such breach and such breach is not fully remedied within
thirty (30) days of the date of such notice. To the extent Buyer or Company
actually receives any proceeds, from insurance or otherwise, for a claim for
which ABB has indemnified Buyer, Buyer shall pay to ABB the amount of such
proceeds if ABB has paid Buyer in full all Losses attributable to such claim, or
Buyer shall reduce the amount of Losses payable by ABB by the amount of such
proceeds. Upon ABB's request, Buyer shall subrogate any third party claim for
which Buyer is seeking indemnification from ABB to ABB.
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9.9 LIABILITY FOR FAILURE TO CLOSE. If all conditions to Closing
specified in Article VIII have been satisfied or, in the case of the conditions
specified by Section 8.2, waived by Buyer, or, in the case of the conditions
specified by Section 8.3, waived by ABB, and either Buyer or ABB fail or refuse
to consummate this Transaction, then the party that fails or refuses to
consummate this Transaction shall be liable to the other party for all direct
and actual losses and damages, including indirect and consequential damages, and
expenses (including attorneys fees and related expenses).
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 TERMINATION. This Agreement may be terminated at any time prior
to the Closing Date:
(a) by mutual consent of Buyer and ABB;
(b) by either Buyer or ABB (provided that the terminating party is not
then in material breach of any representation, warranty, covenant, or agreement
contained in this Agreement) if there has been a breach of any representation,
warranty, covenant, or agreement that has a material adverse effect on the
Business Condition of the Company, or Buyer, as the case may be, or on the
benefits of the transaction provided for in this Agreement, and such breach has
not been cured, or reasonable efforts are not being employed to cure such
breach, within ten (10) days after notice thereof is given to the party
committing such breach;
(c) by either Buyer or ABB if the Transaction shall not have been
Closed before April 15, 1999; or
(d) by either Buyer or ABB if any permanent injunction or other Order
of a court or other competent authority preventing the Transaction shall have
become final and non-appealable.
10.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by Buyer or ABB as provided in Section 10.1, this Agreement shall
forthwith become void and have no effect, and there shall be no liability or
obligation on the part of the Buyer or ABB or their respective officers or
directors, except that (i) the provisions of Sections 7.2, 7.4, 10.2, 11.7,
11.8, 11.9 and 11.10 shall survive any such termination and abandonment, and
(ii) no party shall be released or relieved from any liability arising from the
willful breach by such party of any of its representations, warranties,
covenants, or agreements as set forth in this Agreement.
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ARTICLE XI
GENERAL PROVISIONS
11.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties, and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement survive the Closing as provided
herein
11.2 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed sufficiently given and served for all purposes
when personally delivered, sent by registered mail or given by telex or
machine-confirmed facsimile or three business days after a writing is deposited
in the United States or Swedish mail, as applicable, first class postage or
other charges prepaid and registered, return receipt requested, addressed as
follows (or at such other address for a party as shall be specified by like
notice):
(a) if to Buyer:
Flow International FPS AB
S-721 66
Vasteras, Sweden
Attention: Manager
Phone: 011 46 21 37 70 10
Fax: 011 46 21 32 73 70
WITH A COPY TO:
Preston Gates & Ellis LLP
5000 Columbia Center
701 Fifth Ave.
Seattle, WA 98104-7078
Attention: Robert S. Jaffe
Phone: (206) 623-7580
Fax: (206) 623-7022
b) if to ABB:
Asea Brown Boveri AB
Kopparbergsvagen 2, SE-721 83
Vasteras, Sweden
Attention: General Counsel
Phone: 011 46 21 13 70 20
Fax: 011 46 21 18 12 06
WITH A COPY TO:
Ulf Jonsson
Advokatfirman Sodermark
Strandvagen 1
Box 14055, SE 104 40
Stockholm, Sweden
Phone: 011 46 8 670 57 50
Fax: 011 46 8 663 67 20
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11.3 INTERPRETATION. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section or Exhibit to this
Agreement unless otherwise indicated. The words "INCLUDE", "INCLUDES", and
"INCLUDING" when used therein shall be deemed in each case to be followed by the
words "WITHOUT LIMITATION". The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. This Agreement has been
negotiated by the respective parties hereto and their attorneys and the language
hereof will not be construed for or against either party. A reference to a
Section or an Exhibit will mean a section in, or exhibit to, this Agreement
unless otherwise explicitly set forth.
11.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to each of the other parties, it being understood that
all parties need not sign the same counterpart.
11.5 MISCELLANEOUS. This Agreement and the documents referred to
herein (a) constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof; (b) are not intended to confer upon any other person any rights or
remedies hereunder; and (c) shall not be assigned by operation of law or
otherwise except as otherwise specifically provided.
11.6 NO JOINT VENTURE. Nothing contained in this Agreement will be
deemed or construed as creating a joint venture or partnership between any of
the parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee, or legal representative of any other party. No party will have
the power to control the activities and operations of any other and their status
is, and at all times, will continue to be, that of independent contractors with
respect to each other. No party will have any power or authority to bind or
commit any other. No party will hold itself out as having any authority or
relationship in contravention of this Section.
11.7 TRANSACTIONAL EXPENSES. Whether or not the transactions
contemplated by this Agreement are consummated, Buyer and ABB shall pay its own
fees and expenses incident to the negotiation, preparation, execution, delivery
and performance hereof, including, without limitation, the fees and expenses of
its counsel, accountants and other experts.
11.8 CONFIDENTIALITY. Each party ("RECEIVING PARTY") acknowledges that
the Confidential Information of the other party ("DISCLOSING PARTY") is the
valuable confidential property of the Disclosing Party. Each party agrees to
hold Confidential Information received or otherwise obtained from the other in
confidence. The Receiving Party shall not disclose the Confidential Information
of the Disclosing Party to any third persons or use it in any manner except as
contemplated by this Agreement. The parties further agree that Confidential
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Information of the Disclosing Party shall be disclosed to the Receiving Party's
officers, employees, and third-party consultants, only on a reasonable
need-to-know basis and only with instructions to such persons that they comply
with the restrictions of this provision. "CONFIDENTIAL INFORMATION" means all
information, including all technical and commercial information and data,
disclosed by one party to this Agreement to the other or otherwise obtained,
directly or indirectly, by one party from the other, in the course of this
transaction with respect to Buyer, Company or ABB which, at the time it was
disclosed to or otherwise obtained by a party, was not rightfully in that
party's possession and was not common general public knowledge. This
transaction and its terms and conditions shall be treated as Confidential
Information. The restrictions of this section shall not, (i) apply to
Confidential Information of the Disclosing Party (a) which enters into the
public domain through no fault of the Receiving Party, (b) which is disclosed to
the Receiving Party by a third party with no restriction on disclosure, or (c)
which is independently developed by the Receiving Party; or (ii) prohibit
disclosure of Confidential Information of the Disclosing Party when required by
a court or governmental agency of competent jurisdiction so long as the
Receiving Party takes appropriate steps to attempt to obtain a protective or
other such order with respect to such Confidential Information and advises the
Disclosing Party as soon as reasonably possible of the requirement to make such
disclosure; or (iii) restrict Buyer in its due diligence. This confidentiality
and nondisclosure section shall, except as provided herein, survive termination
of this Agreement and the Closing.
Notwithstanding the foregoing, the limitations on the use of Confidential
Information shall not be construed to limit Buyer's right to make full use of
the assets of the Company after the Closing. Except as otherwise provided in
this Agreement, the terms of this Agreement and the Transaction shall not be
disclosed by either party except to confirm that a sale has occurred after
consummation of the Transaction.
11.9 GOVERNING LAW. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of Sweden.
11.10 ARBITRATION. Any dispute, controversy or claim arising out of or
relating to this Agreement, or the breach, termination or validity thereof,
shall be finally settled under the Rules of the Arbitration Institute of the
Stockholm Chamber of Commerce presently in force by three (3) arbitrators
selected in accordance with said rules. The place of arbitration shall be
Stockholm, Sweden and the law applicable to the arbitration procedure shall be
determined by referring to the law of the place of arbitration. The English
language shall be used throughout the arbitral proceedings.
(THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK)
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SIGNATURE PAGE - AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
IN WITNESS WHEREOF, Buyer and ABB have caused this Agreement to be
executed by their respective and duly authorized officers, have duly executed
this Agreement, all as of the date first written above.
GIGANTISSIMO 2131 AB, UNDER ASEA BROWN BOVERI, AB
CHANGE OF NAME TO
FLOW INTERNATIONAL FPS AB
By By
-------------------------- ---------------------------
Ronald Tarrant, Director and Anders Narvinger, President
Authorized Signatory
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EXHIBIT 2.2
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("AGREEMENT"), is entered into this _____
day of March, 1999 ("EFFECTIVE DATE"), by and among Asea Brown Boveri AB, a
Swedish corporation ("ABB") and Flow Holdings GmbH (SAGL) Limited Liability
Company, a Swiss company ("BUYER"). Capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Main Stock Purchase
Agreement, as defined below.
RECITALS
A. The parties or their Affiliates are simultaneously entering into
the Amended and Restated Stock Purchase Agreement by and among Asea Brown Boveri
AB, a Swedish company and Gigantissumo 2131 AB under name change to Flow
International FPS AB, a Swedish company with respect to the issued and
outstanding stock of ABB Pressure Systems AB, a Swedish company with the
registration number 556064-1770 ("PRESSURE SYSTEMS") ("MAIN STOCK PURCHASE
AGREEMENT") and the Amended and Restated Stock Purchase Agreement by and among
ABB Industrial Systems, Inc., an Ohio corporation, Flow International
Corporation, a Washington corporation and ABB Autoclave Systems Inc., a Delaware
corporation. This Agreement, together with the aforementioned agreements are
the "TRANSACTION AGREEMENTS". Pursuant to the Transaction Agreements Buyer will
be purchasing a business which develops, manufactures, markets and sells
isostatic presses for pressures higher than 15,000 PSI for forming,
densification or microbiological reduction ("BUSINESS").
B. Buyer desires to acquire certain assets of ABB which are used in
the Business of Pressure Systems (the "Acquired Assets" as defined in Section
1.1) and to assume certain contractual obligations relating to the Acquired
Assets, all on the terms and subject to the conditions hereinafter set forth.
INTENDING TO BE LEGALLY BOUND, and in consideration of the premises and
the mutual representations, warranties, covenants and agreements contained
herein, Buyer and ABB hereby agree as follows:
ARTICLE I
PURCHASE OF ASSETS
1.1 PURCHASE OF ASSETS. Subject to the terms and conditions of this
Agreement, at the Closing, as defined below, ABB shall sell, convey, transfer,
assign and deliver to Buyer, and Buyer shall purchase, acquire and accept from
ABB, the following assets (together, the "ACQUIRED ASSETS"):
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All patents and trademarks (excluding any right of whatever kind relating
to "ABB", "BBC", "Asea" or "Brown Boveri", including any such name spelled in
upper or lower case or any combination thereof, or any names confusingly similar
thereto or any combination of such names), and applications for any of the
foregoing, set forth on SCHEDULE 1.1(a) ("ABB INTELLECTUAL PROPERTY"); and
1.2 EXCLUDED LIABILITIES. Buyer shall not assume or be liable for any
of the debts, obligations or liabilities of ABB of any nature whatsoever,
regardless of whether or not such debts, obligations or liabilities have been
disclosed pursuant to this Agreement.
1.3 PURCHASE PRICE. In consideration for the sale, assignment and
transfer of the Acquired Assets and the representations and warranties contained
herein, Buyer agrees to pay to ABB the aggregate amount of Fourteen Million US
Dollars (US$14,000,000) ("PURCHASE PRICE").
1.4 CLOSING AND EFFECTIVE DATE. The Closing shall take place on March
31, 1999 (the "CLOSING DATE" or "CLOSING"), at the offices of Asea Brown Boveri
AB, Vasteras, Sweden, unless another date or place is agreed to in writing by
the parties hereto.
1.5 CLOSING DATE DELIVERIES.
(a) On the Closing Date, ABB shall deliver to Buyer the following
validly executed instruments:
(i) Certified copy of resolutions of the Board of Directors of
ABB authorizing the execution and performance of this Agreement and the
transaction contemplated herein;
(ii) The closing certificate required by Section 5.1;
(iii) Assignments in recordable form with the patent and/or
trademark governmental authorities or instrumentalities in the applicable
jurisdictions of all ABB Intellectual Property being purchased hereunder,
reasonably satisfactory in form and substance to Buyer; and
(iv) Such other instruments or documents necessary to consummate
this Agreement, all satisfactory in form and substance to Buyer.
(b) On the Closing Date, Buyer shall deliver to ABB the following
validly executed instruments:
(i) Fourteen Million US Dollars ($14,000,000) payable to ABB by
wire transfer of immediately available funds;
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(ii) Certified copy of resolutions of the Board of Directors of
Buyer authorizing the execution and performance of this Agreement and the
transaction contemplated herein;
(iii) The closing certificate required by Section 5.2; and
(iv) Such other instruments or documents necessary to consummate
this Agreement, all satisfactory in form and substance to Buyer.
1.7 TAXES. Buyer shall pay all transfer, sales and use taxes arising
out of or in connection with the transaction effected pursuant to this
Agreement.
1.8 ALLOCATION. ABB and Buyer agree that the Purchase Price shall be
allocated to the Acquired Assets as intangibles and agree to prepare and file
all applicable financial reporting and foreign, federal, and local tax returns
(including such forms as may be required by applicable regulations) in a manner
consistent with the allocation and will not in connection with the filing of
such returns make any allocation of the Purchase Price, as defined below, that
is contrary to the allocation. ABB and Buyer shall consult with each other with
respect to all issues related to such allocation in connection with any tax
audit and shall not initiate any positions inconsistent with such allocation in
any tax audit. The parties agree to file all applicable foreign and federal
income tax and corresponding state and/or local tax forms on a timely basis.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF ABB
Except as disclosed in this Agreement, or the Schedules, or in the
disclosure schedules delivered by ABB to Buyer prior to the execution of this
Agreement (the "ABB DISCLOSURE SCHEDULE"), ABB represents and warrants to Buyer
as follows:
2.1 ORGANIZATION, STANDING, AND POWER. ABB is a corporation duly
organized, validly existing, and in good standing under the laws of Sweden. ABB
has all requisite power and authority to own, lease, and operate its properties
and to carry on its businesses as now being conducted, and is duly qualified,
validly existing and in good standing (in such jurisdictions in which good
standing is applicable) to do business in each jurisdiction in which a failure
to so qualify would have a material adverse effect on the Business Condition (as
hereinafter defined) of ABB. As used in this Agreement, "BUSINESS CONDITION"
with respect to any entity shall mean the business, financial condition, results
of operations or assets.
2.2 AUTHORITY. ABB has, or shall have prior to the Closing, all
requisite corporate power and authority to enter into this Agreement and,
subject to the Company's Required Statutory Approvals, to consummate the
transactions contemplated hereby. As used in this Agreement "COMPANY'S REQUIRED
STATUTORY APPROVALS" means such filings, authorizations, orders and approvals as
may be required under federal or foreign laws, or securities laws. The
execution and delivery by ABB of this Agreement and the consummation of the
transactions
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contemplated hereby have been duly authorized by all necessary corporate action
on the part of ABB, including the approval of the Board of Directors and sole
shareholder of ABB. This Agreement has been duly executed and delivered by ABB
and constitutes a valid and binding obligation of ABB enforceable in accordance
with its terms, except that such enforceability may be subject to
(i) bankruptcy, insolvency, reorganization, or other similar laws relating to
enforcement of creditors' rights generally and (ii) general equitable
principles, including the availability of specific performance, injunctive
relief and other equitable remedies.
2.3 TECHNOLOGY AND INTELLECTUAL PROPERTY RIGHTS.
(a) Except as set forth in SCHEDULE 2.3, the ABB Intellectual Property
consists solely of items and rights which are owned by ABB and ABB owns the
entire right, title and interest in and to such ABB Intellectual Property free
and clear of any Liens. To ABB's Knowledge, ABB has all rights in the ABB
Intellectual Property necessary to carry out ABB's current, former (but not
prior to January 1, 1995), and anticipated future (up to the Closing) activities
with respect to the Business of Pressure Systems. ABB's Knowledge means that
the following employees of ABB, Katarina Vannesjo-Lundblad, Kristina Below and
Jessica ABB, Katarina Vannesjo-Lundblad, Kristina Below and Jessica ights which
are owned by ABB and ABB owns the entire right, title and interest in and to
such ABB Intellectual Property free and clear diligence, and based upon the
foregoing, such persons are not aware and have no reasonable basis to believe
that there are any inaccuracies in such specific representation and warranty and
related ABB Disclosure Schedule with respect to which such knowledge statement
is made.
(b) All right and title in the patents and applications thereto
included in the ABB Intellectual Property ("PATENTS") are owned exclusively by
ABB. To the Knowledge of ABB, the inventions which are the subject of the
Patents were not known or used by ABB or its employees or agents or by third
parties in any country before the invention thereof by said employees or agents.
To the Knowledge of ABB, the inventions which are the subject of the Patents
were not patented or described in a printed publication in any country or placed
in public use or on sale in any country more than one year prior to the date of
application for patents by ABB. To the Knowledge of ABB there is no prior art
more relevant to the inventions which are the subject of the Patents than that
considered by the relevant patent office during the prosecution of the patent
applications and patents for the inventions which are the subject of the
Patents.
(c) To ABB's Knowledge, the ABB Intellectual Property does not
infringe on any proprietary right of any Person. No claims (i) challenging the
validity, effectiveness, or ownership by ABB of any of the ABB Intellectual
Property, or (ii) to the effect that the ABB Intellectual Property infringes or
will infringe on any intellectual property or other proprietary right of any
person have been asserted or, to ABB's Knowledge, are threatened by any person
nor to ABB's Knowledge are there any valid grounds for any bona fide claim of
any such kind. All granted or issued patents and all trademarks held by ABB are
valid and enforceable, and all patent applications, provisional patents, and
trademark applications with respect to the ABB Intellectual Property are pending
and all applicable administrative actions, including the payment of fees and
filing of applicable documentation, have been taken, all without challenge of
any kind; and no aspect thereof is subject to any outstanding order, ruling,
decree, judgment or
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stipulation by or with any governmental authority or arbitrator. To ABB's
Knowledge, there is no material unauthorized use, infringement or
misappropriation of any of the ABB Intellectual Property by any third party,
employee or former employee.
(d) ABB has provided to Buyer all written assignments from all parties
who have created any portion of, or otherwise have any rights in or to, the ABB
Intellectual Property or other rights to ABB.
2.4 LEGAL PROCEEDINGS. There are no claims, suits, actions,
arbitrations, legal, administrative or other proceedings or governmental
investigations to which ABB is a party or which are, to the Knowledge of ABB,
threatened against ABB or, to the Knowledge of Seller, which affect the Acquired
Assets or the Business. ABB, with respect to the Acquired Assets or the
Business is not in default with respect to any judgment, order, writ,
injunction, decree or award of any governmental agency or of any arbitrator or
arbitration panel.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to ABB as follows:
3.1 ORGANIZATION; STANDING AND POWER. Buyer is a corporation duly
organized, and validly existing under the laws of Switzerland, has all requisite
power and authority to own, lease, and operate its properties and to carry on
its businesses as now being conducted, and is duly qualified and in good
standing to do business in each jurisdiction in which a failure so to qualify
would have a material adverse effect on the Business Condition of Buyer.
3.2 AUTHORITY. Buyer has, or shall have prior to the Closing, all
requisite corporate power and authority to enter into this Agreement and,
subject to the Buyer's Required Statutory Approvals, to consummate the
transactions contemplated hereby. As used in this Agreement "BUYER'S REQUIRED
STATUTORY APPROVALS" means such filings, authorizations, orders and approvals as
may be required under federal or foreign laws, or securities laws. The
execution and delivery by Buyer of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Buyer including the approval of the Board of
Directors of Buyer. This Agreement has been duly executed and delivered by
Buyer and constitutes a valid and binding obligation of Buyer enforceable in
accordance with its terms, except that such enforceability may be subject to
(i) bankruptcy, insolvency, reorganization, or other similar laws relating to
enforcement of creditors' rights generally and (ii) general equitable
principles, including the availability of specific performance, injunctive
relief and other equitable remedies.
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ARTICLE IV
INDEMNIFICATION
4.1 INDEMNIFICATION BY ABB. Subject to Sections 4.5, 4.6, and 4.7,
ABB shall defend, indemnify, and hold Buyer and its Affiliates harmless from and
against, and reimburse Buyer with respect to, any and all Losses incurred by
Buyer or its Affiliates, employees, officers, directors and agents by reason of
or arising out of or in connection with (i) any breach, or any third party claim
that if true, would constitute a breach, by ABB of any representation or
warranty of ABB contained in this Agreement or in any certificate delivered to
Buyer pursuant to the provisions of this Agreement and/or (ii) the failure,
partial or total, of ABB to perform any agreement or covenant required by this
Agreement to be performed by it.
4.2 INDEMNIFICATION BY BUYER. Subject to Sections 4.5 and 4.6, Buyer
shall defend, indemnify, and hold ABB and its employees, officers, directors,
and agents harmless from and against, and reimburse ABB with respect to, any and
all Losses incurred by ABB by reason of or arising out of or in connection with:
(i) any breach, or any third party claim that if true, would constitute a breach
by Buyer of any representation or warranty of Buyer contained in this Agreement
or in any certificate delivered to ABB pursuant to the provisions of this
Agreement and/or (ii) the failure, partial or total, of Buyer to perform any
agreement or covenant required by this Agreement to be performed by it.
4.3 NOTICE OF CLAIMS. All claims for indemnification under this
Agreement shall be resolved in accordance with the following procedures:
(a) If an indemnified party becomes aware of a Loss, it shall,
as soon as reasonably practical, deliver a Claim Notice to the indemnifying
party for such Losses. If an indemnified party receives notice of a third-party
claim for which it intends to seek indemnification hereunder, it shall give the
indemnifying party prompt written notice of such claim, so that the indemnifying
party's defense of such claim under Section 4.4 hereunder may be timely
instituted.
(b) When Losses are actually incurred or paid by an indemnified
party or on an indemnified party's behalf or otherwise fixed or determined, the
indemnified party shall as soon as reasonably practical, deliver a Payment
Certificate to the indemnifying party for such Losses. If a Claim Notice or
Payment Certificate refers to any claim, action, suit, or proceeding made or
brought by a third party, the Claim Notice or Payment Certificate shall include
copies of the claim, any process served, and all legal proceedings with respect
thereto.
(c) If, after receiving a Payment Certificate, the indemnifying
party desires to dispute such claim or the amount claimed in the Payment
Certificate, it shall deliver to the indemnified party a Counternotice as to
such claim or amount. Such Counternotice shall be delivered within thirty (30)
days after the date the Payment Certificate to which it relates is received by
the indemnifying party. If no such Counternotice is received within the
aforementioned 30-day period, the indemnifying party shall have waived any
further objection to the Payment Certificate or the Losses described in it, and
the indemnified party shall be entitled to prompt payment for such Losses from
the indemnifying party.
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(d) If, within thirty (30) days after receipt by the
indemnified party of the Counternotice to a Payment Certificate, the parties
shall not have reached agreement as to the claim or amount in question, the
claim for indemnification shall be decided in accordance with the provisions of
Section 6.8.
(e) In the event the indemnified party is required to take
action to comply with any requirements imposed by law, to minimize its damages,
to avoid a forfeiture or penalty, or to avoid missing a deadline, the
indemnified party shall be indemnified for its Losses to the full amount set
forth in this Agreement. The indemnified party shall not be penalized for
protecting the indemnifying party's obligations.
4.4 DEFENSE OF THIRD PARTY CLAIMS. The indemnifying party under this
Article IV shall have the right to conduct and control, through counsel of its
own choosing, any third-party claim, action, or suit or compromise or settlement
thereof. The indemnified party may, at its election, participate in the defense
of any such claim, action, or suit through counsel of its choosing, but the fees
and expenses of such counsel shall be at the expense of the indemnified party.
If the indemnifying party does not assume the defense of any such third-party
action, claim, or suit, then the indemnified party may defend, through counsel
of its own choosing, such action, claim, or suit and may settle such action,
claim, or suit and recover from the indemnifying party the amount of such
settlement or of any judgment and the costs and expenses of such defense;
provided, however, that the indemnifying party shall not be liable to pay any
such settlement unless the indemnified party shall have given the indemnifying
party written notice of the terms of the proposed settlement and the
indemnifying party shall have failed, within twenty (20) days of receipt of such
notice, to undertake the defense of such action, claim, or suit. The
indemnifying party shall not compromise or settle any third-party action, claim,
or suit which includes any term that shall require any act or forbearance by the
indemnified party from all liability in respect of such claim, action, or suit
without the prior written consent of the indemnified party, which consent shall
not be unreasonably withheld or delayed. Assumption by an indemnifying party of
control of any such defense, compromise, or settlement shall not be deemed a
waiver by it of its right to challenge its obligation to indemnify the
indemnified party. The parties hereto shall cause that shall cooperate in all
reasonable respects with each other in connection with the defense, negotiation,
or settlement of any legal proceeding, claim, or demand referred to in this
Section 4.4. Buyer and its Affiliates shall take reasonable actions to mitigate
Losses of Buyer with respect to any claim for which Buyer is seeking
indemnification. Failure to so mitigate or the assumption of the defense by
indemnified party as provided above shall not constitute a waiver of its right
to seek indemnification. The indemnifying party and its authorized
representatives shall be given reasonable access to the indemnified party's
documents and records and to its employees to enable the indemnifying party to
examine such documents and records and employees as reasonably necessary in
connection with such defense. Subject to the confidentiality provisions
contained herein, the indemnifying party may make copies of such books and
records as reasonably necessary in connection with such defense. The reasonable
costs of the indemnified party in complying with the foregoing shall be paid by
the indemnifying party.
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4.5 TIME LIMIT. The provisions of this Article IV shall apply only to
Losses that are incurred or relate to asserted claims, demands, or liabilities
for which a Claim Notice is given within three (3) years of the Closing Date,
after which applicable time ABB shall have no liability whateverkind whether for
breach of any representation, warranty or covenant or other provision herein,
provided, however, that the indemnification obligations for such claims for
which a Claim Notice is given within the time period set forth above shall
continue until the final resolution of each such claim.
4.6 LIMITATIONS. Except for any Losses related to or arising from
breaches of any representations or warranties regarding accounts receivable or
Taxes, the covenants of ABB regarding product liability claims coverage under
the Main Stock Purchase Agreement, and any Losses with respect to any Flakt
Contract Claims, none of which shall be subject to any Threshold Amount, the
indemnified party shall be entitled to indemnification only if the total
aggregate Losses under the Transaction Agreements exceed Two Hundred Fifteen
Thousand US Dollars (US$215,000) (the "THRESHOLD AMOUNT"). Once the Threshold
Amount has been exceeded, the indemnified party shall be entitled to
indemnification for all amounts above the Threshold Amount. Except for any
Losses related to or arising from breaches of any representations or warranties
regarding accounts receivable or Taxes, the covenant of ABB regarding product
liability claims coverage contained in the Main Stock Purchase Agreement, and
any Losses with respect to any Flakt Contract Claims, none of which shall be
subject to any limitation of liability, the total aggregate amount which the
indemnified parties under the Transaction Agreements shall be entitled to be
indemnified under the Transaction Agreements will not exceed thirty percent
(30%) of the total aggregate purchase price pursuant to the Transaction
Agreements. Any payment by ABB pursuant to any claim shall constitute a
reduction of the Purchase Price. Buyer at its option may direct ABB to make the
indemnity payment to Company. The sole remedy of Buyer and ABB for breaches of
this Agreement shall be claims made in accordance with and subject to the
limitations of this Article IV.
4.7 OTHER LIMITATIONS. ABB shall not be liable under this Agreement
for any Losses: (a) with respect to any warranty, representation, indemnity,
covenant, or undertaking in connection with the transaction described herein,
except where the same is expressly contained in this Agreement (Buyer hereby
confirms that it has not relied and will not rely on any warranty,
representation, indemnity, covenant, or undertaking of any person which is not
expressly contained in this Agreement); or (b) resulting from a change in
accounting or in taxation policy or practice of Buyer including the method of
submission of taxation returns introduced following the Closing. Claims under
this Agreement by Buyer may only be made by Buyer or its successors or assigns.
If any Loss of Buyer is a tax deductible item, the amounts payable to Buyer with
respect to the indemnification obligations of ABB hereunder shall be reduced to
the extent that ABB can actually benefit from such tax savings within a
reasonable period of time. As to non-third party claims and claims which do not
involve the noncompetition or nonsolicitation provisions contained in the Main
Stock Purchase Agreement, any breach of this Agreement by ABB which is capable
of remedy shall not entitle Buyer to compensation unless ABB is given written
notice of such breach and such breach is not fully remedied within thirty (30)
days of the date of such notice. To the extent Buyer actually receives any
proceeds, from insurance or otherwise, for a claim for which ABB has indemnified
Buyer, Buyer shall pay to
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ABB the amount of such proceeds if ABB has paid Buyer in full all Losses
attributable to such claim, or Buyer shall reduce the amount of Losses payable
by ABB by the amount of such proceeds. Upon ABB's request, Buyer shall
subrogate any third party claim for which Buyer is seeking indemnification from
ABB to ABB.
ARTICLE V
CONDITIONS PRECEDENT
5.1 CONDITIONS OF OBLIGATIONS OF BUYER. The obligations of Buyer to
effect the transaction set forth herein are as set forth in Sections 8.1
(excluding Section 8.1.4) and 8.2, 8.2.1, 8.2.2 and 8.2.3 of the Main Stock
Purchase Agreement. Buyer shall have received a closing certificate signed on
behalf of ABB by an authorized officer as set forth in Section 8.2.1 and 8.2.2.
5.2 CONDITIONS OF OBLIGATIONS OF ABB. The obligation of ABB to effect
the transaction set forth herein are as set forth in Sections 8.1 (excluding
Section 8.1.4), 8.3, 8.3.1, and 8.3.2 of the Main Stock Purchase Agreement. ABB
shall have received a closing certificate signed on behalf of Buyer by an
authorized officer as set forth in Section 8.3.1 and 8.3.2.
ARTICLE VI
GENERAL PROVISIONS
6.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties, and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement survive the Closing as provided
herein.
6.2 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed sufficiently given and served for all purposes
when personally delivered or given by telex or machine-confirmed facsimile or
three business days after a writing is deposited in the United States or Swedish
mail, as applicable, first class postage or other charges prepaid and
registered, return receipt requested, addressed as follows (or at such other
address for a party as shall be specified by like notice):
(a) if to Buyer:
Flow Holdings GmbH (SAGL) Limited Liability Company
S. Balestra #17
6901
Lugano, Switzerland
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WITH A COPY TO:
Preston Gates & Ellis LLP
5000 Columbia Center
701 Fifth Ave.
Seattle, WA 98104-7078
Attention: Robert S. Jaffe
Phone: (206) 623-7580
Fax: (206) 623-7022
b) if to ABB:
Asea Brown Boveri AB
Kopparbergsvagen 2, SE-721 83
Vasteras, Sweden
Attention: General Counsel
Phone: 011 46 21 13 70 20
Fax: 011 46 21 18 12 06
WITH A COPY TO:
Ulf Jonsson
Advokatfirman Sodermark
Strandvagen 1
Box 14055, SE 104 40
Stockholm, Sweden
Phone: 011 46 8 670 57 50
Fax: 011 46 8 663 67 20
6.3 INTERPRETATION. This Agreement has been negotiated by the
respective parties hereto and their attorneys and the language hereof will not
be construed for or against either party.
6.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to each of the other parties, it being understood that
all parties need not sign the same counterpart.
6.5 MISCELLANEOUS. This Agreement, the Closing Agreement of even date
entered into by the parties and Flow International Corporation and the documents
referred to herein (a) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof; (b) are not intended to confer upon any other person any
rights or remedies hereunder; and (c) shall not be assigned by operation of law
or otherwise except as otherwise specifically provided.
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6.6 TRANSACTIONAL EXPENSES. Whether or not the transactions
contemplated by this Agreement are consummated, each of Buyer and ABB shall pay
its own fees and expenses incident to the negotiation, preparation, execution,
delivery and performance hereof, including, without limitation, the fees and
expenses of its counsel, accountants and other experts.
6.7 GOVERNING LAW. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of Sweden.
6.8 ARBITRATION. Any dispute, controversy or claim arising out of or
relating to this Agreement, or the breach, termination or validity thereof,
shall be finally settled under the Rules of the Arbitration Institute of the
Stockholm Chamber of Commerce presently in force by three (3) arbitrators
selected in accordance with said rules. The place of arbitration shall be
Stockholm, Sweden and the law applicable to the arbitration procedure shall be
determined by referring to the law of the place of arbitration. The English
language shall be used throughout the arbitral proceedings.
6.9 ADDITIONAL AGREEMENTS. In case at any time after the Closing Date
any further action is reasonably necessary or desirable to carry out the
purposes of this Agreement or to vest Buyer with full title to all properties,
assets, rights, approvals, immunities, and franchises, the proper officers and
directors of each party to this Agreement shall take all such necessary action.
(THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK)
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SIGNATURE PAGE - ASSET PURCHASE AGREEMENT
IN WITNESS WHEREOF, Buyer and ABB have caused this Agreement to be
executed by their respective and duly authorized officers, have duly executed
this Agreement, all as of the date first written above.
FLOW HOLDINGS GMBH (SAGL) ASEA BROWN BOVERI AB
LIMITED LIABILITY COMPANY
By By
-------------------------- -------------------------
John S. Leness, Anders Navinger,
Authorized Representative President
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EXHIBIT 2.3
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
THIS AMENDED AND RESTATED STOCK PURCHASE AGREEMENT ("AGREEMENT"), is
entered into this ___ day of March, 1999 ("EFFECTIVE DATE"), by and among ABB
Industrial Systems, Inc., an Ohio corporation, ("ABB"), Flow International
Corporation, a Washington corporation ("BUYER") and ABB Autoclave Systems Inc.,
a Delaware corporation ("COMPANY").
RECITALS
A. Company is a joint venture formed pursuant to a joint venture
agreement dated September 30, 1986 by ABB and Autoclave Engineers, a division of
Snap-Tite Inc., a Delaware corporation ("AUTOCLAVE").
B. ABB wishes to sell and Buyer wishes to buy the ABB Shares, as defined
below, pursuant to the terms and conditions set forth herein.
C. The parties entered into a Stock Purchase Agreement dated March 15,
1999 together with the Stock Purchase Agreement by and among Asea Brown Boveri
AB, a Swedish company and Gigantissimo 2131 AB under change of name to Flow
International FPS AB, a Swedish company with respect to the issued and
outstanding stock of ABB Pressure Systems AB, a Swedish company with the
registration number 556064-1770 which provided pursuant to Section 7.16 that the
parties would negotiate in good faith such other agreements to incorporate the
changes resulting from the acquisition of certain intellectual property rights.
INTENDING TO BE LEGALLY BOUND, and in consideration of the premises and the
mutual representations, warranties, covenants and agreements contained herein,
Buyer, Company, and ABB hereby agree as follows:
ARTICLE I
PURCHASE OF ABB SHARES
1.1 PURCHASE OF SHARES. In consideration for the sale, assignment and
transfer of the ABB Shares, as defined herein, and the representations and
warranties contained herein, Buyer agrees to pay to ABB the aggregate amount of
One Million Eight Hundred Fifty-Seven Thousand Five Hundred US Dollars
(US$1,857,500) ("PURCHASE PRICE").
1.2 CLOSING AND EFFECTIVE DATE. The Closing shall take place on March 31,
1999 (the "CLOSING DATE" or "CLOSING"), at the offices of Asea Brown Boveri AB
in Vasteras, Sweden, unless another date or place is agreed to in writing by the
parties hereto.
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1.3 CONDITION PRECEDENT TO CLOSING. The respective obligation of each
party to effect the transaction contained herein shall be subject to the
closings of the transactions set forth in the Transaction Agreements, as defined
below.
1.4 DELIVERY OF CERTIFICATES. At the Closing, ABB shall surrender such
all certificates representing the ABB Shares to Buyer, together with duly
executed stock powers endorsed in blank to effect a transfer of such ABB Shares.
1.5 CLOSING DATE DELIVERIES.
(a) On the Closing Date, Company and ABB shall deliver to Buyer the
following validly executed instruments:
(i) Certified copy of resolutions of the Boards of Directors of
Company and ABB authorizing the execution and performance of this Agreement and
the transaction contemplated herein;
(ii) Officer's Certificate of Company, dated as of the Closing Date,
in form and substance reasonably satisfactory to Buyer, certifying that no
amendments have been made to the Charter Documents, as defined below, of Company
since a specified date;
(iii) Resignations of the members of the Board of Directors and
officers of Company appointed by ABB; and
(iv) Such other instruments or documents necessary to consummate this
Agreement, all satisfactory in form and substance to Buyer.
(b) On the Closing Date, Buyer shall deliver to ABB and Company the
following validly executed instruments:
(i) One Million Eight Hundred Fifty-Seven Thousand Five Hundred US
Dollars (US$1,857,500) payable to ABB by wire transfer of immediately available
funds;
(ii) Certified copy of resolutions of the Board of Directors of Buyer
authorizing the execution and performance of this Agreement and the transaction
contemplated herein; and
(iii) Such other instruments or documents necessary to consummate
this Agreement, all satisfactory in form and substance to Buyer.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY AND ABB
Company and ABB, jointly and severally, represent and warrant to Buyer as
follows:
2.1 ORGANIZATION, STANDING, AND POWER. Company is a corporation duly
organized, validly existing, and in good standing under the laws of Delaware.
Company has all requisite power and authority to own, lease, and operate its
properties and to carry on its businesses as now being conducted, and is duly
qualified, validly existing and in good standing (in such jurisdictions in which
good standing is applicable) to do business in each jurisdiction in which a
failure to so qualify would have a material adverse effect on the Business
Condition (as hereinafter defined) of Company. As used in this Agreement,
"BUSINESS CONDITION" with respect to any entity shall mean the business,
financial condition, results of operations or assets. Company has no
subsidiary. Company has delivered to Buyer complete and correct copies of the
articles, certificate, bylaws, and/or other primary charter and organizational
documents ("CHARTER DOCUMENTS") of Company, in each case, as amended to the date
hereof.
2.2 CAPITAL STRUCTURE.
(a) The authorized capital stock of Company consists of: 3,000 shares of
Class A Common Stock, $1.00 par value of which 51 shares are issued and
outstanding, all of which shares are held by ABB; 3,000 shares of Class B
Common Stock, $1.00 par value of which 49 shares are issued and outstanding, all
of which shares are held by Autoclave; 4,000 shares of Class C Common Stock,
$1.00 par value of which 100 shares are issued and outstanding, 49 shares of
which are held by ABB and 51 shares of which are held by Autoclave (together
"COMPANY SHARES"). All of the issued and outstanding Company Shares held by ABB
are the "ABB SHARES". There is no preferred stock of Company. All Company
Shares have been duly authorized and validly issued, are fully paid and
nonassessable, and were issued in compliance with applicable securities laws and
regulations. ABB is the lawful and beneficial owner of all of the ABB Shares
and has valid title thereto, free and clear of all liens and encumbrances (other
than restrictions under securities laws), of every kind.
(b) All outstanding Company Shares are not subject to any preemptive
rights, or to any agreement to which Company is a party or by which Company may
be bound. There are no options, warrants, calls, conversion rights,
commitments, agreements, contracts, understandings, restrictions, arrangements
or rights of any character to which Company is a party or by which Company may
be bound obligating Company to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of the capital stock of Company, or
obligating Company to grant, extend, or enter into any such option, warrant,
call, conversion right, conversion payment, commitment, agreement, contract,
understanding, restriction, arrangement or right. Company does not have
outstanding any bonds, debentures, notes, or other indebtedness the holders of
which, (i) have the right to vote (or convertible or exercisable into securities
having the right to vote) with holders of Company Shares on any matter, or (ii)
are or will become entitled to receive any payment as a result of the execution
of this Agreement or the completion of the transactions contemplated hereby.
2.3 AUTHORITY. Company and ABB have, or shall have prior to the Closing,
all requisite corporate power and authority to enter into this Agreement and,
subject to the
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Company's Required Statutory Approvals, to consummate the transactions
contemplated hereby. As used in this Agreement "COMPANY'S REQUIRED STATUTORY
APPROVALS" means such filings, authorizations, orders and approvals as may be
required under federal or foreign laws, or securities laws. The execution and
delivery by Company and ABB of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Company and ABB, including the approval of the
Board of Directors and sole shareholder of Company. This Agreement has been
duly executed and delivered by Company and ABB and constitutes a valid and
binding obligation of Company and ABB enforceable in accordance with its terms,
except that such enforceability may be subject to (i) bankruptcy, insolvency,
reorganization, or other similar laws relating to enforcement of creditors'
rights generally and (ii) general equitable principles, including the
availability of specific performance, injunctive relief and other equitable
remedies.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Company and ABB as follows:
3.1 ORGANIZATION; STANDING AND POWER. Buyer is a corporation duly
organized, and validly existing under the laws of the state of Washington, has
all requisite power and authority to own, lease, and operate its properties and
to carry on its businesses as now being conducted, and is duly qualified and in
good standing to do business in each jurisdiction in which a failure so to
qualify would have a material adverse effect on the Business Condition of Buyer.
3.2 AUTHORITY. Buyer has, or shall have prior to the Closing, all
requisite corporate power and authority to enter into this Agreement and,
subject to the Buyer's Required Statutory Approvals, to consummate the
transactions contemplated hereby. As used in this Agreement "BUYER'S REQUIRED
STATUTORY APPROVALS" means such filings, authorizations, orders and approvals as
may be required under federal or foreign laws, or securities laws. The
execution and delivery by Buyer of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Buyer including the approval of the Board of
Directors of Buyer. This Agreement has been duly executed and delivered by
Buyer and constitutes a valid and binding obligation of Buyer enforceable in
accordance with its terms, except that such enforceability may be subject to
(i) bankruptcy, insolvency, reorganization, or other similar laws relating to
enforcement of creditors' rights generally and (ii) general equitable
principles, including the availability of specific performance, injunctive
relief and other equitable remedies.
ARTICLE IV
INDEMNIFICATION
4.1 INDEMNIFICATION BY ABB. Subject to Sections 4.4 and 4.5, ABB shall
defend, indemnify, and hold Buyer and its employees, officers, directors, and
agents harmless from and
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against, and reimburse Buyer with respect to, any and all direct and actual
losses, damages, liabilities, claims, judgments, settlements, fines, costs, and
expenses (including reasonable attorneys' fees) of any kind, net of any
insurance proceeds, but excluding all indirect and/or consequential damages of
any kind, e.g. loss of profit and loss of production costs connected with
interruption of operations ("LOSSES") incurred by Buyer, or Company or its
employees, officers, directors and agents by reason of or arising out of or in
connection with any breach, or any third party claim that if true, would
constitute a breach, by ABB of any representation or warranty of ABB contained
in this Agreement. ABB shall not make any claim against Company, its employees,
officers, directors and agents after the Closing Date for any breach of
representation or warranty of ABB contained in this Agreement or seek
contribution or indemnification from Company, its employees, officers, directors
and agents with respect to any such breach.
4.2 INDEMNIFICATION BY BUYER. Subject to Sections 4.4 and 4.5, Buyer
shall defend, indemnify, and hold ABB and its employees, officers, directors,
and agents harmless from and against, and reimburse ABB with respect to, any and
all Losses incurred by ABB by reason of or arising out of or in connection with
any breach, or any third party claim that if true, would constitute a breach by
Buyer of any representation or warranty of Buyer contained in this Agreement.
4.3 NOTICE. If any action, suit or proceeding shall be commenced against,
or any written claim or demand be asserted against any party claiming
indemnification under this Section 4 ("INDEMNIFIED PARTY") in respect of which
it proposes to demand indemnification hereunder, the Indemnified Party shall
promptly send written notice to the indemnifying party (the "INDEMNIFYING
PARTY") to that effect and shall consult in good faith with the Indemnifying
Party with respect thereto. Subject to the Indemnified Party's right to
participate at its own expense, the defense and settlement of any such action,
suit or proceeding shall be under the sole direction and control of the
Indemnifying Party, who shall reasonably proceed in good faith at all times;
provided that the control by the Indemnifying Party of the defense of any such
action, suit or proceeding shall not delay the timely defense thereof; and
provided, further, that the Indemnifying Party shall not consent to the entry of
any judgment or enter into any settlement which includes any term which shall
require any act or forbearance on the part of the Indemnified Party and which
does not unconditionally release the Indemnified Party from all liability in
respect of such claim, action or proceeding without the prior written consent of
the Indemnified Party, which consent shall not be unreasonably withheld.
4.4 TIME LIMIT. The provisions of this Article IV shall apply only to
Losses that are incurred or relate to asserted claims, demands, or liabilities
for which a Claim Notice is given within eighteen (18) months of the Closing
Date; after which time ABB shall have no liability whateverkind whether for
breach of any representation, warranty or covenant or other provision herein,
provided, however, that the indemnification obligations for such claims for
which a Claim Notice is given within the time period set forth above shall
continue until the final resolution of each such claim. A CLAIM NOTICE means a
written notice in reasonable detail of the facts and circumstances that form the
basis of an indemnification claim hereunder and setting
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forth an estimated amount of the potential Losses, if possible, and the sections
of this Agreement upon which the claim for indemnification for such Losses is
based.
4.5 LIMITATIONS. Except for any Losses related to or arising from
breaches of any representations or warranties regarding accounts receivable or
taxes, ABB's covenant regarding product liability claims coverage contained in
the Amended and Restated Stock Purchase Agreement by and among Asea Brown Boveri
AB, a Swedish company and Gigantissimo 2131 AB under change of name to Flow
International FPS AB, a Swedish company with respect to the issued and
outstanding stock of ABB Pressure Systems AB, a Swedish company with the
registration number 556064-1770, (the "PRESSURE SYSTEMS STOCK PURCHASE
AGREEMENT"), and any Losses with respect to any Flakt Contact Claims, as defined
in the Pressure Systems Stock Purchase Agreement, none of which shall be subject
to any Threshold Amount, the indemnified party shall be entitled to
indemnification only if the total aggregate Losses under the Transaction
Agreements exceed Two Hundred Fifteen Thousand US Dollars (US$215,000) (the
"THRESHOLD AMOUNT"). Once the Threshold Amount has been exceeded, the
indemnified party shall be entitled to indemnification for all amounts above the
Threshold Amount. Except for any Losses related to or arising from breaches of
any representations or warranties regarding accounts receivable or taxes, ABB's
covenant regarding product liability claims coverage contained in the Pressure
Systems Stock Purchase Agreement, and any Losses with respect to any Flakt
Contract Claims, none of which shall be subject to any limitation of liability,
the total aggregate amount which the indemnified parties under the Transactions
Agreements shall be entitled to be indemnified under the Transactions Agreement
will not exceed the thirty percent (30%) of the aggregate purchase price
pursuant to the Transaction Agreements. The sole remedy of Buyer and ABB for
breaches of this Agreement shall be claims made in accordance with and subject
to the limitations of this Article IV. This Agreement, the Pressure Systems
Stock Purchase Agreement and the Asset Purchase Agreement by and among an ABB
entity or entities which own the intellectual property rights used in ABB
Pressure Systems AB's business and an entity to be designated or formed by Flow
International Corporation together are the "TRANSACTION AGREEMENTS".
ARTICLE V
GENERAL PROVISIONS
5.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties, and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement survive the Closing as provided
herein.
5.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed sufficiently given and served for all purposes when
personally delivered or given by telex or machine-confirmed facsimile or three
business days after a writing is deposited in the United States mail, first
class postage or other charges prepaid and registered, return receipt requested,
addressed as follows (or at such other address for a party as shall be specified
by like notice):
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(a) if to Buyer:
Flow International Corporation
23500 - 64th Avenue South
P.O. Box 97040
Kent, WA 98032
Attention: General Counsel
Phone: (253) 850-3500
Fax: (253) 813-3280
WITH A COPY TO:
Preston Gates & Ellis LLP
5000 Columbia Center
701 Fifth Ave.
Seattle, WA 98104-7078
Attention: Robert S. Jaffe
Phone: (206) 623-7580
Fax: (206) 623-7022
b) if to ABB:
Asea Brown Boveri AB
Kopparbergsvagen 2, SE-721 83
Vasteras, Sweden
Attention: General Counsel
Phone: 011 46 21 13 70 20
Fax: 011 46 21 18 12 06
WITH A COPY TO:
Ulf Jonsson
Advokatfirman Sodermark
Strandvagen 1
Box 14055, SE 104 40
Stockholm, Sweden
Phone: 011 46 8 670 57 50
Fax: 011 46 8 663 67 20
AND WITH A COPY TO
Eugene Madara
General Counsel
ABB Industrial Systems, Inc.
501 Meritt 7
P.O. Box 5308
Norwalk, CT 06856-5308
Phone: (203) 750-7666
Fax: (203) 750-2400
5.3 INTERPRETATION. This Agreement has been negotiated by the respective
parties hereto and their attorneys and the language hereof will not be construed
for or against either party.
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5.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to each of the other parties, it being understood that
all parties need not sign the same counterpart.
5.5 MISCELLANEOUS. This Agreement and the documents referred to herein
(a) constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof; (b) are not intended to confer upon any other person any rights or
remedies hereunder; and (c) shall not be assigned by operation of law or
otherwise except as otherwise specifically provided.
5.6 TRANSACTIONAL EXPENSES. Whether or not the transactions contemplated
by this Agreement are consummated, each of Buyer, ABB and Company shall pay its
own fees and expenses incident to the negotiation, preparation, execution,
delivery and performance hereof, including, without limitation, the fees and
expenses of its counsel, accountants and other experts.
5.7 GOVERNING LAW. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of Sweden.
5.8 ARBITRATION. Any dispute, controversy or claim arising out of or
relating to this Agreement, or the breach, termination or validity thereof,
shall be finally settled under the Rules of the Arbitration Institute of the
Stockholm Chamber of Commerce presently in force by three (3) arbitrators
selected in accordance with said rules. The place of arbitration shall be
Stockholm, Sweden and the law applicable to the arbitration procedure shall be
determined by referring to the law of the place of arbitration. The English
language shall be used throughout the arbitral proceedings.
5.9 ADDITIONAL AGREEMENTS. In case at any time after the Closing Date any
further action is reasonably necessary or desirable to carry out the purposes of
this Agreement or to vest Buyer with full title to all properties, assets,
rights, approvals, immunities, and franchises, the proper officers and directors
of each party to this Agreement shall take all such necessary action.
(THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK)
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SIGNATURE PAGE - AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
IN WITNESS WHEREOF, Buyer, Company, and ABB have caused this Agreement to
be executed by their respective and duly authorized officers, have duly executed
this Agreement, all as of the date first written above.
FLOW INTERNATIONAL CORPORATION ABB INDUSTRIAL SYSTEMS, INC.
By By
------------------------------------ ------------------------------
Ronald Tarrant, Chairman, Its
Chief Executive Officer and President ------------------------------
ABB AUTOCLAVE SYSTEMS INC.
By
------------------------------
Jerry Toops, President
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EXHIBIT 20.1
<PAGE>
Len Cereghino & Co. CLIENT: FLOW INTERNATIONAL
CORPORATE INVESTOR RELATIONS CONTACT: Ronald W. Tarrant
2605 Western Ave., Seattle, WA 98121 Chairman & CEO
(206) 448-1996 (253) 850-3500
NEWS RELEASE
- --------------------------------------------------------------------------------
FLOW INTERNATIONAL COMPLETES ACQUISITION OF ABB PRESSURE SYSTEMS AB OF SWEDEN
Kent, WA and Vasteras, Sweden - April 1, 1999 -- Flow International
Corporation (Nasdaq: FLOW) and Asea Brown Boveri AB (ABB) (ST:ABBa and
Nasdaq:ABBBY), today announced Flow has completed the acquisition of ABB
Pressure Systems AB. ABB Pressure Systems, (Pressure Systems) based in
Vasteras, Sweden, was a wholly-owned subsidiary of ABB AB of Stockholm, Sweden.
Pressure Systems is the leading supplier of large, bulk ultrahigh-pressure
systems to the food industry and the world leader in isostatic press systems for
the automotive and aerospace market.
"We are delighted to welcome our newest associates from Pressure Systems to
our company and look forward to working together to continue to advance
ultrahigh-pressure technology to the food, aerospace and automotive markets,"
said Ronald W. Tarrant, Chairman, President and CEO of Flow. "Based on current
backlog, Pressure Systems is expected to add approximately $20 million to our
revenues in fiscal 2000, which begins May 1, 1999. In addition, we expect that
the acquisition will be accretive to earnings in fiscal 2000."
Flow International Corporation is the world leader in the development and
manufacture of ultrahigh-pressure waterjet technology for advanced commercial
application, and a leading provider of robotics and assembly equipment. Flow
provides technologically advanced, environmentally-sound solutions to the
manufacturing and surface preparation cleaning markets.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: STATEMENTS IN THIS NEWS RELEASE LOOKING FORWARD IN TIME INVOLVE RISKS AND
UNCERTAINTIES, INCLUDING RISKS ASSOCIATED WITH ACQUISITIONS, PRODUCT DEMAND,
MARKET ACCEPTANCE RISK, PRODUCT INTRODUCTION DELAYS, INTERNATIONAL REGULATORY
CHANGES, AND OTHER RISK FACTORS DETAILED THE COMPANY'S SECURITIES AND EXCHANGE
COMMISSION FILINGS.
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NOTE: Transmitted on PR Newswire at 8:57 a.m., PST April 1, 1999.
