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 3, 1997
Plymouth Rubber Company, Inc.
(Exact name of registrant as specified in its charter)
Massachusetts 1-5197 04-1733970
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
104 Revere Street, Canton, Massachusetts 02021
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (617) 828-0220
<PAGE> 1
Item 2. Acquisition or Disposition of Assets.
On January 3, 1997, Plymouth Rubber Europa S.A., a wholly owned
subsidiary of the Company, acquired 100 percent of the outstanding
shares of Cintas Adhesivas Nunez S.A. (a privately owned company),
located in Porrino, Spain, for approximately 382,000,000 pesetas.
309,500,000 pesetas were paid at closing, with funds borrowed under
the Company's existing line of credit. 37,500,000 pesetas will be
payable in three annual installments, plus interest, beginning December
31, 2000. An additional payment currently estimated at 35,000,000
pesetas reflecting the change in the acquired company's equity between
February 29, 1996 through December 31, 1996 will be paid on or before
April 3, 1997.
Cintas Adhesivas Nunez S.A. produces vinyl and cloth-based insulating
tapes. The Company intends to produce and market vinyl and cloth-based
insulating tapes from the facility in Porrino, Spain.
The acquisition will be accounted for as a purchase recorded on the
acquiring company's balance sheet as an investment valued at an
estimated 382,000,000 pesetas (approximately $2,900,000) plus
acquisition costs currently estimated at $170,000. Cintas Adhesivas
Nunez S.A. will operate as a wholly-owned subsidiary of Plymouth Rubber
Europa S.A.
<PAGE> 2
Item 7. Financial Statements, Proforma Financial Information and
Exhibits
(a) Financial Statements of businesses acquired:
Not applicable
(b) Proforma Financial Information:
Not applicable
(c) Exhibits:
Exhibits required as part of this report are listed in the
Index to Exhibits appearing on Page 5.
<PAGE> 3
SIGNATURES
Pursuant to the provisions 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.
PLYMOUTH RUBBER COMPANY, INC.
(Registrant)
Date: January 20, 1997 By Duane E. Wheeler
Duane E. Wheeler
Vice President-Finance and Treasurer
<PAGE> 4
INDEX TO EXHIBITS
Exhibit No. Description
(1) Not Applicable
(2) Sale and Purchase Agreement
(4) Not Applicable
(16) Not Applicable
(17) Not Applicable
(20) Not Applicable
(23) Not Applicable
(24) Not Applicable
(27) Not Applicable
(99) Not Applicable
Exhibit 2
SALE AND PURCHASE AGREEMENT OF THE SHARES OF THE COMPANY
CINTAS ADHESIVAS NUNEZ, S.A.
In Porrino on 3rd January nineteen hundred and ninety seven.
OF ONE PART Mrs. M Jose Ramilo Fernandez-Areal; of full age, holder of
Identity Card no 35.875.453; Mrs Almudena Nunez Ramilo, of full age,
holder of Identity Card no 36.068.360 and Mrs. M Jose Nunez Ramilo of
full age, holder of Identity Card no 36.047.304, all of them on their own
name and behalf, and Mrs. Maria Jose Ramilo Fernandez-Areal, on her
daughter Mrs. Brunetta Nunez Ramilo name and behalf, of full age, holder
of Identity Card no 36.047.303 by virtue of the Power she has and declares
in force attached to the present contract. All of them appear in their
capacity as shareholders of the Company CINTAS ADHESIVAS NUNEZ, S.A.
(hereinafter referred to as "Sellers")
OF THE OTHER PART Plymouth Rubber Europa, S..A. a Company, of Spanish
Nationality, of indefinite duration, incorporated by means of the Public
Deed granted on August 26, 1996 before the Madrid Notary Public Mr. Jose
Maria Alvarez Vega, under number 3.421 of his official records, and duly
registered at the Pontevedra Mercantile Registry under folio 049, Book 1847
of companies, sheets number PO-18045, first inscription, and holder of
fiscal identity number A-36269694.
The Company is represented for this act by Mrs. Deborah Kream, of full
age, single, with social address at Canton, Massachussetts, of American
Nationality and holder of passport no 100583760 expedited in Boston
(Massachusetts) by virtue of her post as Vice Secretary of the Board of
Directors of the Company, by virtue of the resolution adopted by said body
in the meeting held on December 20, 1996 in which she is empowered for this
act.
WITNESSETH
I. Sellers are the owners of 100% of the shares of Cintas Adhesivas Nunez,
S.A. (hereinafter referred to as"CANSA"), which was incorporated on 19th
June 1996 by means of the Public Deed granted before the Notary of PORRINO,
Mr. ERNESTO REGUEIRA NUNEZ under number 310of his protocol. It is
registered at the Mercantile Registry of PONTEVEDRA, Book general, Folio
115, Sheet no PO-9734 Its Fiscal Identification Code is 36239341.
The purpose of the Company is the elaboration, transformation, exploita-
tion, manufacture, purchase and sale, exportation, importation, distri-
bution and any kind of negotiation of adhesive products at any stage of
their industrial or commercial process, as well as auxiliary elements for
electric installations in general.
Its share capital is 20.100.000 (TWENTY MILLIONS ONE HUNDRED THOUSAND
ptas.), divided into 4.020 nominative shares, each with a par value of
5.000 (FIVE THOUSAND ptas.), numbered from 1 to 4.020, both inclusive.
II. The representatives of Sellers and Purchaser have held several meetings
for the establishment of a Basis for the negotiation that had the object
the sale by the Sellers of 100% of the shares of CANSA and the Purchaser
having carried out the preliminary reviews of the company, the Sellers
and the Purchaser agree to execute the present Purchase and Sale Agreement
of all the CANSA shares and they carry out the above with the warranty
set forth below and subject to what is established in the following
CLAUSES
The parties agree upon the following definitions:
"Closing date" means the date of the signature of the present agreement
upon which the Sellers shall transfer CANSA's shares to the Purchaser upon
payment of the price by the latter to the Sellers
"The Arbitrator" means "ARTHUR ANDERSEN, S.A", to which the Sellers and
the Purchaser may refer for adjudication any discrepancies that may arise
in the interpretation and application of the Basis of Purchase and
applicability, in accordance to the faculty established in ARTICLE 1.447
of The Spanish CIVIL CODE, in the event, of the inmdenity and
responsibility agreed under Clause Fourth.
FIRST.-PURCHASE AND SELL OF SHARES
The Sellers sell 4.020 ordinary nominative shares of 5.000 pesetas par
value each one, representing 100% of the capital stock of CANSA referred
to in Recital I above to the Purchaser, who buys them free of any charge,
encumbrance, restriction or limitation whatsoever and with all the rights
inherent therein including the right to any current dividend for the
financial year to be ended on 31st December 1996. The shares sold com-
prise all the rights of any nature which they themselves could have at
the date of the signature of this document.
The parties agree to execute the formalization and consummation of the
purchase and sale of shares with the intervention of an Official Stock-
broker at a moment immediately following the signature of the present
Agreement by means of delivering the relevant Share Certificates of the
shares sold and simultaneous payment of the consideration price,
SECOND.-PRICE AND PAYMENT
2.1 Subject to the adjustments described in clause FOURTH herein below,
Plymouth will pay CANSA the following amounts:
i.- At closing :309.5 million pesetas, that is, 359 million pesetas,
minus 49,5 million pesetas to be held back by Plymouth as guarantee,
as described in sub-clause 2.2 below.
ii.- Ninety (90) days after closing: An amount equal to the increase
in net value of CANSA at the closing date as compared to the February
28, 1996 balance sheet, which are estimated at present at 30 million,
regardless of the positive or negative adjustments on this amount to
be made on January 1st 1997, once the final results are known at
closing of the 1996 fiscal year . Should CANSA's results at December
31, 1996 be losses, the amount of those shall be deducted form the
purchase price established in paragraph i) above.
2.2 Plymouth shall hold back from the price, as described in clause 2.1.i
above, 49,5 millions as guarantee of the accuracy and veracity of the
declarations made by CANSA and contained in the Basis of Purchase
which are an annex to the present Agreement.
The guarantee shall be held by Plymouth for a period of FIVE (5) years
as from the signature of the present agreement, and, assuming no
charge has needed to be made against it, as provided for in sub-clause
2.3 below, it shall be given back in accordance with the following
provisions:
i. For the first two years, Plymouth shall hold the full amount of
the guarantee, without any money being paid back.
ii. Subject to clause 2.3. below, on the date of the third anniversary
of the closing date, Plymouth shall give back to the sellers 21,5
million out of the overall amount conforming the guarantee at said
date assuming no charge has needed to be made against the guarantee.
In case charges have been made against said holdback, in accordance
with the provisions of sub-clause 2.3 below, the amount to give back
upon this date shall be an amount equal to 43,43% of the remaining
holdback
iii. Subject to clause 2.3. below, on the fourth anniversary of the
closing date, Plymouth shall give back to the sellers 14,5 million
assuming no charge has needed to be made against the guarantee, as
provided for in sub-clause 2.3 below In case charges have been made
against said holdback, in accordance with the provisions of sub-clause
2.3 below, the amount to give back upon this date shall be an amount
equal to 51,8% of the remaining holdback.
iv. Subject to clause 2.3. below, on the fifth anniversary of the
closing date, Plymouth shall give back to the sellers 13,5 million
assuming no charge has needed to be made against the guarantee, as
provided for in sub-clause 2.3 below. In case charges have been
made against said holdback, in accordance with the provisions of sub-
clause 2.3 below, the amount to give back upon this date the amount
to give back upon this date shall be the whole of the remaining
holdback, whichever amount that is.
2.3 Should any of the warranties and declarations made by the Sellers in
favour of Plymouth, as contained in the Basis of Purchase annexed to
the present Agreement, result to be inaccurate or untruthful, and
should this result in an economic prejudice to CANSA and/or Plymouth,
Plymouth shall have the right to immediately deduct from the holdback
guarantee, in any sequence it deems appropriate, and subject to clause
FOURTH hereafter, any amounts to which it is entitled to be
indemnified pursuant to this Agreement plus an amount equal to 8%
interest over the deducted amount, calculated as from the date of
signature of the present agreement up to the date upon which said
amount is deducted , as well as the right to continue to hold after
any scheduled release date and after December 2001, a reasonable
estimate of future indemnity amounts based on claims asserted or
threatened on or before such dates plus an amount equal to 8% interest
over said claims calculated as from the date of signature of the
present agreement until the date on which said amount is deducted.
2.4 If Plymouth wrongfully (without right to do so under this Agreement
or in accordance with Spanish law) withholds or continues to withhold
all or any portion of the Holdback guarantee beyond the time permitted
therein, then:
a. From and after three (3) business days after the scheduled release
date for such amount, the amount wrongfully with held (but only
the amount wrongfully withheld) shall bear interest at a rate of
MIBOR plus seven (.07) per cent; and
b. In addition to the penalty specified in subsection a) immediately
preceding, if said sum has not been paid on or before sixty days
after written demand therefor has been made upon Plymouth by the
Sellers, and additional penalty of 20 (0.2) percent of the amount
wrongfully with held (but only the amount wrongfully withheld)
shall become immediately due and payable.
If the parties do not reach an agreement about whether Plymouth has
wrongfully with held the amount or not, in the forty days as from the
date of the written request from the sellers demanding payment of the
withheld amounts, the dispute shall be decided upon by arbitration in
the manner prescribed in clause FOURTH hereafter. The parties hereby
declare that they will accept and submit to the arbitrator's decision
which shall be binding for both parties.
2.5 Notwithstanding the above, Plymouth may in no event deduct or apply
against the holdback guarantee any amount, until the aggregate sum of
all or one of its claims permitted hereunder is greater than or equal
to four million pesetas; providing that upon reaching that amount (the
"Triggering amount") Plymouth may apply against and deduct from the
Holdback Guarantee (1) the full amount of any and all claims which
constituted the Triggering amount, as well as (2) any and all future
claims, regardless of their individual or aggregate amounts.
2.6 All payments to be made by Plymouth to the Sellers in accordance with
sub-clause 2.2. here above, shall be made by certified bank or banks
check(s) or by wire transfer to such account or accounts as the
Sellers shall request in writing to Plymouth with a prior notice of
at least eight (8) business days.
THIRD.- BASIS OF PURCHASE
The representations and warranties given by the Sellers as well as the
Appendixes, which are included herein as Annex 2 (hereinafter "Basis of
Purchase") to this Agreement will be considered to form integral part of
this Agreement.
The price consideration has been agreed based on the accuracy and contents
of the representations and warranties given by the Sellers.
The "Basis of Purchase" shall supersede the closing date and the formal-
ization of the obligations contained in clause first hereabove, and shall
be understood as being reproduced at the moment of execution in the sale
and purchase Stockbroker's Policy, to continue to be in full force and
validity for a period of five (5) years as from the closing date.
FOURTH.- INDEMNIFICATION
Should there exist inaccuracies or omissions in the representations made
in the Basis of Purchase and its Annexes, the Purchaser will have the
right to be indemnified or compensated by the Sellers in the manner
indicated in the Sections below.
((1)) Inaccuracies or omissions in the representations and warranties made
in the Basis of Purchase and its Schedules
If after the Closing Date and within the time limit provided for in this
section, inaccuracies or omissions in the data or statements made in the
Basis of Purchase and its Schedules have been discovered which have a
monetary impact on CANSA, the Purchaser shall be entitled to be compensated
in that amount, by the Sellers. The Purchaser will be compensated for any
amounts which result from inaccuracies or omissions in the provisions for
the payment of taxes accrued up to the Closing Date, or any other contin-
gent liability as shown in the Balance Sheets of CANSA originating from
acts or omissions up to the Closing Date.
In the event of debts, liabilities or obligations of whatever nature not
accounted or provisioned for in the Balance Sheets of CANSA which should
have been thus accounted or provided for, these will only be considered
to have a monetary impact on CANSA to the extent that they should actually
be paid by the company, once all reasonable administrative and judicial
recourses corresponding to debts, liabilities or obligations of the company
have been exhausted.
Any time that, in the Purchaser's opinion, there exists any circumstance
which could give rise to his right of compensation under the terms of this
section, he shall inform the Sellers as soon as possible, who, in the same
manner, shall inform the Purchaser in writing of their position in that
respect, within a period of one month, or less. Should the nature of the
circumstance so require.
In the first instance, the Sellers shall state in writing whether or not
they accept the claim. If the Sellers deny it, the Purchaser shall be
entitled to refer its right to be indemnified to the decision of the
Arbitrator.
Should the claim arise from a third party claim, the Sellers shall also
advise in writing if an opposition to the same should be formulated, in the
understanding that the Purchaser will only be obliged to oppose to that
claim if the Sellers have expressly accepted responsibility with regards
to the outcome of said claim.
The Purchaser will provide an opportunity for the Sellers to participate
actively in the judicial or administrative proceedings, all of which are
related to debts, liabilities or obligations before mentioned.
Those proceedings will be, in any case, led by the Purchaser and its legal
representatives. The Purchaser will bear the costs of its legal represent-
atives. Should the claim become enforceable against CANSA, imposing the
obligation to pay costs, these costs, will be added to the amount of the
respective debt, liability or obligation, but not including the fees
accrued by the Purchaser's Procurator and Lawyer.
In the event that at any time during the proceedings referred to above, the
Purchaser proposes to submit to arbitration, to settle or withdraw or
proposes to take any other decision with respect to the subject debt,
liability or obligation, which in the Sellers' reasonable opinion is
against their interests, Sellers will be released from their obligation
under this provision, if the Purchaser persists in this proposed decision
unless the Purchaser refers the reasonability of the commitment, trans-
action, compliance, waiver or any other action, as well as the reason-
ability of the Sellers' opposition to the decision of the Arbitrator and
the latter finds in the Purchaser's favour.
The fees of The Arbitrator will be borne equally by both parties, unless
the Arbitrator substantially confirms the opinion of the Sellers or the
opinion of the Purchaser, in which case, the defeated party will bear the
fees totally.
The Arbitrator's report will be regarded as final and binding on the
parties.
The amounts that become payable in favour of the Purchaser as a consequence
of this Section ((1)) will be immediately paid to the Purchaser by the
Sellers.
The Sellers' liability expires on 31st December 2001. except for those
debts, obligations or liabilities relating to taxes or Social Security
contributions which at such date are the subject of any kind of proceedings
or dispute against CANSA for which the Seller's liability will extend till
the date they expire.
Purchaser is hereby authorised to offset against the holdback any amount
due under this Clause or to retain the pay back of said guarantee in case
Purchaser considers reasonable that some amount will be due under this
Clause.
((2)) Limitation
In any event, it is expressly agreed that the liability of the Sellers with
respect to these guaranties will be limited in maximum to the amount of
the purchase consideration paid for the shares in accordance with Second
Clause above, regardless of whatever inaccuracy or omissions may appear
with respect to the representations made in the Basis of Purchase and its
Schedules, or the liabilities or latent or hidden defects of any nature
that may arise in CANSA. The Purchaser grants the Sellers a minimum
threshold of 4,000,000 pesetas with respect to the above considered
individually or as a whole in accordance and without prejudice to what is
established in clause 2.5 here above.
FIFTH.-TAXES AND EXPENSES
The Stockbroker or Public Notary fees arising from the execution of the
present document on Completion Date will be exclusively borne by the
Purchaser.
SIXTH.- ADMINISTRATIVE APPROVALS.
The Purchaser will obtain the necessary administrative authorisations or
verifications related to foreign investments in order to be able to carry
out the purchases and sales referred herein, including any declarations or
clearances and/or shall present the declarations before the Directorate of
Foreign Transactions. The Sellers will do their best to support and
collaborate with the Purchaser to provide the information and documenta-
tion required by the competent authorities.
SEVENTH.- COVENANT AGAINST COMPETITION.
(a) To induce Purchaser to enter into this Agreement and purchase the
Assets as provided herein, and in partial consideration thereof, Seller
agrees that for a period of three (3) years, beginning on the Closing Date
and ending on the third anniversary date thereof, it will not, except in
connection with CANSA's business, without the prior written consent of
Purchaser, for its own account or jointly with another, directly or
indirectly, for or on behalf of any individual, partnership, corporation
or other legal entity, as principal, agent or otherwise:
(i) engage in, consult with, or own, control, manage or otherwise part-
icipate in the ownership, control or management of a business engaged in
the manufacture, processing, purchase for resale, sale, or distribution
within any part of the Trade Area (as defined below) of CANSA's business;
or
(ii) solicit, call upon, or attempt to solicit the patronage of any
individual, partnership, corporation or other legal entity having an
office or place of business within the Trade Area and to whom the Seller
sold any products currently manufactured by CANSA during the twenty-four
(24) month period immediately preceding the Closing Date (CANSA's
Products), for the purpose of obtaining the patronage of any such
individual, partnership, corporation or other legal entity for the
purchase of any CANSA's Products from anyone other than the Purchaser,
except as an employee and on behalf of the Purchaser.
(b) For the purposes of this clause 2.4, the term "Trade Area" means the
territory described in Schedule 2.4(b), attached hereto, which is the
territory within which Purchaser's customers and accounts are located and
where the Purchaser solicits substantially all of its patronage.
EIGHTH.- MANAGEMENT
The Purchaser is interested in ensuring the continuity service of certain
Managers of CANSA.
Consequently, the Purchaser undertakes to maintain their current conditions
of employment. To said effects, the Sellers undertake to co-operate and
to do their best so that the Purchaser may keep them in their current
employment.
NINTH.- OTHER UNDERTAKINGS AND OBLIGATIONS
9.1 The Sellers agree and undertake that in the period comprised between
the 28th February 1996 and the Closing Date, they have not incurred in any
obligations which are outside the ordinary course of business, including
salary increases not required by Law and payment of any dividend not
already approved, without prior consultation and written approval from the
Purchaser except for matters related in the following paragraph. In addi-
tion, the Sellers represent that within the mentioned period of time they
have entered into no major contracts, out of its ordinary course of
business, without prior consultation and written approval from the
Purchaser.
9.2 The Sellers guarantee that on the date of signature of the present
Agreement, they will have released CANSA from any commercial and non-
commercial claims with CANSA or individuals related with them. The Sellers
guarantee that they have made no intra-group payments or dividends in 1996.
9.3 The existence of this agreement shall be confidential unless otherwise
required by competent authorities. All public statements regarding any
aspects of these transactions, shall be previously agreed in writing
between the parties.
9.6 Seller will obtain a document in which AINSA guarantees that the Basis
of Purchase are correct and accurate and are not affected by the spin-off
dated 11 April 1996.
TENTH.-LAW.
This purchase and sale of CANSA shares shall be governed, construed and
interpreted in accordance with the Laws of Spain.
ELEVENTH.-ARBITRATION
Any disputes arising in connection with the force, effects, interpretation
or execution of this purchase and sale Agreement shall be finally settled
by arbitration which shall take place in Madrid, in accordance with the
rules contained in the Arbitration Law of December 5, 1988.
The award shall be issued by three Arbitrators, one of them appointed by
the Sellers, another by the Purchaser, and the third by mutual agreement
of the arbitrators appointed by the parties. Should the agreement concern-
ing the appointment of the third arbitrator not be reached within the
maximum term of 30 days as from the date of acceptance of the designation
by the parties of their respective arbitrators, the third Arbitrator will
be appointed by the Dean of the Madrid Bar Association, or whoever acting
as the Dean's deputy.
The parties, expressly waiving their right to any jurisdiction which may
correspond to them, undertake to comply with the award issued by the
Arbitrators, who will have a maximum term of two (2) months to issue their
award, as from the date on which they accept their designations.
TWELFTH.- SEVERABILITY
If any of the covenants contained herein is declared to be or becomes
legally void or non enforceable, such covenant shall be considered not
to have been inserted and the Agreement shall continue to be fully
effective as if such covenant
had not existed.
THIRTEENTH .- NOTICES
13.1 All notices and communications which are to be made between the
parties, for the purposes arising from this agreement, shall be made in
writing and shall be delivered by registered mail with acknowledgement of
receipt to the following addresses:
For the Purchaser: PLYMOUTH RUBBER COMPANY INC.
104 Revere Street, Canton, MA 02021-2996 (U.S. of A.)
Tel: 07.1.617.828 0220
Fax: 07.1.617.828 6041
As well as to:
GOMEZ ACEBO & POMBO
Attn. Jose Maria Alvarez/ Beatriz Satrustegui
Paseo de la Castellana 164, Madrid 28046
Tel: 91.582 91 00
Fax: 91.582 91 14
For the Sellers: Plaza de Compostela num 2,3
Virgo, Pontevedra...........
13.2 The parties may change their addresses, notifying each other in
writing in the manner and to the addresses set out
above.
FOURTEENTH.- LANGUAGES
This Agreement and the purchase of shares agreement has been drafted and
executed in Spanish. An English translation will also be provided.
There exists, equally, an English translation thereof.
For the interpretation of the present Agreement, the parties declare that
the Spanish version shall prevail.
And, to said effects, they sign in threefold in the place and date
mentioned above.
12
ANNEX II
BASIS OF PURCHASE
The Sellers represent and warrant:
1.- Organization, capacity and by-laws.
(i) CINTAS ADHESIVAS NUNEZ, S.A. (hereinafter
referred to as "CANSA") is duly organised and in
existence under the Laws of Spain and has sufficient
legal capacity to own and conduct the businesses
making up its corporate activity pursuant to its
Corporate By-laws.
(ii) The existing Corporate By-laws of CANSA, duly
entered in the Commercial Registry, are those
attached as schedule 1 (ii). No modifications have
been resolved with regard to said Corporate By-laws
that are pending recording in the Commercial
Registry. The Corporate By-laws of CANSA have been
adapted to the Stock Companies Act approved by Royal
legislative Decree 1564/1989 of December 22. Said
schedule 1 (ii) details the particulars of the
registration of CANSA.
(iii) The capital stock of CANSA and the shares into
which it is divided is as shown in the Corporate By-
laws attached as schedule 1 (ii). There are no
increases of capital pending registration or in
progress. There is no authorization to the Boards of
Director which would allow increasing the capital
stock according to the terms of Article 153 b) of
the Stock Companies Act. The company has not issued
founder's shares or debentures or any other kind of
security or financial instrument convertible into
shares.
(iv) CANSA has not resolved on its dissolution,
merger or spin-off.
2.- Administrative Bodies, auditors and powers of attorney.
(i) Schedule 2 (i) details the members of the
Administrative Bodies of the company, the dates of
their appointments and of registration in the
Commercial Registry. There is no record that
registration of the resignation or removal of said
directors is pending, nor of the appointment of any
new director [except as expressly indicated
otherwise in Schedule 2 (i).]
(ii) The company has appointed the Auditors detailed
in schedule 2 (ii) which also sets out the terms of
appointment. The economic conditions of the
respective appointments are the usual ones on the
Market. No cause has occurred justifying the
revocation of appointment of said Auditors as
contemplated by Law.
(iii) Schedule 2 (iii) details the main powers of
attorney for representation that have been conferred
by the company. No other powers of attorney have
been conferred that could be binding upon or commit
the company for an amount exceeding 1,000,000
pesetas.
3.- Financial statements and commercial books.
(i) As schedule 3 (i) are attached the annual
reports, balance sheets and profit and loss accounts
of CANSA as of December 31, 1995 and the
provisional Balance Sheet closed on December 31.
1996 and Profit and Loss Accounts closed on December
31, 1996 of said company. The Annual Statements as
of 31st December 1995 have been audited through
CANSA is under no legal obligation to audit, as it
does not reach the threshold established in article
190 of the Companies Act. Said Annual Statements as
well as the auditors report referring to the
economic year ended on December 31, 1996 thus
attached hereto as part of Annex 3(i) and they have
been duly approved by the General Shareholders'
Meeting of the Company. The mentioned balance
sheets and profit and loss accounts are complete,
exact and true and have been prepared in accordance
with Generally Accepted Spanish Accounting
Principles and reflect faithfully the economic and
financial situation of CANSA.
(ii) As from February 28, 1996 CANSA has not
incurred in other liabilities or responsibilities
other than those derived from the ordinary course of
its business.
(iii) CANSA has not issued or resolved to issue
debentures or any other kind of securities in
series.
(iv) CANSA does not own or possess as security its
own shares, has not furnished financial assistance
for the acquisition of its own shares, neither has
it set up cross-shareholdings exceeding 10%, either
directly or through a nominee.
(v) CANSA has not furnished securities, guaranties
or bonds of any kind in favour of third parties,
[except for the amounts set out in the memorandum
accounts appearing in the balance sheets attached
hereto in schedule 3 (i) or what is detailed in
schedule 3 (v).]
(vi) The receivables accounts of CANSA detailed in
its balance sheet as of February 28, 1996, or those
arising afterwards, result from transactions agreed
on a bona fide basis in the normal course of its
business and appear in its provisional balance
closed on December 31, 1996. The pertinent
provisions for bad debts have been established for
the company in accordance with Generally Accepted
Spanish Accounting Principles.
(vii) CANSA keeps its books of commerce up to date
pursuant to existing legislation and in accordance
with Generally Accepted Spanish Accounting
Principles.
(viii) CANSA has deposited its annual accounts with
the Commercial Registry in due time and form.
4.- Taxes.
(i) CANSA has filed in due time and form all the
necessary tax returns of any kind and has paid them
forthwith. The company has not incorrectly enjoyed
any tax allowance. The provisions for taxes which
are reflected in the balance sheets attached as
Schedule 3 i) are sufficient to cover taxes already
accrued and due with the corresponding interest,
surcharges or sanctions which may be applicable.
(ii) Schedule 4 (ii) describes the current tax
inspections which are being carried out on CANSA,
stating the tax periods covered by said inspections.
Except as indicated in schedule 4 (ii), there are no
other tax inspections in progress nor knowledge that
any such are to take place, nor are there any known
deficiencies or claims.
5.- Main agreements.
(i) The agreements entered into by CANSA in the
ordinary course of its business with clients and
suppliers conform to customary practice in Spain and
have no unusual nor abnormally onerous conditions
for the company, except those indicated on Schedule
5 (i).
(ii) Schedule 5 (ii) details the lease agreements
(including leasing contracts) arranged and in force
in which CANSA is lessor or lessee.
(iii) CANSA is not party to any agreement in force
that is outside or exceptional to the ordinary
course of its businesses and that is not included,
or to which reference is not made, under any of the
items of this Basis of Purchase.
(iv) There are no agreements between CANSA and its
Directors. There are no agreements between CANSA
and the Sellers outside of the normal course of its
business agreed out of the normal market conditions.
(v) CANSA has not defaulted the agreements to which
it is a party, neither has it knowledge that such
default has occurred or will occur by the respective
counterparties to said agreements nor are there any
contracts subject to counter claims or set-offs of
third parties.
Neither the execution nor the fulfilment of
this Agreement, nor the change of control in the
company as a consequence of the same, grants to the
counterparties to said agreements the right to
terminate any of said agreements presently in force
with CANSA, except as indicated in Schedule 5(v).
6.- Industrial property and copyright.
(i) Schedule 6 (i) sets out the patents,
trademarks, process designs and other types of
industrial property and copyright and applications
for these, as well as know-how and knowledge not apt
for registration owned by CANSA. All those apt for
registration are duly registered in the company's
names in the registers. CANSA is up to date in the
payment of the fees required by said registry and it
has no knowledge that said registrations infringe or
have been contested due to infringement of other
registrations or types of industrial property and
copyright owned by third parties, except as
indicated in Schedule 6(i).
(ii) CANSA has not finally or temporarily assigned
to third parties the use of the types of industrial
property or copyright and know-how or knowledge not
apt for registration referred to in paragraph (i)
above.
(iii) There are no licenses agreements of any kind
granted by CANSA to third parties and granted by
third parties to CANSA.
7.- Real and movable assets.
(i) CANSA has full title, free from any liens or
encumbrances, prohibitions from disposal, lease,
assignment or restrictions of any kind on its use,
to all the real and movable property and
installations it owns, unless expressly indicated
otherwise in schedule 7 (i) and 7 (ii).
(ii) Schedule 7 (ii) identifies the real property
owned by CANSA setting out the registration details,
for items valued at over five million pesetas.
(iii) All the assets used by CANSA in the course of
its business are in a satisfactory state of use for
the purpose to which they are intended except for
normal wear and tear.
(iv) CANSA has not participations in other
companies.
8.- Stocks, finished product and raw material inventories.
(i) The stocks of finished products and products in
progress owned by CANSA are normally saleable in the
course of its business except for normal incidents
stemming from this activity.
(ii) The stocks of raw materials owned by CANSA are
normally usable for the manufacture of the products
for which they are to be used, with the same
exception consigned in paragraph (i).
9.- Insurance.
(i) CANSA has duly insured the property it owns and
the risks pertaining to its business in accordance
with customary practice in Spain for their
respective sectors.
(ii) The insurance premiums referred to in paragraph
(i) above have been duly paid on their respective
due dates. CANSA has no knowledge that the insurance
company intends to cancel said insurance policy or
seek an abnormal increase in premiums or impose
other additional conditions in an unusual manner.
(iii) No accidents have occurred under the insurance
policies, where payment of which is being debated or
to the Sellers' knowledge, are going to be debated
with the insurance company.
There is no accident claim pending resolution
and which exceeds 1,000,000 pesetas.
10.- Payrolls and service agreements.
(i) Schedule 10 (i) contains a summary of the
payrolls of CANSA, together with the date of the
publishment at the Official Gazette of the
Collective Labour Agreement in force.
(ii) CANSA is up to date in the payment of its
Social Security obligations and remunerations of any
kind payable to its personnel.
(iii) There are no Agreements with golden-parachute
clauses with personnel of CANSA.
CANSA is up to date in the performance of the
obligations deriving for them under the agreements
and has no knowledge that the counterparties thereto
have failed to perform or intend to cancel said
agreements.
(iv) CANSA has not assumed before its employees, Key
Managers or persons with a service contract any
undertaking for remuneration in cash or in kind or
for the case of dismissal, resignation or
retirement.
11.- Licenses and administrative approvals.
(i) CANSA is in possession of the administrative
permits and approvals necessary for the use of its
properties and facilities and for the conduct of its
business. A list of the permits and approvals which
CANSA should have obtained and lacks is attached as
schedule 11 (i).
(ii) CANSA's properties and facilities or the
activities that it conducts [DO NOT] infringe any
legal or administrative provisions relating to urban
planning, environmental matters, restrictive trade
practices, consumer protection, hygiene and safety
at work or of any other kind, unless otherwise
indicated in schedule 11 (ii).
(iii) CANSA has not received any official
notification informing them that the above mentioned
licences are not in order or that any new zoning
regulation is to be applied to the properties which
could adversely affect the assets of the company,
unless otherwise indicated in Schedule 7 (ii).
(iv) CANSA has not or should have knowledge of the
existence of soil polution in the areas where it
carries out its activities or has received official
notification of its existence.
12.- Litigation.
(i) Except as indicated in Schedule 12 (i), CANSA
is not party to litigation of any kind, nor has
knowledge of any claim or other circumstances that
could give rise to litigation that could adversely
and materially affect the company.
(ii) No labour disputes have arisen, nor are
expected to arise, with the personnel of CANSA,
except as provided in Schedule 12 (ii).
(iii) No resolution adopted by the bodies of CANSA
has been formally opposed.
(iv) Neither the shareholders of CANSA nor other
third parties have taken action of liability against
the Directors of CANSA.
(v) There are no pending or threatened lawsuits,
proceedings, etc. to enforce CANSA's compliance with
environmental or occupational laws or regulations or
otherwise to establish environmental liabilities
against or to seek penalties from CANSA.
(vi) CANSA is not aware of any circumstances that
might interfere with continued compliance with
environmental statutes, regulations and permits or
that would give rise to future liabilities or
enforcement actions.
13.- Changes and other adverse circumstances.
No material adverse change has taken place, neither do
they have knowledge of any circumstance that could entail
or that could have a negative impact on the properties of
CANSA.
14.- Information.
(i) All the information supplied by the
representatives and employees of CANSA or by the
Sellers is true and accurate in all material
aspects.
(ii) There is no information known to CANSA and not
expressly mentioned in the preceding paragraphs that
could adversely impair the contents of this Basis of
Purchase.
