SHARE PURCHASE AGREEMENT
XXXXXXX/UWATEC
July 11, 1997
SHARE PURCHASE AGREEMENT
between
Xx. Xxxxx Xxxxxx, Xxxxxxxxxxxxx 000, 0000 Xxxxxxx /
Xxxxxxxxxxx
("Seller R")
Xx. Xxxx Xxxxxxx, Xxxxxxxxx 000, 0000 Xxxxxxx /
Xxxxxxxxxxx
("Seller L")
(Sellers R and L are jointly referred to as "Sellers")
Xxxxxxx Beteiligungsgesellschaft mbH,
00000 Xxxxxxxxx-Xxxxxxxx
Xxxxxxx ("Buyer")
and
Xxxxxxx Worldwide Associates Inc.
0000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
X.X.X.
(the "Parent")
WHEREAS Buyer is interested in acquiring all issued and outstanding 500
bearer shares (the "Uwatec Shares") of CHF 100.- par value each of Uwatec
AG ("Uwatec"), Hallwil, Switzerland, a stock company incorporated under
the laws of Switzerland, having a fully paid up stock capital of CHF
50'000.-, and carrying on the business of producing and selling worldwide
diving and marine products under the trademarks "Uwatec" and "Aladin".
WHEREAS all of the shares of Buyer are owned, indirectly, by Parent.
WHEREAS this Agreement replaces all prior agreements and understandings
regarding the sale of the Uwatec Shares by Sellers to Parent (or to a
subsidiary of Parent).
WHEREAS Sellers (acting with respect to 350 Uwatec Shares as legal and
beneficial owners and with respect to 150 Uwatec Shares as legal owners
and fiduciaries/indirect representatives of an undisclosed third party)
are willing to jointly sell to Buyer and Buyer is prepared to purchase
from Sellers the Uwatec Shares, subject to the terms and conditions of
this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Purchase and Sale
Upon the terms and conditions set forth in this Agreement, on the
Closing Date (as defined in Section 3 hereafter), Sellers shall
jointly sell and Buyer shall purchase from the Sellers the Uwatec
Shares.
2. Purchase Price
In consideration for and against physical delivery of the original
share certificates representing all the Uwatec Shares, Buyer shall
pay a purchase price (the "Purchase Price") as follows:
2.1 Fixed Purchase Price
Buyer will pay to Sellers an amount of US$ 33'542'221.-, less the
Excess Inventory Amount (as defined hereafter), less the amount of
any Tax Claims (as defined hereafter) and less the amounts specified
in Subsection 7 (vii) hereafter (the "Fixed Purchase Price").
For purposes of this Agreement:
a) "Excess Inventory Amount" shall mean the aggregate value of the
Excess Inventory calculated on the basis of the values specified
in Exhibit 1. "Excess Inventory" means the twenty five (25)
amountwise highest (in terms of their values set forth in
Exhibit 1) stock keeping units ("SKU") contained in Uwatec's in-
ventory in excess of the inventory required to support
production, sales and warranty replacements of Uwatec for a
period of one (1) year after the Closing Date. The Excess
Inventory (and the Excess Inventory Amount) will be established
by KPMG Fides Peat and calculated as of the end of the month
prior to the Closing Date on a product by product (i.e., SKU by
SKU) basis based on Uwatec's historical usage of such inventory
items in calendar year 1996. In the absence of a manifest error,
the determination and calculation by KPMG Fides Peat of the
Excess Inventory and Excess Inventory Amount shall be binding
upon the parties.
b) "Tax Claims" shall have the meaning attributed to this term in
Subsection 7 (i).
Any amounts referred to in this Subsection 2.1 which are denominated
in Swiss Francs (CHF) shall be converted into US Dollars (US$) at the
spot exchange rate prevailing two banking days prior to the Closing
for the purchase of CHF against US$ as quoted by Swiss Bank
Corporation.
2.2 Contingent Purchase Price
In addition to the Fixed Purchase Price, Buyer will pay an earnout
calculated as follows (the "Contingent Purchase Price"): (i) in the
event Uwatec's pretax profit (as defined in Exhibit 2), on a calendar
year basis, exceeds CHF 10'775'000.- in 1997, then Buyer shall pay
the Sellers (a) US$ 0 to US$ 4'800'000.- pro rata for Uwatec's 1997
pretax profit between CHF 10'775'000.- and CHF 14'367'000.- and (b)
twenty-five percent (25%) of Uwatec's 1997 pretax profit (as defined
in Exhibit 2) in excess of CHF 14'367'000.- reduced by the applicable
Swiss statutory taxes at rates in 1997 on pretax profits above the
threshold; (ii) in the event Uwatec's pretax profit (as defined in
Exhibit 2), on a calendar year basis, exceeds CHF 12'703'000.- in
1998, then Buyer shall pay the Sellers (a) US$ 0 to US$ 3'840'000.-
pro rata for Uwatec's 1998 pretax profit between CHF 12'703'000.- and
CHF 16'937'000.- and (b) twenty-five percent (25%) of Uwatec's 1998
pretax profit (as defined in Exhibit 2) in excess of CHF 16'937'000.-
reduced by the applicable Swiss statutory taxes at rates in 1998 on
pretax profits above the threshold; (iii) in the event Uwatec's pre-
tax profit (as defined in Exhibit 2), on a calendar year basis, ex-
ceeds CHF 14'627'000.- in 1999, then Buyer shall pay the Sellers (a)
US$ 0 to US$ 3'360'000.- pro rata for Uwatec's 1999 pretax profit be-
tween CHF 14'627'000.- and CHF 19'503'000.- and (b) twenty-five
percent (25 %) of Uwatec's 1999 pretax profit (as defined in Exhibit
2) in excess of CHF 19'503'000.- reduced by the applicable Swiss
statutory taxes at rates in 1999 on pretax profits above the
threshold; and (iv) in the event of Uwatec's pretax profit during
each of the calendar years 1997, 1998 and 1999 shall have equalled or
exceeded CHF 14'367'000.-, CHF 16'937'000.- and CHF 19'503'000.-
respectively, then Buyer shall pay the Sellers an additional US$
2'000'000.-.
2.3 Payment for Excess Inventory
In addition to the Fixed and Contingent Purchase Price, Buyer will
pay for Excess Inventory subject to the terms stipulated in
Subsection 2.4 c).
2.4 Payment Terms
a) Payment of the Fixed Purchase Price shall be made as follows:
(i) The Fixed Purchase Price minus US$ 10'000'000.- shall be
paid in cash on the Closing Date, together with interest
thereon accruing at the rate of six percent (6%) per annum
from March 26, 1997, to the Closing Date.
(ii) The remainder of the Fixed Purchase Price in the amount of
US$ 10'000'000.- shall be converted into Swiss Francs at
the spot exchange rate on the Closing Date quoted by Swiss
Bank Corporation for the sale of US Dollars against Swiss
Francs (the "Exchange Rate") and shall become due and
payable as follows:
- the Swiss Francs equivalent of US$ 2'000'000.-,
converted at the Exchange Rate, on the third (3rd)
anniversary of the Closing Date;
- the Swiss Francs equivalent of US$ 8'000'000.-,
converted at the Exchange Rate, on January 1, 2002;
provided, however, that such payment shall be
conditional upon perfection by Sellers of a pledge
(the "Pledge") over assets acceptable to Buyer (in its
sole discretion) having an aggregate market value
which under international banking standards is
sufficient to fully secure a loan in the principal
amount of US$ 2'000'000.-, which Pledge (i) shall
serve as security for any and all claims which Buyer
may have against Sellers arising out of this Agreement
and (ii) shall be completely released by Buyer on
December 31, 2011.
From March 26, 1997, the remainder of the Fixed Purchase
Price shall bear interest at the rate of six percent (6%)
per annum, payable annually in arrears.
As security for the remainder of the Fixed Purchase Price
minus any claims of Buyer under this Agreement against
Sellers, Buyer will deliver to Sellers on the Closing Date
a guarantee from a prime international bank for a maximum
amount of the Swiss Francs equivalent of US$ 10'000'000.-,
which maximum amount shall be reduced to the Swiss Francs
equivalent of US$ 8'000'000.- on the third (3rd)
anniversary of the Closing Date. The guarantee shall
provide that drawings thereunder may be made against
delivery to the bank of a final judgment or a statement
signed by both parties, specifying the amount, if any, owed
by Buyer to Sellers under this Agreement. The guarantee
shall expire on January 31, 2002, except if on or before
such date legal action has been instituted pursuant to
Section 13 by Sellers against Buyer for amounts allegedly
owed by Buyer to Sellers under this Agreement.
b) Payment of the Contingent Purchase Price, if any, shall be made
as follows:
(i) With respect to any amounts payable pursuant to Subsections
2.2 (i), (ii) and/or (iii) above for the calendar years
1997 through 1999, within forty-five (45) days after the
end of each such calendar year, accompanied by a statement
of which notice shall be given to both Sellers establishing
the factors on which the calculation of the Contingent
Purchase Price for such year is based.
(ii) With respect to the amount payable pursuant to Subsection
2.2 (iv) above, on the third (3rd) anniversary of the
Closing Date.
c) Payments for the Excess Inventory shall be made as follows:
(i) At the end of the month following the first (1st)
anniversary of the Closing Date, and then at the end of
every sixth (6th) month thereafter, Buyer will pay an
amount equal to the aggregate value (calculated on the
basis of the values specified in Exhibit 1) of an
additional six (6) month supply of the Excess Inventory
items (determined on the basis of actual usage during the
preceding six (6) month period); provided, however, that
the prices to be paid by Buyer for inventory pursuant to
this Subsection (i) will be reduced if the market price of
the products is lower than their carrying value determined
on the basis of Exhibit 1. Such payments for Excess
Inventory will be made until Buyer has paid the entire
Excess Inventory Amount (reduced by price reductions as
stated in the preceding sentence) or until the remaining
items contained in the Excess Inventory are determined by
Buyer in its reasonable judgment to be obsolete.
(ii) Each payment by Buyer for Excess Inventory items shall
include interest on such payment accruing at the rate of
six percent (6%) per annum from March 26, 1997, until paid.
In addition, each payment shall be accompanied by a state-
ment of which notice shall be given to both Sellers estab-
lishing the factors on which the calculation is based.
3. Closing
The Closing shall take place as soon as possible after all of the
conditions precedent pursuant to Section 7 hereof have been satisfied
on a date to be mutually agreed upon (the "Closing Date"), which date
shall not be later than thirty (30) business days after Uwatec has
obtained binding confirmations and/or assessments from the tax
authorities pursuant to Subsection 7 (i).
4. Representations and Warranties
Sellers hereby jointly and severally represent and warrant to Buyer
that on March 26, 1997 and continuing through and including the
Closing Date, the following shall be true and accurate:
4.1 The Shares
(i) The Uwatec Shares constitute all of the capital stock of Uwatec.
They are validly issued and fully paid in.
(ii) The Sellers have validly acquired and maintained ownership in
the Uwatec Shares free of all pledges, security interests,
liens, charges, encumbrances, claims and options of whatever na-
ture. The Sellers have full power and authority to dispose
without any restriction of all rights in connection with the
Uwatec Shares, in particular to sell and transfer the Uwatec
Shares in accordance with the terms and conditions of this
Agreement.
4.2 Uwatec
Uwatec is a validly existing Swiss stock company and no resolutions,
agreements or actions are pending for a voluntary or involuntary
dissolution of Uwatec or which would otherwise affect the continued
existence of Uwatec or its ability to carry on its business of devel-
oping, producing and selling diving and marine products.
4.3 The Subsidiaries
(i) As of the Closing Date Uwatec owns, directly or indirectly, such
shares or interests in such companies as listed in Exhibit 3
(the "Subsidiaries"). The identity and share ownership of each
shareholder of the Subsidiaries other than Uwatec is also listed
in Exhibit 3. Uwatec holds the shares or interest in the
Subsidiaries free of all pledges, security interests, liens,
charges, encumbrances, claims and options of whatever nature.
(ii) Each Subsidiary is validly existing under the laws under which
it was incorporated and no resolutions, agreements or actions
are pending for a voluntary or involuntary dissolution of any
Subsidiary or which would otherwise affect any subsidiary's
existence or its ability to continue to do business.
Uwatec and its Subsidiaries are herein referred to as the "Uwatec
Entities".
4.4 Distributions
From January 1, 1996 through the Closing Date, (i) neither Uwatec nor
any of the other Uwatec Entities has or will declare, set aside or
pay any dividend or other distribution in respect of its capital
stock, redeem, purchase or otherwise acquire any of its capital
stock, or any security relating thereto, or make any other payment to
any of its shareholders as shareholder; and (ii) the royalty rates
paid by any Uwatec Entity to any other entity directly or indirectly
owned by one or more of the Sellers have not and shall not be
adjusted upwards.
4.5 Corporate Organization
(i) All facts regarding the Uwatec Entities which have to be
registered are correctly registered in the Register(s) of
Commerce. The excerpts of the Register of Commerce (or
equivalent credentials) listed in Exhibit 4 and the articles of
incorporation listed in Exhibit 5 regarding the Uwatec Entities
are complete and correct and truly reflect their corporate
status as of the signing date.
(ii) The Uwatec Entities have not granted powers of attorney to any
persons, except for the persons registered in the Register of
Commerce and the persons listed in Exhibit 6.
(iii) Neither the board members nor the shareholders nor the managers
of any of the Uwatec Entities have passed any resolutions
outside the ordinary course of business which have not been
disclosed to Buyer prior to the signing of this Agreement.
4.6 Compliance with Applicable Laws / Absence of Claims
(i) The Uwatec Entities have at all times complied and are in
compliance in all respects with the laws and regulations
applicable to them and their business. The Uwatec Entities have
not violated, and are not in default with respect to, any judg-
ment, order, writ, injunction, settlement agreement or decree
of, or any permit, license or other authority from, any court,
department, agency or instrumentality which in any way concerns
or may affect the Uwatec Entities or their business.
(ii) The products manufactured by the Uwatec Entities have in all
material respects been manufactured in conformity with
applicable laws, contractual commitments and all express or
implied warranties.
(iii) There are no claims asserted, threatened or pending before any
court, arbitral tribunal or agency against the Uwatec Entities
including, but not limited to, claims based on product warran-
ties or product liability, contractual, quasi-contractual or
tort claims, as well as claims in connection with labor matters,
except for the claims for which provisions have been made and
which are listed in Exhibit 7.
(iv) The Uwatec Entities' business was conducted in compliance with
all applicable environmental laws. No hazardous substance,
waste, pollutant or other substance regulated under any
applicable environmental or waste disposal law is present on, in
or under any real property owned or leased by the Uwatec En-
tities.
(v) Neither the Uwatec Entities nor the Sellers have knowledge of
circumstances that could, for reasons of environment protection,
give raise to governmental claims for preventive, reparative,
punitive or other remedies, except as those facts described in
Exhibit 8.
(vi) No current environmental law imposes standards or requirements
that may require the Uwatec Entities to make capital
expenditures in excess of CHF 10'000.- aggregate to comply with
such standards or requirements.
(vii) There have been no actual or threatened strikes or labor
disputes against or affecting the Uwatec Entities for the last
three years, and none are expected. The Uwatec Entities have not
had any mass layoffs or plant closings for the last three years.
(viii) The Uwatec Entities or Sellers are not involved in any court or
administrative proceedings, nor are any such proceeding
threatened against them, except for the proceedings listed in
Exhibit 7.
(ix) With respect to the legal disputes between Uwatec and Xxxxxxx
Consulting, Inc. (the "Xxxxxxx Litigation"), listed in Exhibit
7, Sellers warrant that such litigation will be resolved in a
way acceptable to Buyer within three years of the Closing Date
and that Uwatec in connection with such litigation will not be
exposed to losses (including lost profits from prohibition of
sales of future products), damages, expenses (including all
legal fees and expenses incurred or paid by Uwatec on or after
January 1, 1997) and payment obligations (pursuant to final
judgment or settlement) in excess of the aggregate amount of US$
500'000.-. If Uwatec cannot resolve the Xxxxxxx Litigation in a
way acceptable to Buyer on or before January 1, 2002 the amount
of the Pledge pursuant to Subsection 2.4 a) (ii) shall be in-
creased to US$ 4'000'000.- until resolution of the Xxxxxxx
Litigation.
4.7 Financial Statements
(i) Attached hereto are (i) Uwatec's unaudited consolidated xxxxx-
cial statements, prepared by KPMG Fides Peat, as of September
30, 1996, including a profit and loss statement covering the
period from January 1, 1996 through September 30, 1996 (Exhibit
9), (ii) Uwatec's unaudited and unconsolidated financial
statements as of September 30, 1996 (Exhibit 9a), (iii) the Sub-
sidiaries' unaudited and unconsolidated financial statements as
of September 30, 1996 (Exhibit 9a).
(ii) The financial statements referred to in subparagraph (i) (the
"Financial Statements") are complete and correct and were pre-
pared in conformity with United States generally accepted ac-
counting principles; they fairly present the financial position
and the results of the operations of the Uwatec Entities.
(iii) The Uwatec Entities are not subject to any liability or
obligation (actual, contingent or unasserted), except for
liabilities and obligations
- recorded as a liability or a provision in the Financial
Statements; and/or
- arising or incurred in the ordinary course of business
since the respective balance sheet dates of the Financial
Statements.
(iv) The Uwatec Entities hold good and unencumbered title to the
assets listed in the Financial Statements and all relevant
risks, depreciations and losses are accounted for by sufficient
write-offs and provisions;
(v) Since the respective balance sheet dates of the Financial
Statements, there has not been any material adverse change in
the business, financial conditions or operations of the Uwatec
Entities.
4.8 Contracts
(i) Exhibit 10 attached hereto provides a true, accurate and
complete list of oral and written contracts entered into by the
Uwatec Entities (except for contracts regarding the sale by the
Uwatec Entities of their products in the ordinary course of
their business) which are in full force and effect and which are
yet to be performed in full or in part by either of the contract
parties, including, but not limited to, License Agreements,
Know-How Development Agreements (including, but without
limitation, the oral and written agreements with Dynatron AG and
Messrs. Mock and Voellm), Distributorship Agreements, Debt
Agreements, Employment Contracts and Lease Agreements.
(ii) All purchases of inventory items and/or other supplies by any of
the Uwatec Entities after September 30, 1996, have been (and
through the Closing Date will be) made at prevailing competitive
market prices, and no open purchase orders, agreements or other
arrangements with third parties (other than those listed in
Exhibit 11) or with affiliates exist regarding the purchasing of
inventory items and/or other supplies or crediting any other
significant commitments upon any of the Uwatec Entities.
(iii) Exhibit 12 lists as of February 1, 1997, the ten (10) main
suppliers and ten (10) main customers of the Uwatec Entities
(taken on a consolidated basis). None of these suppliers or
customers have broken off or interrupted, nor have threatened to
break off or interrupt, relations with the Uwatec Entities and
none of these customers have reduced or threatened to reduce
their orders significantly.
4.9 Tax Matters
All tax returns required to be filed by the Uwatec Entities with any
competent tax authority have been prepared in accordance with the
relevant rules of tax law and have been duly filed. All taxes
invoiced and/or assessed based on such returns have been paid or
accrued in the Financial Statements of the Uwatec Entities. The
provisions for taxes in the Closing Balance Sheet (as defined in
Subsection 7 (iii) hereafter) will be sufficient for all unpaid taxes
of any kind which are, will or might be assessed in respect of the
business and any transactions (including taxable profit
distributions) of the Uwatec Entities until the Closing Date. There
are no open issues known to the Sellers relating to any tax return
that, if determined adversely to Uwatec or the Subsidiaries, would
result in the assessment of additional taxes, interest or penalties.
4.10 Employees and Benefit Plans
(i) Exhibit 13 which lists all employees of Uwatec and of each
Subsidiaries with their annual salaries and employment benefits
(including pension plans) is complete and correct.
(ii) The Uwatec Entities are not subject to any collective bargaining
agreements, and there is no organizational effort presently made
or threatened by any labor union with respect to employees of
Uwatec Entities.
(iii) The Uwatec Entities have through the date of this Agreement met
all obligations to employees and complied with all applicable
laws respecting employment and employment practices and
conditions of employment and wages and hours, and are not
engaged in any unfair labor practice.
4.11 Transactions with Related Parties and Board Members
(i) Uwatec Entities are not party to any transactions or proposed
transactions with the Sellers, the board members or shareholders
of any of the Uwatec Entities, or any person who is related to
the Sellers or the board members, except for the transactions
contemplated by the Agreements annexed hereto as Exhibit 14
(Employment Agreement with Seller R) and Exhibit 15 (Lease
Agreement with Sellers R and L). All directors' fees, salaries,
bonuses and any other benefits to shareholders and board members
of Uwatec Entities or Sellers as well as all social security
payments due thereon have been duly paid.
(ii) Neither one of the Sellers directly or indirectly controls or
owns any interest in Dynatron AG, Zurich.
4.12 Corporate Property
(i) All items of inventory of the Uwatec Entities are owned by the
Uwatec Entities and are of quality and quantity usable and
saleable by the Uwatec Entities in the ordinary course of
business within one year, except those listed in Exhibit 1 as
Excess Inventory.
(ii) The Uwatec Entities' use of, and all improvements on the real
property which they lease comply with all applicable zoning,
environmental and similar restrictions.
(iii) Exhibit 16 contains a complete and correct list of all the
Uwatec Entities' intellectual property rights (in particular
patents, trademarks and other rights regarding products and
business identifiers, rights regarding design and models,
copyrights, know-how) together with the respective registrations
or registration preparations and/or contractual agreements. The
Uwatec Entities have undertaken all steps necessary for
preservation and acquisition of the intellectual property rights
necessary for the operation of the Uwatec Entities' business.
(iv) After signing and executing this Agreement, the Uwatec Entities
will continue to dispose of the facilities, rights and
governmental or regulatory approvals and permissions that are
necessary to continue the business of the Uwatec Entities to the
same extent as prior to the execution of this Agreement.
5. Covenants
5.1 Conduct of Business
From January 1, 1996, through the Closing Date, except as expressly
provided in this Agreement or as Buyer shall otherwise consent in
writing, which consent shall not be unreasonably withheld, Sellers
will (i) cause the business to be conducted only in the ordinary
course as currently conducted; and (ii) use their reasonable efforts
to preserve intact the business organization and reputation of the
business, keep available the services of the employees of Uwatec and
the Subsidiaries and preserve the relationships with suppliers,
customers and others having business dealings with the Uwatec Enti-
ties. If at any time during such period Sellers become aware of any
material adverse change in the business, financial condition or
results of operations of Uwatec and the Subsidiaries, Sellers shall
promptly notify Buyer with respect thereto. In addition, except as
set forth in this Section or otherwise expressly permitted by the
terms of this Agreement, Sellers shall not permit Uwatec or any of
the Subsidiaries to do any of the following without the prior written
consent of Buyer:
(i) amend its Certificate of Incorporation or Bylaws (or comparable
governing documents);
(ii) declare or pay any dividend or make any other distribution to
shareholders whether or not upon or in respect of any shares of
capital stock;
(iii) redeem or otherwise acquire any shares of its capital stock or
issue any capital stock or any option, warrant or right relating
thereto or any securities convertible into or exchangeable for
any shares of capital stock;
(iv) adopt or amend in any respect any benefit plan or collective
bargaining agreement, except as required by law;
(v) grant to any executive officer or employee any increase in
compensation or benefits, except in the ordinary course of
business consistent with past practice or as may be required
under existing agreements;
(vi) incur or assume any liabilities, obligations or indebtedness for
borrowed money or guarantee any such liabilities, obligations or
indebtedness, other than in the ordinary course of business
consistent with past practice;
(vii) cancel any indebtedness or waive any claims or rights;
(viii) except for transactions contemplated by this Agreement and/or
intercompany transactions in the ordinary course of business,
pay, loan or advance any amount to, or sell, transfer or lease
any of its assets to, or enter into any agreement or arrangement
with, Sellers or any of its affiliates (other than the Uwatec
Entities); provided, however, that Buyer approves and hereby
gives consent to the sale of the sailing ship "Xxxxxxxxxxx B"
for a net amount of US$ 3'200'000.- (after payment of a
commission of US$ 400'000.-) against full release of the loan
from ANZ Grindlays Bank Ltd. in the amount of US$ 3'200'000.-.
(ix) make any change in any method of accounting or accounting
practice or policy;
(x) acquire by merging or consolidating with, or by purchasing any
of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business or-
ganization or division thereof or otherwise acquire any assets
other than in the ordinary course of business;
(xi) make or incur any capital expenditures that, in the aggregate,
are in excess of CHF 500'000.-;
(xii) sell, lease or otherwise dispose of any of its assets, except in
the ordinary course of business consistent with past practice;
(xiii) enter into any lease of real property, except any renewals of
existing leases in the ordinary course of business; or
(xiv) agree, whether in writing or otherwise, to do any of the
foregoing.
5.2 Access to Information
During the period prior to the Closing, Sellers shall give to Buyer
and its accountants, counsels and other representatives upon
reasonable written notice access during normal business hours to all
the properties, books, contracts, documents, commitments, tax returns
and records of the business, and, during such period, shall furnish
promptly to Buyer any information concerning the business as Buyer
may reasonably request. Buyer acknowledges that any information being
provided to it or its representatives by Sellers pursuant to this
Agreement is subject to strict confidentiality.
5.3 Legal Requirements
Each of Buyer and Sellers will use its best efforts and take all
reasonable actions that may be imposed on it or its subsidiaries with
respect to the Closing Date and will promptly cooperate with and
furnish information to each other and to other parties in connection
with any such legal requirements.
5.4 Covenant not to Compete and Confidentiality
The Sellers will not compete in the compass, diving and marine
product markets with the products of Buyer and Buyer's affiliates
(including the Uwatec Entities), directly or indirectly (including,
but not limited to, as employees, principals, shareholders, partners,
entrepreneurs, etc.), at any location in the world, for a period of
five (5) years following the Closing Date, except for the manufactur-
ing and sale of devices that detect and signal movement of boating
anchors when such anchors are in use. The Sellers will maintain the
confidentiality of all information they have or obtain relating to
the Uwatec Entities' products, processes and other proprietary infor-
mation.
Each Seller who is in breach of this non-compete and confidentiality
obligation, shall be obligated to pay Buyer a contractual penalty in
the aggregate amount of the payments such Seller received under this
Agreement. Buyer may, in addition to the penalty, request (i)
continued adherence by each Seller to the non-compete and confiden-
tiality obligation and (ii) compensation for further damages.
6. Buyer's Remedies in Case of Breach
In the event of a breach of any representation and warranty contained
in Section 4 or of any covenant contained in Section 5 of this
Agreement, Sellers shall jointly indemnify, hold harmless and defend
the Buyer from and against any and all claims, losses, liabilities,
costs or damages arising out of, relating to or based upon such
breach pursuant to the following provisions:
6.1 Prerequisites for Remedies
(i) Buyer has no inspection duties.
(ii) Buyer shall give notice to Sellers of any breach within six
months after discovery. Buyer shall provide to Sellers all
documents which may be relevant for considering the breach.
(iii) In case of a breach, Buyer shall have the remedies pursuant to
Subsection 6.2 (i), (ii) and (iii), irrespective of whether
Sellers were negligent or not.
(iv) Sellers shall have the opportunity to defend or compromise
third-party claims which do or might constitute a breach.
6.2 The Remedies
(i) Specific Performance
(a) Buyer may require Sellers to establish at Sellers' cost the
situation which would exist without the breach. Buyer has
the right (but no obligation), after consultation of
Sellers, to establish this situation on behalf of and at
the Sellers' risk and expense.
(b) If the Sellers fail to cure the breach pursuant to
Subsection 6.2 (i) (a) within reasonable time, but within
three months after Buyers' notification at the latest,
Buyer may elect to reduce the Purchase Price pursuant to
Subclause (ii) hereafter or to cure the breach on behalf of
and at Sellers' risk and expense without further ado.
(c) If it is only partially possible to cure the breach, Buyer
may, in addition, reduce the Purchase Price in so far as
there remains a reduction in value.
(ii) Reduction of Purchase Price
Buyer may alternatively claim a reduction of the Purchase Price
by an amount (the "Reduction Amount") which corresponds to the
reduction in value of the Uwatec Shares caused by the breach,
provided that such reduction in value shall be deemed to be
equal to the aggregate amounts of losses, liabilities, damages,
costs, taxes, duties, penalties, expenditures and expenses which
Buyer and/or the Uwatec Entities incur as a result of the
breach. The Reduction Amount shall be paid by Sellers, at
Buyer's election, either to Buyer or to that Uwatec Entity which
was directly affected by the breach; provided, however, that as
long and to the extent as the Purchase Price is not fully paid,
the Reduction Amount shall be settled by way of set-off against
the Purchase Price.
(iii) Recission of Agreement
Buyer may alternatively rescind this Agreement if (a) the breach
occurs before the Closing or (b) if the breach is of such a
nature that Buyer cannot in good faith be expected to be bound
by the Agreement. If the Reduction Amount pursuant to Subclause
(ii) above or the costs to cure the breach pursuant to Subclause
(i) exceed the Purchase Price, Buyer shall only have the remedy
of recission of this Agreement. In case of recission, Buyer
shall transfer back to Sellers, without any warranties or
liabilities whatsoever, the Uwatec Shares and Sellers shall
repay to Buyer all payments of Purchase Price, including inter-
est thereon, received from Buyer until the date of recission.
Moreover, Buyer shall be released from any and all further
obligations pursuant to this Agreement.
(iv) Damages
Buyer's election to exercise one of the above remedies does not
preclude it from claiming damages in case the breach was caused
by Sellers' negligence or willful intent.
6.3 Statute of Limitations
(i) Buyers' remedies for a breach are subject to a statute of
limitations period of three years since the Closing Date. This
statute of limitations shall not apply to any claims for
breaches with respect to which notice has been given to Sellers
pursuant to Subsection 6.1 (ii) before the third anniversary of
the Closing Date.
(ii) Such statute of limitations does not apply to Buyer's remedies
in case of a breach relating to the warranties regarding the
Xxxxxxx Litigation (Subsection 4.6 (ix)) and regarding tax
claims (Subsections 4.9 and 7 (i) hereof). In these cases the
statute of limitations expires on December 31, 2011.
7. Conditions Precedent to Closing
On the Closing Date, the following conditions shall have been
satisfied:
(i) Uwatec shall have obtained binding confirmations and assessments
from (i) the Swiss Federal Withholding Tax Authorities and (ii)
the competent cantonal (and/or federal) authorities establishing
that the aggregate amount of all unpaid or pending withholding
tax or corporate income tax liabilities or claims, if any, in
connection with (i) Uwatec's business operations until December
31, 1996 and (ii) the transfers of assets pursuant to
Subsections 7 (vii) and (viii) (the "Tax Claims"), does not
exceed the Fixed Purchase Price before deduction of the Tax
Claims.
(ii) Buyer shall have completed its due diligence review of the
Uwatec Entities' business and financial statements for the
fiscal years ended December 31, 1995 and 1996, including (i) an
audit by KPMG Fides Peat of the Uwatec Entities' financial
statements for the year ended December 31, 1996, (ii) a final
report by KPMG Fides Peat as of September 30, 1996, and until
the Closing Date no facts shall have been revealed which in the
reasonable judgment of Buyer materially and negatively affect
the financial condition and business perspectives of the Uwatec
Entities.
(iii) Uwatec shall have delivered, at its own expense, an audited
consolidated balance sheet establishing, as of the last day of
the calendar month preceding the Closing Date, that the xxxxxxx-
dated financial position of the Uwatec Entities has not worsened
since the date of the most recent audited Financial Statements
and that the consolidated net equity amounts to, in the minimum,
CHF 6'185'950.- (the "Closing Balance Sheet"). The Closing Bal-
ance Sheet shall be established according to the same principles
as the Financial Statements, shall be audited by KPMG Fides Peat
and shall be accompanied by a statement from Sellers confirming
that no material change occurred between the date of the Closing
Balance Sheet and the Closing Date.
(iv) Sellers shall have delivered a written confirmation stating that
the warranties and representations pursuant to Section 4 are
truth and accurate as of the Closing Date and that the warran-
ties pursuant to Subsection 4.7 equally apply to the Closing
Balance Sheet.
(v) Uwatec shall have entered into a lease agreement regarding the
premises in Hallwil substantially in the form of Exhibit 15
hereto and clearance shall have been received for such lease
agreement under the Swiss Law on Acquisition of Real Property by
Foreigners.
(vi) Uwatec shall have entered into a new employment agreement with
Seller R substantially in the form of Exhibit 14 hereto.
(vii) Uwatec shall have sold and validly transferred to the respective
purchasers the Rolls Royce automobile for not less than CHF
52'000.-, the land in Hallwil for not less than CHF 1'328'000.-
and the tire pressure sensor patent for CHF 300'000.-; provided,
that Uwatec shall receive full payment in cash for said sales at
the Closing simultaneously with the payment of the Purchase
Price by Buyer. For this purpose Sellers hereby instruct Buyer
and Buyer hereby confirms such instruction to Uwatec, if and
when the Closing takes place, to pay the amount of CHF
1'680'000.- directly to Uwatec.
(viii) Uwatec shall have acquired all the shares of Uwaplast AG,
Biberist, for CHF 300'000.- .
(ix) Those directors of Uwatec and its Subsidiaries which Buyer shall
indicate to Sellers no later than 30 days prior to Closing have
delivered their resignations effective the Closing Date.
(x) New Agreements with Dynatron AG, Zurich, (and/or Messrs. Mock
and Voellm), shall have been concluded in the English language,
in form and substance satisfactory to the Buyer.
If any of the above conditions shall not be satisfied within thirty
(30) business days after Uwatec has obtained binding confirmations
and assessments from the tax authorities pursuant to Subsection 7
(i), the parties shall no longer be bound by this Agreement, except
if the parties mutually agree in their sole discretion to extend the
Closing Date pursuant to Section 3.
8. Assumption of Liabilities by Sellers
Sellers hereby assume the following liabilities of Uwatec and its
Subsidiaries:
(i) any liabilities for taxes and assessments, bad debts, excess or
obsolete inventory, and/or those arising out of product warranty
and product return (in excess of historical warranty and return
rates in 1996), product design or product manufacturing on
products produced, distributed and/or sold prior to the Closing
Date, in each case in excess of the provision for such li-
abilities on the Closing Balance Sheet; and/or
(ii) any liabilities not fully recorded and/or accrued on the Closing
Balance Sheet; and/or
(iii) all losses, damages, expenses (including legal fees and
expenses) and payment obligations of Uwatec arising out of the
Xxxxxxx Litigation in excess of an aggregate amount of US$
500'000.- (see Subsection 4.6(ix)).
9. Repayment of Loans from Sport Investment Holdings Ltd.
Within one (1) week after the Closing Date, Uwatec shall repay and
cause the Subsidiaries to repay the total amount (principal and
accrued interest) of loans outstanding from the Uwatec Entities to
Sport Investment Holdings Ltd. as set forth in the consolidated
financial statements pursuant to Subsection 4.7(i)(i), plus interest
thereon at the contractual interest rate (5% - 7,5%) from October 1,
1996 until payment.
10. Uwatec's Right of First Refusal
Uwatec shall have a right of first refusal with respect to all
technology and know-how which Sellers have developed or will develop
(the "Technology") in the field of diving and marine products, except
for devices that detect and signal movement of boating anchors,
subject to the following terms and conditions:
(i) If and when Seller R intends to sell or otherwise dispose of
Technology which he partly or fully developed or will develop
until two years after termination of his employment with Uwatec
or until five years after the Closing Date, whichever occurs
later, he shall first offer such Technology to Uwatec for a
price which is equal to the documentable and reasonable costs of
development.
(ii) If Seller L intends to sell or otherwise dispose of Technology
which he partly or fully developed until the Closing Date, he
shall first offer such Technology to Uwatec for a price which is
equal to the documentable and reasonable costs of development.
Uwatec's right of first refusal pursuant to this Section 10 does not
in any way limit or supersede Sellers' covenant not to compete
pursuant to Subsection 5.4 hereof.
11. Miscellaneous
(i) Amendment and Modification
The parties to this Agreement may amend, modify and supplement
this Agreement in such manner and may be mutually agreed upon by
the parties in writing.
(ii) Expenses
Unless stated otherwise in this Agreement, each party shall be
responsible for and pay the accounting and legal fees and other
expenses incurred by it in connection with this Agreement.
(iii) Notices
All notices, requests, demands and other communications required
or permitted hereunder, shall be in writing and shall be deemed
to have been duly given and delivered, if addressed and sent by
courier, mail or telefax to the addresses indicated on the first
page hereof.
(iv) Additional Documents
The parties to this Agreement each agree to execute and file or
deliver any and all additional documents or instruments
reasonably requested which are necessary or appropriate to
consummate the transactions contemplated herein.
(v) Financial Statements
Buyer shall provide to each of the Sellers quarterly financial
statements of Uwatec from the Closing Date through and including
the calendar year 1999.
(vi) Severability
The parties agree that if any provision of this Agreement shall
under any circumstances be deemed invalid or inoperative, the
Agreement shall be construed with the invalid or inoperative
provision deleted and the rights and obligations of the parties
shall be construed and enforced accordingly.
(vii) Assignment
Neither this Agreement nor any of the rights or obligations
hereunder shall be assigned by any of the parties hereto without
the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement will be binding upon, inure
to the benefit of and be enforceable by the parties and their
respective successors and assigns.
(viii) Parent unconditionally guarantees the full and prompt payment
and performance of the obligations of Buyer under Section 2.
(ix) This Agreement replaces and supersedes any prior agreements and
understandings of the parties regarding the subject matter of
this Agreement.
12. Governing Law
The present Agreement and all rights and obligations arising out of
or in connection with it shall be governed by Swiss internal law
(ignoring principles of conflict of law) with the exclusion of the
Vienna Convention on International Sale of Goods dated April 11,
1980.
13. Arbitration
All disputes arising out of or in connection with the present
Agreement including, but not limited to, its conclusion, binding
effect, amendments and termination shall be resolved, to the
exclusion of the ordinary courts, by an arbitral tribunal by three
arbitrators in accordance with the International Arbitration Rules of
the Zurich Chamber of Commerce. Each of the parties, Buyer and
Parent on the one hand and Sellers on the other hand, shall have the
right to nominate one arbitrator and the arbitrators so nominated
shall elect the chairman of the arbitral tribunal. If the party
appointed arbitrators fail to agree within 20 days on a chairman, the
President of the Zurich Chamber of Commerce shall appoint the
chairman. The language of the arbitral procedures shall be English
and the arbitral tribunal shall have its seat in Zurich.
The decision of the arbitral tribunal shall be final and the parties
waive all challenge of the award in accordance with Article 192 Swiss
Private International Law Statute.
Place and Date: Zurich, July 11, 1997
The Sellers:
/s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
/s/ Xx. Xxxx Xxxxxx
Xx. Xxxx Xxxxxx
(on behalf of Xxxx Xxxxxxx)
Uwatec AG:
(for purposes of Sections 7(vii) and 10)
/s/ Xxxxx Xxxxxx /s/ Xx. Xxxx X. Xxxxxx
Xxxxx Xxxxxx Xx. Xxxx X. Xxxxxx
(with power of attorney)
Place and Date: Zurich, July 11, 1997
The Buyer: Xxxxxxx Beteiligungsgesellschaft mbH
/s/ Xxxxxxx Hell
Xxxxxxx Hell
Place and Date: Zurich, July 11, 1997
The Parent: Xxxxxxx Worldwide Associates, Inc.
/s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
