EXHIBIT 4.5
SHARE PURCHASE AGREEMENT DATED JUNE 10, 2002
AMONG EN-ELTEK NETHERLANDS 2000 B.V., KUBATRONIK-LEITERPLATTEN GMBH,
MR. XXXXX XXXXX, MR. XXXXXX XXXXX AND
MS. XXXXX XXXXXXXXXXX
================================================================================
UR-NR./DEED NO._______________ / 2002
PROTOKOLL UBER EINEN ANTEILSKAUF- MINUTES OF A SHARE PURCHASE AND
UND TRANSFER AGREEMENT
-UBERTRAGUNGSVERTRAG
Heute, den zehnten Juni Today, this tenth of June two thousand
zweitausendzwei and two
-10.06.2002-
erschienen vor mir, the following persons appeared before
me,
XX. XXXX XXXXXXX
Notar mit dem Amtssitz in Neuhauser notary public with registered office
Str. 15, 80331 Munchen, in Xxxxxxxxx Xxx. 00, 00000 Xxxxxxx,
in den Geschaftsraumen der KPMG in the business premises of KPMG
Treuhand Beiten Burkhardt GmbH, Treuhand Beiten Burkhardt GmbH,
Rechtsanwaltsgesellschaft Rechtsanwaltsgesellschaft
Steuerberatungsgesellschaft, Steuerberatungsgesellschaft,
XxxxxxxxxxxxxXx 00, 00000 Xxxxxxx: XxxxxxxxxxxxxXx 00, 00000 Xxxxxxx:
1. Xxxx Xxxxx Xxxxxxxx 1. Mr. Xxxxx Xxxxxxxx
wohnhaft: resident:
Aharonson st. Aharonson st. 52293 - Ramat Gan
52293 - Ramat Gan Israel
Israel
ausgewiesen durch Vorlage identified by presentation of his
seines Reisepasses passport
seines Reisepasses
(nachstehend der "Erschienene zu 1.") (hereinafter "Person Present ad 1.")
================================================================================
2. Mr. Xxxxxx Xxxxx 2. Mr. Xxxxxx Xxxxx
wohnhaft: resident:
Xxxxxx 0 xx. Xxxxxx 0 xx.
Xxx Xxxx. Xxx Xxxx.
Xxxxxx Israel
ausgewiesen durch Vorlage seines/ihres identified by presentation of his
Reisepasses passport
(nachstehend der "Erschienene zu 2.") (hereinafter "Person Present ad 2.")
Die Erschienenen zu 1. und 2. handeln The Persons present ad 1. and 2. shall
wahrend der notariellen Beurkundung be acting throughout this notarization
nicht im eigenen Namen, sondern namens not in their own name but for and on
und im Auftrag von behalf of
EN-ELTEK NETHERLANDS 2002 B.V.
(nachstehend/hereinafter "Eltek" or "Purchaser)
mit Sitz in Amsterdam, Niederlande, with its registered office in
eingetragen im niederlandischen Amsterdam, The Netherlands, registered
Handelsregister unter der Nummer in the companies Registrar of the
34174157, als deren Geschaftsfuhrer. Netherlands under number 34174157, as
its General Managers.
3. Xxxx Xxxxx Xxxxx, 3. Mr. Xxxxx Xxxxx,
wohnhaft: resident:
Xxxxxxxxxxx 0, Xxxxxxxxxxx 0,
00000 Xxxxxxxxx 00000 Xxxxxxxxx
ausgewiesen durch Vorlage seines identified by presentation of his
amtlichen Lichtbildausweises official identity card
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(nachstehend der "Erschienene zu 3." (hereinafter "Person Present ad 3 or
oder "Alois") "Alois").
Die Erschienene zu 3. handelt wahrend The Person Present ad 3. shall be
der notariellen Beurkundung nicht nur acting throughout this notarization
im eigenen Namen, sondern auch not only in his own name but also as a
aufgrund im Original vorgelegter und representative with the power of sole
dieser Urkunde in Kopie beigefugter representation and released from the
Vollmacht als restrictions set forth on Section 181
einzelvertretungsberechtigter und von German Civil Code (BGB) according to
den Beschrankungen des Section 181 BGB the power of attorney which was
befreiter Bevollmachtigter von presented in original and is attached
to this deed in copy as annex of
FRAU/MS XXXXX XXXXXXXXXXX
WOHNHAFT/RESIDENT:
XXXXXXXXXXX 0,
00000 XXXXXXXXX
(NACHSTEHEND/HEREINAFTER "HEIKE")
sowie namens und im Auftrag von as well as for and on behalf of
KUBATRONIK-LEITERPLATTEN GMBH,
mit Sitz in Geislingen / Steige, with its seat in Geislingen / Steige,
eingetragen im Handelsregister des registered in the Commercial Register
Amtsgerichts Goppingen unter HRB 816 of the Lower Court of Goppingen under
Gei, als deren Geschaftsfuhrer mit HRB 816 Gei, as its managing director,
Alleinvertretungsvollmacht und befreit authorized to represent solely and
von den Beschrankungen des Section 181 released from the restrictions set
BGB gemaB Handelsregisterauszug, der forth in Sec. 181 BGB in accordance
dieser Urkunde in Kopie als Anlage with the certified extract of the
beigefugt ist. (nachstehend Commercial Register, a copy of which
"Kubatronik" oder "Gesellschaft") is attached to this this deed as annex
(hereinafter "Kubatronik" or
"Company")
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4. Xxxx Xxxxxx Xxxxx 4. Mr. Xxxxxx Xxxxx
wohnhaft: resident:
Xxxxxxxxx Xxxxxxx 00, Nellinger Strasse 19,
73340 Amstetten 00000 Xxxxxxxxx
ausgewiesen durch Vorlage seines identified by presentation of his
amtlichen Lichtbildausweises official identity card
(nachstehend der "Erschienene zu 4." (hereinafter "Person Present ad 4." or
oder "Thomas"). "Thomas").
(die Erschienenen zu 3 und 4 und Heike (the Persons Present ad 3. and 4. and
nachstehend auch zusammen "Verkaufer") Heike hereinafter together also the
"Sellers")
Auf Ansuchen der Erschienenen Upon request of the Persons Present, I
beurkunde ich hiermit gemaB ihren vor hereby notarise the following
mir abgegebenen Erklarungen was folgt: statements that were made in my
presence:
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PRAAMBEL PREAMBLE
SHARES PURCHASE AGREEMENT
THIS SHARES PURCHASE AGREEMENT (the "AGREEMENT") is made and entered into as of
June 10, 2002, by and among (i) XXXXX, XXXXXX and HEIKE, (ii) COMPANY and (iii)
ELTEK.
WLTNESSETH
WHEREAS, Xxxxx, Xxxxxx and Heike are the only shareholders of the Company as
follows
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NUMBER OF
SHAREHOLDER PORTION OF THE SHARE CAPITAL (DM) PERCENTAGE SHARES
------------------------------------------------------------------------------
Xxxxx Xxxxx 400,000.00 80 1
Xxxxxx Xxxxx 50,000.00 10 1
Xxxxx Xxxxxxxxxxx 50,000.00 10 1
----------- --- ---
total 500,000.00 100 3
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and
WHEREAS, Thomas and Heike wish to sell to the Purchaser and the Purchaser wishes
to purchase from Thomas and Heike their Shares; and
WHEREAS, Alois wishes to sell to the Purchaser and the Purchaser wishes to
purchase from Alois a part of his share in the amount of DM 280,000.00.
Therefore, the share representing DM 400,000.00 of the share capital will be
split into two shares, representing DM 120,000.00 and DM 280,000.00 of the share
capital, respectively. Thus, the Shares to be sold to the Purchaser by the
Sellers shall constitute 76% of the issued and outstanding share capital and
voting rights of the Company on a fully diluted basis (the "ACQUIRED SHARES");
and
WHEREAS, the purchase of the Acquired Shares by the Purchaser is for the benefit
of the Company and shall strengthen its market position.
Now, THEREFORE, in consideration of the representations, warranties, covenants
and agreements set forth herein, the parties hereto hereby agree as follows:
Article 1:
DEFINITIONS
1.1 Definitions.
The following terms, as used herein, have the following meanings:
"AFFILIATE" means any other Person (as defined bellow) controlling,
controlled by, or under common control with such Person; "CONTROL" meaning
(a) the direct or indirect ownership of 25% or more of the voting rights,
the rights to receive profits upon distribution or the rights to
participate in allocation of assets upon liquidation of such Person, (b)
the ability to appoint or elect 25% or more of the governing board, or (c)
the ability to appoint the management of such Person.
"ANNUAL FINANCIAL STATEMENTS" means the accurate, full and complete
financial statements of the Company (including balance sheet, profit and
loss account, notes, statements of operation and statement of cash flows)
at and for the twelve-months respective period, ending on December 31,
2001, adjusted by the Accountant to Generally Accepted Accounting
Principles ("GAAP") in Germany applied on a consistent basis.
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"AUDITED FINANCIAL STATEMENTS" means the accurate, full and complete
audited financial statements of the Company (including balance sheet,
profit and loss account, notes, statements of operation and statement of
cash flows) as of 30 April 2002, prepared in English and in accordance
with German GAAP applied on a consistent basis and certified and audited
by a reputable accountant selected by the Purchaser (the "ACCOUNTANT").
"FINANCIAL STATEMENTS" shall mean the Annual Financial Statements and the
Audited Financial Statements.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other day on
which commercial banks in Germany are not generally open for business.
"CLOSING" means the signing of this Agreement in the presence of a Notary
(the "NOTARY") and the consummation of the transactions contemplated
hereby.
"CONTRACTS" means all written and verbal agreements, contracts, leases,
purchase orders, arrangements, commitments and licenses of the Company.
"TAX" OR "TAXES" means all taxes ("Steuern und steuerliche
Nebenleistungen") within the meaning of Sec. 3 of the German Fiscal Code
("Abgabenordnung") including any tax, levy, duty, fee or any other
compulsory payment of any kind, including accrued or accruing with respect
thereto, imposed under the laws of any jurisdiction, including, without
limitation, income tax, sales tax, value added tax, withholding tax,
property tax, import duties, export duties, social security payments,
employment taxes, municipal taxes, levies and fees.
"EQUITY" means equity under the terms of Sec. 266 para 3 A HGB (German
Commercial Law Act), consisting of the nominal share capital, capital
reserves, retained profit or loss and annual net profit or loss. Sec. 268
para. 1 HGB shall remain unaffected.
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"GUARANTEE" shall mean any obligation, contingent or otherwise, of any
Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness of any other Person in any manner, whether directly or
indirectly, and including, without limitation, any obligation of such
Person, direct or indirect, (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or to purchase (or
to advance or supply funds for the purchase of) any security for the
payment of such Indebtedness, (ii) to purchase property, securities or
services for the purpose of assuring the owner of such Indebtedness of the
payment of such Indebtedness, or (iii) to maintain working capital, equity
capital or other financial statement condition of the primary obligor so
as to enable the primary obligor to pay such Indebtedness; provided,
however, that the term "Guarantee" shall not include endorsements for
collection or deposit, in either case, in the ordinary course of business.
"INDEBTEDNESS" shall mean, with respect to any Person, (i) all obligations
of such Person for borrowed money, or with respect to deposits or advances
of any kind (other than deposits, advances or excess payments accepted in
connection with the sale by such Person of products or services in the
ordinary course of business), (ii) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, (iii) all
obligations of such Person upon which interest charges are customarily
paid (other than obligations accepted in connection with the purchase by
such Person of products or services in the ordinary course of business),
(iv) all obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such Person, (v)
all obligations of such Person issued or assumed as the deferred purchase
price of property or services (other than accounts payable to suppliers
incurred in the ordinary course of business and paid when due), (vi) all
Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien or security interest on property owned or acquired by such
Person whether or not the obligations secured thereby have been assumed,
(vii) all obligations of such Person under leases required to be accounted
for as capital leases under generally accepted accounting principles, and
(viii) all Guarantees of such Person.
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"INVESTMENT" shall mean, with respect to any Person, any loan, advance or
extension of credit (other than in connection with the sale by such Person
of products or services in the ordinary course of business) by such Person
to, and any Guarantee or other contingent liability with respect to the
capital stock. Indebtedness or other obligations of, and any contributions
to the capital of, any other Person, as well as any ownership, purchase or
other acquisition by such Person of any interest in any capital stock or
other securities of any such other Person as well as any transfer or sale
(other than in connection with the sale by such Person of products or
services in the ordinary course of business) of property by such Person to
any other Person other than upon full payment, in cash, of not less than
the agreed sale price or the fair value of such property, whichever is
higher.
"LIEN" means (i) any interest in property (whether real, personal or mixed
and whether tangible or intangible) which secures an obligation owed to,
or a claim by, a Person other than the owner of such property, whether
such interest is based on the common law, statute or contract, including,
without limitation, any such interest arising from a lease, mortgage,
charge, pledge, security agreement, conditional sale, trust receipt or
deposit in trust, or arising from a consignment of bailment given for
security purposes (other than a trust receipt or deposit given in the
ordinary course of business which does not secure any obligation for
borrowed money), (ii) any encumbrance upon such property which does not
secure such an obligation, and (iii) any exception to or defect in the
title to or ownership interest in such property, including, without
limitation, reservations, rights of entry, possibilities of encroachments,
easements, rights of way, restrictive covenants and licenses.
"SHARES" means the shares of the Company.
"PARTIES" means Sellers, Purchaser and the Company.
"PERSON" means an individual, corporation, partnership, limited liability
company, association, trust, estate or other entity or organization,
including a governmental authority.
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"RELATIVE" means the immediate family of any individual, including spouse,
children, brothers, sisters and parents.
"TRUSTEE" means KPMG Treuhand Beiten Burkhardt GmbH having his/her
business address at Xxxxxxxxxxxxxxxx 00, 00000 Xxxxxx, Xxxxxxx.
Article 2:
SALE AND PURCHASE OF SHARES
2.1 PURCHASE AND SALE
On the terms and subject to the fulfillment or waiver of all conditions
set forth in this Agreement, and on the basis of Sellers', Company's and
Purchaser's representations, warranties and covenants hereunder, at the
Closing, Sellers herewith assign, sell, transfer and deliver to Purchaser,
and Purchaser shall purchase and accept from Sellers, the Acquired Shares,
duly authorized, validly issued, fully paid, non-assessable, free and
clear of all Liens and restrictions on transfer and constituting 76% of
the issued share capital and voting rights of the Company, on a fully
diluted basis, in consideration for the Purchase Price specified under
Article 6 herein below. The Purchaser accepts the assignment.
2.2. CLOSING
The Closing will take place by signature of this Agreement on the date
hereof (the "CLOSING DATE"). At the Closing:
(a) The Company shall execute an amendment to the existing lease
agreement for the Company's plant located at Xxxx-Xxxx-Xxxxxxx 00,
Xxxxxxxxxx 00000, parcel 1118, Germany, with OWNER/ LESSOR (the
"REAL PROPERTY") the form of which is annexed herewith as EXHIBIT A.
(b) The Company shall repay a loan (1) to Thomas, in the amount of
60,000 DM (sixty thousand German Marks) (2) to Heike in the amount
of 70,000 DM (seventy thousand German Marks) (the "LOAN") against
receipt by the Company and the Purchaser of a signed waiver in the
form annexed herewith as EXHIBIT B.
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(c) The Company shall distribute to the Sellers according to their
respective pro rata portion, the net amount remaining after
deducting any withholding tax and solidarity surcharge from the
gross dividend that was announced in the Annual Financial Statements
in the amount of 868,560 DM (444,088 Euro) (the "DISTRIBUTABLE
PROFITS").
(d) The Company shall execute an amendment to the existing lease
agreement for a machine, type "Co-Bra Bond Durchlauflinie" with Mrs.
Xxxxx Xxxxx in the form annexed herewith as EXHIBIT C.
(e) The Purchaser, the Sellers and the Trustee shall execute the Trust
Agreement in the form annexed herewith as EXHIBIT K.
(f) Company shall provide the Purchaser with:
(i) a bank confirmation sent by fax, satisfactory to the Purchaser
and/or its counsel, detailing the Company's cash balances at
the Closing Date, prior to the repayment of the Loan and the
payment of the Distributable Profits.
(ii) a resolutions of a Shareholders General Meeting in the form of
EXHIBIT D, regarding, the approval of the year-end financial
statements, the distribution of the Distributable Profits, and
the transfer of the divided share of Alois to the Purchaser.
(iii) a resolutions of the Shareholders General Meeting in the form
of EXHIBIT E according to which within 30 Business Days from
the finalization of the Audited Financial Statements, the
Company shall distribute to the Sellers a dividend out of the
Company's distributable profit for the calendar year 2001, in
an amount which is equivalent to the Company's surplus of
Equity as reflected in the Audited Financial Statements, which
exceed the Determined Sum, provided however that: (1) such
dividend is also distributable out of the Company's profits
after tax according to the Audited Financial Statements (2) in
case such distribution had been performed prior to 30 April
2002 the cash balances of the Company, according to the
Audited Financial Statements, after deduction of Alois'
clearing account with the Company and Alois' and Thomas' 2001
year bonus, would not have been less than 2,500,000 German
Marks (1,278,230 Euro) and (3) that the Company is not
prohibited according to law to make such distribution.
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(g) The Purchaser shall pay the Sellers the Purchase Price pursuant to
Art. 6 hereof.
(h) Alois and the Company represented by its General Meeting shall
execute an amendment to Alois's employment and service agreement in
the form annexed herewith as EXHIBIT F.
(i) Thomas and the Company represented by its General Meeting shall
execute an amendment to Thomas's employment and service agreement in
the form annexed herewith as EXHIBIT G.
(j) The Purchaser shall provide the Sellers with a comfort letter in the
form annexed herewith as EXHIBIT L.
(k) Immediately after the Closing the General Meeting of the Company
shall convene in order to approve: (1) Rules of internal procedure
for the general managers in the form of which is annexed herewith as
EXHIBIT H (2) amendment of the Articles of Association in the form
annexed herewith as EXHIBIT I (3) nomination of general managers, in
the form annexed herewith as EXHIBIT J.
(l) Within sixty (60) days after Closing, the Company shall provide the
Purchaser with a confirmation issued by the Company according to
which until this date all premiums and/or other payment payable
under Thomas's pension policy have been timely paid by the Company
and the Company has otherwise complied fully with the terms and
conditions of the policy.
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The signature of this Agreement is subject to the conditions
precedents, which are stipulated in sections: 2.2(a), 2.2(d),
2.2(f)i-iv, 2.2(h), 2.2(i) 2.2(j).
Article 3:
REPRESENTATIONS AND WARRANTIES OF SELLERS
The Sellers, jointly and severally, hereby represent and warrant to the
Purchaser as of the Closing Date in the form of an independent promise of
guarantee (IM WEGE EINES SELBSTANDIGEN GARANTIEVERSPRECHENS), that the
statements contained in this Article 3 are complete, true and correct.
3.1 CORPORATE ORGANIZATION, POWER AND AUTHORIZATION.
(a) The Company is a private company, company no. HRB 816, Geislingen-
Steige, limited by shares, duly organized and validly existing under
the laws of Germany, with full power and authority to own all of its
properties and assets and to carry on its business as it is now
being conducted or proposed to be conducted, to execute and deliver
this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby.
(b) The Company does not own, directly or indirectly, any equity
interest or other Investment in any corporation, association or
business entity.
(c) All Acquired Shares are duly authorized, validly issued, fully paid,
non assessable and free of any Lien or other limitation or
restriction. Sellers are the owner of the Acquired Shares, free and
clear of any Lien and any other limitation or restriction, and will
transfer and deliver to Purchaser at the Closing valid ownership
title to the Acquired Shares, free and clear of any Lien and any
such limitation or restriction.
(d) Sellers and Company have full power, authority and legal capacity,
and have all governmental licenses, authorizations, permits,
consents and approvals required to enter into this Agreement and to
own, sell and transfer the Acquired Shares sold hereby and to
perform all its other covenants and undertakings hereunder.
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(e) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, have been duly
authorized by all necessary action (corporate or otherwise) on the
part of Sellers and the Company, and no further proceedings
(corporate or otherwise) are, or will be, necessary to authorize
this Agreement or to consummate the transactions contemplated
hereby. This Agreement contains valid and binding obligations of
Sellers and Company, enforceable against them in accordance with its
terms.
3.2 CAPITALIZATION OF THE COMPANY
(a) As of Closing, the Company's entire share capital shall be DM
500,000.00, divided into 3 Shares (50,000.00, 50,000.00,
400,000.00).
(b) The Acquired Shares will constitute 76% of the Company's outstanding
securities on a fully diluted basis on the Closing Date. As of the
Closing there are no outstanding obligations of the Company to
Sellers to repurchase, redeem or otherwise acquire any of the
Acquired Shares. There are no shareholder agreements, voting trusts
or other agreements or understandings to which the Sellers are a
party to, or by which they are bound relating to the voting,
disposition or registration of any shares of the Company. On or
prior to the Closing, Sellers have no and shall have no rights to
acquire any Ordinary Shares or any other capital shares of the
Company.
(c) There are no authorized or outstanding subscriptions, options,
warrants, calls, contracts, demands, commitments, convertible
securities, interests, liens, claims, charges or other legal or
equitable agreements, arrangements or encumbrances of any character
or nature whatsoever or with respect to any interest in the Company
or any of its assets under which the Company is or may become
obligated to issue, assign or transfer any of its securities.
(d) Immediately after the Closing, Alois shall hold 24% of the Company's
issued and outstanding share capital on a fully diluted basis.
During his employment with the Company and during the Option Period,
Alois's holding in the Company shall remain free and clear of any
Lien.
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3.3 NON-CONTRAVENTION.
The execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, do not and will not
(i) contravene or conflict with the Articles of Association or any
constituent documents of the Company, (ii) result in the creation or
imposition of any Lien on the Acquired Shares or on the Company's assets
other then as stipulated in this Agreement (iii) be in conflict with or
constitute (with or without due notice or lapse of time or both) a default
under, any Contract to which Sellers and/or the Company are a party to, or
by which Seller and/or the Company or their properties or assets may be
bound, or, contravene, conflict or constitute a violation of any order or
judgment.
3.4 CONSENTS AND APPROVALS. To the Sellers best knowledge and belief
the execution and performance of this Agreement and the consummation of
the transactions contemplated hereunder and related thereto will not
result in a violation of any applicable law. All approval, permit or
consent of, or filing with, any governmental body, official authority or
any other third party required in connection with the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby, have been obtained.
3.5 AGREEMENTS WITH SELLERS.
Except as disclosed in SCHEDULE 3.5 hereto, there are no direct or
indirect agreements, arrangements, commitments or other transactions
between the Company and Sellers or any of its Affiliates, Relatives,
directors, officers, employees or agents. Except as disclosed in Schedule
3.5 the Sellers do not and will not have any claims and demands
whatsoever, against the Company and/or its assets and/or properties.
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3.6 LITIGATION.
Except as disclosed in SCHEDULE 3.6 hereto, there are no lawsuits,
actions, arbitration or other proceedings or investigations pending or
threatened or to the Sellers best knowledge intended, against the Company
or any of its properties; nor are there any judgments or outstanding
orders, injunctions, decrees or awards (whether rendered by a court, an
administrative body or by arbitration) affecting the Company or any of its
properties or business.
3.7 ASSETS AND PROPERTIES.
(a) The Company has good and marketable title to, or in the case of
leased property and assets, have valid leasehold interests in, all
property and assets (whether real, personal, tangible or intangible)
reflected on the Financial Statements or acquired after the
Financial Statements date. None of such property or assets is
subject to any Lien, except as disclosed in SCHEDULE 3.7 hereto.
(b) All leases of the Real Property and personal property are in good
standing and are valid, binding and enforceable in accordance with
their respective terms-and there does not exist under any such lease
any default or any event which with notice or lapse of time or both
would constitute a default.
(c) The plants, buildings, structures, equipment and machines, owned or
leased by the Company have no material defects, are in good
operating condition and repair and have been maintained consistent
with standards generally followed in the industry, are in adequate
repair and operating conditions and suitable for their present and
intended uses and, in the case of plants, buildings and other
structures (including, without limitation, the roofs thereof), are
structurally sound.
(d) The plants, buildings and structures owned or leased by the Company
have access to (i) public roads or valid easements over private
streets or private property for such ingress to and egress from all
such plants, buildings or structures, and (ii) water supply, storm
and sanitary sewer facilities, telephone, gas and electrical
connections, fire protection, drainage and other public utilities,
in each case as is necessary for the conduct of the businesses of
the Company as it is now being conducted. None of the structures on
the Real Property encroaches upon real property of another Person,
and no structure of any other Person substantially encroaches upon
any of the Real Property.
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(e) The Real Property, and its continued use, occupancy and operation as
currently used, occupied and operated, does not constitute a
nonconforming use under any applicable building, zoning, subdivision
or other land use and similar laws, regulations and permits.
(f) The property and assets owned or leased by the Company, or which
they otherwise have the right to use, constitute all of the property
and assets used or held for use in connection with the businesses of
the Company and are adequate to conduct such businesses as currently
conducted.
(g) Xxxxx Xxxxx, a Relative of the Sellers (the "OWNER") is the sole
owner of the Real Property.
(h) The building rights in the Real Property were not used in whole and
thus there is a possibility to enlarge the plant by approximately
300 xx.xx.
3.8 BUSINESS.
(a) Since the date of its incorporation, and until the date hereof the
Company has operated, its business in the normal and customary
manner.
(b) The Company has complied with all laws, statutes, ordinances, rules,
regulations and orders applicable to its business and has obtained
all certificates, consents, permits, license approvals, orders or
authorizations of, and has made or given all notices, registrations,
declarations, reports of filings (collectively, "PERMITS") with, any
governmental agency, instrumentality or authority (each, a
"GOVERNMENTAL AGENCY"), that are required for or in connection with
the lawful operation of its business, as currently conducted,
including, without limitation, all such Permits as may be required
to permit lawful use, storage, treatment, handling and disposal of
any hazardous waste or materials stored, used or generated by the
Company. All of such Permits are in full force and effect and are
unaffected by the sale of the Acquired Shares contemplated hereby.
None of such Permits will expire or is subject to renewal within the
following year. The Company has complied and is in compliance in all
material respects with all conditions or requirements imposed by any
of such Permits and to the best knowledge of the Sellers no
Governmental Agency intends to cancel, terminate or modify any such
Permit or to require additional Permits, notices, filings or reports
with respect to the operation of the Company's business or, that
valid grounds for any such cancellation, termination or modification
exist.
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(c) Except as otherwise disclosed in SCHEDULE 3.8 hereto, (i) the
Company is in compliance with all environmental laws applicable to
the conduct of its business relating, among others, to emissions,
discharges and releases of hazardous materials into land, soil,
ambient air, water and atmosphere; (ii) the Company is in compliance
with all environmental laws applicable to the conduct of its
business relating to the generalization, treatment, storage,
transportation and disposal of hazardous materials; and (iii) there
exist no hazardous materials on or in the Company's facilities or
real properties.
3.9 LIABILITIES AND GUARANTEES.
(a) Except as specified in SCHEDULE 3.9, the Company did not have at
December 31, 2001 and as of the Closing Date any liabilities or
obligations of any kind, whether accrued, absolute, asserted or
unasserted, contingent or otherwise not reflected, reserved against
or otherwise disclosed in the Financial Statements.
(b) The Company has no Guarantees, and may not be liable by any
obligation (financial or other) of the Sellers or any third party.
The Company has no liability unrelated to the business or
operations conducted by the Company.
(c) The Company has no future liabilities and obligations, contingent or
otherwise, and the Company shall not be required to make any
Investment and/or payment, under any law, contract or commitment
that are not to be incurred in the ordinary course of business.
18
3.10 MATERIAL AGREEMENTS.
All the material Contracts to which the Company is a party or by which it
is bound, including any rights to participate in the Company's income
and/or profits, are fully and correctly described in SCHEDULE 3.10. The
Company is not in violation of any of its Contracts, nor is it a party to
or bound by any Contract, which is so burdensome as to materially affect
or impair its business. All the Contracts of the Company are in full force
and effect. No breach and no condition which if not corrected would
constitute a breach exists in respect of any such Contracts, nor has any
event occurred which is a default or which, after the passage of time or
the giving of notice or both would be a default under any of said
Contracts, which could have a material adverse affect on the Company.
3.11 INTELLECTUAL PROPERTY RIGHTS.
(a) The Company is the sole owner of all patents, trademarks, trade
names, copyright, technology, know-how, process and all other
intellectual property rights, permits and licenses ("INTANGIBLE
RIGHTS") necessary for the business of the Company as now conducted.
The Intangible Rights, other than know-how, process and
information, are fully and accurately described in SCHEDULE 3.11
attached hereto. The Company has not granted any rights in respect
of any Intangible Right or interest therein to any other person.
(b) The Company's Intangible Rights, if any, are free and clear of any
rights, liens and claims of all current and former employees,
consultants, officers and shareholders of the Company.
(c) No person has asserted any claim regarding the use of, or
challenging or questioning the Company's title in any of the
Intangible Rights and the Company has the unrestricted right to use
the Intangible Rights free and clear from any rights, liens, and
claims of any party, and no Intangible Rights has infringed or, will
infringe upon any rights of any third party. To the best of the
Sellers knowledge there are no third party infringement or violation
of any of the Intangible Rights.
19
3.12 FINANCIAL STATEMENTS.
(a) The Annual Financial Statements of the Company attached hereto as
SCHEDULE 3.12 are true, correct and complete, and fairly and
accurately present the financial position, assets, liabilities,
results of operations or other information included therein of the
Company for the period or as of the date therein set forth.
(b) The books and records of the Company as of the date hereof are
accurate and complete in all material respects and there are no
material matters for which entry has not been made in such books and
records.
(c) Except as specified in SCHEDULE 3.12(C) and which has been agreed to
by the Purchaser, since December 31, 2001, there has been no change
in the business, prospects, assets, liabilities, operation or
condition (financial or otherwise) of the Company, other than
changes in the ordinary course of business, none of which
individually or in the aggregate has been materially adverse.
Without limitation to the above, the Sellers hereby clarify that
since the fourth quarter of the fiscal year 2001, and as a result of
the ordinary course of business, the Company's sales decreased by
30% and that the Company has not:
(i) issued or sold or authorized for issuance or sale, or grant
of any options or other agreements with respect to any
shares or any other securities of the Company;
(ii) declared, set aside or paid any dividend or other
distribution with respect to any shares of the Company or
other securities, or any repurchase, redemption or other
acquisition by the Company of any shares or other securities
of the Company;
(iii) incurred, assumed or guaranteed by the Company of any
Indebtedness including, without limitation, for borrowed
money;
(iv) created or incurred of any Lien on any material asset of the
Company;
20
(v) made of any loan, advance or capital contributions to or
Investment in any Person;
(vi) entered into any transaction or commitment, or any contract
or agreement, relating to the Company's assets or business
(including the acquisition or disposition of any assets) or
any relinquishment by the Company of any contract or other
right;
(vii) made any capital expenditure, or commitment for a capital
expenditure, for addition or improvements to the Company's
property, plant and/or equipment;
(viii) terminated, canceled or accelerated, or indicated to that
effect, of any right or obligation of the Company or a loss
of any benefit to which the Company is entitled under any
provision of any agreement or other instrument including
without limitation any agreement for the purchase of
materials, supplies, goods, services, equipment, any sales,
distribution and other customers agreement;
(ix) made any payment for any Guarantee or warranty of any kind
given by the Company;
(x) made any payments to interested parties, including
shareholders, directors and/or officers and has not entered
into any related party transactions including, without
limitation, the payment of any management fees or services
fees or any other payments whatsoever to the Company's
shareholders or any of their affiliates.
(xi) manage its cash-flow out of the ordinary course of business,
including, inter-alia, postponement of payments due by the
Company according to its payment conditions and/or
advancement of collection of outstanding debts to the
Company.
21
3.13 EMPLOYEES.
Set forth in SCHEDULE 3.13 is a list of the names of all employees of the
Company, together with the title or job classification of each such person
and their current salaries and benefits. Except as set forth in Schedule
3.13, none of such persons has an employment agreement or understanding,
whether oral or written, with the Company, which is not terminable on
notice by the Company without cost or other liability to the Company.
Except as set forth in SCHEDULE 3.13, no employee of the Company has
advised the Company (orally or in writing) that he or she intends to
terminate his/her employment with the Company. The Company has complied in
all material respects with all applicable laws relating to the employment
of labor, including provisions relating to wages, hours, equal
opportunity, collective bargaining and the payment of social benefits and
other taxes.
3.14 TAXES.
The Company has timely filed all necessary Tax returns, reports and
notices. The Sellers and the Company have no knowledge, or any reasonable
grounds to know, of any Tax deficiencies, which might be assessed against
the Company. The Company has paid all Taxes, which have become due,
whether pursuant to any assessments or otherwise, and there is no
liability (whether or not disclosed on such returns) or assessments for
any Taxes, that has not been reserved for in the Financial Statements.
3.15 PRODUCTS.
Each of the products produced or sold by the Company is, and at all times
up to and including the sale thereof has been, in compliance in all
respects with all applicable laws and regulations.
3.16 INSURANCE COVERAGE.
SCHEDULE 3.16 sets forth a list and correct description of insurance
policies relating to the assets, business, operations, employees, officers
and directors of the Company end (the "POLICIES"). There is no claim by
the Company pending under any of the Policies as to which coverage has
been questioned, denied or disputed by the issuers of the Policies or in
respect of which such issuers have reserved their rights. All premiums
payable under the Policies have been timely paid and the Company has
otherwise complied fully with the terms and conditions of the Policies.
The Policies (or other policies, providing substantially similar
insurance coverage) are of the type and in amounts customarily carried by
Persons conducting businesses similar to those of the Company. Sellers do
not know of any threatened termination of, premium increase with respect
to, or material alteration of coverage under, any of the Policies.
22
3.17 BACKLOG, ORDERS AND ADVANCES.
All of the Company's purchase orders, backlog of confirmed orders and
customer advances stated in the Financial Statements are, or arising from
or otherwise relating to the business of the Company, valid, genuine and
recorded in the ordinary course of business.
3.18 INVENTORIES.
(a) The inventories stated in the Audited Financial Statements were
properly stated therein at the lesser of cost or fair market value
determined in accordance with German GAAP consistently maintained
and applied by the Company.
(b) The finished products and work in progress under contracts stated in
the Financial Statements were properly stated therein at direct
production cost determined in accordance with German GAAP,
consistently maintained and applied by the Company.
(c) Since the date of the Annual Financial Statements, the inventories
and work in progress of the Company has been maintained in the
ordinary course of business. All such inventories and work in
progress are owned free and clear of all Liens. All of the
inventories, finished products and work in progress recorded in the
Financial Statements consist of items of a quality usable or
saleable at full gross margins (subject, in the case of
work-in-progress inventory, to completion in the ordinary course of
business) in the normal course of business consistent with past
practices and are in quantities sufficient for the normal operation
of the business of the Company in accordance with past practice.
23
3.19 RECEIVABLES. To the best of the Sellers knowledge all accounts, notes
receivable and other receivables stated on the Financial Statements are
valid, genuine and fully collectible in the aggregate amount thereof. All
accounts, notes receivable and other receivables reflected in the
Financial Statements were accrued in the normal course of business of the
Company.
3.20 PAYABLES. All accounts, notes payable and other payables stated in the
Financial Statements are valid, genuine and payable in the normal course
of business of the Company. All accounts, notes payable and other payables
stated in the Annual Financial Statements were incurred in the normal
course of business of the Company.
3.21 CUSTOMERS AND SUPPLIERS. Except as set forth in SCHEDULE 3.21, no customer
of the Company during the 6-month period preceding the Closing Date has
terminated any agreement with the Company. During the 6-month period
preceding the Closing Date, no material supplier of the Company has
indicated in writing that it will stop, or decrease the rate of, supplying
materials, products or services to the Company.
3.22 BROKERS. Neither Sellers nor the Company or anyone acting on their behalf
have employed any broker, or incurred any liability for any brokerage fee
or commission in connection with the transactions, contemplated hereby,
nor is there any basis for any such fee or commission to be claimed by any
person or entity.
3.23 FULL AND CORRECT DISCLOSURE. Each exhibit, schedule and any other document
furnished, or to be furnished, by the Company or Sellers to the Purchaser
in connection herewith is, and unless otherwise expressly stipulated
otherwise, at the Closing shall be, true, correct and complete. No
representation or warranty by the Company or Sellers in this Agreement, or
in any exhibit, schedule or other document furnished, or to be furnished,
to the Purchaser in connection herewith contains or will contain at the
Closing, any untrue statements of a material fact or omits, or will omit,
to state a material fact necessary to make the information provided to the
Purchaser not misleading. There is no fact known to the Company or Sellers
which, had it been disclosed to the Purchaser, might have affected the
terms of the transactions contemplated hereunder in any material manner.
24
3.24 ENVIRONMENTAL. The real estate used by the Company, regardless of whether
or not such real estate is owned by the Company or third parties, as well
as any other operational facilities owned or used by the Company are free
of any contamination or pollution of soil, ground and surface water, air
and any other environmental contamination or pollution which could cause a
liability of the Company. As of the Closing Date, neither the Company nor
the Sellers have received any claim relating to such environmental
contamination or pollution and to the best knowledge of the Company and
the Sellers, no event has occurred that could reasonably be expected to
give rise to such claim.
Article 4:
REPRESENTATIONS AND WARRANTIES OF PURCHASER
4.1 CORPORATE ORGANIZATION, POWER AND AUTHORIZATION. The Purchaser represents
and warrants to Sellers and Company, as of the Closing Date, that the
statements contained in this Article 4 are full, true and correct.
4.2 The Purchaser has full power, authority and legal capacity, and has all
governmental licenses, authorizations, permits, consents and approvals
required to enter into this Agreement and to own, purchase and receive the
Acquired Shares sold hereby and to perform all its other covenants and
undertakings hereunder.
4.3 The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, have been duly
authorized by all necessary action (corporate or otherwise) on the part of
Purchaser, and to the best of Purchaser's knowledge no further proceedings
(corporate or otherwise) are, or will be, necessary to authorize this
Agreement or to consummate the transactions contemplated hereby on behalf
of Purchaser. This Agreement contains valid and binding obligations of
Purchaser, enforceable against him in accordance with its terms.
25
Article 5:
COVENANTS, WAIVER
5.1 CONFIDENTIALITY.
Sellers shall preserve any and all confidential information of the
Company, including without limitation all confidential information
relating to its business, technology, products, suppliers and clients,
development and marketing plans, business strategy and business model, and
shall not reveal any such confidential information to any third party of
any kind, or use it in any way without the express prior written consent
of the Company. The foregoing shall not apply to information, which is
generally available to the public, unless it so became through violation
of this provision, and to information which was acquired and/or developed
independently by the Seller, though no violation of this section 5.1.
5.2 NON-COMPETE.
(a) Each of the Sellers undertake, that so long as he is employed with
the Company or as long as he or any of its Relative holds any shares
of the Company, whichever is later, and for a period of two years
thereafter, he shall refrain from engaging, directly or indirectly,
as a shareholder, partner, joint venturer, consultant, director,
employee, agent or otherwise, in any business and/or activity which
'may compete, with the Company i.e. in connection with printed
circuit boards, in Germany ("COMPETING ENTITY"). It is hereby
clarified that entities, which manufacture or market raw materials
and machinery, for the printed circuit boards industry, do not
compete with the Company's activities.
(b) For a period of two years following the termination of Alois and
Thomas employment with the Company for any reason whatsoever, Alois
and Thomas shall be prevented, directly or indirectly, from hiring
anyone employed by the Company or from causing any employee to
terminate his/her working relationship with the Company unless the
Company has given its prior written approval. This prohibition shall
be limited to a period of one year following the date the employee
terminates his/her employment relationship with the Company.
26
(c) In addition, Alois and Thomas shall be obliged not to unreasonably
impede in the relationships between the Company and its customers
during such two years period.
(d) In the event that Alois or Thomas breach any of the restrictions set
out in this provision, Purchaser is entitled to claim a lump sum
contractual penalty of EURO 20,000 in respect of each instance of a
breach ("Contractual Penalty"). A claim under this provision shall
not prohibit the Purchaser from bringing a claim for further damages
save only that the Contractual Penalty shall be credited against any
such damage claim.
5.3 WAIVER OF CLAIMS.
Each of the Sellers agrees and acknowledges that the Purchase Price
payable in Accordance with the provisions hereof, provide adequate and
final compensation to Sellers from the Purchaser under this Agreement, and
that subject to the payment of said Purchase Price, Sellers, or anyone on
their behalf, or any affiliated Person, shall not be entitled to receive
further compensation from, and hereby irrevocably waives any claim, legal
or otherwise, against, the Company, Purchaser and/or any of their
shareholders, directors, officers and employees, or anyone acting on their
behalf.
Article 6:
PAYMENT OF PURCHASE PRICE
6.1 In consideration for the sale and transfer of the Acquired Shares, as
stipulated in section 2.1 above, the Purchaser shall pay the Sellers a sum
equal to six million German Marks (3,067,751 Euro) (the "COMPANY'S VALUE")
multiplied by seventy-six percent (76%) (the "PURCHASE PRICE"); provided,
however, that:
(a) if the Company's Equity according to the Audited Financial
Statements is less than 3,770,800 German Marks (1,927,979 Euro) (the
"DETERMINED SUM"), then the Purchase Price shall be reduced by a sum
equal to such difference subsequently reducing the Company's Value
(the "REDUCED COMPANY'S VALUE"); and/or
27
(b) if prior to the repayment of the Loan, and the payment of the
Distributable Profits the Company shall have cash balances of less
than 2,500,000 German Marks (1,278,230 Euro), the Purchase Price
shall be reduced by a sum equal to such difference subsequently
reducing the Company's Value (the "REDUCED COMPANY'S VALUE").
6.2 As of the Closing Date, the Purchaser shall pay the Sellers their
respective pro-rata portion of the Purchase Price, minus the Trust Money
(as defined below), by a bank check. 550,000 German Marks (281,211 Euro)
(the "TRUST MONEY") shall be paid by the Purchaser TO KPMG Beiten
Burkhardt (the "TRUSTEE") to be held by the Trustee, in accordance with
the Trust Agreement in the form of EXHIBIT K hereto (the "TRUST
AGREEMENT"), subject to Article 6.3, for the following periods of time:
(a) 50,000 German Marks (25,565 Euro) shall be paid by the Trustee to
the Sellers according to their respective pro-rata portion, if the
Audited Financial Statements reflect that the Company's Equity is
not less than the Determined Sum; and
(b) 144,760 German Marks (74,015 Euro) shall be paid by the Trustee to
the Sellers according to their respective pro-rata portion,
immediately after the Company received tax returns in connection
with the distribution mentioned in section 2.2(c) above amounting to
144,760 German Marks (the "TAX RETURN"); and
(c) the balance of the Trust Money amounting to 355,240 German Marks
(181,631 Euro), shall be paid by the Trustee to the Sellers
according to their respective pro-rata portion, upon the fulfillment
of all the following conditions: (1) the Purchaser notified the
Trustee that the Company was not required to make any Investment
and/or payment in order to comply with any applicable law for 12
months following the Closing; and (2) the Purchaser did not submit a
claim to the Sellers or any of them, with a copy to the Trustee, for
indemnification according to Article 8 hereof, for up to 36 months
following the Closing Date. In case the Purchaser submitted such a
claim, the Trustee shall hold the Trust Money until a court shall
rule in such a claim or until the Purchaser and the Sellers shall
notify the Trustee that they reached a compromise with respect to
the claim, and that the terms and conditions of such compromise were
performed to the satisfaction of all parties.
28
6.3 IN THE EVENT THAT:
(a) the Company's Equity according to the Audited Financial Statements
will be less than the Determined Sum and subject to Article. 6.5
below, the Trustee will pay the Purchaser, immediately after
receiving the Purchaser notice, the sum equal to such a difference
(the "EQUITY RETURN"). In case the Equity Return is less than 50,000
DM the Trustee will pay to the Sellers, according to their
respective pro-rata portion, any such difference. '
(b) if within 24 months following the Closing the Company will not
receive the Tax Return, or any part thereof, the Trustee will pay
the Purchaser, immediately after receiving the Purchaser notice, a
sum equal to the Tax Return or any part thereof. In case the amount
paid by the Trustee to the Purchaser as mentioned above, is less
than 144,760 DM the Trustee will pay the Sellers, according to their
respective pro-rata portion, any such difference.
(c) the Company shall be required to make any Investment and/or payment
in order to comply with any applicable law for 12 months following
the Closing, the Trustee will pay the Purchaser, immediately after
receiving the Purchaser notice, the sum equal to 76% of such
Investment and/or payment.
(d) the Company and/or the Sellers shall be required to indemnify the
Purchaser under Article 8 hereof according to a court decision or
according to a compromise agreement achieved between the Purchaser
and the Sellers, the Trustee will pay the Purchaser, immediately
after receiving the decision or the compromise agreement signed by
the Purchaser and the Sellers, (signature via fax shall be
sufficient) such indemnification from the Trust Money. It is hereby
clarified that the Trustee will pay the Purchaser any amount
determined by the court decision, immediately after receiving the
court decision and regardless of any motion to stay the decision,
appeal with respect to the decision or any other motion that may
effect the court's decision.
29
6.4 The last portion of the Trust Money shall be paid to the Sellers according
to their respective pro-rata portion including any interest accrued
thereon, from the Closing Date until the date such last portion shall be
paid.
6.5 In the event that the Company's Equity according to the Audited Financial
Statements will be less than the Determined Sum and the Trust Money shall
be insufficient to remedy such shortfall, then the Purchaser shall be
entitled to one of the following, according to its full discretion (1)
immediately terminate the Agreement and all sums. paid to the Sellers and
the Trustee shall be immediately returned to the Purchaser, together with
any accrued interest thereon, and the Acquired Shares will return to the
Sellers (2) demand that the Sellers shall pay to the Purchaser such
shortfall and if not paid within 10 days as of the demand, to terminate
the Agreement and all sums paid to the Sellers and the Trustee shall
be immediately returned to the Purchaser, together with any accrued
interest thereon, and the Acquired Shares will return to the Sellers.
Article 7:
MANAGEMENT OF THE COMPANY AND TRANSFER OF SHARES
The Company and the Shareholders hereby undertake that the following procedures
shall be pursued by the Company and its shareholders as of the Closing and the
Articles of Association of the Company shall be amended to reflect the
provisions of this Article 7:
7.1 GENERAL MANAGERS
(a) The management of the business of the Company shall be vested with
the General Meeting which may further exercise all such powers and
do all such acts and things as the Company is authorized to exercise
and do, and are not required by law or by the Articles to be done by
the Company by action of another organ.
30
(b) The General Managers shall be appointed by the General Meeting.
(c) Decisions of the General Managers shall be made according to the
Rules of internal procedure for the general managers the form of
which is annexed herewith as EXHIBIT H.
(d) The Purchaser undertakes that as long as Alois or his Relative holds
20% of the Company's outstanding securities and voting rights, and
Alois did not reach the age of 65 years Alois shall remain General
Manager. Thereafter and as long as Alois or his Relative holds 20%
of the Company's outstanding securities and voting rights, the
parties shall discuss in good faith if Alois shall remain General
Manager or be appointed to the Advisory Board.
7.2 DIVIDEND
Alois and the Purchaser hereby agree that:
(a) they shall make their best effort to enable the finalization of the
Audited Financial Statements no later than within 3 month from the
Closing Date.
(b) Subsequent to the Closing and no later than within 30 Business Days
thereafter the Company shall distribute to the shareholders,
according to their respective pro rata portion, a dividend for the
year 2001 in the amount of 555,363 DM (283,953 Euro). It is hereby
clarified that the distribution of dividend as herein stipulated
might decrease the Company's Equity below the Determined Sum. The
restrictions as set forth in Sec. 7.2 c) below shall not apply to
the above- mentioned distribution.
(c) at the end of every fiscal year, after the approval of the audited
financial statements of the relevant year, the Company shall
distribute, as dividend, at least fifty percent (50%) of its profit
after tax according to the audited financial statements, provided
however, that subsequent to such distribution, the Company shall
have cash balances of not less than one million two hundred and
fifty thousand (1,250,000) German Marks (639,115 Euro).
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7.3 INVESTMENT POLICY
(a) In the event the Company's Shareholders General Meeting should
resolve that Investments are required since the Company does not
have sufficient funds from its own resources and/or from external
resources for the purpose of meeting its obligations and carrying on
its business, the Company's shareholders undertake to provide
financing to the Company, pro rata to their respective holdings in
the Company. The Shareholders General Meeting shall determine in a
simple majority whether the Investment shall be made by way of
shareholders' loans or Guarantees on behalf of the Company (and the
terms of such loans and Guarantees) or by way of investments in the
equity of the Company. Shareholders loans shall bear the highest
interest rate deductible for tax purposes.
(b) A decision with regard to investments in the equity of the Company
according to sections 26-28 of the GmbHG (German Limited Liability
Company Act) and only a decision according to the above-mentioned
sections shall be resolved unanimously.
(c) In the event that the Shareholders General Meeting resolves, as set
forth in Section 7.3 (a) above, that the Shareholders of the Company
shall make an investment in the equity of the Company, such
investment shall be made in the following manner: the Company's
Equity shall be divided by the number of the Company's issued and
outstanding capital and the quotient thereof shall be referred to
herein as the "PLUG NUMBER". Thereafter, the investment amount as
determined by the Shareholders General Meeting shall be divided by
the Plug Number, and the quotient thereof shall be invested in the
Company as share capital (the "INVESTMENT IN CAPITAL"). The
investment amount as determined by the Shareholders General Meeting,
minus the Investment in Capital, shall be invested by the
Shareholders in the Company as premium on shares/capital. In case
the Shareholders General Meeting shall decide on an equity
Investment and a shareholder fails to provide his share, his
holdings in the Company shall be diluted accordingly.
32
7.4 TRANSFER OF COMPANY'S SHARES: RIGHT OF FIRST REFUSAL
Any transfer of shares in the Company shall be subject to a first refusal
as set forth below.
(a) Any shareholder ("OFFEROR") wishing to sell, transfer, convey,
assign or otherwise dispose of any shares of the Company ("OFFERED
SHARES") shall first offer the Offered Shares for sale, on such
terms and in such manner as hereinafter provided, to the other
shareholders of the Company ("OFFER"). Same terms shall apply,
mutatis mutandis, to any sale of shares of the Company pledged to
the benefit of any person and/or entity and/or as a result of a lien
thereon. Any purported transaction in the shares in violation of the
provisions of this Article 7.4. shall be null and void, and the
Company shall not recognize or give any effect thereto. Any transfer
of shares under this Article 7.4. shall not be valid or effective
without the transferee's respective assumption of any loan made by
Offeror to the Company.
(b) The Offer shall be made in writing and shall be sent by registered
mail to the Company and to each person or entity then notified to
the Company as a shareholder of the Company ("OFFEREE/S").
(c) The Offer shall specify the number of the Offered Shares, their
class, the name and address of a bona fide third party potential
purchaser and the consideration per share and other material terms
agreed by the Offeror and said purchaser.
(d) Each Offeree shall have a period of thirty (30) days from the date
the Offer is sent thereto to notify the Offeror in writing
("ACCEPTANCE NOTICE") of its desire to accept the Offer and the
percentage of the Offered Shares which it wishes to purchase in
accordance therewith, which percentage shall not fall below the
percentage that the number of shares of the Company held by each
such Offeree on the date the Offer is sent constitutes out of the
total number of shares of the Company then held by all of such
Offerees ("PRO RATA SHARE").
33
(e) An Offeree who shall not have given an Acceptance Notice within the
said 30 day period as aforesaid shall be conclusively deemed to have
rejected the Offer. A partial, conditional or qualified acceptance
of the Offer, other than as expressly permitted in the preceding
paragraph, shall not be deemed an acceptance of the Offer.
(f) The closing of the transaction for the sale of the Offered Shares by
the Offeror to the purchasing Offeree, if any, shall take place and
be consummated forty five (45) business days following the date upon
which the said period of acceptance of the Offer by all the Offerees
expired. At such closing, the Offeror shall sell and transfer to the
Offerees which served an Acceptance Notice their Pro Rata Share
against payment of the consideration specified in the Offer.
(g) Should any of the Offered Shares be left after allocation among and
transfer to Offerees given Acceptance Notice according to their Pro
Rata Share ("LEFTOVER SHARES"), such Leftover Shares shall be
allocated among those Offerees which requested in their Acceptance
Notice to purchase in excess of their Pro Rata Share ("EXCESS"), on
a basis calculated by dividing the Excess requested by each such
Offeree by the aggregate Excess requested by all such shareholders,
and sold thereto for the consideration specified in the Offer, at
the same Closing.
(h) Notwithstanding anything to the contrary herein, in the event that
by the end of the period specified in Article 7.4.(e) above, the
Offeror shall not have received Acceptance Notices with respect to
all of the Offered Shares, the Offeror shall be free to sell the
Offered Shares under the same terms and conditions specified in the
Offer, to the purchaser specified in the Offer, provided that the
sale be consummated within the time period specified therein for the
closing with such purchaser.
(i) Anything to the contrary notwithstanding, the transfer of shares to
a Permitted Transferee (as hereinafter defined), shall not be
subject to the restrictive provisions of this Article 7.4. set forth
above provided however, that such Permitted Transferee shall assume
the transferring shareholder's respective obligations and rights
hereunder. For purposes hereof, a "PERMITTED TRANSFEREE" of a
shareholder means (x) the spouse, parent, child or sibling of the
respective shareholder, (y) a person or entity that is controlled by
or controlling or under common control with the respective
shareholder; the term "CONTROL" means the possession, directly or
indirectly, of more than 50% of the voting power and the right to
appoint more than 50% of the members of the Board of Directors and
the right to receive more than 50% of the distributed profits. A
Permitted Transferee which receives Company shares by virtue of its
compliance with the terms of the definition under subsection (y)
above, and thereafter ceases to comply with the terms of such
definition, will return the shares so transferred to the transferor
within 15 business days thereafter.
34
7.4.1 PURCHASE AND SALE OF ALOIS'S SHARES:
PUT/CALL RIGHT
(a) At any time during a period of two (2) years after Alois's
employment with the Company will terminate for any reason whatsoever
but no longer than within ten (10) years from the Closing Date (the
"OPTION PERIOD"), Alois shall have the right to require the
Purchaser to purchase Alois's entire holdings in the Company
("ALOIS'S HOLDINGS") on the terms and conditions described herein
(the "PUT RIGHT'). The basic purchase price for ALOIS'S HOLDINGS
shall be: 24% multiplied by the Company's Value or by the Reduced
Company's Value in the event that the Purchase Price was adjusted
according to section 6.1 (a)-(b) (the "PUT/CALL BASIC PRICE"). In
the event that Alois shall exercise the Put Right, the Put/Call
Basic Price shall be adjusted, subject to section 7.4.1 (e) below in
the following manner: the Put/Call Basic Price shall be increased by
1% for every 1% increase, above a ratio of 23% between the Company's
turnover and its profits before tax, according to the Company's last
audited financial statement as of the date of Alois's employment
termination with the Company. The Put/Call basic price shall be
decreased by 1.25% for every 1% decrease below a ratio of 23%
between the Company's turnover and its profits before tax, according
to the Company's last (audited) financial statement as of the date
of Alois's employment termination with the Company.
35
(b) At any time during the Option Period, the Purchaser shall have the
right to require Alois or his Permitted Transferee, to sell Alois's
Holdings to the Purchaser (the "CALL RIGHT"). In the event that the
Purchaser shall exercise the Call Right, the Put/Call Basic Price
shall be adjusted in the following manner: the Put/Call Basic Price
shall be increased, subject to section 7.4.1 (e) below, by 1.5% for
every 1% increase, above a ratio of 23% between the Company's
turnover and its profits before tax, according to the Company's last
(audited) financial statement as of the date of Alois's employment
termination with the Company. The Put/Call basic price shall be
decreased, subject to section 7.4.1(e) below, by 1% for every 1%
decrease below a ratio of 23% between the Company's turnover and its
profits before tax, according to the Company's last (audited)
financial statement as of the date of Alois's employment termination
with the Company.
(c) The Put Right and the Call Right may be exercised by delivering a
written notice, certified by a notary public, of such Party's desire
to exercise the Right (the "Option Notice"). The payment of the
purchase price for Alois' Holdings shall be due within sixty (60)
Business Days following the receipt of the Option Notice by the
other party. Subject to the delivery of the Option Notice the
selling party herewith assigns these shares and the purchasing party
herewith accepts the assignment.
(d) Upon exercise of the Put or Call Right Alois' Holdings are
automatically transferred to the purchasing party without further
action. Alois warrants that his Holdingsshall be non-assessable,
free and clear of all Liens and restrictions on transfer. Article 8
shall apply.
(e) Notwithstanding the above, the Price for Alois's Holdings shall not
be less than 1,080,000 DM and shall not exceed 1,800,000 DM. In the
event that the Purchase Price was adjusted according to section 6.1
(a)-(b) the above - mentioned numbers shall be adjusted accordingly.
36
(f) The Purchaser shall provide Alois with a comfort letter issued by
Eltek Ltd., in the form annexed herewith as EXHIBIT L, to secure the
payment due to Alois in the event of execution of the Put Right as
stipulated above.
(g) Relatives of Alois shall have the Put Right pursuant to this Para.
7.4.1. as well.
Article 8:
INDEMNIFICATION
8.1 INDEMNIFICATION
Without derogating from any right or remedy available under applicable
law, Sellers, jointly and severally, shall indemnify Purchaser against and
shall hold him harmless from any and all damages, loss, liabilities and
expenses (including, without limitation, reasonable expenses of
investigation and reasonable attorneys' fees and expenses in connection
with any claim action, suit or proceeding) ("DAMAGES") immediately and no
later than three (3) Business Days, following the Purchaser written notice
recounting his Damages, arising out of, based on or otherwise incurred or
suffered by Purchaser or the Company in connection with (i) failure to
perform any covenant or obligation of Sellers under this Agreement; (ii)
any liability of the Company which has arisen prior to the Closing Date
and has not been reflected in the Financial Statements; (iii) any
liability of the Company which has arisen after the Closing Date but which
stems prior to the Closing Date; (iv) the use, generation, storage,
release, threatened release, discharge, disposal or presence of hazardous
materials, prior to the Closing, on, under or about any properties owned
or leased by the Company by any Person during the period that the Company
was the legal or equitable owner of any properties owned or leased by the
Company or which occurred prior to such time and was otherwise actually
known by, or should have been known by, the Company. The obligation of the
Company to indemnify the Purchaser and its officers, directors, partners,
employees and agents and each other Person which controls the Purchaser or
any of its partners shall specifically cover and include, without
limitation, all fines and penalties imposed by federal, state or local
authorities, costs of removing or neutralizing the hazardous materials,
injury to the property adjoining any properties owned or leased by the
Company, injury to persons living or working on or about any properties
owned or leased by the Company or adjoining or otherwise affecting
property, and all other indirect or consequential damages incurred by the
Purchaser and its officers, directors, partners, employees and agents and
each other Person.
37
8.2 All the parties hereto shall cooperate in the defense or prosecution
thereof and shall furnish such records, information and testimony, and
attend such conferences, discovery proceedings, hearings, trials and
appeals, as may be reasonably requested in connection therewith.
8.3 (a) Any investigation carried out by Purchaser and any information
provided by the Sellers or the Company shall not discharge the
Sellers in any way from their obligations herein.
(b) The Sellers acknowledge that their respective representations and
warranties are material and the accuracy of the representation and
warranties in all respects is essential for the Purchasers decision
to enter into this Agreement.
(c) In case the Sellers shall breach one or more of the representations
and warranties undertaken by them or any other of the Sellers
obligations herein, the Purchaser may require, according to its sole
discretion (the "Claim") that the Sellers: (i) within a reasonable
period of time, however not later than 8 weeks following receipt of
a written request, bring the Company or the Purchaser, as the case
may be, to the position which would have existed prior to the
breach. If the Sellers within this period of time did not comply
with this request in a way satisfactory to the Purchaser or this
proves to be impossible, then the Purchaser can claim relief; or
(ii) pay to the Company such an amount of money necessary to
adequately compensate the damages suffered by the Company due to the
breach; and/or (iii) to pay to the Purchaser such an amount of money
necessary to compensate the damages suffered by the Purchaser due to
the breach.
38
8.4 TAX CLAUSE
(a) At the request of the Purchaser, the Sellers shall indemnify the
Company for all additional Tax payments having their origin before
the day hereof. This shall apply particularly to additional Tax
payments due to incidents which have subsequently become known,
especially hidden profit distributions and due to tax-driven
investments. Additional taxes resulting from purely timing
differences below Euro 51,129.19 (DEM 100,000) per year shall not
give a right to claim indemnification.
(b) Claims resulting from this provision shall be subject to a
limitation period of six months following the knowledge of Purchaser
of the existence of a final and non-appealable assessment for the
taxes and periods concerned; this shall not apply for tax fraud and
gross negligent tax fraud.
Article 9:
MISCELLANEOUS
9.1 NOTICES.
All notices, requests, demands, claims and other communications hereunder
shall be in writing. Any notice or other communication hereunder shall be
deemed duly given (i) if personally delivered, when so delivered, (ii) if
mailed, ten (10) Business Days after having been sent by registered or
certified mail, return receipt requested, postage prepaid and addressed to
the intended recipient as set forth below, (iii) if given by facsimile,
once such notice or other communication is transmitted to the facsimile
number specified below and electronic confirmation is received, or (iv) if
sent through an overnight delivery service in circumstances to which such
service guarantees next day delivery, the day following being so sent:
39
IF TO SELLERS:
XXXXX XXXXX
Xxxxxxxxxxx 0
00000 Xxxxxxxxx
XXXXXX XXXXX
Xxxxxxxxx Xxxxxxx 00
00000 Xxxxxxxxx
XXXXX XXXXXXXXXXX BORN KUBAT
Xxxxxxxxxxx 0
00000 Xxxxxxxxx
IF TO THE COMPANY:
Kubatronik-Leiterplatten GmbH
Xxxx-Xxxx-Xxxxxxx 00
00000Xxxxxxxxxx
IF TO THE PURCHASER:
EN-Eltek Netherlands 2002 B.V.
Telestone 8 - Teleport
Xxxxxxxxx 000
0000 XX Xxxxxxxxx
The Netherlands
Any party may change the address to which notices and other communications
hereunder are to be delivered by giving the other parties notice in the manner
herein set forth.
40
9.2 AMENDMENTS; NO WAIVERS.
(a) Subject to applicable law, any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by all parties
hereto, or in the case of a waiver, by the party against whom the
waiver is to be effective.
(b) No waiver by a party of any default, misrepresentation or breach of
warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default,
misrepresentation or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or
subsequent occurrence. No failure or delay by a party in exercising
any right, power or privilege hereunder 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. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies
provided by law.
9.3 EXPENSES.
Up to an amount of Euro 180,000, 76% of the aggregate of all costs and
expenses (including legal and other advisory fees) incurred by the parties
in connection with this Agreement and the transactions contemplated hereby
shall be borne by Eltek and 24% of the aggregate shall be borne by the
Sellers., The Company shall reimburse Purchaser and Sellers for their
reasonable out of pocket legal and due diligence expenses exceeding Euro
180,000 and incurred in connection with the purchase of the Acquired
Shares hereunder, and completion of all other transactions contemplated
under this Agreement. The Company shall bear the expenses incurred in the
preparation of the Audited Financial Statements, the notary public fees
and all taxes, duties and levies related to this Agreement and the
consummation of the transaction contemplated hereby.
9.4 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective, successors and permitted assigns. No party
hereto may assign either this Agreement or any of its rights, interests or
obligations hereunder without the prior written approval of each other
party.
41
9.5 GOVERNING LAW.
All matters relating to this Agreement shall be decided under the laws of
Germany, without regard to its conflict of laws principles. Each of the
parties hereto hereby submits to the exclusive jurisdiction of the
competent courts sitting in Munich, Germany.
9.6 COUNTERPARTS; EFFECTIVENESS.
This Agreement may be signed in any number of counterparts and the
signatures delivered by facsimile, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same instrument
9.7 ENTIRE AGREEMENT.
This Agreement and the attached Exhibits A to K constitute the entire
agreement between the Parties with respect to the subject matter hereof
and supersede all prior agreements, understandings and negotiations, both
written and oral, between the Parties with respect to the subject matter
of this Agreement (including without limitation the Memorandum of
Understanding dated February 6, 2002 by the Parties). Neither this
Agreement nor any provision hereof is intended to confer upon any Person
other than the Parties hereto any rights or remedies hereunder.
The captions herein are included for convenience of reference only and
shall be ignored in the construction or interpretation hereof. All
references to an Article or Section refer to this Agreement, and include
all subparts thereof.
9.8 SEVERABILITY.
If any provision of this Agreement, or the application thereof to any
Person, place or circumstance, shall be held by a court of competent
jurisdiction to be invalid, unenforceable or void, the remainder of this
Agreement and such provisions as applied to other Persons, places and
circumstances shall remain in full force and effect only if, after
excluding the portion deemed to be unenforceable, the remaining terms
shall provide for the consummation of the transactions contemplated hereby
in substantially the same manner as originally set forth at the later of
the date this Agreement was executed or last amended.
42
9.9 THIRD PARTY BENEFICIARIES.
No provision of this Agreement shall create any third party beneficiary
rights in any Person, including any Employee or former Employee of the
Company or any affiliate thereof (including any beneficiary or dependent
thereof).
9.11 JOINT AND SEVERAL. The Sellers representations, warranties, duties,
obligations and undertakings under this Agreement shall be joint and
several.
*****
43
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
Auf die Anlagen A-L und die Schedules It is herewith referred to Exhibits
wird verwiesen; auf das Vorlesen der A-L. and all Schedules; the reading
Anlagen Schedules 3.5, 3.10, 3.12 und aloud of-Schedules 3.5, 3.10, 3.12 and
die Listen, die den Schedules 3.11 und the lists annexed to Schedules 3.11
3.13 beigefugt sind, wird verzichtet; and 3.13 is waived; these Exhibits
diese Anlagen wurden den Beteiligten and Schedules have been submitted to
zur Kenntnisnahme vorgelegt und von the parties for notice and were signed
ihnen auf jeder Seite unterschrieben. on each page. All other Exhibits and
Alle anderen Anlagen wurden Schedules were read aloud.
vorgelesen.
Vorstehende Niederschrift wurde vor The minutes above were read out before
dem Notar vorgelesen, von den the notary, approved by the Persons
Erschienenen genehmigt und von ihnen present and signed by them and the
und dem Notar eigenhandig wie folgt notary as follows:
unterschrieben:
XXXXX XXXXX
XXXXXX XXXXX
44
XXXXX XXXXXXXXXXX BORN KUBAT
KUBATRONIK-LEITERPLATTEN GMBH
BY:
-----------------------------
NAME:
TITLE:
-----------------------------
EN-ELTEK NETHERLANDS 2002 B.V.
BY:
-----------------------------
NAME:
TITLE:
45
