UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 22, 1995
(November 17, 1995)
EXIDE ELECTRONICS GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-18106 23-2231834
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
8609 Six Forks Road
Raleigh, North Carolina 27615
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (919) 872-3020
<PAGE>
Item 5. Other Events.
Exide Electronics Group, Inc. ("Exide Electronics") has entered
into a definitive agreement to acquire all of the outstanding stock of Deltec
Power Systems, Inc. ("Deltec") from Fiskars OY AB ("Fiskars") and an
affiliated company, for a purchase price of $195 million, subject to
post-closing adjustments.
Under the agreement, Fiskars will receive approximately $157.5
million in cash and 1,875,000 shares of Exide Electronics common stock valued at
$37.5 million based upon an agreed price of $20 per share, in exchange for all
of the issued and outstanding capital stock of Deltec. In connection with the
transaction, Fiskars will enter into shareholder agreements governing certain
issues with respect to its ownership of Exide Electronics common stock and
providing for Fiskars to have two representatives on Exide Electronics Board of
Directors. The Board will be enlarged from 8 to 10 persons to accommodate the
two new members, who will take office after the acquisition becomes effective.
The Company is in the process of arranging the necessary financing
for the purchase through its existing banks or other lenders. The Company also
is planning to raise a significant portion of the financing through issuance of
public debt securities.
Deltec designs, manufactures, markets, sells and services a broad
line of uninterruptible power systems (UPS) products and power management
software worldwide through its principal operating subsidiaries, Deltec
Electronics Corp. based in San Diego, California and FPS Power Systems based in
Helsinki, Finland. Deltec is one of the world's largest manufacturers of
uninterruptible power systems, and is expected to have revenues of approximately
$130 million in calendar year 1995. Deltec is one of the top five global
providers of smaller UPS systems, which represents the fastest growing market
segment.
The acquisition is expected to close in early 1996. Consummation of
the transaction is subject to completion of the applicable waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and receipt of certain
approvals, and the transaction is subject to customary terms and conditions
which do not include financing.
<PAGE>
Item 7. Financial Statements and Exhibits
(c) Exhibits
99. Press Release dated November 17, 1995.
10. Deltec Purchase Agreement
<PAGE>
EXIDE ELECTRONICS GROUP, INC.
SIGNATURE
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 thereunto duly authorized.
EXIDE ELECTRONICS GROUP, INC.
(Registrant)
Date: December 22, 1995 By: /s/MARTY R. KITTRELL
Marty R. Kittrell
Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
99. Press Release dated November 17, 1995.
10. Deltec Purchase Agreement
EXHIBIT 99
FOR IMMEDIATE RELEASE Investor Contact:
Marty Kittrell
Chief Financial Officer
Exide Electronics Group, Inc.
(919) 872-3020
Media Contact:
Karin Cram
Corporate Communications
Exide Electronics Group, Inc.
(919) 870-3239
EXIDE ELECTRONICS ANNOUNCES AGREEMENT
TO ACQUIRE DELTEC POWER SYSTEMS, INC.
Raleigh, N.C., November 17, 1995 -- Exide Electronics Group, Inc.
(NASDAQ:XUPS), the world's largest dedicated supplier of Strategic Power
Management(TM) and power protection solutions, today announced that it has
entered into a definitive agreement to acquire Deltec Power Systems, Inc.
(Deltec) from Fiskars OY AB (Fiskars) and an affiliated company, for a purchase
price of $195 million, subject to post-closing adjustment.
Under the agreement, which has been approved by the Board of Directors of
each company, Fiskars will receive approximately $157.5 million in cash and
1,875,000 shares of Exide Electronics common stock valued at $37.5 million at a
fixed price of $20 per share, in exchange for all of the issued and outstanding
capital stock of Deltec Power Systems, Inc. In connection with the transaction,
Fiskars entered into a shareholder agreement governing certain issues with
respect to its ownership of Exide Electronics common stock.
The transaction is expected to close in early 1996.
Deltec designs, manufactures, markets, sells and services a broad line of
uninterruptible power systems (UPS) products and power management software
worldwide through its principal operating subsidiaries, Deltec Electronics Corp.
based in San Diego, California and FPS Power Systems based in Helsinki, Finland.
Deltec is one of the world's largest manufacturers of uninterruptible power
systems, and is expected to have revenues of approximately $130 million in
calendar year 1995. Deltec is one of the top five global providers of smaller
UPS systems, which represents the fastest growing market segment.
James A. Risher, president and chief executive officer of Exide
Electronics, stated, "Deltec's products and services, coupled with Exide
Electronics' Strategic Power Management and power protection solutions, result
in an ideal marriage of technologies that provide customers with solutions
perfectly suited to any type of UPS need. This approach of offering `customized
solutions' that are truly designed to fit each customer's unique power
management needs, is a key component of Strategic Power Management."
Risher continued, "Deltec's complementary portfolio of off-line and line
interactive single-phase products has been growing at an industry-leading rate
similar to the growth of Exide Electronics' small systems on-line products. The
combined small system business of the post-acquisition company will make Exide
Electronics a leader in the fastest growing segment of the UPS industry. It will
also further strengthen Exide Electronics' large systems business with
additional 50 hertz products for international markets, and add to Exide
Electronics' global service capabilities. In addition, Deltec's strong market
position internationally and, in particular, its significant business
relationships in Scandinavia, Eastern Europe and Russia dramatically enhance the
number and scope of markets served by Exide Electronics outside the United
States. Deltec has also developed market opportunities in the United States that
closely align with our strategy. In addition, like Exide Electronics, Deltec is
ISO 9000 certified at all of its principal locations."
Risher added, "Our overall corporate strategy includes a corporate
development initiative to make complementary acquisitions which build on our
core strengths in the power management and power protection marketplace. We
believe that Deltec provides an excellent match with our criteria, and the
combined company will have unparalleled global capabilities. Deltec's management
and overall organization, customer relationships, product development
capabilities and power protection technologies also are an excellent fit."
Risher concluded, "We are particularly pleased that Fiskars chose Exide
Electronics as its strategic partner to rationalize its investment in this
industry. With Fiskars maintaining a significant investment position and
representation on our Board of Directors, we both look forward to optimizing the
returns to our shareholders."
Stig Stendahl, chief executive officer of Fiskars stated, "From Fiskars'
point of view, the deal represents the ideal solution to our interest in
developing our UPS business even further. The products and markets of the two
companies complement each other in an excellent way and form a strong base for
further expansion.
S. G. Warburg & Co., Inc. is serving as financial advisor to Exide
Electronics. Raymond James & Associates, Inc. is serving as financial advisor to
Fiskars.
Headquartered in Raleigh, N.C., Exide Electronics provides Strategic Power
Management solutions to a broad range of businesses and institutions worldwide,
including many Fortune 1000 companies. Exide Electronics' products are used for
financial, medical, industrial, telecommunications, military, and aerospace
applications -- wherever continuous power is essential to daily operations. In
fiscal 1995, Exide Electronics had revenues of $391 million and pro forma net
income of $13 million.
EXHIBIT 10
STOCK PURCHASE AGREEMENT
BETWEEN
EXIDE ELECTRONICS GROUP, INC.
("Buyer")
DELTEC POWER SYSTEMS, INC.
("Company")
AND
FISKARS OY AB
and
FISKARS HOLDINGS, INC.
<PAGE>
STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
1. ACQUISITION OF SHARES
1.1. Purchase and Sale of Common Shares
1.2. Redemption of Preferred Shares
2. PURCHASE PRICE - PAYMENT
2.1. Purchase Price
2.2. Payment of Purchase Price
2.3. Post-Closing Adjustments
3. JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF COMPANY AND
SHAREHOLDERS
3.1. Corporate
3.2. Shareholders
3.3. No Violation
3.4. Financial Statements
3.5. Tax Matters
3.6. Absence of Certain Changes
3.7. Absence of Undisclosed Liabilities
3.8. Accounts Receivable
3.9. Inventory
3.10. No Litigation
3.11. Compliance With Laws and Orders
3.12. Environmental Matters
3.13. Title to and Condition of Properties
3.14. Contracts and Commitments
3.15. Labor Matters
3.16. Employee Benefit
3.17. Employment Compensation
3.18. Trade Rights
3.19. Product Liability
3.20. Bank Accounts
3.21. Affiliates' Relationships to Fiskars Companies
3.22. No Brokers or Finders
3.23. Insurance Coverage
3.24. Investment Representations
3.25. Limitations on Warranties and Disclaimers
4. REPRESENTATIONS AND WARRANTIES OF BUYER
4.1. Corporate
4.2. Authority
4.3. No Violation
4.4. No Brokers or Finders
4.5. Investment Representations
4.6. Buyer's Business Investigation
4.7. Knowledge of Buyer
4.8. Sufficient Financing
5. COVENANTS
5.1. Noncompetition; Confidentiality; Non-Solicitation
5.2. Hart-Scott-Rodino Act Filings
5.3. Access to Information and Records
5.4. Conduct of Business Pending the Closing
5.5. Consents
5.6. Access to and Retention of Records
5.7. Availability of Personnel
5.8. Tax Matters
5.9. Corporate Identity
5.10. Transitional Use of Trademark
5.11. Plant Closing
5.12. Other Action
5.13. Disclosure Schedule
5.14. Notification of Breach
5.15. Exclusivity
5.16. Release of Intercompany Payables
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
6.1. Representations and Warranties
6.2. Compliance With Agreement
6.3. Consents and Approvals
6.4. Hart-Scott-Rodino Waiting Period
6.5. Buyer's Due Diligence
6.6. No Litigation
7. CONDITIONS PRECEDENT TO SHAREHOLDERS' OBLIGATIONS
7.1. Representations and Warranties
7.2. Compliance With Agreement
7.3. Hart-Scott-Rodino Waiting Period
7.4. Release of Guarantees
7.5. Terminate all Licenses
7.6. No Litigation
8. INDEMNIFICATION
8.1. By Shareholders
8.2. By Buyer
8.3. Indemnification of Third-Party Claims
8.4. Payment
8.5. Limitations on Indemnification
9. CLOSING
9.1. Documents to be Delivered by Company and Shareholders
9.2. Items to be Delivered by Buyer
10. TERMINATION
10.1. Right of Termination Without Breach
10.2. Termination for Breach
11. MISCELLANEOUS
11.1. Disclosure Schedule
11.2. Further Assurance
11.3. Disclosures and Announcements
11.4. Assignment; Parties in Interest
11.5. Law Governing Agreement
11.6. Amendment and Modification
11.7. Notice
11.8. Expenses
11.9. Entire Agreement
11.10. Counterparts
11.11. Headings
11.12. Facsimile Versions
11.13. Glossary of Terms
<PAGE>
Disclosure Schedule
Schedule 2.1(g) - Trademarks to be Sold
Schedule 3.0 - Shareholders' Knowledge
Schedule 3.1.(c) - Foreign Corporation Qualification
Schedule 3.1.(d) - Subsidiaries
Schedule 3.3 - Default by Shareholders
Schedule 3.4 - Financial Statements
Schedule 3.5.(a) - Taxes
Schedule 3.5.(a) - Tax Returns (Exceptions to Representations)
Schedule 3.5.(b) - Tax Audits
Schedule 3.5.(c) - Consolidated Tax Returns
Schedule 3.6 - Certain Changes
Schedule 3.6(c) - No increase in Compensation
Schedule 3.6.(f) - Permitted Pre-Closing Dividends
Schedule 3.7 - Off-Balance Sheet Liabilities
Schedule 3.10 - Litigation Matters
Schedule 3.11.(a) - Non-Compliance with Laws
Schedule 3.12.(b) - Underground Storage Tanks
Schedule 3.13.(a) - Liens
Schedule 3.13.(b) - Real Property
Schedule 3.14.(a) - Real Property Leases
Schedule 3.14.(b) - Personal Property Leases
Schedule 3.14.(c) - Powers of Attorney
Schedule 3.14.(d) - Collective Bargaining Agreements
Schedule 3.14.(e) - Loan Agreements, etc.
Schedule 3.14.(f) - Guarantees
Schedule 3.14.(g) - Restrictive Agreements
Schedule 3.14.(h) - Other Material Agreements
Schedule 3.15 - Labor Matters
Schedule 3.16.(a) - Employee Plans/Agreements
Schedule 3.16.(b) - Non-US Employee Benefit Plans
Schedule 3.16.(h) - Right to Amend Plans
Schedule 3.16.(i) - Parachute Payments
Schedule 3.16.(j) - Obligations Triggered by Closing
Schedule 3.17 - Employment Compensation
Schedule 3.18 - Trade Rights
Schedule 3.19 - Product Liability Claims
Schedule 3.20 - Bank Accounts
Schedule 3.21.(a) - Contracts with Affiliates
Schedule 3.21.(c) - Obligations of and to Affiliates
Schedule 3.23 - Insurance Policies
Schedule 4.3 - Default by Buyer
Schedule 5.1.(a) - Permissible Activities
Schedule 5.1.(a)(1) - Non-Compete Agreement
Schedule 5.10 - Transitional Trademark License
Schedule 8.5.(d) - List of Buyer's Employees or Agents
Participating in Due Diligence
Schedule 9.1.(c) - Form of Foley & Lardner Legal Opinion
Schedule 9.1.(f) - Form of Shareholder Agreement
Schedule 9.2.(d) - Form of Buyer's Legal Opinion
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement") dated November 16,
1995, by and among EXIDE ELECTRONICS GROUP, INC., a Delaware corporation
("Buyer"), DELTEC POWER SYSTEMS, INC., a Wisconsin corporation ("Company"), and
FISKARS OY AB, a Finnish corporation ("Fiskars") and FISKARS HOLDINGS, INC., a
Wisconsin corporation ("Holdings") (individually "Shareholder" and together the
"Shareholders").
RECITALS
A. Company and its subsidiaries are engaged in the design,
manufacture, marketing, sale, distribution and service of uninterruptible power
supply systems for computers, telecommunications equipment and other similar
applications and related computer software (the "Business"). Shareholders own
all of the issued and outstanding shares (the "Shares") of capital stock of
Company.
B. Company's facilities consist of the business locations described
in Schedule 3.13(b) (the "Facilities").
C. Buyer and Company desire to acquire the Shares from Shareholders
and Shareholders desire to sell and/or transfer the Shares to Buyer and Company,
upon the terms and conditions herein set forth.
NOW THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and conditions
hereinafter set forth, and intending to be legally bound hereby, the parties
hereto agree as follows.
<PAGE>
_ ACQUISITION OF SHARES
1. Purchase and Sale of Common Shares. Subject to the terms and
conditions of this Agreement, and on the basis of and in reliance upon the
representations, warranties, obligations and agreements set forth herein, on the
Closing Date (as hereinafter defined), Fiskars shall sell to Buyer and Buyer
shall purchase from Fiskars all the Shares constituting the outstanding common
capital stock of Company ("Common Shares").
2. Redemption of Preferred Shares.
A. Dividends and Redemptions prior to Closing. During the period
beginning on the date hereof and ending on the Closing Date: (i) Company may pay
dividends on its Class A Preferred Shares in the amounts described in Section
2.c.(3) of the Articles of Incorporation of Company; (ii) Company may exercise
its rights under Section 2.c.(5) of its Articles of Incorporation to redeem
whatever amount of its Class A Preferred Shares that the Board of Directors of
Company believes is appropriate; and (iii) Company may incur indebtedness in an
amount that the Board of Directors of Company believes, in its sole discretion,
to be necessary to allow the payment of dividends and redemption price as
described above in this sentence.
B. Dividends and Redemptions after the Closing. After the
Closing, Buyer shall cause Company to comply with the following conditions:
(1) On the day immediately following
the Closing Date, Company shall redeem, pursuant to
Section 2.c.(5) of Company's Articles of
Incorporation, all but 50 of the then outstanding
shares of its Class A Preferred Shares at a price of
$10,000 per share plus all dividends that have
accrued but have not been paid previously on such
shares; provided, however, that if such redemption
would violate the provisions of Wis. Stat. ss.
180.0640(3), then such redemption shall occur on the
first date, if any, following the Closing Date on
which the provisions of Wis. Stat. ss. 180.0640(3)
would not be violated by such redemption.
(2) On January 8, 1997, Company shall
redeem, pursuant to Section 2.c.(5) of Company's
Articles of Incorporation, all of the then
outstanding shares of its Class A Preferred Shares at
a price of $10,000 per share plus all dividends that
have accrued but have not been paid previously on
such shares; provided, however, that if such
redemption would violate the provisions of Wis. Stat.
ss. 180.0640(3), then such redemption shall occur on
the first date, if any, after January 8, 1997 on
which the provisions of Wis. Stat. ss. 180.0640(3)
would not be violated by such redemption.
(3) Prior to January 8, 1997 Company
shall not exercise its rights under Section 2.c.(5)
of its Articles of Incorporation to redeem any Class
A Preferred Shares except as described above in this
Section 1.2, and Company shall not liquidate or be
dissolved.
(4) Any Class A Preferred Shares held
by Holdings that are redeemed by Company on or after
the date hereof shall be cancelled upon redemption
(rather than being treated, for example, as "treasury
stock") and shall not be issued thereafter by
Company.
C. Restrictions While Class A Preferred Shares are Outstanding.
After the Closing, Buyer shall cause Company and each direct or indirect
subsidiary of Company to comply with each of the following covenants while any
Class A Preferred Shares are outstanding:
(1) Company shall not amend its
Articles of Incorporation, By-laws or other organic
documents to change in any respect the rights,
privileges, or preferences of the holders of Class A
Preferred Shares.
(2) Company shall not be a party to any
merger or consolidation, whether or not Company is
the surviving entity; provided, however, that the
foregoing restriction shall not prevent a merger
involving solely Company and Deltec Electronics
Corporation, a California company ("Deltec").
(3) No direct or indirect subsidiary of
Company (other than Deltec) shall declare or pay a
dividend or make a distribution, or shall redeem,
purchase or otherwise acquire its own stock, or shall
purchase the stock of any corporation that controls,
or is controlled by, or is under common control with,
such subsidiary.
_ PURCHASE PRICE - PAYMENT
1. Purchase Price. The purchase price (the
"Purchase Price") payable for the purchase and/or redemption of the Shares
shall be the sum of One Hundred Ninety Five Million U.S. Dollars
($195,000,000), which shall be allocated and paid as follows:
A. To Holdings, the amounts specified in Sections
1.2(b)(1) and 1.2(b)(2) hereof;
B. To Fiskars, an amount necessary to pay in full
Company's $10 million promissory note dated September 27, 1994 payable
to Fiskars;
C. To Holdings, an amount necessary to pay all
intercompany debt owed by Deltec Electronics Corporation, a subsidiary
of Company ("Deltec"), to Holdings;
D. To Fiskars, 1,875,000 shares of Buyer's common
stock, valued at a fixed price of $20.00 per share;
E. To Fiskars, $10 million as the noncompete payment
provided in the Non-Compete Agreement annexed hereto as Schedule
5.1(a)(1) hereto;
F. To Fiskars, $4 million as the prepaid royalties
provided in the License Agreement annexed hereto as Schedule 5.10;
G. To Fiskars, $3 million representing the purchase
price for the trademarks listed in Schedule 2.1(g) hereto; and
H. To Fiskars, the balance of the Purchase Price in
consideration for the purchase of the Common Shares.
Notwithstanding anything set forth in this Section
2.1, the aggregate cash consideration to be paid by Buyer pursuant to this
Agreement shall not, except as set forth in Section 2.3(d) and 8.2, exceed
$157,500,000.
2. Payment of Purchase Price. All payments under Section 2.1(b),
(c), (e), (f), (g) and (h) shall be made at the Closing, and the payment
specified in Section 1.2(b)(1) on the day after Closing and the payment
specified in Section 1.2(b)(2) on January 8, 1997, by wire transfer of
immediately available funds to an account designated by the recipient not less
than one hour prior to the time for payment specified herein.
3. Post-Closing Adjustments.
A. Preparation of Closing Date Balance Sheet. Within sixty (60)
days after the Closing Date, Price Waterhouse shall prepare and deliver to
the Buyer a consolidated balance sheet for the Company as of the close of
business on the Closing Date (the "Closing Date Balance Sheet"). The
Closing Date Balance Sheet shall be prepared in accordance with U.S.
generally accepted accounting principles ("GAAP"), using the same methods
and criteria employed in connection with the preparation of the Company's
December 31, 1994, consolidated balance sheet ("Latest Year-End Balance
Sheet").
B. Resolution of Disputes. Unless Buyer notifies Shareholders in
writing within thirty (30) days after receipt of the Closing Date Balance
Sheet that Buyer disputes any matter with respect to such Closing Date
Balance Sheet, and specifies in reasonable detail the basis for such
objection and the amount in dispute, the Closing Date Balance Sheet shall
become final and binding upon the parties for purposes of the post-closing
adjustment to be made pursuant to this Section 2.3. During the thirty (30)
day period following Buyer's receipt of the Closing Date Balance Sheet,
Buyer and their representatives shall have the right to review all books
and working papers of Shareholders and Price Waterhouse related to the
preparation of the Closing Date Balance Sheet. If Buyer provides such
notice of objection to Shareholders within such thirty-day period, Buyer
and Shareholders shall negotiate in good faith to resolve the issues set
forth in Buyer's notice of objection during the thirty-day period
following Buyer's notice. If Buyer and Shareholders are unable to resolve
such objections within such thirty-day period, the disputed matters (and
only the disputed matters) shall be submitted to one of the nationally
recognized independent accounting firms which is on the date hereof among
the six largest firms (the "Big Six Accounting Firm") mutually selected by
Buyer and Shareholders. Any reference to the Big Six Accounting Firm shall
be deemed to include a reference to any member or employee thereof (who is
a certified public accountant) which any such firm may designate as the
arbitrator on its behalf. If within ten (10) days following commencement
of the selection process Seller and Shareholders shall have failed to
agree upon the selection of the Big Six Accounting Firm or such firm
declines to act, then Buyer and Shareholders shall each select a Big Six
Accounting Firm and such firms shall jointly select a third firm, with
preference being given to any one of the Big Six Accounting Firms, which
firm shall then act as the arbitrator (the "Arbitrator") to resolve the
disputed matters. The Arbitrator shall act promptly to resolve all
disputed matters and its decision with respect to all disputed matters
shall be final and binding upon the parties hereto and shall not be
appealable to any court. The fees, costs and expenses of the Arbitrator
shall be shared equally between Buyer and Shareholders.
C. Determination of Closing Net Book Value. The Purchase Price
has been determined on the assumption, and the parties have entered into
this Agreement with the reasonable expectation, that the excess of (i) the
Total Assets of the Company as of the Closing Date, over (ii) the Total
Liabilities of the Company as of the Closing Date (the "Closing Net Book
Value"), will be $27,600,000. The term "Total Assets" shall mean all
assets as determined in accordance with U.S. GAAP applied on a basis
consistent with the Latest Year-End Balance Sheet, excluding net
unamortized goodwill and all intercompany receivables. The term "Total
Liabilities" shall mean all liabilities as determined in accordance with
U.S. GAAP applied on a basis consistent with the Latest Year-End Balance
Sheet, excluding all intercompany short and long term debt, payables, and
accrued liabilities, but including a $1,060,000 income tax reserve for the
federal income tax risks associated with the step-up of the assets in the
Deltec Acquisition by Fiskars. The calculation of Closing Net Book Value
is to be determined in a manner consistent with the preparation of the
Recent Balance Sheet to be sold (September 30, 1995) as listed in Schedule
3.4.
D. Purchase Price Adjustment. Within ten (10) days after the
final and binding Closing Date Balance Sheet shall have been prepared as
provided in Section 2.3(b) hereof, and the Closing Net Book Value shall
have been determined as provided in Section 2.3(c) hereof, the amount by
which the Closing Net Book Value shall be less than $27,600,000 shall be
paid by Fiskars to Buyer as a reduction of the Purchase Price, or the
amount by which Closing Net Book Value shall be more than $27,600,000
shall be paid by Buyer to Fiskars as an increase in the Purchase Price,
in either case plus interest computed on the amount of the Purchase Price
adjustment from the Closing Date to the date of payment at the rate of 8%
per annum, such payment to be made by wire transfer as provided in Section
2.2 hereof.
_ JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF
COMPANY AND SHAREHOLDERS
Company and Shareholders, jointly and severally, make the
following representations and warranties to Buyer, each of which is true and
correct on the date hereof, shall remain true and correct to and including the
Closing Date, and shall survive the Closing of the transactions provided for
herein for the period provided for in Section 8.5(a). Regardless of the
foregoing, the representations and warranties set forth in Section 3.2 are made
severally by each Shareholder, with respect to such Shareholder only. With
respect to those representations and warranties below which are stated "to
Shareholders' knowledge" or "to Company's knowledge", "knowledge" shall mean the
actual knowledge of those persons whose names and titles are set out on Schedule
3.0 hereto. For the purposes of this Section 3 (but excluding Sections 3.1 and
3.4), the term "Company" shall include all subsidiaries of the Company. The
exceptions, modifications, descriptions and disclosures in any schedule attached
hereto are made for all purposes of this Agreement and are exceptions to all
representations and warranties set forth in the Agreement or in any agreement or
instrument delivered pursuant to or in connection with this Agreement.
Disclosure of an item in response to one section of this Agreement shall
constitute disclosure in response to every section of this Agreement
notwithstanding the fact that no express cross reference is made. Certain
documents attached to Shareholders' disclosure schedules are in non-English
languages. The Shareholders hereby represent and warrant that none of such
documents discloses information that would constitute a breach of or qualify a
representation or warranty by Shareholders or Company in this Agreement. Until
the foregoing documents are translated into or summarized in English, Buyer
shall not be deemed to have actual knowledge of their content for purposes of
Section 4.7 and 8.5(d).
1. Corporate.
A. Organization. Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Wisconsin.
B. Corporate Power. Company has all requisite corporate power
and authority to own, operate and lease its properties and to carry on its
business as and where such is now being conducted.
C. Qualification. Company is duly licensed or qualified to do
business as a foreign corporation, and is in good standing, in each
jurisdiction wherein the character of the properties owned or leased by
it, or the nature of its business, makes such licensing or qualification
necessary to avoid a material penalty. The states in which Company is
licensed or qualified to do business are listed in Schedule 3.1(c).
D. Subsidiaries. Schedule 3.1(d) sets forth the name,
jurisdiction of incorporation, capitalization, ownership and officers and
directors of each corporation in which the Company has a direct or
indirect equity interest ("Subsidiary") and the jurisdictions in which
each Subsidiary is qualified or licensed to do business as a foreign
corporation (the Company and Subsidiaries are referred to herein
collectively as the "Fiskars Companies" and separately as a "Fiskars
Company"). Except as listed in Schedule 3.1.(d), the Company does not own,
directly or indirectly, any capital stock or other equity securities of
any corporation or have any direct or indirect equity or other ownership
interest in any entity or business. All of the outstanding shares of
capital stock of each Subsidiary owned by the Company are free and clear
of any security interest, restriction, option, voting trust or agreement,
proxy, are validly issued, fully paid and nonassessable except to the
extent provided by Section 180.0622(2)(b) of the Wisconsin Business
Corporation Law. There are no (a) securities convertible into or
exchangeable for the capital stock or other securities of any Subsidiary,
(b) options, warrants or other rights to purchase or subscribe to capital
stock or other securities of any Subsidiary or securities which are
convertible into or exchangeable for capital stock or other securities of
any Subsidiary, or (c) except for the redemption rights described in
Section 1.2 hereof, contracts, commitments, agreements, understandings or
arrangements of any kind relating to the issuance, sale or transfer of any
capital stock or other equity securities of any Subsidiary, any such
convertible or exchangeable securities or any such options, warrants or
other rights. Each Subsidiary (x), except as disclosed in Schedule 3.1(d),
is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation, (y) has full
corporate power and authority to carry on its business as it is now being
conducted and to own and lease the properties and assets it now owns and
leases, and (z) is in good standing and is duly qualified or licensed to
do business as a foreign corporation in each of the jurisdictions listed
opposite the name of such Subsidiary in Schedule 3.1.(d), which are the
only jurisdictions in which such Subsidiary is required to be so qualified
or licensed to avoid a material penalty.
E. Capitalization of the Company. The authorized capital stock of
the Company consists entirely of 6,000 shares of common stock, par value
$0.01 per share and 3,000 shares of Class A preferred stock, par value
$0.01 per share. No shares of such capital stock are issued or outstanding
except for 600 shares of common stock of the Company which are owned of
record and beneficially by Fiskars and prior to the redemptions described
in Section 1.2 hereof, 1,500 shares of Class A preferred stock of the
Company which are owned of record and beneficially by Holdings. All such
shares of capital stock of the Company are validly issued, fully paid and
nonassessable except to the extent provided by Section 180.0622(2)(b) of
the Wisconsin Business Corporation Law. There are no (a) securities
convertible into or exchangeable for any of the Company's capital stock or
other securities, (b) options, warrants or other rights to purchase or
subscribe to capital stock or other securities of the Company or
securities which are convertible into or exchangeable for capital stock or
other securities of the Company, or (c) except for the redemption rights
described in Section 1.2 hereof, contracts, commitments, agreements,
understandings or arrangements of any kind relating to the issuance, sale
or transfer of any capital stock or other equity securities of the
Company, any such convertible or exchangeable securities or any such
options, warrants or other rights.
F. Power. The Company has full power, legal right and authority
to enter into, execute and deliver this Agreement and the other
agreements, instruments and documents contemplated hereby (such other
documents sometimes referred to herein as "Ancillary Instruments"), and to
carry out the transactions contemplated hereby.
G. Authorization. The execution and delivery of this Agreement
and the Ancillary Instruments, and full performance hereunder and
thereunder, have been duly authorized by the Board of Directors of
Company, and no other or further corporate act on the part of Company is
necessary therefor.
H. Validity. This Agreement has been duly and validly executed
and delivered by Company and is, and when executed and delivered each
Ancillary Instrument will be, the legal, valid and binding obligation of
Company, enforceable in accordance with its terms, except as such may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally, and by general equitable principles.
2. Shareholders.
A. Power. Each Shareholder has full power, legal right and
authority to enter into, execute and deliver this Agreement and the
Ancillary Instruments, and to carry out the transactions contemplated
hereby.
B. Authorization. The execution and delivery of this Agreement
and the Ancillary Instruments, and full performance hereunder and
thereunder, have been duly authorized by the respective boards of
directors of each Shareholder, and no other or further corporate act on
the part of any such Shareholder is necessary therefor.
C. Validity. This Agreement has been duly and validly executed
and delivered by each Shareholder and is, and when executed and delivered
each Ancillary Instrument will be, the legal, valid and binding obligation
of such Shareholder, enforceable in accordance with its terms, except as
such may be limited by bankruptcy, insolvency, reorganization or other
laws affecting creditors' rights generally, and by general equitable
principles.
D. Title. At Closing Buyer or Company, as the case may be, will
receive, good and marketable title to the Shares to be sold or transferred
by such Shareholder hereunder, free and clear of all Liens (as defined in
Section 3.13) including, without limitation, voting trusts or agreements,
proxies, marital or community property interests.
3. No Violation. Except as set forth on Schedule 3.3, neither the
execution and delivery of this Agreement or the Ancillary Instruments nor the
consummation by Company and Shareholders of the transactions contemplated hereby
and thereby (a) will violate any statute, law, ordinance, rule or regulation
(collectively, "Laws") or any order, writ, injunction, judgment, plan or decree
(collectively, "Orders") of any court, arbitrator, department, commission,
board, bureau, agency, authority, instrumentality or other body, whether
federal, state, municipal, foreign or other (collectively, "Government
Entities"), (b) except for applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), will require any
authorization, consent, approval, exemption or other action by or notice to any
Government Entity (including, without limitation, under any "plant-closing" or
similar law), or (c) subject to obtaining the consents referred to in Schedule
3.3, will constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, or will result in the termination
of, or accelerate the performance required by, or result in the creation of any
Lien (other than a Permitted Lien) upon any of the assets of the Fiskars
Companies (or the Shares) under, any term or provision of the Articles of
Incorporation and By-Laws of Company or organic documents of Subsidiaries or
breach of any contract, commitment, understanding, arrangement, agreement or
restriction of any kind or character that is material to the Business or would
have a material effect on the ability of the Shareholders and the Company to
consummate the transactions contemplated hereby.
4. Financial Statements. Included as Schedule 3.4 are true and
complete copies of the following financial statements of the Company and certain
Subsidiaries consisting of (i) audited balance sheets of Deltec and of FPS Power
Systems Oy Ab and each of its subsidiaries as of December 31, 1992, 1993, and
1994 and the related statements of income for the years then ended (including
the notes contained therein or annexed thereto), (ii) an audited consolidated
balance sheet for the Company as of December 31, 1994, and an unaudited
consolidated statement of income of the Company for the year then ended, and
(iii) an unaudited consolidated balance sheet of the Company as of September 30,
1995, showing in such balance sheet certain adjustments for cash, goodwill and
intercompany items (the "Recent Balance Sheet"), and the related unaudited
statement of income for the nine (9) months then ended. All of such financial
statements except the Recent Balance Sheet (including all notes and schedules
contained therein or annexed thereto) have been prepared in accordance with
generally accepted accounting principles in effect in the jurisdictions where
that Fiskars Company is incorporated (except as disclosed on Schedule 3.4 and,
in the case of unaudited statements, for the absence of footnote disclosure)
applied on a consistent basis, have been prepared in accordance with the books
and records of each applicable Fiskars Company, and fairly present the financial
position, the results of operations and cash flows of the applicable Fiskars
Company as of the dates and for the years and periods indicated.
5. Tax Matters. Except as set forth on Schedule 3.5(a), all tax
returns, statements, reports and forms (including without limitation estimated
tax returns and reports and information returns and reports) required to be
filed with any tax authority with respect to any taxable period ending on or
before the Closing Date, by or on behalf of any of the Fiskars Companies
(collectively, the "Fiskars Returns"), have been or will be filed when due
(including any extensions of such due date), and all amounts shown due thereon
on or before the Closing Date have been or will be paid on or before such date.
The financial statements (i) fully accrue all actual liabilities for taxes with
respect to all periods through September 30, 1995 and the Fiskars Companies have
not and will not incur any tax liability in excess of the amount reflected on
the September 30, 1995 Recent Balance Sheet with respect to such periods, and
(ii) properly accrue in accordance with GAAP all liabilities, including deferred
tax liabilities for taxes payable after September 30, 1995 with respect to all
transactions and events occurring on or prior to such date. In no event shall
any tax deficiencies be offset by Shareholders or Company against the $1,060,000
income tax reserve referred to in Section 2.3(c). All information set forth in
the notes to the financial statements relating to tax matters is true, complete
and accurate in all material respects. No material tax liability since September
30, 1995 has been incurred other than in the ordinary course of business and
adequate provision will be made for all taxes since that date in accordance with
GAAP on at least a quarterly basis. The Fiskars Companies have withheld and paid
to the applicable financial institution or tax authority all amounts required to
be withheld. The Fiskars Companies (or any member of any affiliated or combined
group of which any of them has been a member) have not granted any extension or
waiver of the limitation period applicable to any Fiskars Returns. There is no
material claim, audit, action, suit, proceeding, or investigation now pending or
threatened against or with respect to any of the Fiskars Companies in respect of
any tax or assessment. No notice of deficiency or similar document of any tax
authority has been received by any of the Fiskars Companies, and there are no
liabilities for taxes (including liabilities for interest, additions to tax and
penalties thereon and related expenses) with respect to the issues that have
been raised (and are currently pending) by any tax authority that could, if
determined adversely to any of the Fiskars Companies, materially and adversely
affect the liability of any of the Fiskars Companies for taxes. The Fiskars
Companies are in full compliance with all the terms and conditions of any tax
exemptions or other tax-sharing agreement or order of a foreign government and
the consummation of the transactions contemplated by this Agreement will not
have any adverse effect on the continued validity and effectiveness of any such
tax exemption or other tax-sharing agreement or order. There is no agreement,
contract or arrangement to which any of the Fiskars Companies is a party that
may result in the payment of any amount that would not be deductible by the
Fiskars Companies by reason of Sections 280G, 162 or 404 of the Internal Revenue
Code (the "Code"). As of the Closing, none of the Fiskars Companies will be a
party to any tax sharing or tax allocation agreement. Except as may be required
as a result of the transactions contemplated by this Agreement, none of the
Fiskars Companies have been or will be required to include any material
adjustment in taxable income for any tax period (or portion thereof) pursuant to
Section 481 or 263A of the Code or any comparable provision under state or
foreign tax laws as a result of transactions, events or accounting methods
employed prior to the consummation of the transactions contemplated by this
Agreement. None of the Fiskars Companies have filed any consent under Section
341(f) of the Code. For purposes of this Agreement, the following terms have the
following meanings: "tax" (and, with correlative meaning, "taxes" and "taxable")
means (i) any net income, alternative or add-on minimum tax, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property environmental or windfall profit tax, custom, duty or other tax
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or any penalty, addition to tax or additional amount
imposed by any governmental tax authority responsible for the imposition of any
such tax (domestic or foreign), (ii) any liability for the payment of any
amounts of the type described in (i) as a result of being a member of any
affiliated, consolidated, combined or unitary group for any taxable period and
(iii) any liability for the payment of any amounts of the type described in (i)
or (ii) as a result of any express or implied obligation to indemnify any other
person.
A. Tax Returns Filed. Except as set forth on Schedule 3.5.(a),
all federal, state, foreign, county, local and other tax returns required
to be filed by or on behalf of a Fiskars Company have been timely filed
and when filed were true and correct in all material respects, and the
taxes shown as due thereon were paid or adequately accrued. The Fiskars
Companies have duly withheld and paid all taxes which each is required to
withhold and pay relating to salaries and other compensation heretofore
paid to the employees of the Fiskars Companies.
B. Tax Audits. The income tax returns of the Fiskars Companies
have been audited by taxing authorities for the periods and to the extent
set forth in Schedule 3.5.(b), and no Fiskars Company has received from
the Internal Revenue Service or from the tax authorities of any country,
state, county, local or other jurisdiction any notice of underpayment of
taxes or other deficiency which has not been paid nor any objection to any
return or report filed by the Fiskars Company. There are outstanding no
agreements or waivers extending the statutory period of limitations
applicable to any tax return or report.
C. Consolidated Group. Schedule 3.5.(c) lists every year Company
or Deltec was a member of an affiliated group of corporations that filed a
consolidated tax return on which the statute of limitations does not bar a
federal tax assessment, and each corporation that has been part of such
group. No affiliated group of corporations of which Company or Deltec has
been a member has discontinued filing consolidated returns during the past
five years.
6. Absence of Certain Changes. Except as and to the extent set
forth in Schedule 3.6, since the date of the Recent Balance Sheet,
there has not been:
A. No Adverse Change. Any material adverse change, or any event
or condition which could reasonably be expected to result in, a material
adverse change in the results of operations, financial condition, assets
or liabilities of the Fiskars Companies taken as a whole (a "Material
Adverse Effect").
B. No Damage. Any loss, damage or destruction, whether covered
by insurance or not, affecting a material part of the Business or the
Fiskars Companies' properties;
C. No Increase in Compensation. Except as disclosed in Schedule
3.6(c) hereto, any increase in the compensation, salaries or wages payable
or to become payable to any employee or agent of a Fiskars Company
(including, without limitation, any increase or change pursuant to any
bonus, pension, profit sharing, retirement or other plan or commitment),
or any bonus or other employee benefit granted, made or accrued, in any
case other than in the ordinary course of business consistent with past
practice;
D. No Labor Disputes. Any labor dispute or disturbance, other
than routine individual grievances which are or could reasonably be
expected to be material to the business, financial condition or results of
operations of the Fiskars Companies;
E. No Commitments. Any commitment or transaction by a Fiskars
Company (including, without limitation, any borrowing or capital
expenditure) other than in the ordinary course of business consistent with
past practice;
F. No Dividends. Except as described in Section 1.2 or
disclosed in Schedule 3.6(f) and except for the regular quarterly dividend
payable with respect to Preferred Shares, any declaration, setting aside,
or payment of any dividend or any other distribution in respect of a
Fiskars Company's capital stock; any redemption, purchase or other
acquisition by a Fiskars Company of any capital stock of a Fiskars
Company, or any security relating thereto; or any other payment to any
shareholder of a Fiskars Company as such a shareholder;
G. No Disposition of Property. Any sale, lease or other
transfer or disposition of any material properties or assets of a
Fiskars Company, except for the sale of inventory items in the ordinary
course of business;
H. No Indebtedness. Any indebtedness for borrowed money
incurred, assumed or guaranteed by a Fiskars Company, other than
intercompany indebtedness and trade payables incurred in the ordinary
course of business consistent with past practice and intercompany loans
to fund the redemption described in Section 1.2 hereof;
I. Loans and Advances. Any loan or advance (other than advances
to employees in the ordinary course of business for travel and
entertainment in accordance with past practice) to any person including,
but not limited to, any Affiliate (for purposes of this Agreement, the
term "Affiliate" shall mean and include all Shareholders, directors and
officers of the Fiskars Companies; the spouse of any such person; any
person who would be the heir or descendant of any such person if he or she
were not living; and any entity in which any of the foregoing has a direct
or indirect interest, except through ownership of less than 5% of the
outstanding shares of any entity whose securities are listed on a national
securities exchange or traded in the national over-the-counter market);
J. Credit. Any grant of credit to any customer or distributor on
terms or in amounts more favorable than those which have been extended to
such customer or distributor in the past, any other change in the terms of
any credit heretofore extended, or any other change of a Fiskars Company's
policies or practices with respect to the granting of credit;
K. No Change in Contract Rights. Any entry into, amendment of,
relinquishment, termination or non-renewal by any of the Fiskars Companies
of any material distribution agreement, OEM agreement, technology
agreement or any other material contract to which any of them are a party
other than in the ordinary course of business consistent with past
practice; or
L. No Other Agreements. Any agreement or arrangement made by any
of the Fiskars Companies to take any action which, if taken prior to the
date hereof, would have made any representation or warranty set forth in
this Section 3.6 untrue or incorrect as of the date when made.
7. Absence of Undisclosed Liabilities. Except as and to the
extent specifically disclosed in the Recent Balance Sheet, in this Agreement or
in Schedule 3.7, to Company's and each Shareholder's knowledge, none of the
Fiskars Companies have any liabilities, commitments or obligations (secured or
unsecured, and whether accrued, absolute, contingent, direct, indirect or
otherwise), except those incurred in the ordinary course of the Business or
which will not have a Material Adverse Effect.
8. Accounts Receivable. All accounts receivable as set forth on
the Recent Balance Sheet or arising since the date of the Recent Balance Sheet
(i) have arisen only in the ordinary course of business consistent with past
practice and (ii) to the knowledge of Company and Shareholders are collectible
in full at the recorded amounts thereof (free of any, and subject to no,
defenses, set-offs or counterclaims) in the ordinary course of business, net of
any allowance for doubtful accounts reflected in the Recent Balance Sheet.
9. Inventory. The inventory as set forth on the Recent Balance
Sheet or arising since the date of the Recent Balance Sheet was acquired and has
been maintained in accordance with the regular business practices of the Company
and the Fiskars Companies, consists of items of a quality and quantity useable
or saleable in the ordinary course of business consistent with past practice,
and is valued at reasonable amounts based on the ordinary course of business of
such companies within the past 12 months.
10. No Litigation. Except as set forth in Schedule 3.10, there is
no action, suit, arbitration, proceeding, investigation or inquiry, whether
civil, criminal or administrative ("Litigation") pending or, to Company's and
each Shareholder's knowledge, threatened against the Fiskars Companies or their
respective officers or directors (in such capacity) and to the knowledge of the
Company or each Shareholder, no event has occurred which might reasonably be
expected to result in any such Litigation. Schedule 3.10 also identifies all
Litigation to which the Fiskars Companies or any of their officers or directors
(in such capacity) have been parties since January 1, 1993. Except as set forth
in Schedule 3.10, no Fiskars Company is subject to any Order of any Government
Entity and to the knowledge of the Company or each Shareholder, no event has
occurred which might reasonably be expected to result in any such Litigation.
11. Compliance With Laws and Orders.
A. Compliance. Except as set forth in Schedule 3.11.(a), to
Company's and each Shareholder's knowledge, the Fiskars Companies have
been (within the last three years) in substantial compliance with all
applicable Laws and Orders, including, without limitation, those
applicable to discrimination in employment, occupational safety and
health, trade practices, competition and pricing, product warranties,
zoning, building and sanitation, employment, retirement and labor
relations, product advertising and protection of the environment where
failure to comply with such Laws and Orders would have a Material Adverse
Effect. Except as set forth in Schedule 3.11.(a), no Fiskars Company has
received notice of any violation or alleged violation of any Laws or
Orders that have not been cured or resolved.
B. Licenses and Permits. The Fiskars Companies have all licenses
and permits of all Government Entities and all certification organizations
required for the conduct of the business (as presently conducted) and
operation of the Facilities where the failure to have same would have a
Material Adverse Effect. All such licenses, permits, approvals,
authorizations and consents are in full force and effect and will not be
affected or made subject to loss, limitation or any obligation to reapply
as a result of the transactions contemplated hereby.
12. Environmental Matters.
A. For the purposes of this Agreement, the term "Environmental
Laws" shall mean all applicable international, federal, state, local and
applicable foreign environmental protection, occupational, health and
safety or similar laws, ordinances, restrictions, licenses, rules,
regulations and permit conditions, including, without limitation, the
Federal Water Pollution Control Act, Resource Conservation & Recovery Act,
Clean Air Act, Comprehensive Environmental Response, Compensation and
Liability Act, Emergency Planning and Community Right to Know Act,
Occupational Safety and Health Act and other federal, state or local laws
of similar effect, each as amended, and the term "Hazardous Materials"
shall mean any toxic or hazardous substance, material or waste or any
pollutant or contaminant, or infectious or radioactive substance or
material, including without limitation, those substances, materials and
wastes defined in or regulated under any applicable Environmental Laws.
B. No Fiskars Company has received any notices, directives,
violation reports, actions or claims from or by (i) any federal, state or
local governmental agency concerning any Fiskars Company and any
Environmental Laws, or (ii) any person alleging that, in connection with
Hazardous Materials, conditions at any real properties leased or owned by
any Fiskars Company have resulted in or caused or threatened to result in
or cause injury or death to any person or damages to or contamination of
any property, including, without limitation, damage to natural resources,
and to the best of each of Company's and Shareholder's knowledge no such
notices, directives, violation reports, actions, claims, assessments or
allegations exist; (iii) no Fiskars Company currently leases, operates or
owns any real properties or, to the knowledge of Company or the
Shareholders, has disposed of Hazardous Materials at any property or
facility that are listed or, to the knowledge of Company or the
Shareholders, are threatened to be listed on a "Superfund" List or with
respect to which there is any pending proceeding or investigation under
any Environmental Law, and, to the best of each of Company's and
Shareholder's knowledge, no such proceeding or investigation is
threatened; (iv) to the best of each of Company's and Shareholder's
knowledge, throughout the period of operation of any real properties by
any Fiskars Company, each Fiskars Company has operated and continues to
operate such real properties in compliance with all Environmental Laws;
(v) to the best of each of Company's and Shareholder's knowledge, no
underground storage tanks either are or have been located at any of such
real properties other than those identified in Schedule 3.12(b) (which
disclosure does not, in and of itself, qualify any of Company's or
Shareholders' representations set forth in this Section 3); (vi) to the
best of each of Company's and Shareholder's knowledge, there has been no
spill, discharge, release, contamination or cleanup of or by any Hazardous
Materials used, generated, treated, stored, disposed of or handled by any
of the Fiskars Companies at such real properties and to the best of each
of Company's and Shareholder's knowledge, no spill, discharge or release
or contamination or cleanup of or by Hazardous Materials has occurred on
or to such real properties by any third party; (vii) to the best of each
of Company's and Shareholder's knowledge, no Fiskars Company has used,
generated, treated, stored, disposed of, handled, transported or released
any Hazardous Material in a manner which would give rise to any liability
under any Environmental Laws; (viii) neither the Company nor any
Shareholder is aware of any facts, events, or conditions (including,
without limitation, the generation, treatment, transport, storage,
emission, disposal, release or other placement, deposit or location of any
substance) which materially interfere with or prevent continued compliance
by any Fiskars Company with, or give rise to any present or potential
liability (including with respect to past activities) under any
Environmental Laws which would have a Material Adverse Effect; and (ix) to
the best of each of Company's and Shareholder's knowledge, no Fiskars
Company has released any other person from any claim under any
Environmental Laws nor waived any rights or defenses concerning any
environmental conditions.
13. Title to and Condition of Properties.
A. Marketable Title. The Fiskars Companies have good and
marketable title to all of their assets, including, without limitation,
all such properties (tangible and intangible) reflected in the Recent
Balance Sheet, except for inventory disposed of in the ordinary course of
business since the dates of such Recent Balance Sheet, free and clear of
all mortgages, liens (statutory or otherwise), security interests, claims,
pledges, licenses, equities, options, conditional sales contracts,
assessments, levies, easements, covenants, reservations, restrictions,
rights-of-way, exceptions, limitations, charges or encumbrances of any
nature whatsoever except Permitted Liens (collectively, "Liens").
"Permitted Liens" means, with respect to any Fiskars Company: (i) Liens
for taxes which are not yet due, are being contested in good faith, or are
not material; (ii) Liens arising under applicable laws to the extent that
such Liens secure obligations thereunder not yet due, including (but not
limited to) Liens incurred and deposits made in connection with workmen's
compensation, unemployment insurance, social security and similar laws;
(iii) Liens disclosed or otherwise reflected in the Recent Financial
Statements or elsewhere in this Agreement; (iv) in the case of real
property, municipal and zoning ordinances and easements for public
utilities, none of which interfere with the use of the property as
currently utilized; and (v) the Liens disclosed on Schedule 3.13(a).
B. Real Property. Schedule 3.13.(b) sets forth all real property
owned, used or occupied by the Fiskars Companies (the "Real Property"),
including a description of all land, and all encumbrances, easements or
rights of way of record (or, if not of record, of which a Fiskars Company
has notice or knowledge) granted on or appurtenant to or otherwise
affecting such Real Property and all plants, buildings or other structures
located thereon. Schedule 3.13.(b) also sets forth, with respect to each
parcel of Real Property which is leased, the material terms of such lease.
There are now in full force and effect duly issued certificates of
occupancy permitting the Real Property and improvements located thereon to
be legally used and occupied as the same are now constituted.
C. No Condemnation or Expropriation. To Company's
and each Shareholder's knowledge, neither the whole nor any portion of
the property or any other assets of a Fiskars Company is subject to any
Order to be sold or is being condemned, expropriated or otherwise taken
by any Government Entity with or without payment of compensation
therefor.
14. Contracts and Commitments.
A. Real Property Leases. Except as set forth in Schedule 3.14.
(a), the Fiskars Companies have no leases of real property that are
material to the Business.
B. Personal Property Leases. Except as set forth in Schedule
3.14.(b), the Fiskars Companies have no leases of personal property
involving consideration or other expenditure in excess of $10,000 or
involving performance over a period of more than 12 months.
C. Powers of Attorney. Except as set forth in Schedule 3.14(c),
the Fiskars Companies have not given a power of attorney, which is
currently in effect, to any person, firm or corporation for any purpose
whatsoever.
D. Collective Bargaining Agreements. Except as set forth in
Schedule 3.14.(d), the Fiskars Companies are not a party to any collective
bargaining agreements with any unions, guilds, shop committees or other
collective bargaining groups or any national labor union contract. Copies
of all such agreements have heretofore been delivered to Buyer.
E. Loan Agreements. Except as set forth in Schedule 3.14.(e),
the Fiskars Companies are not obligated under any loan agreement,
promissory note, letter of credit, or other evidence of indebtedness as a
signatory, guarantor or otherwise.
F. Guarantees. Except as disclosed on Schedule 3.14.(f), the
Fiskars Companies have not guaranteed the payment or performance of any
person, firm or corporation, agreed to indemnify any person or act as a
surety, or otherwise agreed to be contingently or secondarily liable for
the obligations of any person.
G. Non-Competition Agreements. Except as disclosed on Schedule
3.14.(g), the Fiskars Companies have not entered into any agreement or
commitment containing any covenant limiting the freedom of any of the
Fiskars Companies to engage in any line of business, including, without
limitation, the Business, or compete with any person.
H. Other Material Agreements. Except as set forth in Schedule
3.14.(h) hereto, none of the Fiskars Companies have entered into any
agreement or commitment which involve payment or receipt by any of them of
$50,000 or more in the aggregate or which are not cancelable without
penalty within 180 days. [Schedule to be delivered after signing]
15. Labor Matters. Except as set forth in Schedule 3.15, within
the last three years the Fiskars Companies have not experienced any labor
disputes, union organization attempts or any work stoppage due to labor
disagreements in connection with its business. Except to the extent set forth in
Schedule 3.15, (a) there is no unfair labor practice charge or complaint against
any Fiskars Company pending or threatened; (b) there is no labor strike,
dispute, request for representation, slowdown or stoppage actually pending or,
to Company's or Shareholder's knowledge, threatened against or affecting any
Fiskars Company nor any secondary boycott with respect to products of any
Fiskars Company; (c) no question concerning representation has been raised or,
to Company's or Shareholder's knowledge, is threatened respecting the employees
of any Fiskars Company; (d) no grievance which might have a Material Adverse
Effect, nor any arbitration proceeding arising out of or under collective
bargaining agreements or any national labor union contract, is pending; and (e)
there are no administrative charges or court complaints against any Fiskars
Company concerning alleged employment discrimination or other employment related
matters pending or, to Company's or Shareholders' knowledge, threatened before
the U.S. Equal Employment Opportunity Commission or any Government Entity.
16. Employee Benefit Plans.
A. Disclosure. Schedule 3.16.(a) describes all pension, thrift,
savings, profit sharing, retirement, incentive bonus and other material
bonus, medical, dental, life, accident insurance, benefit, employee
welfare, disability, group insurance, stock appreciation, executive or
deferred compensation, hospitalization and other similar fringe or
employee benefit plans, programs and arrangements, and any employment or
consulting contracts, "golden parachutes," collective bargaining
agreements, severance agreements or plans, vacation and sick leave plans,
programs, arrangements and policies, including, without limitation, all
"employee benefit plans" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), all
employee manuals, and all written statements of policies relating to
employment, which are provided to, for the benefit of, or relate to, any
persons ("Employees") employed by a Fiskars Company and under which a
Fiskars Company has any obligation. Without regard to Section 8.5(b)
hereof, Shareholders have agreed to make certain payments to certain
officers of the Company which have not been disclosed to Buyer and for
which Shareholders shall be solely responsible. The items described in the
foregoing sentence are hereinafter sometimes referred to collectively as
"Employee Plans/Agreements," and each individually as an "Employee
Plan/Agreement." Each of the Employee Plans/Agreements is identified on
Schedule 3.16.(a), to the extent applicable, as one or more of the
following: an "employee pension benefit plan" (as defined in Section 3(2)
of ERISA), a "defined benefit plan" (as defined in Section 414 of the
Code), an "employee welfare benefit plan" (as defined in Section 3(1) of
ERISA), and/or as a plan intended to be qualified under Section 401 of the
Code. No Employee Plan/Agreement is a "multiemployer plan" (as defined in
Section 4001 of ERISA), and neither the Fiskars Companies nor (except as
disclosed in Schedule 3.16.(a)(i) any entity affiliated since January 31,
1989, with the Fiskars Companies under Code Section 414 ("ERISA
Affiliate") has ever contributed nor been obligated to contribute to any
such multiemployer plan.
B. Prohibited Transactions, etc. There have been no "prohibited
transactions" within the meaning of Section 406 or 407 of ERISA or Section
4975 of the Code which could have a Material Adverse Effect.
C. Payments and Compliance. With respect to each Employee
Plan/Agreement, (i) all payments due from a Fiskars Company to date have
been made and all amounts properly accrued to date as liabilities of the
Fiskars Company which have not been paid have been properly recorded on
the books of the Fiskars Company and are reflected in the Recent Balance
Sheet; (ii) all reports and information relating to each such Employee
Plan/Agreement required to be disclosed or provided to participants or
their beneficiaries have been timely disclosed or provided; and (iii) each
such Employee Plan/Agreement which is intended to qualify under Section
401 of the Code has received a favorable determination letter from the
Internal Revenue Service with respect to such qualification, its related
trust has been determined to be exempt from taxation under Section 501(a)
of the Code, and nothing has occurred since the date of such letter that
has or is likely to adversely affect such qualification or exemption.
D. Post-Retirement Benefits. Except as set forth in Schedule
3.16.(a), no Employee Plan/Agreement provides benefits, including, without
limitation, death or medical benefits (whether or not insured) with
respect to current or former Fiskars Company employees beyond their
retirement or other termination of service other than (i) coverage
mandated by applicable law, (ii) death or retirement benefits under any
Employee Plan/Agreement that is an employee pension benefit plan, (iii)
deferred compensation benefits accrued as liabilities on the books of the
Fiskars Companies (including the Recent Balance Sheet), (iv) disability
benefits under any Employee Plan/Agreement that is an employee welfare
benefit plan and which have been fully provided for by insurance or
otherwise or (v) benefits in the nature of severance pay.
E. Liability. There is no existing condition or event with
regard to any employee benefit plans ever maintained by the Fiskars
Companies or by an ERISA Affiliate that could subject the parties to this
Agreement or any Employee Plan/Agreement to any risk of liability which
would have a Material Adverse Effect.
F. Funding. Except as set forth in Schedule 3.16(a), each
employee benefit plan that is subject to Title IV of ERISA and/or to
Section 412 of the Code and that is maintained by a Fiskars Company or by
an ERISA Affiliate is fully funded on a termination basis.
G. Compliance. Each Employee Plan/Agreement has been operated
in accordance with its terms and in material compliance with all
applicable laws, orders, governmental rules and regulations including, but
no limited to, ERISA and the Code.
H. Right to Amend or Terminate. Except as disclosed in Schedule
3.16.(h) hereto, no condition exists that would prevent amendment or
termination of any Employee Plan/Agreement.
I. Parachute. Except as disclosed in Schedule 3.16(i), no
excess parachute payment, within the meaning of Code Section 280G will
become payable by any Fiskars Company as a result of the execution or
performance of this Agreement, or on the termination of any director,
officer, or employee after the Closing Date in connection with this
Agreement.
J. No Triggering of Obligations. Other than by reason of actions
taken by Buyer following the Closing, and except as disclosed in Schedule
3.16(j), the consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee of a Fiskars
Company to severance pay, unemployment compensation or any other payment,
except as expressly provided in this Agreement, (ii) accelerate the time
of payment or vesting, or increase the amount of compensation due to any
such employee or former employee or (iii) result in any prohibited
transaction described in Section 406 of ERISA or Section 4975 of the Code
for which an exemption is not available.
K. Non-US Employee Benefit Plans. Schedule 3.16(b) lists (i) each
non-governmental retirement plan maintained or contributed to by or on
behalf of the Shareholders or the Fiskars Companies applicable to
employees of any Fiskars Company located outside of the US (a "Non-US
Retirement Plan") and (ii) each non-governmental non-industry welfare
benefit plan maintained or contributed to by or on behalf of the
Shareholders or the Fiskars Companies applicable to employees of any
Fiskars Company located outside of the US and which, in the case of clause
(ii), obligates or may reasonably be expected to obligate any Fiskars
Company to pay more than US $100,000 annually (a "Non-US Welfare Plan").
Except as set forth in Schedule 3.16(b), each such Non-US Retirement Plan
and Non-US Welfare Plan (collectively, the "Non-US Plans") has been
administered, in all material respects, in compliance with its terms and
the requirements of all applicable Laws and all required contributions to
each Non-US Plan have been made. The Company and/or the Shareholders has
heretofore delivered to Buyer true and complete copies of all of the
written Non-US Plans and written summaries of the oral Non-US Plans and,
where applicable, related trusts, including all amendments. There are no
inquiries or investigations by any foreign government authority, no
termination proceedings and no actions, suits or claims (other than claims
for benefits) pending or, to the Company's or the Shareholders' knowledge,
threatened against any Non-US Plan (or any Shareholder or any Fiskars
Company with respect thereto) or the assets thereof. Except as set forth
in Schedule 3.16(b), there are no unfunded obligations under any Non-US
Plan providing benefits after termination of employment to any employee or
former employee of any Fiskars Company (or to any beneficiary of any such
employee or former employee), including but not limited to retiree health
coverage and deferred compensation, but excluding insurance conversion
privileges under applicable foreign law. No Non-US Plan, plan
documentation or agreement, summary plan description or other written
communication distributed generally to employees of any Fiskars Company by
its terms prohibits the amendment or termination of any such Non-US Plan.
All reports, forms and other documents required to be filed or advisable
to be filed with any government entity with respect to each Non-US Plan
have been timely filed and are accurate.
17. Employment Compensation. Schedule 3.17 contains a true and
correct list of all employees to whom a Fiskars Company is paying compensation,
including bonuses and incentives, at an annual rate in excess of Fifty Thousand
Dollars ($50,000) for services rendered or otherwise; and in the case of
salaried employees such list identifies the current annual rate of compensation
for each employee and in the case of hourly or commission employees identifies
certain reasonable ranges of rates and the number of employees falling within
each such range. [Schedule 3.17 to be delivered after signing]
18. Trade Rights. Schedule 3.18 lists all Trade Rights (as
defined below but excluding know-how and trade secrets) in which a Fiskars
Company now has any interest, specifying whether such Trade Rights are owned,
controlled, used or held (under license or otherwise) by the Fiskars Company,
and also indicating which of such Trade Rights are registered. All Trade Rights
shown as registered in Schedule 3.18 have been properly registered, all pending
registrations and applications have been properly made and filed and all
annuity, maintenance, renewal and other fees relating to registrations or
applications are current. To the Shareholders' and Company's knowledge, no
Fiskars Company is infringing or has infringed any Trade Rights of another in
the operation of the Business nor, to the Shareholders' and Company's knowledge,
is any other person infringing the Trade Rights of a Fiskars Company. Except as
set forth on Schedule 3.18, no Fiskars Company has granted any license or made
any assignment of any Trade Right listed on Schedule 3.18 nor does any Fiskars
Company pay any royalties or other consideration for the right to use any Trade
Rights of others. The consummation of the transactions contemplated hereby will
not alter or impair any Trade Rights owned or used by the Fiskars Companies in
any material adverse manner. As used herein, the term "Trade Rights" shall mean
and include: all patents, trademarks, trade names, service marks, copyrights and
any applications therefor, maskworks, trade secrets, know-how and internally
generated and developed computer software programs or applications (in both
source code and object code forms) that are used in and are material to the
Business as currently conducted. Trade Rights shall not include any trademark or
trade name rights in the word "Fiskars" or in any combination of words or
expression or logo containing "Fiskars" and any rights any of the Fiskars
Companies may have to use such trademark or trade name rights will be
specifically assigned to Fiskars as of the Closing pursuant to written
assignments reasonably acceptable to Fiskars. The Fiskars Companies are the sole
and exclusive owner or licensee of, with all right, title and interest in and to
(free and clear of any Liens), the Trade Rights (defined for this purpose to
exclude know-how and trade secrets), and have sole and exclusive rights (and are
not contractually obligated to pay any compensation to any third party in
respect thereof) to the use thereof or the material covered thereby in
connection with the services or products in respect of which the Trade Rights
(defined for this purpose to exclude know-how and trade secrets) are being used.
Except as disclosed in Schedule 3.18, no claims have been asserted or, to the
Company's or Shareholder's knowledge, are threatened by any person nor are there
any valid grounds, to the Company's or Shareholder's knowledge, for any bona
fide claims (i) to the effect that the manufacture, sale, licensing or use of
any of the products of the Fiskars Companies as now manufactured, sold or
licensed or used by any of the Fiskars Companies infringes on any copyright,
patent, trademark, service mark or trade secret, (ii) against the use by any of
the Fiskars Companies of any trademarks, service marks, trade names, trade
secrets, copyrights, patents, technology, know-how or computer software programs
and applications used in any of the Fiskars Companies' business as currently
conducted, or (iii) challenging the ownership by any of the Fiskars Companies,
the validity, or the effectiveness, of any of the Trade Rights. No Trade Right
or product of any of the Fiskars Companies is subject to any outstanding decree,
order, judgment, or stipulation restricting in any manner the licensing thereof
by any of the Fiskars Companies. The Company has a policy requiring certain
employees to execute a proprietary information and confidentiality agreement.
19. Product Liability. Schedule 3.19 sets forth a list of all
claims since January 1, 1992 arising from or alleged to arise from any injury to
person or property as a result of the use of any product manufactured and sold
by any of the Fiskars Companies.
20. Bank Accounts. Schedule 3.20 sets forth the names and
locations of all banks, trust companies, savings and loan associations and other
financial institutions at which the Fiskars Companies maintain a safe deposit
box, lock box or checking, savings, custodial or other account of any nature,
the type and number of each such account and the signatories therefor, a
description of any compensating balance arrangements, and the names of all
persons authorized to draw thereon, make withdrawals therefrom or have access
thereto.
21. Affiliates' Relationships to Fiskars Companies.
A. Contracts With Affiliates. All leases, contracts, agreements
or other arrangements between a Fiskars Company and any Affiliate that is
material to the Business or which involve payment by any of them of
$50,000 or more in the aggregate or which are not cancelable without
penalty within 180 days notice to terminate are described on Schedule
3.21(a) [delivered after signing].
B. No Adverse Interests. No Affiliate has any direct or
indirect interest in (i) any entity which does business with a Fiskars
Company or is competitive with the Business, or (ii) any property, asset
or right which is used by a Fiskars Company in the conduct of its business
that will not be assigned to the Fiskars Company as part of the Closing
other than trade name or trademark rights in the word "Fiskars," which are
the subject of Section 3.18 and 5.10.
C. Obligations. All obligations of any Affiliate to a Fiskars
Company, and all obligations of a Fiskars Company to any Affiliate, are
listed on Schedule 3.21.(c).
22. No Brokers or Finders. Neither Company nor the Shareholders,
nor any of their respective directors, officers, employees or agents have
retained, employed or used any broker or finder in connection with the
transaction provided for herein or in connection with the negotiation thereof
other than Raymond James & Associates, Inc., whose commissions will be paid by
the Shareholders.
23. Insurance Coverage. There is set forth in Schedule 3.23
hereto a complete and accurate list of all material policies of insurance
maintained by the Fiskars Companies, showing, among other things, the amount of
coverage, the company issuing the policy and the expiration date of each policy.
Such policies are, in the opinion of the Company and the Shareholders, adequate
and in full force and effect and such policies, or other policies covering the
same risks, have been in full force and effect, without gaps, continuously for
the past two (2) years. Copies of all current insurance policies of the Fiskars
Companies have been made available to Buyer for inspection. None of the Fiskars
Companies is in default under any of such policies, and none of the Fiskars
Companies has failed to give any notice or to present any claim under any such
policy in a due and timely fashion. Neither the Company or the Shareholders is
aware of any facts concerning any of the Fiskars Companies or their respective
business, operations, assets and liabilities, contingent or otherwise, upon
which an insurer might be justified in reducing or cancelling coverage on
existing policies.
24. Investment Representations. The representations and
warranties in this Section 3.24 are made by Fiskars exclusively and not by
Company or Holdings. Fiskars' financial condition is presently adequate to bear
the economic risks of owning Buyer's common stock and at the present time
Fiskars could afford a complete loss of such investment. Buyer's common stock is
being acquired by Fiskars for investment only and not with a current view to
resale or other disposition. Fiskars further represents that Fiskars has no
present or contemplated agreement, undertaking, arrangement, obligation,
indebtedness or commitment that requires the sale of Buyer's common stock except
as may be permitted under the Stockholder Agreement between Buyer and Fiskars.
Fiskars acknowledges that its right to sell any part or all of Buyer's common
stock is limited by and subject to the terms and provisions of the Stockholder
Agreement. In reaching the conclusion that Fiskars desires to acquire Buyer's
common stock as a result of the transactions contemplated by this Agreement,
Fiskars has carefully evaluated the financial resources and investment position
of Fiskars and the risks associated with the acquisition and acknowledges that
Fiskars is able to bear the economic risks of such investment.
25. Limitations on Warranties and Disclaimers. The
representations and warranties set forth in this Article 3 and the schedules,
certificates and statements provided pursuant hereto are the only
representations and warranties made by Company and Shareholders with respect to
the Business, the Fiskars Companies or their assets, liabilities, operations and
financial condition. EXCEPT AS SPECIFICALLY SET FORTH HEREIN, ALL WARRANTIES,
EXPRESS OR IMPLIED, ARE HEREBY DISCLAIMED AND EXCLUDED, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT
SHALL COMPANY OR SHAREHOLDERS BE LIABLE FOR ANY OBLIGATIONS OR LIABILITIES WITH
RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY EXCEPT FOR THE REMEDIES,
INCLUDING INDEMNIFICATION, SPECIFICALLY SET FORTH IN THIS AGREEMENT, WHETHER
ARISING OUT OF BREACH OF CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE AND
STRICT LIABILITY) OR OTHER THEORIES OF LAW. UNDER NO CIRCUMSTANCES SHALL COMPANY
OR SHAREHOLDERS BE LIABLE TO BUYER FOR AND COMPANY AND SHAREHOLDERS HEREBY
SPECIFICALLY DISCLAIM ALL CONSEQUENTIAL, INCIDENTAL, PUNITIVE AND CONTINGENT
DAMAGES WHATSOEVER ARISING FROM BREACH OF THIS AGREEMENT. THE COMPANY AND
SHAREHOLDERS MAKE NO REPRESENTATION OR WARRANTY AS TO THE ACCURACY OR
RELIABILITY OF ANY FORECASTS OF REVENUES, SALES, EXPENSES OR PROFITS OF THE
BUSINESS.
<PAGE>
_ REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties to the
Shareholders, each of which is true and correct on the date hereof, shall remain
true and correct to and including the Closing Date and shall survive the Closing
of the transactions provided for herein for the period provided for in Section
8.5(a).
1. Corporate.
A. Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
B. Corporate Power. Buyer has all requisite corporate power to
enter into this Agreement and the other documents and instruments to be
executed and delivered by Buyer and to carry out the transactions
contemplated hereby and thereby.
2. Authority. The execution and delivery of this Agreement and
the other documents and instruments to be executed and delivered by Buyer
pursuant hereto and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by the Board of Directors of Buyer. No other
corporate act or proceeding on the part of Buyer or its shareholders is
necessary to authorize this Agreement or the other documents and instruments to
be executed and delivered by Buyer pursuant hereto or the consummation of the
transactions contemplated hereby and thereby. This Agreement constitutes, and
when executed and delivered, the other documents and instruments to be executed
and delivered by Buyer pursuant hereto will constitute, valid and binding
agreements of Buyer, enforceable in accordance with their respective terms,
except as such may be limited by bankruptcy, insolvency, reorganization or other
laws affecting creditors' rights generally, and by general equitable principles.
3. No Violation. Except as set forth on Schedule 4.3, neither the
execution and delivery of this Agreement or the Ancillary Instruments nor the
consummation by Buyer of the transactions contemplated hereby and thereby (a)
will violate any Laws and Orders, (b) except for applicable requirements of the
HSR Act, will require any authorization, consent, approval, exemption or other
action by or notice to any Government Entity (including, without limitation,
under any "plant-closing" or similar law), or (c) will constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or will result in the termination of, any contract, commitment,
understanding, arrangement, agreement or restriction of any kind or character to
which the Buyer is a party or by which the Buyer may be bound or affected, in
any case where such default, termination, acceleration would have a material
effect on the ability of Buyer to consummate the transactions contemplated
hereby.
<PAGE>
4. No Brokers or Finders. Neither Buyer nor any of its directors,
officers, employees or agents have retained, employed or used any broker or
finder in connection with the transaction provided for herein or in connection
with the negotiation thereof, other than S.G. Warburg & Co., Inc., whose
commissions will be paid by Buyer.
5. Investment Representations. Buyer's financial condition is
presently adequate to bear the economic risks of this investment and at the
present time Buyer could afford a complete loss of such investment (including
certain additional amounts under Wisconsin Statutes Section 180.0622(2)(b)). The
Shares are being acquired by Buyer for investment only and not with a view to
resale or other distribution. Buyer further represents that Buyer has no present
or contemplated agreement, undertaking, arrangement, obligation, indebtedness or
commitment providing for or which is likely to compel a disposition in any
manner of the Company, that Buyer is not aware of any circumstances presently in
existence which are likely to promote in the future any disposition by Buyer of
the Company, and that Buyer does not presently contemplate any sale of any part
of the Company upon the occurrence or nonoccurrence of any predetermined or
undetermined event or circumstance. In reaching the conclusion that Buyer
desires to purchase the stock of Company, Buyer has carefully evaluated the
financial resources and investment position of Buyer and the risks associated
with the acquisition and acknowledges that Buyer is able to bear the economic
risks of such investment.
6. Buyer's Business Investigation. Without limiting Buyer's
rights under Section 6.5 of this Agreement, Buyer acknowledges that it has
conducted an investigation of the Fiskars Companies, their assets, liabilities,
operations and financial conditions, and the Business, it has deemed necessary
and advisable for purposes of determining to enter into this Agreement and
Ancillary Instruments. Except to the extent of the express representations,
warranties and agreements contained in this Agreement, Buyer is purchasing the
Shares in reliance upon its own investigation of the Fiskars Companies. Buyer
agrees and acknowledges that it is experienced in the manufacturing business and
has the knowledge and ability to conduct a full investigation of the Fiskars
Companies and to evaluate the Fiskars Companies' business, operations, financial
conditions, assets and liabilities. BUYER EXPRESSLY REPRESENTS AND WARRANTS THAT
IT HAS NOT RELIED ON ANY PROJECTIONS OR REPRESENTATIONS (ORAL OR WRITTEN) EXCEPT
AS SET OUT HEREIN AND IN THE ANCILLARY INSTRUMENTS, WHICH BUYER HAS OBTAINED
FROM THE COMPANY, SHAREHOLDERS, ITS AFFILIATED COMPANIES OR ANY OF THEIR
RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS OR THE FISKARS COMPANIES.
7. Knowledge of Buyer. Buyer has no actual knowledge of a breach
of any representation, warranty or covenant of Company and Shareholders
contained herein which gives rise, or following the Closing would give rise, to
an indemnification claim under Section 8.1.
8. Sufficient Financing. Buyer has sufficient funds or financing
in place to fund the Purchase Price to be paid at Closing to Shareholders for
the Shares.
_ COVENANTS
1. Noncompetition; Confidentiality; Non-Solicitation. Subject
to the Closing, and as an inducement to Buyer to execute this Agreement and
complete the transactions contemplated hereby, and in order to preserve the
goodwill associated with the Business, each Shareholder hereby covenants and
agrees as follows:
A. Covenant Not to Compete. For a period of four (4) years from
the Closing Date (the Non-Compete Period), no Shareholder will, directly
or indirectly, engage in, continue in or carry on any business which is
competitive with the Business, including owning or controlling any
financial interest in any corporation, partnership, firm or other form of
business organization which is so engaged; provided, however, that the
foregoing shall not prohibit the ownership of securities of Buyer as
herein contemplated or in other corporations which are listed on a
national securities exchange or traded in the national over-the-counter
market in an amount which shall not exceed 5% of the outstanding shares of
any such corporation. Buyer confirms and agrees that Fiskars, Inc., an
affiliate of the Shareholders, currently designs, manufactures and sells
surge protectors and the other products identified in Schedule 5.1.(a) and
this Section 5.1 is not intended in any manner to limit or restrict
Fiskars, Inc. or any other affiliate of the Shareholders from conducting
any part of that business. The parties agree that the geographic scope of
this covenant not to compete shall extend worldwide. The parties agree
that Buyer may sell, assign or otherwise transfer this covenant not to
compete, in whole or in part, to any person, corporation, firm or entity
that purchases all or part of the business of the Fiskars Companies. In
the event a court of competent jurisdiction determines that the provisions
of this covenant not to compete are excessively broad as to duration,
geographical scope or activity, it is expressly agreed that this covenant
not to compete shall be construed so that the remaining provisions shall
not be affected, but shall remain in full force and effect, and any such
over broad provisions shall be deemed, without further action on the part
of any person, to be modified, amended and/or limited, but only to the
extent necessary to render the same valid and enforceable in such
jurisdiction. As of the Closing, Buyer and Fiskars will enter into the
form of Non-Compete Agreement annexed hereto as Schedule 5.1(a)(1) which
will be consistent with the foregoing provisions.
B. Covenant of Confidentiality. No Shareholder shall at any time
subsequent to the Closing, except as explicitly requested by Buyer, (i)
use for any purpose, (ii) disclose to any person, or (iii) keep or make
copies of documents, tapes, discs or programs containing, any confidential
information concerning the Fiskars Companies. For purposes hereof,
"confidential information" shall mean and include, without limitation, all
Trade Rights in which a Fiskars Company has an interest (as limited by
Sections 3.18 and 5.10), and all customer lists and customer information.
C. Non-Solicitation of Employees. Unless restricted by applicable
law, during the Non-Compete Period neither Shareholder will, directly or
indirectly, hire or offer employment to any employee of any of the Fiskars
Companies whose employment is continued by any of the Fiskars Companies or
the Buyer after the Closing Date unless such Fiskars Company or the Buyer
first terminates the employment of such employee.
D. Equitable Relief for Violations. Each Shareholder agrees that
the provisions and restrictions contained in this Section 5.1 are
necessary to protect the legitimate continuing interests of Buyer and
Company in acquiring the Shares, and that any violation or breach of these
provisions will result in irreparable injury to Buyer for which a remedy
at law would be inadequate and that, in addition to any relief at law
which may be available to Buyer for such violation or breach and
regardless of any other provision contained in this Agreement, Buyer shall
be entitled to injunctive and other equitable relief as a court may grant
after considering the intent of this Section 5.1.
2. Hart-Scott-Rodino Act Filings. To the extent such filings have
not been completed prior to the execution of this Agreement, each of the
Shareholders shall cooperate with Buyer in its efforts to comply with the HSR
Act. Prior to making any communication, written or oral, with the Federal Trade
Commission, the Antitrust Division of the federal Department of Justice or any
other governmental agency or authority or members of their respective staffs
with respect to this Agreement or the transactions contemplated hereby, the
parties shall consult each other.
3. Access to Information and Records. During the period prior to
the Closing, Shareholders shall cause the Fiskars Companies to give Buyer, its
counsel, accountants and other representatives (i) access during normal business
hours to all of the properties, books, records, contracts and documents of the
Fiskars Companies for the purpose of such inspection, investigation and testing
as Buyer deems appropriate (and Company shall furnish or cause to be furnished
to Buyer and its representatives all information with respect to the business
and affairs of Company as Buyer may request), and (ii) access to employees,
agents and representatives for the purposes of such meetings and communications
as Buyer reasonably desires.
4. Conduct of Business Pending the Closing. From the date hereof
until the Closing, except as otherwise approved in writing by the Buyer,
Shareholders shall use their best efforts to cause each of the following to
occur:
A. No Changes. The Fiskars Companies will carry on the Business
in the same manner as heretofore and will not make or institute any
material changes in its methods of purchase, sale, management, accounting
or operation, except for the dividends disclosed in Schedule 3.6(f) and
for the redemptions described in Section 1.2 hereof.
B. Maintain Organization. Company will use its reasonable
efforts to preserve the business organization of the Fiskars Companies
intact, and to preserve present relationships with employees, suppliers,
customers and others having business relationships with the Fiskars
Companies.
C. No Breach. Company and Shareholders will not do or omit any
act which may cause a breach of a contract, commitment or obligation where
such breach would have a Material Adverse Effect.
D. No Material Contracts. No contract or commitment will be
entered into, and no purchase of raw materials or supplies and no lease,
license, encumbrance, sale or disposition of assets, goods or services
(real, personal, or mixed, tangible or intangible) will be made, by or on
behalf of a Fiskars Company, except contracts, commitments, purchases or
sales which are in the ordinary course of business and consistent with
past practice.
E. No Corporate Changes. Company shall not amend its Articles of
Incorporation or By-Laws or make any changes in authorized or issued
capital stock.
F. Maintenance of Insurance. Company shall maintain all of the
insurance in effect as of the date hereof for the Fiskars Companies.
G. Maintenance of Property. The Fiskars Companies shall use,
operate, maintain and repair all property of the Fiskars Companies in a
manner consistent with past practice.
H. No Transfer of Common Shares. No Shareholder shall transfer
or attempt to transfer any of the Common Shares except to Buyer pursuant
hereto; and Company shall refuse to accept any certificates for Common
Shares to be transferred or otherwise to allow such transfers to occur
upon its books.
I. Trade Rights. Transfer or license to any person or entity or
otherwise extend, amend or modify in any material respect any Trade Rights
other than licenses to customers in the ordinary course of business
consistent with past practices;
J. Indebtedness. Incur any indebtedness for borrowed money
(other than pursuant to existing credit facilities in the ordinary course
of business or as described in Section 1.2(a) hereof) or guarantee any
such indebtedness or issue or sell any debt securities or rights to
acquire debt securities of any of the Fiskars Companies or guarantee any
debt of others;
K. Revalue Assets. Revalue in any material respect any of the
Fiskars Companies' assets, including without limitation writing down the
value of inventory or writing off notes or accounts receivable other than
in the ordinary course of business consistent with past practice;
L. Taxes. Make or change any material election in respect of
Taxes other than in the ordinary course and consistent with past practice,
adopt or change any accounting method in respect of Taxes, file any
material return or any amendment to a material return, enter into any
closing agreement, settle any claim or assessment in respect of Taxes
(except settlements effected solely through payment of immaterial sums of
money), or consent to any extension or waiver of the limitation period
applicable to any claim or assessment in respect of Taxes;
M. Employee Compensation. Grant any severance or termination pay
(i) to any officer or (ii) to any other employee for which any Fiskars
Company would have any liability, except payments consistent with past
practices or pursuant to written agreements outstanding, or policies
existing, on the date hereof or as previously disclosed to Buyer;
N. Stock Issuance. Issue, grant or sell or authorize or propose
the issuance, grant or sale of, any shares of its capital stock of any
class or securities convertible into, or subscriptions, rights, warrants
or options to acquire, or enter into other agreements or commitments of
any character obligating it to issue, any such shares or other convertible
securities;
O. Other Action. Take, or agree to take, any of the actions
described in Sections 5.4(a) through (n) above, or any action which would
cause or would be reasonably likely to cause any of the conditions set
forth in Article 6 not to be satisfied.
5. Consents. Company and Shareholders will use their best efforts
prior to Closing to obtain all consents that are material to the Business and
necessary for the consummation of the transactions contemplated hereby. Buyer
shall use its reasonable best efforts in response to any reasonable request of
Company to assist Company in obtaining any consents of third parties necessary
for the consummation of the transactions contemplated by this Agreement.
6. Access to and Retention of Records. Following the Closing
Date, Buyer and Shareholders shall afford to each other and their duly
authorized representatives access at all reasonable times during normal business
hours to all books, records, documents and other information concerning the
Fiskars Companies as Buyer or Shareholders, as the case may be, shall request in
order to defend against, oppose or otherwise investigate any claims or potential
claims against Buyer, the Fiskars Companies or Shareholders, as the case may be,
arising as a result of any acts, events or operations prior to the Closing Date
or as a result of this Agreement (including any claims for indemnification under
Article 8). Buyer and Shareholders each agree, and Buyer agrees to cause the
Fiskars Companies, to preserve and keep the records related to the Fiskars
Companies held by such party for a period of six (6) years from the Closing, or
for any longer period as may be required by law or any government agency or
ongoing litigation, and shall make such records and personnel available, in the
case of Buyer, to Shareholders, or in the case of Shareholders, to Buyer as may
be reasonably required in connection with, among other things, any insurance
claims, legal proceedings or governmental investigations. If a party wishes to
destroy such records at that time, it first shall give ninety (90) days prior
written notice to the other party and the other party shall have the right at
their option and expense, upon prior written notice given within that ninety
(90) day period, to take possession of the records within one-hundred eighty
(180) days after the date of the initial notice.
7. Availability of Personnel. Buyer and Shareholders shall
afford, and shall cause their respective affiliates to afford, to each other on
a reasonable basis, but at no charge, personnel of Buyer, the Fiskars Companies
and Shareholders, as the case may be, as necessary to permit Buyer or
Shareholders, as the case may be, to defend against, oppose or otherwise
investigate any potential claim against Buyer or Shareholders, as the case may
be, in connection with the business or operations of the Company or
indemnifications provided hereunder.
8. Tax Matters.
A. Returns. Shareholders shall cause the Fiskars Companies to
prepare and file all federal, state, local or foreign returns required to
be filed relating to tax periods ending prior to the Closing Date. After
the Closing Date, Buyer shall cause the Fiskars Companies to prepare and
file all federal, state, local or foreign returns required to be filed
relating to tax periods beginning on or after the Closing Date.
B. Access. Buyer shall make available to Shareholders, or shall
cause the Fiskars Companies to make available to Shareholders, as may
reasonably be requested by Shareholders, any and all records and/or
employees necessary or useful to Shareholders for (i) the preparation of
any tax returns required to be filed by Shareholders or (ii) the defense
of any audit, examination, administrative appeal or litigation of any tax
return in which the results of operations of the Fiskars Companies were
included. In addition, to the extent Shareholders need any information
concerning the Fiskars Companies, including financial schedules, for the
purpose of preparing or filing federal, state, local or foreign tax
returns or reports, or for any other business purpose, Buyer agrees to
furnish or cause the Fiskars Companies to furnish to Shareholders with
such information as shall be reasonably requested by Shareholders within
fifteen (15) calendar days of such request.
Shareholders shall make available to Buyer or the Fiskars
Companies, as may reasonably be requested by Buyer or the Fiskars
Companies, any and all records and/or employees retained by Shareholders
with respect to the Fiskars Companies necessary or useful to Buyer or the
Fiskars Companies for (i) the preparation of any tax returns required to
be filed by Buyer or the Fiskars Companies or (ii) the defense of any
audit, examination, administrative appeal or litigation of any tax return
in which the results of operations of the Fiskars Companies were included.
In addition, to the extent Buyer or the Fiskars Companies needs any
information concerning the Fiskars Companies which is in the possession of
Shareholders for the purpose of preparing or filing federal, state, local
or foreign returns or reports, or for any other business purpose,
Shareholders agree to furnish Buyer or the Fiskars Companies with such
information as shall be reasonably requested by Buyer or the Fiskars
Companies within fifteen (15) calendar days at such request.
9. Corporate Identity. Buyer acknowledges that after the Closing
Date neither the Fiskars Companies nor Buyer has any right to use the name,
mark, trade name or trademark "Fiskars," the Fiskars corporate symbols or logos,
or any feature or mark similar to any of the foregoing either alone or in any
combination, all rights to which and the rights represented thereby and
pertaining thereto are being retained by Shareholders or their affiliates.
Within thirty (30) days following the Closing Date, Buyer shall cause each of
the Fiskars Companies that includes "Fiskars" in its corporate or business name
to change such name to one that does not include such word or expression. Buyer
agrees to deliver true and correct copies of the instruments effecting each name
change (showing public filing data, if any) to Shareholders within five (5)
business days following such name change.
10. Transitional Use of Trademark. Fiskars agrees to grant to FPS
Power Systems Oy Ab ("FPS") the right to use the trademark "Fiskars"
("Trademark") solely in connection with the operation of the Business in certain
countries for a period of twenty-four (24) months from the Closing Date, with an
option to extend the license for an additional twelve (12) months. During this
period of transitional use, FPS shall not make or commission any new uses of the
Trademark and shall have no other right to use the Trademark. FPS' limited right
to use the Trademark shall be subject to the terms of the License Agreement
attached hereto as Schedule 5.10.
11. Plant Closing. Buyer shall defend and indemnify Shareholders,
their officers, directors, agents, and Affiliates, against any claim, damage, or
expense arising from the failure of any Fiskars Company to comply with the
Worker Adjustment and Retraining Notification Act ("WARN") for a company "plant
closing" or "mass layoff" (as those terms are defined in the Act) occurring
after the Closing Date or any state, local or foreign law applicable to such
matters.
12. Other Action. Each of the parties hereto shall use its best
efforts to cause the fulfillment at the earliest practicable date of all of the
conditions to the parties' obligations to consummate the transactions
contemplated in this Agreement.
13. Disclosure Schedule. Shareholders and Company shall have a
continuing obligation to promptly notify Buyer in writing with respect to any
matter hereafter arising or discovered which, if existing or known at the date
of this Agreement, would have been required to be set forth or described in the
Disclosure Schedule.
14. Notification of Breach. Buyer shall promptly notify
Shareholders and the Company of any information which makes, or if known to
Shareholders or the Company would make, any representation, warranty or covenant
of Shareholders or Company contained herein untrue.
15. Exclusivity. Unless and until this Agreement shall have been
terminated by either party pursuant to Article 10, Shareholders shall not,
directly or indirectly, (i) solicit, initiate or encourage submission of
proposals or offers from any person relating to any acquisition or purchase of
all or substantially all of the assets of or any equity interest in any of the
Fiskars Companies or any merger, consolidation, business combination, purchase
of shares or similar transaction with any of the Fiskars Companies, or (ii)
participating in any discussions or negotiations with any third party regarding
any of the foregoing. The Shareholders will not furnish any information
concerning any Fiskars Company to any person other than Buyer for the purpose
of, or with the intent of, permitting such person or entity to evaluate a
possible acquisition of the Business, assets or capital stock of a Fiskars
Company, in whole or in part.
16. Release of Intercompany Payables. Effective upon the Closing,
the Shareholders and each Affiliate not constituting a Fiskars Company release
and discharge each Fiskars Company from all liabilities for intercompany
payables and any other amounts owing from any Fiskars Company to either
Shareholders or any Affiliates not constituting a Fiskars Company except for
payments provided hereunder and except for those liabilities or payables
reflected on the Closing Date Balance Sheet.
_ CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Each and every obligation of Buyer to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the Closing of each of
the following conditions:
1. Representations and Warranties. Each of the representations
and warranties made by Shareholders and Company in this Agreement, and the
statements contained in the Disclosure Schedule, shall be (i) true and correct
in all material respects when made, and (ii) shall be true and correct at and as
of the Closing Date as though such representations and warranties were made or
given on and as of the Closing Date, except where the failure of such
representations or warranties to be true, complete and correct would not have a
Material Adverse Effect.
2. Compliance With Agreement. Shareholders and Company shall have
in all material respects complied with all of their agreements and obligations
under this Agreement which are to be complied with by them prior to or on the
Closing Date, including the delivery of the closing documents specified in
Section 9.1, except where the failure of such compliance would not have a
Material Adverse Effect.
3. Consents and Approvals. All approvals, consents (including
consents to the assignment of all material contracts of the Business) and
waivers that are required to effect the transactions contemplated hereby shall
have been received, and executed counterparts thereof shall have been delivered
to Buyer, except where the failure to obtain any such approvals, consents or
waivers would not have a Material Adverse Effect or where such failure would not
have a material effect on the ability of the parties to consummate the
transactions contemplated hereby.
4. Hart-Scott-Rodino Waiting Period. All applicable waiting
periods related to the HSR Act shall have expired.
5. Buyer's Due Diligence Investigation. Buyer's pre-closing due
diligence investigation of the Fiskars Companies shall not have uncovered
material facts that were not disclosed in this Agreement or the Disclosure
Schedules (the non-English documents referenced in the first paragraph of
Section 3 are deemed not to be disclosed for this purpose until translated into
or summarized in English) as of the date hereof and that would have a Material
Adverse Effect.
6. No Litigation. No Order shall have been issued or entered
which would be violated by the consummation of the transactions contemplated by
this Agreement and no litigation shall have been commenced seeking to restrain
or prohibit, this Agreement or the transactions contemplated hereby.
_ CONDITIONS PRECEDENT TO SHAREHOLDERS' OBLIGATIONS
Each and every obligation of Shareholders to be performed on the
Closing Date shall be subject to the satisfaction prior to or at the Closing of
the following conditions:
1. Representations and Warranties. Each of the representations
and warranties made by Buyer in this Agreement shall be true and correct in all
material respects when made and shall be true and correct in all material
respects at and as of the Closing Date as though such representations and
warranties were made or given on and as of the Closing Date.
2. Compliance With Agreement. Buyer shall have in all material
respects complied with all of Buyer's agreements and obligations under this
Agreement which are to be complied with by Buyer prior to or on the Closing
Date, including the delivery of the closing documents specified in Section 9.2.
3. Hart-Scott-Rodino Waiting Period. All applicable waiting
periods related to the HSR Act shall have expired.
4. Release of Guarantees. All guarantees or other contingent
obligations of the Shareholders or their Affiliates other than the Fiskars
Companies for any liability or obligation of a Fiskars Company shall have been
released or terminated.
5. Terminate all Licenses. Except for the license described in
Schedule 5.10 hereto, all licenses of "Fiskars" trade names or trademarks with
any of the Fiskars Companies shall have been terminated and the Fiskars
Companies shall have assigned any rights they may have acquired in the Fiskars
trade names or trademarks to Fiskars pursuant to written instruments reasonably
acceptable to Fiskars.
6. No Litigation. No Order shall have been issued or entered
which would be violated by the consummation of the transactions contemplated by
this Agreement and no litigation shall have been commenced seeking to restrain
or prohibit, this Agreement or the transactions contemplated hereby.
_ INDEMNIFICATION
1. By Shareholders. Subject to the terms and conditions of this
Article 8, each Shareholder, jointly and severally, hereby agrees to indemnify,
defend and hold harmless Buyer or any of the Fiskars Companies from and against
all Claims asserted against, resulting to, imposed upon, or incurred by Buyer or
any of the Fiskars Companies by reason of, arising out of or resulting from (a)
the inaccuracy or breach of any representation or warranty of any Shareholder or
Company contained in or made pursuant to this Agreement, or (b) the breach of
any covenant of any Shareholder or the Company contained in this Agreement. As
used in this Article 8, the term "Claim" shall include (i) all losses, direct
damages (excluding any incidental, consequential, punitive or contingent
damages), judgments, awards, settlements, costs and expenses (including, without
limitation, interest, penalties, court costs and reasonable attorneys' fees and
expenses) actually suffered; and (ii) all suits, actions, causes of action and
proceedings.
2. By Buyer. Subject to the terms and conditions of this Article
8, Buyer hereby agrees to indemnify, defend and hold harmless each Shareholder
from and against all Claims asserted against, resulting to, imposed upon or
incurred by any such person, directly or indirectly, by reason of or resulting
from (a) the inaccuracy or breach of any representation or warranty of Buyer
contained in or made pursuant to this Agreement, or (b) the breach of any
covenant of Buyer contained in this Agreement.
3. Indemnification of Third-Party Claims. The obligations and
liabilities of any party to indemnify any other under this Article 8 with
respect to Claims relating to third parties shall be subject to the following
terms and conditions:
A. Notice and Defense. The party or parties to be indemnified
(whether one or more, the "Indemnified Party") will give the party from
whom indemnification is sought (the "Indemnifying Party") prompt written
notice of any such Claim, and the Indemnifying Party will undertake the
defense thereof by representatives chosen by it. Notwithstanding the
foregoing, the failure of an Indemnified Party to give prompt written
notice of a Claim shall not relieve the Indemnifying party of its
indemnification obligations hereunder unless such failure shall result in
material prejudice to the Indemnifying Party. So long as the Indemnifying
Party is defending any such Claim actively and in good faith, the
Indemnified Party shall not settle such Claim. The Indemnified Party shall
make available to the Indemnifying Party or its representatives all
records and other materials required by them and in the possession or
under the control of the Indemnified Party, for the use of the
Indemnifying Party and its representatives in defending any such Claim,
and shall in other respects give reasonable cooperation in such defense.
B. Failure to Defend. If the Indemnifying Party, within a
reasonable time after notice of any such Claim, fails to defend such Claim
actively and in good faith, the Indemnified Party will (upon further
notice) have the right to undertake the defense, compromise or settlement
of such Claim or consent to the entry of a judgment with respect to such
Claim, on behalf of and for the account and risk of the Indemnifying
Party, and the Indemnifying Party shall thereafter have no right to
challenge the Indemnified Party's defense, compromise, settlement or
consent to judgment therein.
C. Indemnified Party's Rights. Anything in this Section 8.3 to
the contrary notwithstanding, (i) if there is a reasonable probability
that a Claim may materially and adversely affect the Indemnified Party
other than as a result of money damages or other money payments which are
less than $10,000,000, the Indemnified Party shall have the right to
defend, compromise or settle such Claim and (ii) with respect to matters
involving third party claimants or plaintiffs, the Indemnifying Party
shall not, without the written consent of the Indemnified Party, settle or
compromise any Claim or consent to the entry of any judgment which does
not include as an unconditional term thereof the giving by the claimant or
the plaintiff to the Indemnified Party of a release from all liability in
respect of such Claim.
4. Payment. Upon judgment, determination, settlement or
compromise of any third party Claim, the Indemnifying Party shall pay promptly
on behalf of the Indemnified Party, and/or to the Indemnified Party in
reimbursement of any amount theretofor required to be paid by it, the amount so
determined by judgment, determination, settlement or compromise and all other
Claims of the Indemnified Party with respect thereto, unless in the case of a
judgment an appeal is made from the judgment. Upon the payment in full by the
Indemnifying Party of such amounts, the Indemnifying Party shall succeed to the
rights of such Indemnified Party, to the extent not waived in settlement,
against the third party who made such third party Claim. The Indemnified Party
may not set off any amount owed to the Indemnifying Party by the Indemnified
Party for any indemnification amount hereunder.
5. Limitations on Indemnification.
A. Time Limitation. No claim or action shall be brought by Buyer
under this Article 8 (i) for a breach of the representations and
warranties made in Sections 3.10, 3.11 and 3.12 after the lapse of three
(3) years following the Closing, (ii) for a breach of the representation
and warranty made in Section 3.5 after the lapse of seven (7) years
following the Closing, and (iii) for breach of any other representation or
warranty after the lapse of eighteen (18) months following the Closing.
Any claim made hereunder for breach of a representation or warranty served
in accordance with the notice provisions of Section 11.7 hereof prior to
the termination of the survival period for such claim shall be preserved
despite the subsequent termination of such survival period.
Notwithstanding the foregoing, there shall be no time limitations on
claims or actions brought by Buyer under this Article 8 for a breach of
the representations and warranties made in Sections 3.1(e) or 3.2.
B. Amount Limitation. Buyer shall not be entitled to
indemnification under this Article 8 for breach of a representation or
warranty unless and then only to the extent the aggregate of the
Shareholders' indemnification obligations to the Buyer pursuant to this
Article 8 exceeds Two Million Five Hundred Thousand Dollars ($2,500,000),
provided that the foregoing limitation shall not apply to claims resulting
from breach of Sections 3.1(d), (e), (f), (g), (h), 3.2 and 3.5 hereof.
The Shareholders' aggregate liability for indemnification claims hereunder
shall be limited to fifty percent (50%) of the Purchase Price.
C. Reductions. Any determination of damages actually incurred by
an Indemnified Party shall be: (i) net of a reasonable estimate of the
present value of any tax benefits realized or reasonably expected to be
realized by the Indemnified Party by reason of the facts and circumstances
giving rise to the Indemnifying Party's liability (after taking into
consideration the tax effect of the receipt by the Indemnified Party of
the indemnification payment); and (ii) net of any insurance proceeds
received by the Indemnified Party in connection with the facts giving rise
to the right of indemnification. The parties agree to use their best
efforts to make claims on and pursue recovery with respect to all
insurance on account of such matters.
D. Certain Claims Waived. Buyer hereby waives any right it may
have to file a claim for reimbursement or indemnity against Shareholders
under the terms of this Agreement concerning any matter with respect to
which it is ultimately determined that the employees, agents or
representatives of Buyer listed in Schedule 8.5(d) who participated in a
due diligence investigation of the Company or in any of the management
presentations conducted by the Company (i) has actual personal knowledge
prior to the Closing Date as a result of such due diligence investigation
or management presentations of specific facts which clearly and obviously
relate to such matter and constitute a breach by a Shareholder of a
representation or warranty made under this Agreement and (ii) fails to
disclose such facts to Shareholders to give Shareholders a reasonable
opportunity to cure such breach prior to the Closing Date. Shareholders
shall have the burden of proof with respect to all facts triggering the
waiver under this Section 8.5(d).
E. Other Remedies. Nothing in this Agreement shall limit a
party's remedies for intentional misrepresentation or right to seek
injunctive relief or specific performance, for the breach of any
representation, warranty or covenant by any other party under this
Agreement.
_ CLOSING
The closing of this transaction (the "Closing") shall take place
at the offices of the Company, 2727 Kurtz Street, San Diego, California, at
close of business on January 4, 1996, or at such other time and place as the
parties hereto shall agree upon. Such date is referred to in this Agreement as
the "Closing Date."
1. Documents to be Delivered by Company and Shareholders. At the
Closing, Company and Shareholders shall deliver to Buyer the following
documents, in each case duly executed or otherwise in proper form:
A. Stock Certificate(s). A stock certificate or certificates
representing the Common Shares, duly endorsed for transfer or with duly
executed stock powers attached.
B. Compliance Certificate. A certificate signed by each
Shareholder that each of the representations and warranties made by
Shareholders and the Company in this Agreement is true and correct in all
material respects on and as of the Closing Date as required by Section
6.1, and that Company and Shareholders have complied with all of Company's
and Shareholders' obligations under this Agreement which are to be
complied with on or prior to the Closing Date as required by Section 6.2.
C. Opinion of Counsel. A written opinion of Foley & Lardner,
counsel to Company and Shareholders, dated as of the Closing Date,
addressed to Buyer, substantially in the form of Schedule 9.1(c)hereto.
D. Certified Resolutions. Certified copies of the resolutions of
the Board of Directors of each Shareholder authorizing and approving this
Agreement and the consummation of the transactions contemplated by this
Agreement.
E. Incumbency Certificate. Incumbency certificates relating to
each person executing (as a corporate officer or otherwise on behalf of
another person) any document executed and delivered to Buyer pursuant to
the terms hereof.
F. Shareholder Agreement. Buyer's form of Shareholder Agreement
substantially in the form of Schedule 9.1(f)hereto.
G. Other Documents. All other documents, instruments or writings
required to be delivered to Buyer at or prior to the Closing pursuant to
this Agreement, including, without limitation, the Non-Compete Agreement
in the form of Schedule 5.1(a)(1)hereto and the License Agreement in the
form of Schedule 5.10 hereto, and such other certificates of authority and
documents as Buyer may reasonably request.
2. Items to be Delivered by Buyer. At the Closing, Buyer shall
deliver or cause to be delivered to Shareholders the following items, in each
case duly executed or otherwise in proper form:
A. Wire Transfers. To Fiskars and Holdings, wire transfers of
the amounts required by Section 2.2 hereof.
B. Buyer's Stock Certificates. A stock certificate or
certificates representing the Buyer's stock to be issued and delivered to
Fiskars as provided in Section 2.1(d) hereof.
C. Compliance Certificate. A certificate signed by Buyer that
the representations and warranties made by Buyer in this Agreement are true and
correct on and as of the Closing Date as required by Section 7.1, and that Buyer
has complied with all of Buyer's obligations under this Agreement which are to
be performed or complied with on or prior to the Closing Date as required by
Section 7.2.
D. Opinion of Counsel. A written opinion of Brobeck Phleger &
Harrison, counsel to Buyer, dated as of the Closing Date, addressed to Company,
substantially in the form of Schedule 9.2(d) hereto.
E. Certified Resolutions. A certified copy of the resolutions of
the Board of Directors of Buyer authorizing and approving this Agreement and the
consummation of the transactions contemplated by this Agreement.
F. Incumbency Certificate. Incumbency certificates relating to
each person executing any document executed and delivered to Company or
Shareholders by Buyer pursuant to the terms hereof.
G. Trademark Assignments. Assignments of any trademark or trade
name rights any of the Fiskars Companies may have in the "Fiskars" trade name or
trademark as required by Section 3.18.
H. Other Documents. All other documents, instruments or writings
required to be delivered to the Shareholders at or prior to the Closing pursuant
to this Agreement, including, without limitation, the Non-Compete Agreement in
the form of Schedule 5.1(a)(1) hereto and the License Agreement in the form of
Schedule 5.10 hereto, and such other certificates of authority and documents as
the Shareholders may reasonably request.
_ TERMINATION
1. Right of Termination Without Breach. This
Agreement may be terminated without further liability of any party at any
time prior to the Closing:
A. by mutual written agreement of Buyer and Shareholders, or
B. by either party if the Closing shall not have occurred on or
before February 23, 1996, provided the terminating party has not, through
breach of a representation, warranty or covenant, prevented the Closing
from occurring on or before such date.
2. Termination for Breach.
A. Termination by Buyer. If there has been a failure of
satisfaction of a condition to the obligations of Buyer as provided in
Article 6 hereof which has not been waived in writing by Buyer, then Buyer
shall notify Shareholders of such failure to give Shareholders the
opportunity, for thirty (30) business days following such notice, to cure
such failure if reasonably capable of being cured. If Shareholders are
unable to cure such failure within such thirty-day period, then, subject
to the last sentence of this Section, Buyer may, by written notice to
Shareholders at any time prior to Closing that such failure is continuing,
terminate this Agreement with the effect set forth in Section 10.2.(c)
hereof. Buyer shall have a right to terminate this Agreement for breach by
the Company or Shareholders of their representations and warranties herein
only with respect to those breaches which would have a Material Adverse
Effect and then only if such breaches are not cured by Shareholders as
provided in this Section 10.2(a). Buyer's sole remedy with respect to any
other uncured breach of representations and warranties shall be limited to
Buyer's claiming indemnification under Section 8.1 hereof.
B. Termination by Shareholders. If (i) there has been a failure
of satisfaction of a condition to the obligations of Shareholders as
provided in Article 7 hereof which has not been waived in writing by
Shareholders, or (ii) Buyer shall have attempted to terminate this
Agreement under this Article 10 or otherwise without grounds to do so,
then Shareholders may, by written notice to Buyer at any time prior to the
Closing that such failure or wrongful termination attempt is continuing,
terminate this Agreement with the effect set forth in Section 10.2.(c)
hereof, provided that Buyer has not remedied such matter (if reasonably
capable of being remedied) within thirty (30) business days following
receipt of written notice from Shareholders.
C. Effect of Termination. Termination of this Agreement pursuant
to this Section 10.2 shall not in any way terminate, limit or restrict the
rights and remedies of any party hereto against any other party which has
violated, breached or failed to satisfy any of the representations,
warranties, covenants, agreements, conditions or other provisions of this
Agreement prior to termination hereof.
_ MISCELLANEOUS
1. Disclosure Schedule. The Schedules have been compiled in a
volume (the "Disclosure Schedule") delivered to Buyer on the date of this
Agreement. Information set forth in the Disclosure Schedule specifically refers
to the article and section of this Agreement to which such information is
responsive but such information shall be deemed to have been disclosed with
respect to all other articles or sections of this Agreement to which it is
relevant.
2. Further Assurance. From time to time, at Buyer's request and
without further consideration, Company and Shareholders will execute and deliver
to Buyer such documents and take such other action as Buyer may reasonably
request in order to consummate more effectively the transactions contemplated
hereby.
3. Disclosures and Announcements. Announcements concerning the
transactions provided for in this Agreement by Buyer, Company or Shareholders
shall be subject to the approval of the other parties in all essential respects;
provided, however, that if either Buyer or Shareholders reasonably determines
that such party is required under applicable securities laws or regulations or
under the rules or regulations of a stock exchange on which such party's stock
is publicly traded, to make such announcement or disclosure, that party may make
such announcement or disclosure as is required but will notify the other party
prior to doing so.
4. Assignment; Parties in Interest.
A. Assignment. Except as expressly provided herein, the rights
and obligations of a party hereunder may not be assigned, transferred or
encumbered without the prior written consent of the other parties.
Notwithstanding the foregoing, Buyer may, without consent of any other
party, cause one or more subsidiaries of Buyer to carry out all or part of
the transactions contemplated hereby; provided, however, that Buyer shall,
nevertheless, remain liable for all of its obligations, and those of any
such subsidiary, to Shareholders hereunder.
B. Parties in Interest. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by the respective successors
and permitted assigns of the parties hereto. Nothing contained herein
shall be deemed to confer upon any other person any right or remedy under
or by reason of this Agreement.
5. Law Governing Agreement. This Agreement may not be modified or
terminated orally, and shall be construed and interpreted according to the
internal laws of the State of California, excluding any choice of law rules that
may direct the application of the laws of another jurisdiction. Fiskars
irrevocably and unconditionally submits to the jurisdiction of competent federal
and state courts of the United States in any action arising under this
Agreement, whether in contract, tort, equity or otherwise, and Fiskars hereby
irrevocably and unconditionally agrees that all claims in respect of any such
actions may be heard and determined in such courts. Fiskars shall appoint prior
to the Closing and thereafter shall maintain its own agent for service of
summons or other legal process in the United States of America, and shall prior
to the Closing provide Buyer with evidence of such appointment.
6. Amendment and Modification. Buyer and Shareholders may amend,
modify and supplement this Agreement in such manner as may be agreed upon in
writing between Buyer and the Shareholders.
7. Notice. All notices, requests, demands and other
communications hereunder shall be given in writing and shall be: (a) personally
delivered; (b) sent by telecopier, facsimile transmission or other electronic
means of transmitting written documents; or (c) sent to the parties at their
respective addresses indicated herein by registered or certified U.S. mail,
return receipt requested and postage prepaid, or by private overnight mail
courier service. The respective addresses to be used for all such notices,
demands or requests are as follows:
(a) If to Buyer, to:
Exide Electronics Group, Inc.
8521 Six Forks Road
Raleigh, NC 27615
Attention: Nicholas J. Costanza
Facsimile: (919) 870-3176
or to such other person or address as Buyer shall furnish to
Shareholders in writing.
(b) If to Shareholders, to:
Fiskars Oy Ab
Mannerheimintie 14 A
00101 Helsinki 10, Finland
Attention: Mr. Stig Stendahl
Facsimile: 011-358-0-644016
(with a copy to)
Mr. Ralf R. Boer
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, WI 53202-5367
Facsimile: (414) 297-4900
or to such other person or address as Shareholders shall designate in
accordance with this Agreement.
(c) If to Company, to:
Deltec Electronics Corporation
2727 Kurtz Street
San Diego, CA 92110
Attention: President
Facsimile: (619) 299-7205
(with a copy to)
Mr. Ralf R. Boer
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, WI 53202-5367
Facsimile: (414) 297-4900
Any notice to Company given after Closing shall also be given in the same
manner to Buyer.
If personally delivered, such communication shall be deemed
delivered upon actual receipt; if electronically transmitted pursuant to this
paragraph, such communication shall be deemed delivered the next business day
after transmission (and sender shall bear the burden of proof of delivery); if
sent by overnight courier pursuant to this paragraph, such communication shall
be deemed delivered upon receipt; and if sent by U.S. mail pursuant to this
paragraph, such communication shall be deemed delivered as of the date of
delivery indicated on the receipt issued by the relevant postal service, or, if
the addressee fails or refuses to accept delivery, as of the date of such
failure or refusal. Any party to this Agreement may change its address for the
purposes of this Agreement by giving notice thereof in accordance with this
Section.
8. Expenses. Regardless of whether or not the transactions
contemplated hereby are consummated:
A. Brokerage. Except as to Raymond James & Associates, Inc., who
shall be compensated by the Shareholders and S.G. Warburg & Co., Inc., who
shall be compensated by Buyer, the Shareholders and Buyer each represent
and warrant to each other that there is no broker involved or in any way
connected with the transfer provided for herein on their behalf
respectively (and Shareholders represent and warrant that there is no
broker involved on behalf of Company) and each agrees to hold the other
harmless from and against all other claims for brokerage commissions or
finder's fees in connection with the execution of this Agreement or the
transactions provided for herein.
B. Expenses to be Paid by Buyer. Buyer shall pay, and shall
indemnify, defend and hold Shareholders harmless from and against, each of
the following:
1. Transfer Taxes. Any sales, use, excise, transfer
or other similar tax imposed with respect to the transactions provided for
in this Agreement, and any interest or penalties related thereto.
2. HSR Act Fees. The filing fees relating to
compliance with the HSR Act.
3. Professional Fees. All fees and expenses of
Buyer's legal, accounting, investment banking and other professional
counsel in connection with the transactions contemplated hereby.
C. Other Expenses. Except as otherwise provided herein, each of
the parties shall bear its own expenses and the expenses of its counsel
and other agents in connection with the transactions contemplated hereby.
All expenses of advisors and counsel for the Company shall be borne by the
Shareholders.
D. Costs of Litigation. The parties agree that the prevailing
party in any action brought with respect to or to enforce any right or
remedy under this Agreement shall be entitled to recover from the other
party or parties all reasonable costs and expenses of any nature
whatsoever incurred by the prevailing party in connection with such
action, including without limitation attorneys' fees and prejudgment
interest.
9. Entire Agreement. This instrument embodies the entire
agreement between the parties hereto with respect to the transactions
contemplated herein, and there have been and are no agreements, representations
or warranties between the parties other than those set forth or provided for
herein.
10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11. Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
12. Facsimile Versions. Facsimile copies of this agreement and
any documents or instruments contemplated hereby that contain signatures shall
be deemed to be original signed documents for purposes of this Agreement and
the Closing.
13. Glossary of Terms. The following sets forth the location of
definitions of capitalized terms defined in the body of this Agreement:
"Affiliate" - Section 3.6.(j) "Agreement" - First Paragraph
"Ancillary Instruments" - Section 3.2.(a) "Business" - Recitals
"Buyer" - First Paragraph "Claim" - Section 8.1 "Closing" -
Preamble to Article 9 "Closing Date" - Section 9 "Common Shares"
- Section 1.1 "Company" - First Paragraph "Deltec" - Section
2.1.(c) "Disclosure Schedule" - Section 11.1
"Employee Plans/Agreement(s)" - Section 3.16.(a) "Employees" -
Section 3.16.(a) "ERISA" - Section 3.16.(a) "Facilities" -
Recitals "Fiskars" - First Paragraph "Fiskars Company" - Section
3.1.(d) "Government Entities" - Section 3.3 "Holdings" - First
Paragraph "HSR Act" - Section 3.3 "Indemnified Party" - Section
8.3.(a) "Indemnifying Party" - Section 8.3.(a) "Laws" - Section
3.3 "Lien" - Section 3.13.(a) "Litigation" - Section 3.10
"Material Adverse Effect" - Section 3.6.(a) "Orders" - Section
3.3 "Permitted Liens" - Section 3.13.(a) "Preferred Shares" -
Section 1.2 "Purchase Price" - Section 2.1 "Real Property" -
Section 3.13.(b) "Recent Balance Sheet" - Section 3.4
"Shareholder" - First Paragraph "Shareholders' Knowledge" -
Article 3 (Intro) "Shares" - Recitals "Subsidiary" - Section
3.1.(d) "Trade Rights" - Section 3.18 "WARN" - Section 5.11
Where any group or category of items or matters is defined collectively in
the plural number, any item or matter within such definition may be referred to
using such defined term in the singular number.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date and year first above written.
BUYER:
EXIDE ELECTRONICS GROUP, INC.
By: /s/JAMES A. RISHER
Name: JAMES A. RISHER
Title: PRESIDENT AND CEO
DELTEC POWER SYSTEMS, INC.
By: /s/JUHA TOIVOLA
Name: JUHA TOIVOLA
Title: PRESIDENT
By: /s/RALF R. BOER
Name: RALF R. BOER
Title: SECRETARY
FISKARS OY AB
By: /s/STIG STENDAHL
Name: STIG STENDAHL
Title: PRESIDENT AND CEO
FISKARS HOLDINGS, INC.
By: /s/RALF R. BOER
Name: RALF R. BOER
Title: SECRETARY
FL36631.6
1
<PAGE>
OMITTED SCHEDULES:
NOTE TO THE COMMISSION REGARDING THE FILING OF SCHEDULES TO THE STOCK
PURCHASE AGREEMENT AMONG EXIDE ELECTRONICS CORPORATION, FISKARS OY AB, AND
FISKARS HOLDINGS, INC., DATED NOVEMBER 17, 1995.
The company has omitted from this filing the schedules to the above-referenced
agreement. These schedules do not contain information that is material to an
investment decision. The company will provide the omitted schedules to the
Commission on request. The following schedules were omitted:
Schedule 3.0 - Shareholders' Knowledge
Schedule 3.1.(c) - Foreign Corporation Qualification
Schedule 3.1.(d) - Subsidiaries
Schedule 3.3 - Default by Shareholders
Schedule 3.4 - Financial Statements
Schedule 3.5.(a) - Tax Returns (Exceptions to
Representations)
Schedule 3.5.(b) - Tax Audits
Schedule 3.5.(c) - Consolidated Tax Returns
Schedule 3.6 - Certain Changes
Schedule 3.6.(f) - Permitted Pre-Closing Dividends
Schedule 3.7 - Off-Balance Sheet Liabilities
Schedule 3.10 - Litigation Matters
Schedule 3.11.(a) - Non-Compliance with Laws
Schedule 3.12.(b) - Underground Storage Tanks
Schedule 3.13.(a) - Liens
Schedule 3.13.(b) - Real Property
Schedule 3.14.(a) - Real Property Leases
Schedule 3.14.(b) - Personal Property Leases
Schedule 3.14.(c) - Powers of Attorney
Schedule 3.14.(d) - Collective Bargaining Agreements
Schedule 3.14.(e) - Loan Agreements, etc.
Schedule 3.14.(f) - Guarantees
Schedule 3.14.(g) - Restrictive Agreements
Schedule 3.14.(h) - Other Material Agreements
Schedule 3.15 - Labor Matters
Schedule 3.16.(a) - Employee Plans/Agreements
Schedule 3.16.(b) - Non-US Employee Benefit Plans
Schedule 3.16.(h) - Right to Amend Plans
Schedule 3.16.(i) - Parachute Payments
Schedule 3.16.(j) - Obligations Triggered by Closing
Schedule 3.17 - Employment Compensation
Schedule 3.18 - Trade Rights
Schedule 3.19 - Product Liability Claims
Schedule 3.20 - Bank Accounts
Schedule 3.21.(a) - Contracts with Affiliates
Schedule 3.21.(c) - Obligations of and to Affiliates
Schedule 3.23 - Insurance Policies
Schedule 4.3 - Default by Buyer
Schedule 5.1.(a) - Permissible Activities
Schedule 5.10 - Transitional Trademark License
Schedule 8.5.(d) - List of Buyer's Employees or Agents
Participating in Due Diligence
Schedule 9.1.(c) - Form of Foley & Lardner Legal Opinion
Schedule 9.1.(f) - Form of Shareholder Agreement
Schedule 9.2.(d) - Form of Buyer's Legal Opinion
