Purchase Agreement
between
1. Xxxxxx Antriebstechnik GmbH & Co. KG (Gummersbach Local Court, HRA
1942), represented by its general partner Xxxxxx Antriebstechnik GmbH
(Gummersbach Local Court, HRB 1283) which is itself represented by its
managing directors with power to represent the company alone Xxxxxxx
Xxxxxxxx and Xxxxxxx Wolfslast, all with business address at
Xxxxxxxxxxxx. 00, 00000 Xxxxxxxxxxx,
- hereinafter: the "Seller",
2. Xxx. Xxxxx Xxxxxxxx, nee Wolfslast, Landwehrstra(beta)e 10 a, 51709
Marienheide,
and
3. XX Xxxx'x (Deutschland) GmbH, formerly JFP Achte
Vermogensverwaltungsgesellschaft mbH with its seat in Xxxxxxxxx
(Xxxxxxxxx Xxxxx Xxxxx, XXX 00000),
- hereinafter: the "Buyer" -
4. Xx. Xxxxxx X. Xxxxx, with business address XX Xxxx'x Incorporated, 000
Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000-0000, XXX,
5. XX Xxxx'x Incorporated, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxxx, XX
00000-0000, XXX, represented by Xx. Xxxxxx X. Xxxxx as Chairman of the
Board,
- hereinafter: the "Guarantor" -
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The parties No. 3 through 5 are represented by Xx. Xxxxxx Xxxxxxx, attorney at
law, Punder, Volhard, Xxxxx & Xxxxxx, Xxxxxxxxxxxxx 0, 00000 Xxxxxxxxxx
Recitals
The Seller is the sole shareholder of
Berges electronic GmbH
(Gummersbach Local Court, hrb 1671)
(hereinafter: "GmbH");
The Seller holds five shares of DM 19,000, DM 1,000, DM 30,000, DM 50,000 and DM
400,000 in GmbH's capital stock of DM 500,000;
GmbH and Xxx. Xxxxx Xxxxxxxx are the sole shareholders of
Xxxxxx electronic S.r.l. (Naturns, Italy)
(Bozen Commercial Register, No. 8404)
(hereinafter: "S.r.l.");
GmbH holds 17,820 shares of LIT 10,000 each and Xxx. Xxxxx Xxxxxxxx hold 180
shares of LIT 10,000 each in the capital stock of S.r.l.;
Messrs. Xxxxxxx Xxxxxxxx and Xxxxxxx Wolfslast are Managing Directors of GmbH
with sole powers of representation and have been released from all limitations,
while the management of S.r.l. is the responsibility of the Board of Directors,
to which belong Xx. Xxxxxxx Xxxxxxxx as Chairman, Xx. Xxxxx Xxxxxx as Vice
Chairman and
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Xxx. Xxxxx Xxxxxxxx as member (updated commercial registry excerpts for the
Seller and the personally liable shareholder thereof, as well as for GmbH,
S.r.l. and Xxxxxx Italiana S.r.l. have been attached hereto as Annex 1);
Xx. Xxxxxxx Xxxxxxxx is the sole shareholder and Managing Director of Xxxxxx
Scandinavia AB, Malmo, Sweden. He is prepared to sell the shares to the Buyer or
to liquidate the company as of 31 December 1997. The parties are yet to discuss
and come to an agreement on this issue.
NOW, THEREFORE, the Parties hereby execute the following
Purchase Agreement.
1. Object of Agreement; Transfer
1.1 The Seller hereby sells and transfers its five (fully paid-in) shares
with respective par values of DM 19,000, DM 1,000, DM 30,000, DM
50,000 and DM 400,000 in GmbH along with all of the dividend
participation rights associated therewith for the current 1997
financial year as well as any ancillary rights to the Buyer.
Immediately following the execution of this Agreement, the Seller and
the Buyer shall execute the agreement on the transfer of the shares
referred to in Section 1.1 attached hereto as Annex 1 A in notarial
form.
1.2 The Buyer hereby accepts the above purchase offer.
1.3 Xxx. Xxxxx Xxxxxxxx sells and transfers the 180 shares of LIT 10,000
each, which she holds in S.r.l. to Xx. Xxxxxx X. Xxxxx within the
framework of the agreement attached as Annex 2; Xxxxxx X. Xxxxx
accepts this purchase offer.
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1.4 The Seller and GmbH have each provided guarantees for the other
company or have taken out loans which can be used by both companies.
Xxxxxx Italiana S.r.l. and S.r.l. have likewise issued mutual
guarantees vis-a-vis the financing banks. Reference is hereby made to
Annex 3.
Attached hereto as Annex 4 are certificates from the relevant banks
which, in the opinion of the Seller and Xxxxxx Italiana S.r.l.,
disclose the amount of the liabilities of GmbH and S.r.l. vis-a-vis
such banks as of 30 June 1997 and which, in the opinion of the Seller
and Xxxxxx Italiana S.r.l., furthermore confirm that GmbH and S.r.l.
shall no longer be liable for any liabilities of the Seller or Xxxxxx
Italiana S.r.l. from 1 July 1997. Reference is made to Section 5.10.1
i) of this Agreement.
The Buyer shall be obligated to effect prior to the Transfer Date the
release of the Seller and Xxxxxx Italiana S.r.l. from the joint
liability and any guarantees in favor of the companies taken over.
This shall transpire through the redemption of bank loans, the
provision of other securities or through refinancing.
1.5 The Guarantor waives its right resulting from the Stand By letter of
Credit No. 4765500264 i-a. (Appendix 5) against Deutsche Bank AG under
the condition precedent that the transfer of shares contemplated in
Section 1.1 has occurred. It will confirm this waiver vis-a-vis
Deutsche Bank AG as soon as practically possible. The Parties agree
that the liability potentially arising from such Letter of Credit
against Deutsche Bank AG is not counted as part of the loan and bank
liabilities pursuant to Section 3.3 hereof.
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2. Transfer Date
In the terms of this Agreement, the Transfer Date shall be 12:00 a.m.
on December 1, 1997. The Companies are deemed to be conducted for the
account of and at the risk of the Buyer from that date.
3. Purchase Price; Loans
3.1 The purchase price for all shares in GmbH shall consist of a premium
of DM 2,200,000.00 (in words: two million two hundred thousand
Deutsche marks) +/- the Asset Book Value of the Equity (as defined in
No. 3.2 below) as of 30 June 1997, which is to be computed on the
basis of the Consolidated Half-Year Financial Statements (as defined
in No. 3.6 below) of GmbH and S.r.l. Out of the purchase price, an
amount of DM 40,000.00 is allocated to the shares transferred by Xxx.
Xxxxx Xxxxxxxx.
The purchase price shall bear interest for the time from July 1, 1997
at a rate of 3%.
3.2 The Asset Book Value of the Equity is to be computed in accordance
with the following example, which is based on the figures as of 31
December 1996:
a) Equity
(1.) Subscribed capital DM 500,000.00
(2.) Surplus capital DM 1,135,300.00
(3.) Retained earnings/accumulated deficit DM 1,698,874.47
---------------
(4.) Interim sum DM 3,334,174.47
(5.) Compensatory item for currency translation DM 41,772.84
(6.) Compensatory item for shares of other
shareholders
a) in subscribed capital DM 1,810.08
b) in surplus capital DM 781.27
c) in retained earnings/accumulated deficit DM 10,331.89
------------
DM 12,923.24
------------
(7.) Total equity DM 3,388,870.55
b) less
(1.) Intangible assets
Franchises, trademarks, patents, licenses DM 1,050,430.53
(2.) Xxxxxxxx XX 2,086,470.18
(3.) Advance payments DM 0.00
(4.) Total DM 3,136,900.71
Material book value of net equity (a minus b) + DM 251,969.84
3.3 The Parties assume that the sum of a) the purchase price under No. 3.1
above, b) the liabilities of the companies taken over (after deduction
of accounts receivable) vis-a-vis subsidiary and c) affiliated
companies and d) the loan liabilities of the companies taken over
shall not exceed DM 11,000,000.00. In the event such assumption be
wrong, the purchase price under No. 3.1 above shall be reduced until
the sum of a), b), c) and d) be DM 11,000,000.00. For the avoidance of
doubt, the term "loan liabilities" shall not encompass any liabilities
listed under the heading "trade liabilities" or "other liabilities" in
the Consolidated Half-Year Financial Statements.
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The figures are as follows as of December 31, 1996:
a) Purchase price under No. 3.1
Asset Book Value of the Equity DM 251,969.84
Premium DM 2,200,000.00
b) Liabilities to subsidiary companies (Xxxxxx
Antriebstechnik GmbH & Co. KG) DM 381,391.55
c) Liabilities to affiliated companies (Berges
Italiana S.r.l.) DM 2,025,608.22
less accounts receivable from affiliated
companies - DM 67,511.83
d) Loan liabilities (vis-a-vis banks and other
loan creditors) DM 4,818,047.50
Total DM 9,609,505.28
3.4 Prior to the Transfer Date, the Buyer shall pay a partial amount of DM
1,660,000 (in words: one million six hundred and sixty thousand
Deutsche marks) to Seller and Xx. Xxxxxx X. Xxxxx shall pay DM 40,000
(in words: forty thousand Deutsche Marks) to Xxx. Xxxxx Xxxxxxxx onto
the following bank accounts:
Seller:
Account Holder: Xxxxxx Antriebstechnik GmbH & Co. KG
Account No.: 0000000
Bank: Deutsche Bank AG, Gummersbach
Bank Code: 384 700 91
Xxx. Xxxxx Xxxxxxxx:
Account Holder: Xxxxxxx Xxxxxxxx
Account No.: 0000000
Bank: Deutsche Bank AG, Gummersbach
Bank Code: 384 700 91
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The remainder of the purchase price must be paid onto the
above-mentioned bank account within 10 days after the Parties agree on
the Consolidated Half-Year Financial Statements.
The following shall apply in the event the Buyer not recognize the
Consolidated Half-Year Financial Statements presented by the Seller:
A purchase price established on the basis of the variant version
prepared by Xxxxxx Xxxxxxxx (see No. 3.7 below) shall be payable
within 10 days after presentation of the modified version. Any further
remaining amounts must be paid within 10 days of the Arbitrator's
decision on the Consolidated Half-Year Financial Statements.
3.5 In the event any actual additional tax expense arise for the
assessment periods prior to the Transfer Date - even as a consequence
of any subsequent tax audits by the Revenue Service - which is not
covered by corresponding liability items - including reserves - and
which is not offset by any reduction of taxes or earnings in the
subsequent years, the purchase price shall be reduced by the
additional tax expense. With regard to the computation of the
additional tax expense, the allocation of profit to reserves on a pro
rata temporis basis must be assumed. The Buyer and Seller shall
mutually provide each other any assistance related to the defense of
any tax claim. In the event any audit by the Revenue Service reveal a
refund, the Buyer shall be obligated to forward the resulting amount
to the Seller.
3.6 The Asset Book Value of the Equity as of the Transfer Date must be
computed on the basis of the consolidated financial statements of GmbH
and S.r.l. to be prepared as of 30 June 1997 (Consolidated Half-Year
Financial Statements).
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GmbH and S.r.l. (hereinafter jointly referred to as "the Companies")
have taken inventories as of 30 June 1997. The Guarantor did not
exercise the possibility granted it to participate in the taking of
the inventories. The Parties agree, however, that no acknowledgment of
the results of the inventories on the part of the Buyer or the
Guarantor is to be seen herein. The Seller commissioned the
independent auditing firm Xxxxxxx u. Partner GmbH (Gummersbach) to
audit and certify the half-year financial statements of GmbH and to
prepare the Consolidated Half-Year Financial Statements on the basis
thereof and on the basis of the financial statements of S.r.l. The
Seller shall present these financial statements prior to November 30,
1997 at the latest. The financial statement must be prepared observing
balance sheet consistency and in accordance with generally accepted
accounting principles in Germany and Italy. However, in order to
compute profit on an accrual basis, trade fair costs, insurance
premiums, allocations rendered for insurance premiums as well as
vacation pay accrued over the year must be accounted for on a pro rata
temporis basis. No liability items are to be set up for the
preparation and auditing of the interim financial statements. Any
claim for the reimbursement of corporate income tax resulting from a
potential loss as of June 30, 1997 shall be activated.
3.7 After receipt thereof, the Seller shall immediately forward one copy
respectively of the semi-annual financial statements of GmbH and
S.r.l. as well as the Consolidated Half-Year Financial Statements to
the Buyer as well as to Xxxxxx Xxxxxxxx GmbH (hereinafter, "AA") as
well as to PUENDER, VOLHARD, XXXXX & AXSTER, Attorneys at Law (Attn.:
Attorney Xxxxxx Xxxxxxx). Insofar as the Buyer not raise any
objections to the Consolidated Half-Year Financial Statements in
writing within six weeks after receipt thereof, which deadline shall
under no circumstances expire prior to December 15, 1997, such
financial statements shall become binding.
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The Buyer shall have AA audit the Consolidated Half-Year Financial
Statements which are prepared by the Seller. If necessary in the
opinion of AA, AA shall prepare a modified version of the Consolidated
Half-Year Financial Statements, which the Buyer shall then forward to
the Seller within the six-week period. Insofar as the Seller not raise
any written objections to the version of the Consolidated Half-Year
Financial Statements modified by AA within six weeks after receipt
thereof, the version of the Consolidated Half-Year Financial
Statements modified by AA shall become binding.
Any objections must be made in writing, whereby communication per fax
shall satisfy the requirement for the written form. Objections
- of the Seller are to be addressed to:
Xx. Xxxxxx X. Xxxxx, XX Xxxx'x Incorporated, 000 Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxx, XX 00000-0000, Telefax 203 622 6538
Xxxxxx Xxxxxxxx Wirtschaftsprufungsgesellschaft
Steuerberatungsgesellschaft mbH, Mergenthalerallee 10-12, 65760
Eschborn/Frankfurt am Main
PUENDER, VOLHARD, XXXXX & AXSTER (Attn.: Attorney Xxxxxx
Xxxxxxx), Xxxxxxxxxxxxx 0, 00000 Xxxxxxxxxxx, Telefax: 0211
4355600
The aforementioned six-week period is satisfied if the objections
have reached either of the three aforementioned addressees in
time.
- of the Buyer are to be addressed to:
Xx. Xxxxxxx Xxxxxxxx at Xxxxxx Xxxxxxxxxxxxxxx XxxX & Xx. XX,
Xxxxxxxxxxxx. 00, 00000 Xxxxxxxxxxx, fax: (+49 2264) 17130.
3.8 In the event each Party object to the Consolidated Half-Year Financial
Statements presented by the other Party, the Parties hereby agree to
initially enter into negotiations to attain a concerted arrangement.
Such negotiations shall include a personal meeting at which Messrs.
Xxxxxx X. Xxxxx and Xxxxxxx Xxxxxxxx must be in attendance. In the
event such negotiations and meetings not lead to any settlement
arrangement within four weeks after the receipt of the most recent
objection, the two versions of the Consolidated Half-Year Financial
Statements shall be presented to KPMG Deutsche Treuhandgesellschaft
AG, Wirtschaftsprufungsgesellschaft, Cologne (hereinafter, "the
Arbitrator"). The Arbitrator shall then make a final decision
regarding the Consolidated Half-Year Financial Statements. Within the
framework of such decision, the Arbitrator shall audit the drafts
prepared by each Party and shall take into consideration the
objections raised by each Party against the draft of the respective
other Party. The Arbitrator must request to hold a joint meeting with
both Parties at which the respective opinions may be explained in
order to attain a concerted arrangement. This meeting may also take
place within the framework of a phone conference.
3.9 The Seller shall render any advance payments requested by the
Arbitrator. Upon the relevant request, the Buyer shall be obligated to
immediately reimburse the Seller for half of the amounts paid in
advance.
3.10 The costs for the preparation and formulation of the half-year
financial statements of S.r.l. and the Consolidated Half-Year
Financial Statements as well as the costs for the preparation,
formulation and auditing of the half-year financial statements of GmbH
shall be borne by the respective company. Insofar as any review by the
Arbitrator be necessary, the Arbitrator must divide the costs in its
invoice between the Seller and the Buyer in accordance with the
principles of xx.xx. 91 et seq. of the Civil Procedure Code.
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4. Compensation of Liabilities; INDEL
4.1 In the past, GmbH and S.r.l. regularly executed exchange transactions
with the Seller on the one hand and Xxxxxx Italiana S.r.l. on the
other. The liabilities of GmbH and S.r.l. currently amount to (after
deduction of counter-claims):
a) Liabilities of S.r.l. vis-a-vis Xxxxxx Italiana S.r.l.: around DM
1,630,000.00
b) Liabilities of GmbH vis-a-vis the Seller: around DM 500,000.00
c) Liabilities of S.r.l. vis-a-vis the Seller: none
The Buyer is aware that the respective balance bears interest at a
rate of 5.5% p.a.
The Buyer shall ensure that GmbH and S.r.l. repay the above-mentioned
amounts to the respective creditors prior to the Transfer Date.
4.2 The figures specified in Section 4.1 above have been computed roughly.
The exact amounts of the balances of the transfer accounts have yet to
be determined, given, for example, that rent and allocations are still
to be settled on a prorated basis. Insofar as it become evident after
the Transfer Date that the above-mentioned values are not accurate,
the Parties shall compensate any difference upon presentation of
proof.
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4.3 The Buyer shall assume an absolute guarantee for the above-mentioned
claims of the Seller and Xxxxxx Italiana S.r.l. against the Companies.
4.4 S.r.l. is entitled to a claim against INDEL (Austria) in the amount of
ATS 4,106,486.10 (in words: four million one hundred and six thousand
four hundred eighty-six Austrian shillings). S.r.l. sold and assigned
this claim at the nominal value to Xxxxxx Italiana S.r.l. by way of
the Deed of 24 July 1997, which is attached hereto as Annex 6. The
purchase price shall be offset by the claims to which Xxxxxx Italiana
S.r.l. is entitled against S.r.l.
The Buyer shall instruct S.r.l. to pay Xxxxxx Italiana S.r.l. a
commission of 3% plus the applicable value-added tax for all
transactions conducted with Xxxxx Pumpen (Austria). This payment duty
shall not apply so long as and insofar as INDEL be entitled to any
commission claim against S.r.l. for these types of transactions. By
way of the agreement with INDEL attached hereto as Annex 6, it shall
be ensured that the commission due to INDEL shall be disbursed to
Xxxxxx Italiana S.r.l. S.r.l. shall not have to pay the provision
twice. The duty to pay commission to Xxxxxx Italiana S.r.l. shall end
as soon as Xxxxxx Italiana S.r.l. has received the amount of ATS
4,106,486.10 from INDEL or S.r.l.
5. Representations and Warranties
5.1 The Seller does not assume any warranty or guarantee for the long-term
value or earnings capacity of the shares or the two Companies.
However, the Seller hereby represents and warrants that the following
facts and circumstances are
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accurate and complete in relation to the Transfer Date. Insofar as the
following representations not represent any "warranted features"
(zugesicherte Eigenschaften), the Seller shall assume an independent
guarantee for the accuracy and completeness of the following facts and
circumstances.
5.2 The Companies
5.2.1 The Companies have been properly formed in accordance with the
respective laws of the places of incorporation and the registered
offices under the bylaws, and continue to operate with legal effect.
5.2.2 The shareholders of the Companies have neither proposed nor approved
the dissolution or windup of the Companies; likewise, no merger of the
Companies with other companies has been proposed or approved.
5.2.3 No petition to initiate bankruptcy or composition proceedings has been
filed with regard to the Companies.
5.2.4 The commercial registry excerpts which are attached hereto as Annex 1
are accurate and complete. All shareholders' resolutions and other
circumstances which are subject to registration are reflected in such
commercial registry excerpts.
5.2.5 The Companies are not bound by any company agreements in the terms
xxxx.xx. 291 et seq. of the Corporation Act.
5.2.6 Beyond the holdings mentioned in the Recitals, neither of the
Companies holds any shares or other holdings in other companies. ASEL,
a former subsidiary of S.r.l., has been wound up. No liabilities
remain.
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5.3 Shares
5.3.1 The factual data in the Recitals are accurate and complete.
5.3.2 The shares in GmbH and S.r.l. (hereinafter collectively: "the Shares")
are free of any pledges, seizures, usufructs or other encumbrances,
including any options or preemption rights in favor of third parties.
The Seller may dispose of the Shares without the cooperation or
approval of third parties. The Seller hereby expressly declares its
approval of the share sale executed by way of this Agreement (see ss.
13 of the GmbH's Articles of Association). The approval of GmbH as
shareholder of S.r.l. has likewise been obtained (Annex 7). No further
restrictions exist in relation to the transferability of the Shares.
5.3.3 Since January 1, 1997, no dividends or interim dividends have been
approved with regard to the Shares. No rights to future dividends or
other rights related to profit have been promised, transferred or
pledged to third parties. No other payments to shareholders have been
made outside the course of ordinary business; the Companies have
likewise not made any promises to make such payments in the future.
5.3.4 Neither the Seller itself nor the shareholders thereof nor relatives
in the first or second degree of such shareholders nor any companies
controlled by these groups of people hold shares directly or
indirectly in companies which compete with the Companies. As a
supplement hereto, reference is hereby made to No. 6.2 hereof.
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5.4 Financial Information
5.4.1 The annual financial statements of the Companies as of December 31,
1994, 1995 and 1996 (hereinafter jointly referred to as "the Financial
Statements"), which are attached hereto as Annexes 8 - 13,
a) have been prepared in relation to the past five financial years
in accordance with the applicable laws and generally accepted
accounting principles in Germany and Italy, observing balance
sheet consistency;
b) provide in the terms of the Commercial Code a true and fair view
of the financial position and earnings and performance of the
Companies.
5.4.2 The annual financial statements of GmbH have been given an unqualified
auditor's opinion by the company's independent auditor. The annual
financial statements of S.r.l. have been formulated by the company's
independent auditor and accountant.
5.4.3 All accounting documents, main ledgers and financial and other
documents of the Companies (including electronically stored financial
information and data):
a) are in the possession of the Companies;
b) have been properly kept with due diligence;
c) have been stored for the periods prescribed by law.
5.4.4 Upon the balance sheet cutoff dates relevant to the respective
financial statements, no liabilities or obligations were known,
whether conditional or not, due or not due, except for those
liabilities and obligations which have been listed in the attached
financial statements or for which reserves have been built.
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5.4.5 As far as is known, the Companies have no contingent liabilities
except for those which have been completely accounted for in the
Financial Statements or the Consolidated Half-Year Financial
Statements.
5.4.6 For the period from 1 January 1997, the following is true:
a) As far as is known, the Companies have not conducted any
transactions or entered into any liabilities which were in
themselves or in their entirety serious in relation to the
Companies' business activity, except for those transactions which
fell within the course of ordinary business.
b) The Seller has not made any withdrawals. The Companies have
likewise not rendered directly or indirectly to the Seller or the
shareholders thereof any payments beyond the fulfillment of
obligations arising in the course of ordinary business.
c) Irrespective of whether insurance protection existed or not, no
damage has occurred and no damage compensation claims against the
Companies have been asserted which have affected the business
activity or the assets of the Companies in any significant way
beyond the course of ordinary business.
d) The Companies have neither provided guarantees nor assumed joint
and several liability nor issued any guaranties for the
liabilities of third parties, unless such occurred within the
course of ordinary business upon conditions and in amounts which
were consistent with the previous business practice.
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e) The inventory has neither increased nor decreased exceptionally.
Apart from common exceptions in the course of ordinary business,
the Companies have neither sold goods under any amount which was
below the valuation in the 1996 annual financial statements nor
have they sold inventory at any prices which did not cover costs.
f) No severance payments have been rendered to managing directors of
the Companies. The total payments rendered in relation to
severance pay or dismissals have not increased in relation to the
average of the previous year.
g) The salaries, ancillary compensation, bonuses and other benefits
which the managing directors or other employees of the Companies
are to be granted have not increased except for the normal
increases and adjustments in the course of ordinary business.
5.4.7 In the period from June 30, 1997, the economic situation of the
Companies did not deteriorate in any identifiable or material fashion
such that the Companies were burdened either individually or together
by more than DM 500,000.00.
5.5 Leased Property
5.5.1 Neither of the Companies owns property.
5.5.2 The subject-premises described in the lease agreements attached hereto
as Annex 14 are rented or leased by the Companies at the terms and
conditions evident in the Annexes; the subject-premises are suited for
the use for which they are intended.
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5.5.3 According to the Seller's knowledge, the current use of the
subject-premises is neither hindered nor prejudiced by any public law
or third-party right. According to the Seller's knowledge, the
official permits and approvals required for the current use have been
presented.
5.5.4 The Buyer hereby confirms that the subject-premises are in good
conditions in conformance with the provisions of the lease agreement.
5.5.5 The Companies have not used or possessed any other property in the
10-year period prior to the execution hereof.
5.5.6 According to the Seller's knowledge, the subject-premises contain
neither asbestos nor any other substances which are harmful in
accordance with the current state of scientific knowledge.
5.5.7 The Seller is unaware of any contamination of the subject-premises,
the surroundings or ground water thereof which require redress.
5.6 Legality of Business Activity
5.6.1 According to the Seller's knowledge, no applicable laws, regulations
or provisions are being violated by the business activity. This
applies in particular to environmental law.
5.6.2 According to the Seller's knowledge, the Companies have always
observed the provisions applicable to employment protection, safety at
the workplace and hygiene.
5.6.3 According to the Seller's knowledge, the Companies have not used,
stored, removed or emitted into the environment any substances which
harm or pollute the environment in any way which violates applicable
provisions and which is thus inadmissible and could disrupt business
activity.
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5.6.4 According to the Seller's knowledge, the Companies possess all
necessary official permits so that nothing opposes the continuance of
the business activity at the same place, in the same type and way and
in the current scope. No issued permits have been canceled or
restricted nor is any cancellation, revocation or restriction
currently foreseeable. The business activity of the Companies is
operated within the framework of the admissible.
5.6.5 The Seller is unaware of any serious on-the-job accidents which are
not fully covered by insurance and which could lead to claims against
the Companies. No employees have asserted claims against the Companies
for any other work-related illnesses.
5.6.6 The Seller is unaware of any facts which make it evident that the
products it produces have not always complied with all applicable laws
and regulations as well as the applicable industrial standards.
5.7 Insurance
5.7.1 The Companies have concluded the insurance agreements listed in Annex
15 the policies of which are attached. The Companies have undertaken
everything in order to maintain the insurance coverage resulting
therefrom.
5.7.2 All insurance premiums which are due in accordance with the
above-mentioned policies have been paid and all obligations for which
the Companies are responsible in accordance with such policies have
been fulfilled.
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5.7.3 The insurance agreements shall remain valid until December 31, 1997,
unless the respective insurance companies terminate such agreements.
5.7.4 The Companies have not been presented any notices, whereby the
insurance companies intend to terminate or no longer renew the
insurance agreements.
5.7.5 The Seller is unaware of any circumstances which could invalidate any
of the insurance agreements or enable the insurance companies to
exercise the special right to termination. The Seller is also unaware
of any circumstances which could lead to an increase of the insurance
premiums or deductibles.
5.8 Intellectual and Industrial Property Rights
5.8.1 The Companies are the sole and exclusive owners of the copyrights,
patents and trademark rights which are listed in the certificate from
the patent attorney active for the Companies, which is attached as
Annex 16 and specifies the respective registration numbers, terms and
material contents thereof. None of the above-mentioned property rights
is encumbered in favor of third parties. The Companies shall be
entitled to continue the use of the company logo (right No. 117288 of
Seller) in red.
5.8.2 To the best of Sellers' knowledge, the Companies have taken all the
measures necessary to maintain the above-mentioned licenses and
property rights; insofar as possible, these property rights have been
registered in the names of the Companies. No registration has expired.
5.8.3 The Companies have not entered into any obligations to provide third
parties access to their business secrets, know-how, confidential
information or lists of customers or suppliers. According to the
Seller's knowledge, such information was exclusively provided in the
past to the Guarantor.
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5.8.4 As far as the Seller is aware, the performance of the business
activity of the Companies does not infringe upon any third-party
property rights.
5.8.5 The Companies have only concluded the license agreements listed in
Annex 17 hereto. All relevant details, including the amounts of the
license fees, are evident in such annex. Insofar as the Seller, one of
the shareholders thereof or any of the other companies controlled
thereby hold rights which pertain to the business, the Seller shall
ensure that GmbH or S.r.l. be granted irrevocable, unlimited and
exclusive licenses free of charge.
5.9 Employees; Supplementary Pensions
5.9.1 All of the persons employed with the Companies as of the Transfer Date
are listed in Annex 18. The Annex also contains part-time employees
and managing directors (hereinafter jointly referred to as
"Employees"). The Annex lists the birth date, date of entry, current
remuneration and other benefits, such as vacation pay, Christmas
money, private use of company cars, benefits for retirement pension
within the framework of direct company insurance, as well as the
position of each Employee. No benefits granted in the past on the
occasion of company anniversaries have been listed.
No employment relations exist with persons not specified in the
above-mentioned Annex. No obligations have been entered into vis-a-vis
the Employees beyond the above-mentioned performances, unless such was
required by law or collective agreements. No benefits for
supplementary retirement pension beyond the direct insurance mentioned
in the Annex have been promised. This also applies to former
Employees.
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5.9.2 No obligations from the cessation, termination, or rescission of
employment agreements are in arrears.
5.9.3 With the exception of the Company Agreement on Premiums under Article
9 of the Collective Agreement (Annex 19), the Companies have not
reached any agreements which the Employees or works councils which
grant Employees claims to profit shares in relation to early
retirement or to any acquisition of shares in the broadest sense. Xx.
Xxxxxxx Xxxxxxxx receives a percentage of profit, while the commercial
agents active for the Companies are remunerated independent of
turnover.
5.10 Material Agreements
5.10.1 With the exception of the agreements listed in Annex 20 hereto, the
Companies are not bound by any of the following agreements ("material
agreements"):
(a) lease or lease-purchase agreements with a term of more than six
months;
(b) agreements for the acquisition of goods or services for a period
of more than six months and/or with a value of more than DM
60,000.00;
(c) purchase or similar agreements whereby the Companies be obligated
to acquire goods, provided such agreements have a term of more
than six months and/or a value of more than DM 60,000.00;
(d) shareholders', joint venture and similar agreements;
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(e) loan and other bank and overdraft agreements other than those
referred to in Section 3.3;
(f) agreements which significantly restrict the freedom of the
Companies in the future to compete in any business sector or
vis-a-vis any particular persons;
(g) agreements or obligations related to the business of either of
the Companies as a whole;
(h) powers of attorney in favor of third parties;
(i) guarantees, sureties or similar obligations in favor of the
Seller, Xxxxxx Italiana S.r.l. or third parties or agreements to
provide securities in favor of others (In particular, no claim
can be brought against the Companies based on the guarantees or
the joint acceptance of bank xxxxx with respect to liabilities of
the Seller of or Xxxxxx Italiana S.r.l.);
(j) pledges or other securities (including the assignment of claims)
other than those given to the banks;
(k) agreements outside of the course of ordinary business and/or at
conditions which would not normally be agreed upon with external
third parties;
(l) any other agreement which obligates the Companies to pay expenses
of more than DM 60,000.00;
(m) commercial agent and authorized dealer agreements.
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5.10.2 According to the Seller's knowledge, within the framework of the
material agreements concluded, no breach of contract has been
committed by the parties to the agreements such that any significant
prejudicial effects on the business activity of the Companies are to
be anticipated.
5.10.3 According to the Seller's knowledge, no customer of the Companies
intends to terminate or modify any existing agreements. In addition,
no reason exists to assume that any customer of supplier of the
Companies shall terminate or restrict its business relations with the
Companies due to the execution of this Agreement and the covenants
related hereto.
5.10.4 No reason exists to assume that any of the Employees of the Companies
decisive for the business activity shall terminate his or her
employment relation with either of the Companies due to this Agreement
or the covenants related hereto.
5.10.5 Through the execution hereof and the covenants related hereto, the
Seller shall not breach any other agreement to which the Companies are
bound. The execution hereof shall furthermore neither enable the
termination of any other agreement nor obligate either of the
Companies to fulfill their obligations from any other agreement early
nor shall either of the Companies fall into arrears in their
obligations as a result hereof. In no case does the continuation of
the agreements entered into by the Companies depend upon the fact that
particular persons (as managing director or in any other capacity)
have a legal relation to the Companies.
5.10.6 Beyond the course of ordinary business, the Companies have not issued
any guaranties or undertakings or commitments in relation to the goods
sold thereby. No servicing agreements which obligate the Companies to
service the goods distributed thereby have been executed. The Seller
is unaware of any warranty claims or claims to subsequent improvement
or replacement deliveries which exceed the average framework of the
previous year.
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5.11 Legal Violations and Litigation
5.11.1 The Seller is unaware of any pending or threatened administrative or
judicial proceedings or proceedings by the district attorney's office
against the Companies or any of the Employees thereof which would
significantly affect the financial or economic position of the
Companies.
5.11.2 Apart from disputes related to individual rights, no labor disputes
have occurred between the Companies and the Employees in the previous
five years. No circumstances which could lead to labor disputes are
currently evident to the Seller.
5.11.3 According to the Seller's knowledge, the Companies are not party to
any agreements or covenants which violate the Act against Restraints
on Competition or the corresponding provisions of other countries. No
agreements or covenants are known which have been or should be
registered in accordance with the above-mentioned laws or which have
been or should have been notified to the European Commission in
accordance with Article 85 of the EU Treaty.
5.11.4 The Companies have not received any requests or notices from the
European Commission or from the authorities competent for cartel and
competition matters in Germany or any other country which could affect
the activities of the Companies in any aspect.
5.11.5 The Companies are not party to any legal disputes, whether they be
criminal, civil (including labor law proceedings), administrative,
arbitration or other proceedings, which are directed toward either of
the Companies or affect them. Likewise, no such proceedings or
investigations against the Companies are foreseeable.
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5.12 Taxes
5.12.1 The Companies have properly filed in a timely fashion all tax and
other declarations which had to be issued in relation to the taxes to
be paid prior to the Transfer Date. All taxes were paid when due.
Insofar as taxes for the period prior to the Transfer Date not yet be
due, reserves shall be built for such in the Consolidated Half-Year
Financial Statements. The Companies have properly and completely
conducted all relevant fiscal transactions.
5.12.2 According to the Seller's knowledge, the Companies shall not lose any
tax advantages due either to the performance of this Agreement or to
any other transactions prior to the Transfer Date.
5.12.3 The structure of the available equity of GmbH as of 31 December 1996
is evident in Annex 21.
5.12.4 According to the Seller's knowledge, no hidden distributions of profit
have been made.
5.12.5 Pursuant to the tax declaration as of 31 December 1996, the GmbH does
not have any loss carry-forward for corporate income tax purposes.
Pursuant to verbal information given by the auditor, the tax audit
performed by the tax authority in 1997 did not result in any
objections. A written confirmation has not yet been received.
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5.13 Performance of Business Activity
5.13.1 According to the Seller's knowledge, the tangible and intangible
assets and rights and know-how at the disposal of the Companies are
sufficient to continue the business activity in the same manner as
before the Transfer Date.
5.13.2 The Companies have access to all business documents and files,
including such documents to which the Companies do not hold exclusive
title or which are not under the direct control of the Companies. The
Buyer is aware that the Companies have jointly used the computer
systems of the Seller and Xxxxxx Italiana S.r.l. and shall also do so
in the future. The Seller and Xxxxxx Italiana S.r.l. hereby agree to
grant the Companies access at any time to the data which affects them.
5.13.3 During the 12 months prior to the execution of this Agreement, no
material changes occurred in relation to the clientele, the business
or other terms and conditions. This is true with the exception of the
price changes known to the Buyer as well as the customers ICBT
(France) and INAG (Germany). In addition, no significant customer or
supplier of the Companies discontinued or significantly reduced its
business relation with the Companies during such period. The Companies
and the Seller have no reason to assume that any such change,
discontinuation or reduction will occur in the foreseeable future.
5.14 Legal Relation between the Companies and the Seller as well as the
Limited Partners Thereof and Xxxxxx Italiana S.r.l.
The managing director agreements between GmbH and Messrs. Xxxxxxx
Xxxxxxxx and Xxxxxxx Wolfslast will be rescinded by mutual agreement
as of November 30, 1997. This also applies to the agreements upon
which the activity of both Xx. Xxxxxxx Xxxxxxxx as Chairman of the
Board of Directors of S.r.l. and Xxx. Xxxxx Xxxxxxxx as member thereof
is based. Moreover, the lease and allocation agreements existing
between GmbH and the Seller as well as S.r.l. and Xxxxxx Italiana
S.r.l. have also been rescinded as of the above-mentioned date.
Reference is hereby made to the new arrangements agreed upon in
accordance with Nos. 7 to 9 hereof.
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The Parties are aware that agreements for the exchange of goods and
services have continuously been and shall still continuously be
executed in the future between the Seller and Xxxxxx Italiana of the
one part and the Companies of the other.
5.15 Product Liability
No claims which have not been dealt with have been asserted from the
point of view of product liability. The Seller is unaware that the
products distributed by the Companies could disclose any design or
series production defects. Reference is hereby made to No. 5.18.3
above.
5.16 Grants and Subsidies
The Companies have not been granted or paid any grants, subsidies or
similar preferential treatment during the last three years from any
international, national or regional agency or authority.
5.17 Miscellaneous
5.17.1 All written information which has been provided by the Seller and the
advisors thereof to the legal representatives, employees or advisors
of the Buyer within the course of the negotiations over this Agreement
is true, complete and accurate in every respect; such information is
likewise not misleading as a result of any omissions or ambiguities or
for any other reason. The contents of such information corresponds to
the state of the Seller's knowledge.
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5.17.2 The Buyer has audited both Companies within the framework of due
diligence proceedings. The Seller hereby warrants and represents that
all inquiries made within the framework of the purchase agreement
negotiations and the due diligence proceedings have been answered
completely and accurately to the best knowledge of the Seller. This
applies in particular to inquiries related to the assets, the business
activity and the financial situation of the Companies.
5.17.3 The Parties hereby agree that ss. 377 and 378 of the Commercial Code
and the second sentence of ss. 460 of the Civil Code shall not be
applicable hereto.
5.17.4 Through the execution or performance of this Agreement, the Seller is
not selling either its entire assets or any substantial part thereof.
5.18 Legal Consequences
5.18.1 Insofar as the Seller has limited the above-mentioned representations
and warranties by reference to its knowledge or lack thereof, warranty
or damage compensation claims shall not exist if such statements
merely be objectively false but shall only exist when such statements
be consciously false.
5.18.2 The right to rescind this Agreement shall be excluded hereby. Insofar
as any warranty claims or claims due to breach of contractual duties,
warranties or representations exist, such shall be limited to
reduction of the purchase price and damage compensation due to
non-performance. Payment need only be rendered insofar as the sum of
the justified reductions and damage compensation claims exceed DM
200,000.00.
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This limitation shall apply neither to claims arising from the
violations of Sections 5.2, 5.3, 5.4.7 or 5.12 above nor to the
provisions regarding the formulation of the Consolidated Half-Year
Financial Statements.
The Buyer must establish a reasonable period of at least one month by
way of registered letter for the Seller to produce the conditions in
accordance herewith.
5.18.3 The representations and warranties issued by the Seller do not relate
to the merchandise procured from the Guarantor or to any claims
related to such merchandise.
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5.19 Limitation of Claims
5.19.1 Unless provided otherwise herein, all claims of the Buyer, even
warranty and damage compensation claims on whatever legal ground,
shall lapse upon the expiration of June 30, 1999.
5.19.2 The Seller shall be liable for the legal existence of the shares as
well as for the right to transfer such to the Buyer for a period of 30
years from the Transfer Date.
5.19.3 Any claims of the Buyer related to taxes and social security
contributions, including any claims to exemptions, shall lapse within
one year after the corresponding decision by the relevant authority
has become non-appealable.
6. Covenant Not to Compete
6.1 The Seller hereby agrees for the period of five years from the
Transfer Date to desist from any competition with the Companies in
their current geographical and technical sector of activity. In
particular, the Seller shall not hold shares either directly or
indirectly in competing companies nor enter the service of any
competing company nor promote any such company directly or indirectly
in any way through advice or action.
6.2 The Parties are aware of the following:
The Companies are active in the production and distribution of
electrical and electronic propulsion elements, while the Seller and
Xxxxxx Italiana S.r.l. produce and distribute mechanical propulsion
elements which are merely electrically controlled. The Parties agree
that the above-mentioned companies may continue to be active in their
respective fields in the future, without such representing any breach
of this Covenant Not to Compete.
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This shall apply irrespective of the fact that electrical and
mechanical propulsion elements are interchangeable in specific cases.
So long as Xx. Xxxxxxx Xxxxxxxx be Managing Director of the Seller and
Chairman or member of the Board of Directors of Xxxxxx Italiana S.r.l.
on the one hand and Managing Director of GmbH and Chairman of the
Board of Directors of S.r.l. on the other, such shall not represent a
breach of any covenant not to compete arising from his fiduciary duty
vis-a-vis the individual companies.
7. Management
7.1 Effective immediately, Xx. Xxxxxxx Wolfslast hereby resigns from his
office as Managing Director of GmbH. Effective immediately, Xxx. Xxxxx
Xxxxxxxx hereby withdraws as Prokuristin [holder of a general power of
attorney] of the GmbH and from the Board of Directors of S.r.l. and
shall provide any statements which are necessary to enter her
withdrawal in the competent registry.
7.2 After the Buyer's take over of the shares in the Companies, Xx.
Xxxxxxx Xxxxxxxx shall also manage the business of GmbH and S.r.l. as
Managing Director and Chairman of the Board of Directors. The
contractual relations between Xx. Xxxxxxx Xxxxxxxx and the two
Companies shall be regulated as of the Transfer Date by way of the
Employment Agreement attached hereto as Annex 22. Xx. Xxxxxxx Xxxxxxxx
shall be entitled to Christmas money and a percentage of profit on a
pro rata temporis basis for the 1997 calendar year from the employment
agreements rescinded as of November 30, 1997. No further claims shall
exist from the employment agreements rescinded as of November 30,
1997.
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8. Lease Agreements
The lease agreements existing between the Seller and Xxxxxx Italiana S.r.l. as
Lessors of the one part and GmbH and S.r.l. as Lessees of the other regarding
the commercial space used in Marienheide and Naturns shall be replaced as of the
Transfer Date by the lease agreements attached hereto as Annex 14.
9. Allocation Agreements
9.1 Employees of the Seller and Xxxxxx Italiana S.r.l. are active for GmbH
and S.r.l. particularly in the accounting and controlling areas as
well as in the warehouse and shipping departments. Conversely,
employees of GmbH and S.r.l. also render services for the Seller and
Xxxxxx Italiana S.r.l.
9.2 Furthermore, various material costs, such as for electricity, postal
fees, cleaning costs, insurance premiums, etc. are mutually settled
between the above-mentioned companies. The amounts mutually settled in
the period from 1994 to 1996 may be found in Annex 23. In relation
thereto, the following is hereby agreed upon between the Parties:
GmbH and S.r.l. shall modify the present phone and fax systems at
their own expense in order to determine in detail which of the
Companies is to be allocated the specific costs. New systems shall be
installed if necessary.
In relation to the other costs, the Parties hereby agree that such
shall be divided and settled as far as possible in accordance with the
scope of the actual use or instigation. Any agreements reached in the
past between the Seller and Xxxxxx Italiana S.r.l. of the one part and
GmbH and S.r.l. of the other shall lose their validity as of the
Transfer Date. In the event no exact costs can be calculated, an
estimate shall be made as appears just based on the percentages
evident in Annex 23.
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The cost prices shall always be decisive. The settlement shall be made
for each calendar year prior to 31 March of the following year. The
Seller and Xxxxxx Italiana S.r.l. shall be entitled to claim monthly
payments on account in the amount of 1/12 of the costs paid in the
previous year after deductions. In the event any individual costs
which were considered in the previous year be eliminated or in the
event new costs arise, such shall be taken into account accordingly.
10. Guarantee; Modified Joint and Several Liability
10.1 The Guarantor hereby assumes the absolute guarantee for all of the
Seller's claims arising from this Agreement vis-a-vis the Buyer.
10.2 The Seller shall be liable jointly and severally for the obligations
of Xxx. Xxxxx Xxxxxxxx arising from this Agreement and the Annexes
hereto. The Buyer hereby waives the assertion of any claims from this
Agreement against Xxx. Xxxxx Xxxxxxxx, with the exception of the claim
to share transfer under Section1.3 hereof.
11. Transition
11.1 As soon as this Agreement becomes binding for both Parties, the Seller
shall ensure that the Buyer's agents be provided upon request any
information regarding business transactions and be granted the
opportunity to inspect all business documents.
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11.2 From the execution hereof, the Seller shall ensure that the Companies
only conduct any transactions outside the course of ordinary business
after obtaining the Buyer's prior approval.
11.3 The Seller and the Buyer shall be obligated to provide each other any
information and to cooperate in all transactions and legal acts which
are necessary for the performance of this Agreement and to desist from
anything which opposes the performance hereof. In relation to the
assertion of claims against third parties or the defense against
third-party claims, the Parties shall provide each other all necessary
information and grant each other the opportunity to inspect any
business documents necessary in this regard. The Companies shall
authorize the Seller to conduct any necessary administrative
proceedings on behalf of the Companies but at the costs of the Seller,
insofar as the financial results of such proceedings affect the
Seller.
12. Final Provisions
12.1 Any modifications of or additions to this Agreement must be made in
writing, unless notarization be required.
12.2 The Parties hereby confirm that no collateral agreements have been
made. This Agreement completely and accurately reflects the will of
the Parties.
12.3 In the event any provision hereof be null and void now or in the
future, the remaining parts of this Agreement shall not be affected
thereby. In the event of the nullity or invalidity of any clause
hereof, such clause shall be replaced by that valid clause which most
closely approximates the financial purpose of the invalid provision.
This shall also apply in the event of any contractual gaps.
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12.4 This Agreement shall replace all written and verbal declarations of
intent of the Parties hereto which were issued in relation to the
contractual negotiations, even in the event such declarations deviate
from the content hereof.
12.5 This Agreement shall be subject to German law. Duesseldorf is hereby
agreed upon as the jurisdiction for the settlement of all claims
arising herefrom.
12.6 The Parties hereby declare that no property forms part of the assets
of the Companies.
13. Costs
The Buyer shall bear the costs of the notarization of the agreements pursuant to
Section 1.2 and Section 1.3 and any further costs which might result from the
application for registration with the commercial register of any actions under
this Agreement. Each Party shall bear the costs of its advisors.
Dusseldorf, this 23rd day of October 1997, 7 p.m.
signed by K. Sarstedt, H. Wolfslast, D. Sarstedt and X. Xxxxxxx
