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) December 5, 1994
GOULDS PUMPS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-684 15-0321120
(Commission File Number) (IRS Employer
Identication No.)
240 Fall Street, Seneca Falls, New York 13148
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code
(315) 568-2811
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ITEM 2. Acquisition of Assets
Goulds Pumps, Inc. ("Goulds") completed the previously
announced acquisition of all shares of Pumpenfabrik Ernst
Vogel, AG ("Vogel"), the leading pump manufacturer in
Austria with 1993 sales of $60 million. Established in
1909, Vogel has manufacturing facilities in Austria with
sales branches throughout Austria and in Germany, Poland,
and Hungary.
The value of the transaction is approximately $51
million, including approximately $34 million of debt
which is being assumed. The Company borrowed
approximately $17 million from the Canadian Imperial Bank
of Commerce to fund the transaction. The transaction is
not expected to be dilutive to earnings per share in 1995
and will contribute positively thereafter.
The Company believes that the Vogel acquisition is
consistent with its strategic direction. It provides the
Company with a market leadership position in Austria and
considerably strengthens the product portfolios of the
Water Technologies Group and Industrial Products Group
throughout Europe, including Central Europe.
Vogel sells under three principal brand names in Austria
and in the countries to which it exports. Vogel Pumps is
its main brand name and constitutes an excellent line of
water pumps providing important upper end synergy with
the Company's existing Goulds Pumps Europe-Lowara water
pump line which experienced excellent sales growth within
Europe, and abroad. The product line sold under the
Ochsner brand name provides a significant increase in the
product offering and market presence for Goulds'
industrial market position in Europe and is expected to
provide important industrial pump synergies. The product
line sold under the Pantucek brand offers complete
mechanical and electrical packages for municipal sewage
systems and has significant potential in Central Europe
and good demand in Western Europe.
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ITEM 7. Financial Statements, Pro Forma Financial Information and
Exhibits
The following financial statements, and exhibits are filed as
a part of this report.
(a) Financial statements of the business acquired, prepared
in accordance with U.S. generally accepted accounting
principles pursuant to Rule 3.05 of Regulation S-X and
provided to Goulds Pumps by Vogel:
Item Page
Audited financial statements of the Vogel business
Report of Sot Sud-Ost Treuhand, Certified Accountants 4
Consolidated Balance Sheet - March 31, 1994 5
Consolidated Statement of Operations -
Year ended March 31, 1994 6
Consolidated Statement of Shareholders' Equity 7
Consolidated Statement of Cash Flows -
Year ended March 31, 1994 8
Notes to Consolidated Financial Statements 9
Due to unavailability of recent interim Vogel information,
unaudited interim financial statements of Vogel will be
provided within 60 days of this report's filing date as an
amendment on Form 8-K/A.
(b) Pro forma financial information required pursuant to
Article 11 of Regulation S-X will be provided within 60
days of this report's filing date as an amendment on Form
8-K/A.
(c) Exhibit in accordance with the provisions of Item 601 of
Regulation S-K:
Exhibit
(2) Purchase Agreement between Goulds and Vogel as of
December 5, 1994. (See pages 15 through 50 of this
report.)
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INDEPENDENT AUDITORS' REPORT
To the Stockholders of Pumpenfabrik Ernst Vogel Ges.m.b.H.
Stockerau, Austria
We have audited the accompanying consolidated balance sheet of
Pumpenfabrik Ernst Vogel GmbH and the wholly owned subsidiaries
Pantucek Klaranlagen GmbH, AVIS Werbung GmbH and VOGEL
Umwelttechnik GmbH as of March 31, 1994 and the related statements
of operations, shareholders' equity, and cash flows for the year
then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the consolidated financial
position of Pumpenfabrik Ernst Vogel GmbH and subsidiaries as of
March 31, 1994 and the consolidated results of their operations and
their cash flows for the year then ended in conformity with
generally accepted accounting principles.
Vienna, Austria SOT SUD-OST TREUHAND
September 23, 1994 AKTIENGESELLSCHAFT
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CONSOLIDATED BALANCE SHEET
Pumpenfabrik Ernst Vogel GmbH and subsidiaries
(Austrian Schillings in thousands) March 31, 1994
ASSETS
Current Assets
Cash and cash equivalents 6,295
Receivables (net of allowance for
doubtful accounts of 5.703) 166,678
Inventories 262,304
Prepaid expenses 566
Net assets of Frigopol business
(discontinued operations) 66,479
Total current assets 502,322
Intangible assets 101,918
Property, plant and equipment - net 70,875
Leased equipment 64,947
Investments, including investments in affiliates 18,628
Deferred tax asset 0
Other assets 598
759,288
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current maturities of debt 281,765
Trade payables 120,719
Income taxes payable 2,778
Accrued liabilities 36,247
Other 56,570
Total current liabilities 498,079
Long-term debt 104,467
Lease obligation 72,827
Pension 1,682
Other long-term liabilities 28,352
Deferred tax liability 7,812
Shareholders' Equity
Common stock 29,000
Additional paid-in capital 1,651
Retained earning 15,418
Total shareholders' equity 46,069
759,288
See notes to Consolidated Financial Statements.
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CONSOLIDATED STATEMENT OF OPERATIONS
Pumpenfabrik Ernst Vogel GmbH and subsidiaries
For the year ended
(Austrian Schillings in thousands) March 31, 1994
Net sales 723,820
Costs and expenses
Cost of sales 570,991
Selling, general and administrative expenses 108,561
Research and development expenses 3,128
Value adjustments in respect of shares in
group undertakings 4,300
Value adjustments of other financial assets 93
Earnings from investment and affiliates (120)
Interest expenses 33,687
Interest income (2,774)
Other income - net (5,994)
711,872
Earnings before taxes from continuing operations 11,948
Income taxes on continuing operations (4,510)
Earnings from continuing operations 7,438
DISCONTINUED OPERATIONS:
Loss from discontinued operations,
net of tax benefit of 3.395 (13,415)
Net loss (5,977)
See notes to Consolidated Financial Statements.
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CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Pumpenfabrik Ernst Vogel GmbH and subsidiaries
(Austrian Schillings in thousands, except share data)
Common stock Add'l. Retained Total
Shares Amount paid-in earnings shareholders'
capital equity
Balance, 3/31/93 29,000 29,000 1,651 21,395 52,046
Net Loss (5,977) (5,977)
Balance, 3/31/94 29,000 29,000 1,651 15,418 46,069
See notes to Consolidated Financial Statements.
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CONSOLIDATED STATEMENT OF CASH FLOWS
Pumpenfabrik Ernst Vogel GmbH and subsidiaries
(Austrian Schillings in thousands) March 31, 1994
Operating activities:
Net loss - 5.977
Adjustments to reconcile net loss
to net cash applied to operations:
Depreciation and amortization 37.980
Gain on sale of fixed assets -127
Increase in deferred tax liability 638
Value adjustments in respect of shares
in group undertakings 4.300
Value adjustments in respect of
other financial assets 93
Increase in receivables - 38.498
Increase in inventories - 24.016
Increase in other long-term liabilities 4.684
Decrease in pension - 959
Decrease in income taxes payable - 458
Decrease in accrued liabilities - 11.550
Increase in trade payables 35.980
Decrease in prepaid expenses and
other current assets - 63
Other - 6.224
Net cash applied to operating activities - 4.197
Investing activities:
Earnings of the sale of assets 1.440
Investments in affiliates - 3.013
Investments in intangible assets - 1.986
Investments in property, plant and equipment - net - 29.650
Net cash applied to investing activities - 33.209
Financing activities:
Decrease in lease obligation -8.305
Payments of long-term debt - 24.616
Increase in current maturities of debt 71.729
Net cash provided by financing activities 38.808
Increase in cash and cash equivalents 1.402
Cash and cash equivalents, beginning of year 4.893
Cash and cash equivalents, end of year 6.295
See notes to Consolidated Financial Statements.
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PUMPENFABRIK ERNST VOGEL GmbH AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Consolidation
The consolidated financial statements include the accounts of
Pumpenfabrik Ernst Vogel GmbH ("Vogel") and the wholly owned
subsidiaries Pantucek Klaranlagen GmbH ("Pantucek"), AVIS Werbung
GmbH ("AVIS") and VOGEL Umwelttechnik GmbH ("Umwelttechnik") after
elimination of all significant intercompany transactions as of
March 31,1994 and for the year then ended.
The companies have a fiscal year-end of March.
Cash and Cash Equivalents
Cash and cash equivalents include all cash balances and highly
liquid investments with original maturities of three months or
less. The carrying values of cash and cash equivalents approximate
fair values due to the short maturities of these financial
instruments.
Inventories
Inventories are stated at the lower of cost or market.
Property, Plant and Equipment
Property, plant and equipment is stated at cost, less
accumulated depreciation. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets
ranging from 5 to 25 years for buildings and 5 to 10 years for
machinery and equipment.
Capital leases
Capital leases are stated in accordance with FASB 13. Leased
equipment is stated at present value of annual payments at
inception less accumulated depreciation. The lease obligations are
stated at present value of future lease payments. A deferred tax
asset is stated due to the exposure between net book value and
lease obligation.
Income Taxes
Deferred tax liabilities and assets for the expected future
tax consequences of events that have been included in the
consolidated financial statements are recognized. A 10% deferred
tax liability has been stated for tax (investment) allowances
according to Section 10 Austrian tax law.
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2. Inventories
Inventories are summarized as follows:
TATS
Raw materials 44.190
Work in process 78.740
Finished goods 139.374
262.304
3. Intangible assets
Intangible assets are summarized as follows:
TATS
Goodwill (net of accumulated amortization of 11.989) 93.555
Other assets (net of accumulated amortization of 5.507) 8.363
101.918
Goodwill results from two acquisitions that have occurred since
1990. Pantucek was acquired in 1990 and has a net value of TATS
21.317 as of March 31, 1994. Ochsner Pumps was acquired in 1992 and
has a net value of TATS 72.238 at March 1994.
4. Property, Plant and Equipment
Major classes of property, plant and equipment consist of the
following:
TATS
Land and buildings 38.350
Machinery and equipment 168.567
206.917
Less accumulated depreciation 136.042
Property, plant and equipment net 70.875
5. Debt and Credit agreements
5.1. Debt consists of the following:
TATS
Stille Einlagen nach dem Beteiligungsfondgesetz
6,5%-7,3%, due 1995-1997 80.000
Overdrafts
5,0%-8,5%, due currently 169.198
Short-term loans
5,75%-8,25%, due 1994 19.795
Revolving credits
5,0%-5,75% 56.657
Term loans
3,5%-8,83%, 1994 - 2001 60.582
386.232
Unused credit lines 98.560
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Collaterals:
1. Creditanstalt-Bankverein
TS 37.000 are collaterated through export claims. The
remaining credits to the amount of TS 88.750 are secured
through mortgage, shares and assignment agreements.
2. Remaining banks
TS 22.400 are collaterated through export claims and TS
70.723 through securities.
Consolidated
Less current portion 386.232
Long term portion 281.765
104.467
Virtually all of the companies' assets are pledged against the
various borrowings listed above.
5.2. Five year payout
TATS
1995 281.765 *)
1996 37.387
1997 12.192
1998 11.126
1999 14.663
Thereafter 29.099
386.232
*) This figure includes revolving credits and overdrafts.
5.3. Pledged assets
Maximum limit mortgage
(amount in TATS) land registration place
number
480 1850 Stockerau
1.505 1850 Stockerau
4.298 1850 Stockerau
15.300 1850, 1811 Stockerau
2.400 1850, 1811 Stockerau
6.000 1850 Stockerau
2409 Salzburg/Maxglan
3.000 1850 Stockerau
2409 Salzburg/Maxglan
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Pledgings
Creditanstalt-Bankverein:
deposit-no. 0079-10631/92, market value ATS 10.741.765,96
Volkskreditbank:
deposit-no. 39.001.433, market value ATS 3.639.285,00
In addition a liability statement of February 2, 1994 exists to the
amount of ATS 15,000,000.- to the favor of Vogel Umwelttechnik
GmbH.. As of March 31, 1994 the outstanding balance amounts to ATS
11,626,845.
6. Commitments
The companies have various capital lease agreements for land and
buildings, machinery and other equipment. Future minimum rental
payments are approximately as follows:
Years ending March 31 TATS
1995 15.693
1996 11.406
1997 9.846
1998 8.540
1999 7.311
Thereafter 48.499
Total minimum lease payments 101.295
Less amount representing interest 28.468
Present value of minimum lease payments 72.827
7. Taxes
The components of the outstanding liabilities for taxes as of March
31, 1994 are as follows:
TATS
Current:
Trade tax (Gewerbesteuer) 2.071
Real estate tax 707
2.778
Deferred:
Corporate tax 7.812
Tax provisions 10.590
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The components of the total net deferred tax liabilities are as
follows:
TATS
Deferred tax asset
Capital leases exposure 2.679
Valuation allowance for deferred tax assets (2.679)
Gross deferred tax assets 0
Deferred tax liabilities
Tax allowance, Section 10 Austrian income tax (1.507)
BFAG provisions (3.131)
Other long term liabilities *) (3.174)
Deferred tax liability (7.812)
Net deferred tax liabilities (7.812)
*) resulting from redundancy payment accrual
8. Investments, Including Investments in Affiliates
Nominal capital Share of book value
the Company of the share
ATS
Obliged Companies
Ochsner Prozebtechnik
GesmbH, Linz 500.000 500.000 380.000 900.000
Associated Companies
VOGELPUMPEN-DRV-IKS
GesmbH, Kincesbanya,
Ungarn Ft 5.100.000 Ft 1.700.000 178.500
Other Investments
Volksbank Stockerau,
reg. GesmbH, Stockerau 5.000 5.000
Oberosterreichische Volks-
kreditbank GenmbH, Linz 1.100 100
Siedlungsgenossenschaft
Bausparerheim GenmbH, Salzburg 3.000 3.000
Securities
(present market value of 18.213.814 ATS) 17.541.000
Total 18.627.600
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9. Pension plans
The company grants a pension of ATS 13,000.-- per month to Mrs.
Herta Ochsner. Payments are made 14 times a year, whereby an
additional pension payment is paid in the months June and November
each year.
In addition a minimum pension is paid to former employees (on
average ATS 2,400.-- per person per year). These claims are not
material.
10. Discontinued operations
During the first quarter of fiscal 1995, the Company announced its
intent to dispose off its refrigerated compressors manufacturing
division (FRIGOPOL). The results of this business, which is
classified separately as discontinued operations in the
accompanying consolidated statement of operations, are summarized
as follows:
Year Ended
March 31, 1994
Net sales 78.671
Loss from operations before income tax benefit (16.810)
Loss from operations (13.415)
Income tax benefit (3.395)
Net assets of discontinued operations are stated at estimated
realizable value and consist principally of accounts receivable,
inventories, fixed assets and certain intangibles and liabilities
to be assumed. The net assets of the FRIGOPOL business have been
classified as a current asset in the accompanying balance sheet as
of March 31, 1994 due to the expected dates of sale. The assumed
disposal of FRIGOPOL will result in no gain or loss. The following
table summarizes the net assets as of March 31, 1994 of the
FRIGOPOL business:
Inventories 29.727
Receivables, net 17.371
Property, plant and equipment 21.586
Intangibles, net 1.637
Other long-term assets 1.398
Less accruals (5.240)
Net assets of FRIGOPOL business 66.479
<F50>
SHARE PURCHASE AGREEMENT
entered into by and between
1. Goulds Pumps GmbH,
Dr. Karl Lueger-Ring 12
A-1010 Vienna, Austria
2. Goulds Pumps Ltd.,
Milleway Rise Industrial Estate
Axminster, Devon
England EX 13 5HU
(hereinafter individually referred to as a "Purchaser" and
collectively as, "Purchasers")
on the one hand
and
3. Ing. Gerhard Vogel,
Wiesenerstrabe 10,
A-2000 Stockerau, Austria
4. Hermine Vogel,
Wiesenerstrabe lO,
A-2000 Stockerau, Austria
5. Lauermann Familien-Privatstiftung
Goldschmiedgasse 6
1010 Wien
(hereinafter collectively referred to as "Sellers")
on the other hand
for the sale and purchase of shares in
Pumpenfabrik Ernst Vogel Aktiengesellschaft
(formerly Pumpenfabrik Ernst Vogel Gesellschaft m.b.H.)
(hereinafter referred to as "VOGEL-PUMPEN" or "the Company")
<F50>
TABLE OF CONTENTS
Preamble
Section I: Definitions and Interpretation
Section II: Share Purchase, Closing Date
Section III: Purchase Price
Section IV: Business Operations until the Closing Date
Section V: Warranties and Representations
Section VI: Management
Section VII: Conditions to Transfer of Ownership and Payment of
Purchase Price
Section VIII: Certain Actions Before Closing
Section IX: Applicable Law and Arbitration
Section X: General Provisions
<F50>
PREAMBLE
A) VOGEL-PUMPEN originally was a limited liability company with
its corporate seat in Stockerau, Austria, entered into the
commercial register of the Provincial Court of Korneuburg under
file no. FN 59353i. It was transformed into a stock corporation
("Aktiengesellschaft) in November 1994. The stated share capital of
VOGEL-PUMPEN totals ATS 29,000,000.00. Following the
aforementioned transformation into a stock corporation, the shares
of VOGEL-PUMPEN are held by the Sellers as follows:
Name Percentage of nominal value of
the stated shareholding share
capital
1. Ing. Gerhard Vogel 25 % ATS 7,250,000.00
2. Hermine Vogel 25 % ATS 7,250,000.00
3. Lauermann Familien- 50 % ATS 14,500,000.00
Privatstiftung
B) VOGEL-PUMPEN holds directly or indirectly 100 % of the stated
share capital of
a) Ernst Vogel Pumpen Export Gesellschaft m.b.H. & Co. KG,
Stockerau, Austria
b) Ochsner GmbH, Dusseldorf, Germany
c) Ochsner Prozebtechnik GmbH, Linz, Austria
d) Vogel Umwelttechnik GmbH, Hollabrunn, Austria
e) Pantucek Klaranlagen GmbH, Prellenkirchen, Austria
f) AVIS Werbung GmbH, Stockerau, Austria
g) Ochsner Gas Compressor Systems GmbH, Linz, Austria
VOGEL-PUMPEN holds a 76 % participation in Ochsner Prozebtechnik
GmbH & Co KG in Liqu., Linz, Austria, the remaining participations
being held by Mr. Karl Ochsner (22.8 %) and by Mr. Gerhard Ochener
(1.2 %).
VOGEL-PUMPEN, furthermore, holds 33 % in VOGEL-PUMPEN DRV-IKS Kft.,
Kincesbanya, Hungary.
Finally, VOGEL-PUMPEN maintains sales offices in Warszawa, Poland
and Katowice, Poland.
<F50>
Certain of the above subsidiaries are inoperative (items a), c), g)
and Ochsner Prozebechnik GmbH & Co KG in Liqu., Linz , Austria
above) and one of them is in the process of being liquidated
(Ochsner Prozebtechnik GmbH & Co KG in Liqu., Linz, Austria).
C) Prior to the Closing Date (as defined below) the Frigopol
Business (as defined below) will be divested in form of a
contribution in kind to another company held by all or some of the
Sellers or by way of splitting or by a sale of the respective
assets. The Frigopol Business is not included in the acquisition
hereunder and its divesting therefore does not reflect on the
Purchase Price (as defined below).
The subject-matter of the acquisition hereunder is, therefore,
VOGEL-PUMPEN and its 100 % direct and/or indirect shareholdings in
the aforementioned companies (hereinafter referred to as "VOGEL-
PUMPEN Companies") as well as the shareholding of VOGEL-PUMPEN in
DRV-IKS Kft., Hungary.
D) Prior to the date of the signing of this Agreement the Sellers
at the request of the Purchasers have held a shareholders' meeting
of VOGEL-PUMPEN resolving to transform VOGEL-PUMPEN into a stock
corporation ("Aktiengesellschaft") on the basis of the balance
sheet of VOGEL-PUMPEN as of March 31, 1994. As a consequence of
such transformation, each of the Sellers has been issued an interim
certificate representing shares equal to 25 % and 50 % respectively
of the capital stock of the transformed company.
E) Sellers desire to sell all shares in the Company held by them
after said transformation pursuant to the terms and conditions
hereof, and Purchasers are willing to purchase such shares.
F) Purchasers, both through the adviser of Sellers, Creditanstalt
Investment Bank Aktiengesellschaft (hereinafter "CAIB"), and
directly from the Sellers, have received certain information and
documents concerning the VOGEL-PUMPEN Companies, including but not
limited to (a) the audited non-consolidated financial statements of
the VOGEL-PUMPEN Companies as of March 31, 1994, (b) the auditors'
reports concerning the VOGEL-PUMPEN Companies for the past three
years, (c) the VOGEL-PUMPEN Companies' non-consolidated balance
sheet and profit and loss statements as of March 31, 1994 as well
as (d) a report on the VOGEL-PUMPEN Companies prepared by SOT
Sud-Ost Treuhand Aktiengesellschaft ("the SOT-Report"). In
addition, Purchasers, prior to the execution of this Agreement,
personally and/or by trusted experts conducted a due diligence and
<F50>
technical and commercial review of the VOGEL-PUMPEN Companies an
through their consultants a review of the VOGEL-PUMPEN Companies'
financial results as of July 31, 1994 in order to arrive at a
decision to execute this Agreement. In view of the above, the
Sellers are prepared to give only limited representations and
warranties, i. e., only to the extent explicitly set forth in
Section V. Furthermore, the agreement on the amount of the
Purchase Price took into consideration the results of the interim
financial statements of the VOGEL-PUMPEN Companies prepared by the
Purchasers and their auditors.
NOW, THEREFORE, the contracting parties agree as follows:
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SECTION I
DEFINITIONS AND INTERPRETATIONS
1.1 In this Agreement and its Annexes, the words used herein shall
have the following meaning:
"VOGEL-PUMPEN": Pumpenfabrik Ernst Vogel Aktiengesellschaft, a
stock corporation with its corporate seat in Stockerau, Austria,
and business address at Ernst-Vogel-Strabe 2, A-2000 Stockerau,
Austria, entered into the commercial register of the Provincial
Court of Korneuburg (formally, prior to the transformation, under
file no. FN 59353i).
"Frigopol Business": The FRIGOPOL division of the Company,
including all assets and liabilities pertaining thereto, as more
clearly defined in Annex l.l.a hereto.
"Closing Date": A date on or before December 5, l994 to be agreed
between the contracting parties, unless the parties mutually agree
on a later date in which case such date shall be the Closing Date
for the purpose of this Agreement.
"Purchasers": Goulds Pumps GmbH and Goulds Pumps Ltd.
"Escrow Agent": Creditanstalt-Bankverein of Schottengasse 6, A-1010
Vienna, Austria, or its successor or assignee.
"Escrow Agreement": The agreement entered into between the Sellers,
the Purchasers and the Escrow Agent in accordance with the
provisions of this Agreement.
"VOGEL-PUMPEN Companies": VOGEL-PUMPEN, Ernst Vogel Pumpen Export
GmbH & Co. KG, Stockerau, Ochsner GmbH, Dusseldorf, Ochsner
Prozebtechnik GmbH, Linz, Ochsner Prozebtechnik GmbH & Co KG in
Liqu., Linz, Pantucek Klaranlagen GmbH, Prellenkirchen, Vogel
Umwelttechnik GmbH, Hollabrunn, AVIS Werbung GmbH, Stockerau and
Ochsner Gas Compressor Systems GmbH, Linz.
"Sellers": Ing. Gerhard Vogel, Hermine Vogel, Lauermann
Familien-Privatstiftung.
"Sellers' Warranties": The representations, warranties and
covenants given and entered into by the Sellers in Section V
hereof.
"Agreement": The present Share Purchase Agreement and its Annexes,
unless the context clearly indicates otherwise.
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Financial Statements": The unconsolidated, balance sheets and
profit and loss statements of the VOGEL-PUMPEN Companies as of
March 31, 1994 as per Annex l.l.b (audited with respect to
VOGEL-PUMPEN, unaudited with respect to all other VOGEL-PUMPEN
Companies).
"Accounting Principles": The principles used for the establishment
of the Financial Statements on the basis of Austrian generally
accepted accounting principles, as set out in Annex l.l.c.
1.2 The Annexes and the Preamble to this Agreement constitute
integral parts hereof and shall therefore be deemed to be part
of the Agreement and construed as having the same effect.
1.3 The headings in this Agreement have been introduced merely for
convenience and shall not affect the construction or
interpretation hereof.
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SECTION II
SHARE PURCHASE, CLOSING DATE
2.1 Prior to the date of the signing of this Agreement, the
Sellers have held a shareholders' meeting of VOGEL-PUMPEN
resolving to transform the Company into a stock corporation on
the basis of the balance sheet as of March 31, 1994. The
capital stock of the transformed company is ATS 29,000,000.00
and is divided into 2,900 bearer shares with a nominal value
of ATS 10,000.00 each. Each of the Sellers has been issued 725
shares and 1,450 shares, respectively represented by interim
certificates, two for each of the Sellers. The interim
certificates shall be numbered 1 to 6 ("the Interim
Certificates") .
2.2 The Sellers herewith sell to Purchasers and the Purchasers
herewith buy from the Sellers the 2,900 shares ln VOGEL-PUMPEN
with a nominal value of ATS 10,000.00 ten thousand Austrian
schillings) each, as issued after the transformation of VOGEL-
PUMPEN, thus, in the aggregate, shares with a nominal value of
ATS 29,000,000.00 (twenty-nine million Austrian schillings),
corresponding to 100% of the entire capital stock of VOGEL-
PUMPEN, together with all rights and obligations attaching to
such shareholdings ("the Shares").
The Purchasers purchase the Shares in the following
proportion:
Goulds Pumps GmbH purchases 2,897 shares, and
Goulds Pumps Ltd purchases 3 shares.
2.3 The Shares are represented by the Interim Certificates which
will be assigned and transferred to the Purchasers. The
transfer and assignment of the Shares to the Purchasers and
the payment of the Purchase Price to the Sellers shall take
place on the Closing Date and shall be subject to the
conditions set forth in this Agreement.
2.4 The contracting parties have agreed to schedule the closing on
or before December 5, 1994. If a delay occurred, neither
contracting party shall be bound by this Share Purchase
Agreement any longer (except as set forth herein), unless (i)
the parties mutually agree on an extension of the above time
period and/or on the determination of another day as Closing
Date or (ii) the failure to implement is attributable to one
side preventing the fulfillment of a condition in violation of
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the principle of acting in good faith or to one side's
failure to do everything that is reasonably necessary or
required to make such fulfillment of a condition possible, in
which case the non-defaulting side may opt, by notice in
writing, to maintain this Agreement in full force and effect
and to insist on the performance of the other side's
contractual obligations.
In case of non-implementation of the share purchase as
aforesaid, the Purchasers shall promptly destroy any and all
records, and copies thereof, obtained from the VOGEL-PUMPEN
Companies in the course of its review of the VOGEL-PUMPEN
Companies, including but not limited to the due diligence
review, and any notes and other documents made in the course
of or as a result of such review and/or based on information
received from the Sellers and/or the VOGEL-PUMPEN Companies in
connection with the contemplated purchase of the Shares. The
Purchasers shall, furthermore, not make use of any
confidential information obtained from the Sellers, the VOGEL-
PUMPEN Companies and/or their advisors because of or in
connection with such share purchase.
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SECTION III
PURCHASE PRICE
3.1 The purchase price for 100 % of the Shares shall be ATS
184,980,595.00 (one hundred eighty four million nine hundred
eighty thousand five hundred ninety five Austrian schillings)
( "the Purchase Price") and shall be paid on or before the
Closing Date clear and free of any deductions, withholdings or
setoffs, in cash, by banker's check or in any other manner
agreed to by the Sellers, as follows:
(a) ATS 159,220,595.00 (one hundred fifty-nine million two
hundred twenty thousand five hundred ninety-five Austrian
schillings). This portion of the Purchase Price shall be
paid by the Purchasers on or before the Closing Date to
the Sellers in the following amounts:
(1) Ing. Gerhard Vogel ATS 39,805,148.75 (25 %)
(2) Hermine Vogel ATS 39,805,148.75 (25 %)
(3) Lauermann Familien- ATS 79,610,297.50 (50 %)
Privatstiftung
(b) ATS 25,760,000.00 (twenty-five million seven hundred
sixty thousand Austrian schillings) shall be remitted by
the Purchasers on or before the Closing Date to the
escrow account with the Escrow Agent ("the Escrow
Account") set up in accordance with the Escrow Agreement.
The agreement of the parties on the Purchase Price was based
on the assumption that payment of the Purchase Price will be
made with a value date not later than September 30, 1994.
Consequently, if the closing does not take place on or before
September 30, 1994 the Purchase Price shall bear interest at
a rate per annum equal to the Secondary Market Rate for
"Einmalemissionen" as monthly published by the Austrian
National Bank under item 5.4 of the "Statistische
Monatsberichte" and which shall accrue as from the
aforementioned value date until November 30, 1994, inclusive,
such interest to be paid at the same time as the Purchase
Price and pursuant to sub-section a) above.
The Purchasers shall be jointly and severally liable for the
payment of the Purchase Price.
3.2 The parties hereto shall sign and execute the Escrow Agreement
prior to the Closing Date on mutually acceptable terms and
conditions.
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The portion of the Purchase Price on the Escrow Account shall
be due and payable as set forth in sub-section 5.6.
Interest accruing on the Escrow Account shall be due to the
Sellers pro rata their present shareholdings in the Company
and shall be paid to them promptly upon crediting of same to
the Escrow Account.
The parties, acting in good faith, shall agree on a form of
investment of the amount from time to time credited to the
Escrow Account that takes into account both the interest of
the Sellers to maximize the amount of interest and the
interest of the Purchasers to be reimbursed without undue
delay any justified claim for breach of the Sellers'
Warranties.
The Sellers shall be free to substitute any amount to be paid
from the Escrow Account to the Purchasers pursuant to the
provisions of sub-section 5.6 by funds in an equal amount from
other sources in which case a corresponding amount shall be
released, and paid to them, from the Escrow Account
immediately upon maturity of funds on the Escrow Account that
have been invested for a fixed period of time and that
therefore were not immediately available for settlement of a
justified claim of the Purchasers.
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SECTION IV
BUSINESS OPERATIONS UNTIL THE CLOSING DATE
4.1 For the time between the signing of this Agreement and the
Closing Date, the Sellers, in their capacity as sole
shareholders of VOGEL-PUMPEN, or as the case may be, as
managing directors or members of the managing boards of the
VOGEL-PUMPEN Companies, undertake to procure that the business
operations of all VOGEL-PUMPEN Companies shall remain in each
and every aspect (in particular as regards personnel,
finance, accounting, etc.) within the scope of the business
operations undertaken until the signing date and within the
scope of the operations typical of an enterprise of the
VOGEL-PUMPEN Companies (except for the divesting of the
FRIGOPOL Business and the consequences arising therefrom).
None of the VOGEL-PUMPEN Companies shall enter into legal
transactions or other business transactions going beyond that
scope without having obtained the Purchasers' prior written
consent, it being agreed that the Purchasers will not
unreasonably withhold their consent. In particular, but
without prejudice to the generality of the foregoing, any of
the following matters require the prior consent of the
Purchasers:
4.1.1 any shareholders' resolution, be it adopted at a
shareholders' meeting of any of the VOGEL-PUMPEN
Companies or by means of a written vote;
4.1.2 any hidden or open distribution of profits;
4.1.3 the alienation or encumbrance of assets of any of
the VOGEL-PUMPEN Companies, unless such assets are
not of a material value;
4.1.4 the issuance of guarantees or undertakings of
indemnification in excess of ATS 2,000,000.00;
4.1.5 the conclusion of legal transactions going beyond
the ordinary scope of business, involving an amount
of more than ATS 2,000,000.00;
4.1.6 the conclusion of long-term contracts that cannot
be terminated legally at six months' notice
maximum, without material adverse legal
consequences for the VOGEL-PUMPEN Company
concerned;
4.1.7 the acquisition and alienation as well as any other
disposition of shares and investments of whatever
kind, including, without being limited to, shares
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and investments in corporations, partnerships,
joint ventures, funds, trusts, foundations or the
like;
4.1.8 the borrowing of money for a term exceeding 12
months or ATS 2,000,000.00;
4.1.9 the appointment of general agents or "Hand-
lungsbevollmachtigte" (persons holding a commercial
power of attorney pursuant to sec. 54 of the
Austrian Commercial Code), or the promising of
executive positions in any of the VOGEL-PUMPEN
Companies to present employees or newly recruited
persons;
4.1.10 the giving of notice to, dismissal of, or approval
of the termination by mutual agreement of,
employees of any of the VOGEL-PUMPEN Companies who
are essential for the normal conduct of business
and who cannot be easily replaced within a short
period of time;
4.1.11 the hiring of employees except under the terms and
conditions usually agreed to by the VOGEL-PUMPEN
Companies;
4.1.12 the conclusion of agreements with the works council
or interest groups;
4.1.13 the acquisition, alienation or encumbrance of real
property;
4.1.14 the termination or violation of any significant
business relationship or contract involving an
amount in excess of ATS 2,000,000.00;
4.1.15 the agreement, conditionally or otherwise, to do
any of the acts referred to in sub-sections 4.1.1
through 4.1.14.
4.2 If and when a matter or issue arises that would require the
Purchasers' consent pursuant to sub-section 4.1, the Sellers
shall notify the Purchasers thereof without delay and, if the
Purchasers refuse to consent to the act or measure proposed by
the Sellers, the Sellers shall refrain therefrom and/or shall
procure that the VOGEL-PUMPEN Company concerned does not take
such act or measure (either). The Purchasers shall give or
deny their consent as aforesaid within a reasonable time. The
Sellers shall be authorized, however, to take any action
necessary to prevent disadvantages for any of the VOGEL-PUMPEN
Companies, if the urgency of the matter does not allow to wait
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for the Purchasers' response or if such response is not given
in time ("deemed consent of the Purchasers").
4.3 The Sellers shall immediately notify the Purchasers in writing
of any matter or issue which arises or becomes known to the
Sellers between the date of the signing hereof and the Closing
Date and which constitutes, or would constitute after the
Closing Date, a breach of the Sellers Warranties or of other
representations, warranties, undertakings or obligations
assumed in this Agreement.
4.4 The Sellers shall procure that the Frigopol Business will
effectively be divested on or prior to the Closing Date by
contribution of the Frigopol Business into Frigopol
Kaltemaschinen GmbH and subsequent sale of the shares in such
company to one or more of the Sellers against a consideration
of ATS 1.00. The contractual arrangements in this connection
shall provide that all present and future liabilities related
to the Frigopol Business shall be assumed by Frigopol
Kaltemaschinen GmbH, except as explicitly set forth herein.
The Sellers herewith warrant that the shareholders of Frigopol
Kaltemaschinen GmbH shall provide such company with sufficient
financing in order to enable such company to meet at all times
its obligations to indemnify VOGEL-PUMPEN against any and all
liabilities arising from the Frigopol Business. For the
avoidance of doubt the liability of the Sellers out of the
above warranty shall not be subject to any of the limits on
liability set forth in Section 5. The Purchasers shall cause
VOGEL-PUMPEN to enable the Sellers and/or their advisors to
assume the defence of any claims. The provisions of sub-
section 5.6 shall apply mutatis mutandis.
In view of the difficulty to identify exactly those supplies
already made from third party suppliers that are attributable
to the Frigopol Business, the parties have agreed that the new
owner of the Frigopol Business shall assume and repay loans
presently extended to the Company in an amount equal to the
value of supplies made and remaining unpaid, attributable to
the Frigopol Business, and that the Company will continue to
assume, and will settle, the corresponding claims of the
suppliers. The details thereof are set out in Annex 1.1.a. The
Sellers shall therefore indemnify and hold harmless the
Company and the Purchasers against any loss, costs and
expenses resulting from a breach of the undertaking to assume
and repay the loans as aforesaid, and the Purchasers shall
indemnify and hold harmless the Sellers and/or the new owner
of the Frigopol Business against any loss, costs and expenses
resulting from a breach of the Company' s obligation to
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finally settle the aforesaid suppliers' claims without any
recourse of either the Company or the Purchasers to the
Sellers and/or the new owner of the Frigopol Business.
Following the divesting of the Frigopol Business the Company
shall continue to perform and/or undertake certain services,
works and supplies for the Frigopol Business to the extent and
basically within the scope such services, works and supplies
have been performed so far (e.g., accounting services). The
Company will charge for such services, works and supplies at
cost, without adding a profit margin, provided that (a)
services shall be provided at cost (i.e., costs of
personnel) up to a maximum amount of ATS 1,000,000.00 per
calendar year and (b) works and supplies (e.g., supply of
engines, manufacturing works = "Lohnarbeit") shall be
performed at cost on the same basis presently existing and as
defined in Annex 1.1.a up to a maximum amount of ATS
9,000,000.00 and for a maximum period until December 31, 1995.
Services, supplies and works in excess of the above limits
shall be performed and/or undertaken at market rates. The
details will be set out in an agreement to be entered into by
the Company and the new owner of the Frigopol Business with
the approval of the Purchasers, such approval not to be
unreasonably withheld. Said agreement will also deal with the
time period during which said services will be performed.
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SECTION V
WARRANTIES AND REPRESENTATIONS
5.1 In connection with the formation of this Agreement, the
Purchasers and the Sellers each represent and warrant to the
other(s) as follows:
a) Goulds Pumps Ltd. is a corporation duly organized,
validly existing and in good standing under the laws of
England and has all requisite corporate power and
authority to own, operate or use all of its properties
and assets and, within the applicable laws, to carry on
its business as now being conducted; Goulds Pumps GmbH
has been duly registered with the Companies Register at
the Commercial Court Vienna.
b) neither the execution nor the performance of this
Agreement is subject to further corporate-law or other
approvals; the execution, delivery and performance by the
approvals; the execution, delivery and performance by the
Purchasers of this Agreement and the consummation by it
of the transactions contemplated hereby have been duly
authorized, and no other action on the part of the
Purchasers is necessary for the execution, delivery and
performance by the Purchasers of this Agreement and the
consummation by them of the transactions contemplated
hereby. This Agreement has been duly executed and
delivered by the Purchasers and is a legal, valid and
binding obligation of the Purchasers, enforceable against
the Purchasers in accordance with its terms;
c) neither the execution nor the performance of this
Agreement violates (i) the applicable articles of
association or any other applicable legal provisions;
(ii) any judgment, court order or decree applicable to
the Sellers or the Purchasers; or (iii) a contract or
other legal instrument to which the Sellers or the
Purchasers are a party or by which any of their property
is bound;
d) all statutorily required notices, notifications, consents
and approvals necessary for the entry into and
performance of this Agreement have already been procured
or will be procured or made by the Closing Date;
e) there is no administrative or court proceeding or
arbitration case pending or threatened which might
considerably impair the performance of this Agreement by
any of the contracting parties.
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5.2 In connection with the sale of the Shares agreed upon herein
the Sellers represent and warrant vis-a-vis the Purchasers as
set forth below:
a) The Sellers and/or the respective VOGEL-PUMPEN Company
hold(s) exclusive and unrestricted title, free from any
encumbrances, to the Shares and all direct and indirect
shareholdings of VOGEL-PUMPEN in the VOGEL-PUMPEN
Companies on the day of the signing of this Agreement and
also on the Closing Date. All said Shares or share
quotas and shareholdings have been fully paid up either
in cash or in kind. As of the Closing Date, VOGEL-PUMPEN
directly or indirectly holds 100 % of the shares in
Ochsner Prozebtechnik GmbH, Linz. The Company holds only
a 76 % participation in Ochsner Prozebtechnik GmbH & Co
KG in Liqu..
There are no rights or claims of third parties whatsoever
pertaining to any of the aforementioned shares nor are
there any preemptive rights of take-over, rights to
conversion, options or other rights similar to these from
an economic or legal point of view as regards the VOGEL-
PUMPEN Companies.
b) All VOGEL-PUMPEN Companies are enterprises duly
established and validly existing under the law of their
incorporation, except those companies that are in the
process of being liquidated and dissolved.
c) The Financial Statements have been established in
accordance with generally accepted Austrian accounting
principles ("AGAAP") as specified by the Accounting
Principles (Annex 1.1.c); they are complete and correct.
The valuation of the items of property and liabilities
reported in the balance sheets are correct, accurately
reflect the value of the assets and liabilities of the
VOGEL-PUMPEN Companies and are in accordance with the
uniformly applied AGAAP and the Accounting Principles.
As of March 31, 1994, there exist in particular no
liabilities that should have been included in the
Financial Statements pursuant to AGAAP and the Accounting
Principles, but effectively have not been accounted for.
The Sellers do not warrant, for the avoidance of doubt,
the collectibility of any accounts receivable or the
merchantability of the particular items of the assets or
the inventory nor the proper valuation of the inventory.
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d) Since the balance sheet date, i.e., March 31, 1994, until
the Closing Date there have been no material adverse
changes in the consolidated net asset value of the VOGEL-
PUMPEN Companies and in the financial standing of the
VOGEL-PUMPEN Companies so that the continuity of the
companies as regards their property structure, capital
structure and operating profit is and will be ensured.
This warranty does not include, however, for the
avoidance of doubt, negative consequences, if any, for
the VOGEL-PUMPEN Companies resulting from the
notification of the public of the intent of the Sellers
to sell, and of the Purchasers to buy, the Shares nor the
costs and expenses incurred by any or all of the VOGEL-
PUMPEN Companies in connection with the preparation,
negotiation and signing of this Agreement. For the
avoidance of doubt it is agreed that the difference
between the consolidated net asset value resulting from
the Financial Statements and the consolidated net asset
value resulting from the interim financial statements as
per July 31, 1994 does not constitute a material adverse
change in the above meaning.
e) No distribution of profits has been made since March 31,
1994 until the date of the signing hereof.
f) The VOGEL-PUMPEN Companies are owners of the entire
moveable and immovable property appearing in the
Financial Statements, to which the individual VOGEL-
PUMPEN Companies hold free and unrestricted title and
which are not encumbered with any rights of third
parties, except for the charges and encumbrances listed
in Annex 5.2.f.
g) All plant and equipment of the VOGEL-PUMPEN Companies are
in an useable state of repair, normal wear and tear since
the time of the Purchasers' inspection of such plant and
equipment excepted.
h) There are no claims of third parties vis-a-vis the VOGEL-
PUMPEN Companies, except for claims that have arisen in
the ordinary and regular course of business and which
were correspondingly taken into account in the Financial
Statements on the basis of the AGAAP and the Accounting
Principles, nor have such extraordinary claims of third
parties arisen between March 31, 1994 and the date of the
signing hereof, except as listed in Annex 5.2.h. All
agreements in existence as of the Closing Date between
any of the VOGEL-PUMPEN Companies and a company
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controlled by any of the Sellers have been concluded on
an arm's length basis, except as disclosed in Annex
5.2.h. In view of the provisions of sub-section 4.4
above, the foregoing warranty does not apply, however,
with respect to the Frigopol Business and/or the new
owner thereof.
i) Until the date of the signing hereof, the VOGEL-PUMPEN
Companies have timely and accurately filed and provided
all returns and information to be made and given under
the applicable tax laws or requested from the tax
authorities and have properly taken them into account in
the Financial Statements. All taxes that are assessed on
an annual basis and that are attributable to the fiscal
years preceding or ending on March 31, 1994 either have
been paid or have been sufficiently reserved for in the
Financial Statements. As of the Closing Date there
remain no taxes unpaid that are payable as a one-time
payment (e.g., documentary stamp taxes, capital transfer
taxes), except for taxes of this kind that become payable
as a result of transactions permitted to be undertaken or
carried on pursuant to the provisions of Section IV.
above.
j) The VOGEL-PUMPEN Companies have obtained from the
authorities all permits and approvals required for their
operation. Those permits and approvals validly exist.
The VOGEL-PUMPEN Companies have complied with all orders,
requests or decrees issued to them by any competent
authority under environmental protection law. None of
the Sellers is aware of any proceedings for compliance
with or violation of applicable environmental protection
laws and regulations and none is aware that any such
proceedings are threatening. All permits and approvals
under applicable environmental protection laws necessary
for the operation of the VOGEL-PUMPEN Companies have been
obtained and validly exist. To the extent a VOGEL-PUMPEN
Company incurs costs for preventive measures and/or
clean-up costs ("Sicherungs- und Sanierungsaufwand") due
to environmental regulations, the Sellers shall bear
and/or reimburse to the respective company 50 % (fifty
percent) of such costs up to a maximum of ATS
11,000,000.00 (eleven million Austrian schillings).
As regards the real estates EZ 201 and EZ 679, which are
still registered in the name of Ochsner Prozesbtechnik
GmbH & Co KG in Liqu., the declaration by
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Raiffeisenlandesbank Oberosterreich reg. GenmbH, dated
May 4th, 1994, to hold such company harmless, inter alia,
against the clean-up of contaminations is a validly
existing obligation of Raiffeisenlandesbank
Oberosterreich reg. GenmbH.
k) As of the date of the signing hereof there are no labor-
law agreements, including plant or other agreements with
employees' representatives or trade unions (except
applicable collective bargaining agreements), other than
those listed in Annex 5.2.k. Annex 5.2.k also lists all
fringe benefit and pension schemes.
l) Prior to the signing of this Agreement, the Sellers
disclosed or granted inspection of all contracts relating
to the VOGEL-PUMPEN Companies which are of essential
impact on the business operations of the individual
companies.
m) All VOGEL-PUMPEN Companies have insurance, including
product liability insurance, in such amount and covering
such risks as is necessary for their operation.
n) Apart from the proceedings outlined in Annex 5.2.n, there
are no proceedings before courts, arbitral tribunals or
administrative authorities pending, or threatened against
the VOGEL-PUMPEN Companies that involve an amount or
value in excess of ATS 500,000 per case.
o) The VOGEL-PUMPEN Companies hold good an valid title
and/or licences to the industrial property rights,
including, without being limited to, patents, trademarks,
rights in design and copyrights, that are necessary to
conduct their business as presently conducted. Licences
have been granted to any or all of the VOGEL-PUMPEN
Companies with respect to the patents held by certain
Sellers which licences shall survive the Closing Date for
an indefinite period of time and shall be without
obligation to the VOGEL-PUMPEN Companies to pay royalties
to the respective Seller.
With respect to those VOGEL-PUMPEN Companies that are in the
process of being liquidated and dissolved, the above
representations and warranties are given with the proviso that
they shall apply with respect to such companies only to the
extent reasonably practicable, taking into account their
present state of liquidation.
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5.3 The Purchasers' remedies in case of a breach of any
representation or warranty expressly or impliedly given or
made by the Sellers hereunder shall be limited to a subsequent
corresponding reduction, and refund, of the Purchase Price.
Any liability of the Sellers for breach of any or all of the
Sellers' Warranties shall therefore be limited, in the
aggregate, to an amount equal to the Purchase Price.
In the event of a violation of any of the Sellers' Warranties,
the Sellers shall refund an amount to the Purchasers which
would be necessary to indemnify and hold the affected VOGEL-
PUMPEN Company/Companies harmless against any damage or loss
suffered by it in consequence of the breach of any of the
Sellers' Warranties, such amount(s) not to exceed, however,
the claim limit as defined in sub-section 5.5 below. Tax
benefits arising to that VOGEL-PUMPEN Company in consequence
of the non-observance of such Sellers' Warranties shall be
deducted from the loss or damage incurred, unless the tax
benefit will consist in the deferral of such tax only.
Consequently, in case the profit for tax purposes would be
increased, in particular as a result of a tax audit, then such
profit shall be set off against tax loss carry forwards, if
any. Should a tax audit result in the request of the tax
authorities to capitalize certain expenses and should, as a
consequence thereof, such capitalizations lead to the
possibility of depreciations in the succeeding years, any
payments requested by the tax authorities at the outcome of
the tax audit as a result of such capitalizations shall not be
deemed to be liabilities of the Sellers under the tax
warranty, but shall be borne by the VOGEL-PUMPEN Companies.
The Sellers shall not be under any liability whatsoever in
respect of any claim in relation to a breach of any of the
Sellers' Warranties:
a) if and to the extent that a claim arises from a voluntary
act or transaction carried out after the Closing Date by
any VOGEL-PUMPEN Company or the Purchasers, unless such
act or transaction is based on a legally binding
obligation by the respective VOGEL-PUMPEN Company entered
into on or prior to the Closing Date; or
b) if and to the extent that a claim arises from an act or
omission compelled by law after the Closing Date or as a
result of the passing of an enactment or other government
regulation with retrospective effect or of the
introduction of or of any changes in law or of any
changes in the prevailing interpretation of the law after
the Closing Date; or
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c) if and to the extent that a claim arises from any matter
or thing either provided for or required by this
Agreement or an act or omission by or occurring at the
written request or with the prior written consent of the
Purchasers or from a change of accounting policy or
practise of the Purchasers or any VOGEL-PUMPEN Company or
an act or omission permitted to be done by any of the
VOGEL-PUMPEN Companies as a consequence of the
Purchasers' consent within the meaning of the provisions
of sub-section 4.2 above; or
d) to the extent that the damage or loss which is the
subject of the claim has been or is made good or is
otherwise compensated for without cost to the Purchasers
or any VOGEL-PUMPEN Company.
e) to the extent that the damage or loss became apparent
during the Purchasers' financial due diligence and is
reflected in the interim financial statements as per July
31, 1994 and served as argument for reducing the Purchase
Price during the final negotiations, the burden of proof
being with the Sellers.
Unless otherwise provided herein, all representations and
warranties contained herein are valid both on the date of
signing hereof and on the Closing Date. Deviations on the
Closing Date from the date of the signing hereof shall be
permissible to the extent the measure leading to such
different fact situation was taken with the Purchasers' actual
written consent or was permitted to be done pursuant to the
provisions of sub-section 4.2 above.
5.4 Unless specifically stipulated otherwise, the claims of the
Purchasers under the Sellers' Warranties shall become statute-
barred eighteen (18) months after the Closing Date, with the
exception of (a) claims due to tax liabilities, if any, of the
VOGEL-PUMPEN Companies pursuant to sub-section 5.2 (i) above
("the Tax Warranty"), and (b) the environmental warranty
pursuant to sub-section 5.2.(j) above ("the Environmental
Warranty").
The warranty period for the claims under the Tax Warranty
shall expire thirty-six (36) months following the date of
filing of the last of the VOGEL-PUMPEN Companies' income tax
returns for the fiscal year 1993/94, it being understood that
(i) the above tax warranty will cover the results of any
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tax audit officially initiated (or notified in advance
pursuant to sec. 148 para 5 Federal Tax Procedure Code) prior
to the lapse of the above 36-months period, regardless of the
termination of such audit and the ensuing proceedings, if any,
provided that the Purchasers notify the Sellers of the
commencement of such tax audit prior to the lapse of such
period and (ii) the management of the VOGEL-PUMPEN Companies
shall be free to determine the time for filing the above
income tax returns, irrespective of past practice.
The warranty period for claims under the Environmental
Warranty shall expire five (5) years after the Closing Date.
The Purchasers must raise their claims (together with
reasonable substantiation) in writing within 60 (sixty) days
after discovering a fact which gives raise to a claim, but in
any case before the end of the warranty period and must,
furthermore, initiate arbitration proceedings within a further
period of twelve months if no agreement with the Sellers is
reached on such claims in order not to have their claims
statute-barred.
5.5 Claim limit:
The sellers shall not be jointly, but only severally liable
for any claims raised by the Purchasers out of this Agreement,
each seller pro rata its present shareholding in the Company.
The aggregate liability of the Sellers taken together shall be
limited (i) to 14 % (fourteen percent) of ATS 184,000,000.00,
i. e., ATS 25,760,000.00, for claims duly notified to the
Sellers within twelve months following the Closing Date, and
(ii) to 7 % (seven percent) of ATS 184,000,000.00 i.e.,
12,880,000.00, for claims duly notified to the Sellers after
the twelfth, but on or before the last day of the eighteenth
month immediately following the Closing Date, it being
understood that the aggregate liability of the Sellers with
respect to both categories of claims as aforesaid shall not
exceed ATS 25,760,000.00. Notwithstanding the above, the
above claim limit shall not apply to claims relating to
unrestricted title to the Shares and the existence of the
VOGEL-PUMPEN Companies (sub-sections 5.2.a and b) and the tax
warranty pursuant to sub-section 5.2(i) above where the
aggregate maximum liability shall be the ATS 184,000,000.00.
When calculating the above limit, the claims not having such
a limit shall not be taken into consideration.
<F50>
Furthermore, the above claim limit of 14%/7% shall not apply
to claims under the Environmental Warranty, where the claim
limit shall be 5.5% of ATS 184,000,000.00, i.e., ATS
10,120,000.00. For the avoidance of doubt, claims under the
Environmental Warranty shall be dealt with separately, as far
as the Claim Limit is concerned, from other claims for breach
of warranties. Consequently, the claim limit for those two
kinds of claims shall be separate.
No claim shall be brought against the Sellers nor shall the
Sellers be liable to the Purchasers in respect of a breach of
any of the Sellers' Warranties unless the aggregate amount of
the liability of the Sellers for all such claims exceeds ATS
1,200,000.00 and then in respect of just the excess over ATS
1,200,000.00.
The above provisions shall, however, not apply with respect to
claims under the Environmental Warranty where no minimum
threshhold is applicable.
5.6 Any claims of the Purchasers for breach of the Sellers'
Warranties (except for claims under the Environmental
Warranty) shall as a rule be satisfied from the portion of the
Purchase Price deposited on the Escrow Account pursuant to
sub-section 3.1 (b). Consequently, the Escrow Account shall
not secure claims under the Environmental Warranty and the
release of funds on the Escrow Account (as specified below)
shall not be prevented or impaired by any claim under the
Environmental Warranty or by any dispute with respect to such
claims. Each claim of the Purchasers must be reasonably
substantiated. The Purchasers shall provide the Sellers and,
at their request, their advisors will all information they may
reasonably request in order to ascertain the validity of such
claims. The Purchasers shall, furthermore, grant the Sellers
and their advisors all access to the books and records of the
VOGEL-PUMPEN Companies that they may reasonably request in
order to examine such claims. At the request of the Sellers,
the Purchasers shall enable the Sellers and/or their advisors
to assume the defence of any claims and in any proceedings
brought against the VOGEL-PUMPEN Companies and which are the
subject of a claim for breach of the Sellers' Warranties, in
particular tax proceedings, and to file any submissions and
appeals that the Sellers and/or their advisors may deem
advisable or appropriate. The Purchasers shall cause the
VOGEL-PUMPEN Companies to sign and execute any and all
documents, including but not limited to powers of attorney to
the Sellers and/or their advisors, deemed necessary or
advisable by the Sellers in this respect.
<F50>
The Sellers shall notify the Purchasers within a reasonable
time whether and to which extent they accept a claim raised by
the Purchasers. With respect to any amount accepted by the
Sellers to be justified, the Sellers shall issue a
confirmation in writing which confirmation shall be deemed to
be the authorization for the Escrow Agent to release and
disburse such amount to the Purchasers from the portion of the
Purchase Price remaining on the Escrow Account.
At the end of 54-week period immediately following the Closing
Date the Escrow Agent shall release, and pay to the Sellers in
proportion to their present shareholding in the Company, from
the portion of the Purchase Price initially deposited on the
Escrow Account an amount equal to the balance of (a) 50 % of
such initially deposited amount and (b) the aggregate of the
amounts with respect to which the Escrow Agent has received
(i) a written confirmation by the Sellers agreeing to release
to the Purchasers a specified amount in settlement of a
justified claim of the Purchasers or (ii) written evidence
that the Purchasers have duly notified the Sellers of a claim
in such amount for breach of the Sellers' Warranties.
At the end of a 18-month plus two weeks period immediately
following the Closing Date the Escrow Agent shall release, and
pay to the Sellers in proportion to their present shareholding
in the Company, from the portion of the Purchase Price
initially deposited on the Escrow Account and remaining after
the lapse of the above 54-week period, an amount equal to the
balance of (a) such remaining amount and (b) the aggregate of
the amounts with respect to which the Escrow Agent has
received (i) a written confirmation by the Sellers agreeing to
release to the Purchasers a specified amount in settlement of
a justified claim of the Purchasers or (ii) written evidence
that the Purchasers have duly notified the Sellers of a claim
in such amount for breach of the Sellers' Warranties.
Any amounts corresponding to amounts with respect to which the
Escrow Agent has received evidence of a duly notified claim by
the Purchasers shall continue to be held in escrow until the
Escrow Agent either has received written confirmation from the
Sellers agreeing to release a specified amount to the
Purchasers or, but not later than 31 months immediately
following the Closing Date, reasonably satisfactory evidence
that the Purchasers have initiated arbitration proceedings
pursuant to this Agreement for a specified amount. Any
amounts with respect to which the Escrow Agent shall not have
received a confirmation or evidence as aforesaid shall be
released by the Escrow Agent to the Sellers after the lapse of
a 31-month plus one week period following the Closing Date in
proportion to the present shareholdings of the Sellers in the
Company.
<F50>
Any amounts retained by the Escrow Agent as a consequence of
its notification of the initiation of arbitration proceedings
shall either be paid to the Purchasers upon presentation of a
final arbitral award confirming that the Purchasers' claims
were justified, and in the amount set forth in such award, or,
alternatively, to the Sellers upon presentation of a final
arbitral award rejecting the Purchasers' claims in whole or in
part (in the latter case only with respect to such amount not
awarded to the Purchasers) in proportion to their present
shareholdings in the Company.
Any acceptance by the Sellers of a claim raised by the
Purchasers and/or any confirmation to release an amount to the
Purchasers from the Escrow Account shall be deemed validly
given only if duly signed by all the Sellers (or their
successors in law).
The fees and expenses of the escrow Agent for maintaining and
operating the Escrow Account and for performing the
obligations set forther herein and in the Escrow Agreement
shall be borne one half by the Purchasers and one half by the
Sellers.
In case arbitration proceedings with respect to a claim of the
Purchasers are commenced and an arbitral award rendered in
such proceedings and such award challenged on the ground of
Sec. 595 (1) fig.7 of the Austrian Code of Civil Procedure,
("Wiederaufnahmsklage") such action shall not be a cause for
not releasing any amounts remaining on the Escrow Account to
the Sellers if such amounts were due to them pursuant to such
arbitral award.
<F50>
SECTION VI
MANAGEMENT
It is in the joint interest of the contracting parties that the
Sellers, insofar as they have been involved in the management of
the VOGEL-PUMPEN Companies up till now, continue their activities
within the Goulds Pumps Group. Accordingly, the existing employ-
ment contracts shall be terminated as of the Closing Date and all
payments due to the existing managing directors shall be paid to
them by the Company. New service contracts shall be negotiated in
good faith and shall be signed on or before the Closing Date. The
Purchasers agree that such Sellers shall be authorized to devote a
reasonable amount of time to the management of the company
carrying on the Frigopol Business.
<F50>
SECTION VII
CONDITIONS PRECEDENT TO TRANSFER OF OWNERSHIP AND PAYMENT OF
PURCHASE PRICE ("CLOSING")
The obligation of the Sellers to transfer ownership to the Shares
to the Purchasers and the obligation of Purchasers to pay the
Purchase Price to the Sellers are subject to the satisfaction, at
or prior to the Closing Date, of each of the following conditions
precedent unless compliance with such condition precedent is waived
by the parties to the benefit of which such condition was included.
Each party shall use best efforts to meet or cause to be met all
conditions precedent within its own sphere of influence or that are
to be fulfilled by it.
7.1 Specific conditions to be fulfilled by the Sellers
A) At the Closing, the Sellers shall deliver to the Purchasers:
a) the resignations of the members of the Supervisory Board
of the Company referred to in Section 8.2;
B) On or before the Closing Date the Sellers shall deliver to the
Purchasers
a) evidence of the completion of the divestiture of the
Frigopol Business as specified in sub-section 4.4.;
b) evidence of the completion of the sale of land specified
in sub-section 8.1.
7.2 Specific conditions to be fulfilled by the Purchasers
A) At the Closing, the Purchasers shall deliver to the Sellers:
a) releases of the Sellers for any personal liability
assumed by any of them for indebtedness of any or all of
the VOGEL-PUMPEN Companies towards credit institutions,
leasing companies and "Beteiligungsfondsgesellschaften".
B) On or before the Closing Date, the Purchasers shall deliver
to the Sellers
a) certified resolutions of the Board of Directors of Goulds
Pumps, Ltd., authorizing and approving the execution,
delivery and performance of this Agreement and all other
documents and agreements to be executed and delivered by
Goulds Pumps Ltd. in connection herewith;
<PAGE>
b) an opinion of English counsel to Goulds Pumps Ltd., in
the form attached as Annex 7.3.c;
7.3 Specific conditions requested by the Purchasers
On or before the Closing Date, the Purchasers shall have
received:
a) approval by the board of directors of Goulds Pumps, Inc.
of the transaction contemplated by this Agreement.
7.4 Specific conditions to be fulfilled by Sellers and Purchasers
a) conclusion of the Escrow Agreement
<F50>
SECTION VIII
CERTAIN ACTIONS BEFORE CLOSING
8.1 Prior to the Closing Date, the Sellers shall cause VOGEL-
PUMPEN to sell to some or all of the Sellers the piece of land
registered with the land register under file no. EX 5075 of
the land register of 11142 Stockerau. The purchase price shall
be ATS 980,595.00. The transfer costs, including but not
limited to land transfer tax, registration fees and legal
fees, shall be borne by VOGEL-PUMPEN. VOGEL-PUMPEN shall also
bear the costs of erecting a fence at the border of this piece
of land and the present site of VOGEL-PUMPEN, such cost not to
exceed ATS 2,800.00 per meter, excluding VAT. The purchase
contract for the land shall provide for a right of first
refusal ("Vorkaufsrecht") to be granted to VOGEL-PUMPEN and to
be registered in the land register in favour of VOGEL-PUMPEN.
8.2 Upon timely written request of the Purchasers, the Sellers
will ensure that on the Closing Date the members of the
Supervisory Board of the Company (to the extent they have not
been appointed by the employees) have handed in their letters
of resignation or that they are recalled. The Purchasers
undertake to ensure that such resigning persons will be
released from their liability in the shareholders' meeting
which addresses the financial statements of fiscal year
1993/1994.
8.3 The financial statements for the fiscal year 1993/1994 will be
formally approved prior to the Closing Date and a discharge of
liability of the managing directors for the fiscal year
1993/1994 will be voted for.
8.4 On or before the Closing Date the Purchasers shall cause the
release of the Sellers for any personal liability assumed by
any of them for indebtedness of any or all of the VOGEL-PUMPEN
Companies towards credit institutions leasing companies and
"Beteiligungsfondsgesellschaften" and shall, if necessary or
requested, constitute adequate substitute security for the
benefit of the persons or entities towards which any or all of
the Sellers have assumed such securities in the past.
8.5 On or before the Closing Date the Sellers will provide the
Purchasers with the following tax related documents:
(a) a signed copy of all statutory reports for the fiscal
year 1993/1994;
<F50>
(b) signed copies of the income tax returns for all VOGEL-PUMPEN
Companies for the fiscal year 1992/93, which shall be
prepared, signed and filed by the respective companies prior
to the Closing Date; and
(c) signed income tax returns for all VOGEL-PUMPEN Companies
for the fiscal year 1993/94, which shall be prepared, signed
and otherwise ready for actual filing in accordance with sub-
section 5.4.
<F50>
SECTION IX
APPLICABLE LAW AND ARBITRATION
9.1 This Agreement and any and all agreements and contracts
entered into in connection herewith, including the following
arbitration clause, shall be governed by Austrian law,
excluding, however, its conflict of laws rules.
9.2 Submission to arbitration
All disputes between or among the parties to this Agreement
and/or the legal successors of the parties arising out of or
in connection with this Agreement, including but not limited
to any question regarding its existence, validity or
termination, shall be finally settled, to the exclusion of
proceedings before courts of law, under the Rules of
Arbitration and Conciliation ("Vienna Rules") of the Inter-
national Arbitral Center of the Federal Economic Chamber,
Vienna (in the version in force at the time of the signature
of this Agreement) by three arbitrators appointed in
accordance with the said Rules.
9.3 Multi-party proceeding
(a) As more than two persons are party to this Agreement, it
is expressly stipulated that more than one claimant
and/or more than one defendant are permitted.
(b) For the purpose of the nomination of arbitrators, there
is deemed to be only one claimant party and one defendant
party, regardless of whether multiple parties appear.
Unless otherwise provided, the nomination and the
appointment of arbitrators shall be made in accordance
with the Vienna Rules, in particular their Section 10. In
the event of conflicting legal acts by joint parties, the
provisions of the Austrian Code of Civil Procedure
concerning the joinder of parties shall be applicable.
9.4 Place of arbitration
(a) The place of arbitration shall be Vienna, Austria.
(b) The arbitral tribunal is nevertheless authorized to carry
out certain portions of the proceedings, for example
meetings, hearing of witnesses, out-of- court viewing and
the like, outside of the agreed upon place of
arbitration, if the arbitrators so determine.
<F50>
9.5 Proceedings
(a) The proceedings shall be governed by the Vienna Rules.
The application of Section 595 (1) fig. 7 of the Austrian
Code of Civil Procedure is not waived by the parties.
(b) The language of arbitration shall be English. The parties
are nevertheless entitled to submit documents in the
German language, if the document is originally in German,
without having to provide a translation. Nevertheless,
the arbitrators may order the submitting party to provide
an English translation.
(c) The losing party in the proceeding shall compensate the
prevailing party for the costs of arbitration. The
arbitrators may determine the amount of said costs
without taking any guidelines for fees or disbursements
into consideration. In case a party prevails only
partially, the arbitrators are authorized to award a
proportionate amount of the costs or arbitration to such
party.
(d) Any award or other decision of the arbitral tribunal
shall be made by a majority of the arbitrators. In
addition to making a final award, the arbitral tribunal
shall be entitled to make interim, interlocutory or
partial awards. Procedural decisions may be taken and/or
executed by the chairman alone provided he has consulted
the other arbitrators (at least over the phone).
<F50>
SECTION X
GENERAL PROVISIONS
10.1 Every assignment or transfer of the contractual rights or
duties of any of the parties shall require the prior consent
of the other parties.
10.2 All notices, notifications, returns, declarations and
statements given and made hereunder to any other contracting
party may be made by registered letter or by fax. Stricter
formal requirements contained herein for the issuance of
specific statements or notifications shall not be affected
thereby; such statements or notifications shall then be given
by registered letter. The notices of whatever kind shall be
directed to the telefax numbers or postal addresses specified
below, unless the contracting parties will have notified the
other parties of different numbers or addresses to be
applicable:
for the Sellers:
(a)Ing. Gerhard Vogel
Wiesnerstrabe 10
A-2000 Stockerau
Fax no. (43-2266) 626 388
(b)Lauermann Familien-Privatstiftung
Goldschmiedgasse 6
A-1010 Vienna
for the Purchasers: Goulds Pumps GmbH,
c/o Dorda, Brugger & Jordia
Dr. Karl Lueger-Ring 12,
A-1010 Vienna, Austria
Fax no. (+43-1) 533 47 97
10.3 Amendments to and modifications of this Agreement shall be
valid only if executed in writing. Any and all agreements
between the contracting parties prior to the signing of the
present Share Purchase Agreement become inoperative.
10.4 If any provision hereof is or becomes invalid, this shall not
affect the other provisions hereof. The invalid provision
shall be replaced by a provision which, from its economic
purpose and effect, comes as close as possible to the invalid
provision and which is consistent with the original intent of
the parties.
<F50>
10.5 The Purchasers shall bear the fees, expenses, taxes and
charges, if any, incurred in connection with the
transformation of the Company into a stock corporation and the
transfer of the Shares contemplated herein, including but not
limited to capital transfer taxes, stock exchange turnover tax
and real estate transfer tax.
10.6 Notwithstanding anything to the contrary contained herein, the
Purchasers may sell the Shares or transfer their rights under
this Agreement to an affiliate in which case all references to
"Purchasers" shall be deemed to mean such affiliate; provided,
however, that such assignment or transfer shall not affect the
Purchasers' obligations under this Agreement. In case of the
acquisition of the Shares by a nominee of the Purchasers, the
Purchasers herewith irrevocably and unconditionally guarantee
the performance of such nominee's obligations as acquiror of
the Shares pursuant to this Agreement. No nominee or affiliate
as aforesaid shall be acceptable to the Sellers, and no
assignment and transfer as aforesaid shall be valid, unless
such nominee, transferee or assignee has submitted in writing
to arbitration pursuant to Section 9 above.
10.7 This Agreement shall be established in six counterparts, with
one copy for each of the Sellers and one copy for each of the
Purchasers. The original language of this Agreement shall be
the English language and an authenticated translation of this
Agreement into the German language shall be enclosed to the
Agreement. In case of any discrepancies between the two
versions, the English language version shall prevail.
Vienna, December 5, 1994
____________________________ ___________________________
Goulds Pumps GmbH Goulds Pumps Ltd.
____________________________ ___________________________
Ing. Gerhard Vogel Lauermann Familien-
Privatstiftung
____________________________
Hermine Vogel
<F50>
SCHEDULE OF ANNEXES
Annex 1.1. a Description of Frigopol Business
bFinancial Statements of the VOGEL-PUMPEN Companies
cAccounting Principles
Annex 5.2. f Charges and Encumbrances to Movable and Immovable
Assets
- registered mortgages
- non-registered mortgages
- global assignment of accounts receivable
Annex 5.2. h Extraordinary claims of third parties
Annex 5.2. k Labor-law agreements, fringe benefits, pension
schemes
Annex 5.2. n Proceedings pending before courts, arbitral
tribunals or administrative authorities
- Ochsner license / distribution agreements
termination
Annex 7.3. c Form of legal opinion of U.K. counsel to the
Purchasers
<F50>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
GOULDS PUMPS, INCORPORATED
Date: December 19, 1994 By:s/John P. Murphy
John P. Murphy
Vice President-Finance and
Chief Financial Officer
(Mr. Murphy is Chief
Financial Officer and has
been duly authorized to sign
on behalf of the Registrant.)
