Exhibit 2.1
Sale and Transfer Agreement recorded on December 8, 1999.
Exhibit 2.1
Deed Roll Nr. W 1064/1999
(Share Transfer Agreement)
R e c o r d e d
in Dusseldorf on 8th December 1999
Before me, the undersigned Notary in Dusseldorf
Xx. Xxxxxx Xxxx
practising in Dusseldorf
appeared today:
1. Xx. Xxxxxx Stohlmeier, attorney-at-law,
office address: Xxxxxxxxxxxxx 0, 00000 Xxxxxxxxxx,
personally known to the notary public,
acting not for himself but as proxy for
XXXX INDUSTRIES INC., Tyson Place, Suite
200, 0000 Xxxxxxxx Xxxx, Xxxxxxxxx XX 00000, XXX,
acting under a written power of attorney dated 7th December 1999, a fax
copy of which is attached to this notarial deed as ANNEX 1, promising
to submit the original of the power of attorney;
(hereinafter referred to as "Seller")
2. Dr. Dr. Xxxxx Xxx,
Xxxxxxxxxx 0, 00000 Xxxxxx,
acting not for himself but as proxy for
CERTINA AKTIENGESELLSCHAFT, Xxxxxxxxxx 0, Xxxxxxxxxxxxx, 00000 Munchen,
under a written power of attorney dated 19th November 1999 a certified
copy of which is attached to this deed as ANNEX 2, promising to
promptly submit a written confirmation of his power of attorney,
(hereinafter referred to as "Buyer").
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The Seller and the Buyer collectively referred to as the "Parties".
Dr. Dr. Low proved his identity by means of his personal identity card.
Upon inquiry by the acting notary, the appeared confirmed that the acting notary
has not previously been involved in the subject matter of this notarial deed.
The notary ascertained that the appeared are in sufficient command of the
English language.
The appeared requested the notarization of the following
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SALE AND TRANSFER AGREEMENT
PREAMBLE
1. The Seller is the owner of Xxxx Industries Germany GmbH in Paderborn,
registered in the Commercial Register at the Local Court of Paderborn
under HRB 3008 (the "Holding Company").
2. The Holding Company is the owner of Xxxx Germany Beteiligungs-GmbH,
Paderborn, registered in the Commercial Register at the Local Court of
Paderborn under HRB 248 (the "General Partner").
3. The Holding Company is the limited partner, and the General Partner is
the general partner of Xxxx Industries Paderborn GmbH & Co. KG,
registered in the Commercial Register at the Local Court of Paderborn
under HRA 472 (the "Company").
4. The Company has in the past suffered losses from its operations which
losses have continuously been compensated by the Seller or the Holding
Company. The Seller has decided to divest its interest in the Holding
Company to the Buyer who is interested in acquiring the Holding Company
and, thereby, the Company which the Buyer wishes to turn around into an
operation which in the foreseeable future will become profitable. The
Buyer has presented a feasibility study to the Seller in this regard.
5. In an effort to facilitate the transfer of the Company to the Buyer as
a going concern and in order to support the financial position of the
Company, the Seller is prepared to accept a negative purchase price and
to give other support to the Company and to the Buyer, all as described
in more detail in the following
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SALE AND TRANSFER AGREEMENT
Section 1
OBJECT OF THE AGREEMENT
The Seller holds one share in the nominal amount of DM 50,000 in the
Holding Company (the "Share"). The Share is fully paid up. The Seller
sells this Share to the Buyer at the conditions stated below with
effect as of 31st December 1999, 24:00 hours/1st January 2000, 0:00
hours (the "Effective Date"). The Buyer accepts this sale.
Section 2
PURCHASE PRICE
(1) The purchase price for the Share shall be DM 1.00 (in words: one German
Xxxx).
(2) The purchase price shall be due today and has been paid.
Section 3
RIGHT TO PARTICIPATE IN PROFITS
The right to participate in any undistributed profits attributable to the Share
shall pass to the Buyer together with the Share sold. The Buyer shall be
entitled to any profits attributable to the Share from the current financial
year as well as to profits from any earlier financial years which have not been
distributed to the shareholder.
Section 4
ASSIGNMENT
The Seller hereby assigns the Share to the Buyer with effect as of the Effective
Date. The Buyer hereby accepts this assignment and obligates itself to notify
the assignment of the Share to the Company in accordance with Section 16 of the
Limited Liability Companies Act (GESETZ BETREFFEND DIE GESELLSCHAFTEN MIT
BESCHRANKTER HAFTUNG, GmbHG).
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Section 5
CONSENTS
The assignment of the Share does not require the consent of the Company
under its articles of association.
Section 6
NO REPRESENTATIONS OR WARRANTIES
(1) The Buyer has had an opportunity to make an informed assessment of the
General Partner and the Company and their respective operations, assets
and liabilities (all of this hereinafter collectively referred to as
the "Business"). In particular, the Buyer has inspected the production
site of the Company and has had the opportunity to receive information
from the Company's management.
(2) The Seller makes no representations or warranties of any nature
whatsoever, whether express or implied, with respect to the Business
and shall in no way be liable for any deficiencies or defects of the
Business, whether known to the Seller or not.
(3) To the extent permitted by law, all past, present and future claims of
the Buyer against the Seller, other than those expressly provided for
in this Agreement, shall hereby be excluded, regardless of whether or
not such claims are presently known or not and regardless of whatever
legal concept they may be based upon.
Section 7
COVENANTS OF SELLER AND RELATED ENTITIES
(1) Prior to the Effective Date, the Seller shall on behalf of the Company
repay all bank debts and other debts arising from financial loans given
to the Company in such a fashion that the Company will be free of such
debts on the Effective Date.
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(2) The Seller shall on behalf of the Company settle vis-a-vis G&R
Grundverwaltung GmbH, Paderborn ("G&R") its payment claim against the
Company arising out of the lease agreement relating to the property
presently leased by the Company with respect to all lease payments and
interest for the time period up until the Effective Date, and shall
cause G&R to enter into a new respective lease agreement with the
Company with effect as of the Effective Date.
(3) The Seller shall continue to pay the rent to G&R on behalf of the
Company for the time period until the date two years after the
Effective Date or until an Event of Default (as defined below) occurs,
whichever comes first.
(4) The Seller shall prior to the Effective Date, and shall cause its
related companies within the meaning of Sec. 15 German Stock
Corporation Act, including G&R, ("AKTIENGESETZ - VERBUNDENE
UNTERNEHMEN") (hereinafter "Related Companies") to, waive all claims,
if any, which they may have against the Company, the General Partner
and the Holding Company with regard to any time period up until the
Effective Date.
Section 8
XEROX SUBCONTRACTOR RELATIONSHIP/OTHER CUSTOMERS
(1) The Company is a supplier to the Xerox Group of companies. For the time
period up until one year after the Effective Date or until an Event of
Default occurs, whatever comes first, the Seller shall, and shall cause
its Related Companies to, retain the Company as a subcontractor for
orders placed with the Seller by Xerox for products currently produced
by the Company. The pricing in the relationship between Xerox and the
Seller and between the Seller and the Company shall be the same with
regard to products manufactured by the Company in 1999.
(2) This obligation shall be limited to an aggregate maximum turnover in
the equivalent of US$ 2.2m and shall be allocated to the time period
ending one year after the Effective Date.
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(3) The obligation of the Seller to retain the Company as a subcontractor
shall exist only to the extent that the Company delivers the products
in question with the same quality and speed as it has done before in
its normal course of business.
(4) The Seller and the Related Companies shall not actively entice away the
other existing customers of the Company with respect to products
manufactured by the Company in 1999.
Section 9
CONTINUED FINANCIAL SUPPORT
(1) For a time period up until 24 months after the Effective Date or until
an Event of Default occurs, whichever comes first, the Seller shall pay
financial support to the Company in the aggregate amount in the
equivalent of US$ 2.4 m in accordance with the payment plan set out in
SCHEDULE 9.
(2) For the avoidance of doubt, the obligations of the Seller under
Sections 7 (3), 8 (1) and 9 (1) shall cease upon an Event of Default
occurring, to the extent not yet completely fulfilled at such time.
(3) The financial support shall be deferred if and to the extent the
Company makes profits in any given calendar month for which financial
support was contemplated by Schedule 9 because the Parties assumed that
the Company would make losses until the end of the time period
described in para. (1) above. Deferred payments will be made up in the
first payment period in which there are losses. For purposes of
determining payment periods after the final scheduled payment date of
1st July 2000, payment periods shall commence on 31st October 2000,
31st January 2001, 30th April 2001, 31st July 2001, 31st October 2001
and ending 31st December 2001.
(4) The Buyer shall furnish to the Seller monthly reports on the Financial
Status of the Company no later than two weeks after the end of each
calendar month for the time period until 31st December 2002 or until
all deferred payments have been made, whichever comes first.
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Section 10
EVENT OF DEFAULT
(1) Each of the individual cases described below shall for the purpose of
this Agreement constitute an Event of Default:
(a) The initiation of a liquidation procedure relating to the
Company;
(b) the discontinuation of a material part of the Business absent
a liquidation;
(c) the opening of an insolvency procedure over the assets of the
Company or the rejection of an insolvency procedure due to the
lack of assets;
(d) the failure of the then current management ("GESCHAFTSFUHRER")
of the Company to apply for the opening of insolvency
procedures where there is a statutory obligation to do so;
(e) any comparable occurrence as described in Section 10 (1) (a)
through (d) above, whether under German law or any foreign
law.
(2) Any occurrence in accordance with Section 10 (1) (a) through (e) shall
also be deemed an Event of Default if it occurs to a legal entity,
business operation or person which is a legal successor to the Company
or to which the whole or a portion of the business of the Company as
conducted immediately prior to the Effective Date or assets of the
Company owned by it prior to the Effective Date have been transferred
after the Effective Date.
Section 11
ACCOUNTS
(1) Following the signing of this Agreement and prior to the Effective
Date, the Seller shall cause the Company to draw up the Company's
accounts as per the Effective Date, consisting of a best effort
estimate of the assets and liabilities of the Company as of the
Effective Date, (the "Estimated Accounts"). The Estimated Accounts
shall be drawn up in accordance with applicable German accounting
principles as
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previously applied by the Company and otherwise in accordance with the
relevant regulations of German law.
(2) Immediately after the Effective Date, the Company shall prepare the
Annual Accounts for the fiscal year 1999, also in accordance with
applicable German accounting principles as previously applied by the
Company and otherwise in accordance with the relevant regulations of
German law (the "Annual Accounts").
(3) The Annual Accounts shall be presented to the Seller who shall have a
period of six weeks to object to items of the Annual Accounts, if any.
Should the Seller and the Company disagree on any items of the Annual
Accounts, they shall try to reach an amicable agreement among
themselves. If these efforts are unsuccessful, an auditing firm to be
chosen by the Chairman of the Auditors Association (INSTITUT DER
WIRTSCHAFTSPRUFER) in Dusseldorf shall be instructed by either the
Seller or the Buyer to make a binding determination in the form of a
factual arbitral award on the disputed item of the Annual Accounts. The
costs of such factual arbitration shall be split equally between the
Seller and the Company, regardless of the outcome. The Annual Accounts,
as agreed between the Seller and the Company or as bindingly determined
by the instructed auditing firm are the "Binding Accounts".
Section 12
COMPENSATION PAYMENTS
(1) No later than five business days after the Effective Date, the Seller
shall pay to the Company 75 % of the following amount, as shown in the
Estimated Accounts: Any amount by which the "payables" exceed the
"receivables".
(2) No later than five business days after the Binding Accounts have become
available to the Seller, the amount calculated in accordance with
Section 12 (1) above shall again be calculated on the basis of the
Binding Accounts.
(3) Any balance between the payment made in accordance with sec. 12 (1)
above and the amount calculated in accordance with sec. 12 (2) above
shall promptly be equalized between the Seller and the Company.
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(4) The Seller shall bear the accrued severance costs with regard to all
employment relationships terminated by the Company prior to the date
hereof, whereby "termination" means the service of notice of
termination ("Kundigung").
(5) The Seller shall even prior to the Effective Date cause the Company's
management to cooperate with the Buyer with regard to additional
dismissals or other measures affecting the Company's employees in order
to put the Buyer in a position to initiate such measures prior to the
passing of critical notice periods, if any.
Section 13
USE OF NAME
The Buyer shall promptly and in any event within two months after the Effective
Date change the company names of the Company, the General Partner and the
Holding Company in such a fashion that the name "Xxxx" or a confusingly similar
name, alone or in conjunction with other name components, is no longer part of
the company names of the Company, the General Partner or the Holding Company.
Section 14
COVENANTS OF THE BUYER/INDEMNITY
(1) The Buyer is aware that the support given by the Seller to the Company
in accordance with this Agreement is essential to sustain the ongoing
business operations of the Company. Therefore, whilst the Seller
acknowledges that the Buyer is free to exercise its entrepreneurial
discretion in how he runs the business operation of the Company, the
Buyer undertakes, for a time period of 24 months after the Effective
Date not to misappropriate the support given by the Seller or its
Related Companies to the Company. In particular, the Buyer undertakes
for such time period not to deprive the Company of any assets to the
detriment of the Company and to the benefit of the Buyer, whether
related or unrelated to the Buyer, or any other party if and to the
extent that such action would be contrary to the best interest of the
Company.
(2) The Buyer hereby agrees to indemnify and hold harmless the Seller and
any entity related to the Seller from any and all claims and
liabilities arising out of any act or
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omission of the Buyer, the Company, the Holding Company or the General
Partner or any legal successor thereof after the Effective Date.
(3) If the Company is sold or otherwise disposed of by the Buyer (other
than to the Seller or the Buyer or a related company of the Buyer
within the meaning of sec. 15 of the German Stock Corporation Act) (a
"Sale"), any support by the Seller under this Agreement shall cease
immediately.
(4) For the longer of the period during which support is due under sec. 9
or twelve months from the Effective Date, if a Sale occurs, the Buyer
shall pay half of the proceeds arising from such Sale to the Seller.
Section 15
CONFIDENTIALITY
The parties shall maintain confidentiality with regard to any facts or any
information relating to this Agreement and the parties shall not disclose such
facts or information to any third party unless they are subject to a legal
obligation to do so. Any public statement shall be agreed upon between the
parties prior to publication.
Section 16
AMENDMENTS/TRANSACTION STRUCTURE
(1) Any amendments or addition to this Agreement must be made in writing
unless stricter statutory form requirements apply. This shall also
apply to any amendment or addition to this provision making the written
form mandatory.
(2) The Parties are aware that the transaction structure contemplated in
this Agreement may not be the most tax-efficient structure for the
Seller and its Related Companies. The Buyer therefore agrees to fully
cooperate with the Seller and its Related Companies and any party or
parties designated by them (collectively the "Second Parties") to
achieve and implement a modified transaction structure, which in the
view of the Seller is more tax efficient or otherwise more beneficial
for the Second Parties. This obligation of the Buyer includes the
obligation to unwind this
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transaction and to enter into a new transaction with the Second Parties
at the request of the Seller and to give and accept all declarations
and to do all other things which are necessary or reasonable in this
regard, provided, however, that the Buyer shall not be obligated to so
cooperate if the modified transaction is less beneficial to him under
any economic aspect, unless the Seller, simultaneously with the
entering into the modified transaction compensates the Seller for any
adverse effects brought upon him as a result of the modified
transaction, including the reimbursement of notarization costs arising
through the modified transaction, and reasonable legal fees arising in
connection with legal or tax advice sought by the Buyer with regard to
the modified transaction; such costs shall be discussed with the Seller
in advance. The rights of the Seller under this para. (2) shall be
limited in time until the Effective Date.
(3) The Parties had originally envisaged that the Buyer would acquire the
shares in the General Partner and the limited partner interest in the
Company (but not the shares in the Holding Company) at the same
economic terms contemplated herein. Upon the request of the Seller, the
Buyer agrees to instead acquire the shares in the Holding Company. The
Seller indemnifies the Buyer for all liabilities of the three acquired
companies arising out of the fact that the alternative acquisition
structure has been chosen which includes the acquisition of the Holding
Company.
(4) The Seller warrants that the Holding Company has a share capital of
DM 50,000 which is fully paid up and that the Holding Company has no
liabilities in its balance sheet (other than the net equity), in
particular no accruals, debts and the like.
Section 17
CHOICE OF LAW/STIPULATED VENUE
This Agreement is subject to the laws of the Federal Republic of Germany. To the
extent legally permissible, the parties submit themselves to the jurisdiction of
the courts of Munich.
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Section 18
SEVERABILITY
If a provision of this Agreement or a provision subsequently added to this
Agreement should be or become invalid in whole or in part or if this Agreement
should contain a contractual gap, this shall not affect the validity of the
remaining provisions. Instead of the invalid provision, such reasonable
provision shall apply which, as far as legally permissible, best approximates
what the parties to the agreement have intended. For the purpose of filling a
contractual gap such reasonable provision shall apply which the parties had
intended in view of the purpose of this Agreement if they had considered the
issue. If the invalidity of a provision is caused by the extent of a performance
or time (deadline or date) determined therein, such extent of performance shall
be deemed to be agreed which comes closest to the originally agreed extent of
performance or time (deadline or date) which is legally permissible.
Section 19
COSTS/TAXES
(1) The Buyer shall bear the costs of the notarization. The Company does
not own real property.
(2) Each party shall bear the costs of its own advisors.
The Notary cautioned the parties concerning liability for outstanding capital
contributions (RUCKSTANDIGE STAMMEINLAGEN) or capital contributions that have
not been fully paid up (DIFFERENZHAFTUNG), and that the tax authorities will
examine the question of whether real property transfer tax is payable.
The above instrument was read to the persons appearing, was available for their
inspection, was approved and personally signed by them and the Notary as
follows:
