<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): AUGUST 31, 1998
<TABLE>
<CAPTION>
POWER-ONE, INC.
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(Exact name of registrant as specified in its charter)
<S> <C> <C>
DELAWARE 0-29454 77-0420182
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State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File number) Identification No.)
740 CALLE PLANO, CAMARILLO, CA 93012
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(Address of principal executive offices) (Zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (805) 987-8741
NOT APPLICABLE
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(Former name, former address and former fiscal year, if changed since last report)
</TABLE>
<PAGE>
2
Item 2 - Acquisition or Disposition of Assets
Effective August 31, 1998, pursuant to the terms and conditions of a Stock
and Loan Purchase Agreement (the "Purchase Agreement") dated as of August 25,
1998, between SBC Equity Partners Ltd. ("EP"), Defi Holding SA ("DEFI"),
Elektrowatt AG ("Electrowatt"), Dr. Hans Grueter ("HG"), Dr. Martin Schnider
("MS"), and Johann Milavec ("JM"), (collectively, "Sellers"), and Power-One,
Inc., (the "Company"), the Company acquired all of the outstanding capital stock
in and certain convertible loans of Melcher Holding AG ("Melcher") from Sellers
for a purchase price of approximately $42 million; in addition Melcher had
approximately $11 million of indebtedness outstanding. Approximately $6.7
million was placed in an escrow to fund possible indemnification claims under
the Purchase Agreement.
Melcher, a Swiss corporation with its registered offices in Uster,
Switzerland, is primarily engaged in the design and manufacture of high-
reliability DC/DC power conversion products which it distributes throughout
Europe. Melcher has manufacturing operations in three European locations and
sales and application engineering offices in seven European countries, the
United States and Canada. The Company intends to operate the acquired company
in substantially the same manner as it was operated prior to the acquisition.
The purchase price was negotiated at arms length with the Sellers, none of
whom had any prior relationship with the Company. The Company was advised by
independent investment banking firms.
The source of funds for the acquisition was a combination of the Company's
available cash, as well as advances totaling $10 million under its existing
credit facility.
Item 7 - Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
As of the date of filing of this Current Report on Form 8-K, it is
impracticable for the Registrant to provide the financial statements required by
this Item 7(a). In accordance with Item 7(a)(4) of Form 8-K, such financial
statements shall be filed by amendment to this Form 8-K as soon as practicable
but not later than 60 days after this report is required to be filed.
(b) Pro forma financial information.
As of the date of filing of this Current Report on Form 8-K, it is also
impracticable for the Registrant to provide the pro forma financial information
required by this Item 7(b). In accordance with Item 7(b)(2) of Form 8-K, such
financial information shall be filed by amendment to this Form 8-K as soon as
practicable but not later than 60 days after this report is required to be filed
(c) Exhibits
The exhibits listed below are filed as part of, or incorporated by
reference, into this report.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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<S> <C>
2.1 Stock and Loan Purchase Agreement effective August 31,
1998 between SBC Equity Partners Ltd., Defi Holding SA,
Elektrowatt AG, Dr. Hans Grueter, Dr. Martin Schnider,
Johann Milavec and Power-One, Inc. regarding the sale and
purchase of shares in and certain convertible loans to
Melcher Holding AG
</TABLE>
The Registrant undertakes to furnish supplementally to the Commission, upon
request, a copy of any Exhibit or Schedule to the Stock and Loan Purchase
Agreement.
<PAGE>
3
SIGNATURES
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 hereunto duly authorized.
Dated: September 14, 1998 Power-One, Inc.
By: /s/ STEVEN J. GOLDMAN
------------------------------
Steven J. Goldman
Chairman of the Board, Chief Executive
Officer and President
By: /s/ EDDIE K. SCHNOPP
-------------------------------
Eddie K. Schnopp
Vice President, Finance and Logistics,
Chief Financial Officer and Secretary
<PAGE>
STOCK AND LOAN PURCHASE AGREEMENT
between
SBC EQUITY PARTNERS LTD.,
Walchestrasse 9, CH-8006 Zurich (hereinafter "EP")
DEFI HOLDING SA,
Boulevard de Grancy 1, CH-1006 Lausanne (hereinafter "DEFI")
ELEKTROWATT AG,
Bellerivestrasse 36, CH-8008 Zurich (hereinafter "ELEKTROWATT")
DR. HANS GRUTER,
Im Obstgarten 13, CH-8700 Kusnacht (hereinafter "HG")
DR. MARTIN SCHNIDER,
FlUhgasse 33c, CH-8008 Zurich (hereinafter "MS")
JOHANN MILAVEC,
Wiesenweg 5, CH-5210 Windisch (hereinafter "JM")
(EP, DEFI, Elektrowatt, HG, MS
and JM hereinafter
collectively "SELLERS")
ON THE ONE HAND
and
POWER ONE, INC.,
740 Calle Plano, Camarillo, CA 93012,
United States of America (hereinafter "PURCHASER")
ON THE OTHER HAND
REGARDING THE SALE AND PURCHASE OF SHARES IN
AND CERTAIN CONVERTIBLE LOANS TO
MELCHER HOLDING AG
(THE "COMPANY")
<PAGE>
CONTENTS
RECITALS
1. DEFINITIONS
2. PURCHASE OF THE SHARES AND THE CONVERTIBLE LOANS
3. PAYMENT INTO ESCROW
4. COMPLETION
5. CONDITIONS FOR COMPLETION
6. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
7. WARRANTIES OF PURCHASER
8. INDEMNIFICATION OF PURCHASER
9. INDEMNIFICATION OF SELLERS
10. PROCEDURE FOR INDEMNIFICATION
11. TERMINATION OF OBLIGATIONS
12. COVENANTS AND AGREEMENTS OF THE PARTIES
13. MISCELLANEOUS
<PAGE>
RECITALS
WHEREAS
(A) Melcher Holding AG (the "COMPANY"), is a Swiss "AKTIENGESELLSCHAFT" with an
issued and outstanding share capital of CHF 4'800'000.-- divided into
100'000 registered shares Type "A" with a par value of CHF 10.-- each (the
"A-SHARES") and 152'000 registered shares Type "B" with a par value of CHF
25 each (the "B-SHARES", and an issued and outstanding participation
capital of CHF 227'300.-- divided into 2'273 registered participation
certificates ("PARTIZIPATIONSSCHEINE") with a par value of CHF 100.-- each
(the "PARTICIPATION CERTIFICATES").
(B) Elektrowatt has granted to the Company the Electrowatt Convertible Loan (as
defined below), and EP has granted to the Company the EP Convertible Loan
(as defined below), and DEFI has granted to the Company the DEFI
Convertible Loan (as defined below), for the conversion of which
convertible loans the Company has created a conditional share capital of
CHF 1'200'000.-- divided into 48'000 B-Shares.
(C) The Sellers hold the following shares in the Company: (i) EP 35'000
A-Shares and 136'012 B-Shares and 1'417 Participation Certificates, (ii)
DEFI 15'988 B-Shares; (iii) HG 5'000 A-Shares and 20 Participation
Certificates; (iv) MS 25'000 A-Shares; and (v) JM 35'000 A-Shares.
(D) Sellers are desirous to sell to Purchaser subject to the terms of this
Agreement all of the Shares (as defined below) and the Convertible Loans
(as defined below).
(E) Purchaser is desirous to acquire from Sellers subject to the terms of this
Agreement all of the Shares (as defined below) and the Convertible Loans
(as defined below).
(F) Purchaser intends to acquire simultaneously from certain employees of the
Company 836 Participation Certificates at a price of USD 670.85 per
Participation Certificate pursuant to separate agreements with such
employees of the Company.
(G) Purchaser has had prior to the signing of this Agreement access to the
Disclosed Information (as defined below), and Purchaser has had the
opportunity to review and examine the Disclosed Information.
Now, therefore the parties have agreed as follows:
1. Definitions
1.1 In this Agreement, its Recitals, Annexes and Schedules, unless the context
requires otherwise, each of the following expressions shall have the
meaning set forth opposite it:
"Affiliate(s)" a Person that directly, or indirectly
through one of more intermediaries,
controls or is controlled by or is under
common control with, the Person specified;
<PAGE>
"Agreement" this Stock and Loan Purchase Agreement,
together with all Schedules and Annexes
hereto;
"Ancillary Agreements" the Selling Managers Employment
Agreements, the termination agreement
referred to in Section 4.2(f)(iii), the
Indemnification Escrow Agreement, the
Selling Managers' Escrow Agreement, the
confidentiality agreement between the
Parties dated 31 March 1998 and the
exclusivity agreement between the Parties
dated July 20, 1998;
"Approval" any approval, authorization, consent,
qualification, or registration, or any
waiver of any of the foregoing, required
to be obtained from, or any notice,
statement, or other communication required
to be filed with or delivered to, any
Governmental Entity or any other Person.
"Amended Disclosure Letter" a letter or letters from Sellers to
Purchaser setting out facts or
information, which have arisen or which
have come to the attention of Sellers
after the date of the Disclosure Letter
but prior to Completion, which, but for
their disclosure to Purchaser, would mean
that any of the Warranties was untrue or
inaccurate;
"Balance Sheet" the Company's consolidated unaudited
balance sheet dated 30 June 1998;
"Business" the design, manufacture and sale of power
supplies as presently being conducted by
the Company and the Subsidiaries and as
reflected in the Financial Statements.
"Business Day" a day, except a Saturday or Sunday, on
which banks in California and Zurich
generally are open for business;
"Business Year" the annual period commencing on October 1
and ending on September 30 of the
following year;
"CO" the Swiss Code of Obligations;
"Company" Melcher Holding AG, a Swiss
"Aktiengesellschaft" with its registered
offices in Cham, Switzerland;
"Completion" performance of all the matters described
in this Agreement as occurring at
completion thereof pursuant to Section 4.,
other than any matters which may be and
are duly waived pursuant thereto;
"Completion Date" the date on which Completion occurs;
<PAGE>
"Contract" any written agreement, arrangement, bond,
commitment, franchise, indemnity,
indenture, instrument, lease or license;
"Convertible Loans" collectively the EP Convertible Loan, the
DEFI Convertible Loan and the Elektrowatt
Convertible Loan;
"DEFI Convertible Loan" the certain convertible loan granted by
DEFI to the Company in the amount of CHF
14'810 pursuant to the Convertible Loan
Agreement, dated June 26, 1996, by and
between the Company and EP and the
Syndication Agreement dated January 7,
1997, by and between EP and DEFI,
convertible into 269 B-Shares;
"Disclosed Information" the documents listed on Annex 1.1(a);
"Disclosure Letter" a letter from the Sellers to Purchaser
which was delivered to, and accepted by,
Purchaser previously to the date hereof
and which discloses facts which but for
their disclosure to Purchaser would mean
that any of the Warranties was untrue or
inaccurate and which may be amended
pursuant to the terms of this Agreement
and which shall also include the Amended
Disclosure Letter. The Sections of the
Disclosure Letter shall be numbered to
correspond to the applicable Section of
this Agreement and, together with all
matters under such heading, shall be
deemed to qualify only that Section,
unless it is clearly evident from any such
disclosure that it also qualifies any
other Section;
"Elektrowatt Convertible Loan" the certain convertible loan granted by
Elektrowatt to the Company in the amount
of CHF 2'500'000 pursuant to the
Convertible Loan Agreement, dated July 8,
1996, by and between the Company and
Elektrowatt, convertible into 45'440
B-Shares;
"EP Convertible Loan" the certain convertible loan granted by EP
to the Company in the amount of CHF
125'990 pursuant to the Convertible Loan
Agreement, dated June 26, 1996, by and
between the Company and EP, convertible
into 2'291 B-Shares (under due
consideration of the Syndication Agreement
by and between EP and DEFI dated January
7, 1997);
"Environmental Warranty" the Warranty set forth in Section 6.18;
"Escrow Agent" shall mean Dr. Christoph Schmid, Attorney-
at-Law, Dufourstrasse 56, CH-8008 Zurich;
"Execution Date" the date of signing of this Agreement;
<PAGE>
"Financial Statements" collectively the Company's consolidated
audited financial statements for the
business years ending 30 September 1996
and 30 September 1997, respectively
(collectively the "Audited Financial
Statements"), and the Company's
consolidated unaudited financial
statements for the period from 1 October
1997 until 30 June 1998 (the "Unaudited
Financial Statements"), as attached in
Annex 1.1(b);
"Governmental Entity" any government or any agency, bureau,
board, commission, court, department,
official, political subdivision, tribunal,
or other instrumentality of any
government;
"Group Companies" each of the Company and its Subsidiaries;
"Indemnifiable Claim" any Loss for or against which any party is
entitled to indemnification under this
Agreement;
"Indemnification Escrow the agreement to be executed at the
Agreement" Completion between Purchaser, the Sellers
and the Escrow Agent governing the escrow
deposit described in Section 3 hereof
substantially in the form of Annex 1.1(c);
"Indemnified Party" the party entitled to indemnity hereunder;
"Indemnifying Party" the party obligated to provide
indemnification hereunder;
"Intellectual Property" has the meaning set forth in Section 6.10;
"Knowledge of Sellers" the knowledge of any individual Seller and
the knowledge of any of the directors and
executive officers of any Seller that is
not an individual;
"Lien" any lien, charge, encumbrance, claim or
other security interest and any adverse
claims whatsoever, including, but not
limited to, interests arising from
options, mortgages, indentures, security
agreements or other agreements or
obligations whether written or oral and
whether or not relating in any way to
credit or the borrowing of money;
"Loan Purchase Price" has the meaning set forth in Section 2.4;
"Loss" means any action, cost, damage,
disbursement, expense, liability, loss,
deficiency, diminution in value,
obligation, penalty or settlement of any
kind or nature, whether foreseeable or
unforeseeable, including but not limited
to, interest or other carrying costs,
penalties, legal, accounting and other
professional fees and expenses incurred in
the
<PAGE>
investigation, collection, prosecution
and defense of claims and amounts paid in
settlement, that may be imposed on or
otherwise incurred or suffered by the
specified Person (which in each instance
exceed the provision made for such
instance in the Balance Sheet, as provided
for in more detail in Section 8.5);
"Material Adverse Effect" any change in or effect on the Business or
any part thereof that has been or should,
in the exercise of Sellers' reasonable
business judgment, have been foreseeable
to be materially adverse to the prospects,
results of operations, financial condition
properties (including intangible
properties), assets (including intangible
assets) or liabilities of the Business
taken as a whole;
"Material Contract" has the meaning set forth in Section 6.11
below;
"Melcher AG" Melcher AG, a Swiss corporation with its
registered offices in Uster, Switzerland;
"Permit" any license, permit, franchise,
certificate of authority, or order, or any
waiver of the foregoing, required to be
issued by any Governmental Entity;
"Person" an association, a corporation, an
individual, a partnership, a trust or any
other entity or organization, including a
Governmental Entity;
"Purchase Price" the aggregate amount of the Share Purchase
Price and the Loan Purchase Price;
"Regulations" the regulations, in the agreed form, as
amended from time to time, regarding the
ongoing operation of the Company by the
board of directors;
"Resigning Board Members" the board members of the Company and of
any Subsidiary who have been requested in
writing by the Purchaser prior to the
Completion Date to resign from the board
as of Completion;
"Shares" as the context may require, all or any
part of the A-Shares, the B-Shares and the
Participation Certificates owned by the
Sellers as shown in Section 2.1;
"Selling Managers" Dr. Hans Gruter, Dr. Martin Schnider and
Johann Milavec;
"Selling Managers Employment the employment and management agreements
Agreements" to be entered into between Melcher AG and
the Selling Managers, in the form attached
as Annex 1.1(d), to be executed and
delivered at Completion;
<PAGE>
"Selling Managers' Escrow the agreement to be executed at the
Agreement" Completion between Purchaser, the Selling
Managers and the Escrow Agent governing the
escrow deposit described in Section 4.3
substantially in the form of Annex 1.1(e);
"Share Purchase Price" has the meaning set forth in Section 2.2;
"Subsidiaries" the subsidiaries of the Company listed in
Annex 6.3 hereto;
"Taxes" means any taxes, duties and levies and
social security contributions, fees,
assessments or charges of any kind
whatever imposed by any Governmental
Entity, any interest and penalties (civil
or criminal), and any Loss in connection
with the determination, settlement or
litigation of any Tax liability;
"Tax Return" means a declaration, statement, report,
return or other document or information
required to be filed or supplied with
respect to Taxes.
"Tax Warranty" the Warranty set forth in Section 6.16
below;
"Warranties" the representations and warranties given
by Sellers to Purchasers in Section 6 of
this Agreement, and the representations
and warranties given by the Purchaser to
the Sellers in Section 7 of this
Agreement;
1.2 unless the context otherwise requires, any reference to a statutory
provision shall include such provisions as from time to time modified or
re-enacted or consolidated so far as such modification or re-enactment or
consolidation applies or is capable of applying to any transactions
entered into hereunder;
1.3 references to Recitals, Sections, Annexes and Schedules are to recitals,
sections, annexes and schedules of this Agreement;
1.4 the headings are for convenience only and shall not affect the
interpretation hereof; and
1.5 unless the context otherwise requires, words denoting the singular only
shall include the plural and vice versa.
2. Purchase of the Shares and the Convertible Loans
2.1 PURCHASE AND SALE OF SHARES AND PARTICIPATION CERTIFICATES.
The Sellers hereby sell and the Purchaser hereby purchases the Shares as
follows:
<PAGE>
EP: 35'000 A-Shares
136'012 B-Shares
1'417 Participation Certificates
DEFI: 15'988 B-Shares
HG: 5'000 A-Shares
20 Participation certificates
MS: 25'000 A-Shares
JM: 35'000 A-Shares
Unless expressly stipulated otherwise herein, all benefits vesting in,
and in connection with, and passage of risks in, and in connection with,
the Shares, shall take place upon Completion and be governed by this
Agreement, in particular this Section 2.1, and shall not be governed by
Art. 185 CO.
2.2 PURCHASE PRICE FOR THE SHARES. The purchase price for the Shares to be
purchased by the Purchaser hereunder shall amount to USD 33'164'888.--
(the "SHARE PURCHASE PRICE"). Accordingly, the Share Purchase Price
amounts to USD 67.085 per A-Share, USD 167.713 per B-Share, USD 670.85
per Participation Certificate and is payable to the individual Sellers in
the following portions subject to Section 3. below:
EP: USD 26'109'550.--
DEFI: USD 2'681'396.--
HG: USD 348'842.--
MS: USD 1'677'125.--
JM: USD 2'347'975.--
2.3 PURCHASE AND SALE OF THE CONVERTIBLE LOANS.
EP, DEFI and Elektrowatt hereby sell and assign and the Purchaser hereby
purchases and assumes the Convertible Loans as follows:
EP: The EP Convertible Loan
DEFI: The DEFI Convertible Loan
Elektrowatt: The Elektrowatt Convertible Loan
2.4 CONSIDERATION FOR THE CONVERTIBLE LOANS. The aggregate consideration for
the Convertible Loans shall amount to USD 8'050'224.-- (the "LOAN
PURCHASE PRICE"). The Loan Purchase Price is payable to the individual
Sellers in the following portions subject to Section 3. below:
EP: USD 384'230.--
<PAGE>
DEFI: USD 45'115.--
Elektrowatt: USD 7'620'879.--
2.5 SELLERS' INDIVIDUAL SHARE IN THE AGGREGATE PURCHASE PRICE. For all
purposes of this Agreement, the Sellers share the Purchase Price as
follows:
SELLER AMOUNT PERCENTAGE
EP USD 26'493'780.-- 64.28%
DEFI USD 2'726'510.-- 6.61%
Elektrowatt USD 7'620'879.-- 18.49%
HG USD 348'842.-- 0.85%
MS USD 1'677'125.-- 4.07%
JM USD 2'347'975.-- 5.70%
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Total USD 41'215'112.-- 100.00%
3. PAYMENT INTO ESCROW
3.1 EXECUTION OF THE INDEMNIFICATION ESCROW AGREEMENT. On or before
Completion of this Agreement, the Sellers and the Purchaser and the
Escrow Agent shall enter into the Indemnification Escrow Agreement.
3.2 PAYMENT INTO ESCROW. Upon Completion, a portion of the Purchase Price in
the aggregate amount of USD 6'660'000 (approximately CHF 10 mio) (the
"ESCROW PAYMENT") shall be paid into escrow by the Purchaser under the
Indemnification Escrow Agreement, which amount shall reduce the Share
Purchase Price and the Loan Purchase Price each Seller is entitled to
under Section 2.2 and 2.4 above pro rata to their respective share in the
aggregate Purchase Price, in order to secure any Indemnifiable Claim the
Purchaser may have hereunder.
3.3 The Parties agree that the Escrow Payment shall be converted from United
States Dollars into Swiss Francs by the Escrow Agent promptly upon
receipt pursuant to the Escrow Agreement.
4. COMPLETION
4.1 TIME AND PLACE OF COMPLETION. Subject to the provisions of this
Agreement, Completion shall take place in Zurich, Switzerland, at the
offices of Rinderknecht Glaus & Stadelhofer, Beethovenstrasse 7, CH-8002
Zurich, Switzerland, on September 1, 1998, effective as of 12.01 a.m. of
such date, or at such other place or on such other date as may be
mutually agreed by Sellers and Purchaser.
<PAGE>
4.2 ACTIONS AT COMPLETION. At Completion, the following actions shall be
taken:
(a) DELIVERY OF THE SHARES. Sellers shall deliver to Purchaser or its
representative the share certificates representing all of the A-
Shares and the B-Shares, together with any endorsement and other
documentation as may be required to convey to Purchaser full legal
title, free of any Liens, and full voting rights, without any
further registration (other than the registration in the share
ledgers of the Company), filing or similar requirement, to the
A-Shares and the B-Shares.
(b) DELIVERY OF PARTICIPATION CERTIFICATES. EP and HG shall deliver to
Purchaser or its representative the certificates representing the
Participation Certificates held by each of them, together with any
endorsement and other documentation as may be required to convey to
Purchaser full legal title, free of any Liens, and full voting
rights, without any further registration (other than the
registration in the participation certificate ledgers of the
Company), filing or similar requirement, to such Participation
Certificates.
(c) DELIVERY OF THE ASSIGNMENTS OF THE CONVERTIBLE LOANS. EP, DEFI and
Elektrowatt shall deliver to Purchaser or its representative the
documents representing the Convertible Loans, together with the
assignments in the form set forth in Annex 4.2(c) and other
documentation as may be required to convey to Purchaser full legal
title, free of any Liens, in the Convertible Loans.
(d) DELIVERY OF BOARD RESOLUTIONS. Sellers shall deliver to Purchaser or
its representative certified copies of the board resolution of the
Company in the form attached hereto as Annex 4.2(d), pursuant to
which the Purchaser will be registered with full voting rights as
the shareholder for all the A-Shares and the B-Shares and registered
holder of the Participation Certificates.
(e) PAYMENT OF SHARE PURCHASE PRICE AND LOAN PURCHASE PRICE. Purchaser
shall pay:
(i) USD 22'212'733.-- being the portion of the Share Purchase
Price and the Loan Purchase Price payable to EP less the pro
rata Escrow Payment; and
(ii) USD 2'286'284.-- being the portion of the Share Purchase
Price and the Loan Purchase Price payable to DEFI less the
pro rata Escrow Payment; and
(iii) USD 6'389'445.-- being the portion of the Loan Purchase Price
payable to Elektrowatt less the pro rata Escrow Payment; and
(iv) USD 97'411.-- being one third of the portion of the Share
Purchase Price payable to HG less the pro rata Escrow
Payment; and
(v) USD 468'688.-- being one third of the portion of the Share
Purchase Price payable to MS less the pro rata Escrow
Payment; and
(vi) USD 656'118.-- being one third of the portion of the Share
Purchase Price payable to JM less the pro rata Escrow
Payment; and
<PAGE>
(vii) USD 6'660'000.-- being the Escrow Payment into the escrow
account pursuant to the Indemnification Escrow Agreement; and
(viii) USD 2'444'433.-- being the deferred portion of the Purchase
Price payable to the Selling Managers pursuant to Section 4.3
into the escrow account pursuant to the Selling Managers'
Escrow Agreement.
The payments to all Sellers pursuant to Section 4.2(e)(i) through
(vi) in the aggregate amount of USD 32'110'679.-- shall be made and
evidenced by irrevocable wire transfer to the account of EP with UBS
AG, Geneva Branch, account no. CO 131.960.0. The allocation among
the Sellers shall be made outside this Agreement, and the Purchaser
shall have no responsibility for such allocation.
(f) DELIVERY OF CERTAIN AGREEMENTS AND DOCUMENTS. Sellers shall deliver
to the Purchaser or its representative original copies of
(i) the Selling Managers Employment Agreements in the agreed form
set forth in Annex 1.1(d) hereto duly executed and delivered
by each of the Selling Managers and Melcher AG;
(ii) written letters of resignation from the Resigning Board
Members;
(iii) the employment termination agreement between Melcher AG and
Thomas Seiler, as executed on August 10, 1998;
(iv) the Amended Disclosure Letter.
(g) SELLING MANAGERS' ESCROW AGREEMENT. Purchaser, Selling Managers and
Escrow Agent shall execute and deliver to each other party thereto
the Selling Managers' Escrow Agreement.
(h) WRITTEN CONFIRMATION OF WARRANTIES. Sellers shall deliver to
Purchaser, and Purchaser shall deliver to Sellers, written
confirmations in the agreed form confirming that all of such party's
Warranties made in this Agreement, taken individually and as a whole
are true and correct in all material respects as of the Completion
Date as though made on such date and that such party has complied
with all covenants and agreements required by this Agreement to be
performed by such party on or before the Completion Date.
(i) AUDITORS' CONFIRMATION. Purchaser shall receive from the Company's
auditors written confirmation covering the items listed in Annex
4.2(i) regarding the non-Swiss Subsidiaries, which confirmations
shall be reasonably satisfactory in form and substance to Purchaser
and its counsel.
(k) COMPLIANCE STATEMENTS. Purchaser and Sellers or their respective
legal counsel shall, subject to Section 5.3, each deliver to the
other party a compliance statement substantially in the form
attached hereto as Annex 4.2(k) confirming the receipt of the
documents listed in Section 4.2 and fulfillment (or due waiver) of
all of the conditions set forth in Sections 5.1 and 5.2,
respectively.
(l) REPAYMENT OF CERTAIN LOANS. The Selling Managers shall have caused
the loans granted by EP, DEFI and Elektrowatt to the Company in the
aggregate amount
<PAGE>
of CHF 3'500'000 plus accrued interest to be repaid in full
contemporaneously with the Completion.
4.3 PAYMENT OF DEFERRED PORTION OF PURCHASE PRICE.
(a) The balance or the deferred portion of the Purchase Price payable to
the Selling Managers shall be paid by the Purchaser as follows:
(i) one third of the total Purchase Price payable to the Selling
Managers on the day occurring 180 days after the Completion
Date ("Second Installment"); and
(ii) one third of the total Purchase Price payable to the Selling
Managers on the day occurring 365 days after the Completion
Date ("Third Installment"),
provided, however, that:
(1) the Purchaser may reduce the amounts for the Second Installment
and the Third Installment payable to a Selling Manager in the event
that (i) such Selling Manager gives a notice of termination of his
Selling Manager Employment Agreement at free will, and not for
cause, and such notice of termination is given prior to the first
anniversary of the Completion Date, (ii) Melcher AG terminates such
Selling Manager's Selling Manager Employment Agreement for cause
within the meaning of Article 337 CO (KUNDIGUNG AUS WICHTIGEM GRUND)
prior to the first anniversary of the Completion (in either case, a
"Qualifying Termination Event"). Notwithstanding the foregoing, any
other reason for a termination of a Selling Manager Employment
Agreement (eg. death, loss of capability to act, disability,
termination by the Company without cause etc.) shall not give rise
to a reduction of the Second Installment or the Third Installment,
it being understood that the giving of a notice of termination of
any one of the Selling Managers does not affect the claims in
respect of the Second Installment or the Third Installment of the
other Selling Mangers for whom no event of termination has occurred;
and
(2) in case of death, loss of the capability to act, disability or
termination by the Company without cause, the outstanding Second
Installment or Third Installment payable to such Selling Manager
shall immediately become due and payable by the Purchaser to such
Selling Manager or his estate without any reduction.
(b) If a Qualifying Termination Event occurs on or before 180 days after
the Completion Date, the Second Installment shall be reduced to an
amount determined as follows:
Second Installment x X
-----
180
where X equals the number of days elapsed from the Completion Date.
In such event, the Purchaser shall not be obligated to pay the Third
Installment.
<PAGE>
If a Qualifying Termination Event occurs after the 180th day
following the Completion Date but before the 365th day, the Third
Installment shall be reduced to an amount determined as follows:
Third Installment x Y
-----
185
where Y equals the number of days elapsed from the 180th day.
(c) The Escrow Agent shall invest the deferred portion paid into escrow
in accordance with the Selling Managers' Escrow Agreement, and the
Selling Managers shall receive from Purchaser together with the
principal of the deferred portion the net accrued interest at a rate
of 5% p.a. with respect to such principal.
(d) The payment of the deferred portion to the Selling Managers pursuant
to the above provisions shall be effected by the Escrow Agent
pursuant to the provisions of the Selling Managers' Escrow
Agreement.
5. Conditions for Completion
5.1 CONDITIONS TO PURCHASER'S OBLIGATION TO COMPLETE THIS AGREEMENT. The
obligations of Purchaser to be performed at Completion are conditional on
all the actions set forth in Section 4.2.(a),(b),(c),(d), (f) (as to
Sellers' confirmation), (i) (as to Sellers' auditors' confirmation) and
(k) (as to Sellers' compliance statement) having been completed (or being
waived in writing by Purchaser) and on all of the following conditions
being fulfilled (or being waived in writing by Purchaser) at or prior to
Completion:
(a) NO INJUNCTIONS OR PROHIBITIONS. No judgment, order or injunction
shall have been issued by any Governmental Entity or by any third
party, which prohibits the acquisition by Purchaser of the Shares
and/or the Participation Certificates to be acquired by the
Purchaser hereunder and/or the Convertible Loans. In such case the
Parties endeavor to cooperate in good faith with the view of
overcoming such impediment.
(b) NECESSARY APPROVALS. All Approvals with respect to the transactions
contemplated by this Agreement shall have been obtained.
(c) NO MATERIAL ADVERSE CHANGES. There shall not have occurred, between
the date hereof and the Completion Date, any event which has a
Material Adverse Effect.
(d) WARRANTIES AND COVENANTS. The Warranties made by Sellers (subject to
the Disclosure Letter and the Amended Disclosure Letter) herein,
taken individually and as a whole, shall be true and correct in all
material respects as set forth in Section 6 below, both on the
Execution Date and on the Completion Date as though made on such
date, and Sellers shall be in material compliance with all covenants
and agreements made by them in this Agreement.
5.2 CONDITIONS TO SELLERS' OBLIGATION TO COMPLETE THIS AGREEMENT. The
obligations of Sellers to be performed at Completion are conditional on
all the actions set forth in
<PAGE>
Section 4.2.(e),(g),(h) (as to Purchaser's confirmation), and (k) (as to
Purchaser's compliance statement) having been completed (or being waived
in writing by Sellers) all of the following conditions being fulfilled
(or being waived in writing by Sellers) at or prior to Completion:
(a) NO INJUNCTIONS OR PROHIBITIONS. No judgment, order or injunction
shall have been issued by any Governmental Entity or by any third
party, which prohibits the acquisition by Purchaser of the Shares
and/or the Participation Certificates to be acquired by the
Purchaser hereunder and/or the Convertible Loans. In such case the
Parties endeavor to cooperate in good faith with the view of
overcoming such impediment.
(b) NECESSARY APPROVALS. All approvals by governmental authorities with
respect to the transactions contemplated by this Agreement shall
have been obtained.
(c) NO MATERIAL ADVERSE CHANGES. There shall not have occurred, between
the date hereof and the Completion Date, any event which has a
Material Adverse Effect.
(d) WARRANTIES AND COVENANTS. The Warranties made by Sellers (subject to
the Disclosure Letter and the Amended Disclosure Letter) herein,
taken individually and as a whole, shall be true and correct in all
material respects as set forth in Section 6 below, both on the
Execution Date and on the Completion Date as though made on such
date, and Sellers shall be in material compliance with all covenants
and agreements made by them in this Agreement.
5.3 COMPLETION DESPITE NON-FULFILLMENT OF CONDITIONS. Sellers and Purchaser
jointly may agree that Completion shall take place despite the non-
fulfillment of all or any of the Conditions which have not been waived
but without affecting their rights and remedies in respect of such non-
fulfillment.
5.4 NO OTHER CONDITIONS PRECEDENT. The Parties' obligation to complete is not
subject to any conditions other than as provided in this Section 5.
6. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers jointly and severally represent and warrant to the Purchaser
that:
6.1 ORGANISATION AND QUALIFICATION. As of the Completion Date, the Group
Companies are duly organised and validly existing under the laws under
which they have been incorporated. The Group Companies have full right
and authority and all necessary governmental licences to own and to
operate their properties and to engage in the business in which they are
now engaged. The execution and delivery of this Agreement by each Seller
and the performance of this Agreement by such Seller will not require
filing or registration of Sellers or any Group Company with, or the
issuance of any Permit by, or receipt of any Approval from, any other
Person or Governmental Entity under the terms of any applicable laws or
Contracts, except where failure to obtain or make the same would not
prevent any Seller from performing any of its material obligations under
this Agreement and would not, individually or in the aggregate, have a
Material Adverse Effect.
<PAGE>
6.2 CAPITAL STRUCTURE
(a) The Group Companies have the authorized and outstanding share
capital set forth in Annex 6.2(a). No further shares, non-voting
stock, or similar rights in the Group Companies have been or will by
the Completion Date be created or issued. All shares of capital
stock of the Company and the Subsidiaries are duly authorized,
validly issued, and, except for treasury shares, if any, outstanding
and are fully paid.
(b) Except for the Convertible Loans, there are no outstanding options,
warrants, agreements or other obligations of any kind which may
require the Company or any of the Subsidiaries to issue, repurchase,
redeem or otherwise acquire any equity securities or which restrict
the right of any such Group Companies to transfer, vote or to
receive dividends or the proceeds of liquidation with respect to any
equity interest in such Group Companies.
6.3 SUBSIDIARIES OF THE COMPANY. All of the entities in which the Company has
a direct or indirect ownership interest are listed in Annex 6.3. In each
of these Subsidiaries, the Company owns beneficially, directly or
indirectly, the equity and voting interests shown in Annex 6.3 free and
clear of any Liens. To the extent that Annex 6.3 shows any equity and/or
voting interest in any Subsidiary as being held by third parties to
comply with applicable mandatory law, such equity and/or voting interest
is held by such third parties pursuant to nominee or similar agreements
granting the Company all rights to such equity and/or voting interest.
6.4 OWNERSHIP
(a) As of the Execution Date and the Completion Date, the Sellers are
with respect to the numbers of Shares and Participation Certificates
shown in Section 2.1 above, the owners and registered in the
shareholders' register of the Company. They have good and valid
title to the respective Shares and Participation Certificates shown
in Section 2.1 above which hereby will be sold free and clear of all
Liens. Each of the Sellers with respect to the numbers of Shares and
Participation Certificates shown in Section 2.1 above has full right
and capacity to transfer and sell complete and unencumbered title to
such Shares and Participation Certificates.
(b) As of the Execution Date and the Completion Date, EP, DEFI and
Elektrowatt have good and marketable title to the EP Convertible
Loan, the DEFI Convertible Loan and the Elektrowatt Convertible
Loan, respectively, and the Convertible Loans are free and clear of
any Liens, have not been assigned or promised to be assigned to any
third party, there have not been any repayments under any of the
Convertible Loans, and the Company has no claim against any of EP,
DEFI and Elektrowatt allowing the set-off of any portion of the
Convertible Loans.
(c) Upon delivery of the Shares, the Participation Certificates and
documents mentioned in Section 4.2(a), (b) and (c) of this
Agreement, the Purchaser will receive good and valid title to the
Shares, the Participation Certificates held by any of the Sellers,
and the Convertible Loans, all free and clear of all Liens.
<PAGE>
6.5 LEGAL CAPACITY. Each of the Sellers individually and not jointly
represents and warrants that it or he has full legal capacity and
authority to execute and deliver this Agreement and the Ancillary
Agreements to which it/he is a party, and to consummate the transactions
contemplated herein. This Agreement and the Ancillary Agreements, upon
execution and delivery by each of the Sellers, will constitute the legal,
valid and binding obligations of the Sellers enforceable in accordance
with their terms. The execution, delivery, and performance of this
Agreement, the Ancillary Agreements, and any related agreements by each
Seller will not violate or constitute a breach or default (whether upon
lapse of time or the occurrence of any act or event or otherwise) under
any Material Contract.
6.6 FINANCIAL STATEMENTS
(a) The Financial Statements, consisting in each instance of a balance
sheet, income statement, statement of cash flow and statement of
changes in Stockholder's equity, have been prepared in accordance
with the accounting and consolidation principles applicable under
Swiss law as described in the Audited Financial Statements as
consistently applied and show a true and fair view in accordance
with such accounting principles of the financial position of the
Group Companies on a consolidated basis and the results of their
operations and changes in financial position for the respective
periods then ended, subject, in the case of the Unaudited Financial
Statements, to normal year-end audit adjustments of the type and
scope identified in the Disclosure Letter which will not have a
Material Adverse Effect.
(b) The accounting and consolidation principles used for the preparation
of the Financial Statements have been consistently applied during
the 2 years preceding the Execution Date as described in the
Financial Statements.
(c) On 30 June 1998, the Group Companies had on a consolidated basis no
material liabilities other than those shown in the Unaudited
Financial Statements which should have appeared therein according to
the accounting principles referred to in the foregoing paragraphs.
(d) The books and records (including also EDP records) of the Company
and the Subsidiaries have been maintained in accordance with good
business practices and applicable local legal, regulatory and
accounting requirements, reflect only valid transactions, are
complete and correct and accurately reflect the basis for the
financial position and results of operation of each of such
companies.
(e) Annex 6.6(e) sets forth each and every item for which a provision
has been included or made in the Balance Sheet and the respective
amount of any such provision for each item.
6.7 TITLE TO ASSETS AND PROPERTY. The Company and the Subsidiaries each have
good and marketable title to or other legal right to use all properties
and assets (real, personal, tangible and intangible), including, without
limitation, all such properties and assets that it or they purport to own
or have a legal right to use as reflected on the Balance Sheet or
acquired after the date of the Balance Sheet (except for properties and
assets disposed of for fair value since the date of the Balance Sheet in
the ordinary course of business and consistent with past practice). None
of such properties or assets reflected on the Balance Sheet or acquired
after the date of the Balance Sheet is subject to any Lien except
(a) statutory Liens not yet delinquent; (b) Liens, with respect to the
<PAGE>
properties or assets of the Company and the Subsidiaries taken as a
whole, that do not individually or in the aggregate materially impair or
materially interfere with the present use of the properties or assets or
otherwise materially impair present business operations at such
properties; and (c) Liens for Taxes not yet delinquent or the validity of
which are being contested in good faith by appropriate actions.
6.8 CONDITION OF PROPERTY. All machinery and equipment owned or leased by
any of the Subsidiaries that are material for the Business are in good
condition having regard to their age except for ordinary wear and tear.
The Group Companies have facilities adequate to conduct the Business, as
conducted now, and to produce and manufacture the Group Companies
products in the quality and quantity to comply with its business plan for
1999 in conjunction with the additional investments provided therein.
6.9 INVENTORIES. All inventory of the Subsidiaries, whether or not reflected
in the Balance Sheet, consists of a quality and quantity usable and
salable in the ordinary course of business, except for obsolete items and
items of below-standard quality, all of which have been written off or
written down to net realizable value in the Balance Sheet in accordance
with the accounting and consolidation principles applicable under Swiss
law as described therein and as consistently applied by the Group
Companies. All finished goods inventories of the Business reflected in
the Balance Sheet were produced or acquired by the Subsidiaries in the
ordinary course of business, and the Subsidiaries have good and
marketable title to the inventory.
6.10 INTELLECTUAL PROPERTY.
(a) The Group Companies own or have adequate right to use all the know-
how and all patents, trademarks, trade names, copyrights and other
intellectual property rights (collectively "Intellectual Property")
which are necessary for the conduct of their current business and
the absence of which would have a Material Adverse Effect on such
business.
(b) Except as disclosed in the Disclosure Letter, neither the Company
nor any Subsidiary has violated or is violating the rights of others
by the use of any of the Intellectual Property. Neither the Company
nor any Subsidiary has granted, or agreed to grant, to any others
any right to use any of the Intellectual Property, except for the
license agreements as are listed and described in the Disclosure
Letter.
(c) The trademarks and patents listed in Annex 6.10(c) ("Pending
Registrations") have been duly applied for the classes stated in the
pertinent jurisdiction and all formal and other requirements (such
as payment of fees etc.) to achieve the registration in the
competent office's normal course of business have been fulfilled. No
objections have been raised against any of the Pending Registrations
by the competent office or any third party.
(d) The Sellers have no Knowledge of any matter which will, if and when
raised and prosecuted by any third party, lead to the nullity or
materially affect the validity of any of the registered Intellectual
Property; furthermore, no third party has raised any claims for
nullity of the registered Intellectual Property or has claimed that
any of the registered Intellectual Property is not valid.
6.11 MATERIAL CONTRACTS.
<PAGE>
(a) Annex 6.11(a) contains an accurate and complete list as of the date
thereof of Contracts to which the Company or any Subsidiary is a
party or by which any of them is bound and that (a) after the date
of the Balance Sheet obligates the Company or any Subsidiary to pay
an amount of CHF 500'000 or more, (b) contains a covenant not to
compete, (c) provides for a guaranty or indemnity by the Company or
any Subsidiary of any obligations or liability in excess of CHF
500'000, (d) grants a power of attorney, agency, or similar
authority to another Person or entity other than any director or
employee with signatory power, (e) contains a right of first refusal
with respect to any assets with a fair market value in excess of CHF
500'000, (f) constitutes a collective bargaining agreement, or
(g) grants rights to the Company with respect to any stock of a
Subsidiary owned by a third party (collectively the "Material
Contracts"). True, correct, and complete copies of the Material
Contracts appearing in Annex 6.11(a), including all amendments and
supplements, have been made available to Purchaser. Each Material
Contract is in full force and effect; there has not occurred any
default by the Company or any Subsidiary under any of the Material
Contracts which remains unremedied as of the date of this Agreement
and which could have a Material Adverse Effect; and, to the
Knowledge of Sellers, there has not occurred any default by other
Parties to any of the Material Contracts which would have a Material
Adverse Effect.
(b) To the Knowledge of Sellers and except as set forth in the
Disclosure Letter, all of the Material Contracts have been validly
executed and are in force and effect and are enforceable.
(c) The Group Companies have not entered into any contract, whether in
writing or orally, that could have a Material Adverse Effect on the
Group Companies after the Completion Date.
6.12 ABSENCE OF DEFAULT UNDER CONTRACTS. None of the members of the Group
Companies is in, and the preparation and consummation of the transactions
contemplated by this Agreement does not and will not result in, any
default under, or breach of, any Material Contract which might result in
termination of such agreements or liability of or other loss to any of
the Group Companies. To the Knowledge of the Sellers, all third parties
to the Material Contracts are in substantial compliance therewith and not
in material default thereunder and no event has occurred or is subsisting
which would with the giving of notice and/or lapse of time, constitute or
result in, such a breach or the acceleration of any such Material
Contract.
6.13 EMPLOYMENT MATTERS.
(a) Except as required by the applicable laws and regulations or as
described in the Disclosure Letter, neither the Company nor any
Subsidiary nor any separate pension entity has any contractual
severance arrangements with any of their members of management or
employees. All pension obligations with respect to past and present
employees of any of the of the Group Companies are fully funded or
provisions therefor have been made for in the Balance Sheet.
(b) The Sellers have delivered to Purchaser copies of employment
materials and descriptions of all pension and benefit plans
covering all of the employees of
<PAGE>
the Group Companies in Switzerland, and a standard employment
agreement together with a copy of the employment handbook for
all employees of the Group Companies in Slovakia.
(c) There is not now pending or, to the Knowledge of the Sellers,
threatened any labor dispute, strike or work stoppage of
employees of, or any charge or complaint regarding labor
matters by any competent governmental body against, the
Company or any Subsidiary, and Sellers have no reason to know
or believe that there may be in the near future any such
dispute, strike, work stoppage, charge or complaint.
6.14 EXECUTIVE POWERS. Annex 6.14 lists the names of all key managers and
directors of the Company and the Subsidiaries, all bank accounts
owned by the Company and the Subsidiaries and the Persons authorized
to make withdrawals from such accounts.
6.15 PERMITS AND AUTHORISATIONS. The Group Companies have all permits and
authorisations which are necessary to carry on their businesses in
all material respects in the same manner as presently conducted.
6.16 TAXES
(a) The Group Companies have timely filed all Tax Returns that
are legally required to be filed.
(b) The Group Companies have paid all Taxes which have become
due, and, as regards those Taxes not yet due, have made
sufficient provision therefor.
(c) All Financial Statements include accruals to the dates of
such financial statements for all unpaid Taxes to which the
Company or any Subsidiary are subject, whether or not yet due
and payable and whether or not disputed, and the provisions
for taxes thereon are not less than the aggregate of all such
accrued Taxes.
(d) The Group Companies have only been audited by the tax authorities
for the tax years indicated in Annex 6.16(d). No Group Company has
been notified by the tax authorities of any deficiencies or
assessments of penalties or interest. None of the Group Companies is
a party to a tax-sharing agreement with any other Person.
6.17 COMPLIANCE WITH LAW. None of the Group Companies materially violates any
law or administrative regulation in a way which would have a Material
Adverse Effect.
6.18 ENVIRONMENTAL PROTECTION.
(a) All properties and facilities that are operated by the Group
Companies are in compliance with all applicable legal requirements
relating to public health and safety and protection of the
environment, the non-compliance with which would have a Material
Adverse Effect. No representation or warranty is given with respect
to any possible pollution if and to the extent that it was caused by
a person or legal entity other than the Group Companies.
<PAGE>
(b) There have been no claims, complaints or notices received by the
Seller, the Company or the Subsidiaries in respect of any alleged
violation of or liability under any environmental law or regulation,
nor are any such claims now pending or threatened.
(c) Neither the Company nor any of the Subsidiaries are required to make
any material expenditure or investment to comply with any
environmental laws or regulations, and Sellers are not aware of any
obligation that the Company or any of the Subsidiaries may become
liable for in the future.
(d) The Group Companies have maintained all documents and records and
made all filings required by applicable legal requirements relating
to public health and safety and to protection of the environment.
The air and water emission, discharge and waste disposal practices
used by the Group Companies fully comply with, and have at all times
complied with, all applicable environmental laws and regulations in
all material respects.
6.19 INSURANCE. Annex 6.19 contains an accurate and complete listing (showing
type of insurance, amount, insurance company, annual premium and special
exclusions) of all policies for the Company and all Subsidiaries on a
worldwide basis of fire, liability, worker's compensation and other forms
of insurance owned or held by Melcher AG. Each Subsidiary has in effect
all local policies or coverage required by such worldwide policies of
Melcher AG. All such policies or coverage are in full force and effect,
are sufficient for compliance with all requirements of law and of all
agreements to which Company or any Subsidiary is a party, are valid,
outstanding and enforceable policies or coverage, to the Knowledge of the
Sellers provide adequate insurance coverage for the assets and operations
of Company and each Subsidiary, and will not in any way be affected by,
or terminate or lapse by reason of, the transactions contemplated by this
Agreement.
6.20 NO ADVERSE CHANGE. In the period between 30 June 1998 and the Completion
Date:
(a) the businesses of the Group Companies have in all material respect
been conducted in the ordinary course, there has not been any change
in the nature of the business of the Company, which would have a
Material Adverse Effect on it, and there have not been made any
material disposals of assets of the Group Companies other than in
the ordinary course of business;
(b) the Group Companies have not suffered any Material Adverse Effect in
its consolidated financial position;
(c) have not made any dividend or other distribution of profit or any
direct or indirect redemption, purchase or other acquisition of any
quotas or shares in the Group Companies.
(d) to the Knowledge of Sellers, but without any further investigation,
there are no liabilities of any nature, whether accrued, absolute,
contingent, or otherwise, which relate to any of the Group Companies
or the Business and are material, singly or in the aggregate, except
liabilities that (i) are reflected on or disclosed in the Financial
Statements, (ii) were incurred after 30 June 1998 in the ordinary
course of business, (iii) arise under this Agreement or the
Ancillary
<PAGE>
Agreements or any other document entered into in connection herewith
or therewith, or (iv) are set forth in the Annexes or the Disclosure
Letter.
6.21 LITIGATION. Except as for the litigation and disputed matters disclosed
in the Disclosure Letter ("Disclosed Litigation"), there is no
litigation, order, arbitration, prosecution, governmental proceeding or
investigation pending or, to the Knowledge of the Sellers, threatened
against any of the Group Companies or any of their assets which if
adversely determined, individually or in the aggregate, could have a
Material Adverse Effect. The provisions made in the Balance Sheet for
risks of litigation, as set forth under the heading "Litigation" in Annex
6.6(e), are sufficient to cover all risks and costs, including attorney
and court fees, in connection with the Disclosed Litigation.
6.22 BROKERS AND FINDERS. Sellers and their agents have incurred no obligation
or liability, contingent or otherwise, for brokerage or finders' fees or
agents' commissions or other similar payment in connection with this
Agreement that would have to be paid by the Company or any Subsidiary.
6.23 GRANTS. Except as described in the Disclosure Letter, there is no
liability or obligation for the repayment of any grant, subsidy or
financial assistance received by any Group Companies from any government
department, agency or authority, and in respect of grants or subsidies
received, nothing has been done or omitted to be done what could render
any such grants or subsidies becoming repayable, withdrawn or withheld or
what would create an obligation to repay any such grant or subsidy
received.
6.24 NO FURTHER REPRESENTATIONS OR WARRANTIES. The Sellers do not grant any
implied or express representation or warranty other than those set forth
in this Section 6. of this Agreement.
7. WARRANTIES OF PURCHASER
Purchaser represents and warrants to Sellers as follows:
7.1 ORGANIZATION AND GOOD STANDING. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, United States of America and has full corporate power
and authority to own or lease its assets and properties and to carry on
its business as the same has heretofore been conducted. The execution,
delivery and performance of this Agreement by the Purchaser will not
require filing or registration with, or the issuance of any Permit by, or
receipt of any Approval from, any other Person or Governmental Entity
under the terms of any applicable laws, except where failure to obtain or
make the same would not prevent the Purchaser from performing any of its
material obligations under this Agreement.
7.2 LEGAL AND AUTHORIZED TRANSACTIONS. The execution and delivery by
Purchaser of this Agreement and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized by all
necessary corporate action by Purchaser. This Agreement and the Ancillary
Agreements, upon execution and delivery by Purchaser, will constitute
legal, valid and binding obligations of Purchaser, enforceable in
accordance with their terms.
<PAGE>
7.3 NO BREACH. Neither the execution and delivery by Purchaser of, or the
performance by Purchaser of its obligations under this Agreement or under
the Ancillary Agreements nor the consummation by Purchaser of the
transactions contemplated hereby or thereby, will violate any provision
of the charter or by-laws of Purchaser or any agreement to which the
Purchaser is a party.
7.4 FINANCIAL CONDITION. Purchaser's financial condition is such that
Purchaser is able to pay the Purchase Price at the Completion and any
other payment to be made under this Agreement or any of the Ancillary
Agreements whenever such payments fall due.
7.5 NO FURTHER REPRESENTATIONS OR WARRANTIES. The Purchaser does not grant
any implied or express representation or warranty other than those set
forth in this Section 7. of this Agreement.
8. INDEMNIFICATION OF PURCHASER
8.1 OBLIGATIONS OF SELLERS. Sellers agree with Purchaser to indemnify and
hold harmless Purchaser, or at its request, the Company or any
Subsidiary, against any and all Losses of Purchaser, the Company or any
of the Subsidiaries, directly or indirectly, as a result of, or based
upon or arising from, any inaccuracy in or breach or nonperformance of
any of the representations, warranties, covenants or agreements made by
Sellers in or pursuant to this Agreement.
8.2 CERTAIN TAX MATTERS. Sellers agree with Purchaser to indemnify and hold
harmless Purchaser, or at its request, the Company or any Subsidiary,
against (i) any Tax payable by or on behalf of the Company or any of the
Subsidiaries for any taxable period ending on or prior to 30 June 1998,
(ii) Taxes of any member of a consolidated or combined tax group of
which Sellers or any of their Affiliates is, or were at any time, a
member, for which the Company and/or any Subsidiary is jointly or
severally liable as a result of its inclusion in such group, (iii) any
claim or demand for reimbursement or indemnification resulting from any
transfer by Seller prior to the Completion of any Tax benefits or credits
to any other Person, and (iv) any Tax liabilities arising out of the
transfer of the Shares, the Participation Certificates and/or the
Convertible Loans.
8.3 CERTAIN LITIGATIONS. Without limitation to the generality of Section 8.1
regarding any litigation, Sellers agree with Purchaser to indemnify and
hold harmless Purchaser, or at its request, the Company or any
Subsidiary, against any and all Losses exceeding the provision made
therefor in the Balance Sheet pursuant to Annex 6.6(e), suffered out of
or in connection with the alleged patent infringement notified on 25
August 1997 by VICOR Corporation and/or its intellectual property holding
affiliate VLT Inc. (collectively "VICOR"), including without limitation
(i) any and all royalties payable by any of the Group Companies for the
use of the technology covered by any of VICOR's patents, whether on
products sold prior or after the Completion Date, and (ii) any and all
damages (including punitive damages) payable by any of the Group
Companies for infringement of any of VICOR's patents; and (iii) any and
all cost and expenses (including reasonable attorneys' fees, but not
including any internal cost) to be incurred by the Purchaser and or any
of the Group Companies in connection with the defense against a claim
made by and/or any settlement negotiations with VICOR. Purchaser agrees
that it will work with the management of the Company and its
<PAGE>
Subsidiaries to minimize any royalties or other payments that may be
payable to VICOR.
8.4 FORM OF INDEMNIFICATION. Any indemnification by Sellers to be made
hereunder shall be made in form of a payment to Purchaser, or at its
request to the Company or any Subsidiary, of an amount in Swiss Francs
equal to the amount of such Losses suffered by the Purchaser, the Company
or the Subsidiary.
8.5 LIMITATION ON INDEMNIFICATION BY SELLERS. Notwithstanding anything herein
to the contrary, Sellers shall not be liable to indemnify the Purchaser
pursuant to this Section 8 (i) for any individual Indemnifiable Claim not
exceeding CHF 30'000, or (ii) until the total amount of all Indemnifiable
Claims exceeding individually CHF 30'000 notified by Purchaser pursuant
to Section 10.1 exceeds CHF 750'000, but then for the entire amount of
all such Indemnifiable Claims, or (iii) for aggregate Indemnifiable
Claims notified on or before 30 April 2000 pursuant to Section 10.1 in
excess of CHF 20'000'000, or (iv) for aggregate Indemnifiable Claims
notified after 30 April 2000 in respect of Section 6.16 and/or 6.18
pursuant to Section 10.1, in excess of the lowest of
(a) CHF 15'000'000; and
(b) the sum of CHF 10'000'000 and the difference between (i) CHF
10'000'000 and (ii) the sum of (x) the amount of payments by the
Escrow Agent to Purchaser under the Indemnification Escrow Agreement
prior to 30 April 2000 and (y) other amounts notified to Escrow
Agent under the Indemnification Escrow Agreement, which have not
been resolved by 30 April 2000; and
(c) if the aggregate Indemnifiable Claims notified on or before 30 April
2000 are in excess of CHF 10'000'000, the amount of CHF 20'000'000
less the sum of (x) the amount of payments by the Escrow Agent to
Purchaser under the Indemnification Escrow Agreement prior to 30
April 2000 and (y) other amounts notified to Escrow Agent under the
Indemnification Escrow Agreement, which have not been resolved by 30
April 2000; provided that if any Indemnifiable Claims are later
resolved at an amount less than the amount originally claimed, the
excess shall be added to the maximum liability for Indemnifiable
Claims under Section 6.16 and/or 6.18.
Accordingly, the liability of Sellers under this Agreement is limited in
all instances to the aggregate maximum amount of CHF 20'000'000.
Sellers shall not be liable to indemnify the Purchaser for any item for
which a provision has been made on the Balance Sheet as listed in Annex
6.6(e) until that provision has been used up and then only for the
excess; provided that while a provision listed in Annex 6.6(e) may be
used for all related items, it may not be used for unrelated items. For
sake of example, if there is a provision listed in Annex 6.6(e) for an
aggregate of CHF 500'000 for litigation on the Balance Sheet, no claim
for a Loss relating to litigation may be made until all losses relating
to litigation exceed CHF 500'000, even if the provision for a specific
item of litigation has been exceeded. Moreover, provisions listed in
Annex 6.6(e) for income taxes, VAT, warranties, litigation and similar
items may only be used for such items and there shall be no cross-
utilization of provisions listed in Annex 6.6(e).
8.6 LIABILITY OF INDEMNIFICATION. Notwithstanding the representations and
warranties given by the Sellers hereunder jointly and severally, the
parties agree that no Seller shall be
<PAGE>
liable for any indemnification hereunder in excess of its/his pro rata
share of the Purchase Price, such pro rata share in the Purchase Price
being determined in Section 2.5, provided however that any
indemnification payable by each of the Sellers hereunder shall be paid in
the first instance for all Sellers out of the Escrow Payment in accordance
with the Indemnification Escrow Agreement and, if such Escrow Payment is
used up or all or part of the Escrow Payment is paid to the Sellers, by
each Seller pursuant to their respective pro rata share.
9. INDEMNIFICATION OF SELLERS
9.1 OBLIGATIONS OF PURCHASER. Purchaser agrees to indemnify and hold harmless
Sellers from and against any Losses of Sellers, directly or indirectly,
as a result of, or based upon or arising from, any inaccuracy in or
breach or nonperformance of any of the representations, warranties,
covenants or agreements made by Purchaser in or pursuant to this
Agreement.
9.2 FORM OF INDEMNIFICATION. Any indemnification by Purchaser to be made
hereunder shall be made in form of a payment to each of the Sellers in an
amount equal to his share as determined in Section 2.5 of the amount of
such Losses suffered by the Sellers in Swiss Francs.
10. PROCEDURE FOR INDEMNIFICATION
10.1 NOTICE. Each Party to this Agreement shall notify the other Party (in
case of the Purchaser notifying with copy to the Escrow Agent) in writing
within 30 days after it has detected a misrepresentation or breach of
representations or warranties by the other Party, provided that no delay
on the part of the notifying party shall relieve the other party from any
liability or obligation hereunder unless (and then solely to the extent
that) the other party are prejudiced by such failure to give notice. The
notification shall, in case of the Purchaser, be made in accordance with
the provisions of the Escrow Agreement, and in case of the Sellers
describe the claim and the related alleged facts in reasonable detail to
the extent then known and indicate the provisions of this Agreement
allegedly violated and any Losses allegedly incurred by the Sellers as a
consequence of such breach. The notified Party shall then have the
opportunity with the other Party's written consent (such consent not to
be unreasonably withheld) and at its own cost and expense to cure the
breach within 60 days from receipt of the notification to the extent such
breach is curable.
10.2 DEFENSE. If any claim, demand or liability is asserted by any third
party against any Indemnified Party, the Indemnifying Party shall upon
the written request of the Indemnified Party, defend any actions or
proceedings brought against the Indemnified Party in respect of matters
embraced by the indemnity, but the Indemnified Party shall have the right
to conduct and control the defense of any Indemnifiable Claim if the
Indemnified Party chooses to do so, on behalf of and for the account and
risk of the Indemnifying Party who shall be bound by the result so
obtained to the extent provided herein, provided that the Indemnifying
Party shall be entitled to participate in any such defense at its own
expense, and provided further that the Indemnified Party may not enter
into any compromise or settlement without the consent of the Indemnifying
Party, which consent shall not be unreasonably withheld. If, after
<PAGE>
notification of any action or proceeding, the Indemnifying Party neglects
to defend the Indemnified Party or elects not to participate therein, a
recovery against the Indemnified Party suffered by it in good faith, is
conclusive in its favor against the Indemnifying Party, provided however
that, if the Indemnifying Party has not received reasonable notice of the
action or proceeding against the Indemnified Party, judgment against the
Indemnified Party is only presumptive evidence against the Indemnifying
Party. Each party hereto, to the extent that it is or becomes an
Indemnifying Party, hereby stipulates that a judgment against the
Indemnified Party shall be conclusive upon the Indemnifying Party. The
parties shall cooperate in the defense of all third party claims which
may give rise to Indemnifiable Claims hereunder. In connection with the
defense of any claim, each party shall make available to the party
controlling such defense, any books, records or other documents within
its control that are reasonably requested in the course of such defense.
10.3 TAX ADJUSTMENTS. Any amounts payable by the Indemnifying Party to or on
behalf of an Indemnified Party in respect of a Loss shall be adjusted as
follows:
(a) If such Indemnified Party is liable for any additional Taxes as a
result of the payment of amounts in respect of an Indemnifiable
Claim, the Indemnifying Party will pay to the Indemnified Party in
addition to such amounts in respect of the Loss within 10 days after
being notified by the Indemnified Party of the payment of such
liability (x) an amount equal to such additional Taxes (the "Tax
Reimbursement Amount") plus (y) any additional amounts required to
pay additional Taxes imposed with respect to the Tax Reimbursement
Amount and with respect to amounts payable under this clause (y),
with the result that the Indemnified Party shall have received from
the Indemnifying Party, net of the payment of Taxes, an amount equal
to the Loss. Purchaser undertakes to use its reasonable endeavours
to mitigate any adverse tax consequences of Purchaser in connection
with any payment of Sellers in respect of an Indemnifiable Claim.
(b) The Indemnified Party shall reimburse the Indemnifying Party an
amount equal to the net reduction in any year in the liability for
Taxes (that are based upon or measured by income) of the Indemnified
Party or any member of a consolidated or combined tax group of which
the Indemnified Party is, or was at any time, part, which reduction
is actually realized with respect to any period after the Completion
Date and which reduction would not have been realized but for the
amounts paid (or any audit adjustment or deficiency with respect
thereto, if applicable) in respect of a Loss, or amounts paid by the
Indemnified Party pursuant to this paragraph (a "Net Tax Benefit").
The amount of any Net Tax Benefit shall be paid not later than 15
days after the date on which such Net Tax Benefit shall be realized.
For purposes of this clause 10.3(b), the Net Tax Benefit shall be
deemed to be actually realized on the date on which such Net Tax
Benefit is used to compute an obligation to pay installments of
estimated tax or, if earlier, reported earnings; provided, however,
that if the amount of any Net Tax Benefit is subsequently affected
by reason of any event or events, including, without limitation, any
payment of Taxes by such Indemnified Party with respect to the loss
of such Net Tax Benefit upon audit or litigation, appropriate
adjustments and payments to take into account the increase or
decrease in such Net Tax Benefit shall be made between the
Indemnified Party and the Indemnifying Party within 15 days after
such event
<PAGE>
or events. Any expenses associated with the realization of a Net Tax
Benefit or any contest or proceeding with respect to a Net Tax
Benefit shall be deemed to reduce such Net Tax Benefit. Purchaser
agrees to provide Seller or its designated representatives with such
assistance and such documents and records reasonably requested by
them that are relevant to their ability to determine whether a
Net Tax Benefit has been realized including but not limited to
copies of Tax Returns, estimated tax payments, schedules, and related
supporting documents.
10.4 EXCLUSION OF REMEDIES BY LAW. The parties mutually agree and acknowledge
that the terms and provisions set forth in this Agreement shall be
exclusively applicable in respect of any Warranties or termination rights
given herein and any claims, actions or remedies either party may have
against the other in respect of any Warranties or in respect of
termination of this Agreement, except for any termination under Section
11.1(b). Such contractual rights and obligations shall be in lieu of any
rights or obligations set forth in the applicable laws, in particular in
the CO. The parties hereby expressly exclude the application of the
provisions of the articles 197 through 210 CO, including but not limited
to the right of Purchaser to rescind the agreement under article 205 CO,
the right for reduction of the purchase price (article 205 CO) and notice
requirements under article 201 CO, as well as of the article 97 seq. CO
and of article 41 seq. CO.
10.5 SURVIVABILITY. The indemnification provisions contained in Section 8
through 10 of this Agreement further shall survive the Completion and
shall remain in effect until 30 April 2000, except that (i) the
Purchaser's rights to indemnification arising out of breaches or non-
fulfillment of the Warranty contained in Section 6.16 (Tax Warranty) and
in Section 6.18 (Environmental Warranty) shall survive until the 4th
(fourth) anniversary of the Completion Date.
11. TERMINATION OF OBLIGATIONS
11.1 NON-COMPLIANCE WITH COMPLETION OBLIGATIONS. If any of the Parties fails
to comply fully with the obligations imposed upon it by Section 4.2, the
other party shall not be required to comply with the obligations upon it
under Section 4. Furthermore, in the event that, on the Completion Date,
Purchaser or Sellers does not comply with the obligations to be performed
by it or them as set out or referred to in Section 4.2, then the Party
not in default shall be entitled to:
(a) first to postpone the date of Completion to a date not more than 15
(fifteen) days later on the basis that the provisions of Section 4.2
shall apply as if such new date had always been the Completion Date,
and the Party in default shall use its/their best efforts to cure
the default;
if then the Party in default is still not in compliance with
its/their obligations then the Party not in default shall, without
prejudice to any other rights against the Party in default (it
being agreed and understood that in such case Section 10.4 shall
not apply), be entitled (at its or his option as the case may be)
to:
(b) rescind this Agreement forthwith without prejudice to any and all
other remedies it has or may have; or
<PAGE>
(c) proceed to complete this Agreement so far as may be practical,
including any applications to the competent court for an order or
judgment for completion of the transaction and payment of the
Purchase Price.
11.2 TERMINATION OF AGREEMENT FOR OTHER REASONS. (a) This Agreement and the
transactions contemplated by this Agreement may be otherwise terminated:
(i) By mutual consent in writing by Purchaser and Sellers; or
(ii) By the Purchaser if it determines in its sole judgment that
any of the disclosures made in the Amended Disclosure Letter
would have a Material Adverse Effect.
(b) If this Agreement shall be terminated pursuant to this Section 11.2,
all further obligations of the parties under this Agreement shall
terminate without further liability of any party to another.
(c) If this Agreement shall so lapse and be of no further force or
effect, then the parties shall be under no further obligation to each
other in respect of this Agreement except that:
(i) Section 13.4 (Notice), Section 13.15 (Governing Law) and
13.16 (Jurisdiction) shall continue to apply; and
(ii) the lapse shall be without prejudice to any accrued rights or
liabilities.
12. COVENANTS AND AGREEMENTS OF THE PARTIES
12.1 ACQUISITION OF 836 PARTICIPATION CERTIFICATES. Sellers shall use their
best endeavours to provide Purchaser on or before Completion with duly
executed Sale and Purchase Agreements and respective endorsments for all
836 Participation Certificates substantially in the form attached as
Annex 12.1 from all current registered holders of Participation
Certificates (other than EP and HG). To the extent that such duly
executed sale and purchase agreements have not been obtained upon
Completion, the Sellers undertake to continue thereafter to use their
best endeavours to obtain such duly executed Sale and Purchase Agreements
outstanding.
12.2 ACCESS TO INFORMATION AND PROPERTIES. As of the date hereof, Purchaser
has had an opportunity to review the Disclosed Information, and from the
date hereof until the Completion Date, Sellers shall continue to provide
Purchaser and its representatives all reasonably required and available
information on the Group Companies' assets, books, contracts, commitments
and records and other information concerning such companies and their
affairs. Sellers agree, however, that with respect to the Warranties
given by Sellers pursuant to Section 6 hereof, Purchaser shall only be
regarded as being aware of the matters disclosed in this Agreement, the
Annexes (except in Annex 1.1(a)) and the Schedules hereto, and the
Disclosure Letter, including the Amended Disclosure Letter,
notwithstanding any further investigation by Purchaser and
notwithstanding that any information is or may be contained in the
Disclosed Information.
<PAGE>
12.3 BUSINESS PENDING COMPLETION. Pending the Completion, except as otherwise
consented to by Purchaser (which consent shall not unreasonably be
withheld) in writing, Sellers covenant that:
(a) ORDINARY COURSE OF BUSINESS. The Business shall be conducted only in
the ordinary course consistent with past practice. This shall mean,
for example:
(i) all material existing insurance policies shall be maintained,
except where the insured risks have ceased to exist or where
replaced by a policy providing substantially the same cover;
(ii) Sellers shall use all reasonable efforts, and shall cause the
Company and the Subsidiaries to use all of its reasonable
efforts, to keep the Business and their business
organizations intact and to preserve, to the extent practical
and beneficial to the Company or the Subsidiaries, its
existing relationships with suppliers, employees, customers
and others having business relations with it;
(iii) except as otherwise provided in this Agreement, neither the
Company nor any Subsidiary shall:
(1) appoint or dismiss any directors or employees earning
over CHF 100'000 per annum, make any material change in
compensation for management or employees other than in
accordance with existing agreements or labor contracts and
other than salary adjustments and increases in the line of
the past business practice of the Group Companies;
(2) declare or distribute any dividends or other
distributions;
(3) issue or create any obligation to issue any equity
securities or modify any rights in respect thereof;
(4) redeem or purchase any shares or in any way reorganize
its share capital;
(5) acquire or dispose of (other than in the ordinary course
of business consistent with past practice or for replacement
purposes) any assets of material value;
(6) give any guarantees or indemnities other than in the
ordinary course of business consistent with past practice;
(7) encumber or transfer (other than in the ordinary course
of business consistent with past practice) any assets, except
for any transfers between the members of the Group Companies;
(8) make any borrowing in excess of its existing bank
facilities (credit line), grant any loans (other than small
loans or advances to employees or agents) or make any
guarantees or indemnities, except pursuant to arrangements or
commitments which existed prior to 30 June, 1998 or except as
is consistent with normal past practice and existing business
needs or except between the members of the Group Companies;
<PAGE>
(9) alter its customary manner of keeping its books, records
and financial accounts, except as required or suggested by
Purchaser;
(10) alter or amend its articles of incorporation or by-laws
or other governing document, unless as necessary to give
effect to the provisions of this Agreement or except as
required by any applicable law;
(11) commence any litigation (save in respect of collection
of debts or as may be necessary or beneficial in the ordinary
course of business).
(b) Sellers shall use their best efforts to procure that each of the
Company and any of the Subsidiaries shall conduct their businesses
in such a manner that, on the Completion Date, the Warranties of
Sellers contained in this Agreement shall be true in all material
respects as though such representations and warranties were made on
and as of such date.
13. MISCELLANEOUS
13.1 COSTS AND EXPENSES BORNE BY THE PARTIES. Subject to the other provisions
of this Agreement, each party will bear its own costs and expenses in
connection with this Agreement.
13.2 OTHER COSTS. If Completion occurs, the Company shall pay on demand:
(i) all fees and costs of the Company or Melcher AG in connection
with the Sellers Employment Agreements;
(ii) all compensations costs, fees and expenses in relation to the
resignation of Mr. Thomas Seiler to the extent not paid
previously.
13.3 TAXES. All Swiss stamp duty on transfer of the Shares, the Participation
Certificates and the Convertible Loans hereunder to the Purchaser, if
any, shall be paid by the Sellers. All other Taxes which are imposed by
statute or directive on a party shall be paid by such party.
13.4 NOTICES. All notices required or permitted to be given hereunder shall be
in writing and shall be delivered personally or sent by telecopier and
promptly confirmed by, or postage prepaid by registered, certified or
express mail, or reputable overnight courier service, and shall be deemed
given when delivered to the following addresses:
IF TO SELLERS: SBC Equity Partners Ltd
Walchestrasse 9
CH-8006 Zurich, Switzerland
Attn. Dr. Bernhard Steck
Fax: ++41 1 239 85 11
with copy to: Dr. Peter Isler
Niederer Kraft & Frey
Bahnhofstrasse 13
<PAGE>
CH-8001 Zurich, Switzerland
Fax: ++41 1 217 14 00
with copy to: Dr. Rene Bosch
Homburger Rechtsanwalte
Weinberstrasse 56/58
CH-8006 Zurich, Switzerland
Fax: ++41 1 265 35 11
IF TO PURCHASER: Power-One, Inc.
740 Calle Plano
Camarillo, CA 93012, U.S.A.
Attn. Steven J. Goldman, CEO
Fax: ++1 805 484-0445
with copy to: Kendall R. Bishop, Esq.
1999 Avenue of the Stars
Suite 700
Los Angeles, California 90067, U.S.A.
Fax: ++1 310 246-6779
with copy to: Dr. Hannes Glaus/Dr. Thomas M. Rinderknecht
Rinderknecht Glaus & Stadelhofer
Beethovenstrasse 7
CH-8002 Zurich, Switzerland
Fax: ++41 1 287 2400
or in any case to such other address as hereinafter shall be furnished as
provided in this Section 13.4 by any of the Parties to this Agreement to
the other party.
13.5 WAIVER; REMEDIES. Unless explicitly stipulated otherwise herein, no delay
on the part of Sellers or Purchaser in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any
waiver on the part of Sellers or Purchaser of any right, power or
privilege hereunder, nor shall any single or partial exercise of any
right, power or privilege hereunder, preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder.
13.6 ENTIRE AGREEMENT. This Agreement, together with the respective Annexes
and Schedules hereto, and the Ancillary Agreements, constitute the entire
agreement between the Parties with respect to the subject matter
contemplated therein and supersede all other prior agreements or
understandings of the Parties relating thereto.
13.7 AMENDMENT. Changes or amendments of this Agreement shall only be made in
writing.
13.8 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which together shall
constitute a single agreement.
13.9 RIGHTS OF THIRD PARTIES. Except as otherwise expressly provided in this
Agreement, nothing in this Agreement is intended, or shall be construed,
to give any Person or
<PAGE>
entity other than the Parties to this Agreement any rights or remedies
based on this Agreement.
13.10 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding on the
Parties hereto and their respective successors and assigns. Neither party
shall assign this Agreement or any rights or obligations hereunder to any
third party without the written consent of the other party hereto, which
consent shall not be unreasonably withheld, and any attempted assignment
in violation of the foregoing prohibition shall be null and void.
Nevertheless, Purchaser shall have the right to assign this Agreement, or
any rights and obligation hereunder, to any Affiliate of Purchaser
designated by Purchaser in writing to Sellers provided (i) it delivers to
Sellers at the time of such assignment a guarantee relating to the
performance of such obligations in form and substance reasonably
satisfactory to Sellers and (ii) such Affiliate agrees (in form
acceptable to Sellers) to reassign the same to Purchaser upon its ceasing
to be an Affiliate and (iii) the rights of Sellers hereunder are not in
any way impaired, jeopardized or prejudiced.
13.11 PUBLIC ANNOUNCEMENTS. Sellers and Purchaser will consult before issuing
any press release or otherwise making any public statement with respect
to this Agreement and the transactions contemplated hereby and, except as
required by law or any other regulatory authority, shall not issue any
such press release or make any such public statement prior to such
consultation and without the other party's prior written approval such
approval not to be unreasonably withheld.
13.12 INVALIDITY AND UNENFORCEABILITY OF PROVISIONS. In the event that any of
the terms or provisions of this Agreement should be in conflict with any
applicable rule, law or statutory provision or should be otherwise
unenforceable under any applicable laws or regulation of any government
or subdivision thereof, such terms or provisions shall be deemed stricken
from this Agreement but such invalidity or unenforceability shall not
invalidate any of the other terms and provisions of this Agreement and
this Agreement shall remain otherwise fully in force. Such invalid or
unenforceable provision shall be replaced by a substitute provision which
is valid and enforceable and which duly reflects the economical interest
the Parties had in good faith by the application of the invalid
provision.
13.13 TIME OF THE ESSENCE. Except as otherwise expressly provided, time is of
the essence of this Agreement.
13.14 SUCCESSION. This Agreement shall be binding on and shall inure to and for
the benefit of the successors, heirs and assignees of the Parties.
13.17 FURTHER ASSURANCES. Sellers and Purchaser shall each execute and deliver
all such instruments and other documents and take all such actions as
Purchaser or Sellers may reasonably require in order to give full effect
to the provisions of this Agreement.
13.18 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the LAWS OF SWITZERLAND without reference to the
principles of conflict of laws and under exclusion of the Vienna
Convention on the International Sale of Goods of April 11, 1980.
13.19 JURISDICTION. For all disputes arising in connection with this Agreement
the Parties submit to the exclusive jurisdiction of the COMMERCIAL COURT
OF ZURICH ("Handelsgericht des Kantons Zurich") subject to appeal
(including appeal to the Swiss Federal Tribunal, "Bundesgericht"), as
provided by law.
<PAGE>
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LEFT BLANK INTENTIONALLY]
<PAGE>
LIST OF ANNEXES
Annex 1.1(a) List of Disclosed Information
Annex 1.1(b) Audited Financial Statements and Unaudited Financial
Statements
Annex 1.1(c) Form of Indemnification Escrow Agreement
Annex 1.1(d) Selling Managers Employment Agreements
Annex 1.1(e) Form of Selling Managers' Escrow Agreement
Annex 4.2(c) Agreed Form of assignment for the Convertible Loans
Annex 4.2(d) Agreed Form of the board resolution of the Company
Annex 4.2(i) Items to be covered by the auditors' confirmation
regarding non-Swiss Subsidiaries
Annex 4.2(k) Form of the compliance statement by each of Sellers
and Purchaser
Annex 6.2(a) List of Group Companies showing authorized outstanding
share capital for each company
Annex 6.3 List of Subsidiaries showing direct or indirect ownership
interest of the Company
Annex 6.6(e) List of provisions included in the Balance Sheet, stating
the amount and the respective item for which such
provision has been made
Annex 6.10(c) List of Pending Registrations of trademarks and patents
Annex 6.11(a) List of Material Contracts
Annex 6.14 List of all key managers and directors of the Company and
the Subsidiaries, all bank accounts of the Group
Companies and the Persons authorized to make withdrawals
therefrom
Annex 6.16(d) Details on tax audits performed with respect to any
Group Company;
Annex 6.19 List of worldwide insurance policies held or owned by
Melcher AG for all Group Companies
Annex 12.1 Form of the Sale and Purchase Agreement for the 836
Participation Certificates
<PAGE>
IN WITNESS whereof the Parties have executed this Agreement in Zurich on the
25th day of August 1998.
PURCHASER: POWER-ONE
By:
---------------------------
Name:
Title:
SELLERS:
SBC EQUITY PARTNERS LTD.
By:
---------------------------
Name:
Title:
ELECTROWATT AG
By:
---------------------------
Name:
Title:
DEFI HOLDING S.A.
By:
---------------------------
Name:
Title:
------------------------------
DR. HANS GRUTER
------------------------------
DR. MARTIN SCHNIDER
------------------------------
JOHANN MILAVEC
