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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): January 14, 1999
Lydall, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-7665 06-0865505
(Commission File Number) (IRS Employer Identification No.)
One Colonial Road
P.O. Box 151
Manchester, CT 06045-0151
(Address of principal executive offices) (Zip Code)
(860) 646-1233
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 30, 1998, a wholly-owned subsidiary of Lydall, Inc. ("the
Company") acquired for cash all of the outstanding shares of Gerhardi & Cie.
GmbH & Co. KG ("Gerhardi"), a privately held German manufacturer of
automotive components.
Under the terms of the agreement and in consideration for the outstanding
shares, the Company paid to Gerhardi a negotiated purchase price of $30.7
million (DM 51.5 million) and assumed Gerhardi's existing liabilities, net of
cash, of approximately $21.8 million (DM 36.6 million). The purchase price is
subject to a post-closing net equity adjustment as defined in the agreement.
Lydall, Inc. funded the acquisition through interim borrowing on existing
lines of credit. It is the Company's intention to evaluate and obtain
permanent financing.
The terms of the purchase are more fully described in the Purchase and Sale
Agreement. A copy of the translated agreement is attached as Exhibit 2.1 hereto.
The registrant hereby undertakes to furnish to the Commission upon its request,
copies of the original executed agreement, written in German, not filed with
this report. The Company also issued a related press release on January 4, 1999,
a copy of which is attached herewith as Exhibit 99.1 hereto.
Gerhardi is a designer and manufacturer of metal heat shields, injection molded
acoustical and trim parts, and chrome plated decorative trim parts. The Company
intends to continue the manufacture of these products in the acquired
facilities.
ITEM 5. OTHER EVENTS
On January 4, 1999 the Board of Directors of the Company announced that Roger
M. Widmann was named Chairman of The Company's Board of Directors effective
immediately. The Company issued a related press release on January 4, 1999, a
copy of which is attached herewith as Exhibit 99.2 hereto.
Also on January 4, 1999, the Company announced that it will record
nonrecurring expenses and write-offs in the fourth quarter ended December 31,
1998, totaling approximately $9 million, or $.57 per share. The major
components include the accrual of severance costs related to the retirement
of the Company's former Chief Executive Officer and Chairman, Leonard R.
Jaskol, and an impairment loss recognized on goodwill of the Company's Fort
Washington Operation and certain other assets in accordance with Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long Lived Assets and for Long Lived Assets to Be Disposed Of." In
conjunction with recognizing the impairment loss, the Company also revised
its estimated useful life of the goodwill of Fort Washington from 20 to 15
years. The Company issued a related
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press release on January 4, 1999, a copy of which is attached herewith as
Exhibit 99.3 hereto.
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). The
Registrant has determined that it will not be practicable to
obtain an audited Operating Statement required by this Item
7(a). The required audited Balance Sheet shall be filed by amendment
to this Form 8-K no later than 60 days after January 14, 1999
as permitted by Item 7(a) 4 of Form 8-K.
(b) Pro Forma Financial Information
As of the date of filing of this Current Report on Form 8-K, it is
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 no later than 60 days after January 14, 1999.
(c) Exhibits
2.1 Purchase and Sale Agreement (English translation) signed as of December
30, 1998 by and between HOHENSTAUFEN EINHUNDERTSTE Vermogensverwaltungs GmbH,
a wholly-owned subsidiary of Lydall, Inc., and Gerhardi & Cie. GmbH & Co. KG
related to the purchase of all the outstanding shares of Gerhardi & Cie. GmbH
& Co. KG. The registrant hereby undertakes to furnish to the Commission upon
its request, copies of all exhibits, schedules and other attachments to the
Purchase and Sale Agreement not filed with this report.
99.1 Press Release dated January 4, 1999 titled "Lydall Acquires Gerhardi & Cie.
GmbH & Co. KG, a German Automotive Parts Manufacturer"
99.2 Press Release dated January 4, 1999 titled "Roger M. Widmann Elected
Chairman of the Board of Lydall, Inc."
99.3 Press Release dated January 4, 1999 titled "Lydall Revises Earnings
Forecast and Announces Write-offs Totaling $9 Million in the Fourth Quarter
Ended December 31, 1998"
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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.
LYDALL, INC.
By:
-----------------------------
John E. Hanley
Vice President-Finance
and Treasurer
Date: January 14, 1999
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PURCHASE AND SALE AGREEMENT
BETWEEN
1. Robert Neuerbourg, Dipl.-Ing., residing at 58849 Herscheid, Unter den
Buchen 15
- hereinafter referred to as "NEUERBOURG" -,
2. Klaus Steinweg, Dipl.-Ing., residing at 58511 Ludenscheid,
Bonhoefferstrabe 40
- hereinafter referred to as "KLAUS STEINWEG" -,
3. Ingeborg Schloemer, housewife, residing at 58511 Ludenscheid, An den
Husareneichen 7
- hereinafter referred to as "I. SCHLOEMER" -,
4. Gerhard Schloemer, Dipl.-Ing., residing at 58511 Ludenscheid, An den
Husareneichen 7
- hereinafter referred to as "G. SCHLOEMER" -,
5. Dr. Hans-Gert Steinweg, Dentist, residing at 58511 Ludenscheid,
Hochstrabe 74
- hereinafter referred to as "DR. STEINWEG" -,
6. Annette Langbein, housewife, residing at Munich, Mettnauerstrabe 10
- hereinafter referred to as "LANGBEIN" -,
7. Wolfgang Steinweg, Dipl.-Ing., residing at 58440 Plettenberg,
Haydnstrabe 13,
- hereinafter referred to as "W. STEINWEG" -,
8. Klaus Steinweg jun., student, residing at 58511 Ludenscheid,
Dickestrabe 16
- hereinafter referred to as "K. STEINWEG" -,
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9. Christiane Steinweg, student, residing at 58511 Ludenscheid,
Dickestrabe 16
- hereinafter referred to as "C. STEINWEG" -,
10. Malve Steinweg, housewife, residing at 58511 Ludenscheid, Werdohler
Strabe 26
- hereinafter referred to as "M. STEINWEG" -,
11. Stefphanie Hueck, Dipl.-Kfm., residing at 58511 Ludenscheid,
Breslauerstrabe 52,
- hereinafter referred to as "HUECK" -,
- the parties under 1 through 11 hereinafter also collectively referred
to as "SELLERS"-;
12. Gerhardi & Cie. Metall- und Kunststoffwerke GmbH, Schlittenbacher
Strabe 2, 58511 Ludenscheid, registered with the Commercial Registry of
the Magistrates Court of Ludenscheid under HRB 1596
- hereinafter referred to as "GERHARDI GmbH" -
13. Gerhardi & Cie. GmbH & Co. KG, Schlittenbacher Strabe 2, 58511
Ludenscheid, registered with the Commercial Registry of the Magistrates
Court of Ludenscheid under HRA 797
- hereinafter referred to as "GERHARDI KG" -,
- Gerhardi GmbH and Gerhardi KG hereinafter also jointly referred to as
"GERHARDI COMPANIES" -.
and
14. HOHENSTAUFEN EINHUNDERTSTE Vermogensverwaltungs GmbH (the name change of
which to Lydall Deutschland Holding GmbH has been resolved but not yet
registered with the Commercial Registry), Hohenstaufenring 62, 50674
Cologne, registered with the Commercial Registry of the Magistrates
Court of Cologne under HRB 30991,
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- hereinafter referred to as "PURCHASER" -.
PREAMBLE
I.
1. WHEREAS the Sellers are the sole owners of the Gerhardi Companies,
comprising Gerhardi GmbH and Gerhardi KG.
2. WHEREAS Gerhardi GmbH has a fully paid registered share capital of
DM 100,000, which is held by the Sellers as follows:
- Neuerbourg holds fully paid shares in the aggregate par amount of
DM 7,600 consisting of two shares in the par amount of DM 3,800 and
DM 3,800,
- I. Schloemer holds fully paid shares in the aggregate par amount of
DM 15,800 consisting of two shares in the par amount of DM 8,200
and DM 7,600,
- K. Steinweg holds one fully paid in share in the par amount of
DM 6,450,
- C. Steinweg holds one fully paid in share in the par amount of
DM 6,450,
- G. Schloemer holds one fully paid in share in the par amount of
DM 8,200,
- W. Steinweg holds one fully paid in share in the par amount of
DM 13,000,
- Klaus Steinweg holds one fully paid in share in the par amount of
DM 13,000,
- M. Steinweg holds one fully paid in share in the par amount of
DM 7,300,
- Hueck holds one fully paid in share in the par amount of DM 7,000,
- Dr. Steinweg holds one fully paid in share in the par amount of
DM 7,600,
- Langbein holds one fully paid in share in the par amount of
DM 7,600.
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Gerhardi GmbH acts as the general partner of Gerhardi KG and is not
engaged in any other business activities. Gerhardi GmbH does not hold a
share in the capital of Gerhardi KG.
3. WHEREAS Gerhardi KG has a fully paid registered limited partner capital
of DM 1,200,000, which is held by Sellers as sole limited partners as
follows:
- Neuerbourg holds a fully paid limited partner's share of DM 91,200
- I. Schloemer holds a fully paid limited partner's share of
DM 190,200
- K. Steinweg holds a fully paid limited partner's share of DM 77,800
- C. Steinweg holds a fully paid limited partner's share of DM 77,800
- G. Schloemer holds a fully paid limited partner's share of DM 97,800
- W. Steinweg holds a fully paid limited partner's share of DM 155,600
- Klaus Steinweg holds a fully paid limited partner's share of
DM 155,600
- M. Steinweg holds a fully paid limited partner's share of DM 87,600
- Hueck holds a fully paid limited partner's share of DM 44,000
- Dr. Steinweg holds a fully paid limited partner's share of DM 91,200
- Langbein holds a fully paid limited partner's share of DM 91,200.
Gerhardi KG is engaged in the production and distribution of automotive
parts.
4. WHEREAS Gerhardi KG, by virtue of the notarial asset transfer
agreement of November 30, 1998 (Notarial Deed No. 563/1998 of the Notary
Public Jurgen Bergfeld in Ludenscheid) (hereinafter referred to as "NAB
ASSET TRANSFER AGREEMENT") agreed to transfer substantially all of the
assets pertaining to its non-automotive business, however, not including
claims against customers, (hereinafter referred to as "NAB-BUSINESS") to
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Gerhardi AluTechnik GmbH & Co. KG with effect of December 1, 1998, all
participations in which are held by the Sellers.
5. WHEREAS the Sellers are interested in selling the Gerhardi Companies
with all tangible and intangible assets to the Purchaser on the basis of
the terms and conditions set forth in this Agreement, while the
Purchaser is interested in acquiring the Gerhardi Companies in this form.
N O W T H E R E F O R E, the parties hereto conclude the following
PURCHASE AND SALE AGREEMENT
I.
SALE AND TRANSFER OF PARTICIPATIONS IN THE
GERHARDI COMPANIES
1. The Sellers hereby sell and transfer to the Purchaser, which accepts
such sale and transfer, all shares in Gerhardi GmbH in the aggregate par
amount of DM 100,000 as set forth in Section 2 of the Preamble hereto,
with the rights to all profits of Gerhardi GmbH not yet distributed on
December 31, 1998, 23.59 hrs. (hereinafter referred to as "EFFECTIVE
DATE"), and all profit-drawing rights as from the Effective Date as
follows:
- Neuerbourg his fully paid shares in the aggregate par amount of
DM 7,600 consisting of two shares in the par amount of DM 3,800 and
DM 3,800;
- I. Schloemer her fully paid shares in the aggregate par amount of
DM 15,800 consisting of two shares in the par amount of DM 8,200
and DM 7,600;
- K. Steinweg his fully paid share in the par amount of DM 6,450;
- C. Steinweg her fully paid share in the par amount of DM 6,450;
- G. Schloemer his fully paid share in the par amount of DM 8,200;
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- W. Steinweg his fully paid share in the par amount of DM 13,000;
- K. Steinweg his fully paid share in the par amount of DM 13,000;
- M. Steinweg her fully paid share in the par amount of DM 7,300;
- Hueck her fully paid share in the par amount of DM 7,000;
- Dr. Steinweg his fully paid share in the par amount of DM 7,600;
- Langbein her fully paid share in the par amount of DM 7,600.
2. The Sellers furthermore hereby sell and transfer to the Purchaser, which
accepts such sale and transfer,
(a) by way of special succession, their limited partner's shares in
Gerhardi KG in the aggregate amount of DM 1,200,000 as set forth in
Section 3 of the Preamble hereto as follows:
- Neuerbourg his limited partner's share in the amount of DM 91,200;
- I. Schloemer her limited partner's share in the amount of DM 190,200;
- K. Steinweg his limited partner's share in the amount of DM 77,800;
- C. Steinweg her limited partner's share in the amount of DM 77,800;
- G. Schloemer his limited partner's share in the amount of DM 97,800;
- W. Steinweg his limited partner's share in the amount of DM 155,600;
- Klaus Steinweg his limited partner's share in the amount of
DM 155,600;
- M. Steinweg her limited partner's share in the amount of DM 87,600;
- Hueck her limited partner's share in the amount of DM 44,000;
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- Dr. Steinweg his limited partner's share in the amount of DM 91,200;
- Langbein her limited partner's share in the amount of DM 91,200.
By virtue of the above purchase, the Purchaser becomes limited partner
of Gerhardi KG holding the above limited partners' shares in the par
amount of DM 1,200,000, while the Sellers cease to be limited partners
of Gerhardi KG without being entitled to any claims whatsoever for
whatsoever reason against Gerhardi KG. Sellers, Purchaser and Gerhardi
GmbH undertake to notify the change of the limited partners to the
Commercial Register of Gerhardi KG in the correct form without undue
delay.
The transfer of the limited partners' shares and the entry of Purchaser
into Gerhardi KG as limited partner becomes effective on the Effective
Date. The Sellers will be obligated to deliver a signed application for
registration of the transfer of the limited partners' shares at the date
of signing.
(b) their entire rights and claims to all profits of Gerhardi KG as
from the Effective Date and
(c) all other rights and claims, if any, connected with such limited
partner's shares and profit entitlements.
3. Sellers have extended loans to Gerhardi KG, which as of December 31,
1997 are valued as set forth in ANNEX A.. hereto which were increased in
1998 by interest and profits (assuming that the Sellers remain
shareholders of Gerhardi KG until year end 1998) and which have been
reduced in 1998 by withdrawals (hereinafter referred to as "SHAREHOLDER
LOANS").
4. The Sellers hereby furthermore sell and transfer to the Purchaser, which
accepts such sale and transfer,
(a) all other rights and claims which they have against the Gerhardi
Companies, in particular their respective Shareholder Loans, and
(b) all tangible and intangible assets owned in whole or in part by the
Sellers which serve or are destined to serve the business of the
Gerhardi Companies.
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5. (a) The Sellers herewith, upon waving all legal requirements as to
notice and form, convene a joint shareholders' meeting of Gerhardi
GmbH and Gerhardi KG and - G. Schloemer, W. Steinweg and Klaus
Steinweg also acting in their position as managing directors of
Gerhardi GmbH - unanimously resolve the approval of the
Shareholders' Meeting to the sale and assignment of all shares and
limited partners' shares in the Gerhardi Companies pursuant to the
provisions of this Agreement as well as release Klaus Steinweg from
the restrictions pursuant to Section 181 German Civil Code for
purposes of all declarations made by him in this Agreement on behalf
of the Gerhardi Companies.
(b) Also the Gerhardi Companies hereby consent to and approve of the
sale and assignment of all shares and limited partners' shares in
the Gerhardi Companies to the Purchaser pursuant to the provisions
of this Agreement for whatsoever statutory and/or contractual
purposes.
(c) Notwithstanding the approvals pursuant to Sections (a) and (b)
above, each of the Sellers herewith declares his approval with
respect to all agreements and declarations made by other Sellers
pursuant to the provisions of this Agreement and hereby waives all
options, pre-emptive rights and rights of first refusal and all
other rights and claims of any nature whatsoever which he or she
may have in respect of the participations, shares and other
properties sold and transferred to the Purchaser by any of the
Sellers pursuant to Sections 1 to 4 above. A respective approval
and a respective waiver are hereby declared by the Gerhardi
Companies.
(d) The Sellers sell and transfer to the Purchaser, which accepts such
sale and transfer, all shares in Gerhardi GmbH and all
participations in Gerhardi KG (except for the participation of
Gerhardi GmbH in Gerhardi KG), even if these shares and
participations have denominations other than those shown in
Sections 1 and 2 above and/or are held by the Sellers severally,
jointly or in partnership in a form other than as shown in such
Sections. Differences in the allocation of values to the Sellers
shall be settled in the relation between the Sellers.
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II.
LEGAL RELATIONS
BETWEEN THE SELLERS, THE GERHARDI COMPANIES AND THE PURCHASER
MUTUAL RELEASE UNDERTAKINGS
1. Except as expressly set forth in this Agreement and its Annexes, all
legal relations between the Sellers and the Gerhardi Companies and all
rights and claims of the Sellers against the Gerhardi Companies shall
terminate as of the Effective Date and no obligation or liability
whatsoever shall arise for the Gerhardi Companies or the Purchaser from
such termination. The Sellers shall procure that the same applies to
all legal relations between relatives within the meaning of Section 15
German Tax Code (hereinafter referred to as "RELATIVES") and/or companies
other than the Gerhardi Companies which are directly or indirectly
controlled by the Sellers and/or their Relatives (hereinafter referred
to as "CONTROLLED COMPANIES") and the Gerhardi Companies and to all
rights and claims of Relatives and/or Controlled Companies against the
Gerhardi Companies and will if necessary hold the Gerhardi Companies and
the Purchaser fully harmless in good time.
The provisions of this Section 1 shall not apply to
(a) the employment agreement between Gerhardi KG and Klaus Steinweg;
(b) the existing parts supply agreement and scrap raw material sale
agreement between Gerhardi KG and Gerhardi AluTechnik GmbH & Co.
KG, to the extent such agreements have been concluded on arms
length terms;
(c) the loan agreement between Mrs. Maritta Loos-Neuerbourg and
Gerhardi KG in respect of which the Sellers represent that Gerhardi
KG may repay such loan within six months after the Effective Date
without penalty.
2. The Sellers shall procure that, upon the request of the Purchaser, all
members of supervisory and advisory boards and other similar bodies, if
any, of the Gerhardi Companies will resign from their positions within
one month from such request and that no obligation or liability
whatsoever will arise for the Gerhardi Companies or the Purchaser
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from such resignations. W. Steinweg and G. Schloemer herewith declare
their resignation as managing directors effective on the Effective Date.
3. All existing pension arrangements between the Gerhardi Companies and the
Sellers and Relatives shall have been terminated prior to the Effective
Date and no obligation or liability shall arise for the Gerhardi
Companies as a result thereof. These pension obligations shall
irrespective of the validity of their termination not be accrued for in
the Effective Date Financial Statements. Sellers undertake to indemnify
the Gerhardi Companies from any pension-related claims Klaus Steinweg
may raise.
4. The Gerhardi Companies and the Purchaser undertake
(a) to hold the Sellers after today fully and in good time harmless
from any responsibility for obligations or liabilities of the
Gerhardi Companies and
(b) to procure that assets which are in the private ownership of the
Sellers and do not form part of the transactions agreed herein but
secure obligations or liabilities of the Gerhardi Companies are
released from this encumbrance as quickly as possible,
except to the extent that the Sellers have represented and
warranted in this Agreement that such obligations or liabilities of
the Gerhardi Companies do not exist and/or have undertaken in this
Agreement to hold harmless the Gerhardi Companies and/or the
Purchaser from such obligations and liabilities.
5. The Sellers undertake to hold the Gerhardi Companies and the Purchaser
fully and in good time harmless (vollstandige und rechtzeitige
Freistellung) from
(a) all obligations and liabilities of the Sellers, Relatives and
Controlled Companies which may be claimed from the Gerhardi
Companies and the Purchaser, and
(b) all rights and claims of third parties whatsoever relating to
shares and/or limited partners' shares in the Gerhardi Companies,
including without limitation thereto, claims alleging title to
and/or encumbrances of such shares, profit participation or
comparable entitlements and the like, and
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(c) all liabilities regarding taxes, social security charges, customs and
other public dues of the Gerhardi Companies which exist on the
Effective Date or arise from acts, omissions or circumstances before
the Effective Date, to the extent that they are not reflected or
reserved in the Final Effective Date Balance Sheets within the
meaning of Part III Section 2 (g) (without supplementary balance
sheets of the Sellers) below, and
(d) all obligations and liabilities of the Gerhardi Companies
relating to the NAB-Business including without limitation
those resulting from the transfer thereof to Gerhardi AluTechnik
GmbH & Co. KG to the extent not yet performed, except, however, for
those obligations and liabilities under the agreements described in
Part II Section 1 (b) above, and
(e) losses of existing environmental insurance coverage
(restricted to the insurance case Ibbenburen) of the Gerhardi
Companies; the indemnification pursuant to this para. (e) shall not
be limited in time or amount.
III.
PURCHASE PRICE FOR THE GERHARDI COMPANIES
1. The entire consideration (hereinafter referred to as "PURCHASE PRICE")
for the sale and transfer of all participations and other properties
pursuant to Part I above and for all other obligations assumed by the
Sellers in this Agreement shall be DM 51,500,000 (in words: Deutsche Mark
fifty-one million five hundred thousand),
(a) plus or minus the amount by which the consolidated net equity
value of the Gerhardi Companies as of the Effective Date to be
determined pursuant to Section 2 below exceeds or falls short of an
amount of DM 28,000,000 (in words: Deutsche Mark twenty-eight
million)
2. (a) The consolidated net equity value of the Gerhardi Companies
as of the Effective Date (being defined as: total assets less total
liabilities, except for the Shareholder Loans) shall be determined on
the basis of tax financial statements of each of the Gerhardi
Companies (without supplementary balance sheets of the Sellers) as of
the Effective Date pursuant to the provisions of paragraphs (b) to
(g) below (hereinafter referred to as "EFFECTIVE DATE FINANCIAL
STATEMENTS" and the balance sheets forming part thereof as "EFFECTIVE
DATE BALANCE SHEETS").
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(b) The Effective Date Financial Statements shall be prepared in
accordance with the accounting principles represented and warranted
by the Sellers in Part IV, Section 3 (a) below in respect of the tax
1997 Financial Statements within the meaning of said clause, with a
full physical count of fixed assets and inventories as of the
Effective Date. The effects of changes, if any, resulting from
accounting principles applied in the tax 1997 Financial Statements to
accounting principles applied in the Effective Date Financial
Statements shall be eliminated except as otherwise expressly agreed
by the parties hereto in writing or as such changes are compulsorily
requested by law.
Irrespective of whether or not accruable under German tax
laws, a lump sum accrual in the amount of DM 2,500,000 (less
insurance coverage guaranteed by AXA Colonia in writing prior to or
on March 13, 1999) will be built in the Effective Date Financial
Statements in respect of environmental liabilities of the Gerhardi
Companies.
To the extent AXA Colonia makes payment to the Gerhardi
Companies in respect of such liabilities, the Effective Date
Financial Statements shall be adjusted accordingly. Upon request
and at the expense of the Sellers, the Gerhardi Companies shall sue
the insurer.
(c) The Gerhardi CompaniesSellers shall prepare the Effective
Date Financial Statements as soon as reasonably possible in
accordance with paragraphs (a) and (b) above. The Gerhardi
Companies shall engage the chartered accountant Mr. Gunter Hunecke
for the preparation of the Effective Date Financial Statements and
that the Effective Date Financial Statements as prepared by
Mr. Hunecke, including Mr. Hunecke's report thereon, shall be
submitted to the Sellers and the Purchaser for its review. The costs
connected with the preparation of the Effective Date Financial
Statements shall be fully reflected in the Effective Date
Financial Statements.
(d) The Effective Date Financial Statements prepared in
accordance with paragraph (c) above shall be audited by PWC Deutsche
Revision AG, Wirtschaftsprufungsgesellschaft (hereinafter
"PURCHASER'S AUDITOR") upon the instruction of Purchaser. The
Purchaser's Auditor shall have the right to participate in the
physical count of the fixed assets and inventories and have complete
access
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to all books, records and properties of the Gerhardi Companies
in order to conduct this audit. The audit by the Purchaser's Auditor
shall in particular address the compliance with the accounting
principles set forth in paragraphs (a) and (b) above. Changes of the
Effective Date Financial Statements submitted for audit which are, in
the opinion of the Purchaser's Auditor, required shall be shown as
corrections in the Purchaser's Auditor's audit report (hereinafter
"PURCHASER'S AUDITOR'S AUDIT REPORT"). The Purchaser's Auditor shall
upon request in the course of his audit give the parties and the
professional advisers and accountants instructed by them a
reasonable opportunity to give explanations and to commend on
changes to the Effective Date Financial Statements, if any,
considered necessary by him. The costs of the audit by Purchaser's
Auditor shall not be reflected in the Effective Date Financial
Statements.
(e) The Sellers have the right to have the Effective Date
Financial Statements prepared pursuant to paragraphs (c) and (d)
above and the Purchaser's Auditor's Audit Report audited at their
expense by a chartered accountant of their choice (hereinafter
"SELLERS' AUDITOR") as soon as reasonably possible. The costs of the
audit by the Sellers' Auditor shall not be reflected in the Effective
Date Financial Statements. The provisions in paragraph (d), second,
third and fifth sentences, shall apply mutatis mutandis in respect of
the audit by the Sellers' Auditor.
(f) The preparation of the Effective Date Financial Statements
pursuant to Section 2 (c) above shall be completed as quickly as
possible, but no later than February 15, 1999. The audit by the
Purchaser's Auditor shall be completed within month after submission
of all Effective Date Financial Statements for audit.
The Purchaser's Auditor shall submit the Purchaser's Auditor's Audit
Report to all parties immediately after its finalisation. If neither
party contradicts the Purchaser's Auditor's Audit Report within
15 days after receipt thereof, the audit result including
corrections, if any, set forth therein shall be binding upon all
parties for purposes of the determination of the Purchase Price.
A contradiction can be made either direct vis-a-vis the Purchaser's
Auditor or vis-a-vis the Sellers or the Purchaser respectively, their
representatives pursuant to Part VIII, Section 3 below.
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The fifteen day period for the contradiction shall be extended by one
further month in case the Sellers inform the Purhcaser before
expiration of such one month period that they will exercise their
right pursuant to paragraph (e) above. The Sellers' Auditor's Audit
Report in this case shall also be submitted to all parties
immediately after its finalisation.
(g) To the extent that some or all parties contradict the audit
result including corrections, if any, within the period for
contradiction set forth in paragraph (e) above and the Purchaser's
Auditor and the Sellers' Auditor or the parties cannot agree upon the
points of contention raised by way of contradiction within one month
after receipt of the last contradiction, the certified public
accountant Arthur Andersen Cologne shall determine with binding
effect for all parties in accordance with the principles set forth
in paragraphs (a) and (b) above how the points of contention raised
by way of contradiction and not already agreed between the parties
shall be settled. The costs of Arthur Andersen Cologne shall be
borne by the parties in the relation in which they do not prevail
with their respective opinion.
The Effective Date Financial Statements which have become binding
pursuant to Section 2 (f) or pursuant to this Section 2 (g) are
hereinafter referred to as "FINAL EFFECTIVE DATE FINANCIAL
STATEMENTS", respectively "FINAL EFFECTIVE DATE BALANCE SHEETS".
(h) Subsequent changes, if any, to the Effective Date Financial
Statements, including changes, if any, resulting from administrative
audits, shall not have any effect upon the determination of the
Purchase Price and shall also not result in any other payments in
cash or in kind on any legal basis whatsoever of the Sellers to the
Gerhardi Companies and the Purchaser or the Gerhardi Companies and
the Purchaser to the Sellers, except that 50% of any increase in net
equity value (see Section 2 (a) above) resulting from the tax
audit for the years 1995 through 1998, up to a maximum of
DM 1,000,000, which shall increase the Purchase Price and except as
expressly provided otherwise in this Agreement and its Annexes.
The representations and warranties of the Sellers in Part IV below
shall not be affected.
3. The Purchase Price shall allocate to the assets sold and transferred
to the Purchaser hereunder as follows:
<PAGE>
(a) an amount equal to the nominal amount of the Shareholder Loans to the
acquisition thereof;
(b) the balance to the acquisition of all other assets acquired hereunder.
4. The Purchase Price shall be due and payable by money transfer as follows:
(a) an amount of DM 46,500,000 to the account No. 9622580 of Klaus
Steinweg with Stadtsparkasse Koln in Cologne (Bank Reference
No. 370 501 98) (who shall be responsible for the allocation of the
Purchase Price among the Sellers);
(b) an amount of DM 5,000,000 shall be paid in the escrow account
jointly held by the Sellers (insofar represented by Klaus Steinweg)
and the Purchaser No. 9632589 with Stadtsparkasse Koln in Cologne
(bank reference no. 370 501 98) on or before the Effective Date.
The amount so placed in the escrow account shall serve as security
for all claims the Purchaser may have against the Sellers under or in
connection with this Agreement. Insofar as the Purchaser can claim
indemnification or compensations from the Sellers under this
Agreement, such payments have to be made out of the escrow account at
the first place. The Purchaser agrees that all interests accrued on
the escrow account shall be paid out to the Sellers regardless of any
possible claims by the Purchaser against the Sellers under this
Agreement at the end of this escrow agreement. The Purchaser shall
give its consent to the release of the monies placed in the escrow
account (except for an amount of DM 2,500,000) on July 1, 2000 if and
to the extent the Purchaser has no claims against the Sellers
under or in connection with this Agreement at that time. The
Sellers shall without undue delay agree at any time to
payments out of the escrow amount to the Purchaser if and to
the extent the Purchaser has claims against the Sellers under
or in connection with this Agreement.
The remaining DM 2,500,000 shall be released to the Sellers
upon the later of (i) the date of completion of all administrative
audits (including delivery of audit reports) of the Gerhardi
Companies concerning the period until the Effective Date or
(ii) March 31, 2001, if and to the extent Purchaser, by then, has no
claims against the Sellers under or in connection with this
Agreement.
<PAGE>
Seller hereby irrevocably authorizes Mrs. Mary Tremblay, c/o Lydall
Inc. to draw from the escrow account on behalf of the Seller whenever
a first level court judgment has been granted providing for a payment
obligation of the Sellers under this Agreement.
5. Any Purchase Price adjustment pursuant to Section 1 (a) above
shall be paid to the entitled party within one week after the Effective
Date Financial Statements have become binding pursuant to Section 2 (e)
or 2 (f) above. Payment to the Purchaser shall be made into a bank
account yet to be designated.
IV.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers represent expressly and warrant as a guaranteed quality
(zugesicherte Eigenschaft) that the following representations and
warranties are complete and correct today and as of the Effective Date.
1. (a) The statements in Sections 2 and 3 of the Preamble hereto
about the Gerhardi Companies and the participations therein are
complete and correct in every respect. The participations in the
Gerhardi Companies are fully paid, non-assessable and free of
secondary or other obligations and/or restrictions.
(b) Persons and companies other than those shown in the Preamble
hereto do not hold any direct or indirect interest of any type
whatsoever in the Gerhardi Companies, and there are no claims for the
granting of any such interest. All participations in the Gerhardi
Companies are free from all rights of third parties of any type
whatsoever and there are no claims for the granting of such rights or
the transfer of such participations.
(c) Except for the Articles of Association of the Gerhardi
Companies as set forth in ANNEX B.. hereto, as well as other
agreements, resolutions and promises specifically referenced in this
Agreement and its Annexes, there are no agreements, resolutions or
promises concerning (i) the relationship between the Gerhardi
Companies and their shareholders/partners, (ii) the corporate/
partnership relations of the Gerhardi Companies or (iii) the
appointment of members of any
<PAGE>
board of the Gerhardi Companies, nor are there any obligations to
enter into such agreements, resolutions or promises.
(d) ANNEX C.. hereto contains a correct and complete list of all
managers, Prokurists and comparable members of the management of the
Gerhardi Companies, all members of any supervisory or advisory board
or similar bodies, if any, of the Gerhardi Companies and all general
Powers of Attorney granted by the Gerhardi Companies as well as all
bank accounts and signature authorities.
(e) The Shareholder Loans have been fully paid and neither
portion thereof has been repaid to the Sellers.
2. (a) Except as set forth in ANNEX D.., the Gerhardi Companies have
full, unrestricted and unencumbered title to, and possession of, all
tangible and intangible assets which serve or are destined to serve
their business except for those tangible assets which are leased from
persons and companies other than the Sellers, the Relatives and the
Controlled Companies in the ordinary course of business on normal
market terms or which are still subject to usual reservations of
title by suppliers pending payment.
(b) The Gerhardi Companies do not have any branches or divisions
outside of their principal place of business and do not hold any
interest in any other enterprises.
(c) With the transfer of the shares in Gerhardi GmbH, the
participations in Gerhardi KG and the other assets to the Purchaser
pursuant to Part I above, the Purchaser acquires full, unrestricted
and unencumbered title to these shares, participations and assets at
its free disposal.
(d) Except as set forth in ANNEX O hereto, the Sellers,
Relatives and/or Controlled Companies do not hold any participations
in any enterprise other than the Gerhardi Companies which are engaged
in the area of activity of the Gerhardi Companies or a related area
or maintains business relations with the Gerhardi Companies except
Gerhardi AluTechnik GmbH & Co. KG.
3. (a) The financial statements of the Gerhardi Companies as per
December 31, 1997 (hereinafter referred to as "1997 FINANCIAL
STATEMENTS") attached as ANNEX A.. to this Agreement have been
prepared with the care of a conscientious businessman
<PAGE>
on the basis of proper book-keeping and in accordance with
accounting, valuation and depreciation principles generally
accepted in Germany. Such principles have in each case been
applied consistently and without change as in the three preceding
years. All risks, devaluations and losses ascertainable at the time
of the preparation of the 1997 Financial Statements have been duly
provided for by sufficient depreciations, changes of evaluation or
reserves; all pension obligations have been accrued for in
accordance with Section 6a EStG. The 1997 Financial Statements are
complete and correct and present completely and correctly the
financial position of the Gerhardi Companies as of December 31, 1997
and the results of the operations of the Gerhardi Companies for the
period then ended.
(b) The representations and warranties pursuant to paragraph (a)
above shall apply mutatis mutandis in respect of the Effective Date
Financial Statements. As per the Effective Date, the Gerhardi
Companies do not have any pension obligation other than those set
forth in Annex E.. hereto. There are no liabilities of the Gerhardi
Companies which exist on the Effective Date or arise from acts,
omissions or circumstances before the Effective Date which are not
reflected or reserved in the Effective Date Balance Sheets except for
those with regard to which special representations and warranties
have been given.
4. Except as set forth in ANNEX F.., since December 31, 1997 the
Gerhardi Companies have only been conducted within the normal and ordinary
course of business. Since that time no extraordinary business event or
legal arrangement has occurred or been entered into (except for the NAB
Asset Transfer Agreement) and there has also not been any event which by
itself or together with other events has materially adversely affected the
assets or the profit situation of the Gerhardi Companies. All salary and
wage increases granted since January 1, 1998 were required under
collective bargaining agreements or if that was not the case were within
the normal scope.
5. All material moveable assets of the Gerhardi Companies, and/or
customers to the extent located on the Plant Real Estate, have been well
maintained and are in reasonably good and serviceable condition, normal
wear and tear excepted. All inventories of the Gerhardi Companies existing
on the Effective Date have been valued in the 1997 Financial Statements
according to the strict lower of costs or market price principle and are
by quantity and quality usable and salable in the ordinary course of
business, taking into consideration any
<PAGE>
devaluations made in respect thereof; all inventories acquired in the
meantime are by quantity and quality usable or salable in the ordinary
course of business.
6. (a) ANNEX D.. hereto contains a complete and correct list of all
built-up and vacant real estate, all rights in or to real estate, all
buildings, improvements and constructions owned by the Gerhardi
Companies on real estate owned by third parties and shown in the 1997
Balance Sheets (without supplementary balance sheets of the Sellers)
or which have been acquired by the Gerhardi Companies in the
meantime; except as set forth in ANNEX D.., the Gerhardi Companies
have full and unrestricted title or an unrestricted claim to, and
possession of, such real estate, rights, buildings and improvements
and constructions (hereinafter referred to as "PLANT REAL ESTATE").
The Gerhardi Companies have not disposed of or taken any steps to
dispose of the Plant Real Estate and are not under any commitment to
dispose of it.
(b) Except for those encumbrances listed in ANNEX D.. hereto, the
Plant Real Estate is not subject to any encumbrances, restrictions or
rights of third parties whether or not registered in the Land
Register, and no application for the registration of any encumbrance,
restriction or right of third parties in the Land Register has been
filed, the Gerhardi Companies have not granted and are not committed
to grant any such rights to third parties or have subjected or are
committed to subject the Plant Real Estate to any such encumbrances
or restrictions. All securities listed in ANNEX D.. hereto secure
liabilities of the Gerhardi Companies only which will properly be
reflected in the Effective Date Balance Sheets (without supplementary
balance sheets of the Sellers)
(c) All buildings, improvements and constructions on the Plant Real
Estate (hereinafter referred to as "PLANT BUILDINGS") are in
reasonably good and serviceable condition, normal wear and tear
excepted. The Plant Buildings neither encroach on property owned by
third parties nor are they in material violation of any rights of
third parties or municipal zoning plans or other legal provisions.
All permits required for the Plant Buildings have been properly
granted. The condition and the present use of the Plant Real Estate,
including the Plant Buildings, do not materially violate any building
regulations or restrictions and are unobjectionable within the
meaning of the applicable administrative and other legal provisions.
The representations and warranties contained in this para. (c) do not
refer to any environmental administrative or legal provision.
<PAGE>
(d) The Plant Real Estate constitutes the entire plant area of
the Gerhardi Companies. There are no municipal zoning plans or
similar regulations impeding construction on the vacant or partly
vacant Plant Real Estate in a way which would materially impair the
expansion of existing, or the construction of the new buildings
currently planned in Meinerzhagen, nor will the lack of such plans or
regulations have such consequences. Purchaser is aware that, so far,
a partial permit regarding the foundation has been granted only.
7. Except for the dispute set forth in ANNEX G.. hereto, the Gerhardi
Companies are not a party to, or threatened by, any litigation,
administrative proceedings or investigations, nor are circumstances
known to exist which might reasonably be expected to provide a basis
for such litigation, administrative proceedings or investigations. The
Gerhardi Companies are not subject to any judgment, decree or
settlement in any legal or administrative proceedings which materially
restricts or impairs them in certain business measures, in the
acquisition or disposition of assets, in competition or in the
operation of their business.
8. Except for the contracts, agreements and promises described in
ANNEX H.. hereto (hereinafter collectively referred to as "CONTRACTUAL
OBLIGATIONS"), no Gerhardi Company is subject to any Contractual
Obligations of the type set forth in ANNEX H.. hereto.
The information on the contents of the Contractual Obligations in
ANNEX H.. hereto is complete and correct. The Contractual Obligations are
valid and enforceable against the parties thereto, and neither the
Gerhardi Companies nor the respective other party has breached, or is
in default under, any the Contractual Obligations to any material
degree. The execution and the consummation of this Agreement create no
right to any change or termination of any Contractual Obligations to
any repayment of any grants, tax advantages or comparable benefits of
any kind whatsoever granted to the Gerhardi Companies to the
acceleration of any material obligation or liability of the Gerhardi
Companies nor will they to Sellers' knowledge result in the reduction
or termination of any supply or delivery relations between the Gerhardi
Companies and their suppliers and customers.
The contracts referred to in Part II Section 1 (b) above have been
concluded on arms length term.
9. ANNEX I.. hereto contains a complete and correct list of all
patents, petty patents, design patents, trademarks and respective
applications and of all other industrial property rights of
<PAGE>
the Gerhardi Companies. Except as set forth in ANNEX I, These industrial
property rights are free from all rights of third parties and not
subject to cancellation or total or partial nullification or any
material rights of prior users; the Gerhardi Companies are also not
restricted in their sole and exclusive use. To Sellers' knowledge none
of these industrial property rights is infringed by third parties.
The Gerhardi Companies own all manufacturing, processing and marketing
know-how for their entire previous and present products and for all
products and product improvements in preparation and hold, to the
extent that such manufacturing, processing and marketing know-how has
been reduced to writing, all documents pertaining thereto. Except as
set forth in ANNEX I.. hereto, the Gerhardi Companies do not infringe any
industrial property rights of third parties by manufacturing processes.
The Gerhardi Companies do not infringe any industrial property rights
of third parties by sale or use of their present products or by any
other act within their business.
10. ANNEX K.. hereto contains a complete and correct list of the ten
largest customers and the ten largest suppliers as well as of all
suppliers of the Gerhardi Companies which, for goods and services of
any kind, are the sole source of supply for which there is no
alternative source on comparable conditions (except for energy supply
agreements and PTT services).
11. Except as shown in ANNEX L.. hereto, the Gerhardi Companies have
duly filed by the due date all tax returns and other reports required
under the applicable laws to be filed with tax and other authorities,
paid all due taxes, tax pre-payments and other public dues, retained
all taxes, social security charges and other charges to be retained and
paid them by the due date to the respective recipient and paid all
related delay charges and penalties, if any. The amount of any tax
decreases (limited to wage, trade and value added tax) which relate to
the time periods up to December 31, 1998 shall be paid by the Purchaser
as additional Purchase Price to the Sellers insofar as such tax
decreases have not been provided for in the Effective Date Financial
Statements and do not cause increased taxes in subsequent years.
12. ANNEX M.. contains a list of all insurance policies purchased by the
Gerhardi Companies. The insurance contracts are in full force and effect
and all premiums due until today have been paid.
<PAGE>
13. The Gerhardi Companies have obtained all administrative approvals and
licenses which they require for the conduct of their present business.
They do not materially violate in their business any rights of third
parties or any applicable laws including competition and trade law
14. On the basis of the present production, including production
increases planned by the Gerhardi Companies, the fresh water supply
and the disposal of waste water and gases, as well as solid effluent and
waste, are fully assured. All products manufactured and/or distributed
by the Gerhardi Companies conform to legal and other applicable
provisions including defined standards.
15. To Sellers' knowledge, there are no particular circumstances which
could in the future materially affect the business of the Gerhardi
Companies. The Sellers have no knowledge of any facts or circumstances
which will result in any restriction, impediment or cessation of the
manufacture and/or marketing of any material product presently
manufactured and/or marketed by the Gerhardi Companies.
The Sellers do not give any representation or warranty with regard to
environmental matters.
V.
PERFORMANCE AND LIABILITY
1. (a) If a representation or warranty is incorrect or not complied
with, the Sellers shall compensate the Purchaser for any damage
which the Purchaser would not have suffered if such representation
or warranty were correct or complied with. The Purchaser shall
have no claim against the Sellers if the total amount of the
Purchaser's claims is less than DM 100,000 ("Freigrenze"). The
Purchaser's claims shall, in total, be limited to the maximum
amount of DM 10,000,000.
(b) The Sellers shall be jointly and severally liable for the
performance of this Agreement and for all claims of the Purchaser
against the Sellers of any type whatsoever pursuant to this
Agreement.
(c) The Sellers are joint creditors.
<PAGE>
2. (a) The period of limitation for all claims under the representations
and warranties made by the Sellers in this Agreement of the
Purchaser pursuant to this Agreement shall run until March 31,
2001, unless a longer period of limitation is set forth under the
laws of Germany or results from this paragraph (a) for the
respective claim.
The afore-mentioned period of limitation shall, to the extent
necessary, extend for claims in respect of liabilities of the
Gerhardi Companies, for taxes, social security and other public
dues until the expiration of 6 months after final assessment,
following the administrative audits for the respective periods, of
the respective taxes, social security charges and other public dues
payable by the Gerhardi Companies for the period through the
Effective Date.
Shorter periods of limitation which are mandatory under the laws of
Germany shall not be affected by the foregoing.
(b) The provisions in the first and third paragraphs of Section (a)
above shall apply mutatis mutandis to all claims of the Sellers
pursuant to this Agreement.
3. Any other remedy not provided for in this Agreement, in particular every
right of rescission (Wandelung und Rucktritt) shall be excluded.
Sections 123, 476 and 826 German Civil Code shall not be affected.
4. (a) Any review, inspection and investigation of the Purchaser or
any certified public accountant, attorney or other consultant
retained by the Purchaser shall neither affect the Sellers'
obligations, representations and warranties hereunder nor the right
of the Purchaser to raise claims on the basis of such obligations,
representations and warranties.
(b) Claims of the Purchaser against the Sellers on the basis of the
representations and warranties of the Sellers in this Agreement
which concern events or due dates prior to the Effective Date can
only be raised to the extent that the damages giving rise to such
claims have not already been reflected in the balance sheets and
the profit and loss statements which form part of the Effective
Date Financial Statements (without supplementary balance sheets
of the Sellers).
<PAGE>
VI.
IMPLEMENTATION
1. Tax matters of the Gerhardi Companies (including appeals) concerning
the period through the Effective Date shall be handled by the Gerhardi
Companies and the Purchaser in agreement with the Sellers. The Sellers
must in particular be notified in time of, and the Sellers and their
advisors professionally bound to secrecy must be given an opportunity to
comment on and to participate in, tax audits. Binding declarations to
the tax authorities which may have consequences for the Sellers shall be
made by the Purchaser only in agreement with the Sellers. The Sellers
assume corresponding obligations vis-a-vis the Gerhardi Companies and
the Purchaser.
2. The advisors professionally bound to secrecy, the Gerhardi Companies
and the Purchaser shall grant the Sellers and their representatives also
after the Effective Date the right to inspect all books and business
records of the Gerhardi Companies relating to the period until the
Effective Date, to the extent that such inspection is reasonably
requested for tax reasons, for reasons of defense against claims or for
other legitimate reasons.
3. The parties undertake, upon the request of any party, at any time
after today and without further compensation to execute all documents in
proper form and to take all reasonable measures which may still be
necessary in order to consummate and to comply fully with the purpose of
this Agreement.
4. ANNEX .. hereto contains a list of all accounts receivable of the
Gerhardi Companies which, as of the Effective Date are more than 1 (one)
year old, an update of which will be produced by the Purchaser and
provided to the Sellers on March 15, 1999.
Seller hereby undertakes to purchase all accounts receivable listed
in such update for 97% of their nominal values.
The Purchase Price shall be paid within 5 working days
following receipt of Purchaser's invoice.
VII.
NAME RIGHTS, SECRECY, NON-COMPETITION COVENANTS
1. (a) The Gerhardi Companies and the Purchaser and their successors
shall have the
<PAGE>
right to use in the future in accordance with the
then prevailing provisions of the law the present firm names of the
Gerhardi Companies and every distinctive part thereof, in
particular the name "Gerhardi" with or without addition, for
themselves or for a subsidiary, branch or a division.
(b) The Sellers undertake in the future not to use the present firm
names of the Gerhardi Companies nor any distinctive part thereof
nor any firm name confusingly similar therewith, with or without
addition, nor a trademark, a design or a trade dress presently used
by the Gerhardi Companies or confusingly similar with the ones used
by the Gerhardi Companies in any business connection whatsoever.
The use of the name "Gerhardi" by the Sellers shall only be
excluded in the area of activity of the Gerhardi Companies and in
related areas and excluded in subordinated stages of treatment and
processing. The use of the name "Gerhardi" by the Sellers or
by an enterprise in which they hold a controlling interest is
expressly permitted with regard to and in connection with the
manufacture or distribution of plastic floor tiles.
(c) The authorizations pursuant to this Section 1 supersede any name
right-related restriction whatsoever provided in the NAB Asset
Transfer Agreement. Sellers undertake to procure that Gerhardi
AluTechnik GmbH & Co. KG refrain from any action whatsoever which
could affect the authorizations granted under this Section 1.
2. Each of the Sellers undertakes for a period of 10 years from today to
keep strictly secret all matters and in particular all business and trade
secrets of the Gerhardi Companies known to him/her and not to disclose
such matters and secrets, directly or indirectly, to any third party, nor
to cause such disclosure by third parties, nor to abet or justify such
disclosure, nor to use such matters or secrets for himself.
3. Each Seller undertakes for a period of 10 years from today, without
the prior written consent of the Purchaser, not to cause or influence any
worker, employee, agent or adviser (excluding lawyers, certified public
accountants and tax advisers) now or in the future employed or retained
by the Gerhardi Companies to work in any way whatsoever for him/her, for
an enterprise in which he/she holds an interest or for a competitor or to
terminate an existing relationship with the Gerhardi Companies.
<PAGE>
4. Each Seller undertakes for a period of 5 years from the
Effective Date not to manufacture, distribute or render in Europe
and North America any products or services which are of the same
kind as, or competitive with, products or services manufactured,
distributed or rendered by the Gerhardi Companies in the past or at
present or planned to be manufactured, distributed or rendered by
the Gerhardi Companies, nor to assist third parties, directly or
indirectly, in the manufacture, distribution or rendering of such
products or services, nor to hold in any way whatsoever an interest
in a company which manufactures, distributes or renders such
products or services. Excluded from this restriction is (i) the
acquisition and holding for investment purposes of shares or
convertible debentures of a company listed on a major stock
exchange which is engaged in the manufacture, distribution or
rendering of such products or services, provided that the
respective Seller does not acquire directly and/or indirectly
shares or convertible debentures which constitute or can be
constituted to consist of more than 5 per cent of the share capital of
the respective company, and (ii) any activity of a Seller for the
Gerhardi Companies.
VIII.
NOTIFICATION TO CARTEL OFFICE
The Purchaser undertakes to notify the consummation of the transfer of shares
in the Gerhardi Companies as provided for in this Agreement to the German
Federal Cartel Office immediately after the Effective Date, if required.
IX.
MISCELLANEOUS
1. The fees of the German Federal Cartel Office shall be borne
equally by the Purchaser and the Sellers, if required. The
Commercial Register fees resulting from Commercial Register
applications required hereunder shall be borne by the Gerhardi
Companies. Apart therefrom, each contractual party shall bear its
own costs and taxes and the costs of its advisers and auditors.
<PAGE>
2. Changes and amendments to this Agreement as well as
declarations to be made hereunder shall be valid only if made in
writing unless a Notarial Deed is legally required. This shall
also apply to any change of this provision.
3. (a) The Sellers shall appoint a person or a legal
entity which is authorized to make and accept with legally binding
effect for all of the Sellers all declarations under this Agreement
or in consummation hereof.
<PAGE>
The Sellers appoint as such agent: Klaus Steinweg
(b) The Purchaser shall advise the Sellers of a person or
legal entity which is authorized to make and accept with legally
binding effect for the Gerhardi Companies and the Purchaser all
declarations under this Agreement or in consummation thereof.
The Purchaser appoints as such agent: John Hanley
(c) A change in the person or address of such agent shall be
effective for the other party only one month after the date on
which it has been notified of such change. Until the lapse of such
period, the authority of the previous agent as well as his address
shall be deemed to continue. The obligation to nominate an (as far
as the Sellers are concerned: joint) agent shall apply at least
until December 31, 2003.
4. Each party shall be personally responsible for the fulfillment of
all obligations, if any, vis-a-vis brokers or finders assumed by that
party in respect of the transactions agreed herein. The Sellers
represent and warrant that the Gerhardi Companies are not subject to
obligations vis-a-vis brokers or finders.
5. If a provision of this Agreement should be or become invalid or
not contain a necessary regulation, the validity of the other
provisions of this Agreement shall not be affected thereby. The
invalid provision shall be replaced and the gap be filled by a legally
valid arrangement which corresponds as closely as possible to the
intention of the parties or what would have been the intention of the
parties according to the aim and purpose of this Agreement if they had
recognized the gap.
6. The Annexes to this Agreement form an integral part of the
Agreement. The headings in this Agreement shall only serve the purpose
of easier orientation and are of no consequence for the contents and
interpretation of this Agreement. Statements in one provision or Annex
to this Agreement shall be deemed to have been made also for the
purposes of all other provisions of and Annexes to this Agreement.
7. This Agreement shall be governed by German law.
8. The German version of this Agreement shall be binding.
An English translation is attached.
<PAGE>
9. The Courts of Cologne shall have jurisdiction for all disputes
arising out of or in connection with this Agreement, including disputes
about its validity. For a Seller who is not a merchant within the
meaning of the law, this clause on jurisdiction shall only apply in the
case of Section 38, Sub-Section 3, paragraph 2 of the Procedural Code.
Cologne, this very 30st day of December, 1998
<TABLE>
<S> <C>
__________________________________ ______________________________
Robert Neuerbourg Klaus Steinweg
__________________________________ ______________________________
Ingeborg Schloemer Gerhard Schloemer
represented by represented by
Klaus Steinweg Klaus Steinweg
__________________________________ ______________________________
Dr. Hans-Gert Steinweg Annette Langbein
represented by represented by
Klaus Steinweg Klaus Steinweg
__________________________________ ______________________________
Wolfgang Steinweg Klaus Steinweg jun.
represented by
Wolfgang Steinweg
</TABLE>
<PAGE>
<TABLE>
<S> <C>
__________________________________ ______________________________
Christiane Steinweg Malve Steinweg
represented by represented by
Wolfgang Steinweg Wolfgang Steinweg
__________________________________ ______________________________
Stefanie Hueck Gerhardi & Cie Metall- und Kunst-
stoffwerke GmbH
represented by
Klaus Steinweg (Managing Director)
__________________________________ _______________________________
Gerhardi & Cie. GmbH & Co. KG HOHENSTAUFEN EINHUNDERTSTE
represented by Vermogensverwaltungs GmbH
Gerhardi & Cie. Metall- und Kunststoff- (in the future: Lydall Deutschland
werke GmbH, represented by Holding GmbH)
Klaus Steinweg (Managing Director) represented by
John Hanley (Managing Director)
</TABLE>
<PAGE>
LYDALL ACQUIRES GERHARDI & CIE. GmbH & CO. KG,
A GERMAN AUTOMOTIVE PARTS MANUFACTURER
MANCHESTER, CT -- January 4, 1999 -- Christopher R. Skomorowski, President
and Chief Executive Officer of Lydall, Inc. (NYSE:LDL), today announced that
Lydall, through its wholly owned German subsidiary, has purchased for an
undisclosed cash amount all of the outstanding stock of Gerhardi & Cie. GmbH
& Co. KG, a privately held German manufacturer of automotive components.
The acquisition of Gerhardi, which directly complements Lydall's domestic
automotive thermal business, is key to the Company's strategy of becoming a
global leader in thermal and acoustical automotive markets. Founded in 1796,
Gerhardi produces and distributes a variety of quality metal heat shields and
acoustical components as well as interior and exterior trim parts for
automotive applications. Gerhardi has projected sales of approximately $70
million (approximately DM115 million) for 1998, and operates three plants in
Germany.
Mr. Skomorowski commented, "We are very excited about the addition of
Gerhardi. It is a dynamic and growing company with exceptional people,
quality products, and strong European market positions. Gerhardi adds
sophisticated production capacity and significantly broadens our customer and
technology bases."
Mr. Klaus Steinweg, formerly one of four Managing Directors and a major
shareholder of Gerhardi, added, "Gerhardi shares a common vision and culture
with Lydall. We believe in long-term commitment to our customers and to
ongoing quality improvement. We are both suppliers with broad engineering and
design capabilities, working directly with customers and end-users to ensure
the highest degree of satisfaction and product competitiveness. In my
opinion, this is a big step toward ensuring the future development of
Gerhardi in the global automotive market."
Gerhardi will operate under the management of Lydall Westex, which is headed
by Raymond S. Grupinski. Mr. Klaus Steinweg and Dr. Ing. Leopold Schmidt,
also a former Managing Director, will remain as Co-Managing Directors
reporting to Mr. Grupinski.
Lydall's current line of automotive thermal barriers is used in most
U.S.-manufactured sport-utility vehicles and light trucks as well as in vans,
mid-size trucks and cars. The addition of Gerhardi positions Lydall as a
<PAGE>
recognized direct supplier to a large number of European carmakers as well,
including BMW, Audi, Volkswagen, Saab, and DaimlerChrysler.
Commenting on the acquisition, Mr. Grupinski noted, "The Gerhardi acquisition
strengthens our existing positions with Ford Motor Co. (NYSE:F),
DaimlerChrysler AG (NYSE:DAJ), and General Motors Co. (NYSE:GMC) in the U.S.
as well as expands our opportunities to supply the U.S. facilities of
European manufacturers."
Lydall, Inc. is a $230-million New York Stock Exchange company whose
subsidiaries manufacture technologically advanced engineered products for
demanding specialty applications primarily servicing filtration and
heat-management applications. Its subsidiary, Lydall Westex, is a market
leader in specialty heat-management and acoustic systems to the automotive
market.
Stockholders are referred to Lydall's Annual Report, "Analysis of Results --
Forward-Looking Information," which outlines certain risks regarding the
Company's forward-looking statements. Such risks include: a major downturn
of the U.S. automotive market, which currently accounts for approximately 24
percent of Lydall's total sales, excluding foreign and aftermarket sales; a
meaningful decrease in the number of clean rooms being built worldwide; and
significant, unforeseen changes in raw material pricing, specifically virgin
fiber used in producing the Company's materials handling slipsheets. Also,
the timing and degree of success of new-product programs impact Lydall's
projected results. For further details on these risks and other pertinent
information on Lydall, copies of the company's Forms 10-K, 10-Q, and 8-K are
available on the World Wide Web at Corporate Financials Online
(http://www.cfonews.com/ldl) and Lydall's own website
(http://www.lydall.com). Copies of these documents can also be obtained from
the Company. Write or call: Carole F. Butenas, Vice President --
Investor Relations, at One Colonial Road, Manchester, CT 06040;
Tel. 860-646-1233, E-Mail: [email protected].
<PAGE>
ROGER M. WIDMANN ELECTED CHAIRMAN OF THE BOARD OF LYDALL, INC.
MANCHESTER, CT - January 4, 1999 - The Board of Directors of Lydall, Inc.
(NYSE:LDL) today announced that Roger M. Widmann, a Board Member since 1974,
has been named Chairman of Lydall's Board of Directors effective immediately.
Mr. Widmann (age 59) is a Principal of the investment banking firm of Tanner
& Co., Inc., which specializes in providing advice to corporations ranging
from Fortune 200 companies to mid-sized firms. From 1986 to 1995, Mr.
Widmann was a Senior Managing Director of Chemical Securities Inc., a
subsidiary of Chemical Banking Corporation (now Chase Manhattan Corporation).
He established Chase Manhattan's fee-based corporate finance business in
1986, and in addition to his responsibilities in the U.S., was responsible
for projects in areas ranging from South America to Eastern Europe and the
Middle East.
Prior to joining Chemical Securities Inc., Mr. Widmann was a founder
and Managing Director of First Reserve Corporation, the largest
independent energy investing firm in the U.S. Previously, he was Senior
Vice President with the investment banking firm of Donaldson, Lufkin &
Jenrette. He began his career as an SEC trial attorney.
Mr. Widmann served as a Director of Weatherford Corporation in Houston,
Texas, from 1993 to 1998. He currently is a Senior Moderator of humanities
seminars at The Aspen Institute and President of the March of Dimes Birth
Defects Foundation of New York. He is also a member of the board of the
Third Century Fund, a part of the Brown University Endowment Fund.
Mr. Widmann holds a B.A. degree from Brown University and a LL.B. degree from
Columbia Law School.
Lydall, Inc. is a $230-million New York Stock Exchange company whose
subsidiaries manufacture technologically advanced engineered products for
demanding specialty applications primarily servicing filtration and
heat-management applications.
# # #
<PAGE>
LYDALL REVISES EARNINGS FORECAST AND ANNOUNCES WRITE-OFFS TOTALING
$9 MILLION IN THE FOURTH QUARTER ENDED DECEMBER 31, 1998
MANCHESTER, CT - January 4, 1999 - Lydall, Inc. today revised its earnings
forecast for 1998 and announced expected nonrecurring expenses and write-offs
in the fourth quarter ended December 31, 1998, totaling $9 million.
In mid-October 1998, Lydall forecast earnings per share of approximately $.85
for the year 1998 and approximately $.20 a share for the fourth quarter ended
December 31, 1998. On December 2, 1998, the Company announced the retirement
of Leonard R. Jaskol as Chairman and CEO of Lydall and the appointment of
Christopher R. Skomorowski as CEO in addition to his position as President.
At that time, Lydall said that it would be incurring a charge to earnings in
the fourth quarter related to Mr. Jaskol's retirement in addition to other
nonrecurring charges and asset write-offs.
The Company now anticipates that earnings from operations will be
approximately $.14 a share for the fourth quarter ended December 31, 1998.
Also in the quarter, the Company expects to record approximately $9 million,
or $.57 per share, of nonrecurring charges and write-offs of certain assets
in accordance with Statement of Financial Accounting Standards No.121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of," ("SFAS 121").
Accordingly, Lydall anticipates reporting an after-tax loss per share of
approximately $.43 for the fourth quarter and after-tax income per share for
the year ended December 31, 1998, of approximately $.22.
Mr. Skomorowski commented, "Continuing softness in our markets for
high-efficiency air filtration media, higher than anticipated costs
associated with automotive product launches, and disappointing results from
several of our mature businesses contributed to lower than expected operating
results in the fourth quarter. The good news is that we introduced a record
number of new thermal/acoustic automotive products during 1998. Although we
suffered from the growing pains and resultant costs connected with the sheer
volume of introductions, we look forward to reaping the rewards in 1999.
"Nonrecurring charges during the quarter were primarily associated with the
costs of consolidating our North Carolina operations and Mr. Jaskol's
retirement. The major portion of the impairment losses under the guidance of
SFAS 121 related to our Fort Washington Operation. We estimate that the
realization of cash flows from this business, which has not met Lydall's
<PAGE>
expectations, will take much longer than originally anticipated. As a
result, during the quarter, management determined that an impairment loss
should be recorded."
Mr. Skomorowski continued, "Lydall is fundamentally sound, and we are
optimistic about future growth opportunities. In the near term, we
anticipate improving results in the first quarter of 1999, particularly
related to our automotive thermal businesses. We will be realizing sales of
a number of new products from our U.S. operations early in the year. And, of
course, we are all very excited about the acquisition of Gerhardi in Germany,
which we announced this morning. It promises to be strategically very
important to our becoming a global supplier to the automotive industry."
Lydall, Inc. is a $230-million New York Stock Exchange company whose
subsidiaries manufacture technologically advanced products for demanding
specialty applications primarily servicing filtration and heat-management
applications.
# # #
Stockholders are referred to Lydall's Annual Report, "Analysis of Results -
Forward-Looking Information," which outlines certain risks regarding the
Company's forward-looking statements. Such risks include: a major downturn
of the U.S. automotive market, which currently accounts for approximately 24
percent of Lydall's total sales, excluding foreign and aftermarket sales; a
meaningful decrease in the number of clean rooms being built worldwide; and
significant, unforeseen changes in raw material pricing, specifically virgin
fiber used in producing the Company's materials handling slipsheets. Also,
the timing and degree of success of new-product programs impact Lydall's
projected results. For further details on these risks and other pertinent
information on Lydall, copies of the company's Forms 10-K, 10-Q, and 8-K are
available on the World Wide Web at Corporate Financials Online
(http://www.cfonews.com/ldl) and Lydall's own website (http://www.lydall.com).
Copies of these documents can also be obtained from the Company. Write or
call: Carole F. Butenas, Vice President - Investor Relations, at One Colonial
Road, Manchester, CT 06040; Tel. 860-646-1233, E-Mail: [email protected].
