UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For the
quarterly period ended March 31, 1999
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition from to
Commission File No. 027222
CFC INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 36-3434526
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 State Street, Chicago Heights, Illinois 60411
Registrant's telephone number, including
area code: (708) 891-3456
Indicated by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES ( X ) NO ( )
As of May 12, 1999, the Registrant had issued and outstanding 4,049,572 shares
of Common Stock, par value $.01 per share, and 518,169 shares of Class B Common
Stock, par value $.01 per share.
CFC INTERNATIONAL, INC.
INDEX TO FORM 10-Q
Page
Part I - Financial Information:
Item 1 - Financial Statements
Consolidated Balance Sheets - March 31, 1999 and
December 31, 1998................................... 3
Consolidated Statements of Income for the
three (3) months ended March 31, 1999
and March 31, 1998.................................. 4
Consolidated Statements of Cash Flows for the
three (3) months ended March 31, 1999
and March 31, 1998.................................. 5
Notes to Consolidated Financial Statements.......... 6-7
Item 2 - Management's Discussion and Analysis
of Financial Condition and Results of Operations.... 8-11
Part II - Other Information:
Item 6. Exhibits........................................ 12
Signatures............................................... 13
Part I
Item 1. Financial Statements
CFC INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS AT
MARCH 31, 1999 AND DECEMBER 31, 1998
March 31, December 31,
1999 1998
---- ----
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ............... $ 2,461,534 $ 5,434,595
Accounts receivable, less allowance for
doubtful accounts of $1,180,646 and
$625,000 respectively ................ 11,258,393 7,767,135
Employee receivable ..................... 36,589 35,653
Inventories:
Raw materials ........................ 1,430,491 1,281,868
Work in process ...................... 1,566,017 1,233,287
Finished goods ....................... 8,634,565 4,919,531
------------ ------------
11,631,073 7,434,686
Prepaid expenses and other
current assets ....................... 1,146,640 687,506
Deferred income taxes ................... 868,976 868,976
------------ ------------
Total current assets .............. 27,403,205 22,228,551
------------ ------------
PROPERTY, PLANT AND
EQUIPMENT, NET ....................... 26,481,561 15,323,705
Other assets ............................ 1,953,868 1,727,440
------------ ------------
Total assets ...................... $ 55,838,634 $ 39,279,696
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt ....... $ 3,982,020 $ 1,347,693
Accounts payable ........................ 5,038,886 2,187,784
Accrued environmental liability ......... 244,937 244,937
Accrued bonus ........................... 102,079 550,944
Accrued vacation ........................ 542,602 559,357
Other accrued expenses and
current liabilities .................. 5,110,640 2,031,484
------------ ------------
Total current liabilities ......... 15,021,164 6,922,199
------------ ------------
DEFERRED INCOME TAXES ................... 1,443,607 2,110,274
LONG-TERM DEBT .......................... 16,712,387 9,276,587
------------ ------------
Total liabilities ................. 33,177,158 18,309,060
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value,
10,000,000 shares authorized 4,378,771
and 4,226,469 shares issued at
March 31, 1999 and December 31, 1998 . 43,304 42,281
Class B common stock, $.01
par value, 750,000 shares
authorized, 518,169 shares
issued and outstanding at
March 31, 1999 and December 31, 1998 . 5,182 5,182
Additional paid-in capital .............. 11,464,091 10,551,354
Retained earnings ....................... 12,761,925 11,979,842
Cumulative translation adjustment ....... (221,855) (216,852)
------------ ------------
24,052,647 22,361,807
Less 331,346 and 331,346
treasury shares of common stock,
at cost at March 31, 1999
and December 31, 1998 ................ (1,391,171) (1,391,171)
------------ ------------
22,661,476 20,970,636
Total liabilities and
stockholders' equity ................. $ 55,838,634 $ 39,279,696
============ ============
The accompanying notes are an integral part of
the financial statements.
CFC INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
Three Months Ended March 31,
1999 1998
---- ----
(Unaudited)
Net sales ......................... $ 13,004,066 $ 12,661,137
Cost of goods sold ................ 8,263,307 7,796,135
------------ ------------
Gross profit ...................... 4,740,760 4,865,002
Marketing and selling expenses .... 1,405,605 1,358,197
General and administrative expenses 1,356,779 1,114,042
Research and development expenses . 397,146 366,247
------------ ------------
3,159,530 2,838,486
------------ ------------
Operating income .................. 1,581,230 2,026,516
Other expenses:
Interest ..................... 150,384 165,165
Miscellaneous ................ 73,094 19,463
------------ ------------
223,478 184,628
------------ ------------
Income before income taxes
and minority interest ........... 1,357,752 1,841,888
Provision for income taxes ........ 575,669 664,392
------------ ------------
782,083 1,177,496
Minority interest in income
of CFC Applied Holographics ..... -- (139,904)
------------ ------------
Net Income ........................ $ 782,083 $ 1,037,592
============ ============
Basic earnings per share .......... $ 0.17 $ 0.23
Diluted earnings per share ........ $ 0.17 $ 0.23
The accompanying notes are an integral part of
the financial statements.
CFC INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
Three Months Ended March 31,
1999 1998
---- ----
(Unaudited)
Cash flow from operating activities:
Net income .......................... $ 782,083 $ 1,037,592
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization .... 608,322 574,893
Minority interest in
CFC Applied Holographics ....... -- 139,924
Changes in assets and liabilities:
Accounts receivable ............ (213,647) (121,285)
Inventories .................... 572,191 480,852
Employee receivable ............ (936) --
Prepaid expenses and other
current assets ............... (581,451) (137,317)
Accounts payable ............... 966,890 320,773
Accrued vacation ............... (16,755) (534)
Accrued bonus .................. (448,865) 298,981
Accrued expenses and other
current liabilities .......... (194,372) 18,372
----------- -----------
Net cash provided by
operating activities ................. 1,474,460 2,612,251
----------- -----------
Cash flows from investing activities:
Additions to property, plant
and equipment ...................... (1,055,621) (508,744)
Cash paid for acquired business .... (3,265,301) --
----------- -----------
Net cash used in investing activities .. (4,320,922) (508,744)
----------- -----------
Cash flows from financing activities:
Proceeds from term loans ............. 10,981 --
Repayment of term loans .............. (162,118) (27,876)
Repayment of capital lease ........... (6,619) (18,165)
Net proceeds and disbursements
of loans to employees .............. -- (5,288)
Proceeds from issuance of stock ...... 36,160 27,345
Purchase of treasury stock ........... -- (645,495)
----------- -----------
Net cash (used in)/provided
by financing activities .............. (121,596) (669,479)
----------- -----------
Effect of exchange rate changes
on cash and cash equivalents ......... (5,003) (6,428)
----------- -----------
Increase (decrease) in cash
and cash eqivalents .................. (2,973,061) 1,427,600
Cash and cash equivalents:
Beginning of period ................. 5,434,595 1,841,070
----------- -----------
End of Period ....................... $ 2,461,534 $ 3,268,670
=========== ===========
The accompanying notes are an integral part of
the financial statements.
CFC INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 AND 1998
(Unaudited)
Note 1. Basis of Presentation
In the opinion of management, the accompanying unaudited interim consolidated
financial statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the financial position of CFC
International, Inc. (the Company) as of March 31, 1999 and December 31, 1998,
the results of operations for the three (3) months ended March 31, 1999 and
1998, and statements of cash flows for the three (3) months ended March 31, 1999
and 1998.
The unaudited interim consolidated financial statements included herein have
been prepared pursuant to the rules and regulations for reporting on Form 10-Q.
Accordingly, certain information and footnote disclosures normally accompanying
the annual consolidated financial statements have been omitted. The interim
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
latest annual report on Form 10-K.
Results for an interim period are not necessarily indicative of results for the
entire year and such results are subject to year-end adjustments and an
independent audit.
Certain prior year amounts have been reclassified to conform to current year
presentation.
Note 2. Adoption of New Accounting Standard
Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 "Reporting Comprehensive Income." This statement requires that
all items recognized under accounting standards as components of comprehensive
income be reported in an annual financial statement that is displayed with the
same prominence as other annual financial statements. This Statement also
requires that an entity classify items of other comprehensive income by their
nature in an annual financial statement. For example, other comprehensive income
may include foreign currency translation adjustments, minimum pension liability
adjustments, and unrealized gains and losses on marketable securities classified
as available-for-sale. Annual financial statements for prior periods will be
reclassified, as required. The Company's total comprehensive income was as
follows:
Three Months Ended March 31,
1999 1998
---- ----
Net earnings ................................. $ 782,083 $1,037,592
Less: foreign currency translation adjustment 5,003 94,138
---------- ----------
Total comprehensive income ................... $ 777,080 $ 943,454
========== ==========
Note 3. Earnings Per Share
March 31, 1999 March 31, 1998
------------------------ -------------------------
Per Per
Income Shares Share Income Shares Share
------ ------ ----- ------ ------ -----
Basic Earnings
Per Share:
Income available
to Common Stockholders...$782,083 4,565,595 $.17 $1,037,592 4,465,608 $.23
Effect of Dilutive
Securities:
Options exercisable..... 2,663 7,227
Convertible debt........ 24,000 190,476 27,000 214,286
Diluted Earnings
per Share................$806,083 4,758,704 $.17 $1,064,592 4,687,121 $.23
Note 4. Acquisition of Oeserwerk
On March 19, 1999, the Company acquired substantially all of the assets and
assumed substantially all of the liabilities of Oeserwerk KG for a total cost of
approximately $17 million. Oeserwerk is a manufacturer that applies coatings to
a plastic film from which its customers transfer the dry coating to their
products. The products include printed woodgrain patterns, simulated metal and
pigmented products for the graphics and bookbinding industries. The Oeserwerk
assets consisted principally of buildings and land valued at approximately $6.1
million, machinery and equipment valued at approximately $4.5 million, and trade
accounts receivables and inventory valued at approximately $8.3 million. The
Company financed the acquisition with $3.3 million cash and the issuance of
100,000 shares of restricted common stock. In addition, the Company assumed
approximately $12.3 million of Oeserwerk's debt, and refinanced this debt with
the Deutsche Bank and ABN-AMRO Deutschland. The results of operations of
Oeserwerk since the acquisition have been included in the accompanying
consolidated financial statements since March 19, 1999.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
- --------
The Company formulates, manufactures, and sells chemically-complex, transferable
multi-layer coatings for use in many diversified markets such as furniture and
building products, pharmaceutical products, transaction cards (including credit
cards, debit cards, ATM cards, and access cards), intaglio printing, and on
holographic packaging and authentication seals.
The Company's gross profit reflects the application of all direct product costs
and direct labor, quality control, shipping and receiving, maintenance, process
engineering, plant management, and a substantial portion of the Company's
depreciation expense. Selling, general, and administrative expenses are
primarily composed of sales representatives' salaries and related expenses,
commissions to sales representatives, advertising costs, management
compensation, related depreciation, and corporate audit and legal expense.
Research and development expenses include salaries of technical personnel,
related depreciation, and experimental materials.
Results of Operations
- ---------------------
The following table sets forth, for the periods indicated, certain items from
the Company's consolidated financial statements as a percentage of net sales for
such period.
Quarter Ended March 31,
1999 1998
---- ----
Net sales ............................... 100.0% 100.0%
Cost of sales ........................... 63.5 61.6
Gross profit ............................ 36.5 38.4
Selling, general and administrative ..... 21.2 19.5
Research and development ................ 3.1 2.9
Operating income ........................ 12.2 16.0
Interest expense and other .............. 1.8 1.5
Income before taxes and minority interest 10.4 14.5
Provision for income taxes .............. 4.4 5.2
Minority interest ....................... -- 1.1
----- -----
Net income .............................. 6.0% 8.2%
===== =====
Quarter Ended March 31, 1999 Compared to Quarter Ended March 31, 1998
- ---------------------------------------------------------------------
Net sales for the quarter ended March 31, 1999 increased 2.7% to $13.0 million,
from $12.7 million for the quarter ended March 31, 1998. Printed product sales
decreased 2.2% to $4.4 million, from $4.5 million primarily due to softness in
the markets the Company serves. Pharmaceutical product sales decreased 6.4% to
$2.2 million, from $2.3 million, primarily due to an unusually large order in
1998 to fill the inventory requirements of a Baxter Healthcare acquisition.
Security product (mag stripe, signature panels, tipping products for credit
cards and intaglio printed products) sales decreased 14.5% to $2.2 million, from
$2.6 million. This decrease was primarily a result of a decline in magnetic
sales, from customers liquidating existing inventories in anticipation of an
industry-wide transition to a higher oersted product by mid-1999. An oersted is
a measure of electronic energy required to encode magnetic stripes. In addition,
a weak initial public offering market caused a smaller demand for stock
certificates. Sales of simulated metal and other pigmented products increased
24.7% to $1.8 million, from $1.4 million, primarily due to the Oeserwerk
acquisition which added approximately $800,000 in net sales to this category
offset by the sales erosion in lower margined products. Holographic product
sales increased 33.4% to $2.4 million for the quarter ended March 31, 1999,
compared to $1.8 million for the quarter ended March 31, 1998. This increase was
due primarily to strong demand for authentication labels from a major toy
producer and continuing demand for holographic packaging, as it becomes an
important part of brand identification.
Gross profit for the quarter ended March 31, 1999 decreased 2.6% to $4.7
million, from $4.9 million for the quarter ended March 31, 1998 as a result of
lower historical sales and higher manufacturing costs. The gross profit margin
for the quarter ended March 31, 1999 decreased to 36.5% from 38.4% for the
quarter ended March 31, 1998. The decrease in gross profit was attributable to
less sales on a historical based business resulting in the Company's fixed costs
being a higher percentage of net sales.
Selling, general, and administrative expenses for the quarter ended March 31,
1999 increased 11.3% to $2.8 million from $2.5 million for the quarter ended
March 31, 1998. This increase was primarily due to the additional $130,000 in
operating expenses attributable to the Oeserwerk acquisition and higher
employment and related costs. Selling, general, and administrative expenses for
the quarters ended March 31, 1999 increased as a percent of net sales to 21.2%
from 19.5% for the quarter ended March 31, 1998. This increase in percentage was
primarily due to the reasons noted above.
Research and development expenses for the quarter ended March 31, 1999 increased
8.4% to $397,000 from $366,000 for the quarter ended March 31, 1998. Research
and development expenses for the quarter ended March 31, 1999 increased as a
percentage of net sales, to 3.1% from 2.9% for the quarter ended March 31, 1998.
This increase in percentage was primarily due to the increase in personal costs
attributable to the relocation of the holographics origination laboratory to the
Northern Bank Note facility.
Operating income for the quarter ended March 31, 1999 decreased 22.0% to $1.6
million, from $2.0 million for the quarter ended March 31, 1998. The decrease in
operating income is primarily due to the decrease in gross profit and increase
in operating expenses noted above. Operating income for the quarter ended March
31, 1999 decreased as a percentage of net sales to 12.2% from 16.0% for the
quarter ended March 31, 1998. This decrease is primarily due to a decrease in
gross profit as a percentage of net sales and increased operating expenses, as
also explained above.
Interest expense for the quarter ended March 31, 1999 decreased 8.9% to
$150,000, from $165,000 for the quarter ended March 31, 1998. This decrease was
primarily due to the refinancing of the mortgage on the Company's Chicago
Heights facility at a lower rate of interest. Going forward, interest costs are
expected to increase by $125,000 per quarter, due to the Oeserwerk acquisition.
Income taxes for the quarter ended March 31, 1999 decreased to $576,000 from
$664,000 for the quarter ended March 31, 1998. The provision decreased to 4.4%
of sales for the quarter ended March 31, 1999 from 5.2% of sales for the quarter
ended March 31, 1998 due to the decrease in operating income as a percentage of
sales.
Net income for the quarter ended March 31, 1999 decreased 24.6% to $782,000,
from $1,037,592 for the quarter ended March 31, 1998. This decrease in net
income is primarily due to the decrease in operating income explained above.
Liquidity and Capital Resources
- -------------------------------
Working capital, consisting predominately of inventories and receivables,
decreased from $15.3 million at December 31, 1998 to $12.4 million at March 31,
1999. This decrease was primarily due to an increase in short-term borrowings
and operating liabilities assumed as part of the acquisition of Oeserwerk. Short
term borrowings increased from $1.3 million at December 31, 1998 to $4.9 million
at March 31, 1999. Operating liabilities increased from $5.6 million at December
31, 1998 to $11.1 million at March 31, 1999. These were offset by a $4.8 million
increase in inventory and a $3.6 million increase in accounts receivables due
entirely to the acquisition of Oeser's assets.
During the first quarter of 1999, the Company made no borrowings against the
revolving credit agreement maintained with the Company's primary bank. This
agreement, which expires April 1, 2001 is unsecured and provides for borrowings
up to $4,500,000. The Company believes that the net cash provided by operating
activities and amounts available under the revolving credit agreement are
sufficient to finance the Company's growth.
Quantitative and Qualitative Disclosures About Market Risk
- ----------------------------------------------------------
The Company does not use derivative financial instruments to address interest
rate, currency, or commodity pricing risks. The following methods and
assumptions were used to estimate the fair value of each class of financial
instruments held by the Company for which it is practicable to estimate that
value. The carrying amount of cash equivalents approximates fair value because
of the short maturity of those instruments. The estimated fair value of the
Company's long-term debt approximated its carrying value at March 31, 1999 and
1998 based upon market prices for the same or similar type of financial
instrument.
Item 6. EXHIBITS
(a) Exhibits
Exhibit
Number
------
10.1 Second Amendment to Amended and Restated Loan Agreement
10.2(a) Share Purchase Agreement
10.2(b) Agreement Concerning Waiving of Claims
10.2(c) Reimbursement Agreement
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, on May 1, 1999.
CFC INTERNATIONAL, INC.
Dennis W. Lakomy
Vice President, Chief Financial Officer,
Secretary, and Treasurer
(Principal Financial Officer)
Jeffrey E. Norby
Controller
(Principal Accounting Officer)
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
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0
0
<COMMON> 22,661,476
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<TOTAL-REVENUES> 13,004,066
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<TOTAL-COSTS> 8,263,307
<OTHER-EXPENSES> 2,978,773
<LOSS-PROVISION> 253,851
<INTEREST-EXPENSE> 150,384
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<INCOME-TAX> 575,669
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SECOND AMENDMENT
TO AMENDED AND RESTATED LOAN AGREEMENT
This SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
(this "Amendment") is made as of March 19, 1999 by and between CFC
INTERNATIONAL, INC., a Delaware corporation ("Borrower") and LASALLE BANK
NATIONAL ASSOCIATION, a national banking association ("Bank").
BACKGROUND
A. Borrower and Bank are parties to an Amended and Restated
Loan Agreement dated as of April 1, 1998, as amended as of November 13, 1998 (as
the same may be hereafter amended, modified or supplemented from time to time,
the "Loan Agreement"), pursuant to which Bank has made revolving loans and
advances in an aggregate principal amount outstanding not to exceed $4,500,000
to Borrower (the "Revolving Loan");
B. Borrower has requested that Bank (i) extend the maturity of
the Revolving Loan and (ii) modify certain financial covenants, and Bank is
willing to make such modifications provided that Borrower enter into this
Amendment and upon the terms and conditions set forth herein.
C. Terms used herein but not defined herein shall have the
meanings assigned to them in the Loan Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual promises herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:
SECTION 1 AMENDMENTS TO LOAN AGREEMENT
1.1 Section 1 of the Loan Agreement is hereby amended by
deleting the date "April 1, 2000" in the definition of "Revolving Loan Maturity
Date" and by inserting in its place the date "April 1, 2001".
1.2 Section 10.1 is hereby amended by deleting the amount
"$12,000,000" in the second line thereof and by inserting in its place the
amount "$15,000,000".
1.3 Section 10.2 is hereby amended by deleting the phrase "2.0
to 1" in the third line thereof and by inserting in its place the phrase "2.5 to
1".
SECTION 2 REPRESENTATIONS AND WARRANTIES
To induce Bank to amend the Loan Agreement and grant its
consent and the requested waiver, Borrower represents and warrants to Bank that:
2.1 Compliance with Loan Agreement. On the date hereof,
Borrower is in compliance with the terms and provisions set forth in the Loan
Agreement (as modified by this Amendment) and no Event of Default specified in
Section 11 of the Loan Agreement, nor any event which would, upon notice or
lapse of time, or both, constitute such an Event of Default, has occurred.
2.2 Representations and Warranties. On the date hereof, the
representations and warranties and covenants set forth in Sections 7, 8, 9 and
10 of the Loan Agreement (as modified by this Amendment) are true and correct
with the same effect as though such representations and warranties and covenants
had been made on the date hereof, except to the extent that such representations
and warranties and covenants expressly relate to an earlier date.
2.3 Corporate Authority of Borrower. Borrower has full power
and authority to enter into this Amendment and to incur and perform the
obligations provided for under this Amendment and the Loan Agreement, all of
which have been duly authorized by all proper and necessary corporate action. No
consent or approval of stockholders or of any public authority or regulatory
body is required as a condition to the validity or enforceability of this
Amendment.
2.4 Amendment as Binding Agreement. This Amendment constitutes
the valid and legally binding obligation of Borrower, fully enforceable against
Borrower, in accordance with its terms.
2.5 No Conflicting Agreements. The execution and performance
by the Borrower of this Amendment will not (i) violate any provision of law, any
order of any court or other agency of government, or the Articles of
Incorporation or By-Laws of Borrower, (ii) violate any indenture, contract,
agreement or other instrument to which Borrower is a party, or by which its
property is bound, or be in conflict with, result in a breach of or constitute
(with due notice and/or lapse of time) a default under, any such indenture,
contract, agreement or other instrument or result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon any of the
property or assets of Borrower.
SECTION 3 CONDITIONS PRECEDENT
The agreement by Bank to amend the Loan Agreement is subject
to the following conditions precedent:
3.1 Borrower shall have delivered to Bank a replacement
Revolving Loan Note in the original principal amount of $4,500,000, made by
Borrower and payable to the order of Bank, in the form of Exhibit A attached
hereto.
3.2 Borrower shall have provided to Bank certified copies of
the unanimous written consent of its Board of Directors authorizing the
execution, delivery and performance by the Borrower of this Amendment and the
agreements, instruments and documents executed in connection herewith.
SECTION 4 GENERAL PROVISIONS
4.1 Except as amended by this Amendment, the terms and
provisions of the Loan Agreement shall remain in full force and effect and are
hereby affirmed, confirmed and ratified in all respects. Borrower ratifies,
confirms and affirms without condition, all liens and security interests granted
to the Bank pursuant to the Loan Agreement and the Loan Documents, and such
liens and security interests shall continue to secure the obligations and
liabilities of Borrower to Bank, including but not limited to, all loans made by
the Bank to the Borrower under the Loan Agreement as amended by this Amendment.
4.2 This Amendment shall be construed in accordance with and
governed by the laws of the State of Illinois, and the obligations of Borrower
under this Amendment are and shall arise absolutely and unconditionally upon the
execution and delivery of this Amendment.
4.3 This Amendment may be executed in any number of
counterparts.
4.4 Borrower hereby agrees to pay all out-of-pocket expenses
incurred by Bank in connection with the preparation, negotiation and
consummation of this Amendment, and all other documents related thereto,
including without limitation, the reasonable fees and expense of Bank's counsel,
and any filing fees required in connection with the filing of any documents
necessary to consummate the provisions of this Amendment.
4.5 On or after the effective date hereof, each reference in
the Loan Agreement or any of the Loan Documents to this "Agreement" or words of
like import, shall unless the context otherwise requires, be deemed to refer to
the Loan Agreement as amended hereby.
(Remainder of page intentionally left blank)
IN WITNESS WHEREOF, Borrower and Bank have caused this
Amendment to be duly executed by their duly authorized officers, all as of the
date and year first above written.
CFC INTERNATIONAL, INC.
By: _________________________
Title:_______________________
LASALLE BANK NATIONAL
ASSOCIATION
By: _________________________
Title: ______________________
Exhibit A to Second Amendment
REVOLVING NOTE
$4,500,000 March 19, 1999
CFC International, Inc., a Delaware corporation (the
"Borrower"), for value received, hereby promises to pay to the order of LaSalle
Bank National Association, a national banking association (the "Bank"), on April
1, 2001, the principal sum of Four Million Five Hundred Thousand Dollars
($4,500,000), or such lesser amount of all of the then outstanding advances made
by the Bank to the Borrower pursuant to Section 2 of the "Loan Agreement" (as
hereinafter defined), together with interest on any and all principal amounts
remaining unpaid hereunder from time to time from the date hereof until paid at
the rates and payable as provided in the Loan Agreement.
Any amount of interest or principal hereof which is not paid
when due, whether on a Monthly Payment Date, at stated maturity, by acceleration
or otherwise, shall bear interest payable on demand at the "Default Rate" (as
such term is defined in the Loan Agreement).
All payments of principal and interest on this Note shall be
payable in lawful money of the United States of America. In no event shall the
interest payable exceed the highest rate permitted by law. Principal and
interest shall be paid to the Bank at its office at 4747 West Irving Park Road,
Chicago, IL 60641 or at such other place as the holder of this Note may
designate in writing to the Borrower. The Bank may charge any deposit or other
account maintained by the Borrower with the Bank or any of the Bank's affiliates
amounts equal to all payments of principal, accrued interest and fees from time
to time as they come due and payable hereunder or under any agreement pursuant
to which this Note was issued. All payments hereunder shall be applied as
provided in the Loan Agreement. In determining the Borrower's liability to the
Bank hereunder, the books and records of the Bank shall be controlling absent
manifest error.
This Note evidences certain indebtedness incurred under the
Amended and Restated Loan Agreement, dated as April 1, 1998, as amended as
November 13, 1998 and as of the date hereof, between the Borrower and the Bank
(the "Loan Agreement"), to which reference is hereby made for a statement of the
terms and conditions under which the due date of this Note or any payment
thereon may be accelerated or is automatically accelerated, or under which this
Note may be prepaid or is required to be prepaid. All capitalized terms used
herein shall, unless otherwise defined herein, have the meanings set forth in
the Loan Agreement. The holder of this Note is entitled to all of the benefits
provided in said Loan Agreement and the Loan Documents referred to therein. The
Borrower agrees to pay all reasonable costs of collection and all reasonable
attorneys' fees paid or incurred in enforcing any of the Bank's rights hereunder
promptly on demand of the Bank and as more fully set forth in the Loan
Agreement.
Upon the occurrence of an Event of Default under the Loan
Agreement, the outstanding indebtedness evidenced by this Note, together with
all accrued interest, shall be due and payable in accordance with the terms of
the Loan Agreement, without notice to or demand upon the Borrower, and the Bank
may exercise all of its rights and remedies reserved to it under the Loan
Agreement or applicable law.
The Borrower, endorsers and all other parties to this Note
waive presentment, demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement of
this Note and the Loan Agreement. In any action on this Note, the Bank or its
assignee need not file the original of this Note, but need only file a photocopy
of this Note certified by the Bank or such assignee to be a true and correct
copy of this Note.
No delay on the part of the Bank in exercising any right under
this Note, any security agreement, guaranty or other undertaking affecting this
Note, shall operate as a waiver of such right or any other right under this
Note, nor shall any omission in exercising any right on the part of the Bank
under this Note operate as a waiver of any other rights.
If any provision of this Note or the application thereof to
any party or circumstance is held invalid or unenforceable, the remainder of
this Note and the application of such provision to other parties or
circumstances will not be affected thereby and the provisions of this Note shall
be severable in any such instance. All references to the singular shall be
deemed to include the plural, and vice versa, where the context so requires.
THE BORROWER HEREBY WAIVES ANY RIGHT THE BORROWER MAY NOW OR
HEREAFTER HAVE TO SUBMIT ANY CLAIM, ISSUE OR DEFENSE ARISING HEREUNDER OR UNDER
THE OTHER DOCUMENTS RELATING TO THIS NOTE TO A TRIAL BY JURY.
This Note constitutes a renewal and restatement of, and
replacement and substitution for, the Revolving Note dated April 1, 1998 of the
Borrower made payable to the order of Bank in the principal amount of Four
Million Five Hundred Thousand Dollars ($4,500,000.00) (the "Original Note"). The
indebtedness evidenced by the Original Note is continuing indebtedness, and
nothing herein shall be deemed to constitute a payment, settlement or novation
of the Original Note, or to release or otherwise adversely affect any lien,
mortgage or security interest securing such indebtedness or any rights of the
Bank against any guarantor, surety or other party primarily or secondarily
liable for such indebtedness.
This Note shall be deemed to have been made under and shall be governed
in accordance with the internal laws and not the conflict of law rules of the
State of Illinois.
CFC INTERNATIONAL, INC.
-------------------------------------
By:
Title:
SHARE PURCHASE
Share purchase contract
among
1. Dr. Ernst Georg Oeser, Kurze Strasse 4, 73092 Heiningen;
2. Heinz-Jochen Oeser, Herrschaftsstrasse 50, 73087 Boll;
3. Florian Oeser, Haldenweg 20, 73087 Boll;
4 Jochen Oeser, Herrschaftsstrasse 50, 73087 Boll
- hereinafter referred to jointly as "Sellers" -
and
5. SESVENNA 19. Vermogensverwaltungs GmbH1, Munich, in the future to be
operating as CFC Oeserwerk GmbH, Rigistrasse 20, 73037
Goppingen
- hereinafter referred to as "purchaser" -
as well as
6. CFC International, Inc., 500 State Street, Chicago Heights, IL 60411,
USA
- hereinafter referred to as "CFC" -
Prefatory Notes
1. SELLERS Florian Oeser and Jochen Oeser are partners with unlimited
liability while SELLERS Dr. Ernst Georg Oeser and Heinz-Jochen Oeser
are partners with limited liability in the Oeserwerk Ernst Oeser &
Sohne KG, domiciled in Goppingen, entered in the Register of Companies
at the Civil Court at Goppingen at Roll Number 1400 (hereinafter
referred to as the "company").
The COMPANY operates an enterprise engaged in the manufacture and
distribution of films and similar products, of products which result
from an advanced development in this field, and of machines which serve
to treat or process these products.
2. The COMPANY is in each case the sole partner in the Oeser France SARL
and in the Oeser Italia S.r.l. (the "SUBSIDIARIES"). The SUBSIDIARIES
and the COMPANY are referred to jointly as the COMPANIES.
3. The COMPANY is the owner of the following pieces of real property
(the "Properties") in Caputh:
a) Plot Nos. 193, 195, 199 and 203 in Plat 1, entered in the Land
Register at the Civil Court at Caputh, for Caputh,
Sheet 641.;
b) Plot No. 194 in Plat 1, entered in the Land Register at the
Civil Court at Caputh, for Caputh, Sheet 940.
c) Plot No. 200 in Plat 1 and Plot No. 81 in Plat 10, each
entered in the Land Register at the Civil Court at Caputh,
for Caputh, Sheet 852.
In accordance with the wishes of the parties to this contract the
Properties are to be withdrawn by the PARTNERS. To this end the
Properties were transferred with the document of Notary Public Goser,
located in Sussen, dated March 18, 1999, to the Grundstucksgesellschaft
Krahenburg-Caputh GmbH & Co. KG.
Moreover the PARTNERS, also on March 18, 1999, have withdrawn from the
COMPANY's assets the claims to restitution for properties situated in
the territory demarcated in Article 3 of the German Unification Treaty,
doing so with the document of the Notary Public Goser, located in
Sussen, transferring these claims to the Grundstucksgesellschaft
Krahenburg-Caputh GmbH & Co. KG.
4. All the shares in the PURCHASER are held by the SESVENNA 20.
Vermogensverwaltungs GmbH, Munich, to be operating in the future as CFC
Oeser Europe GmbH, Goppingen (hereinafter referred to as "CFC EUROPE")
this being an indirect subsidiary of CFC. CFC is an enterprise which
also engages in the manufacture and sale of films and similar products.
CFC desires to manufacture and distribute these products in Europe as
well. CFC consequently intends to acquire all the shares in the
COMPANY, acting indirectly through the PURCHASER. To this end the
parties to the contract agree as follows:
Section 1
Ownership of the COMPANY
1. The following persons are today unlimited-liability partners in the COMPANY,
holding the following capital shares:
a) Mr. Florian Oeser DM 152,977.00
b) Mr. Jochen Oeser DM 76,351.00
-------------------------
Total of capital shares held by the
unlimited-liability partners DM 229,328.00
2. On December 31, 1998, the following persons were limited-liability
partners in the COMPANY, holding the following capital shares:
a) Dr. Ernst Georg Oeser DM 448,114.00
b) Mr. Heinz-Jochen Oeser DM 1,011,714.00
c) Ms. Ursula Donner-Plenio DM 575,791.00
d) Ms. Rosemarie Eccardt DM 627,029.00
e) Ms. Dr. Helga Geitmann DM 718,595.00
f) Ms. Irmgard Haesler DM 105,131.00
g) Ms. Margret Kullmer DM 108,294.50
h) Ms. Christiane Morel DM 246,558.00
i) Ms. Ingeborg Oeser DM 238,492.00
j) Dr. Henning Oeser DM 631,704.00
k) Ms. Angelika Schnarrenberger DM 108,294.50
l) Ms. Elisabeth Schubert DM 765,079.00
m) Ms. Claire Straass DM 346,403.00
n) Ms. Ruth Vocke DM 105,222.00
o) Mr. Peter-Christian Eccardt DM 127,038.00
p) Mr. Jens Geitmann DM 103,665.00
q) Ms. Jutta Geitmann-Hampe DM 103,665.00
r) Ms. Veronika Lieckfeld DM 76,351.00
s) Ms. Angelika Mausolff DM 122,362.00
t) Ms. Fredericke Oellbrunner DM 152,978.00
u) Ms. Nicole-Bettina Goldmann DM 70,119.00
v) Ms. Sabine Oeser DM 76,351.00
w) Mr. Heinz-Werner Schubert DM 274,813.00
x) Mr. Wolff-Dietrich Schubert DM 274,813.00
y) Ms. Stephanie Straass DM 76,351.00
-------------------------
Total of capital shares held by
the limited-liability partners DM 7,494,927.00
=========================
3. After December 31, 1998, Ms. Jutta Geitmann-Hampe assigned her
limited-liability share, at a value of DM 103,665.00, to Mr. Jens
Geitmann. Ms. Jutta Geitmann-Hampe has thus departed from the COMPANY.
The positive balance in her private account, in the amount of DM
3,963.38, has been paid out to her.
4. The unlimited-liability partners in the COMPANY listed at Paragraph 1
and the limited-liability partners in the COMPANY listed in Paragraph 2
are referred to hereinafter jointly as the "PARTNERS."
5. The SELLERS will acquired the shares of all those PARTNERS who are not
included among the SELLERS, in each case under the suspensive condition
that the purchase price as per Section 3, Paragraph 1, has been paid
and the STOCK as per Section 3, Paragraph 2, has been transferred, so
that the nominal value of all the PURCHASER's capital shares at the
COMPLETION DATE (cf. Section 2, Paragraph 2) will amount to DM
7,724,255.00. The PURCHASER is aware that the capital shares on
December 31, 1998, were diminished by losses to a total of DM
6,254,018.00 (in words: six million two hundred fifty four thousand and
eighteen Deutschmark).
Section 2
Purchase and assignment
1. The SELLERS sell herewith, with economic effect on March 19, 1999, all
capital shares in the COMPANY, with a total nominal value of DM
7,724,255.00 (hereinafter referred to as the "shares"). The PURCHASER
herewith accepts the sale. Also sold are all credit balances in the
partners' accounts on March 19, 1999, and in particular any of the
PARTNERS' claims in respect of loans made to the COMPANY, with the
exception of the balance in her private account paid out to Ms. Jutta
Geitmann-Hampe as per Section 1, Paragraph 3.
2. The SELLERS herewith assign all SHARES, with economic effect on March
19, 1999, to the PURCHASER, who accepts the same. Also assigned at the
same time are all credit balances in the partners' accounts on March
19, 1999, and in particular claims in respect of loans made to the
COMPANY. The real transfer of title to the SHARES and all credit
balances in the partners' accounts on March 19, 1999, with the
exception of the item specified in Section 1, Paragraph 3, is subject
to the following suspensive conditions:
a) Payment in full of the purchase price as specified in Section 3,
Paragraph 1; b) The transfer of the STOCK and any associated documents
as specified in Section 3, Paragraph 2; c) The satisfaction of the
PURCHASER's obligations as per Section 4, Paragraphs 2 and 3; d) The
acquisition of all SHARES by the SELLERS.
The day upon which the suspensive conditions listed above at a) to
d) have been satisfied is referred to hereinafter as the "COMPLETION
DATE".
3. The sellers Dr. Ernst Georg Oeser and Florian Oeser undertake to
relieve the PURCHASER from the COMPANY's retirement pension obligations
vis a vis employees and former employees. If after the present day the
PURCHASER or the COMPANY discharges pension obligations in accordance
with Clause 1, then the PURCHASER shall be entitled to claim
reimbursement for the sellers Dr. Ernst Georg Oeser and Florian Oeser.
4. The SELLERS have by way of the declaration contained in Annex 2.4
waived all claims vis a vis the COMPANY and in particular all claims to
retirement benefits and remunerations, to include remunerations for
partners' inventions and royalties based on the COMPANY's Articles of
Association, including their annexes.
Section 3
Purchase price
1. The total purchase price for the SHARES amounts to DM 6,000,000.00 (in
words: six million Deutschmark). It shall be remitted, discharging all
indebtedness vis a vis the SELLERS, to the special account "Verkauf
Oeserwerk", Account number 222265 at the Deutsche Bank, Goppingen,
Routing Transit Number 610 700 78. The claim to the purchase price
becomes payable within three banking days after fulfillment of the
following prerequisites:
a) Fulfillment of the obligations as per Section 4, Paragraphs 2
and 3;
b) Demonstration vis a vis the PURCHASER that the transfer of all
SHARES to the SELLERS is satisfied only subject to the
suspensive condition that the PURCHASER fulfils its obligation
vis a vis the SELLERS to pay the purchase price, including the
transfer of stock;
c) Effective waiver by the SELLERS and all other shareholders to
all claims against the COMPANY, to include all claims to
pensions, remuneration and royalties based upon the COMPANY's
Articles of Incorporation, to include all annexes to the same;
Crediting to the specified bank account is authoritative in regard to
fulfillment. If the PURCHASER is in default of payment, then interest
shall be paid on the amount not remitted punctually at a rate 3.5% p.a.
above the three-month EURIBOR rate in effect on the date at which the
purchase price becomes due.
2. The PURCHASER shall transfer to the PARTNERS (Section 428, German Civil
Code), with real effect at the latest ten banking days following the
fulfillment of the conditions specified above in Paragraph 1,
Letters a) to c) a total of 100,000 (in words: one hundred thousand)
voting shares in CFC, so-called "Common Stock" (hereinafter referred to
as "STOCK"). Of those 100,000 shares of STOCK, 55,532 shall be
transferred directly to the PARTNERS, divided, as shown in Annex 3.2;
the other 44,468 shall, as is also shown in Annex 3.2 and in accordance
with Paragraph 3, be given to bank trust administration by the
Deutsche Bank AG, Goppingen Branch Office. The PURCHASER is deemed to
have satisfied its obligations in Clauses 1 and 2 when the Deutsche
Bank AG, Goppingen Branch Office, receives the share certificates for
the STOCK. The STOCK is not registered as per the 1933 Securities Act
in its current version (the "Securities Act") and thus is subject to
the limitations on sale set forth in Rule 144 of the Securities Act in
its current version. The share certificates for the STOCK shall bear a
legend indicating the restriction on disposal. The PURCHASER shall
transfer to the SELLERS, in addition to the stock certificates,
the documents required by the law of the United States of America to
demonstrate the SELLERS' ownership to CFC, to all government agencies,
to the Securities and Exchange Commission, to the stock exchanges and
to every third party which intends to acquire the STOCK or rights to
the STOCK or to a bank which deposits the STOCK in a custodianship
account in favor of the SELLERS.
3. Of the 100,000 shares of STOCK owed in accordance with Paragraph 2, the
PURCHASER is entitled to place in bank trust administration with the
Deutsche Bank AG, Goppingen Branch office, 44,468 shares of STOCK (the
"WITHHELD STOCK"). In accordance with the bank trust administration
agreement to be concluded with the Deutsche Bank AG, access to the
WITHHELD STOCK shall be possible only jointly by the CFC and the
SELLERS; the SELLERS' entitlement to access may be exercised by each
individual SELLER. CFC shall approve the release of the WITHHELD STOCK
to the SELLERS following the expiry of one year following the
COMPLETION DATE but deducting the number shares of WITHHELD STOCK
corresponding to the amount of the claims - calculated in accordance
with Section 8, Paragraph 5, penultimate clause - which the CFC or the
PURCHASER has made good against the SELLERS due to infringement of the
guarantees (Section 7 in conjunction with Section 8) (the "FROZEN
STOCK"). If the CFC or the PURCHASER has made good such a claim within
one year following the COMPLETION DATE, then CFC shall consent to
the release of the FROZEN STOCK in each case to the extent - calculated
as prescribed in Section 8, paragraph 5, penultimate clause - in which
the SELLERS satisfy the claims made good as per Clause 3 or as soon as
it is determined without further possibility of appeal or is
acknowledged in writing by CFC that the claims made good by CFC or the
PURCHASER in accordance with Clause 3 no longer exist.
4. The purchase price shall be reduced by that amount by which the
COMPANY's bank liabilities at the present day exceed the value of DM
18,100,000 (in words: eighteen million one hundred thousand
Deutschmark).
5. If Mr. Roger Hruby sells so many shares of CFC stock that his holdings
in CFC fall below 35% (the "STOCK SALE"), then the PURCHASER shall
ensure that the PARTNERS are granted entitlement to concurrent rights
of sale at the same terms for that percentage of their stock in CFC
which corresponds to the amount of CFC stock sold by Mr. Roger Hruby in
the course of the STOCK SALE seen as a percentage of the total CFC
stock held by Mr. Roger Hruby prior to the STOCK SALE.
Section 4
Exemption from joint liability for debts payable to banks
1. The COMPANY has on March 18, 1999, bank obligations listed in Annex 4.1
vis a vis the credit institutions named there.
2. The PURCHASER undertakes, subject to Paragraph 3, to discharge
completely either itself and/or by way of a company associated with it
the credit obligations as specified in Paragraph 1, up to a maximum
amount of DM 18,100,000.00 (in words: eighteen million one hundred
thousand Deutschmark) or to assume those obligations in such a way that
the banks exempt the SELLERS from personal joint liability. To this end
the PURCHASER shall submit to the SELLERS declarations made by the
banks, with content in the spirit of the following:
"On behalf of the ........ Bank we declare that the .........
bank will lay no claim on the unlimited-liability partners Dr.
Ernst Georg Oeser, Heinz-Jochen Oeser, Florian Oeser and
Jochen Oeser as individuals bearing personal liability for
credit obligations previously incurred, currently in existence
or incurred in the future by the Oeserwerk Ernst Oeser & Sohne
KG or its legal successor."
The obligations from which the SELLERS are released by way of the above
declarations shall amount to a maximum of DM 18,100,000.00, wherein the
PURCHASER may select at its own discretion the obligations which it
assumes and the amount to which it assumes the same if and to the
extent that the total of the obligations exceeds DM 18.100,000.00.
3. The PURCHASER and the SELLERS will to the best of their power attempt
to obtain the statement of exemption from liability as per Paragraph 2
also in regard of the COMPANY's obligations vis a vis the Deutsche
Industrie-Kreditbank (the "IKB OBLIGATIONS"). The PURCHASER does,
however, fulfill its obligations as per Paragraph 2 and in regard to
the IKB OBLIGATIONS even now in that the PURCHASER declares herewith to
hold the SELLERS free of any and all claims resulting from the IKB
OBLIGATIONS and to reimburse to the SELLERS following the COMPLETION
DATE payments made against the IKB OBLIGATIONS.
Section 5
Exemption from liability by the PURCHASER
Over and above the credit obligations to be assumed pursuant to Section 4,
Paragraph 2, the PURCHASER relieves the SELLERS of all debts and obligations
which were incurred, now exist or shall be incurred in conjunction with the
business operations, deriving from the business operations or as a consequence
of the COMPANY's business operations and for which the SELLERS are liable in
accordance with Section 128 of the Handelsgesetzbuch {German Commercial Code}.
This does not apply to obligations (a) which derive from intentional, tort
liability or (b) which would culminate in a claim by the PURCHASER or CFC
against the SELLERS or which for other reasons based on this contract would not
have to be assumed.
Section 6
Company management
1. Mr. Florian Oeser has, prior to the conclusion of the present contract,
concluded with the PURCHASER an employment contract as general manager,
Mr. Jochen Oeser an employment contract as commercial affairs manager.
2. The SELLERS undertake to manage the COMPANY's business up to the
COMPLETION DATE in close coordination with CFC and always within the
framework of orderly business operations and to engage in transactions
beyond the scope of ordinary business operations only with the prior,
written consent of the PURCHASER or CFC.
Section 7
SELLERS' warranties
The SELLERS warrant as follows, referenced to the COMPLETION DATE, wherein
warranties which are given in regard to the COMPANIES are applicable to each
individual COMPANY:
1. that the COMPANY is a limited-liability partnership properly instituted
in accordance with the laws of the Federal Republic of Germany and now
existing;
2. that all facts eligible for entry, shown in the extract from the
Register of Companies enclosed as Annex 7.2, are reflected completely
and truly, and in particular that no resolutions eligible for entry
have been adopted which have not yet been entered in the Register of
Companies;
3. that the limited partnership capital contributions have been paid in
full and, subject to the withdrawal of the assets listed in Clause 2 of
the Prefatory Notes, have not been refunded and that there exists no
obligation for refunding and that they have been diminished in value
due to losses as of December 31, 1998, to an extent which, in total,
does not exceed the value specified in Section 1, Paragraph 5;2 the
PURCHASER is aware that the COMPANY has registered further losses since
December 31, 1998;
4. that the SHARES as described in Section 1 do exist, that they are the
property of the PARTNERS as identified in Section 1, and that they are
not encumbered by any entitlements of third parties, and in particular
that
a) no SHARE has been attached, pledged, assigned by way of
security or for other reasons;
b) there exist no options or other rights of third parties to the
acquisition or encumbrance of any of the SHARES;
c) no SHARE is the subject of any trust;
d) no SHARE or entitlement arising from a SHARE is the subject of
usufructuary rights of third parties, sub-holdings, dormant
partnerships or similar relationships or encumbrances under
company law;
e) the sale of the SHARES to the PURCHASER does not require any
assents which have not yet been given;
f) no insolvency proceedings have been applied for or opened in
regard to the COMPANY's assets or the assets of one or more of
the SELLERS and that there are no circumstance prevailing
which could justify a challenge to the sale of the SHARES in
accordance with bankruptcy laws or the provisions of the
Contestation Act.
Excepted from Letters a), b), c) and d) are entitlements on
the basis of which the SELLERS acquire the SHARES of
their co-partners in accordance with Section 1, Paragraph 2,
in order to then sell them to the PURCHASER;
5. a) that there are no holdings in the COMPANY other than those
depicted in Section 1, Paragraphs 1 and 2, and that with the
exception of those listed in Annex 7.5a there exist no legal
circumstances on the basis of which there exists any claim to
participation in the COMPANY's turnover or profit;
b) that the PARTNERS have no claims against the COMPANIES with
the exception of the claims by Messrs. Jochen Oeser and
Florian Oeser for remuneration through to the COMPLETION DATE
as per the Articles of Association;
6. that the COMPANY has concluded neither affiliation agreements in the
spirit of Section 291 ff. of the {German} Company Act nor joint venture
agreements nor cooperation agreements and that the COMPANY - with the
exception of providing security in the amount of DM 1,000,000 covering
the obligations of Oeser France SARL vis a vis the Deutsche Bank AG and
a letter of responsibility to the amount of ITL 500,000,000 vis a vis
the Instituto Bancario, San Paolo di Torino, I-33710 Pordenone for
Oeser Italia S.r.l. - bears no liability for obligations of any third
party based upon letters of responsibility, sureties, guarantees,
cumulative assumption of debts or similar legal basis with the
exception of the sureties listed in Annex 7.6; that there exist no
liabilities to the SUBSIDIARIES for obligations of any third party
based upon letters of responsibility, sureties, guarantees, cumulative
assumption of debts or similar legal basis;
7. that the extracts from the Land Register dated February 2, 1999,
describe truly the ownership situation for and the actual encumbrances
on the properties in Goppingen and Holzheim, that there exist no
contractual encumbrances or limitations and that, with the exception of
that in Annex 7.7b, there are no public zoning or building restrictions
on the properties in Goppingen and Holzheim; that the properties used
by the COMPANY at Rigistrasse 20 in Goppingen-Holzheim and at
Heinrich-Landerer-Strassee 66 in Goppingen are owned by the COMPANY and
are encumbered with mortgages totaling no more than DM 10,765,000 and
that no encumbrance with further mortgages has been effected nor has
such been registered at the Land Registry Office;
8. that the value of the real estate in Goppingen and Holzheim plus the
value of the buildings erected subsequently as ascertained in the
Expert Assessment prepared in about 1993 by the Assessors' Committee of
the Town of Goppingen (the "ASSESSMENT") is at least DM 10,000,000.00
(in words: ten million Deutschmark) and to the best of the SELLERS'
knowledge there exist no circumstances according to which the
assumptions serving as the basis for the ASSESSMENT or the conclusions
drawn therefrom are not valid. The SELLERS do not, however, undertake
any guarantee that the price of DM 10,000,000.00 could currently be
realized on the market;
9. Proprietary rights:
a) that to the best of the SELLERS' knowledge, without having
conducted further research, Annex 7 reflects completely and
correctly the patents, utility models, design patterns,
trademarks, copyrights and other industrial proprietary rights
used, required, invented or registered in or for the business
operations for world-wide, unlimited manufacture and
distribution of the COMPANY's products;
b) that the COMPANY, with the exception of the license agreements
cited at Paragraph 10, is the unrestricted owner of the
patents, utility models, design patterns, trademarks,
copyrights and other industrial proprietary rights cited in
Annex 7; that to the best of the SELLERS' knowledge these
rights are free of any third-party entitlements, that they do
not violate any rights of third parties and are not in danger
of being cancelled or declared null and void; that in regard
to the above-mentioned industrial proprietary rights all fees
which are due have been paid and that to the best of the
SELLERS' knowledge all other activities required to keep these
rights in force have been effected in due time;
c) that to the best of the SELLERS' knowledge the operation of
the COMPANIES' business activities does not violate any
industrial proprietary rights of third parties;
d) that to the best of the SELLERS' knowledge, without having
conducted further research, there exist no restrictions in
regard to the COMPANIES' using the names "Oeser" or
"Oeserwerk";
10. Licenses:
a) that Annex 7 contains a true and complete list of all license
agreements, with the exception of software license agreements
in normal business operations, which have been concluded by
the COMPANIES;
b) that there are no fees exceeding DM 10,000 which are to be
paid annually to any third party for patents, utility models,
design patterns, trademarks, copyrights, software or other
industrial proprietary rights which are employed in the
COMPANIES' business operations if such license fees were not
cited among the license agreements listed in Annex 7 and that
the use of the industrial proprietary rights cited in the
foregoing clause is not limited by any rights of third
parties;
11. that except for the withdrawal of the assets listed in Clause 2 of the
Prefatory Notes the PARTNERS have not made any withdrawals since
December 31, 1998, and that none of the COMPANIES' liabilities vis a
vis the PARTNERS, and in particular those arising from PARTNERS' loans,
has been repaid;
12. Annual financial statements:
a) that the preliminary, consolidated annual financial statements
as of December 31, 1998 (the "ANNUAL FINANCIAL STATEMENTS")
enclosed as Annex 7.12 provide a picture of the assets,
financial and revenue situation of the COMPANY and the
enterprises affiliated with it corresponding to the actual
circumstances; that the ANNUAL FINANCIAL STATEMENTS depict
correctly and completely all the COMPANY's existing or
conditional assets and liabilities (the cash values are
reported in regard to the liabilities) and that the ANNUAL
FINANCIAL STATEMENTS have been prepared consistently in
compliance with generally recognized bookkeeping and balance
sheet rules;
b) that up to the present date and up to the cut-off date no
significant or unfavorable changes have taken place in
comparison with the ANNUAL FINANCIAL STATEMENTS and that no
changes have taken place outside ordinary business operations
in regard to the COMPANY's assets and liabilities; significant
changes in the spirit of the present Letter b) are such which
would result in deviations of at least DM 500,000 from the
ANNUAL FINANCIAL STATEMENTS;
13. Assets:
a) that the COMPANIES' real property including buildings, the
movable assets and store are in good condition, taking into
account normal depreciation, corresponding to orderly business
operations; the PURCHASER is aware that repairs as described
in Annex 7.13a are required.
b) that the COMPANIES' real property, the movable assets and
inventory of goods and in particular the assets reported in
the ANNUAL FINANCIAL STATEMENTS - with the exception of assets
sold in the course of ordinary business activity are - aside
from the retention of ownership of movable assets arising in
ordinary business activities, legal rights to attach,
encumbrances entered in the Land Register including the
extension to include movable assets as per Section 1120 of the
Civil Codes and the other rights listed in Annex 7.13b - the
unconditional property of the COMPANY, subject to the transfer
mentioned in Paragraph 3 of the Prefatory Notes, and are not
encumbered by entitlements of third parties or otherwise;
14. a) aa) that there do not emanate from the real
property belonging to the COMPANY or from the
real property used by the COMPANY in the past
(the "REAL PROPERTY") any contaminations of the
soil, groundwater or other goods of considerable
value or that such are inflicted on neighboring
properties ("ENVIRONMENTAL CONTAMINATIONS");
bb) that the operation of the COMPANY's enterprises
has in the past complied with all applicable
public regulations and in particular legal
or other environmental rules imposed by
government offices and currently complies with the
same unless the con-compliance is not substantial
and without significant effects on the
enterprise's operations or financial situation;
The SELLERS are also liable in accordance with Letters aa) and
bb) for all expenditures which are necessary or indicated as
per current or future statutes in order to carry out
activities for recognizing hazards, limiting hazards or
rehabilitation in so far as such activities are required or
indicated in order to eliminate the ENVIRONMENTAL
CONTAMINATIONS and in that way to ensure that no hazards,
considerable disadvantages or considerable nuisances for
significant protected goods, in particular those of
individuals or the public, arise or persist ("ENVIRONMENTAL
EXPENDITURES"); the SELLERS relieve the PURCHASER of all
claims by third parties and of claims by the responsible
authorities which are referenced to ENVIRONMENTAL
EXPENDITURES.
b) that, with the exception of product numbers 609HK and 609WH,
which are kept on hand for application to plastic materials,
the COMPANY produces no products and, with the exception of
those listed in Annex 7.14b, has in its inventories no
products which contain heavy metals; that the products in the
COMPANY's inventories which contain heavy metals have a book
value of less than DM 100,000 at the present day;
c) CFC undertakes to submit a copy of the environmental survey by
the ERM Lahmeyer to the seller Dr. Ernst Georg Oeser.
15 Litigation and safeguard of rights:
that with the exception of those cited in Annex 7 no litigation or
administrative procedures with a litigation value of at least DM 25,000
are pending or, to the best of the SELLERS' knowledge, are threatening
in which the COMPANIES are involved our could become involved and that
there exist no judgments or decrees which prohibit or limit the
COMPANIES' undertaking certain actions;
16. Significant contracts:
that with the exception of the contracts and obligations listed in the
annexes cited below there exist for the COMPANY no contracts or
obligations of the types cited below which have significant impact upon
its financial and business situation and that, except in the course of
normal business operations, the contracts cited shall continue in force
unamended and that there are no prevailing circumstances, including any
which might arise as a consequence of concluding or carrying out the
present contract, which could influence or endanger the unchanged
continuation of these rights and contracts:
a) contracts of employment with the COMPANY's legal
representatives and executives, and retirement pension and
benefits packages or agreements for legal representatives and
executives; the contracts currently in force are listed in
Annex 7; the COMPANY may down to the present day remit to the
sellers Dr. Ernst Georg Oeser and Mr. Heinz-Jochen Oeser and
to Ms. Ingeborg Oeser the pensions provided for in the
COMPANY's Articles of Association;
b) other employment contracts that provide for annual
remuneration of more than DM 100,000.00 or rulings in regard
to bonuses, royalties, retirement or early retirement
arrangements or that contain agreements which provide for more
than one year's advance notification of termination; the
contracts currently in force are listed in Annex 7;
c) contracts with all types of consultants with annual
remuneration of at least DM 25,000 in the individual instance;
the contracts currently in force are listed in Annex 7;
d) license agreements and other contracts regarding industrial
proprietary rights; the contracts currently in force are
listed in Annex 7;
e) contracts with customers or suppliers with a value exceeding
DM 100,000.00 per year as well as contracts which provide for
discounts, deductions, bonuses or pre-payments not in
accordance with standard business practices or which are
calculated below cost; the contracts currently in force are
listed in Annex 7;
f) rental and leasing agreements, with the exception of standard
leasing and rental agreements for office machines and
equipment; the contracts currently in force are listed in
Annex 7;
g) loans, credit lines, suretyships and furnishing security of
any kind, either granted or taken, with the exception of
normal performance bonds and loans to employees which in each
case do not exceed two months' salary; the contracts currently
in force are listed in Annex 7;
h) contracts with sales representatives, trade representatives
and franchised dealers; the contracts currently in force are
listed in Annex 7;
i) insurance policies, with the exception of insurance for
company vehicles and insurance covering hazards in low-voltage
power circuits; the contracts currently in force are listed in
Annex 7;
j) agreements limiting competition, which exclude or restrict the
COMPANY's right to trade freely in certain products in certain
territories; the contracts currently in force are listed in
Annex 7;
k) contracts with or other rights and obligations vis a vis the
SELLERS or any of their relatives in the meaning of Section 15
of the Tax Code or vis a vis other companies in which one or
more of the SELLERS or their relatives in the meaning of
Section 15 of the Tax Code has holdings of at least 5%; the
contracts currently in force are listed in Annex 7;
l) contracts or obligations out of which there could arise
obligations which in the individual case or cumulatively
amount to a total of more than DM 100,000.00 per year or which
provide for performance beyond December 31, 1999; the
contracts currently in force are listed in Annex 7;
m) company agreements and agreements with labor unions, with the
exception of industrial or nationwide collective bargaining
agreements; the contracts currently in force are listed in
Annex 7;
17. Fulfilling contracts:
a) that the COMPANY has by the COMPLETION DATE fulfilled all the
contracts mentioned above and/or has done everything necessary
to satisfy all the obligations arising from these contracts
when they become due, provided that the damages arising from
the violation of this sub-paragraph, Letter a), exceeds DM 500
in the individual case;
b) that none of the above-mentioned contracts can be terminated
or amended on the basis of the change in the COMPANY's
ownership;
c) that the SELLERS are also not aware that any third party will
modify any of the above-mentioned contracts or obligations
arising from such contracts on the basis of the transactions
provided for in the present contract;
d) that the prices quoted in all the contracts, bids, orders and
proposals which are in effect or pending at the COMPLETION
DATE and affect the sales of the COMPANY's products were
calculated in accordance with the COMPANY's previous practice
in regard to returns and profit margins;
18. Product liability and guarantee claims:
a) that the products delivered by the COMPANIES are to the best
of the SELLERS' knowledge in compliance with all regulations
under public and private law - subject to the following
special stipulation in regard to warranty claims, and in
particular that all products and services were sold subject to
standard guarantee terms and that there exist no guarantee
entitlements which could result in claims against the
COMPANIES to a value of more than DM 25,000.00 per customer;
b) that the COMPANIES have not to the present date delivered or
manufactured any goods or products from which product
liability claims could be derived and for the satisfaction of
which the COMPANIES - with the exception of the excess
provided for in the insurance contracts - could not be fully
reimbursed by insurance;
19. that the COMPANIES possess all government concessions, permits and
licenses necessary to conduct business activities and that according to
the best of the SELLERS' knowledge no revocation, no additional
requirements or limitations of these concessions, permits and licenses
are threatening; all these concessions, permits and licenses, with the
exception of building permits, are listed in Annex 7;
20. that the COMPANIES have paid all taxes, social security contributions
and other public levies associated with the time period through to
December 31, 1998, or have formed appropriate accruals in the ANNUAL
FINANCIAL STATEMENTS and, further, that all taxes, social security
contributions and other public levies which affect the period from
December 31, 1998, to the COMPLETION DATE have been paid in so far as
they were payable prior to the COMPLETION DATE; that the COMPANIES had
submitted all the required tax returns to the responsible tax
authorities prior to the COMPLETION DATE; that the COMPANIES, on the
COMPLETION DATE, were not in arrears in payments of taxes, levies or
social security contributions which are due; that the COMPANY has been
audited by the responsible internal revenue office in regard to income,
turnover and capital taxes through to and including the business year
ending on December 31, 1993;
21. that the COMPANIES are the policyholders for valid insurance policies
in force against fire, theft and other operational risks and in
particular in regard to product liability and other liability as well
as interruptions in operations, in each case with appropriate coverage
and terms, at least through June 30, 1999; a list of these insurance
policies (including the insured risk, policy number, insurance company,
annual premiums and terms) - with the exception of insurance for
company vehicles and covering hazards in low-voltage power circuits -
is contained in Annex 7;
22. that all obligations vis a vis employees, regardless of whether they
are due to statutes, contracts or operational practice, to pay and
perform regular or extraordinary remuneration, compensation,
anniversary awards or retirement payments or other payments which are
not a part of the salaries of employees in the business operations and
which are associated economically with the period prior to February 28,
1999, have been fulfilled by the COMPANIES and/or sufficient accruals
have been formed in the ANNUAL FINANCIAL STATEMENTS to cover the cash
value of these obligations in full; that, where nothing to the contrary
is listed in Annex 7, that the COMPANIES have, since January 1, 1998,
not been the subject of strikes, work stoppages or interruptions or
industrial unrest among employees;
23. that, where nothing to the contrary is listed in Annex 7, and according
to the best of the SELLERS' knowledge, no regular customer or supplier
with whom the COMPANIES transacted purchases or sales of more than DM
100,000.00 in the business year most recently ended intends to
terminate business relationships with the COMPANIES as a consequence of
the transactions provided for in the present contract;
24. that, in so far as nothing to the contrary is specified in Annex 7.24, and
since December 31, 1998,
a) the COMPANIES' business has been continued within the
framework of ordinary business operations;
b) none of the COMPANIES' material contracts has been modified or
terminated;
c) with the exception of normal salary increases, the COMPANIES'
remunerations to its legal representatives, executives,
employees, agents or consultants have not been increased;
d) no pensions, bonuses, profit-sharing schemes or other
remunerations for the COMPANIES' legal representatives,
executives or employees have been introduced, nor have
existing obligations of this type been increased;
e) the COMPANIES have not taken on any significant obligations or
sold or caused to be encumbered major assets except within the
framework of normal business activities;
f) there has been no significant deterioration in the business
profit, the financial situation, the assets, the liabilities
or the COMPANIES' equity capital;
g) there have been no damages or losses, regardless of whether or
not covered by insurance, which result in damages or losses
exceeding DM 50,000 for the COMPANIES, in so far as they are
not listed in Annex 7;
h) there are no circumstances of any other kind, emanating from
the operations, which could have a significant, negative
impact on the COMPANIES; and
i) aside from obligations devolving to the COMPANY on the basis
of the Articles of Incorporation, no payments have been made
to the SELLERS and no distribution of dividends has been
undertaken.
The SELLERS do not offer any guarantee as to the profitability of the
COMPANIES.
25. that the disposal of the SHARES does not require the consent on the
part of the spouse of any one or more SELLERS in accordance with
Section 1365 of the Civil Code or that such consent has been given;
26. a) that the COMPANY is the owner of all shares in the
SUBSIDIARIES;
b) that the SUBSIDIARIES have been properly established in
accordance with the laws of their particular domiciles and
that they are existing companies;
c) that the contributions to capital have been paid in full and
have not been returned and that there is no obligation to
repay;
d) that the partnership shares in the SUBSIDIARIES are not
encumbered with any rights of third parties and, in
particular,
aa) no shares have been attached, pledged or assigned as
security or for other reasons;
bb) there exist no options or other rights of third parties
to acquire or encumber shares in the SUBSIDIARIES;
cc) no share in the SUBSIDIARIES is the subject of any
trust arrangement or and there exist no usufructuary
rights of third parties, sub-holdings, dormant
partnerships or other corporate relationships nor
encumbrances;
dd) no insolvency or similar proceedings to realize all or
part of the assets of any of the SUBSIDIARIES have
been applied for or instituted;
e) That there exist no legal circumstances on the basis of which
any third party holds any claim to participation in the
turnover, with the exception of annual turnover bonuses, or in
the profits of any of the SUBSIDIARIES to a total of more than
DM 25,000;
27. that the SELLERS have given to the PURCHASER true, correct and complete
information on all circumstances known to them or to the best of their
knowledge recognizable to them which could have a significant impact on
the COMPANY's economic situation or the business operations. The
circumstance that the PURCHASER and its consultant have had access to
business records and an opportunity to conduct a survey of the
COMPANY's business transactions does not affect the undertakings and
guarantees. Guarantee claims are, however, excluded in so far as the
material circumstances relevant to the evaluation and their business
consequences were known to the PURCHASER; otherwise, Sections 439, 460
and 464 of the Civil Code are not applicable. The PURCHASER is assumed
to have the knowledge held by Messrs. Dennis Lakomy and Roger Hruby as
well as by the PURCHASER's advisors from the Doser Amereller Noack /
Baker & McKenzie law offices and by PricewaterhouseCoopers GmbH
chartered accountants. In regard to facts with environmental relevance
and their economic consequences, the PURCHASER is assumed to have
available only the knowledge of the ERM Lahmeyer GmbH International.
The SELLERS bear the burden of proof for the exclusion of the warranty
entitlements in accordance with this paragraph. Sections 377 and 378 of
the Commercial Code are not applicable.
28. In so far as knowledge is key as regards the undertakings and
guarantees in accordance with the present Section 7, the SELLERS are
assumed to have the current knowledge at the disposal of the legal
representatives and COMPANY's employee Mr. Hans-Peter Post as well as a
knowledge of all circumstances of which Mr. Post should have been
aware.
29. In evaluating the culpability of the SELLERS in accordance with this
contract, the due care of an ordinary businessman (Section 43,
Paragraph 1 of the GmbHG [Limited Liability Companies Act]) shall be
taken as the standard. "Best knowledge" in the spirit of this contract
means active knowledge or culpable lack of knowledge.
Section 8
Infringement of the SELLERS' guarantees
1. If a guarantee is incorrect or incomplete, then the PURCHASER grants
the SELLERS a period of 30 days in which to rectify the infringement.
2. The PURCHASER is entitles to withdraw from this contract without
prejudice to its entitlement instead to demand indemnification for
damages in accordance with Paragraph 5:
a) If one of the guarantees as per Section 7, Paragraphs 1
through 5, is false and the SELLERS fail to eliminate these
rights of third parties within a reasonable period of time as
specified by the PURCHASER or
b) In case of a deliberate deception perpetrated by the SELLERS.
3. If the conditions stated in Paragraph 2 are present, then the PURCHASER
may declare withdrawal by registered mail with advice of delivery
provided that it had previously and also by registered mail with advice
of delivery unsuccessfully demanded that the SELLERS within two months
of the receipt of the demand put the COMPANY in the situation in which
it would have been if the guarantees had been correct.
4. In the event of withdrawal, CFC shall transfer back to the SELLERS all
the SHARES, free of limitations on resale and any rights of third
parties unless such limitations on resale or rights of third parties
were already in force when the SHARES were transferred to the
PURCHASER. The PURCHASER may, instead of withdrawing from the contract,
demand a reduction in the purchase price.
5. If one of the guarantees in Section 7 is violated, then the PURCHASER
may reduce the purchase price or demand from the SELLERS as joint
debtors indemnification for the damages and, if the PURCHASER has
suffered damages over and above this, then demand indemnification for
these damages as well. The PURCHASER can demand reimbursement for the
damages suffered by CFC EUROPE due to violation of the guarantees in
reference to the Oeser France SARL. It is, however, possible to claim a
reduction or indemnification for damages only if the damages resulting
from the violation of the guarantees exceeds DM 75,000.00.
Indemnification for damages shall be rendered in cash up to an amount
of DM 6,000,000.00. Any amount of damages beyond this can be paid by
re-assignment of the shares of STOCK; here the closing quotation on the
final day of trading before that day on which the written notification
of the claim for indemnification of damages by the PURCHASER is
received by the SELLERS shall be used in calculating the claim for
damages satisfied by the transfer of the shares. Any damages going
beyond this need not be compensated for by the SELLERS.
6. With the exception of claims to indemnification for damages resulting
from legal deficiencies (Section 7, Paragraphs 1 through 5) and with
the exception of claims to compensation for damages and/or
reimbursement for tax and social security levies (Section 7, Paragraph
20), claims in accordance with this present Section 8 lapse 24 months
after the COMPLETION DATE. Claims in accordance with the present
Section 8 to compensation for damages due to legal deficiencies
(Section 7, Paragraphs 1 through 5) lapse ten years after the
COMPLETION DATE.
Claims resulting from a violation of undertakings and guarantees in
regard to tax and social security liabilities (Section 7, Paragraph 22)
lapse within six months following the date upon which the assessment
note issued by the social security or tax authority becomes final
and/or unappealable.
The periods of limitation as prescribed in the present Paragraph 6
shall be suspended as soon as the PURCHASER notifies the SELLERS by
registered mail with advice of delivery of the violation of the
guarantee.
7. The foregoing guarantee regulations are final. The PURCHASER may, if
nothing to the contrary is expressly specified in this contract, lodge
no further claims against the SELLERS, regardless of the legal
justification, which arise from the infringement of contractual,
pre-contractual or legal obligations unless the SELLERS acted with
intent.
8. If, following the COMPLETION DATE, an external tax audit of the
COMPANIES is conducted, affecting the period of time through to the
COMPLETION DATE, then the SELLERS shall be given the opportunity to
participate in the audit and, in particular, in the final consultations
by way of an agent pledged to maintain professional confidentiality.
The SELLERS shall at their request and at their expense be provided
with all information necessary to protect their interests. Over and
above this the SELLERS may at their own expense demand that the company
affected by the relevant tax assessment file appeal. Proceedings shall
then be pursued by the SELLERS, at their own expense.
Section 9
Guarantees by the PURCHASER
1. The PURCHASER guarantees:
a) that CFC is a properly established and existing joint stock
company in accordance with the laws of the State of Delaware ;
b) that any contribution of capital to be paid on the STOCK has
been paid in full and has not been returned and that there
exist no obligations on the part of the shareholders to remit
payments or ancillary payments;
c) that the shares of STOCK do exist and are not encumbered with
any rights of third parties, and in particular that
aa) no STOCK has been attached, pledged or assigned as
security or for other reasons;
bb) there exist no options or other rights of third parties
to acquisition or encumbrance of the STOCK;
cc) no STOCK is the subject of any trust relationship with
the exception of the bank trust administration at
the Deutsche Bank AG, Goppingen Branch Office;
dd) no STOCK or entitlement arising from STOCK is the
subject of usufructuary rights of third parties,
sub-holdings, dormant partnerships or similar
relationships or encumbrances under company law;
d) that the sale of the STOCK is subject to no restrictions
beyond those listed in Section 3, Paragraph 2;
f)3 that no bankruptcy proceedings have been opened in regard to
the PURCHASER's assets and that there exist no circumstances
which could justify contesting the transfer of the shares of
STOCK in accordance with bankruptcy regulations, regulations
contained in legislation governing contestation or other
regulations;
g) that according to the best of the PURCHASER's and CFC's
knowledge there exist no significant circumstances emanating
from the CFC operations which could lead to the assumption
that today's stock exchange quotation for the STOCK will
decline significantly and in particular that at present no
issue of additional blocks of STOCK which could dilute the
value of the STOCK is planned. In particular the PURCHASER is
not liable for changes in stock market quotations due to
macroeconomic or monetary influences, due to a general stock
market trend or due to a deterioration of the market situation
for the PURCHASER's or CFC's products as well as due to the
introduction of a stock option plan.
Section 10
Violation of guarantees by the PURCHASER
1. If a guarantee is incorrect or incomplete, then the SELLERS grant to
the PURCHASER a reasonable period of time to rectify the violation.
2. The SELLERS and the PARTNERS are entitled to transfer the shares of
STOCK back to the PURCHASER concurrently upon payment of an additional
price of DM 12.50 (in words: twelve Deutschmark and fifty Pfennig) per
share of stock if one of the guarantees as per Section 9 is incorrect
and the violation is not rectified in accordance with Paragraph 1.
3. If the conditions described at Paragraph 2 are satisfied, then the
SELLERS can demand, by registered mail with advice of delivery, payment
of the additional purchase price. The additional purchase price is due
one week following receipt of the registered mail with advice of
delivery if the SELLERS proffer the return of the STOCK. Otherwise,
Section 3, Paragraph 1, final clause and penultimate clause applies
mutatis mutandis.
4. Paragraph 7 applies mutatis mutandis. The guarantee period for claims
in accordance with the present Section 10 is 24 months after the
COMPLETION DATE.
Section 10a
Interim financial statements, taxes
1. There exists agreement between the parties to this contract that
consolidated interim financial statements for the COMPANY, at today's
date, shall be prepared immediately and at the COMPANY's expense,
following the standard principles for bookkeeping and for the drawing
up of accounts and ensuring balance sheet continuity, and requiring
written approval by CFC and the SELLERS.
2. All taxes which fall due as a result of the COMPANY's business
operations and which are to be allocated to the period of time down to
the present date shall be borne by the SELLERS; taxes which are to be
allocated to later periods shall be borne by the PURCHASER.
3. The SELLERS undertake to submit to the tax offices responsible in each
case tax returns for the period down to the COMPLETION DATE only after
they have been examined by a tax accountant commissioned by CFC.
Section 11
Joint liability of CFC
CFC assumes joint and several co-liability for all the PURCHASER's obligations
arising from this contract or which are in conjunction with the conclusion or
execution of this contract.
Section 12
Continued use of the name "Oeser"
The SELLERS grant to the PURCHASER herewith the unrestricted, irrevocable and
perpetual right to continue to use the name "Oeser" and the designation
"Oeserwerk" for any and all operational purposes, to include use in the company
name and/or logo of the company, as well as to designate products.
Section 13
Right to withdrawal
1. The PURCHASER is entitled to withdraw from this contract if it has
itself observed the contract and if the conditions as per Section 2,
Paragraph 2, Letter d) have not been fulfilled by April 15, 1999, at
the latest.
2. The SELLERS are entitled to withdraw from this contract if they have
themselves observed the contract and if all conditions as per Section
2, Paragraph 2, Letters )4 to c), have not been satisfied by April 15,
1999.
3. The entitlement of a party to this contract to withdraw from the
contract lapses as soon as the condition which justifies the
entitlement to withdraw occurs.
Section 14
Prohibition of competition
1. Sellers Dr. Ernst Georg Oeser and Mr. Heinz-Jochen Oeser pledge that
they and the companies associated with them will not, within three
years from the present date, enter into competition, either direct or
indirect, with the COMPANY and will not either directly or indirectly -
found or participate in, provide advice to and/or provide support in
any other fashion to a company which is in competition with the
COMPANY's current business operations. This prohibition of competition
is limited geographically to the COMPANIES' current territory for its
business activities. Excepted from this are the holdings of sellers Dr.
Ernst Georg Oeser and Mr. Heinz-Jochen Oeser in companies traded on the
stock market in so far as the holdings do not exceed 2% of the capital
stock of that listed company and holdings in CFC.
2. If Dr. Ernst Georg Oeser or Mr. Heinz-Jochen Oeser violate the
foregoing prohibition of competition, then a contractual penalty in the
sum of DM 50,000.00 shall be paid for each instance of contravention.
In the event of ongoing infringement of the foregoing prohibition of
competition, each month or fraction thereof in which the infringement
incurs shall be deemed a separate instance of contravention. The
enforcement of claims for compensation of damages arising from the
violation of the contract or of the claim to fulfillment is not
affected hereby.
Section 15
Final terms
1. Annexes 2.4 through 7.4 to this contract are essential components in
the contract.
2. This contract is subject to German law.
3. All additions or amendments to this contract shall be valid only if
made in writing in so far as no other special form is required. This
also applies to the revocation of this written-form clause.
4. The costs for any notarization and registration for the execution of
this contract shall be borne by the PURCHASER. The SELLERS shall bear
the costs incurred due to the payment of the purchase price through a
notarial trust account. Otherwise the parties to the contract shall
themselves bear the costs which they incur. The COMPANY shall bear no
costs which would not have been incurred during the course of normal
business; the COMPANY shall in particular bear no costs which it would
not have also occurred without the preparation, the conclusion and the
conduct of this contract or a sales contract with another purchaser.
5. All declarations and notifications pursuant to this contract shall be
directed to the following addresses if the contract party affected has
not reported a new address by way of registered mail with advice of
delivery:
a) For the SELLERS, with effect for all SELLERS, who herewith
grant in this respect authorization for receipt to Mr.
Florian Oeser:
Florian Oeser
Oeserwerk Ernst Oeser & Sohne KG
Rigistrasse 20
73037 Goppingen
b) For the PURCHASER and CFC:
CFC International Ltd.
Roger F. Hruby, CEO
500 State High Street
Chicago Heights, IL 60411
USA
6. The place of performance and court of venue for all disputes is
Goppingen.
7. This contract supersedes all written and oral declarations given by the
parties to the contract in conjunction with the contract negotiations.
8. Should individual provisions of this contract be or become ineffective,
either in whole or in part, or should there be a gap in the contract,
then the validity of the remaining provisions shall not be affected. An
appropriate provision shall take the place of the ineffective provision
or to cover the gap which, in so far as this is legally possible, is as
close as possible to that which the parties to this contract desired or
which in accordance with the spirit and purpose of this contract would
have desired had they taken the point into account.
Stuttgart, March 19, 1999
- ------------------------------- -------------------------------
- - Dr. Ernst Georg Oeser - - Heinz-Jochen Oeser -
- ------------------------------- -------------------------------
- - Florian Oeser - - Jochen Oeser -
- ------------------------------- -------------------------------
- - SESVENNA 20. - CFC International Inc.,
Vermogensverwaltungs GmbH, represented by Roger F. Hruby
Munich, and Dennis W. Lakomy -
represented by Roger F. Hruby -
- --------
1 Later references are to the "SESVENNA 20. Vermogensverwaltungs GmbH".
2 The paragraph number is not clearly indicated in the German version
provided to the translator.
3 There is no subparagraph "e)" present in the German version provided to the
translator.
4 No letter is specified in the German version provided to the translator.
Agreement Concerning Waiving of Claims
between
1. Dr. Ernst Georg Oeser, Kurze Strasse 4, 73092 Heiningen;
2. Heinz-Jochen Oeser, Herrschaftsstrasse 50, 73087 Boll;
3. Florian Oeser, Haldenweg 20, 73087 Boll;
4. Jochen Oeser, Herrschaftsstrasse 50, 73087 Boll
- hereinafter jointly "the Sellers" -
and
5. Oeserwerk Ernst Oeser & Sohne KG, Rigistrasse 20, 73037 Goppingen
- hereinafter "the Company" -
Prefatory Note
The Sellers intend to transfer their shares in the Company to SESVENNA 19.
Vermogensverwaltungs GmbH, Munich, in the future to be operating as CFC
Oeserwerk GmbH. In fulfillment of Section 2, Paragraph 4 of the Share Purchase
Contract, they agree with the Company:
Section 1
Declaration of Waiver
The Sellers waive the claims vis-a-vis the Company stated in Section 2,
Paragraph 4 and Section 7, Paragraph 5, Letter b) of the Share Purchase Contract
of March 19, 1999. The Company hereby accepts said waiver.
Section 2
Restitution of Claims
If the suspensive conditions according to Section 2, Paragraph 2 of the Share
Purchase Contract are not fulfilled within six months, the claims shall be
restituted.
- -------------------------------------- ----------------------------------
Dr. Ernst Georg Oeser Heinz-Jochen Oeser
- -------------------------------------- ----------------------------------
Florian Oeser Jochen Oeser
- --------------------------------------
Oeserwerk Ernst Oeser & Sohne KG, Oeserwerk Ernst Oeser & Sohne KG,
represented by Florian Oeser represented by Jochen Oeser
Annex 3.2
Name Number of shares
- ---- ----------------
o Dr. Ernst Georg Oeser 11,282 )
o Heinz-Jochen Oeser 11,556 ) 44,468 into
o Florian Oeser 11,163 ) 12 month escrow
o Jochen Oeser 10,467 )
o Peter-Christian Eccardt 6,000 ]
o Dr. Helga Geitmann 11,907 ]
o Jens Geitmann 3,436 ]
o Nicole-Bettin Goldmann 1,162 ]
o Rainer Konig 1,795 ]
o Veronika Lieckfeld 1,266 ]
o Christiane Morel 4,085 ]
o Sabine Oeser 1,266 ] 55,532
o Angeli Schnarrenberger 1,795 ]
o Elisabeth Schubert 8,000 ]
o Heinz-Werner Schubert 3,036 ]
o Wolff-Dietrich Schubert 3,036 ]
o Claire Straass 5,739 ]
o Stephanie Straass 1,266 ]
o Ruth Vocke 1,743 ]
------------------------
o TOTAL 100,000
========================
Annex 4.1
Oeserwerk Bankers
Bank
Sort Swift Account Debit Credit
Name/Address Code Code Number Balance Balance
- ------------ ---- ---- ------ ------- -------
Deutsche Bank AG 61070078 DEUTDESS610 254268 4,046,090.53
Goppingen branch
Morikestrasse 9
73033 Goppingen
Landesbank 61050101 LAGIDE6S870 8700216 2,171,289.07
Goppingen branch
Poststrasse 37
73033 Goppingen
Baden-Wurttemberg 61040014 COBADEFF610 188769400 1,701,334.95
Commerzbank AG
Goppingen branch
Lange Strasse 11
73033 Goppingen
Dresdner Bank AG 61080006 DRESDEFF610 206903900 1,791,600.27
Goppingen branch
Marktplatz 3
73033 Goppingen
Kreissparkasse 61050000 GOPSDE6G 13509 147,931.77
Marktstrasse 2
73033
Goppingen
Postbank 60010070 PBNKDEFF600 0018216-706 21,044.95
Stuttgart office
Kleiner
70173
Stuttgart
Schlossplatz 4
Bankhaus 61030000 MARBDE61 2526 6,660.55
Kirchstrasse 35
73033
Goppingen
Gebruder Martin 30010400 IKBDDED1 2010345870 7,598,146.00
IKB Deutsche
Industriebank
Berlin office
Bismarckstrasse 105
10625
Berlin ------------ ---------
17,456,392.59 27,705.50
Overall balance 17,428,687.09
Annex to
Section 7
Item 2
Extract from the Register of Companies - authenticated copy - of Goppingen Local
Court, No. HRA 1400, 16 pages, dated January 1, 1999
Annex to
Section 7
Item 5
a)
Articles of Association of Oeserwerk, Ernst Oeser & Sohne KG dated June 1, 1978
with 4 amendments: Sections 5 and 17 on November 14, 1997, and Section 14 on
November 8, 1996. Also Annexes 1 and 2 of June 1, 1978.
Annex to
Section 7
Item 6
Sureties
Suretyships from Oeser Italia, granted for Fiat Punto and guarantee deposit
Zanchetta
Annex to
Section 7
Item 7
Zoning or building restrictions
Letter from Grassle, architects, dated March 5, 1999
Zoning restrictions sheet No. 2786, page 1 Plot No. 447/1 and 445
Zoning restrictions sheet No. 2093, page 1 Former plot No. 446
(no longer exists)
Zoning restrictions sheet No. 2786, page 2 Plot No. 445 + 485
Location plan
Zoning restrictions sheet No. 2786, page 3 Plot No. 445
Location plan
Annex to
Section 7
item 9
a)
Patents: Canceled trademark (4 sheets)
Utility model 8616114.8
Patent application 87108466.1
Disclosure specification 2916723
Patent application 19717004.8-43
File number P3611719.6-43
Patent application P1611473.1-27
Patent application 010777 IV C/229
Utility model, device for applying metallized colored
coatings
Utility model, Trademarks
Utility model, Infraprint
Utility model, Oeser stamping veneer
Utility model, Neocolor
Utility model, Effekta
Utility model, Stella
Utility model, IMATA silver German
Utility model, IMATA silver international
Utility model, IMATA gold German
Utility model, IMATA gold international
Utility model, Oeser film German
Utility model, Oeser film international
Annex to
Section 7
Item 10, licenses
b)
SAP licenses BIW
FI 5 users DM 35,000
CO 4 users DM 35,000
MM 6 users DM 35,000
PP 5 users DM 40,000
DW 1 user DM 7,500
BC Basic 50 users DM 55,000
HR-PA 400 users DM 30,000
SAP licenses CMCS
SD 20 users DM 85,000
TR/CM 1 user DM 12,500
IM 1 user DM 12,500
PP 5 users DM 25,000
Microsoft licenses
Windows NT Workstation, 100-user open license
Micrografx 2 User 1073776-010, dated December 4,1998
Word 97, 73 users
Office Standard 97, 17 users
Office Professional 97, 12 users
MS-Project, 2 users
Excel 97, 33 users
Visio incl. Business Modeler, 2 users
Auto CAD, 1 user
CTL-Server Novell 4.11, 100 users
Arcserve Topcase Groupwise, 50 users
FAX-Server = Tobit Faxware
Cheyenne Antivirus
Win Up 96, 3 users
Symphony 3.0, 4 users
Paradox 4.0, 3 users
Lotus Smatsuite 3.1, 2 users
Flowcharter, 1 user + 2 additional
Autosketsch 5.0, 3 users
Apple Adobe Illustrator
Apple Quark Xpress
TUV Qualitatsmanagement GmbH, Munich, February 20, 1997 ISO 9001
Licenses Oeser France
Coffra Expertise Bookkeeping and customers 2 users FFR 22,914.00
Groupe SMW Pyra 2 users FFR 22,914.00
Microsoft Office 97 6 users
Microsoft Windows NT 4.0 6 users
Annex to
Section 7
Item 12, Annual Financial Statements
a) enclosed Annual Financial Statements
b) that up to the present date and up to the cut-off date no significant
or unfavorable changes have taken place in comparison with the Annual
Financial Statements and that no changes have taken place outside
ordinary business operations ...
Oeser Italia subsidiary written off in 1st quarter of 1999
approx. DM 200,000
Annex to
Section 7
Item 13, Assets
a)
Necessary repairs to buildings
Facility at Heinrich-Landerer-Strasse 66, Goppingen
Facility at Rigistrasse 20, Goppingen-Holzheim
b)
Land charge in favor of Industriekreditbank Berlin in the amount of DM 10.765
million alongside general credit conditions of KfW
Annex 13 a)
Letter to Oeserwerk Ernst Oeser & Sohne KG from Grassle, architects, dated
December 8, 1998
Necessary repairs to buildings
Facility at Goppingen, Heinrich-Landerer-Strasse 66 and
Facility at Goppingen-Holzheim, Rigistrasse 20
Dear Mr. Oeser,
Please find enclosed a schedule of the necessary repair work on various
buildings at the forenamed facilities. An approximate cost estimate is also
attached.
I. FACILITY AT HEINRICH-LANDERER-STRASSE 66, GOPPINGEN
1. IMATA high-rise building
- - Scaffolding work on 3 facades for rehabilitation approx. DM 10,000.00
work on the roof and west facade
- - Plumbing work: renewal of roof guttering, approx. DM 12,000.00
conductors, inlet surrounds, attic covering
- - Roofing work: fixing new inlet surrounds, approx. DM 5,000.00
minor repairs
- - Plastering work: repair external rendering at approx. DM 5,000.00
top southwest corner
- - West facade: full trapezoidal sheet cover approx. DM 18,000.00
(flute size 35) on substructure
- - Connecting work at steel structures, pipe approx. DM 5,000.00
culverts etc.
SUB-TOTAL 1 approx. DM 55,000.00
2. Production hall
- - Repair to damaged rainwater gutters and approx. DM 11,000.00
conductors, especially on western side,
including traveling scaffold
- - In heating room south: properly repair approx. DM 3,000.00
flue connection
- - Repair steel gates between building sections approx. DM 11,000.00
- - Renew 3-leaf timber door at area way to IMATA approx. DM 7,000.00
SUB-TOTAL 2 approx. DM 32,000.00
3. Administration building
- - Repair steel door in heating room approx. DM 300.00
- - Laboratory basement: close wall openings approx. DM 1,000.00
(=> fire protection)
SUB-TOTAL 3 approx. DM 1,300.00
4. Solvent store/garages
- - Renew external damaged lightning conductor approx. DM 3,000.00
SUB-TOTAL 4 approx. DM 3,000.00
TOTAL I approx. DM 91,300.00
plus VAT
II. FACILITY AT RIGISTRASSE 20 - GOPPINGEN-HOLZHEIM
1. Production hall east
- - Roofing to winding shop damaged => repair approx. DM 1,000.00
- - Paint rainwater gutters and conductors approx. DM 2,000.00
- - Steel gate north side damaged => repair approx. DM 1,500.00
- - Repair plastic curtains on east and north gates approx. DM 3,000.00
SUB-TOTAL 1 approx. DM 7,500.00
2. Production hall west
- - Paint rainwater gutters and conductors approx. DM 2,000.00
- - Renew joints between reinforced concrete approx. DM 1,500.00
lintels (-) gas concrete slabs on north side
- - Repair leak on west facade above switch cabinets, approx. DM 5,000.00
pipe brackets
SUB-TOTAL 2 approx. DM 8,500.00
3. Tank room / filling room
- - Paint rainwater gutters and conductors approx. DM 2,000.00
SUB-TOTAL 3 approx. DM 2,000.00
TOTAL II approx. DM 18,000.00
plus VAT
SUMMARY
Facility at Heinrich-Landerer-Strasse, Goppingen
TOTAL I approx. DM 91,300.00
Facility at Rigistrasse 20 - Goppingen-Holzheim
TOTAL II approx. DM 18,000.00
approx. DM109,300.00
Ancillary building costs approx. DM 11,000.00
approx. DM120,300.00
plus VAT
Please contact me in case of any queries.
Yours sincerely,
Enclosure
Annex to
Section 7
Item 16, significant contracts
k)
n/a
Annex to
Section 7
Item 16, significant contracts
l) contracts or obligations out of which there arise obligations which in
the individual case or cumulatively amount to a total of more than
DM 100,000.00 per year ...
Maintenance and service agreements
Plaut, Stuttgart ................ SAP software 18.03.99
SWT Softwareteam ................ Topcase 01.10.92
Arnold, Stuttgart ............... Ramps 02.09.97
Bunk, Schorndorf ................ Security alarm agreement 25.04.96
Bunk, Schorndorf ................ Security service Holzheim 25.04.96
Bunk, Schorndorf ................ Security service Goppingen 25.04.96
Crawford, Stuttgart ............. Electric gate 02.04.97
Habeko, Weissach ................ High-lift truck CTS 12/224 SO 22.08.96
Haisch, Gingen .................. Elevator 14.01.87
Heraeus, Hanau .................. Suntest C7-18 23.03.84
Herco, Freiberg ................. Water treatment plant 31.08.92
Jungheinrich, Bietigheim ........ High-lift truck ETV 12 22.10.97
Jungheinrich, Bietigheim ........ High-lift truck TFG 20 22.10.97
Jungheinrich, Bietigheim ........ High-lift truck GLP 032 22.10.97
Jungheinrich, Bietigheim ........ High-lift truck EJCL 10 22.10.97
Jungheinrich, Bietigheim ........ High-lift truck HC 16 22.10.97
Kampwerth, Bad Laer ............. Refuse compaction container 02.05.91
Kienle, Goppingen ............... Heating system, Gottingen 14.04.73
Kurfess, Geislingen ............. Heating system, Holzheim 28.11.95
Linde, Stuttgart ................ Gas 07.04.94
LTG, Stuttgart .................. TRA Goppingen 02.12.98
Luz, Albershausen ............... Building cleaning 29.05.98
Minimax, Stuttgart .............. Fire extinguishers 14.09.95
Minimax, Stuttgart .............. Sprinkler system 14.09.95
Otis, Berlin .................... Elevator, Goppingen 16.04.96
Ruwac, Melle .................... Industrial vacuum cleaners 22.02.96
Stahl, Stuttgart ................ Crane 13.10.97
Sudalarm, Filderstadt ........... Alarm system 16.12.97
WESS, Leutenbach ................ Extraction system 04.07.89
Zellweger, Burstadt ............. Gas warning devices 19.01.98
Willmann, Denkendorf ............ Time recorder 01.07.85
Bosch, Stuttgart ................ Rent of fire alarm system 29.07.97
IT leasing Total commitment DM 2,654,262 Term 36 DM 81,305.00 per month
months
Copier rent Term 48 months until March 2001 DM 481.70 per month
Copier rent Term 48 months until March 2001 DM 1,123.83 per month
Fax machine rent Term 36 months until December 2001 DM 60.20 per month
Fax machine rent Term 36 months until June 2000 DM 86.00 per month
Hire purchase of Term 60 months until December 2000 DM 67.00 per month
franking machine
Annex to
Section 7
Item 16, significant contracts
m) company agreements and agreements ...
Company agreement concerning time recording, dated August 31, 1998
Company agreement No. 1 concerning works council consultations,
dated March 31, 1998
Company agreement No. 2 concerning recruitment procedure, dated June 15 1998
Company agreement No. 4 concerning flexible work hours, dated March 2, 1999
Company agreement No. 6 concerning vacations and plant closures around public
holidays, dated March 2, 1999
Annex to
Section 7
Item 16, significant contracts
l)
Car leasing
AUDI A6 ............ Term 42 months until May 2002 DM 912.00 per month
VW Passat Variant .. Term 36 months until December 2000 DM 887.00 per month
Mercedes Benz ...... Term 42 months until June 2000 DM 974.62 per month
VW Golf Variant .... Term 48 months until February 2003 DM 497.00 per month
Gas supply agreement, Oeser Italia, dated March 6, 1998, valid until March 5,
2001
Electricity supply agreement, Neckarwerke, dated January 24, 1990 relating to
H.L.-Str. 66 Agreement No. 421052
Electricity supply agreement, Neckarwerke, dated January 24, 1990 relating to
Rigistrasse 20 Agreement No. 421224
Electricity supply agreement, Neckarwerke, relating to Rigistrasse 12
Gas supply agreement, GVF, dated September 9, 1986 relating to Rigistrasse 20
Gas supply agreement, GVF, dated May 16, 1990 relating to
Heinr.-Landerer-Str. 66
Annex to
Section 7
Item 19, government concessions, permits and licenses
Tax concession for use of spirits, granted by the main customs office in
Stuttgart-Ost.
Customs tariff concession (license to process duty-free goods) for benzenes,
toluenes and xylenes, granted by the main customs office in Stuttgart-Ost. We
must verify the use of toluene and xylene to the main customs office in Ulm. The
most recent audit was conducted on February 4, 1999.
We applied for a tax concession to use natural gas to eliminate waste gases on
November 9, 1998. The concession refers to both post-combustion plants.
Modification permit under emission protection law to build and operate a waste
gas purification plant on the premises at Heinrich-Landerer-Str. 66, granted on
June 3, 1991 (operating permit for Goppingen).
Modification permit under emission protection law to build a TNA plant to purify
the solvent emissions of all plants at the Holzheim facility, Rigistrasse 20,
granted on November 11, 1986 (operating permit for Holzheim).
Annex to
Section 7
Item 21
ATS
Ernst Oeser & Sohne KG
Overview of business insurances
Annual
Sum Premium
Property/ Insured incl.
Contract Insured Lives in DM insurance
Type Insurer Risks Insured (Policy Value) Term tax
- ---- ------- ----- ------- -------------- ----- ---
Fire/ Allianz Fire Buildings 14,921,016.00 01.01.00 106,396.80
all risk 8098200 (replacement
value)
EC Equipment 49,193,737.00
(replacement
value)
Burglary Inventories 11,000,000.00
and (fixed sum)
house-
breaking
by persons
unknown
(from
outside)
Models/patterns 10,000.00
Provision 2,000,000.00
Containers 60,000.00
Premium rate 1.218/oo
Fire Allianz Fire Profit and 40,202,000.00 01.01.00 22,111.00
con- 8098280 fixed costs
se- with 24-month
quen- liability
tial period
loss Premium rate 0.50/oo
Elec- DARAG All risk Data, office and 407,581.00 01.01.00 1,549.90
tronics 30000299 incl. communications
internal technology
business
damage
Data media 50,000.00
Business Allianz Third- Personal injury 5,000,000.00 01.01.00 16,645.80
and 0014640 party and property
product liability damage, lump
liability claims sum per event.
arising
from
business
premises
and
product
risks,
incl.
extended
product
liability
-worldwide-
Annual maximum 10,000,000.00
Premium rate 0.35/oo
(based on
turnover)
Environ- Allianz Equip- Personal 5,000,000.00 01.01.00 27,666,90
mental 2022126 ment injury and
liability pursuant property
to Water damage
Resources lump sum
Management per event
Act Equip- and year
ment
pursuant
to
Environ-
mental
Liability
Act
(Annex 1)
Environ-
mental
basic
cover
Transport HDI Damage Procurement Transport 01.01.00 14,087.50
003264- loss of and maximum
06014 insured intermediate 500,000.00
goods transportation,
during dispatch of
trans- pre-products
porta- and end products
tion and as well as
interim capital goods-
storage worldwide-
Premium rate 0.25/oo
(based on
turnover)
Exhibi- 06026 Exhibition
tion booth,
risks exhibits
Premium rate 1.05/oo 500.00
(based on
value)
Minimum
premium
Works 06040 Electronic 15,000.00
measuring
instruments
in own
vehicles
Premium rate 22.5/oo 388.10
Accident HDI Occupational 34 named Various 01.01.00 4,667.20
03264- and persons individual
03013 recreational Benefits sums
accidents- in case insured
worldwide- of death
and
invalidity
Legal DAS Court and 21 cars 100,000.00 01.01.00 2,599.80
remedy 313- defense 3 trucks
(traffic) 3276 costs in
case of
traffic
offenses,
vehicles
and
contractual
disputes
Legal HDI Preliminary Florian Oeser 500.000,00 01.01.00 8,096.00
remedy 03264- investigation, Holger Wolters
(crim- 04017 court and Jochen Oeser
inal defense costs Heinz-Jochen Oeser
law) in criminal
proceedings
Motor Allianz Third party All vehicles Unlimited 01.01.00 27,700.00
registered
or leased by
Oeser
Fully 16 cars Excess 650
comprehensive 2 trucks
Part 2 cars Excess 300
comprehensive
Business Fully and part Employees' Excess 300 2,500.00
travel own comprehensive vehicles
damage during
business
travel
Motor Alte Third party 2 high-lift Unlimited 01.01.00 276.00
Leipziger trucks
Export AK Loss of Customer Maximum 01.01.00 18,000.00
credit Mainz receivables receivables liability 20
112-126. because of respect of times annual
805-00/4 insolvency which a premium
and non- limit
payment application
has
been submitted
Premium rate 1.4/oo
(based on
monthly balance)
Intervention 5.0%
surcharge
(on premium)
Oeser France 10,500.00
Comm- AK Loss of Customer Maximum 38,500.00
ercial Mainz receivables receivables liability
credit 312- because of in respect 20 times
126. insolvency of which a annual
805.00/6 limit premium
application
has been
submitted
Premium rate 1.4/oo
(based on
monthly
balance)
Total 302,185.00
Annex to
Section 7
Item 22
n/a
Annex to
Section 7
Item 23
Message Joywin
Request to deliver in future with a neutral label.
Annex to
Section 7
Item 24 that, in so far as nothing to the contrary is specified in
Annex xxxx, and since December 31, 1998,
a - f) n/a
g) there have been no damages or losses, regardless of whether or
not covered by insurance
Loss of receivables from Menno GmbH Gingen DM 39,662.18
The customer is covered by credit insurance
h - i) n/a
Annex to
Section 7
Item 28
Persons whose knowledge is included
Mr. Hans-Peter Post
Annex to
Section 7
Item 14
a)
Measurements taken on the thermal waste air purification plant in Holzheim
revealed CO values that were higher than normal, but below the maximum limit.
An inspection is scheduled for March 27/28, 1999.
Annex to
Section 7
Item 14
b) that, with the exception of product numbers 609 HK and 609 WH, which
are kept on hand for application to plastic materials, the Company
produces no products which contain lead.
Lists of residual stocks of products that contain lead can be consulted at
Oeserwerk.
Some goods purchased for resale contain lead.
Annex to
Section 7
Item 15, litigation and safeguard of rights
a) that with the exception of those cited in Annex xxx no litigation or
administrative procedures ...
Contact with attorneys Mossner, Weller, Schwarz & Partner
Dr. Vetter concerning the possibility of contractual amendment SAP / CMCS / ECS
Correspondence dated February 24,1999 and March 5, 1999
Annex to
Section 7
Item 16, significant contracts
a) contracts of employment with the COMPANY's legal representatives and
executives ...
Oeser, Florian Management
Oeser, Jochen Management
according to the Articles of Association of Oeserwerk, Ernst Oeser & Sohne KG
dated June 1, 1978 with 4 amendments, agreement and Annexes 1 + 2
Herrscher, Dr. Otto Research & Development
Hummel, Reiner Marketing & Sales
Konig, Eberhard Order to Delivery
Kuhnberger, Bernd Quality Management & Assurance
Post, Hans-Peter Administration
Wawrzinek, Gerold Materials Management
Annex to
Section 7
Item 16, significant contracts
b) other employment contracts that provide for annual remuneration of more
than DM 100,000.00 or rulings in regard to bonuses, royalties,
retirement or early retirement arrangements ...
Amann, Heinz
Bruno, Wolf-Dieter
David, Martin
Fuchs, Walter
Leveringhaus, Jurgen
Muller, Harry
Muller, Erwin
Schurr, Heidemarie
Oeser, Ingeborg
Oeser, Dr. Ernst Georg
Oeser, Heinz-Jochen
according to the Articles of Association of Oeserwerk, Ernst Oeser & Sohne KG
dated June 1, 1978 with 4 amendments, agreement and Annexes 1 + 2
Annex to
Section 7
Item 16, significant contracts
c) contracts with all types of consultants (> DM 25,000 a year)
Siebel, Wuppertal 15.01.97 Consultant's agreement
Priebelsky, Martin 10.04.92 Consultant's agreement
KPMG, Stuttgart Audit of annual financial
statements and tax advice
CMCS/Delta Unternehmensberatung SAP advice, customizing
SID technical safety management, February 2, 1999
Staufenakademie Boll, consultancy commission for QM, winding shop and T 6
Staufenakademie Boll, consultancy commission, modification T 6
Sphara Emission measurements
Annual management fee approx. DM 46,000.00
TUV (technical safety) inspections are required for the following equipment:
Lightning protection equipment, Goppingen and Holzheim
Pressure vessels of compressor plant
Electrical equipment, Goppingen and Holzheim
Solvent tanks, Goppingen and Holzheim
Oil tanks, Goppingen and Holzheim
Passenger elevators, Goppingen and Holzheim
Alcohol tank Goppingen
Hazardous materials store
Annex to
Section 7
Item 16, significant contracts
d)
n/a
Annex to
Section 7
Item 16, significant contracts
e) contracts with customers or suppliers with a value exceeding DM
100,000.00 per year as well as contracts which provide for discounts,
deductions, bonuses or pre-payments not in accordance with standard
business practices or which are calculated below cost
Kornmark, Berlin 17.03.97 Outline agreement
Mannesmann VDO, Babenhausen 09.10.98 Annual contract 1999
Order placed by Coroplast, Wuppertal - order value DM 72,850.00
Offer submitted to Dorken, Herdecke - anticipated order value DM 105,000.00
Drahtwerke Elisental 19.02.98 Supplier's outline agreement
Vapor deposition wire, pure
aluminium 1.5 mm
Elektroschmelzwerk, Kempten 28.04.98 Supplier's outline agreement
Evaporator boats
API (Whiley) 20.01.99 Most recent revision of outline
agreement for blocking
foil 81 GT black
Mitsubishi, Wiesbaden Long-term price agreements
Seahan, Eschborn Long-term price agreements
Mitsubishi, Wiesbaden 01.01.92 Consignment stock contract
Toray, Frankfurt 04.12.97 Consignment stock contract
Du Pont, Bad Homburg Consignment stock contract
Annex to
Section 7
Item 16, significant contracts
f) rental and leasing agreements
Pribelsky, Martin 28.09.95 Part acceptance of office rental
cost
Hartmann-Oeser Monthly office rent DM 600.00
IT leasing Total commitment DM 2,654,262 Term 36 DM 81,305.00 per month
months
Car leasing
AUDI A6 ......... Term 42 months until May 2002 DM 912.00 per month
AUDI A3 ......... Term 36 months until December 1999 DM 688.00 per month
AUDI A6 ......... Term 36 months until February 1999 DM 989.00 per month
VW Passat ....... Term 48 months until February 1999 DM 546.00 per month
AUDI A4 ......... Term 36 months until June 1999 DM 860.00 per month
AUDI A4 ......... Term 36 months until August 1999 DM 861.00 per month
AUDI 80 Avant ... Term 48 months until July 1999 DM 758.00 per month
AUDI A6 ......... Term 42 months until November 1999 DM 826.00 per month
VW Golf Variant . Term 48 months until April 1999 DM 554.00 per month
VW Passat Variant Term 36 months until December 2000 DM 887.00 per month
Mercedes Benz ... Term 42 months until June 2000 DM 974.62 per month
VW Golf Variant . Term 48 months until February 2003 DM 497.00 per month
Annex to
Section 7
Item 16, significant contracts
g) loans either granted or taken, loans to employees ...
n/a
Annex to
Section 7
Item 16, significant contracts
h)
oral clientele protection agreements without binding legal effect
Interfrance, Hosbach
--------------------
There does not exist either a contract or any other written form of our
oral agreement concerning clientele protection in favor of Interfrance.
SCS Schwarz & Co., Leinfelden-Echterdingen
------------------------------------------
An oral agreement exists for us to supply Schwarz, as a customer, with
our transparent varnish foil 799 RPK, article number C 535010, for use
with Xeikon digital printers. It has been agreed orally that we shall
not offer this product to users of the Xeikon digital printers and,
where appropriate, that we shall refer such clients to Schwarz.
Annex to
Section 7
Item 16, significant contracts
i) insurance policies ...
Insurances
Fire / all risk Allianz 8098200
Fire consequential loss Allianz 8098280
Electronics DARAG 30000299
Business and product liability Allianz 0014640
Environmental liability Allianz 2022126
Transport HDI 003264-06014
Exhibition risks HDI -06026
Works traffic HDI -06040
Accident HDI 03264-03013
Legal remedy (traffic) DAS 313-3276
Legal remedy (criminal law) HDI 03264-04017
Motor Allianz third party
Business travel own damage Allianz fully and part
comprehensive
Motor Alte Leipziger third party
(high-lift trucks)
Export credit AK Mainz 112-126.805-00/4
Commercial credit AK Mainz 312-126.805-00/6
Annex to
Section 7
Item 16, significant contracts
j) agreements limiting competition ...
Hatipoglu, Istanbul 29.01.92 Agency agreement, Turkey
Schessi, Donzdorf 21.08.98 Sales agreement, Germany
Joywin, Hongkong 17.03.98 Agency agreement, Hongkong,
Macao and China
Foilco, Atherton 26.11.87 Agency agreement, England
Goodie, New Delhi 14.01.93 Agency commitment, Nepal
Nouravian, Teheran 12.04.89 Agency commitment, Iran
Kapadia, Bombay 19.07.66 Agency agreement, India
Zethraeus, Stockholm 04.10.66 Agency agreement, Sweden
Dina, Koprivnica 30.07.97 Agency agreement, Croatia,
Bosnia-Herzegovina
Kazziha, Damascus 04.07.91 Agency agreement, Syria
Coding, Martin 15.01.96 Dealership agreement,
Slovakia
Scanex, Horb 03.06.91 Sales commitment, Poland
Mayer, Brunn 23.05.85 Agency agreement, Austria
Sorequil, Lisbon 01.10.81 Agency agreement, Portugal
Exim, Seoul 01.12.92 Agency agreement, Korea
Cogimex, Brussels 14.01.48 Agency agreement, Belgium
Equiplas, Paris 18.01.89 Sales commitment, France
El Wafa, Cairo 01.09.98 Agency agreement, Egypt
Taro, Karachi 10.10.96 Agency agreement Pakistan
Huggins, Port of Spain 05.02.81 Agency agreement, Trinidad
and Tobago
Stralfors, Ljungdahls 12.03.99 Exclusivity for type 15371
Emafyl, London since 1996 Exclusivity for decor foils
as per enclosed list in
file
Pending agreements
- ------------------
KBAT, Novosibirsk 10.03.99 Dealership agreement for
territory east of the
Urals
Typical non-binding commitments
- -------------------------------
Hazeghnejad, Teheran 05.06.89 These and similar
commitments have been
made
Eni-Trade, Helsingborg 27.03.91 to several of our business
associates, but we do not
regard them as
obligations.
oral clientele protection agreements without binding legal effect
Interfrance, Hosbach
--------------------
There does not exist either a contract or any other written form of our
oral agreement concerning clientele protection in favor of Interfrance.
Page 2
Section 7, item 16 j)
SCS Schwarz & Co., Leinfelden-Echterdingen
An oral agreement exists for us to supply Schwarz, as a customer, with
our transparent varnish foil 799 RPK, article number C 535010, for use
with Xeikon digital printers. It has been agreed orally that we shall
not offer this product to users of the Xeikon digital printers and,
where appropriate, that we shall refer such clients to Schwarz.
REIMBURSEMENT AGREEMENT
between
Sesvenna 20. Vermogensverwaltungs
(in the process of being renamed CFC EUROPE GMBH)
and
LASALLE BANK NATIONAL ASSOCIATION
Dated as of March 19, 1999
REIMBURSEMENT AGREEMENT
This Reimbursement Agreement (this "Agreement") dated as of the 19th
day of March, 1999 is by and between Sesvenna 20. Vermogensverwaltungs GmbH (in
the process of being renamed CFC EUROPE GMBH), a German corporation (the
"Company") and LASALLE BANK NATIONAL ASSOCIATION, a national banking association
(the "Bank").
W I T N E S S E T H:
WHEREAS, the Company has entered into that certain letter agreement
(the "ABN Loan Documents") with ABN AMRO Bank (Deutschland) AG ("ABN AMRO")
providing for a DM 7,500,000 line of credit (the "Line of Credit") and a DM
11,000,000 term loan (the "Term Loan"; the Term Loan and the Line of Credit are
collectively referred to as the "Loans");
WHEREAS, the Company has requested that Bank cause LaSalle National
Bank ("L/C Bank") to issue an irrevocable standby letter of credit in the form
of Attachment A hereto (such letter of credit, as amended, modified or otherwise
supplemented from time to time, is referred to herein as the "Letter of Credit")
in favor of ABN AMRO to secure the obligations and liabilities of the Company to
ABN AMRO under the ABN Loan Documents, with such Letter of Credit to be in an
amount not exceeding DM 19,425,000 (the "Stated Amount"); and
WHEREAS, the parties hereto desire to enter into this Agreement in
order to, among other things, provide for the issuance of the Letter of Credit
and certain of the terms and conditions relating thereto;
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS. For the purpose of this Agreement, capitalized terms
used herein and not otherwise defined shall have the meanings assigned to them
in the other Loan Documents. In addition to terms defined elsewhere herein, the
following terms shall have the following meanings:
"Affiliate" of any Person shall mean any other Person which, directly
or indirectly, controls, is controlled by, or is under common control with such
Person. A Person shall be deemed to be "controlled by" any other Person if such
other Person possesses, directly or indirectly, the power
(1) to vote securities having fifty percent (50%) or more voting power
(on a fully diluted basis) for the election of directors
or managing general partners; or
(2) to direct or cause the direction of the management and policies of such
Person, whether by contract or otherwise.
"Authorized Officer" means, in the case of a corporation, the Chairman,
the Managing Director, the President, any Executive Vice-President, Vice
President of Finance, any Vice President or the Treasurer of the specified
corporation.
"Business Day" means any day other than (A) a Saturday, Sunday, or (B)
a day on which banking institutions located in Chicago, Illinois, are required
or are authorized by law or executive order to close.
"Certifying Officer" shall mean the Secretary or an Assistant Secretary
of the specified corporation.
"Date of Issuance" shall mean the date of issuance and delivery of the
Letter of Credit.
"Default" shall mean any event which with notice or lapse of time, or
both, would become an Event of Default.
"DM" or "Deutsche Mark" shall mean lawful currency of the Federal
Republic of Germany.
"Event of Default" shall have the meaning assigned to such term in
Section 10 hereof.
"Expiration Date" means the last day a drawing is available under the
Letter of Credit by operation of its terms, or as defined herein in subsection
3(f) hereof.
"Initial Stated Amount" shall mean the Stated Amount of the Letter of
Credit on the Date of Issuance.
"Loan Documents" means this Agreement, the Pledge, the ABN Loan
Documents, and all instruments, documents and agreements executed in connection
herewith or therewith, as the same may be amended, modified, supplemented or
restated from time to time, and "Loan Document" shall mean any one of the
foregoing.
"Obligations" shall mean all indebtedness, liabilities,
responsibilities and obligations, whether now existing or hereafter arising,
primary or contingent, owing to the Bank or the L/C Bank by the Company, whether
pursuant to this Agreement, any guaranty in favor of Bank by any Subsidiary or
the Company, by assignment, participation or otherwise, and all covenants,
agreements and obligations, whether now existing or hereafter arising, to be
performed or observed in favor of the Bank by the Company, whether pursuant to
this Agreement or otherwise.
"Person" shall mean any natural person, joint venture, trust,
unincorporated organization, firm, association, corporation, institution,
entity, partnership, public body or governmental body of any kind whatsoever.
"Prime Rate" means for any day the rate of interest announced by the
Bank from time to time as its prime rate which is not intended to be the Bank's
lowest or most favorable rate of interest at any one time. The effective date of
any change in the Prime Rate shall be for purposes hereof the date any change in
the Prime Rate is announced or quoted by the Bank.
"Subsidiary" means, with respect to any Person, any corporation of
which the outstanding capital stock having more than fifty percent (50%) of the
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, by such
Person and one or more other Subsidiaries of such Person or by one or more other
Subsidiaries of such Person.
SECTION 2. ISSUANCE OF THE LETTER OF CREDIT. The Bank agrees to cause the L/C
Bank to issue on the date of execution and delivery of this Agreement, upon the
terms, subject to the satisfaction of the conditions and relying upon the
representations and warranties set forth in this Agreement, the Letter of Credit
in substantially the form of Attachment A hereto. The Letter of Credit shall
initially be in a Stated Amount of DM 19,425,000 (the "Stated Amount").
SECTION 3. REIMBURSEMENT AND OTHER PAYMENTS.
(1) Reimbursement and Interest. The payment of a draft under the Letter of
Credit shall constitute a loan to and indebtedness of the Company and the
Company hereby agrees to pay to the Bank (i) the full amount of all drawings
made under the Letter of Credit immediately upon payment by the L/C Bank, of
each such drawing and on the date of each such payment and (ii) on demand, any
and all reasonable charges and expenses which the Bank or L/C Bank may pay or
incur relative to the Letter of Credit and any and all reasonable expenses
incurred by the Bank in enforcing any rights under this Agreement, including,
but not limited to, reasonable attorneys' fees incurred by the Bank in enforcing
any of such rights. If the Company does not make such reimbursements on the date
due or demanded, in addition to any Event of Default resulting therefrom, such
reimbursement obligations shall bear interest at the rate per annum specified in
Section 3(h) hereof.
(2) Commission and Other Fees. The Company hereby agrees to pay the following
amounts to the Bank:
(1) an annual Letter of Credit fee in the amount of .75% per
annum of the Stated Amount, or such lesser face amount as the Letter of
Credit has been reduced to as of the date of any such payment, payable in
advance, on the Date of Issuance and on each anniversary thereof hereafter;
(2) a transaction fee in an amount equal to the greater of
(a) one-eighth of one percent (1/8 of 1%) of any amount drawn under
the Letter of Credit to pay principal or interest or expenses on the
Loans, or (b) $200, plus, in either case, any applicable wire transfer and
special handling charges of the L/C Bank, payable when such drawing has
been paid by the L/C Bank;
(3) all customary fees and administrative expenses of the Bank
or L/C Bank in connection with the issuance, transfer, maintenance,
modification (if any) and administration of the Letter of Credit,
payable upon demand from time to time; and
(4) a commitment fee in the amount of .5% of the Stated Amount,
payable on the Date of Issuance.
(3) Computation of Interest. Interest payable hereunder shall be computed on the
basis of a year of 360 days, for the actual number of days elapsed (including
the first day and excluding the last day). Whenever any payment under this
Agreement shall be due on any day that is not a Business Day, the date for
payment thereof shall be extended to the next succeeding Business Day. If the
due date for any such payment is so extended or extended for any other reason,
including operation of law, interest shall accrue and be payable for such
extended time.
(4) Change in Law, Compensation.
(1) If any change in any law, regulation, guideline or directive
(whether or not having the force of law) or in the interpretation thereof
by any court or administrative or governmental authority charged with the
administration thereof shall either (1) impose, modify or deem
applicable any reserve, special deposit or similar requirement against
letters of credit issued by the Bank or the L/C Bank, or any advance or
forbearance in respect of the reimbursement obligations of the Company
under this Agreement (an "Advance") or (2) impose on the Bank or the
L/C Bank any other condition regarding this Agreement, the Letter of
Credit and the result of any event referred to in clause (1) or (2)
above shall be to increase the cost to the Bank or L/C Bank of issuing
or maintaining the Letter of Credit (which increase in cost shall be
the reasonable allocation of the aggregate of such cost increases
resulting from such events), then, upon demand by the Bank, the Company
shall immediately pay to the Bank or the L/C Bank from time to time as
specified by such party, additional amounts which shall be sufficient
to compensate such party for such increased cost from the date of such
change, together with interest on each such amount from the date
demanded until payment in full thereof at the rate provided in clause
(ii) of paragraph (a) above. A certificate setting forth in reasonable
detail such increased cost incurred by any such party as a result of
any event mentioned in clause (1) or (2) above, submitted by such party
to the Company, shall be conclusive, absent manifest error, as to the
amount thereof.
(2) If any change in any law, regulation, guideline or directive
(whether or not having the force of law) or in the interpretation thereof
by any court or administrative or governmental authority charged with
the administration thereof shall prohibit or restrict the making of any
drawing under the Letter of Credit, maintaining as outstanding any loan
on behalf of the Company or the charging of interest on such loan, the
Company agrees that the Bank or the L/C Bank shall have the right to
comply with such prohibition or restriction and require repayment in
full of each loan together with accrued interest thereon. A certificate
setting forth the details concerning the foregoing submitted by the
Bank or the L/C Bank to the Company shall be conclusive, absent
manifest error, as to such matters.
(5) Time and Place of Payment. All payments by the Company to the Bank hereunder
shall be made by 12:00 noon (Chicago time) on the date due in lawful currency of
the United States, in immediately available funds, to the Chicago office of the
Bank at 4747 West Irving Park Road, Chicago, Illinois 60641 in an amount equal
to the U.S. Dollar equivalent of the amount in DM paid by the L/C Bank under the
Letter of Credit to ABN AMRO, at the exchange rate in effect on the date of the
payment by the L/C Bank.
(6) Expiration. The Expiration Date of the Letter of Credit shall be the earlier
of (i) the later of the close of banking business in Chicago on April 15, 2004,
or such later date as the Letter of Credit has been extended to in accordance
with its terms (the "Stated Expiration Date"), or if such day is not a Business
Day, then the next succeeding Business Day; and (ii) the close of business on
the date on which the Loans have been indefeasibly paid in full.
(7) Non-Usurious Interest Rate. It is the intention of the Bank and the Company
to comply with the laws of the State of Illinois and notwithstanding any
provision to the contrary contained herein, the Company shall not be required to
pay, and the Bank shall not be permitted to collect any interest (or fees
determined to constitute interest) in an amount in excess of, the maximum
non-usurious amount of interest permitted by applicable law ("Excess Interest").
If any Excess Interest is provided for or determined to have been provided for
under this Agreement by a court of competent jurisdiction, then in such event
(i) the provisions of this subsection 3(g) shall govern and control; (ii)
neither the Company nor any endorser shall be obligated to pay any Excess
Interest; (iii) any Excess Interest that the Bank may have received hereunder
shall be, at Bank's option, (1) applied as a credit against the outstanding
principal balance of the Obligations or accrued and unpaid interest (not to
exceed the maximum amount permitted by law), (2) refunded to the payor thereof,
or (3) any combination of the foregoing; (iv) the interest rate(s) provided for
herein shall be automatically reduced to the maximum lawful rate allowed under
applicable law, and this Agreement shall be deemed to have been, and shall be,
reformed and modified to reflect such reduction; and (v) neither the Company nor
any endorser shall have any action against the Bank for any damages, penalties
or relief under any usury statute to set aside the Obligations or to make the
Obligations or any portion thereof uncollectible arising out of the payment or
collection of any Excess Interest.
(8) Late Payments. If the principal amount of any Obligation is not paid when
due, such Obligation shall bear interest until paid in full at a rate per annum
equal to the Prime Rate from time to time in effect plus two percent (2%),
payable on demand, for the period from and including the date on which payment
is due or declared due, but not including the date on which the payment is made.
Interest shall be computed on the basis of a year consisting of 360 days for the
actual number of days elapsed.
SECTION 4. REDUCTION.
Reduction of the Stated Amount. The Letter of Credit shall be
permanently reduced on a quarterly basis in an amount equal to DM 218,750, if
within ten (10) days after the end of each calendar quarter, ABN AMRO shall not
have made a drawing thereunder.
SECTION 5. CONDITIONS PRECEDENT TO ISSUANCE OF THE LETTER OF CREDIT. The
obligation of the Bank to cause the L/C Bank to issue the Letter of Credit shall
be subject to the satisfaction of the following conditions precedent:
(1) The following statements shall be true and correct on the Date of Issuance
and the Bank shall have received a certificate of the Company signed on its
behalf by an Authorized Officer, dated the Date of Issuance, stating that:
(i) the representations and warranties contained in the Loan
Documents and this Agreement are correct on and as of the Date
of Issuance as though made on and as of such date; and
(ii) no Event of Default has occurred and is continuing, or
would result from the issuance of the Letter of Credit, and no
event has occurred and is continuing which would constitute
any such Event of Default but for the requirement that notice
be given or time elapse or both;
(b) The Bank shall have received on or before the Date of
Issuance the following, each dated the Date of Issuance or the date
hereof, as the Bank may require, in form and substance satisfactory to
the Bank and its counsel:
(i) incumbency certificate with respect to the Authorized
Officers of the Company executing the documents referred to in
item (i) above;
(ii) evidence of the due authorization, execution and delivery
by the parties thereto of the Loan Documents to which the
Company or any Subsidiary is a party, including without
limitation fully executed copies (or a certified duplicate
thereof) of each of the ABN Loan Documents;
(iii) a guaranty by CFC International, Inc. of the obligations
of the Company hereunder;
(iv) the pledge by the Company of the shares of CFC Oeserwerk
GMBH and CFC Oeser France SARL ("Pledge") as collateral for
the Obligations;
(v) copies of the organizational documents of the Company;
(vi) an opinion of counsel to the Company;
(vii) a fully executed copy of this Agreement; and
(viii) such other certificates, documents, instruments,
approvals (and, if requested by the Bank, certified duplicates
of executed copies thereof) or opinions as the Bank may
reasonably request.
SECTION 6. OBLIGATIONS ABSOLUTE. The Obligations of the Company under this
Agreement shall be absolute, unconditional and irrevocable, and shall be paid
and performed strictly in accordance with the respective terms thereof, under
all circumstances whatsoever, including, without limitation, the following
circumstances:
(1) any lack of validity or enforceability of the Letter of Credit;
(2) any amendment or waiver of or any consent to departure from all or any
of the other Loan Documents;
(3) the existence of any claim, set-off, defense or other rights which the
Company may have at any time against any beneficiary or any transferee of the
Letter of Credit (or any persons or entities for whom any such beneficiary or
any such transferee may be acting), the Bank or the L/C Bank (other than the
defense of payment to the Bank in accordance with the terms of this Agreement)
or any other person or entity, whether in connection with this Agreement, the
Letter of Credit, the Loan Documents or any unrelated transaction;
(4) any statement or any other document presented under the Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect whatsoever; provided
that the acceptance of any such statement or document by the Bank or the L/C
Bank shall not be the result of gross negligence or willful misconduct by the
Bank or the L/C Bank;
(5) payment by the L/C Bank under the Letter of Credit against presentation of a
sight draft or certificate which does not comply with the terms of the Letter of
Credit, provided that such payment shall not have constituted gross negligence
or willful misconduct of the L/C Bank;
(6) payment by the L/C Bank under the Letter of Credit notwithstanding:
(i) any instructions of the Company given after the Letter
of Credit is issued not to make payment thereunder;
(ii) the occurrence of any event, including, without
limitation, the commencement of legal proceedings to prohibit
payment under the Letter of Credit; or
(iii) the issuance of any order by any government agency,
governing body or court whether or not having jurisdiction in
the premises prohibiting payment under the Letter of Credit
provided that such payment shall not have constituted gross
negligence or willful misconduct on the part of the L/C Bank;
and
(7) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, provided that such other circumstance or happening shall
not have been the result of gross negligence or willful misconduct of the Bank
or the L/C Bank.
SECTION 7. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to the Bank as follows:
(1) Incorporation By Reference. The representations and warranties of the
Company as set forth in the ABN Loan Documents are hereby incorporated in this
Agreement by this reference as if they were fully set forth herein, and such
representations and warranties shall continue in effect as long as this
Agreement remains in effect regardless of whether the ABN Loan Documents shall
be earlier terminated. If any provision contained in this Agreement is in
conflict with, or inconsistent with, any provisions in the ABN Loan Documents,
the provision contained in this Agreement shall govern and control with respect
to the contractual relationship between the Company and the Bank under this
Agreement.
(2) Reaffirmation and Readoption. Each and every representation and warranty
contained in the ABN Loan Documents or thereafter made by the Company is hereby
reaffirmed and readopted as being true and correct in all respects on and as of
the date hereof.
(3) Power and Authority, No Contravention. The execution, delivery and
performance by the Company of this Agreement has been duly authorized by all
necessary corporate action, and (i) does not contravene any law or contractual
restriction binding on or affecting the Company, and (ii) does not contravene
any charter, or other organizational document of the Company.
(4) No Consent, etc. No consent, authorization, order, registration,
qualification or approval or other action by, and no notice to or filing with,
any Person is required for the due execution, delivery and performance by the
Company of this Agreement, other than those already obtained.
(5) Legal, Valid and Binding. This Agreement has been duly executed and
delivered by the Company, is the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
(6) Litigation. There is no outstanding judgment, order or award, or pending
action or proceeding before any court, governmental agency or arbitrator against
or directly involving, the Company and, to the best of the Company's knowledge,
there is no threatened action or proceeding affecting the Company before any
court, governmental agency or arbitrator which, in any case, may materially and
adversely affect the financial condition, business, properties or operations of
the Company.
(7) Compliance with Other Instruments, Material Restrictions. The Company is not
in default in the performance, observance or fulfillment of any of the material
obligations, covenants or conditions contained in any agreement, instrument or
document evidencing or pursuant to which indebtedness has been issued by it or
in any other agreement to which it is a party. The Company is not a party to any
agreement or other instrument or subject to any other restriction which
materially adversely affects its business, property, assets, operations or
condition, financial or otherwise.
(8) No Defaults. No Event of Default or no event has occurred and is continuing
which would constitute any such Event of Default but for the requirement that
notice be given or time elapse or both.
SECTION 8. AFFIRMATIVE COVENANTS OF THE COMPANY. So long as the Expiration Date
has not occurred or any Obligation has not been completely performed or
otherwise satisfied, unless the Bank shall otherwise consent in writing, the
Company agrees:
(1) Incorporation by Reference. The affirmative covenants of the Company as set
forth in the ABN Loan Documents, as amended from time to time, are hereby
incorporated in this Agreement by this reference as if they were fully set forth
herein, and such covenants shall continue in effect and the Company agrees to
keep and perform same as long as this Agreement remains in effect regardless of
whether the ABN Loan Documents shall be earlier terminated. If any provision
contained in this Agreement is in conflict with, or inconsistent with, any
provisions in the ABN Loan Documents, the provision contained in this Agreement
shall govern and control with respect to the contractual relationship among the
Company and the Bank under this Agreement.
(2) Payment and Performance. The Company will pay and perform each of the
Company's covenants and obligations under this Agreement, the Letter of Credit,
and the Loan Documents in accordance with the terms and conditions set forth
herein and therein.
(3) Reports and Notices of Certain Events. The Company will furnish to the Bank,
promptly, and in no event more than five (5) Business Days after learning of the
occurrence of any of the following, written notice thereof, describing the same
and the steps, if any, being taken by the Company with respect thereto: (i) the
occurrence of an Event of Default or (ii) the institution of, or any adverse
determination in, any litigation, arbitration or governmental proceeding that is
material to the transactions contemplated by this Agreement.
(4) Annual Profitability. The Company and its Subsidiaries shall each have an
after-tax Net Income of not less than $1 as of the end of each of its fiscal
years. For purposes hereof, "Net Income" shall mean the net income of each of
the Company and its Subsidiaries as calculated in accordance with Generally
Accepted Accounting Principles consistently applied.
(5) Financial Reporting. The Company shall cause to be furnished to the Bank:
(i) Beginning with the month ending May 31, 1999, as soon as
practicable, and in any event within thirty (30) after the end
of each month, the Company's and its Subsidiaries'
consolidated and consolidating statements of income and
retained earnings and statements of cash flow for the month
then ended and consolidated and consolidating balance sheets
of the Company and its Subsidiaries as of the end of such
month, all in reasonable detail, and certified by an
Authorized Officer of Company as being accurate in all
material respects and on a basis consistent with that applied
in the preparation of Company's previous monthly financial
statements; and
(ii) As soon as practicable and, in any event, within ninety
(90) days after the end of each fiscal year of the Company,
beginning with the fiscal year ended December 31, 1999, the
Company's consolidated and consolidating audited statements of
income and retained earnings and statements of cash flow for
the fiscal year then ended and consolidated and consolidating
balance sheets of the Company and its Subsidiaries as of the
end of such fiscal year, all in reasonable detail, certified
by an independent certified public accountant selected by the
Company, and reasonably acceptable to the Bank and prepared in
accordance with Generally Accepted Accounting Principles
consistently applied.
(6) Records, Books and Inspections. The Company will maintain complete and
accurate records and books of account; permit reasonable access by the Bank to,
and permit the Bank to make copies of and to take abstracts from, such books and
records of the Company. The Bank shall treat all such information as
confidential and shall disclose it only to the L/C Bank, Bank's regulators,
employees, agents, assignees, participants, under court order or in connection
with any administrative or judicial proceeding.
(7) Other Agreements. The Company will not enter into any agreement containing
any provision that would be violated or breached in any material respect by the
performance of the Company's obligations under this Agreement, the Letter of
Credit or any of the Loan Documents or under any other instrument or document
delivered or to be delivered by the Company thereunder or in connection
therewith.
(8) Borrowing Base. The Company shall cause its Subsidiary, CFC Oeserwerk GMBH
("Oeserwerk") to provide to the Bank on a monthly basis, within ten (10)
Business Days after the end of each month, a Borrowing Base Certificate (the
"Borrowing Base Certificate") in the form of Attachment B, calculating the
Eligible Accounts and Eligible Inventory of Oeserwerk. If at any time, the
outstanding principal balance of the Line of Credit exceeds the Borrowing Base,
the Company shall or shall cause Oeserwerk to make a payment to ABN AMRO in the
amount of such deficiency.
For purposes of this section,
"Account" means all contract rights, any and all manner of
accounts receivable, contract rights, and all security agreements, guaranties,
letters of credit and any other collateral security for any or all of the
foregoing wheresoever located and whether now or hereafter owned, acquired,
arising or existing.
"Account Debtor" means the Person obligated on any Account.
"Borrowing Base" shall mean: (a) 80% of the face amount of the
Eligible Accounts of Oeserwerk plus (b) 50% of the lower of cost or market value
of the Eligible Inventory of Oeserwerk.
"Eligible Accounts" means such Accounts arising in the
ordinary course of Oeserwerk's business which are not subject to any lien or
encumbrance and which are evidenced by an invoice. In addition, no Account shall
be an Eligible Account, if:
(i) it arises out of a sale made by Oeserwerk to an
Affiliate of Oeserwerk or to a Person controlled by
an Affiliate of Oeserwerk; or
(ii) it is due or unpaid more than ninety (90) days
after the original invoice date; or
(iii) twenty-five percent (25%) or more at any one
time of the Accounts from a particular Account Debtor are
not deemed Eligible Accounts hereunder; or
(iv) the Account Debtor has commenced a voluntary
case under any bankruptcy or insolvency law, as now
constituted or hereafter amended, or a decree or order for
relief has been entered by a court having jurisdiction in
the premises in respect of the Account Debtor in an
involuntary case under the bankruptcy or insolvency laws,
as now constituted or hereafter amended, or any other
petition or other application for relief under the
bankruptcy or insolvency laws has been filed against the
Account Debtor, or if the Account Debtor has failed,
suspended business, ceased to be solvent; or
(v) the goods giving rise to such Account have not
been shipped and delivered to the Account Debtor or the
Account otherwise does not represent a final sale; or
(vi) the Account is subject to any offset, deduction,
defense, dispute, or counterclaim, or if the Account is
contingent in any respect or for any reason; or
(vii) Oeserwerk has made any agreement with any
Account Debtor for any deduction therefrom, except for
discounts or allowances made in the ordinary course of
business for prompt payment, all of which discounts or
allowances are reflected in the calculation of the face
value of each respective invoice related thereto;
"Eligible Inventory" shall mean that portion of Oeserwerk's
inventory consisting of new raw materials and finished goods which is not
subject to any lien or encumbrance, is in good and saleable condition and is not
obsolete, damaged or defective, but shall not include work-in-process, supplies
or packaging material.
SECTION 9. NEGATIVE COVENANTS OF THE COMPANY. So long as the Expiration Date has
not occurred or any Obligation has not been completely performed or otherwise
satisfied, unless the Bank shall otherwise consent in writing, the Company
agrees:
(1) Incorporation By Reference. The negative covenants of the Company as set
forth in the ABN Loan Documents, as amended from time to time, are hereby
incorporated in this Agreement by this reference as if they were fully set forth
herein, and such covenants shall continue in effect and the Company agrees to
keep and perform same as long as this Agreement remains in effect regardless of
whether the ABN Loan Documents shall be earlier terminated. If any provision
contained in this Agreement is in conflict with, or inconsistent with, any
provisions in the Loan Documents, the provision contained in this Agreement
shall govern and control with respect to the contractual relationship between
the Company and the Bank under this Agreement.
(2) Liens. The Company shall not and shall not permit Oeserwerk to create,
incur, grant, pledge, permit or suffer to exist, any security interest, lien,
pledge, mortgage, charge, or encumbrance upon any of its real or personal
property assets, except as provided in the Pledge.
(3) Other Agreements. The Company will not enter into any agreement containing
any provision that would be violated or breached in any material manner by the
performance of the Company's obligations under this Agreement or any other
instrument or document delivered or to be delivered by the Company hereunder or
in connection herewith.
SECTION 10. EVENTS OF DEFAULT. Upon the occurrence of any one or more of
the following events (herein referred to as an "Event of Default"), unless
waived by the Bank pursuant to Section 12 hereof:
(1) Incorporation By Reference. Each "Event of Default" as set forth in the ABN
Loan Documents, as amended from time to time, are hereby incorporated in this
Agreement by this reference as if it were fully set forth herein, regardless of
whether the ABN Loan Documents shall be earlier terminated. If any provision
contained in this Agreement is in conflict with, or inconsistent with, any
provisions in the ABN Loan Documents, the provision contained in this Agreement
shall govern and control with respect to the contractual relationship between
the Bank and the Company under this Agreement; or
(2) Untrue Representation. Any representation or warranty made by the Company
herein, in the other Loan Documents in any certificate, financial or other
statement furnished to the Bank by the Company pursuant to this Agreement or any
other Loan Document shall prove to have been untrue or incomplete in any
material respect when made; or
(3) Failure to Pay. The Company shall fail to pay when due any Obligation; or
(4) Failure to Perform. The Company shall fail to perform or observe any term,
covenant or agreement contained in this Agreement, and any such failure shall
remain unremedied for ten (10) days after written notice thereof shall have been
given to the Company by the Bank; or
(5) Insolvency. The Company becomes insolvent or over-indebted, or a request for
opening of court insolvency proceedings is filed, or the Company commences
out-of-court reorganization or composition negotiations with creditors; or
(6) Dissolution. The Company shall be dissolved or its existence shall otherwise
be terminated.
(7) Other Agreements. A default shall occur and be continuing under any
agreement between the Company and the Bank or under any obligation owed by the
Company to the Bank, subject to any applicable grace or cure period;
(8) Other Indebtedness. A default shall occur in the payment when due (subject
to any applicable grace or cure period), whether by acceleration, redemption, or
otherwise, of any material indebtedness (other than indebtedness under this
Agreement) for borrowed money of the Company, the effect of which causes the
Person to whom such indebted ness is owed to cause such indebtedness to become
due prior to its stated maturity or otherwise accelerated; or
(9) Judgment. A judgment or order shall be rendered against the Company for the
payment of money in excess of DM 435,000, and such judgment or order shall
continue unsatisfied or unstayed for a period of 60 consecutive days.
(10) Lack of Validity. Any provision of this Agreement shall at any time for any
reason cease to be valid and binding on the Company, or shall be declared to be
null and void, or the validity or enforceability thereof shall be contested by
the Company or any other party (excluding the Bank) or any governmental agency
or authority or the Company or any other party shall deny that it has any or
further liability or obligation under this Agreement; or
(11) Borrowing Base Deficiency. The Company or CFC Oeserwerk shall fail to pay
to ABN AMRO the amount of any borrowing base deficiency as provided in Section
8(h) hereof.
SECTION 11. DEFAULT, RIGHTS AND REMEDIES OF THE BANK.
Upon the occurrence of an Event of Default, the Bank may exercise any
one or more of the following rights and remedies contained in this Agreement,
all of the rights and remedies under applicable laws, all of which rights and
remedies shall be cumulative and non-exclusive, to the extent permitted by law:
(1) by written notice to the Company, require that the Company immediately
prepay to the Bank in immediately available funds an amount equal to the
Available Amount (such amounts to be held by the Bank as collateral security for
the Obligations), provided however, that in the case of any Event of Default
described in Section 10(e), such prepayment Obligations shall automatically
become immediately due and payable without any notice;
(2) by written notice to the Company, declare all Obligations to be, and such
amounts shall thereupon become, immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Company, provided that upon the occurrence of an Event of Default under
Section 10(e) hereof such acceleration shall automatically occur; or
(3) pursue any other action available at law or in equity.
(4) DEMAND, PRESENTMENT, PROTEST AND NOTICE OF DEMAND, PRESENTMENT, PROTEST AND
NONPAYMENT ARE HEREBY WAIVED BY THE COMPANY EXCEPT FOR NOTICE OF ACCELERATION IN
ACCORDANCE WITH SUBSECTION 11(a) HEREOF. THE COMPANY ALSO WAIVES THE BENEFIT OF
ALL VALUATION, APPRAISAL AND EXEMPTION LAWS.
SECTION 12. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement, or consent to any departure by the Company therefrom shall in
any event be effective unless the same shall be in writing and signed by the
Bank, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 13. NOTICES. Except as otherwise expressly provided herein, any notice
required or desired to be served, given or delivered hereunder shall be in
writing, and shall be deemed to have been validly served, given or delivered
three (3) days after deposit in the United States mails, with proper postage
prepaid, or upon delivery by courier or upon transmission by telex, telecopy or
similar electronic medium to the following addresses:
(i) If to the Bank, at:
LaSalle Bank National Association
4747 West Irving Park Road
Chicago, Illinois 60641
Attn: Deborah Grudzien
Facsimile (773) 202-2805
with a copy to:
Jenner & Block
One IBM Plaza
Chicago, Illinois 60611
Attn: Rochelle P. Slater, Esq.
Facsimile: (312) 840-7722
(ii) If to the Company, at:
CFC Europe GmbH
Rigistrasse 20
73037 Goeppingen-Holzheim
Germany
Attn: Florian Oeser
Facsimile: 011-49-71-61-800-94-60
with a copy to:
CFC International, Inc.
500 State Street
Chicago Heights, Illinois 60411
Attn: Roger Hruby
or to such other address as each party designates to the other in the manner
herein prescribed.
SECTION 14. NO WAIVER; REMEDIES. No failure on the part of the Bank to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder
preclude any other further exercise thereof or the exercise of any other right.
The remedies herein provided are cumulative and not exclusive of any remedies
provided in any other Loan Document or now or hereafter existing at law or in
equity.
SECTION 15. INDEMNIFICATION. The Company hereby indemnifies and holds harmless
the Bank from and against any and all claims, damages, losses, liabilities,
reasonable costs or expenses whatsoever which the Bank may incur (or which may
be claimed against the Bank by any person or entity whatsoever) by reason of or
in connection with the execution and delivery or transfer of, or payment or
failure to pay under, the Letter of Credit; provided that the Company shall not
be required to indemnify the Bank for any claims, damages, losses, liabilities,
costs or expenses to the extent, but only to the extent, caused by (a) the
willful misconduct or gross negligence of the Bank or L/C Bank in determining
whether a sight draft or certificate presented under the Letter of Credit
complied with the terms of the Letter of Credit or (b) the Bank's or L/C Bank's
willful failure to pay under the Letter of Credit after the presentation to it
by ABN AMRO of a sight draft and certificate strictly complying with the terms
and conditions of the Letter of Credit. Nothing in this Section 15 is intended
to limit the reimbursement obligation of the Company contained in paragraph (a)
of Section 3 hereof. In case any action or proceeding is brought against the
Bank in respect of which indemnity may be sought under this Agreement the party
seeking indemnification shall give notice of any such action or proceeding to
the Company and may require the Company, upon such notice, to assume the defense
of the action or proceeding; provided that failure of such party to give such
notice shall not relieve the Company from any of its obligations under this
Section 15. Upon receipt of notice from any party seeking indemnification the
Company shall resist and defend such action or proceeding at the Company's
expense. The obligations of the Company under this Section 15 shall survive the
payment of the Obligations owed under this Agreement and the termination of this
Agreement. SECTION 1.
SECTION 16. CONTINUING OBLIGATION. This Agreement is a continuing obligation and
shall (i) be binding upon the Company, its successors and assigns, and (ii)
inure to the benefit of and be enforceable by the Bank and its successors,
transferees and assigns; provided that the Company may not assign all or any
part of this Agreement without the prior written consent of the Bank. The Bank
may assign, negotiate, pledge or otherwise hypothecate all or any portion of
this Agreement, or grant participations herein, in the Letter of Credit or in
any of its rights or security hereunder, including, without limitation, the
instruments securing the Company's obligations hereunder. No such assignment or
participation by the Bank, however, will relieve the L/C Bank of its obligation
under the Letter of Credit. In connection with any assignment or participation,
the Bank may disclose to the proposed assignee or participant any information
that the Company is required to deliver to the Bank pursuant to this Agreement;
provided, however, that if any such information is confidential, such third
party shall first enter into a confidentiality agreement with the Company.
SECTION 17. LIMITED LIABILITY OF THE BANK. The Company assumes all risks of the
acts or omissions of ABN AMRO with respect to its use of the Letter of Credit.
Neither the Bank nor any of its officers or directors shall be liable or
responsible for: (a) the use which may be made of the Letter of Credit or for
any acts or omissions of ABN AMRO and any transferee in connection therewith;
(b) the validity, sufficiency or genuineness of documents, or of any
endorsement(s) or signature(s) thereon, even if such documents should in fact
prove to be in any or all respects invalid, insufficient, fraudulent or forged;
(c) payment by the Bank or the L/C Bank against presentation of documents which
do not comply with the terms of the Letter of Credit, including failure of any
documents to bear any reference or adequate reference to the Letter of Credit;
or (d) any other circumstances whatsoever in making or failing to make payment
under the Letter of Credit, except only that the Company shall have a claim
against the Bank, and the Bank shall be liable to the Company, to the extent,
but only to the extent, of any direct, as opposed to consequential, damages
suffered by the Company which the Company proves were caused by (i) the L/C
Bank's willful misconduct or gross negligence in determining whether documents
presented under the Letter of Credit comply with the terms of the Letter of
Credit, or (ii) the L/C Bank's willful failure to pay under the Letter of Credit
after the presentation to it by ABN AMRO of a sight draft and certificate
strictly complying with the terms and conditions of the Letter of Credit.
SECTION 18. COSTS, EXPENSES AND TAXES. The Company agrees to pay on demand all
reasonable costs and expenses in connection with the preparation, execution,
delivery and administration of this Agreement and any other documents which may
be delivered in connection with this Agreement, including, without limitation,
the reasonable fees and out-of-pocket expenses of special counsel and local
counsel for the Bank with respect thereto and with respect to advising the Bank
as of its rights and responsibilities under this Agreement and all reasonable
costs and expenses, if any, in connection with (i) the change in terms,
maintenance, renewal or cancellation of the Letter of Credit, (ii) any and all
reasonable amounts which the Bank has paid relative to the Bank's curing of any
Event of Default resulting from the acts or omissions of the Company under this
Agreement or any Loan Document, (iii) the enforcement of this Agreement or any
Loan Documents, or (iv) any action or proceeding relating to a court order,
injunction or other process or decree restraining or seeking to restrain the
Bank from paying any amount under the Letter of Credit. In addition, the Company
shall pay any and all stamp and other similar taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing and
recording of the Letter of Credit, this Agreement, any other Loan Document or
any other document which may be delivered in connection with this Agreement, and
agrees to save the Bank harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes
and fees.
SECTION 19. SEVERABILITY. Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition, unenforceability
or non-authorization without invalidating the remaining provisions hereof or
affecting the validity, enforceability or legality of such provision in any
other jurisdiction.
SECTION 20. SATISFACTION REQUIREMENT. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to the Bank, the determination of such satisfaction
shall be made by the Bank, in its sole and exclusive judgment exercised in good
faith.
SECTION 21. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS WITHOUT
GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF. THE COMPANY AGREES
AND CONSENTS TO THE EXERCISE OF JURISDICTION OVER IT BY ANY STATE OR FEDERAL
COURT IN THE STATE OF ILLINOIS AND THAT ANY ACTION OR PROCEEDING BROUGHT BY THE
COMPANY UNDER THIS AGREEMENT OR AGAINST THE BANK SHALL BE BROUGHT IN SUCH
COURTS.
SECTION 22. WAIVER OF TRIAL BY JURY. EACH OF THE COMPANY AND THE BANK HEREBY
AGREES THAT, IN ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, IRREVOCABLY
WAIVES ANY AND ALL RIGHTS TO TRIAL THEREOF BY JURY.
SECTION 23. CURRENCY OF ACCOUNT AND PAYMENT. Payment for each and every
obligation due from the Company hereunder shall be made in lawful currency of
the United States. If any sum due from the Company under this Agreement, or any
order or judgment given or made in relation hereto has to be converted from the
currency (the "First Currency") in which the same is payable hereunder, or under
such order or judgment into another currency (the "Second Currency") for the
purpose of (i) making or filing a claim or proof against the Company, (ii)
obtaining an order or judgment in any court or other tribunal, or (iii)
enforcing any order or judgment given or made in relation hereto, the Company
shall indemnify and hold harmless each of the Persons to whom such sum is due
from and against any loss suffered as a result of any discrepancy between (a)
the rate of exchange used for such purpose to convert the sum in question from
the First Currency into the Second Currency and (b) the rate or rates of
exchange at which such Person may in the ordinary course of business purchase
the First Currency with the Second Currency upon receipt of a sum paid to it in
satisfaction, in whole or in part, of any such order, judgment, claim or proof.
SECTION 24. ENGLISH LANGUAGE This Agreement shall be made in the
English language and each communication and document made or delivered by one
party to another pursuant to this Agreement shall be in the English language or
accompanied by a translation thereof into English certified (by an officer of
the Person making or delivering the same), as being a true and accurate
translation thereof.
SECTION 25. FORUM AND JURISDICTION. The Company irrevocably waives any
objection which it might now or hereafter have to the court referred to in
paragraph 21 above being nominated as the forum to hear and determine any suit,
action or proceeding, and to settle any disputes which may arise out of or in
connection with this Agreement and agrees not to claim that any such court is
not a convenience or appropriate forum. The Company agrees the process by which
any suit, action or proceeding is begun may be served on it by being delivered
to CFC International, Inc. at its principal place of business at c/o CFC
International, Inc., 500 State Street, Chicago Heights, Illinois 60411. Nothing
contained herein shall affect the right of the Bank to serve process in any
other manner permitted by law nor shall limit the Bank's right to take
proceedings against the Company in any other court of competent jurisdiction,
nor shall the taking of proceedings in any one or more jurisdictions preclude
the taking of proceedings in any other jurisdiction (whether concurrently or
not) if and to the extent permitted by applicable law.
SECTION 26. WITHHOLDING. All payments made by the Company hereunder
shall be made free and clear of, and without deduction, for any present or
future taxes, withholdings or charges other than income taxes of the United
States and any political subdivision thereof on the interest income received by
the Bank (all such non-excluded taxes, withholdings or charges are hereinafter
referred to as "Taxes"). If the Company shall be required by law to deduct any
Taxes from any sum payable hereunder, (i) the sum payable shall be increased so
that after making all required deductions, the Bank receives the amount
originally payable, and (ii) the Company shall pay the amount of such deductions
to the relevant taxing authority in accordance with applicable law and provide
Bank with an original or certified copy of a receipt evidencing payment thereof.
SECTION 27. COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
SECTION 28. HEADINGS. Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their duly authorized officers as of the day and year first above
written.
CFC EUROPE GMBH
By: ____________________________________
Title: ____________________________________
LASALLE BANK NATIONAL ASSOCIATION
By: ____________________________________
Title: ____________________________________
