Exhibit 10.15
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SALE AND PURCHASE AGREEMENT
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regarding the acquisition of
KACHELE-CAMA LATEX GMBH,
Industriepark Rhon,
Xx Xxxxxxxxxx 0,
00000 Xxxxxxxxxx
Roll of Deeds of 2003 No. [ ]
NEGOTIATED
ON JUNE 10, 2003
AT BASEL
Before me, the undersigned notary
Xx. Xxxxxx Xxxxxx
whose official seat is in Xxxxxxxxxxxxxxx 0, XX-0000 Xxxxx
appeared today
1. Xx. Xxxxx Xxxxxxx, who declared that he is not acting in his own name and
on his own behalf but as sole managaing director of XXXXXXX XXXXXXX GMBH,
Xxxxxxx. 0, 00000 Xxxxxxxx/Xxxx, Xxxxxxx,
- hereinafter referred to as "SELLER 1" -
2. Xx. Xxxxxx Xxxxxx, who declared that he is not acting in his own name and
on his own behalf but in his capacity as proxy on behalf of AGS ASSET AND
GROWTH LTD., Xxxxxxx, Isle of Man, Channel Island on the basis of a
power-of-attorney dated March 28, 2003, a copy of which is attached to this
deed
- hereinafter referred to as "SELLER 2" -
- the parties 1. and 2. hereinafter individually or
collectively also referred to as "SELLER" or "SELLERS" -
and
3. Xx. Xxxxxx Xxxxxxxxx, who declared that he is not acting in his own name
and on his own behalf but in his capacity as proxy on behalf of
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a) NORTH SAFETY PRODUCTS HOLDING GMBH I. GR. Xx Xxxxxxxxxx 0, 00000
Xxxxxxxxxx on the basis of a power-of-attorney dated April 30, 2003, a copy
of which is attached to this deed
- hereinafter referred to as "PURCHASER" -
- Sellers and Purchaser hereinafter individually or
collectively also referred to as "PARTY" or "PARTIES" -
and
b) NORTH SAFETY PRODUCTS INC. , 0000 Xxxx Xxxx, Xxxxx 000, Xxx Xxxxx,
Xxxxxxxx 00000, XXX, on the basis of a power-of-attorney dated June 4,
2003, a copy of, which is attached to this deed
- hereinafter referred to as "GUARANTOR"
Xx. Xxxxx Xxxxxxx, Xx. Xxxxxx Xxxxxx and Xx. Xxxxxx Xxxxxxxxx identified
themselves by their identity cards.
The persons appearing answered the question of the notary about a prior
involvement (VORBEFASSUNG) within the meaning of Section 3 para. 1 sentence 1
no. 7 of the German Recording Act (BEURKUNDUNGSGESETZ) in the negative.
The acting notary advised the persons appearing that a notary who or whose
partners in the law firm have formerly acted as legal advisors to one of the
parties involved in the matter to be notarized would not be entitled to take
office as a notary in the matter at hand pursuant to Section 233 Sect. 1(4) of
the Introductory Act of the Canton Basel-City relating to the Swiss Civil Code
which provision corresponds with the so-called "Vorbefassungsverbot" under the
German Act of Notarization (Section 3 Sect. 1(7)). The acting notary stated that
he himself and his firm have not been involved in the matter at hand in the
meaning of said provisions. By approving the present Notarial Deed, the parties
hereto shall confirm such statement of the acting notary.
The persons appearing declared as follows:
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TABLE OF CONTENTS
RECITALS 7
1. CURRENT STATUS OF KCL GROUP 9
2. PURCHASE, SALE AND ASSIGNMENT OF THE KCL SHARES 10
3. PURCHASE PRICE/EARN OUT 11
4. PAYMENT OF FINAL PURCHASE PRICE/EARN OUT 12
5. SIGNING DATE/EFFECTIVE DATE/CLOSING AND CLOSING DATE 13
6. WARRANTIES OF SELLERS 18
7. WARRANTIES OF PURCHASER 29
8. REMEDIES 30
9. INTERIM MANAGEMENT/OTHER AGREEMENTS 33
10. ANNOUNCEMENT/CONFIDENTIALITY AND CO-OPERATION 39
11. NON-COMPETE/NON-SOLICITATION 40
12. NOTICES 41
13. MISCELLANEOUS 42
14. LIST OF SCHEDULES 45
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DEFINITIONS
2001 Accounts as defined in Section 6.1.5
2002 Accounts as defined in Section 6.1.5
Adjusted Net Working Capital As defined in Section 9.7
Affiliates of any particular Person means any other
Person controlling, controlled by or under
common control with such particular Person,
where "control" means the possession, directly
or indirectly, of the power to direct the
management and policies of a Person whether
through the ownership of voting securities,
contract or otherwise.
Agreement as defined in Recital (B)
Banking Days as defined in Section 13.6
Benefit Plans as defined in Section 6.1.19
Best Knowledge as defined in Section 6.3
Business as defined in Recital (A)
Cash as defined in Section 9.7
Closing as defined in Section 5.4
Closing Date as defined in Section 5.4
Closing Events as defined in Section 5.5
Companies as defined in Section 1.4
Contract as defined in Section 6.1.6.(c)
Default Interest Rate as defined in Section 4.3
Disclosure Schedules as defined in Section 6.2
Earn Out as defined in Section 3.3
Effective Date as defined in Section 5.1.2
Encumbrances as defined in Section 1.2
Environmental Laws as defined in Section 6.1.22
Equity Interest as defined in Section 1.3
Escrow Agent as defined in Section 4.1
Expiration Date as defined in Section 5.6.1(c)
Final Purchase Price as defined in Section 3.1
Governmental Authorities as defined in Section 5.2.1(b)
Guarantor North Safety Products Inc.
Indebtedness as defined in Section 6.1.25
Intellectual Property Rights as defined in Section 6.1.8
Interim Accounts as defined in Section 6.1.5
KCL as defined in Recital (A)
KCL Combined Financial as defined in Section 6.1.5
Statements
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KCL Financial Statements as defined in Section 6.1.5
KCL Group as defined in Section 1.4
KCL Group Shares as defined in Section 1.3
KCL's Auditor as defined in Section 6.1.5
KCL Shares as defined in Section 1.2
KCL Subsidiaries as defined in Section 1.3
KCL Subsidiary Financial as defined in Section 6.1.5
Statements
Liability Cap as defined in Section 9.5.3
Losses as defined in Section 8.1
Management Service Agreement as defined in Section 6.1.18
Material Adverse Effect as defined in Section 5.2.1(e)
Material Agreements as defined in Section 6.1.6
Party / Parties Sellers and Purchaser individually or
collectively, as the case may be
Permits as defined in Section 6.1.10
Permitted Encumbrances as defined in Section 6.1.17
Person means an individual, a partnership, a limited
liability company a corporation, an
association, a joint stock company, a trust, a
joint venture, an unincorporated organization
and a governmental entity or any department,
agency or political subdivision thereof.
Purchase Price as defined in Section 3.1
Purchase Price Interest as defined in Section 3.2
Purchaser North Safety Products Holding GmbH i. Gr., Xx
Xxxxxxxxxx 0, 00000 Xxxxxxxxxx
Purchaser Claim as defined in Section 8.2
Purchaser's Account as defined in Section 8.7
Real Property as defined in Section 6.1.17
Restricted Persons as defined in Section 11.1
Sahara Gloves as defined in Section 3.3
Seller 1 Xxxxxxx Xxxxxxx GmbH, Xxxxxxx. 0, 00000
Xxxxxxxx/Xxxx, Xxxxxxx
Seller 2 AGS Asset and Growth Ltd., Xxxxxxx, Isle of
Man, Channel Island
Sellers' Account as defined in Section 4.1
Significant Companies as defined in Section 1.4
Signing Date as defined in Section 5.1.1
Target Amount as defined in Section 3.3
Tax Return means any return, declaration,
report, claim for refund,
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information return or other document filed or
required to be filed in connection with the
determination, assessment or collection of any
Tax of any party or the administration of any
laws, regulations or administrative
requirements relating to any Tax.
Taxes as defined in Section 6.1.11
Termination Fee as defined in Section 5.6.2
Third Party Claim as defined in Section 8.6
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The persons appearing take note of the reference deed, which is presented to
them in the original dated June 6, 2003 (notarized deed Allg. Prot. Nr. .../2003
of Xx. Xxxxxx Xxxxxx, notary public). The persons appearing explicitly approve
all declarations made by ... with respect to the reference deed and its
contents.
The notary has informed the persons appearing that the contents of the reference
deed shall become binding upon the parties through conclusion of this agreement
as a part of this agreement. The persons appearing waived their rights to have
the reference deed read aloud and further waived their rights to have the
reference deed appended hereto.
All reference to Schedules in the following "Share
Sale and Purchase Agreement"
refer to the respective Schedules of the reference deed.
Thereafter the persons appearing hereon declared:
SHARE
SALE AND PURCHASE AGREEMENT
RECITALS
(A) WHEREAS, Sellers are the sole shareholders of Kachele-Cama Latex GmbH
(hereinafter "KCL"). KCL and its respective subsidiaries develop,
manufacture, market and sell protective gloves (hereinafter the
"BUSINESS").
(B) WHEREAS, Sellers intend to sell and assign 100% of the shares in KCL to
Purchaser upon the terms and conditions of this agreement including its
schedules (hereinafter the "AGREEMENT").
(C) WHEREAS, Purchaser wishes to purchase 100% of the shares in KCL from
Sellers upon the terms and conditions of this Agreement.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. CURRENT STATUS OF KCL GROUP
1.1 KCL is a German limited liability company (GESELLSCHAFT MIT
BESCHRANKTER HAFTUNG, GMBH), formed and validly existing under German
law with its registered seat at Xxxxxxxxxxxxx Xxxx, Xx Xxxxxxxxxx 0,
00000 Xxxxxxxxxx, Xxxxxxx. KCL is registered with the Commercial
Register of the Local Court of Fulda under HRB 420.
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1.2 The total share capital of KCL amounts to Euro 4,601,700.00 (in words:
Euro four million six hundred and one thousand and seven hundred) and
consists of the following individual shares:
- one share in the nominal amount of EURO 2,300,850.00, owned by
Seller 1 free and clear of all liens, encumbrances, security
interests, pledges and restrictions on transfer (collectively,
"ENCUMBRANCES"); and
- one share in the nominal amount of EURO 2,300,850.00, owned by
Seller 2 free and clear of all Encumbrances.
(hereinafter collectively the "KCL SHARES").
1.3 KCL directly or indirectly holds participations and interests in the
companies which are listed in SCHEDULE 1.3. Each such company is
sometimes referred to herein individually as a "KCL SUBSIDIARY" and
collectively as the "KCL SUBSIDIARIES". SCHEDULE 1.3 sets forth for
each KCL Subsidiary (i) its name and jurisdiction of incorporation or
formation, (ii) the nature of its corporate entity (e.g., whether such
KCL Subsidiary is a corporation, limited liability company, limited
partnership or a foreign equivalent thereof), (iii) the authorized
share capital or other indicia of equity interest ownership ("EQUITY
INTEREST") of such KCL Subsidiary and (iv) the number of issued and
outstanding Equity Interests held by KCL, on the one hand, and all
other holders, on the other hand. The issued and outstanding Equity
Interests held by KCL as set forth in SCHEDULE 1.3 are herein referred
to as the "KCL GROUP SHARES".
1.4 KCL and the KCL Subsidiaries are herein collectively referred to as the
"COMPANIES" or the "KCL GROUP". KCL, KCL CZ s.r.o. and KCL-Guba Kft.
are herein collectively referred to as the "SIGNIFICANT COMPANIES". The
present corporate structure of the KCL Group is shown in SCHEDULE 1.4
attached hereto.
2. PURCHASE, SALE AND ASSIGNMENT OF THE KCL SHARES
2.1 Sellers, upon the terms and subject to the conditions set forth in this
Agreement, hereby agree to sell and transfer the KCL Shares to
Purchaser, free and clear of all Encumbrances, and Purchaser, upon the
terms and subject to the conditions set forth in this Agreement, hereby
agrees to purchase from Sellers and accepts the transfer of the KCL
Shares, free and clear of all Encumbrances.
2.2 In the event that the transactions contemplated by this Agreement are
consummated, the beneficial title in the KCL Shares shall pass to
Purchaser with economic effect as of the Effective Date as defined in
Section 5.1.2. As of the Effective Date, all benefits and burdens of
the KCL Shares including all profits attributable to them from the
Effective Date shall accrue to Purchaser.
2.3 The transfer of legal and beneficial title and the assignment
(DINGLICHER RECHTSUBERGANG) of the KCL Shares shall be subject to all
of the Closing Events (as defined in Section 5.5 below) having taken
place (or having been waived, to the extent
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possible under this Agreement) and conditional upon fulfillment or
waiver of all of the Conditions of Closing (as defined in Section 5.2
below).
2.4 KCL has, by means of its own consent and by means of a unanimous
resolution of its shareholders (each of which is attached hereto as
SCHEDULE 2.4), granted its consent to the transfer of the KCL Shares
contemplated herein according to Section 4 of the Articles of
Association of KCL.
3. PURCHASE PRICE/EARN OUT
3.1 In consideration of the sale of the KCL Shares to Purchaser, Purchaser
shall pay to Sellers the FINAL PURCHASE PRICE and, if earned, the Earn
Out under Section 3.3. The Final Purchase Price consists of (i) an
amount in cash equal to EURO 16,250,000.00 (in words: Euro sixteen
million and two hundred fifty thousand) (the "PURCHASE PRICE"), PLUS
(ii) the Purchase Price Interest as defined in Section 3.2 below.
3.2 From July 1, 2003 through the Closing Date, the Purchase Price shall
bear interest at a rate of 6 (six) percent per annum (the "PURCHASE
PRICE INTEREST").
3.3 In addition to the payment of the Final Purchase Price as defined
above, and as further consideration, the following "EARN OUT" scheme
shall apply:
In the event that the number of pairs of Sahara Gloves sold by KCL for
any of the twelve-months ending December 31, 2003, December 31, 2004 or
December 31, 2005, exceeds the Target Amount for such twelve-month
period, Purchaser shall make a one-time payment to Sellers equal to
EURO 250,000.00 for such period which payment shall be due and payable
on March 1 of the calendar year following any such period; provided
that (i) in the event that no payment is made pursuant to this Section
3.3 for the 12-months ending December 31, 2003 and the number of pairs
of Sahara Gloves sold by KCL for the 24-months ending December 31, 2004
exceeds 200% of the Target Amount, Purchaser shall (without duplication
to any other provision of this Section 3.3) make a one-time payment to
Sellers equal to EURO 500,000.00 for such 24-month period and (ii) in
the event that no payment has been made pursuant to this Section 3.3
(including clause (i) of this proviso) and the number of pairs of
Sahara Gloves sold by KCL for the 36-months ending December 31, 2005
exceeds 300% of the Target Amount, Purchaser shall (without duplication
to any other provision of this Section 3.3) make a one-time payment to
Sellers equal to EURO 750,000.00 for such 36-month period. When used
herein, "TARGET AMOUNT" is 3,425,935 (which is the number of pairs of
Sahara Gloves sold by KCL for the twelve-month period ended December
31, 2002). "SAHARA GLOVES" means the family of Sahara gloves that
include only the products "Sahara" (articles 0100/0101/0102), "Monsun"
(articles 0105/0106/0107) and "Taifun" (0151/0152/0157), which are
marked with an asterisk on SCHEDULE 3.3.
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4. PAYMENT OF FINAL PURCHASE PRICE/EARN OUT
4.1 Subject to satisfaction or waiver of the conditions set forth herein,
the Final Purchase Price shall be paid to Sellers at the Closing Date
as defined in Section 5.4 below. Subject to satisfaction or waiver of
the conditions set forth herein, EURO 3,750,000.00 of the Final
Purchase Price shall be paid by Purchaser at the Closing Date to an
account details of which are to be provided by Xx. Xxxxxx Xxxxxx
("ESCROW AGENT") prior to the Closing Date and be held and distributed
under the rules of the Escrow Agreement referred to under Section 5.5
(a) (6) below. The remaining amount of the Final Purchase Price shall
be paid by Purchaser free of costs and charges or withholdings of
whatsoever nature, as a net amount and by wire transfer of immediately
available funds to Sellers' Account as set forth in SCHEDULE 4.1.
4.2 The payment of any Earn Out amounts as set forth in detail in Section
3.3 above shall, if and when due and payable, be made to Sellers'
Account as specified in SCHEDULE 4.1.
4.3 The default interest rate (herein "DEFAULT INTEREST RATE") on any
payment obligation to Sellers or Purchaser from time to time
outstanding under this Agreement that has not been paid in accordance
with its terms, for each day until repaid in full, shall be 5
percentage points p.a. above the 3-month Euro Interbank Offered Rate
(EURIBOR) (or, if no longer applicable, the respective successor rate)
computed on the basis of a 365 day year.
4.4 The Guarantor hereby unconditionally guarantees to the Sellers the
fulfilment of the obligations of the Purchaser under this Agreement to
pay the Final Purchase Price, the Earn Out and the Termination Fee, if
and when the same shall become due and payable and, as the case may be,
the payment of default interest; it being understood and agreed that
Sellers may claim payment under this payment guarantee with respect to
any such payment obligation only if such payment obligation has become
due and payable and Purchaser has failed to satisfy such obligation
within 30 days thereafter. For the period between the Signing Date and
the registration of the Purchaser with the commercial register,
Guarantor hereby guarantees to the Sellers the fulfillment of all
obligations of the Purchaser under this Agreement subject to the terms
and conditions set forth in this Agreement.
4.5 No managing director or shareholder of the Purchaser nor any Persons
acting on behalf of Purchaser shall assume any liability under Section
11 para. 2 of the German Limited Liability Companies Act (GmbHG) and
the related liability concepts of pre-incorporation debt assumption
(VORBELASTUNGSHAFTUNG) and liabilities for differences in value of
assets (DIFFERENZHAFTUNG); the liability (if any) of Purchaser is,
between Purchaser and the Sellers, restricted by applying Section 13
para. 2 of the German Limited Liability Companies Act (GmbHG) to the
parties of this Agreement.
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5. SIGNING DATE/EFFECTIVE DATE/CLOSING AND CLOSING DATE
5.1 Signing Date and Effective Date, and Closing Date shall each have the
following meaning in this Agreement:
5.1.1 "SIGNING DATE" shall be the day on which this Agreement has been
duly notarized and executed by the Parties.
5.1.2 "EFFECTIVE DATE" shall be December 31, 2002, 24:00 hours German
time.
5.1.3 "CLOSING DATE" shall be the date as defined in Section 5.4 below.
5.2 CONDITIONS OF CLOSING.
5.2.1 CONDITIONS OF OBLIGATIONS OF PURCHASER. The obligation of
Purchaser to consummate the transactions contemplated by this Agreement
is subject to the prior satisfaction of each of the following
conditions on or prior to the Closing Date, any of which may be waived
by Purchaser (in its sole and absolute discretion):
(a) REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS.
The representations and warranties of the Sellers set forth in this
Agreement will be true and correct in all material respects (except
that the representations and warranties which are qualified as to
"materiality" or "Material Adverse Effect" or any other word or phrase
deriving from or including "material" shall be true and correct in all
respects) at and as of the Closing Date as though then made and as
though the Closing Date were substituted for the date of this Agreement
or, in the case of any representations and warranties that expressly
related only to a date earlier than the Closing Date on and as of such
earlier date (in either case, without taking into account any
disclosures made by any Seller or KCL to Purchaser pursuant to Section
9.2.5 hereof). Each of the Sellers, KCL and each of the other Companies
will have performed in all material respects all of the covenants and
agreements required to be performed by them under this Agreement on and
prior to the Closing Date.
(b) GOVERNMENTAL APPROVALS. All necessary consents or approvals
by Governmental Authorities that are required for the consummation of
the transactions contemplated hereby (including, without limitation,
the valid transfer of the KCL Shares to Purchaser) will have been
obtained, including, without limitation, all merger control approvals
or clearances required under German and Rumanian law, in each case on
terms satisfactory to Purchaser. For purposes of this Agreement, the
term "GOVERNMENTAL AUTHORITIES" shall mean any domestic (federal, state
or local) or foreign government or governmental, regulatory or
administrative authority, agency, commission, board, bureau, court or
instrumentality or arbitrator of any kind.
(c) OTHER CONSENTS AND APPROVALS. The following will have been
obtained, in each case on terms satisfactory to Purchaser: (i) all
consents and approvals by third parties that are required for the valid
transfer of the KCL Shares to Purchaser or that are otherwise required
for the consummation of the transactions contemplated hereby
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or that are required in order to prevent a breach of or a default under
or a termination or modification of or acceleration of any obligation
under any material agreement to which any party or its affiliates is a
party or to which any material portion of the property of any party is
subject, including, without limitation, each of the consents and
authorizations listed on SCHEDULE 6.1.1; and (ii) confirmation letters
by each of KCL's third-party financing sources and lenders concerning
the outstanding principal and interest balances of all third-party
Indebtedness as of Closing.
(d) NO INJUNCTION. No preliminary or permanent injunction or
order that would prohibit or restrain the consummation of the
transactions contemplated hereunder shall be in effect and no
Governmental Authority or other third party shall have commenced or
threatened to commence an action or proceeding seeking to enjoin the
consummation of such transactions or to impose liability on the parties
hereto in connection therewith; provided that Sellers shall use their
commercially reasonable efforts to have such injunction or order
vacated.
(e) NO MAC. Since January 1, 2003, no change shall have
occurred which has had or could reasonably be expected to have a
material adverse effect on the financial condition, operating results,
assets, operations, business prospects, employee relations or customer
or supplier relations of KCL or any of the other Companies ("MATERIAL
ADVERSE EFFECT").
(f) FINANCING. Purchaser shall have received all of the
financing necessary for the consummation of the transactions
contemplated hereby.
Any condition specified in this Section 5.2.1 may be waived by
Purchaser in its sole and absolute discretion; provided that no such
waiver will be effective unless it is set forth in a writing executed
by Purchaser.
5.2.2 CONDITIONS OF OBLIGATIONS OF SELLERS. The obligation of Sellers
to consummate the transactions contemplated by this Agreement is
subject to the prior satisfaction of the following conditions on or
prior to the Closing Date, any of which may be waived by any Seller (in
its sole and absolute discretion):
(a) REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS.
The representations and warranties of the Purchaser set forth in this
Agreement will be true and correct in all material respects (except
that the representations and warranties which are qualified as to
"materiality" or any other word or phrase deriving from or including
"material" shall be true and correct in all respects) at and as of the
Closing Date as though then made and as though the Closing Date were
substituted for the date of this Agreement or, in the case of any
representations and warranties that expressly related only to a date
earlier than the Closing Date on and as of such earlier date (in either
case, without taking into account any disclosures made by Purchaser to
Sellers pursuant to Section 9.3.1 hereof). Purchaser will have
performed in all material respects all of the covenants and agreements
required to be performed by Purchaser under this Agreement prior to the
Closing Date.
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(b) GOVERNMENTAL APPROVALS. All necessary consents or approvals
by Governmental Authorities that are required for the consummation of
the transactions contemplated hereby (including, without limitation,
the valid transfer of the KCL Shares to Purchaser) will have been
obtained, including, without limitation, all merger control approvals
or clearances required under German and Rumanian law.
(c) NO INJUNCTION. No preliminary or permanent injunction or
order that would prohibit or restrain the consummation of the
transactions contemplated hereunder shall be in effect and no
Governmental Authority or other third party shall have commenced or
threatened to commence an action or proceeding seeking to enjoin the
consummation of such transactions or to impose liability on the parties
hereto in connection therewith; provided that Purchaser shall use its
commercially reasonable efforts to have such injunction or order
vacated.
Any condition specified in this Section 5.2.2 may be waived by Sellers
in their sole and absolute discretion; provided that no such waiver
will be effective unless it is set forth in a writing executed by
Sellers.
5.3 COOPERATION. The Parties undertake to use all reasonable endeavors to
render to each other all support and cooperation reasonably necessary
to ensure that the conditions to Closing set forth in Section 5.2 are
fulfilled as soon as possible after the Signing Date. In particular,
though each Party remains responsible for preparing and making its own
required filings, Sellers and Purchaser shall cooperate with one
another in preparing and making the filings described in SCHEDULE 5.3
and in furnishing information required in connection therewith.
5.4 CLOSING DATE. The closing for the consummation of the transactions
contemplated by this Agreement (the "CLOSING") shall, unless another
date or place is mutually agreed to in writing by Sellers and
Purchaser, take place no later than six (6) Banking Days following the
satisfaction or waiver of each of the conditions specified in Section
5.2 hereof (the "CLOSING DATE") at the offices of Holters & Xxxxxx,
Frankfurt or such other place as may be mutually determined by the
Parties.
5.5 CLOSING EVENTS. On the Closing Date, the following events ("CLOSING
EVENTS") shall take place:
(a) DELIVERIES OF SELLERS. Sellers shall deliver to Purchaser,
or cause KCL to deliver to Purchaser, as applicable, each of the
following:
(1) a certificate from Sellers, in the form attached
hereto as SCHEDULE 5.5(a)(1), dated the Closing Date and signed by each
Seller, certifying that the conditions specified in Section 5.2.1 have
been fully satisfied;
(2) certified copies of the following organizational
documents of KCL as in effect as of the Closing: excerpt from the
commercial register, Articles of Association;
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(3) copies of all third party and governmental
consents, approvals, filings, etc. required to be obtained and/or
delivered on or prior to the Closing Date pursuant to Section 5.2.1;
(4) copies of resignation letters whereby all current
members of the Advisory Board (BEIRAT) of KCL shall have resigned from
their positions with immediate effect;
(5) an executed copy of a License Agreement in the form
attached hereto as SCHEDULE 5.5(a)(5) regarding the granting of a
license of the name "Xxxxxxx" as part of KCL's company name (which
License Agreement shall be in full force as of the Closing);
(6) a notarized executed copy of the Escrow Agreement
between Purchaser, Sellers and Xx. Xxxxxx Xxxxxx (as Escrow Agent) in
the form attached hereto as SCHEDULE 5.5(a)(6) (which Escrow Agreement
shall be in full force as of the Closing); and
(7) execution of the Closing Protocol in the form
attached as SCHEDULE 5.5(a)(7) hereto.
(b) DELIVERIES OF PURCHASER. Purchaser shall deliver to
Sellers, or cause to be delivered to Sellers, each of the following:
(1) a certificate from Purchaser, in the form attached
hereto as SCHEDULE 5.5(b)(1) dated the Closing Date and signed by
Purchaser, certifying that the conditions specified in Section 5.2.2(a)
have been fully satisfied;
(2) certified copies of all resolutions authorizing the
execution, delivery and performance of this Agreement and the
consummation of all transactions contemplated by this Agreement;
(3) copies of all third party and governmental
consents, approvals, filings, etc. required to be obtained and/or
delivered on or prior to the Closing Date pursuant to Section 5.2.2;
(4) payment of the Final Purchase Price pursuant to
Section 4.1; and
(5) execution of the Closing Protocol in the form as
attached as SCHEDULE 5.5(a)(7) hereto.
5.6 TERMINATION OF AGREEMENT.
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5.6.1 TERMINATION. This Agreement may be terminated and abandoned at
any time prior to the Closing Date:
(a) By mutual written consent of Purchaser, on the one hand,
and Sellers, on the other hand;
(b) By Purchaser, on the one hand, or Sellers, on the other
hand, if any Governmental Authority shall have issued an order (which
has not been vacated, withdrawn or overturned) permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated hereby
and such order shall have become final and nonappealable; provided that
the right to terminate this Agreement pursuant to this Section 5.6.1(b)
shall not be available to any Party that has failed to perform its
obligations under the proviso contained in Sections 5.2.1(d) or
5.2.2(c);
(c) By Purchaser, on the one hand, or Sellers, on the other
hand, if the transactions contemplated hereby shall not have been
consummated on or before September 30, 2003 (the "EXPIRATION DATE");
provided that a Party will not be entitled to terminate this Agreement
pursuant to this Section 5.6.1(c) if (i) that Party's breach of this
Agreement has been the cause of or resulted in the failure of the
transactions contemplated hereby to occur on or before the Expiration
Date or (ii) that Party has failed to satisfy any condition set forth
in Section 5.2 hereto that such Party was required to satisfy;
(d) By Purchaser if (i) there has been a material breach by any
Seller of any of its representations, warranties or covenants contained
in this Agreement, which breach is not cured within five (5) days after
notice thereof is received by such breaching party (provided that
neither Seller shall be entitled to any cure period for any breach of
Section 9.4 (Exclusivity)) or (ii) events have occurred which have made
it impossible to satisfy a condition precedent to the obligation of
Purchaser to consummate the transactions contemplated hereby, unless
Purchaser's breach of this Agreement has caused the condition to be
unsatisfied; or
(e) By Sellers if (i) there has been a material breach by
Purchaser of any of its representations, warranties or covenants
contained in this Agreement, which breach is not cured within five (5)
days after notice thereof is received by Purchaser or (ii) events have
occurred which have made it impossible to satisfy a condition precedent
to the obligation of Sellers to consummate the transactions
contemplated hereby, unless any Sellers' breach of this Agreement has
caused the condition to be unsatisfied or (iii) Closing has not
occurred on or before July 15, 2003 although all Conditions of
Obligations of Purchaser (Section 5.2.1) have been fulfilled with the
exception of the Condition of Closing in Section 5.2.1(f) (Financing)
and/or the Condition to Closing in Section 5.2.1(a) to the extent
Purchaser asserts a breach of the covenant in Section 9.2.3.
5.6.2 EFFECT OF TERMINATION. Except as set forth below, in the event
of termination of this Agreement as provided in Section 5.6.1, notice
thereof shall be promptly given by the terminating Party to the other
Party and thereafter this Agreement shall
16
forthwith become void, and there shall be no liability or obligation on
the part of Purchaser or any of its Affiliates or Sellers or any of
their Affiliates except that (a) the provisions of Section 10.1 (Public
Announcements) and Section 10.2 (Confidentiality) and this Section 5.6
shall remain in full force and effect, (b) if all of the conditions to
Closing set forth in Section 5.2.2 above have been satisfied or waived
and either of the Sellers intentionally fail to close the transactions
contemplated hereby in accordance with Section 5.5, Sellers shall pay
an indemnification of 10 percent of the Final Purchase Price (the
"TERMINATION FEE") to Purchaser within five (5) days after such
termination and (c) if all of the conditions to Closing set forth in
Section 5.2.1 above have been satisfied or waived by Purchaser
(including the condition to Closing set forth in Section 5.2.1(f)
(Financing)) and Purchaser intentionally fails to close the
transactions contemplated hereby in accordance with Section 5.5,
Purchaser shall pay in the aggregate the Termination Fee to the Sellers
within five (5) days after such termination. The above mentioned rules
shall also apply in the event that this Agreement is terminated as a
result of any breach of Section 9.4, in which case Sellers shall
immediately pay to Purchaser, by wire transfer of immediately available
funds, the Termination Fee.
6. WARRANTIES OF SELLERS
6.1 Sellers, unless otherwise stated herein, jointly and severally warrant
to Purchaser as an independent undertaking of warranty that the
following information is true and correct as of the Signing Date and
the Effective Date (it being agreed that, for the avoidance of doubt,
any reference in this Section 6.1 to the term "Business" shall only
include the business of the respective Company for which the respective
warranty is given - i.e. in a warranty given with regard to KCL only,
any reference therein to the term "Business" shall include the business
of KCL only and any reference to the Business without limitation to (a)
specific Company/Companies shall mean the Business as defined in
Recital (A) of this Agreement):
6.1.1 ENFORCEABILITY, NO CONFLICT. This Agreement constitutes legal,
valid, and binding obligations of Sellers, enforceable against Sellers
in accordance with the terms hereunder. Sellers have the absolute and
unrestricted right, power, authority, and capacity to execute and
deliver this Agreement and to perform their respective obligations
under this Agreement, which actions have been duly authorized and
approved by all necessary corporate and shareholder action with respect
to each Seller. Each of the Companies has all requisite power and
authority and all Permits and authorizations necessary to own and
operate its properties and to carry on its business as now conducted.
Except for the cartel clearances required pursuant to Section 5.2.1(b)
above, neither Sellers nor any of the Companies are required to give
any notice to any person or obtain any consent or authorization of any
Governmental Authority or any third party in connection with the
execution and delivery of this Agreement other than those listed in
SCHEDULE 6.1.1. Neither the execution and delivery of this Agreement
nor the consummation or performance of any of the transactions
contemplated hereunder will directly or indirectly (with or without
notice or lapse of time) contravene, violate, cause a default under,
cause (or give the right to any third party to cause) acceleration of
performance or termination of, require the
17
consent of or filing with, or require that any notice be delivered to
any Governmental Authority or third party, pursuant to the terms of any
governmental authorization, legal requirement, rule, Permit,
regulation, order, constitutive or governing document or contract to
which Sellers or any of the Companies are bound or subject. This
Agreement has been duly authorized, executed and delivered by each
Seller.
6.1.2 KCL SHARES. Each Seller with regard to his shareholdings
warrants that the KCL Shares (i) exist in the amounts set out in
Section 1.2, (ii) are fully paid-up and have not been repaid and (iii)
are owned beneficially and of record by Sellers, as set forth under
Section 1.2, and will be assigned to Purchaser free and clear of any
Encumbrances. The KCL Shares comprise 100% of the issued and
outstanding share capital of KCL. Except for this Agreement, there are
no outstanding or authorized options, warrants, rights, contracts,
calls, puts, rights to subscribe, preemptive rights, conversion rights
or other agreements or commitments providing for the issuance,
disposition or acquisition of any share capital of KCL or any rights or
interests exercisable therefore. No shareholder is a party to any
voting trust, proxy or other agreement or understanding with respect to
the voting of any share capital of KCL. KCL does not own treasury
shares (EIGENE GESCHAFTSANTEILE) nor is any share capital of KCL
redeemable within the meaning of Section 21 or Section 34 of the German
GmbH Act. The statements made in Section 1.1 are true and correct in
all respects.
6.1.3 KCL SUBSIDIARIES. Each KCL Subsidiary is duly organized and
validly existing under the laws of its jurisdiction of incorporation or
organization. The KCL Group Shares (i) are fully paid-up and have not
been repaid and (ii) are owned beneficially and of record by KCL free
and clear of any Encumbrances, and in the amounts set forth on SCHEDULE
1.3. Except as set forth in SCHEDULE 1.3, there are no outstanding or
authorized options, warrants, rights, contracts, calls, puts, rights to
subscribe, preemptive rights, conversion rights or other agreements or
commitments providing for the issuance, disposition or acquisition of
any of the KCL Group Shares or any rights or interests exercisable
therefore. KCL is not party (directly or indirectly) to any voting
trust, proxy or other agreement or understanding with respect to the
voting of any KCL Group Shares. Except as set forth on SCHEDULE 1.3,
KCL does not own or control and has not, within the last three years,
owned or controlled, whether directly or indirectly, any stock,
partnership interest, joint venture interest, equity participation or
other security or interest in any other partnership, joint venture,
trust, corporation, limited liability company or other entity or
association. KCL has no obligation or liability of any kind or nature
(whether fixed or contingent) (i) to make any payments into the capital
of or otherwise provide any financing or monies to any of the KCL
Subsidiaries or (ii) for any indebtedness, liability or other
obligation of any KCL Subsidiary. The statements made in Section 1.3
are true and correct in all respects. SCHEDULE 6.1.3 sets forth each
shareholder agreement, partnership agreement, joint venture agreement
or similar agreement to which any member of the KCL Group is party.
6.1.4 BANKRUPTCY OR JUDICIAL COMPOSITION PROCEEDINGS. No bankruptcy
or judicial composition proceedings concerning Sellers or the Companies
have been applied for, and to Sellers' Best Knowledge (as defined in
SECTION 6.3 below), no
18
circumstances exist which would require the application for any
bankruptcy or judicial composition proceedings and no circumstances
exist pursuant to any applicable bankruptcy laws which could justify
the nullification of this Agreement. To Sellers' Best Knowledge, no
third party has instituted any insolvency proceedings against any
member of the KCL Group. With regard to KCL, no illiquidity is
threatened within the meaning of Section 18 of the German Insolvency
Act.
6.1.5 ACCOUNTS. KCL's financial statements as of December 31, 2001
(herein "2001 ACCOUNTS"), as of December 31, 2002 (herein "2002
ACCOUNTS"), and KCL's interim accounts as of March 31, 2003 (the
"INTERIM ACCOUNTS") (2001 Accounts and 2002 Accounts collectively the
"KCL FINANCIAL STATEMENTS") attached hereto as SCHEDULE 6.1.5 (a), have
been prepared and adopted by KCL in good faith, and, in the case of the
2001 Accounts and the 2002 Accounts, reviewed and certified without
qualifications by Xxxxxxx, Sattele & Partner GmbH,
Wirtschaftsprufungsgesellschaft (herein "KCL'S AUDITOR"). The KCL
Financial Statements have been prepared in accordance with the German
Commercial Code (HGB), consistently applied, and in accordance with all
further accounting requirements under German law (GRUNDSATZE
ORDNUNGSGEMA(BETA)ER BUCHFUHRUNG), with the principles of continuity in
accounting policies and in evaluation principles as well as on the
basis of past practice with regard to the making of provisions, and are
consistent with the books and records of KCL and fairly present in all
material respects the financial position of KCL as of the periods then
ended. The KCL Group's combined financial statements as of December 31,
2002 attached hereto as SCHEDULE 6.1.5 (b) (the "KCL COMBINED FINANCIAL
STATEMENTS") have been prepared by KCL in good faith. All financial
statements of the KCL Subsidiaries (true and correct copies of which
are attached to SCHEDULE 6.1.5(b)), which served as a basis for the
above-mentioned KCL Combined Financial Statements (collectively, the
"KCL SUBSIDIARY FINANCIAL STATEMENTS") have been prepared in good faith
and in compliance with applicable national GAAP respectively, are
consistent with the books and records of the respective KCL Subsidiary
and fairly present in all material respects the financial position of
the respective KCL Subsidiary as of the period then ended.
6.1.6 MATERIAL AGREEMENTS.
(a) As at the Signing Date, none of the Significant Companies
is a party to, bound by or subject to: any Contract (excluding
employment contracts with the exception of senior executive employees)
which (i) involves payments of a total amount in excess of EURO
30,000.00 (in words: Euro thirty thousand) p.a. and which is not
terminable on 90 days or less notice without cost or penalty or (ii)
which restricts any member of the KCL Group from doing business in any
jurisdiction except for the Contracts disclosed in SCHEDULE 6.1.6 (such
Contracts disclosed in SCHEDULE 6.1.6 being collectively referred to as
"MATERIAL AGREEMENTS"). Sellers have delivered to Purchaser true and
correct copies of each Material Agreement required to be disclosed on
SCHEDULE 6.1.6 and which are marked with an asterisk thereon.
(b) Except as disclosed on SCHEDULE 6.1.6: (i) no Material
Agreement has been breached in any respect or canceled by any party
thereto and neither Seller is aware of
19
any basis for any anticipated breach by any other party to any Material
Agreement; (ii) each of the Significant Companies has performed all of
their obligations required to be performed by them under each of the
Material Agreements and neither Seller, nor any of the Significant
Companies, has received any claim, whether written or oral, that it has
breached any of the terms or conditions of any Material Agreement;
(iii) no event has occurred which with the passage of time or the
giving of notice or both would result in a breach or default under any
Material Agreement by any party thereto; and (iv) to the Best Knowledge
of Sellers, no member of the KCL Group is party to any Contract which,
individually or in the aggregate, could have or could reasonably be
expected to have a Material Adverse Effect on the Business. Each
Material Agreement is valid, binding and enforceable and is in full
force and effect, except to the extent enforcement thereof may be
limited by applicable bankruptcy or insolvency laws or general
equitable principles.
(c) For purposes of this Agreement, "CONTRACT" means, with
respect to any Person, any contract, license, agreement, commitment,
purchase order, note, bond, mortgage, indenture, lease or other
property agreement, partnership or joint venture agreement or other
legally binding agreement, whether oral or written, applicable to it or
its properties or assets.
6.1.7 COMPLIANCE. Except as disclosed in SCHEDULE 6.1.7, each Seller
and each of the Companies is and has been in compliance with all laws,
regulations, rules and ordinances of all Governmental Authorities
applicable to the Business or any of the Companies. No notice, claim,
charge, complaint, action, suit, proceeding, investigation or hearing
has been received by any Seller or any of the Companies or filed,
commenced or threatened against any Seller or any of the Companies with
respect to the Business or any of the Companies, alleging a violation
of or liability or potential responsibility under any such law,
regulation, rule or ordinance which has not heretofore been duly cured
and for which there is no remaining liability.
6.1.8 INTELLECTUAL PROPERTY. KCL owns, or lawfully uses under
license, all such patents, utility models, design patents, patent
applications, corporate names, internet domain names, trade marks,
service marks copyrights and other intellectual property rights
(whether registered or unregistered) necessary to carry on the Business
of the KCL Group as presently conducted (herein collectively
"INTELLECTUAL PROPERTY RIGHTS") and the use of such Intellectual
Property Rights does not to the Best Knowledge of Sellers infringe upon
any third party rights; a complete list of all registered and other
material Intellectual Property Rights of KCL is attached hereto as
SCHEDULE 6.1.8(a). The Intellectual Property Rights comprise all of the
intellectual property rights necessary for the operation of the
Business of the KCL Group as currently conducted. Except as disclosed
in SCHEDULE 6.1.8 (b), the Intellectual Property Rights are not the
subject of any pending or threatened proceedings for opposition,
cancellation, revocation, misuse, infringement, misappropriation or
rectification.
6.1.9 INSURANCE. KCL maintains in full force and effect for its own
benefit the policies of insurance covering losses (subject to
deductibles or self-insurance to the
20
extent set forth on SCHEDULE 6.1.9) until the Closing Date which are
listed in SCHEDULE 6.1.9.
6.1.10 PERMITS. Each of the Significant Companies is in possession of
and in compliance with all material approvals, licenses and permits of
Governmental Authorities necessary to operate the Business as it
currently exists (herein the "PERMITS"). All such Permits concerning
KCL are set forth on SCHEDULE 6.1.10. No loss or expiration of any
Permit is pending or, to the Best Knowledge of Sellers, threatened,
other than expiration in accordance with the terms thereof. All of the
Permits shall remain in full force and effect immediately after the
consummation of the transactions contemplated hereby.
6.1.11 TAXES. All Tax Returns required to be filed by KCL or any other
Significant Company on or before the Signing Date have been timely
filed, all such Tax Returns have been prepared in compliance with all
applicable laws and regulations, and all such Tax Returns are true and
accurate in all respects. Each Significant Company has paid all Taxes
which have become due for payment prior to the Signing Date and, to the
extent applicable, have made sufficient provisions for the payment of
all Taxes of the Companies through the Closing Date. Without limiting
the generality of the foregoing, all Taxes of each Significant Company
for periods ending on or prior to the Effective Date (whether or not
yet due for payment) have been paid or fully accrued as a liability on
the face of the Balance Sheet contained in the 2002 Accounts. "TAXES"
shall mean any and all taxes (ABGABEN) of any kind or nature, license
and registration fees, social security contributions
(SOZIALVERSICHERUNGSBEITRAGE), duties or withholdings of any nature
whatsoever imposed by any Governmental Authority, together with any and
all penalties, fines, additions to tax and interest thereon. There is
no action, suit, taxing authority proceeding or audit now in progress,
pending or threatened against any Significant Company with respect to
any Tax relating to the Business. Each Significant Company has withheld
and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, creditor,
independent contractor or other third Person.
6.1.12 PRODUCT LIABILITY. There are no product liability claims
relating to products manufactured or sold by any Significant Company
which are presently pending. In the last two years prior to the
Effective Date, no product liability claims in an amount in excess of
EURO 10,000.00 (in words: Euro ten thousand) in the individual case and
EURO 30,000.00 (in words: Euro thirty thousand) in the aggregate have
been raised against the Companies.
6.1.13 LITIGATION. With regard to the Companies, there is no action,
suit, investigation or proceeding pending against, or to the Best
Knowledge of Sellers, as of the date hereof, threatened against or
otherwise affecting any Company or the Business, before any court or
arbitrator or other Governmental Authority except as disclosed in
SCHEDULE 6.1.13.
6.1.14 WORKS COUNCIL. There are no agreements with the works council,
labor unions or similar organizations of any Significant Company except
those disclosed in
21
SCHEDULE 6.1.14. No Significant Company has experienced any work
stoppage or slowdowns due to labor disagreements with respect to the
Business nor is any pending or threatened. There is no grievance or
arbitration proceeding pending ("EINIGUNGSSTELLE").
6.1.15 EU SUBSIDIES. None of the Companies has received any subsidies
not approved by EU. SCHEDULE 6.1.15 sets forth all subsidies received
by KCL during the past three (3) years and the material terms thereof.
6.1.16 ABSENCE OF FACTS OR EVENTS. Except as listed on SCHEDULE 6.1.16,
since January 1, 2003, KCL has conducted the Business of the KCL Group
only in the ordinary course of business consistent with past custom and
practice (including, without limitation, with respect to the offering
of special sales or incentive programs or the filling of distribution
channels), has incurred no liabilities with respect to the Business
other than in the ordinary course of business consistent with past
practice and custom and there has not been:
(a) any occurrence, event, change, incident, action, failure
to act or transaction which has had or could reasonably be expected to
have a Material Adverse Effect;
(b) (i) any hiring of new employees of the Business whose
annual compensation (including commissions and bonuses reasonably
likely to be earned) exceeds EURO 50,000.00, (ii) any material
amendment to any employment agreement, (iii) any increase in the
compensation payable or to become payable by the Business to any of its
employees, other than annual compensation increases made in the
ordinary course of business consistent with past custom and practice,
(iv) any material increase in or material modification of the coverage
or benefits under any employee benefit or welfare plan affecting
personnel of the Business, (v) any termination of employment of any
employee of the Business whose annualized compensation (including
commissions and bonuses) exceeds EURO 50,000.00 or (vi) any other
material change in the employment terms for any employee of the
Business;
(c) any sale, assignment, modification, transfer, release or
waiver of any contractual rights, claims or other assets of the
Business valued at more than EURO 100,000.00 individually or in the
aggregate, other than (i) changes to contracts in the ordinary course
of business consistent with past custom and practice or (ii) sales or
transfers of inventory and products to unaffiliated third Persons on an
arm's-length basis in the ordinary course of business consistent with
past custom and practice;
(d) any Encumbrance placed on any of the assets or properties
of the Business;
(e) any material adverse modification, termination of, or
claims of any material breach under, any Contract;
(f) any transaction entered into or consummated by any Seller
or any of the Companies with respect to the Business, except with
unaffiliated third Persons on an
22
arm's-length basis in the ordinary course of business consistent with
past custom and practice;
(g) any direct or indirect dividend, distribution or other
transfer (by whatever means or method) by any of the Companies to any
Seller or any Affiliate of any Seller of any assets or property of the
Business of any nature (including cash) or any redemption or
repurchase, directly or indirectly, of any Equity Interests of any of
the Companies;
(h) any direct or indirect dividend, distribution or other
transfer (by whatever means or method) by any of the KCL Subsidiaries
to KCL of any assets or property of any nature (including cash) or any
redemption or repurchase, directly or indirectly, of any Equity
Interests of any of the KCL Subsidiaries;
(i) any sale, assignment, transfer, abandonment or lapse of
any Permit or any Intellectual Property Right or other intangible
assets used by the Business, or disclosure of any material proprietary
confidential information to any Person;
(j) any change in the conduct of cash management customs and
practices (including, without limitation, any delay or postponement in
the payment of accounts payable or other liabilities of the Business,
any acceleration of the collection of accounts receivable of the
Business, or maintenance of inventory levels) or any expenditures of
cash (other than in the ordinary course of business in order to
discharge trade payables);
(k) any loans or advances to, or guarantees for the benefit
of, or entered into any transaction in excess of EURO 25,000.00 in the
aggregate with any of the Companies or any Affiliate (including any KCL
Subsidiary), shareholder, officer, director or employee of any of the
Companies, except for the transactions contemplated by this Agreement
and for advances consistent with past custom and practice made to
officers, directors and employees for travel expenses incurred in the
ordinary course of business;
(l) any issuance, sale or transfer of any notes, bonds or other
debt securities, any Equity Interests, any securities convertible,
exchangeable or exercisable into Equity Interests, or warrants, options
or other rights to acquire any Equity Interests of any of the
Companies;
(m) any increase of borrowing of any amount or any additional
incurrence of Indebtedness in excess of EURO 100,000.00 in the
aggregate in comparison to the level of Indebtedness of KCL existing as
of the Effective Date (EURO 1,636,362.43) or any material change in the
accounting methods of any of the Companies;
(n) any discharge or satisfaction of any Encumbrance on the
assets or properties of the Business, any payment of any material
obligation or liability (other than in the ordinary course of business
consistent with past practice and custom) or any payment of
Indebtedness;
23
(o) any payments or other transfers (or commitments to do so)
of any assets (including, without limitation, cash or Equity Interests)
or liabilities in connection with, or in contemplation of, the
transactions contemplated by this Agreement;
(p) receipt of any notification that any material distributor,
supplier or licensor will stop or decrease in any material respect the
rate of business done with the Business;
(q) court-recorded or out-of-court settlement or compromise of
any litigation related to the Business;
(r) any payment or commitment to make any payment of any costs,
expenses or fees of any Seller, directly or indirectly, in connection
with, or in contemplation of, this Agreement or the transactions
contemplated hereby;
(s) any capital expenditures or commitments for capital
expenditures involving more than (i) EURO 825,000.00 in the aggregate
through the period ending June 30, 2003 or alternatively (ii) EURO
925,000 in the aggregate through the period ending July 31, 2003; or
(t) any investment in, loans or advances to or guarantees for
the benefit of any person or entity (including any KCL Subsidiary).
6.1.17 PROPERTIES; ASSETS.
(a) SCHEDULE 6.1.17 hereto accurately sets forth and describes
in reasonable detail as of the date hereof all real property used by
KCL, whether owned, leased or otherwise occupied and includes recent
excerpt from the respective land register (the "REAL PROPERTY"). KCL
has good title (EIGENTUM) to all owned Real Property, free and clear of
all Encumbrances (other than Encumbrances registered with the
respective land register on the Effective Date, Liens for Taxes not yet
due and payable, purchase money Encumbrances and Encumbrances securing
rental payments under capital lease arrangements and other non-material
Encumbrances arising in the ordinary course of business and not
incurred in connection with the borrowing of funds, collectively
"PERMITTED ENCUMBRANCES"). Except as set forth on SCHEDULE 6.1.17, KCL
has not leased or otherwise granted to any person or entity the right
to use or occupy such owned Real Property or any portion thereof. KCL
has a valid leasehold interest in each parcel of leased Real Property,
free and clear of all Encumbrances, other than Permitted Encumbrances.
(b) KCL owns, subject to retention of title in the ordinary
course of business, good and marketable title (EIGENTUM) to, or a valid
leasehold interest in, all of the personal and tangible personal
property and assets of the Business, free and clear of all
Encumbrances, other than Permitted Encumbrances. All of the tangible
personal property and assets are in good operating condition and
repair, ordinary wear and tear not caused by neglect excepted, and are
useable in the ordinary course of business.
24
(c) At the Closing, the assets and properties of the
Significant Companies, together with any rights, properties or
interests to be made available to Purchaser and the Companies pursuant
to this Agreement, will include all of those assets and property (real,
personal, tangible and intangible) necessary to conduct the Business of
the KCL Group as presently conducted and as presently proposed to be
conducted, all of which will be free and clear of all Encumbrances
(other than Permitted Encumbrances).
6.1.18 EMPLOYEES.
(a) Each Significant Company has paid or made adequate
provision to pay all wages and other compensation and all other amounts
due and payable to any employee or former employee through and
including the Closing Date.
(b) To the Best Knowledge of Sellers, no senior executive
employee of KCL or any Significant Company has given notice of
termination of his employment contract since October 1, 2002. Without
limiting the generality of the foregoing, (i) neither party to that
certain Management Service Agreement, dated December 3, 1994, by and
between KCL and Xx. Xxxxxx Xxxxxxx (the "MANAGEMENT SERVICE AGREEMENT")
has provided the other with notice of its or his intent to terminate
the Management Service Agreement and (ii) the term of the Management
Service Agreement was automatically extended on December 31, 2002 for
an additional term of four years, beginning January 1, 2003. Sellers
and each Significant Company has complied, and is in compliance, with
all applicable laws and all shop agreements (BETRIEBSVEREINBARUNGEN)
with such Significant Company's works council and other similar bodies
relating to the employment of labor, including provisions thereof
relating to wages, hours, occupational safety, equal opportunity,
collective bargaining and the payment of social security, unemployment
and other Taxes. None of the Significant Companies is party to any
contract which could require such Significant Company to pay any
additional compensation, bonuses (including, without limitation, any
retention bonuses) or other amounts as a result, in whole or in part,
of the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby, to any employee or former
employee of any such Significant Company.
6.1.19 EMPLOYEE BENEFITS. Except as set forth on SCHEDULE 6.1.19
attached hereto, no employee benefit plans, profit-sharing, deferred
compensation, bonus, incentive, option, equity purchase, vacation pay,
holiday pay, pension, retirement plans, medical and other compensation
or benefit arrangements or plans (collectively, "BENEFIT PLANS") are
maintained or contributed to or required to be contributed to by KCL
for the benefit of its employees (or former employees) and/or its
beneficiaries. Sellers have delivered or made available to Purchaser
true and complete copies of all documents pertaining to those items
required to be disclosed on SCHEDULE 6.1.19. None of the Companies
maintains, contributes to or has any liability with respect to any
Benefit Plans with respect to their employees (or former employees)
other than those disclosed on SCHEDULE 6.1.19. KCL has timely made all
contributions required by law to be made to the Benefit Plans, and has
timely filed all reports and other
25
documents required to be filed with respect thereto. All Benefit Plans
of KCL required by operation of law to be transferred to Purchaser as a
result of the transactions contemplated hereby comply in form and
operation with the applicable requirements of law.
6.1.20 BROKERAGE. There are no claims for brokerage commissions,
finders fees or similar compensation in connection with the
transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of Sellers or any Company.
6.1.21 AFFILIATE TRANSACTIONS. Except as disclosed on SCHEDULE 6.1.21
attached hereto, no shareholder (including Sellers), director, officer,
employee or Affiliate of any of the Companies (or any of the relatives
or Affiliates of any of the foregoing) or relative of them within the
meaning of Section 15 of the German General Tax Act (ABGABENORDNUNG) is
(or has been during the last 12 months) a party to any understanding,
contract or transaction with any of the Companies, or has (or had
during the last 12 months) any interest in any property or assets used
in or necessary to the Business, except for at-will employment
arrangements.
6.1.22 ENVIRONMENTAL MATTERS. Except as set forth on SCHEDULE 6.1.22:
(a) Each Significant Company has complied in all material
respects with and is currently in compliance in all material respects
with all federal, state, provincial, local and foreign statutes,
regulations, ordinances, and other provisions having the force or
effect of law, all judicial and administrative orders and
determinations and all contractual obligations, concerning public
health and safety, worker health and safety, and pollution and
protection of the environment ("ENVIRONMENTAL LAWS") and neither of the
Sellers nor KCL nor any other Significant Company has received any oral
or written notice, report or information regarding any material
liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise) or any corrective, investigatory or remedial obligations
arising under applicable Environmental Laws which relate to any of the
Companies or any of their respective properties or facilities.
(b) Each Significant Company has obtained and complied in all
material respects with, and is currently in compliance in all material
respects with, all Permits, licenses and other authorizations that are
required pursuant to any applicable Environmental Laws for the
operation of the Business. All such Permits, licenses and other
authorizations of KCL are contained in SCHEDULE 6.1.10.
(c) Sellers have furnished or provided access to Purchaser all
environmental audits and reports relating to KCL's premises which are
in its possession or under its reasonable control.
6.1.23 WARRANTIES. No liability exists for replacement of the products
sold or delivered by or on behalf of KCL or other damages in connection
with such sales or deliveries made at any time prior to the Closing
Date.
26
6.1.24 ABSENCE OF UNDISCLOSED LIABILITIES. KCL has not, or will not
have as of the Closing, any obligation or liability (in any case,
whether known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated or due or
to become due) arising out of or related to facts, events,
transactions, occurrences or actions or inactions arising on or prior
to the Closing Date, other than: (i) liabilities and obligations set
forth on face of the 2002 Accounts, (ii) liabilities and obligations
incurred in the ordinary course of business consistent with past
practice and custom (none of which is a liability resulting from,
arising out of, relating to, in the nature of, or caused by any breach
of contract, breach of warranty, tort, infringement, violation of law,
environmental matter, claim or lawsuit) and (iii) other liabilities and
obligations expressly disclosed (by both description and amount) on
SCHEDULE 6.1.24.
6.1.25 LONG-TERM LIABILITIES. The Companies are not subject to any
long-term liabilities (i.e., liabilities with a term in excess of one
year), except for the Indebtedness disclosed in SCHEDULE 6.1.25. The
outstanding balances and general terms of all Indebtedness of the KCL
Group are disclosed on SCHEDULE 6.1.25 hereto. For purposes of this
Agreement, "INDEBTEDNESS" means, with duplication, (a) all obligations
of any of the Companies for borrowed money (including, without
limitation, any indebtedness of any kind owed by any of the Companies
to any Seller or any Affiliates of any Seller (other than intercompany
accounts among KCL and any of its wholly-owned subsidiaries or among
such wholly-owned subsidiaries); (b) all capitalized lease obligations
of any of the Companies; (c) all notes payable and extensions of credit
of any of the Companies whether or not representing obligations for
borrowed money; (d) any obligation of any of the Companies owed for all
or any part of the deferred purchase price of property or services; (e)
any unfunded employee welfare, benefit or pension liabilities of any of
the Companies; (f) any obligations of any of the Companies to pay any
additional compensation, severance, bonuses (including, without
limitation, any retention or incentive bonuses) or other amounts as a
result, in whole or in part, of the consummation of the transactions
contemplated hereby, to any Person; and (g) all guarantees of any of
the Companies in connection with any of the foregoing. Indebtedness of
KCL at December 31, 2002 does not exceed EURO 1,636,362.43. None of the
Companies is subject to any Indebtedness owed or owing to any Seller or
any Affiliate of any Seller. KCL does not owe any Indebtedness to any
non-wholly-owned KCL Subsidiary.
6.1.26 CUSTOMER AND SUPPLIER SATISFACTION. No material supplier of the
KCL Group has indicated that it may or shall stop, or decrease the rate
of, supplying materials, products or services to any member of the KCL
Group, and, to the Best Knowledge of Sellers, there is no fact,
condition, situation or set of circumstances which could cause any such
supplier to do any of the foregoing in the next two years. No material
customer of the KCL Group has, as a consequence of dissatisfaction with
the KCL products and/or services, indicated that it may or shall stop,
or decrease the rate of, buying materials, products or services from
any member of the KCL Group, and, to the Best Knowledge of Sellers,
there is no fact, condition, situation or set of
27
circumstances which could cause any such customer to do any of the
foregoing in the next two years.
6.2 All Schedules referred to in this SECTION 6.1 are collectively referred
to as "DISCLOSURE SCHEDULES".
6.3 For the purpose of this Agreement, "BEST KNOWLEDGE" of Sellers shall
mean the actual knowledge of Sellers (which shall include the actual
knowledge and awareness, after due inquiry, of the Advisory Board
members of KCL and the Managing Director of KCL, Xx. Xxxxxxx) in
relation to the warranties of Sellers contained in this Agreement after
using due inquiry that a reasonably prudent business person would use
in similar circumstances.
6.4 Purchaser agrees to accept the KCL Shares and the Business without
reliance upon any express or implied representations or warranties of
any nature made by or on behalf of or imputed to Sellers, except for
representations and warranties set forth in this Agreement.
Purchaser acknowledges that Sellers make particularly no representation
or warranty with respect to:
6.4.1 any projections, estimates or budgets delivered to or made
available to Purchaser of future revenues, future results of operations
(or any component thereof), future cash flows including but not limited
to (a) cash flows arising out of the results of any litigation or
similar dispute or (b) future financial condition (or any component
thereof) or the future business and operations of the Business;
6.4.2 any other information or documents made available to Purchaser
or its counsel, accountants or advisors with respect to the Business or
its respective businesses or operations, except as set forth in this
Agreement; or
6.4.3 the results of any litigation or similar procedure, except as
expressly set forth in this Agreement.
6.5 Section 442 of the German Civil Code (BGB) and Sections 377 and 378 of
the German Commercial Code (HGB) do not apply directly nor by way of
analogy nor by construction of this Agreement or the rights of
Purchaser hereunder.
7. WARRANTIES OF PURCHASER
Purchaser warrants as an independent undertaking of warranty as of the
Signing Date and the Closing Date that:
7.1 ENFORCEABILITY, NO CONFLICT. This Agreement constitutes the legal,
valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms. Purchaser has the absolute and
unrestricted right, power, authority, and capacity to execute and
deliver this Agreement and to perform its obligations under this
28
Agreement, which actions have been duly authorized and approved by all
necessary corporate action of Purchaser. Except for the cartel
clearances required pursuant to Section 5.2.1(b) above, Purchaser is
not required to give any notice to any person or obtain any consent or
authorization of any Governmental Authority in connection with the
execution and delivery of this Agreement. Neither the execution and
delivery of this Agreement nor the consummation or performance of any
of the transactions contemplated hereby will directly or indirectly
violate the certificate of incorporation or by-laws of Purchaser or any
contract to which Purchaser is subject of or violate any applicable
law, rule, regulation, judgment, injunction, order or decree.
7.2 LITIGATION. There is no action, suit, investigation or proceeding
pending against, or to the knowledge of Purchaser, as of the date
hereof, threatened against or affecting Purchaser before any court or
arbitrator or governmental body, agency or official which in any manner
challenge or seek to prevent, enjoin, alter or materially delay the
transaction contemplated hereunder.
7.3 PURCHASE FOR INVESTMENT. Purchaser is acquiring the KCL Shares and the
Business for investment for Purchaser's own account, not as a nominee
or agent, and not with a present view to the resale or distribution of
any part of the KCL Shares or the Business, and Purchaser has no
present intention of selling, granting any participation in, or
otherwise distributing the Business within one year from the Effective
Date, except transferring all or part of the KCL Shares and all or part
of the Business to affiliated enterprises of Purchaser in the meaning
of Section 15 German Stock Corporation Act.
8. REMEDIES
8.1 NATURE OF REMEDIES. In the event of any breach or non-fulfillment by
Sellers of any of the warranties, covenants or agreements contained in
this Agreement (without taking into account any disclosures made by any
Seller pursuant to Section 9.2.4 hereof), Sellers shall be liable for
putting Purchaser, or, at the election of Purchaser, the Companies into
the same position that it or they would have been in if the warranties,
covenants or agreement contained in this Agreement had been correct or
had not been breached (NATURALRESTITUTION). Purchaser has the right to
set Sellers a period of no less than 30 days for putting Purchaser, or,
at the election of Sellers, the Companies into the same position that
it or they would have been in if the warranties, covenants or agreement
contained in this Agreement had been correct or had not been breached
(NATURALRESTITUTION). After the expiry of this period Sellers shall pay
damages to Purchaser or the Companies (as determined above) in
accordance with Sections 249 ET SEQ. of German Civil Code (BGB) for all
losses, damages, liabilities, claim actions, deficiencies, costs,
out-of-pocket expenses (including reasonable attorneys' fees or travel
expenses) or Taxes suffered, sustained or incurred by Purchaser
(collective, "LOSSES") as a result of or in connection with such breach
or non-fulfillment. The right of third parties to make claims against
the Sellers in accordance with generally applicable principles of
German law of damages (DRITTSCHADENSLIQUIDATION; VERTRAG MIT
SCHUTZWIRKUNG ZUGUNSTEN DRITTER), if any, remain unaffected. Sellers
shall in no event be liable for any consequential damages
29
(FOLGESCHADEN), lost profits (ENTGANGENER GEWINN), damages incidental
(ANLA(BETA)LICH) to any breach or non-fulfillment of the warranties,
covenants or agreements or any internal costs and expenses incurred by
the Companies or Purchaser.
8.2 PROCEDURE. In the event of any breach or non-fulfillment by Sellers of
any of the warranties, covenants or agreements contained in this
Agreement, Purchaser will give Sellers notice of such breach or
non-fulfillment, with such notice stating the nature thereof and the
amount involved, to the extent that such amount has been determined at
the time when such notice is given, promptly after discovery of such
breach or non-fulfillment (herein "PURCHASER CLAIM"); provided that the
failure to so notify the Sellers shall not relieve Sellers of their
obligations hereunder, except to the extent that such failure shall
have actually materially prejudiced the Sellers. Without prejudice to
the validity of the Purchaser Claim or alleged claim in question, in
connection with any investigation by Sellers and their accountants and
their professional advisors with respect to any such Purchaser Claim,
Purchaser shall cause its commercially reasonable efforts to cause the
Companies to make available, at Sellers' cost and expense, those
non-attorney-client-privileged portions of the books and records of the
Companies relevant to such Purchaser Claim, subject to Sellers' and its
accountants and advisors' agreement to comply with customary
confidentiality restrictions. All other requests for information and
access to the Companies' premises, personnel and documents shall be
considered by Purchaser on a case-by-case basis; provided that
Purchaser will not unreasonably withhold or delay such information and
access.
8.3 ADJUSTMENTS. Sellers shall not be liable for, and Purchaser shall not
be entitled to recover any Losses for any portion of any Purchaser
Claim if and to the extent that:
8.3.1 such matter has been expressly reserved for in the 2002
Accounts (e.g. by way of a provision (RUCKSTELLUNG), or depreciation
(ABSCHREIBUNG), or exceptional depreciation (AU(BETA)ERPLANMA(BETA)IGE
ABSCHREIBUNG), or depreciation to reflect lower market values
(ABSCHREIBUNG AUF DEN NIEDRIGEREN BEIZULEGENDEN XXXX)), but only to the
extent of such reserve as set forth on SCHEDULE 8.3.1 hereto, which
specifically sets forth all reserves set forth on the 2002 Accounts and
the amount reserved therefore;
8.3.2 such portion is actually recovered from a third Person or under
an insurance policy in force on the Effective Date (net of any increase
in insurance premium or cost to such third party);
8.3.3 the payment or settlement of any item giving rise to such
portion results in a Tax benefit to the Companies or Purchaser which is
realized within two years of the date that the Purchaser Claim is made
(but only to the extent of such Tax benefit);
8.3.4 such portion results from or is increased by the passing of, or
any change in, after the Effective Date, any law, statute, ordinance,
rule, regulation, or administrative practice of any government,
governmental department, agency or regulatory body including (without
prejudice to the generality of the foregoing) any increase in the rates
of Taxes or any imposition of Taxes or any withdrawal or relief from
Taxes not actually (or prospectively) in effect at the Effective Date;
or
30
8.3.5 such portion results from a failure of Purchaser or the
Companies to mitigate damages to the extent required by Section 254 of
the German Civil Code.
8.4 This Agreement does not affect the general principles under German law
of damages that Sellers shall not be liable for any Purchaser Claim if
and to the extent Purchaser has caused (VERURSACHT ODER MITVERURSACHT)
the emergence of the damage (Section 254 German Civil Code) and that,
when calculating the amount of the liability of Sellers under this
Agreement, all advantages in connection with the relevant matter shall
be taken into account (Vorteilsausgleich).
8.5 MISCONDUCT. Claims based on deliberate misconduct (VORSATZLICHES
HANDELN) are not limited by any of the provisions of this Agreement.
8.6 THIRD PARTY CLAIMS.
8.6.1 If, after the Closing, the Companies or Purchaser are sued or
threatened to be sued by a third party, including without limitation
any Government Authorities, or if the Companies or Purchaser are
subjected to any audit or examination by any Tax authority (herein
"THIRD PARTY CLAIM"), which may give rise to a Purchaser Claim,
Purchaser shall give Sellers prompt notice of such Third Party Claim;
provided that the failure to so notify the Sellers shall not relieve
Sellers of their obligations hereunder, unless, and only to the extent
that, the failure to notify has materially negatively prejudiced the
defense against the Third Party Claim. Subject to the satisfaction of
the conditions set forth below, the Sellers shall have the right to
assume and control the defense of such Third Party Claim or the
litigation resulting therefrom by delivering written notice of such
election to the Purchaser within thirty (30) days of receiving Notice
of such Third Party Claim.
8.6.2 If Sellers elect to assume the defense of such Third Party
Claim or litigation resulting therefrom, they must first enter into an
agreement with Purchaser (in form and substance reasonably satisfactory
to Purchaser) pursuant to which Sellers agree, jointly and severally,
to be, subject to the limitations of claims contained in Section 9.5,
fully responsible to Purchaser for all Losses relating to such Third
Party Claim. Notwithstanding the foregoing, Sellers shall not have the
right to assume control of, or continue to control, such defense if the
Third Party Claim (1) involves criminal or quasi-criminal allegations,
(2) involves a claim with regard to which Purchaser believes in good
xxxxx Xxxxxxx failed or are failing to vigorously prosecute or defend,
(3) involves potential Losses in excess of the amount equal to (a) the
amount by which the Liability Cap exceeds the aggregate amount of
Losses Purchaser has recovered from Sellers prior to such time
(together with all Losses Purchaser is then seeking to recover from
Sellers) MULTIPLIED BY (b) 1.5 or (4) involves a claim for non-monetary
relief.
8.6.3 In addition, Sellers shall not, in the defense of such claim or
any litigation resulting therefrom, consent to entry of any judgment
(other than a judgment of dismissal on the merits without costs) or
enter into any settlement (except with the
31
written consent of Purchaser not to be unreasonably withheld) which
does not include as an unconditional term thereof the giving by
claimant or plaintiff to Purchaser of a release from all liability in
respect of such claim or litigation. Notwithstanding anything in this
Section 8.6 to the contrary, Purchaser may, with counsel of its choice
and at its expense, participate in the defense of any such claim or
litigation to the extent such defense is assumed by Sellers.
8.6.4 If Sellers shall not assume the defense of any such claim by a
third party or litigation resulting therefrom after receipt of notice
from Purchaser or if Sellers are precluded from assuming any such
defense by pursuant to the provisions of Section 8.6.2 hereof,
Purchaser may defend against such claim or litigation in such manner as
it reasonably deems appropriate and it may settle such claim or
litigation on such terms as it may deem appropriate. Any such action by
Purchaser shall not in any manner relieve Sellers of their obligations
under this Section 8 (including, without limitation, reimbursement for
the amount of any judgment or settlement rendered or entered into with
respect to any such Third Party Claim and for all damages incurred by
Purchaser in connection with the defense against or settlement of any
such Third Party Claim if and to the extent the Third Party Claim gives
rise to a Purchaser Claim).
8.7 PAYMENT. All payments owed by Sellers to Purchaser under this Agreement
shall be paid by Sellers by wire transfer to the account number
00000000, kept with Sparkasse Fulda Bank, SWIFT Code XXXXXXXX, BIC Code
XXXXXXX0XXX (BANKLEITZAHL 530 501 80) (herein "PURCHASER'S ACCOUNT") or
such other account as may be designated by Purchaser in writing to
Sellers within five (5) Banking Days after all or any portion of the
Purchaser Claim has been determined or agreed to be due and owing.
8.8 OFFSET. Any Losses which Purchaser suffers, sustains or becomes subject
to and with respect to which Purchaser is entitled to claim damages
from any of the Sellers under this Agreement may, in the sole
discretion of Purchaser, be satisfied (to the extent of such offset) by
setting off all or any portion of such Losses against any amounts which
Purchaser owes to any Seller at such time.
9. INTERIM MANAGEMENT/OTHER AGREEMENTS
9.1 INTERIM MANAGEMENT. From the Signing Date until the Closing Date,
Sellers shall cause the Companies to conduct their businesses in the
ordinary course of business consistent with past practice and custom
and shall cause the Companies to use their reasonable best efforts to
preserve their ongoing business organizations and relationships with
third parties.
Without limiting the generality of the foregoing, for the period
between the Signing Date and the Closing Date, Sellers shall ensure
that the Companies will not without the consent of Purchaser:
32
(i) adopt or propose any change in their organizational
documents or bylaws;
(ii) merge or consolidate with any other person or acquire a
material amount of assets from any other person or to
split any Company;
(iii) sell or otherwise dispose of any material assets or
property except pursuant to existing contracts or
commitments or otherwise in the ordinary course of
business consistent with past practice;
(iv) permit any of its material assets to be subjected to any
mortgage, pledge, lien, security interest, Encumbrance,
restriction, or charge of any kind, except for those
arising by court order or by operation of law or those
already existing as at the Signing Date;
(v) grant any increase in wages, salaries, bonus or other
remuneration of any senior managing officer;
(vi) enter into any material Contract or other transaction
relating to the Business or materially modify, amend,
cancel or terminate any Material Agreement;
(vii) take any action which, or omit to take any action the
omission of which, would require disclosure under
Section 6.1.16;
(viii) reduce the KCL Group's existing insurance coverage; or
(ix) agree, whether or not in writing, to do any of the
foregoing.
In case of breaches of the Interim Management obligations of Sellers as
set forth in this Section 9.1, Section 8 shall apply MUTATIS MUTANDI.
9.2 AFFIRMATIVE COVENANTS OF SELLERS. Between the date hereof and the
Closing Date, except as otherwise expressly provided in this Agreement,
Sellers will cause the Companies to:
9.2.1 conduct its business and operations only in the usual and
ordinary course of business in accordance with past custom and
practice, including, without limitation, with respect to maintenance of
working capital levels, collection of accounts receivable, payment of
employee compensation, payment of accounts payable and cash management
practices generally;
9.2.2 keep in full force and effect its corporate existence;
9.2.3 permit Purchaser and its employees, agents, financing sources,
environmental consultants and accounting and legal representatives to
have access, upon reasonable notice, to its books, records, key
personnel, independent accountants, legal counsel,
33
property, facilities, equipment and lenders with respect to the
Business or the operations of the Companies (it being understood that
any access to information relating to customers or suppliers shall only
be permitted if Purchaser has proven to Sellers by submittal of
supporting documents that the condition of Closing in Section 5.2.1(f)
is met or, alternatively, if Purchaser has waived this condition of
Closing versus Sellers in writing); subject to compliance with
applicable merger control laws;
9.2.4 use commercially reasonable efforts to keep the Companies'
business organization and material properties intact, including its
present business operations and physical facilities and the Companies'
present relationships with material lessors, licensors, suppliers,
distributors and customers and others having material business
relations with the Companies;
9.2.5 promptly inform Purchaser in writing of any variances from the
representations and warranties contained in this Agreement or any
breach of any covenant hereunder by any Seller; and
9.2.6 cooperate with Purchaser and use commercially reasonable
efforts to cause the conditions to Purchaser's obligation to close to
be satisfied (including, without limitation, the execution and delivery
of all agreements contemplated hereunder to be so executed and
delivered).
9.3 AFFIRMATIVE COVENANTS OF PURCHASER. Between the date hereof and the
Closing Date, except as otherwise expressly provided in this Agreement,
Purchaser will:
9.3.1 promptly inform Sellers in writing of any variances from the
representations and warranties contained in this Agreement or any
breach of any covenant hereunder by Purchaser of which Purchaser
becomes aware; and
9.3.2 cooperate with Sellers and use its commercially reasonable
efforts to cause the conditions to Sellers obligation to close to be
satisfied (including, without limitation, the execution and delivery of
all agreements contemplated hereunder to be so executed and delivered).
9.4 EXCLUSIVITY. From and after the date hereof until the first to occur of
(i) the Closing or (ii) the termination of this Agreement pursuant to
Section 5.6, each of the Sellers agrees, on behalf of itself and each
of the Companies, that neither they nor any of their respective
directors, officers, employees, equityholders, agents or
representatives will discuss or pursue a possible sale,
recapitalization or other disposition of any of the Companies or the
Business, any securities or assets of the Companies or the Business
(other than the sale of goods or product in the ordinary course of
business) or any interest therein with any other Person or provide any
information to any other Person in connection therewith. Each of the
Sellers represents that, from and after the date hereof, neither it nor
any of the Companies will, by pursuing the transactions contemplated
hereby, violate the terms of any other contract or obligation to which
it or any such Company is subject, and will promptly (but in any event
within one Banking Day) inform Purchaser of and provide Purchaser with
information regarding
34
any other offers or expressions of interest for the KCL Group or any
portion thereof. Each of the Sellers shall immediately cease and cause
the Companies and their respective directors, officers, employees,
equityholders, agents and representatives to immediately cease any and
all existing activities, discussions or negotiations with any Persons
(other than Purchaser or any of its representatives) conducted
heretofore with respect to any sale, recapitalization or other
disposition of the Companies or any interest therein, and shall use
best efforts to cause any such Persons in possession of confidential
information about the Companies that was furnished by or on behalf of
the Sellers or any of the Companies to return or destroy all such
information in the possession of any such Person.
9.5 LIMITATION OF CLAIMS
9.5.1 All claims of Purchaser for breach of warranties arising under
this Agreement or covenants which by their terms require performance
prior to the Closing Date shall be time-barred (VERJAHREN) unless
written notice of such claim is delivered to the Sellers according to
Section 8.2 (i) within 18 months after the Closing Date. The 18 months'
period provided for above does not apply to:
- all claims of Purchaser for Tax-related Losses, which shall
be time-barred for each Tax upon expiration of the applicable
statute of limitation;
- all claims of Purchaser in respect of Losses arising from a
breach of Section 6.1.22 (Environmental Matters) which shall
be time-barred on the 5th anniversary of the Effective Date;
- all claims of Purchaser in respect of Losses arising from a
breach of Sections 6.1.1, 6.1.2 and 6.1.3 which shall be
time-barred on the 8th anniversary of the Effective Date;
- all claims for breach of covenants that require performance
after the Closing Date which shall be time-barred on the 5th
anniversary of the Effective Date.
9.5.2 The Parties hereto agree that so long as such written notice is
given on or prior to the applicable survival date, such warranties
shall continue to survive until such matter is resolved and the
limitation period shall accordingly be tolled (GEHEMMT) provided,
however, that Purchaser commences judicial proceedings within 60 days
after the expiry of the relevant period set forth in Section 9.5.1
above.
9.5.3 With respect to any claim for breaches of warranties under this
Agreement, Sellers will not have any obligation to pay damages to
Purchaser with regard to any Losses by reason of any such claim until
the Purchaser has suffered Losses by reason of all such claims in
excess of EURO 225,000.00 (in words: Euro two-hundred twenty-five
thousand), which amount shall be fully recoverable by the Purchaser to
the extent such Losses exceed such amount. Sellers will not be liable
to Purchaser for any Losses resulting from any breach of any warranties
of Sellers under this Agreement in an
35
aggregate amount in excess of EURO 4,000,000.00 (herein "LIABILITY
CAP"). The total liability of Sellers under this Agreement with respect
to Losses arising from a breach of any warranty made specifically with
respect to any KCL Subsidiary and/or Significant Company shall not
exceed EURO 1,000,000.00. The limitations on indemnification recovery
under this Section 9.5.3, however, do not apply to any claims based on
the warranties given by Sellers with respect to any of the Companies
under Sections 6.1.1, 6.1.2, 6.1.3 and 6.1.11.
9.5.4 The Parties are in agreement that the remedies and claims which
any Party may have for breach of obligations set forth in or in
connection with this Agreement, are solely governed by this Agreement,
and that the remedies provided for by this Agreement shall be the
exclusive remedies available to the Parties. Apart from the rights of
the Parties under this Agreement, (i) any right of Parties to withdraw
from (RUCKTRITT) this Agreement or to require the winding up of the
transaction contemplated hereunder, or to reduce the consideration to
be paid (MINDERUNG), (ii) any claims for breach of pre-contractual
obligations or ancillary obligations (SCHADENERSATZ WEGEN
PFLICHTVERLETZUNG), and (iii) any other claims and remedies for
Purchaser or Sellers under German law (except claims for willful
deceit) (ARGLISTIGE TAUSCHUNG) are hereby expressly excluded and waived
by the Parties.
9.5.5 The Parties are fully aware of the discussion amongst German
legal scholars caused by the enactment of Section 444 of the German
Civil Code (BURGERLICHES GESETZBUCH; BGB) as amended with effect from
January 1, 2002 focusing on the question whether the usual practice in
share purchase and transfer agreements of the seller giving certain
guarantees to the purchaser within certain limitations clearly defined
in the agreement may be rendered impossible by Section 444 BGB (as
amended) declaring any such limitations unenforceable. In that respect
the Parties, having given this issue due consideration and having
received legal advice from their respective legal advisors, wish to
state the following: It is the common conviction of the Parties that
the provisions of Section 444 BGB (as amended) do not apply to
independent undertakings of warranty (as provided under Sections 6 and
7 and as opposed to guarantees regarding qualities or characteristics
of the good purchased (BESCHAFFENHEITSGARANTIEN)). In light of this,
the Parties wish to confirm to one another that (i) the warranties set
forth in this Agreement with the contents described in more detail in
Sections 6 and 7 neither constitute any guarantees regarding qualities
or characteristics (BESCHAFFENHEITSGARANTIEN) within the meaning of
Sections 443, 444 BGB nor covenants regarding qualities or
characteristics (BESCHAFFENHEITSVEREINBARUNGEN) within the meaning of
Section 434 para. 1 sentence 1 BGB, and (ii) the provisions contained
in Sections 6, 7 and this Section 9.5 do not, and are not intended to,
represent any exclusions (AUSSCHLUSSE) or limitations (BESCHRANKUNGEN)
within the meaning of Section 444 BGB (as amended); rather the
provisions contained in Sections 6, 7 and this Section 9.5 form an
integral part of the warranties and, consequently, determine and
constitute the contents (INHALT) of the independent undertakings of
warranty set forth in this Agreement. For these reasons, the Parties
conclude that Section 444 BGB (as amended) does not apply to the
independent undertakings of warranty set forth in Sections 6, 7 and
this Section 9.5,
36
even to the extent any of the warranties relate to qualities or
characteristics (BESCHAFFENHEIT) of the object of the sale contemplated
by this Agreement. The Parties acknowledge that the interpretation
contained in this Section 9.5 and the conclusions set out above are
irrevocable and binding on them and any court of arbitration, state
court, authority or any other natural or legal person whatsoever.
Purchaser acknowledges that Sellers have only agreed to give the
warranties in this Agreement on the contractual basis
(GESCHAFTSGRUNDLAGE) of Section 444 BGB not being applicable to any
such warranty, and Purchaser hereby confirms and subscribes to such
understanding.
9.5.6 TAX MATTERS. The KCL Group shall pay all Taxes with respect to
any period ending on or prior to the Closing Date (it being understood
and agreed that Sellers shall be responsible for causing the KCL Group
to pay all such Taxes with respect to any period ending on or prior to
the Effective Date and, post-Closing, Purchaser shall be responsible
for causing the KCL Group to pay all such Taxes with respect to periods
beginning after the Effective Date). Each of the Parties hereto shall
cooperate fully, as and to the extent reasonably requested by another
Party, in connection with the filing of Tax Returns pursuant to this
Section 9.5.6 and any audit, litigation or other proceeding with
respect to Taxes. Such cooperation shall include signing any Tax
Return, amended Tax Returns, claims or other documents necessary to
settle any Tax controversy, the retention and (upon another Party's
request) the provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide
additional information and explanation of any material provided
hereunder. Without the prior written consent (which shall not be
unreasonably withheld or delayed) of Purchaser, neither Seller shall
make or change any election, change an annual accounting period, file
any amended Tax Return, enter into any closing agreement, settle any
Tax claim or assessment relating to KCL Group, surrender any right to
claim a refund of Taxes, or take any other similar action, or omit to
take any action relating to the filing of any Tax Return or the payment
of any Tax, if such action or omission would have the effect of
increasing the Tax liability of the KCL Group, Purchaser or any
Affiliate of Purchaser, with respect to any pre-Closing or post-Closing
Tax period.
9.6 WAIVER, RELEASE AND DISCHARGE. Effective upon the Closing, each Seller
(on behalf of itself and each of its Affiliates) hereby irrevocably
waives, releases and discharges each of the Companies from any and all
liabilities and obligations to such Seller or any of such Seller's
Affiliates of any kind or nature whatsoever, whether in its capacity as
Seller hereunder, as a shareholder of KCL or otherwise (including,
without limitation, in respect of rights of contribution or
indemnification), in each case whether absolute or contingent,
liquidated or unliquidated, known or unknown, and whether arising
hereunder or under any other agreement or understanding or otherwise,
and neither Seller nor any of their respective Affiliates shall seek to
recover any amounts in connection therewith or thereunder from any of
the Companies. Each Seller (on behalf of itself and each of its
Affiliates) hereby acknowledges that it and its Affiliates will have no
claims or rights to contribution or indemnity from any of the
37
Companies with respect to any amounts paid by any of them pursuant to
this Agreement.
9.7 CLOSING DATE INDEBTEDNESS AND CLOSING DATE NET WORKING CAPITAL. Sellers
covenant and agree that they will deliver KCL to Purchaser on the
Closing Date with an aggregate amount of Indebtedness (as defined in
Section 6.1.25) of not more than EURO 1,736,362.43 (in words: one
million seven hundred thirty-six thousand three hundred sixty-two and
forty-three one hundredths). Sellers further covenant and agree that
they will deliver KCL to Purchaser on the Closing Date with Adjusted
Net Working Capital of not less than EURO 3,678,000.00 (in words: three
million six hundred seventy-eight thousand). "ADJUSTED NET WORKING
CAPITAL" means (i) the current assets (including Cash but excluding any
goodwill or other intangible assets) of KCL, minus (ii) the sum of (a)
the current liabilities of KCL and (b) the Indebtedness of KCL, in each
case as of the close of business on the Closing Date and as determined
in accordance with generally accepted German accounting principles,
consistently applied, with the principles of continuity in accounting
policies and in evaluation principles as well as on the basis of past
practice with regard to the making of provisions. "CASH" means cash on
hand, deposits held without limitation or restriction by financial
institutions and short-term, highly liquid investments that are
immediately convertible into cash without loss or cost, net of any bank
overdrafts or similar items. For purposes of compliance with this
Section 9.7, Cash spent for fixed asset investments as part of
KCL's capital expenditures budget 2003 up to a maximum of EURO
500,000.00 in the aggregate shall also be accounted for as Cash.
SCHEDULE 9.7 sets forth a model calculation of Adjusted Net Working
Capital for the year-ended December 31, 2002. In the event of any
inconsistency between Schedule 9.7 and this Section 9.7, the principles
laid down in this Agreement shall prevail. Any payment made by Sellers
as a consequence of a breach of Sentence 1 of this Section 9.7, as the
case may be, shall reduce the amount of Indebtedness for purposes of
calculating the Adjusted Net Working Capital in terms of this Section
9.7.
10. ANNOUNCEMENT/CONFIDENTIALITY AND CO-OPERATION
10.1 ANNOUNCEMENT. Each of the Parties undertakes that prior to the Closing
Date it will not make an announcement in connection with this Agreement
unless required by applicable law and unless the other Party hereto has
given its consent to such announcement, including the form of such
announcement, which consent may not be unreasonably withheld and may be
subject to conditions. If and to the extent any announcement or
disclosure of information regarding the subject matter of this
Agreement is to be made under applicable laws the Party being concerned
shall not disclose any such information without prior consultation with
the other Party. After the Closing Date, Sellers and Purchaser shall
make an announcement of the transaction contemplated herein, the
wording of which shall be agreed amongst the Parties beforehand.
Notwithstanding anything to the contrary set forth in this Section
10.1, Sellers and Purchaser shall keep confidential the terms of this
Agreement unless the respective Party is obligated to disclose any
details hereof under applicable law. In such event the disclosing Party
shall inform the other Parties thereof without undue
38
delay and in such case, the provisions of the last sentence of Section
10.2 shall apply, mutatis mutandis, to this Section 10.1.
10.2 CONFIDENTIALITY. After the Closing, each Seller shall, and shall cause
each of its Affiliates to, continue to maintain the confidentiality of
all information, documents and materials relating to the Business, the
KCL Group or Purchaser, including all such materials which remain in
the possession of Seller after the Closing, except to the extent
disclosure of any such information is required in the opinion of such
Seller's outside counsel by law or authorized by Purchaser or
reasonably occurs in connection with disputes over the terms of this
Agreement. After the Closing, Purchaser shall, and shall cause the KCL
Group to, maintain the confidentiality of all information, documents
and materials relating to the Sellers (other than that relating to the
KCL Group or any relationship between the KCL Group and any of their
shareholders) which Purchaser has obtained in connection with this
Agreement and with the transactions contemplated herein, except to the
extent disclosure of any such information is required by law in the
opinion of Purchaser's outside counsel or authorized by any such
Seller, as the case may be, or reasonably occurs in connection with
disputes over the terms of this Agreement. In the event that any Party
reasonably believes after consultation with counsel that it is required
by law to disclose any confidential information described in this
Section 10.2 the disclosing Party will (a) provide the other Parties
with prompt notice before such disclosure in order that any Party may
attempt to obtain a protective order or other assurance that
confidential treatment will be accorded such confidential information
and (b) cooperate with the other party in attempting to obtain such
order or assurance.
10.3 COOPERATION. Upon and after the Signing Date, the Parties shall use all
reasonable endeavors to execute and deliver or procure to be done,
executed and delivered all such further acts, deeds, documents,
instruments of conveyance, assignment and transfer and things as may be
reasonably necessary to implement the transfer of the KCL Shares to
Purchaser and to put control of the Companies in the hands of Purchaser
in accordance with the terms and conditions set forth in this
Agreement.
11. NON-COMPETE/NON-SOLICITATION
11.1 Each of the Sellers undertakes (on behalf of itself and each of its
Affiliates (collectively, "RESTRICTED PERSONS")), for the benefit of
Purchaser and for a duration of three (3) years from the Closing Date,
not to compete anywhere in the world directly or indirectly for itself
or any other Person against the KCL Group by the development,
manufacture, marketing or sale of protective gloves, nor to directly or
indirectly acquire or maintain an interest in any business which is in
competition with any of the existing business operations of the KCL
Group. This non-compete undertaking also encompasses the rendering of
advisory or management services to any enterprise competitive with the
Business of the Companies.
11.2 Each of the Sellers undertake to cause each Restricted Person not to
solicit or endeavour to entice away any current or future employee or
senior executive (LEITENDER ANGESTELLTER) of the KCL Group (or any
person who was an employee of the
39
KCL Group at any time during the six-month period immediately preceding
the Closing Date) for a period of three (3) years from the Closing
Date.
11.3 If, at the time of enforcement of this Section 11, a court shall hold
that the duration, scope, geographic area or other restrictions stated
herein are unreasonable under circumstances then existing, the Parties
agree that the maximum duration, scope, geographic area or other
restrictions deemed reasonable under such circumstances by such court
shall be substituted for the stated duration, scope, geographic area or
other restrictions.
11.4 Each Seller recognizes and affirms that in the event of breach of any
of the provisions of this Section 11 by any Restricted Person, money
damages would not in any case be adequate and Purchaser and the KCL
Group would not have an adequate remedy at law. Accordingly, each
Seller agrees (on behalf of itself and each of the other Restricted
Persons) that each of Purchaser and any member of the KCL Group shall
have the right, in addition to any other rights and remedies existing
in their favor, to enforce their rights and the Restricted Persons'
obligations under this Section 11 not only by an action or actions for
damages, but also by an action or actions for specific performance
and/or injunctive relief in order to enforce or prevent any violations
(whether anticipatory, continuing or future) of the provisions of this
Section 11 (including, without limitation, the extension of the three
(3) year non-compete and non-solicitation period by a period equal to
(i) the length of the violation of this Section 11 plus (ii) the length
of any court proceedings necessary to stop such violation). In the
event of a breach or violation by any Seller or any other Restricted
Person of any of the provisions of this Section 11, the running of such
Non-Competition Period (but not of the Restricted Persons' obligations
under this Section 11) shall be tolled with respect to each Restricted
Person during the continuance of any actual breach or violation.
12. NOTICES
All notices and other communications to be given or delivered to any
Party under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally
delivered, sent by reputable overnight courier or transmitted by
facsimile or telecopy, to the addresses and/or telecopy number
indicated below (unless another address is so specified in writing):
If to Sellers:
1. Xxxxxxx Xxxxxxx GmbH
Jahnstra(beta)e 9
D-73235 Weilheim/Teck
for the attention of Xx. Xxxxx Xxxxxxx
and
40
2. TREUCO Treuhand Gesellschaft
Claridenstra(beta)e 25
post-office box 562
XX-0000 Xxxxxx
for the attention of Xx. Xxxxxx Xxxxxx
with copies to:
Holters & Xxxxxx
Xxxxxxxx-xxx-Xxxxx-Xxx. 00-00
00000 Xxxxxxxxx xx Xxxx, Xxxxxxx
Fax: +49 69 - 00 00 00 00
If to Purchaser:
c/o Norcross Safety Products L.L.C.
0000 Xxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx
with a copy to:
Xxxxxxxx & Xxxxx
000 X. Xxxxxxxx Xx.
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, P.C.
Xxxxxxx Xxxxxxx
13. MISCELLANEOUS
13.1 EXPENSES; FEES. All expenses, costs, fees and charges in connection
with the transactions contemplated under this Agreement including
without limitation, legal services, shall be borne by the Party
commissioning the respective costs, fees and charges. Except as set
forth below, each of Purchaser, on the one-hand, and the Sellers on the
other hand, shall be responsible for, as and when due of all transfer,
documentary, sales, use, stamp, notary, registration, conveyance, or
similar transfer Taxes arising out of the sale of the KCL Shares or
otherwise incurred in connection with this Agreement or the
consummation of the transactions contemplated hereby excluding land
transfer Taxes and all official fees charged by the cartel authorities
in connection with the merger clearances required under this Agreement)
and all charges
41
for or in connection with the recording of any document or instrument
contemplated hereby. Notwithstanding anything to the contrary set forth
herein, Purchaser shall be fully responsible for 100% of all land
transfer Taxes and related fees and costs arising in connection with or
as a result of the transactions contemplated hereby and for 100% of all
official fees charged by the cartel authorities in connection with the
merger clearances required under this Agreement.
13.2 ENTIRE AGREEMENT. All Schedules (including, in particular, the
Disclosure Schedules) to this Agreement constitute an integral part of
this Agreement. This Agreement and the Schedules referred to under this
Section 13.2 above comprise the entire agreement between the Parties
concerning the subject matter hereof and supersede and replace all oral
and written declarations of intention made by the Parties in connection
with the contractual negotiations.
13.3 AMENDMENT AND WAIVER. Changes or amendments to this Agreement
(including this Section 13.3) must be made in writing by the Parties or
in any other more restrictive legally required form, if so required. No
waiver of any provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provisions, whether or not similar,
nor shall any waiver constitute a continuing waiver.
13.4 ASSIGNMENT. No Party shall be entitled to assign any rights, claims or
obligations under this Agreement without the written consent of the
other Parties; provided that Purchaser shall be entitled to assign any
of its rights, claims and/or obligations under this Agreement to its
lenders as collateral security, to any Affiliate or to any purchaser of
all or any portion of Purchaser or its Affiliates.
13.5 INTEREST. Interest payable under any provision of this Agreement shall
be calculated on the basis of actual days elapsed divided by 360.
13.6 BANKING DAYS. "BANKING DAYS" (BANKARBEITSTAGE) (excluding, for the
avoidance of doubt, Saturdays) shall be those prevailing in Frankfurt
am Main and Chicago, Illinois.
13.7 BENEFICIARIES. This Agreement shall not grant any rights to, and is not
intended to operate for, the benefit of third parties unless otherwise
explicitly provided for herein.
13.8 HEADINGS. In this Agreement, the headings are inserted for convenience
only and shall not affect the interpretation of this Agreement. Where a
German term has been inserted in quotation marks and/or italics, it
alone (and not the English term to which it relates) shall be
authoritative for the purpose of the interpretation of the relevant
term in this Agreement.
13.9 SET-OFF. No Party, except as provided otherwise herein, shall be
entitled (i) to set-off (AUFRECHNEN) any rights and claims it may have
against any rights or claims any other Party may have under this
Agreement or (ii) to refuse to perform any obligation it may have under
this Agreement on the grounds that it has a right of retention
(ZURUCKBEHALTUNGSRECHT) unless the rights or claims of the relevant
Party claiming a
42
right of set-off (AUFRECHNUNG) or retention (ZURUCKBEHALTUNG) have been
acknowledged (ANERKANNT) in writing by the relevant other Party/Parties
or have been confirmed by final decision of a competent court (GERICHT)
or arbitration court (SCHIEDSGERICHT).
13.10 CURRENCY CONVERSION. Except as set forth otherwise in this Agreement,
any currency conversions shall be determined on the basis of the
exchange rates prevailing on the day on which the respective payments
become due and payable as published in the FRANKFURTER ALLGEMEINE
ZEITUNG under the "Cross Rates" section on such date, or, absent any
quotes on such date, the closest date thereafter, unless stated
otherwise in this Agreement.
13.11 GOVERNING LAW. This Agreement shall be governed by and be construed in
accordance with German substantive law (DEUTSCHES MATERIELLES RECHT).
13.12 ARBITRATION. All disputes arising in connection with this Agreement
shall be finally settled according to the Arbitration Rules of the
German Institution of Arbitration e. V. (DIS) without recourse to the
ordinary courts of law. The place of arbitration shall be
Frankfurt/Germany. If the amount in dispute does not exceed EURO
750,000 which shall be exclusively determined by DIS, the arbitral
court shall consist of one arbitrator who must be qualified to act as
judge in Germany (BEFAHIGUNG ZUM RICHTERAMT). If the amount of a
complaint is increased by the respective plaintiff, thereby exceeding
an amount in dispute of EURO 750,000, or if the defendant raises
counter-claims by way of set-off or counter-suit, thereby exceeding an
amount in dispute of EURO 750,000 before the first oral hearing in
front of the single arbitrator took place, the arbitration court shall
consist of three (3) arbitrators and the single arbitrator appointed
shall serve as chairman. In all other cases the abitral court shall
consist of three (3) arbitrators of which the chairman must be
qualified to act as judge in Germany (BEFAHIGUNG ZUM RICHTERAMT). Each
party shall nominate one arbitrator. The third arbitrator, who will act
as chairman of the arbitral court, shall be appointed by the parties
within three weeks after the appointment of the last of the two
arbitrators appointed by the parties. After expiry of this period
without a chairman having been jointly appointed by the parties, the
two arbitrators appointed by the parties shall appoint a chairman
within further three weeks. In case this does not happen, each party is
authorized to apply to the DIS to appoint the chairman. The arbitration
language shall be English.
13.13 SEVERABILITY. In the event that one or more provisions of this
Agreement shall, or shall be deemed to, be invalid or unenforceable,
the validity and enforceability of the other provisions of this
Agreement shall not be effected thereby. In such case, the Parties
hereto agree to recognize and give effect to such valid and enforceable
provision or provisions which correspond as closely as possible with
the commercial intent of the Parties. The same shall apply in the event
that the Agreement contains any gaps (VERTRAGSLUCKEN).
43
14. LIST OF SCHEDULES
Schedule 1.3 Foreign KCL Subsidiaries Reference Deed
Schedule 1.4 Present Corporate Structure of the KCL Reference Deed
Group
Schedule 2.4 Shareholders' Resolution
Schedule 3.3 Family of Gloves Reference Deed
Schedule 4.1 Sellers' Account Reference Deed
Schedule 5.3 Anti-Trust Filings Reference Deed
Schedule 5.5 (a)(1) Form of Sellers' Certificate Reference Deed
Schedule 5.5 (a)(5) Form of License Agreement Reference Deed
Schedule 5.5 (a)(6) Form of Escrow Agreement Reference Deed
Schedule 5.5 (a)(7) Form of Closing Protocol Reference Deed
Schedule 5.5 (b)(1) Form of Purchaser's Certificate Reference Deed
Schedule 6.1.1 Consent Requirements Reference Deed
Schedule 6.1.3 Shareholder Agreements and similar Reference Deed
agreements
Schedule 6.1.5(a) KCL Financial Statements Reference Deed
Schedule 6.1.5(b) Combined Financial Statements Reference Deed
Schedule 6.1.6 Material Agreements Reference Deed
Schedule 6.1.7 Compliance with Laws Reference Deed
Schedule 6.1.8(a) Intellectual Property Rights Reference Deed
Schedule 6.1.8(b) Intellectual Property Proceedings Reference Deed
Schedule 6.1.9 List of Insurances Reference Deed
Schedule 6.1.10 List of Permits Reference Deed
Schedule 6.1.13 List of Litigation Reference Deed
Schedule 6.1.14 List of Agreements Works Council Reference Deed
Schedule 6.1.15 Subsidies Reference Deed
Schedule 6.1.16 Absence of Facts or Events Reference Deed
Schedule 6.1.17 Real Property/Permitted Encumbrances Reference Deed
Schedule 6.1.19 List of Benefit Plans Reference Deed
Schedule 6.1.21 Affiliate Transactions Reference Deed
Schedule 6.1.22 Environmental Matters Reference Deed
44
Schedule 6.1.24 Undisclosed Liabilities Reference Deed
Schedule 6.1.25 Long Term Liabilities Reference Deed
Schedule 8.3.1 Reserves in the 2002 Accounts Reference Deed
Schedule 9.7 Calculation of Adjusted Net Working Reference Deed
Capital
45
IN WITNESS WHEREOF this Deed including Schedule 2.4 hereto has been read aloud
to the persons appeared and this Notarial Deed including the Schedules hereto
was confirmed and approved by the persons appeared. The persons appeared then
signed this Deed. All this was done on the day here below written in the
presence of me, the Notary Public, who also signed this Deed and affixed my
official seal.
Basel, this 10th day of June 2003 (two thousand and three)
[Seal] /s/ [ILLEGIBLE]
/s/ [ILLEGIBLE]
/s/ [ILLEGIBLE]
/s/ [ILLEGIBLE]
Allg. prot. nr. 57/2003
46
