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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 22, 1997
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COMPUTER PRODUCTS, INC.
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(Exact name of registrant as specified in its charter)
Florida 0-4466 59-1205269
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(State or other jurisd- (Commission (IRS Employer
iction of incorporation) File Number) Identification No.)
7900 Glades Road, Suite 500, Boca Raton, Florida 33434-4105
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (561) 451-1000
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N/A
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(Former name or former address, if changed since last report)
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<PAGE>
Item 2. Acquisition or Disposition of Assets
On July 22, 1997, pursuant to an Agreement on the Sale, Purchase and Transfer of
Shares (the "Purchase Agreement") by and among Mr. Horst Schultz and Mrs.
Brigitte Schultz (the "Sellers") and Herbert Elektronische Gerate GmbH & Co. KG
("Herbert"), Dutor Holding B.V., and Computer Products Power Conversion Limited
(U.K.) (collectively the "Purchasers"), all wholly-owned subsidiaries of
Computer Products Inc. (the "Registrant"). The Purchasers acquired all the
outstanding capital stock of the following affiliated companies collectively
referred to as the Elba Group: Elba Electric GmbH, Elba Modul GmbH, ELBA
ELEKTRONIK - BAUELMENTE AG, Elba Electronics Ltd., Elba Electric-Produktion
s.r.o.,Elba Electronique S.A.R.L., and KRP Power Source B.V. The Elba Group is
engaged in the design, manufacture and marketing of a wide range of both AC/DC
and DC/DC power conversion products in Europe. The Purchase Agreement is filed
as Exhibit 2 hereto.
The purchase price of 52 million Deutsche marks (approximately $29 million) was
based on the financial statements of the Elba Group as of and for the year ended
December 31, 1996 and projections provided by the Sellers and reviewed by the
Purchasers and their advisors. Such purchase price is subject to a downward
adjustment based upon a post-closing audit pursuant to the terms of the Purchase
Agreement.
The purchase price was funded by proceeds from two seven-year term loans
from First Union National Bank, London Branch to the Registrant and Herbert,
respectively, in the aggregate principal amount of 52 million Deutsche marks.
The loans bear interest at Libor plus .75%.
It is the intention of the Registrant, subject to a review of each acquired
company, to continue to use the acquired assets in substantially the same manner
as prior to the acquisition with certain changes to operating procedures and
upgrades to or changes of existing equipment.
The description contained herein of the Agreement is qualified in its entirety
by reference to the Purchase Agreement, dated as of July 22, 1997 and the press
release, dated July 28, 1997, which are attached hereto as Exhibit 2 and Exhibit
99, respectively, and incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(a) Financial statements of business 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 no 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) of Form 8-K, such
financial statements shall be filed by amendment to this Form 8-K as soon as
practicable but no later than 60 days after this Report is required to be filed.
(c) Exhibits
Exhibit No. Description
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2 Agreement on the Sale, Purchase and Transfer of
Shares dated as of July 22, 1997.
99 Press release issued by the Company
on July 28, 1997.
<PAGE>
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 hereunto duly authorized.
COMPUTER PRODUCTS, INC.
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(Registrant)
Dated: August 4, 1997
By:Richard J.Thompson
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Richard J.Thompson,
Vice President-Finance and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
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Exhibit
No. Description
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99 Press release issued by the Company on July 28, 1997.
2 Agreement on the Sale, Purchase and Transfer of Shares
dated as of July 22, 1997.
FOR IMMEDIATE RELEASE
Investor Relations Contact: Company Contact:
John Nesbett Richard Thompson
Lippert/Heilshorn & Associates Chief Financial Officer
(212) 838-3777 (561) 451-1000
COMPUTER PRODUCTS, INC. ACQUIRES EUROPEAN ELBA GROUP
MID-RANGE POWER SUPPLIES EXPAND COMMUNICATIONS
PRODUCT OFFERINGS
BOCA RATON, FL (July 28, 1997) -- Computer Products, Inc. (Nasdaq/NM:CPRD), one
of the world's leading manufacturers of electronic subsystems for power
conversion, today announced that it has acquired the privately-held Elba Group,
a European designer, manufacturer and marketer of a wide range of both AC/DC and
DC/DC power conversion products. Elba's fastest growing product segment is its
medium power AC/DC converters (150-750 watts) sold to OEM communications
customers under the Elba and KRP Power Source labels.
Computer Products purchased Elba for $29 million in cash provided by a 7-year
loan facility with First Union National Bank. Elba's revenues for the twelve
trailing months ended June 30, 1997 were approximately $25 million. The Elba
Group's customers include major multinational corporations such as Ericsson,
Kodak, Krone AG and Siemens among others. Elba currently has 375 employees.
Elba has design, sales and manufacturing organizations in Oberhausen and
Einsiedel, Germany; Chomutov, Czech Republic and Etten-Leur, Netherlands. The
Company also has sales offices in Pfaffikon, Switzerland; Vaulx-Milieu, France;
and Chesterfield, United Kingdom.
Mr. Richard Thompson, Vice President and CFO of Computer Products, stated, "The
acquisition of the Elba Group adds significant design expertise along with a
strong product offering and important relationships with the world's leading
Wireless and Telecommunications equipment manufacturers. Elba also enjoys a
prominent position in supplying power products to the rapidly deregulating cable
television business in Europe. We believe that Computer Products extensive sales
channels can accelerate the growth of this business. The acquisition also
expands our European presence, adds low cost manufacturing capacity in the Czech
Republic and is expected to be accretive to Computer Products' earnings."
Mr. Thompson continued, "Our European business, headquartered in Youghal,
Ireland, recorded $57 million in sales last year accounting for 28% of Computer
Products total sales. The addition of the Elba Group clearly enhances our
presence in the region and demonstrates our commitment to servicing a global
customer base."
Computer Products, Inc., headquartered in Boca Raton, Fla., is a manufacturer of
standard and custom-designed power supplies and power subsystems and other
real-time systems applications for the communications industry. The Company has
operations in Madison, Wis., Boston, Mass., Fremont and Huntington Beach,
Calif., Hong Kong and Zhongshan, China, and the Republic of Ireland.
This release, other than historical financial information, may consist of
forward-looking statements that involve risks and uncertainties. These
statements may differ materially from actual future events or results. Readers
are referred to the documents filed by the Company with the SEC, specifically
the most recent reports on Forms 10-K and 10-Q, which identify important risk
factors that could cause actual results to differ from those contained in the
forward-looking statements.
Number 91 of the Document Register for 1997
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D o n e
in Frankfurt am Main on July 22, 1997
Before me, the undersigned attorney-at-law
Dr. Jorg Michael Lang
as officially appointed representative (Notarvertreter)
of the Notary Public
in the district of the Superior Court of Frankfurt am Main
DR. HANS HOFMANN
with official domicile at Frankfurt am Main
appeared today:
1. a) Mr. Horst Schultz,Ing. grad.,
b) Mrs. Brigitte Schultz,
both residing at Gebruder-Grimm-Weg 1,
68804 Altlussheim, Germany,
- hereinafter collectively called "The Sellers" -,
acting as shareholders of
(i) Elba Electric GmbH,
(ii) Elba Modul GmbH,
(iii) Elba AG,
(iv) Elba Ltd.,
(v) Elba s. r. o.,
(vi) Elba S.A.R.L.,
(vii) KRP Power Source B.V.
2. Mr. Richard J. Thompson,
with offices at 7900 Glades Road, Suite 500,
Boca Raton, Florida FL 33434, U.S.A.,
according to his statement not acting on his own behalf, but rather
exclusively for
a) "Herbert" Zehnte Beteiligungs- und Verwaltungsgesellschaft mbH,
with offices at Freiherr-vom-Stein-Strasse 24 - 26,
D-60323 Frankfurt am Main
- hereinafter called "Herbert GmbH" -
a company registered in the Commercial Register of Frankfurt am
Main under HR B 42550, acting as partner and future general partner
(Komplementar) of
Herbert Elektronische Gerate GmbH & Co. KG.
in Grundung,
with offices at
Freiherr-vom-Stein-Strasse 24 - 26,
D-60323 Frankfurt am Main
- hereinafter called "Herbert GmbH & Co. KG" -
upon its registration in the Commercial Register A of Frankfurt am Main in his
capacity as appointed Managing Director of Herbert GmbH having sole power of
representation, undertaking to submit a certified copy of an excerpt from the
Commercial Register B of Frankfurt am Main as soon as he is entered in the
Commercial Register as Managing Director of Herbert GmbH and a certified copy of
an excerpt from the Commercial Register A of Frankfurt am Main as soon as
Herbert GmbH & Co. KG is registered as limited partnership
(Kommanditgesellschaft). A certified copy of the shareholders' resolution by
which the managing director Richard J. Thompson was appointed, and a certified
copy of the application for the entry of Herbert GmbH & Co. KG in the Commercial
Register are attached to this notarial deed as Exhibits A and B;
b) Computer Products Inc.,
with offices at
7900 Glades Road, Suite 500,
Boca Raton, Florida FL 33434, USA
- hereinafter called "Guarantor" -
in his capacity as Vice President Finance having sole power of
representation.
By way of proof the authority of Mr. Richard J. Thompson to represent
the Guarantor, Mr. Richard J. Thompson submitted a legalized
Secretary's Certificate of the Assistant Secretary of the Guarantor
dated July 7, 1997, which is attached to this notarial deed as Exhibit
C.
3. Dr. Erich Michel, Attorney-at-Law,
with offices at Freiherr-vom-Stein-Strasse 24 - 26,
D-60323 Frankfurt am Main,
according to his statement not acting on his own behalf, but rather
exclusively for
a) Dutor Holding B. V.,
with offices at Blaak 555,
NL-3011 GB Rotterdam, The Netherlands
- hereinafter called "Dutor B. V." -,
as attorney-in-fact submitting to the officially appointed representative
of the notary public by way of proof of his authority to act for the
aforementioned company a notarially certified power of attorney with a
notarial certificate of authorization (Vertretungsbescheinigung) dated
July 9, 1997 which is attached to this notarial deed as Exhibit D;
b) Computer Products GmbH
Maxallee 5
92224 Amberg
-hereinafter called ,,Computer Products GmbH" -,
a company registered in the Commercial Register of Amberg under HR B 1435
acting as partner and future limited partner (Kommanditist) of Herbert
GmbH & Co. KG upon its registration in the Commercial Register A of
Frankfurt am Main
as attorney-in-fact submitting to the officially appointed representative
of the notary public by way of proof of his authority to act for the
aforementioned company powers of attorney signed by Messrs. Siegfried
Georg Kreuzer and Garry John Duffy in their capacity as managing
directors of Computer Products GmbH dated July 8, 1997 and July 15, 1997
which are attached to this notarial deed as Exhibits E and F undertaking
to submit a certified excerpt of the Commercial Register certifying that
Messrs. Siegfried Georg Kreuzer and Garry John Duffy are fully authorized
to represent Computer Products GmbH and to sign the power of attorney on
its behalf. The original of this document shall be attached to this
notarial deed upon receipt by the notary public.
c) Computer Products Power
Conversion Limited (U.K.),
with offices at Garden House,
1 High Street,
Lane End, High Wycombe
Bucks, HP 143 JF,
United Kingdom
- hereinafter called "CPI UK" -,
as attorney-in-fact submitting to the officially appointed
representative of the notary public by way of proof of his authority to
act for the aforementioned company a power of attorney signed by Mr.
Gary John Duffy in his capacity as director of CPI UK dated July 1997
which is attached to this notarial deed as Exhibit G with the
undertaking to sumbit a notarial certification certifying that Mr. Gary
John Duffy is fully authorized to represent CPI UK and to sign the
power of attorney on its behalf. The original of this document shall be
attached to this notarial deed upon receipt by the notary public.
- Herbert GmbH & Co. KG, Dutor B. V. and CPI UK hereinafter
collectively called "The Purchasers" -.
The deponents mentioned under Nos. 1 a), 1 b) and 2) identified themselves by
presenting their valid identity cards or passports to the officially appointed
representative of the Notary Public.
The deponent mentioned under No. 3 is personally known to the officially
appointed representative of the Notary Public.
The deponents expressly requested that this notarial deed be prepared in the
English language. They confirm that they have command of the English language.
I, Dr. Jorg Michael Lang, as officially appointed representative of the Notary
Public, have command of both the German and the English language and certify
that I expressly assured myself of the fact that the deponents have sufficient
command of the English language. The officially appointed representative of the
Notary Public pointed out to the deponents that they can request a German
translation of this notarial deed. However, the deponents stated that they do
not request a German translation of this notarial deed without, however, waiving
their right to request such a translation at a later point in time.
As regards the wording and contents of the Attachments 0.8 through 5 of the
following Purchase Agreement, reference is hereby made to the notarial deed No.
90/1997 of the Notary Public Dr. Hans Hofmann with offices in Frankfurt am Main
(hereinafter referred to as "Reference Deed") which was also recorded in the
English language. Pursuant to ss. 13a Beurkundungsgesetz, the Reference Deed is
hereby made an essential part of this notarial deed. The Reference Deed, the
original of which is available, is known to us, the deponents, and we waive the
reading out aloud and perusal of the Reference Deed and waive the attachment of
the Reference Deed to this notarial deed.
The deponents requested the notarization of the following
AGREEMENT ON THE SALE, PURCHASE AND TRANSFER OF SHARES
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Schedule of Definitions
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<TABLE>
<CAPTION>
<S> <C>
Elba Electric GmbH The stated capital of Elba Electric GmbH as defined in Section 1 of the WHEREAS
Stated Capital clause
Elba Electric GmbH The Elba Electric GmbH shares as defined in Section 1 of the WHEREAS clause
Shares
Elba Electric GmbH Elba Electric Gesellschaft mit beschrankter Haftung, Weiherweg 6, 68794
Oberhausen-Rheinhausen, Federal Republic of Germany
Elba Modul GmbH ELBA-modul Gesellschaft zur Herstellung modularer Stromversorgungen mbH,
Weiherweg 6, 68794 Oberhausen-Rheinhausen, Federal Republic of Germany
Elba Modul GmbH The stated capital of Elba-Modul GmbH as defined in Section 2 of the WHEREAS
Stated Capital clause
Elba Modul GmbH The shares of Elba-Modul GmbH as defined in Section 2 of the WHEREAS clause
Shares
Elba AG EL-BA ELECTRONIC-BAUELEMENTE AG, Obermattstrasse 84, 8330 Pfaeffikon, Switzerland
Elba AG The stated capital of Elba AG as defined in Section 3 of the WHEREAS clause
Stated Capital
Elba AG The shares of Elba AG as defined in Section 3 of the WHEREAS clause
Shares
Elba AG Trust Share The Elba AG Share held in trust by Mr. Heinz Stengel as defined in Section 3 of
the WHEREAS clause
Elba Ltd. Elba Electronics, Ltd., Carrwood Road, Chesterfield Trading Estate, S41 9QB,
Derbyshire, United Kingdom
Elba Ltd. The stated capital of Elba Ltd. as defined in Section 4 of the WHEREAS clause
Stated Capital
Elba Ltd. The shares of Elba Ltd. as defined in Section 4 of the WHEREAS clause
Shares
Elba s.r.o. ELBA-elektric-produktion s.r.o., Jirkov, Kludskeho 1320, Czech Republic
Elba s.r.o. The stated capital of Elba s.r.o. as defined in Section 5 of the WHEREAS clause
Stated Capital
Elba s.r.o. The share of Elba s.r.o. as defined in Section 5 of the WHEREAS clause
Share
Elba S.A.R.L. Elba electronique S.A.R.L., l'Isle d'Abbeau, 29 Rue Concorcet, 38090
Vaulx-Milieu, France
Elba S.A.R.L. The stated capital of Elba S.A.R.L. as defined in Section 6 of the WHEREAS clause
Stated Capital
Elba S.A.R.L. The shares of Elba S.A.R.L. as defined in Section 6 of the WHEREAS clause
Shares
KRP KRP Power Source B.V., Nieuwe Donk 6, 4870 AC Etten-Leur, The Netherlands
KRP The authorized stated capital of KRP Power Source B.V. as defined in Section 7
Stated Capital of the WHEREAS clause
KRP The shares of KRP as defined in Section 7 of the WHEREAS clause
Shares
Companies Shall mean Elba Electric GmbH, Elba Modul GmbH, Elba AG, Elba Ltd. and ELBA
s.r.o., collectively
Elba Electric GmbH
Subsidiaries Shall mean Elba S.A.R.L. and KRP collectively
ELBA GROUP Shall mean the Companies and the Elba Electric GmbH Subsidiaries collectively
Companies
Shares Shall mean the Elba Electric GmbH Shares, the Elba Modul GmbH Shares, the Elba
s.r.o. Share, the Elba Ltd. Shares, the Elba AG Shares, the Elba S.A.R.L.
Shares and the KRP Shares, collectively
Effective Date Shall mean the date defined in Section 1.2
Shareholder Loan Shall mean the loan receivable due to Mr. Schultz from Elba Electric GmbH as
defined in Section 8 of the WHEREAS clause
Share Purchase Price Shall mean the purchase price for the Shares as defined in Section 2.1
Loan Purchase Price Shall mean the purchase price for the Shareholder Loan as defined in Section 2.1
Total Purchase Price Shall mean the Share Purchase Price and the Loan Purchase Price collectively as
defined in Section 2.2
Escrow Amount Shall mean the amount defined in Section 2.3
Escrow Account Shall mean the account defined in Section 2.4
Pledge Shall have the meaning as defined in Section 2.4
Disbursement Date Shall have the meaning as defined in Section 2.4
Effective Date Shall mean combined financial statement including
Balance Sheet profit and loss statement of the ELBA GROUPCompanies
as of the Effective Date according to German
Commercial Code (HGB-Vorschriften) as defined in Section 2.5
Resolution Period Shall mean the 30-day-period as defined in Section 2.5
Arbitrator Shall mean the qualified professional (,,Wirtschaftsprufer") and member of a
reputable German Auditing Firm as defined in Section 2.5
Funded Debt Shall mean any indebtedness of the ELBA GROUP Companies for borrowed money as
defined in Section 2.6
Adjustment Amount Shall mean the amount of the Purchase Price Adjustment as defined in Section 2.6
Executed Agreements Shall mean the Agreements, Schedules Exhibits, Documents and Instruments as
defined in Section 3.6
Combined Financial Shall mean the financial statements as defined in Section 3.11
Statements
German GAAP Shall mean German generally accepted accounting
principles("Grundsatze ordnungsgemasser Buchfuhrung")
according to German Commercial Code
(HGB-Vorschriften) as defined in Section 2.5
Annual Statements Shall mean the annual statements of the ELBA GROUP Companies as defined in
Section 3.11.2
Local GAAP Shall mean generally accepted accounting principles applied in the respective
jurisdiction as defined in Section 3.11.2
Real Estate Shall mean the real estate owned by the ELBA GROUP Companies as defined in
Section 3.16
Rented Real Estate Shall mean the real estate rented by the ELBA GROUP Companies as defined in
Section 3.16
Material Contracts Shall mean the agreements and obligations of the ELBA GROUP Companies as defined
in Section 3.23
Loss Shall have the meaning as set forth in Section 4.1
Losses Shall have the meaning as set forth in Section 4.1
Indemnified Party Shall have the meaning as set forth in Section 4.1
Indemnifying Party Shall have the meaning as set forth in Section 4.1
The Banks Shall have the meaning as set forth in Section 5.
</TABLE>
WHEREAS:
1. The Sellers are the sole shareholders of Elba Electric Gesellschaft mit
beschrankter Haftung, a company which is incorporated under the laws of
the Federal Republic of Germany, which is registered in department B of
the Commercial Register of the Lower Court (Amtsgericht) of Bruchsal
under HRB 0227-PH and has its main business establishment at Weiherweg
6, 68794 Oberhausen-Rheinhausen, Federal Republic of Germany
(hereinafter ,,Elba Electric GmbH").
The stated capital of Elba Electric GmbH (hereinafter referred to as
the ,,Elba Electric GmbH Stated Capital") is DM 400,000.00, is fully
paid up and consists of the following shares (hereinafter referred to
as the ,,Elba Electric GmbH Shares"):
(1) (a share in the nominal amount of DM 18,000.00 held by Mr. Schultz)
(2) (a share in the nominal amount of DM 162,000.00 held by Mr. Schultz)
(3) (a share in the nominal amount of DM 180,000.00 held by Mr. Schultz)
(3) (a share in the nominal amount of DM 2,000.00, held by Ms. Schultz)
(4) (a share in the nominal amount of DM 18,000.00, held by Ms. Schultz)
(5) (a share in the nominal amount of DM 20,000.00, held by Ms. Schultz)
2. Furthermore the Sellers are the sole shareholders of ELBA - modul
Gesellschaft zur Herstellung modularer Stromversorgungen mbH, a company
which is incorporated under the laws of the Federal Republic of
Germany, which is registered in department B of the Commercial Register
of the Lower Court (Amtsgericht) of Bruchsal under HRB 384-PH and has
its main business establishment at Weiherweg 6, 68794
Oberhausen-Rheinhausen, Federal Republic of Germany (hereinafter "Elba
Modul GmbH").
The stated capital of Elba Modul GmbH (hereinafter referred to as the
"Elba Modul GmbH Stated Capital") is DM 100,000.00, is fully paid up
and consists of the following shares (hereinafter referred to as the
"Elba Modul GmbH Shares"):
(1) (two shares in the nominal amount of DM 40,000.00 each held by Mr. Schultz)
(2) (two shares in the nominal amount of DM 10,000.00 each held by Ms. Schultz)
3. Furthermore the Sellers and Mr. Heinz Stengel (in trust for Mr. and
Ms. Schultz) are the sole shareholders of EL-BA Electronic-Bauelemente
AG, a company which is incorporated under the laws of Switzerland,
which is registered under company number CH-020.3.907.635-3 in the
Commercial Register of the Kanton Zurich and has its main business
establishment at Obermattstra(beta)e 84, 8330
Pfaffikon, Switzerland (hereinafter "Elba AG").
The stated capital of Elba AG (hereinafter referred to as the "Elba AG
Stated Capital") is Swiss Francs 100,000.00 is fully paid up and
consists of the following issued shares (hereinafter referred to as the
"Elba AG Shares"):
(1) (100 shares in the nominal amount of Swiss Francs 500.00 each held by
Mr. Schultz)
(2) (99 shares in the nominal amount of Swiss Francs 500.00 each , held by
Ms. Schultz)
(3) (one share in the nominal amount of Swiss Francs 500.00, held in trust
by Heinz Stengel for Mr. Schultz (hereinafter "Elba AG Trust Share"))
4. Furthermore Mr. Schultz and members of the Randolph McDonald family are
the sole shareholders of Elba Electronics Ltd., a company which is
incorporated under the laws of the United Kingdom, which is registered
under company number 2129130 in the Company Register of Cardiff and has
its main business establishment at Carrwood Road, Chesterfield Trading
Estate, S41 9QB Derbyshire, United Kingdom (hereinafter ,,Elba Ltd.").
The stated capital of Elba Ltd. (hereinafter referred to as the "Elba
Ltd. Stated Capital") is Pound Sterling 100.00, is fully paid up and
consists of the following issued shares (hereinafter referred to as the
"Elba Ltd. Shares"):
(1) (50 shares in the nominal amount of one Pound Sterling each held by
Mr. Schultz)
(2) (11 shares in the nominal amount of one Pound Sterling each held by
Mr. Randolph McDonald)
(3) (10 shares in the nominal amount of one Pound Sterling each held by
Ms. Keren Fiore)
(4) (2 shares in the nominal amount of one Pound Sterling each, held by
Mr. Luca Fiore-McDonald)
(5) (2 shares in the nominal amount of one Pound Sterling each held by Ms.
Saffron Fiore-McDonald)
(6) (25 shares in the nominal amount of one Pound Sterling each held by
Ms. Schultz).
5. Furthermore Mr. Schultz is the sole shareholder of
ELBA-elektric-produktion s.r.o. a company which is incorporated under
the laws of the Czech Republic, which is registered in Section "C" of
the Commercial Register of the County Commercial Court of Usti nad
Labem under No. 8906 and has its registered seat at Jirkov, Kludskeho
1320, Czech Republic at and its production unit at Zadni Vinohrady ul.
Alfonse Muchy, 43001 Chomutov, the Czech Republic (hereinafter "Elba
s.r.o.").
The stated capital of Elba s.r.o. (hereinafter referred to as the
,,Elba s.r.o. Stated Capital") is Czech Crowns 100,000.00, is fully
paid up and consists of the following share (hereinafter referred to as
the ,,Elba s.r.o. Share"):
- (one share (Gesellschaftsanteil) in the nominal amount of Czech Crowns
100,000.00, held by Mr. Schultz)
6. Furthermore the Sellers, Elba Electric GmbH and Mr. Francois Lantelme
are the sole shareholders of Elba electronique S.A.R.L., a company
which is incorporated under the laws of the French Republic, which is
registered with the Registry of Commerce and Companies of Vienne under
No. B 385 123 419 and has its main business establishment at Domaine
d'Entreprises de L'Isle d'Abbeau, 29 Rue Concorcet, 38090 Vaulx-Milieu,
France (hereinafter "Elba S.A.R.L.").
The stated capital of Elba S.A.R.L. (hereinafter referred to as the
"Elba S.A.R.L. Stated Capital") is French Francs 700,000.00, is fully
paid up and consists of the following issued shares (hereinafter
referred to as the "Elba S.A.R.L. Shares"):
(1) (700 shares in the nominal amount of French Francs 100.00 each held by
Mr. Schultz)
(2) (700 shares in the nominal amount of French Francs 100.00 each held by
Ms. Schultz)
(3) (4,900 shares in the nominal amount of French Francs 100.00 each held
by Elba Electric GmbH)
(4) (700 shares in the nominal amount of French Francs 100.00 each held by
Mr. Francois Lantelme)
7. Furthermore Elba Electric GmbH and MAW Holding B.V. are the sole
shareholders of KRP Power Source B.V., a company which is incorporated
under the laws of the Netherlands, which is registered with the Chamber
of Commerce (Kamer van Koophandel en Fabrieken voor Westelijk
Noord-Brabant) under No. 69711 and has its main business establishment
at Nieuwe Donk 6, 4870 AC Etten-Leur, The Netherlands (hereinafter
"KRP").
The authorized capital of KRP (hereinafter referred to as the "KRP
Stated Capital") is Dutch Guilders 200,000.00. The stated capital of
KRP is Dutch Guilders 100,000.00, is fully paid up and consists of the
following issued shares (hereinafter referred to as the "KRP Shares"):
(1) (60 shares in the nominal amount of Dutch Guilders 1,000.00 each held
by Elba Electric GmbH)
(2) (40 shares in the nominal amount of Dutch Guilders 1,000.00 each held
by MAW Holding B.V.)
Elba Electric GmbH, Elba Modul GmbH, Elba s.r.o., Elba Ltd., and Elba
AG hereinafter are collectively referred to as "Companies". Elba
S.A.R.L. and KRP hereinafter are collectively referred to as "Elba
Electric GmbH Subsidiaries". The Companies and the Elba Electric GmbH
Subsidiaries hereinafter are collectively referred to as "ELBA GROUP
Companies".
The Elba Electric GmbH Shares, the Elba Modul GmbH Shares, the Elba s.r.o.
Share, the Elba Ltd. Shares, the Elba AG Shares, the Elba S.A.R.L.
Shares and the KRP Shares hereinafter are collectively referred to as
"Shares".
8. Furthermore, Mr. Schultz is the owner of a loan receivable from Elba
Electric GmbH in the principal amount of DM 2,285,429.00 plus interest
accrued thereon since July 18, 1997 (the "Shareholder Loan"). The
Shareholder Loan represents the remaining balance of such loan as of
December 31, 1996, together with accrued interest, net of (i) a loan
received by Mr. Schultz from Elba Modul GmbH and (ii) a loan received
by Ms. Schultz from Elba Electric GmbH, as shown in
Attachment 0.8
of the reference deed and after deduction for payments thereon, as
shown on such Attachment 0.8.of the reference deed. The results of the
netting process as mentioned above are shown in the Netting Agreement
on Shareholder Loans and Payables in Exhibit 0.8.
9. The Sellers wish to sell, and the Purchasers wish to purchase the
Shares and the Shareholder Loan. It is the common understanding of the
parties that 60 KRP Shares and 4,900 Elba S.A.R.L. Shares will be
acquired by the Purchasers through the acquisition of the Elba Electric
GmbH Shares and that on the Effective Date (as defined in Section 1.2)
the Sellers will sell and transfer all Shares held by them, and have
the right to cause, and shall cause, all Shares not held by them or
Elba Electric GmbH to be transferred to Purchasers such that the
Purchasers collectively will directly or indirectly own 100% of the
Shares as of the Effective Date.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1
Sale and Transfer of the Shares and of the Shareholder Loan, Completion
Mechanics, Right to Receive Dividends, Effective Date
1.1 Upon the terms and conditions of this Agreement the Sellers hereby sell
and transfer and will cause to be transferred to Purchasers the Shares
including all ancillary rights attached as described in this Section
1.1 below.
1.1.1 Out of the Elba Electric GmbH Shares Mr. Schultz sells
and transfers to Herbert GmbH & Co. KG a share in the nominal
amount of DM 18,000.00, a share in the nominal amount of DM
162,000.00 and a share in the nominal amount of DM 180,000.00.
Ms. Schultz sells and transfers to Herbert GmbH & Co. KG a
share in the nominal amount of DM 2,000.00, a share in the
nominal amount of DM 18,000.00 and a share in the nominal
amount of DM 20,000.00.
1.1.2 Out of the Elba Modul GmbH Shares Mr. Schultz sells and
transfers to Herbert GmbH & Co. KG two shares in the nominal
amount of DM 40,000.00 each and Ms. Schultz sells and
transfers to Herbert GmbH & Co. KG two shares in the nominal
amount of DM 10,000.00 each.
1.1.3 Out of the Elba AG Shares, Mr. Schultz sells and
transfers to Dutor B.V. 100 shares in the nominal amount of
Swiss Francs 500.00 each, Ms. Schultz sells and transfers to
Dutor B.V. 99 shares in the nominal amount of Swiss Francs
500.00 each and Mr. Schultz herewith assigns all rights and
claims he has under the trust agreement with Mr. Stengel
regarding the Elba AG Trust Share to Dutor B.V. which herewith
accepts the assignment. Such trust agreement is being
terminated by Mr. Schultz as of the day of this deed.
1.1.4 Out of the Elba Ltd. Shares Mr. Schultz sells and
transfers to CPI UK 50 shares in the nominal amount of one
Pound Sterling each, and Ms. Schultz sells and transfers to
CPI UK 25 shares in the nominal amount of one Pound Sterling
each. Out of the Elba Ltd. Shares held by other shareholders
holding such shares as identified in Section 4 of the WHEREAS
clause Mr. Schultz also sells to CPI UK 25 shares in the
nominal amount of one Pound Sterling each, and will cause such
shareholders to transfer to CPI UK such Elba Ltd. Shares on
the Effective Date.
1.1.5 Mr. Schultz sells and transfers to Dutor B.V. the Elba
s.r.o. Share held by Mr. Schultz.
1.1.6 Out of the Elba S.A.R.L. Shares Mr. Schultz sells and
transfers to Herbert GmbH & Co. KG 700 shares in the nominal
amount of French Francs 100.00 each and Ms. Schultz sells
and transfers to Herbert GmbH & Co. KG 700 shares in the
nominal amount of French Francs 100.00 each. Out of the Elba
S.A.R.L. Shares held by Mr. Francois Lantelme, Mr. Schultz
sells to Herbert GmbH & Co. KG 700 shares in the nominal
amount of French Francs 100.00 each and will cause Mr.
Francois Lantelme to transfer to Herbert GmbH & Co. KG such
Elba S.A.R.L. Shares on the Effective Date.
1.1.7Out of the KRP Shares held by MAW Holding B.V., Mr.Schultz
sells to Herbert GmbH & Co. KG 40 shares in the nominal
amount of Dutch Guilders 1,000.00 each and will cause MAW
Holding B.V. to transfer to Herbert GmbH & Co. KG such KRP
Shares on the Effective Date.
The Purchasers respectively accept such sale and transfer as outlined above.
Dutor B.V. in its capacity as new shareholder of Elba s.r.o.
accepts and acceeds to the current wording of the Articles of
Association of Elba s.r.o..
1.2 The transfer of the Shares in accordance with this Agreement shall
become effective on the date hereof (the "Effective Date").
1.3 In order to effectuate the transfer of title in the Shares in
accordance with this Agreement, the Sellers have implemented and have
caused to have implemented, as of the Effective Date, the formal steps
set forth on
Attachment 1.3.
of the reference deed.
1.4 The dividend of the current fiscal year as well as the dividends of
previous fiscal years which have not been distributed to shareholders
(e.g. accumulated rights to receive a dividend and profits of previous
fiscal years with respect to which no resolution on the appropriation
of results (Ergebnisverwendung) has been passed) regarding the
Companies shall be exclusively accrued to the respective Purchasers.
The dividend of the current fiscal year as well as the dividends of
previous fiscal years which have not been distributed to shareholders
(e.g. accumulated rights to receive a dividend and profits of previous
fiscal years with respect to which no resolution on the appropriation
of results (Ergebnisverwendung) has been passed) regarding the Elba
Electric GmbH Subsidiaries shall be exclusively accrued to Elba
Electric GmbH or the respective Purchaser, as the case may be.
1.5 Upon the terms and conditions of this Agreement the Sellers herewith
sell and assign to Herbert GmbH & Co. KG the Shareholder Loan. Herbert
GmbH & Co. KG herewith accepts such sale and assignment.
SECTION 2
Purchase Price, Escrow Account
2.1 The aggregate purchase price for the Shares shall be DM 49,714,571.00
(in words: Deutsche Mark forty-nine million sevenhundred fourteen
thousand fivehundred seventy-one) (the ,,Share Purchase Price"),
subject to adjustment as hereinafter provided.
Of the Share Purchase Price, an amount of DM 32,906,917.00 (which
includes amounts in respect of the Elba S.A.R.L. Shares (DM 272,098.00)
and KRP Shares (DM 9,491,048.00) held by Elba Electric GmbH) as of the
Effective Date represents the purchase price for the Elba Electric GmbH
Shares.
Of the Share Purchase Price, an amount of DM 5,428,740.00 represents
the purchase price for the Elba Modul GmbH Shares.
Of the Share Purchase Price, an amount of DM 1,578,468.00 represents
the purchase price for the Elba AG Shares.
Of the Share Purchase Price, an amount of DM 3,351,468.00 represents
the purchase price for the Elba Ltd. Shares.
Of the Share Purchase Price, an amount of DM 7,000.00 corresponding to
the equivalent amount of Czech Crowns on the day of execution of this
Agreement and according to the official rate of the Czech National Bank
represents the purchase price for the Elba s.r.o. Share.
Of the Share Purchase Price, an amount of DM 116,613.00 represents the
purchase price for the Elba S.A.R.L. Shares purchased from the Sellers
as of the Effective Date.
Of the Share Purchase Price, an amount of DM 6,325,365.00 represents
the Purchase Price for the KRP Shares purchased from the Sellers as of
the Effective Date.
The purchase price for the Shareholder Loan shall be DM 2,285,429.00
(the "Loan Purchase Price") subject to adjustment as hereinafter
provided.
2.2 Of the Share Purchase Price and the Loan Purchase Price (hereinafter
collectively "Total Purchase Price" which shall amount to an aggregate
of DM 52,000,000.00), an amount of DM 46,800,000.00 (in words: Deutsche
Mark forty-six million eighthundred thousand) shall be paid by the
Purchasers on the Effective Date by means of wire transfers, in
accordance with joint written payment instructions received from
Sellers, simultaneously with tender of delivery of the Shares in form
proper for transfer and other instruments set forth in Attachment 1.3
of the reference deed. Payment in accordance with such instructions
shall discharge the Purchasers vis-a-vis both Sellers.
2.3 A further amount of DM 5,200,000.00 (the "Escrow Amount") shall be paid
on the Effective Date into the account no. 8839383-00 (bank
identification no. 30040000) (the "Escrow Account") with Commerzbank AG
Dusseldorf jointly opened and managed by the Sellers in accordance with
the following provisions.
2.4 The Escrow Amount shall serve to partially secure any claims the
Purchasers may have against the Sellers hereunder and is pledged to the
Purchasers according to the pledge agreement in
Attachment 2.4
of the reference deed (the "Pledge"). The Escrow Amount together with
any interest, dividends or other profits accrued (unless distributed)
but less all bank fees shall be released to the Sellers on September 1,
1998, less any amounts as shall be necessary to cover any claims under
this Agreement pursuant to the adjustment of the Purchase Price, with
respect to accounts receivable pursuant to Section 3.12 or the
indemnification obligations of Sellers under Section 4 hereof as set
forth below. Interest, dividends or other profits accrued on the Escrow
Account shall be added to, and may be withdrawn together with the
principal amount. In case that the Total Purchase Price is adjusted
downward, the Purchasers shall be entitled to the interest, dividends
or other profits accrued on the Escrow Account on the respective amount
of the price reduction.
The Pledge shall be released by the Purchasers in full on September 1,
1998 (the "Disbursement Date"); provided, however, that if prior to the
Disbursement Date the Purchasers shall notify the Sellers that it has
made a claim under Section 4 hereof (relating to indemnification), then
an amount equal to the amount of each such claims shall be held in
pledge (beyond the Disbursement Date, if necessary). Any amounts held
in Pledge beyond the Disbursement Date shall be released to the Sellers
on November 1, 1998 unless prior to that date (i) the Purchaser filed
legal suit pursuant to Section 9.7 in respect of a claim under Section
4 hereof, and (ii) provided the Sellers with evidence of such filing.
Any amounts held in Pledge on such date in excess of amounts claimed in
such filing shall be released from Pledge on such date;
2.5 The Guarantor will prepare and deliver to the Sellers a combined
balance sheet and profit and loss statement of the ELBA GROUP Companies
as of the Effective Date (the "Effective Date Balance Sheet") within
onehundred twenty (120) days of the Effective Date. The Effective Date
Balance Sheet shall be (i) prepared in accordance with German generally
accepted accounting principles ("Grundsatze ordnungsgemasser
Buchfuhrung") according to the German Commercial Code
(HGB-Vorschriften) (hereinafter referred to as German GAAP) and (ii)
applied (to the extent in accordance with (i) above) under observance
of continuity in the accounting and evaluation principles in the
preparation of the combined balance sheet of the ELBA GROUP Companies
as at December 31, 1996, and shall be audited by Arthur Andersen. The
Guarantor shall make available to the Sellers (and Coopers & Lybrand)
such books, records and work papers and provide access to such
personnel as are reasonably necessary in order to review the Effective
Date Balance Sheet. Within thirty (30) days after receipt of the
Effective Date Balance Sheet by the Sellers, the Sellers may give
written notice of disagreement with the Effective Date Balance Sheet to
the Guarantor. If within such 30-day period the Sellers shall accept
the Effective Date Balance Sheet by written notice to the Guarantor or
shall not otherwise give written notice of disagreement to the
Guarantor within such 30-day period, the Effective Date Balance Sheet
shall be deemed accepted. If the Sellers shall give the Guarantor
notice of any disagreement, the Sellers and the Guarantor will, if
possible, resolve the matter(s) in dispute promptly after notice
thereof. Any disputed matter(s) that are not resolved by the parties
within the 30-day period following the receipt of such notice of
disagreement (the "Resolution Period") will be set forth in writing by
the Sellers and the Guarantor and such matter(s) shall be submitted to
one arbitrator being a qualified professional ("Wirtschaftsprufer") and
member of a reputable German auditing firm (the "Arbitrator") for final
and binding resolution. The Arbitrator shall be agreed upon between the
parties and, if the parties are unable to so agree within the 10-day
period following expiration of the Resolution Period, shall be selected
by the Chamber of Commerce (Industrie- und Handelskammer) Frankfurt am
Main. The Arbitrator shall be directed to consider only those matters
in dispute and to act promptly to resolve all disputed matters, and its
decision (which shall be in writing) with respect thereto shall be
final and binding upon the parties hereto. If a notice of disagreement
is received by the Guarantor, then the Effective Date Balance Sheet as
adjusted by the parties or the Arbitrator, as the case may be, shall be
final and binding upon the parties hereto on the earlier of (i) the
date the parties resolve in writing all disputed matters and (ii) the
date all disputed matters are finally resolved in writing by the
Arbitrator. The fees and expenses, if any, of the Arbitrator shall be
paid by the Guarantor and/or by the Sellers. The allocation of such
fees and expenses to the Guarantor and/or the Sellers shall be finally
resolved by the Arbitrator in application by analogy of the principles
set forth under Sec. 91 et seq. of the German Civil Procedure Code. The
parties shall cooperate with the Arbitrator to enable the Arbitrator to
render his decision within 30 days of his appointment.
2.6 In the event that the net equity according to German GAAP as shown on
the Effective Date Balance Sheet increased by the amount of any
accruals for any environmental liability risks associated with the Real
Estate or the Rented Real Estate is less than DM 10,000,000.00 (in
words: Deutsche Mark ten million), the Total Purchase Price shall be
reduced by a sum equal to the aggregate amount of any such deficiency
(the ,,Adjustment Amount"). The Adjustment Amount, if any, shall be
paid to the Purchasers first from the Escrow Amount and next from
Sellers to the extent of any deficiency in the Escrow Amount after the
Effective Date Balance Sheet shall, subject to adjustments, if any, be
accepted by the Sellers or otherwise shall become final and binding
upon the parties in accordance with Section 2.5 hereof. In addition to
the forgoing purchase price adjustment, the Total Purchase Price will
be reduced on a DM for DM basis for the amount of any payments
(including but not limited to the payment of approximately DM
242,800.00 made to Commerzbank AG in June 1997) made by any of the ELBA
GROUP Companies since January 1, 1997 and not refunded by the Sellers
in respect of borrowed money, excluding the Shareholder Loan and
excluding inter-company loans (hereinafter "Funded Debt"), except
regular amortization thereof in the ordinary course of business.
SECTION 3
Sellers' Representations and Warranties
The Sellers as joint debtors (Gesamtschuldner) represent and warrant to the
Purchasers in the form of an independent promise of guarantee (selbstandiges
Garantieversprechen) that the following statements are true and accurate as of
the Effective Date:
3.1 The statements made in the Whereas clause of this Agreement with
respect to the Sellers and the ELBA GROUP Companies are complete and
correct. All of the Shares have been duly and validly issued and are
fully paid and non-assessable. There are no options, warrants, rights,
calls, commitments, conversion rights, plans or other agreements of any
character to which the ELBA GROUP Companies or each of them is/are a
party or otherwise bound which provide for the purchase or issuance by
the ELBA GROUP Companies of any authorized but not outstanding, or
authorized and outstanding, shares of capital stock of the ELBA GROUP
Companies. There is no personal liability, and there are no preemptive
or similar rights, attached to the Shares.
3.2 Elba Electric GmbH and Elba Modul GmbH each are corporations with
limited liability (Gesellschaft mit beschrankter Haftung) duly
organized under the laws of the Federal Republic of Germany and validly
existing in accordance with the excerpt of the Commercial Register as
Attachment 3.2a
of the reference deed and the Articles of Association filed
with the Commercial Register and attached as
Attachment 3.2b
of the reference deed. There are no shareholder resolutions amending
the Articles of Association which have not yet been registered in the
Commercial Register, nor are there any side agreements relating to the
constitution or organization of the Elba Electric GmbH and Elba Modul
GmbH.
3.3 Elba s.r.o., Elba Ltd., Elba S.A.R.L., Elba AG and KRP are, as the case
may be, either companies with limited liability or stock corporations
with limited liability duly organized under the laws of the Czech
Republic or the United Kingdom or Switzerland or the French Republic or
the Netherlands, as the case may be, and validly existing in accordance
with the respective excerpts of the Commercial Registers attached as
Attachment 3.3a
of the reference deed and the Articles of Association filed with the
respective Commercial Registers and attached as
Attachment 3.3b
of the reference deed. There are no shareholder resolutions amending
the Articles of Association which have not yet been registered in the
respective Commercial Register, nor are there any side agreements
relating to the constitution or organization of Elba s.r.o., Elba Ltd.,
Elba S.A.R.L., Elba AG and KRP.
3.4 The ELBA GROUP Companies have no equity participations or other
ownership interests in other businesses or entities and are under no
obligation to acquire such participation or interest, or to invest in,
make loans to, or to share profits with, any other business, entity or
person.
3.5 The ELBA GROUP Companies have not entered into any agreement relating
to the establishment of a silent partnership or into any affiliation
agreement(Unternehmensvertrage)within the meaning ofSection 291 et seq.
of the German Stock Corporation Act (Aktiengesetz).
3.6 Sellers and each other holder of Shares own all title in the Shares
held by them as described in the WHEREAS clause free of any third party
rights. Sellers have the right to cause such other shareholders to
transfer the Shares held by them in accordance herewith. Upon transfer
of the Shares in accordance herewith on the Effective Date, the Shares
will be free from any encumbrances or any other rights for the benefit
of third parties unless caused by the Purchasers. Sellers have the
right and the power to freely dispose of the Shares and there is no
consent required from any third party (including, without limitation,
any holder thereof identified in the WHEREAS clause) which has not been
obtained. All preemptive rights applicable to the transfer of the
Shares have been terminated or waived. The sale and transfer of the
Shares do not violate the rights of any third party. The Shares do not
constitute all or substantially all of the Sellers' assets.
The execution and delivery by the Sellers of this Agreement and all of
the agreements, Schedules, Exhibits, documents and instruments
specifically provided hereunder to be executed and/or delivered by any
or all of them (all of the foregoing, including this Agreement, being
hereinafter collectively called the ,,Executed Agreements"), the
performance by the Sellers (to the extent that they are parties
thereto) of their respective obligations under the Executed Agreements,
and the consummation of the transactions contemplated by the Executed
Agreements, have been duly and validly authorized by all necessary
corporate action on the part of the ELBA GROUP Companies and by the
Sellers. Neither the execution and delivery by the Sellers of the
Executed Agreements, nor the consummation of the transactions
contemplated thereby, nor the performance by the Sellers of their
respective obligations under the Executed Agreements, shall (nor with
the giving of notice or the lapse of time or both would) (i) conflict
with or result in a breach of any provision of the organizational and
governing documents of any of the ELBA GROUP Companies, (ii) to
Sellers' best knowledge, give rise to a default, or any right of
termination, cancellation or acceleration, under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation to which any of
the ELBA GROUP Companies is a party or by which it or any of its
properties or assets may be bound, (iii) violate any order, writ,
injunction, decree, law, statute, rule or regulation applicable to the
ELBA GROUP Companies, or the Sellers or any of their respective
properties or assets other than laws, rules and regulations of the
United States of America, or (iv) result in the creation or imposition
of any lien, claim, restriction, charge or encumbrance or similar claim
upon any of the properties or assets of the ELBA Group Companies.
3.7 The Shares are fully paid up and no open or concealed repayment of
capital contributions has occurred.
3.8 As of December 31, 1996 the combined Funded Debt of the ELBA GROUP
Companies was as set forth in
Attachment 3.8a.
of the reference deed. Since December 31, 1996 through the Effective
Date the ELBA GROUP Companies have made no payments in Funded Debt
except regular amortization thereof required thereunder in the ordinary
course of business as set forth in
Attachment 3.8.b.
of the reference deed. As of the Effective Date, all Funded Debt will
be satisfied in full. Attachment 0.8 is a correct description of the
balance of the Shareholders Loan as of the Effective Date and all
payments made thereon since December 31, 1996. Except as set forth in
the Annual Statements, there are no amounts due to the ELBA GROUP
Companies from Sellers.
3.9 [Intentionally left blank.]
3.10 No bankruptcy or composition proceedings have been initiated and are
still pending against the Sellers or the ELBA GROUP Companies or its
Subsidiaries and there are to the best of Seller's knowledge currently
no circumstances which would justify the initiation of such proceedings
in the future.
3.11. Annual Statements
3.11.1 The combined financial statements (including balance sheet, profit and
loss account and notes) of the ELBA GROUP Companies for the fiscal year
ended December 31, 1996 (hereinafter "the Combined Financial
Statements") attached as
Attachment 3.11.1
of the reference deed have been prepared in accordance with German
GAAP. These Combined Financial Statements present a true and fair view
of the assets, equity, liabilities and results situation of the ELBA
GROUP Companies for the period and at such date which is in accordance
with the actual circumstances within the meaning of Section 297 of the
German Commercial Code (Handelsgesetzbuch).
3.11.2 The annual financial statements (including balance sheet, profit and
loss account and notes) of the ELBA GROUP Companies for the fiscal year
ended December 31, 1996, originals or copies of which have been
delivered to the Purchasers, have with the exception of Elba AG been
prepared in accordance with generally accepted accounting principles
(Grundsatze ordnungsgema(beta)er Buchfuhrung) applied in the respective
jurisdiction (hereinafter referred to as
"local GAAP") as well as observing continuity in the accounting and
evaluation principles except as expressly stated otherwise in the
Annual Statements and present a true and fair view of the assets,
finances and results situation of the respective ELBA GROUP Companies
for such periods and at such dates which is in accordance with local
GAAP. While the Annual Statements of Elba AG may neither be in
compliance with applicable statutory provisions nor local GAAP, the
Sellers hereby expressly warrant and guarantee that the Annual
Statements of Elba AG nevertheless present a true and fair view of the
assets, finances, liabilities and results situation of Elba AG. The
accounting books and records of the ELBA GROUP Companies are complete
and correct, have been maintained in accordance with good business
practices and, except for Elba AG, applicable law, and accurately
reflect the financial condition and results of operations of the ELBA
GROUP Companies as set forth in the Annual Statement referred to
herein. With the exception of liabilities resulting from executory
contracts (nicht vollstandig erfullte Vertrage) the ELBA GROUP
Companies do not have any liabilities (including but not limited to
claims arising from product liability) or obligations, whether known,
unknown, accrued, absolute, contingent or otherwise which have not been
either (i) in the case of liabilities and obligations of a type
customarily reflected on the corporate balance sheets of the ELBA GROUP
Companies, reflected on the Annual Statements in accordance with local
GAAP (ii) incurred, consistent with past practice, in the ordinary
course of business since the date of the balance sheet and which do not
involve more than DM 25,000.00 individually or DM 100,000.00 in the
aggregate, or (iii) liabilities and obligations described in
Attachment 3.11.2b
of the reference deed.
3.12 The accounts receivable reflected in the books and records of the ELBA
GROUP Companies as of the Effective Date, less a bad debt reserve equal
to the sum of (i) a bad debt reserve as of the Effective Date equal, as
a percentage of total receivables, to the reserve set forth in the
December 31, 1996 Combined Financial Statements plus (ii) fifty percent
(50%) of the excess of the bad debt reserve set forth in the Effective
Date Balance Sheet over the bad debt reserve calculated pursuant to (i)
above, will be fully collectible within 180 days from the Effective
Date. If and to the extent that such accounts receivable are not
collected within such 180-day period, and provided that the Purchasers
have given notice to the Sellers of any such accounts receivable not
collected within 90 days after the Effective Date, the Total Purchase
Price for the Shares will be adjusted downward by the amount of such
uncollected receivables and the Sellers shall pay the amount thereof
first from the Escrow Amount and, next, from Sellers' funds to the
extent of any deficiency in the Escrow Amount within 10 business days
of notice to such effect upon tender of transfer of the respective
accounts receivable by the respective creditor company to the Sellers.
Notwithstanding such delivery, Sellers may request that the Purchasers
continue efforts to collect such amounts in Purchasers' own name (but
for the benefit of Sellers) and, if not so requested, Purchasers may
request that Sellers coordinate collection efforts with Purchasers in
the event that Purchasers believe that independent collection efforts
by Sellers would be detrimental to Purchasers' ongoing relationship
with the account debtor. Payments received from or credited to any
customer shall be applied first to the invoice identified by such
customer, or if not identified, then in payment of such customer's
oldest account receivable, unless such customer shall specifically
allege that such receivable is in dispute, in which event the payment
shall be applied in payment of the undisputed portion of such
receivable and then in payment of the customer's next oldest undisputed
account receivable. The Purchasers specifically agree not to influence
in any way how a customer pays an invoice other than in the order which
they have been sent to such customer and not to settle, compromise or
reduce the amount, or delay the payment, of any invoice existing as of
the Effective Date except in the ordinary course of business and
consistent with the Seller's prior practice. The Purchasers agree to
use collection procedures for the collection of the accounts receivable
that are substantially the same as used by the ELBA GROUP Companies
prior to Effective Date. To the extent that any of such accounts
receivables are collected by the Purchasers after the adjustment to the
Total Purchase Price or payment of the deficiency by the Sellers, as
the case may be, the Purchasers shall pay such amounts to the Sellers
within 10 business days after receipt thereof.
3.13 The inventories of the ELBA GROUP Companies are accurately shown in the
books and records of the Companies and are, as regards quantity and
quality, to the extent not depreciated or covered by respective
reserves as shown in such books and records (1) in the case of raw
materials, supplied goods and semi-finished goods usable in the
ordinary course of business, and (2) in the case of finished products
and merchandise goods, in a condition which permits their sale in the
ordinary course of business at then prevailing market prices.
3.14
Attachment 3.14
of the reference deed contains a complete and correct list and summary
description of the ELBA GROUP Companies' hospitalization, insurance
plans or arrangements providing for benefits for employees of the ELBA
GROUP Companies, except for benefits stipulated by generally applicable
laws in the industry. Such Schedule also lists the names and
compensation of all persons whose total annual compensation (direct and
indirect) from any of the ELBA GROUP Companies (whether salary, bonus
or otherwise) during the last fiscal year was DM 100,000.00 or more, or
who are presently scheduled to receive compensation of at least DM
100,000.00 during the current fiscal year or whose employment is not
terminable with a notice period longer than those provided for under
generally applicable laws, save for restrictions under generally
applicable laws, by any of the ELBA GROUP Companies. The method of
accruing vacations by the ELBA GROUP Companies on its books and records
is in accordance with local GAAP.
Exhibit 3.14 contains true and complete copies of agreements pursuant
to which all pension and similar plans and obligations of the Elba
Electric GmbH to Mr. and Ms. Schultz are terminated. All pensions and
similar plans and obligations the ELBA GROUP Companies will be
terminated in consideration of the transfer by the ELBA GROUP Companies
of the pension assets (life insurance, etc) to the pension
beneficiaries on its books as of June 20, 1997. Such agreements are
valid and binding and have been, or will be implemented at the sole
cost and expense of Sellers. To the extent any such termination shall
not be effective on the Effective Date, Sellers shall cause such
terminations to become effective as soon as practicable thereafter but
in any event within 60 days. There are no liabilities of the ELBA GROUP
Companies whatsoever arising from these pensions as of the Effective
Date or thereafter and Sellers shall cause each employee entitled to
participate therein to deliver written releases of the ELBA GROUP
Companies from all liabilities thereunder. The Sellers agree to
indemnify and keep indemnified the ELBA GROUP Companies against any
costs, expenses, loss or other liability including, but not limited to,
any tax liability of the ELBA GROUP Companies arising from or in
connection with the administration or winding up of any pension plan or
in connection with any claim which is brought against the ELBA GROUP
Companies relating to any pension plan. Sellers shall not, however, be
required to indemnify in respect of any tax liability of any ELBA GROUP
Company arising as a result of the forgiveness of any unfunded
liability under any such pension plan.
3.15 The ELBA GROUP Companies have paid out no constructive
dividends (verdeckte Gewinnausschuttungen).
3.16 The ELBA GROUP Companies are the owner of real estate as specified in
Attachment 3.16a
of the reference deed (collectively, the "Real Estate"). The respective
excerpts from the cadastrial chart (Katasterplan), land register, and
construction encumbrance register (Baulastenverzeichnis) for the
Oberhausen and Einsiedel site and equivalent documents for the other
jurisdictions in which the other ELBA GROUP Companies are located are
attached as
Attachment 3.16b
of the reference deed accurately reflect the factual and legal
circumstances relating to the Real Estate. Save as expressly stated
otherwise in
Attachment 3.16c
of the reference deed the Real Estate is free from any encumbrances and
any other rights for the benefit of third parties which may not be seen
from the land register or construction encumbrances register or any
other register. There are no filings for registration which are not yet
registered in the land register or construction encumbrances register
or any other register. To Sellers' best knowledge, the Real Estate and
the Rented Real Estate (as defined below) and the use thereof conform
in all respects with all covenants and restrictions applicable to the
Real Estate and all applicable building, zoning, land use and other
laws apart from environmental laws covered by Section 3.30 and no
failure of the Real Estate or the Rented Real Estate or their use to so
conform will have an adverse effect on the ELBA GROUP Companies.
The ELBA GROUP Companies have rented the real estate as specified in
Attachment 3.16d
of the reference deed and Exhibit 3.16.d (collectively, the "Rented
Real Estate"). Save as expressly stated otherwise in
Attachment 3.16e
of the reference deed the Real Estate and the Rented Real Estate
constitutes the premises actually used by the ELBA GROUP Companies. No
additional premises are used by the ELBA GROUP Companies and the
respective rental agreements are to the best of Sellers' knowledge
valid and binding and enforceable in accordance with their terms, and
are in full force and effect. There is no default or breach thereof by
the Companies or to the best of Sellers' knowledge of any other party
thereto.
Except as set forth in
Attachment 3.16f
of the reference deed to the extent any stockholder, officer or
director of the ELBA GROUP Companies or any affiliate or associate of
such person is a party to any lease, the Sellers believe that such
lease is upon equivalent terms as would have been obtained if such
lease was negotiated with unrelated third parties. True and complete
copies of all leases including all amendments, addenda, waivers and all
other binding documents affecting the tenant's rights thereunder, are
attached in Attachment 3.16f of the reference deed.
Except as set forth on Attachment 3.16f of the reference deed, the
Sellers and/or the ELBA GROUP Companies have not received any notice of
or writing by any insurance company which has issued a policy covering
any part of any Real Estate or Rented Real Estate or by any
governmental authority requiring any repairs or work to be done on any
part of any Real Estate or Rented Real Estate within the past 3 years
which have not been complied with or performed. All of the public
utilities required for the operation of the Real Estate or Rented Real
Estate in the manner currently operated are installed and operating,
and all installation and connection charges have been paid in full or
provided for.
In respect of the Real Estate of Elba Ltd. there is not, and so far as
the Sellers are aware has not been, in force any policy relating to
defective title or restrictive covenant indemnity.
Elba Ltd. is not in occupation of or entitled to any estate or interest
in any land or premises save the Real Estate and Rented Real Estate of
Elba Ltd.
As to Elba Ltd., the Sellers are not actually or contingently liable as
an original contracting party, or as a guarantor of any party to or as
an assignee having given direct covenant, or otherwise contractually
liable in respect of any lease or leasehold property or license
connected therewith.
3.17 With the exception of the items listed in
Attachment 3.17
of the reference deed or Attachment 3.23 or 3.31 of the reference deed,
(i) all assets necessary for or used in the present business operations
of the ELBA GROUP Companies are reflected in the respective Annual
Statements or have been acquired in the ordinary course of business
since the dates thereof, and (ii) the ELBA GROUP Companies are the
legal and beneficial owner of all fixed assets (Gegenstanden des
Anlagevermogens) used in its business operations. Such assets are free
from any encumbrances or any other rights for the benefit of third
parties. Such assets are in a good operating and maintenance condition,
except as set forth in Attachment 3.17 or 3.23 or 3.31 of the reference
deed and except for normal wear and tear and wear in the ordinary
course of business. The ELBA GROUP Companies respectively are the legal
and beneficial owner of all current assets (Gegenstande des
Umlaufvermogens) used in its business operations except for those
listed in Attachments 3.17 or 3.23 or 3.31 of the reference deed. Such
assets are free from any encumbrances and any other rights for the
benefit of third parties with the exception of statutory pledges or
retention of title rights entered into the ordinary course of business
for liabilities reflected in the Annual Statements.
3.18 The list attached as
Attachment 3.18
to the reference deed completely and correctly sets forth all
intellectual property rights and copyrights used in the business of the
ELBA GROUP Companies (including, without limitation, patents, utility
models, trademarks, tradenames, design patents, copyrights and all
applications therefor, but excluding standard software for personal
computers and business equipment for which the ELBA GROUP Companies
have valid licenses) owned by the ELBA GROUP Companies or with respect
to which the ELBA GROUP Companies have been granted a license for use,
as well as of, with respect to such rights in respect to which the ELBA
GROUP Companies have been granted a license for use, a list of the
relevant license agreements (with the exceptions of standard software
for personal computers and business equipment, for which the ELBA GROUP
Companies have valid licenses). To the best of Sellers' knowledge the
ELBA GROUP Companies do not use any intellectual property rights, nor
is any of the ELBA GROUP Companies dependent on any such rights other
than those set forth in Attachment 3.18 of the reference deed (with the
exceptions of standard software for personal computers and business
equipment, for which the ELBA GROUP Companies have valid licenses). To
the best of Sellers' knowledge no intellectual property or copyrights
used by the ELBA GROUP Companies have been challenged by nor infringes
upon the rights of any third parties.
3.19 Unless listed in
Attachment 3.19
of the reference deed there are no ongoing contractual relationships
between the ELBA GROUP Companies on the one side and the Sellers, their
relatives or businesses affiliated with the Sellers within the meaning
of Section 15 of the German Stock Corporation Act (Aktiengesetz) on the
other side except for the Shareholders Loan and employment agreements
with the Sellers. All such contractual relationships except for the
Shareholder Loan will be terminated on or prior to the Effective Date
without cost or further obligation to the ELBA GROUP Companies or the
Purchasers. At the Effective Date there will be no liabilities or
obligations resulting from any such relationships except for the
Shareholder Loan and Sellers`rights to receive the pension assets.
The ELBA GROUP Companies are not a party to or bound by any agreement
or involved in any transaction in which any officer, director or
stockholder, or any affiliate or associate of any such person has, or
had when made, a direct or indirect material interest except (i) for
the management agreement between KRP and MAW Holding B.V. referred to
in Attachment 3.23 of the reference deed and being terminated on the
Effective Date, (ii) a trust agreement with Mr. Heinz Stengel regarding
the Trust Share, (iii) agreements described in Attachments 3.14, (iv)
employment and service agreements and (v) the Shareholder Loan.
3.20 The ELBA GROUP Companies have received no oral or written complaints
with respect to its supply, purchase, sale, distribution, sales
representative or similar agreements necessary for the normal operation
of the business or any notice from any customer that it intends to
return any inventory of any of the ELBA GROUP Companies other than in
customary amounts in the ordinary course of business.
Attachment 3.20
of the reference deed contains a true and complete list of all of the
ELBA GROUP Companies' 20 largest suppliers and customers (or all
suppliers and customers, if less than 20, but not including suppliers
and customers representing turnover of less than DM 20,000.00 per
year). The ELBA GROUP Companies have received no notice stating that
any such supplier or customers expects to materially reduce its
business with the Companies by reason of the transactions contemplated
by this Agreement or for any other reason whatsoever. The ELBA GROUP
Companies have no agreement or understanding with any customer that
upon return of any products to any of the ELBA GROUP Companies that
such customer will be entitled to a credit for any amount other than
the invoice price of the products so returned, except to the extent
required under generally applicable laws. Except as is set forth in
Attachment 3.20 of the reference deed, (i) the ELBA GROUP Companies are
not a party to or bound by any distributorship, dealership, sales
agency, franchise, license or similar agreement which relates to the
sale or distribution of its products and services, (ii) the ELBA GROUP
Companies do not have any sole-source supplier of significant goods or
services (other than utilities) with respect to which practical
alternative sources are not available on substantially equivalent terms
and conditions, (iii) there are not pending, and to Sellers' and the
ELBA GROUP Companies' knowledge there are not threatened, any
collective labor negotiations, strikes or grievances involving or
affecting the ELBA GROUP Companies and, to the Sellers' and the ELBA
GROUP Companies' knowledge, no organizing activities involving union
representation exist in respect of any of its employees, (iv) the ELBA
GROUP Companies neither give nor are bound by any express warranties
relating to its products or services other than stated in the catalogue
of standard business terms, or otherwise, attached in Attachment 3.23
of the reference deed and, to the knowledge of the Sellers and the ELBA
GROUP Companies, there has been no assertion of any breach of product
warranties which could have a material adverse effect on the business
or financial condition of the ELBA GROUP Companies and, to the
knowledge of the Sellers and the ELBA GROUP Companies, there are no
general manufacturing or design defects with respect to any product or
any defective services sold by the ELBA GROUP Companies whether
relating to its safety, efficacy, fitness for purpose sold or
otherwise.
3.21 The list attached as
Attachment 3.21
of the reference deed completely and accurately sets forth all bank
accounts of the ELBA GROUP Companies and the respective signatories.
3.22
Attachment 3.22
of the reference deed and Exhibit 3.22 completely and accurately set
forth all insurance policies (except standard motor vehicle insurance)
taken out by or for the benefit of the ELBA GROUP Companies or its
business operations. The respective policy holder is in good standing
with respect to its obligations under the insurance policy. No
insurance policy will lapse upon the consummation of this Agreement.
3.23
Attachment 3.23
of the reference deed and Exhibit 3.23 completely and accurately set
forth all outstanding agreements and obligations (whether written or
orally concluded) of the ELBA GROUP Companies and not reflected in
other Attachments (hereinafter referred to as the ,,Material
Contracts") relating to one of the following items or concluded with,
or granted to, one of the following parties:
3.23.1 all agreements and obligations relating to the
acquisition, sale, encumbrance of other
dispositions of real estate or rights equivalent to
real estate rights;
3.23.2 all agreements relating to the acquisition or sale of
fixed assets (Gegenstande des Anlagevermogens),
including intangible and tangible fixed assets (with
the exception of real estate and rights equivalent to
real estate rights) and financial assets the value of
which exceeds DM 50,000.00 in the individual case;
3.23.3 all business lease agreements (Pachtvertrage), rental
agreements (Mietvertrage) or leasing arrangements
(Leasing-vertrage) to the extent that they require
annual payments of DM 5,000.00 in the individual
case;
3.23.4 all license agreements entered into by each of the
ELBA GROUP Companies as licensor or licensee to the
extent that they require annual payments of DM
1,000.00 in the individual case;
3.23.5 all credit agreements entered into by the ELBA GROUP
Companies as lender or borrower, with the exception
of shareholders loans, inter-company loans and
customary extensions of payment dates for receivables
or payables granted or received in the ordinary
course of business, as well as all factoring
arrangements;
3.23.6 all agreements with domestic or foreign authorized
dealers (Vertragshandler) or agents as well as all
similar distribution agreements which either in case
of their termination result in compensation claims
against the ELBA GROUP Companies or whose notice
period for termination exceeds one (1) month;
3.23.7 all agreements with advisers to the extent that they
require annual payments in excess of DM 50,000.00
in the individual case;
3.23.8 catalogue of standard business terms used in the
day-to-day business of the ELBA GROUP Companies;
3.23.9 all collective bargaining agreements and shop
agreements entered into by the Companies or to which
the Companies are subject (with the exception of
multifacility, regional or multi-regional collective
bargaining arrangements);
3.23.10 all cooperation and similar agreements with third
parties and any agreement or obligation having
an restrictive impact on competition;
3.23.11 all agreements or obligations entered into or assumed
by the ELBA GROUP Companies outside the ordinary
course of its business to the extent that they
require annual payments of DM 10,000.00 in the
individual case;
All Material Contracts are valid and enforceable, and their validity
and enforceability has not been legally contested or questioned. No
Material Contract is terminated nor to the best of Sellers' knowledge
about to be terminated. Neither the ELBA GROUP Companies nor to the
best of Sellers' knowledge its contracting partner has breached or is
in default with respect to any Material Contract.
3.24 The list attached as
Attachment 3.24
of the reference deed completely and accurately sets forth all
employees of the ELBA GROUP Companies and identifying those employees
who are eligible for periodical bonuses based upon their individual
performance. No employee marked therein as "important" by the
Purchasers has declared his or her intention to terminate his or her
employment relationship with the ELBA GROUP Companies as requested by
the Purchasers.
3.25 The list attached as
Attachment 3.25
of the reference deed completely and accurately sets forth all powers
of attorney issued by the ELBA GROUP Companies and presently in force
which are not reflected in the excerpt from the commercial register
attached as Attachments 3.2a through 3.3a of the reference deed.
3.26 The ELBA GROUP Companies have duly prepared and timely filed all tax
and social security returns. All taxes, social security contributions
(Sozialversicherungsbeitrage), and all other public law dues of any
kind owed by the ELBA GROUP Companies have been paid when due or
accrued for in the Annual Statements or the books of the ELBA Group
Companies.
Attachment 3.26
of the reference deed is a complete and correct description of the
corporate income tax structure of the usable equity (verwendbares
Eigenkapital) pursuant to Section 30 of the German Corporate Income Tax
Act of Elba Electric GmbH and Elba Modul GmbH shown in the Annual
Statements.
3.27 The ELBA GROUP Companies have applied for, received, and used all
public grants only in accordance with applicable law and in compliance
with all regulatory orders and conditions. No such grants will have to
be repaid due to circumstances known to the Sellers at the time of
execution of this Agreement.
3.28 The list attached as
Attachment 3.28
of the reference deed completely and accurately sets forth all legal
disputes and regulatory proceedings to which the ELBA GROUP Companies
are party or subject. Aside from the listed disputes and proceedings no
disputes or proceedings are pending or threatened, nor to the Sellers'
knowledge are there any circumstances which are likely to give rise to
such disputes or proceedings. No pending proceeding will result in a
material adverse effect to any of the ELBA GROUP Companies.
3.29 To the Sellers' best knowledge, neither the operation nor any of the
ELBA GROUP Companies' products violate any applicable law or regulatory
orders. The ELBA GROUP Companies are not engaged in any activity or
omitting to take any action as a result of which they are in violation
of any law, rule, regulation, statute, order, injunction or decree, or
any other requirement of any court or governmental or administrative
body or agency, applicable to the ELBA GROUP Companies or any of its
properties, products, operations, businesses, pension or other employee
benefit plans, labor practices, including without limitation, any laws,
rules, and regulations regarding to air, water, solid or liquid waste
disposal practices, health or safety practices, advertising practices
or hiring, promotion or retirement practices, the violation of which
may result in a material and adverse effect on the business or
condition (financial or otherwise) of the ELBA GROUP Companies. The
ELBA GROUP Companies have all regulatory permits required for the
conduct and continuation of its present operations. To the best of
Sellers' knowledge none of such permits has been revoked or is about to
be modified or restricted.
3.30 Notwithstanding the classification of the Oberhausen Real Estate and
Rented Real Estate (if any) in the "ltlastenkataster" or any accrual in
respect of environmental liabilities on the Effective Date Balance
Sheet, the Real Estate and Rented Real Estate used by the ELBA GROUP
Companies and all other operational facilities are free from any
pollution of the soil, ground water, air or any other environmental
pollution created during the use or ownership of such Real Estate by
the ELBA GROUP Companies and, to the ELBA GROUP Companies' and the
Sellers' knowledge during the periods prior to or subsequent to such
use or ownership by the ELBA GROUP Companies. The business operations
of the ELBA GROUP Companies do not cause and have not caused any
pollution of the soil, water, air or any other environmental pollution
with respect to which any of the ELBA GROUP Companies could be held
liable. With the exception of the items listed in
Attachment 3.30
of the reference deed the ELBA GROUP Companies have complied with and
have received no notice of any violation of all applicable
environmental and zoning laws and other provisions. The fresh water
supply , the disposal of waste water and emission of gases, solids, and
effluents are fully assured for the present business operations.
No other provision in this Agreement shall be construed in any way as
to give the Purchasers and/or the Guarantor any rights with respect to
the environmental subject matter hereof.
3.31 Since December 31, 1996, and continuing through the Effective Date, the
business operations of the ELBA GROUP Companies have been conducted
exclusively in the ordinary course of business, in accordance with
cautious practice and substantially in the same manner as before. There
have been no materially adverse changes with respect to such business
operations or the asset, financial or result situation or with respect
to important assets or contracts of the ELBA GROUP Companies. No hidden
reserves have been dissolved or withdrawn except in the ordinary course
of business.
Except as and to the extent set forth in
Attachment 3.31
of the reference deed, since the last Annual Statements the ELBA GROUP
Companies have not:
3.31.1 suffered any material adverse change in its
working capital, condition (financial or
otherwise), assets liabilities, business, operations
or prospects;
3.31.2 incurred any material liabilities or obligations
except items incurred in the ordinary course of
business and consistent with past practice which do
not, in the aggregate, exceed DM 100,000.00;
3.31.3 paid, discharged or satisfied any claim,
liabilities or obligations (absolute, accrued,
contingent or otherwise) other than (i) the repayment
of Funded Debt as set forth on Attachment 3.8(b)
of the reference deed, and repayment of
intercompany obligations (ii) repayments on the
Shareholder Loan as set forth in Attachment 0.8 of
the reference deed and (iii) the payment,
discharge or satisfaction in the ordinary course
of business and consistent with past practice of
liabilities and obligations reflected and reserved
against in the Annual Statements or incurred in
the ordinary course of business and consistent
with past practice;
3.31.4 permitted or allowed any of its property or assets
(real, personal or mixed, tangible or intangible) to
be subject to any mortgage, pledge lien, security
interest, encumbrance, or restriction with the
exception of statutory pledges or retention of title
rights in the ordinary course of business;
3.31.5 written down the value of any inventory or written
off as uncollectable any notes or accounts
receivable, except for write-downs and write-offs in
the ordinary course of business and consistent with
past practice, none of which are material;
3.31.6 waived any claims or rights of substantial value, or
sold, transferred or otherwise disposed of any of its
properties or assets (real, personal or mixed,
tangible or intangible) other than in the ordinary
course of business and consistent with past practice
and other than the netting of the shareholder loans
as reflected in Attachment 0.8 of the reference deed
and Exhibit 0.8;
3.31.7 except in the ordinary course of business disposed of
or permitted to lapse any rights to use any patent,
trademark, trade name or copyright, or disposed of or
disclosed to any person any trade secret, formula,
process or know-how not theretofore a matter of
public knowledge;
3.31.8 granted any general increase in the
compensation of officers or employees (including any
such increase pursuant to any bonus, pension,
profit-sharing or other plan or commitment) or any
increase in the compensation payable or to become
payable to any officer or employee;
3.31.9 made any single capital expenditure or commitment in
excess of DM 50,000.00 for additions to property,
plant, equipment or intangible assets or made
aggregate capital expenditures and commitments in
excess of DM 250,000.00 (on a consolidated basis) for
additions to property, plant, equipment or intangible
assets;
3.31.10 declared, paid or set aside for payment any dividend
or other distribution (including any preliminary
or constructive distribution)in respect of capital
stock other than (i) a dividend of NLG 1,000,000.00
declared by KRP,NLG 400,000.00 of which has been paid
to MAW Holding B.V.and the remaining NLG 600,000.00
has been paid to,and has not been further distributed
or paid out by, Elba Electric GmbH and(ii)a dividend
of Pound Sterling 200,000.00 declared by Elba Ltd.,
Pound Sterling 50,000.00 of which has been paid to
shareholders of Elba Ltd. other than Sellers and the
remaining Pound Sterling 150,000.00 of which is due
to Sellers, has not been paid and is being waived by
Sellers;
3.31.11 made any change in any method of accounting or
accounting practice; or
3.31.12 agreed whether in writing or otherwise, to take any
action described in this Section unless such action is
specifically excepted from this Section.
3.32 Except as set forth on
Attachment 3.32
of the reference deed, no agent, broker, person or firm acting on
behalf of any of the ELBA GROUP Companies and the Sellers or under the
authority of any of the foregoing, is or shall be entitled to a
brokerage commission, finder's fee, or other like payment in connection
with any of the transactions contemplated hereby, from any of the ELBA
GROUP Companies.
3.33 No representation or warranty made by the Sellers in this Agreement or
any of the Agreements contemplated hereby or delivered in connection
with the transactions contemplated hereby contains any untrue statement
of a material fact or omits to state a material fact necessary in order
to make the statements therein not misleading.
3.34 The ELBA GROUP Companies have not incurred or paid any legal accounting
or other costs in connection with this Agreement or the transactions
contemplated hereby.
SECTION 4
Indemnities
4.1 The Sellers hereby, jointly and severally, agree to indemnify, hold
harmless, pay and reimburse the Purchasers and the ELBA GROUP Companies
from and against any and all damages, (including, but not limited to,
all legal and other expenses including reasonable attorneys' fees)
sustained or incurred by any indemnified party, arising out of a breach
of any of the representations and warranties under Section 3 or for any
damage (including taxes) which may be sustained or incurred by
Purchasers or Elba AG as a result of any non-compliance of Elba AG's
financial statements and accounting system with applicable Swiss laws
(each, a "Loss" and, collectively, "Losses"). The Sellers hereby
jointly and severally agree to restore the Purchasers or the ELBA GROUP
Companies, at the discretion of the Purchasers, to such position as it
would have been in, had such statement or statements made pursuant to
Section 3, been accurate. In the event that any claim is asserted
against any party hereto, or any party hereto is made a party defendant
in any action or proceeding, and such claim, action or proceeding
involves a matter which is the subject of this indemnification, then
such indemnified party (an "Indemnified Party") shall give written
prompt notice thereof to the indemnifying party (an "Indemnifying
Party") of such claim, action or proceeding (although the failure to
give such notice shall not limit an Indemnified Party's right to
indemnification unless the Indemnifying Party is prejudiced in
defending such claim by such lack of notice), and such Indemnifying
Party shall have the right to join in the defense of said claim, action
or proceeding at such Indemnifying Party's own cost and expense and, if
the Indemnifying Party agrees in writing to be bound by and to promptly
pay the full amount of any final judgment from which no further appeal
may be taken and if the Indemnified Party is reasonably assured of the
Indemnifying Party's ability to satisfy such agreement, then at the
option of the Indemnifying Party, such Indemnifying Party may take over
the defense of such claim, action or proceeding, except that, in such
case, the Indemnified Party shall have the right to join in the defense
of said claim, action or proceeding at its own cost and expense;
provided, however, that the Indemnifying Party shall not settle or
compromise any claim, action or proceeding without the prior written
consent of the Indemnified Party which will not be unreasonably
withheld or delayed; and provided, further, that no consent shall be
necessary if the Indemnified Party shall be unconditionally released
and completely reimbursed for all Losses in respect of such claim. No
claim will be subject to indemnification which is not asserted prior to
the expiration of the relevant Survival Period set forth in Section 4.2
hereof. The legal principles stated in Sections 460 and 464 of the
German Civil Code (Burgerliches Gesetzbuch) shall not apply.
The Indemnified Parties shall not be entitled to an indemnification to
the extent that (i) the incorrectness of an Annual Statement gives rise
only to a transfer of an item from one accounting period to another
resulting in a corresponding saving of taxes in any other year from
1997 onwards or such incorrectness does not result in an incorrectness
in the Combined Financial Statements, (ii) Purchasers have been
compensated for such claim pursuant to Section 2.6 or (iii) an item
resulting in a Loss to one or more of the Indemnified Parties results
also in payments under insurance coverages.
4.2 Any claims against the Sellers for breach of any of the warranties or
representations under this Agreement must be in writing in a notice to
the Sellers
4.2.1 if relating to taxes, social security contributions and
other public dues on or prior to the expiry of three
months after the assessment order (Steuerbescheid),
correction assessment order issued after the relevant
tax or social security audit, or non-appealable tax or
social security court judgment, as the case may be, for
taxes or social security contributions relating to
periods up to the Effective Date shall have been served
and become final, except in cases of tax fraud and
grossly negligent tax reduction, and
4.2.2 if relating to the warranties given as to the title in
the Shares and in the Shareholder Loan or legal defects
thereto (Rechtsmangel) thirty years from the Effective
Date;
4.2.3 in all other cases, by August 31, 1998.
4.3 There shall be no liability in respect of a relevant claim under this
Section 4, unless in the individual case the claim exceeds DM
100,000.00 or, in the aggregate the amount of any claims exceeds DM
1,000,000.00. Once an individual claim exceeds DM 100,000.00 or in the
aggregate the amount of any claims exceeds DM 1,000,000.00 the Sellers
have to indemnify the Purchasers or the ELBA GROUP Companies as the
case may be for the total amount of the claim and not only for the
amounts in excess of the aforementioned thresholds. The total amount of
the Sellers' overall liability under this Section 4 is limited to an
amount of DM 13,000,000.00 (in words: Deutsche Mark thirteen million).
The above limitations shall in any event not apply to a liability
relating to the warranties as to the title in the Shares and in the
Shareholder Loan or legal defects thereto (Rechtsmangel) and/or
warranties relating to taxes, warranties with respect to the
Shareholder Loan in Section 3.8; warranties specifically relating to
payments of costs by Sellers and warranties in Section 3.12 and the
warranty containd in Section 3.14 as far as it relates to the
termination of any pension or similar plan.
4.4 The Purchasers shall cause the ELBA GROUP Companies to permit the
Sellers and such of their advisors as are bound by professional secrecy
obligations to participate in all tax and social security field audits
of the ELBA GROUP Companies in relation to all periods up to the
Effective Date. The Purchaser shall procure that the ELBA GROUP
Companies inform the Sellers of the announcement or commencement of
such field audit without any undue delay. If no agreement can be
reached about the results of any such field audit, then Purchasers
shall, upon Sellers' request, cause the respective ELBA GROUP Companies
to initiate legal proceedings against the respective tax assessment
order (Steuerbescheid) or social security assessment order and, if
necessary, conduct a legal action in accordance with Sellers'
instructions. The cost of any such legal action shall be borne by
Sellers.
4.5 The legal remedies against the Sellers shall be limited to the
enforcement of the rights and claims explicitly provided for in this
Agreement. The Purchasers and the Guarantor shall not be entitled to a
rescission or diminution of the Total Purchase Price except as set
forth in Section 2.6 of this Agreement.
SECTION 5
Release of Securities
Commerzbank AG and Volksbank e.G. Bruchsal (collectively "the Banks")
have, as of the date hereof, confirmed the repayment of the Funded Debt
of the ELBA GROUP Companies and released, or have agreed, upon receipt
of written notice of termination of the relevant credit facility from
Mr. Schultz, to release all security (e.g. land charges, transfer of
title for security arrangements, assignment of trade account
receivables) which the ELBA GROUP Companies have provided to the Banks
as collateral. The confirmations issued by the Banks are attached as
Attachment 5
to the reference deed.
SECTION 6
Guaranty
Guarantor hereby irrevocably guarantees the fulfillment of all the obligations
of the Purchasers under this Agreement.
SECTION 7
Covenant not to Compete
7.1 Sellers undertake for a period of five (5) years from the Effective
Date not to engage in any activity, either as an investor, employee,
officer, director, consultant or otherwise, which would, directly or
indirectly, compete with or result in competition with the present
business operations of the ELBA GROUP Companies including, without
limitation, Sellers shall not establish or acquire any business
operations which would, directly or indirectly, compete with the
business operations of the ELBA GROUP Companies, or acquire shares in
such business, or advise such business. It is understood that the
activity of the Sellers and the shares held by them in Eurotest System-
electronic GmbH and Eurotest Testsysteme GmbH, both at Hauptstrasse 121
in Altlussheim, do not compete with the present business operations of
the ELBA GROUP Companies, provided, however, that such activities shall
be limited to the production and sale of laboratory equipment, testing
equipment and testing systems.
7.2 This covenant not to compete shall not apply to the acquisition of 5
percentor less of the shares of companies listed on a stock exchange.
7.3 In the event that a breach of the covenant not to compete set forth in
Section 7.1 continues after a remediation period of one month has
expired within which Sellers have not ceased their conduct in spite of
a written warning issued by any of the Purchasers, then the Sellers
shall be liable to pay to Purchasers a contractual penalty in the
amount of DM 100,000.00 (in words: Deutsche Mark onehundred thousand).
In the event of a continuing violation, for each additional month that
the violation continues the Sellers shall pay a further contractual
penalty in the amount of DM 100,000.00 (in words: Deutsche Mark
onehundred thousand). The Purchasers reserve any other rights they may
have to request further damages or discontinuance of the prohibited
conduct.
7.4 It is understood between the parties that Section 7.3 shall not apply
to any activity of the Sellers in the United Kingdom. As far as the
United Kingdom is concerned, the parties agree that each of the
undertakings set out in this Section 7 is separate and severable and
enforceable accordingly and if any one or more of such undertakings or
part of an undertaking is held to be against the public interest or
unlawful or in any way an unreasonable restraint of trade, the
remaining undertakings or remaining part of the undertakings will
continue in full force and effect and will bind each of the Sellers. No
restriction contained in this Agreement, or in any agreement or
arrangement of which this Agreement forms part, which causes this
Agreement or that agreement or arrangement to be subject to
registration under the Restrictive Trade Practices Act 1976 applicable
in the United Kingdom will take effect until the day after particulars
of this Agreement or of that agreement or arrangement, as the case may
be, have been furnished to the Director General of Fair Trading
pursuant to that Act.
SECTION 8
Confidentiality, Non-Solicitation and Press Releases
8.1 The Sellers shall keep confidential their knowledge about the ELBA
GROUP Companies and its business operations and not use such
confidential information for themselves or for any others, unless the
relevant facts are publicly known or the disclosure is legally
required. Sellers agree not to solicit or entice away any employees of
the ELBA GROUP Companies to assume employment with the Sellers or a
business affiliated with Sellers.
8.2 The parties to this Agreement agree to keep strictly confidential any
information obtained by them in connection with the negotiation and
conclusion of this Agreement with respect to the respective other party
and its affiliated companies.
8.3 Neither party shall make any press release nor any similar public
announcement with respect to the transaction contemplated in this
Agreement without the prior written agreement of the other party except
as required by applicable law.
SECTION 9
Miscellaneous
9.1 The costs, taxes, and expenses associated with this Agreement including
the fees assessed by any Cartel Authority, if any, in connection with
the required merger control notification and any transfer taxes
resulting from the agreements and transactions set forth in this
Agreement, but only up to that amount which would be payable if Mr.
Schultz and Ms. Schultz were the sole and absolute owners of the
Shares, shall be borne by Purchasers except for the following:
9.1.1 each party shall bear the costs and fees of its own
professional advisors;
9.1.2 the Guarantor shall bear the cost of James Elision,
Corporate Partnering Associates.
9.1.3 Purchasers shall bear the notarization costs of this
deed and the reference deed except for an amount of
DM 30,000.00 thereof which shall be borne by the
Sellers.
9.2 This Agreement, including this provision, may only be amended by
written or, if necessary, notarial instrument.
9.3 The invalidity or unenforcability of any provision of this Agreement
shall not affect the validity and enforceability of the remaining
provisions. Any invalid or unenforceable provision shall, to the extent
permitted by law, be replaced by such provision as comes closest to
what the parties intended in accordance with the meaning and purpose of
this Agreement, if they had considered such invalidity or
unenforceability when entering into this transaction. This shall also
apply to the identification of an obligation in terms of amount or time
(period or date). The parties agree that they will cooperate to amend
this Agreement to reflect any such matter.
9.4 Any agreements made heretofore between the parties to this Agreement
are superseded by the conclusion of this Agreement.
9.5 Any notice required to be given by any party hereto to the other shall
be deemed validly served and received if hand-delivered or sent by or
by a reputable express courier, or by registered or recorded letter
sent to the following address:
If to the Sellers:
Mr. Ing. grad. Horst Schultz
Gebruder-Grimm-Weg 1
68804 Altlusshein
Germany
-------------------------------------------------
If to the Purchasers:
Computer Products Inc.
7900 Glades Road # 500
Boca Raton, FL 33434, U.S.A.
Attn: Mr. Richard J. Thompson
-------------------------------------------------
If to the Guarantor:
Computer Products Inc.
7900 Glades Road # 500
Boca Raton, FL 33434, U.S.A.
Attn: Mr. Richard J. Thompson
-------------------------------------------------
each party may replace the address given for it by advising the other
party in writing of its new address.
9.6 As process agent ("Zustellungsbevollmachtigter") for the initiation of
a legal action or services which need to be made in a pending legal
dispute as well as for the receipt of any declaration of will requiring
receipt (,,empfangs-bedurftige Willenserklarung") each of the
Purchasers and the Guarantor appoints each partner of the Frankfurt am
Main office of the law firm Wessing Berenberg-Gossler Zimmermann Lange,
Freiherr-vom-Stein-Str. 24-26, 60323 Frankfurt am Main.
9.7 For purposes of any notices under this Agreement, each of the Sellers
shall have power to act for and bind the other Seller. For purposes of
any notices under this Agreement, each of the Purchasers and the
Guarantor shall have power to act for and bind the other Purchasers.
With respect to any rights the Purchasers may have according to the
terms and conditions of this Agreement the following shall apply: each
Purchaser shall be entitled to claim any rights it may have according
to this Agreement on his own regardless of the actions of the other
Purchaser. Joint creditorship (,,Gesamtglaubigerschaft") is excluded.
9.8 This Agreement shall be governed by the laws of the Federal Republic of
Germany.
All disputes arising from this Agreement including its validity shall
be finally settled in English, according to the Arbitration Rules of
the German Institute of Arbitration e.V. (DIS) without recourse to the
ordinary courts of law according to the Arbitration Agreement which is
attached as Exhibit 9.8. The arbitration tribunal may also decide on
the validity of this Arbitration Agreement. Arbitration shall be
conducted in Frankfurt am Main, Germany, and proceedings shall be in
the English language.
9.9. It is agreed that any document containing the signature of Mr.Schultz
shall be deemed signed by both Mr. and Ms. Schultz and notices or other
documents received by Mr. Schultz shall be deemed received by Ms.
Schultz.
9.10 The parties agree that they will do all such acts and things and
execute all such documents as may be required on or subsequent to
completion to vest in the Purchaser legal and beneficial ownership of
the Shares in accordance with this Agreement and otherwise to give
effect to its terms.
SECTION 10
General Release
Each of the Sellers agree that he or she has no claims or rights of
action against any ELBA GROUP Company whatsoever, has not transferred
any such claim or right to any other party and any such claim or right
which may exist is irrevocably released and waived, including, without
limitation, claims and rights with respect to any dividend declared but
not paid by any ELBA GROUP Company EXCEPT FOR the Shareholder Loan,
Sellers' right to receive certain pension assets in consideration of
the termination of pension plans in accordance herewith and any claim
or right arising hereunder.
Sellers have delivered or caused to be delivered to Purchasers general
releases of, or similar general waivers of claims against, Purchasers
from each other holder of Shares identified in the WHEREAS clause and
Mr. R.H. Grijseels, in form and substance reasonably satisfactory to
Purchasers.
Without prejudice to any contractual agreement between the parties, the
officially appointed representative of the Notary Public then advised the
deponents of the following:
- - The Purchaser of the Share assumes liability in law for cash
contributions to the share capital of the Company not yet effected, if
any, as well as for any shortfall in the value of capital contributions
in kind, if any, and for any repayment of capital;
- - shares in a GmbH can only be validly transferred under German law if
the transferor is the lawful owner of the shares, there being no
concept of bona fide acquisition of shares under German law. The
Sellers are liable for the transfer of the Shares which they do not own
to the Purchasers as they have agreed to sell said shares.
The officially appointed representative of the Notary Public furthermore advised
the deponents that he has not checked whether the Sellers are the lawful owners
of the shares of the company and whether the Sellers can validly transfer the
shares to the Purchasers.
The officially appointed representative of the Notary Public did not provided
the deponents with advice on tax matters of any kind. He recommended obtaining
expert advice on tax matters.
The officially appointed representative of the Notary Public expressly
recommended obtaining separate legal advice on the legal consequences of this
transaction in the various governing legal systems especially with respect to
their statutory prerequisites of the transfer of Shares.
Despite these recommendations the deponents requested immediate notarization of
this transaction.
THEREUPON, this notarial deed and the Exhibits 3.14, 3.16d, 3.22, 3.23 and 9.8
were read aloud in the presence of the officially appointed representative of
the Notary Public to the deponents, were approved by them, and signed by them in
their own hands before the officially appointed representative of the Notary
Public and by the officially appointed representative of Notary Public as
follows:
IN WITNESS WHEREOF, the undersigned have executed this Agreement this 22nd day
of July, 1997.
SELLERS:
HORST SCHULTZ
- -------------
Mr. Ing. grad. Horst Schultz
BRIGITTE SCHULTZ
- ----------------
Mrs. Brigitte Schultz
PURCHASERS:
HERBERT Elektronische Gerate GmbH & Co. KG
By: Herbert Zehnte Beteiligungs- und Verwaltungs-GmbH, as general partner
for Herbert Elektronische Gerate GmbH & Co. KG
By: RICHARD J. THOMPSON
-------------------
Mr. Richard J. Thompson
Geschaftsfuhrer
DUTOR HOLDING B.V.
By: DR. ERICH MICHEL
----------------
ATTORNEY AT LAW
COMPUTER PRODUCTS POWER
CONVERSION LIMITED (U.K.)
By: DR. ERICH MICHEL
----------------
ATTORNEY AT LAW
GUARANTOR:
COMPUTER PRODUCTS INC.
By: RICHARD J. THOMPSON
-------------------
Mr. Richard J. Thompson
Title: Vice President
