UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 14, 1997
BACOU USA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-28040 05-0470688
(Commission File Number) (IRS Employer Identification No.)
10 Thurber Boulevard, Smithfield, RI 02917
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 401-233-0333
<PAGE>
Item 2. Other Events.
On April 14, 1997, Bacou S.A. ("Bacou S.A."), the majority shareholder of
Bacou USA, Inc. ("Bacou USA"), entered into a stock purchase agreement (the
"Stock Purchase Agreement"), with the shareholders of Comasec International S.A.
("Comasec"). Simultaneously, Bacou S.A. and Bacou USA entered into an Assignment
Agreement (the "Assignment").
The Stock Purchase Agreement provides for the acquisition of all of the
capital stock of Comasec by Bacou S.A., including a French operating company,
Fenzy S.A., a United States operating company, Survivair, Inc., a Connecticut
corporation ("Survivair"), as well as two United States holding companies,
Comasec Holdings, Inc. ("Comasec Holdings") and Interspiro Holdings, Inc. The
Assignment provides for the acquisition of the United States entities by Bacou
USA through the redemption of the interest of Comasec in Comasec Holdings (the
"Acquisition"). The total acquisition price will be approximately $27,400,000 in
cash, subject to certain closing adjustments (the "Purchase Price").
Consummation of the Acquisition is subject to certain conditions including
(i) approval of the Department of Justice and Federal Trade Commission, (ii) the
divestiture by Comasec of certain operating companies and (iii) approval by the
Oversight Committee of the Board of Directors of Bacou USA.
During March 1997 in anticipation of the Acquisition, Bacou USA, through
its wholly-owned subsidiary Uvex Safety, Inc., borrowed $8,000,000 under its
existing term facility (the "Existing Facility"). The proceeds from the Existing
Facility, together with cash reserves, were utilized to fund Pro-Tech
Respirators, Inc., a wholly-owned subsidiary of Bacou USA ("Pro-Tech") with
$28,000,000, which in turn advanced $28,000,000 to Bacou S.A. for its use in
closing the transaction with the shareholders of Comasec. The advance is
evidenced by a promissory note which bears interest at the overnight deposit
rate available at the Paris branch of Banque Nationale de Paris (the "Promissory
Note"). The Purchase Price for the Acquisition will be paid by the assignment of
the Promissory Note to Comasec, then a wholly-owned subsidiary of Bacou S.A.
Attached to this Form 8-K are unaudited financial statements of Survivair
for the years ended December 31, 1996 and 1995. These financial statements
present the financial position and operating results of Survivair on a
historical basis and do not give effect to the Acquisition as discussed above.
Item 7. Financial Statements and Other Exhibits.
(a) Financial Statements of Businesses Acquired
Not Applicable
(b) Pro Forma Financial Information
Not Applicable
(c) Exhibits
See exhibit index annexed hereto
Item 601
Exhibit Table Reference Exhibit Title Page
Exhibit 2(a) Stock Purchase Agreement dated
as of April 14, 1997 among
Bacou S.A. and Francis Berend,
Pierre Alain Berend, Philippe
Berend, Pascal Berend and the
other Sellers parties thereto
Exhibit 2(b) Agreement dated as of April 14,
1997 between Bacou S.A. and
Bacou USA, Inc.
Exhibit 99(a) Unauditied Financial Statements
of Survivair, Inc. for 1996
and 1995
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
BACOU USA, INC.
Registrant
By /s/Philip B. Barr
--------------------------
Philip B. Barr
Executive Vice President and
Chief Financial Officer
Dated: May 12, 1997
Exhibit 2(a)
STOCK PURCHASE AGREEMENT
BY AND AMONG
BACOU S.A.
AND
FRANCIS BEREND, PIERRE ALAIN BEREND, PHILIPPE BEREND,
PASCAL BEREND AND THE OTHER SELLERS PARTIES HERETO
With Respect to All of the
Outstanding Capital Stock of
COMASEC INTERNATIONAL S.A.
Dated as of April 14, 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS........................................................1
1.1 DEFINITIONS...............................................................1
ARTICLE II CLOSING............................................................9
2.1 TIME AND PLACE OF CLOSING.................................................9
2.2 PURCHASE AND SALE OF SHARES...............................................9
2.3 CLOSING..................................................................10
2.4 EFFECTIVE DATE BALANCE SHEET AND SPECIAL REPORT..........................11
2.5 POST-CLOSING ADJUSTMENT OF ESTIMATED PURCHASE PRICE......................12
2.6 JOINT AND SEVERAL........................................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS..................13
3.1 ORGANIZATION.............................................................13
3.2 AUTHORIZED CAPITALIZATION; OUTSTANDING STOCK.............................14
3.3 SUBSIDIARIES.............................................................14
3.4 AUTHORITY; BINDING EFFECT................................................14
3.5 NON-CONTRAVENTION........................................................14
3.6 FINANCIAL STATEMENTS.....................................................15
3.7 INTERIM CHANGES..........................................................15
3.8 OWNED AND LEASED PROPERTY................................................16
3.9 ENVIRONMENTAL MATTERS....................................................17
3.10 INTELLECTUAL PROPERTY RIGHTS............................................18
3.11 LITIGATION..............................................................19
3.12 TAX MATTERS.............................................................20
3.13 COMPLIANCE WITH APPLICABLE LAW..........................................22
3.14 CONTRACTS...............................................................22
3.15 EMPLOYEE BENEFIT PLANS..................................................22
3.16 [INTENTIONALLY OMITTED].................................................25
3.17 INSURANCE...............................................................24
3.18 LABOR RELATIONS.........................................................25
3.19 LOCATION OF OFF SITE ASSETS.............................................26
3.20 INVENTORY...............................................................26
3.21 ACCOUNTS RECEIVABLE.....................................................26
3.22 AGENTS..................................................................27
3.23 WARRANTY AND PRODUCT LIABILITY CLAIMS...................................27
3.24 NO BROKERS..............................................................27
3.25 NO OTHER AGREEMENTS TO SELL.............................................27
3.26 DISCLOSURE..............................................................28
3.27 [INTENTIONALLY OMITTED].................................................28
3.28 COPIES OF DOCUMENTS.....................................................28
3.29 INTERCOMPANY ACCOUNTS...................................................28
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER...........................28
4.1 ORGANIZATION.............................................................29
4.2 AUTHORITY................................................................28
4.3 NON-CONTRAVENTION........................................................28
ARTICLE V FURTHER AGREEMENTS OF THE PARTIES..................................29
5.1 CONDUCT OF BUSINESS PRIOR TO CLOSING.....................................29
5.2 MAINTENANCE OF CORPORATE EXISTENCE.......................................32
5.3 FILINGS; OTHER ACTION....................................................32
5.4 ACCESS TO INFORMATION....................................................32
5.5 PUBLICITY................................................................32
5.6 BANK ACCOUNTS............................................................32
5.7 NO SOLICITATION OF TRANSACTIONS...........................................33
5.8 TAXES AND FEES............................................................34
5.9 COOPERATION...............................................................33
5.10 ACCESS TO BOOKS AND RECORDS..............................................34
5.11 DELIVERY OF US GAAP FINANCIALS...........................................34
5.12 SELLERS' REPRESENTATIVE..................................................35
5.13 INCOMPLETE SCHEDULES.....................................................34
5.14 CONVERTIBLE BONDS........................................................34
5.15 SCHEDULE DISCLOSURES; ABILITY TO UPDATE..................................34
5.16 INSURANCE COVERAGE.......................................................35
5.17 TRANSFER OF SHARES TO A SELLER...........................................36
5.18 COMASEC NAME.............................................................35
5.19 COLLECTION OF RECEIVABLES................................................35
5.20 SALE OF INVENTORY........................................................37
5.21 NET FINANCIAL INDEBTEDNESS...............................................36
5.22 JOINT AND SEVERAL........................................................36
5.23 SELLERS' CONFIDENTIALITY.................................................37
5.24 BUYER'S CONFIDENTIALITY..................................................38
ARTICLE VI CONDITIONS TO CLOSING..............................................38
6.1 CONDITIONS TO OBLIGATIONS OF SHAREHOLDERS.................................38
6.2 CONDITIONS TO OBLIGATIONS OF BUYER........................................39
ARTICLE VII DIVESTITURES......................................................43
7.1 DIVESTED GLOVE SUBSIDIARIES...............................................43
7.2 DIVESTED INTERSPIRO SUBSIDIARIES..........................................44
7.3 INTERCOMPANY INDEBTEDNESS.................................................45
7.4 PROCEEDS OF DIVESTITURE...................................................45
ARTICLE VIII INDEMNIFICATION..................................................45
8.1 INDEMNIFICATION...........................................................45
ARTICLE IX TERMINATION........................................................49
9.1 TERMINATION...............................................................49
9.2 SPECIFIC PERFORMANCE......................................................49
ARTICLE X GENERAL.............................................................49
10.1 AMENDMENT AND WAIVER.....................................................49
10.2 NOTICES..................................................................50
10.3 COUNTERPARTS.............................................................51
10.4 PARTIES IN INTEREST......................................................51
10.5 ENTIRE AGREEMENT.........................................................52
10.6 APPLICABLE LAW...........................................................52
10.7 HEADINGS.................................................................52
10.8 THIRD PARTIES............................................................52
10.9 SEVERABILITY.............................................................52
10.10 SURVIVAL OF REPRESENTATIONS ETC.........................................52
10.11 DISPUTE RESOLUTION......................................................53
10.12 HEREOF, HEREIN, ETC.....................................................54
10.13 COMPUTATION OF TIME PERIODS.............................................54
10.14 ACCOUNTING TERMS........................................................54
SCHEDULES AND EXHIBITS
----------------------
Schedule 1 List of Shareholders
Schedule1-A List of Sellers other than the Shareholders (to be completed
prior to Closing).
Schedule2.3(b)(i)- A Sellers' Ownership Percentages and Account Numbers (to
be completed prior to Closing).
Schedule 3 Divested Subsidiaries.
Schedule 3.1 Purchased Subsidiaries.
Schedule 3.2 Authorized Capitalization; Outstanding Stock at Signing.
Schedule 3.2-A Authorized Capitalization; Outstanding Stock; Ownership
Percentage at closing (to be completed prior to Closing).
Schedule 3.5 Non-Contravention.
Schedule 3.6 Financial Statements.
Schedule 3.6(a) Carve-out Methodology.
Schedule 3.6(b) Accounting Principles.
Schedule 3.6(c) Form for PW Special Purpose Report.
Schedule 3.7 Interim Changes.
Schedule 3.8(b) Leased Real Property and Tangible Personal Property.
Schedule 3.8(d) Owned Real Property.
Schedule 3.9 Environmental Matters.
Schedule 3.10(a) Intellectual Property Rights.
Schedule 3.10(c) Intellectual Property Rights.
Schedule 3.10(e) Intellectual Property Rights.
Schedule 3.11 Litigation.
Schedule 3.12(a) Contested Tax Matters.
Schedule 3.12(b) Tax Actions, Suits, Proceedings, Audits and
Investigations.
Schedule 3.13 Compliance with Applicable Law.
Schedule 3.14 Contracts.
Schedule 3.15 Employee Benefit Plans.
Schedule 3.17 Insurance.
Schedule 3.18(a) Employee loans.
Schedule 3.18(b) Outstanding Bonuses, Vacation Pay, Severance Pay or Back
Wages.
Schedule 3.18(c) Employees.
Schedule 3.19 Location of Off Site Assets.
Schedule 3.20 Inventory.
Schedule 3.21 Accounts Receivable.
Schedule 3.22 Agents.
Schedule 3.23(a) Warranties and guarantees.
Schedule 3.23(b) Accidents.
Schedule 3.29 Intercompany Accounts.
Schedule 4. Interspiro Group.
Schedule 5.1(xiii) Settled or Compromised Claims or Liabilities.
Schedule 5.1(xv) Capital Expenditures.
Schedule 5.13 Incomplete Schedules and Exhibits.
Schedule 6.2(e) Organizational Documents.
Schedule 6.2(f) Certificates of Good Standing.
Schedule 7.1 Divestiture of Glove Subsidiaries.
Schedule 7.2 Divestiture of Interspiro Subsidiaries
Exhibit A Form of Opinion of Cleary, Gottlieb, Steen & Hamilton.
Exhibit B Form of Opinion of Hughes, Hubbard & Reed.
Exhibit C [Intentionally Omitted]
Exhibit D Form of Bank Guarantee.
Exhibit D-1 Form of Purchase Price Bank Guarantee
Exhibit E Form of Operating Agreements.
Exhibit F Form of Lazard Letter.
<PAGE>
This Stock Purchase Agreement is made and entered into as of the 28th day
of March, 1997 by and among Bacou S.A., a French societe anonyme ("Buyer"), each
of the individuals identified on Schedule 1 attached hereto and made a part
hereof (collectively, the "Shareholders" and individually, a "Shareholder") and
each Person who shall be identified on Schedule 1-A to be attached hereto and
made a part hereof on or before the Closing (together with the Shareholders,
collectively the "Sellers" and each a "Seller") (as amended, modified or
supplemented, in each case from time to time and whether in whole or in part,
this "Agreement").
WITNESSETH:
WHEREAS, the authorized capital stock of Comasec International S.A., a
French societe anonyme (the "Company"), consists of 40,000 authorized shares of
common stock, of which 40,000 of such shares are issued and outstanding as of
the date hereof, it being agreed there will be 45,000 such shares authorized,
issued and outstanding as of the Closing (the "Shares");
WHEREAS, on the date of this Agreement the Shares are owned beneficially
and of record as set forth on Schedule 3.2 attached hereto and made a part
hereof; and
WHEREAS, as of the Closing the Shares shall be owned beneficially and of
record by the Sellers in the amounts set forth on Schedule 3.2-A to be attached
hereto and made a part hereof on or before the Closing;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Definitions. As used in this Agreement, the following capitalized terms
shall have the meanings set forth below (references to the plural include the
singular and to the singular include the plural):
"Affiliate" means, as to any Person (the "First Person") (i) any other
Person that, directly or indirectly, controls, is under common control with or
is controlled by, the First Person, and (ii) any director, officer, shareholder
or employee of the First Person. For purposes of this definition, "control"
(including the terms "controlled by" and "under common control with") as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise.
"Bacou USA" means Bacou USA, Inc., a Delaware corporation.
"Bank Guarantee" means the four year First Demand Bank Guarantee in an
initial amount equal to FF 25,000,000 issued by a Paris branch of a bank having
a Standard & Poors rating of at least one A to be delivered by Shareholders to
Buyer at the Closing, substantially in the form of Exhibit D.
"Business Day" means any day other than Saturday, Sunday or other day on
which commercial banks are required or permitted to close by law in France.
"Buyer Indemnitee" and "Buyer Indemnitees" has the meaning set forth in
Section 8.1(a).
"CERCLA" has the meaning set forth in the definition of "Environmental
Laws".
"Charter" means the certificate or articles of incorporation, partnership
agreement or other organizational document of any Person, each as amended or
modified.
"Cleanup" means all actions required to: (i) clean up, remove, treat or
remediate Hazardous Substances in the Environment; (ii) prevent the Release of
Hazardous Substances so that they do not migrate, endanger or threaten to
endanger public health or welfare of the Environment; (iii) perform pre-remedial
studies and investigations and post-remedial monitoring and care; or (iv)
respond to any government requests for information or documents in any way
relating to cleanup, removal, treatment or rededication or potential cleanup,
removal, treatment or remediation of Hazardous Substances in the Environment, in
each case to the extent required by applicable Environmental Laws.
"Closing" has the meaning set forth in Section 2.1.
"Closing Material Adverse Effect" means any effect or series of effects
that would reasonably be likely to have, in the aggregate and in the sole
reasonable discretion of Buyer, a negative financial impact during the
twenty-four month period ending on December 31, 1998 of at least either (i) FF
5,000,000 on the gross profit of the Combined Group taken as a whole, or (ii) FF
2,000,000 on the net profits of the Combined Group taken as a whole.
"Code" means the US Internal Revenue Code of 1986, as amended.
"Combined Group" means the Company and the Purchased Subsidiaries.
"Company" has the meaning set forth in the recitals to this Agreement.
"Contract" means (a) each written employment agreement to which the Company
or any Purchased Subsidiary is a party and any other agreement to which the
Company or any Purchased Subsidiary is a party that is related to severance or
change in control benefits, immediate or deferred compensation, bonuses,
pensions, retirement payments, profit sharing, stock bonuses, equity
opportunities, insurance, hospitalization, medical expenses, death benefits or
any similar employee benefits applicable to employees or categories of employees
of the Company or any Purchased Subsidiary; (b) each capital investment contract
to which the Company or any Purchased Subsidiary is a party requiring payment
over the remainder of the term in excess of FF 100,000; (c) each agreement,
document or instrument to which the Company or any Purchased Subsidiary is a
party relating to the borrowing of money by the Company or a Purchased
Subsidiary; (d) each guarantee issued by or for the benefit of the Company or
any Purchased Subsidiary; (e) each mortgage, security agreement or other
collateral arrangement securing indebtedness of the Company or any Purchased
Subsidiary to any Person; (f) each contract to which the Company or any
Purchased Subsidiary is a party with a supplier not terminable within 90 days
and requiring annual payments or payments over the remainder of its term in
excess of FF 200,000; (g) each written or verbal contract to which the Company
or any Purchased Subsidiary is a party with a customer involving payments of
more than the greater of (i) FF 200,000 or (ii) 2% of 1996 sales of such entity;
(h) each lease of tangible personal property to which the Company or any
Purchased Subsidiary is a party requiring annual payment in excess of FF 25,000;
(i) each real property lease to which the Company or any Purchased Subsidiary is
a party; (j) each service and consulting agreement to which the Company or any
Purchased Subsidiary is a party involving payments of more than FF 100,000 per
annum and which cannot be terminated without penalty upon less than 90 days
notice; (k) each collective bargaining agreement to which the Company or any
Purchased Subsidiary is a party; (l) each licensing agreement to which the
Company or any Purchased Subsidiary is a party (except off-the-shelf software
licensing agreements); (m) each contract to which the Company or any Purchased
Subsidiary is a party requiring any consents or approvals in connection with the
transactions contemplated by the terms of any Purchase Document; (n) each Tax
revenue or expense sharing agreement to which the Company or any Purchased
Subsidiary is a party; (o) each management or operating agreement to which the
Company or any Purchased Subsidiary is a party; (p) each contract between any
two or more of the Company, a Subsidiary of the Company or their respective
Affiliates (other than employment agreements entered into in the ordinary course
of business); (q) each hedging, interest rate, currency rate or other currency
related or similar agreement to which the Company or any Purchased Subsidiary is
a party; and (r) each agreement or commitment not entered into in the ordinary
course of business; in each case including all amendments, modifications and
supplements thereto.
"Convertible Bonds" means those certain bonds in the aggregate amount of FF
20,000,000 issued by the Company in 1991 and convertible into capital stock of
the Company.
"Damages" has the meaning set forth in Section 8.1(a).
"Divested Glove Subsidiaries" means the Subsidiaries of the Company set
forth in Section A of Schedule 3.
"Divested Interspiro Subsidiaries" means the Subsidiaries of the Company
set forth in Section B of Schedule 3.
"Divested Subsidiary" means each Subsidiary of the Company listed on
Schedule 3.
"Divestiture" means the sale, transfer or other disposition of the Divested
Subsidiaries pursuant to Article VII and the consummation of the transactions
contemplated by Article VII.
"Divestiture Expenses" means all fees, costs, expenses, Taxes and other
liabilities arising under, in connection with or pursuant to all or any part of
the Divestiture.
"Effective Date" means April 1, 1997.
"Effective Date Balance Sheet" has the meaning set forth in Section 2.4(a).
"Effective Date Net Equity" has the meaning set forth in Section 2.4(a).
"Environment" means soil, surface waters, groundwater, land, stream
sediments, surface or subsurface strata, ambient air and any environmental
medium, whether indoors or outdoors.
"Environmental Claim" means any claim, action, cause of action,
investigation or notice (written or oral) by any Person alleging potential
liability for investigatory costs, Cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries, or penalties
arising out of, based on or resulting from (a) the presence, or Release into the
Environment, of any Hazardous Substance at any location, whether or not owned or
operated by the Company or any Subsidiary, or (b) circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all environmental, health or safety-related
laws, regulations, by-laws, rules, ordinances, judicial or administrative
decrees or decisions, orders or requirements applicable to the Company or any
Purchased Subsidiary relating to the physical or environmental condition or use
of their respective properties, their respective businesses or pollution or
protection of human health or the Environment, including, without limitation,
the Comprehensive Environmental Response Compensation and Liability Act, 42
U.S.C., Section 9601, et seq., as amended ("CERCLA"), the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901, et seq., as amended, the Clean Air
Act, 42 U.S.C. Section 7401 et seq., as amended, the Clean Water Act, 33 U.S.C
Section 1251, et seq., the Toxic Substance Control Act, 15 U.S.C Section 2601 et
seq., the Occupational Safety and Health Act, laws relating to Releases or
threatened Releases of Hazardous Substances into the Environment or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
Release, transport or handling of Hazardous Substances, and all laws and
regulations with regard to recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Substances.
"Estimated Purchase Price" has the meaning set forth in Section 2.3.
"Fenzy" means Fenzy S.A., a French societe anonyme.
"Financial Statements" means, collectively, the 1995 Proforma Combined
Balance Sheet, the 1996 Proforma Combined Financial Statements, the Effective
Date Balance Sheet and the US GAAP Financials.
"GAAP" means U.S. generally accepted accounting principles applied on a
consistent basis.
"Glove Intercompany Indebtedness" has the meaning set forth in Section
7.1(b).
"Governmental Entity" means any government or any agency, bureau, board,
commission, court, department, official, political subdivision, tribunal or
other instrumentality of any government.
"Guarantee Notice" has the meaning set forth in Section 8.1(h).
"Guarantees" means any or both of the Bank Guarantee and the Purchase Price
Bank Guarantee.
"HSR Act" means the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976,
as amended.
"HSR Approval" means the expiration, early termination or waiver of the
waiting period (including extensions thereof) and the waiver or withdrawal of
any objections, if applicable, under the HSR Act.
"Hazardous Substance" means any pollutant, contaminant, toxic substance,
hazardous waste, hazardous material, or hazardous substance, or any oil,
petroleum or petroleum product, each as defined in any Environmental Laws.
"IAS" means International Accounting Standards applied on a consistent
basis.
"Indebtedness" means all indebtedness and liabilities of the type properly
reflected on a balance sheet prepared in accordance with Schedules 3.6(a) and
3.6(b) as "short term borrowings" or "long term borrowings"; the term
Indebtedness shall also include (a) items properly reflected on such balance
sheet under the headings "trade creditors", "other creditors", and "Provisions
for liabilities and charges", to the extent any such items have not been accrued
in accordance with the historical practices of the applicable member of the
Combined Group and (b) items properly reflected on such balance sheet as "trade
creditors" if they are "Past Due" and provided, further, the term Indebtedness
shall not include any indebtedness evidenced by the Convertible Bonds or any
intercompany indebtedness between entities comprising the Combined Group. For
the purposes of this Agreement "Past Due" shall include for US and French
obligations, unpaid obligations more than (i) thirty or (ii) sixty days end of
month, respectively, from the date of invoice.
"Insurance Policies" has the meaning set forth in Section 3.17.
"Intellectual Property Rights" means all right, title and interest of the
Company or any Purchased Subsidiary in and to all licenses, trademarks,
tradenames, service marks, patents, copyrights, processes of every kind and
description, manufacturing and technical know-how and information, production
and technical data, computer data, printouts and software, trade names, trade
secrets and similar properties (including, without limitation, all
registrations, renewals or applications for registration or renewal of any of
them, in each case whether completed, pending or in the process of preparation),
and all licenses, royalty agreements, permits and authorizations with respect to
any of the foregoing, in the United States or anywhere else in the world, now
used or used in the three years preceding the date hereof, acquired or developed
by or for the Company or any Purchased Subsidiary, together with the goodwill
associated with the foregoing.
"Intercompany Indebtedness" means collectively the Glove Intercompany
Indebtedness and the Interspiro Intercompany Indebtedness.
"Interspiro Intercompany Indebtedness" has the meaning set forth in Section
7.2(b).
"Inventory Notice Date" has the meaning set forth in Section 5.20(b).
"KPMG" means KPMG Peat Marwick LLP and its world-wide Affiliates.
"Knowledge of the Company" means the knowledge of any Shareholder or any
President, Vice President, Chief Executive Officer, Chief Financial Officer,
managing director, general manager or executive employee of the Company or any
Purchased Subsidiary.
"Leased Real Property" has the meaning set forth in Section 3.8(b).
"Lien" means any claim, charge, easement, encumbrance, lease, covenant,
security interest, mortgage, lien, option, pledge, right of others, or
restriction (whether on voting, sale, transfer, disposition, use or otherwise),
whether imposed by agreement, understanding, law, equity or otherwise.
"Material Adverse Change" means a change that has a Material Adverse
Effect.
"Material Adverse Effect" means, with respect to any Person, any effect
that is, or series of effects that are, in the aggregate, materially adverse to
the business, assets, properties or condition (financial or otherwise) of such
Person.
"Maximum Amount" has the meaning set forth in Section 8.1(c).
"Net Combined Equity" means the amount of shareholders equity of the
Combined Group, calculated in accordance with IAS and in accordance with the
accounting principles set forth on Schedule 3.6(b) and subject to the carve-out
methodology set forth on Schedule 3.6(a).
"Net Financial Indebtedness" means, at any time, (a) the total Indebtedness
of the Combined Group at such time, minus (b) the amount of cash and cash
equivalents of the Combined Group at such time, and minus (c) the amount of any
non-trade receivables of the members of the Combined Group which are owed by the
Divested Subsidiaries net of any non-trade payables by members of the Combined
Group to Divested Subsidiaries.
"Operating Agreements" means the agreements set forth on Exhibit E.
"Owned Real Property" has the meaning set forth in Section 3.8(d).
"Ownership Percentage" has the meaning set forth in Schedule 2.3 (b) (i)-A
"Permit" means any environmental permit, license, approval, consent or
authorization issued by a federal, state or local Governmental Entity.
"Person" means an individual, sole proprietorship, corporation, societe
anonyme, societe civile, partnership, limited liability company, joint venture,
trust, unincorporated organization, mutual company, joint stock company, estate,
union, employee organization, bank, trust company, land trust, business trust or
other organization, or a Governmental Entity.
"PIBOR" means the Paris Interbank Offered Rate for three month deposits in
French Francs as published in Les Echos in the section "Taux-Changes-Options".
"Priority Claims" has the meaning set forth in Section 8.1(a).
"Purchase Documents" means this Agreement, the Transfer Agreements and the
Guarantees, and the certificates and other documents executed or delivered
pursuant to any of the foregoing.
"Purchase Price" has the meaning set forth in Section 2.2.
"Purchase Price Bank Guarantee" means the First Demand Guarantee in an
amount of FF 10,000,000 issued by a Paris branch of a bank having a Standard &
Poors rating of at least one A to be delivered by the Shareholders to the Buyer
at the Closing substantially in the form of Exhibit D-1.
"Purchased Subsidiaries" means the Subsidiaries listed on Schedule 3.1
"PW" means Befec Price Waterhouse and its world-wide Affiliates.
"Receivable Notice Date" has the meaning set forth in Section 5.19(b).
"Release" means any releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing or
dumping of any substance into the Environment.
"Shareholders" has the meaning set forth in the recitals to this Agreement.
"Shareholder Indemnitee" and "Shareholder Indemnitees" has the meaning set
forth in Section 8.1(b).
"Sellers" has the meaning set forth in the recitals to this Agreement.
"Sellers' Representative" has the meaning set forth in Section 5.12.
"Shares" has the meaning set forth in the recitals to this Agreement.
"Special Report" has the meaning set forth in Section 2.4(a).
"Subsidiary" means (a) any Person in an unbroken chain of Persons beginning
with the Company if each of the Persons other than the last Person in the
unbroken chain, then owns equity securities possessing 50% or more of the total
combined voting power of all classes of equity securities in one of the other
Persons in such chain, (b) any partnership in which the Company or a Subsidiary
of the Company is a general partner, and (c) any partnership in which the
Company or a Subsidiary of the Company possesses or is entitled to a 50% or
greater interest in the total capital or total income of such partnership.
"Survivair" means Survivair, Inc., a Connecticut corporation.
"Tangible Personal Property" means furniture, fixtures, equipment,
machinery, vehicles, supplies, inventories, materials, apparatus, tools,
implements, appliances and other tangible personal property of every kind and
description.
"Taxes" means any federal, state, local, domestic, foreign, national,
international or other tax, duty, tariff, levy, impost, fee or assessment,
including, without limitation, value added, ad valorem, income, estimated
income, business, corporation, gross receipts, profits, deemed profits,
franchise, capital stock, employees' income withholding, back-up withholding,
social security, unemployment, disability, real property, personal property,
license, sales, use, excise, transfer, customs, payroll, withholdings,
employment, occupation and other taxes or governmental duties, taxes, fees or
charges, including any interest, penalties or additions on or to the foregoing.
"Threshold" has the meaning set forth in Section 8.1(c).
"Transfer Agreement" means those certain Share Transfer Agreements to be
filed with the applicable office of the Recette des Impots with respect to the
sale of the Shares pursuant to this Agreement.
"Underground Storage Tank" has the same meaning and definition as set forth
in paragraph (1) of 42 U.S.C Section 6991, and shall also include a tank for
storing motor fuel or heating oil, pipeline facility, surface impoundment, pond
or lagoon, storm water or wastewater collection system, flow-through process
tank, liquid trap or associated gathering lines directly related to oil or gas
production and gathering operations.
"US GAAP Financials" means, collectively, (i) the combined balance sheet at
December 31, 1995 of the US Subsidiaries, prepared in accordance with GAAP and
subject to the specific accounting treatments set forth therein, together with
an unqualified audit opinion of PW, in form and substance satisfactory to Buyer,
stating, among other things, that such balance sheet presents fairly, in all
material respects, the financial position of such Subsidiaries at December 31,
1995, and (ii) the combined financial statements of the US Subsidiaries, such
financial statements to be comprised of a combined balance sheet and combined
statements of earnings, stockholders' equity and cash flow, in each case as of
or for, as the case may be, the twelve month period ended December 31, 1996, and
prepared in accordance with GAAP and subject to the specific accounting
treatments set forth therein, together with an unqualified audit opinion of PW,
in form and substance satisfactory to Buyer, stating, among other things, that
such financial statements present fairly, in all material respects, the
financial position, results of operations, stockholders' equity and cash flow of
such Subsidiaries in each case as of and for the twelve month period ended
December 31, 1996.
"US Subsidiary" means Survivair, Comasec Holdings, Inc., a Connecticut
corporation, and Interspiro Holding Inc., a Connecticut corporation.
"1995 Proforma Combined Balance Sheet" means the balance sheet of the
Combined Group at December 31, 1995, prepared in accordance with IAS and in
accordance with the accounting principles set forth on Schedule 3.6(b) and
subject to the carve-out methodology set forth on Schedule 3.6(a), together with
a special purpose report of PW, in the form set forth on Schedule 3.6(c).
"1996 Proforma Combined Financial Statements" means the financial
statements of the Combined Group comprised of a combined balance sheet, combined
income statement and combined statement of changes in financial position, in
each case as of or for, as the case may be, the twelve month period ended
December 31, 1996 and prepared in accordance with IAS and in accordance with the
accounting principles set forth on Schedule 3.6(b) and subject to the carve-out
methodology set forth on Schedule 3.6(a), together with a special purpose report
of PW in the form set forth on Schedule 3.6(c).
ARTICLE II
CLOSING; EFFECTIVE TIME
-----------------------
2.1 Time and Place of Closing. The consummation of the transactions
contemplated hereby (the "Closing") shall take place at the offices of Cleary,
Gottlieb, Steen & Hamilton, 41, avenue de Friedland, 75008 Paris France on April
30, 1997, or at such other time or place as is mutually agreed upon by the
Sellers' Representative and Buyer, but in any event no later than May 30, 1997.
Each party hereto agrees to use its best efforts to cause the Closing to be
consummated.
2.2 Purchase and Sale of Shares. Subject to all of the terms and conditions
set forth herein and in reliance on the representations and warranties of each
Shareholder and Buyer set forth herein, the Sellers agree to sell to Buyer, and
Buyer agrees to purchase from the Sellers, at the Closing the Shares for a price
determined pursuant to this Section 2.2 and subject to adjustment as provided in
Section 2.5 (the "Purchase Price"). The Purchase Price shall be equal to (a) the
sum of FF 180,000,000 plus the total amount of after-tax cash consideration (i)
paid to the Combined Group for the Divested Subsidiaries and/or (ii) received
from a liquidation of a Divested Subsidiary as of the Closing; minus (b) the sum
of the total amount of the Net Financial Indebtedness as of the Effective Date
plus the Divestiture Expenses, if any, paid or incurred by any member of the
Combined Group. All computations set forth in the immediately preceding clauses
(a) and (b) shall be determined in French Francs. To the extent that any amount
included in such computations is expressed in a currency other than French
Francs, such amount shall be converted to French Francs at the exchange rate
offered by the Paris office of Banque Nationale de Paris as of the date on which
such computation is to be determined as set forth in such clauses (a) and (b).
For the purpose of this section, the portion of the consideration for the
Divested Subsidiaries which is taxable to the Company will be deemed to be
subject to long-term capital gains tax, if permitted.
2.3 Closing; Payment.
(a) At the Closing, the Sellers or Sellers' Representative, as the
case may be, shall deliver to Buyer
(i) the Bank Guarantee, it being understood that the undrawn face
amount of the Bank Guarantee shall be reduced to (x) FF 20,000,000 on
the first anniversary of the Closing, (y) FF 15,000,000 on the second
anniversary of the Closing, and (z) FF 10,000,000 on the third
anniversary of the Closing;
(ii) the Purchase Price Bank Guarantee; and
(iii) the other closing documents to be delivered by the Sellers
or Sellers' Representative, as the case may be, pursuant to Section
6.2.
(b) At the Closing, Buyer shall deliver:
(i) FF 229,000,000 (the "Estimated Purchase Price") to the
Sellers by wire transfer of readily available funds which shall be
allocated among the Sellers in proportion to their respective
Ownership Percentages, to each Seller's account as shall be set forth
on Schedule 2.3(b)(i) - A, provided, however, that to the extent
necessary Buyer can apply the portion of the Purchase Price allocable
to any Seller to remove any Lien on Shares owned by such Seller; and
(ii) to Seller's Representative, the closing documents to be
delivered by Buyer pursuant to Section 6.1.
2.4 Effective Date Balance Sheet and Special Report.
(a) Within ninety (90) days after the Effective Date, Shareholders
shall deliver to Buyer a balance sheet of the Combined Group as of the
Effective Date (the "Effective Date Balance Sheet") which shall reflect the
Net Combined Equity (adjusted to neutralize the effect of changes in
currency exchange rates between December 31, 1996 and the Effective Date)
of the Combined Group as of the Effective Date (the "Effective Date Net
Equity"). The Effective Date Balance Sheet shall be prepared in accordance
with IAS applied consistently with the IAS accounting principles reflected
in the 1996 Proforma Combined Financial Statements and in accordance with
the accounting principles set forth on Schedule 3.6(b) and subject to the
carve-out methodology set forth on Schedule 3.6(a) and shall be accompanied
by a special purpose report of PW in a form consistent with Schedule 3.6(c)
stating, among other things, that the Effective Date Balance Sheet presents
fairly the Net Combined Equity of the Combined Group as of the Effective
Date. In addition (i) PW shall provide Sellers' Representative within the
same period of 90 days a special report showing a calculation of the Net
Financial Indebtedness as of the Effective Date and (ii) KPMG shall provide
Sellers' Representative within forty five (45) days after the Closing a
special report showing the total amount of after-tax cash consideration
paid to the Combined Group for the Divested Subsidiaries including proceeds
from the liquidation of any Divested Subsidiary and the amount of
Intercompany Indebtedness, if any, as of the Closing (such reports,
collectively, the "Special Report"). Buyer and Sellers shall make available
the necessary cooperation of the Company and the Purchased Subsidiaries as
reasonably needed to prepare the Special Report and the Effective Date
Balance Sheet and to compute the Effective Date Net Equity.
(b) Buyer and KPMG shall have the right to observe and review the
Effective Date Balance Sheet audit of PW and the Special Report and
therefore shall have immediate access to all of the workpapers, schedules,
memoranda and other documents prepared or reviewed by PW or any other
auditing firm, involved in the audit of the Effective Date Balance Sheet,
the computation of the Net Financial Indebtedness, and the Special Report.
The Sellers, Buyer and KPMG shall deliver to PW a release letter in a form
consistent with the hold-harmless letter executed by Buyer, Bacou USA and
KPMG, dated March 18, 1997, and delivered to PW. Buyer shall complete its
review of the Effective Date Balance Sheet and the Special Report prepared
by PW and Sellers shall complete their review of the Special Report
prepared by KPMG in each case within thirty (30) days after Buyer or
Sellers' Representative, as the case may be, receipt thereof. If such
Person agrees with the Effective Date Balance Sheet and the Special Report,
or if such Person does not object to the same within such thirty (30) day
period, then such Effective Date Balance Sheet and the Closing Net Equity
reflected therein or the Special Report, as the case may be, shall be
deemed final and adopted by Sellers and Buyer. The fees and expenses of
KPMG with respect to its preparation of the Special Report shall be split
equally between the Buyer, on the one hand, and the Shareholders, on the
other hand.
(c) If Buyer believes that any adjustment should be made to the
Effective Date Balance Sheet or to the portion of the Special Report
prepared by PW it shall give Sellers' Representative written notice of such
proposed adjustments, and the reasons therefor, within the same thirty (30)
day period. If Sellers' Representative agrees with the proposed amendments,
these shall be made and the Effective Date Balance Sheet or the Special
Report (as the case may be), as amended, will be deemed final and adopted
by Sellers and Buyer. If Sellers believe that any adjustment should be made
to the portion of the Special Report prepared by KPMG, Sellers'
Representative shall give Buyer written notice of such proposed
adjustments, and the reasons therefor, within the same thirty (30) day
period. If Buyer agrees with the proposed amendments, these shall be made
and the Effective Date Balance Sheet or the Special Report (as the case may
be), as amended, will be deemed final and adopted by Sellers and Buyer. If
any proposed amendments are disputed by Sellers' Representative or Buyer,
the parties shall negotiate in good faith to resolve all disputed
amendments.
(d) If, after a period of thirty (30) days following the date on which
either Buyer has given Sellers' Representative written notice of any
proposed adjustments or Sellers' Representative has given Buyer written
notice of any proposed adjustments, any such adjustments still remain
disputed, then the disputed items shall be referred to Deloitte & Touche
(or, in the event Deloitte & Touche does not accept such assignment, to
such other accounting firm as shall be reasonably acceptable to Buyer and
Sellers' Representative) who shall function as an independent arbitrator
and whose decision shall be final and binding on the parties. The
independent auditor shall render a written decision within thirty (30) days
which shall be prepared in conformance with this Section 2.4. The fees and
expenses of the independent auditor shall be split equally between the
Buyer, on the one hand, and the Shareholders, on the other hand, unless the
independent auditor shall determine that a party has acted in bad faith
with respect to any claim or defense, in which case such independent
auditor may allocate the responsibility for payment of fees and expenses as
it deems appropriate.
(e) Buyer shall cause the Company and each Purchased Subsidiary to
provide to such independent auditor or arbitrators all necessary
cooperation and access to its records, premises, personnel and auditors in
order to resolve promptly any dispute as referred to in Section 2.4(c).
2.5 Post-Closing Adjustment of Estimated Purchase Price. Upon finalization
of the Effective Date Balance Sheet and the Special Report pursuant to Section
2.4, the Estimated Purchase Price shall be adjusted as follows:
(a) The Estimated Purchase Price shall be decreased by an amount equal
to the amount (if any) by which actual Net Combined Equity at December 31,
1996 exceeds Effective Date Net Combined Equity.
(b) To the extent the Net Financial Indebtedness as of the Effective
Date is greater or less than FF 56,000,000, then the Estimated Purchase
Price shall be decreased or increased, respectively, by such amount.
(c) If the total amount of after-tax cash consideration paid to the
Combined Group as of the Closing for the Divested Subsidiaries is greater
than FF 105,000,000, the Estimated Purchase Price shall be increased by an
amount equal to such excess. If the total amount of after-tax cash
consideration paid to the Combined Group as of the Closing for the Divested
Subsidiaries is less than FF 105,000,000, the Estimated Purchase Price
shall be decreased by an amount equal to FF 105,000,000 minus such total
amount of after-tax cash consideration.
All computations set forth in the immediately preceding clauses (a) through
(c) shall be determined in French Francs. To the extent that any amount included
in such computations is expressed in a currency other than French Francs, such
amount shall be converted to French Francs at the exchange rate offered by the
Paris office of Banque Nationale de Paris as of the date on which such
computation is to be determined as set forth in such clauses (a) through (c).
The net increase or decrease in the Estimated Purchase Price as determined
herein shall be paid by Buyer to Sellers' Representative (for the account of the
Sellers), or by Sellers to Buyer, as the case may be. Any payment required to be
made by either party hereto pursuant to this Section 2.5 shall be made as soon
as practicable after the Closing and in any event no later than ten (10) days
after the Effective Date Balance Sheet and Special Report have been adopted as
provided in Section 2.4, and shall bear interest from the Closing through the
date of payment at an interest rate per annum equal to PIBOR in effect on the
Closing, plus 75 basis points. If any payment due by Sellers is not timely made,
Buyer shall have the right to exercise the Guarantees (subject to the terms and
provisions of Section 8.1(h)) for an amount equal to such payment together with
all accrued and unpaid interest through the date of such exercise.
2.6 Joint and Several. All representations, warranties and covenants of the
Shareholders set forth in this Article II shall be the joint and several
representations, warranties and covenants of the Shareholders. All
representations, warranties and covenants of the Sellers set forth in this
Article II shall be the joint and several representations, warranties and
covenants of the Sellers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
----------------------------------------------
Each Shareholder hereby jointly and severally represents and warrants the
following to Buyer. Except where specifically limited, all representations and
warranties are given as of the date hereof and as of the Closing as if made on
and as of the Closing. No specific representation or warranty shall limit the
generality or applicability of a more general representation or warranty:
3.1 Organization. The Company and each Purchased Subsidiary is a
corporation or societe anonyme duly organized, validly existing and in good
standing under the laws of its state or country of incorporation as set forth
opposite its name on Schedule 3.2 and has the corporate power and authority to
own or lease its properties and carry on its business as now being conducted.
The Company and each Purchased Subsidiary is duly qualified to do business as a
foreign corporation and is in good standing in every jurisdiction in which the
operation of its business requires such qualification, except for failures, if
any, to be so qualified and in good standing which would not have a Material
Adverse Effect on the Company or any Purchased Subsidiary. The Shareholders
have, prior to the execution and delivery of this Agreement, made available to
Buyer, copies of the Charter, statuts and by-laws, as applicable, of the Company
and each Purchased Subsidiary, each as in effect on the date hereof. The minute
books, stock certificate books and stock transfer ledgers of the Company and
each Purchased Subsidiary (copies of which have been provided by the
Shareholders to Buyer prior to the date hereof) are complete and correct and
properly reflect all material transactions involving the business and operations
of the Company and such Purchased Subsidiary.
3.2 Authorized Capitalization; Outstanding Stock. Schedules 3.2 and 3.2-A
set forth as of the date hereof and as of the Closing, respectively (i) the
authorized capital stock of the Company and each Purchased Subsidiary, (ii) the
number of shares of capital stock of the Company and each Purchased Subsidiary
that are issued and outstanding, and (iii) the name of the legal and beneficial
holder thereof. Such shares are owned beneficially and of record by such holders
and each such holder has good and valid title to such shares as of the date
hereof and as of the Closing such shares will be free and clear of all Liens.
Such shares have been duly authorized, are validly issued and are fully paid and
non-assessable and free of preemptive rights and have not been issued in
violation of any securities laws. Except for the Convertible Bonds, there are no
outstanding rights, warrants, options or agreements with respect to any class of
capital stock of the Company or any Purchased Subsidiary. Schedules 3.2 and
3.2-A set forth the certificate number and the number of outstanding shares
evidenced thereby issued by the Company or any Purchased Subsidiary.
3.3 Subsidiaries. As of the date hereof, the Company has no Subsidiaries
other than the Subsidiaries listed on Schedules 3 and 3.1 and as of the Closing
the Company shall have no Subsidiaries other than the Purchased Subsidiaries.
Except as set forth in Schedule 3.2 the Company is and as of the Closing without
any exception will be, directly or indirectly, the record and legal and
beneficial owner of all of the outstanding shares of capital stock of each
Purchased Subsidiary, and there are no proxies granted or voting trusts or other
voting agreements with respect to such shares. Neither the Company nor any
Purchased Subsidiary is a party to any partnership agreement or understanding or
joint venture agreement or understanding.
3.4 Authority; Binding Effect. Each Seller has full power, authority and
capacity to execute and deliver each Purchase Document to which such Seller is a
party and to perform the transactions required of such Seller thereunder. Each
Purchase Document to which any Seller is a party has been duly authorized,
executed and delivered by such Seller and constitutes the legal, valid and
binding obligations of such Seller enforceable against such Seller in accordance
with the terms and provisions thereof, subject to general equity principles and
to applicable bankruptcy, fraudulent transfer, insolvency, reorganization,
moratorium and other similar laws from time to time in effect affecting the
enforcement of creditors' rights generally (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
3.5 Non-Contravention. Except as set forth on Schedule 3.5, neither the
execution and delivery by any Seller of any Purchase Document to which such
Seller is a party nor the consummation by such Seller of the transactions
contemplated thereby (a) will violate any provision of the Charter, statuts or
by-laws, as applicable, of the Company or any Purchased Subsidiary, (b) will
violate or conflict with any applicable statute, law, ordinance, rule,
regulation, order, judgment or decree applicable to the Company, any Purchased
Subsidiary or any Seller, (c) will conflict with or constitute a violation of or
a default (or an event which with notice or lapse of time or both, would
constitute a default) under, or will result in the termination of, or accelerate
performance required by, any contract to which the Company, any Subsidiary of
the Company or any Seller is a party or to which any of the assets or properties
of the Company, any Purchased Subsidiary or any Seller are subject, or (d) will
result in the creation of any Lien upon any of the capital stock of the Company
or any Purchased Subsidiary or upon any of the property or assets of the Company
or any Purchased Subsidiary. Except for the approval of the Purchase Documents
by the Board of Directors of the Company, which has already been obtained if
required, and the HSR Approval, neither the execution or delivery by any Seller
of any Purchase Document to which such Seller is a party nor the consummation of
the transactions contemplated thereby will require the consent, authorization or
approval of, or notice to or filing or registration with, any Person.
3.6 Financial Statements. The 1995 Proforma Combined Balance Sheet and the
1996 Proforma Combined Financial Statements attached hereto as Schedule 3.6 (i)
are true, accurate and complete in all material respects; and (ii) fairly and
accurately present, in all material respects, the properties, assets,
liabilities, financial positions, results of operations and cash flows of the
Combined Group as of the respective dates and for the respective periods covered
thereby. The 1995 Proforma Combined Balance Sheet and the 1996 Proforma Combined
Financial Statements have been prepared pursuant to and in accordance with IAS
and in accordance with the accounting principles set forth on Schedule 3.6(b)
and subject to the carve-out methodology set forth on Schedule 3.6(a) and are
accompanied by a special purpose report of PW in a form consistent with Schedule
3.6(c).
As of December 31, 1996, neither the Company nor any Purchased Subsidiary
had any liabilities or obligations (whether secured or unsecured, accrued,
absolute, contingent or otherwise) which, under IAS, should have been but which
were not reflected or reserved against in the 1996 Proforma Combined Financial
Statements.
3.7 Interim Changes. Since December 31, 1996 neither the Company nor any
Purchased Subsidiary incurred any liabilities or obligations (whether secured or
unsecured, accrued, absolute, contingent or otherwise), except any such
liabilities or obligations incurred in the ordinary course of business of the
Company or such Purchased Subsidiary, as the case may be. During the period from
December 31, 1996 through and including the Closing, the business of the Company
and each Purchased Subsidiary has been operated in the ordinary course and,
except as set forth on Schedule 3.7, neither Company nor any Purchased
Subsidiary has:
(a) experienced any work stoppage with respect to the business of the
Company or any Purchased Subsidiary or obtained knowledge of any threatened
or anticipated work stoppage;
(b) sustained any damage or loss to its business or properties in
excess of FF 100,000 in any instance or FF 500,000 in the aggregate
(whether or not covered by insurance);
(c) instituted or settled any litigation, action or proceeding
relating to its business;
(d) received any notice of default under any Contract; or
(e) otherwise suffered a Material Adverse Change.
3.8 Owned and Leased Property.
(a) The Company and each Purchased Subsidiary has good and marketable
title to its owned Tangible Personal Property free and clear of all Liens
except Liens for current Taxes and assessments not yet delinquent or being
contested in good faith by appropriate proceedings.
(b) All leases and subleases pursuant to which the Company or any
Purchased Subsidiary (i) leases (whether as lessee or lessor) its Tangible
Personal Property excluding leases for less than FF 5,000 per month and
terminable without penalty within 12 months, or (ii) leases or has leased
(since the date on which the Company or such Purchased Subsidiary was
created or acquired by the Company or a Purchased Subsidiary, as such date
is set forth on Schedule 3.2) any real property as lessor or lessee (the
"Leased Real Property") are set forth on Schedule 3.8(b). Such leases and
subleases (other than the leases identified on Schedule 3.8(b) as no longer
in effect) are in good standing and are valid and binding against the
Company or such Purchased Subsidiary, as the case may be, and the other
parties thereto, in accordance with their respective terms, subject to
general equity principles and to applicable bankruptcy, fraudulent
transfer, insolvency, reorganization, moratorium and other similar laws
from time to time in effect affecting creditors' rights generally (whether
considered in a proceeding in equity or at law), and there is not, under
any of such leases or subleases any existing default, event of default or
event which with notice or lapse of time or both would constitute a
default, any Purchased Subsidiary or the Person from or to whom the Company
or any Purchased Subsidiary leases or subleases such Tangible Personal
Property or Leased Real Property. None of the rights of the Company or any
Purchased Subsidiary under any of such leases or subleases is subject to
termination or modification as the result of the transactions contemplated
by any Purchase Document.
(c) All buildings, machinery, equipment, fixtures, rolling stock and
tools (including, without limitation, all replacement parts therefor to the
extent such parts exist), used or useful in the business of the Company or
any Purchased Subsidiary, whether owned or leased by the Company or any
Purchased Subsidiary have been properly maintained and are in good
operating condition (except for ordinary wear and tear), and are capable of
being used in the business of the Company or such Purchased Subsidiary, as
the case may be, without present need for repair or replacement except in
the ordinary course of business.
(d) All real property owned by the Company or a Purchased Subsidiary
since the date on which the Company or such Purchased Subsidiary was
created or acquired by the Company or a Purchased Subsidiary, as such date
is set forth on Schedule 3.2, is set forth on Schedule 3.8(d) (the "Owned
Real Property").
(e) There are no encroachments upon any Owned Real Property or Leased
Real Property and the improvements situated upon such premises do not
encroach upon or violate any rights or way, easements or the lands of
others. The use of such premises by the Company or any Purchased
Subsidiary, as the case may be, and the conduct therein of the business of
the Company or such Purchased Subsidiary do not violate any law, rule,
regulation or zoning or use ordinance of any governmental body of authority
and, in connection with such use and conduct, there are no violations of
law or rule with respect to water supply, sewage or waste disposal
facilities.
(f) Neither the Company nor any Purchased Subsidiary has received any
notice of any special assessment or condemnation from a Governmental Entity
with respect to any of the Owned Real Property or Leased Real Property.
3.9 Environmental Matters. Except as disclosed in Schedule 3.9:
(a) All permits, licenses and other authorizations which are required
under the applicable Environmental Laws for the operation of each property
owned, leased or occupied by the Company or a Purchased Subsidiary which
are required to be obtained or applied for by the Company or a Purchased
Subsidiary have been obtained or applied for;
(b) Neither the Company nor any Purchased Subsidiary has failed to
comply with any applicable Environmental Laws;
(c) Neither the Company nor any Purchased Subsidiary has Released,
placed, stored, buried or dumped any Hazardous Substances on or beneath any
property (in each case in violation of applicable Environmental Laws);
(d) Neither the Company nor any Purchased Subsidiary has received any
notice or order from any Person advising it that it is responsible for or
potentially responsible for Cleanup or remediation of any Hazardous
Substances and neither the Company nor any Purchased Subsidiary has entered
into any agreements concerning such Cleanup;
(e) There is no Environmental Claim pending or, to the Knowledge of
the Company, threatened against the Company or any Purchased Subsidiary or
pending or, to the Knowledge of the Company, threatened against any other
Person whose liability for any Environmental Claim the Company or any
Purchased Subsidiary has or may have retained or assumed either
contractually or by operation of law;
(f) There are no past or present actions, activities, circumstances,
conditions, events or incidents (including, without limitation, the Release
or presence of any Hazardous Substance) which, to the Knowledge of the
Company, could form the basis of any Environmental Claim against the
Company or any Purchased Subsidiary or against any other Person whose
liability for any Environmental Claim the Company or any Purchased
Subsidiary has or may have retained or assumed either contractually or by
operation of law;
(g) The Shareholders have delivered or otherwise made available for
inspection to Buyer true, accurate and complete copies and results of any
reports, studies, analyses, tests or monitoring possessed or initiated by
the Company or any Purchased Subsidiary pertaining to Hazardous Substances
in, on, beneath or adjacent to any Owned Real Property or any Leased Real
Property or regarding compliance by the Company or any Purchased Subsidiary
with applicable Environmental Laws;
(h) No transfers of permits or other governmental authorizations under
Environmental Laws, and no additional permits or other governmental
authorizations under Environmental Laws, will be required to permit Buyer
to conduct the business of the Company or any Purchased Subsidiary in full
compliance with all applicable Environmental Laws immediately following the
Closing, as conducted by the Company or such Purchased Subsidiary, as the
case may be, immediately prior to the Closing;
(i) Neither the Company nor any Purchased Subsidiary has any
Underground Storage Tanks; and
(j) None of the Owned Real Property or any Leased Real Property is
located in a special flood hazard area.
3.10 Intellectual Property Rights.
(a) Schedule 3.10(a) lists: (i) all registered Intellectual Property
Rights owned by the Company or a Purchased Subsidiary, together with
applications therefor that are pending or in the process of preparation;
(ii) all licenses (other than licenses with respect to the Company's or a
Purchased Subsidiary's use of off-the-shelf software programs) and other
agreements allowing the Company or any Purchased Subsidiary to use the
Intellectual Property Rights; and (iii) all royalty agreements relating to
any Intellectual Property Rights and to which the Company or any Purchased
Subsidiary is a party.
(b) Either the Company or a Purchased Subsidiary is the sole and
exclusive owner of the registered Intellectual Property Rights listed on
Schedule 3.10(a), free and clear of any claims or Liens. Except as
disclosed in Schedule 3.10(b), the Company and each Purchased Subsidiary
has the means, rights and information (including, without limitation,
Intellectual Property Rights) required to manufacture, process, sell, offer
for sale and use the items and perform the services as presently being
manufactured, processed, offered for sale, sold, used or performed by it,
without incurring any liability for license fees, royalties or other
payments or any claims of infringement of any intellectual property rights
of any other Person.
(c) Except as disclosed in Schedule 3.10(c), none of the Intellectual
Property Rights infringes upon the rights of any third party nor, to the
Knowledge of the Company, does any use by any third party of any of the
Intellectual Property Rights infringe upon any of the rights of the Company
or a Purchased Subsidiary therein, and there are no claims pending or
threatened in connection with any such infringement with respect to any of
the Intellectual Property Rights.
(d) Neither the Company nor any Purchased Subsidiary has received any
notice that any of its processes or products infringe upon any intellectual
property rights of any third party.
(e) Neither the Company nor any Purchased Subsidiary pays any royalty
to any Person with respect to any of the Intellectual Property Rights or
any of the expertise relating thereto, nor does the Company or any
Purchased Subsidiary receive royalties with respect thereto. Neither the
Company nor any Purchased Subsidiary has licensed or sublicensed any of the
Intellectual Property Rights to any Person except as set forth on Schedule
3.10(e). Neither the Company nor any Purchased Subsidiary has received any
notice which would prevent or materially hinder it from using anywhere in
the world any of its Intellectual Property Rights.
(f) All fees with respect to registered Intellectual Property Rights
have been paid and the Company has not taken any action or failed to take
any action that would impair any of its right, title or interest in any of
the Intellectual Property Rights.
(g) The execution and delivery of the Purchase Documents and
performance thereunder will not result in the loss or impairment of any of
the Intellectual Property Rights.
3.11 Litigation. Except as set forth in Schedule 3.11, there are no
actions, suits or proceedings by or before any court or Governmental Entity
pending or, to the Knowledge of the Company, threatened by or against the
Company or any Purchased Subsidiary or involving or affecting the business of
the Company, any Purchased Subsidiary or any of their respective assets. Neither
the Company nor any Purchased Subsidiary is subject to any order, writ,
injunction, judgment or decree.
3.12 Tax Matters.
(a) All returns with respect to Taxes of the Company and each
Purchased Subsidiary, including estimated tax returns and other information
returns, declarations and reports, which are required to be filed have been
duly and timely filed in accordance with applicable tax law with the
appropriate Governmental Entities. All Taxes shown as due and owing on such
returns and reports have been fully and timely paid and such returns and
reports accurately reflect all liability for Taxes of the Company and each
Purchased Subsidiary for the periods, operations or transactions covered
thereby. The Shareholders have delivered to Buyer true and complete copies
of all federal, state, foreign and local income Tax returns of the Company
and each Purchased Subsidiary filed by or with respect to the Company and
each Purchased Subsidiary or with respect to the income or operations of
the Company or any Purchased Subsidiary for the years ending on or after
December 31, 1993. With respect to any period for which Tax returns of the
Combined Group have not been filed as of the Closing, or for which Taxes
are not due or owing as of the Closing, the Company and each Purchased
Subsidiary has made due and sufficient accruals therefor in (i) with
respect to any period ending on or prior to December 31, 1996, the balance
sheet included in the 1996 Proforma Combined Financial Statements, and (ii)
with respect to the period commencing on January 1, 1997 up to and
including March 31, 1997, the Effective Date Balance Sheet.
(b) Except as set forth in Schedule 3.12(b), there is no action, suit,
proceeding, audit, investigation or claim now pending or, to the Knowledge
of the Company, threatened, regarding any Taxes relating to the income,
properties or operations of the Company or any Purchased Subsidiary or
their respective businesses. No examination of any Tax return of the
Company or any Purchased Subsidiary (other than any purely internal
governmental examination of which neither the Company, any Purchased
Subsidiary nor any Shareholder is aware) is currently in progress.
(c) There are no Tax sharing agreements or arrangements to which the
Company or any Purchased Subsidiary is now or ever has been a party.
(d) There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any return of the Company or
any Purchased Subsidiary for any period with respect to any Tax. No taxing
authority has asserted a claim for the assessment of any additional Tax for
which the Company or any Purchased Subsidiary is liable.
(e) Each Seller is a resident of, or entity organized under the laws
of, France.
(f) There are no Liens for Taxes on the assets of the Company or any
Purchased Subsidiary other than for current Taxes not yet due and payable.
(g) The Company and each Purchased Subsidiary has complied (and until
the Closing will comply) with all applicable laws, rules and regulations
relating to the payment and withholding of Taxes and have, within the time
and in the manner prescribed by law, withheld from employee wages and paid
over to the proper governmental authorities all amounts required to be so
withheld and paid over under all applicable laws.
(h) Neither the Company nor any Purchased Subsidiary has requested any
extension of time within which to file any Tax return, which Tax return has
not since been filed.
(i) Except for powers of attorney granted to the Company's
accountants, no power of attorney has been granted by the Company or any
Purchased Subsidiary with respect to any matter relating to Taxes which is
currently in force.
(j) No property of the Company or any Purchased Subsidiary is property
that is or will be required to be treated as being owned by another Person
pursuant to the provisions of Section 168(f)(8) of the Code (as in effect
prior to amendment by Tax Reform Act of 1986) or is "tax exempt use
property" within the meaning of Section 168 of the Code.
(k) Neither the Company nor any Purchased Subsidiary is required to
include in income any adjustments by reason of a change in accounting
method and to the Knowledge of the Company no such adjustment or change in
accounting method has been proposed by any taxing authority.
(l) Neither the Company nor any Purchased Subsidiary is or has been a
United States real property holding company (as defined in Section
897(c)(2) of the Code) during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
(m) All transactions subject to United States Taxes which could give
rise to a "substantial understatement" of Federal Income Tax (within the
meaning of former Section 6661 of the Code or Section 6662 of the Code)
were adequately disclosed on the Tax returns of the Company and the
Purchased Subsidiaries as required by such Sections of the Code.
(n) No member of the Combined Group has or shall have at any time any
liability for any Taxes of any Divested Subsidiary.
3.13 Compliance with Applicable Law. Each of the Company and the Purchased
Subsidiaries has all licenses, permits, approvals and other authorizations as
are necessary in order to enable it to own and conduct its business as currently
conducted. Neither the Company nor any Purchased Subsidiary has violated or
failed to comply with any, and the operations of the business of the Company and
each Purchased Subsidiary are in compliance with all, federal, state, foreign
and/or local laws, statutes, codes, orders, plans, decrees, ordinances, rules
and regulations, including, without limitation, compliance with the requirements
of the works council in accordance with Article L 432-1, paragraph 3, of the
French Labor Code. Except as set forth in Schedule 3.13, neither the Company nor
any Purchased Subsidiary has received notice of any violation of, or liability
or responsibility under, any applicable federal, state, foreign, or local law,
statute, code, order, plan, ordinance, decree, rule or regulation and neither
the Company nor any Purchased Subsidiary has received written notice of any
threatened claim of such a violation, liability or responsibility (including any
investigations relating thereto).
3.14 Contracts. Schedule 3.14 lists each Contract. All Contracts are in
full force and effect and are valid and binding, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws now or
hereafter in effect relating to or affecting the enforcement of creditors'
rights generally and subject to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity). Neither the
Company nor any Purchased Subsidiary nor, to the Knowledge of the Company, any
other Person is in default under, nor has the Company, any Purchased Subsidiary
or any other Person waived any material rights under, any of the Contracts. A
true and complete copy of each written Contract has been delivered to Buyer.
3.15 Employee Benefit Plans.
(a) Definitions. The following terms, when used in this Section 3.15,
shall have the following meanings:
"Benefit Arrangement" shall mean any employment, consulting, severance
or other similar contract, arrangement or policy and each plan, arrangement
(written or oral), program, agreement or commitment providing for insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits, life, health, disability or accident benefits
(including, without limitation, any "voluntary employees' beneficiary
association" as defined in Section 501(c)(9) of the Code providing for the
same or other benefits) or for deferred compensation, profit-sharing
bonuses, stock options, stock appreciation rights, stock purchases or other
forms of incentive compensation or post-retirement insurance, compensation
or benefits which (A) is not a Welfare Plan, Pension Plan or Multiemployer
Plan, (B) is entered into, maintained, contributed to or required to be
contributed to, as the case may be, by any US Subsidiary or any ERISA
Affiliate, and (C) covers any employee or former employee of any US
Subsidiary.
"Employee Plans" shall mean all Benefit Arrangements, Multiemployer
Plans, Pension Plans and Welfare Plans.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean any corporation or business which is now,
or at the relevant times was, a member of a controlled group of
corporations or trades or businesses with any US Subsidiary, as defined in
Sections 414(b), (c), (m) or (o) of the Code.
"Multiemployer Plan" shall mean any "multiemployer plan," as defined
in Section 4001(a)(3) of ERISA, which any US Subsidiary or any ERISA
Affiliate maintains, administers, contributes to or is required to
contribute to.
"Pension Plan" shall mean any "employee pension benefit plan," as
defined in Section 3(2) of ERISA (other than a Multiemployer Plan), which
any US Subsidiary or any ERISA Affiliate maintains, administers, or
contributes to or is required to contribute to.
"Welfare Plan" shall mean any "employee welfare benefit plan," as
defined in Section 3(1) of ERISA, which any US Subsidiary or any ERISA
Affiliate maintains, administers, contributes to or is required to
contribute to.
(b) Disclosure: Delivery of Copies of Relevant Documents and Other
Information. Schedule 3.15 sets forth a complete list of Employee Plans
that cover employees of any US Subsidiary. The Shareholders have delivered
to Buyer true and complete copies of each of the following documents: (i)
each Welfare Plan and Pension Plan (and, if applicable, related trust
agreements) and all amendments thereto, all written interpretations thereof
and written descriptions thereof which have been distributed to the
employees of any US Subsidiary and all annuity contracts or other funding
instruments pertaining to each Welfare Plan and Pension Plan, (ii) each
Benefit Arrangement including written descriptions thereof which have been
distributed to the employees of any US Subsidiary and a description of any
such Benefit Arrangement which is not in writing, (iii) the most recent
determination letter issued by the Internal Revenue Service with respect to
each Pension Plan covering United States employees, and (iv) for the three
most recent plan years, Annual Reports on Form 5500 Series required to be
filed with any governmental agency for each Pension Plan and Welfare Plan.
For purposes of this paragraph (b), Multiemployer Plans, Pension Plans and
Welfare Plans shall only include those plans that cover any employee or
former employee (or beneficiary of either of the foregoing) of any US
Subsidiary.
(c) (i) Pension Plans. No Pension Plan is subject to the minimum
funding requirements of Title I of ERISA or Section 412 of the Code or
Title IV of ERISA. Each Pension Plan, each related trust agreement, annuity
contract or other funding instrument is qualified and tax-exempt under the
provisions of Code Section 401(a) (or 403(a), as appropriate) and 501(a)
and has been so qualified during the period from its adoption to date. No
lien imposed under the Code or ERISA exists or is likely to exist on
account of any Pension Plan.
(ii) Employee Plans. No Employee Plan provides benefits,
including, without limitation, death or medical benefits (whether or
not insured), with respect to current or former employees of any US
Subsidiary after retirement or other termination of service (other
than (i) coverage mandated by applicable law including, without
limitation, health benefit continuation rights under federal and state
law, (ii) death benefits or retirement benefits under any "employee
pension plan," as that term is defined in Section 3(2) of ERISA, (iii)
deferred compensation benefits accrued as liabilities on the books of
any US Subsidiary or any ERISA Affiliate, or (iv) benefits, the full
cost of which is borne by the current or former employee (or his or
her beneficiary)). No amounts payable under the Employee Plans or any
other agreement or arrangement to which any US Subsidiary is a party
will, as a result of the transaction contemplated hereby, fail to be
deductible for federal income tax purposes by virtue of Section 280G
of the Code.
(iii) Multiemployer Plans. Neither any US Subsidiary nor any
ERISA Affiliate contributes to, or within the past six years has been
obligated to contribute to, any Multiemployer Plan.
(iv) Compliance with Law. Each Welfare Plan which is a "group
health plan," as defined in Section 607(1) of ERISA or Section
5000(b)(1) of the Code, has been operated, in all material respects,
in compliance with provisions of Part 6 of Title I of ERISA and
Section 4980B of the Code at all times.
(v) Benefit Arrangements. Each Benefit Arrangement which covers
employees of any US Subsidiary has been maintained, in all material
respects, in compliance with its terms and, in all material respects,
with the applicable requirements of the Code or ERISA.
(vi) Fiduciary Duties and Prohibited Transactions. Neither any US
Subsidiary nor any plan fiduciary of any Welfare Plan Pension Plan or
Benefit Arrangement which covers or has covered employees or former
employees of any US Subsidiary or any ERISA Affiliate, has engaged in
(i) any transaction in violation of Sections 404 or 406 of ERISA or
(ii) any "prohibited transaction," as defined in Section 4975 of the
Code for which no exemption exists under Section 408 of ERISA or
Section 4975(c)(2) or (d) of the Code.
(vii) No Liability. No US Subsidiary has taken any action, nor
has any event occurred, that has resulted or will likely result in
liability under Title IV of ERISA, including, but not limited to,
withdrawal liability with respect to any Multiemployer Plan, which
liability will become a liability of Buyer. All Employee Plans are
fully paid up or fully funded or adequate provision for all
liabilities or obligations of each US Subsidiary in respect of or
relating to any period or portion thereof on or before the Closing
have been made in the Financial Statements.
(viii) Other Plans. Except as provided in Schedule 3.15, neither
the Company nor any Purchased Subsidiary presently maintain any
Benefit Arrangements for non United States employees, and each such
Benefit Arrangement listed on Schedule 3.15 is in substantial
compliance with applicable law in the non-US jurisdiction in which it
was established.
(d) Neither the Company nor Fenzy maintain any health or life
insurance, pension, profit sharing, retirement, bonus, incentive, stock
option or stock purchase, insurance, severance or other employee benefit
plans or arrangements (including, without limitation, settlement
agreements), in which any employee of the Company or Fenzy participate
("Company Benefit Plans") except those listed on Schedule 3.15 or those
which are required by law or the applicable collective bargaining
agreement. The Company and Fenzy are in compliance with their obligations
under any applicable law in connection with Company Benefit Plans. The
Company has previously provided to Buyer true, complete and correct copies
of all Company Benefit Plans. Liabilities relating to Company Benefit Plans
have been adequately reserved against in the 1996 Proforma Combined
Financial Statements.
3.16 [Intentionally Omitted]
3.17 Insurance. Each insurance policy currently in effect that insures the
business, property (whether real or personal), operations, employees or officers
of the Company or any Purchased Subsidiary is listed on Schedule 3.17
(collectively, the "Insurance Policies") and is in full force and effect, the
premiums due thereunder have been paid as they became due and payable and
neither the Company nor any Purchased Subsidiary has received any notice of
cancellation or termination in respect of any such policy or is in default
thereunder. Such policies are sufficient for compliance with all requirements of
law. Schedule 3.17 sets forth all outstanding claims under any Insurance Policy.
3.18 Labor Relations. (a) No work stoppage by employees of the Company or
any Purchased Subsidiary is pending or, to the Knowledge of the Company, is
threatened. Neither the Company nor any Purchased Subsidiary is involved in or,
to the Knowledge of the Company, threatened with any labor dispute, arbitration,
lawsuit or administrative proceeding relating to labor matters involving any of
the employees of the Company or any Purchased Subsidiary with respect to its
business (excluding workers' compensation claims and wrongful termination
litigation described in Schedule 3.11 which, in the aggregate, would not have a
Material Adverse Effect on the Company or any Purchased Subsidiary). Except as
set forth in Schedule 3.18(a) there are no outstanding loans or advances to any
officer, director, employee or shareholder of the Company or any Purchased
Subsidiary other than advances made in the ordinary course of business not in
excess of FF 20,000 with respect to any such person.
(b) Except as set forth on Schedule 3.18(b), neither the Company nor
any Purchased Subsidiary:
(i) was liable, as of December 31, 1996, for any accrued bonus
compensation, vacation pay, severance pay or arrears of wages except
as reflected on the 1996 Proforma Combined Financial Statements;
(ii) is currently involved in or has had any activity or
proceedings by a labor union or representative thereof to organize any
of its employees and no such activity or proceeding has been
threatened against the Company or any Purchased Subsidiary; and
(iii) is subject to any pending or, to the Knowledge of the
Company, threatened complaints or investigations involving the Company
or any Purchased Subsidiary by any Person responsible for the
investigation and enforcement of any foreign, federal, state or local
labor, employment or discrimination laws, statutes, public policies,
orders, regulations, ordinances or other requirements respecting any
labor, employment and employment practices, discrimination, terms and
conditions of employment, or wages and hours other than routine visits
carried out by any such Person in the ordinary course which have not
resulted in any complaints, further investigations or liability to the
Company or any Purchased Subsidiary.
(c) Schedule 3.18(c) sets forth (i) each employee of the Company and
each Purchased Subsidiary, (ii) all compensation (including, without
limitation, bonuses, premiums and other benefits) paid, or due and payable,
to such employee, during the twelve month period ending on December 31,
1996, (iii) the current monthly salary of such employee and all bonuses,
premiums and other benefits to which such employee is entitled, (iv) the
job description and classification and seniority of such employee, (v) the
locations in which such employee works, and (vi) a description of the
employment contract with such employee indicating, without limitation, the
term of such contract, the hours per week that such employee is obligated
to provide services to the Company or a Purchased Subsidiary, the number of
vacation days per annum to which such employee is entitled and whether such
employment is deemed part time or full time. To the extent any such
employment contract is written, a complete copy thereof has been delivered
to Buyer. Schedule 3.18 (c) further sets forth (i) employees of any member
of the Combined Group who have a protected status or are a representative
of employees of any member of the Combined Group, (ii) former employees of
any member of the Combined Group who have priority rehiring rights or to
whom any member of the Combined Group is obligated in any respect and the
nature of such obligations, and (iii) any employee of any member of the
Combined Group who is employed by a Divested Subsidiary, the number of
hours per week such employee is committed to provide services to such other
Person and the compensation and other benefits such employee receives for
such services from such Divested Subsidiary. Notwithstanding the foregoing,
with respect to Schedule 3.18(c) Survivair shall not be required to
disclose the job descriptions required by the immediately preceding clause
(iv).
3.19 Location of Off Site Assets. Except as set forth on Schedule 3.19 and
except for goods in transit and financial assets, none of the tangible assets of
the Company or any Purchased Subsidiary is located on any real property other
than the Properties owned or leased by the Company or a Purchased Subsidiary as
of the date hereof.
3.20 Inventory. All inventory of each of the Company and the Purchased
Subsidiaries has been and will be acquired in the ordinary course of business
and consistent with its prior practice. Except as shown on Schedule 3.20, all of
the inventory (including raw materials, work-in-process, finished goods, and all
packing, packaging and instructional materials for the same) of Company and each
Purchased Subsidiary as of March 31, 1997 is reflected (including any reserves
therefor) in the Effective Date Balance Sheet, or was acquired thereafter and
is, and as of the Closing will be, in good condition, not obsolete, defective or
subject to any material backlog, and is and will be usable or salable in the
usual and ordinary course of business within its normal inventory "turn"
experience and is valued at the lower of cost (determined on a first-in
first-out basis) or market value, except to the extent of the inventory reserves
reflected in the Effective Date Balance Sheet. For purposes of the immediately
preceding sentence, such reserves shall be determined in accordance with
paragraph 2.8 of Schedule 3.6(b). Neither the Company nor any Purchased
Subsidiary is under any liability or obligation with respect to the return or
repurchase of any non defective goods in the possession of customers except for
amounts which are not material and are consistent with historical levels of
returns and allowances and have been appropriately provided for in the Effective
Date Balance Sheet.
3.21 Accounts Receivable. Schedule 3.21 lists (i) all of the accounts
receivable of the Company or any Purchased Subsidiary in excess of Twenty-Five
Thousand French Francs (FF 25,000) written off since December 31, 1995 or
against which a specific reserve has been provided, and (ii) each account
receivable of the Company or any Purchased Subsidiary not arising in the
ordinary course of its business. Except as set forth on Schedule 3.21 or except
for allowances or reserves for bad debt reflected in the Effective Date Balance
Sheet, all of the accounts receivable of the Company and each Purchased
Subsidiary of any nature as of the Effective Date will be collected in the usual
and ordinary course of business without resort to legal proceedings and will be
paid in cash, without any set-off, on or prior to the sixth month anniversary of
the Effective Date. For purposes of determining compliance with the preceding
sentence credit shall be given for the aggregate amount of accounts receivable
collected during the six month period commencing on the Effective Date which had
been written-off prior to the Effective Date. Schedule 3.21 sets forth a list of
all accounts receivable of the Company and each Purchased Subsidiary in excess
of Twenty-Five Thousand French Francs (FF 25,000) with an invoice date prior to
July 1, 1996 that have not been paid on or prior to December 31, 1996.
3.22 Agents. Except (i) as set forth on Schedule 3.22, (ii) for agents for
service of process and customs brokers, and (iii) as provided in Section
3.12(i), neither the Company nor any Purchased Subsidiary has designated or
appointed any Person to act for it or on its behalf pursuant to any power of
attorney or agency which is presently in effect.
3.23 Warranty and Product Liability Claims. (a) Except as disclosed on
Schedule 3.23(a), neither the Company nor any Purchased Subsidiary has made any
express warranties or guaranties with respect to any products manufactured or
sold or services rendered in the operation of its business, and no claims are
pending or threatened or have been asserted during the past two (2) years that
any product of the Company or any Purchased Subsidiary was defective or caused
any injury or harm to any person or property other than routine product warranty
claims, the cost of which are adequately reserved or provided for in the
Financial Statements as of the respective dates thereof. All pending, threatened
or asserted claims set forth on Schedule 3.23(a) are covered by insurance and
are not subject to any deductibles other than the amount of the deductible set
forth opposite such claim on such Schedule.
(b) Schedule 3.23(b) sets forth all accidents involving, to the Knowledge
of the Company, any product manufactured or sold by any member of the Combined
Group or by any services rendered by any member of the Combined Group,
regardless of whether a claim therefor has been asserted or threatened.
3.24 No Brokers. Except with respect to Lazard Freres & Company, whose
fees, commissions, costs and expenses shall be solely for the account of the
Shareholders, neither any Seller, the Company nor any Subsidiary of the Company
has employed any broker, finder, advisor or intermediary in connection with the
transactions contemplated hereby which would be entitled to a broker's, finder's
or similar fee or commission in connection therewith or upon the consummation
thereof.
3.25 No Other Agreements to Sell. Except for (i) the transfer of Shares by
a Shareholder to one or more of the Sellers listed on Schedule 1-A (subject,
however, to compliance with Section 5.17), (ii) the transactions contemplated by
Section 5.1(b), and (iii) the Divestiture, none of the Sellers, the Company or
any of the Purchased Subsidiaries is a party to any agreement to sell all or a
portion of any of the capital stock of the Company or any Purchased Subsidiary
or any of their respective assets (other than the sale of inventory in the
ordinary course of business) to any Person other than Buyer.
3.26 Disclosure. No statement contained in this Agreement and the Schedules
hereto contains or will contain any untrue statement of a material fact or omits
or will omit to state a material fact necessary to make the statements contained
therein not misleading.
3.27 [Intentionally Omitted]
3.28 Copies of Documents. The Shareholders have caused to be delivered to
the Buyer and its advisers, true, complete and correct copies of all documents
referred to in this Article III or in any Schedule attached hereto.
3.29 Intercompany Accounts. Schedule 3.29 sets forth (i) all intercompany
loans payable and intercompany loans receivable (a) among entities within the
Combined Group, and (b) among any member of the Combined Group, on the one hand,
and any Divested Subsidiary, on the other hand, in each case at December 31,
1996.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants the following to each Shareholder.
Except as specifically limited, all such representations and warranties are
given as of the date hereof and as of the Closing as if made on and as of the
Closing. No specific representation or warranty shall limit the generality or
applicability of a more general representation or warranty:
4.1 Organization. Buyer is a societe anonyme duly organized and validly
existing under the laws of France and has the corporate power and authority to
carry on its business as now being conducted. Buyer has, prior to the execution
of this Agreement, made available to the Company a copy of its Charter and
statuts, each as in effect on the date hereof.
4.2 Authority; Binding Effect. Buyer has the necessary corporate power and
authority to enter into each Purchase Document to which it is a party and to
consummate the transactions contemplated thereby. The Board of Directors of
Buyer has duly authorized the execution, delivery and performance of the
Purchase Documents to which Buyer is a party and the consummation of the
transactions contemplated thereby. No other corporate action or proceeding on
the part of Buyer is necessary to authorize the execution and delivery of such
Purchase Documents or the consummation by Buyer of the transactions contemplated
thereby. When fully executed and delivered, such Purchase Documents will
constitute valid and binding agreements of Buyer enforceable against Buyer in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to or affecting the enforcement of creditors' rights generally
and subject to general principles of equity (regardless of whether enforcement
is sought in a proceeding at law or in equity).
4.3 Non-Contravention. Neither the execution and delivery by Buyer of any
Purchase Document to which Buyer is a party nor the consummation by Buyer of the
transactions contemplated thereby (a) will violate any provision of the Charter
or statuts of Buyer, or (b) will violate or conflict with any applicable
statute, law, ordinance, rule, regulation, order, judgment or decree applicable
to Buyer. Except for approval by the Board of Directors of Buyer, which has
already been obtained, and the HSR Approval, neither the execution or delivery
by Buyer of any Purchase Document to which Buyer is a party nor the consummation
of the transactions contemplated thereby will require the consent, authorization
or approval of, or notice to or filing or registration with, any Person.
ARTICLE V
FURTHER AGREEMENTS OF THE PARTIES
---------------------------------
5.1 Conduct of Business Prior to Closing. (a) Except as provided in Section
5.1(b) or Section 5.14, from the Effective Date through the Closing, the
Shareholders shall cause the Company and each Purchased Subsidiary to carry on
its business in the ordinary course and consistent with prior practice. Without
limiting the foregoing, except as contemplated by this Agreement, the
Shareholders shall cause the Company and each Purchased Subsidiary to:
(i) use all reasonable efforts to preserve intact its business
and assets;
(ii) use all reasonable efforts to preserve its present
relationships with suppliers, distributors and customers;
(iii) maintain its accounting policies and its books, accounts
and records in the usual and ordinary manner;
(iv) maintain its assets in good repair and operating condition,
ordinary wear and tear excepted;
(v) maintain its Insurance Policies as in effect on the date
hereof; and
(vi) make no material change in the character of its business.
Without limiting the foregoing, except as contemplated by this Agreement, the
Sellers shall not permit the Company or any Purchased Subsidiary to do any of
the following or to enter into any contract, agreement, commitment or
arrangement to do any of the following:
(i) except with respect to the transactions contemplated by this
Agreement, incur or become subject to, or agree to incur or become
subject to, any liability (whether secured or unsecured, accrued,
absolute, contingent or otherwise), except (a) any such liabilities
incurred in the ordinary course of its business, consistent with past
practice, the outstanding amount of any of which shall not exceed, at
any time, FF 1,000,000, and (b) loans to officers, directors or
employees of the Company or any Purchased Subsidiary made in the
ordinary course of business but not exceeding FF 20,000 at any time
outstanding for any such Person;
(ii) except with respect to the transactions contemplated by this
Agreement, enter into any commitment not terminable in less than
thirty (30) days;
(iii) split, combine or reclassify any of its capital stock or
issue any other security in respect of, in lieu of or in substitution
therefor, or repurchase, redeem or otherwise acquire any of its shares
of capital stock;
(iv) issue, deliver, pledge, encumber, sell or purchase any
shares of its capital stock or securities convertible into, or rights,
warrants or options to acquire, any shares of its capital stock or
other convertible securities of the Company or any Purchased
Subsidiary;
(v) acquire or agree to acquire by merging or consolidating with,
or by purchasing any material portion of the capital stock or assets
of, or by any other manner, any business, corporation, partnership,
association or other business organization, or any division thereof;
(vi) amend its Charter, statuts or by-laws;
(vii) change its accounting methods, principles or investment
practices, actuarial practices, underwriting standards or retention
policies, claims, payment and processing practices, policies regarding
intercompany transactions or other policies or practices affecting its
assets, liabilities or business;
(viii) amend, cancel, terminate (other than by its terms) or
waive any provision of any Contract to which it is a party which
required, requires or is anticipated to require payments in excess of
FF 50,000, in the aggregate, in any twelve-month period;
(ix) grant a Lien;
(x) grant any general pay increases to its employees, officers or
directors or change the rate of compensation, commission, bonus or
other remuneration payable to any of its employees, directors,
officers, agents or shareholders;
(xi) enter into any employment, compensation or other agreement
with any of its officers, directors, shareholders, Affiliates,
employees or agents (other than in connection with the hiring of new
employees in the ordinary course of business at an annual compensation
not in excess of FF 160,000 for any person) or terminate the
employment of any of its officers or employees;
(xii) cancel or establish any Employee Plan or Company Benefit
Plan, make any payments or distributions under any Employee Plan or
Company Benefit Plan existing on the date hereof or modify any
Employee Plan or Company Benefit Plan;
(xiii) cancel or compromise any of its claims or liabilities
other than in the ordinary course of business or pay, cancel, waive or
discharge any Lien other than in the ordinary course of business
except as disclosed in Schedule 5.1(xiii);
(xiv) make, pay, set aside or declare any dividends or make other
distributions to any Person in respect of their ownership of any
capital stock of the Company or any Purchased Subsidiary;
(xv) acquire or commit to acquire any capital assets having a
cost in excess of FF 100,000 in any instance or FF 500,000 in the
aggregate for the Combined Group, except as disclosed in Schedule
5.1(xv);
(xvi) except for the sale of inventory in the ordinary course of
business and the sale or disposition of obsolete or unutilized assets
in accordance with existing written policy, sell, assign, transfer,
convey, lease or otherwise dispose of any of its assets or properties;
(xvii) do or omit to do anything which would cause any of the
representations and warranties in Article III to be or become untrue;
(xviii) enter into any lease, whether as lessor or lessee, for
real property or incur any obligation to enter into any such lease or
purchase any real property;
(xix) dispose of or permit the lapse of any Intellectual Property
Rights; or
(xx) sell any marketable securities.
(b) The Sellers, the Company or any Subsidiary of the Company may take
any action as may be required to give effect to the Divestiture, the
purchase and conversion of the Convertible Bonds (as provided in Section
5.14) and the execution and delivery of the Operating Agreements, and such
actions, provided they are consistent with the requirements of the
Divestiture, such purchase of the Convertible Bonds and the Operating
Agreements shall not be deemed a breach of any representation, warranty or
covenant of the Sellers hereunder; provided, however, to the extent not
attached hereto as part of Exhibit E, the Operating Agreements shall be in
form and substance satisfactory to Buyer. Neither the Company nor any
Purchased Subsidiary shall disburse any of the proceeds of the Divestiture.
(c) The Shareholders shall cause the parties to the Operating
Agreements to execute and deliver such Agreements on or prior to the
Closing and shall deliver a copy thereof to Buyer at the Closing.
5.2 Maintenance of Corporate Existence. The Shareholders shall cause the
Company and each Purchased Subsidiary (i) to maintain its corporate existence in
its jurisdiction of incorporation, and (ii) to be in good standing in its
jurisdiction of incorporation and in such other countries and States in which
the conduct of its business or the maintenance of its assets requires it to be
in good standing.
5.3 Filings; Other Action.
(a) The Shareholders shall cause the Company and each Purchased
Subsidiary to and Buyer shall (a) use all best efforts to cooperate with
one another in (i) determining which filings or registrations are required
to be made prior to the Closing with, and which consents, approvals,
permits or authorizations are required to be obtained prior to the Closing
from, any Governmental Entity in connection with the execution and delivery
of each Purchase Document and the consummation of the transactions
contemplated thereby, and (ii) timely make all such filings and
registration and timely seek all such consents, approvals, permits or
authorizations; and (b) use all reasonable efforts to take, or cause to be
taken, all other action and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
transactions contemplated by each Purchase Document.
(b) Without limiting the generality of the foregoing, the Buyer and
the Company shall file Premerger Notification and Report Forms with the
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice, it being agreed that the Shareholders cause the
forms required to be filed by the Company or any Subsidiary under the HSR
Act no later than April 17, 1997. Within one Business Day of Buyer's
receipt of written notice that such filing has been made, Buyer shall file
all necessary applications and forms required to be filed by it under the
HSR Act with respect to the transactions contemplated hereby.
5.4 Access to Information. The Shareholders shall, and shall cause the
officers and employees of the Company and each Subsidiary of the Company to,
afford Buyer and its representatives complete access at all reasonable times to
the properties, books and records of the Company and each such Subsidiary.
5.5 Publicity. Prior to the Closing neither Buyer nor any Seller shall, nor
shall any Seller permit the Company or any Subsidiary of the Company to, issue a
press release or make any public announcement concerning the transactions
contemplated by this Agreement, except (i) as may be agreed upon by Buyer and
any Shareholder, or (ii) as Buyer shall be required under applicable securities
laws.
5.6 Bank Accounts. At least two weeks prior to the Closing the Shareholders
shall deliver to Buyer a list setting forth all banks and other financial
institutions with which the Company or any Purchased Subsidiary maintains an
account or a safe deposit box, showing the account numbers of all such accounts
and the names of the persons authorized as signatories thereon or to act or deal
in connection therewith. The Shareholders shall cause the Company and each
Subsidiary of the Company to cooperate with Buyer and to execute all necessary
documentation to effect fully any changes desired, as of the Closing, by Buyer
in the persons authorized as signatories thereon or to act or deal in connection
therewith.
5.7 No Solicitation of Transactions. Except for the transfer of Shares by a
Shareholder to one or more of the Sellers listed on Schedule 1-A (subject,
however, to compliance with Section 5.17), the transactions contemplated by
Section 5.1(c) and the Divestiture, from the date hereof through the Closing,
the Sellers will not, nor will the Sellers permit the Company or any Subsidiary
of the Company to, directly or indirectly, solicit, initiate or continue any
discussions or negotiations with, or encourage or respond to any inquiries or
proposals by, or participate in any negotiations with, or provide any
information to, or otherwise cooperate in any other way with, any Person or
group of Persons (other than Buyer and its representatives) relating to any
acquisition or purchase of any assets of, or any equity interest in, the Company
or any Purchased Subsidiary or any merger, consolidation or business combination
with the Company or any Purchased Subsidiary.
5.8 Taxes and Fees. The Sellers shall pay all sales, use, transfer, real
estate transfer, registration, excise and other similar Taxes and fees
(including stamp duties) resulting from the consummation of the transactions
contemplated hereby. The Shareholders shall pay all fees, costs and expenses
incurred by or for the account of any Seller, the Company or any Subsidiary of
the Company in connection with the negotiation, execution and delivery of the
Purchase Documents and the consummation of the transactions contemplated
thereby, including, without limitation, the fees, costs and expenses of counsel
to the Sellers, the Company and each Subsidiary of the Company, and the fees,
costs and expenses of the accountants of the Sellers, the Company and each
Subsidiary of the Company to the extent such accountants' fees, costs and
expenses exceeds FF 427,500; provided, however, Buyer shall pay the taxes due
for registration of the Transfer Agreements in the applicable office of the
Recette des Impots up to a maximum of FF 80,000. The Shareholders shall also be
responsible for all income and/or capital gains Tax assessed or payable in
connection with the consummation of the transactions contemplated hereby.
5.9 Cooperation. Each party shall provide the other with such cooperation
as may reasonably be requested, at the expense of the requesting party (unless
the requesting party is to be indemnified with respect thereto, in which case
such cooperation shall be given at the expense of the indemnifying party), in
connection with the post-Closing matters contemplated by this Agreement,
including, without limitation, the defense of any claims whether existing as of
the Closing or arising thereafter out of, or relating to, an occurrence or event
happening before, on or after the Closing, including without limitation by
making available all books and records relating thereto and all employees having
knowledge of the matters in controversy; provided, however, Buyer shall not be
required to make available employees of the Company or any Purchased Subsidiary
for more than one day unless (i) Shareholders shall compensate the employer of
such employee for such time and reimburse all travel and other related costs,
and (ii) such time shall not unreasonably inconvenience such employer, in the
sole judgment of such employer.
5.10 Access to Books and Records. Each party shall make available to the
other such books and records of the Company and the Purchased Subsidiaries in
its possession and, in the case of the Buyer, in the possession of the Company
or a Purchased Subsidiary, as may be required by the other party in connection
with any legal, regulatory or administrative proceeding including Tax audit or
investigation and in connection with any covenant, indemnity or other agreement
contained herein. Such books and records will be open for inspection upon
reasonable notice during regular business hours. Neither the Buyer nor the
Sellers shall be required to provide the other with such books and records
already in its possession and neither the Buyer nor the Shareholders nor the
Company shall be required to treat the books and records of the Company or the
Purchased Subsidiaries other than in accordance with their regular document
retention practices.
5.11 Delivery of US GAAP Financials. The Shareholders shall deliver to
Buyer on or before May 31, 1997 a copy of the US GAAP Financials.
5.12 Sellers' Representative. The Sellers hereby authorize and direct
Francis Berend to act as Sellers' Representative (in such capacity, the
"Sellers' Representative") and to make any and all decisions to be made and to
take or omit to take any and all actions which may be made or be taken by any
Seller under any Purchase Document, including, without limitation, initialing
this Agreement and the Exhibits and the Schedules hereto, executing any
certificates required by any Purchase Document on behalf of any Seller,
receiving distributions thereunder and making disbursements thereunder, making,
compromising or paying claims for indemnification as contemplated by Article
VIII, and receiving notices pursuant to section 1690 of the French Civil Code.
All out-of-pocket expenses incurred by the Sellers' Representative in acting on
behalf of the Sellers with respect to such matters shall be for the account of
the Shareholders. In the event of the death or disability of Francis Berend, or
at the written designation of Francis Berend, and upon receipt of written notice
thereof by Buyer, Philippe Berend shall become the successor Sellers'
Representative without any further action of any other Seller.
5.13 Incomplete Schedules. Shareholders and Buyer acknowledge that
Schedules 1-A 2.3(b)(i)-A and 3.2-A are incomplete or omitted on the date of
execution of this Agreement. Shareholders shall deliver such Schedules, together
with all supporting documentation, to Buyer prior to the Closing.
5.14 Convertible Bonds. The Sellers shall acquire all of the Convertible
Bonds free and clear of any Lien and shall convert them into 5,000 shares of
capital stock of the Company prior to the Closing.
5.15 Schedule Disclosures; Ability to Update. Although a particular
Schedule reference is indicated, disclosure with respect to one Schedule shall
be deemed disclosure under each other Schedule to this Agreement, where
information in such other Schedule is specifically referenced. From time to time
prior to the Closing, Sellers will promptly supplement or amend the Schedules
(and provide Buyer with all applicable documents relating to such supplement or
amendment) with respect to any matter which may arise after the date hereof and
which would have been required to be set forth or described in such Schedules
and which matter does not arise as a result of a breach or default under any
representation, warranty or covenant of the Shareholders or Sellers in this
Agreement; provided, however, Buyer shall have the right to terminate this
Agreement within ten (10) days of its receipt of such supplemented or amended
Schedules if all or any part of such supplemented or amended information is
deemed by Buyer, in its reasonable discretion, to have a Material Adverse Effect
on any member of the Combined Group.
5.16 Insurance Coverage. With respect to the Company and each Purchased
Subsidiary, the Buyer will, for the lesser of two (2) years following the
Closing or the period during which either it or an Affiliate of Buyer owns the
Company or such Purchased Subsidiary cause the Company or such Purchased
Subsidiary, as the case may be, to maintain "claims made" or "occurrence"
insurance coverage which is substantially comparable to that in force as of the
Closing, and the Sellers will cause each of the Divested Subsidiaries to also
maintain such insurance coverage comparable to that in force as of the Closing.
5.17 Transfer of Shares to a Seller. Prior to the Closing any Shareholder
may transfer all or any part of the Shares held by such Shareholder to one or
more of the Sellers set forth on Schedule 1-A provided that contemporaneously
with such transfer each such Seller executes this Agreement on the signature
pages hereto and within two (2) Business Days of such transfer delivers three
(3) originals of such signature pages to Buyer.
5.18 Comasec Name. Within 60 days after the Closing, the Company and the
Purchased Subsidiaries shall discontinue using the name "COMASEC" as part of any
corporate name and within 360 days after the Closing the Buyer shall discontinue
using the name "COMASEC" in connection with its operations (e.g. stationery,
forms, dies, products and packaging).
5.19 Collection of Receivables.
(a) After the Closing, Buyer shall cause the Company and the Purchased
Subsidiaries to use their reasonable efforts, consistent with prior
business practices of the Company and the Purchased Subsidiaries, to
collect all accounts receivable reflected in the Effective Date Balance
Sheet. With respect to any payments on accounts receivable reflected in the
Effective Date Balance Sheet, Buyer shall apply such payments in the order
of the oldest invoice first unless the customer shall have rejected the
goods covered thereby, or shall have otherwise disputed the invoice to
which a payment must be applied. Buyer shall give the Shareholders
reasonable access to the books and records of the Company and the Purchased
Subsidiaries to verify any accounts receivable with respect to which any
claim under Section 5.19(b) is made. Buyers shall not take any action to
vary the terms of payment of any such account receivable set forth on the
Effective Date Balance Sheet, except to extend the payment date to no
longer than 180 days after the normal due date.
(b) Thirty (30) days after the date by which all accounts receivable
are to be collected as specified in Section 3.21, the Buyer shall notify
the Shareholders (the "Receivable Notice Date") of all accounts receivable
described in Section 3.21 which remain uncollected and Buyer shall have the
right to exercise the Guarantees (subject to the terms and provisions of
Section 8.1(h)) for an amount equal to the aggregate amount of such
uncollected accounts receivable minus an amount equal to the sum of (i) the
specific reserves, if any, therefor set forth in the Effective Date Balance
Sheet, and (ii) the aggregate amount of accounts receivable collected
during the six month period commencing on the Effective Date which had been
written-off prior to the Effective Date. Each account receivable for which
Buyer claims indemnification and which remains uncollected as of the
Receivable Notice Date shall be assigned to the Sellers' Representative,
for collection for the Shareholders' account if Shareholders shall so
request. If Buyer subsequently collects any receivable assigned to the
Shareholders pursuant to this Section 5.19, Buyer shall remit amounts so
collected to the Shareholders to the extent of any amounts actually paid by
the Shareholders to Buyer for such receivable.
5.20 Sale of Inventory.
(a) After the Closing, Buyer shall cause the Company and the Purchased
Subsidiaries to use their reasonable efforts, consistent with prior
business practices of the Company and the Purchased Subsidiaries, to use or
sell the inventory reflected in the Effective Date Balance Sheet on a
first-in first-out basis.
(b) Within thirty (30) days after the date by which all inventory is
to be used or sold as specified in Section 3.20 the Buyer shall notify the
Shareholders (the "Inventory Notice Date") of all inventory described in
Section 3.20 which remains unused or unsold and Buyer shall have the right
to exercise the Guarantees (subject to the terms and provisions of Section
8.1(h)) for an amount equal to the book value of such unused or unsold
inventory minus an amount equal to the reserves for inventory, if any,
reflected in the Effective Date Balance Sheet.
5.21 Net Financial Indebtedness. The Shareholders shall use their best
efforts to cause the Company and all its Subsidiaries to conduct their business
so that the amount of the Net Financial Indebtedness as of the Closing will not
exceed FF 56,000,000.
5.22 Joint and Several. All representations, warranties and covenants of
the Shareholders set forth in this Article V shall be the joint and several
representations, warranties and covenants of the Shareholders. All
representations, warranties and covenants of the Sellers set forth in Article V
shall be the joint and several representations, warranties and covenants of the
Sellers.
5.23 Sellers' Confidentiality.
(a) Each Seller agrees that unless authorized or instructed in writing
by the Company, such Seller shall not permit, suffer or cause any Divested
Subsidiary or Affiliate thereof, except to the extent disclosure by such
Seller or the applicable Divested Subsidiary is required pursuant to an
order or requirement of a court, administrative agency or other
governmental body, to disclose to others, or use, any inventions,
discoveries, secrets or confidential information, knowledge or data
(whether in oral, written or machine-readable form) of any member of the
Combined Group (regardless of whether such inventions, discoveries,
secrets, information, knowledge or data have been designated as secret or
confidential by any member of the Combined Group) unless and until, and
then to the extent and only to the extent that, such inventions,
discoveries, secrets, information, knowledge or data become available to
the public otherwise than by a violation of this clause.
(b) No Seller shall, except to the extent disclosure by such Seller or
the applicable Divested Subsidiary is required pursuant to an order or
requirement of a court, administrative agency or other governmental body,
permit, suffer or cause any Divested Subsidiary or any Affiliate thereof to
disclose to others, or use, any of the information relating to present and
prospective customers of any member of the Combined Group (excluding
existing customers which they have in common), business dealings with such
customers, prospective sales and advertising programs and agreements with
any member of the Combined Group, present or prospective sources of supply
or any other business arrangements of any member of the Combined Group,
including, but not limited to, customers, customer lists, costs, prices and
earnings, unless and until, and then to the extent and only to the extent
that, such information becomes available to the public otherwise than by a
Seller's act or omission.
(c) Each Seller shall inform the Divested Subsidiaries and each
Affiliate thereof that all improvements, developments, discoveries,
computer software, computer programs, records, reports, documents,
photographs, catalogs and other writings which relate to current or likely
future business of any member of the Combined Group are the sole and
exclusive property of such member of the Combined Group and any of such
matter in the hands of any Divested Subsidiary or any Affiliate thereof
shall be promptly destroyed or returned to the member of the Combined Group
from which it originated.
(d) No Seller shall permit, suffer or cause any Divested Subsidiary or
any Affiliate thereof to solicit or attempt to solicit any employee of any
member of the Combined Group to leave the employ of such member of the
Combined Group, or during the five years following the Closing, to employ
any such employee who has been compensated at a level of at least US
$50,000 (or its equivalent) per annum.
(e) Each Seller agrees that a remedy at law for any breach of the
foregoing covenants would be inadequate and that Buyer shall be entitled to
a temporary and permanent injunction or any order for specific performance
of such covenants without the necessity of proving actual damages.
5.24 Buyer's Confidentiality.
(a) Buyer agrees that unless authorized or instructed in writing by
any Divested Subsidiary, Buyer shall not permit, suffer or cause any member
of the Combined Group or Affiliate thereof, except to the extent disclosure
by such Seller or the applicable member of the Combined Group is required
pursuant to an order or requirement of a court, administrative agency or
other governmental body, to disclose to others, or use, any inventions,
discoveries, secrets or confidential information, knowledge or data
(whether in oral, written or machine-readable form) of any member of the
Combined Group (regardless of whether such inventions, discoveries,
secrets, information, knowledge or data have been designated as secret or
confidential by any member of the Combined Group) unless and until, and
then to the extent and only to the extent that, such inventions,
discoveries, secrets, information, knowledge or data become available to
the public otherwise than by a violation of this clause.
(b) Buyer shall not, except to the extent disclosure by Buyer or the
applicable member of the Combined is required pursuant to an order or
requirement of a court, administrative agency or other governmental body,
permit, suffer or cause any member of the Combined Group or any Affiliate
thereof to disclose to others, or use, any of the information relating to
present and prospective customers of any Divested Subsidiary (excluding
existing customers which they have in common), business dealings with such
customers, prospective sales and advertising programs and agreements with
any Divested Subsidiary present or prospective sources of supply or any
other business arrangements of any member of the Divested Subsidiary,
including, but not limited to, customers, customer lists, costs, prices and
earnings, unless and until, and then to the extent and only to the extent
that, such information becomes available to the public otherwise than by a
Seller's act or omission.
(c) Each Seller shall inform the Divested Subsidiaries and each
Affiliate thereof that all improvements, developments, discoveries,
computer software, computer programs, records, reports, documents,
photographs, catalogs and other writings which relate to current or likely
future business of any member of the Combined Group are the sole and
exclusive property of such member of the Combined Group and any of such
matter in the hands of any Divested Subsidiary or any Affiliate thereof
shall be promptly destroyed or returned to the member of the Combined Group
from which it originated.
(d) The Buyer and its Affiliates shall not solicit or attempt to
solicit any employee of any member of the Divested Subsidiaries to leave
the employ of such member of the Divested Subsidiaries, or during the five
years following the Closing, to employ any such employee who has been
compensated at a level of at least US $50,000 (or its equivalent) per
annum.
(e) Each Seller agrees that a remedy at law for any breach of the
foregoing covenants would be inadequate and that Buyer shall be entitled to
a temporary and permanent injunction or any order for specific performance
of such covenants without the necessity of proving actual damages.
ARTICLE VI
CONDITIONS TO CLOSING
---------------------
6.1 Conditions to Obligations of Shareholders. The obligations of each
Shareholder to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment, at or prior to the Closing, of each of the
following further conditions, unless Shareholders, in their sole discretion,
shall waive such fulfillment:
(a) Representations and Warranties. Each of the representations and
warranties of Buyer contained in this Agreement shall be true and correct
in all material respects as of the Closing, and Sellers' Representative
shall have received from an authorized executive officer of Buyer a
certificate, dated as of the Closing, to such effect.
(b) Covenants. All covenants contained in this Agreement to be
complied with by Buyer on or before the Closing shall have been complied
with in all material respects, and Sellers' Representative shall have
received from an authorized executive officer of Buyer a certificate, dated
as of the Closing, to such effect.
(c) Opinion of Buyer's Counsel. Sellers' Representative shall have
received an opinion of Cleary, Gottlieb, Steen & Hamilton, counsel to
Buyer, dated as of the Closing, in the form attached hereto as Exhibit A
and made a part hereof.
(d) No Litigation. No suit, action or other proceeding shall be
pending or threatened before any court or Governmental Entity as of the
Closing seeking to restrain, prohibit or to obtain damages or other relief
in connection with, or as a consequence of any Purchase Document, or the
consummation of the transactions contemplated thereby, and Sellers'
Representative shall have received from Buyer a certificate, dated as of
the Closing, of an authorized executive officer of Buyer to such effect.
(e) Chairman's Certificate. Sellers' Representative shall have
received from Buyer a certificate executed by its Chairman certifying (i)
copies of resolutions duly adopted by the Board of Directors of Buyer
authorizing the execution and delivery by Buyer of each Purchase Document
to which Buyer is a party and the performance of the transactions
contemplated thereby, and that such resolutions have not been amended or
rescinded and are in full force and effect as of the Closing, (ii) the
statuts of Buyer to be true and complete as of the Closing, (iii) the name,
title and signature of the officers of Buyer authorized to execute and
deliver each Purchase Document to which Buyer is a party, and (iv) that
Buyer has not taken any proceedings for the dissolution or liquidation of
Buyer.
(f) Certificate of Existence. Buyer shall have delivered to Sellers'
Representative a K-bis extract issued by the competent Registry of
Commerce, dated as of a date no earlier than thirty (30) days prior to the
Closing, evidencing the existence of Buyer in such jurisdiction.
(g) HSR Approval. The HSR Approval shall have been obtained.
The agreements, certificates, documents, other evidence of compliance and
opinion described in this Section 6.1 shall be in form and substance
satisfactory to Sellers' Representative in his sole discretion and shall, except
as otherwise provided, be delivered to the Sellers' Representative at the
Closing.
6.2 Conditions to Obligations of Buyer. The obligations of Buyer to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment, at or prior to the Closing, of each of the following further
conditions, unless Buyer, in its sole discretion, shall waive such fulfillment:
(a) Representations and Warranties. Each of the representations and
warranties of each Shareholder contained in each Purchase Document to which
such Shareholder is a party shall be true and correct in all material
respects as of the Closing as if such representations and warranties were
made as of the Closing and Buyer shall have received a certificate of
Sellers' Representative, dated as of the Closing, to such effect. For
purposes of this Section 6.2(a), a material breach of a representation or
warranty shall mean one or more breaches that, individually or in the
aggregate, have a Material Adverse Effect on the Company and the Purchased
Subsidiaries taken as a whole.
(b) Covenants. All covenants contained herein or in any other Purchase
Document to be complied with by any Seller on or before the Closing shall
have been complied with in all material respects and Buyer shall have
received a certificate of Sellers' Representative, dated as of the Closing,
to such effect. For purposes of this Section 6.2(b), a material breach of a
covenant shall mean one or more breaches that, individually or in the
aggregate, have a Material Adverse Effect on the Company and the Purchased
Subsidiaries taken as a whole.
(c) Opinion of Counsel. Buyer shall have received an opinion of Hughes
Hubbard & Reed, counsel to each Seller, the Company and each Purchased
Subsidiary, dated as of the Closing, in the form attached hereto as Exhibit
B and made a part hereof.
(d) No Litigation. No suit, action or other proceeding shall be
pending or threatened before any court or Governmental Entity as of the
Closing seeking to restrain, prohibit or to obtain damages or other relief
in connection with, or as a consequence of, any Purchase Document or the
consummation of the transactions contemplated thereby, and Buyer shall have
received a certificate of Sellers' Representative, dated as of the Closing,
to such effect.
(e) Chairman's Certificate; Charter Documents. Buyer shall have
received from Sellers' Representative a certificate executed by the
Chairman of the Company certifying (i) copies of resolutions duly adopted
by the Board of Directors of the Company authorizing or ratifying the
execution and delivery by the Company of each Purchase Document to which
the Company is a party and the performance of the transactions contemplated
thereby, and that such resolutions have not been amended or rescinded and
are in full force and effect as of the Closing, (ii) the statuts of the
Company to be true and complete as of the Closing, (iii) the name, title
and signature of the officers of the Company authorized to execute and
deliver each Purchase Document to which the Company is a party, and (iv)
that the Company has not taken any proceedings for the dissolution or
liquidation of the Company. Buyer shall have received from the Shareholders
or Sellers' Representative a copy of the organizational documents listed on
Schedule 6.2(e) of the Company and each Purchased Subsidiary certified by
the applicable authority set forth on Schedule 6.2(e), in each case as of a
date no earlier than thirty (30) days prior to the Closing.
(f) Certificate of Good Standing. The Shareholders or Sellers'
Representative shall have delivered to Buyer:
(i) with respect to each Purchased Subsidiary that is a US
corporation, a certificate issued by the applicable authority set
forth on Schedule 6.2(f), dated as of a date no earlier than thirty
(30) days prior to the Closing, evidencing the good standing of such
Purchased Subsidiary; and
(ii) a K-Bis extract issued by the competent registry of
commerce, dated as of a date no earlier than thirty (30) days prior to
the Closing, evidencing the existence of the Company and Fenzy.
(g) Payment Information. The Seller's Representatives shall have
delivered to Buyer the amount of the Estimated Purchase Price to be paid to
each Seller (based on such Seller's Ownership Percentage) on the Closing
and the name of the bank and account number to which such amount is to be
transferred on the Closing as provided in Section 2.3.
(h) Divestiture. Buyer shall have received a certificate of Sellers'
Representative, dated as of the Closing, certifying that the Divestiture
has been fully completed in compliance with this Agreement, including,
without limitation, Article VII, and that all consideration due and payable
to any member of the Combined Group in connection with the Divestiture has
been paid.
(i) Lazard Letter. Sellers shall have received from Lazard Freres et
Cie a letter in the form attached hereto as Exhibit F regarding, among
other things, the fairness of the consideration received by the Company or
any Purchased Subsidiary in connection with the Divestiture. The
Shareholders shall bear the cost of such letter and shall have delivered a
copy of the same to Buyer.
(j) Share Transfer Forms/ Stock Certificates. The Sellers shall have
delivered to Buyer (i) duly executed share transfer forms (ordres de
mouvements de titres) which effectively transfer all of the Shares to
Buyer, and (ii) stock certificates (for each Purchased Subsidiary which is
a US corporation) or shareholder registries or other appropriate
documentation for the Purchased Subsidiaries organized in jurisdictions
having a book entry system to record share ownership.
(k) Bank Accounts. The Shareholders or Sellers' Representative shall
have delivered to Buyer the list required by Section 5.6.
(l) Resignations. The Shareholders or Sellers' Representative shall
have delivered to Buyer resignation letters executed by each of the
directors and officers of the Company and the Purchased Subsidiaries;
provided, however, that the foregoing shall not apply to employees of
Survivair who have executed and delivered employment agreements (in a form
approved by Buyer) to Survivair pursuant to which they are to be officers
of Survivair after the Closing; and provided further that if any such
resignation by a Person other than a Shareholder shall violate an existing
employment agreement, the Shareholders shall give Buyer at least 10
Business Days prior notice thereof, and such resignation shall not be
required unless Buyer shall so request within 5 Business Days prior to the
Closing.
(m) Purchase Documents. Each Seller shall have executed and delivered
to Buyer the Purchase Documents to which such Seller is a party and
Sellers' Representative shall have filed the Transfer Agreements in the
applicable office of the Recette des Impots and shall have paid all
applicable filing and registration fees relating thereto, subject to the
provisions of Section 5.8.
(n) Consents. All consents, approvals and authorization of, and
notices to and filings and registrations with, any Person that may be
required to be made or obtained in connection with the transactions
contemplated by any Purchase Document (including, without limitation, all
filings and notices required pursuant to the HSR Act) shall have been made
or obtained, and Buyer shall have received from Sellers' Representative a
certificate, dated as of the Closing, to such effect.
(o) Transactions between the Combined Group and the Divested
Subsidiaries. The Shareholders shall have delivered to Buyer such
agreements, documents and instruments as Buyer may request evidencing the
release by each Divested Subsidiary of all obligations, indebtedness and
liabilities (other than accounts payable arising in the ordinary course of
business and which are not overdue) of the Company or any Purchased
Subsidiary to such Divested Subsidiary and the termination of all
agreements, documents and instruments evidencing such obligations,
indebtedness and liabilities. All obligations, indebtedness and liabilities
(other than accounts payable arising in the ordinary course of business and
which are not overdue) of each Divested Subsidiary to the Company or any
Purchased Subsidiary shall have been fully paid and performed and Buyer
shall have received from each Shareholder or Sellers' Representative a
certificate, dated as of the Closing, to such effect together with evidence
of such payment and performance.
(p) Bonds. The Convertible Bonds shall have been purchased by the
Shareholders and converted into capital stock of the Company and Buyer
shall have received from each Shareholder or Sellers' Representative a
certificate to such effect.
(q) Guarantees. The Shareholders shall have delivered to Buyer the
Bank Guarantee and the Purchase Price Bank Guarantee, duly executed and
issued.
(r) Closing Material Adverse Effect. No Closing Material Adverse
Effect shall have occurred.
(s) Minute Books, etc. Shareholders shall deliver to Buyer on or prior
to the Closing complete and correct minute books, stock certificate books
and stock transfer ledgers of the Company and each Purchased Subsidiary.
The agreements, certificates, documents, other evidence of compliance and
opinions described in this Section 6.2 shall be in form and substance
satisfactory to Buyer in its sole discretion and shall, except as otherwise
provided, be delivered to Buyer at the Closing.
ARTICLE VII
DIVESTITURES
------------
7.1 Divested Glove Subsidiaries.
Each Shareholder hereby jointly and severally represents, warrants and
covenants to Buyer as follows:
(a) The Shareholders shall cause the Company and its relevant
Subsidiaries to sell or otherwise convey to an entity to be organized and
owned by one or more of the Sellers all of the authorized and outstanding
share capital of the Divested Glove Subsidiaries with the exception of
S.T.M. SARL (Tunisia) and S.B.C. SA which will be liquidated on or prior to
the Closing. The procedures relating to these conveyances and liquidation
along with the values involved in each of the transactions is set forth in
Schedule 7.1. With respect to S.B.C. S.A., it is understood that it may be
sold, liquidated or (subject to Buyer's prior written approval in its sole
discretion) merged into the Company. In the case of a merger or liquidation
the associated formalities may not be completed by the Closing. Buyer and
Sellers shall cooperate in the completion of these formalities as quickly
as possible, but in no case later than June 15, 1997. The liquidation
proceeds (net of tax) or the net (after tax) amount contributed by the
merged company will only be credited to the Sellers (without interest) upon
the completion of all formalities and the determination by KPMG that there
is no associated Intercompany Indebtedness.
(b) The transactions described in Schedule 7.1 shall be consummated no
later than the Closing so that there shall exist as of the Closing no
rights, obligations, claims or indebtedness of any nature (including but
not limited to intercompany loans payable or intercompany loans receivable)
between the Divested Glove Subsidiaries and the Company or any of the
Purchased Subsidiaries, or guarantees or obligations of the Company or any
of the Purchased Subsidiaries, for the benefit, of any of the Divested
Glove Subsidiaries which rights, obligations, guarantees, claims or
indebtedness, other than rights and obligations which are not past due
arising in the ordinary course of business associated with the purchase,
distribution and sale of goods or services manufactured or provided by one
or the other of the two groups, shall constitute the "Glove Intercompany
Indebtedness".
(c) The agreements evidencing the sale or conveyancing of the Divested
Glove Subsidiaries (copies of which shall be delivered to Buyer by
Shareholders at least five Business Days prior to the execution thereof and
which shall be in form and substance reasonably satisfactory to Buyer)
shall contain no commitments, covenants, representations or warranties by
the Company or the Purchased Subsidiaries or the acquiror other than
undertakings to (i) purchase and sell the shares in question, (ii) pay the
purchase price in the manner described and (iii) carry out any legal
formalities to consummate the transaction.
(d) All Divestiture Expenses shall be for the sole account of the
Shareholders who acknowledge that neither the Buyer nor the Company nor any
Purchased Subsidiary shall have any liability therefor.
7.2 Divested Interspiro Subsidiaries.
Each Shareholder hereby jointly and severally represents, warrants and
covenants to Buyer as follows:
(a) The Shareholders shall cause the Company and its relevant
Subsidiaries to sell or otherwise convey all of the authorized and
outstanding share capital of the Divested Interspiro Subsidiaries to any
Person other than a member of the Combined Group. The procedures relating
to these conveyances along with the values involved in each of the
transactions is set forth in Schedule 7.2.
(b) The transactions described in Schedule 7.2 shall be consummated no
later than the Closing so that there shall exist as of the Closing no
rights, obligations, claims or indebtedness of any nature (including but
not limited to intercompany loans payable or intercompany loans receivable)
between the Divested Interspiro Subsidiaries and the Company or any of the
Purchased Subsidiaries, or guarantees or obligations of the Company or any
of the Purchased Subsidiaries for the benefit of any of the Divested
Interspiro Subsidiaries, which rights, obligations, guarantees, claims or
indebtedness other than rights and obligations which are not past due
arising in the ordinary course of business associated with the purchase,
distribution and sale of goods or services manufactured or provided by one
or the other of the two groups, shall constitute the "Interspiro
Intercompany Indebtedness".
(c) The agreements evidencing the sale or conveyancing of the Divested
Interspiro Subsidiaries (copies of which shall be delivered to Buyer by
Shareholders at least five Business Days prior to the execution thereof and
which shall be in form and substance satisfactory to Buyer) shall contain
no commitments, covenants, representations or warranties by the Company or
the Purchased Subsidiaries or the acquiror other than undertakings to (i)
purchase and sell the shares in question, (ii) pay the purchase price in
the manner described and (iii) carry out any legal formalities to
consummate the transaction.
(d) All Divestiture Expenses shall be for the sole account of the
Shareholders who acknowledge that neither the Buyer nor the Company nor any
Purchased Subsidiary shall have any liability therefor.
7.3 Intercompany Indebtedness. If, notwithstanding the provisions of
Sections 7.1(b) and 7.2(b), there exists Intercompany Indebtedness owed by any
Divested Subsidiary to one or more of the members of the Combined Group as of
the Closing, Shareholders shall pay to Buyer, within five days of demand
therefor, an amount equal to such Intercompany Indebtedness. For purposes of
this Section 7.3, all computations shall be determined in French Francs. To the
extent that any amount included in such computations is expressed in a currency
other than French Francs, such amount shall be converted to French Francs at the
exchange rate offered by the Paris office of Banque Nationale de Paris as of the
Closing. Any payment required to be made pursuant to this Section 7.3 shall bear
interest from the Closing through the date of payment at an interest rate per
annum equal to PIBOR in effect on the Closing, plus 75 basis points. If such
payment is not timely made, Buyer shall have the right to exercise the
Guarantees (subject to the terms and provisions of Section 8.1(h)) for an amount
equal to such payment together with all accrued and unpaid interest through the
date of such exercise.
7.4 Proceeds of Divestiture. In the event that all or any portion of the
consideration to be paid to any member of the Combined Group in connection with
the Divestiture is in the form of a promissory note, such promissory note shall
be paid in full, in cash, on or before the Closing.
ARTICLE VIII
INDEMNIFICATION
---------------
8.1 Indemnification. (a) Each Shareholder jointly and severally agrees to
indemnify and hold harmless Buyer and any Affiliate of Buyer (including, without
limitation, Bacou USA) who directly or indirectly acquires control of the
Company or any Purchased Subsidiary within six (6) months after the Closing, and
their respective successors, assigns, shareholders, officers, directors,
employees and agents (collectively, "Buyer Indemnitees" and individually a
"Buyer Indemnitee") from and against and in respect of any liability, actions,
suits, proceedings, demands, assessments, judgments, losses, claims, damages,
costs and expenses, including, without limitation, reasonable attorneys' and
experts' fees and costs of investigation and analysis incurred by such Buyer
Indemnitee (collectively, "Damages") with respect to (i) a breach of any
representation or warranty or non-performance of any covenant of any Seller or
Shareholder set forth in any Purchase Document or non-fulfillment of any
agreement on the part of the Company, any Purchased Subsidiary or any Seller or
Shareholder under the terms thereof, (ii) Divestiture Expenses, (iii) any and
all liabilities and obligations (whether matured, contingent or otherwise,
direct or indirect, now existing or hereafter arising, including, without
limitation, all liabilities and obligations with respect to Taxes and
Environmental Claims) of (x) the Company or a Purchased Subsidiary to any
Divested Subsidiary (other than accounts payable arising in the ordinary course
of business and which are not overdue, and accounts payable arising under the
Operating Agreements or other obligations with respect thereto) and (y) any
Divested Subsidiary with respect to which the Company or a Purchased Subsidiary
may be liable, (iv) any claim, suit, investigation or proceeding against the
Buyer, its Affiliates or the Company or any of the Purchased Subsidiaries or any
of their respective assets or properties that arises out of or relates to the
Divestiture or any part thereof, or any sale, issuance, purchase, redemption,
repurchase or conversion of the Convertible Bonds or any capital stock issued
upon any conversion thereof, (v) any claims by an employee or former employee of
the Company or any Subsidiary of the Company for a breach of Article L 122-12 of
the French Labor Code, or any other similar legislation in any other
jurisdiction, by the Company, the Buyer or any of the Subsidiaries of the
Company, including, but not limited to, claims for termination indemnities
and/or damages, (vi) any product liability or warranty claims which arose on or
prior to the Effective Date or which arose after the Effective Date but relate
to a period on or before the Effective Date, to the extent, in either case, not
covered by insurance (provided such claims shall not include the amount of any
insurance deductible with respect thereto) or not reflected on the Effective
Date Balance Sheet, or (vii) Environmental Claims (Damages with respect to the
immediately preceding clauses, are hereinafter referred to as "Priority Claims"
except for clauses (i) and (vii)).
(b) Buyer agrees to indemnify and hold harmless the Shareholders and
their respective heirs, successors and assigns (collectively, "Shareholder
Indemnitees" and individually a "Shareholder Indemnitee") from and against
and in respect of any Damages incurred by any such Shareholder Indemnitee
with respect to a breach of any representation or warranty or
non-performance of any covenant of Buyer set forth in this Agreement, or
non-fulfillment of any agreement on the part of Buyer under the terms of
this Agreement.
(c) Except as provided in Section 8.1(e), anything contained in this
Agreement to the contrary notwithstanding (i) no Shareholder shall be
personally liable to any Buyer Indemnitee for any Damages for which such
Buyer Indemnitee is entitled to indemnification pursuant to this Agreement
until the aggregate amount for which all Buyer Indemnitees are entitled to
indemnification under this Agreement exceeds FF 250,000 (the "Threshold")
at which time the Shareholders shall be jointly and severally liable for
all amounts in excess thereof up to and including a maximum aggregate
amount of FF 75,000,000 (the "Maximum Amount"), and (ii) Buyer shall not be
personally liable to any Shareholder Indemnitee for any Damages for which
such Shareholder Indemnitee is entitled to indemnification pursuant to this
Agreement until the aggregate amount for which all Shareholder Indemnitees
are entitled to indemnification under this Agreement exceeds an amount
equal to the Threshold at which time Buyer shall be liable for all amounts
in excess thereof up to and including an amount equal to the Maximum
Amount.
(d) In determining the Threshold and in otherwise determining the
amount to which Buyer Indemnitees are entitled to assert a claim for
indemnification in connection with an alleged breach of the Shareholders
representations, warranties and covenants under the Purchase Documents (i)
Damages shall be determined net of any tax benefits related to such Damages
to the extent that such tax benefits are actually usable by the Buyer, the
Company or the Purchased Subsidiaries in the year in which such Damages
were booked (which tax benefits shall be conclusively determined by Buyer's
independent accounting firm), and (ii) no item of Damage shall be included
in such determination if the gross amount thereof is less than FF 1,000.
All Damages shall be determined net of any insurance proceeds actually
received relating thereto.
(e) The indemnification obligations of the Shareholders and Buyer as
provided in this Agreement shall only be with respect to indemnification
claims made by Buyer or the Shareholders, as the case may be, within two
(2) years after the Closing; provided, however, the indemnification
obligations of the Shareholders with respect to:
(i) Priority Claims;
(ii) fraud or intentional misrepresentation; or
(iii) a breach of Sections 2.5 (Post-Closing Adjustment of
Estimated Purchase Price), 3.2 (Authorized Capitalization; Outstanding
Stock), 3.12 (Tax Matters), 3.15 (Employee Benefit Plans) (to the
extent such breach relates to the payment of social security, national
health or other similar Benefit Arrangements required by applicable
law), 5.8 (Taxes and Fees) or 7.3 (Intercompany Indebtedness);
shall (A) survive until thirty (30) days after the expiration of the applicable
statute of limitations (including any extensions thereof); (B) not be subject to
the Threshold requirements set forth in Section 8.1(c) and shall not be included
in any computation to determine whether the Threshold has been reached; and (C)
together with any indemnification obligations of the Shareholders with respect
to a breach of Section 3.9 (Environmental Claims), not be subject to the Maximum
Amount limitation and shall not be included in any computation to determine
whether the Maximum Amount has been reached. Without limiting Buyer's rights and
remedies hereunder (including, without limitation, Buyer's right to proceed
directly against any Shareholder), all or any part of the indemnification
obligations of any Shareholder hereunder may, at the sole election of the Buyer
Indemnitee, be paid by drawing down under the Guarantees in accordance with the
terms and provisions of Section 8.1(h).
(f) Promptly after receipt by an indemnified party under this Section
8.1 of notice of any third party claim or the commencement of any action by
a third party, the indemnified party shall, if a claim in respect thereof
is to be made against the indemnifying party under this Section 8.1, notify
the indemnifying party in writing of the claim or the commencement of that
action stating in reasonable detail the nature and basis of such claim and
a good faith estimate of the amount thereof, provided that the failure to
notify the indemnifying party shall not relieve it from any liability which
it may have to the indemnified party unless and only to the extent such
failure materially prejudices the ability of the indemnifying party to
defend against or mitigate damages arising out of such claim. If any claim
shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein, and to assume the defense thereof at its expense with
counsel reasonably satisfactory to the indemnified party, and to settle and
compromise any such claim or action. After notice from the indemnifying
party to the indemnified party of its election to assume the defense of
such claim or action, the indemnifying party shall not be liable for other
expenses subsequently incurred by the indemnified party in connection with
the defense thereof; provided, however, that if the indemnifying party
elects not to assume such defense, the indemnified party may retain counsel
satisfactory to it and to defend, compromise or settle such claim on behalf
of and for the account and risk of the indemnifying party, and the
indemnifying party shall pay all reasonable fees and expenses of such
counsel for the indemnified party promptly as statements therefore are
received; and, provided further that the indemnified party shall not
consent to entry of any judgment or enter into any settlement or compromise
without the written consent of the indemnifying party which consent shall
not be unreasonably withheld. In the event the indemnifying party is one or
more of the Sellers, such consent may be given by the Sellers'
Representative. Buyer and each Shareholder shall render to each other such
assistance as may reasonably be requested in order to insure the proper and
adequate defense of any such claim or proceeding, including, without
limitation, making available to each other such documents, books, records
and financial data of any sort as may reasonably be requested. The
indemnified party shall also have the right to select its own counsel, at
its own expense, to represent the indemnified party and to participate in
the defense of such claim, as applicable. Any claim for indemnification
based on a third-party claim shall only be payable when such third-party
claim, other than expenses for counsel (as provided above) and other
out-of-pocket expenses reasonably incurred in the defense of such claim,
shall have been settled or such claim has been fully and finally determined
and shall not be on appeal, or the indemnified party is otherwise required
to perform or make payment.
(g) Notwithstanding the definition of "Damages", except with respect
to legal fees arising with respect to or related to claims by third
parties, the term "Damages", with respect to any particular claim for
Damages shall not be deemed to include legal fees which shall exceed 100%
of the amount of indemnification owed to any Buyer Indemnitee.
(h) With respect to any Damages for which Buyer is entitled to
indemnification pursuant to this Agreement and that are to be satisfied
from the proceeds of the Guarantees, Buyer shall deliver to Sellers'
Representative notice of such claim for Damages together with one of the
documents referred to in Exhibit 1 to either of the Guarantees (each of the
foregoing documents, a "Guarantee Notice"). If within thirty (30) days
after Sellers' Representative's receipt of a Guarantee Notice the
Shareholders have not paid such claim (regardless of the reason for such
non-payment), Buyer may, in its sole discretion, draw down under the
Guarantees in an amount up to such claim. Buyer shall also deliver to
Sellers' Representative such other documents with respect to such claim as
Sellers' Representative may reasonably request but such request shall not
affect the aforementioned thirty-day period or Buyer's right to draw down
under the Guarantees with respect to such claim. All funds that have been
advanced by a bank under a Guarantee and that were not due or that were not
awarded by a court decision or arbitration sentence will be returned to the
Sellers' Representative.
ARTICLE IX
TERMINATION
-----------
9.1 Termination. Subject to the provisions of Section 9.2, this Agreement
may be terminated by written notice given by Buyer or the Sellers'
Representative to the other:
(a) by the mutual consent of Buyer and the Sellers' Representative;
(b) by either Buyer or the Sellers' Representative, if the Closing has
not occurred on or before 12:00 Midnight (Paris, France time) on the latest
date set forth in Section 2.1; provided, however, that the right to
terminate this Agreement under this clause (b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Closing to have
occurred on or before such date;
(c) by Buyer in the event of a breach by the Shareholders of any
provision of this Agreement which shall have a Closing Material Adverse
Effect; or
(d) by the Sellers' Representative in the event of a material breach
by Buyer of this Agreement following 20 Business Days Notice to Buyer and
opportunity to cure.
Nothing set forth in this Section 9.1 shall relieve any party of any liability
for a breach of this Agreement.
9.2 Specific Performance. The obligations of the Sellers and Buyer under
this Agreement are unique. If either the Sellers or Buyer should default in
their respective obligations under this Agreement, the Sellers and Buyer
acknowledge that it would be extremely impracticable to measure the resulting
damages. Accordingly, the Shareholders and Buyer may, in addition to any other
available rights or remedies, sue in equity for specific performance, and hereby
expressly waive the defense that a remedy in damages will be adequate.
ARTICLE X
GENERAL
-------
10.1 Amendment and Waiver. No amendment of any provision of this Agreement
shall in any event be effective, unless the same shall be in writing and signed
by the parties hereto. Any failure of any party to comply with any obligation,
agreement or condition hereunder may only be waived in writing by the other
party but such waiver shall not operate as a waiver of, or estoppel with respect
to, any subsequent or other failure. No failure by any party to take any action
against any breach of this Agreement or default by the other party shall
constitute a waiver of such party's right to enforce any provision hereof or to
take any such action.
10.2 Notices. Any notices or other communications required to be given
pursuant to this Agreement shall be in writing and shall be deemed given: (i)
upon delivery, if by hand; (ii) three (3) Business Days after mailing, if sent
by registered or certified mail, postage prepaid, return receipt requested;
(iii) one (1) Business Day after mailing, if sent via overnight courier; or (iv)
upon transmission, if sent by telex or facsimile except that if such notice or
other communication is received by telex or facsimile after 5:00 p.m. on a
Business Day at the place of receipt, it shall be effective as of the following
Business Day. All notices and other communications hereunder shall be given as
follows:
(a) If to Buyer, to it at:
Bacou, S.A.
Zone Industrielle Paris Nord II
13, rue de la Perdrix
P.B. 50398
95943 Roissy Charles-de-Gaulle Cedex
France
Attention: Philippe Bacou,
Chairman, President and CEO
Telephone No.: 011-33-14-990-7000
Telecopier No.: 011-33-14-990-7058
with a copy to:
Bacou USA, Inc.
10 Thurber Boulevard
Smithfield, Rhode Island 02917
Attention: Philip B. Barr, Jr.
Telephone No.: (401) 232-1200
Telecopier No.: (401) 232-2230
and
Cleary, Gottlieb, Steen & Hamilton
41, avenue de Friedland
75008 Paris, France
Attn: Mr. Jean-Michel Tron
Telephone No.: 011-33-14-074-6800
Telecopier No.: 011-33-14-563-6637
and
Edwards & Angell
2700 Hospital Trust Tower
Providence, Rhode Island 02903
Attention: Richard M.C. Glenn, III, Esq.
Telephone No.: (401) 274-9200
Telecopier No.: (401) 276-6611
(b) If to any Seller or the Sellers' Representative, to the
Sellers' Representative at:
Francis Berend
43, boulevard d'Auteuil
5 Villa Persane
92100 Boulogne
Telephone No.: 33.1.46.03.06.16
with a copy to:
Hughes, Hubbard & Reed
47, Avenue Georges Mandel
75116 Paris
France
Attention: Mr. Claude Suleyman
Telephone No.: 011-33-01-44-05-8000
Telecopier No.: 011-33-01-45-53-1504
Any party may change its address for receiving notice by written notice given to
the other names above in the manner provided above.
10.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
10.4 Parties in Interest. This Agreement shall bind and inure to the
benefit of the parties named herein and their respective heirs, successors and
assigns. Except for the assignment of all or any part of the Purchase Documents
by Buyer to an Affiliate of Buyer (including, without limitation, Bacou USA),
this Agreement shall not be assignable by any party without the prior written
consent of the other party. An assignment will be considered as having occurred
as of the date Bacou USA directly or indirectly controls the US Subsidiaries and
notice thereof shall have been given by a process server to Sellers'
Representative in compliance with Article 1690 of the French Civil Code. For
this purpose, control shall be defined in the same manner, as set forth in the
definition of "Subsidiary" in this Agreement. Upon any such assignment to Bacou
USA or an Affiliate thereof, such assignee shall be entitled to exercise all of
Buyer's rights of indemnification under Article VIII hereof, with respect to
matters arising with respect or relating to the US Subsidiaries. Any attempted
assignment of this Agreement in breach of this provision shall be void and of no
effect. Notwithstanding any such assignment by Buyer, Buyer shall remain liable
for the performance of its obligations hereunder.
10.5 Entire Agreement. This Agreement, together with the exhibits and
schedules attached hereto and the other Purchase Documents, contains the entire
agreement and understanding of the parties hereto with respect to the matters
herein set forth, and all prior negotiations and understandings relating to the
subject matter of the Purchase Documents are merged therein and are superseded
and canceled by the Purchase Documents. This Agreement may not be modified
except in writing, signed by both of the parties hereto.
10.6 Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal substantive laws of France, without giving effect
to the principles of conflicts of laws thereof.
10.7 Headings. The section and other headings contained in this Agreement
are for reference purposes only and shall not affect any way the meaning or
interpretation of this Agreement.
10.8 Third Parties. Nothing herein expressed or implied is intended or
shall be construed to confer upon or give to any person or entity other than the
parties hereto and their affiliates, successors or assigns, any rights or
remedies under or by reason of this agreement.
10.9 Severability. In the event that any provision of this Agreement is
declared by a court of competent jurisdiction or arbitration tribunal to be void
or unenforceable, the parties hereto expressly agree that such void or
unenforceable provision shall be deemed severed from this Agreement, and the
remainder of this Agreement shall not be affected thereby and shall remain in
full force and effect to the extent feasible in the absence of the void and
unenforceable provision. The parties furthermore agree to execute and deliver
such amendatory contractual provisions to accomplish lawfully as nearly possible
the goals and purposes of the provision so held to be void or unenforceable.
10.10 Survival of Representations Etc. (a) The representations and
warranties of each Shareholder and Buyer contained herein shall survive the
consummation of the transactions contemplated hereby and the Closing. All such
representations and warranties shall survive until the expiration of the
second-year anniversary of the Closing; provided, however, that the
representations and warranties in Section 2.5 (Post-Closing Adjustment of
Estimated Purchase Price), 3.2 (Authorized Capitalization; Outstanding Stock),
3.12 (Tax Matters), 3.15 (Employee Benefit Plans) (to the extent it relates to
the payment of social security, national health or other similar Benefit
Arrangements required by applicable law), 5.8 (Taxes and Fees) and 7.3
(Intercompany Indebtedness) shall survive until 30 days following the expiration
of the applicable statute of limitations (including any extensions thereof). The
termination of the representations and warranties as provided herein shall not
affect the rights of a party hereto in respect of any claim made by such party
in a writing received by the other party hereto prior to the expiration of the
applicable survival period provided herein.
(b) All covenants and agreements respectively made by the Sellers and Buyer
in the Purchase Documents will survive the consummation of the transactions
contemplated hereby and the Closing, and will remain in full force and effect
thereafter, until the expiration of the terms or periods respectively specified
therein or (in the case of covenants and agreements that have no such specified
term or period), indefinitely; provided, however, that any claim for
nonfulfillment of or failure to perform a covenant or agreement may be asserted
at any time after, and may be pursued beyond, the expiration of such covenant or
agreement, until such claim is resolved by final, nonappealable judgment or
arbitration decision or by settlement.
10.11 Dispute Resolution. The parties shall make every effort to settle all
disputes arising in connection with this Agreement amicably by negotiations held
in good faith. Failing such amicable settlement, the dispute shall be submitted
to arbitration as set forth below.
Any party wishing to submit a dispute to arbitration (hereinafter the
"Plaintiff") shall send to the other party (hereinafter the "Defendant") a
notification by registered letter with return receipt requested, stating the
subject of the dispute and announcing its decision to use either a sole
arbitrator or a panel of three, and stating the name of the proposed sole
arbitrator or appointing one member of the panel of three arbitrators.
The Defendant shall reply by registered mail with return receipt requested,
either stating its acceptance of the sole arbitrator proposed by the Plaintiff,
if applicable, or requesting that the dispute be submitted to three arbitrators,
and appointing the second member of the panel of three arbitrators.
Absent a reply from the Defendant within fifteen (15) days of the date of
the Plaintiff's notification, or in the event that the parties are unable to
agree on the name of a sole arbitrator within fifteen (15) days of such
notification, or in the event that the two appointed arbitrators are unable to
agree on the appointment of a third arbitrator within fifteen (15) days of the
second arbitrator's appointment, either of the parties may request the
appointment of a sole arbitrator, or of a second or third arbitrator, as the
case may be, by a summary order of the President of the Commercial Court of
Paris.
The arbitral proceedings will take place in Paris, and the tribunal's
decision shall be rendered within six (6) months of its constitution. The
language of the arbitration proceedings shall be English.
The arbitrators shall be released from the requirement to adhere to the
rules governing form and deadlines provided by the New French Code of Civil
Procedure, but shall allow contradictory presentation of statements and
observations by the parties.
The arbitration decision shall not be subject to any appeal or opposition.
The party which fails to comply with the decision shall pay all costs and
fees arising or resulting from enforcement of the decision.
The arbitrators shall award reimbursement of attorney's fees and other
costs, at arbitration, to the prevailing party in such manner as the arbitrators
shall deem appropriate. In addition, the losing party shall reimburse the
prevailing party for attorney's fees and disbursements and court costs incurred
by the prevailing party in successfully seeking any preliminary equitable relief
or judicially enforcing any arbitration award.
Judgment upon the award of the arbitrators may be entered in any court
having jurisdiction thereof.
10.12 Hereof, Herein, etc. The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Unless otherwise specified herein, the term "or" has the inclusive meaning
represented by the term "and/or" and the term "including" is not limiting. All
references as to "Sections", "Subsections", "Articles", "Schedules" and
"Exhibits" shall be to Section, Subsections, Articles, Schedules and Exhibits,
respectively, of this Agreement unless otherwise specifically provided.
10.13 Computation of Time Periods. In the computation of periods of time
from a specified date to a later specified date, unless otherwise specified
herein the words "commencing on" mean "commencing on and including", the word
"from" means "from and including" and the words "to" and "until" each means "to
but excluding".
10.14 Accounting Terms. Except as otherwise specifically provided herein,
all accounting terms shall be construed in accordance with IAS. Except as
otherwise specifically provided herein, all financial statements required to be
delivered hereunder shall be prepared, and all accounting determinations and
calculations shall be made, in accordance with IAS.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
or on behalf of each of the parties hereto as of the date first above written.
BUYER:
BACOU S.A.
By:/s/Philippe Bacou
----------------------------------------------
Name: Philippe Bacou
Title: Chairman
SHAREHOLDERS:
/s/Francis Berend
----------------------------------------------
Francis Berend
/s/Pierre Alain Berend
----------------------------------------------
Pierre Alain Berend
/s/Philippe Berend
----------------------------------------------
Philippe Berend
/s/Pascal Berend
-----------------------------------------------
Pascal Berend
OTHER SELLERS:
Exhibit 2(b)
AGREEMENT
---------
This Agreement is entered into as of this 14th day of April, 1997 by and
between Bacou S.A., a French societe anonyme ("Buyer"), Bacou USA, Inc., a
Delaware corporation ("Bacou USA") (as amended, this "Agreement"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed thereto as set forth in the "Stock Purchase Agreement" (as defined
below).
W I T N E S S E T H:
--------------------
WHEREAS, Buyer is a party to that certain Stock Purchase Agreement, dated
as of April 14, 1997, by and among Buyer and the shareholders of Comasec
International, S.A., a French societe anonyme (the "Company") (as amended, the
"Stock Purchase Agreement"); and
WHEREAS, as a condition to entering into the Stock Purchase Agreement,
Buyer has required that Bacou USA enter into this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties hereto, Buyer and
Bacou USA hereby agree as follows:
1. Bacou USA agrees to authorize "CHINC" (Comasec Holding, Inc., a
Connecticut corporation) to redeem all of the issued and outstanding shares of
capital stock of CHINC held by the Company (the "Redemption") for an aggregate
purchase price of USD 27,350,000 plus (a) the total amount of after-tax cash
consideration paid to the US Subsidiaries for the Divested Subsidiaries as of
the Effective Date to the extent such consideration is retained by the US
Subsidiaries after the Redemption; minus (b) the sum of the total amount of the
Net Financial Indebtedness of the US Subsidiaries as of the Effective Date to
the extent such indebtedness remains unpaid after the Redemption plus the
Divestiture Expenses, if any, paid or incurred by any US Subsidiary. All
computations set forth in the immediately preceding clauses (a) and (b) shall be
determined in accordance with Article II of the Purchase Agreement.
2. Buyer hereby assigns to Bacou USA in conformance with section 10.4 of
the Stock Purchase Agreement, effective immediately upon the consummation of the
Merger, all of its right, title and interest in, to and under the Purchase
Documents to the extent such rights relate to any US Subsidiary (whether
pursuant to a representation, warranty or covenant or otherwise) including,
without limitation, all of Buyer's indemnification rights under the Purchase
Documents to the extent such rights relate to indemnification claims with
respect to any US Subsidiary or any of its Affiliates or "Subsidiaries" (as
defined below) (whether pursuant to a breach of a representation, warranty or
covenant enuring to the benefit of, binding upon or applicable to such US
Subsidiary, Affiliate or Subsidiary or otherwise) and hereby agrees that Bacou
USA may exercise such rights directly against the applicable obligor (including,
without limitation, any one or more of the Shareholders). If requested by Bacou
USA, Bacou SA will make demand from time to time under the Guarantees for
indemnification claims permitted under the Stock Purchase Agreement relating to
any US Subsidiary. For purposes of this Agreement the term "Subsidiary" shall
mean (a) any Person in an unbroken chain of Persons beginning with Comasec
Holdings, Inc., a Connecticut corporation ("CHINC"), if each of the Persons
other than the last Person in the unbroken chain, then owns equity securities
possessing 50% or more of the total combined voting power of all classes of
equity securities in one of the other Persons in such chain, (b) any partnership
in which CHINC or a Subsidiary of CHINC is a general partner, and (c) any
partnership in which CHINC or a Subsidiary of CHINC possesses or is entitled to
a 50% or greater interest in the total capital or total income of such
partnership.
3. Upon the redemption of CISA's shares in CHINC, Bacou SA shall notify
this assignment to the Seller's Representative (as defined in the Stock Purchase
Agreement) pursuant to the Article 1690 of the Civil Code.
4. Bacou USA hereby assumes and agrees to perform all of Buyer's
obligations under the Purchase Documents to the extent such obligations relate
to or are to be performed by any US Subsidiary.
5. Bacou USA and Buyer each hereby agree to provide the other with such
cooperation as may reasonably be requested, at the expense of the requesting
party, in connection with the transactions contemplated by this Agreement,
including, without limitation (a) the Merger, (b) the defense of any claim that
may be asserted against Buyer or Bacou USA by any Seller under any Purchase
Document, and (c) the assertion or pursuit of any claim that may be asserted
against any Seller by Buyer or Bacou USA under any Purchase Document. In
addition, Buyer shall deliver to Bacou USA promptly following the consummation
of the Merger complete and correct minute books, stock certificate books and
stock transfer ledgers of each US Subsidiary and the stock certificates of the
Subsidiaries of CHINC. Each of the Buyer and Bacou USA shall make available to
the other such books and records of the Company and the Purchased Subsidiaries
in its possession or over which it has control as may be required by such other
party in connection with (a) any legal, regulatory or administrative proceeding
(including, without limitation, any Tax audit or investigation) relating to or
concerning any US Subsidiary, or (b) any covenant, indemnity or other agreement
of, applicable to, binding upon or for the benefit of any US Subsidiary under
any Purchase Document. Such books and records will be open for inspection upon
reasonable notice during regular business hours. Neither the Buyer nor Bacou USA
shall be required to provide the other with such books and records already in
its possession and neither the Buyer nor Bacou USA shall be required to treat
the books and records of the Company or any Purchased Subsidiaries other than in
accordance with their regular document retention practices.
6. In the event that (a) Buyer or its subsidiaries shall receive any
payments (including, without limitation, insurance proceeds) or other property
to which a US Subsidiary is entitled, or (b) Bacou USA or its subsidiaries shall
receive any payments (including, without limitation, insurance proceeds) or
other property to which the Company or any Purchased Subsidiary (other than a US
Subsidiary) is entitled, then Buyer or Bacou USA, as the case may be, shall hold
any amount or property so received in trust for the benefit of the Company or
the applicable Purchase Subsidiary, as the case may be, and shall promptly
deliver the same, in the form received with all necessary endorsements or
documents of transfer, to Bacou USA or Buyer, respectively.
7. Notwithstanding anything to the contrary contained herein, Bacou SA
acknowledges that the rights and obligations of Bacou USA under the Agreement
are subject to the approval by the Oversight Committee of the Board of Directors
of Bacou USA of the fairness of the transactions contemplated hereby with
respect to Bacou USA. Such approval by the Oversight Committee shall be
conclusively deemed to have been received unless Bacou USA shall have notified
Bacou SA at least two business days prior to the Closing under the Purchase
Agreement that Bacou USA is terminating this Agreement because such approval has
not been obtained. In the event Bacou USA shall give such notice of termination,
this Agreement shall immediately become null and void and of no further force or
effect.
8. No amendment of any provision of this Agreement shall in any event be
effective, unless the same shall be in writing and signed by the parties hereto.
Any failure of any party to comply with any obligation, agreement or condition
hereunder may only be waived in writing by the other party but such waiver shall
not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. No failure by any party to take any action against any breach of this
Agreement or default by the other party shall constitute a waiver of such
Party's right to enforce any provision hereof or to take any such action.
9. Notices hereunder shall be given as provided in the Purchase Agreement,
however, notices to Bacou USA shall be delivered to it at 10 Thurber Boulevard,
Smithfield, Rhode Island 02917, Attention: Philip B. Barr, Jr., Telephone No.:
(401) 232-1200, Telecopier No.: (401) 232-2230.
10. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same Agreement.
11. This Agreement shall bind and inure to the benefit of the parties named
herein and their respective heirs, successors and assigns.
12. This Agreement shall be governed by and construed in accordance with
the internal substantive laws of France, without giving effect to the principles
of conflicts of laws thereof.
13. In the event that any provision of this Agreement is declared by a
court of competent jurisdiction or arbitration tribunal to be void or
unenforced, the parties hereto expressly agree that such void or unenforceable
provision shall be deemed severed from this Agreement, and the remainder of this
Agreement shall not be affected thereby and shall remain in full force and
effect to the extent feasible in the absence of the void and unenforceable
provision. The parties furthermore agree to execute and deliver such amendatory
contractual provisions to accomplish lawfully as nearly possible the goals and
purposes of the provision so held to be void or unenforceable.
IN WITNESS WHEREOF, each of Buyer and Bacou USA have caused this Agreement
to be duly executed and delivered as of the date first set forth above.
BACOU S.A.
By:/s/ Philippe Bacou
----------------------------------
Name: Philippe Bacou
Title: Chairman
BACOU USA, INC.
By:/s/ Walter Stepan
----------------------------------
Name: Walter Stepan
Title: Vice Chairman, President
and CEO
By:/s/ Philip B. Barr, Jr.
-----------------------------------
Name: Philip B. Barr, Jr.
Title: Executive Vice President
Exhibit 99(a)
Survivair, Inc.
(A wholly-owned subsidiary of
Comasec Holdings, Inc.)
Financial Statements
December 31, 1996 and 1995
<TABLE>
<CAPTION>
Balance Sheet
December 31,
<S> <C> <C>
Notes 1996 1995
Assets
Current Assets: $ 765,066 $ 409,619
Cash and cash equivalents
Accounts receivable, net of allowance for
doubtful accounts of $69,000 and $35,000 2,911,913 3,046,905
Inventories 1 & 2 3,418,036 4,274,916
Deferred income taxes 1 & 5 644,984 874,608
Prepaid expenses and other receivables 264,447 402,209
------- -------
Total current assets 8,004,446 9,008,257
Property, plant and equipment, net 1 & 3 2,575,120 2,009,212
Intangible assets, net of accumulated
amortization of $295,060 and $265,550 1 44,738 74,248
Amounts due from Parent 7 2,367,493 1,054,401
Amounts due from affiliates 7 6,577 -0-
---------------- -------------------
$ 12,998,374 $ 12,146,118
============ ============
Liabilities and Shareholder's Equity
Current Liabilities:
Accounts payable and
accrued expenses 9 $2,248,388 $2,363,685
Noncurrent liabilities:
Deferred income taxes 1 & 5 48,477 35,257
Amounts due to Parent/affiliates 7 119,221 9,385
Long-term debt 4 -0- 800,000
--------------- -------
2,416,086 3,208,327
--------- ---------
Commitments and Contingencies 1,6,7 & 8
Shareholders equity:
Common stock, no par value; 20,000
shares authorized, 1,000 shares issued
and outstanding 1,814,280 1,814,280
Retained earnings 8,768,008 7,123,511
--------- ---------
Total shareholder's equity 10,582,288 8,937,791
---------- ---------
$ 12,998,374 $ 12,146,118
============== ==============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Income
For the year ended
December 31,
<S> <C> <C>
Notes 1996 1995
Net sales $ 30,339,247 $ 31,694,564
Cost of products sold 19,834,784 19,852,364
---------- ----------
Gross profit 10,504,463 11,842,200
Other expenses:
General and administrative expenses 2,927,084 3,089,937
Selling expenses 4,457,632 4,589,471
Other expenses 6 & 7 313,592 187,038
Interest expense, net 21,310 46,078
------------ ------------
Income before provision for income taxes 2,784,845 3,929,676
Provision for income taxes 1 & 5 1,140,348 1,596,803
--------- ---------
Net income $ 1,644,497 $2,332,873
=========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Shareholder's Equity
Total
Common stock Retained Shareholder's
Shares Amount Earnings Equity
<S> <C> <C> <C> <C>
Balance at December 31, 1994 1,000 $ 1,814,280 $ 4,790,638 $6,604,918
Net income ------- --------- 2,332,873 2,332,873
--------- ---------
Balance at December 31, 1995 1,000 1,814,280 7,123,511 8,937,791
------- --------- --------- ---------
Net income ------ --------- 1,644,497 1,644,497
--------- ---------
Balance at December 31, 1996 1,000 $ 1,814,280 $ 8,768,008 $ 10,582,288
===== =========== =========== ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Cash Flows
For the year ended
December 31,
<S> <C> <C>
1996 1995
Cash flows from operating activities:
Net income $1,644,497 $ 2,332,873
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 824,033 669,619
Amortization 29,510 29,510
Allowance for doubtful accounts 34,000 (115,000)
Loss on disposal of assets 2,853 -0-
Deferred income taxes 242,844 177,948
------- -------
1,133,240 762,077
2,777,737 3,094,950
Changes in operating assets and liabilities:
Accounts receivable 100,992 (148,810)
Inventories 856,880 321,630
Prepaid expenses and other receivables 137,762 (277,247)
Accounts payable and accrued expenses (115,297) (597,886)
--------- ---------
980,337 (702,313)
------- ---------
Net cash provided by operating activities 3,758,074 2,392,637
--------- ---------
Cash flows from investing activities:
Net cash used in investing activities -
capital expenditures (1,392,794) (978,226)
----------- ---------
Cash flows from financing activities:
Amounts due from affiliates (6,577) 113,726
Amounts due from Parent (1,313,092) (1,054,401)
Net borrowings (repayments) on long-term debt (800,000) 800,000
Amounts due to Parent/affiliates 109,836 (2,164,856)
------- -----------
Net cash used in financing activities (2,009,833) (2,305,531)
----------- -----------
Net increase (decrease) in cash and cash equivalents 355,447 (891,120)
Cash and cash equivalents at beginning of year 409,619 1,300,739
------- ---------
Cash and cash equivalents at end of year $ 765,066 $ 409,619
========= =========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Notes to the Financial Statements
1. Description of business and summary of significant accounting policies
Description of business
Survivair, Inc. (the Company) is a manufacturer of self contained
breathing apparatus, air purifying respirators, replacement cartridges
and gas detection equipment, with customers primarily in the United
States of America. The Company is a wholly-owned subsidiary of Comasec
Holdings, Inc. (the Parent). The Parent is a wholly-owned subsidiary
of Comasec International, S.A.
Summary of significant accounting policies
Use of estimates in the preparation of financial statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period.
Cash and cash equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid instruments purchased with an original maturity of less
than three months to be cash equivalents.
Inventories
Inventories are recorded at the lower of cost or market, cost being
determined on a first-in, first-out (FIFO) basis.
Depreciation
Depreciation of property, plant and equipment is calculated on a
straight-line basis over the estimated useful lives of the assets,
typically ranging from three to nine years. Expenditures for
maintenance, repairs and minor renewals are charged directly to
expense as incurred. When property and equipment are sold or otherwise
disposed of, the related cost and accumulated depreciation are removed
from the accounts and the resulting gains or losses are reported in
the results of operations.
Intangible assets
Intangible assets include the cost in excess of the fair value of
assets purchased and patents. Intangible assets are amortized on a
straight-line basis over their estimated useful lives, ranging from
eleven to twenty years.
Research and development costs
Cost of products sold includes research and development costs of
$1,540,261 in 1996 and $1,541,394 in 1995.
Fair value of financial instruments
The Company values financial instruments as required by Statement of
Financial Accounting Standards No. 107, "Disclosures about Fair Values
of Financial Instruments" (SFAS 107). The carrying amounts of cash and
cash equivalents, accounts and other receivables, accounts payable,
accrued expenses and debt approximate fair value. For certain balances
due to or from related parties a reasonable estimate of fair value
could not be made without incurring excessive costs. Accordingly, all
balances due to or from related parties are carried at their original
cost.
Income taxes
The Company accounts for income taxes in accordance with the provision
of Statement of Financial Accounting Standards No. 109 (SFAS 109).
Under the liability method specified by SFAS 109, the deferred tax
assets and liabilities are measured each year based on the difference
between the financial statement and tax bases of assets and
liabilities at the applicable enacted tax rates. The deferred tax
provision is the result of changes in the deferred tax assets and
liabilities.
The Company is included in the consolidated group filing of Federal
income taxes of the Parent. Current and deferred income taxes of the
Company have been allocated as if the Company were a separate
taxpayer.
The Parent's consolidated Federal income tax returns for the years
ended December 31, 1991 through 1995 are under examination by the IRS.
Management does not believe that the ultimate resolution of such
examination will have a material adverse impact on the Company's
financial condition or results of operations.
Statement of Cash Flows
Supplemental disclosures of cash flow information:
Cash paid during the year for interest $23,811 $54,774
Reclassifications
Certain prior year amounts have been reclassified to conform with the
December 31, 1996 presentation.
2. Inventories
Inventories comprised the following at December 31, 1996 and 1995,
respectively:
1996 1995
Raw materials $ 2,260,245 $ 2,584,938
Work-in-process 538,849 695,809
Finished goods 1,033,507 1,391,169
--------- ---------
3,832,601 4,671,916
Less reserves (414,565) (397,000)
--------- ---------
$ 3,418,036 $ 4,274,916
=========== ===========
3. Property, plant and equipment, net
Property, plant and equipment comprised the following at December 31,
1996 and 1995, respectively:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Leasehold improvements $1,141,392 $1,141,392
Equipment 7,690,542 6,184,613
Furniture, fixtures and office equipment 1,761,300 1,622,456
--------- ---------
10,593,234 8,948,461
Less accumulated depreciation and amortization (8,254,576) (7,462,598)
----------- -----------
2,338,658 1,485,863
Construction-in-process 236,462 523,349
------- -------
$ 2,575,120 $ 2,009,212
=========== ===========
</TABLE>
4. Notes payable
As of December 31, 1996, the Company has a credit agreement with a
bank, effective May 13, 1991, which provides for a $5,000,000
revolving line of credit which expires on June 14, 1999. The Company
may at its option reduce the revolving line of credit amount by
increments of $500,000. This revolving line of credit accrues interest
on each borrowing at the Adjusted Eurodollar Rate, as specified in the
credit agreement, plus 1.375% or the prime rate as specified in the
credit agreement, at the Company's option. The credit agreement is
collateralized by all the assets of the Company. Under the provisions
of the credit agreement, the Company must comply with certain
restrictive covenants, including maintenance of certain financial
ratios.
No amounts were outstanding under this agreement at December 31, 1996.
Borrowings outstanding under this agreement were $800,000 at December
31, 1995.
5. Income taxes
The income tax provision comprises the following for the years ended
December 31, 1996 and 1995, respectively:
1996 1995
Current:
Federal $ 708,592 $ 1,057,840
State 188,912 361,015
------- -------
897,504 1,418,855
------- ---------
Deferred:
Federal 146,670 139,764
State 96,174 38,184
------ ------
242,844 177,948
------- -------
$1,140,348 $1,596,803
========== ==========
The effective income tax rate was approximately 41% at December 31,
1996 and 1995. Deferred tax assets and liabilities are measured based
on the difference between the financial statement and tax bases of
assets and liabilities at the applicable enacted tax rates. Deferred
tax assets and liabilities are the result of depreciation expense,
inventory cost capitalization, allowance for doubtful accounts
receivable and currently non-deductible accrued liabilities.
6. Commitments
The Company leases its manufacturing and office facilities and
vehicles under noncancellable operating leases with expiration dates
through February 2005.
Future minimum lease payments under noncancellable operating leases
are as follows:
Year ending December 31,
------------------------
1997 $302,711
1998 436,946
1999 410,412
2000 447,898
2001 447,898
Thereafter 1,444,470
----------
$3,490,335
==========
For the years ended December 31, 1996 and 1995 the Company incurred
rent expense of $597,549 and $608,135, respectively.
During 1996, the Company made a $150,000 payment to a supplier to
cancel a purchase commitment. Such amount is included in other
expenses in the accompanying Statement of Income.
7. Amounts due from (to) Parent and affiliates and related party
transactions
Non-interest bearing amounts due from (to) Parent and affiliates
comprised the following:
1996 1995
Amounts due from Parent $ 2,367,493 $ 1,054,401
Amounts due to Parent -0- (9,385)
Amounts due from (to) affiliates:
Comasec S.A. 4,994 -0-
Fenzy, S.A. 1,583 -0-
Comasec International, S.A. (119,221) -0-
--------- -------------
Net amounts due from (to) Parent and $ 2,254,849 $ 1,045,016
affiliates =========== ===========
Amounts due from (to) Parent and affiliates primarily comprise
balances relating to various purchases, sales and loans between the
Company, the Parent and its affiliates. Amounts due from (to) Parent
and affiliates are not anticipated to be collected within the next
year. Accordingly, such amounts have been classified as non-current.
During 1996 and 1995, the Company sold inventory to related party
entities totaling $646,272 and $355,034, respectively, and purchased
inventory from Fenzy, S.A. totaling $58,402 and $39,805, respectively.
Comasec International, S.A. (CISA) provides management services to the
Company for a fee. The management fee amounts have been included as a
component of other expenses in the accompanying Statement of Income
and totaled $74,319 and $105,098 for the years ended December 31, 1996
and 1995, respectively.
At December 31, 1996, the Company had guaranteed $1,000,000 of
borrowings available to a related party. Management does not
anticipate any material loss as a result of such guarantee.
8. Contingencies
The Company is a defendant in legal actions arising during the normal
course of business. The litigation process is inherently uncertain and
it is possible that the resolution of these disputes and lawsuits may
adversely effect the Company. Management believes, however, that the
ultimate resolution of such matters will not have a material adverse
impact on the Company's financial position or results of operations.
9. Employee benefit plans
During 1996 and 1995, the Parent maintained a 401(k) savings and
defined contribution pension plan covering substantially all employees
of the Company who have attained the age of 21 and have at least one
year of service with the Company. The Company contributed $435,136 and
$425,425 for 1996 and 1995, respectively, including discretionary
contributions of $250,000 for each of 1996 and 1995 to this pension
plan.
10. Subsequent Event
On March 28, 1997, the shareholders of CISA entered into a definitive
agreement to sell 100% of the issued and outstanding shares of CISA.
