UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: JUNE 30, 1995
COMMISSION FILE NUMBER: 1-8782
GLEASON CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 16-1224655
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 University Avenue, Rochester, New York 14692
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (716) 473-1000
<PAGE>
ITEM 2. Acquisition of Assets
No change.
ITEM 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
No change.
(b) Pro Forma Financial Information
No change.
(c) Exhibits
2. Acquisition Agreement
An English language translation of the purchase contract
between the Company and Eckhart Muller-Heydenreich,
the receiver in the bankruptcy proceedings of Hurth Maschinen
und Werkzeuge GmbH is filed as an exhibit in this amendment
to the Current Report. Refer to the index to exhibits.
<PAGE>
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.
GLEASON CORPORATION
Registrant
DATE: July 10, 1995
John J. Perrotti
John J. Perrotti
Vice President - Controller
(Principal Financial Officer)
<PAGE>
Index to Exhibits to Form 8-K/A
Exhibit 1. English translation of the purchase contract
between the Company and Eckhart Muller-Heydenreich,
the receiver in the bankruptcy proceedings
of Hurth Maschinen und Werkzeuge GmbH.
Exhibit 1.
Original: German
Translation Final Version June 30 1995
Purchase Contract
between
Eckhart Muller-Heydenreich, Attorney-at-Law,
SchwanthalerstraBe 32/V, 80336 Munchen as Receiver in the
subsequent bankruptcy procedure over the assets of Hurth
Maschinen und Werkzeuge GmbH, Munich HRB 95145
- hereinafter: "Seller" -
and
1. Gleason International Marketing Corporation
1000 University Avenue, Rochester, NY 14692-2970 USA,
Niederlassung Stuttgart
represented by Ralph E. Harper, Secretary & Treasurer
- hereinafter: "Purchaser" -
as well as
2. Gleason Works Acquisition Corporation
1000 University Avenue, Rochester, NY 14692-2970 USA,
represented by Ralph E. Harper,
Vice-President & Treasurer
- hereinafter "Purchaser 2" -
1
Preamble
With resolution of the Municipal Court Bankruptcy Court of
May 31, 1995, file no. 152 VN/13/95 the subsequent
bankruptcy procedure has been initiated with respect to the
assets of Hurth Maschinen und Werkzeuge GmbH with its
registered offices in Munich, HRB 95145 Mr. Muller-
Heydenreich, Attorney-at-Law, has been appointed as
receiver.
The object of this Contract is the sale of tangible and
intangible assets of the bankruptcy debtor. The Purchaser
intends to have the business activities in Munich continued
by an affiliate of the Purchaser.
The Seller warrants to the Purchaser with respect to these
business activities that presently there are no requirements
of any nature whatsoever by the authorities which have not
been complied with and that, to the Seller's best knowledge
the business activities of Hurth Maschinen und Werkzeuge
GmbH have been carried out in accordance with all relevant
statutory provisions and regulations.
2
Sale of the Moveable Fixed Assets and the Goodwill
(1) The Seller sells and transfers to the Purchaser
pursuant to Sec. 3 (6) of the Contract as of the Effective
Date all moveable fixed assets of the bankruptcy debtor,
including but not limited to all items mentioned in the
opinion of Angermann Industrieanlagen GmbH on the evaluation
of the moveable fixed assets of May 15, 1995 (Exhibit 1)
unless such items are expressly excluded from evaluation in
this opinion as they are not the property of the bankruptcy
debtor. The inventory list of this opinion is a part of this
Contract. The administrative software which is being used in
the business activities of the bankruptcy debtor shall also
be sold and transferred to the extent the bankruptcy debtor
holds title hereto. The goodwill also to be sold and
transferred from the Seller to the Purchaser as of the
Effective Date includes lists and informations on all
current customers and suppliers and, in particular the
rights to all orders for products to be manufactured where
production has not yet started.
The sale of the items of the moveable fixed assets will be
effected free from any rights of third parties.
(2) Any moveable fixed assets which are located in the
business enterprise but where the bankruptcy debtor is only
authorized to use them on the basis of lease or other
contracts on use are not sold hereby.
To the extent that the Purchaser does not wish to continue
these contracts the Purchaser shall communicate this to the
Seller on or before the Effective Date. The Seller shall
then make use of Seller's rights pursuant to Secs. 17, 19 of
the German Bankruptcy Act, and in coordination with the
Purchaser, shall cancel or otherwise terminate any such
contracts for use. All contracts which the Purchaser wishes
to continue are listed on Exhibit 2. This list will be
updated as of the Effective Date. To the extent that the
Purchaser assumes such contracts for use the Purchaser does
not assume any obligations of the bankruptcy debtor from the
period prior to the Effective Date as defined in Sec. 17 (2)
of this Contract. The Seller shall without undue delay use
its best efforts to cause the contractual partner of such
contracts for use to agree to the desired transfer of
contracts. The Seller hereby authorizes the Purchaser to
enter into negotiations with the respective contractual
partners regarding the continuation of such contracts for
use or new contracts.
(3) The sale is made on the basis of inspection made by the
Purchaser, i.e. under exclusion of any warranties for
defects. No particular qualities of the purchased items are
being warranted.
(4) Should any of the purchased items be no longer in
existence or not fit for use prior to the Effective Date the
purchase price shall be reduced by the estimated value of
such items no longer in existence or unfit for use in
relation to the total estimated value. In the event that the
purchase price has already been paid such amount shall be
reimbursed by the Seller.
(5) The Seller shall retain title to the items sold
pursuant to no. 1 above until payment of the first
installment of the purchase price has been made pursuant to
Sec. 15 (2) of the Contract.
3
Products on Stock, Raw Material and Supplies
(1) The Seller sells and transfers to the Purchaser as of
the Effective Date all raw material and supplies as well as
those finished and half-finished products which can not be
attributed to a client's order (products on stock) which are
on stock on the business premises of the bankruptcy debtor
described in Exhibit 9. These items shall be transferred
free from any rights of third parties. To the extent that
there are any rights of third parties to these items the
Seller shall assume the obligation to have these rights
extinguished.
(2) The sale is made under exclusion of any warranty for
defects. The Seller warrants that he is not aware of any
such defects. The Seller does not make any warranties for
the particular qualities of any items.
(3) The raw material and supplies as well as the products
on stock were inventoried and evaluated as of May 31, 1995
(Exhibit 3) . They will again be inventoried and evaluated
as of June 30, 1995. The physical inventory and evaluation
shall be made in accordance with the same principles which
were applied in the initial inventory as of May 31, 1995 and
shall be supervised and audited by Ernst & Young GmbH
Wirtschaftsprufungsgesellschaft. Such inventory shall be
completed within 90 days after the Effective Date at the
latest.
The purchase price for the inventory has been calculated on
the basis of the existing, counted and evaluated inventories
as of May 31, 1995 in accordance with the principles set
forth below:
basis=net book value ("bb")
write off for net realizable value in % ("%")
purchase price ("pp")
(All figures calculated in DM)
bb % pp
for raw material and supplies 1.766.742 50 883.371
for own spare parts in the warehouse 2.788.380 50 1.394.190
for spare parts in the workshops 2.404.739 50 1.202.370
for machinery/spare parts 3.702.700 50 1.851.350
in stock not attributable to client orders
___________
Total 5.331.281
===========
(4) Only in the case of a deviation in excess of 5 % (in
the aggregate) between the counted and evaluated inventories
as of May 31, 1995 and as of June 30, 1995 (either greater
or less than the initial calculated and evaluated value),
shall the purchase price to be paid pursuant to Sec. 15 be
adjusted accordingly, using the same calculation principles
set forth in no. (3) above. The determination of the 5 %
threshold referred to above shall also take into account
(cumulatively) any further deviations with respect to
production costs to be taken into account cumulatively
pursuant to the provisions of Sec. 6 (3) of this Contract.
Any purchase price adjustment shall be made in the full
percentage of the deviation and shall not be limited to the
percentage exceeding the 5% threshold referred to above.
(5) With respect to the purchase price adjustment to be
made under no. (4) above or Sec. 6 (3) below the Purchaser
will pay a partial amount of the purchase price to be paid
pursuant to Sec. 15 to Seller into an escrow account in the
name of Purchaser at the law firm Beiten Burkhardt Mittl &
Wegener (the "Trustees") on the Effective Date. Such escrow
account shall be released to the Seller and/or Purchaser
upon mutual written instruction by the Seller and the
Purchaser to the Trustees, attn. Dr. Jack Schiffer or Dr.
Hans Peter Mechlem, by facsimile or mail. It is understood
between the Seller and the Purchaser that the actual amount
of the escrow account shall by no means limit the claims of
either party regarding the purchase price adjustment. To the
extent the claims of the Purchaser exceed the escrow amount
such claims may also be charged against the amounts in
escrow pursuant to Sec. 16 or any other escrow amount under
this Contract and vice-versa. In the event of a dispute
between the Seller and the Purchaser regarding the inventory
as of June 30, 1995 and the final purchase price adjustment
both parties shall in good faith attempt to amicably resolve
such dispute within a period of 14 days after such dispute
arose. If no agreement can be reached within this period the
determination of the purchase price shall be made by a
neutral auditor acting as arbitrator. If the parties cannot
agree on the person of the neutral auditor he shall be
appointed by the Institute of Accountants in Dusseldorf
(Institut der Wirtschaftsprufer e. V.). The determination of
the amount of the purchase price adjustment by said auditor
shall be final and binding. The escrow account shall then be
released accordingly. The costs of the auditor shall be
allocated to the Purchaser and the Seller in accordance with
Secs. 91 et seq. of the German Code of Civil Procedure.
(6) The Seller shall retain title to all purchased items
pursuant to no. (1) above until payment of the first
installment of the purchase price to be paid pursuant Sec.
15 (2) of this Contract.
4
Patents, Trademarks and Other Industrial Property Rights
(1) The bankruptcy debtor owns the patents, trademarks,
license rights and other industrial property rights listed
in Exhibit 4. As regards the contents, term and territorial
scope of the protection reference is made to the statements
in Exhibit 4.
As of the Effective Date, the Seller shall sell and transfer
pursuant to Sec. 3(6) of the Contract the aforementioned
items to the extent required by law, by separate notarial
agreement to the Purchaser 2 and shall cooperate with the
completion of any measures required to effectuate the
transfer of such items. If and to the extent that the
consent of any third party is required for such transfer,
the Seller shall use its best efforts to obtain such
consent.
The Seller warrants that it is not aware of any existing or
threatened claims or litigation relating to these assets.
(2) Moreover, the Seller shall sell and transfer to the
Purchaser 2 pursuant to Sec. 3(6) of the Contract all
inventions, the know-how, business secrets, procedures,
formulas and other intangible items which are not included
in the industrial property rights and all embodiments of
such items, e.g. written descriptions, samples, drawings,
plans etc. of the Seller or the bankruptcy debtor,
respectively, as of the Effective Date. To the extent such
transfer requires the consent of third parties, the Seller
shall use its best efforts to cause such consent to be
given. Such consent requirements are set forth in Exhibit 4.
(3) The Seller shall sell and transfer to the Purchaser 2
as of the Effective Date pursuant to Sec. 3(6) of the
Contract the exclusive right and title to all trademarks,
industrial and intellectual property rights and know-how
that belong to Seller which is to be understood to include
all such rights used, developed or under development
currently or in the past by the Seller for the manufacture
of products related to gears, including without limitation
shaving, honing, hobbing or other machines and tooling. It
is understood that know-how which is not available in
tangible form will be either compiled in tangible form or
communicated verbally to the Purchaser 2 by the Seller and
that reasonable steps will be taken to protect the
confidential nature of such know-how and prevent its
unauthorized removal from the Seller or disclosure to third
parties.
4a
Company Name
(1) The Seller sells and transfers to the Purchaser
pursuant to Sec. 3(6) of the Contract the exclusive right to
use the component of the company name "Hurth Maschinen und
Werkzeuge" fully or partially.
(2) The Seller shall change the company name of "Hurth
Maschinen und Werkzeuge GmbH" in an appropriate manner in
order to enable the Purchaser to acquire and use the company
name. He shall support the Purchaser in all respects related
thereto. The Purchaser is aware of the fact that delays may
occur as a result of the necessary applications for
registration with the Trade Register. The Seller hereby
expressly warrants that such transfer of the company name
will not be subject to any third party claims.
5
Business Documents
The Seller shall submit to the Purchaser all business
documents of the bankruptcy debtor. This shall not apply to
such documents where the Seller has a legal obligation to
preserve them. Upon request, however, the Seller shall put
at the Purchaser's disposition such documents for
disposition for purposes of inspection and preparation of
copies.
6
Sale of Unfinished Products
(1) The Seller sells and transfers to the Purchaser the
unfinished products on the Effective Date in their
individual degrees of completion. They have been
manufactured in order to fill existing orders and have not
been produced on stock. These products are listed in Exhibit
5.
The sale is made under exclusion of any warranty for
defects, however, free from any rights of third parties.
Should there be any rights of third parties the Seller
assumes the obligation vis-a-vis the Purchaser to have these
rights extinguished. The Seller shall retain title to such
purchased items until payment of the first installment of
the purchase price has been made pursuant to Sec. 15 (2) of
this Contract.
(2) The purchase price for the unfinished products referred
to in no.(1) above has been calculated as follows:
The production costs for unfinished products have been
listed and evaluated as of May 31, 1995, as set forth in
Exhibit 5. They will again be listed and evaluated as of
June 30, 1995. Such new evaluation shall be made in
accordance with the same principles which were applied in
the initial evaluation as of May 31, 1995. Such evaluation
shall be completed within 90 days after the Effective Date
at the latest.
(3) The purchase price for such unfinished products shall
be 70% of the production costs, i.e. DM 5.783.750 as of May
31,1995. The final determination of the production costs and
the adjustment of the purchase price shall be made on the
same basis, i.e. 70 % of the evaluated production costs, as
of June 30, 1995. Any adjustment pursuant to this Section
shall be taken into account in the determination of the 5%
threshold referred to in Sec. 3 (4), provided that in the
event that the 5% threshold is reached, the purchase price
adjustment shall be made in full without limitation by the
5% threshold. The determination of whether the 5% threshold
has been reached will be made by comparing the aggregate
amount of the value of the products on stock pursuant to
Sec. 3 and the production costs pursuant to Sec. 6 as of May
31, 1995 (totalling DM11.115.031) to the corresponding,
newly calculated aggregate amount as of June 30, 1995. The
provisions of Sec. 3 (5) shall apply accordingly.
(4) The purchase price to be paid pursuant to Sec. 15 of
this Contract shall be further reduced by any payments on
account to the Seller or the bankruptcy debtor for the
unfinished products sold pursuant to no. (1) above made
prior to or after the Effective Date. Such payments on
account as of May 31, 1995 are fully and correctly set forth
by the Seller in the schedule attached to Exhibit 5 and
shall be updated as of June 30, 1995. In the event that the
purchase price has already been paid the Seller shall
reimburse the Purchaser for any amounts due under this
provision.
(5) The Purchaser assumes the obligation to use its best
efforts to duly complete these products and to deliver them
within the agreed delivery period to the customers,
provided that product manufacture by the Seller is on
schedule. The Purchaser is aware of the current state of the
production schedule.
7
Transfer of Orders where Production has not yet Started
The Seller submits to the Purchaser a list with all orders
that have already been given or are still under negotiations
where production has not yet started (Exhibit 6) as of the
Effective Date. The Purchaser assumes the obligation vis-a-
vis the Seller to carry out orders already given. This does
not apply to orders where the Purchaser informs the Seller
on or before the Effective Date that the Purchaser is not
prepared to carry them out or not to carry them out under
the agreed conditions. With respect to such orders the
Seller shall retain the right to refuse performance by
declaration pursuant to Sec. 17 of the German Bankruptcy Act
or to transfer these orders to a third party which is
willing to execute them.
The counter-value for the orders assumed by the Purchaser
has been included in the ascertainment of the purchase price
pursuant to Sec. 15. No special portion of the purchase
price is therefore to be attributed hereto. The purchase
price shall be reduced by any payments on account made to
the Seller or the bankruptcy debtor prior to or after the
Effective Date for such orders. Such payments on account as
of May 31, 1995 are fully and correctly set forth by the
Seller in the schedule attached to Exhibit 6 and shall be
updated as of June 30, 1995. In the event that the purchase
price has already been paid the Seller shall reimburse the
Purchaser for any amounts due under this provision.
8
Consent of Customers
With respect to the customer orders referred to in Secs. 6
and 7 the Seller shall request the customers to confirm that
they agree to the transfer of these orders to the Purchaser.
Should any customer refuse to accept the transfer of an
order to the Purchaser, the Purchaser can, at its
discretion, duly complete and deliver such order for the
Seller. The Seller shall pass on to the Purchaser the entire
sales proceeds of such orders including payments on account,
less a lump sum equal to 10% of the sales proceeds to which
the Seller is entitled.
If, in an individual case, the consent is refused and the
order is validly cancelled by the customer in whole, the
completed product relating hereto is deemed not to have been
sold and the order relating hereto has not been assumed by
the Purchaser.
As regards cancelled orders for unfinished products referred
to Sec. 6 the purchase price will be reduced accordingly. No
deduction from the purchase price shall be admissible in
case of orders referred to in Sec. 7 where production has
not yet started.
9
Current Orders
The Purchaser shall assume the contracts entered into with
suppliers to the extent that deliveries are made after June
30, 1995. The obligations arising out of such contracts are
listed in Exhibit 7. Any payments on account made by the
Seller are to be reimbursed to the Seller within 15 days
upon receipt of a written request for reimbursement by the
Seller. A list of all long term delivery contracts and other
significant supplier contracts as of May 31, 1995 is
attached to Exhibit 7, which also sets forth the status on
such orders and payments on accounts. Such list shall be
updated as of June 30,1995.
10
Warranty and Maintenance Obligations
The Purchaser shall assume the Seller's contractual
obligations for warranty and maintenance with respect to
products delivered prior to the conclusion of this Contract,
provided, however, that such products were sold in the
ordinary course of business and produced in accordance with
the Seller's customary production standards. Those orders
for which the warranty periods or, respectively, the
maintenance obligations have not yet expired are listed in
Exhibit 8 hereto. In particular the foregoing assumption by
the Purchaser shall not include any claims based on tort or
on the German Product Liability Act.
The Purchaser assumes the aforementioned obligation also vis-
a-vis the respective customer as beneficiary. This shall
also apply to those orders which are completed on the
Effective Date.
The services to be rendered by the Purchaser under the
assumed warranty and maintenance obligations have been
considered in the calculation of the purchase price. No
deduction will be made.
The Purchaser assumes the obligation to perform the
outstanding installation and documentation of delivered
products pursuant to the list attached to Exhibit 8. The
services to be rendered by the Purchaser in this regard
have been considered in the calculation of the purchase
price. No deduction will be made.
11
Commissions
The Purchaser does not assume any obligation arising out of
any existing agency, distributorship or similar agreement,
except as provided in the following paragraph.
The Purchaser assumes any commissions to be paid to agents
or agencies for all orders received before the Effective
Date for which delivery is made after the Effective Date,
provided that such claims for commission are justified under
the respective agency agreements as well as under the
applicable statutory requirements.
12
Cooperation in the Winding-up Activities of the Receiver
The Purchaser shall assist the Seller in its winding-up
responsibilities as receiver. The Purchaser shall in
particular by using the assumed personnel procure the
necessary information in connection with the examination of
claims, collection of debts, clarification of collateral
rights of creditors, including but not limited to retentions
of title, as well as accounting matters regarding employees
and cooperate in the handling of such matters. The Purchaser
shall issue references for the employees of the bankruptcy
debtor which are leaving.
13
Other Assets, Obligations
(1) Any assets which are not expressly mentioned in this
Contract are not sold. This shall apply in particular to
claims of the Seller vis-a-vis third party, post bank and
bank credit balances, cash on hand as well as the shares in
Hurth Modul GmbH, Chemnitz.
(2) The Purchaser shall not assume any obligations of the
Seller. This shall in particular apply with respect to any
environmental liabilities relating to the business, real
estate and business buildings. The Seller shall hold
harmless and fully indemnify the Purchaser from any such
claims. The Seller warrants that he is not aware of any
potential environmental liabilities as of the Effective
Date.
(3) The Seller shall at its expense provide the Purchaser
with the financial statements (unaudited) of the bankruptcy
debtor as of December 31, 1994, by July 15, 1995 at the
latest. If such financial statements are not provided to the
Purchaser in time, the Purchaser may have prepared such
annual statements by a chartered accountant of his choice at
the expense of the Seller. The costs may be charged against
any escrow accounts referred to under Sec. 15 (2) of this
Contract.
14
Use of the Business Real Estate and the Business
Buildings
The Purchaser is aware of the fact that the business real
estate marked in red in Exhibit 9 and the business buildings
thereupon are not the Seller's property but are leased to
the Seller under an agreement dated December 30, 1990 by
Carl Hurth Maschinen and Zahnradfabrik GmbH & Co. A copy of
the lease has been submitted to the Purchaser. With
resolution of the Municipal Court Munich Bankruptcy Court of
May 31, 1995 the subsequent bankruptcy procedure were
initiated over the assets of Carl Hurth Maschinen- und
Zahnradfabrik GmbH & Co.
The business real estate marked in red in Exhibit 9
constitutes the part of the business real estate and
business buildings which is essential for the continuation
of the business. The Seller assumes the obligation to use
best efforts to support the conclusion of a lease between
this receiver and the Purchaser with terms satisfactory to
the Purchaser at its sole discretion and with a minimum term
of five years and a net lease payment not exceeding DM
110.000 per month . Such lease agreement shall provide for
an obligation of the landlord to assume the sole
responsibility for any environmental liabilities relating to
the business real estate and business buildings not caused
by the Purchaser and that the landlord shall hold harmless
and fully indemnify the Purchaser from any such claims.
15
Purchase Price
(1) The purchase price as of May 31, 1995, subject to
adjustment as provided in this Contract, has been compiled
as follows:
1. For the patents and industrial property rights
pursuant to Sec. 4 of this Contract DM 2.000.000,--
2. For the moveable fixed assets and the goodwill
pursuant to Sec. 2 of this Contract and for
orders not yet in production pursuant to
Sec. 7 of this Contract DM 2.850.000,--
(DM 0,00 for the goodwill included)
3. For the raw material and supplies
the amount calculated pursuant
to Sec. 3 of this Contract, presently DM 5.331.281,--
4. For the orders in production the
purchase price to be calculated
pursuant to Sec. 6 of this Contract, presently
DM 5.783.750,--
5. Less payments on account as of
May 31, 1995 pursuant to Secs.
6 and 7 of this Contract ./. DM 1.277.499,--
Total (before adjustments) DM 14.687.532,--
The parties assume that the sale is not subject to value
added tax. If, however, the sale should be subject to tax
the Purchaser shall pay the value added tax to be
transferred by the Seller to the fiscal authorities
immediately upon receipt of an invoice relating hereto.
(2) The purchase price shall be paid as follows:
1. The first installment of the purchase price in the
amount of DM 3.187.532 shall be due for payment by the
Purchaser to the Seller on the Effective Date. The purchase
price to be paid by Purchaser 2 in the amount of DM
2.000.000 shall also be due for payment on the Effective
Date.
2. The second installment in the amount of DM 6.000.000
shall be paid into an escrow account in the name of the
Purchaser with the Trustees (as defined in Sec. 3 (5) of
this Contract) on the Effective Date. The Trustees shall
release to the Seller monthly a partial amount plus accrued
interest on such amount for each employee whose employment
relationship has been finally terminated by the Seller in
accordance with Sec. 16 of this Contract. Further details
are set forth in Sec. 16 of this Contract.
3. The third installment in the amount of DM 1.000.000
shall be paid into the above mentioned escrow account on the
Effective Date. The Trustees shall release to the Seller
and/or Purchaser such escrow amount plus accrued interest
upon written mutual instruction from the Seller and the
Purchaser in accordance with Secs. 3 and 6 of this Contract.
4. The fourth installment in the amount of DM 500.000
shall be paid into the above mentioned escrow account on the
Effective Date. This amount shall remain in escrow as a
security for possible claims of the Purchaser and the
Purchaser 2 against the Seller arising out of or related to
this Contract. Such escrow amount plus accrued interest
shall be released to the Seller 6 months after the Effective
Date to the extent that the Purchaser or the Purchaser 2 has
not substantiated in writing any claims against the Seller
prior to such date. If the Purchaser or the Purchaser 2 has
substantiated any claims the amount in escrow equal to such
claims shall remain with the Trustees until final settlement
of or court ruling on such claims and shall be allocated and
released to the Seller or the Purchaser or the Purchaser 2
in accordance with such final settlement or court ruling.
5. The fifth installment in the amount of DM 2.000.000
shall be paid into the above mentioned escrow account on the
Effective Date. This amount shall remain in escrow as a
security for possible claims of the Purchaser pursuant to
Sec. 13 (2) of this Contract. The release of this amount to
the Seller is contingent on the result of an expert opinion
of the company Boden-Wasser-Untergrund, Gesellschaft
burgerlichen Rechts, in 73230 Kirchheim/Teck,
Dettingerstraae 146, to be provided by the Seller regarding
the existence of possible environmental contamination with
the target to make clear and definitive statements with
respect to the potential contamination and the respective
costs for the removal or remediation of such contamination,
if any, on the premises which are subject to the
contemplated lease agreement pursuant to Sec. 14 of this
Contract and are to be used by the Purchaser for its
business purposes, in accordance with the following
guidelines:
(a) Should the expert opinion conclude, after a thorough
examination (based on a specified pattern (verdichtetes
Raster) including a sufficient number of soil and
groundwater drilling samples), that on the business premises
which are the subject of the contemplated lease agreement
pursuant to Sec. 14 of this Contract there exist no or no
significant environmental contamination of any kind, in
particular no air, ground, or water pollution, then the
amount in escrow is due upon the receipt of such opinion.
(b) Should the expert opinion conclude that environmental
contamination of the nature described above does exist, and
that it is probable that an amount in excess of DM 2.000.000
will be necessary to remove or remedy such contamination,
the Purchaser shall retain this amount. This, however, shall
not apply if, in spite of the existence of environmental
contamination, on the basis of clear written statements by
the competent authorities the Purchaser can continue its
business activities without any restrictions on the premises
which are subject to the contemplated lease agreement
pursuant to Sec. 14 of this Contract until the expiration of
a period of 5 years beginning on the date this Contract was
concluded. In such a case the amount is to be paid out to
the Purchaser.
(c) Should the expert opinion conclude that, despite the
existence of environmental contamination of the nature
described above, the cost to remove or remedy such will be
less than DM 2.000.000, the amount held in escrow will be
reduced to the amount estimated to be necessary to remove or
remedy such contamination. This reduced amount shall be
released after a period of five years beginning on the date
this Contract was concluded, to the extent that the
Purchaser has not, prior to this time, been approached by
the responsible authorities regarding the Purchaser's
liability for environmental contamination. Clause 2 of the
preceding lit. (b) shall apply analogously in this case.
(d) In any event, the amount in escrow is due to the Seller
when the Seller has presented certification from the
appropriate environmental authorities that the Purchaser
will not be held liable for environmental contamination of
the nature described above.
The amount in escrow will be placed in an interest earning
account. The interest accrued on the amount prior to the
time such amount is released will be due to the party who is
entitled to receive such released amount.
The Purchaser assumes a lump sum amount of DM 24.000 plus
statutory value added tax of the overall costs of this
expert opinion and shall reimburse this amount to the Seller
upon presentation of the total invoice from the company
Boden-Wasser-Untergrund.
(3) If the Purchaser's payment of the purchase price
pursuant to no. (2) above is delayed by more than two
weeks, the Seller shall be entitled to rescind this Contract
without any further reminder or grace period.
It is agreed that, in addition hereto, the Seller shall be
able to claim damages for non-performance of the Contract.
(4) The Purchaser and the Purchaser 2 shall be liable
jointly and severally for the payment of the purchase price.
16
Employees
(1) The Purchaser shall assume the employees listed in
Exhibit 10 as of July 1, 1995 and enter into all rights and
duties under the existing employment agreements with such
employees according to Sec. 613 a of the German Civil Code.
Moreover, the Purchaser shall assume the apprentices
pursuant to Exhibit 11 and assumes the obligation to enter
into all rights and duties under the existing apprenticeship
agreements with such apprentices. The Seller shall terminate
all employees not mentioned in Exhibits 10 or 11, with the
exception of those employees who are accorded special
statutory protections, before the Effective Date and shall
release all such employees, including those accorded special
protections, from service.
(2) If any of the employees or apprentices assumed or to be
assumed pursuant to the Exhibits, terminate their employment
as a result of their own termination notices, termination
agreements or terminations for reasons based on the person
of the employee or the employee's behaviour on or before
December 31, 1995 the Purchaser shall assume the same
obligation vis-a-vis other employees or, respectively,
apprentices whom the Seller will appoint to the Purchaser as
replacement if and when the persons so appointed are
comparable to the leaving persons as regards their
education, qualification and performance. Permanently
disabled employees or employees who are older than 51 years
shall be exempted herefrom. In this respect the right of the
Seller is conditional upon the Purchaser replacing the
employee; under no circumstances shall this provision be
construed to require the Purchaser to replace the employee.
The same shall apply with respect to any employees and
apprentices listed in the Exhibits who oppose the assumption
of their employment / apprentice relationship by the
Purchaser. Immediately after the conclusion of this purchase
Contract the employees / apprentices of Hurth Maschinen und
Werkzeuge GmbH listed in Exhibits 10 and 11 shall be
notified of the business transfer as of July 1, 1995 in
order to start the opposition period (3 weeks after having
received knowledge of the business transfer).
(3) With respect to the employees / apprentices to be
assumed pursuant to preceding nos. 1 and 2 the Purchaser
shall assume all claims under the employment / apprentice
relationships of such employees as of the Effective Date.
Holiday entitlement shall be assumed by the Purchaser. Over
time compensation accrued before the Effective Date is the
responsibility of the Seller. The Seller shall hold the
Purchaser harmless insofar. The Seller indemnifies the
Purchaser for all other claims of the assumed employees
which originate before the Effective Date.
(4) To the extent that justified claims for continued
employment and remuneration as well as for any compensation
payments are raised against the Purchaser by those employees
/ apprentices who are not mentioned in the Exhibits, the
Seller shall hold the Purchaser harmless from such claims.
The Seller is fully liable and will indemnify Purchaser for
all claims with respect to the employees not mentioned in
Exhibits 10 and 11, in particular for all claims resulting
out of a social plan, an early termination agreement, the
termination period or other legal grounds before and after
the Effective Date. Moreover, any litigation with respect to
these employees, shall be the Seller's responsibility and
shall be pursued at the cost of the Seller. Upon request of
the Seller, however, the Purchaser shall render all
declarations and carry out all measures which are deemed to
be necessary by the Seller including but not limited to any
terminations based on business reasons after any business
transfer and including all business decisions to be made
necessarily prior hereto. This shall not apply to the extent
that the Purchaser actually makes use of the labour of such
employees. Insofar, any calculations shall be made under
consideration of proportionate claims for vacation pay and
any other proportionate fringe benefits. The Purchaser,
however, shall be authorized to use the workforce of such
employees who are not assumed pursuant to Exhibit 10 and 11
and who have entered into termination agreements with the
Seller until the termination of their employment
relationships as stated in the termination agreement. For
these employees the Purchaser assumes the salary costs as
well as secondary costs related to salary for the duration
of their occupation as of the Effective Date. Apart
therefrom the provisions of this Section shall apply
analogously to these employees.
(5) The Purchaser is aware of the fact that a works council
exists for Hurth Maschinen und Werkzeuge GmbH which, at the
same time, is also a works council for the employees of Carl
Hurth Maschinen- und Zahnradfabrik GmbH & Co. as well as of
Hurth Getriebe und Zahnrader GmbH. After the business
transfer the members of the works council have to be newly
elected as the number of the members of the works council no
longer corresponds to the provisions of the Company
Constitution Act ("Betriebsverfassungsgesetz"). Furthermore,
the Purchaser is aware of the fact that there are shop
agreements relating to the business of Hurth Maschinen und
Werkzeuge GmbH and that there are tariff regulations. The
Purchaser is aware of any restrictions, changes of work
conditions, claims under shop agreements and tariff
regulations pursuant to Sec. 613 a of the German Civil Code.
Insofar, the Seller does not assume any liability for any
measures eventually contemplated by the Purchaser. It is
entirely the Purchaser's discretion to negotiate with the
work's council or the employees in order to terminate or
amend any shop agreements.
(6) If the Purchaser carries out any new job recruitment or
measures to increase the personnel on or before June 1,
1996, the Purchaser shall have the obligation to first offer
the respective jobs to suitable prior employees of Hurth
Maschinen und Werkzeuge GmbH to the extent that these
employees are qualified herefore, show the necessary
performance and shall hire these if they are prepared to
accept such employment. Permanently disabled employees and
employees who are older than 51 years shall be exempted
herefrom.
(7) The Purchaser assumes according to no. (1) above only
283,5 employees and 12 apprentices. The Purchaser is
entitled to make a hold back of the purchase price in the
amount of DM 50.000 for every employee not mentioned in
Exhibits 10 and 11. The hold back shall be paid into an
escrow account in the name of the Purchaser with the
Trustees. The amount of the hold back was calculated on the
assumption that the Seller currently employs 403 employees,
i.e. 120 more than are named in Exhibit 10. The Trustees
shall release to the Seller an amount of DM 50.000 plus
accrued interest on such amount for each such employee whose
employment relationship has been finally terminated by the
Seller either by termination agreement or termination notice
which has not been disputed or justified by court ruling.
The Seller has to produce sufficient evidence to the
Purchaser that the employment has been finally terminated.
The other provisions of Sec. 3 (5) shall be applied
accordingly. To the extent that employment relationships of
employees not mentioned in Exhibits 10 and 11 have passed to
the Purchaser according to Sec. 613 a of the German Civil
Code, the purchase price shall be reduced by DM 50.000 for
any such employee, provided that such employee has not been
hired pursuant to no. (2) above, and the Trustees shall
release to the Purchaser an amount of DM 50.000 plus accrued
interest for each such employee. The payment due in the
amount of DM 50.000 will be charged against any
indemnification claims of the Purchaser against the Seller
regarding the respective employee pursuant to Sec. 16 (4)
above. Otherwise the provisions of Sec. 3 (5) shall be
applied accordingly.
17
Requirements for Validity / Effective Date
(1) The validity of this Contract shall be subject to the
condition precedent of the consent of either the assembly of
creditors or a preliminary creditor commission appointed by
the court. Furthermore, the Purchaser has the option to
rescind this Contract without any penalty by written notice
to the Seller prior to the Effective Date if a lease
pursuant to Sec. 14 with the receiver of Carl Hurth
Maschinen und Zahnradfabrik GmbH & Co has not been concluded
by July 4, 1995; moreover, neither the Purchaser nor the
Seller shall be liable for any claims for damages arising
out of the rescission of this Contract because of the
nonoccurrence of the lease. Additionally, the Purchaser
retains the right to rescind this Contract should Ford,
Cologne rightfully cancel, in whole or in part, the orders
described in Exhibit 6, except to the extent that such
cancellation is based on reasons which are the Purchaser's
responsibility. In the case of a rescission of this Contract
related to the orders of Ford, Cologne, the parties shall
negotiate in good faith to continue this Contract under
reasonably adjusted conditions.
(2) The Effective Date shall be July 1, 1995.
18
Escape Clause
Should any provision of this Contract be invalid or
unenforceable, the validity of the remainder of the Contract
shall not be affected thereby. The parties shall be
obligated to replace the invalid or unenforceable provisions
by such provisions which replicate as nearly as possible the
economic results of the replaced provision.
19
Final Provisions
(1) Amendments of and supplements to this Contract must be
made in writing unless notarization is required.
(2) To the extent that this is legally possible, this
Contract shall be subject to the laws of the Federal
Republic of Germany and Munich shall be agreed as venue.
(3) The timing and content of any press releases or other
public statements made by the Seller shall be coordinated if
possible with the Purchaser in advance. If such prior
coordination is not possible the Seller shall immediately
inform the Purchaser thereafter. The Purchaser will not
unduly reject any proposals made with respect hereto without
cause.
(4) The Purchaser shall have the right to assign rights and
duties hereunder totally or partially to any of its
affiliates. The Purchaser, however, shall remain liable vis-
a-vis the Seller for Purchaser's obligations hereunder in
case of such assignment.
(5) The contractual parties shall cooperate in the spirit
of mutual trust in the execution of this Contract.
<PAGE>
The following is the listing of exhibits to the purchase
contract between the Company and Echhart Muller-Heydenreich,
the receiver in the bankruptcy proceedings of Hurth
Maschinen und Werkzeuge GmbH. The Company will furnish
supplementally a copy of any omitted exhibit to the
Commission upon request.
Exhibits to Contract
Exhibit 1: Opinion of Angermann Industrieanlagen GmbH
Exhibit 2: Contracts to be Assumed by Purchaser
Exhibit 3: Evaluation of Raw Material and Supplies as
well as of Products
Exhibit 4: Patents, Trademarks and Other Industrial
Property Rights
Exhibit 5: Unfinished Products
Exhibit 6: Orders Given and Orders under Negotiation
Exhibit 7: Obligations under Contracts with Suppliers
Exhibit 8: Warranty and Maintenance Obligations
Exhibit 9: Plan of Business Premises
Exhibit 10: Employees to be Assumed
Exhibit 11: Apprentices to be Assumed
<PAGE>
Munchen, den 30.6.1995
Verkaufer: Kaufer:
Eckhart Muller-Heydenreich Ralph E. Harper
Rechtsanwalt Ralph E. Harper
Eckhart Muller-Heydenreich Secretary & Treasurer
als Konkursverwalter Gleason International
Marketing Corporation
Niederlassung Stuttgart
Ralph E. Harper
Ralph E. Harper
Vice-President & Secretary
Gleason Works Acquisition Corp.
