Execution
Copy
STOCK PURCHASE AGREEMENT
dated as of
June 15, 2000
by and between
CELSIUS AB
and
UNITED DEFENSE INDUSTRIES, INC.
________________________________________________________________________________
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TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS.................................................................................. 1
1.1 Defined Terms..................................................................... 1
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1.2 Certain Usage..................................................................... 8
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ARTICLE II. PURCHASE AND SALE OF SHARES................................................................. 8
2.1 Purchase and Sale of Shares....................................................... 8
2.2 Total Consideration and Terms..................................................... 8
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2.3 Intercompany Cash Accounts........................................................ 10
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2.4 Post-Closing Adjustment........................................................... 10
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2.5 Noncompetition Agreement.......................................................... 11
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2.6 Disclosure Schedule............................................................... 15
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ARTICLE III. CLOSING.................................................................................... 15
3.1 Closing........................................................................... 15
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3.2 Seller's Closing Deliveries....................................................... 15
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3.3 Purchaser's Closing Deliveries.................................................... 16
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3.4 Appointment of Directors.......................................................... 16
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3.5 Director Discharge from Pre-Closing Liabilities................................... 16
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ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE SELLER................................................ 16
4.1 Authority......................................................................... 16
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4.2 Organization and Standing......................................................... 16
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4.3 Capitalization.................................................................... 17
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4.4 Books and Records................................................................. 18
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4.5 Audited Financial Statements...................................................... 18
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4.6 Unaudited Financial Statements.................................................... 18
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4.7 Undisclosed Liabilities........................................................... 19
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4.8 Licenses, Permits and Authorizations.............................................. 19
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4.9 Labor Matters..................................................................... 19
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4.10 Contracts......................................................................... 20
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4.11 Litigation........................................................................ 22
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4.12 Taxes............................................................................. 22
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4.13 Absence of Certain Changes, Events or Conditions.................................. 22
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4.14 Legal Compliance.................................................................. 24
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4.15 No Conflict with Other Documents.................................................. 25
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4.16 Government Contracts; Backlog..................................................... 25
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4.17 Title to Personal Properties; Absence of Encumbrances, Etc........................ 26
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4.18 Pension and Employee Benefit Plans................................................ 26
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4.19 Bank Accounts..................................................................... 27
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4.20 Brokers and Advisors.............................................................. 27
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4.21 Environmental Matters............................................................. 27
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4.22 Customers and Suppliers........................................................... 28
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4.23 Insurance......................................................................... 28
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4.24 Intellectual Property............................................................. 29
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4.25 Real Property..................................................................... 29
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4.26 European Community Concentration Threshold........................................ 30
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4.27 Governmental Authorities; Consents................................................ 30
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4.28 No Pending Transactions........................................................... 30
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4.29 Full Disclosure................................................................... 30
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ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PURCHASER.................................................. 30
5.1 Organization of Purchaser......................................................... 30
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5.2 Authorization..................................................................... 31
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5.3 No Conflict or Violation.......................................................... 31
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5.4 Governmental Authorities; Consents................................................ 31
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5.5 Brokers' Fees..................................................................... 31
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ARTICLE VI. COVENANTS OF SELLER......................................................................... 31
6.1 Conduct of Business............................................................... 31
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6.2 Foreign Sales Agreements.......................................................... 33
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6.3 Antitrust Filings................................................................. 33
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6.4 No Solicitations.................................................................. 33
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6.5 Notice to Purchaser............................................................... 34
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6.6 Consents; Reasonable Effort....................................................... 34
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6.7 Inspections....................................................................... 34
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6.8 Financial Statements.............................................................. 34
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6.9 Section 338 Election.............................................................. 35
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ARTICLE VII. COVENANTS OF PURCHASER..................................................................... 35
7.1 Antitrust Filings................................................................. 35
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7.2 Notice to Seller and the Company.................................................. 35
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7.3 State Department Approval......................................................... 35
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ARTICLE VIII. COVENANTS OF SELLER AND PURCHASER......................................................... 36
8.1 Confidentiality................................................................... 36
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8.2 Cooperation and Records Retention................................................. 36
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8.3 India Guarantee Agreement......................................................... 37
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ARTICLE IX. CONDITIONS TO OBLIGATIONS................................................................... 37
9.1 Conditions to Obligations of Purchaser and Seller................................. 37
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9.2 Conditions to Obligations of Purchaser............................................ 37
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9.3 Conditions to the Obligations of Seller........................................... 38
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ARTICLE X. TERMINATION.................................................................................. 39
10.1 Termination....................................................................... 39
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10.2 Effect of Termination............................................................. 40
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10.3 Risk of Loss...................................................................... 40
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ARTICLE XI. POST CLOSING OBLIGATIONS; SURVIVAL OF REPRESENTATION........................................ 41
11.1 Indemnification................................................................... 41
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11.2 Survival of Representations....................................................... 44
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11.3 Rights of Set-Off................................................................. 44
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11.4 Pension Refund.................................................................... 44
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11.5 Hagglunds Joint Venture........................................................... 44
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11.6 Skaana Receivable................................................................. 45
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11.7 Seller Guarantees................................................................. 45
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ARTICLE XII. MISCELLANEOUS.............................................................................. 47
12.1 Waiver............................................................................ 47
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12.2 Notices........................................................................... 47
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12.3 Assignment........................................................................ 48
12.4 Rights of Third Parties........................................................... 48
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12.5 Reliance.......................................................................... 48
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12.6 Transfer Taxes; Title Costs; Expenses............................................. 48
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12.7 Construction...................................................................... 48
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12.8 Captions; Counterparts............................................................ 49
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12.9 Entire Agreement.................................................................. 49
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12.10 Amendments........................................................................ 49
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12.11 Severability...................................................................... 49
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12.12 Publicity......................................................................... 49
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12.13 Arbitration....................................................................... 50
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12.14 Purchaser's Remedies.............................................................. 50
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is entered into by
and between Celsius AB, registration number 556194-4652, a limited company
incorporated under the laws of Sweden ("Celsius" or the "Seller") and United
Defense Industries, Inc., a Delaware corporation ("Purchaser").
RECITALS:
WHEREAS, Seller owns of record and beneficially 500,000 shares (the
"Shares") of the capital stock of Bofors Weapon Systems AB, registration number
556204-1904, a limited company incorporated under the laws of Sweden ("BWS" or
the "Company"), which constitutes all of the issued and outstanding capital
stock of BWS (the "Shares"); and
WHEREAS, upon the terms and subject to the conditions set forth
herein, Seller desires to sell to Purchaser, and Purchaser desires to purchase
from Seller the Shares, free and clear of any and all Encumbrances.
AGREEMENT:
NOW THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I.
DEFINITIONS.
1.1 Defined Terms. As used herein, the following terms shall have the
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following meanings:
"Accounting Principles" shall mean the accounting principles used by
the Company and its consolidated Subsidiaries in the preparation of their
historical financial statements including the December 31 Financial Statements,
which accounting principles conform to the requirements of GAAP, consistently
applied.
"Action" shall mean any claim, action, suit, arbitration or
proceeding by or before any Governmental Authority, arbitrator or mediator.
"Affiliate" shall mean with respect to any specified Person, any
other Person that, directly or indirectly, controls, is controlled by, or is
under common control with, such Person, through one or more intermediaries or
otherwise.
"Agreement" shall have the meaning set forth in the Preamble.
"Ancillary Agreements" shall mean the Escrow Agreement, Bofors
Missiles Manufacturing Agreement, the Intellectual Property Agreements, the
Transition Services Agreement, the CWS Supply Agreement, the Bofors Missiles
Development Agreement, Bofors Carl Gustaf Manufacturing Agreement, the Bofors
Carl Gustaf Development Agreement,
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the Bofors Support Supply Agreement, the Bofors Test Center Proving Facilities
Agreement, Understanding Regarding Lease Agreement, the CTE/CTV Proximity Fuse/
Proximity Fuse Programmer Transfer Agreement, the Bofors Test Center
Stockholders Agreement, the Bofors Supply Stockholders Agreement, the India
Guarantee Agreement and the SAAB Guarantee Agreement.
"Antitrust Laws" means any antitrust or competition laws promulgated
by the United States, Sweden, the European Union or any other Governmental
Authority to whose jurisdiction the Company may be subject.
"Assets" shall have the meaning set forth in Section 10.3.
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"Audited Financial Statements" shall have the meaning set forth in
Section 4.5.
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"Adjustments" shall have the meaning set forth in Section 4.6.
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"Books and Records" shall mean all of the following as made and kept
by the Company or its Subsidiaries (a) all records and lists pertaining to the
Business, assets, liabilities, customers, suppliers or Personnel of the Company,
(b) all product, business and marketing plans of the Company, (c) all books,
ledgers, files, reports, plans, drawings and operating records of every kind
maintained by the Company and (d) all stock books, stock ledgers and corporate
minutes of the Company.
"Bofors Test Center Stockholders Agreement" shall mean that certain
Stockholders Agreement, dated as of December 22, 1999, by and among BWS, Bofors
Carl Gustaf AB, Bofors Missiles AB and Nexplo Bofors AB.
"Bofors Support Stockholders Agreement" shall mean that certain
Stockholders Agreement, dated as of December 22, 1999, by and among BWS, Bofors
Carl Gustaf AB and Bofors Missiles AB.
"Business Day" shall mean any day that is not a Saturday, Sunday or
any other day on which banks are required or authorized by law to be closed in
Stockholm, Sweden or New York, NY.
"Bofors Carl Gustaf Development Agreement" shall mean that certain
Development Agreement, dated as of May 30, 2000, by and between BWS and Bofors
Carl Gustaf AB.
"Bofors Carl Gustaf Manufacturing Agreement" shall mean that certain
Manufacturing Agreement, dated as of May 30, 2000, by and between BWS and Bofors
Carl Gustaf AB.
"Bofors Missiles Development Agreement" shall mean that certain
Development Agreement, dated as of May 18, 2000, by and between BWS and Bofors
Missiles AB.
"Bofors Missiles Manufacturing Agreement" shall mean that certain
Manufacturing Agreement, dated as of May 18, 2000, by and between BWS and Bofors
Missiles AB.
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"Bofors Support Supply Agreement" shall mean that certain Supply
Agreement, dated as of February 24, 2000, by and between BWS and Bofors Support
AB.
"Bofors Test Center Proving Facilities Agreement" shall mean that
certain Proving Facility Agreement, dated as of February 24, 2000, by and
between BWS and Bofors Test Center AB.
"BWS" shall have the meaning set forth in the Preamble.
"BWS Capital Stock" shall have the meaning set forth in Section
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4.3(a).
"Celsius" shall have the meaning set forth in the Preamble.
"Claims" shall have the meaning set forth in Section 11.1(a).
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"Closing" shall have the meaning set forth in Section 3.1.
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"Closing Balance Sheet" shall mean the audited consolidated balance
sheet of BWS and its consolidated Subsidiaries as of the Closing Date.
"Closing Cash Consideration" shall have the meaning specified in
Section 2.2.
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"Closing Date" shall have the meaning set forth in Section 3.1.
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"Closing Net Assets" shall have the meaning set forth in Section
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2.4(a).
"Company" shall have the meaning set forth in the Preamble.
"Company's Business" shall have the meaning set forth in Section
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2.5(g).
"Contracts" shall mean, collectively, all agreements, contracts,
subcontracts, leases, purchase orders, memoranda of understanding and other
binding contractual commitments (whether written or oral) to which the Company
is a party or by which any of its Assets may be bound, including those contracts
listed on Schedule 4.10.
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"CTE/CTV Proximity Fuse/ Proximity Fuse Programmer Transfer
Agreement" shall mean that certain Transfer Agreement, dated as of June 14,
2000, by and between BWS and CTE and CTV.
"CTV" shall mean CelsiusTech Vetronics AB, registration number
556169-8431, a Swedish limited company.
"Current Products" shall have the meaning set forth in Section
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2.5(a)(iii)
"CWS" shall mean Celsius Weapons System AB, registration number
556258-2352, a Swedish limited company.
"CWS Supply Agreement" shall mean that certain India Supply
Agreement, dated as of May 18, 2000 by and between CWS and the Company.
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"December 31 Balance Sheet" shall mean the audited consolidated
balance sheet of the Company and its consolidated Subsidiaries as of December
31, 1999.
"December 31 Financial Statements" shall mean the December 31 Balance
Sheet and the related audited statements of operations, changes in shareholders'
equity and cash flow for the one year period ended on December 31, 1999.
"Disclosure Schedule" shall mean the schedules to this Agreement.
"Earn-Out" shall have the meaning set forth in Section 2.2(b).
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"Earn-Out Period" shall have the meaning set forth in Section 2.2(b).
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"Earn-Out Liquidation Amount" shall have the meaning set forth in
Section 2.2(c).
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"Earn-Out Threshold Amount" shall have the meaning set forth in
Section 2.2(b).
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"Encumbrance" shall mean any mortgage, claim, charge, lien, easement,
right-of-way, covenant, condition, option, pledge, call, commitment, security
interest, conditional sales agreement, title retention agreement, lease and any
other imperfection of title or restriction of any kind and nature, choate or
inchoate.
"Employment Laws" shall have the meaning set forth in Section
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4.18(a).
"Environmental Laws" shall mean any and all applicable laws
regulating, relating to or imposing liability or standards of conduct concerning
protection of the environment or of human health relating to exposure of any
kind of Hazardous Materials, as has been, or is, as of the date hereof, in
effect.
"Escrow Account" shall have the meaning set forth in Section 11.7(b).
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"Escrow Agent" shall have the meaning set forth in Section 11.7(b).
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"Escrow Agreement" shall have the meaning set forth in Section
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11.7(b).
"Excluded Products" shall have the meaning set forth in Section
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2.5(a)(ii)
"Financial Obligations" shall have the meaning set forth in Section
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11.7(b).
"Fixtures" shall mean any fixtures, machinery, installations and
building equipment located at or on any Real Property.
"FMV" shall mean the Forsvarets Materielverk.
"FPG" shall mean Forsakringsbolaget Pensionsgaranti, omsesidigt.
"FSAs" shall have the meaning set forth in Section 4.16(d).
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"GAAP" shall mean Swedish generally accepted accounting principles,
consistently applied.
"Governmental Authority" shall mean any national, multi-national,
municipal or local government (or any political subdivision of any of the
foregoing), including any governmental authority, regulatory or administrative
agency, governmental commission, department, board, bureau, court, tribunal,
arbitrator or arbitral body.
"Government Contract" shall mean any Contract in which the ultimate
contracting party is a Governmental Authority that involves the performance of
services or the delivery of goods by the Company.
"Government Order" shall mean any order, writ, rule, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Hagglunds Joint Venture" shall mean H-B Utveckling AB, registration
number 556074-1364, a Swedish limited company.
"Hazardous Materials" shall mean any hazardous substance, gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, ureaformaldehyde insulation, asbestos or
asbestos-containing materials, pollutants, contaminants, radioactivity, and any
other materials or substances of any kind, whether solid, liquid or gas, and
whether or not any such substance is defined as hazardous under any
Environmental Law, that is regulated pursuant to any Environmental Law or that
could give rise to Liability under any Environmental law.
"Improvements" shall mean any right, title or interest in any
buildings, facilities, other structures and improvements, building systems and
Fixtures.
"Indebtedness" of any Person shall mean all obligations of such
Person (a) for borrowed money, (b) evidenced by notes, bonds, debentures or
similar instruments, (c) for the deferred purchase price of goods or services
(other than trade payables in the ordinary course of business), (d) under
capital leases, or (e) in the nature of guarantees of the obligations described
in clauses (a) through (d) above of any other Person.
"Indemnified Party" shall have the meaning set forth in Section
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11.1(c).
"Indemnitor" shall have the meaning set forth in Section 11.1(c).
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"Independent Accountant" shall have the meaning set forth in Section
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2.4(c).
"India Guarantee Agreement" shall mean that certain Agreement to be
entered into at the Closing by and among Seller, the Company and Purchaser in
accordance with Section 8.3.
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"Insurance Policies" shall have the meaning set forth in Section
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4.23.
"Intellectual Property" shall mean each material patent, registered
and unregistered trademark, service mark, trade dress, logo, trade name,
copyright and registration or application for
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any of the foregoing together with all material know-how, trade secrets,
confidential information, software, technical information, process technology,
plans, drawings and blue prints owned by the Company or its Subsidiaries,
including any Intellectual Property owned by Seller that relates to the business
or operations of the Company or its Subsidiaries and which is used by the
Company or the Subsidiaries.
"Intellectual Property Agreements" shall mean, collectively, each of
(a) that certain Agreement Regarding the Sale of Patents and Patent
Applications, dated as of June 15, 2000 by and between Bofors AB and BWS; (b)
that certain Patent License Agreement, dated as of June 15, 2000, by and among
Bofors AB, Bofors Missiles AB and BWS; and (c) that certain Patent License
Agreement, dated as of June 15, 2000, by and between BWS and SAAB AB.
"Law" shall mean all laws, statutes, rules, regulations, ordinances
and other pronouncements having the effect of law (including common law) of any
Governmental Authority.
"Liabilities" shall mean any direct or indirect liability,
Indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or
endorsement of or by any Person of any type, whether accrued, absolute,
contingent, matured, unmatured or other to be recorded in accordance with GAAP
and the Accounting Principles.
"Loss Contract" shall mean any Material Contract for which the
Company has accrued a loss on its financial statements or which the Company
reasonably expects, based on the Company's knowledge as of the date hereof, to
result in a loss.
"Machinery and Equipment" shall have the meaning set forth in Section
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4.17.
"Material Adverse Effect" shall mean a material adverse effect on the
business, assets, liabilities, condition (financial or otherwise), results of
operations or prospects of the Company and its Subsidiaries, taken as a whole.
"Material Contract" shall have the meaning set forth in Section 4.10.
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"Minority Subsidiaries" shall mean Bofors Support AB and Bofors Test
Centre AB.
"Net Assets" shall have the meaning set forth in Section 2.4(a).
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"Net Order Intake" shall have the meaning set forth in Section
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2.2(c).
"Payment Date" shall have the meaning set forth in Section 2.2(c).
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"Pension Schemes" shall have the meaning specified in Section
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4.18(b).
"Permits" shall have the meaning set forth in Section 4.8.
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"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, labor union or Governmental Authority.
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"Personnel" shall have the meaning set forth in Section 4.13(b).
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"Post-Closing Adjustment" shall have the meaning set forth in Section
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2.4(e).
"Post-Signing Financial Obligations" shall have the meaning set forth
in Section 11.7(b).
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"Pre-Closing Environmental Matter" shall mean any environmental Claim
or any noncompliance with any Environmental Laws on the part of Seller, the
Company, its Subsidiaries or any of their respective Affiliates or predecessors
in interest occurring or in existence on, or arising from actions occurring or
conditions existing prior to, the Closing Date.
"Prime Rate" shall have the meaning set forth in Section 11.1(a).
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"Purchaser" shall have the meaning set forth in the Preamble.
"Purchaser Indemnitees" shall have the meaning set forth in Section
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11.1(a).
"Qualified Order" shall have the meaning set forth in Section 2.2(c).
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"Real Estate Records" shall mean, to the extent in the possession or
control of Seller or the Company, the real estate records, files, books,
blueprints, plans (as-built and otherwise), surveys, specifications, designs,
drawings, and other data associated with the Real Property.
"Real Property" shall have the meaning set forth in Section 4.25(a).
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"Real Property Lease" shall have the meaning set forth in Section
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4.25(a).
"Restricted Parties" shall have the meaning set forth in
Section 2.5(a).
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"SAAB Guarantee Agreement" shall mean that certain Guaranty Agreement
dated as of June 15, 2000 by and among Seller, SAAB AB and Purchaser.
"Seller" shall have the meaning set forth in the Preamble.
"Seller Indemnitees" shall have the meaning set forth in Section
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11.1(b).
"Shares" shall have the meaning set forth in the Recitals.
"SPP" shall mean Fosakringsbolaget SPP.
"Subsidiary" shall mean any corporation, partnership, limited
liability company, joint venture or other entity in which the Company, directly
or indirectly, holds fifty percent (50%) or more of the voting power of all
equity securities or other ownership interests of such entity, or over which the
Company either directly or indirectly exercises actual control. For purposes of
this Agreement, the Subsidiaries of the Company shall include the Hagglunds
Joint Venture and the Minority Subsidiaries, but shall exclude CWS and CTV.
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"Target Net Assets" shall mean One Hundred Sixty Million Twenty-Nine
Thousand (160,029,000) SEK.
"Tax" or "Taxes" shall mean all taxes, estimated taxes, withholding
taxes, assessments, levies, imposts, fees and other charges, including, without
limitation, any interest, penalties, additions to tax or additional amounts that
may become payable in respect thereof, imposed by any Governmental Authority,
which taxes shall include, without limitation, all income taxes, payroll and
employee withholding taxes, unemployment insurance, social security, sales and
use taxes, value-added taxes, excise taxes, franchise taxes, gross receipts
taxes, occupation taxes, real and personal property taxes, stamp taxes, transfer
taxes, workers' compensation and other obligations of the same or of a similar
nature.
"Tax Benefit" shall have the meaning set forth in Section
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11.1(d)(viii).
"Tax Returns" shall mean all reports, returns, declarations, claims
for refund or statements of any kind or nature relating to Taxes, and any
schedule or attachment thereto and any amendment thereof.
"Total Consideration" shall have the meaning set forth in Section
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2.2.
"Transactions" shall mean the transactions contemplated by this
Agreement and the Ancillary Agreements.
"Transition Services Agreement" shall mean that certain Transition
Services Agreement by and between Seller and the Company dated as of
June 13, 2000, together with the addenda thereto.
"Understanding Regarding Lease Agreement" shall mean that certain
agreement by and between United Defense Industries, Inc. and Celsius AB, dated
as of the date hereof, whereby Celsius AB agrees to cause its wholly-owned
Subsidiary to extend the ground lease with respect to certain real property
leased by Bofors Test Centre AB.
"VAT" shall mean Value Added Tax as defined in the Value Added Tax
Act, 1994:200.
1.2 Certain Usage. As used herein the following additional terms
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shall have the following meaning:
The term "including" as used herein shall be read to mean "including,
without limitation."
The term "knowledge" as used herein, shall mean with respect to any
person, those facts or circumstances actually known by such person. For purposes
of this Agreement, the knowledge of Per Ove Morberg, John Ershammar, Magnus
Ingessen and Hakan Ahsberg, shall be imputed to Seller and the Company, and the
knowledge of Francis Finelli, David Wallestad and Kathryn Johnbull shall be
imputed to Purchaser.
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ARTICLE II.
PURCHASE AND SALE OF SHARES.
2.1 Purchase and Sale of Shares. Upon the terms and subject to the
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conditions contained herein, Purchaser will acquire from Seller, and Seller will
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sell to Purchaser, the Shares free and clear of all Encumbrances.
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2.2 Total Consideration and Terms. The aggregate consideration for
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the Shares to be purchased by Purchaser hereunder (the "Total Consideration")
shall, subject to adjustment as provided in Section 2.4, consist of (i) One
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Hundred Eighty Million Four Hundred Thousand (180,400,000) SEK (the "Closing
Cash Consideration"), and (ii) the Earn-Out. The Total Consideration shall be
payable as follows:
(a) On the Closing Date, Purchaser shall pay to Seller by wire
transfer of immediately available funds the Closing Cash Consideration.
(b) Purchaser shall, or shall cause the Company to, pay to
Seller an earn-out royalty (the "Earn-Out") with respect to each calendar year
from the Closing Date to December 31, 2004 (the "Earn-Out Period") equivalent to
two percent (2%) of an amount equal to (i) the Net Order Intake during such
calendar year (or with respect to 2000, such portion of the calendar year from
and after the Closing) minus (ii) One Hundred Million (100,000,000) SEK (or the
prorated portion thereof from and after the Closing during the 2000 calendar
year) (the "Earn-Out Threshold Amount"). The Earn-Out shall be calculated and
paid in accordance with Section 2.2(c) below.
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(c) For purposes of this Agreement, "Net Order Intake" shall
mean, without duplication, the Company's and Purchaser's (or any of their
respective Subsidiaries') aggregate revenues actually collected from binding
orders placed during the Earn-Out Period (each, a "Qualified Order") for
products or services sold by the Company, Purchaser or any of their respective
Subsidiaries to the government of India pursuant to (i) the Supply Contract
and/or License Agreements between the president of India and AB Bofors as of
March 1986, (ii) any subsequent agreement or order entered into for the purchase
of any products or spare parts for the FH77B of the type which may be purchased
pursuant to the terms of the Supply Contract and/or License Agreement described
in clause (i), or (iii) any agreement or order for the purchase and sale of the
howitzer upgrade known as the FH77BD/L45mkI (Indien) (whether such revenues are
collected during the Earn-Out Period or at any time thereafter); provided,
however, that Net Order Intake shall not include any revenues earned by the
Company or its Subsidiaries pursuant to the India Supply Agreement. A portion of
the Earn-Out shall be paid each January 31st (each a "Payment Date") by wire
transfer of immediately available funds to an account designated by Seller to
Purchaser and the Company in writing until all amounts payable as a result of
the Earn-Out have been paid in full. Prior to each Payment Date, the Company
shall deliver a written notice to the Seller setting forth the Qualified Orders
which accrued during the previous calendar year, the revenues collected from
Qualified Orders during the previous calendar year and a calculation of the
amount payable to Seller on such Payment Date (calculated in accordance with the
next sentence). The amount payable on each such Payment Date shall be equal to
(A) 2% of (x) the aggregate amount of revenues from Qualified Orders actually
collected by the Company during all calendar years during the Earn-Out Period
preceding such Payment Date, minus (y) the aggregate Earn-Out Threshold Amount
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for all calendar years during the Earn-Out Period preceding such Payment Date,
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minus (B) the aggregate amount paid by Purchaser or the Company to Seller
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pursuant to this Section 2.2(c) prior to such Payment Date; provided, however,
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in the event such amount is a negative number, the amount payable by Purchaser
or the Company to Seller on such Payment Date shall be zero and Seller shall
have no obligation to pay Purchaser or the Company any amount. On or prior to
January 31, 2007, Purchaser shall, or shall cause the Company to, pay to Seller
an amount (the "Earn-Out Liquidation Amount") equal to the Earn-Out payable
hereunder with respect to all revenues from Qualified Orders that have not been
collected prior to December 31, 2006, but that are reasonably likely to be
collected at any time thereafter. In the event that any such Qualified Orders
are thereafter cancelled or facts and circumstances arise that make it
reasonably likely that the revenues therefrom will not be realized or realizable
by the Company, the Company shall notify the Seller in writing of such facts or
circumstances and the amount of the revenues which will not be realized or
realizable, and the Seller shall, within 10 Business Days after receiving such
written notice, refund the portion of Earn-Out Liquidation Amount paid by the
Company with respect to such revenues.
(d) Following each Payment Date, the Company shall provide
Seller's independent accountants reasonable access to the management of the
Company and the financial records of the Company and its Subsidiaries for the
prior calendar year for the sole purpose of verifying the amount of Qualified
Orders received by the Company and its Subsidiaries, the amounts collected with
respect to Qualified Orders during such period and the calculation of the Earn-
Out payable with respect to such period. It shall be a condition to the
provision of any information pursuant to this subparagraph (d) that Seller and
its independent auditor sign a confidentiality agreement reasonably satisfactory
to the Company with respect to any information so provided.
2.3 Intercompany Cash Accounts. Prior to the Closing, Seller shall
--------------------------
cause any and all amounts of cash or cash equivalents of the Company and any of
its Subsidiaries held by Seller or an Affiliate of Seller, to be transferred by
Seller or Seller's Affiliate(s) to an account or accounts established solely for
the Company or its Subsidiaries (as the case may be).
2.4 Post-Closing Adjustment.
-----------------------
(a) Within ninety (90) calendar days following the Closing
Date, Seller shall prepare and deliver to Purchaser (i) the Closing Balance
Sheet (together with the audit report thereon), and (ii) a calculation of the
Net Assets of the Company as of the Closing Date as set forth on the Closing
Balance Sheet (the "Closing Net Assets"). The Closing Balance Sheet shall be
prepared in accordance with GAAP, using the Accounting Principles used in the
preparation of the December 31 Financial Statements of the Company based upon
financial information provided by the Company and its Subsidiaries consistent
with past practices. Notwithstanding the requirements of GAAP or the past
practices of Seller or the Company, the parties agree that the Closing Balance
Sheet will reflect no upward or downward adjustments in reserves from amounts
contained in the December 31 Balance Sheet except to the extent such adjustments
result from changes in facts or circumstances occurring after December 31, 1999
or increases in profit or accrual rates on contracts in process from the rates
reflected on the December 31 Balance Sheet. During the preparation of the
Closing Balance Sheet by Seller and the period of any dispute provided for in
Section 2.4(c), Purchaser shall cause the Company, its Subsidiaries and their
-------
accountants to provide such reasonable access to the Company, its Books and
Records (including work papers) and Personnel
10
<PAGE>
as may be necessary, to permit Seller and PricewaterhouseCoopers to prepare and
audit the Closing Balance Sheet and to investigate the basis of any such
dispute. "Net Assets" as of any date shall mean (x) the assets of the Company
and its consolidated Subsidiaries as of such date, minus (y) the Liabilities of
the Company and its consolidated Subsidiaries as of such date.
(b) Purchaser may dispute any amounts reflected on the Closing
Balance Sheet or Seller's calculation of the Closing Net Assets, but only on the
basis that the amounts reflected on the Closing Balance Sheet were not recorded
in accordance with GAAP or are inconsistent with the Accounting Principles used
in the preparation of the December 31 Financial Statements or were otherwise not
prepared in accordance with Section 2.4(a). Purchaser shall notify Seller in
-------
writing of each disputed item, specifying the amount of each item in dispute and
setting forth in reasonable detail the basis for each item in dispute, within
forty-five (45) calendar days of Purchaser's receipt of the Closing Balance
Sheet. If Purchaser has not notified Seller of any such dispute within such
forty-five (45) day period, then the Closing Balance Sheet shall be deemed to be
final and conclusive on the parties hereto, and any amount payable under Section
-------
2.4(d) shall be paid by Purchaser or Seller, as the case may be in accordance
with Section 2.4(d).
-------
(c) In the event of such a dispute, Purchaser and Seller shall
negotiate in good faith to reconcile their differences. If such dispute has not
been resolved within thirty (30) days after Seller's receipt of notice of such
dispute (or such longer period as they may mutually agree), Seller and/or
Purchaser shall submit the item(s) remaining in dispute to an internationally
recognized independent accountant selected by mutual agreement of Purchaser and
Seller or, in failure of such agreement, an independent "Big Five" accounting
firm selected by the chairman of the London Court of International Arbitration
(the "Independent Accountant"), which shall, as promptly as practical but in no
event later than thirty (30) calendar days after such submission, determine and
report in writing upon such remaining disputed item(s) based solely upon the
written submissions of the parties. Such determination and report shall be
final, binding and conclusive on the parties hereto. The fees and disbursements
of the Independent Accountant shall be paid by Purchaser and by Seller in
proportion to the amount the Seller or Purchaser has put in dispute on which the
Independent Accountant has found in favor of such party.
(d) On the date which is three (3) Business Days after the
final determination of the Closing Net Assets in accordance with this Section
-------
2.4, Seller or Purchaser, as the case may be, shall make any payment due, in
accordance with the terms of this subsection (d). If the Post-Closing Adjustment
(as defined below) is a negative number, Seller shall pay to Purchaser in
immediately available funds an amount equal to the absolute value of the Post
Closing Adjustment. If the Post-Closing Adjustment is a positive number,
Purchaser shall pay (or shall cause the Company to pay) to Seller in immediately
available funds an amount equal to the Post-Closing Adjustment. In the event
Seller fails to make any payment due and owing to Purchaser hereunder, Purchaser
shall have the right but not the obligation to offset such amounts against any
amounts owing to Seller from the Company pursuant to Section 2.4(c). Purchaser
-------
and Seller agree that the Total Consideration shall be deemed to be increased by
all payments made by Purchaser to Seller and the Total Consideration shall be
deemed to be decreased by all payments made by Seller to Purchaser.
(e) The "Post-Closing Adjustment", which may be positive or
negative, shall equal the Closing Net Assets less the Target Net Assets.
11
<PAGE>
2.5 Noncompetition Agreement.
------------------------
(a) Seller agrees that, for a period of five (5) years following
the Closing Date, it will not, and it will cause each of its Affiliates listed
on Schedule 2.5(a) (collectively, the "Restricted Parties") not to, engage,
--------
directly or indirectly, anywhere in the world in any line of business within the
"Company's Business" (as defined in Section 2.5(g) below), or to acquire any
other business entity where the major reason for the acquisition is to compete
with the Company; provided however, that the Restricted Parties may:
----------------
(i) manufacture, market and sell the Strix munitions for
mortars when done in cooperation with BWS in accordance with the SAAB/BWS
Cooperation Agreement regarding Strix;
(ii) manufacture, retrofit, install, repair, overhaul,
service, market and sell "Excluded Products" (as defined herein). In no event
shall Excluded Products be interpreted to mean a complete vehicular system. The
parties recognize and agree that all ground vehicle platforms are exclusively
within the Company's Business and that this clause shall not be deemed to
include the right for the Restricted Parties to manufacture, retrofit, install,
repair, overhaul, service, market and sell Ground Combat or Support Vehicle
Systems. The term "Excluded Products" shall mean the following:
(A) LVS System;
(B) Laser rangefinder;
(C) IR cameras;
(D) DIRSI system;
(E) ARTE 725 system and its succeeding system;
(F) ELMA grenade system with its successor the
ASW Alecto Systems;
(G) Deception torpedoes;
(H) Firecontrol system for 9 LV family of naval
guns;
(I) Sights and fire control systems for (1)
combat vehicles (2) main battle tanks and
(3) anti aircraft guns from caliber 20mm
and above, including vehicle mounted as
well as stationary applications;
(J) Army C4I-systems on all levels;
(K) Electronic systems for detection and
clearance of land mines;
(L) Integrated defensive aid systems for
vehicles;
(M) Electronic subsystems and components for
vehicle systems;
(N) SKER System and its succeeding system; and
(O) RIA;
(iii) manufacture, market and sell any products that: (A) are
in production by the Restricted Parties as of the Closing Date; and (B) do not
compete with the
12
<PAGE>
Company's Business, as of the Closing Date (each, a "Current Product" and
collectively, the "Current Products").
(b) Upon determination, through mutual agreement or by arbitration
in accordance with this Agreement, that the Restricted Parties are, directly or
indirectly, competing with the Company's Business by developing, manufacturing,
marketing, selling or servicing any products that were not (i) Current Products
of the Restricted Parties as of the Closing Date, (ii) Excluded Products, or
(iii) specifically addressed elsewhere in this Section 2.5, the Restricted
Parties agree to cease immediately all activities related to such competing
products.
(c) Seller shall be entitled to engage in the development,
manufacture, retrofit, installation, repair, overhaul, engineering, design,
service, marketing and sale of any component part or subsystem that may fall
within the Company's Business, but that is substantially the same as classes of
products or services that primarily are sold commercially by Seller for non-
military uses.
(d) If at any time the Company or its successor(s) should decide
that it no longer desires to pursue intelligent and brilliant ammunition, the
Restricted Parties or their successors(s) will be given the right of first
refusal to acquire access to, and permission to use solely for such purpose, the
Intellectual Property of the Company related to intelligent and brilliant
ammunition. Similarly, if at some point the Restricted Parties or their
successor(s) should decide that they no longer desire to pursue intelligent and
brilliant ammunition, the Company or its successor(s) will be given the right of
first refusal to acquire access to, and permission to use solely for such
purpose, the Intellectual Property of Bofors Missiles AB or its successors
related to intelligent and brilliant ammunition .
(e) If the Company decides not to offer its products or
capabilities in response to a specific request, within the Company's Business,
from any Swedish Governmental Authority, the Company will enter into
negotiations with the Restricted Parties to seek a fair, reasonable and joint
approach to the satisfaction of said request, failing which, either party may
request that the parties arbitrate, in accordance with this Agreement. This
obligation shall apply "mutatis mutandis" for specific opportunities, whereby
the Restricted Parties decide not to offer their products or capability in
response to a specific request of any Swedish Governmental Authority.
(f) Seller may continue to develop, market and sell man-portable
unguided rocket systems, including the Carl Gustaf System, the AT4 System, the
MBT LAW System, and their subsystems, to include warheads and ammunition and
future derivatives thereof.
(g) For purposes of this Agreement, the "Company's Business" shall
be to engage in the development, manufacture, retrofit, installation, overhaul,
repair, engineering, design, service, sale and marketing of:
(i) guns and unguided rocket systems, including (A)
carriers, (B) launchers with chemical, electrothermal and/or electromagnetic
launching and (C) integrated C4I systems, including gun control, fire control,
ballistic computers and ammunition programming systems for the aforesaid
systems;
13
<PAGE>
(ii) ammunition for guns and unguided rocket systems
including (A) chemical, electrothermal and electromagnetic propulsion, (B)
kinetic, chemical and/or electromagnetic warheads, (C) sensorfuzed sub-
munitions, (D) sensors, (E) fuzes, (F) trajectory control systems, and (G)
intelligent and brilliant ammunition for the aforementioned weapon systems,
including without limitation, BONUS, TCM, and 3P;
(iii) ground combat vehicle systems and support vehicle
systems, to include all subsystems, for military and other applications;
(iv) Landmine Clearance Equipment;
(v) warheads with graded effect for guns and unguided rocket
systems;
(vi) ABRAHAM Technology (ABRAHAM Technology is currently
focused on the development of an anti-aircraft defense system intended to meet
the threat from precision guided weapons such as cruise missiles and attack
missiles. The basis of the technology is a long range laser sensor coupled with
a warhead with directed effect. The warhead has a number of preprogrammable
and/or trajectory adaptable lethality modes such as splinters, shape charge and
electromagnetic pulse. ABRAHAM, in system form, may be deployed on or close to a
protected object. The platform could be a ground vehicle, an aircraft, a ship, a
container module or some other platform. ABRAHAM technology will be applied in
many other areas as protection systems of different kinds.);
(vii) support and test equipment, training equipment, support
systems, maintenance, repair, service and assistance, facilities, supply
support, PHS&T and documentation for the aforementioned businesses and products;
and
(viii) other applications, in addition to military applications
for the above listed products and services.
(h) If any court of competent jurisdiction shall finally hold that
the time, territory or any other provision set forth in this Section 2.5
-------
constitutes an unreasonable restriction, such provision shall not be rendered
void, but shall apply as to such time, territory, or to such other extent as
such court may determine constitutes a reasonable restriction under the
circumstances involved.
(i) The parties acknowledge that the restrictions contained in this
Section 2.5 are reasonable and necessary to protect the legitimate interests of
-------
Seller and Purchaser. Seller acknowledges that Purchaser shall be entitled to
injunctive relief to enforce the terms and provisions of this Section 2.5.
-------
(j) Seller further agrees that it will not, for a period commencing
on the date hereof and ending two (2) years following the Closing Date,
knowingly actively seek the employment of or hire the employees of Purchaser or
the Company.
(k) To the extent the Company, in the conduct of its existing
business as of the effective date of this Agreement, infringes upon any
intellectual property rights of Seller not
14
<PAGE>
otherwise licensed to the Company, Seller agrees to grant to Company freedom
from suit with regard to such rights and Seller hereby grants an exclusive
license to use such intellectual property in the field of use of the Company's
Business. With respect to BONUS, 3P and TCM, the parties recognize that Company
may require additional technical information in order to fully incorporate such
products into Company's existing business at the Closing. Seller agrees, upon
reasonable notice and at the convenience of the parties, to permit access to and
use of such information only for such products within the Company's Business.
(l) Seller agrees that the Company owns all of the intellectual
property rights for the 3P Ammunition family, including without limitation, (i)
all of its components, to include the proximity fuze programmer (PFP) and the
electronic components of the fuze and (ii) all test equipment and production
tooling and equipment. Additionally, Seller agrees that the Company has the sole
right to manufacture or have manufactured the 3P Ammunition Family. Seller
further agrees to work together with the Company to (w) document the Company's
ownership of 3P, (x) complete the transfer of competence from Seller to the
Company, (y) provide the necessary data package to the Company and (z) complete
a definitive agreement to this end prior to Closing, completion of such
agreement to be a Closing condition.
(m) Seller acknowledges that the Restricted Parties do not
constitute all of the Affiliates of Seller and therefore agrees that it shall be
a violation of this Section 2.5 for any personnel, assets or intellectual
property employed, owned or used by Seller or any Restricted Party as of the
date hereof to engage in or be used for the purpose of conducting any activity
prohibited under this Section 2.5 by or through any Affiliate of Seller which is
not a Restricted Party.
(n) Purchaser and Seller agree that the amount of the Total
Consideration allocable to the terms and provisions of this Noncompetition
Agreement shall be One Million (1,000,000) SEK.
2.6 Disclosure Schedule. The parties hereto acknowledge that, as of the
-------------------
date hereof, the Disclosure Schedules to this Agreement (other than Schedules
2.5(a), 6.2, 11.7(a) and 11.7(b)) have not been completed and that such
Disclosure Schedules are in integral part of this Agreement. Accordingly, Seller
agrees that, not later than June 23, 2000, Seller shall deliver to Purchaser a
certified complete set of Disclosure Schedules for Purchaser's review. Purchaser
shall have five Business Days from its receipt of such Disclosure Schedule to
notify Seller of any objection to the form or content of any of the materials
contained therein, which objection may be made in its sole and absolute
discretion. If Purchaser delivers written notice of any objections, Purchaser
and Seller agree to negotiate in good faith with respect to the portions of the
Disclosure Schedule that are the subject of Purchaser's objection. If after 10
Business Days of the date on which Purchaser delivers written notice with
respect to such objections, the parties are unable to resolve such objections to
their mutual satisfaction, then upon written notice to the other party, either
party may terminate this Agreement without any further obligation to the other
party.
ARTICLE III.
CLOSING.
3.1 Closing. The consummation of the purchase and sale of the Shares
-------
(the "Closing") shall take place at 10:00 a.m., local time, on the fifth (5th)
Business Day following the
15
<PAGE>
satisfaction of the conditions to the obligations of the parties set forth in
Section 9.1 hereof, at the offices of Rydin & Carlsten Advokatbyra AB,
-------
Norrmalmstorg 1, S-111 87 Stockholm, or at such other time or place as Seller
and Purchaser may agree in writing (the day on which the Closing takes place
being referred to herein as the "Closing Date").
3.2 Seller's Closing Deliveries. At the Closing, Seller shall deliver
---------------------------
to Purchaser (a) stock certificates evidencing the Shares, duly endorsed in
blank or accompanied by a stock power duly executed in blank, and (b) the other
documents required to be delivered by Seller pursuant to Article IX hereof.
-------
3.3 Purchaser's Closing Deliveries. At the Closing, (a) Purchaser shall
------------------------------
pay to Seller the Closing Cash Consideration (as provided in Section 2.2 hereof)
-------
and (b) Purchaser shall deliver to Seller the other documents required to be
delivered by Purchaser pursuant to Article IX hereof.
-------
3.4 Appointment of Directors. At the Closing, the Purchaser shall cause
------------------------
general meetings and board meetings to be held in the Company allowing the
Purchaser to appoint new directors and deputy directors and to appoint company
signatories. The Purchaser shall prepare the minutes of said meetings as well as
the necessary ancillary documentation and the Purchaser shall cause the
documentation to be submitted to the Patent and Registration Office or any other
relevant authority for registration immediately following said meetings.
3.5 Director Discharge from Pre-Closing Liabilities. At the next annual
-----------------------------------------------
general meeting of shareholders of the Company, the Purchaser undertakes to
grant those directors in the Company who have retired discharge from liability
for their administration until the Closing, however, only provided that, in the
auditor's reports for the relevant period, the Company's auditors do not
recommend against such discharge.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
Seller hereby makes the representations and warranties set forth below,
except as otherwise set forth on the Disclosure Schedule, which representations
and warranties are as of the date hereof, and will be, as of the Closing Date,
true and correct. Other than the representations and warranties set forth in
Sections 4.2(c), 4.3(b) and 4.15(a) and (b), all representations and warranties
made by Seller herein with respect to the Hagglunds Joint Venture are made to
the best of Seller's knowledge and Seller shall be liable only for a breach
thereof if Seller has actual knowledge that such representation and warranty is
not true and correct as of the date hereof and as of the Closing Date.
4.1 Authority. Seller has full corporate power and authority to
---------
execute, deliver and perform its obligations under this Agreement and each of
the Ancillary Agreements to which it is a party and to consummate the
Transactions. This Agreement has been duly authorized by, constitutes a binding
obligation of, and is enforceable against, Seller in accordance with its terms.
Each of the Ancillary Agreements to which Seller is a party shall, as of the
Closing Date, have been
16
<PAGE>
duly authorized and shall thereafter constitute a binding obligation of Seller,
enforceable against Seller in accordance with their terms.
4.2 Organization and Standing.
-------------------------
(a) Seller is a limited company duly organized, validly existing
and in good standing under the laws of Sweden, registered in the Companies
Registry with registration number 556194-4652, with full power and authority to
conduct its business as it is now being conducted.
(b) BWS is a limited company duly organized, validly existing and
in good standing under the laws of Sweden, registered in the Companies Registry
with registration number 556204-1904, with full power and authority to conduct
its business as it is now being conducted. True and correct copies of the
charter documents of BWS, as amended as of the date hereof, have been provided
to Purchaser.
(c) Each Subsidiary of the Company is duly organized, validly
existing and in good standing under the laws of Sweden, registered in the
Companies Registry with the registration number set forth on Schedule 4.2(c),
with full power and authority to conduct its business as it is now being
conducted. True and correct copies of the charter documents of each such
Subsidiary, as amended as of the date hereof, have been provided to Purchaser.
4.3 Capitalization.
--------------
(a) BWS. The entire authorized share capital of BWS is 50
million SEK divided into 500,000 shares (the "BWS Capital Stock"), each with a
nominal value of SEK 100 of which all are issued and outstanding. No shares of
the BWS Capital Stock are held in BWS's treasury and no shares are reserved for
issuance. All issued and outstanding shares of BWS Capital Stock (i) have been
duly authorized and validly issued and are fully paid and nonassessable, without
attachment of any preemptive rights, (ii) were issued in compliance with all
applicable Laws and (iii) are held of record and beneficially by Seller free and
clear of any Encumbrances. There are (x) no securities of BWS convertible into
or exchangeable for shares of capital stock or other voting securities of BWS,
(y) no subscription rights, options, warrants, calls, commitments, preemptive
rights or other rights of any kind to acquire from BWS and no obligation of BWS
to issue, sell, register for sale, redeem or otherwise acquire, any shares of
capital stock or other voting securities of BWS or any securities of BWS
convertible into or exchangeable for such capital stock or voting securities and
(z) no equity equivalents, interests in the ownership or earnings of, or stock
appreciation, phantom stock or other similar rights of, or with respect to, BWS.
Neither BWS nor Seller is a party to or bound by any contracts or commitments of
any character relating to any issued or unissued stock or any other equity
security issued or to be issued by BWS.
(b) Subsidiaries. Schedule 4.3(b) sets forth a list of each
--------
Subsidiary of BWS, specifying with respect to each such Subsidiary, the
jurisdiction of organization, the number of shares of authorized capital stock,
the par value of such stock, and the number of shares that are issued and
outstanding and the identity and number of shares held of record by each holder
thereof. Except as indicated on Schedule 4.3(b), all of the issued and
--------
outstanding shares of capital stock of each Subsidiary of BWS are owned of
record and beneficially by BWS, free and clear of any
17
<PAGE>
Encumbrances. All of the shares of capital stock of each Subsidiary of BWS have
been duly authorized and validly issued and are fully paid and non-assessable,
were issued and sold in accordance with applicable laws and were not issued in
violation of any preemptive or other similar rights. Except for the shares of
capital stock of the Subsidiaries owned by BWS or as otherwise indicated on
Schedule 4.3(b), there are no (i) outstanding equity securities of the
--------
Subsidiaries of BWS or (ii) commitments or obligations of any kind or character
for (A) the issuance of equity securities of any Subsidiary of BWS or (B) the
repurchase, redemption or other acquisition of any equity securities of any
Subsidiary of BWS. Except as set forth on Schedule 4.3(b), there are no
stockholder agreements, voting trusts, proxies or other agreements or
understandings with respect to or concerning the purchase, sale or voting of the
equity securities of any Subsidiary of BWS. Except for the equity securities of
the Subsidiaries of BWS described on Schedule 4.3(b), neither BWS nor its
--------
Subsidiaries owns equity securities in any other Person.
4.4 Books and Records. The Books and Records of BWS and each of its
-----------------
Subsidiaries have been made available to Purchaser or its representatives and
have been maintained in accordance with sound business practices and all
applicable Laws. The minute books of BWS are accurate, complete and correct and
have been maintained in accordance with applicable Laws.
4.5 Audited Financial Statements
----------------------------
(a) Attached as Schedule 4.5(a) hereto are true and correct
--------
copies of (i) the audited consolidated balance sheets of the Company and its
consolidated Subsidiaries as of December 31, 1999 and the related statements of
income, cash flows and stockholder's equity for the one year period then ended,
in each case together with pro forma adjustments prepared by the Company's
independent auditors to remove therefrom the assets, liabilities and equity of
CWS and CTV, and any revenues, expenses or other operating results of each of
them (the "Pro Forma Adjustments") and (ii) the audited consolidated balance
sheets of the Company and its consolidated Subsidiaries as of December 31, 1998
and December 31, 1997, and the related statements of income, cash flows and
stockholder's equity for the one year periods then ended, together with the
audit reports thereon ((i) and (ii) collectively, the "Audited Financial
Statements"). The Audited Financial Statements have been prepared in accordance
with GAAP using the Accounting Principles consistently applied by the Company
throughout the periods covered by such statements, and present fairly the
financial position and results of operations of the Company and its consolidated
Subsidiaries at the dates of such statements and for the periods covered
thereby. As adjusted by the Pro Forma Adjustments, the December 31 Financial
Statements present fairly the financial position and results of operations of
the Company and its consolidated subsidiaries other than CTV and CWS at the
dates of such statements and for the periods covered by.
(b) Attached as Schedule 4.5(b) hereto are true and correct copies of
--------
the audited consolidated balance sheets of each of the Minority Subsidiaries and
the Hagglunds Joint Venture as of December 31, 1999 and December 31, 1998 and
the related statements of income, cash flows and stockholder's equity for the
one year period then ended (the "Subsidiary Financial Statements"). The
Subsidiary Financial Statements have been prepared in accordance with GAAP and
the Accounting Principles consistently applied throughout the periods covered by
such statements, and present fairly the financial position and results of
operations of the Minority Subsidiary or the Hagglunds Joint Venture to which
such financial statement relates at the dates of such statements and for the
periods covered thereby.
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<PAGE>
4.6 Unaudited Financial Statements. Attached as Schedule 4.6 hereto
------------------------------ --------
are true and correct copies of the following: (a) unaudited balance sheets of
the Company and its consolidated Subsidiaries as of February 29, 2000; (b) the
unaudited balance sheet of the Company as of March 31 and April 30, 2000, and
the related statements of income, cash flows and stockholder's equity for the
period beginning January 1, 2000 and ending on the date of such unaudited
financial statements (collectively, the "Unaudited Financial Statements"). The
Unaudited Financial Statements have been prepared in accordance with GAAP using
the Accounting Principles consistently applied by the Company throughout the
periods covered by such statements (except for the absence of footnotes and
other presentation items, and subject to normal year end adjustments, none of
which will individually or in the aggregate be material) and present fairly the
financial position and results of operations of the Company (and, in the case of
the February 29, 2000 Unaudited Financial Statements, its consolidated
Subsidiaries) at the dates of such statements and for the periods covered
thereby.
4.7 Undisclosed Liabilities.
----------------------
(a) Except for such Liabilities as are disclosed on the December
31 Balance Sheet, to the best of Seller's knowledge, the Company has no material
Liabilities, whether absolute or contingent, liquidated or unliquidated, due or
to become due, except for (i) such Liabilities as have arisen after December 31,
1999, in the ordinary course of business, consistent with past practices of the
Company and its Subsidiaries and (ii) such Liabilities as would not individually
or in the aggregate have a Material Adverse Effect on the Company.
(b) Schedule 4.7(b) sets forth a description of certain
--------
contingent liabilities of the Company that are not required to be included in
the Company's December 31 Balance Sheet in accordance with GAAP and which were
disclosed by Seller to Purchaser prior to the date hereof. Such description
shall include Seller's best estimate of the maximum amount payable by the
Company as a result of such liabilities.
4.8 Licenses, Permits and Authorizations. Schedule 4.8 contains a true
------------------------------------
and correct list of all material licenses, permissions, authorizations and
consents issued by any Governmental Authority to the Company or any of the
Minority Subsidiaries (collectively, "Permits"). All such Permits are in full
force and effect. Except as set forth on Schedule 4.8 there are no proceedings
pending, or to the knowledge of Seller, threatened, that seek the revocation,
cancellation, suspension or adverse modification thereof. Such Permits
constitute all of the material Permits necessary to permit the Company and the
Minority Subsidiaries to own, operate, use and maintain their assets and
properties in the manner in which they are now operated and maintained and to
conduct the business of the Company and the Minority Subsidiaries as currently
conducted. All required filings with respect to such material Permits have been
timely made, and all required applications for renewal thereof have been timely
filed, except for any failure to timely file any filing or application that may
not reasonably result in the termination, nonrenewal or material adverse
modification of the material Permit to which such filing or application relates.
4.9 Labor Matters. Schedule 4.9 contains a true, correct and complete
------------- --------
list of all of the collective bargaining agreements to which the Company is a
party. Except as set forth on Schedule 4.9, no labor dispute, strike, work
--------
stoppage or material labor relations problem of any kind that has affected or
may affect the Company's or any of its Subsidiaries' businesses or
19
<PAGE>
operations in any material respect has occurred during the past two (2) years,
or, to the knowledge of the Seller, currently is pending or threatened. Except
as set forth on Schedule 4.9, neither the Company nor any of its Subsidiaries
--------
has entered into any severance or similar arrangement in respect of any present
employee of the Company or any of its Subsidiaries that will result in any
obligation (absolute or contingent) of Purchaser, the Company or any of its
Subsidiaries to make any payment to any present employee of the Company or any
of its Subsidiaries following termination of employment or upon a change of
control of the Company or any of its Subsidiaries. Except as set forth on
Schedule 4.9, neither the Company nor any of its Subsidiaries has engaged in any
--------
unfair labor practice and there are no complaints against the Company or any of
its Subsidiaries pending before any Governmental Authority by or on behalf of
any employee of the Company or any of its Subsidiaries.
4.10 Contracts. Schedule 4.10 contains a true, correct and complete
--------- --------
list of all of the Contracts described in Sections 4.10(a)-(o) below, to which
the Company is a party or by which its properties or assets is bound (each, a
"Material Contract"):
(a) Each Contract that involves performance of services or
delivery of goods and/or materials by or to the Company in an amount or value in
excess of 5,000,000 SEK, including a description of any offset arrangements or
requirements with respect thereto and the amount thereof; provided however that
such Contracts shall not include any Contracts pursuant to which the Company
has, as of the date hereof, fulfilled all of its performance obligations
thereunder;
(b) Each note, debenture, other evidence of Indebtedness,
guarantee, loan, interest rate and currency obligation swap, letter of credit,
surety-bond or financing agreement or instrument or other contract for money
borrowed, including any agreement or commitment for future loans, credit or
financing;
(c) Each Contract not in the ordinary course of business
including all Contracts relating to the acquisition or disposition of any
Subsidiary or any material assets of the Company (other than sales of inventory
in the ordinary course of business); provided however that such Contracts shall
not include any Contracts pursuant to which the Company has, as of the date
hereof, fulfilled all of its performance obligations (contingent or otherwise);
(d) Each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other contract affecting the
leasing of, title to, use of, or any leasehold or other interest in, any real or
personal property having annual rental payments in excess of 500,000 SEK;
(e) Each material licensing agreement with respect to
Intellectual Property, including agreements with current or former employees,
consultants or contractors regarding the appropriation or ownership of
Intellectual Property (other than (i) any such license granted by the Company to
FMV in the ordinary course of business as part of or as a condition to any
performance contract, (ii) any such license granted to any other Person in
connection with any subcontract, coproduction agreement, teaming agreement or
other similar arrangement solely with respect to the rights necessary for such
Person to perform its obligations thereunder, or (iii) any
20
<PAGE>
agreement between the Company and its employees in relation to their employment
by the Company);
(f) Each Contract, other than the plans and arrangements set forth in
Schedule 4.18 hereof, between the Company and any of its officers or employees
--------
earning a salary of not less than 1,000,000 SEK per year, or which provides for
bonuses, pensions, options, deferred compensation, retirement payments, profit
sharing, severance payments or the like (other than agreements with employees
granting them the right to participate in the plans and arrangements set forth
on Schedule 4.18) that could result in the Company's obligation (contingent or
--------
otherwise) to pay to any officer or employee an amount exceeding 1,000,000 SEK
per year individually or 2,000,000 SEK per year in the aggregate;
(g) Each joint venture contract, partnership agreement, limited
liability company agreement or other Contract (however named) involving a
sharing of profits, losses, costs or liabilities by the Company with any other
Person;
(h) Each Contract, other than the Noncompetition Agreement, containing
covenants that restrict the Company's business activity or limit the freedom of
the Company to engage in any line of business or to compete with any Person or
in any geographic area;
(i) Each Contract providing for payments to or by any Person based on
sales, purchases or profits, other than direct payments for goods;
(j) Each power of attorney currently effective and outstanding to any
Person other than an employee of the Company or solely for access to any bank
accounts of the Company;
(k) Each Contract providing for capital expenditures for investments
after the date hereof in an amount in excess of 500,000 SEK.
(l) Each written warranty, guaranty or other similar undertaking with
respect to contractual performance extended by the Company other than in the
ordinary course of business;
(m) Each Loss Contract;
(n) Each Contract with Seller or any of its Affiliates involving the
provision of goods or services by or to the Company after the Closing Date
having a value equal or greater than 5,000,000 SEK individually or 10,000,000
SEK in the aggregate; and
(o) Any other Contract material to the business or operations of the
Company.
Each Material Contract is valid and in full force and effect in all material
respects (except those as by their terms may expire prior to Closing). The
Company is not in default, or alleged to be in default, in any material respect
under any Material Contract to which it is a party or by which it is bound and
each such Material Contract is enforceable against the Company in accordance
with its terms. The consummation of the transactions contemplated by this
Agreement will not cause a
21
<PAGE>
material default under, or provide any right of termination with respect to, any
Material Contract. To the knowledge of the Seller, no party with whom the
Company or any of its Subsidiaries has a Material Contract is in default
thereunder in any material respect and each such Material Contract is
enforceable against each such other Person party thereto in accordance with its
terms. To the knowledge of the Seller, no event has occurred and no other facts
or circumstances exist that, with notice or lapse of time or both, could
materially impair the ability of the Company or any of its Subsidiaries party
thereto from enforcing any of their respective rights under any Material
Contract in any material respect or is reasonably likely to constitute a
material breach or material default by any party thereto.
4.11 Litigation. There are no Actions or any other proceedings at law
----------
or in equity or investigations by any Governmental Authority pending against the
Company or any of its Subsidiaries, or, to the best of Seller's knowledge,
threatened against or affecting the Company or any of its Subsidiaries, their
respective properties or business or the transactions contemplated by the
Agreement or the Ancillary Agreements. Neither the Company nor any of its
Subsidiaries is subject to or bound by any order of any Governmental Authority
entered in any Action to which it is a party or of which the Company has
knowledge.
4.12 Taxes.
-----
(a) Except as set forth in Schedule 4.12 hereto, each of BWS and
--------
each of its Subsidiaries has, in accordance with applicable Law, timely filed or
caused to be filed all of the Tax Returns required by Law to be filed and has
fully paid all Taxes for which it has become liable to pay on or prior to the
Closing Date. There is no dispute, audit, investigation, proceeding, deficiency
or claim, and there is no notice of any of the foregoing concerning any
Liability with respect to Taxes owed by BWS or any of its Subsidiaries either
claimed or raised in writing by any Governmental Authority or as to which the
Company has knowledge.
(b) Except as set forth in Schedule 4.12, there are no
--------
circumstances that would permit any Governmental Authority to levy additional
amounts of any Tax, fines or other punitive damages against BWS or any of its
Subsidiaries or to disallow the deductibility of any cost items reflected in
such accruals or in any Tax return filed by or with respect to the Company or
its Subsidiaries prior to the Closing Date other than such amounts as shall be
accrued on the Closing Balance Sheet.
(c) The Company has established adequate reserves in accordance
with the Accounting Principles in the December 31 Balance Sheet and the
Unaudited Financial Statements, which are sufficient for the payment of all
unpaid Taxes, whether or not disputed, for the period ended on or prior to the
date hereof and all prior periods.
Without limiting the generality of the foregoing:
(d) No Taxes, fines or punitive damages will be levied or, where
relevant, no loss of Tax losses will occur as a result of any reorganization of
BWS and its Subsidiaries, including the transfer of assets to BWS or the
transfer by BWS of the capital stock of CTV or CWS to Celsius prior to the
Closing or any of the transactions contemplated hereby; and
22
<PAGE>
(e) No fines or punitive damages will be levied as a result of
periodization errors in the VAT reporting of BWS or any of its Subsidiaries:
4.13 Absence of Certain Changes, Events or Conditions. Except as
--------------------------------------------------
set forth in Schedule 4.13, since December 31, 1999, there has not been any:
--------
(a) Material Adverse Change in the business, operations,
condition (financial or otherwise), assets, liabilities or prospects of the
Company and its Subsidiaries taken as a whole;
(b) except for normal periodic increases in the ordinary course
of business consistent with past practice, (i) increase in the compensation
payable or to become payable by the Company or any of its Subsidiaries to any of
their officers, directors or employees (collectively, the "Personnel"), (ii)
bonus, incentive compensation, service award or other like benefit granted, made
or accrued, contingently or otherwise, for or to the credit of any of the
Personnel, except in the ordinary course of business consistent with past
practices, (iii) employee welfare, pension, retirement, profit-sharing or
similar payment or arrangement made or agreed to by the Company or any of its
Subsidiaries for any Personnel except pursuant to the existing plans and
arrangements described in Schedule 4.18 or (iv) new employment agreements to
--------
which the Company or any of its Subsidiaries is a party of the type required to
be disclosed pursuant to Section 4.10(f) hereof;
(c) addition to or modification of the Pension Schemes other than
(i) contributions made in accordance with the normal practice of the Company and
its Subsidiaries or (ii) the extension of coverage to other Personnel who became
eligible after December 31, 1999;
(d) sale, assignment or transfer of any material assets of the
Company or any of its Subsidiaries other than the sale of inventory in the
ordinary course of business;
(e) cancellation of any Indebtedness or waiver of any rights of
substantial value to the Company or any of its Subsidiaries, other than in the
ordinary course of business;
(f) cancellation, termination, or material amendment of any
Material Contract, Permit or other instrument material to the Company;
(g) capital expenditure for investments in fixed assets or any
incurring of liability therefor by the Company, except for such capital
expenditures that do not, individually or in the aggregate, exceed 500,000 SEK;
(h) failure to operate the business of the Company and each of
its Subsidiaries in the ordinary course in any material respect so as to use
reasonable efforts to preserve such business intact, to keep available the
services of the Personnel, and to preserve the goodwill of the Company's and its
Subsidiaries' suppliers, customers and others having business relations with the
Company or any of its Subsidiaries;
(i) change in accounting methods or practices by the Company;
23
<PAGE>
(j) revaluation by the Company of any of its assets or
properties, including without limitation, writing off notes or accounts
receivable;
(k) damage, destruction or loss (whether or not covered by
insurance) of any material assets of the Company or any of its Subsidiaries;
(l) Indebtedness incurred by the Company or any of its
Subsidiaries other than the Haaglunds Joint Venture or any commitment to incur
Indebtedness entered into by the Company or any of its Subsidiaries (other than
the Haaglunds Joint Venture) other than (i) Indebtedness or any commitment to
incur Indebtedness in the ordinary course of business in an aggregate amount
that is less than Five Million (5,000,000) SEK or (ii) intercompany Indebtedness
incurred in the ordinary course of business between or among Seller, the Company
or any of its Subsidiaries;
(m) declaration, setting aside for payment of dividends or
distributions in respect of any securities of the Company or any of its
Subsidiaries or any redemption, purchase or other acquisition by the Company or
any of its Subsidiaries of their respective securities;
(n) issuance or reservation for issuance by the Company or any
of its Subsidiaries of, or commitment to issue or reserve for issuance any
securities of, the Company or any of its Subsidiaries;
(o) execution, termination or material amendment of any lease
for real or personal property by the Company or any of its Subsidiaries
involving an annual payment in excess of 500,000 SEK; or
(p) any agreement by the Company or any of its Subsidiaries to
do any of the foregoing.
4.14 Legal Compliance. Except for Environmental Laws and Employment
----------------
Laws, each of which is the subject of other representations and warranties
contained herein, (a) neither the Company nor any of its Subsidiaries or their
respective predecessors in interest is, and at no time during the past five (5)
years has been, in material violation of or in material default under any Law
applicable to it or its assets and properties, (b) no action, proceeding,
investigation, charge, complaint, claim, demand or notice has been filed or
commenced against the Company or any of its Subsidiaries (or against Seller or
any of its Affiliates relating to the Company or any of its Subsidiaries or
their respective predecessors in interest), alleging any such violation or
default, nor to the knowledge of Seller are any such actions threatened, and (c)
neither the Company nor any of its Subsidiaries or their respective predecessors
in interest, or Seller or any of its Affiliates on the Company's or its
Subsidiaries or their respective predecessors in interest behalf has, during the
past five (5) years, conducted any internal investigation in connection with
which Seller or any of its Affiliates, or the Company or any of its Subsidiaries
or their respective predecessors in interest retained or sought advice from
outside legal counsel with respect to any actual, potential or alleged material
violation of any Law by the Company or any of its Subsidiaries or their
respective predecessors in interest (or Seller or any of its Affiliates relating
to the Company or its Subsidiaries or their respective predecessors in
interest), or any of their respective Personnel or agents. None of Seller, its
Affiliates, or their respective representatives or agents is, and at no time
during the past
24
<PAGE>
five (5) years has been, in material violation of or in material default under
any Law for which the Company or its Subsidiaries may have any liability.
4.15 No Conflict with Other Documents. The execution and delivery
----------------------------------
of this Agreement and the Ancillary Agreements and the carrying out of the
transactions contemplated hereby or thereby, will not:
(a) result in any violation, termination or modification of, or
be in conflict with, the charter documents of the Company, any of its
Subsidiaries or Seller;
(b) subject to obtaining the consents, approvals and actions,
making the filings and giving the notices disclosed in Schedule 4.15 or
--------
described in Section 4.26, conflict with or result in a material violation of
-------
any term or provision of any Law applicable to the Company or any of its
Subsidiaries or their respective assets and properties;
(c) (i) conflict with or result in a material violation or
material breach of, (ii) constitute (with or without notice or lapse of time or
both) a material default under, (iii) require the Company or its Subsidiaries to
obtain any consent, approval or action of, make any filing with or give any
notice to any other Person as a result or under the terms of, (iv) result in or
give to any other Person any right of termination, cancellation, acceleration or
material modification in or with respect to, or (v) result in the creation or
imposition of any Encumbrance (other than a Permitted Encumbrance) upon the
Company or its Subsidiaries or any of their respective assets and properties
under, any Material Contract or any Permits to which the Company or its
Subsidiaries is a party or by which any of their respective assets and
properties are bound.
4.16 Government Contracts; Backlog.
-----------------------------
(a) There is no Action or investigation pending or, to the
knowledge of the Seller, threatened against the Company or any of its
Subsidiaries (or against Seller or any of its Affiliates with respect to the
Company), asserting or alleging the commission of criminal acts or bribery by
any such Person with respect to any Government Contract. Neither the Company nor
any of its Subsidiaries is currently, or at any time within the past five (5)
years has ever been, debarred or suspended from participation in the award of
Government Contracts (it being understood that debarment and suspension does not
include ineligibility to bid for certain Government Contracts due to generally
applicable bidding requirements). The Company and each of its Subsidiaries is,
and at all times within the past five (5) years has been, in all material
respects, in compliance with all applicable Laws relating to any Government
Contract, and none of Seller, the Company or any of their respective
Subsidiaries has received written notice of any kind from any Governmental
Authority alleging any violation, or notifying any such Person of any
investigation of a possible violation, of any applicable Law by Company or any
of its Subsidiaries or any act for which the Company or any of its Subsidiaries
could be debarred or suspended from contracting with any Governmental Authority,
or prohibiting or seeking to prohibit the Company or any of its Subsidiaries
from conducting, or restricting or seeking to restrict the Company's or any of
its Subsidiaries' ability to conduct, all or any part of their respective
businesses or operations or from contracting with any Governmental Authority. No
payment has been made by the Seller, the Company or any of their respective
Affiliates, or, to the knowledge of Seller, by any Person acting on behalf of
any such Person, to any other Person in connection with any Government Contract
in
25
<PAGE>
violation of applicable procurement Laws or in violation of (or requiring
disclosure pursuant to) any other applicable Law. The cost accounting and
procurement systems maintained by the Company and its Subsidiaries with respect
to Government Contracts are in compliance in all material respects with all
applicable Laws.
(b) With respect to each material Government Contract: (i) the
Company and each of its Subsidiaries party thereto has complied with all
material terms and conditions of such material Government Contract, including
all clauses, provisions and requirements incorporated expressly by reference or
by operation of law therein; (ii) all representations and certifications
executed, acknowledged or set forth in, or pertaining to, such material
Government Contract are complete and correct in all material respects as of
their effective date, and the Company and each of its Subsidiaries party
thereto, as applicable, have complied in all material respects with all such
representations and certifications; and (iii) no termination for convenience,
termination for default, cure notice or show cause notice is in effect as of the
date hereof pertaining to any material Government Contract.
(c) Schedule 4.16(c) identifies with respect to each material
--------
Government Contract to which the Company is a party and which has an aggregate
funded and unfunded backlog in excess of 5,000,000 SEK, the amount in SEK of the
backlog of the Company thereunder as of December 31, 1999.
(d) Schedule 4.16(d) lists each foreign sales agent agreement or
--------
any similar agency or representation Contract to which the Company, Seller or
any of their respective Subsidiaries is a party (or pursuant to which any of
them may have any obligation) requiring payments to any third party in
connection with sales by the Company or any of its Subsidiaries to any customer
(collectively, the "FSAs"). True and correct copies of each of the FSAs have
been provided to Purchaser prior to the date hereof. None of the FSAs violate
any applicable Law.
4.17 Title to Personal Properties; Absence of Encumbrances, Etc. The
-----------------------------------------------------------
Company or one or more of its Subsidiaries has and on the Closing Date will
have, good and marketable title to all of the Company's or such Subsidiaries'
personal property (collectively, the "Machinery and Equipment") owned or
reflected in the December 31 Balance Sheet, with such changes as thereafter have
occurred in the ordinary course of business, in each case free and clear of
Encumbrances. The Machinery and Equipment taken as a whole is in good operating
condition and repair (subject to normal wear and tear) and is suitable for the
purposes for which it is presently or historically has been used. Except as
otherwise contemplated by this Agreement, the Company or one or more of its
Subsidiaries owns, in the case of leases and licenses, has valid and subsisting
leasehold interests or licenses in, or, in the case of government furnished
property, otherwise possesses a valid right to use, all of the material
properties and assets of whatever kind (whether real or personal, tangible or
intangible and including, without limitation, all material Intellectual
Property) necessary to operate the business as currently conducted.
4.18 Pension and Employee Benefit Plans.
----------------------------------
(a) Except as set forth in Schedule 4.18 the Company and each of
its Subsidiaries has complied in all material respects with all laws, rules and
regulations relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours,
26
<PAGE>
benefits, collective bargaining, the payment of social security and similar
taxes, occupational safety and health and plant closings ("Employment Laws") and
has, and shall have paid or made provisions for in the Closing Balance Sheet all
contributions due from it as of the Closing. The Company and each of its
Subsidiaries has made sufficient provisions in its December 31 Balance Sheet in
respect of holiday pay. Except as will be reflected in the Closing Balance
Sheet, neither the Company nor any of its Subsidiaries will be liable as of the
Closing for the payment of any material taxes, fines, penalties or other
amounts, however designated, for failure to comply with any of the foregoing
Employment Laws.
(b) Except as disclosed in Schedule 4.18, neither the Company
--------
nor any of its Subsidiaries is a party to any agreement and has not incurred any
liability for the provision of benefits to any employee of the Company or any of
its Subsidiaries other than those payable, as required by any Employment Laws,
or pursuant to, state social security schemes or schemes of national insurance,
collective bargaining agreements, or other material Contracts disclosed to
Purchaser, including Sweden ITP, (the "Pension Schemes") on or following
retirement or death for or in respect of any of the employees of the Company or
any of its Subsidiaries.
(c) Except as set forth in Schedule 4.18, the Company's and its
Subsidiaries' Pension Schemes have been established, maintained and administered
at all times in accordance with all applicable Employment Laws and the Company
and each of its Subsidiaries has, as of the date hereof complied in all material
respects with all of its obligations and duties (including statutory duties)
under and in respect of the Pension Schemes.
4.19 Bank Accounts. Schedule 4.19 contains a list of all bank
------------- --------
accounts, safe deposit boxes and lock boxes maintained by the Company, and all
authorized signatures therefor, which list is complete and accurate.
4.20 Brokers and Advisors. None of Seller, the Company or any of its
--------------------
Subsidiaries has taken any action that would give rise to a valid claim against
any party hereto for a brokerage commission, finder's fee, consulting or
advisory fee, or similar payment, other than fees payable solely by Seller to
UPS Warburg for which none of the Company, its Subsidiaries or Purchaser shall
have any liability.
4.21 Environmental Matters.
---------------------
(a) (i) The Company and its Subsidiaries are, and at all times
during the previous three (3) years have been, in compliance with all applicable
Environmental Laws and any administrative or judicial notices or orders issued
or promulgated pursuant to or under any such Environmental Laws; (ii) the
Company and its Subsidiaries hold, and at all times during the previous three
(3) years have held, all material Permits required under the applicable
Environmental Laws for the operation of their business and the ownership of
their assets and properties, and (iii) to the knowledge of Seller, no
modification or change to the operations of the Company's or any of its
Subsidiaries' business will be required upon renewal of any such Permits.
Neither the Company nor its Subsidiaries has received any notice from any
applicable Governmental Authority alleging any violation of any Environmental
Laws. Except as set forth on Schedule 4.21, no Governmental Authority has
conducted any audits, assessments, tests or other
27
<PAGE>
reviews in connection with environmental matters regarding the Company or any of
its Subsidiaries.
(b) None of Seller, the Company or their respective Subsidiaries
has stored, deposited, used, treated, kept, disposed of, released or emitted any
Hazardous Materials on any of the Real Property or buildings used by the Company
or any of its Subsidiaries in contravention of any applicable Environmental
Laws.
(c) Neither the Company nor its Subsidiaries has any obligation
or Liability, whether actual or contingent, with respect to storage, treatment,
clean-up or disposal of any Hazardous Materials.
(d) There are no environmental reports or assessments in the
possession or control of Seller, the Company or any of their Affiliates relating
to the current or prior business of the Company or any of its Subsidiaries that
have not been delivered or made available to Purchaser.
4.22 Customers and Suppliers. Schedule 4.22 sets forth a complete and
----------------------- --------
accurate list of the names of (a) the ten largest customers of the Company
(including Seller and its Affiliates), showing the approximate total sales in
SEK by the Company to each such customer during the 1998 and 1999 calendar years
and (b) the ten largest suppliers of the Company (including Seller and its
Affiliates), showing the approximate total purchases in SEK by the Company from
each such supplier during the 1998 and 1999 calendar years. None of Seller, the
Company or any of their respective Subsidiaries has received any communication
from any customer or supplier listed in Schedule 4.22 notifying any of them of
--------
any intention to terminate or materially reduce purchases from or supplies to
the Company and its Subsidiaries or the intention to terminate or fail to renew
their current Contracts, if any, with the Company and its Subsidiaries or fail
to exercise any purchase option thereunder.
4.23 Insurance.
---------
(a) Schedule 4.23 contains an accurate and complete description
--------
of all policies of property, fire and casualty, product liability, workers'
compensation and other forms of insurance held by or for the benefit of the
Company or any of its Subsidiaries or insuring any of their assets or properties
(collectively, the "Insurance Policies"). True and correct and complete copies
of such insurance policies have been made available to Purchaser.
(b) Except as set forth Schedule 4.23 all Insurance Policies (i)
--------
are valid, outstanding, and enforceable policies, and (ii) will not terminate or
lapse by reason of the transaction contemplated by this Agreement with respect
to any claim arising prior to the Closing Date.
(c) None of Seller, the Company or its Subsidiaries has received
(i) any notice of cancellation of any Insurance Policy or refusal of coverage
thereunder, (ii) any notice that any issuer of such Insurance Policy has filed
for protection under applicable bankruptcy laws or is otherwise in the process
of liquidating or has been liquidated, or (iii) any other notice that any such
28
<PAGE>
Insurance Policy is no longer in full force or effect or that the issuer of any
such Insurance Policy is no longer willing or able to perform its obligations
thereunder.
4.24 Intellectual Property. Schedule 4.24 lists each patent, patent
--------------------- --------
application, invention disclosure, trademark, trademark application,
servicemark, servicemark application, trade name, copyright registration and
copyright application in which the Company has