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EXHIBIT 10.11
STOCK PURCHASE AGREEMENT
BETWEEN
ROLAND STAPHANE AND ANGELE STAPHANE
AND
XXXX PLASTICS SARL
DATED OCTOBER 28, 1997
RELATED TO
SALE AND PURCHASE
OF
100% OUTSTANDING SHARES
OF
SOMOMECA INDUSTRIES SA
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") made as of
this 28th day of October, 1997, between XXXX PLASTICS SARL, a corporation
organized under the laws of France, whose head office is located at 00 xxx xx
Xxxxx 00000 Xxxxx (the "Buyer") and Roland STAPHANE and Angele STAPHANE
(collectively, the "Seller").
W I T N E S S E T H :
WHEREAS, Seller and the minority shareholders as listed in
Exhibit I attached hereto (collectively the "Minority Shareholders") are the
owners of 500,000 shares (the "Shares"), representing 100% of the outstanding
shares, of SOMOMECA INDUSTRIES, a French societe anonyme (the "Company") having
a corporate capital of FF 25,000,000 (twenty-five million French Francs),
divided into 500,000 shares of FF 50 (fifty French Francs) par value per share,
whose head office is located at X.X. xx Xxxxxxx - 00, xxxxxx xxx Xxxxxx, Xxxxxx
xxx Xxxxx (71100) France and which is registered with the Registry of Commerce
and Companies of Chalon sur Saone under the number B 341 543 031;
WHEREAS, the Company through its direct and indirect
subsidiaries listed in Schedule 2.1.6 attached hereto (the "Subsidiaries")
conducts a business (the "Business") engaged in the manufacture and sale of
injection molded plastic products, tool molds and tools (the "Products") (the
Company and its Subsidiaries shall be referred herein collectively as the "SI
Group");
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, the Shares, for the purchase price and upon the terms and
conditions hereinafter set forth; and
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, the parties hereto agree as follows:
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ARTICLE 1 - PURCHASE AND SALE OF SHARES
1.1 Sale of Shares. Upon the terms and subject to the
conditions hereof, Seller agrees to sell, assign and transfer to Buyer and Buyer
agrees to purchase from Seller, at the Closing (as defined in Section 5.1
hereof), the Shares.
1.2 Purchase Price and Payment.
1.2.1 Share Purchase Price.
Upon the terms and subject to the conditions hereof,
Buyer shall pay to Seller FF 77,000,0 00 (xxxxxxx-xxxxx xxxxxxx Xxxxxx Xxxxxx)
in cash for the 500,000 Shares (the "Share Purchase Price"), less the Deposit
Amount provided for in Section 1.2.8 be low.
1.2.2 Additional Consideration.
(a) Subject to the provisions set forth below, the
Buyer agrees to pay additional consideration (the "Additional Consideration")
for the Shares in the event that the EBIT (as defined in sub-section (iii)
below) for the period beginning September 1, 1997 and ending August 31, 1998
(the "Earn-out Period") exceeds FF 30,000,000 (thirty million French Francs).
(i) The Additional Consideration,
if any, will be determined as follows:
FF 3,000,000 + [EBIT - FF 30,000,000] = Additional Consideration
(ii) In the event that the EBIT for
the Earn-out Period exceeds FF 40,000,000 (forty million French Francs)
the Additional Consideration shall be FF 13,000,000 (thirteen million
French Francs).
(iii) For the purposes
of this Section 1.2.2(b), EBIT shall mean the earnings of the Company
and its consolidated Subsidiaries (excluding earnings from exceptional
events such as sales of assets), before charges for (1) interest, (2)
taxes, (3) management fees, (4) employee profit sharing, and (5)
redundancies ("EBIT"). Exhibit II hereto contains the list of prin-
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ciples and rules which will be applied to the determination of EBIT.
Other than pursuant to Section 1.2.2(c) below, the Additional
Consideration provided for herein shall be paid by Buyer to Seller
within (30) thirty calendar days of the receipt by Buyer of the audited
consolidated financial statements of the Company for the Earn-out
Period (the "August 31, 1998 Financial Statements"). The August 31,
1998 Financial Statements shall be delivered to the Buyer no later than
on November 30, 1998.
(b) Within five (5) business days of receipt by the
Buyer of the August 31, 1998 Financial Statements, Buyer shall deliver to Seller
(i) a copy of the August 31, 1998 Financial Statements, and (ii) a certificate
(the "Additional Consideration Certificate") setting forth the Additional
Consideration, if any, due to the Seller and the calculations utilized to
determine the Additional Consideration, if any. Seller shall have twenty (20)
calendar days after the delivery to Seller of the August 31, 1998 Financial
Statements and the Additional Consideration Certificate in which to review such
documents. The Additional Consideration Certificate shall be conclusive and
binding on Seller unless Seller notifies Buyer in writing within such twenty
(20) calendar day period of any good faith objection to the Additional Consider-
ation Certificate, specifying in reasonable detail the items and amounts subject
to such objection (the "Earn-out Disputed Items"). If within such twenty (20)
calendar day period Seller notifies Buyer in writing of any such objection, then
Seller and Buyer shall use reasonable efforts during twenty (20) calendar days
after the expiration of such initial twenty (20) calendar day period to resolve
in good faith their differences and agree upon any adjustments to the Additional
Consideration Certificate. Any Earn-out Disputed Items which are not resolved by
the mutual agreement of Buyer and Seller within such twenty (20) calendar day
period shall be submitted for resolution to the Paris office of KPMG, or, if
KPMG shall not accept such mission, to another internationally recognized
independent certified public accounting firm mutually acceptable to Seller and
Buyer (the "Earn-out Independent Accounting Firm"). If within ten (10) calendar
days following the date on which KPMG shall have refused its mission, Seller and
Buyer cannot agree on the choice of such Earn-out Independent Accounting Firm,
either party shall be entitled
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within ten (10) calendar days following such ten (10) calendar day period to
request the designation of an Earn-out Independent Accounting Firm by the
President of the Court of Commerce of Paris. Seller and Buyer shall instruct the
Earn-out Independent Accounting Firm to limit its examination to the unresolved
Earn-out Disputed Items, to resolve any such unresolved Earn-out Disputed Items
affecting the Additional Consideration Certificate, and to use its best efforts
to make its determination thereon within twenty (20) calendar days after its
engagement hereunder. The resolution of any such previously unresolved Earn-out
Disputed Items by such accounting firm shall be made in a writing delivered to
Buyer and Seller and shall be final, conclusive and binding upon Seller and
Buyer in accordance with Articles 1592 and 2044 et seq. of the French Civil
Code. The fees and expenses charged by the Earn-out Independent Accounting Firm
with respect to Earn-out Disputed Items shall be borne equally by Seller and
Buyer.
(c) The Additional Consideration, if any, as finally
determined pursuant to Section 1.2.2 (a) or (b) above, shall be paid by Buyer to
Seller within four (4) business days of its final determination.
1.2.3 Base Balance Sheet. Attached hereto as
Schedule 1.2.3 is the balance sheet of the Company and its consolidated
Subsidiaries as of February 28, 1997 ("Base Balance Sheet"), prepared inter-
xxxxx by the SI Group. The shareholders' equity shown on the Base Balance Sheet
will be referred to herein as the "Base Shareholders' Equity".
1.2.4 Closing Balance Sheet.
(a) As soon as practicable and, in any event, not
later than thirty (30) business days after the Closing, Seller shall deliver to
Buyer a balance sheet of the Company and its consolidated Subsidiaries as at the
end of the Closing Date including notes ("Closing Balance Sheet") setting forth
the shareholders' equity as of the Closing Date. In the event the Closing
occurs on a date which is not the last day of a calendar month, the balance
sheet as of the last day of the immediately preceding calendar month shall be
the Closing Balance Sheet. The joint physical counting of the inventory
provided for in Section 1.2.4(b) below shall be done as of November 30, 1998.
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(b) The Closing Balance Sheet shall be prepared
internally on a basis consistent with the Base Balance Sheet. Xxxxxx Xxxxxxxx,
Buyer's independent, certified public accountants, on behalf of Buyer, shall
have access to all work papers in connection with the preparation of the Base
Balance Sheet and the Closing Balance Sheet. Seller and Xxxxxx Xxxxxxxx, on
behalf of Buyer, shall participate at the Closing Date in a joint physical
counting of the inventory.
1.2.5 Disputes Regarding the Closing Balance Sheet.
(a) Buyer shall have thirty (30) business days after
the delivery to Buyer of the Closing Balance Sheet in which to review such
documents. The Closing Balance Sheet shall be conclusive and binding on Buyer
unless Buyer notifies Seller in writing with in such thirty (30) business day
period of any good faith objection to the Closing Balance Sheet, specifying in
reasonable detail the items and amounts subject to such objection (the
"Disputed Items"), it being agreed that the quantity of the inventory, counted
jointly by the parties in accordance with the provisions of Section 1.2.4 of
this Agreement, shall control and shall not be a Disputed Item. If within such
thirty (30) business day period Buyer notifies Seller in writing of any such
objection, then Buyer and Seller shall use reasonable efforts during twenty (20)
business days after the expiration of such initial thirty (30) business day
period to resolve in good faith their differences and agree upon any adjustments
to the Closing Balance Sheet. Any Disputed Items which are not resolved by the
mutual agreement of Buyer and Seller within such twenty (20) business day period
shall be submitted for resolution to the Paris office of KPMG, or, if KPMG shall
not accept such mission, to another internationally recognized independent
certified public accounting firm mutually acceptable to Seller and Buyer (the
"Independent Accounting Firm"). If within ten (10) business days following the
date on which KPMG shall have refused its mission, Seller and Buyer cannot agree
on the choice of such Independent Accounting Firm, either party shall be
entitled within ten (10) business days following such ten (10) business day
period to request the designation of an Independent Accounting Firm by the
President of the Court of Commerce of Paris. Seller and Buyer shall instruct the
Independent Accounting Firm to limit its examination to the unresolved Disputed
Items, to resolve any such unresolved
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Disputed Items affecting the Closing Balance Sheet, and to use its best efforts
to make its determination thereon within twenty (20) business days after its
engagement hereunder. The resolution of any such previously unresolved Disputed
Items by such accounting firm shall be made in a writing delivered to Buyer and
Seller and shall be final, conclusive and binding upon Seller and Buyer in
accordance with Articles 1592 and 2044 et seq. of the French Civil Code. The
fees and expenses charged by the Independent Accounting Firm with respect to
Disputed Items shall be borne equally by Seller and Buyer.
(b) The Closing Balance Sheet to which Buyer does
not object, or to which Seller and Buyer agree, or as otherwise conclusively
determined pursuant to Section 1.2.5(a) hereof (such final form of the Closing
Balance Sheet being referred to herein as the "Final Closing Balance Sheet")
shall be used in deter mining the Adjustment Amount referred to in Section 1.2.6
hereof. The shareholders' equity shown on the Final Closing Balance Sheet shall
be referred to herein as the "Closing Shareholders' Equity".
1.2.6 Determination of any Adjustment Amount. If the
Closing Shareholders' Equity of the SI Group is less than the Base Shareholders'
Equity of the SI Group, Seller shall pay the difference to Buyer on a franc for
franc basis within four (4) business days. The amount of this post-closing
adjustment, if any, shall be referred to herein as the "Adjustment Amount".
1.2.7 Method of Payment. All cash payments under
this Agreement shall be made to the receiving party by bank wire transfer of
the required amount in immediately available funds in an account of the
receiving party designated by it for such purpose no later than four (4)
business days before the date on which such payment must be made.
1.2.8 Deposit. On the date hereof or promptly after
the execution hereof, Buyer has deposited or shall deposit in escrow in an
account with Credit Agricole - Indosuez (the "Escrow Agent") French FF 5,000,000
(five million French Francs) or the equivalent thereof in United States dollars
(the "Deposit Amount") subject to an escrow agreement substantially in the
form attached hereto as Exhibit III (the "Escrow Agreement"). The Escrow Agent
shall be entitled to invest the Deposit Amount in OPCVM's managed
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by the Escrow Agent. The flat fee payable to the Escrow Agent shall be borne
equally by the parties hereto. The Deposit Amount will be disbursed as follows:
(a) If the Closing shall occur on or before December
15, 1997, the Deposit Amount plus capital gains net of taxes upon disposition of
OPCVM' s, if any, will be paid to the Seller and the Share Purchase Price will
be reduced accordingly.
(b) If the Closing does not occur on or before
December 15, 1997 as a result of the failure of the Seller to satisfy the
conditions to the obligations of the Buyer in this Agreement, the Deposit
Amount plus capital gains upon disposition of OPCVM's, if any, will be paid to
the Buyer; provided, that in the event the Closing does not occur as a result of
the failure the satisfy the condition provided for in Section 4.1.4 hereof, the
Deposit Amount and capital gains upon disposition of OPCVM's, if any, shall be
paid in equal parts to the Seller and to the buyer.
(c) If the Closing does not occur on or before
December 15, 1997 as a result of the failure of the Buyer to satisfy the
conditions to the obligations of the Seller in this Agreement the Deposit
Amount plus capital gains upon disposition of OPCVM's, if any, will be paid to
the Seller.
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Seller. Except in the
case of representations and warranties made as of a specific date, which shall
be deemed made as of such date, Seller represents and warrants to Buyer, as of
the date hereof and as of the Closing, as follows:
2.1.1 Status.
(a) Seller. Roland STAPHANE and Angele STAPHANE are
French nationals married with a common estate settlement.
(b) Company and Subsidiaries. The Company and the
Subsidiaries are corporations duly organized and validly existing under the laws
of France or Portugal, as the case may be, and have all requisite corporate
power and authority to own the
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properties and carry on the Business as it is now being conducted and to own,
use, lease and operate the properties and assets of the Business owned, used,
leased and operated by or in connection with the Business. The copy of the
Company's and each Subsidiaries' statutes (articles and by-laws) as of the date
hereof, delivered to Buyer on the date hereof, is complete and correct and
presently in effect.
2.1.2 Share Capital.
(a) The share capital of the Company is FF
25,000,000 (twenty-five million French Francs), consisting of 500,000 shares, of
FF 50 (fifty French Francs) par value per share.
(b) The Shares of the Company and the shares of its
Subsidiaries are validly issued, fully paid and are not subject to any rights of
first refusal, buy-out or similar rights, calls or assessments. There is no
outstanding security convertible into or exchangeable for capital stock of the
Company or any of its Subsidiaries. There are no (i) options, war rants or other
rights to purchase or subscribe to capital stock of the Company or any of its
Subsidiaries, (ii) contracts, commitments, agreements, under standings or
arrangements of any kind relating to the issuance or disposition of capital
stock of the Company or any of its Subsidiaries or the issuance or disposition
of any security convertible into or exchange able for (A) capital stock of the
Company or any of its Subsidiaries, or (B) any option, warrant or right to
purchase or subscribe to capital stock of the Company or any of its
Subsidiaries. None of the Shares of the Company or the shares any of its
Subsidiaries were issued in violation of the preemptive rights of any
shareholder.
2.1.3 Title to Shares. Except as set forth in
Schedule 2.1.3, Seller has good and market able title to the Shares and to all
of the rights afforded thereby, free of all encumbrances, security interests,
charges, pledges, options, restrictions on transfer, voting trusts, voting
agreements, guarantees and any other adverse claims of any kind (the "Encum-
brances"). Except as set forth in Schedule 2.1.3, the Company has good and
marketable title to the shares of its direct and indirect Subsidiaries and to
all of the rights afforded thereby, free of Encumbrances.
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2.1.4 Authority.
(a) Seller has full power and authority to enter
into, execute and deliver this Agreement and the other documents contemplated
hereby and to carry out the transactions contemplated hereby, including without
limitation, the transfer, assignment and delivery of the Shares as provided in
this Agreement, and such delivery will convey to Buyer good and marketable
title to the Shares free of any Encumbrances. This Agreement and the other
agreements executed in connection with this transaction constitute the valid and
binding obligations of Seller, enforceable in accordance with their respective
terms.
(b) Seller represents that the Minority Shareholders
have full power and authority to enter into, execute and deliver the stock
powers and all other documents necessary to transfer, assign and de liver their
Shares to Seller and such delivery will convey to Seller good and marketable
title to the Shares free of any Encumbrances. All such documents constitute the
valid and binding obligations of the Minority Shareholders, enforceable in
accordance with their respective terms.
(c) Seller represents that the minority shareholders
of the Subsidiaries have full power and authority to enter into, execute and
deliver the stock powers and all other documents necessary to transfer, assign
and deliver their shares to the Company and such delivery will convey to the
Company good and marketable title to the shares free of any Encumbrances. All
such documents constitute the valid and binding obligations of the minority
shareholders, enforceable in accordance with their respective terms.
2.1.5 Financial Statements.
(a) The Audited Consolidated Financial Statements
(as defined in Section 2.1.5(f) hereof) as of August 31, 1996 attached hereto as
Schedule 2.1.5( a), have been prepared in accordance with French generally
accepted accounting principles ("French GAAP") on a basis consistent with prior
years, and are true, complete and accurate and fairly present the financial
position of the SI Group as of such date and have been certified without
qualification by the Cabinet Xxxxx et Associes, the SI Group's independent
accountants, whose reports thereon are included therewith.
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(b) The Audited Financial Statements (as defined in
Section 2.1.5(h) hereof) as of August 31, 1994, 1995 and 1996 attached hereto as
Schedule 2.1.5(b), have been prepared in accordance with French GAAP on a basis
consistent with prior years, and are true, complete and accurate and fairly
present the financial position of the respective entities as of such date and
have been certified without qualification by the Cabinet Xxxxx et Associes, the
SI Group's independent accountants, whose reports thereon are included
therewith.
(c) The Unaudited Consolidated Financial Statements
(as defined in Section 2.1.5(g) hereof) as of February 28, 1997 and as of the
Closing Date have been or will be prepared in accordance with French GAAP
subject for specific accounting principles set forth in Schedule 2.1.5(c), and
are or will be true, complete and accurate and fairly present or will fairly
present the financial position of the SI Group as of such date.
(d) There are no liabilities of the SI Group which
were not fully reflected or reserved against in the Unaudited Consolidated
Financial Statements as of February 28, 1997, except as set forth in Schedule
2.1.5(d) hereto.
(e) Neither the Company nor any member of the SI
Group has suspended its payments nor is it in judicial liquidation, receivership
or moratorium; nor has it made an amicable settlement with its creditors
(reglement amiable); nor is it in judicial reorganization (redressement
judiciaire) or judicial liquidation (liquidation judiciaire); nor has it been
the object of any proceedings for the reorganization or collective discharge of
its liabilities; nor is it under the threat of any such proceedings.
(f) As used in this Agreement, "Audited Consolidated
Financial Statements" means the balance sheet, income statement and statement
of changes in financial position of the Company and its consolidated
Subsidiaries, together with the notes and annexes thereto, prepared in
accordance with French GAAP in effect on the date thereof and applied
consistently with prior periods as certified by SI Group's independent
accountants.
(g) As used in this Agreement, "Unaudited
Consolidated Financial Statements" means the
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balance sheet, the income statement and statement of changes in financial
position of the Company and its consolidated Subsidiaries, together with the
notes thereto, prepared or to be prepared in accordance with French GAAP and the
principles disclosed in Schedule 2.1.5(c) in effect on the date thereof and
applied consistently with prior periods, except for normally recurring year-end
adjustments, which adjustments are not material either individually or in the
aggregate.
(h) As used in this Agreement, "Audited Financial
Statements" means the balance sheet, in come statement and statement of changes
in financial position of, separately, each of the Company and its Subsidiaries,
together with the notes and annexes thereto, prepared in accordance with French
GAAP in effect on the date thereof and applied consistently with prior periods
as certified by SI Group's independent accountants.
2.1.6 Subsidiaries. Except as set forth in Schedule
2.1.6 hereto, the Company has no subsidiaries and does not directly or
indirectly own any capital stock of or equity interests in any corporation,
partnership, or other person. Except as set forth in Schedule 2.1.6 hereto, the
Company is not a member of or a participant in any partnership, joint venture,
Groupement d'Interet Economique or similar enterprise.
2.1.7 Actions Since February 28, 1997. Except as set
forth in Schedule 2.1.7, since February 28, 1997, the SI Group has conducted the
Business only in accordance with its ordinary and usual course, consistent with
its past practice, and no member of the SI Group has:
(a) created, incurred or assumed any long-term debt
(including obligations in respect of capital leases), or created, incurred,
assumed, maintained or permitted to exist any short-term debt other than in its
ordinary and usual course of business, consistent with its past practice;
(b) assumed, guaranteed, endorsed or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person, other than in its ordinary and usual course
of business, consistent with its past practice;
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(c) permitted or allowed any Real Property (as
defined in Section 2.1.9 hereof) or any Movable Property (as defined in Section
2.1.10 hereof) to be mortgaged, pledged or subjected to any other Encumbrance
except for any Permitted Encumbrances (as defined in Section 8.11(f) hereof);
(d) sold, transferred or otherwise disposed of, or
agreed to sell, transfer or otherwise dispose of any of its assets (other than
its inventory);
(e) acquired any other business or entered into any
licensing arrangement or joint venture pertaining to the operation of the
Business;
(f) entered into other agreements, commitments or
contracts, except agreements, commitments or contracts made in the ordinary and
usual course of business, consistent with its past practice and in an amount not
to exceed FF 50,000 (fifty thou sand French Francs) individually;
(g) entered into any transaction with Seller or any
affiliate of Seller (other than another member of the SI Group), other than in
the ordinary and usual course of business, consistent with its past practice;
(h) declared, set aside or paid any dividend or
other distribution in kind in respect of the Shares;
(i) redeemed or otherwise acquired any Shares;
(j) made any other payment to Seller or any of its
affiliates (other than another member of the SI Group);
(k) made or committed to make any capital
expenditures in an amount greater than FF 50,000 (fifty thousand French Francs)
per item;
(l) suffered any damage or destruction, whether or
not covered by insurance, adversely affecting the Business;
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(m) satisfied and discharged any Encumbrances, or
paid any obligation or liability other than current liabilities incurred in the
ordinary and usual course of business, consistent with its past practice;
(n) sold, assigned or granted rights under any
patent, trade name, trademark or copyright, or any application therefor, or any
trade secrets or designs for any products currently manufactured or services
provided by the Business;
(o) knowingly waived any rights of material value;
(p) made any general wage or salary increase to
Employees (as defined in Section 2.1.19 hereof) (except for annual increases and
annual bonuses in the ordinary and usual course of business, consistent with
its past practice); made any increase in compensation not consistent with its
past practice payable or to become payable to any of the cadres of the SI Group;
made or suffered any termination of employment of any of the Key Employees (as
defined in Section 3.1.9 hereof), or received notice of any expression or
intention by any of the Key Employees to terminate his or her employment;
(q) become involved or threatened with any labor
dispute which has had or could have an ad verse effect on the Business;
(r) suffered any casualty loss not in the ordinary
and usual course of business, consistent with its past practice;
(s) amended the articles of incorporation or by-
laws, entered into any agreement or merger, consolidation, or reorganization,
dissolved or entered into any plan of liquidation or dissolution, purchased or
issued any shares or other securities, or entered into any commitments or
arrangement for the voting, purchase, redemption or issuance of shares of
capital stock or other securities, made any change in the number of issued
shares of its capital stock, granted any right or option or made any commitment
or agreement relating to its capital stock, or acquired or created any
subsidiary;
(t) made or suffered any cancellation or termination
of any insurance policy; or
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(u) experienced any other event or condition of any
character which is, or with the lapse of time or occurrence of such event or
condition could be, materially adverse to the financial condition, business,
assets, results of operations or prospects of the Business.
2.1.8 Industrial Property.
(a) Except as set forth in Schedule 2.1.8(a), the SI
Group has no Industrial Property (de fined in Section 8.11(h) below). The
Industrial Property listed in Schedule 2.1.8(a) is hereinafter referred to as
the "SI Group Industrial Property".
(b) The SI Group has a valid contractual right to
use the SI Group Industrial Property disclosed in paragraph (a) above; except as
set forth in Schedule 2.1.8(b), all of the SI Group Industrial Property is held
free and clear of any Encumbrances.
(c) The SI Group Industrial Property constitutes all
of the Industrial Property used in the conduct of the Business, and is
sufficient for each member of the SI Group on a stand-alone basis to conduct
its Business, as heretofore conducted. No registration or application therefor
has lapsed, expired or been abandoned or cancelled.
(d) No SI Group Industrial Property is the subject
of any pending or threatened opposition, cancellation, interference or similar
proceeding be fore any registration authority, and there are no claims pending,
or threatened (nor does Seller know of any valid basis for any claim), before
any court or registration office challenging (i) the registrability, validity,
renewal or enforceability of the SI Group Industrial Property, (ii) the SI
Group's owner ship rights therein (with respect to owned SI Group Industrial
Property), or (iii) the SI Group's use of the SI Group Industrial Property on
the grounds of infringement upon the proprietary rights of a third party. The
SI Group's use of the SI Group Industrial Property has not and does not infringe
upon the Industrial Property rights of any third party and there are no
infringements of the SI Group Industrial Property by any third party. The
consummation of the transactions contemplated by this Agreement by Seller will
not result in the loss, termination or impairment of any of the SI Group
Industrial Property. Except as set forth in Schedule 2.1.8(d), the SI Group is
not a
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party to any agreement by which it agrees to maintain the secrecy or
confidentiality of any SI Group Industrial Property.
2.1.9 Real Property; Leases of Real Property.
(a) Schedule 2.1.9(a) hereto contains a full
description of all real property (including plants, buildings, structures and
fixtures) used in the operation of the Business and which is owned by the SI
Group (the "Owned Real Property") or leased or used by the SI Group (the "Leased
Real Property") (the Owned Real Property and the Leased Real Property are
collectively referred to herein as the "Real Property").
(b) There are no contracts or agreements with any
person with regard to the sale or granting by any member of the SI Group of any
interest in the Owned Real Property. The SI Group has all easements and rights
of ingress and egress necessary for maintenance of utilities and services and
for all operations conducted on the Real Property.
(c) The copies of all documents relating to title
(including thirty year root of title (origine de propriete trentenaire)), or
rental (including leasing agreements (credit-bail)), of Real Property which
will be delivered to Buyer at the Closing will be valid, complete, correct and
in full force and effect.
(d) Except as disclosed in Schedule 2.1.18 (b) and
as set forth in the Environmental Report (as defined in Section 2.1.18(b) below
and contained in Schedule 2.1.18 (b)), all of the Real Property is in good
working condition with no known (i) required maintenance and repairs, and (ii)
material defects, and is adequate for the uses to which it is being put, subject
to routine maintenance and repairs which are not material in nature or cost,
provided that normal wear and tear is excepted. Neither Seller nor any member of
the SI Group has received any notification that it is in violation of any
applicable regulation and no such violation exists, with respect to the Real
Property.
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2.1.10 Movable Property.
(a) Schedule 2.1.10(a)(i) contains a list of all
assets used by the SI Group in the conduct of the Business as heretofore
conducted including all movable property (the "Movable Property"). Schedule
2.1.10(a)(ii) contains the list of all items of Movable Property which are
excluded from the indemnification by Seller under the provision of Section 6
for breach of representations and warranties made by Seller in Section
2.1.10(c) below.
(b) All of the Movable Property is sufficient to
conduct the business of the SI Group on a stand-alone basis.
(c) Except for items of Movable Property set forth
in Schedule 2.1.10(a)(ii) above, all of the Movable Property is in good working
condition with no known material defects and is adequate for the uses to which
it is being put, subject to routine maintenance and repairs which are not
material in nature or cost, provided that normal wear and tear is excepted. None
of such Movable Property is in need of maintenance or repairs except ordinary
routine maintenance and repairs which are not material in nature or cost. With
respect to each item of Movable Property, neither Seller nor any member of the
SI Group has received any notification that it is in violation of any applicable
regulation and, with respect to each piece of Movable Property, no such
violation exists.
2.1.11 Title to Property. Except as set forth in
Schedule 2.1.11, the SI Group has good and marketable title pertaining to all
Owned Real Property (including the origine de propriete trentenaire) and to all
Movable Property purported to be owned by it, subject to no Encumbrances, except
for Permitted Encumbrances. Except as set forth in Schedule 2.1.11, the
Business is not subject to a nantissement de fonds de commerce or equivalent
lien in any jurisdiction.
2.1.12 Contracts and Commitments.
Except as set forth in Schedule 2.1.12:
(a) All contracts, leases and agreements entered
into by any member of the SI Group pertaining to the operation of the Business
(the "Contracts") are valid, in full force and effect, and enforceable in all
respects by the SI Group. The SI
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Group has performed all of its material obligations required to be performed
thereunder, and no member of the SI Group is in default or violation thereof.
(b) There are no contracts with respect to which the
performance of this Agreement by Seller will constitute a default or an event of
acceleration or will give the other contracting party a right to terminate,
renegotiate or amend such contracts.
(c) There are no outstanding purchase contracts or
purchase commitments of any member of the SI Group which involve payments by any
member of the SI Group of more than FF 50,000 (fifty thousand French Francs)
individually or which continue for a period of more than twelve (12) months.
(d) There are no outstanding sales orders, contracts
or commitments of any member of the SI Group which involve payment to any member
of the SI Group of more than FF 50,000 (fifty thousand French Francs)
individually or which continue for a period of more than twelve (12) months.
(e) There are no outstanding contracts, agreements
or arrangements with (i) officers, Employees, agents, consultants, advisors,
salesmen or sales representatives of the SI Group providing for annual payments
in excess of FF 50,000 (fifty thousand French Francs) or (ii) sales or other
agents, franchisees, distributors or dealers of the SI Group, in each case,
which are not cancellable by the SI Group on notice of not longer than ninety
(90) calendar days without liability, penalty or premium (imposed by contract)
or which provide for the payment of any bonus or commission based on sales or
earnings.
(f) No member of the SI Group is in default under
any contract made or obligation owed by it in connection with the Business.
(g) No member of the SI Group is restricted from
carrying on the Business anywhere in the world.
2.1.13 Inventory. All of the inventories of the SI
Group as of the Closing Date (the "Inventories") except for inventory for which
there is a specific reserve on the Closing Balance Sheet, will consist of a
quality and quantity usable and salable
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in the ordinary and usual course of business consistent with past practice and
with the specifications for such Inventories as described in the SI Group's
product sales documentation, and will be owned by the SI Group. The Inventories
consist of (i) raw materials; (ii) on-going works; (iii) semi-finished products,
and (iv) finished products. The Inventories of the SI Group consisting of
finished products are saleable within a period of twelve (12) months.
2.1.14 Receivables. All accounts receivable of the
SI Group as of the Closing Date (the "Receivables") will represent sales
actually made in the ordinary and usual course of business, consistent with past
practice and will represent the legal, valid and binding obligations of the
obligors thereon. Except as set forth in Schedule 2.1.14, ninety-five percent
(95%) of the Receivables shown in the Closing Balance Sheet will be collectable
within one hundred eighty (180) calendar days of the Closing Date. One hundred
percent (100%) of the Receivables shown in the Closing Balance Sheet less any
specific reserve therefor will be collectable within nine (9) months of the
Closing Date.
2.1.15 Litigation. Except as set forth in Schedule
2.1.15, there is no civil, criminal or administrative action, suit, demand,
claim, hearing, notice of violation or investigation, proceeding or demand
letter pending or threatened, against any member of the SI Group, nor is there
any such action against an officer, director or senior manager of any member of
the SI Group, relating to the Business. No member of the SI Group has received
any notice that it is subject to any judgement, order or decree, entered in any
lawsuit or proceeding which is likely to affect its ability to conduct the
Business in all respects as presently being conducted.
2.1.16 No Broker. There is no broker, finder or
financial advisor other than Xxxx-Xxxxxxx de Boissieu of CNPA (Centre National
de Partenariat et d'Acquisition), who is acting or has acted on Seller's behalf,
nor is there any person, firm or corporation entitled to receive any brokerage,
commission or finder's or financial advisory fee from Seller, in connection
with the transactions contemplated by this Agreement. Any fees and expenses for
any such broker, including fees owed to Xxxx-Xxxxxxx de Boissieu of CNPA
(Centre National de Partenariat et d'Acquisition), will be paid by Seller.
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2.1.17 Governmental Permits; Compliance with Laws.
(a) The operation of the Business as heretofore
conducted does not require any permits, licenses or authorizations (other than
Environmental Permits, as defined in Section 2.1.18(a)).
(b) Each member of the SI Group is in all material
respects in compliance with all applicable laws, regulations, orders and
permits of all authorities or agencies applicable to the Business (including
without limitation, those relating to anti trust and trade regulation, health
and safety, labor, employment, and zoning and building codes, but excluding
Environmental Laws, as defined in Section 6.10(b) and referred to specifically
in Section 2.1.18). No notices have been received by any member of the SI Group
relating to termination or cancellation of, and no member of the SI Group is in
violation of the terms and conditions of, any such permits or authorizations. No
member of the SI Group has received any complaint, citation or notice of
violation from any Governmental Entity (as defined in Section 8.11(g) hereof)
and none is threatened, alleging that any member of SI Group has violated any
laws or regulations of Governmental Entities applicable to the Business other
than Environmental Laws.
2.1.18 Environmental Matters. The Seller and the
Buyer acknowledge that the purchase price for the Shares has been reduced by FF
5,000,000 (five million French Francs) in order to exempt Seller from liability
for environmental issues, except as specifically provided herein.
(a) Except as set forth in Schedule 2.1.18(a) or
Schedule 2.1.18(b), neither the Seller, nor to the best of Seller's knowledge
the Company, has received any written communication indicating that (i) any
member of the SI Group has failed to obtain any permit, license or other
authorization ("Environmental Permits") which are required under the
Environmental Laws for the ownership and use of Real Property and the operation
of the Business; (ii) any of such Environmental Permits have ceased to be in
effect; (iii) an appeal or any other action is pending to revoke any such
Environmental Permit; or (iv) any member of the SI Group has failed to be in
full compliance with all terms and conditions of any such Environmental Permit.
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(b) Schedule 2.1.18(b) hereto contains an
environmental audit report prepared for Buyer (the "Environmental Report"). The
Environmental Report contains:
(i) an accurate and complete list
of Environmental Permits necessary to the conduct of the Business;
(ii) an accurate and complete list
of Hazardous Substances (as defined in Section 6.10(c) hereof) used or
generated by the SI Group;
(iii) an accurate and complete
description of the waste disposal practices of the SI Group,
including the names of owners or operators of each location to which
wastes have been sent for treatment, storage or disposal;
(iv) an accurate and complete
description of material environmental instructions by Governmental
Entities received by the SI Group, with respect to the Business;
(v) an accurate and complete
description of material environmental risks and hazards tied to the
Business as required by Law no 76-663 of July 19, 1976 on
regulated facilities (installations classees); and
(vi) except as otherwise set forth
in Schedule 2.1.18(b)(vi), an accurate and complete description of any
underground storage tanks, asbestos, equipment using PCBs, underground
injection xxxxx, or septic tanks in which process wastewater or any
Hazardous Substances have been disposed.
(c) Seller has heretofore delivered to Buyer
accurate and complete copies of all environmental studies made in the last five
years relating to the Real Property or any other property or facility previously
owned, operated or leased by the SI Group.
(d) Neither the Seller, nor to the best of the
Seller's knowledge the Company, has received any written communication
indicating that (i)
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there is any pending or threatened, claim, lawsuit, or administrative proceeding
against any member of the SI Group with respect to the Business under any
Environmental Law; (ii) there is a violation of any applicable Environmental
Law; (iii) that any member of the SI Group may otherwise be liable under any
applicable Environmental Law, including, but not limited to, a Cleanup (as
defined in Section 6.10(a) hereof), which violation or liability is unresolved;
or (iv) there has been any release, spill or discharge of Hazardous Substances
on or underneath any of the Real Property, that would be reasonably likely to
have a material adverse effect on the Business.
2.1.19 Employees; Employee Benefits; Health and
Safety.
(a) Seller has heretofore delivered to Buyer an
accurate and complete (i) list identifying by age, seniority and classification
the employees of each member of the SI Group (the "Employees") as of the date
hereof, (ii) schedule of remuneration by classification as of the date hereof,
(iii) description of all the standard employment practices and policies and
(iv) summary of all important modifications since the Base Balance Sheet, in the
general level of compensation paid to the Employees.
(b) Schedule 2.1.19(b) contains an accurate and
complete description of each of the non-statutory employee benefits provided to
Employees (in cash or in kind). Except as set forth in Schedule 2.1.19(b)
hereto, there are no pension or retirement benefits, bonus, profit sharing,
stock purchase or stock option plans, company savings plans or employee funds of
each member of the SI Group beyond mandatory statutory or regulatory obligations
(collectively, the "Benefit Plans") with respect to which each member of the SI
Group has or could incur any obligation or liability or which are maintained,
contributed to or sponsored by each member of the SI Group for the benefit of
any current or former employee, officer or director of each member of the SI
Group. Each member of the SI Group is in compliance with all statutory or
regulatory requirements with respect to the Employees. Except as set forth in
Schedule 2.1.19(b) hereto, all Benefit Plans are fully funded or amounts due
pursuant thereto are fully insured or adequate resources there for have been
made in the Base Balance Sheet, in accordance with French GAAP, or will be made
on the Closing Balance Sheet. All payments of social securi-
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ty contributions and contributions to the various social and retirement and
related organizations required to be made by each member of the SI Group have
been duly made. Each member of the SI Group has duly and timely filed all
returns with the social security and retirement and related organizations and
authorities, such returns have been accurately prepared, and no member of the
SI Group is, or may become, liable for any adjustment or penalty related to any
such filings or on account of any payments made for any past period.
(c) Except as set forth in Schedule 2.1.19(c), with
respect to the Employees:
(i) there are no agreements or
arrangements with any present or former Employees that are not in the
ordinary and usual course of business, consistent with past
practice;
(ii) there is no Employee whose
termination would require payment by each member of the SI Group of an
amount exceeding that provided by law or by the applicable collective
bargaining agreement or internal collective workers' agreements;
(iii) there is no Employee whose
compensation or other benefits are based on the profits, results or
turn over of the SI Group, or any member of the SI Group, in any manner
exceeding that provided by law or the applicable collective
bargaining agreement or internal collective workers' agreements;
(iv) there is no Employee who has
the right to employment benefits or rights or pensions or other
retirement benefits exceeding those provided by law or the applicable
collective bargaining agreement or internal collective labor
agreements; and
(v) there is no Employee who is or
may be entitled to any compensation as a result of the consummation of
the transactions contemplated by this Agreement.
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(d) Except as set forth in Schedule 2.1.19(d), there
is no lawsuit, arbitration or proceeding pending or threatened, against any
member of the SI Group, in connection with any Employee or former employee.
(e) Each member of the SI Group is in compliance
with all health and safety laws and regulations, including without limitation,
work councils, workers representatives and collective bargaining agreements,
issued by any and all Governmental Entities, and there are no worker safety and
health reports, studies, investigations and audits which identify material
liabilities with respect to the Business.
(f) Seller has heretofore delivered to Buyer an
accurate and complete copy of all collective bargaining agreements, trade union
agreements, internal collective labor agreements and company-wide agreements
applicable to each member of the SI Group as well as all trade-unions
represented in the SI Group.
2.1.20 Loans to or from Directors, Officers and
Employees. Except as set forth in Schedule 2.1.20, there are no outstanding
material loans or open account advances payable to any member of the SI Group by
any current or former officer, director, or employee of any member of the SI
Group, and there are no guarantees, endorsements or other obligations of any
member of the SI Group with respect to any indebtedness, obligation or
liability of any of the foregoing persons. There are no outstanding loans or
open account advances payable by any member of the SI Group to any current or
former officer, director, or employee of any member of the SI Group.
2.1.21 Taxes.
(a) Each member of the SI Group has, within the time
and in the manner prescribed by law:
(i) duly filed with the appropriate
taxing authorities all Tax Returns (as defined in Section 2.1.21(g)
hereof) required to be filed by or with respect to such member of the
SI Group or with respect to or attributable to the Business or the
assets of such member of the SI Group,
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and all such Tax Returns are accurate, correct and complete in all
material respects;
(ii) timely paid in full or has
made adequate provision on the Base Balance Sheet for all Taxes (as
defined in Section 2.1.21(f) hereof) shown to be due on such Tax
Returns or otherwise due and payable with respect to the SI Group or
the Business or the assets of the SI Group; and
(iii) complied with all applicable
laws, rules and regulations relating to the withholding of Taxes and
the payment of withheld Taxes.
(b) The Tax Returns referred to in paragraph (a)
above are not currently the subject of any audit or other proceeding by a tax
administration or any local or foreign governmental authority. There are no
outstanding waivers or comparable consents or extensions given by any member of
the SI Group regarding the application of the statute of limitations with
respect to such Tax Returns. No such audit or proceeding is threatened against
any member of the SI Group.
(c) There are no Encumbrances for Taxes upon the
assets of any member of the SI Group.
(d) Neither Seller nor any member of the SI Group
has received any notice of deficiency or assessment from any national, local or
foreign governmental authority with respect to any liability for Taxes of any
member of the SI Group or with respect to the Business or the assets of any
member of the SI Group, which liability has not been fully paid or finally
settled. No administrative, judicial or other proceeding is presently pending
with respect to any Taxes or Tax Returns of any member of the SI Group or with
respect to the Business or the assets of any member of the SI Group.
(e) No member of the SI Group is a party to any
written agreement providing for the allocation or sharing of Taxes, and no
member of the SI Group shall have any continuing obligations or liabilities
under any such agreement after the Closing Date.
(f) For purposes of this Agreement, the term "Tax"
or "Taxes" shall mean all direct or
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indirect taxes, charges, fees, levies or other assessments, including, without
limitation, all net income, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, withholding, payroll,
employment, social security, unemployment, excise, estimated, severance,
property or other taxes, duties, fees, assessments or charges of any kind
whatsoever, including any interest, penalties or additional amounts attributable
thereto imposed by any national, local or foreign governmental authority.
(g) For purposes of this Agreement, the term "Tax
Return" shall mean any return, report, information return, statement,
declaration or other document (including any related or supporting information)
filed or required to be filed with any national, local or foreign governmental
authority in connection with any determination, assessment or collection of any
Tax or other administration of any laws, regulations or administrative
requirements.
2.1.22 Restrictions and Authorizations. Except as
set forth in Schedule 2.1.22, the consummation of the transactions contemplated
by this Agreement and the other documents contemplated hereby or thereby will
not result in a breach of, or constitute a default under, or give rise to a
right of termination of, any Contract, permit or authorization to which any
member of the SI Group is subject or a party, or violate any of the provisions
of the by-laws of any member of the SI Group, and no approval, consent, or
authorization, or filing or registration with, any Governmental Entity, or any
third party with respect to the Contracts, is required on the part of Seller or
any member of the SI Group in connection with the execution, delivery and
performance of this Agreement and the other documents contemplated hereby and
thereby. Contracts, permits or authorizations listed in Schedule 2.1.22 shall be
hereinafter referred to as "Specific Contracts".
2.1.23 Powers of Attorney; Bank Accounts.
(a) No person, corporation, firm, association or
business entity holds a proxy, general or special power of attorney, or other
similar instrument from any member of the SI Group.
(b) Schedule 2.1.23(b) hereto identifies each bank
or other financial institution at which
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any member of the SI Group has an account and the names of all persons having
signature authority over any such account.
2.1.24 Product Liability.
Except as set forth in Schedule 2.1.24:
(a) Since 1990, there have been no civil, criminal
or administrative actions, suits, notices of violation, notices of investigation
or notices of proceedings which were or are pending or threatened, and there
have not been any written demands or claims (and since 1990 there have been no
oral demands or claims) against any member of the SI Group, and there have been
no oral demands or claims made to agents acting on behalf of the SI Group, in
each case relating to any alleged hazard or alleged defect in design,
manufacture, materials or workmanship, including, without limitation, any
alleged failure to warn or alleged breach of express or implied warranties or
representations, relating to any product manufactured, distributed, or sold by
the SI Group.
(b) Since 1990, there have not been any product
recalls, reworks, or post-sale warnings (the "Recalls") issued by any member of
the SI Group and, there have been no oral Recalls issued by agents acting on
behalf of any member of the SI Group, relating to any product designed,
manufactured, distributed, or sold by the SI Group or any investigation or
consideration of, or decision concerning, whether or not to undertake any such
Recall.
2.1.25 Insurance. The SI Group maintains insurance
policies equal to or in excess of the average coverage for companies operating
in a similar line of business and in a similar geographical location. All
insurance policies currently maintained by the SI Group and which cover
properties, assets, businesses and operations of the SI Group are valid and in
full force as of the date of this Agreement and shall remain in effect in
accordance with their terms. All current premiums have been paid. No member of
the SI Group is in breach in any material respect of the terms of any such
policies and has timely served proper and accurate notice of all events or
information required in connection with such policies in a timely manner. The
consummation of the transactions contemplated by this Agreement shall not
constitute a default or an event of acceleration or otherwise entitle
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insurers to terminate, renegotiate or amend the current insurance policies.
2.2 Representations and Warranties of Buyer. Except in the
case of representations and warranties made as of a specific date, which shall
be deemed made as of such date, Buyer represents and warrants to seller as of
the date hereof and as of the Closing Date, as follows:
2.2.1 Corporate Status. Buyer is a corporation duly
organized and validly existing under the laws of France, and has all requisite
corporate power to own its properties and carry on its business as now being
conducted.
2.2.2 Execution and Effect of Agreement. Buyer has
the full corporate power and authority to enter into this Agreement and the
other documents contemplated hereby. The execution and delivery of this
Agreement and the other documents contemplated hereby and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
the necessary corporate action of Buyer, and no other proceedings will be
necessary to authorize this Agreement or the other documents contemplated hereby
or the consummation of the transactions contemplated hereby or thereby, and this
Agreement constitutes the valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms.
2.2.3 No Lawsuits; Consents. There is no lawsuit,
arbitration or proceeding pending or, to the knowledge of Buyer, threatened
against Buyer which might prevent the consummation of any of the transactions
contemplated by this Agreement, and no approval or authorization of any
Governmental Entity or of any third party is required in connection with the
execution, delivery and performance by Buyer of this Agreement and the other
documents contemplated hereby and thereby.
2.2.4 No Broker. There is no broker, finder or
financial advisor, acting or who has acted on Buyer's behalf, nor is there any
person, firm or corporation entitled to receive any brokerage or finder's or
financial advisory fee from any party other than Buyer in connection with the
transactions contemplated by this Agreement.
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ARTICLE 3 - COVENANTS
3.1 Covenants of Seller.
3.1.1 Business in Ordinary Course. Except as
contemplated by this Agreement, during the period from the date hereof to the
Closing, Seller shall cause each member of the SI Group to conduct the Business
in accordance with the ordinary and usual course of business, consistent with
past practice, (specifically including, without limitation, the collection of
"accounts receivable" and the payment of "accounts payable"). Without limiting
the generality of the foregoing and except as otherwise expressly provided in
this Agreement, during the period from the date hereof to the Closing, Seller
covenants that no member of the SI Group will take, without the prior written
consent of Buyer, any exceptional action, including, without limitation, an
action which will cause the representations and warranties contained in Section
2.1.7 hereof not to be true and correct as of the Closing.
3.1.2 Perform Contracts. Between the date hereof and
the Closing, Seller shall cause each member of the SI Group to perform all
obligations to be performed under all the Contracts, leases and documents
relating to the properties and the Business, consistently with past practice.
3.1.3 Employment Agreement with Seller. At the
Closing Date Seller shall enter into the employment agreement with Buyer
substantially in a form attached hereto as Exhibit IV (the "Employment
Agreement").
3.1.4 Non-Competition.
(a) Seller covenants and agrees that, for the period
of his employment under the Employment Agreement and for the three years
following the termination of the Employment Agreement, he will not and will not
permit, in the European Union and North America, any corporation, partnership
or other person in which Seller will be involved to, directly or indirectly,
hire, solicit or attempt to hire or solicit any Employee; or
(i) engage in;
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(ii) have any ownership or
equity interest in any business, firm, corporation, joint venture or
other entity engaged in; or
(iii) consult with or assist any
person or entity who or which is engaged in;
any business which competes, directly or indirectly, with the Business (A) as
conducted on the Closing, (B) as conducted anytime within the three (3) year
period prior to the Closing, and (C) after giving effect to such new products,
additives or other items as the SI Group plans on the date of this Agreement to
introduce in the period ending on the third anniversary of the Closing in any
jurisdiction or market in which the Business or the SI Group operates or engages
in sales activities directly or through its agents, distributors, brokers or
affiliates.
(b) If any provision of paragraph (a)
of this Section 3.1.4 shall be adjudged to be excessively broad as to duration,
geographical scope, activity or subject, the parties intend that any such
provision shall be deemed modified to the minimum degree necessary to make such
provisions valid and enforceable under applicable law and that the provision
shall thereafter be enforced to the fullest extent possible. The existence of
any claim which Seller may allege against Buyer, whether based on this
Agreement or otherwise, will not prevent the enforcement of this Section 3.1.4.
Seller agrees that monetary damages will not be a sufficient remedy for a
breach of this covenant, and that Buyer shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Section 3.1.4 and to
enforce specifically the terms and provisions hereof, in addition to any other
remedy to which Buyer may be entitled.
3.1.5 Directors. Effective Closing, Seller shall
cause the directors of the Company and each member of the SI Group to submit
their written resignations from such positions.
3.1.6 Customers/Suppliers Transition.
(a) Between the date hereof and the Closing, Seller
shall take or shall cause each member of the SI Group to take such commercially
reasonable
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steps as Buyer may require, to ensure a smooth business transition for each
member of the SI Group and the distributors and major suppliers and customers of
the SI Group including, as appropriate the arranging of joint visits to such
distributors and major suppliers and customers. To this effect, Seller shall de-
liver to Buyer, as promptly as possible and no later than five business days
after the date hereof, a list of major customers and major suppliers of the
Business. Between the date hereof and the Closing, without the prior written
consent of Seller, which consent shall not be unreasonably withheld, the Buyer
will not communicate with any of the customers of the Business.
(b) Seller shall assist the Buyer at the Closing to
send jointly signed letters to the major customers and suppliers and to make
joint announcements.
(c) Between the date hereof and the Closing, Seller
shall take or shall cause each member of the SI Group to take such commercially
reasonable steps as Buyer may require, including joint visits to the relevant
customers, to ensure that the Specific Contracts are not terminated or otherwise
adversely affected by the completion of the transactions contemplated by this
Agreement.
3.1.7 Shares.
(a) Prior to Closing, Seller shall purchase from the
Minority Shareholders the Shares owned by the Minority Shareholders in the
Company which have not been transferred to Seller on the date of this Agreement.
(b) Prior to Closing, Seller shall cause the Company
to purchase from SDR Centrest the shares of Financiere Somomeca SA owned by SDR
Centrest.
(c) Prior to Closing, Seller shall cause the Company
to purchase from the minority shareholders (including, directors) the shares
owned by such minority shareholders in the Subsidiaries.
3.1.8 Access to Information. Between the date of this
Agreement and the Closing, Seller will cause each member of the SI Group, upon
reasonable notice from Buyer and during normal business hours:
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(i) to give Buyer and its
authorized representatives reasonable access to all books, records,
offices and other facilities and properties of the SI Group,
(ii) permit Buyer and its
authorized representatives to make such inspections thereof as Buyer
may reasonably request, and
(iii) cause its officers to
furnish Buyer with such financial and operating data and other
information with respect to business and properties of each member of
the SI Group as Buyer may from time to time reasonably request; pro-
vided, however, that any such access shall be conducted in such a
manner as not to interfere with the operation of the Business.
3.1.9 Key Employees. Seller shall use best efforts
to ensure the continuance of the employment of the key employees of
the SI Group listed on Schedule 3.1.9 hereto (the "Key Employees").
3.2 Covenant of Buyer.
3.2.1 Regulatory Filings. Promptly the Closing, Buyer
shall cause the relevant members of the SI Group to notify the Prefecture of the
change in control of the Business as required by Article 34 of the Decree no
77-1133 dated September 21, 1977. Any such request for approval and notification
and any subsequent report form and supplemental information shall be in
compliance with the applicable legal requirements.
3.3 Mutual Covenants. Each of Seller and covenants and
agrees as follows:
3.3.1 Publicity. Seller and Buyer agree that, from
the date hereof through the Closing, no public release or announcement
concerning the transactions contemplated hereby shall be issued by either party
without the prior consent of the other party, except as such release or
announcement may be required by law or the rules or regulations of any
Governmental Entity, in which case the party required to make the release or
announcement shall allow the
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other party reasonable time to comment on such release or announcement in
advance of such issuance.
3.3.2 Commercially Reasonable Efforts. Subject to the
terms and conditions of this Agreement, each party shall use its commercially
reasonable efforts to cause each of the conditions to Closing to be fulfilled
and the Closing to occur.
3.3.3 Cooperation.
(a) Seller and Buyer shall keep each other apprised
of the status of any communication with, and any inquiries or requests for
additional information from, any foreign or domestic antitrust or competition
authority or Governmental Entity, and shall comply promptly with any such
inquiries or requests.
(b) Each of Seller and Buyer shall use its best
efforts to obtain any clearance required under any applicable legislation, rules
or regulations for the purchase and sale of the Shares. All such requisite
consents of Governmental Entities as may be so required are set forth in
Schedule 3.3.3 hereto (collectively, the "Governmental Consents").
(c) Neither party shall be required by this Section
3.3.3 to take any action that would unreasonably interfere with the conduct of
its business or unreasonably disrupt its normal operations (or, in the case of
Buyer, the business or operations of any member of the SI Group).
3.3.4 Access to Information. After the Closing each
of Buyer and Seller shall furnish or cause to be furnished, upon reasonable
written notice, to the other and its employees, counsel, auditors and
representatives access, during normal business hours, such information and
assistance relating to the SI Group as is reasonably necessary for financial
reporting and accounting matters, the preparation and filing of any tax
returns, reports or forms or the defense of any tax claim or assessment as well
as the preparation of any filing or submission which is necessary under any
applicable legislation, rules or regulations.
3.3.5 Records. At the Closing, Seller shall cause to
be delivered to Buyer all agreements, documents, books, records and files,
including records and files stored on computer disks or tapes or any
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other storage medium (collectively, the "Records") and all copies thereof, in
the possession of Seller, directly relating to the Business.
3.3.6 Confidentiality.
(a) Seller covenants that, after the Closing, it will
not, without the prior written consent of Buyer, disclose to any person
confidential information relating to or concerning the SI Group, the Business,
or Buyer (the "Confidential Information"), unless Seller is legally obligated
to disclose such information.
(b) In the event that Seller is requested or required
by documents subpoena, civil investigative demand, interrogatories, requests for
information, or other similar process to disclose any Confidential Information,
Seller will provide Buyer with prompt notice of such request or demand or other
similar process so that Buyer may seek an appropriate protective order or, if
such request, demand or other similar process is not mandatory, waive compliance
with the provisions of this Section 3.3.6, as appropriate.
(c) The term "Confidential Information" does not
include information which:
(i) becomes generally available to
the public other than as a result of disclosure by Seller in violation
of the preceding paragraph,
(ii) was available on a
nonconfidential basis prior to its disclosure by Seller, or
(iii) becomes available to Seller
on a nonconfidential basis from a source other than the Business,
provided that such source is not bound by a confidentiality agreement
with the Company or any member of the SI Group, Buyer or their re-
spective representatives.
3.3.7 Taxes. With regard to Taxes, Buyer and Seller
agree to cause the SI Group to prepare and timely file all required Tax Returns
of the SI Group or relating to the business or the assets of
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the SI Group for any taxable year or period which ends on or before the Closing.
ARTICLE 4 - CONDITIONS
4.1 Conditions to Obligations of Buyer. The obligations of
Buyer to complete the purchase of the Shares on the Closing are subject to the
following conditions:
4.1.1 Representations and Warranties True and
Correct. Seller's representations and warranties made in this Agreement shall
be true and correct as of the date hereof, and as of the Closing (except to the
extent such representations and warranties expressly relate to an earlier date,
in which case they shall have been true and correct as of such date), and Seller
shall deliver certificates to Buyer executed by the chief financial officer or
other appropriate officers of the Company to this effect.
4.1.2 Compliance with Agreement. Seller shall have
performed and complied in all material respects with all of their obligations
under this Agreement, or shall have cured any instance of material
non-performance or non-compliance, at or before the Closing, and Seller shall
deliver a certificate to Buyer executed by Seller to this effect.
4.1.3 No Regulatory Impediment. No statute, rule,
regulation, executive order, decree, temporary restraining order, preliminary or
permanent injunction or other order enacted, entered, promulgated, enforced or
issued or other legal restraint or prohibition preventing the purchase of the
Shares shall be in effect.
4.1.4 Financing. Buyer shall have obtained from the
banks sufficient funds to pay to Seller the Share Purchase Price and the
maximum amount of Additional Consideration provided for herein.
4.1.5 Shares.
(a) Seller shall have purchased the Shares owned by
the Minority Shareholders in the company and Seller shall have valid, good and
marketable titles to such Shares free of any Encumbrances.
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(b) The Company shall have purchased the shares of
Financiere Somomeca SA owned by SDR Centrest.
(c) The Company shall have purchased the shares of
its Subsidiaries from the minority shareholders of such Subsidiaries.
4.1.6 No Material Adverse Change. From the date of
the Base Balance Sheet to the Closing, no member of the SI Group shall have
suffered any material adverse change in its business, prospects, financial
condition, working capital, assets, liabilities (absolute, accrued, contingent
or otherwise), reserves or operations, provided, that changes in financial
ratios shall not constitute a material adverse change.
4.1.7 Work Councils. Any and all consultations shall
have occurred with the work councils of the relevant members of the SI Group.
4.1.8 Bank Support. The Seller shall have delivered a
bank letter of credit or bank guarantee as provided in Section 6.2(a) hereof.
4.2 Conditions to Obligations of Seller. The obligations of
Seller to complete the sale of the Shares on the Closing are subject to the
following conditions:
4.2.1 Representations and Warranties True and
Correct. Buyer's representations and warranties made in this Agreement shall be
true and correct in all material respects as of the date hereof and as of the
Closing (except to the extent such representations and warranties expressly
relate to an earlier date, in which case they shall have been true and correct
as of such date).
4.2.2 Compliance with Agreement. Buyer shall have
performed and complied in all respects with all of its obligations under this
Agreement or shall have cured any instance of material non-performance or
non-compliance, at or before the Closing.
4.3 Mutual Conditions. The obligations of
Buyer and Seller to complete the purchase and the sale
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of the Shares on the Closing are subject to the following mutual conditions.
4.3.1 Governmental Consents. All Governmental
Consents shall have been obtained.
4.3.2 Escrow Agreement. The parties and the Bank
shall have executed the Escrow Agreement.
4.3.3 Employment Agreement. The parties shall have
executed the Employment Agreement.
ARTICLE 5 - CLOSING
5.1 Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, 00 xxx xx Xxxxxxxx Xx. Xxxxxx, 00000 Xxxxx on
December 15, 1997 or at such other place and at such other time and date as may
be mutually agreed upon in writing by Buyer and Seller, provided, however, that
the Closing shall take place no later than the last business day of the month
during which all of the conditions to Closing set forth in Article 4 hereof
shall have been fulfilled (the "Closing Date").
5.2 Deliveries. At the Closing:
5.2.1 Seller's Deliveries. Seller shall deliver, or
shall cause to be delivered, to Buyer the following:
(a) Duly signed and completed stock powers (ordres de
mouvement) in favor of Buyer or its designee(s) for the Shares.
(b) The stock transfer register (registre des
mouvements de titres) and the stockholder register (registre des comptes
d'actionnaires) of the Company.
(c) A letter of resignation signed by each of the
directors of each member of the SI Group effective upon the appointment of new
directors in accordance with paragraph (d) hereafter.
(d) The minutes of a duly called meeting of the
board of directors or of the shareholders' meeting of each member of the SI
Group, as the case
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may be, a draft of which shall have been delivered by Seller to Buyer reasonably
in advance of the Closing, including provisions with respect to, inter alia,
appointing new directors.
(e) The bank letter of credit or bank guarantee as
provided in Section 6.2(a) hereof.
5.2.2 Buyer's Deliveries. Buyer shall deliver, or
shall cause to be delivered, to Seller the Share Purchase Price minus the
Deposit Amount and capital gains net of taxes upon disposition of OPCVM's, if
any.
ARTICLE 6 - INDEMNIFICATION
6.1 General Indemnification by Seller.
(a) Subject to the terms and conditions of this
Agreement, Seller agrees to indemnify, defend and hold harmless Buyer, from and
against expenses resulting from any and all liabilities, obligations, damages,
deficiencies, losses, claims, actions, lawsuits, proceedings, judgments,
demands, costs and penalties (including reasonable attorneys' fees) (the
"Indemnifiable Losses") asserted against, suffered or incurred by Buyer or any
member of the SI Group resulting from (i) any breach of Seller's representa-
tions or warranties contained herein, or (ii) any breach of Seller's covenants
contained herein.
(b) Without limiting the generality of the foregoing,
the term "Indemnifiable Losses" shall include any penalty, late payment
interest, increase or fine which may fall or be deemed to be due as a result of
any Tax audit as well as of any audit or other action or administrative
proceeding by any Governmental Entity, as well as any penalty, late payment
interest, surcharge or fine or cost or expense of compliance with any order,
decree, directive or judgement which may fall or be deemed to be due as a result
of any claim, proceeding, order, directive or judgment relating, directly or
indirectly, to the domestic or international operations or activities of the SI
Group.
(c) Without limiting the generality of the foregoing,
the parties hereto agree that the term "Indemnifiable Losses" shall include
losses resulting from third parties claiming, on the basis of Articles
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1382, 1383, 1384 and from 1146 to 1156 of the French Civil Code, civil and
contractual responsibility (responsabilite civile) of the SI Group arising from
activities of the SI Group prior to the Closing.
6.2 Limitation of Liability.
(a) The indemnification obligations of Seller for any
Indemnifiable Loss incurred by Buyer or the SI Group in respect of any breach of
the representations and warranties contained in this Agreement (other than with
respect to Taxes) shall not exceed in the aggregate FF 10,000,000 (ten million
French Francs). Seller shall provide Buyer with a bank letter of credit or bank
guarantee in the amount of FF 10,000,000 (ten million French Francs), in either
case in a form, and issued by a bank, reasonably acceptable to the Buyer.
(b) Buyer shall not be entitled to make a claim for
any Indemnifiable Loss incurred in respect of any breach of the representations
and warranties contained in this Agreement unless and until the aggregate
amount of claims for Indemnifiable Losses exceeds one hundred thousand French
Francs (FF 100,000); provided, that when the amount claimed exceeds FF 100,000
(one hundred thousand French Francs), the claim shall be made for the entire
amount then claimed.
(c) The limitations set forth in paragraphs (a) and
(b) above shall not apply to any indemnification obligation of Seller under
Section 2.1.21 hereof, nor any breach of the covenants of Seller contained in
this Agreement.
6.3 Survival of Seller's Representations, Warranties
and Covenants.
(a) The representations and warranties under Sections
2.1.1, 2.1.2, 2.1.3, 2.1.4 and 2.1.16 hereof shall survive indefinitely.
(b) Claims for indemnification in respect of any
breach of representations and warranties of Seller under Section 2.1.21 of this
Agreement shall be made within the applicable statute of limitations plus sixty
(60) business days.
(c) Claims for indemnification in respect of any
breach of representations and warranties
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of Seller under this Agreement, other than those referred to in paragraphs (a)
and (b) above, shall be made within a period of three (3) years after the
Closing; provided, that on the third anniversary of the Closing, any amount then
claimed by Buyer will be sought whether or not it exceeds FF 100,000 (one hun-
dred thousand French Francs).
(d) The covenants of Seller contained herein shall
survive after the Closing. Claims for indemnification in respect of any breach
of a covenant of Seller under this Agreement shall be made within the time
period, if any, specified within such covenant, or within the applicable
statute of limitations for contractual claims, if no time period for making a
claim is specified within such covenant.
6.4 Third Party Claim. Under this Agreement, the obligation
of Seller to indemnify (the "Indemnifying Party") and the entitlement to
indemnification of Buyer (the "Indemnified Party") in respect of, arising out
of or involving a claim or demand made by third parties (the "Third Party
Claims") will be subject to the following terms and conditions:
(i) Upon receipt of written notice
of any Third Party Claim asserted against, resulting to, imposed upon
or incurred by an Indemnified Party, such Indemnified Party will
undertake the defense thereof, by counsel of its own choosing, which
counsel shall be reasonably satisfactory to the Indemnifying Party,
provided that (A) the Indemnified Party agrees to consult with the
Indemnifying Party in a timely manner on all important strategic
matters relating to any such Third Party Claim, (B) the Indemnified
Party shall not settle any Third Party Claim without the prior consent
of the Indemnifying Party, which consent shall not be unreasonably
withheld, taking into account the balance of interests between the
legal merits of the claim and any bona-fide commercial interest of the
Indemnified Party to agree to a prompt settlement, and (C) that the
Indemnified Party shall have a good faith duty to mitigate any loss in
a commercially reason able manner, including taking all commercially
reasonable steps to recover amounts due to the Indemnified Party as a
result of
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the relevant Third Party Claim. The Indemnifying Party shall pay the
reason able legal fees and legal expenses incurred by the Indemnified
Party in the defense of such claims.
(ii) The Indemnifying Party will
provide the Indemnified Party against whom a Third Party Claim is
asserted with access to all records and documents relating to any
Third Party Claim. The Indemnified Party will provide the Indemnifying
Party with access to all records and documents of the Indemnified
Party relating to any Third Party Claim.
6.5 Notices. Buyer shall notify Seller in, and in
reasonable detail, of the nature of the claim if possible
(i) within thirty (30) business
days after receipt by Buyer of written notice of any Third Party Claim,
(ii) within thirty (30) business
days after a determination by Buyer that any facts or circumstances of
which it has learned give rise to a claim, and
(iii) with respect to Taxes,
within ten (10) business days of receipt of any Tax assessment notice
(including a notice of proposed assessment);
failure to provide such notice in writing within such ten (10) or thirty (30)
business day period shall only reduce indemnification to the extent the failure
to notify on a timely basis shall have increased the amount of the otherwise
Indemnifiable Loss.
6.6 When Payable. Indemnification under this Agreement shall
be payable with respect to any claim concerning an Indemnifiable Loss (as
defined in Section 6.1(b) and (c) hereof) upon the earliest of:
(i) the date any payment is
required to be made to any Tax or other administrative authority with
respect to any claim from such authority with respect to which no
further appeal may be made;
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(ii) the resolution of such claim
by mutual agreement between Seller and Buyer;
(iii) the issuance of a final
judgment, award, order or other ruling (which is not subject to appeal
or with respect to which the time for appeal has elapsed) by a court
or arbitral tribunal having jurisdiction over the appropriate parties
and the subject matter of such claim or to which such claim was
submitted for resolution by joint agreement between Seller and Buyer;
or
(iv) the final settlement of a
Third Party Claim.
6.7 Miscellaneous Provisions.
(a) The amount of any indemnity payable hereunder on
account of an Indemnifiable Loss shall be reduced by any insurance proceeds
actually received by the Indemnified Party with respect thereto.
(b) The amount of any indemnity payable hereunder on
account of an Indemnifiable Loss shall be further reduced by the amount of
specific re serves, other than the floating (general) reserves, booked on the
Closing Balance Sheet.
(c) The amount of any indemnity payable hereunder on
account of an Indemnifiable Loss shall be net of any actual cash tax saving for
the SI Group resulting from such Indemnifiable Loss.
(d) Any amount owed to Buyer by Seller for
Indemnifiable Losses shall be treated for accounting purposes as an adjustment
to the Share Purchase Price referred to in Section 1.2.1(a) hereof.
6.8 Environmental Indemnification by Seller. Seller shall
defend, indemnify, and hold harmless Buyer from and against any and all damages
resulting from a civil, criminal or administrative litigation relating to:
(i) Cleanup of Hazardous
Substances released, disposed of or discharged: (A) on, beneath or
adjacent to the
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Real Property on or prior to the Closing; or (B) at any other location
if such substances were generated, used, stored, treated, transported
or released by or on behalf of the Business or any predecessor thereto
on or prior to the Closing; and
(ii) Loss of life, injury to
persons or property, or damage to natural resources caused by the
actual or alleged release, storage, transportation, treatment, disposal
or generation of Hazardous Substances generated, stored, used, dis-
posed of, treated, handled or shipped by Seller on or prior to the
Closing;
except to the extent that the environmental liability or cost arose from
activities of Buyer after the Closing.
6.9 Responsibility for Cleanup. Indemnification shall be
available under this Section 6.9 only with respect to those specific claims for
which Buyer has provided written notice to Seller by the fifth anniversary of
the Closing, provided, however, that Buyer may provide notice under this
Section, prior to the fifth anniversary of the Closing, for claims for a Cleanup
resulting from the generation, storage, use, disposal, treatment, handling,
shipping or release of Hazardous Substances prior to the Closing, even if a
Cleanup has not yet been required by a Governmental Entity.
6.10 Definitions. As used in this Agreement:
(a) A "Cleanup" means all actions required to:
(i) cleanup, remove, treat or
remediate Hazardous Substances in the outdoor environment;
(ii) prevent the Release of Hazardous
Substances so that they do not migrate, endanger or threaten to en-
danger public health or welfare or the outdoor environment;
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(iii) perform pre-remedial studies
and investigations and post-remedial monitoring and care;
(iv) respond to any government
requests for information or documents in any way relating to a
cleanup, removal, treatment or remediation or potential cleanup,
removal, treatment or remediation of Hazardous Substances in the
outdoor environment; or
(v) any legal or administrative
proceedings related to items (i) through (iv), including, but not
limited to, actions brought by third-parties to recover costs incurred
with respect to a Cleanup.
(b) "Environmental Laws" means all applicable
treaties, laws, regulations, directives, circulars, orders, decrees, judgements,
injunctions, permits, approvals, authorizations, permissions or notices
including, without limitation, all restrictions, conditions, standards,
limitations, prohibitions, requirements, obligations, schedules and timetables
contained in the Environmental Laws or contained in any regulation, code, plan,
order, decree, judgment, in junction, notice or demand letter issued, entered,
promulgated or approved thereunder, relating to pollution or protection of the
environment, including, without limitation, laws relating to releases or
threatened releases of Hazardous Substances into the indoor or outdoor
environment (including, without limitation, ambient air, surface water,
groundwater, land, surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, release,
transport or handling of Hazardous Substances.
(c) "Hazardous Substances" means all substances or
materials regulated as explosive, flammable, toxic or radioactive under any
Environmental Law including, but not limited to, petroleum, asbestos, or
polychlorinated biphenyls.
ARTICLE 7 - TERMINATION
7.1 Termination. This Agreement may only terminated (a)
by mutual written consent of the hereto; (b) by Buyer, if any of the conditions
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provided for in Sections 4.1 or 4.3 of this Agreement has not been met by
December 31, 1997, and has not been waived by Buyer by such date; (c) by Seller,
if any of the conditions provided for in Sections 4.2 or 4.3 of this Agreement
has not been met by December 31, 1997, and has not been waived by Seller by such
date.
7.2 Consequences. If this Agreement is terminated and the
transactions contemplated hereby are abandoned as described in this Article 7:
(i) this Agreement shall become
void and of no further force or effect, except for the provisions of
(A) Section 8.5 relating to certain expenses, (B) Section 3.3.1
relating to publicity, (C) Sections 2.1.16 and 2.2.4 relating to
brokers' fees and (D) this Section 7.2;
(ii) all confidential information
provided by either party to the other shall be returned to such first
party or, upon such first party's instruction, destroyed; and
(iii) neither party shall be liable
to the other party for any damages by virtue of any breach of this
Agreement.
ARTICLE 8 - MISCELLANEOUS
8.1 Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if in writing and personally
delivered or sent by registered or certified mail, return receipt requested,
postage prepaid, or if sent by facsimile transmission with confirmation of
receipt addressed as follows or to such other address as the parties shall have
given notice of pursuant hereto:
Buyer: XXXX PLASTICS SARL
C/O GALT INDUSTRIES, INC.
000 Xxxxx Xxxxxx - 0xx Xxxxx Xxxxx 000 Xxx Xxxx, XX
00000 X.X.X.
Attn: Xxxxxx X. Xxxxx
Telecopy: 0 (000) 000-0000
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With copy to: Skadden, Arps, Slate, Xxxxxxx
& Xxxx, LLP
00 xxx xx Xxxxxxxx Xx. Xxxxxx
00000 Xxxxx, Xxxxxx
Attn: Xxxxxx X. Xxxxxxx
Telecopy: 33 (0) 0 00-00-00-00
Seller: Xxxxxx and Angele STAPHANE
Parc des Chenevres
0, xxx xxx Xxxxxx
Xxxxx (Xxxxx xx Xxxxx), Xxxxxx
With copy to: Jurifib SA
00, xxx xx xx Xxxxxxxxxx
00000 Xxxx, Xxxxxx
Attn: Xxxxxxx Xxxxxxx
Telecopy: 33 (0) 0 00-00-00-00
8.2 Entire Agreement. This Agreement, the Schedules and
Exhibits hereto represent the entire understanding and agreement of the parties
and supersede all prior agreements, understandings of arrangements among the
parties hereto with respect to the subject matter hereof and can be amended,
supplemented or changed, only by written instrument making specific reference to
this Agreement signed by the party against whom enforcement of such amendment,
supplement or modification. Buyer acknowledges that Seller has made no
representation or warranty to Buyer, and that Buyer has relied on no
representation or warranty, other than those specifically set forth herein.
8.3 Section Headings. The section headings in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
8.4 Applicable Law/Governing Language.
(a) This Agreement shall be governed by and construed
and enforced in accordance with the laws of France.
(b) The parties acknowledge that the negotiations
were conducted, and the Agreement prepared and executed, in French and English.
8.5 Expenses. Whether or not the transactions contemplated
hereby are consummated, the parties
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hereto shall pay their own respective expenses provided that all transfer taxes
in connection with the purchase of the Shares and all notarial costs and
expenses in connection with the transactions contemplated by this Agreement
shall be borne by Buyer.
8.6 Waiver.
(a) Any party may, by written notice the other party:
(i) extend the time for the
performance of any of the obligations or other actions of such other
party;
(ii) waive any inaccuracies in the
representations of such other party contained in this Agreement; or
(iii) waive compliance with any of
the agreements of such other party contained in this Agreement or waive
or consent to the modification of performance of any of the obligations
of such other party.
(b) No failure or delay by a party in exercising any
right, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder.
8.7 Severability. If at any time subsequent to the date
hereof, any provisions of this Agreement shall be held by any court of competent
jurisdiction to be illegal, void or unenforceable, such provision shall be of no
force and effect. The invalidity or non-enforceability of any provision of this
Agreement, in whole or in part, shall not affect the validity or enforceability
of any other provision of this Agreement, all of which shall to the full extent
consistent with law continue in full force and effect.
8.8 Incorporation by Reference. The Schedules and the
Exhibits to this Agreement constitute integral parts of this Agreement and are
hereby incorporated into this Agreement by this reference.
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8.9 Counterparts. This Agreement shall be executed in two
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
8.10 Assignment. The rights and obligations under this
Agreement may not be assigned or delegated by any party hereto, in whole or in
part, to any third party without the prior written consent of the other party
hereto, provided, however, that without such prior consent, Buyer shall have
the right to assign all or any part of its rights and obligations under this
Agreement to (i) any Buyer's affiliate or, (ii) by way of security, guarantee or
pledge, to any person procuring credit to Buyer; provided, further, that Buyer
irrevocably and unconditionally guarantees the prompt and complete performance
by such transferee of Buyer's obligations hereunder.
8.11 Certain Definitions. For purposes of Agreement, the
term:
(a) "affiliate" of any corporate person means any
other person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the first mentioned
person. A person shall be deemed to control another person if such first
mentioned person owns, directly or indirectly, 50% or more of the voting rights
of the second mentioned person;
(b) "enforceability", "binding and enforceable in
accordance with its terms" or terms of similar import, where they describe an
obligation of a party to any agreement, shall be deemed in all cases to be
subject to applicable bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect or
by legal or equitable principles relating to or limiting creditors' rights
generally;
(c) "business day" means any day other than a
Saturday, Sunday or a public bank holiday in France;
(d) "person" means an individual, corporation,
partnership, association, trust or any unincorporated organization;
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(e) "material" when used in connection with the
Business shall mean material to the Business as a whole;
(f) "Permitted Encumbrances" shall mean,
collectively, encumbrances for current taxes or assessments not delinquent,
builder, contractor, workmen, repairmen, carrier encumbrances or other similar
encumbrances also arising and continuing in the ordinary and usual course of
business, consistent with past practice, for obligations which are not xxxxx-
xxxxx, and which do not materially affect the value of the property or the
usefulness thereof to the Business.
(g) "Governmental Entity" means any local, regional,
or national, or European department, division or other body, or any court of
competent jurisdiction, administrative agency or commission or other
governmental authority or instrumentality domestic or foreign, including any
legislative body, administrative agency, court, commission, council or other
organ of the European Union and including without limitation the Prefecture,
the Ministere de l'Environnement, the Direction Regionale de l'Industrie, de la
Recherche et de l'Environnement (the "DRIRE") and the Direction Departementale
des Affaires Sanitaires et Sociales.
(h) "Industrial Property" means patents, patent
applications, registered copyrights and applications therefor, registered
trademarks and applications therefor, registered trade name and design and
applications therefor; unregistered copyrights and trademarks, know-how, trade
secrets and proprietary technology; licenses and other agreements relating to
the items listed above.
8.12 Dispute Resolution.
(a) Except as provided in Sections 1.2.2 and 1.2.5
hereof, any dispute, controversy or claim arising out of or in connection with
this Agreement or the breach, termination or validity thereof (a "Dispute"),
shall be finally settled by arbitration under the Rules of Arbitration of the
International Chamber of Commerce (the "ICC") then in effect (the "Rules"),
except as modified herein. The arbitration shall be held in Paris, France. The
arbitration proceedings shall be conducted in English or French as decided by
the arbitration tribunal, documentary exhibits
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may be admissible in French or English without translation into French or
English, as the case may be, and the award shall be rendered in both the English
and French languages.
(b) There shall be three arbitrators of whom Buyer
shall select one and Seller shall select one within twenty (20) business days of
defendant's receipt of the request for arbitration. The two arbitrators thus
appointed shall select the third arbitrator to act as Chair of the tribunal
within twenty (20) business days of the selection of the second arbitrator. If
any arbitrator has not been appointed within the time limits specified herein,
such appointment shall be made by the ICC upon the written request of either
party within twenty (20) business days of such request. Each arbitrator shall be
fluent in both English and French.
(c) The parties hereby waive any rights of
application or appeal to the courts of France to the fullest extent permitted by
law in connection with any question of law arising in the course of the
arbitration or with respect to any award made, except for actions to enforce an
arbitral award and actions seeking interim, interlocutory or other provisional
relief in any court of competent jurisdiction.
(d) The award shall be final and binding upon the
parties, and shall be the sole and exclusive remedy between the parties
regarding any claims, counterclaims, issues, or accounting presented to the
arbitral tribunal. Judgment upon any award may be entered in any court having
jurisdiction.
(e) The parties shall each bear its own costs and
expenses and an equal share of the arbitrators' and administrative fees of the
arbitration.
(f) Any monetary award shall be made and promptly
payable in French Francs free of any tax, deduction or offset, and the arbitral
tribunal shall be authorized in its discretion to grant pre-award and post-award
interest at commercial rates. Any costs, fees, or taxes incident to enforcing
the award shall, to the maximum extent permitted by law, be charged against the
Party resisting such enforcement.
(g) This Agreement and the rights and obligations of
the Parties shall remain in full force
49
51
and effect pending the award in any arbitration proceeding hereunder.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the day and year first above written.
SELLER
By: /s/ Roland Staphane
------------------------------
Roland STAPHANE
By: /s/ Angele Staphane
------------------------------
Angele STAPHANE
BUYER
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Title: Chairman and Chief Executive Officer
50
52
LIST OF EXHIBITS
EXHIBIT I: List of Minority Shareholders
EXHIBIT II: EBIT calculation
EXHIBIT III: Escrow Agreement
EXHIBIT IV: Employment Agreement
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53
LIST OF SCHEDULES
Schedule 1.2.3: Base Balance Sheet
Schedule 2.1.3 Title to Shares
Schedule 2.1.5(a): Audited Consolidated
Financial Statements
Schedule 2.1.5(b): Audited Financial Statements
Schedule 2.1.5(c): Specific Accounting
Principles
Schedule 2.1.5(d): Off Balance Sheet Liabilities
Schedule 2.1.6: Subsidiaries
Schedule 2.1.7: Actions since February 28,
1997
Schedule 2.1.8(a): List of the SI Group
Industrial Property
Schedule 2.1.8(b): Encumbrances on the SI Group
Industrial Property
Schedule 2.1.8(d): Secrecy and confidentiality
agreements with respect to
the SI Group Industrial
Property
Schedule 2.1.9(a): List and Description of Real
Property
Schedule 2.1.10(a)(i): Movable Property
Schedule 2.1.10(a)(ii): Excluded Items of the Movable
Property
Schedule 2.1.11: Title to Property
Schedule 2.1.12: Contracts
Schedule 2.1.14: Certain Receivables
Schedule 2.1.15: Litigation
Schedule 2.1.18(a): Environmental Permits
II
54
Schedule 2.1.18(b): Environmental Report
Schedule 2.1.19(b): Non-Statutory Employee Benefits
Schedule 2.1.19(c): Arrangements with Employees
out of the ordinary course
Schedule 2.1.19(d): Litigation with Employees
Schedule 2.1.20: Loans to Directors, etc.
Schedule 2.1.22: Restrictions and
Authorizations
Schedule 2.1.23(b): List of Bank Accounts
Schedule 2.1.24: Product Liability
Schedule 3.1.9: Key Employees
Schedule 3.3.3: Governmental Consents
III
55
TABLE OF CONTENTS
Page
ARTICLE 1 - PURCHASE AND SALE OF SHARES 2
1.1 Sale of Shares................................................... 2
1.2 Purchase Price and Payment....................................... 2
1.2.1 Share Purchase Price....................... 2
1.2.2 Additional Consideration................... 2
1.2.3 Base Balance Sheet......................... 4
1.2.4 Closing Balance Sheet...................... 4
1.2.5 Disputes Regarding the Closing
Balance Sheet.............................. 5
1.2.6 Determination of any Adjustment
Amount..................................... 6
1.2.7 Method of Payment.......................... 6
1.2.8 Deposit.................................... 6
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES 7
2.1 Representations and Warranties of Seller......................... 7
2.1.1 Status..................................... 7
2.1.2 Share Capital.............................. 8
2.1.3 Title to Shares............................ 8
2.1.4 Authority.................................. 9
2.1.5 Financial Statements....................... 9
2.1.6 Subsidiaries............................... 11
2.1.7 Actions Since February 28, 1997............ 11
2.1.8 Industrial Property........................ 14
2.1.9 Real Property; Leases of Real Prop-
erty....................................... 15
2.1.10 Movable Property........................... 16
2.1.11 Title to Property.......................... 16
2.1.12 Contracts and Commitments.................. 16
2.1.13 Inventory.................................. 17
2.1.14 Receivables................................ 18
2.1.15 Litigation................................. 18
2.1.16 No Broker.................................. 18
2.1.17 Governmental Permits; Compliance with
Laws....................................... 19
2.1.18 Environmental Matters...................... 19
2.1.19 Employees; Employee Benefits; Health
and Safety................................. 21
2.1.20 Loans to or from Directors, Officers
and Employees.............................. 23
2.1.21 Taxes...................................... 23
2.1.22 Restrictions and Authorizations............ 25
2.1.23 Powers of Attorney; Bank Accounts.......... 25
2.1.24 Product Liability.......................... 26
2.1.25 Insurance.................................. 26
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2.2 Representations and Warranties of Buyer.......................... 27
2.2.1 Corporate Status........................... 27
2.2.2 Execution and Effect of Agreement.......... 27
2.2.3 No Lawsuits; Consents...................... 27
2.2.4 No Broker.................................. 27
ARTICLE 3 - COVENANTS 28
3.1 Covenants of Seller.............................................. 28
3.1.1 Business in Ordinary Course................ 28
3.1.2 Perform Contracts.......................... 28
3.1.3 Employment Agreement with Seller........... 28
3.1.4 Non-Competition............................ 28
3.1.5 Directors.................................. 29
3.1.6 Customers/Suppliers Transition............. 29
3.1.7 Shares..................................... 30
3.1.8 Access to Information...................... 30
3.2 Covenant of Buyer................................................ 31
3.2.1 Regulatory Filings......................... 31
3.3 Mutual Covenants................................................. 31
3.3.1 Publicity.................................. 31
3.3.2 Commercially Reasonable Efforts............ 32
3.3.3 Cooperation................................ 32
3.3.4 Access to Information...................... 32
3.3.5 Records.................................... 32
3.3.6 Confidentiality............................ 33
3.3.7 Taxes...................................... 33
ARTICLE 4 - CONDITIONS 34
4.1 Conditions to Obligations of Buyer............................... 34
4.1.1 Representations and Warranties True
and Correct................................ 34
4.1.2 Compliance with Agreement.................. 34
4.1.3 No Regulatory Impediment................... 34
4.1.4 Financing.................................. 34
4.1.5 Shares..................................... 34
4.1.6 No Material Adverse Change................. 35
4.1.7 Work Councils.............................. 35
4.1.8 Bank Support............................... 35
4.2 Conditions to Obligations of Seller.............................. 35
4.2.1 Representations and Warranties True
and Correct................................ 35
4.2.2 Compliance with Agreement.................. 35
4.3 Mutual Conditions................................................ 35
4.3.1 Governmental Consents...................... 36
4.3.2 Escrow Agreement........................... 36
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ARTICLE 5 - CLOSING 36
5.1 Closing.......................................................... 36
5.2 Deliveries....................................................... 36
5.2.1 Seller's Deliveries........................ 36
5.2.2 Buyer's Deliveries......................... 37
ARTICLE 6 - INDEMNIFICATION 37
6.1 General Indemnification by Seller................................ 37
6.2 Limitation of Liability.......................................... 38
6.3 Survival of Seller's Representations, Warranties
and Covenants.................................................... 38
6.4 Third Party Claim................................................ 39
6.5 Notices.......................................................... 40
6.6 When Payable..................................................... 40
6.7 Miscellaneous Provisions......................................... 41
6.8 Environmental Indemnification by Seller.......................... 41
6.9 Responsibility for Cleanup....................................... 42
6.10 Definitions...................................................... 42
ARTICLE 7 - TERMINATION 43
7.1 Termination...................................................... 43
7.2 Consequences..................................................... 44
ARTICLE 8 - MISCELLANEOUS 44
8.1 Notices.......................................................... 44
8.2 Entire Agreement................................................. 45
8.3 Section Headings................................................. 45
8.4 Applicable Law/Governing Language................................ 45
8.5 Expenses......................................................... 45
8.6 Waiver........................................................... 46
8.7 Severability..................................................... 46
8.8 Incorporation by Reference....................................... 46
8.9 Counterparts..................................................... 47
8.10 Assignment....................................................... 47
8.11 Certain Definitions.............................................. 47
8.12 Dispute Resolution............................................... 48
LIST OF EXHIBITS I
LIST OF SCHEDULES II
iii
