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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: February 10, 1999
CTB INTERNATIONAL CORP.
(Exact name of registrant as specified in the charter)
Commission File Number 000-22973
Delaware 35-1970751
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
State Road 15 North, P.O. Box 2000, Milford, IN 46542-2000
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (219)-658-4191
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Item 5. Other Events.
The following are filed as Exhibits to the Report.
Exhibit Number 99.1: Press Release dated January 14, 1999
Exhibit Number 99.2: Acquisition Agreement of all shares of ROXELL N.V.
by and among ROXELL N.V. as COMPANY and THE RAMSER FAMILY as SELLERS
and CTB, INC., ROXELL HOLDING N.V. as PURCHASERS
Exhibit Number 99.3: Representations and Warranties of Sellers
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CTB International Corp.
Dated: February 10, 1999 By /s/ Don J. Steinhilber
-------------------------------------
Don J. Steinhilber
Vice President, Chief Financial Officer
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FOR IMMEDIATE RELEASE RELEASE #990114RX
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Contact: Don Steinhilber, Vice President and Chief Financial Officer,
(219) 658-4191
CTB INTERNATIONAL CORP. COMPLETES PURCHASE OF ROXELL N.V.
MILFORD, Ind., January 14, 1999 - CTB International Corp. (NASDAQ: CTBC) today
reported that it completed the previously-announced acquisition of Roxell N.V.
Based in Belgium, Roxell is a leading global manufacturer and marketer of
systems for the poultry and swine production industries.
Roxell recorded sales of $41.0 million and net income of $1.9 million in the
fiscal year ended October 31, 1998, based on a current exchange rate of 34.8
Belgian francs to the U.S. dollar.
The cash purchase totaled 1.277 billion Belgian francs (net of cash acquired),
or approximately $37 million USD, and was financed through additional
borrowings. The acquisition is not expected to significantly impact CTB's
earnings in 1999, however positive contributions to earnings are anticipated in
future years.
Chris Chocola, president and chief executive officer of CTB, said, "We are
excited about the tremendous opportunity to partner with Roxell, and we believe
that the combination creates a clear leader in the worldwide poultry and swine
equipment industries."
CTB International Corp., based in Milford, Indiana, is a leading manufacturer
and marketer of automated feeding, watering, heating, and ventilation systems;
automated controls; commercial egg laying and handling systems; and feed and
grain storage bins as well as grain handling equipment. The company also markets
breeder nesting systems. Founded in 1952, CTB serves the poultry, swine, egg
production and grain industries. It operates from facilities in Europe and Latin
America as well as from U.S. plants in Indiana, Alabama, Missouri, and
Pennsylvania. Roxell is based in Maldegem, Belgium and also has facilities in
Arkansas and Brazil.
This document contains certain statements regarding the future, including,
without limitation, the potential effects of the above-referenced transaction,
and involves certain risks and uncertainties regarding CTB International Corp.'s
business and operations and the agriculture industry. Actual results may differ
materially from those projected in forward-looking statements. Please refer to
the Company's Securities and Exchange Commission filings, including, but not
limited to, the Company's Form 10-K filing, where specific risk factors that
could cause actual results to differ materially from the forward-looking
statements made in this news release are identified.
# # #
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__________________________
ACQUISITION AGREEMENT
OF ALL SHARES OF
ROXELL N.V.
BY AND AMONG
ROXELL N.V.
AS COMPANY
AND
THE RAMSER FAMILY
GERARD VAN ROOIJEN
LIVINCO N.V.
A.O.
AS SELLERS
AND
CTB, INC.,
ROXELL HOLDING N.V.
AS PURCHASERS
DATED AS OF NOVEMBER 30, 1998
___________________________
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BY AND AMONG:
ROXELL N.V., a Company organized and existing under the laws of Belgium, having
its registered office at Industrielaan 13, B - 9990 Maldegem, registered with
the Register of Commerce of Gent under number 99.273,
represented for the purpose of the present Agreement by Mr. Gerard van Rooijen,
hereinafter referred to as the "Company",
AND :
1. (a) Mr. Fred Ramser, residing in 19824 Peach Ridge Road, Goshen,
46526, USA;
(b) Mr. Mark Alan Ramser, residing in 1055 Fleetwood Drive, Indianapolis,
Indiana, USA;
(c) Mrs. Janet L. Burd Ramser, residing in 900 Golden Cypress Court,
Chesapeake, VA 23320-2707, USA;
(d) Mrs. Christine Noell Brubaker Stacey, residing in 4617 Bismark Hills
Way N.E., Rio Rancho, New Mexico 87124, USA;
(e) Mrs. Laura Kathleen Brubaker, residing in 900 Golden Cypress Court,
Chesapeake, VA 23320-2707, USA;
hereinafter collectively referred to as the "Ramser Family" or the "Class A
Shareholders";
2. Mr. Gerard van Rooijen, residing in Kleine Katsweg 34 b, B - 9990 Maldegem,
Belgium,
hereinafter referred to as "Mr. Van Rooijen" or the "Class B Shareholder";
3. Livinco N.V., a Company organized and existing under the laws of Belgium,
having its registered office at Industrielaan 13, B - 9990 Maldegem,
registered with the Register of Commerce of Gent under number 129.965,
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represented for the purpose of the present Agreement by Mr. Gerard van
Rooijen, hereinafter referred to as "Livinco" or the "Class C Shareholder";
4. (a) Mr. Etienne Steur, residing in Hekers 38, 9052 Zwijnaarde;
(b) Mr. Stefaan De Clerck, residing in Balgerhoeke 73, 9900 Eeklo;
(c) Mrs. Huguette Van Parrys, residing in Pollepelstraat 2/A,
B-9990 Maldegem;
(d) Mr. Danny De Rouck, residing in Heidekasteeldreef 23, 9290 Berlare;
(e) Mr. Ronny Dhont, residing in Toekomststraat 71, 8310 Sint-Kruis
(Brugge);
hereinafter collectively referred to as the "Class D Shareholders";
the Class A Shareholders, the Class B Shareholder, the Class C Shareholder and
the Class D Shareholders and the Company hereinafter collectively referred to as
the "Sellers",
AND:
1. CTB INC., a Company organized and existing under the laws of Indiana
(U.S.A.), having its registered office at State Road 15 North, P.O. Box 2000,
Milford, Indiana (USA) 46542-2000, registered with the Secretary of State of
Indiana,
represented for the purpose of the present Agreement by J. Christopher Chocola,
2. ROXELL HOLDING N.V., a Company organized and existing under the laws of
Belgium, having its registered office at Berckmansstraat 83, 1060 Brussels, to
be registered with the Register of Commerce of Brussels,
represented for the purpose of the present Agreement by J. Christopher Chocola
and Michael J. Kissane,
CTB Inc. and ROXELL HOLDING N.V. hereinafter collectively referred to as the
"Purchasers",
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The Company, the Sellers and the Purchasers hereinafter collectively referred to
as the "Parties";
W I T N E S S E T H :
WHEREAS, the Purchasers want to acquire the total issued and outstanding share
capital of the Roxell group comprising the following companies: Roxell N.V.,
Roxell Inc., and participations in Roxell Ltda (Brazil) and V.R. Equipment Ltd
(India);
WHEREAS, the Sellers are the sole owners of all shares issued by Roxell N.V.,
which owns all shares of Roxell Inc., and 80 % of the shares issued by Roxell
Ltda and 22.5 % of the shares issued by V.R. Equipment Ltd.;
WHEREAS, the companies of the Roxell group are principally engaged in the
business of manufacturing of automated feeding and watering systems as well as
feed storage facilities for the poultry and swine production industries;
WHEREAS, the Purchasers are willing to purchase the shares of Roxell N.V. from
the Sellers, who are willing to sell these shares to the Purchasers, upon the
terms and conditions hereinafter set forth.
NOW THEREFORE, THE PARTIES HAVE AGREED AS FOLLOWS
ARTICLE 1. - DEFINITIONS
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1.1. Unless otherwise defined herein, the following terms shall have the
following meanings for all purposes of this Agreement:
"AFFILIATE" means, except as otherwise defined in this Agreement, an
affiliated Company as defined in the Royal Decree of October 8, 1976, as
amended by the Royal Decree of March 6, 1990, on annual accounts of
enterprises;
"AGREEMENT" means this acquisition agreement for the sale and purchase of
the total issued and outstanding share capital of the Company as the same
may be amended, modified and/or restated from time to time;
"ANNUAL ACCOUNTS" means the consolidated balance sheet, statement of profit
and loss and disclosure notes of the Company showing the financial
situation of the Companies as per October 31, 1995, 1996 and 1997, prepared
by the board of directors of the Company, (audited and certified by the
Company's statutory auditor) annexed to the present Agreement as Section
9.1. of the Disclosure Letter;
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"CLOSING" means the complete effectuation of the transfer of title to the
Shares by the Sellers to the Purchasers and the confirmation of all steps
and formalities provided for in this Agreement related thereto, in
accordance with the provisions of Article 9 of this Agreement;
"CLOSING BALANCE SHEET" means the consolidated financial statements of the
Company showing the financial situation of the Companies as of the Closing
Date as referred to in Article 3.3 of this Agreement;
"CLOSING BALANCE DATE" means December 31, 1998;
"CLOSING DATE" means the later of (i) the day on which the last of the
conditions set out in Article 8.1 of this Agreement has been fulfilled, or
has been waived by the Purchasers, as applicable, (ii) January 1, 1999, or
(iii) any other date for the transfer of the Shares mutually agreed by the
Parties;
"COMPANY" means Roxell N.V., a Company organized and existing under the
laws of Belgium, having its registered office at Industrielaan 13, 9990
Maldegem, registered with the Register of Commerce of Gent under number
99.273;
"COMPANIES" means collectively the following companies comprising the
Roxell group: Roxell N.V., Roxell Inc., and Roxell Ltda (Brazil);
"DISCLOSURE LETTER" means the letter dated on the same date as this
Agreement and annexed to this Agreement as Exhibit 5.(b) written by the
Sellers and accepted by the Purchasers for the purpose of informing the
Purchasers of the matters which constitute exceptions to the
Representations and Warranties made in this Agreement;
"ESCROW ACCOUNT" means the account No. 290-0123255-86 opened at or prior to
the Closing Date in the name of the Purchasers and the Sellers with
Generale Bank in Gent as provided for in Article 6.2 of this Agreement;
"ESTIMATED CLOSING BALANCE SHEET" means the estimated consolidated
financial statements of the Company showing the financial situation of the
Companies as of the Closing Balance Date as referred to in Article 3.1 and
to be annexed to the present Agreement as Exhibit 3.1;
"FINANCIAL STATEMENTS" mean jointly the Annual Accounts, the Estimated
Closing Balance Sheet and the Closing Balance Sheet including any notes and
exhibits thereto;
"INTELLECTUAL PROPERTY" means the trademarks, service marks, trade names,
patents, copyrights, software, know-how, confidential information, trade
secrets, customer lists, marketing and customer information, design rights
(registered or unregistered), manufacturing formulas, procedures, and
records, research and development reports, all technical documentation
relating to any
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of the foregoing and all other intellectual property rights which relate
to, are necessary or useful to or which have been or are used by the
Companies for the conduct of its business;
"PARTICIPATIONS" means the companies in which Roxell N.V. has a
participation, i.e. Roxell Ltda (Brazil) (80 %) and V.R. Equipment Ltd
(India) (22.5 %);
"PURCHASE PRICE" means the purchase price as defined in Article 3 of the
present Agreement;
"REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS" means the
representations and warranties made by the Purchasers in this Agreement and
set out in Exhibit 5.(a);
"REPRESENTATIONS AND WARRANTIES OF THE SELLERS" means the representations
and warranties made by the Sellers in this Agreement and set out in Exhibit
5.(a);
"ROXELL LTDA" means a company organized and existing under the laws of
Brazil, having its registered office at Rua Carlos Roberto Frashetti 51,
Nova Odessa, Sao Paulo, Brazil, registered with the Register of Commerce of
Sao Paulo under number 35.214.705.195;
"ROXELL INC." means a company organized and existing under the laws of
Arkansas (U.S.A.), having its registered office at South Old Missouri Road
3917, Springdale, Arkansas, U.S.A., registered with the Secretary of State
of Arkansas;
"SHARES" means all 49,460 existing and outstanding bearer shares, without
nominal value, of Roxell N.V.;
"STEVENS N.V." means a company organized and existing under the laws of
Belgium, having its registered office at Passtraat 1, 9100 Sint-Niklaas,
registered with the Register of Commerce of Sint-Niklaas under number
46.449;
"V.R. EQUIPMENT LTD." means a company organized and existing under the laws
of India, having its registered office at Gat. No. 88, Village Jambhul,
Taluka Maval, Pune 412106, India, registered with the Register of Commerce
of Andhra Praesch under number 01-15544;
1.2. The index, captions and headings are for convenience only and shall not
define, limit or affect the scope, intent, construction or interpretation
of this Agreement or any provision hereof.
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1.3. The words "herein", "hereof", "hereunder", "hereby", "hereto", "herewith"
and words of similar import shall refer to this Agreement as a whole and
not to any particular article, section, subsection or other subdivision.
1.4. The words "include", "includes", "including" and all forms and derivations
thereof shall mean including but not limited to.
1.5. Words of the singular number shall include correlative words of the plural
number and vice versa.
Unless otherwise provided herein, all references to a fixed time of a day
shall mean Brussels, Belgium time as in effect on such day and references
to a "day" shall mean a business day.
ARTICLE 2. - SALE, PURCHASE AND TRANSFER OF TITLE
- -------------------------------------------------
2.1. Subject to the terms and conditions set forth in this Agreement, the
Sellers hereby sell the Shares free and clear of any encumbrance to the
Purchasers who purchase the Shares from the Sellers at and with effect as
from the Closing Date. Roxell Holding purchases at least all of the Shares
from the Class B Shareholder.
2.2. As from the Closing Date, the Purchasers shall have the full right of
ownership of the Shares, including all rights to vote and to receive
dividends.
2.3. The conveyance of the Shares sold under this Agreement will be effected on
the Closing Date through the delivery of the Shares by the Sellers to the
Purchasers.
2.4. The Sellers acknowledge that it is an express condition for the Purchasers
entering into this Agreement that they acquire directly all shares of
Roxell N.V., and indirectly all shares of Roxell Inc. and the
Participations, and that, as a consequence thereof, it is an essential
element of this Agreement and the transactions contemplated thereby that,
at the Closing Date and thereafter, Roxell N.V. owns free and clear of any
encumbrances, all shares of Roxell Inc. and 80 % of the shares issued by
Roxell Ltda and 22.5 % of the shares issued by V.R. Equipment Ltd.
2.5. The Purchasers guarantee to the Sellers that Roxell Holding is a Belgian
resident. Unless legally forced or required to do so the Purchasers
undertake that, during a period of 13 months as of the Closing Date, Roxell
Holding shall not sell or otherwise transfer any of the Shares which it
acquired from the Class B Shareholder to a non-Belgian resident or to a
corporate entity which does not have its principal place of business,
registered office, actual management or administrative seat in Belgium.
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Moreover, unless legally forced or required to do so the Purchasers
undertake that Roxell Holding shall not sell or otherwise transfer any of
the Shares which it acquired from the Class B Shareholder to any individual
or corporate entity which would sell or otherwise transfer such Shares to a
non-Belgian resident or to a corporate entity which does not have its
principal place of business, registered office, actual management or
administrative seat in Belgium.
In case of a breach of these obligations, the Purchasers shall indemnify
the Class B Shareholder for all taxes, including penalties and interests,
(in accordance with Articles 90, 90 and 94 of the Belgian Code on Income
Taxes) which would be due as a result of this breach.
ARTICLE 3. - PURCHASE PRICE AND PURCHASE PRICE ADJUSTMENT
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3.1 ESTIMATED CLOSING BALANCE SHEET
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The Sellers shall cause the Company to prepare and deliver to the Purchasers at
the latest on December 15, 1998 an estimated consolidated closing balance sheet
of the Company showing the estimated financial situation of the Companies as of
the close of business on the Closing Balance Date (the "ESTIMATED CLOSING
BALANCE SHEET"), which is prepared on a basis consistent with the basis to be
used for the Closing Balance Sheet (as defined below) referred to in Article
3.3., i.e. as if the Closing Balance Date was the Company's normal year end, in
accordance with (i) Belgian Generally Accepted Accounting Principles ("GAAP")
and (ii) prior years accounting principles, estimates, allowances and valuation
rules of the Company consistently applied on a going concern basis.
At the latest on December 22, 1998 the Purchasers shall deliver to the Sellers a
written statement of objections to the Estimated Closing Balance Sheet including
the grounds thereof. Any part of the Estimated Closing Balance Sheet not
disputed by the Purchasers in such statement of objections shall be deemed
accepted by the Purchasers, except to the extent any such parts are changed or
adjusted in the Adjusted Closing Balance Sheet (as defined below) referred to in
Article 3.3.
The statement of objections of the Purchasers shall be examined by the Sellers
and their advisors who will discuss this statement with the relevant
representatives of the Purchasers. The Sellers may write the results of their
examination in a statement of objections and deliver such to the Purchasers. Any
part of the statement of objections of the Purchasers not disputed in the
statement of objections of the Sellers shall be deemed accepted by the Sellers.
The Purchasers and the Sellers will negotiate in good faith in order to solve
any remaining disputes as to reach an agreement on the Estimated Closing Balance
Sheet, at the latest on the Closing Date.
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3.2 PURCHASE PRICE
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On the Closing Date, the Purchasers shall pay by wire transfer in immediately
available funds to the account specified by the Sellers the Estimated Purchase
Price as defined below, minus 10 % of the Estimated Purchase Price which 10 %
the Purchasers shall deposit directly into the Escrow Account, as provided for
in Article 6.2. This amount will be allocated by and among the Sellers in
proportion to their respective shareholdings. The Purchasers do not have any
responsibility with respect to the allocation of this amount among the Sellers.
The Estimated Purchase Price shall be the amount equal to (i) BF
1,277,000,000.00 (one billion two hundred seventy seven million Belgian Francs)
plus (ii) the amount of Cash (as defined in Article 3.3) on the Estimated
Closing Balance Sheet minus (iii) the amount of Debt (as defined in Article 3.3)
on the Estimated Closing Balance Sheet minus (iv) the positive amount, if any,
of the excess of BF 246,258,000.00 (two hundred forty six million two hundred
fifty eight thousand Belgian Francs) over the Adjusted Net Asset Value (as
defined in Article 3.3) on the Estimated Closing Balance Sheet (the "ESTIMATED
PURCHASE PRICE"). The amount of BF 246,258,000.00 (two hundred forty six million
two hundred fifty eight thousand Belgian Francs) is the Net Asset Value of the
Company per October 31, 1997, as agreed by both Parties.
The preceding adjustments (mentioned above under (ii), (iii) and (iv)) are
independent of each other. The Estimated Purchase Price will be adjusted on a
Belgian Franc for Belgian Franc basis.
3.3 PURCHASE PRICE ADJUSTMENT
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(a) As soon as practicable, but in no event later than thirty (30) days
following the Closing Date, the Company shall prepare and deliver to the
Purchasers and the Sellers a Closing Balance Sheet (as defined below) as of
the close of business on the Closing Balance Date (including the notes
thereto, the "CLOSING BALANCE SHEET") together with the workpapers used in
the preparation thereof.
The Closing Balance Sheet shall present the amounts of Cash and Debt and
the Adjusted Net Asset Value of the Companies as of the close of business
on the Closing Balance Date. The Closing Balance Sheet shall be prepared as
if the Closing Balance Date was the Company's normal year end, in
accordance with (i) Belgian Generally Accepted Accounting Principles
("GAAP") and (ii) prior years accounting principles, estimates, allowances
and valuation rules of the Company consistently applied on a going concern
basis.
Reserves, liabilities, allowances and similar items shall be made on the
Closing Balance Sheet for all liabilities (whether contingent or otherwise)
and to appropriately value the assets of the Company.
The Purchasers have accepted the specific disclosures exhaustively set out
in Section 9 of the Disclosure Letter. By accepting such specific
disclosures the
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Purchasers acknowledge that they cannot make any objections to such items,
nor any claim for indemnification based on such specific disclosures in
accordance with Article 6.
As used herein, the following terms shall have the following meanings:
- "ADJUSTED NET ASSET VALUE" means total assets minus total liabilities
minus Cash plus Debt as herein defined of the Company on the Closing
Balance Date, not taking into account the effects resulting from the
Company selling its own shares to the Purchasers.
- "CASH" means cash and cash equivalents (without duplication, net of
outstanding checks) of the Company.
- "DEBT" means, without duplication, "long term financial debt" including
the current portion of any long term debt, as well as any other funded
indebtedness including, without limitation, any bank revolving line of
credit or overdraft mechanism, and any capitalized leases, including
any of the foregoing reflected as current liabilities of the Company.
Debt does not include trade accounts payable and accrued liabilities.
Debt shall be interpreted to conform to Belgian GAAP.
- "ORDINARY COURSE LIABILITIES" include trade accounts payable and
operating accrued liabilities, deferred income taxes, and such other
established or determined liabilities unrelated to "long term financial
debt" or other funded indebtedness or capitalized leases.
(b) The Purchasers and the Sellers shall have thirty (30) days to review the
Closing Balance Sheet after receipt thereof. The Company shall provide the
Purchasers and the Sellers full access to the books and records within
normal business hours to enable them to complete their review. If either
party so notifies the other party of its objection to the Closing Balance
Sheet, the Purchasers and the Sellers shall, within thirty (30) days
following such notice (the "RESOLUTION PERIOD"), attempt to resolve their
differences and any resolution by them as to any disputed amounts shall be
final, binding and conclusive.
If, at the conclusion of the Resolution Period, any amounts remain in
dispute, then all amounts remaining in dispute shall be submitted within 20
days to arbitration pursuant to Article 13.2 hereof. All fees and expenses
relating to the work, if any, to be performed by the arbitrator shall be
borne entirely by the non-prevailing party who shall be determined by the
arbitrator. The arbitrator shall determine, based solely on written
presentations by the Sellers and the Purchasers, and not by independent
review, only those issues still in dispute. The arbitrator's determination
shall be made within thirty (30) days of submission as provided above,
whether or not such presentations by the Sellers and the Purchasers have
been made within such period, and shall be set
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forth in a written statement delivered to the Sellers and the Purchasers
and shall be final, binding and conclusive.
The term "ADJUSTED CLOSING BALANCE SHEET", as hereinafter used, shall mean
the definitive Closing Balance Sheet agreed to by the Purchasers and the
Sellers or the definitive Closing Balance Sheet resulting from the
determinations made by the arbitrator (in addition to those items
theretofore agreed to by the Sellers and the Purchasers).
(c) The difference of (A) the Estimated Purchase Price over (B) the amount
equal to (i) BF 1,277,000,000.00 (one billion two hundred seventy seven
million Belgian Francs) plus (ii) the amount of Cash on the Adjusted
Closing Balance Sheet minus (iii) the amount of Debt on the Adjusted
Closing Balance Sheet minus (iv) the positive amount, if any, of the excess
of BF 246,258,000.00 (two hundred forty six million two hundred fifty eight
thousand Belgian Francs) over the Adjusted Net Asset Value on the Adjusted
Closing Balance Sheet shall herein be referred to as the "ADJUSTMENT
AMOUNT". The amount of the Estimated Purchase Price after adjustment by the
Adjustment Amount, shall be referred to as the "PURCHASE PRICE" or the
"FINAL PURCHASE PRICE".
Within five (5) business days after the Adjusted Closing Balance Sheet is
agreed to or any remaining disputed items are ultimately resolved pursuant
to Article 3.3(b):
(x) if the Adjustment Amount is a positive number, the Sellers shall pay
the Purchasers the Adjustment Amount (plus interest accrued thereon
from the Closing Date to the date of payment at a rate equal to the
prime rate of the Company's senior lender) by wire transfer in
immediately available funds to the account specified by the Purchasers;
and
(y) if the Adjustment Amount is a negative number, the Purchasers shall pay
the Sellers the absolute value of the Adjustment Amount (plus interest
accrued thereof from the Closing Date to the date of payment at a rate
equal to the prime rate of the Company's senior lender), to be
allocated among the Sellers in proportion to their respective Share
holdings, by wire transfer in immediately available funds to the
account specified by the Sellers.
Any Adjustment Amount to be paid by the Sellers to the Purchasers shall not
be paid from the Escrow Account and shall not reduce the amounts otherwise
payable from the Escrow Account, unless the Purchasers elects otherwise, in
writing, at its sole option and discretion.
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ARTICLE 4. - REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
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The Purchasers represent and warrant to the Sellers that the Representations and
Warranties, attached as Exhibit 4 are true and correct on the date of this
Agreement and shall survive the date of this Agreement.
ARTICLE 5. - REPRESENTATIONS AND WARRANTIES OF THE SELLERS
- ----------------------------------------------------------
The Sellers represent and warrant to the Purchasers that the Representations and
Warranties, attached as Exhibit 5.(a), are true and correct on the date of this
Agreement and shall survive the date of this Agreement.
They shall be qualified only by reference to those matters specifically
disclosed and accepted by the Purchasers in the Disclosure Letter, attached as
Exhibit 5.(b). The Disclosure Letter exhaustively contains all matters which
constitute specific exceptions to the Representations and Warranties made in
this Agreement. As a result, the Sellers make all Representations and
Warranties, attached as Exhibit 5.(a), subject to the matters specifically
disclosed in the Disclosure Letter.
ARTICLE 6. - INDEMNIFICATION
- ----------------------------
6.1 INDEMNIFICATION BY THE SELLERS
- ------------------------------------
Without prejudice to any other rights and remedies available by law to the
Purchasers and to the Companies, the Sellers undertake to hold harmless against
all claims and indemnify the Purchasers or the Companies for any losses, damages
or expenses (including interest payments) or decrease of the assets of the
Companies, sustained by the Purchasers or the Companies as a result of the
inaccuracy in or breach of any of the Representations and Warranties of the
Sellers, and/or any breach of any undertaking or obligation of the Sellers
contained in this agreement.
The Purchasers shall take all reasonable steps to avoid or mitigate any such
losses, damages or expenses (including interest payments) or decrease of the
assets of the Companies. The Purchasers undertake to inform the Sellers of any
such losses, damages or expenses (including interest payments) or decrease of
the assets of the Companies within 10 days after the Purchasers' discovery
hereof, in order to enable the Sellers to remedy such losses, damages or
expenses (including interest payments) or decrease of the assets of the
Companies, provided, however, that any delay in giving such information will not
result in the waiver by the Purchasers of any of its rights except to the extent
the rights of the Sellers are actually prejudiced by such failure or delay.
No claim or demand which would result in the Sellers being liable hereunder may
be settled without the consent of the Sellers, which consent shall not be
unreasonably withheld. For the purposes of this article, any losses, damages or
expenses incurred by
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the Companies and Participations as a result of any such violation or inaccuracy
of the Warranties and Representations of the Sellers shall be regarded as being
incurred by the Purchasers in proportion to the actual number of shares in such
company directly or indirectly held by the Purchasers.
6.2 GUARANTEE FOR INDEMNIFICATION
- ----------------------------------
As a guarantee for the payment of any amounts due from the Sellers in respect of
indemnification pursuant to the provisions of this Agreement, the Parties have
agreed that at the Closing Date the amount of ten percent (10 %) of the
Estimated Purchase Price will be deposited by the Purchasers directly into the
Escrow Account in accordance with Article 3.2 of this Agreement. The Parties
will execute on the Closing Date an Escrow Agreement substantially in the form
as attached hereto as Exhibit 6.2.
6.3 MINIMUM THRESHOLD AND MAXIMUM LIABILITY OF THE SELLERS
- -----------------------------------------------------------
The Sellers shall have no liability in respect of any claims under this Article
6 of this Agreement if the aggregate amount for which the Sellers would be
liable to the Purchasers in respect of those claims is equal to or less than the
sum of (a) the positive amount, if any, of the excess of the Adjusted Net Asset
Value on the Adjusted Closing Balance Sheet, as defined in Article 3.3, over BF
246,258,000.00 (two hundred forty six million two hundred fifty eight thousand
Belgian Francs) (the "Excess Net Asset Value") plus (b) the unused portion of
the Closing Balance Sheet accruals and provisions which have been or would
require being released in accordance with (i) Belgian Generally Accepted
Accounting Principles ("GAAP") and (ii) prior years accounting principles,
estimates, allowances and valuation rules of the Company consistently applied on
a going concern basis (the "'Released Accruals") (the Excess Net Asset Value and
the Released Accruals together referred to as the "Minimum Threshold"). Any
unused portion of the Closing Balance Sheet accruals and provisions can only be
considered once for the calculation of the Released Accruals. If the aggregate
amount of such claims exceeds the Minimum Threshold, only the excess of such
aggregated claims shall be eligible for payment.
No such claims shall be based on matters which have directly resulted in an
adjustment to the Purchase Price or which are reserved in the Closing Balance
Sheet, but only to the extent they are reserved for in the Closing Balance
Sheet. Any such claims will also be reduced, Belgian franc for Belgian franc, by
the amount of any actual tax benefits or by the amount of insurance benefits or
any other compensation actually received by the Company as a result of the basis
of such claim.
The liability of the Sellers as a result of the inaccuracy in or breach of any
of the Representations and Warranties shall be limited to the amount of the
escrow, except for tax and social security, and/or fraud, intentional fault, or
willful misconduct among Parties and/or defects in title to the assets or the
shares of the Companies and the
- --------------------------------------------------------------------------------
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<PAGE> 14
capacity to transfer same, and environmental issues, which shall be limited in
amount to fifty percent (50%) of the Purchase Price.
6.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
- -----------------------------------------------
(a) Subject to the provisions hereafter, any claim by the Purchasers under the
Representations and Warranties has to be introduced before the expiration
of a period of two (2) years following the Closing Date.
(b) Notwithstanding Article 6.4.(a), any claim by the Purchasers under the
Representations and Warranties relating to tax and social security, and/or
fraud, intentional fault, or willful misconduct among Parties and/or
defects in title to the assets or the shares of the Companies and the
capacity to transfer same, and environmental issues, has to be introduced
before the expiration of the later of (i) a period of five (5) years
following the Closing Date, or (ii) the expiration of any applicable
statute of limitations.
ARTICLE 7. - ACTIONS PRIOR TO CLOSING
- -------------------------------------
7.1 CONDUCT OF THE COMPANY
- ----------------------------
During the period from the date hereof to the Closing Date:
(a) Operations in the Ordinary Course of Business
Except as contemplated by this Agreement, the Companies shall, and the
Sellers shall cause the Companies to, conduct their business operations
according to the ordinary and usual course of business and will use their
reasonable best efforts:
(i) to preserve intact their business organization;
(ii) to maintain their books and records in accordance with past
practices;
(iii) to keep available the services of their officers and employees; and
(iv) to maintain satisfactory relationships with licensors, suppliers,
distributors, customers and others having business relationships with
them.
The Company and the Sellers shall confer with the Purchasers or its
representatives to keep them informed with respect to operational matters
of a material nature and to report the general status of the ongoing
operations of the business of the Companies.
- --------------------------------------------------------------------------------
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<PAGE> 15
(b) Forbearances by the Companies
Except as contemplated by this Agreement, the Companies will not, and the
Sellers will not permit the Companies to, without the prior written
consent of the Purchasers:
(1) incur any new debt, liability or obligation, direct or indirect,
whether accrued, absolute, contingent or otherwise (other than
short-term indebtedness in the ordinary course of business consistent
with past practice in an amount not to exceed BF 850,000);
(2) assume, guarantee, endorse or otherwise become responsible for the
obligations of, or make any loans or advances to, any other individual,
firm or corporation (other than any of the Companies);
(3) make any direct or indirect redemption, purchase or other acquisition
of any shares of its capital stock or declare, set aside or pay any
dividend or distribution (whether in cash, capital stock or property),
other than any dividends to the Company from any of the Companies and
the Participations except as described in Section 9.5 and 11.c of the
Disclosure Letter;
(4) mortgage, pledge or otherwise encumber any of its properties or assets
other than in the ordinary course of business consistent with past
practice;
(5) sell, lease, transfer or dispose of any of its properties or assets,
waive or release any rights of material value, or cancel, compromise,
release or assign any indebtedness owed to it or any claims held by it
except for sales of inventory in the ordinary and usual course of
business and consistent with past practice;
(6) except for capital expenditures not to exceed BF 850,000 individually
and/or BF 3,000,000 in the aggregate or items included in the capital
budget included in the Disclosure Letter, make any investment or
expenditure of a capital nature either by purchase of stock or
securities, contributions to capital, property transfers or otherwise,
or by the purchase of any property or assets of any other individual,
firm or corporation;
(7) enter into any transaction other than in the ordinary and usual course
of its business and consistent with past practice;
(8) enter into or terminate any agreement, plan or lease, or make any
change in any of its agreements, plans or leases other than in the
ordinary course of business consistent with past practice;
- --------------------------------------------------------------------------------
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<PAGE> 16
(9) permit any insurance policy naming it as a beneficiary or a loss
payable payee to be cancelled or terminated or any of the coverage
thereunder to lapse;
(10) enter into any collective bargaining agreements, except for the
ongoing collective bargaining negotiations regarding the
reclassification of blue-collar workers and the effects thereof;
(11) hire any new employees (other than in the ordinary course of business
consistent with past practice) or increase in any manner the
compensation, remuneration or fringe benefits of any of its officers
or employees, except for the employees' reasonable year end and salary
reviews, effective as of January 1, 1999, or pay or agree to pay any
pension, retirement allowance, or other benefit not required by any
existing employee benefit plan to any such officers or employees,
commit itself to any employment agreement or employee benefit plan
with or for the benefit of any of its officers or employees or any
other person, or alter, amend, terminate in whole or in part, or
curtail or permanently discontinue distributions to, any pension plan
or any other employee benefit plan;
(12) issue any shares of capital stock or issue any warrants, options,
calls, subscriptions, or other agreements or commitments obligating it
to issue shares of capital stock;
(13) enter into an agreement to do any of the things described in clauses
(1) through (12) of this Article 7.1.(b); or
(14) take any action that would render inaccurate any representation and
warranty made herein.
7.2 CONSENTS, AUTHORIZATIONS, ETC.
- -----------------------------------
Each party hereto will use its commercially reasonable efforts to obtain all
consents, authorizations, orders and approvals of, and make all filings and
registrations with, any governmental commission, board or other regulatory body
or any other person required for or in connection with the consummation of the
transactions contemplated hereby and will cooperate fully with the other parties
in assisting them to obtain such approvals and to make such filings and
registrations. No party hereto will take or omit to take any action for the
purpose of delaying, impairing or impeding the receipt of any required consent,
authorization, order or approval or the making of any required filing or
registration.
The Parties shall prepare all necessary documents for the filing with the
Belgian and other relevant anti-trust authorities. The Purchasers shall be
responsible for the filing with the Belgian and other relevant anti-trust
authorities within 3 days from the date hereof. In the event that the relevant
anti-trust authority would not clear this
- --------------------------------------------------------------------------------
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<PAGE> 17
Agreement and the transfer of the Shares contemplated herein, the Parties agree
to negotiate in good faith with the relevant authorities in order to obtain
clearance and to take any reasonable measures required by the authorities with
the goal that this transfer of Shares will not be prohibited or restricted in
any material way.
7.3 INVESTIGATION BY THE PURCHASERS
- ------------------------------------
Prior to the Closing Date, the Purchasers and their advisors may request such
information of the business, properties, assets and liabilities of the Company
and its financial and legal conditions as they deem necessary or advisable to
familiarize themselves therewith and to enable them to examine and review the
Estimated Closing Balance Sheet, provided that such investigation shall not
unreasonably interfere with the normal operations of the Company.
Prior to the Closing Date, upon reasonable prior notice and as far as necessary
to enable them to examine and review the Estimated Closing Balance Sheet, the
Company and the Sellers have agreed to permit the Purchasers and its authorized
representatives (including its advisors), or cause them to be permitted, to have
full access to the premises, books and records, officers, employees, and
independent accountants (including the independent accountant's work papers) of
the Company at reasonable hours, and prior to the Closing Date the officers of
the Company shall furnish the Purchasers and its advisors with such financial
and operating data and other information with respect to the business,
properties and assets of the Company as they shall from time to time reasonably
request.
In the event this Agreement is terminated, the Purchasers agree to return
promptly, if so requested by the Company, every document furnished to the
Purchasers by the Company and the Sellers, in connection with the transactions
contemplated hereby, and any copies thereof the Purchasers may have made, and to
use its best efforts to cause its representatives to whom such documents were
furnished promptly to return such documents, and any copies thereof any of them
may have made.
7.4 EXCLUSIVITY
- ----------------
During the period from the date of this Agreement to the Closing Date, or until
this Agreement is terminated (the "Exclusivity Period"), the Company and the
Sellers will not, nor will it cause, direct or authorize any of the Company's
and the Sellers' officers, directors, affiliates (including without limitation
Livinco N.V.), employees or agents to, initiate, encourage, solicit or continue
any negotiations or discussions with any third party other than the Purchasers
for the purpose of inducing or soliciting such party to make a proposal for a
merger or other business combination or to offer to acquire in any manner a
substantial equity interest in, or a substantial portion of the assets of the
Companies or provide information to any third party in respect to any of the
foregoing.
- --------------------------------------------------------------------------------
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<PAGE> 18
The Company and the Sellers will notify the Purchasers promptly if any inquiries
or solicitations are received subsequent to the date hereof with respect to any
such actual or potential proposals.
During the Exclusivity Period, the Company and its principal shareholders and
management will work exclusively with the Purchasers, and will cooperate with
Purchasers, in their undertaking of the due diligence and preparation of the
Closing contemplated herein.
7.5 PUBLICITY
- --------------
From the date hereof to the Closing Date, each party hereto agrees not to issue
any press release with respect to the transactions contemplated hereby without
the consent, which shall not be unreasonably withheld, of the Company (in the
case of releases or statements issued or made by the Purchasers) or the
Purchasers (in the case of releases or statements issued or made by the Company
or any of the Sellers).
7.6 ADDITIONAL AGREEMENTS
- --------------------------
Subject to the terms and conditions herein provided, each of the parties hereto
agrees to use its best efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated hereby as soon as reasonably practicable hereinafter.
ARTICLE 8. - CONDITIONS
- -----------------------
8.1 CONDITIONS PRECEDENT
- --------------------------
Consummation of the transactions contemplated hereby is subject to the
fulfillment to the reasonable satisfaction of the Parties, prior to or at the
Closing Date, of each of the following conditions:
(a) Consents, Authorizations, etc.
Parties shall have obtained clearance, by receipt of notice or by
expiration of the applicable waiting period, from the Belgian and other
relevant anti-trust authorities of the transfer of Shares contemplated by
this Agreement.
(b) Representations and Warranties
The representations and warranties of the Sellers and the Purchasers
contained in this Agreement are true and correct in all material respects
(except that such representations and warranties specifically qualified by
materiality shall be read for purposes of this Article so as not to require
an additional degree of
- --------------------------------------------------------------------------------
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<PAGE> 19
materiality) at and as of the Closing Date with the same force and effect
as if made at and as of the Closing Date; and the Sellers, the Purchasers
and the Company shall have performed or complied in all material respects
with all agreements and covenants required by this Agreement to be
performed or complied with by them at or prior to the Closing Date. The
Sellers and the Purchasers acknowledge that the condition precedent
contained in this Article 8.1(b) shall not be invoked for items which
appear from the documents exhaustively listed in Enclosure 1A and 1C to the
Disclosure Letter.
(c) Termination of agreements
The Companies and/or the Sellers shall have terminated all agreements
listed in Enclosure 26 of the Disclosure Letter without notice or indemnity
for the contracting parties and without any liability of the Companies
and/or the Purchasers upon termination. All such agreements shall have been
terminated with effect at the latest as of the Closing Balance Date.
The Companies and/or the Purchasers shall be released, in form and
substance satisfactory to the Purchasers, of any claims the contracting
parties may have against the Companies and/or the Purchasers.
(d) Sale of Stevens N.V.
The Company shall have sold or transferred all shares of Stevens N.V. to
any or more of the Sellers with effect at the latest as of the Closing
Balance Date without any representation and warranty given by the Company
nor any liability of the Company and/or the Purchasers upon termination.
8.2 CONSEQUENCES AND WAIVER BY THE PURCHASERS
- ----------------------------------------------
If any of these conditions set out in Article 8.1. of this Agreement, has not
been fulfilled at the latest on January 12, 1999, this Agreement shall
automatically become null and void and have no effect. Neither the Sellers nor
the Purchasers shall be entitled to any compensation whatsoever from the other
Party.
Each of the parties hereto agrees to use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations in view of
the fulfillment of the conditions set out in Article 8.1 of this Agreement as
soon as reasonably practicable hereinafter.
The Purchasers can at any time and at its sole discretion waive, partially or
entirely, any or all conditions set out in Article 8.1 of this Agreement.
- --------------------------------------------------------------------------------
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ARTICLE 9. - CLOSING
- --------------------
9.1. The transfer of title to the Shares and the execution of all documents in
connection therewith shall take place at the Closing Date, at the offices
of De Bandt, van Hecke & Lagae, or such other place as may be agreed upon
by the Parties.
9.2. At the Closing Date, or at such other date mutually agreed by the Parties,
the following formalities shall be effected by the Parties:
- the Parties shall confirm the fulfillment of all conditions set out in
Article 8.1 of this Agreement; and
- the Sellers shall deliver the Shares to the Purchasers; and
- the Purchasers shall pay to the Sellers, as provided for in Article 3
of the Agreement, the Estimated Purchase Price , minus 10 % of the
Estimated Purchase Price; and
- the Purchasers shall deposit into the Escrow Account 10% of the
Estimated Purchase Price; and
- the Parties shall execute the Escrow Agreement; and
- the Sellers shall submit to the Purchasers signed resignation letters,
substantially in the form of the draft annexed to the Agreement as
Exhibit 9.2.(a) for Mr. Forrest Lee Ramser, Mr. Fred Ramser, Mr.
Etienne Steur, Mr. Gerard van Rooijen, Mr. Ronny Dhont and Mr. Robert
Dossche resigning from their duties as directors of the Company ; and
- Gerard van Rooijen, Danny De Rouck, Ronny Dhont, Stefaan De Clerck,
Kris Francoys and Luc Lasoen shall execute the agreements of
independent directors of the Company in the form attached hereto as
Exhibit 9.2.(b); and
- the extraordinary shareholders' meeting of the Company/ies, as soon as
possible after the Closing Date, shall appoint Gerard van Rooijen,
Danny De Rouck, Ronny Dhont, Stefaan De Clerck, Kris Francoys and Luc
Lasoen as independent directors with effect as of the Closing Date.
ARTICLE 10. - POST CLOSING COVENANTS
- ------------------------------------
A. NON-COMPETITION
10.1. The Sellers hereby undertake to the Purchasers that they will not, except
with Purchasers' prior written consent, whether directly or indirectly,
whether remunerated or not through agents, Affiliates, group companies,
intermediaries, joint ventures, alliances or as director, manager,
shareholder of
- --------------------------------------------------------------------------------
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<PAGE> 21
any companies or as subcontractor, for a period of four years as of the
Closing Date:
(a) compete with the Companies or the Participations or the Purchasers
in any way;
(b) solicit or endeavour to entice away from or discourage from dealing
with the Companies or the Participations or induce to trade on
different terms, any person who was at any time a customer or client
of the Companies or the Participations;
(c) supply or provide any goods or services normally supplied by the
Companies or the Participations to any person who was at any time a
customer or client of the Companies or the Participations or any
person to whom the Companies or the Participations supplied or
provided goods or services;
(d) solicit or endeavour to entice away from or discourage from being
employed by the Companies or the Participations any consultant or
employee of the Companies or the Participations, whether or not such
person would commit a breach of contract by reason of leaving
employment; and
(e) be legally or economically involved, in any way whatsoever, into
activities similar or competing with the activities of the Companies
or the Participations or the Purchasers.
The above obligations apply only to the industries that are served by the
Companies or the Participations at the Closing Date or during the period
of four years thereafter.
As to any of the Sellers who are elected as independent directors of
Roxell N.V., should such Seller be discharged or not be reelected as such
independent director for reasons other than willful misconduct or gross
negligence, then in such event, the period for the above obligations
shall be one year as of such discharge or non-reelection, but in no event
beyond four years as of the Closing Date.
10.2. The Sellers acknowledge that the provisions of this Article 10.1 are
reasonable and necessary to protect the legitimate interests of the
Purchasers and that any violation of such provisions will result in
damage to the Purchasers and the Companies and the Participations for
which injunctive relief and specific performance may be sought without
the necessity to prove actual damage, provided however, that the
Purchasers shall also be entitled to pursue any other remedies available
to it for breach of this Agreement, including the recovery of monetary
damages.
- --------------------------------------------------------------------------------
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10.3. The Sellers who infringe the stipulations set forth in Article 10.1.
shall forfeit to the Purchasers by the mere fact of such infringement, an
immediately payable amount, which shall not be subject to mitigation, of
BF 10,000,000 to be increased with BF 100,000 for each day, or part of a
day, that such infringement continues after the first day of
infringement, without prejudice to Purchasers' right to claim monetary
damages, losses and costs exceeding the above amounts.
10.4. If any of the provisions of this Article shall ever be deemed to exceed
the time, geographic or other limitations provided by the law applicable,
they shall not be nullified but automatically reformed to conform with
the maximum permitted by applicable law.
B. CO-OPERATION
10.5. The Parties shall fully co-operate and shall use their best efforts to
cause the management and employees of the Companies to co-operate fully
with the Parties, in order to promote and effect an orderly transition of
the ownership of the Companies, to maintain the customer relationships
and the employees of the Companies, and to otherwise provide for the
conduct of the business of the Companies in substantially the manner as
was being conducted before the date of this Agreement.
10.6. The Parties acknowledge that certain computations, exchange and
notification of information and other actions may be required from time
to time with respect to this Agreement even after the date of Closing.
The Parties and their respective representatives shall use their best
efforts to co-operate with one another in the expeditious completion of
all such computations, notifications and actions required.
10.7. Each Party shall reasonably co-operate with the other Party in the event
of an audit by the competent authorities with respect to tax issues
relating to or arising out of the conduct of the business of the
Companies prior to the Closing Date.
C. SECRECY OBLIGATIONS OF THE SELLERS
10.9. The Sellers agree to hold in confidence, not to use, and not to disclose,
directly or indirectly, any and all technical and commercial information
relating to the Companies and the Participations (meaning, all
information or data with respect to the conduct or details of the
business of the Company including, without limitation, methods of
operation, customers and customer lists, details of contracts with
customers, consultants, suppliers or employees, products, proposed
products, former products, proposed, pending or completed acquisitions of
any company, division, product line or other business unit, prices and
pricing policies, fees, costs, plans, designs, technology, inventions,
- --------------------------------------------------------------------------------
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trade secrets, know-how, software, marketing methods, policies, plans,
personnel, suppliers, competitors, markets or other specialized
information or proprietary matters of the business of the Companies)
except information which:
(i) at the Closing Date is in the public domain;
(ii) after the Closing Date is published or otherwise becomes part of the
public domain independently of a disclosure in any form whatsoever
by the Sellers.
Such obligation shall be for an indefinite period of time after the
Closing Date.
D. COMMUNICATIONS
10.10. All public announcements, releases, statements and communications by the
Sellers and/or Purchasers to third persons (excluding the employees of
either Party and customers) relating to this Agreement shall be made only
at such time and in such manner as may be previously agreed upon in
writing by the Parties, unless otherwise required by law or contract. To
the greatest extent practicable, the Sellers and the Purchasers shall
discuss with each other the form, timing and substance of such
announcements, releases, statements and communications prior to the
dissemination thereof.
ARTICLE 11. - JOINT AND SEVERAL LIABILITY
- -----------------------------------------
11.1. Subject to Article 11.2 all of the representations, warranties, covenants
and agreements from the Sellers herein are joint and several up to a
maximum amount of ten percent (10 %) of the Estimated Purchase Price.
11.2. The Sellers are not jointly and severally liable for the representations,
warranties, covenants and agreements exhaustively listed in Exhibit 11.2.
11.3. Any liability relating to the representations, warranties, covenants and
agreements from the Sellers herein, which do not fall within the scope of
Articles 11.1 and 11.2, shall be borne by each of the Sellers in
accordance with the schedule attached hereto in Exhibit 11.3.
ARTICLE 12. - COSTS
- -------------------
The Sellers and the Purchasers shall be responsible for their own fees and costs
incurred in connection with the transactions contemplated by this Agreement.
None of the costs or expenses pertaining to the transactions contemplated by
this Agreement, including the costs and expenses of external legal, financial or
other advisors (with the exception of auditors' fees properly incurred in
running the business of the Companies
- --------------------------------------------------------------------------------
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<PAGE> 24
and not pertaining to this transaction) or finders' fees, brokerage fees or
commissions, shall be charged by the Sellers in any way to any of the Companies.
ARTICLE 13. - GOVERNING LAW - ARBITRATION
- -----------------------------------------
13.1. This Agreement shall be governed by and construed in accordance with the
laws of Belgium.
13.2. Any dispute arising under Article 3.3 of this Agreement, shall be finally
settled by neutral binding arbitration by a partner in a "Big 5"
accounting firm other than Deloitte & Touche. The place of arbitration
shall be Brussels and the proceedings shall be conducted in the English
language.
13.3. Any dispute concerning the validity, interpretation or the performance of
the other articles of this Agreement shall be finally settled under the
Rules of Cepani. The arbitral tribunal shall be composed of three
arbitrators. The place of arbitration shall be Brussels and the
proceedings shall be conducted in the English language.
ARTICLE 14. - MISCELLANEOUS
- ---------------------------
14.1. All notices in connection with this Agreement shall be given by notice in
writing, hand delivered or sent by registered (air)mail or by facsimile
transmission confirmed by registered (air)mail. All such notices shall be
sent to the telecopier number or address (as the case may be) specified
hereafter, or to such other number or address the parties may have last
specified by notice to the other party sent as aforesaid. A copy of all
notices shall be sent, in the same way and at the same time as the
original notice is sent, to the person specified hereafter. All such
notices shall be effective upon receipt, it being understood that in case
of a notice sent by telecopy, the date of receipt of the telecopy shall
be taken into account.
Notices to the Sellers: Gerard van Rooijen
Address Kleine Katsweg 34 b
9990 Maldegem
Belgium
Telecopier nr **/32/50/71.49.80
Copy to: Fred Ramser
Address 19824 Peach Ridge Road
Goshen
Indiana, U.S.A
Telecopier nr **/1/219/533-2838
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Notices to the Purchasers: CTB, Inc .
Attn President
Address State Road 15 North
P.O. Box 2000
Milford, IN 46542-2000
Telecopier nr **/1/219/658-3472
Copy to: De Bandt, Van Hecke & Lagae
Attn Paul Van Hooghten, Esq.
Stefaan Deckmyn, Esq.
Address rue Brederode 13
B-1000 Brussels
Belgium
Telecopier nr **/32/2/501.95.77
14.2. This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors and assigns. The Sellers may not,
directly or indirectly, assign or transfer this Agreement or any right,
obligation or interest herein in whole or in part without the prior
written consent of the Purchasers in each instance and unless the
assignee or transferee shall have assumed in writing all the duties and
obligations of the Sellers and furthermore the Sellers shall remain
primarily liable hereunder.
14.3. Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction, shall be ineffective to the extent of such prohibition
or unenforceability without affecting, impairing or invalidating the
remaining provisions hereof or the enforceability thereof. The Parties
shall use their best efforts to negotiate an alternative valid provision
that achieves the original intent of the Parties to the fullest extent
possible and which shall replace the invalid, illegal or unenforceable
provision.
14.4. No failure or delay on the part of any of the Parties in exercising in
whole or in part any right under this Agreement shall operate as a waiver
of, or impair, any such right, the further exercise thereof or the
exercise of any other right. No waiver shall be effective unless given in
writing.
14.5. This Agreement may be amended only by an instrument in writing executed
by duly authorized representatives of the Parties.
14.6. The attachments and Exhibits to this Agreement, and any other document
attached to this Agreement and referred to herein are an integral part of
this Agreement.
14.7. This Agreement together with the agreements referred to in the Agreement
contains the entire agreement of the Parties relating to the subject
matter hereof and supersedes all oral statements and prior writings with
respect thereto.
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<PAGE> 26
14.8. Parties hereto commit themselves not to disclose any information with
respect to the contents of this Agreement and the attached Exhibits to
third parties, unless they are under an obligation to do so by or
pursuant to a legal obligation.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly initialed
on each page and executed in Brussels on November 30, 1998, in [15] originals,
and each of the Parties acknowledges receipt of one original.
THE COMPANY
ROXELL N.V.
By: /s/ Gerard van Rooijen
-----------------------
Gerard van Rooijen, Managing Director
THE SELLERS
Class A Shareholders:
1. Ramser Family
2. Mark Alan Ramser
3. Janet L. Burd Ramser
4. Christine Brubaker Stacey
5. Laura K. Brubaker
All above five parties are hereby represented through proxy by:
/s/ Gerard van Rooijen
- ----------------------
Gerard van Rooijen
- --------------------------------------------------------------------------------
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<PAGE> 27
Class B Shareholder:
/s/ Gerard van Rooijen
- ------------------------
Name: Gerard van Rooijen
Class C Shareholder:
LIVINCO N.V.
By: /s/ Gerard van Rooijen
------------------------
Gerard van Rooijen, Proxy
Class D Shareholders:
1. Etienne Steur
2. Stefaan De Clerck
3. Huguette Vanparrys
4. Danny De Rouck
5. Ronny Dhont
All above five parties are hereby represented through proxy by:
/s/ Gerard van Rooijen
- ------------------------
Gerard van Rooijen
- --------------------------------------------------------------------------------
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<PAGE> 28
THE PURCHASERS
CTB Inc. ROXELL HOLDING N.V.
/s/ J. Christopher Chocola
/s/ J. Christopher Chocola /s/ Michael J. Kissane
- ----------------------------- -----------------------------
by Mr. J. Christopher Chocola by Mr. J. Christopher Chocola
Title: President: CEO and Mr. Michael J. Kissane
Title: Directors
- --------------------------------------------------------------------------------
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EXHIBITS
--------
Exhibit 3.1 Estimated Closing Balance Sheet
(to be provided at the latest on December 15, 1998)
Exhibit 4 Representations and Warranties of the Purchasers
Exhibit 5.(a) Representations and Warranties of the Sellers
Exhibit 5.(b) Disclosure Letter
Exhibit 6.2. Escrow Agreement
Exhibit 8.1.(c) see Enclosure 26 of the Disclosure Letter
Exhibit 9.2.(a) Resignation Letters
Exhibit 9.2.(b) Independent Director Agreements
Exhibit 11.2. Exceptions to Joint and Several Liability of the Sellers
Exhibit 11.3. Schedule of Distribution of Liability of Sellers
- --------------------------------------------------------------------------------
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EXHIBIT 99.3
EXHIBIT 5(a)
The Sellers hereby represent and warrant to the Purchasers that the following
Representations and Warranties pertaining to the Companies are true and correct
on the date of this Agreement and shall survive the date of this Agreement.
The Representations and Warranties shall be qualified only by reference to those
matters specifically disclosed in the Disclosure Letter and shall not apply to
these matters.
Except if stated expressly otherwise, all Representations and Warranties apply
- -mutatis mutandis- to each of Roxell N.V., Roxell Inc. and Roxell Ltda., but not
to V.R. Equipment Ltd., for which specific representations and warranties will
apply. For the purposes of these representations and warranties, "Companies"
means collectively the following companies: Roxell N.V., Roxell Inc. and Roxell
Ltda. For Roxell Inc. some additional specific representations and warranties
according to US law apply.
Every reference to the knowledge, information, awareness or conviction of the
Sellers with respect to any of these Representations and Warranties shall mean
that the Sellers have reviewed, examined and investigated the subject matter of
such Representation and Warranty in the way a diligent and prudent Seller
("bonus pater familias") would have or ought to have done.
I. REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANIES
------------------------------------------------------
1. CORPORATE AND STOCK REPRESENTATIONS
-----------------------------------
1.1. CAPITAL OF THE COMPANIES
------------------------
The registered capital of the Companies is as follows:
Roxell N.V.: BEF 6,796,000, represented by 49,460 bearer shares.
Roxell Inc.: USD 2,000, represented by registered shares numbered from
1 through 2,000, of which 2,000 are owned by Roxell N.V.
Roxell Ltda: 328,950 R$, represented by registered and numbered from 1
through 328,950, of which 263,160 are owned by Roxell N.V.
V.R. Equipment Ltd.: 15,000,000 Rupees, represented by registered
shares and numbered from 1 through 1,500,000, of which 338,000 are
owned by Roxell N.V.
The capital shares of the Companies are duly and validly issued in
compliance with all applicable laws and regulations and fully paid in,
and constitute all of the issued capital shares in the Companies.
The Companies have not issued any other shares, bonds, convertibles,
profit certificates, subscription rights or similar instruments. No
options, warrants, calls, agreements or commitments of any kind
obligating the Companies to issue any equity interests or other stock
exists. The Companies are not obligated or committed to purchase,
redeem or otherwise acquire any of its outstanding shares or options
relating thereto.
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1.2. OWNERSHIP OF THE SHARES OF THE COMPANIES AND OF VR EQUIPMENT LTD.
-----------------------------------------------------------------
The Sellers are on the date hereof the lawful holder and registered
owner of 49,460 shares in the Company, which is the lawful holder and
registered owner of: 2,533 shares in the Company (the shares in the
Company are referred to as the "Shares"), , 2,000 shares in Roxell
Inc., 263,160 shares in Roxell Ltda and 338,000 shares in V.R.
Equipment Ltd. All the above shares are owned free and clear of any
liens, pledges, encumbrances, "usufruit/vruchtgebruik", claims,
options, warrants, restrictions of any kind and nature whatsoever
affecting any of the rights attached to such shares or rights to
transfer the shares.
All transfers of the shares, whereto the Sellers were a party and which
occurred prior to the Closing Date, were effected legally, validly and
in good faith and no claims whatsoever exist or are threatened with
respect to any such transfer.
The Sellers have full legal right, power and authority to enter into
this Agreement and to convey and transfer the Shares to the Purchasers.
The conveyance of the Shares to the Purchasers transfers valid title
thereto including the full right to receive dividends, interim
dividends and other payments with respect to the Shares, free and clear
of any pledges, liens, encumbrances, "usufruit/vruchtgebruik", claims,
options, restrictions affecting any of the rights attached to such
Shares.
Except as set forth in Section 1.2 of the Disclosure Letter, no
shareholders' agreements or similar documents regarding the Shares
exist. The transfer of the Shares to the Purchasers will not constitute
an infringement of any provision of the articles of association of the
Companies, any laws or regulations or any obligation of the Sellers,
whether by contract or otherwise assumed.
For VR Equipment Ltd., only the following specific Representations and
Warranties apply:
(i) VR Equipment Ltd. is in all respects duly incorporated, validly
existing for an indefinite duration, and duly registered under the
applicable law;
(ii) the financial statements and documents of VR Equipment Ltd. are
audited by S.R. Batliboi & Co, members of Ernst & Young
International.
1.3. INTERESTS IN OTHER COMPANIES
----------------------------
The Company has no interest directly or indirectly in any company,
association or business organisation, other than:
- 100 % in Roxell Inc.
- 80 % in Roxell Ltda (Brazil)
- 22.5 % in V.R. Equipment Ltd (India).
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The Sellers have no interest directly or indirectly in any competing
company, association or business organisation other than those set out
in Section 1.3 of the Disclosure Letter.
1.4. INCORPORATION, ORGANIZATION AND EXISTENCE OF THE COMPANIES
----------------------------------------------------------
The Companies are in all respects duly incorporated, validly existing
for an indefinite duration, and duly registered, under the laws of
Belgium or any other applicable law.
The Companies have all requisite corporate power to own their assets
and to carry out their business as it is now being conducted, and said
business has been conducted and is being conducted in conformity with
the Companies' articles of association and all applicable laws and
regulations.
No action is pending or threatened to declare the Companies bankrupt
and the Companies have not filed or commenced any proceedings for
judicial or extra-judicial arrangement or settlement with their
creditors, nor is there any moratorium, liquidation or receivership
procedure pending or threatened against them.
The Companies are not a party to any merger.
1.5. CORPORATE DOCUMENTS
-------------------
The Sellers have delivered to the Purchasers true and complete copies
of the latest version of the articles of association and copies of the
certificate of registration (with latest updates) with the "registre du
commerce/ handelsregister" of the Companies or any similar institution,
in the form set forth in Section 1.5 of the Disclosure Letter.
All accounts, books, ledgers, financial and other records of whatever
kind, of the Companies to be maintained by law and according to good
business practices (including books and records maintained for tax
purposes) are kept at the Companies' offices, have been fully, properly
and accurately maintained and contain due and accurate records of all
matters required to be entered therein, and reflect truly and
accurately all transactions involving the businesses and affairs of the
Companies.
The minute books of the Companies contain complete and accurate records
of all shareholders' and directors' meetings and of all actions taken
by such shareholders and directors. The meetings referred to in such
minute books were duly and validly called and held, and the resolutions
appearing in such minute books were duly and validly adopted. The
signatures appearing on all documents contained in such minute books
are the true signatures of the persons purporting to have signed.
The Sellers have delivered to the Purchasers true and complete copies
of the updated share registers of the Companies, in the form set forth
in Section 1.5 of the Disclosure Letter, or true and complete lists of
the holders of bearer shares of the Companies. The share registers of
the Companies or the list of holders of bearer shares accurately
reflect the number of shares held by each shareholder as well as the
correct identity and address of the latter.
All particulars, resolutions and other documents required to be filed
or published in respect of the Companies have been properly filed or
published.
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1.6. REPRESENTATION AND BANKS
------------------------
Set forth in Section 1.6 of the Disclosure Letter are:
(a) the names and addresses of all persons holding a power of
attorney on behalf of the Companies and the subject, scope and
extent of such power; and
(b) the names and addresses of all banks and other financial
institutions in which the Companies have an account, deposit or
safe deposit box, with the names and addresses of all persons
authorised to draw on said accounts or deposits or who have
access to such boxes. All delegations of power and withdrawal of
same have been duly filed with the Register of Commerce and other
appropriate authorities.
2. ASSETS
------
2.1. OWNERSHIP OF FIXED AND CURRENT ASSETS
-------------------------------------
The Companies are the owner free and clear of all mortgages, pledges,
encumbrances, claims, options, preemption rights, restrictions,
easements ("servitude/ erfdienstbaarheid"), classification as a
monument and commitments of any kind of all the land, buildings,
installations, machinery, interests in other enterprises, accounts
receivable, cash and all other fixed and current assets ("actifs
immobilises et actifs circulants/vaste activa en vlottende activa"),
including but not limited to raw materials, in process products and
finished products that they presently own.
There is no pledge on the assets ("gage sur fonds de commerce/pand op
handelszaak") of the Companies to the benefit of any third party. There
are no assets which are secured by article 20.5 of the Belgian Mortgage
Law of December 16, 1851 ("voorrecht van de onbetaalde verkoper").
2.2. OPERATING CONDITION OF TANGIBLE ASSETS
--------------------------------------
Subject to ordinary wear and tear and obsolescence, the tangible assets
("immobilisations corporelles/materiele vaste activa") of the Companies
are in good operating condition and repair, fit and useable for the
purpose for which they are being utilized. The Sellers know of no
reason why the Purchasers may not anticipate full utilization of said
assets for the balance of the lifetime for which they were designed,
manufactured, built and/or installed.
2.3. INVENTORY
---------
All inventories, i.e. raw materials, in process products, finished
products and returned products, carried by the Companies, and reflected
on the Annual Accounts, the Estimated Closing Balance Sheet and the
Adjusted Closing Balance Sheet, are or will be valued at the lower of
cost or market on a first-in-first-out basis consistent with Belgian
GAAP. The Company has adequate obsolescence reserves to cover inventory
items which have a market value lower than cost.
Except to the extent of inventory reserves reflected in the Estimated
Closing Balance Sheet and the Adjusted Closing Balance Sheet, the items
included in said inventories
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are normal items of inventory suitable and merchantable at customary
prices for the filling of orders in the normal course of business.
2.4. REAL ESTATE
-----------
Set forth in Section 2.4 of the Disclosure Letter is a true, accurate
and complete list of all real estate owned by the Companies. The
Companies own such real estate free and clear of any mortgages,
promises to mortgage; securities, easements, classification as a
monument or any restrictions. The Companies do not own or lease any
real estate other than as set forth in Section 2.4 of the Disclosure
Letter.
3. INTELLECTUAL PROPERTY
---------------------
3.1. LIST OF INTELLECTUAL PROPERTY
-----------------------------
At the latest at the Closing Date, the Sellers will deliver to the
Purchasers in Section 3.1. of the Disclosure Letter a true and complete
list of all trademarks, service marks, trade names, corporate names,
designs and logos, patents and copyrights, whether registered or not,
owned by the Companies, whether used or not, and of all registrations
and applications for registration (the "Proprietary Rights"), and of
all license, distributorship, franchise or other agreements (as a
licensor) relating to these Proprietary Rights.
At the latest at the Closing Date, the Sellers will deliver to the
Purchasers in this same Section 3.1. of the Disclosure Letter also a
true and complete list of all trademarks, service marks, trade names,
corporate names, designs and logos, patents and copyrights, whether
registered or not, licensed by the Companies as a licensee, whether
used or not, and of all registrations and applications for registration
(the "Licensed Rights"), and of all license, distributorship, franchise
or other agreements (as a licensor) relating to the Licensed Rights.
3.2. OWNERSHIP, RIGHT TO USE AND REGISTRATION
----------------------------------------
The Companies are the sole and exclusive owner of, and have the sole
and unrestricted right to use all of the Proprietary Rights . The
Companies have the right to assign any interest or rights held in any
such Proprietary Rights. The Companies and Sellers represent and
warrant that they have obtained in all material respects all rights and
transfers of rights, including from employees, agents, independent
consultants, clients, subcontractors and contractors, in such
Proprietary Rights to their benefit.
All registrable Proprietary rights, Licensed Rights and Intellectual
Property have been duly registered in all material respects with all
appropriate domestic, foreign or international administrative agencies.
Each such registration is current and valid in all material respects
and no cancellation or invalidity proceedings have been initiated or
threatened with respect to any registration.
Each license, distributorship, franchise or other agreements referred
to in paragraph 3.1. is valid, existing and in force in all material
respects, and there has not been, and the Sellers do not know of any
basis for, any claim of breach or default, with respect to such
agreements.
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3.3. RIGHTS OF THIRD PARTIES
-----------------------
The Companies are not infringing upon or otherwise violating the rights
of any third party with respect to any of the Proprietary rights,
Licensed Rights and Intellectual Property. There are no claims or
proceedings pending or threatened, which would challenge the rights of
the Companies in respect of the Proprietary rights, Licensed Rights and
Intellectual Property. No third party is infringing upon or otherwise
violating the rights of the Companies with respect to any of the
Proprietary rights, Licensed Rights and Intellectual Property.
By using the Intellectual Property they use, by pursuing their business
and in any other manner, the Companies and Sellers warrant and
guarantee that they are not infringing upon or otherwise violating the
rights of any third party with respect to any trademarks, service
marks, corporate names and logos, trade names, patents, copyrights,
software rights, licenses and trade secrets. No proceedings have been
instituted or threatened, nor has any claim been made alleging any such
infringement or violation.
4. AGREEMENTS AND COMMITMENTS
--------------------------
4.1. LIST OF AGREEMENTS AND COMMITMENTS
----------------------------------
Set forth in Section 4.1. of the Disclosure Letter is a true and
complete list of all material agreements and commitments of any kind
(other than license agreements related to intellectual property,
insurance policies, labor agreements, contracts with trade unions and
collective bargaining agreements referred to respectively in Sections
3.1., 5.1. and 6.1. of these Representations and Warranties) to which
the Companies are a party or by which they or any of their assets may
be bound. At the latest at the Closing Date, Section 4.1. of the
Disclosure Letter shall also include all distribution agreements and
agency agreements.
The agreements and commitments referred to in this paragraph 4.1.
include, but are not limited to, all agreements with the Sellers, real
property leases as lessor and lessee, equipment rental and leasing,
loans, borrowing facilities, State, regional, local or international
aids and subsidies, mortgages, security or guaranty agreements or
commitments to secure credit to it or to a third party, or to guarantee
obligations of a third party, letters of comfort issued for a third
party or by a third party for its benefit, service or product
guarantees, appointment as a corporate representative of another
corporate entity, service agreements with accountants, lawyers and
other independent consultants, joint venture agreements, agency and
distribution agreements, standard terms of purchase or sale, or terms
of business, agreements relating to the acquisition or disposal of
companies, businesses or fixed assets during the last 3 years and
commitments to enter into agreements or to modify existing agreements.
Section 4.1. of the Disclosure Letter also contains a schedule of the
top twenty customers and the top twenty major suppliers of the Company
indicating materials and/or services supplied or purchased.
For the purposes of this paragraph 4.1., the following agreements or
commitments shall be deemed to be "material":
(a) all agreements and commitments of any kind - other than insurance
contracts, license agreements related to intellectual property,
labor agreements and contracts
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with trade unions and collective bargaining agreements - to which
the Company is a party or by which it or any of its assets may be
bound and which are in excess of BF 1,500,000 and entered into
for a period in excess of 3 months;
(b) all agreements relating to the acquisition or disposal of
companies, businesses or fixed assets during the last three years
in excess of BF 5,000,000.
4.2. ONEROUS OR UNUSUAL COMMITMENTS
------------------------------
To the best of the Sellers' knowledge, the Companies are not a party to
any agreement or commitment, the performance of which by any of them
will have a material adverse effect on their assets or financial
condition. No purchase commitments of the Companies are in excess of
the normal requirements of the business or at an excessive price. There
are no agreements or commitments not made in the ordinary course of
business or which are not of an entirely arm's length nature. There are
no apparent at the time of the signing unusual, abnormal or onerous
agreements or commitments which could be considered as such for any
similar company in the same business.
4.3. REAL PROPERTY LEASES
--------------------
All lease agreements relating to real property to which the Companies
are a lessee are duly registered. The Companies enjoy peaceful and
undisturbed possession under all leases under which it is operating.
None are threatened with suspension or cancellation.
There are no disputes existing or threatened with adjoining land owners
or building owners. The Companies have not agreed to any sub-lease or
assignment of any rights arising under a lease. The leased properties
have not been built or leased, or are not occupied, in violation of any
building, zoning or land use regulations, legal or administrative
provisions, or agreements binding the Companies, from which it would
result that the use of a leased property would or could be affected,
reduced or excluded.
4.4. RESTRICTIONS AND INTERESTS IN COMPETITORS
-----------------------------------------
Except for this Agreement, the Companies are not bound by any
non-competition obligation and the Companies have not entered into any
written or oral agreement, commitment or understanding limiting or
restraining it from carrying out its activities by engaging or
competing, in any business, with any third party.
Neither the Sellers, nor their respective spouses, children or parents,
nor the Companies, nor any of their directors, nor, to the best of the
Sellers' knowledge, any of their officers, employees or agents nor any
Affiliate of the foregoing persons, has any direct or indirect interest
in any competitor of the Companies or in any other person with whom the
Companies do business.
4.5. INSIDER AGREEMENTS
------------------
There is not outstanding any written or oral agreement or arrangement
to which the Companies are a party and in which the Sellers or any of
their present directors, or, to the best of the Sellers' knowledge, any
of their former directors, present officers, employees or agents, or
any of the Sellers' spouses, children or parents, or any Affiliate
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of any of the foregoing persons, are or have been interested, whether
directly or indirectly.
4.6. DEBTS TO AND FROM RELATED PARTIES
---------------------------------
As of the Closing Date, the Companies are not indebted to the Sellers
or to any present director or, to the best of the Sellers' knowledge,
to any former director, present officer, employee or agent of the
Sellers or of the Companies, or to any of the Sellers' spouses,
children or parents, or to any Affiliate of any of the foregoing
persons, other than for payment of salaries and compensation for
services actually rendered to the Companies in the ordinary course of
their business. As of the Closing Date, there are no debts owed to the
Companies by any of the same persons or any Affiliate thereof.
5. INSURANCE
---------
5.1. LIST OF INSURANCE POLICIES
--------------------------
Set forth in Section 5.1. of the Disclosure Letter is a true and
complete list of all insurance policies maintained by the Companies.
5.2. SCOPE OF COVERAGE
-----------------
All the assets of the Companies of an insurable nature are and have at
all material times been insured in amounts representing the full
replacement or reinstatement thereof against fire and other risks
customarily insured against by persons carrying on the same classes of
business as those carried on by the Companies. The Companies are and
have at all material times been adequately covered against such
casualties, risks and contingencies (including, but not limited to,
accident, injury, third party loss and loss of profits), and in such
amounts, types and forms, as are customarily covered by persons
carrying on the same classes of business as those carried on by the
Companies.
5.3. VALIDITY AND ENFORCEABILITY
---------------------------
All of the foregoing insurance policies are currently in full force and
effect and all billed or due premiums have been paid. To the best of
the Sellers' knowledge, nothing has been done or omitted to be done
which would make any insurance policy void, avoidable or non operative.
Neither the Sellers nor the Companies have received any notification of
the cancellation or suspension of any policy or any notification of the
cancellation, suspension or reduction of the guarantee thereunder, or
that any policy will not be renewed. There are no claims, demands or
offsets which impairs the full value of these policies.
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6. EMPLOYEES, CONSULTANTS AND INDEPENDANT CONTRACTORS
--------------------------------------------------
6.1. LABOR AGREEMENTS AND COLLECTIVE BARGAINING AGREEMENTS
-----------------------------------------------------
Set forth in Section 6.1.(a) of the Disclosure Letter is a true and
complete list of all employees of the Companies and Livinco N.V. and a
true and complete description of their names and addresses (and, if
possible, their duties, duration of agreement, possible protected
employee status (trade union representative), age, length of service
and, taking into account any applicable indexation, their current
salary, commissions, remunerations in kind, bonuses, pensions, group
insurance contributions and other fringe benefits). Except as set forth
in Section 6.1.(a) of the Disclosure Letter there are no expatriates in
the Companies and Livinco N.V.
Set forth in Section 6.1.(b) of the Disclosure Letter is a true and
complete list of all collective bargaining agreements entered into by,
or applicable to the Companies and Livinco N.V.. Attached in Section
6.1.(b) of the Disclosure Letter is a true and complete copy of all
such agreements which are not publicly available.
6.2. CONSULTANT AND INDEPENDENT CONTRACTOR AGREEMENTS
------------------------------------------------
Set forth in Section 6.2.(a) of the Disclosure Letter is a true and
complete list of all persons and companies rendering consulting
services to the Companies and Livinco N.V. and of all independant
contractors, subcontractors, management companies or any other person
or company working in an independant capacity for or on behalf of the
Companies and Livinco N.V., including a true and complete description
of their names and addresses (and, if possible, their duties, duration
of the agreements, their current fees, commissions, remunerations in
kind, bonuses, pensions, and other fringe benefits).
6.3. BENEFITS, PENSIONS AND OTHER INSURANCES
---------------------------------------
No benefits or rights other than those described in the individual
labor agreements or mentioned in the pay slips ("loonbrieven") or in
the Companies' group insurance plan, consulting or contractor
agreements or the collective bargaining agreements referred to in
paragraph 6.1.and 6.2. have been granted to the employees, consultants
or contractors. The Companies and Livinco N.V. have not entered into
any additional agreement for the granting of life and group insurance,
and pensions of any kind.
6.4. COMPLIANCE
----------
The Companies and Livinco N.V. have fully complied with all individual
labor and consulting or contractor agreements and all collective
bargaining agreements referred to in paragraph 6.1. and 6.2. All
remunerations and moneys to be paid to the employees or consultants or
contractors of the Companies and Livinco N.V. have been calculated and
paid in conformity with the applicable legal and tax rules. This
includes all holiday pay for the Companies' and Livinco N.V.'s
employees and the prorated part of the year end bonus -if any-, of the
Companies' and Livinco N.V.'s employees, as well as the social security
contributions on the said amounts, and related to the employment of the
said employees, prior to the Closing Date.
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All social security payments and withholding tax payments due at or
prior to the date of this Agreement in connection with said employment
agreements have been made in due time and the Companies and Livinco
N.V. fully complied with all applicable tax and social security
legislation pertaining thereto.
The Companies and Livinco N.V. do not have as of the date of this
Agreement and will not have at any subsequent date any unsatisfied
obligation, whether in the form of a requirement to give notice or
payment of an indemnity in lieu thereof, towards any persons with
regard to the termination of their employment,consulting or contractor
agreement with the Companies and Livinco N.V. prior to the date of
this Agreement.
The Companies and Livinco N.V. are not and have not engaged in any
labor leasing activities ("interimarbeid") without the necessary
permits and licenses.
6.5. LABOR TROUBLES AND STRIKES
--------------------------
There have not been and there are no labor troubles or strikes existing
or threatened, affecting or that would affect adversely the financial
condition, operations, liquidity, assets or prospects of the Companies
and Livinco N.V.
6.6. INCENTIVE SCHEMES
-----------------
The Companies and Livinco N.V. do not have in existence nor are they
proposing to introduce any share incentive scheme, share option scheme,
profit sharing, commissions, bonus packages or other such incentive
schemes for all or any of their directors, employees, consultants or
other third party except for the advantages expressly provided for in
the employment or consulting agreements or mentioned in the pay slips
("loonbrieven") which have been fully disclosed to the Purchasers.
6.7. RETIREMENT
----------
The Companies and Livinco N.V. do not have any obligation of whatever
nature towards any present or former director or employee in
connection with retirement or early retirement.
All obligations of the Companies and Livinco N.V. which are due and
payable with respect to all former and current pension policies and
which are related to the employment of employees or directors prior to
the Closing Date have been fully and finally settled and all
liabilities of the Companies and Livinco N.V. in respect of or in
relation to the accrued pension entitlements of former and current
employees and which are related to the employment prior to the Closing
Date have been properly and duly funded or provided for in the
Accounts.
7. ENVIRONMENTAL MATTERS
---------------------
The Companies have not been subject to any environmental audit, study
or test performed by or on behalf of any administration or governmental
authority and there is no reason for any remedial works or clean-up. No
such authority has given any direction or order to the Companies in
connection with environmental matters.
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The soil, subsoil and groundwater of the land presently and previously
owned or leased by the Companies are not polluted. The Companies have
not caused any soil, subsoil or groundwater pollution in the land owned
or leased by it. Pollution means the presence of substances that might
have an adverse effect on men, public health and/or the environment.
The land and buildings presently and previously owned or leased by the
Companies are and have not been used for the handling, processing,
treatment, storage or disposal of hazardous substances, in violation of
any legislation or regulation pertaining to the use, labelling,
manufacturing, storage, disposal and transport of such substances, or
in a way that could give rise to any liability. No underground tanks or
other underground storage receptacles for those substances are located
in such land or buildings.
There is no asbestos in the buildings owned or leased by the Companies.
The Companies have not disposed of, or arranged for the disposal of,
any waste, or drained any waste water, or pumped any surface water or
groundwater, nor carried out any other activity subject to a permit,
authorization or notification obligation in violation of any
legislation or regulation pertaining to the disposal of waste and
wastewater, to the pumping of groundwater or surface water, or of any
legislation or regulation that subjects the performance of activities
to a permit, authorization or notification obligation, or in a way that
could give rise to any liability.
8. AUTHORIZATIONS, DEFAULT AND LITIGATION
--------------------------------------
8.1. AUTHORIZATIONS
--------------
The Companies have all proper administrative or other licenses,
permits, certificates, consents, approvals and other authorizations
required for the conduct of its activities in the places and in the
manner in which such activities are presently carried out by it,
including, but not limited to, building and operating permits, export
and import licenses, water intake, sewer outlets and discharges.
A list of all such authorizations is attached in Section 8.1. of the
Disclosure Letter.
The Companies are operating in conformity with all conditions imposed
by such authorizations.
No such authorization has expired before the date of this Agreement or
will expire before the end of term for which they have been delivered,
and none are threatened with suspension, modification, revocation or
cancellation nor will be affected by the execution and delivery of this
Agreement or the consummation of the transactions contemplated herein.
To the extent necessary, requests for renewal of such authorization
have been timely filed.
No such authorization requires in order to be maintained and to remain
valid any notification prior or after the execution and delivery of
this Agreement.
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The Companies have made all investments necessary to maintain its
activities in compliance with the licenses, permits, certificates,
consents, approvals and other authorizations.
The Companies have no reason to believe that such licenses, permits,
certificates, consents, approvals and other authorizations (A) will not
be renewed, (B) will be renewed under terms that could reasonably be
expected to have an adverse effect on the Companies.
8.2. COMPLIANCE WITH LAWS
--------------------
To the best of the Sellers' knowledge, the Companies have complied with
all applicable laws, regulations, court decisions, arbitration awards
and other legal requirements affecting their business and operations in
each jurisdiction in which they do business.
To the best of the Sellers' knowledge, no part of the business and
operations of the Companies is threatened by published or announced
changes in such legal requirements.
No agreement, commitment or arrangement to which the Companies are a
party infringes Belgian or EC competition law and in particular, but
without prejudice to the generality of the foregoing, Articles 85 and
86 of the Treaty establishing the European Economic Community or any
legislative or administrative act issued thereunder.
To the best of the Sellers' knowledge, the Companies have not, directly
or indirectly, paid or delivered any fees, commissions or other sums of
money or items of property however characterized to any finders,
agents, customers, government officials or other parties, in the United
States or in any other country, which in any manner are related to the
business or operations of the Companies, and which have been illegal
under any federal, state or local laws of the United States, including,
without limitation, the U.S. Foreign Corrupt Practices Act, or any
other country or territory having jurisdiction over any or all of the
Companies. The Companies have not participated, directly or indirectly,
in any boycotts or similar practices, including, without limitation,
the Arab Boycott of Israel.
8.3. COMPLIANCE WITH AGREEMENTS
--------------------------
To the best of the Sellers' knowledge, all material agreements of any
kind to which the Companies are a party or by which they or any of
their assets may be bound are valid, binding and enforceable in
accordance with their terms. To the best of the Sellers' knowledge,
they have been fully complied with by the parties thereto. To the best
of the Sellers' knowledge, there is no breach or default by any of the
parties thereto which has not been waived and no event has occurred
which, with notice or lapse of time or both, would constitute such a
breach or default.
8.4. LITIGATION
----------
No claim, investigation, lawsuit or similar proceeding is existing, on
request from or against the Companies, nor, to the best of the
Sellers' knowledge, threatened against the Companies, before any
judicial or administrative court, arbitrage tribunal or any official
authority. All claims, investigations, lawsuits or similar proceedings
set forth in Section
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<PAGE> 13
8.4 of the Disclosure Letter are fully reflected or adequately
reserved against in the Annual Accounts and the Estimated Closing
Balance Sheet.
To the best of the Sellers' knowledge, there are no circumstances or
events or facts arisen prior to the date of this Agreement which could
give rise to such claims, investigations, lawsuits or similar
proceedings.
8.5. EFFECT OF THIS AGREEMENT
------------------------
The execution and delivery of this Agreement by the Sellers and the
consummation of the transactions contemplated herein will not result in
or constitute any of the following:
(a) a default or an event that would be a default, breach or
violation of the charter of the Sellers or the Companies or of
any agreement or commitment of any kind to which the Companies,
the Sellers are a party or by which it or any of its assets may
be bound;
(b) an event that would result in the termination of any agreement of
the Companies or that would permit any party to terminate any
agreement or to accelerate the maturity of any indebtedness or
other obligation of the Companies;
(c) the creation or imposition of any mortgage, charge or other
encumbrance on any of the assets of the Companies;
(d) to the best of the Sellers' knowledge, an event that would permit
any domestic, foreign, international or supranational
jurisdiction or regulatory body to suspend, modify, revoke or
cancel the valid transfer of the Shares as contemplated by this
Agreement or any of the authorizations referred to in paragraph
8.1. of this Agreement, to impose any restrictions on the
Purchasers or on the Companies or any of their assets and
activities;
(e) to the best of the Sellers' knowledge, a violation of any
domestic, foreign, international or supranational applicable laws
and regulations, court decisions, arbitrage awards and other
legal requirements;
(f) to the best of the Sellers' knowledge, an event that would
jeopardize the continued legal existence and normal business
operations of the Companies in any manner whatsoever.
8.6. AUTHORITY TO ENTER INTO THIS AGREEMENT
--------------------------------------
The Sellers have the right, corporate power, capacity and authority to
enter into this Agreement and to perform and consummate the
transactions contemplated therein.
No prior authorization, consent or approval of, or notification to, any
other person or any domestic, foreign, international or supranational
jurisdiction or regulatory body or any workers' council or union is
required prior or after the execution and delivery of this Agreement,
under any agreement, law, regulation court decision, arbitrage award or
other legal requirement.
The execution and delivery of this Agreement has been duly authorized
by the Sellers's boards of directors and no further corporate action is
necessary. All persons who execute
13
<PAGE> 14
this Agreement and the Disclosure Letter and all attachments,
schedules, financial statements and other documents delivered on
behalf of the Sellers have been duly authorized by all necessary
corporate action of the Sellers. Attached in Section 8.6. of the
Disclosure Letter is a true and complete copy of all supporting
documents.
8.7. VALIDITY AND ENFORCEABILITY OF THIS AGREEMENT
---------------------------------------------
This Agreement is valid, binding upon the Sellers, and enforceable
against the Sellers in accordance with its terms by the Purchasers.
8.8. BROKERS
-------
All negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by the Purchasers directly
with the Sellers without the intervention of any other Person on behalf
of the Sellers in such manner as to give rise to any valid claim by any
Person against the Purchasers and the Companies or any affiliate for a
finder's fee, brokerage commission or similar payment.
9. FINANCIAL STATEMENTS
--------------------
9.1. REFERENCED FINANCIAL STATEMENTS
-------------------------------
Attached in Section 9.1. of the Disclosure Letter are the audited
consolidated financial statements of the Company showing the financial
situation of the Companies as per October 31, 1995, 1996 and 1997, as
certified by the Companies' statutory auditors
("commissaires-reviseurs/commissaris-revisor") (the "Annual
Accounts").
In Exhibit 3.1 to the Agreement, the unaudited estimated consolidated
financial statements of the Company showing the financial situation of
the Companies as per the Closing Date, drafted in accordance with
Article 3.1 of the Agreement (the "Estimated Closing Balance Sheet")
will be attached.
The Annual Accounts of the Companies have been timely deposited in the
form as required by Belgian or any other applicable law with the
competent authorities.
9.2. ACCOUNTS WARRANTY
-----------------
The Financial Statements of the Company, on the basis of which the sale
referred to herein is made, have been prepared in accordance with (i)
Belgian Generally Accepted Accounting Principles ("GAAP") and (ii)
prior years accounting principles, estimates, allowances and valuation
rules of the Company consistently applied on a going concern basis, and
truly and accurately reflect the financial condition and results of
operations of the Companies on the dates indicated.
The financial records and books of account are complete and properly
and accurately reflect the business of the Companies.
14
<PAGE> 15
9.3. VALUATION OF FIXED AND CURRENT ASSETS
-------------------------------------
The value attributed to each fixed and current asset ("actifs
immobilises et actifs circulants/vaste activa en vlottende activa") of
the Companies does not exceed the current market value thereof as at
the respective dates of the Financial Statements. The rate of
depreciation applied, when appropriate, to each fixed asset is adequate
to write down the value of such fixed asset to its net realizable value
as at the end of its useful working life.
9.4. ACCOUNTS RECEIVABLE
-------------------
All accounts receivable and all other receivables reflected on the
Closing Balance Sheet are good and collectible within normal payment
terms after the date of this Agreement in the currency in which they
are billed or due. They are not and, to the best of the Sellers'
knowledge, will not be subject to a valid defense, counterclaim or
offset.
All doubtful accounts have been duly provisioned in accordance with (i)
Belgian Generally Accepted Accounting Principles ("GAAP") and (ii)
prior years accounting principles, estimates, allowances and valuation
rules of the Company consistently applied on a going concern basis.
9.5. OUTSTANDING INDEBTEDNESS
------------------------
Except for Debt disclosed in the Annual Accounts and the Closing
Balance Sheet, the Companies do not have any such liabilities or
obligations or are not directly or indirectly liable or obligated in
any way to guarantee or assume any such debt or obligation of any
person.
The Sellers have no reasonable grounds to know of any basis for the
assertion against the Companies of any liability, obligation or claim
not fully reflected or reserved against in the Annual Accounts and the
Closing Balance Sheet.
9.6. PRODUCTS LIABILITY
------------------
The Sellers verify the actual known complaints of products liability on
a regular basis with their distributors and resellers. To the Sellers'
knowledge there are no facts or events which have occurred forming the
basis for any claim against the Companies for products liability,
whether in tort or strict liability or on account of any express or
implied warranty, and all reserves therefor on the Annual Accounts and
the Closing Balance Sheet are adequate.
10. TAXES
-----
10.1. The tax liabilities of the Companies have been examined by and/or
reported to the appropriate taxing authorities and are closed by
applicable statutes and finally determined for all taxes of any kind
and all taxable years through and including the year ended October 31,
1993.
10.2. The Companies and Livinco N.V. have fulfilled all material obligations
with respect to all national, local and other domestic or foreign, both
direct or indirect taxes (including
15
<PAGE> 16
income taxes, registration duties, real estate taxes, customs duties,
etc.) of any nature whatsoever, including their filing obligations and
the payment of such taxes, duties and levies of any nature whatsoever.
10.3. The Companies and Livinco N.V.:
(a) have timely filed all federal, state, national, local and other
domestic or foreign tax returns, reports and declarations, required
to be filed with respect to taxes, both direct and indirect
(including, but not limited to income taxes, registration taxes,
real and personal property taxes, customs duties and parafiscal,
social security payments and similar charges) in conformity with
all applicable laws and regulations, and such returns, reports and
declarations are true and accurate in all material respects;
(b) have timely paid all such taxes, duties, levies, charges,
assessments, prepayments, withholding taxes, tax increases,
penalties and interests, related to all earnings, activities, acts,
omissions, events or facts which occurred in any tax period up to
the Closing Date, due to or claimed to be due by all national,
local and other authorities, and there is no further liability for
any such taxes, assessments, prepayments and withholding taxes, and
no interest or penalties accrued or accruing with respect thereto,
except as has been fully reserved for in the Financial Statements;
(c) have not executed or filed with any tax and social security
authority any agreement extending the period of filing of any tax
return, report or declaration or the period of assessment or
collection of any taxes or charges; and
(d) have made full provisions for taxes not yet due and attributable
to all periods ended on or before the date of this Agreement, where
allowed pursuant to Belgian Generally Accepted Accounting
Principles; and
(e) have filed timely and correctly all protests, requests for relief,
reimbursement of taxes to which the Companies could be legally
entitled.
10.4. There are no tax liens or mortgages on any asset of the Companies and
Livinco N.V. There are no law suits, proceedings, investigations or
claims initiated or pending against the Companies and Livinco N.V.
with respect to taxes of any nature and there is no basis for such law
suits, proceedings, investigations or claims. No relief (by way of
deducting, reduction, set-off, exemption or otherwise) from, against
or in respect of any taxation or charge has been claimed by or given
to the Companies and Livinco N.V. which could be withdrawn, postponed,
restricted or otherwise lost as a result of any act, omission, event
or circumstance arising or occurring at any time after the date of
this Agreement. All deferred tax liabilities of the Companies and
Livinco N.V., if any, are reflected in the Financial Statements and
the respective amounts have been fully reserved for.
10.5. The Companies and Livinco N.V. have not entered into, nor are, nor have
been a party to, nor otherwise have been involved in any scheme or
arrangement designed wholly or partly for the purpose of unlawfully
avoiding taxes and have not unlawfully invoked an exemption or
reduction of tax.
10.6. Set forth in Section 10.6. of the Disclosure Letter is a list and
description of the tax carry-forward losses ("pertes
recuperables/aftrekbare bedrijfsverliezen") and investment credits
("deductions pour investissements/investeringsaftrek") available to the
Companies, which are admitted by the tax authorities.
16
<PAGE> 17
11. ABSENCE OF CHANGES
------------------
11.1. Since the last day of the period covered by the Annual Accounts and up
to the Signing Date:
(a) there has not been any change in the capitalization, financial
condition, operations, liquidity, assets, rights, liabilities,
and prospects of the Companies except in their ordinary course of
business and no such change is threatened or anticipated;
(b) the Companies have carried out their business as a bonus pater
familiae and so as to maintain the same as a going concern and
have not otherwise entered into, carried out or been involved with
any contracts or disposed of any or jeopardised any assets or
increased any liability;
(c) the Companies have not distributed, declared or paid any dividends
or "tantiemes", or otherwise distributed or taken corporate action
to distribute any additional funds to directors, shareholders or
holders of other stock;
(d) no material contract, liability or commitment (whether in respect
of expediture or otherwise) has been entered into by the
Companies which is of a long term (i.e. in excess of 12 months)
or of an unusual (i.e. not in the ordinary course of business of
the Companies) nature;
(e) the Companies have not disposed of or agreed to dispose any
assets except in the ordinary course of business;
(f) no debtor has been released by the Companies on terms that it
pays less than the book value of its debt and no debt owing to
the Companies has been deferred, subordinated or written off or
proven to any extent irrecoverable;
(g) the Companies have not made any change in the numbers of their
senior managers, directors or independant consultants nor in the
remuneration, benefits or other terms of employment of their
senior managers, directors or independant consultants;
(h) the businesses of the Companies have not been affected by the
loss of any important customer or source of supply, and the
Sellers are not aware of any fact likely to give rise to any such
effect whether before or after the Closing Date;
(i) there has not been by the Companies any investment made in the
debt or equity of another entity;
(j) there has not been any material (x) change in any investment,
accounting, tax accounting, financial reporting, inventory,
credit, allowance or tax practice, election or policy of the
Companies; (y) change in any method of calculating any bad debt,
contingency or other reserve of the Companies or any subsidiary
for accounting, financial reporting or tax purposes, or any
change in the fiscal year of the Companies or (z) decrease in
selling prices or increase of purchase prices.
11.2. Without prejudice to Section 11.1, as of the Signing Date and up to the
Closing Date:
(a) there will not be, as a result of any action and/or omission of
the Sellers, any change in the capitalization, financial
condition, operations, liquidity, assets,
17
<PAGE> 18
rights, liabilities, and prospects of the Companies except in
their ordinary course of business and no such change is threatened
or anticipated;
(b) the Companies will carry out their business as a bonus pater
familiae and so as to maintain the same as a going concern and
will not otherwise enter into, carry out or be involved with any
contracts or dispose of any or jeopardise any assets or increase
any liability;
(c) the Companies will not distribute, declare or pay any dividends
or "tantiemes", or otherwise distribute or take corporate action
to distribute any additional funds to directors, shareholders or
holders of other stock;
(d) no material contract, liability or commitment (whether in respect
of expediture or otherwise) will be entered into by the Companies
which is of a long term (i.e. in excess of 12 months) or of an
unusual (i.e. not in the ordinary course of business of the
Companies) nature;
(e) the Companies will not dispose of or agree to dispose any assets
except in the ordinary course of business;
(f) no debtor will be released by the Companies on terms that it pays
less than the book value of its debt and no debt owing to the
Companies will be deferred, subordinated or written off or proven
to any extent irrecoverable;
(g) the Companies will not make any change in the numbers of their
senior managers, directors or independant consultants nor in the
remuneration, benefits or other terms of employment of their
senior managers, directors or independant consultants;
(h) as a result of any action and/or omission from the Sellers, the
businesses of the Companies will not be affected by the loss of
any important customer or source of supply, and the Sellers are
not aware of any fact which is likely to give rise to any such
effect whether before or after the Closing Date;
(i) there will not be by the Companies any investment made in the
debt or equity of another entity;
(j) there will not be any material (x) change in any investment,
accounting, tax accounting, financial reporting, inventory,
credit, allowance or tax practice, election or policy of the
Companies; (y) change in any method of calculating any bad debt,
contingency or other reserve of the Companies or any subsidiary
for accounting, financial reporting or tax purposes, or any
change in the fiscal year of the Companies or (z) decrease in
selling prices or increase of purchase prices.
12. SUBSIDIES AND PREMIUMS
----------------------
Nothing has occurred and the Companies have not done or agreed to do
anything as a result of which either (i) any subsidy or grant paid to
the Companies is or may be liable to be refunded in whole or in part or
(ii) any such subsidy or grant for which application has been made by
them will or may not be paid or may be reduced. The sale of the Shares
as such contemplated by this Agreement will not require the
reimbursement of or otherwise jeopardise the Companies entitlement to
benefit from any subsidies or grants in accordance with the terms under
which they were granted to the Companies.
18
<PAGE> 19
13. YEAR 2000
---------
Concerning the year 2000 no problems will arise with regard to the
software developed, installed, modified or otherwise taken care of by
the Companies which might result in claims against the Companies,
except for software made by third parties. Sellers are not aware of any
such problems in such software made by third parties. Sellers are not
aware of any such problems affecting the businesses of the Companies or
any material customer or supplier of any of the Companies.
14. DATABASE
--------
The Companies are in full compliance with the law of December 8, 1992
on the Protection of Privacy with regard to the Processing of Personal
Data and its implementing Royal Decrees.
15. INFORMATION
-----------
15.1. GENERAL
-------
All information in written or documentary form which has been provided
by the Sellers and/or their advisers or agents to the Purchasers or its
advisers or agents in the course of the negotiations leading to the
Agreement, was when given and is, per the date hereof, true complete
and accurate and not misleading in any respect.
15.2. EXHIBITS
--------
The facts set out in the Exhibits, including the Disclosure Letter and
its attachments, are true complete and accurate in all respects,
subject to the qualifications and limitations set out in the Disclosure
Letter.
15.3. DISCLOSURE
----------
There are no facts relating to the Companies or their business which
are material for disclosure to intending Purchasers thereof which have
not been disclosed in writing to the Purchasers or which having been
disclosed, would cause the Purchasers not to enter into this Agreement.
II. SPECIFIC ADDITIONAL REPRESENTATIONS AND WARRANTIES REGARDING ROXELL INC.
------------------------------------------------------------------------
16. US TAX MATTERS
--------------
16.1. All federal, state, local and foreign tax returns and tax reports
required to be filed by or with respect to Roxell Inc. have been duly
filed. All taxes (including interest, penalties and related costs) with
respect to Roxell Inc. for all taxable periods ending on or prior to
the Closing Date have been paid, except:
19
<PAGE> 20
(a) to the extent of reserves for taxes (other than deferred taxes)
reflected on the Financial Statements less payments of such taxes
on or prior to the Closing Date and
(b) for such taxes (other than deferred taxes) that are provided for
in the books and records of Roxell Inc. for the period beginning
immediately following the date of the Financial Statements and
ending on the Closing Date but only to the extent that such taxes
arise from taxable income resulting from the day to day sales and
operations of Roxell Inc. occurring during such period and not
taxes arising from other transactions or events, including,
without limitation, any taxes on income resulting from
transactions contemplated by this Agreement and any taxes
relating to prior periods;
provided, however, that the reserve set forth in clause (a) above and
the provision for taxes set forth in clause (b) above shall be reduced
for the tax effect of any deductions relating to the exercise or
cancellation of any stock options.
No issues have been raised, either orally or in writing, (and are
currently pending) by any foreign, federal, state or local taxing
authority in connection with any of the returns or reports referred to
in this Section 16.1. No waivers of statutes of limitations as to any
tax matters are currently in effect with respect to Roxell Inc.
16.2. All tax returns filed by Roxell Inc. were true and correct in all
material respects as of the date on which they were filed.
Complete copies of all federal, state and local income tax returns for
Roxell Inc. that have been filed with respect to taxable periods for
which the statute of limitations period has not run have been delivered
to the Purchasers.
Roxell Inc. has provided to the Purchasers all revenue agent's reports
and other written assertions by governmental authorities of
deficiencies or other liabilities for taxes of Roxell Inc. with
respect to past periods for which the statute of limitations period
has not run.
All amounts required to be collected or withheld by Roxell Inc. with
respect to taxes have been duly collected or withheld and any such
amounts that are required to be remitted to any taxing authority have
been duly remitted.
16.3. No extension of time within which to file any tax return that related
to Roxell Inc. has been requested, which return has not since been
filed.
There are no tax rulings, requests for rulings, or closing agreements
to which Roxell Inc. is a party or is subject which could affect the
liability for taxes for any period after the Closing Date.
All federal income tax returns of Roxell Inc. with respect to taxable
periods through the year ended September 30, 1993 have been examined
and closed or are returns with respect to which the applicable statute
of limitations period has expired without extension or waiver.
No power of attorney has been granted by Roxell Inc. with respect to
any matter relating to taxes of Roxell Inc. which is currently in
force.
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<PAGE> 21
16.4. Roxell Inc. has not filed a consent under Section 341(f) of the
Internal Revenue Code (the "CODE") or any comparable provision of state
revenue statutes. Roxell Inc. has made all payments of estimated taxes
required to be made under Section 6655 of the Code and any comparable
provisions of state, local or foreign law. Any adjustment of taxes of
Roxell Inc. made by the Internal Revenue Service in any examination
which is required to be reported to the appropriate state, local or
foreign taxing authorities has been reported, and any additional taxes
due with respect thereto have been paid.
16.5. Roxell Inc. has not agreed or are not required to include in income
any adjustment pursuant to Section 481(a) of the Code (or similar
provisions of other laws or regulations) by reason of a change in
accounting method.
No excess loss accounts exist with respect to Roxell Inc. There is no
deferred gain or loss arising from deferred intercompany transactions
between Roxell Inc. and its subsidiaries. Roxell Inc. is not a party to
any agreement that would result by its terms in the payment of a
non-deductible "excess parachute payment" within the meaning of Section
280G of the Code. The amount of deferred tax assets and liabilities
reflected on the Financial Statements are determined in accordance with
GAAP (subject, in the case of Estimated Closing Balance Sheet, to
normal year-end adjustments consistent with past practice).
16.6. For the purpose of this Agreement, any federal, state, local or foreign
income, franchise, sales, use, transfer, payroll, unemployment, Social
Security, personal property, occupancy or other tax, levy, impost,
imposition, assessment or similar charge, together with any related
addition to tax, interest or penalty thereon, is referred to as a
"tax".
17. US EMPLOYEE MATTERS
-------------------
17.1. EMPLOYEE BENEFIT PLANS
----------------------
Section 17.1 of the Disclosure Letter contains a complete list of
Roxell Inc.'s employee benefit plans ("Plans") consisting of each:
(i) "employee welfare benefit plan", as defined in Section 3(1) of
the Employee Retirement Income Security Act of 1974 ("ERISA"), to
which Roxell Inc. contributes or is required to contribute,
including each multi-employer welfare plan ("Welfare Plan"), and
sets forth the amount of any liability of Roxell Inc. for
payments more than thirty days past due with respect to each
Welfare Plan as of the Closing Date;
(ii) "multi-employer pension plan", as defined in Section 3(37) of
ERISA, to which Roxell Inc. (or any entity which is a member of a
"controlled group or corporations" with or is under "common
control" with Roxell Inc. as defined in Section 414(b) or (c) of
the Internal Revenue Code of 1986 as amended ("Common Control
Entity") has contributed or been obligated to contribute at any
time after September 25, 1980 ("Multi-employer Plan");
(iii) "employee pension benefit plan", as defined in Section 3(2) of
ERISA, (other than a Multi-employer Plan) to which Roxell Inc. or
any Common Control Equity contributes or is required to
contribute ("Pension Plan"); and
21
<PAGE> 22
(iv) deferred compensation plan, bonus plan, stock option plan,
employee stock purchase plan and any other employee benefit plan,
agreement, arrangement or commitment, other than normal payroll
practices and policies concerning holidays, vacations and salary
continuation during short absences for illness or other reasons,
maintained by Roxell Inc.
17.2. PENSION PLANS
-------------
The funding method used in connection with each Pension Plan which is
subject to the minimum funding requirements of ERISA is acceptable and
the actuarial assumptions used in connection with funding each such
plan, in the aggregate, are reasonable. The assets of each Pension Plan
are sufficient to discharge all liabilities under such plan, on an
ongoing basis and on a termination basis, and there is no "accumulated
funding deficiency", as defined in Section 302(a)(2) of ERISA, with
respect to any plan year of any such plan. Neither Roxell Inc. nor any
Common Control Entity has any liability for unpaid contributions with
respect to any Pension Plan.
(i) Each Pension Plan and each related trust agreement, annuity
contract or other funding instrument is qualified and tax-exempt
under the provisions of Code Sections 401(a) (or 403(a) as
appropriate) and 501(a).
(ii) To the best of the Sellers' knowledge, each Pension Plan and each
related trust agreement, annuity contract or other funding
instrument complies currently, and has complied at all times in
the past, both as to form and in operation, with the provisions
of applicable Federal law, including the Code and ERISA.
(iii) Roxell Inc. has paid all premiums (and interest charges and
penalties for late payment, if applicable) due the Pension
Benefit Guaranty Corporation ("PBGC") with respect to each
Pension Plan for each plan year thereof for which such premiums
are required. To the best of the Sellers' knowledge, there has
been no "reportable event" (as defined in Section 4043(b) of
ERISA and the PBGC regulations under such Section) with respect
to any Pension Plan. No liability to the PBGC has been incurred
by Roxell Inc. or any Common Control Entity on account of the
termination of any Pension Plan.
No filing has been made by Roxell Inc. or any Common Control
Entity with PBGC, and no proceeding has been commenced by the
PBGC, to terminate any Pension Plan. NeitherRoxell Inc. nor any
Common Control Entity has, at any time, (a) ceased operations at
a facility so as to become subject to the provisions of Section
4062(e) of ERISA, (b) withdrawn as a substantial employer so as
to become subject to the provisions of Section 4063 of ERISA, or
(c) ceased making contributions on or before the Closing Date to
any Pension Plan subject to Section 4064(a) of ERISA to which
Roxell Inc. or any Common Control Entity made contributions
during the five years prior to the Closing Date.
17.3. MULTI-EMPLOYER PLANS
--------------------
Neither Roxell Inc. nor any Common Control Entity has, at any time,
withdrawn from a Multi-employer Plan in a "complete withdrawal" or a
"partial withdrawal" as defined in ERISA Section 4203 and 4205,
respectively.
22
<PAGE> 23
17.4. PROHIBITED TRANSACTIONS
-----------------------
Neither Roxell Inc. nor, to the Sellers' knowledge after due inquiry,
any Plan fiduciary of any Welfare Plan or Pension Plan has engaged in
any transaction in violation of Section 406(a) or (b) of ERISA or any
"prohibited transaction", as defined in Section 4975(c)(1) of the Code,
for which no exemption exists under Section 4975(c)(2) or 4975(d) of
the Code.
17.5. COPIES OF RELEVANT PLAN DOCUMENTS
---------------------------------
True and complete copies of each of the following documents have been
delivered by Roxell Inc. to the Purchasers:
(i) each Welfare Plan and each Pension Plan, related trust
agreements, annuity contracts or other funding instruments,
(ii) each plan, agreement, arrangement and commitment referred to in
Sections 2.2(m) and (n), and complete descriptions of any such
plan which is not in writing,
(iii) the most recent determination letter issued by the Internal
Revenue Service with respect to each Pension Plan,
(iv) Annual Reports on Form 5500 Series required to be filed with any
governmental agency for each Welfare Plan and each Pension Plan
for the two most recent plan years and
(v) all actuarial reports prepared for the last three years for each
Pension Plan.
17.6. VALIDITY AND ENFORCEABILITY OF PLANS
------------------------------------
To the best of the Sellers' knowledge and after due examination , each
Welfare Plan, Pension Plan, related trust agreement, annuity contract
or other funding instrument and each plan, agreement, arrangement and
commitment referred to in Section 2.2(m) and (n) is legally valid and
binding and in full force and effect.
17.7. PAYMENTS TO RETIREES
--------------------
Neither Roxell Inc. nor any Welfare Plan has any obligation to make
any payment to or with respect to any former or current employee of
Roxell Inc. pursuant to any retiree medical benefit or other Welfare
Plan.
17.8. LITIGATION UNDER PLANS
----------------------
Neither Roxell Inc. nor any Plan is a party to any litigation relating
to, or seeking benefits under, any Plan.
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17.9. EMPLOYMENT AGREEMENTS
---------------------
Roxell Inc. is not a party to any employment, severance or similar
agreements.
17.10. LABOR MATTERS
-------------
There are no controversies pending between Roxell Inc. and any of its
employees or officers. Roxell Inc. is not subject to any collective
bargaining agreements and, to the Sellers' knowledge after due
inquiry, there is no current prospect for any union election.
18. US ENVIRONMENTAL MATTERS
------------------------
18.1. Roxell Inc. is in compliance in all material respects with all
applicable Environmental Laws (as defined below), and for the past five
(5) years has been in such compliance, and to the Sellers' knowledge
there is no reason to believe that circumstances exist which could
prevent or interfere with (A) continued compliance in all material
respects by Roxell Inc. with all applicable Environmental Laws after
the Closing Date, or (B) Environmental Laws that are reasonably likely
to become applicable to Roxell Inc. after the Closing Date and that
could individually or in the aggregate, have a Material Adverse Effect
after the Closing Date if adopted.
18.2. Roxell Inc. holds all material Environmental Permits (as defined
bellow) necessary to conduct its operations as they are currently
conducted; Section 18.2. of the Disclosure Letter includes a true and
complete list of all such Environmental Permits and their expiration
dates, and Roxell Inc. has no reason to believe that such permits (A)
will not be renewed, or (B) will be renewed under terms that could
reasonably be expected to have an adverse effect on Roxell Inc.
18.3. There are no Materials of Environmental Concern (as defined below)
present at, and no Materials of Environmental Concern are or have been
in any way released or threatened to be released from, any Roxell Inc.
Property (as defined below), former Roxell Inc. Property, or as a
result of present or former operations of Roxell Inc. or any
predecessor entity (including without limitation the disposal of
Materials of Environmental Concern at any location other than a Roxell
Inc. Property or former Roxell Inc. Property), that could reasonably be
expected to be in material violation of or otherwise to give rise to
material liability of Roxell Inc. under any Environmental Law.
18.4. No reports of any kind have been made to or required by any
governmental authority pursuant to any Environmental Law concerning
spills or any other releases of any kind at, or in any way from, any
Roxell Inc. Property, former Roxell Inc. Property, or as a result of
present or former operations of Roxell Inc. or any predecessor entity,
for which spills, releases, or reports thereof Roxell Inc. may be
liable under any Environmental Law; true and complete copies of all
written reports concerning such spills and other releases have been
provided or made available to the Purchasers.
18.5. None of the following are or have been on, under, in or at any Roxell
Inc. Property, or to the Sellers' knowledge after due inquiry, any
former Roxell Inc. Property: (A) underground or aboveground storage
tanks containing Materials of Environmental
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Concern; (B) polychlorinated biphenyls; (C) asbestos or
asbestos-containing materials; (D) septic tanks, septic fields,
dry-wells, or similar structures; (E) lagoons or impoundments; or
other bodies of water to which Materials of Environmental Concern may
have been discharged; (F) landfills or dumping areas; or similar
locations where Materials of Environmental Concern may have been
placed.
18.6. Roxell Inc. has not received any Environmental Claim (as defined
below), and to the Sellers' knowledge after due inquiry, no
Environmental Claim has been threatened against Roxell Inc. by any
person.
18.7. Roxell Inc. has not entered into, agreed to, nor is Roxell Inc.
otherwise subject to any judgement, decree, order or similar
requirement under any Environmental Law, nor to the Sellers' knowledge
after due inquiry is any such judgment, decree, order or requirement
being negotiated that may obligate or affect Roxell Inc.
18.8. Roxell Inc. has not assumed or retained, contractually or by
operation of law, any liabilities or obligations of other persons,
contingent or otherwise, in connection with any Environmental Law.
18.9. There are no past or present actions, activities, events, conditions or
circumstances, including without limitation the release, threatened
release, emission, discharge, generation, treatment, storage or
disposal of Materials of Environmental Concern, that could reasonably
be expected to give rise to any material liability or obligation of
Roxell Inc. under any Environmental Laws. None of the matters set forth
in the Disclosure Letter, or any aggregation thereof, could reasonably
be expected to have a Material Adverse Effect.
18.10. True and complete copies of all reports, studies, assessments, audits,
and similar documents in the possession or control of Roxell Inc., the
Company or any Seller that address any issues of actual or potential
noncompliance in any material respect with, or actual or potential
material liability under, any Environmental Laws that may affect Roxell
Inc. have been provided to the Purchasers prior to the signing hereof.
18.11. As used in this Section 18:
"ENVIRONMENTAL CLAIM" means any written or oral notice, claim, demand,
action, suit, complaint, proceeding or other communication by any
person alleging liability or potential liability (including without
limitation liability or potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resource damages,
property damage, personal injury, fines or penalties) arising out of,
relating to, based on or resulting from (i) the presence, discharge,
emission, release or threatened release of any Materials of
Environmental Concern at any location, (ii) circumstances forming the
basis of any violation or alleged violation of any Environmental Law or
Environmental Permit, or (iii) otherwise relating to obligations or
liabilities under any Environmental Law.
"ENVIRONMENTAL LAWS" means all foreign (to the extent applicable),
federal, state and local statutes, rules, regulations, ordinances,
orders, judgements, decrees and common law relating in any manner to
contamination, pollution, or protection of human health or the
environment, including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act, the Solid Waste
Disposal Act, the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the ENDANGERED
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Species Act, the National Environmental Protection Act, the
Occupational Safety and Health Act, the Emergency Planning and
Community-Right-to-Know Act, the Safe Drinking Water Act, all as
amended, and similar laws of any other governmental authority.
"ENVIRONMENTAL PERMITS" means all permits, licenses, registrations and
other governmental authorizations or exemptions required under
Environmental Laws.
"MATERIALS OF ENVIRONMENTAL CONCERN" refers to any waste, pollutant,
contaminant or other substance of any kind (including without
limitation odors, radioactivity, and electromagnetic fields) regulated
by or under, or which may otherwise give rise to liability under, any
Environmental Law.
"ROXELL INC. PROPERTY" means all real property in which Roxell Inc.
has any legal interest, including without limitation a leasehold
interest, and any equipment or other property owned or leased by
Roxell Inc.
-----------------------
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