Form 8-K BALCHEM CORP For: Jun 13
Exhibit 2.1
TABLE OF CONTENTS
1
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DEFINITIONS AND INTERPRETATION
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3
|
2
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SALE AND PURCHASE OF THE SHARES
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8
|
3
|
CLOSING CONDITIONS
|
9
|
4
|
CLOSING
|
10
|
5
|
LOCKED BOX – NO LEAKAGE UNDERTAKING
|
12
|
6
|
CONDUCT OF BUSINESS PRIOR TO CLOSING
|
12
|
7
|
BUYERS’ DUE DILIGENCE
|
13
|
8
|
WARRANTIES OF THE SELLER
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13
|
9
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WARRANTIES OF THE BUYERS
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21
|
10
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COMPENSATION
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22
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11
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SPECIFIC INDEMNITIES
|
26
|
12
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TERMINATION
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27
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13
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PROTECTION OF GOODWILL
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28
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14
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OTHER UNDERTAKINGS
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29
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15
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CONFIDENTIALITY
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30
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16
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MISCELLANEOUS
|
30
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Schedule 1.1 BDC
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Bring Down Confirmation
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Schedule 1.1 EB
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Equity Bridge
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Schedule 1.1 MAC
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Management Accounts
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Schedule 1.1 MAG
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Material Agreements
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Schedule 1.1 SU
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Subsidiaries
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Schedule 2.3.1
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Earn-Out
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Schedule 4.1.2(vii)
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Consents from third parties
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Schedule 10.3.1
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Warranty Insurance Policy
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(A) |
The Seller owns all 432,368,897 shares (the "Shares") in Kechu BidCo AS, reg. no 923 855 866, a a limited liability company
duly incorporated under the laws of Norway, having its registered address at Hieronymus Heyerdahls gate 1, 0160 Oslo, Norway (the "Company");
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(B) |
The Shares constitute 100% of the share capital of the Company;
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(C) |
The Company owns all 1,520,697 shares in Kappa Bioscience AS, reg. no 990 476 357, a limited liability company duly incorporated under the laws of Norway, having its registered
address at Silurveien 2B, 0280 Oslo, Norway ("Kappa Bioscience");
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(D) |
Kappa Bioscience's business is business of developing, producing and selling products within food articles, dietary supplements and medicine (the "Business");
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(E) |
The Seller wishes to sell the Shares and the Buyers wish to buy the Shares in the proportions of 93% to Balchem and 7% to B.V. (the “Buyers’
Proportions”); and
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(F) |
This Agreement sets out the terms and conditions upon and subject to which the Buyers will acquire the Shares from the Seller and the Seller will sell the Shares to the Buyers.
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1 |
DEFINITIONS AND INTERPRETATION
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1.1 |
Definitions
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(i) |
any dividend or distribution of profits or assets declared, paid or made, or any repurchase, redemption or return of share capital, in each case by the Group to the Seller or an
Affiliate of the Seller;
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(ii) |
any payments or transfer of value by the Group to or for the benefit of the Seller or an Affiliate of the Seller;
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(iii) |
a waiver, forgiveness, deferral, release, discharge or discount by the Group of any amount, obligation or liability owed or due to the Seller or an Affiliate of the Seller;
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(iv) |
any Seller's Transaction Costs paid or agreed to be paid by any Group Company;
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(v) |
any guarantees or liabilities assumed or incurred (or any indemnity given in respect thereof) by any Group Company to or for the benefit of the Seller or an Affiliate of the Seller;
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(vi) |
the creation of any commitment or obligation to do any of the foregoing; and
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(vii) |
any net Tax, fee or expenses triggered or incurred by the Group as a result of or in connection with the above,
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(i) |
any salaries, bonuses and other remuneration (including expenses), as well as directors' fees (including expenses) and/or consultancy fees, which are consistent with historical
practice and are payable or paid in the ordinary course of business to the Seller or any of its Affiliates;
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(ii) |
any payments for an amount accrued or contemplated to be paid in the Accounts or the Equity Bridge;
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(iii) |
any fees or other payments pursuant to agreements or arrangements disclosed in the Data Room Documents entered into by the Group as part of its ordinary course of business;
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(iv) |
any Seller's Transaction Costs which are reimbursed by the Seller to the Group before or at Closing;
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(v) |
any payments permitted under this Agreement;
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(vi) |
any matter undertaken at the written request of a Buyer and acknowledged as Permitted Leakage; and
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(vii) |
any Tax, fee or expenses triggered or incurred by the Group as a result of or in connection with the above;
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1.2 |
Interpretation
|
1.2.1 |
Any reference to a statutory provision shall include a reference to the provision as amended or replaced from time to time and any subordinate legislation made
under such statutory
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provision.
1.2.2 |
Whether or not something is "material" for the purposes of this Agreement shall be determined by reference to the Group or, as the context may require, the
obligations and Warranties of a Party pursuant to this Agreement, taken as a whole. Notwithstanding the limitation of any of the Seller's Warranties by the use of the word "material" or similar words or expressions, the inclusion of an item
in a Schedule shall not imply that such item is "material" for the purposes of this Agreement.
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2 |
SALE AND PURCHASE OF THE SHARES
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2.1 |
Sale and purchase
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2.1.1 |
On the terms and subject to the conditions set forth in this Agreement, at the Closing Date:
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(ii) |
the Buyers shall pay the Purchase Price and the Shareholder Receivable Purchase Price to the Seller in accordance with the Buyers’ Proportions.
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2.1.2 |
2.1.4 |
Any and all cash payments due to the Seller pursuant to this Agreement shall be paid to the Seller's Bank Account.
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2.2 |
Purchase Price
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2.2.2 |
The purchase price payable for the Shareholder Receivable shall be a NOK amount equal to the nominal value of the Shareholder Receivable (to be notified by the
Seller to the Buyers at or
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prior to Closing) (the "Shareholder Receivable Purchase Price").
2.3 |
Additional Purchase Price
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2.3.1 |
In addition to the Purchase Price the Seller may become entitled to the Earn-Out Amount pursuant to the terms and conditions of Schedule 2.3.1 Earn-Out.
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2.4 |
The Contingent Liability and the Shareholder Receivable
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2.4.3 |
The Seller, or another Person of sufficient substance designated by the Seller, shall compensate the Buyers and the Company for any Loss as a result of or due to
any claims from the former owners of the Company related to the Contingent Liability.
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3 |
CLOSING CONDITIONS
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3.1 |
Condition in favour of the Buyers
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(i) |
Seller has delivered the Swedbank Release Letter to Balchem;
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(ii) |
The Seller’s Warranties shall, up until the Closing, be true and accurate in all material respects, and if a Seller’s Warranty is qualified by materiality, such warranty shall be
true and correct in all respects;
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changes materially negatively from the NBI Report by Howden dated 3 May 2022 due to the underwriting process
performed by the insurance company. However, if no Warranty and Insurance Policy is obtained as set out in this clause 3.1.1(i), the Seller in accordance with Clause 10 shall be entitled to
provide the Buyers with coverage for the Seller's Warranties instead of the Warranty and Insurance Policy on the following terms with the result that this clause (iv) will be waived by the Buyers:
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(a) |
Clauses 10.3 and 10.4 shall be deemed deleted;
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(b) |
No liability shall arise unless the Buyers in writing have notified the Seller where the factual basis for the Claim is specified in reasonable detail within the
date falling one week after the 2022 annual accounts have been audited; and in no event later than 30 June 2023;
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(c) |
Single Loss pursuant to Clause 10.5.1(i) shall be 0.1% of the Purchase Price;
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(d) |
The basket amount pursuant to Clause 10.5.1(ii) shall be 1% of the Purchase Price; and
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(e) |
The aggregate liability pursuant to Clause 10.5.1(iii) shall be limited to an amount equal to 15% of the Purchase Price. Any indemnity payable pursuant to Clause
(iii) above shall be included when calculating the 15% aggregate liability.
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3.2 |
Best endeavours
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3.2.1 |
The Parties undertake to use their best endeavours to fulfil the conditions described in Clause 3.1 above.
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4 |
CLOSING
|
4.1 |
Closing
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4.1.2 |
At Closing, the Seller shall:
|
(i) |
deliver to the Buyers a copy of a board resolution of the Company approving the Buyers' acquisition of the Shares and the Shareholder Receivable;
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(ii) |
deliver to the Buyers a written notification in accordance with section 4-10 of the Private Limited Liability Companies Act, duly executed on behalf of the Company, confirming that
the Buyers are entered into the Company's shareholders' register as of Closing as the owners of the Shares, free and clear of any Encumbrance, together with an updated shareholders' register, evidencing that the Buyers are the owner of the
Shares;
|
(iii) |
present to Balchem the shareholders’ registers of the Group Companies, updated (where required) to meet all requirements under the governing law of the respective Group Company and
to accurately reflect the ownership of the shares in the Group
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Companies as of the Closing Date;
(iv) |
deliver to Balchem written documentation evidencing that the Contingent Liability has been assigned and transferred from the Company to the Seller;
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(v) |
deliver to the Buyers written documentation evidencing that the Shareholder Receivable has been assigned and transferred to the Buyers in the Buyers’ Proportions;
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(vi) |
deliver the Bring Down Confirmation to Balchem as required by the Warranty Insurance Policy;
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(vii) |
deliver to Balchem consents from contracting parties and other parties set out in Schedule 4.1.2(vii);
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(viii) |
deliver to Balchem the resignations of the directors from the board of directors of the respective Group Companies whereby the respective directors confirm his/her resignation from
the respective board of directors and that he/she has no outstanding claims towards the Group in the capacity of directors of the board, save for ordinary board remuneration up to the Closing Date (if applicable);
|
(ix) |
deliver to Balchem general PoA enabling one or more individuals designated by the Buyers, to act on behalf of each of the Group Companies until new members of the board of directors
of the Group Companies have been duly registered; and
|
(x) |
deliver to Balchem an electronic copy of the Data Room Documents.
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4.1.3 |
At Closing, the Buyers shall:
|
(ii) |
repay or procure the repayment of all outstanding amounts under the Swedbank Loans in accordance with the Swedbank Release Letter;
|
(iii) |
deliver to the Seller a copy of a notification to the Company of the purchase of the Shares in accordance with section 4-12 of the Private Limited Liability Companies Act;
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(iv) |
procure and be responsible for that the Extraordinary General Meetings are held by the relevant Group Companies in accordance with Clause 14.2, at which, among other things, the
directors resigning in accordance with Clause 4.1.2(vii) are replaced; and
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(v) |
make all deliveries to the Insurer as required under the Warranty Insurance Policy.
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4.2 |
Procedure at Closing
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4.2.1 |
All actions to take place at the Closing in accordance with this Clause 4 shall be carried out at the same time so that the Seller shall not be obliged to
transfer the Shares to the Buyer before receipt of the Buyers' payment of the Purchase Price has been confirmed by the Seller. All actions to take place at the Closing in accordance with this Clause 4 shall be mutually conditional upon each
other. Each Party may (in addition to and without prejudice to all other rights and remedies available to it) revoke any action taken under Clauses 4.1.2 or 4.1.3 (as applicable), and accordingly demand reversal of such action if the other
Party is unable to perform all of its obligations thereunder.
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4.2.2 |
5 |
LOCKED BOX – NO LEAKAGE UNDERTAKING
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5.2 |
The Seller undertakes to notify the Buyers in writing promptly after becoming aware of any Leakage, providing reasonable details (including quantum).
|
5.3 |
If any Leakage has occurred after the Accounts Date that is not repaid to the relevant Group Company prior to Closing the Seller shall pay to the relevant Group
Company an amount equal to the Leakage received (i.e. the transfer of value received) by the Seller or its Affiliates as a result of the Leakage.
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5.4 |
The Seller shall not under any circumstances have liability under this Clause 5 unless the Buyers have notified the Seller in writing of a claim related to a
Leakage on or before the date falling twelve (12) months after the Closing Date.
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5.5 |
This Clause 5 shall be the sole and exclusive remedy for any Leakage.
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6 |
CONDUCT OF BUSINESS PRIOR TO CLOSING
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6.1 |
Except as contemplated by this Agreement or as approved by the Buyers in writing, between the date hereof and the Closing Date, the Seller shall cause the Group
to:
|
(i) |
refrain from:
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(a) |
amending its Organisational Documents or from otherwise changing the number of authorised or issued shares or share capital in the Group Companies;
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(b) |
issuing options, warrants or other similar rights to acquire shares in the Group Companies;
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(c) |
declaring, setting aside or paying any dividend or other distribution, or from directly or indirectly redeeming, purchasing or otherwise acquiring any of its
shares; and
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(d) |
except for in the ordinary course of business and consistent with historical practice sell, pledge or encumber any asset;
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(e) |
transferring any business operation of any Group Company or part thereof;
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(f) |
establish or make any commitment to establish any incentive bonus, profit sharing, stock option plan or other incentive scheme in the Group;
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(g) |
making any changes to the terms of employment or the amount of remuneration payable to any employee of the Group, other in the ordinary course of business as
part of the Group’s annual adjustment of salary for its employees;
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(h) |
conduct its operations in the ordinary course of business and in accordance with applicable law; and
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(i) |
agree or arrange to do any of the foregoing.
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7 |
BUYERS’ DUE DILIGENCE
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8 |
WARRANTIES OF THE SELLER
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As of the Execution Date, unless otherwise stated herein, the Seller makes the warranties (Norwegian: garantier) set out in this Clause 8 (the "Seller's Warranties") to the Buyers. The Seller shall without further action be deemed to have repeated the
Seller's Warranties as of the Closing Date, unless a Seller's Warranty speaks to the situation as of the Execution Date only.
8.1 |
Power and authority
|
8.1.1 |
The Seller has the requisite corporate power and authority to sign and deliver this Agreement and to perform its obligations under this Agreement.
|
8.1.2 |
This Agreement has been duly entered into by the Seller and constitutes valid and binding obligations of the Seller.
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8.2 |
Share capital and ownership to the Shares
|
8.2.1 |
The Company has a share capital of NOK 129,710,669.10 divided into 432,368,897 shares, with a par value of NOK 0.30 each.
|
8.2.2 |
The Seller owns and hold full right and title to the Shares.
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8.2.3 |
The Shares are legally issued and fully paid up and constitute the entire share capital of the Company.
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8.2.4 |
Other than the securities granted pursuant to the Swedbank Loans, the Shares are free and clear of any Encumbrances. There are no commitments to give or create
any Encumbrance on the Shares, and no third party is entitled to any of the foregoing.
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8.2.5 |
No Person has any options, convertible securities or other rights which require or may require the Company, and the Company has not passed any resolution, to
issue any new shares, equity interests or securities of any kind to any Person.
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8.3 |
The Group Companies
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8.3.2 |
Each of the Group Companies are private limited liability companies duly organised and validly existing under the Laws of its incorporation and have all
requisite powers and authorities to own their assets and to conduct their business in the manner in which it is now being conducted.
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8.3.3 |
The shares in the Subsidiaries have been duly authorised and validly issued and are fully paid up.
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8.3.4 |
There are no options, warrants, convertible loans, other equity interests, or rights to acquire, subscribe or receive any present or future equity interest or
shares in the Group Companies (whether conditional or otherwise).
|
8.3.5 |
The Organisational Documents of each of the Group Companies are up-to-date and there are no resolutions of the shareholders of the Group Companies for amendments
which are not shown in the Organisational Documents.
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8.4 |
Insolvency
|
8.4.1 |
No Group Company is insolvent and there are no proceedings in relation to any compromise or arrangement with creditors or any winding up, bankruptcy or other
insolvency proceedings concerning any Group Company and no events have occurred which, under applicable law, would justify such proceedings. No Group Company has commenced negotiations with one or more of its current creditors with a view to
rescheduling any of its indebtedness.
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8.5 |
Accounts and assets
|
8.5.1 |
The Accounts have been prepared in accordance with applicable law and the Accounting Principles (unless otherwise stated within). The Accounts give a true and
fair view of the financial position, results of the operations, assets, liabilities and cash flows of the Group as of, and for the period ending on, the Accounts Date.
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8.5.2 |
As of the Accounts Date there were no other liabilities (contingent or otherwise), pledges, obligations or commitments of a type required to be disclosed on a
balance sheet prepared in accordance with the Accounting Principles other than as disclosed in the Accounts.
|
8.5.3 |
The Group holds good title to all assets reflected on the balance sheet of the Group as of the Accounts Date, except for assets sold or disposed of in the
ordinary course of business since the Accounts Date or as provided for in this Agreement. All such assets are free and clear of any Encumbrances other than those described in the Data Room Documents and, to the Seller’s Knowledge, in good
working condition, subject to normal wear and tear.
|
8.5.4 |
At the Accounts Date, the Group was the legal and beneficial owner of the assets set forth or referred to in the balance sheet of the Accounts.
|
8.5.5 |
The Accounting Principles have not changed in any material respects as applied in the Accounts
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compared with the accounts for the previous two (2) financial years, except in connection with the changes related to IFRS or as a result of new legislation.
8.5.6 |
Each Group Company owns, or is entitled to use, all of the material assets, in each case as is necessary to carry on the Business in all material respects as
carried out on the Execution Date.
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8.6 |
The Management Accounts
|
8.6.1 |
The Management Accounts have been prepared in accordance with the Accounting Principles, to the extent the Accounting Principles are applicable to such accounts.
The Management Accounts do not materially misstate the Group Companies' financial condition and the results of the Group Companies and the Group Companies' operations as per the relevant dates and the relevant periods, apart from making any
provisions or reservations, whether for Taxes or otherwise, that are typically made only in the annual accounts.
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8.7 |
Taxes
|
8.7.1 |
Each Group Company has timely filed or caused to be filed all Tax Returns which are or were required to be filed. The Tax Returns filed by any Group Company are
in all material respects true, correct and complete.
|
8.7.2 |
Each Group Company has paid, or made provision for the payment of, all Taxes that have or will become due pursuant to those Tax Returns.
|
8.7.3 |
As of the Execution Date, there are no Tax audits, disputes or litigation currently pending or, to the Seller's Knowledge, threatened with respect to any Group
Company, except as described in the Data Room Documents.
|
8.7.4 |
The Group is not, and will not as a result of the Transaction, become liable for Taxes of the Seller or any Affiliates of the Seller.
|
8.7.5 |
The Group has no, and has to the Sellers' Knowledge not previously had, permanent establishment or permanent representative and no claim for any Tax has been or
may be made by any Tax authority against the Group in a jurisdiction where the Group does not file Tax Returns for the respective Tax to the effect that the Group is or may be subject to Tax by any Tax authority in that jurisdiction.
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8.8 |
Relationship to Seller and its Affiliates
|
8.8.1 |
Save as described in the Data Room Documents, there are no guarantees or similar commitments issued by the Group for the obligations of the Seller or any of its
Affiliates and the Seller or any of its Affiliates have not issued any financial guarantee or other surety securing any obligation or liability of the Group.
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8.9 |
Conduct of business
|
8.9.1 |
Since the Accounts Date, the Group has carried on its business in the ordinary course. The Group has not since the Accounts Date performed, or been caused to
perform, any act, or made any omission, that would be prohibited in the period between the Execution Date and the Closing Date pursuant to Clause 6.
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8.9.2 |
Since the Accounts Date, there has been no material adverse change in the Business, conditions or operations of any Group Company, excluding changes in general
economic conditions and conditions in the industries in which the Group conduct business, changes due to COVID-19, changes in regulatory, legislative or political conditions and any geopolitical conditions, outbreak of hostilities, acts of
war, sabotage, terrorism or military actions, and no such change is to the Sellers' Knowledge expected.
|
8.10 |
Real property
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8.10.1 |
8.10.2 |
Each of the Group Company's leases all the real property necessary to conduct its business as it is currently conducted. All leases pursuant to which any of the
Group Companies leases any material real property are valid and effective in accordance with their respective terms as described in the Data Room Documents. The Group Companies do not use or occupy any other real estate.
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8.10.3 |
No Group Company is in material breach of any lease of real property and to the Seller's Knowledge no counterparty is in breach of any material provision of any
such lease.
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8.11 |
Material Agreements
|
8.11.1 |
A complete and accurate copy of each Material Agreement is included in the Data Room Documents.
|
8.11.2 |
The Material Agreements are valid and binding on the Group and on the relevant counterparty and have been complied with by the Group and, to the Seller's
Knowledge, by the relevant counterparty. No written allegation of any breach or invalidity of any Material Agreement has been received by the Group that has not been remedied.
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8.11.3 |
8.11.4 |
Save as set out in the Data Room Documents, no Material Agreement contains any obligation for the Group to notify or seek the consent of or other action by a
counterparty or any other person in the event of the execution of the Agreement or the consummation of the Transaction.
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8.12 |
Employees
|
8.12.1 |
The Group has no other employees than listed in folder 5.1 of the Data Room Documents.
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8.12.2 |
An overview of main terms and conditions of employment of the Key Employees has been disclosed in the Data Room Documents.
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8.12.3 |
The Group has duly and completely fulfilled all material payment and other obligations towards its employees when due.
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8.12.4 |
As of the Execution Date, no Key Employee has served notice of termination of his or her current employment with the Group and, to the Seller's Knowledge, no
member of the Key Employees intends to give such notice.
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8.12.5 |
Save as set out in the Data Room Documents, there is no incentive bonus, profit sharing, stock option plan or other incentive scheme in force in the Group as of
the Execution Date.
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8.12.6 |
The Group has not violated statutory minimum wage regulations in the three years prior to the Execution Date.
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8.12.7 |
Save as set out in the Data Room Documents, the Group is not party to any collective bargaining agreements or similar arrangements with respect to its employees.
|
8.12.8 |
The Group is not liable to make any outstanding payment to an employee, director or former employee by way of damages or compensation for loss of office or
employment, redundancy or unfair or wrongful dismissal, or, save as set out in the Data Room Documents, pursuant to any agreement on termination of employment, early retirement or any other agreement.
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8.12.9 |
Save as set out in the Data Room Documents, there are no, and have not been during the last three years, disputes between any Group Company and any of its
employees, and there are no unresolved labour union grievances, unfair labour practices or labour arbitration proceedings pending or, to the Seller's Knowledge, threatened relating to the Group Companies.
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8.13 |
Pension
|
8.13.1 |
8.13.2 |
The Group has made the necessary payments, allocations and assignments and contributed the necessary funds as required under applicable laws or contractual
agreements or arrangements concerning pensions to their current or former employees.
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8.13.3 |
No employee or former employee of the Group Companies has threatened to make or made any complaint or claim, other than a routine claim for benefits, in respect
of such pension schemes.
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8.14 |
Intellectual Property Rights
|
8.14.1 |
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8.14.3 |
The Group is not infringing any Intellectual Property Right of any Person.
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8.14.4 |
Save as disclosed in the Data Room Documents and to the Seller's Knowledge, no Person is infringing or has infringed any Intellectual Property Rights of the
Group.
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8.14.5 |
[Omitted].
|
8.14.6 |
Save as disclosed in the Data Room Documents, the Group has entered into appropriate agreements with all of its employees, freelancers and contractors relating
to the protection of confidential information, trade secrets and the assignment to the Group of all Intellectual Property Rights created for or on behalf of the Group.
|
8.14.7 |
All employees and consultants who contributed to the discovery or development of any of the Intellectual Property Rights owned by the Group have fully and
finally (without any compensation remaining to be paid) assigned all rights to such Intellectual Property Rights to the Group, including the right for the Group to modify, sublicense and further assign such Intellectual Property Rights, nor
have any such person any rights or claims against the Group with regard to any inventions made during his or her services to the Group.
|
8.14.8 |
All fees applicable to the Group’s registered material Intellectual Property Rights have been paid when due.
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8.15 |
IT
|
8.15.1 |
The IT systems used by the Group are either solely their property, free and clear from any Encumbrances, or properly used under a valid license.
|
8.15.2 |
The IT systems used by the Group have been and are duly and properly protected against access and use by all unauthorised persons. In respect of owned IT
systems, the Group has sole possession of the source code in relation thereto and has not granted any rights in or over the source code to any Person (excluding open-source contributions made by the Group as set out of the Data Room
Documents).
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8.15.3 |
The Group has not developed or modified any software used in the Group’s business that is licensed according to license terms that does not allow users to copy,
distribute, and/or modify the software unless such modifications and/or source code of the software are made publicly available.
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8.15.4 |
The Group has procedures in place designed to take and store back-up copies of the software and data of the business of the Group and to minimise unauthorised
access to and the introduction of viruses and other contaminants of such software and data, and have in all material respects complied with such procedures.
|
8.15.5 |
To the Seller's Knowledge, the Group’s IT systems:
|
(i) |
have not been subject to material defects or fails to function save as set out in the Data Room Documents, and there have been no failures or breakdowns of such IT
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system which have caused any material disruption to the business of the Group;
(ii) |
have policies designed to preserve the availability, security and integrity of, and the data processed and stored on, such IT systems; and
|
(iii) |
save as set out in the Data Room Documents, have been maintained and currently have the benefit of appropriate development maintenance and support agreements.
|
8.16 |
Data protection
|
8.16.1 |
The business of the Group is in all material respects compliant with the General Data Protection Regulation (GDPR) and the Norwegian Data Protection Act and
other applicable laws for the protection of personal data.
|
8.16.2 |
To the Seller's Knowledge, the Group and its business operations are not subject to any investigations or proceedings by data protection authorities. In the
three years prior to the Execution Date, there has to the Seller's Knowledge not been any loss of personal data or any other breach of the protection of personal data within the meaning of Art. 33 GDPR.
|
8.16.3 |
Save as disclosed in the Data Room Documents, during the past three years the Group has not been party to any investigations by data protection authorities nor
claims by any third parties with regard to data protection breaches nor have such claims been threatened.
|
8.17 |
Compliance with Applicable Laws and Regulatory Approvals
|
8.17.2 |
Neither any Group Company, nor any of its directors, officers, employees or other representatives, have to the Seller's Knowledge directly or indirectly, during
the last three years unlawfully given or agreed to give any material gift or similar benefit (other than with respect to bona fide payments for which adequate consideration has been given) to, and there are to the Seller's Knowledge no
situations with respect to a Group Company during the last three years which involved or involve the use of a Group Company's funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to political activity, or
the giving or receipt of any illegal discounts or rebates.
|
8.17.3 |
To the Seller's Knowledge, each Group Company is and has during the last three years been in compliance with all applicable anti-bribery and corruption,
anti-money laundering laws and regulations that applies or applied to the Group.
|
8.17.4 |
The Group holds all permits, licenses and authorisations which are necessary for the Group to conduct its business as it is currently conducted. No Group Company
has, as of the Execution Date, received any notice from any Governmental Body to the effect that it is in violation of any permit, license or authorisation.
|
8.18 |
Insurance
|
8.18.1 |
The Data Room Documents contains information of all material insurance policies currently
|
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held by the Group.
8.18.2 |
The Group has the required, by law or any agreement to which the Group is party, insurance policies in place and all premiums due under all material insurance
policies have been paid.
|
8.18.4 |
No notifications have been received with regard to (i) the non-renewal of any insurance policy or renewal on less favourable terms and conditions than those
which are currently in place; or (ii) any refusal to indemnify the Company or any of the Subsidiaries in relation to a particular event.
|
8.19 |
Litigation
|
8.19.1 |
8.19.2 |
To the Seller's Knowledge, there are no investigations, disciplinary proceedings or other circumstances as of the Execution Date that reasonably could be
expected to lead to any legal action, litigation or arbitration against the Group.
|
8.20 |
Environment
|
The Group is not liable for any contamination in its capacity as the lessee of real property or otherwise.
|
8.20.2
|
To the Seller's Knowledge, at the Execution Date there is no threatened or ongoing governmental investigation or enquiry relating to any alleged material breach
of any environmental law by any Group Company.
|
8.21 |
Intermediaries
|
8.21.1 |
No broker, finder, advisor or intermediary will be entitled to any fee, commission or other payment of any nature from the Group Companies in connection with the
Transaction or the completion of it.
|
8.22 |
Data Room Documents
|
8.23 |
8.23.1 |
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to the Buyers in connection with the Transaction.
8.23.2 |
The Seller's Warranties constitute an exhaustive regulation of the Buyers' requirements as to the Shares, and no further requirements as to the quality, fitness
for purpose or merchantability of the Shares or the assets, liabilities and operations of the Group shall apply, whether by implication or by the application of background law. Without prejudice to the generality of the foregoing, the Seller
makes no warranty to the Buyers with respect to, and shall have no liability to the Buyers based on, any financial projection, forecast or other forward-looking statements relating to the Group.
|
8.23.3 |
8.24 |
Principle of exclusivity of the Seller's Warranties
|
8.24.1 |
A fact, matter or circumstance which might lead to a Claim under the Seller's Warranties shall only be covered by one of the Seller's Warranties and shall be
covered exclusively by the Seller's Warranty under which the fact, matter or circumstance in question is the more specifically covered or described.
|
8.25 |
Interpretation of no reference to the Data Room Documents
|
8.25.1 |
References to the Data Room Documents in some of the Seller's Warranties set out in this Clause 8 (whether by exceptions, or otherwise) shall not be construed to
imply that the principles set forth in Clause 10.2 do not apply to the Seller's Warranties where there is no reference to the Data Room Documents.
|
9 |
WARRANTIES OF THE BUYERS
|
As of the Execution Date, unless otherwise stated herein, the Buyers make the warranties (Norwegian: garantier) set out in this Clause 9 (the "Buyers' Warranties") to the Seller. The Buyers shall without further action be deemed to have repeated the Buyers' Warranties as at the Closing Date.
9.1 |
Organisation
|
9.1.1 |
Balchem is a corporation, duly organised and validly existing under the laws of State of Maryland, U.S.A. and B.V. is a private limited liability company (besloten vennootschap met beperkte aansprakelijkheid) duly organised and validly existing under the laws of The Netherlands and each Buyer has all necessary corporate power and authority
to own, lease or operate its properties and assets and to conduct its business as it is now conducted.
|
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9.2 |
Power and authority
|
9.2.1 |
Each Buyer has sufficient corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement has been
duly authorised, executed and delivered by each Buyer and, assuming the due authorisation, execution and delivery of this Agreement by the Seller, this Agreement constitutes the legal, valid and binding obligation of the Buyers enforceable
against the Buyers in accordance with its terms.
|
9.3 |
No violation or conflict or consent
|
9.4 |
Availability of funds
|
9.4.1 |
The Buyers have the required funds to pay the Purchase Price to the Seller at Closing and to make any additional payment pursuant to this Agreement when due.
|
9.5 |
Filings and approvals
|
9.6 |
No knowledge of breach
|
9.6.1 |
The Buyers have completed their Due Diligence investigation of the Group to their satisfaction and have no outstanding requests for further information or
documentation. The Buyers are at the Execution Date not aware of any fact or circumstance that may result in their making any Claim against the Seller under the Seller's Warranties.
|
10 |
COMPENSATION
|
10.1 |
Principle for compensation and right to remedy
|
10.1.2 |
The Seller's obligation to compensate the Buyers for a Loss which the Buyers incur as a result of breaches to the Seller's Warranties is exclusively secured by
the Warranty Insurance Policy as further set out in clause 10.3.
|
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10.2 |
The Buyers' Due Diligence
|
10.2.3 |
The Buyers confirm that they do not rely on any other express or implied representations or warranties than the Seller's Warranties.
|
10.3 |
Warranty insurance
|
10.3.4 |
10.4 |
Time limitations
|
10.4.1 |
No liability shall arise under Clause 10 unless the other Party in writing has notified the Party
|
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in breach, where the factual basis for the Claim is specified in reasonable detail:
(i) |
within sixty (60) Business Days from the date when the Party became aware or could reasonably be expected to become aware that a Claim could be brought against the other Party, if
and to the extent the failure to timely notify the other Party results in the Claim being a higher amount than the claiming Party would have been entitled to, had the Party given a timely written notice; and
|
(ii) |
with respect to any Claim relating to a breach of:
|
(a) |
the Fundamental Warranties and the Seller's Warranty set out in Clause 8.6 (Taxes), within 60 months after the Closing Date; and
|
(b) |
all other Seller's Warranties, the date falling 18 months after the Closing Date.
|
10.5 |
Limitation on payments
|
10.5.1 |
The maximum aggregate liability of the Seller under this Agreement shall be subject to the following limitations:
|
(i) |
the Seller shall have no liability with respect to any single Loss which does not exceed 0.1% of the Purchase Price;
|
(ii) |
(iii) |
the Seller's aggregate liability shall in any event be limited to an amount equal to 20% of the Purchase Price.
|
10.5.2 |
Clause 10.5.1 (i) and 10.5.1(ii) shall not apply to a breach of Fundamental Warranties.
|
10.6 |
Calculation of Losses
|
10.6.1 |
For the purposes of this Agreement, a liability which is contingent shall not constitute a Loss unless and until such contingent liability becomes an actual
liability and is due and payable. The Buyers may make a notification of a claim with respect to a contingent loss or matter in order to meet and comply with the time limitation in Clause 10.4.1, and as a result of such notification, retain
the right to pursue the claim if and when the Loss no longer is contingent, provided that the other terms and conditions for making such a claim are met.
|
10.6.2 |
The Buyers shall not be entitled to recover any Loss more than once in respect of the same circumstances giving rise to more than one Claim under this Agreement.
|
10.6.3 |
10.6.4 |
No liability for the Seller shall arise:
|
(i) |
if and to the extent that a provision or allowance for the matter in question (as a specific reserve) has been made in the Accounts or the Equity Bridge;
|
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(ii) |
if and to the extent that any Claim occurs as a result of any legislation not in force at the date hereof, or which takes effect retroactively, or occurs as a result of any increase
in the Tax rate in force at the date hereof or any change in the generally established practice of the relevant Tax authorities, whether or not the change purports to be effective retrospectively in whole or in part;
|
(iii) |
(iv) |
if and to the extent that the Claim has arisen as a result of any change after the Closing Date in the accounting or valuation principles of the Group; or
|
(v) |
which would not have arisen but for an act or omission by the Buyers or the Group after the Closing Date causing the circumstances resulting in the Claim.
|
10.6.5 |
Any amount paid by the Seller to the Buyers for any loss incurred by the Buyers shall be regarded as a reduction of the Purchase Price.
|
10.7 |
Third Party Claims
|
10.7.1 |
If the Buyers or the Group receives notice of any claim from a third party which may give rise to a Claim against the Seller due to any breach of the Seller's
Warranties or any other obligation of the Seller under this Agreement (a "Third Party Claim"), the Buyers shall without undue delay notify the Seller in writing. The Buyers shall
further procure that the Seller is kept informed of the development and the Group’s handling of the claim, and that the Seller is given access to information and documentation required to assess the claim. To the extent necessary to enable
the Seller to form an opinion of the appropriateness of the Group's defence against or follow-up of a Third Party Claim, the Buyers shall further procure that the Seller is given access to correspondence and documentation relevant for such
assessment.
|
10.7.2 |
The Buyers shall not and shall use all reasonable endeavours to ensure that the Group does not waive any rights, accept any obligations or make any payments with
liability or other effect for the Seller related to a Third Party Claim without the Seller's prior consent in writing.
|
10.7.3 |
The Seller may (but shall have no obligation to), at its sole option, assume at its sole cost and expense the full defence and control of a Third Party Claim,
conditional upon the Seller acknowledging in writing its obligation to indemnify the Buyers against Losses that may result from such Third Party Claim.
|
10.7.4 |
The Seller shall be entitled to settle any Third Party Claim in respect of which the Seller has assumed the defence in accordance with the provisions of this
Clause 10.7 without consent of the Buyers, provided that the settlement includes a full and unconditional release of the Buyers and the Group from all liability in respect of the Third Party Claim.
|
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defence of any legal or arbitration proceedings of the Third Party Claim, subject to the rights of any third party insurers.
10.7.6 |
The Seller shall have no liability for any loss incurred by the Buyers resulting from a breach of the provisions of this Clause 10.7.
|
10.8 |
10.8.1 |
The Buyers and the Group shall have an obligation to reasonably seek to mitigate any Loss suffered due to any breach of the Seller's Warranties or any other
obligation of the Seller under this Agreement.
|
10.8.2 |
10.8.3 |
The Buyers shall not, and shall procure that no Affiliate of the Buyers (including the Group) shall, deliberately initiate any inquiry and/or investigation by
any Governmental Body for the purpose of incurring or increasing a Loss suffered by the Buyers as a result of breach of the Seller's Warranties or any other obligation of the Seller under this Agreement.
|
10.9 |
Sole remedy
|
10.9.2 |
For the avoidance of doubt, the Group shall be not be entitled to raise any Claim against the Seller or any Affiliate of a Seller, and the Buyers shall indemnify
and hold harmless the Seller from any Loss caused by such a Claim.
|
10.10 |
Fraud and willful misconduct
|
10.10.1 |
10.11 |
10.11.1 |
11 |
SPECIFIC INDEMNITIES
|
11.1.1 |
The Seller undertakes to indemnify and hold the Buyers and the Group harmless from, on a NOK for NOK basis, any Loss of the Group [Parenthetical Omitted]
attributable to
|
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circumstances related to the time on or before the Closing Date resulting from, arising out of, consisting of or in any way related to the [Omitted]. The Parties
specifically agree that the Seller’s liability according to this Clause 11.1.1 does not include:
|
(i) |
[Omitted]
|
(ii) |
[Omitted]
|
(a) |
[Omitted];
|
(b) |
[Omitted];
|
(c) |
[Omitted]; and
|
(iii) |
[Omitted].
|
11.1.2 |
Seller’s liability pursuant to Clause 11.1.1 shall be limited to EUR 30 million. This EUR 30 million limitation on Seller’s liability shall not apply to Claims
against the Seller resulting from fraud or willful misconduct on the part of the Seller.
|
11.1.3 |
Any claim against the Seller under this Clause 11 must be notified to the Seller in specifying the factual basis for the Claim reasonable detail not later than
on the date falling 18 months after the Closing Date.
|
11.1.4 |
For the avoidance of doubt, the limitations set out in Clauses 10.2, 10.5, 10.6.4(i) and 10.9.1 shall not apply to any
Claim under this Clause 11.
|
11.1.5 |
It is specifically noted that Clause 10.3 shall be disregarded and shall not apply with regard to the Seller’s liability under this Clause 11.
|
11.1.6 |
The Seller shall be entitled to receive from the Buyer an amount equal to any cash received from the [Omitted] and/or the
fair market value of the shares of [Omitted] if such are returned to Kappa Bioscience.
|
12 |
TERMINATION
|
12.1 |
Termination
|
12.1.1 |
This Agreement may be terminated and the transactions contemplated herein may be abandoned by either Party if Closing has not occurred (other than through the
fault of the Party seeking to terminate this Agreement) within the Long Stop Date or such later date as the Parties may agree upon in writing.
|
12.1.2 |
The Agreement may not be terminated after Closing.
|
12.2 |
Rights on Termination
|
12.2.1 |
If this Agreement is terminated pursuant to Clause 12.1, all further obligations of the Parties pursuant to this Agreement shall terminate without further
liability of a Party to the other, provided, however, that the obligations of the Parties contained in Clauses 15 (Confidentiality),
|
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16.7 (Notices), 16.8 (Costs), 16.9 (Governing Law) and 16.10 (Dispute Resolution) shall survive such termination.
13 |
PROTECTION OF GOODWILL
|
13.1 |
Non-compete
|
13.1.2 |
The restriction in clause 12.1.1 also applies to any shares or ownership interest in any such competing business, whether in whole or in part, directly or
indirectly, through or in cooperation with any other Persons. Notwithstanding the foregoing, the provisions in this Clause 13.1 shall not restrict or prevent a Restricted Person from (i) acquiring or holding shares representing no more than
2.5% of the issued share capital of any company which is listed on a recognized stock exchange, or (ii) making investment in equity or debt funds or private equity funds with a general mandate.
|
13.2 |
Non-solicitation
|
13.2.1 |
Each Restricted Person undertakes, to the extent permitted by applicable law, for the Non-Compete Period, not to employ, seek to employ, solicit or facilitate
the employment of any employee of the Group or otherwise encourage such employee of the Group to terminate its relationship with the Group.
|
13.2.2 |
Notwithstanding the foregoing, nothing herein shall restrict or preclude the Seller or a direct or indirect shareholder of the Seller from hiring any employee
who responds to a general advertisement of employment which is placed in the ordinary course of business or who first initiates an employment discussion with the Seller or shareholder of the Seller, so long as the Seller or shareholder of the
Seller has not violated the restrictions on solicitation contained in this Agreement.
|
13.2.3 |
Each Restricted Person undertakes, for the Non-Compete Period, not to influence or attempt to influence any customer or supplier of the Group to amend, terminate
or otherwise discontinue such relationship with the Group.
|
13.3 |
Compensation for Restrictions
|
13.3.1 |
Each Party acknowledges that each of the restrictions in this Clause 13 is no more extensive than is reasonable and necessary to protect the interests of the
Buyers as the buyers of the Shares. The consideration for the restrictions contained in this Clause 13 is included in the Purchase Price.
|
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14 |
OTHER UNDERTAKINGS
|
14.1 |
Access to information
|
14.1.1 |
Balchem acknowledges that the Seller may need access, from time to time, after Closing to certain accounting or Tax records and other relevant information held
by the Group to the extent such records and information pertain to events occurring prior to Closing and agrees that Balchem shall, and shall cause the Group to:
|
(i) |
14.2 |
14.2.2 |
The Buyers hereby agree to, and shall procure that the Company and relevant Group Companies waive, release and discharge, from and after Closing to the fullest
extent permitted in accordance with applicable laws, any person who was at any time prior to Closing a director or deputy director of the Company or relevant Group Companies (each a "Covered
Director") from any and all claims, obligations and liabilities in relation to their function as director of the Company or relevant Group Companies, which the Buyers or the Companies have or may at any time have had against any such
Covered Director. The above shall not include any liability for fraud, wilful misconduct or gross negligence by the Covered Directors. At the Extraordinary General Meetings, a decision shall be formally adopted by each of the of the Company
and relevant Group Companies to confirm the above.
|
14.3 |
Guarantee
|
14.3.1 |
Balchem hereby unconditionally and irrevocably guarantees as for its own obligation (In Norwegian:
selvskyldnerkausjon) to the Seller the full, due and punctual performance of all obligations of B.V. under this Agreement.
|
14.3.2 |
Balchem hereby waives any rights which they may have to require the Seller to proceed first against, or claim payment, if any, from B.V. to the effect that as
between the Seller and Balchem the latter shall be liable as the principle debtor as if it had entered into the undertakings of B.V. on its own account.
|
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15 |
CONFIDENTIALITY
|
15.1.3 |
This Clause 15 shall be in full force and effect for a period of two years from the Closing Date.
|
16 |
MISCELLANEOUS
|
16.1 |
Press releases etc
|
16.1.1 |
The Buyers and the Seller shall issue a joint press announcement, in a format to be agreed between the Parties as soon as possible after the Execution Date and
in no event later than three (3) Business Days after the Execution Date. Nothing set forth herein shall prevent a Party from making any disclosure required by applicable law or any listing agreement with or rules or regulations of any stock
exchange (based upon the reasonable advice of counsel).
|
16.2 |
Delayed Payment
|
16.2.1 |
If any sum due for payment in accordance with this Agreement is not paid on the due date for payment, the Party in default shall pay Default Interest on that sum
from but excluding the due date to and including the date of actual payment.
|
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16.3 |
Illegality
|
16.3.1 |
If any one or more of the provisions contained in this Agreement shall be held invalid, illegal or unenforceable in any respect in any competent jurisdiction,
the validity, legality and enforceability of such provision or provisions shall not in any way be affected or impaired thereby in any other jurisdiction and the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired.
|
16.4 |
Entire Agreement; Amendment
|
16.4.2 |
16.5 |
Waiver and Release
|
16.5.1 |
No delay in exercising or non-exercise by any Party of any of its rights under or in connection with this Agreement shall operate as a waiver or release of that
right. Rather, any such waiver or release must be specifically granted in writing signed by the Party granting it and shall (i) be confined to the specific circumstances in which it is given; (ii) not affect any other enforcement of the same
or any other right; and (iii) (unless it is expressed to be irrevocable) be revocable at any time in writing.
|
16.6 |
Assignment
|
16.6.1 |
16.7 |
Notices
|
16.7.1 |
Unless otherwise specified herein, any notice required to be given hereunder by any Party shall be deemed to have been given if mailed by prepaid registered
mail, delivered to the address of the other Party or sent by email as hereinafter set forth:
|
If to the Buyers, to:
|
|
Balchem Corporation
|
|
Postal address:
|
|
52 Sunrise Park Road
|
|
New Hampton, NY 10958
|
|
Attention: General Counsel
|
|
Email: [email protected]
|
|
Balchem B.V. c/o Balchem Corporation
|
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Postal address:
|
|
52 Sunrise Park Road
|
|
New Hampton, NY 10958
|
|
Attention: General Counsel
|
|
Email: [email protected]
|
|
Always with a copy to:
|
|
Ernst & Young Advokatfirma AS
|
|
Office address:
|
|
Dronning Eufemias gate 6A, 0191 Oslo, Norway
|
|
Postal address:
|
|
P.O. Box 1156 Sentrum, 0107 Oslo, Norway
|
|
Att.: Kjeld Arne Rogde Thomassen
|
|
Email: [email protected]
|
|
If to the Seller, to:
|
|
Kechu MidCo AS
|
|
Postal address:
|
|
Hieronymus Heyerdahlsgate 1, 0160, Oslo, Norway
|
|
Att: Johanna Rydén and Hanne Ottar
|
|
Email: [email protected] and [email protected]
|
|
Always with a copy to:
|
|
Advokatfirmaet CLP DA
|
|
Office address:
|
|
Sommerrogata 13-15, 0255 Oslo, Norway
|
|
Postal address:
|
|
P.O. Box 1974 Vika, 0117 Oslo, Norway
|
|
Att.: Jakob Villum
|
|
Email: [email protected]
|
16.8 |
Costs
|
16.8.1 |
16.9 |
Governing Law
|
16.9.1 |
This Agreement shall be governed and construed in accordance with Norwegian law, without regard to its conflicts of law rules and principles. In using English
terms and concepts in the Agreement, the Parties have not intended to incorporate any legal standards other than those that would result from a translation of such terms and concepts into Norwegian and/or an interpretation of such terms and
concepts under Norwegian law.
|
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16.10 |
Dispute resolution
|
16.11 |
Counterparts
|
16.11.1 |
This Agreement may be executed by electronic signature (such as Scrive and DocuSign) and in one or more counterparts and delivered via Adobe® Portable
Document Format (PDF), or other electronic means, each of which shall be an original, but all of which together shall constitute one and the same instrument, it being understood that all Parties need not sign the same counterpart for this
Agreement to become effective.
|
***
[The next page is the signature page]
33 of 42
SIGNATURE PAGE FOR SHARE PURCHASE AGREEMENT
13 June 2022
For Kechu MidCo AS
|
For Balchem Corporation
|
||
Name: Johanna Rydén
|
Name: Theodore L. Harris
|
||
Title: Chairperson
|
Title: Chairman of the Board, CEO & President | ||
For Balchem B.V.
|
|||
Name: Theodore L. Harris
|
|||
Title: Managing Director
|
34 of 42
SCHEDULE 1.1 BDC: BRING DOWN CONFIRMATION
To: [●] (the Buyer)
Date: [●]
BRING DOWN CONFIRMATION
Reference is made to the share purchase agreement (the Agreement) dated [●] entered into between Kechu MidCo AS
(the Seller) and the Buyer concerning sale and purchase of all shares in Kechu Bidco AS, reg. no. 923 855 866.
Any defined terms used in this letter shall have the meaning given to them in the Agreement.
On behalf of the Seller it is hereby confirmed that subject to any breaches of the Seller's Warranties, which the Seller is not liable for pursuant to Clause 9.2 (The Buyer’s Due Diligence) of the Agreement, that no facts, matters or circumstances constituting a breach of the Seller's Warranties have been identified, [except for: [any exceptions to be
described]].
On behalf of the Seller it is hereby confirmed that due inquiry has been made with the individuals referred to in the definition of "Seller's Knowledge" in the Agreement,
no earlier than one day before issuing this letter.
The provisions in Clauses 16.9 (Governing Law) and 16.10 (Dispute
resolution) of the Agreement shall apply mutatis mutandis to this letter.
On behalf of the Seller:
|
||
|
||
Name:
|
||
Title:
|
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(i) |
Kappa Bioscience AS, the Company is the sole shareholder of Kappa Bioscience AS.
|
(ii) |
Kappa Bioscience Europe GmbH, Kappa Bioscience AS is the sole shareholder of Kappa Bioscience Europe GmbH.
|
(iii) |
Kappa Bioscience USA Inc., Kappa Bioscience AS is the sole shareholder of Kappa Bioscience USA Inc.
|
(iv) |
Kappa Solutions AS, Kappa Bioscience AS is the sole shareholder of Kappa Solutions AS (it is noted that 10% of the shares in Kappa Solutions AS are held by Kappa Solutions AS).
|
(v) |
Kappa Ingreidents GmbH [Parenthical Omitted]. Kappa Bioscience AS is the sole shareholder of Kappa Solutions AS ([Parenthical Omitted].
|
39 of 42
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Exhibit 99.1
Balchem Corporation Signs Definitive Agreement to Acquire Kappa Bioscience AS
New Hampton, New York, (June 14, 2022) - Balchem Corporation (NASDAQ: BCPC), a global specialty ingredients company focused on Nutrition and Health, has signed a definitive agreement to acquire Kappa Bioscience AS (“Kappa”), a leading science-based manufacturer of specialty vitamin K2 for the human
nutrition industry, headquartered in Oslo, Norway.
Vitamin K2 is a fast-growing specialty vitamin that plays a crucial role in the human body for bone health, heart health, immunity, and athletic
performance. Primarily, vitamin K2 supports the transport and distribution of calcium in the body. Vitamin K2 is important at all life stages, from pregnancy
and early life to healthy aging. Kappa’s K2VITAL® branded vitamin K2 is the leading synthetic vitamin K2 and is backed by strong intellectual property and a deep clinical research portfolio.
Ted Harris, Chairman, CEO and President of Balchem, said, “We
are thrilled to welcome Kappa Bioscience’s strong and experienced team to Balchem. This acquisition accelerates our strategy to expand our portfolio of science-based specialty nutrients with leading positions in growing markets. Vitamin K2 fits
squarely with our strategic focus and our vision of ‘making the world a healthier place’. Kappa is the leader within its space and the only company offering a patented, 99.7% all-trans vitamin K2 as MK-7, identical to the bioactive vitamin K2
molecule found in nature. We believe the combining of our two companies will strengthen our scientific and technical expertise, geographic reach, and marketplace leadership while ultimately leading to accelerated growth for both companies’
portfolios.”
Egil Greve, Kappa Bioscience President & CEO, said, “We
are extremely excited to join Balchem, a market leader in human nutrition and health and a science-driven company that aligns well with our vision to improve the quality of life for all. Our partners can expect continued expert knowledge, scientific
excellence, product safety and quality, and customer service as we further strengthen these areas together with Balchem. Our two companies are very complementary to each other. Balchem’s strength in the United States will further accelerate the
growth of Kappa’s vitamin K2 platform in that key market. At the same time, Kappa provides Balchem with increased access to European markets. Both companies
share a passion for science-based nutrition solutions while operating to the highest integrity and doing it right.”
Balchem is acquiring Kappa from majority owner Verdane Edda for an enterprise value of NOK 3.175B (approximately USD 338M). This transaction represents an
EV/EBITDA multiple of 18x based on the 2022 forecast EBITDA. Kappa’s forecast 2022 revenues are approximately NOK 500M (approximately USD 53M) with a strong growth and margin profile. The transaction is expected to be accretive to Balchem’s earnings
per share in 2022 on an adjusted basis. In addition to the purchase price, the sellers have an opportunity to receive an additional payment in 2024 of 0% to 16% of the enterprise value based on growth and other performance targets.
The transaction closing is subject to the completion of customary closing conditions and will be financed through Balchem’s existing revolving credit
facility and cash on hand.
Following the acquisition, Kappa will be included in Balchem’s Human Nutrition and Health business segment.
About Balchem Corporation
Balchem Corporation develops, manufactures and markets specialty ingredients that improve and enhance the health and well-being of life on
the planet by providing state-of-the-art solutions and the finest quality products for a range of industries worldwide. The company reports three business segments: Human Nutrition & Health; Animal Nutrition & Health; and Specialty Products.
The Human Nutrition & Health segment delivers customized food and beverage ingredient systems, as well as key nutrients into a variety of applications across the food, supplement and pharmaceutical industries. The Animal Nutrition & Health
segment manufactures and supplies products to numerous animal health markets. Through Specialty Products, Balchem provides specialty-packaged chemicals for use in healthcare and other industries, and also provides chelated minerals to the
micronutrient agricultural market.
About Kappa Bioscience
Kappa Bioscience AS was founded in Oslo, Norway, in 2006 following a game-changing discovery: The synthesis of pure, all-bioactive vitamin K2 MK-7, an
essential vitamin needed to direct calcium around our bodies and keep hearts, bones, and lots of other things healthy. Today, that pioneering spirit is still as strong as ever. With patented processes, innovative technology, and renowned expertise,
Kappa Bioscience AS produces K2VITAL® and K2VITAL® Delta; vitamin K2 with unmatched purity and stability, in a wider range of formulations than anyone else, to bring the best possible benefits of vitamin K2 to everyone.
From vitamin K2 and turn-key solutions to research and marketing initiatives, to product launches and growth strategies, Kappa Bioscience AS believes in
doing it right. That means developing products and services that set new standards of excellence, made with integrity, and through close collaboration. Together with its partners, Kappa Bioscience AS is helping the health and nutrition industry turn
a corner, without cutting corners.
Forward-Looking Statement
This release contains forward-looking statements, which reflect Balchem’s expectation or belief concerning future events that involve risks and
uncertainties. Balchem can give no assurance that the expectations reflected in forward-looking statements will prove correct and various factors could cause results to differ materially from Balchem’s expectations, including risks and factors
identified in Balchem’s annual report on Form 10-K for the year ended December 31, 2021. Forward-looking statements are qualified in their entirety by the above cautionary statement. Balchem assumes no duty to update its outlook or other
forward-looking statements as of any future date.
Contact:
Jacqueline Yarmolowicz, Executive Assistant
Telephone: 845-326-5600
Email: [email protected]
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