Share Purchase Agreement
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SHARE PURCHASE AGREEMENT
Entered into in Milan on January 9, 2003 between
Pulse Electronics (Singapore) Pte. Ltd ("Purchaser"), a company incorporated
under the laws of Singapore and having its registered offices in 000 Xxxxxxx
Xxxxx, # 00-00/00 XX Xxxxxx, Xxxxxxxxx 000000 and represented by its proxy
holder, Xx. Xxxxxxx XxXxxxxxx
and
Forfin Holdings B.V. ("Seller"), a company incorporated under the laws of The
Netherlands and having its registered offices in Max Xxxxxxxx 00, 0000 XX
Xxxxxxxxx and represented by its director Monterrey Executives BV, Max Xxxxxxxx
00, 0000 XX Rotterdam, in the person of Xx. Xxxxxxxx Xxxxx;
Purchaser and Seller also are sometimes referred to individually as a "Party",
or collectively, the "Parties".
WHEREAS
- Seller owns 99,199984524% of the corporate capital of Xxxxx High Tech Wire
Wound Components S.r.l., a company incorporated under the laws of Italy,
with registered offices in Orsenigo (CO), Fiscal Code and VAT no.
02681890139, registered at the Business Registry of Como with no.
02681890139 , corporate capital(euro)4,394,040.00, ("Company"). The
remaining 0.800015476% is owned by Xx. Xxxxx Xxxxxxx ("Other
Shareholder");
- The Company is the result of a de-merger from Xxxxx Corporation S.p.A., a
company incorporated under the laws of Italy, with registered offices in
Xxx Xxxxxx xx. 00, Xxxxxxxx (Como), Fiscal Code and VAT no. 02390960132,
corporate capital(euro) 3,509,960.00 wholly paid in, registered at the
Business Registry of Como with no. 02390960132 ("Eldor"). Through the
de-merger, the whole Consumer Business of Eldor was transferred to the
Company. Seller owns 100% of the corporate capital of Eldor;
- The de-merger was approved by the Board of Directors of Eldor on March 28,
2002, by Eldor's Extraordinary Shareholders' Meeting on April 22, 2002 and
finalized through the deed executed before Notary Public Xxxxxxxx Xxxxxx
on June 26, 2002 (rep. 218312, racc. 29376);
- Eldor Slovakia Sro., a company incorporated under the laws of Slovakia,
with registered offices in Xxxxxxx 000, 00000 Xxxxx, Xxxxxxxx ("Eldor
Slovakia") prior to the Closing carried out the Consumer Business and also
activities not related to the Consumer Business.
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- The Company owns 99.68% of Xxxxx Elektronik Sanay Ticaret A.S., a company
incorporated under the laws of Turkey, with registered offices in Baglar
Mahallesi, Fatih Caddesi X-Xxxxx, Xxxxxxx Xxxxxxxx, Xxxxxxxx, Xxxxxx and a
branch in Xxxx Sokak N. 106/110, Ege Serbest Bologesi Subesi / Gaziemir,
Izmir, Turkey ("Eldor Turkey"). The remaining 0.32% of Eldor Turkey is
presently held by Xx. Xxxxxxxx Xxxxx and other members of his family.
Eldor Turkey, including its branch shall also be referred to collectively
as "Subsidiary", and the Company and the Subsidiary, together, referred to
as the "Companies".
- Purchaser intends to buy, and Seller intends to sell a quota representing
100% of the corporate capital of the Company ("Quota"). Seller is
committed irrevocably to sell and transfer the Quota to Purchaser under
the terms and conditions set forth in this Share Purchase Agreement
("Agreement"). Purchaser is committed irrevocably to purchase the Quota
from Seller under the terms and conditions set forth in this Agreement.
NOW THEREFORE, the Parties hereto agree as follows:
ARTICLE 1 - GENERAL
Definitions, Annexes Schedules and Recitals. The definitions, Annexes, Schedules
and the recitals form an integral and substantial part of this Agreement. The
definitions set forth in Annex 1 apply to the Agreement.
ARTICLE 2 - PURCHASE AND SALE OF THE QUOTA
Seller hereby sells and transfers and causes the Other Shareholder to sell and
transfer to Purchaser, and Purchaser purchases on the terms and conditions set
forth herein, the Quota free and clear of any Lien, together with any rights,
including dividends pertaining to the Quota effective from January 1, 2002.
Simultaneously, Seller causes the other shareholders of the Subsidiary to
transfer their shares in the Subsidiary for the aggregate consideration of
(euro) 1 to those Persons the Purchaser may indicate at its sole option.
ARTICLE 3 - CONSIDERATION, CONSIDERATION ADJUSTMENT AND TERMS OF PAYMENT
3.1 Consideration. The Parties have agreed that the aggregate purchase price
of the Quota is (euro) 81,600,000.00 (eighty-one million and six hundred
thousand Euros) less the aggregate Funded Debt of the Company as of the
Closing Date (hereinafter the "Consideration"), subject to the adjustment
described in Section 3.2 below.
3.2 Consideration Adjustments
(A) IMBDA. As promptly as practicable but not later than March 15, 2003,
the Purchaser shall cause to be prepared and delivered to the Seller
a consolidated balance sheet and income statement of the Company as
of the Closing Date (the "2002 Financial Statements"), from which
the XXXXX ("0000 XXXXX") and
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Overhead Expenses shall be computed. The 2002 Financial Statements
shall have been audited by KPMG, LLP ("KPMG") and prepared in
accordance with Italian GAAP, as supplemented by the items set forth
in Annex 3.2 hereto (Italian GAAP as supplemented in Annex 3.2 is
the "Calculation Method").
(B) Upon reasonable notice, the Purchaser will give the Seller and its
designated accountant access to the premises of the Company, to its
books and records and to the appropriate personnel of the Company
for purposes of confirming the 2002 Financial Statements and the
Overhead Expenses for purposes of Annex (3), Section 1.1 (f) hereof;
it being understood that the Purchaser shall give such access not
later than three (3) days after receipt of the Seller's request.
Unless the Seller notifies the Purchaser in writing that it
disagrees with the 0000 XXXXX or Overhead Expenses within forty five
(45) days after receipt thereof, the 2002 IMBDA, and/or Overhead
Expenses for purposes of Annex (3), Section 1.1 (f) hereof shall be
conclusive and binding on the Purchaser and the Seller. If the
Seller notifies the Purchaser in writing of the Seller's
disagreement with the 0000 XXXXX or Overhead Expenses within forty
five (45) day period, then the Purchaser and the Seller shall
attempt in good faith to resolve their differences with respect
thereto within thirty (30) days after the Purchaser's receipt of the
Seller's written notice of disagreement. Any dispute regarding the
0000 XXXXX or Overhead Expenses not resolved by the Purchaser and
the Seller within such 30-day period will be resolved by Ernst&Young
(the "Final Audit Firm"). The Purchaser, on the one hand, and the
Seller, on the other hand, each represent and warrant to the other
that neither it nor their Affiliates currently have any material
audit, advisory, tax or other relationship with the Final Audit
Firm. At the date of appointment of the Final Audit Firm, the
Purchaser and Seller will restate such representation and warranty
as at such date. If, for any reason, any party is unable to make
such a representation and warranty, the Seller and Purchaser shall
select such other Big Four or other accounting firm as they may
agree to serve as the Final Audit Firm; it being understood that
neither the Purchaser and it Affiliates, on one hand, nor the Seller
and its Affiliates, on the other hand, have any material audit,
advisory, tax or other relationship with the such accounting firm as
above selected to serve as the Final Audit Firm. The determination
by the Final Audit Firm shall be based on the Calculation Method and
shall be made as promptly as possible, but in no event later than
sixty (60) days after the date the Final Audit Firm was retained.
Such determination of the 0000 XXXXX Overhead Expenses for purposes
of Annex (3), Section 1.1 (f) hereof (with such modifications
therein, if any, as reflect such determination by the Final Audit
Firm) shall be binding and conclusive upon the parties, which agree
not to contest or appeal the same. The procedure set forth in this
Subsection shall be the exclusive method for resolution of a dispute
concerning the 0000 XXXXX and/or the Consideration Adjustments under
this Section 3.2 and/or the Overhead Expenses for purposes of Annex
(3), Section 1.1 (f) hereof. For the sake of clarity, the mediation
and arbitration provisions under Section 8.8 hereof are not
applicable to disputes under this Section 3.2. The fees and expenses
of the Final Audit Firm shall be shared equally by the Purchaser and
Seller.
(C) In the event the 0000 XXXXX is less than 26.5 million Euros, the
Consideration
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shall be adjusted by the difference between (i) 81.6 million Euros
and (ii) the product obtained by multiplying the 81.6 million Euros
by a fraction, the numerator of which is 2002 IMBDA stated in Euros
and the denominator of which is 26.5 million Euros (the "IMBDA
Consideration Adjustment"). The IMBDA Consideration Adjustment shall
be payable to Purchaser as provided in Section 3.3 below.
3.3 Terms of Payment. The Consideration, the Funded Debt and the IMBDA
Consideration Adjustment will be paid by the Parties as follows;
3.3.1 The Consideration shall be paid by Purchaser to Seller on the
Closing Date by non transferable bank drafts or wire transfer (to be
performed SWIFT, with fixed value at the Closing Date and at no cost
for the Seller) in the name or to the account of Seller or as
otherwise directed by Seller.
3.3.2 The IMBDA Consideration Adjustment due pursuant to Section 3.2 above
shall be paid by Seller to the Purchaser within ten (10) Business
Days from the final determination of such IMBDA Consideration
Adjustment as provided above. The IMBDA Consideration Adjustment
will be paid by non transferable bank drafts or wire transfer (to be
performed SWIFT, with fixed value at the date it will be due and at
no cost for Purchaser) in the name or to the account of Purchaser or
as otherwise directed by Purchaser in the communication concerning
such IMBDA Consideration Adjustment. The amount of such payment
shall bear interest from the Closing Date to the date of payment at
the rate established by First Union, N.A. from time to time as its
prime rate (the "Prime Rate"), which rate shall be adjusted as of
the date of each change in the Prime Rate.
3.3.3 The Funded Debt (except (i) any amounts due to Employees listed in
Schedule 3(w) transferred to the Company after the De-merger, which
amounts shall be paid by the Company when they become due, (ii) any
amount for overdue accounts payable in excess, at the Closing Date,
of 1.8 million Euro in the aggregate, which amount shall be paid by
the relevant Companies according to the ordinary course of business,
but shall remain the obligation of Seller to fund as a part of the
Funded Debt; and (iii) the amounts of the facilities granted to the
Subsidiary by TURKIYE IS BANKASI and TEKFEN BANK AS vis-a-vis export
commitments, as better identified in Schedule 3(t), which shall be
paid when due) shall be paid at the Closing by the Purchaser, in the
name and on behalf of the Companies, to the banks, leasing companies
and/or any other credit institution as payment of the portion of any
Funded Debt owed to such banks, leasing companies and/or any other
credit institutions by the Companies in accordance with the written
instruction given by the Seller.
With specific reference to the amount of the Funded Debt to be
actually repaid on the Closing Date, the Parties acknowledge that
the relevant pay off notices (as mentioned in par. 7.2.(o)) indicate
the balance due at the Business Day immediately preceding the
Closing Date.
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In this respect, the Parties agree that any charge or benefit
resulting, even after the Closing Date, but referring to the period
up to the Closing Date (included), on any of the accounts of the
Companies to which the Funded Debt refers, shall be, respectively,
for the account or for the benefit of the Seller, which shall be
therefore liable for, or, respectively, entitled to, the negative or
positive balance between such charges and benefits.
For the sake of clarity, it is understood that the charges will
include interest, if any, on the Funded Debt for the time between
the reference date considered in the relevant pay off notice and the
Closing date, and the benefits will include, if any, payments of
commercial receivables disposed by the relevant debtor up to the
Closing Date (included), even if recorded by the receiving bank or
financial institution after the Closing Date.
ARTICLE 4 - CLOSING DATE
4.1 The Closing Date. The Closing of the purchase and sale of the Quota will
take place on January 9, 2003, in Milan at the place agreed between the
Parties and at the presence of the Notary Public chosen by Purchaser.
4.2 Effective date. The sale and purchase of the Quota will be effective as of
the close of business on the Closing Date, even though Purchaser will
benefit from the rights, including dividends pertaining to the Quota as
from the date set forth in Article 2 above.
4.3 Closing Documents. At Closing, Purchaser shall pay the Consideration to
Seller and the Other Shareholder in accordance with Section 3.3 above and
shall deliver to Seller the closing documents set forth in Section 7.3
below, and Seller shall deliver to Purchaser the closing documents set
forth in Section 7.2 hereto.
ARTICLE 5 - REPRESENTATIONS, WARRANTIES, COVENANTS AND
CONDITIONS
5.1 Representations and Warranties. The representations and warranties of the
Purchaser and Seller are set forth in Annexes 2 and 3 hereto,
respectively.
5.2 Covenants. The covenants of the Parties are set forth in Annex 4 hereto.
ARTICLE 6 - INDEMNIFICATION
6.1 Survival of Representations and Warranties and Covenants.The
representations and warranties set forth in Annex 3 hereto and the
covenants contained in this Agreement and the Schedules hereto shall
survive the Closing Date (i) with respect to the representations and
warranties set forth in Sections 1.1 (a), (b) and (c) of Annex 3 with
respect to the ownership of the Quota and the shares of the Subsidiary and
the covenants contained in this Agreement, Annexes and the Schedules
hereto, without
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limitation as to time, (ii) with respect to the representations and
warranties set forth in Section 1.1 (n) of Annex 3 hereto relating to
Taxes, Section 1.1 (q) of Annex 3 relating to environmental matters,
Section1.1 (o) of Annex 3 hereto with respect to Taxes relating to
employment and labor matters, and Section1.1 (w) relating to Extraordinary
Transactions for a period ending 60 days after the applicable statute of
limitations and (iii) with respect to any other representation or warranty
until the end of the eighteen (18) month period from the Closing Date.
6.2 Indemnification by Purchaser. From and after the Closing, Purchaser will
indemnify, defend and hold the Seller harmless from and against any and
all actions, suits, demands, assessments, judgments, losses, liabilities,
damages, costs and expenses (including penalties, reasonable attorney's
fees, accounting fees and investigation costs) ("Losses") suffered or
incurred by the Seller resulting or arising from any breach of the
representations, warranties and covenants of Purchaser contained in this
Agreement or in the documents delivered pursuant to this Agreement
6.3 Indemnification by Seller. From and after the Closing, the Seller will
indemnify, defend and hold Purchaser, the Company and Subsidiary and each
of their officers, directors, employees and Affiliates (each a "Purchaser
Indemnified Party" and collectively, the "Purchaser Indemnified Parties")
harmless from and against any and all Losses suffered or incurred by
Purchaser Indemnified Parties, resulting or arising from (i) any breach of
the representations and warranties contained in Annex 3 to this Agreement;
(ii) any failure to perform or breach of the covenants of the Seller
contained in this Agreement, (iii) any suit, proceeding, action, claim or
investigation, pending or threatened, against a Purchaser Indemnified
Party that arose from any matter or state of facts existing on or prior to
the Closing Date unless such matter, state of facts, suit or action is
disclosed in a Schedule to this Agreement in reasonable detail; (iv)
liabilities or obligations arising out of the Companies' or Eldor Slovakia
or any of their Affiliates' infringement of any third party's Intellectual
Property prior to the Closing Date unless and to the extent disclosed in a
Schedule to this Agreement; and (v) liabilities or obligations arising in
connection with the sale of any products manufactured and/or sold by the
Companies, Eldor, Eldor Slovakia or any of their Affiliates prior to the
Closing Date unless and to the extent disclosed in a Schedule to this
Agreement.
6.4 Notice, Payment of the Indemnity. The procedures for the request and the
payment of the indemnification are indicated in Annex 6 hereto.
6.5 Bank Guarantee. The Seller shall obtain, at its sole expense, and deliver
to Purchaser at the Closing an unconditional guaranty from a financial
institution acceptable to Purchaser of the Seller's obligations to
indemnify the Purchaser under this Article 6 and Annex 6 and to pay the
IMBDA Consideration Adjustment in Article 3 hereof, if any (the "Bank
Guarantee"). The amount of the Bank Guaranty shall be (i) Euros
10,000,000.00 (ten million) until the first anniversary of the Closing
Date, and (ii) Euros 5,000,000.00 (five million) for the period between
the first anniversary of the Closing Date and the expiration of the
eighteenth month after the Closing Date, and shall be substantially in the
form of Annex 7.2(a) hereto. If at the expiration of the Bank Guarantee
the same is not renewed and/or substituted by a new bank guarantee
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having the same terms and conditions as provided in Annex 7.2(a), and
therefore should an escrow agent be appointed as provided in the Bank
Guarantee, the Parties acknowledge and agree that (i) the fees of the
escrow agent will be incurred exclusively by the Seller; and (ii) the
escrow agreement will have terms and conditions that are substantially
identical to the ones of the Bank Guarantee.
6.6 Other Limitations. Notwithstanding anything to the contrary contained in
this Agreement:
(a) the Seller and/or Purchaser shall have no liability to the other
party pursuant to Section 6 until Losses incurred or suffered by the
Purchaser Indemnified Parties reaches Euro 65,000.00 in the
aggregate (the "Basket"), it being understood that, once the Basket
is exceeded, the Seller and/or Purchaser shall be liable for any
amount exceeding the Basket;
(b) the amount of any indemnification owing by a Party shall be reduced
by the amount of any insurance proceeds which the Indemnified Party
or any Purchaser Indemnified Party actually receives;
(c) the amounts owing by Seller under Section 6 shall further be offset
against the specific reserve (if any) as reflected in the Financial
Statements and De-merger Balance Sheet with respect to the risks
from which the Loss originates, such specific reserves are set forth
on Schedule 6(c) hereto; and
(d) the total aggregate liability of Seller or Purchaser under this
Section 6 (including Annex 6) with respect to any matter
contemplated in this Agreement shall not exceed the amount of Euro
30,000,000.00 from the Closing until the eighteenth month after the
Closing Date, Euro 15,000,000.00 thereafter and until the third
anniversary of the Closing Date and Euro 10,000,000.00 thereafter
and until the expiration of the survival period set forth in Article
6.1.(ii) above (the "Cap").
Notwithstanding anything to the contrary contained in this Agreement, in
no event shall the limitation in this Section 6.6 (a) (the Basket) be
applicable to Losses arising as a result of (1) a breach of the
representations and warranties in Section 1.1(f) of Annex 3 pertaining to
the amount of the Overhead Expenses, (2) a breach of the representations
and warranties in Sections 1.1(n)(xvi) or (xvii) of Annex 3 but only if
such breach relates to the De-merger, (3) a breach of representation and
warranty in the last paragraph of Section 1.1 (o) of Annex 3, (4) a claim
for indemnification for receivables pursuant to Section 1.5 of Annex 6,
(5) the existence of Funded Debt in excess to that resulting from Schedule
3(t), or (6) the actual fraud by the Seller. Accordingly, Purchaser shall
be entitled to indemnification from the Seller from the first Euro of
Loss.
Notwithstanding anything to the contrary contained in this Agreement, in
no event shall the limitation in this Section 6.6 (d) (the Cap) be
applicable to Losses arising as a result of (1) a breach of the
representations and warranties in Sections 1.1(n) (xi), (xvi) or (xvii) of
Annex 3 but only if such breach relates to the De-merger, or (2) a breach
of the covenants in Section 1.1 of Annex 4 hereto or (3)the actual fraud
by the Seller.
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6.7 Sole remedy. Except for the representation and warranty in Section 1.1(i)
of Annex 3, upon the completion of the Closing, the right to be
indemnified pursuant to and in accordance with the provisions of this
Section 6 (including Annex 6) shall constitute the sole and exclusive
remedy of the Indemnified Party in respect of any breach by the
Indemnifying Party of the provisions of this Agreement.
6.8 The indemnities will be fully effective notwithstanding the due diligence
review made by Purchaser; provided however, Seller shall not be obligated
to indemnify any Purchaser Indemnified Party if facts giving rise to the
indemnification claim are described in reasonable detail in this Agreement
or in the Schedules.
ARTICLE 7 - CLOSING DOCUMENTS
7.1 At the Closing, the Seller and the Other Shareholder, on one side, and the
Purchaser shall execute the notarial deed of transfer of the Quota to the
Purchaser, before a Notary Public chosen by Purchaser, in accordance with
Article 2479 of the Italian Civil Code, as amended by Law 310 of August
12, 1993; it being understood and agreed that notwithstanding any possible
conflicting provision contained in the above mentioned deed of transfer,
the contractual terms and conditions governing the transfer of the Quota
are and shall be only those contained in this Agreement (as the same may
be amended from time to time), which shall in no way be novated by such
deed of transfer. For the above purposes, the Seller hereby undertakes to
cause the Other Shareholder to execute the above mentioned deed of
transfer.
7.2 Seller shall deliver to Purchaser the following documents at the Closing:
(A) The Bank Guarantee in the form of Annex 7.2(a);
(B) The resignation, release and waiver by the current directors and
statutory auditors of the Company and the Subsidiary in the form of
Annex 7.2(b) hereto;
(C) Copies of the Company Shareholders' Meeting held on December 20,
2002, appointing the new Board of Directors and the new Board of
Statutory Auditors in compliance with the instructions supplied by
Purchaser; copy of the Subsidiary's Board resolution convening the
Shareholders' Meeting for the appointment of the new Board of
Directors and the new Board of Statutory Auditors in compliance with
the instructions supplied by Purchaser;
(D) Evidence (see Annex 7.2(n)) that title to all of the assets related
to the Consumer Business located in Eldor Slovakia were or will be
transferred to the Subsidiary within February 28, 2003; it being
understood that their delivery will take place not later than
February, 28, 2003 and the Seller will bear all related costs,
including breakdown, shipping and reassembly of the manufacturing
lines;
(E) Non-Compete Agreement in the form of Annex 7.2(e) hereto duly signed
by Seller (also including a Seller's commitment to cause any
Seller's Affiliate not to compete);
(F) Evidence that all shares of Eldor Slovakia have been transferred by
the Company to and/or any of its Affiliates;
(G) Consulting Agreement between the Company and Xx. Xxxxxxxx Xxxxx in
the form of Annex 7.2(g)_ hereto duly signed by Xx. Xxxxxxxx Xxxxx
(the "Consulting Agreement");
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(H) Eldor Trademark License Agreement between Xxxxx Holding SpA, Eldor,
and the Company in the form of Annex 7.2(h) hereto (the "Trademark
License Agreement");
(I) Design License Agreement for Flyback Transformers between Eldor and
the Company in the form of Annex 7.2(i) hereto (the "Design License
Agreement");
(J) Service and Maintenance Agreement between Eldor and the Company in
the form of Annex 7.2(j) hereto (the "Service Agreement");
(K) Information Technology Services Agreement signed by Eldor and the
Company in the form of Annex 7.2(k) hereto, pursuant to which Eldor
would provide the Purchaser with certain IT Services (the "IT
Agreement");
(L) Sublease and Transition Service Agreement between Eldor and the
Company in the form of Annex 7.2(l) hereto (the "Sublease
Agreement");
(M) Landlord's approval to the Sublease; and
(N) Toll Production Agreement between Eldor Slovakia and the Company in
the form of Annex 7.2(n) hereto (the "Toll Production Agreement");
(O) Pay off Notices and releases for the Funded Debt from each of the
lending institutions;
(P) Sale and Exclusivity Agreement between Eldor and the Company, also
on behalf of the Subsidiary, in the form of Annex 7.2(p) hereto (the
"Selling Limitation Agreement"); and
(Q) All Consents or waivers of rights of first refusal required to
consummate the transactions contemplated herein, if any;
(R) Shares Transfer Statement from all Other Subsidiary Shareholders to
transfer title of such Shares to Purchaser's designees for one Euro
each.
7.3 Purchaser shall deliver to Seller the following documents at the Closing:
(A) the Consulting Agreement duly signed by the Company;
(B) the Trademark License Agreement duly signed by the Company;
(C) the Design License Agreement duly signed by the Company;
(D) the Service Agreement duly signed by the Company;
(E) the Sale Agreement duly signed by the Company;
(F) the IT Agreement duly signed by the company,
(G) the Sublease Agreement duly signed by the Company;
(H) the Toll Production Agreement duly signed by the Company; and
(I) the Selling Limitation Agreement duly signed by the Company, also on
behalf of the Subsidiary.
ARTICLE 8 - MISCELLANEOUS
8.1 Notices. All notices, requests and other communications to any Party will
be in writing and will be given:
If to Purchaser to: With copies to:
C/o Pulse Engineering, Inc. Technitrol, Inc.
00000 Xxxxx Xxxxx Xxxxx 0000 Xxxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000 Suite 385
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Attn: Xxxx X. Xxxxxxxx, Xxxxxxxxx Xxxxxxx, XX 00000
fax: x0.000.000 8334 Attn: Xxx Xxxxx Xxxxx, General
Counsel
fax: x0.000.000 6950
If to Seller to: With copies to:
Xxxxx Corporation S.p.A Pavia e Ansaldo
Xxx Xxxxxx 00 Xxx xxx Xxxxx 0
00000 Orsenigo (Como) 20121 Milano
Italy Italy
Attn.: Xxxxxxxx Xxxxx Attn: Xxxxxxxx Xxxxxxxx
fax: +39. 000.000000 fax: x00.00.0000.0000
or to such other address or fax number as such Party may specify by
written notice to the other Party. If no such notice is given, any
delivery to the address indicated in the Agreement will be considered
valid.
The notices, requests and other communications will be delivered by
registered mail return receipt or by fax, provided that a confirmation
copy of such fax is sent to the other Party by registered mail or by
express courier no later than the first business day following the date of
the fax transmission.
Each notice, request or communication will be effective: if given by fax,
when such fax is actually received as confirmed by the report of the fax
machine of the transmitting party; if given by registered mail, on the
date of delivery certified on the return card.
8.2 Brokers. Seller shall pay for any investment banker, broker, finder,
intermediator or any other Person ("Broker") engaged by Seller, the
Company or any of their Affiliates who might be entitled to a fee or
commission upon consummation of the contemplated transactions. Purchaser
shall pay the fee or commission for any Broker it engaged in connection
with the transactions contemplated by this Agreement.
8.3 Expenses and Taxes. All legal, accounting and other costs and expenses
incurred in connection to the Agreement and the transactions contemplated
in it will be paid by the Party incurring such expenses. However,
Purchaser will bear all stock transfer tax, registration fees, court
duties, stamp duties or notarial fees payable in connection with the
performance of the Closing. The Seller shall be liable for all other taxes
arising in connection with the transactions contemplated by this
Agreement.
8.4 Successors and Assigns. This Agreement will be binding upon and will inure
to the benefit of the Parties and their respective successors and assigns.
The Agreement itself, however, may not be assigned by any party without
the prior written consent of the other Party. Notwithstanding the
foregoing, the rights of Purchaser may be transferred to any Affiliate of
any company in the Technitrol Group but no such transfer will relieve
Purchaser of its obligations under the Agreement.
8.5 Entire Agreement, Amendments. This Agreement, the annexes, Schedules and
the
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related agreements specifically referred to embody the entire agreement of
the Parties with respect to the subject matter and supersede all prior
agreements. This Agreement may be amended, and any provision waived, only
in writing. This Agreement supersedes the letter of intent and the
confidentiality agreements executed by the Parties prior to the Closing
Date.
8.6 Originals. This Agreement is executed in two originals in English
language. Translations into Italian are for convenience purposes only.
Accordingly, all documentation, notices and correspondence pursuant or
relating to this Agreement shall be submitted and maintained in the
English language. In the event this Agreement is translated, the English
version shall control all interpretation hereof.
8.7 Captions. The captions and indexes in this Agreement are for convenience
of reference only and will not limit or otherwise affect any of the terms
or provisions of the Agreement.
8.8 Arbitration. Except for a dispute under Article 3, none of the Parties
shall institute a proceeding in any court or administrative agency to
resolve a dispute between the parties hereunder, whether arising prior to
or after the Closing Date, before that Party has sought to resolve the
dispute through direct negotiation with the other Party. If the dispute is
not resolved within three weeks after a demand for direct negotiation, the
Parties shall attempt to resolve the dispute through mediation. If the
Parties do not promptly agree on a mediator, then either Party may notify
the CEDR Center for Effective Dispute Resolution of London, UK at the
following address: Xxxxxxxx Xxxxx, 0 Xxxxxxx Xxxxxxxx Xxxxxx, Xxxxxx
X000XX, XX or at the then current address, if different. The fees and
expenses of the mediator shall be paid one-half each by the Seller and
Purchaser. If the mediator is unable to facilitate a settlement of the
dispute within a reasonable period of time, as determined by the mediator,
the mediator shall issue a written statement to the Parties to that effect
and the aggrieved Party may then seek relief through arbitration. All
disputes arising out of this Agreement, except those pursuant to Article
3, including those concerning its validity, interpretation, performance
and termination, and not solved pursuant to the above, shall be referred
to an arbitral tribunal consisting of three arbitrators (one selected by
the Purchaser, one selected by the Seller, and the third selected jointly
by the arbitrators) appointed according to the International Arbitration
Rules of the Chamber of National and International Arbitration of Milan,
which the parties declare that they know and accept in their entirety. The
arbitrators shall decide according to the norms ("rituale").The language
of the arbitration shall be English and the panel shall sit in Milan.
8.9 Media Releases. Promptly following execution and delivery of this
Agreement by all parties, a press release in the form of Annex 8.9_shall
be issued by Technitrol, Inc. Thereafter, neither the Seller nor any of
its Affiliates or representatives shall issue any press release after the
date hereof or otherwise make any public statement with respect to the
transactions contemplated hereby without the consent of Purchaser (which
shall not be unreasonably withheld, conditioned or delayed), except to the
extent that the Seller is advised by its counsel that such a press release
or statement is required by applicable law or regulations, and then only
after consultation with Purchaser. Also thereafter, Purchaser shall
consult with the Seller before Purchaser or any of its Affiliates or
representatives shall issue any press release after the date hereof which
Page 12 of 41
discloses any of the material terms of this Agreement; provided, however,
nothing herein shall be construed to require the Purchaser to consult with
the Seller before issuing any press release or other public statement or
disclosure relating to the Companies and their business, including any
financial information.
8.10 Registration in the Shareholders' Book. The Board of Directors of the
Company is authorized, subject to the completion of the Closing and to the
fulfillment of the requirements provided by Article 2479 of the Italian
Civil Code, as amended by Law 310 of August 12, 1993, to register the
transfer of the Quota in the shareholders' book of the Company, subject to
the obligations set forth by the Italian law.
8.11 Governing law. This Agreement and the rights and obligations of the
parties will be governed by, construed with and enforced in accordance
with Italian law without application of its conflict of law principles.
This Agreement has been signed on behalf of each of the parties as of the date
first above written.
Pulse Electronics (Singapore) Pte. Ltd Forfin Holding B.V.
By: Xxxxxxx XxXxxxxxx By: Xxxxxxxx Xxxxx
Title: Proxy Holder Title: Director
--------------------- -------------------
Page 13 of 41
ANNEX 1 - DEFINITIONS
In addition to the definitions set forth in the Agreement, the following will
apply:
Accounting Principles means the generally accepted accounting principles
used in Italy, as far as the Company is concerned,
or in Turkey, as far as the Subsidiary is
concerned, applied in a manner which is consistent
with the manner in which they were applied in the
preparation of the respective financial statements
for Xxxxx for the year ended on December 31, 2001,
as far as the Company is concerned, or of the
Subsidiary, in each case, as supplemented, to any
necessary extent, by the principles stated by the
International Accounting Standard Committee.
Assets means all tangible and intangible assets
(including, but not limited to, Equipment,
Equipment Designs, Inventory, Real Property,
Accounts Receivable, Intellectual Property and
prepaid assets), as well as the financial assets,
credits, interests (if any) and the "cash",
including the bank account deposits, of the
Company, whether or not reflected in the Company's
Records or Accounts.
Affiliate means with respect to any Person, any other Person
that controls, is controlled by or is under common
control with, whether by way of voting capital
stock or otherwise, another Person.
Bank Guarantee means the bank guarantee, issued by a primary bank
selected by the Seller and accepted by the
Purchaser substantially in the form of Annex 7.2
(a).
Best Knowledge means the knowledge of the senior managers of
either of the Companies or Xxxxx after reasonable
investigation under the circumstances.
Business Day means any day other than a Saturday or Sunday or a
day that is a bank holiday in Milan, Italy or
Philadelphia, Pennsylvania.
Closing means the consummation of the Agreement, before
the public Notary, according to Italian law,
scheduled on the Closing Date.
Closing Date means the date and time on which the Closing shall
be held as provided in Article 4.1 of the
Agreement.
Consideration means the price of the Quota, as indicated in
Section 3.1 of the Agreement.
Page 14 of 41
Consumer Business the OEM consumer wound magnetics business (i.e.
the business related to the fly back transformers,
switch mode transformers and the color deflection
yokes to the OEM consumers) carried out by Xxxxx
up to the de-merger and by the Companies
thereafter.
Contract means any oral or written agreement,
understanding, unilateral undertaking or similar
instrument to which any of the Companies is a
party.
De-merger means the de-merger through which the whole
Consumer Business of Xxxxx was transferred to the
Company, approved by the Board of Directors of
Xxxxx on March 28, 2002, by Eldor's Extraordinary
Shareholders' Meeting on April 22, 2002 and
finalized through the deed executed before Notary
Public Xxxxxxxx Xxxxxx on June 26, 2002 (rep.
218312, racc. 29376)
De-merger Balance Sheet means the balance sheet of the Company as at
June 30, 2002 attached hereto as Schedule 3(f).
Xxxxx Group means Xxxxx Holding S.p.A., with registered
offices in Orsenigo (Como), at 00, Xxx Xxxx
Xxxxxx, and all Persons directly or indirectly
controlled by it, excluding the Companies.
Xxxxx Slovakia Business means the Equipment, the Inventory (if any) and
the other Assets of Xxxxx Slovakia and related to
the Consumer Business, including any pending order
for manufacturing of products.
Xxxxx Consumer
Trademarks means the trademarks owned by Xxxxx Holding S.p.A.
listed in Schedule 1 of the Trademark License
Agreement and used or useable in the Consumer
Business.
Employee(s) means any Person who has entered into an
employment relationship of any kind (including,
but not limited to, Dirigenti) with the Companies
which makes him qualify as a lavoratore
subordinato or any equivalent qualification
according to the respective applicable law.
Equipment means any machinery, fixed assets (except Real
Property), tools (including plastic injection
moulds), dies, jacks, moulds, computers, copiers,
telephones, motor vehicle, office furniture,
equipment or any tangible personal property owned
or leased by the Companies in order to operate the
Business as it has been operated in 2002.
Page 15 of 41
Equipment Designs means all presently existing manuals, designs,
specifications, software disks (but with the
exclusion of any source code), and presently
existing engineering and other drawings,
engineering notes and any other material written
information relating to all the Equipment of the
Companies, including those formerly owned by Xxxxx
Slovakia.
Extraordinary Transaction means the De-merger and any operation of merger,
de-merger, contribution of assets/liabilities to
capital, exchange of shares, increase of shares,
or undertaking to transfer the business or any
portion thereof in any manner and transfer of
shares or equity of Xxxxx Slovakia.
Financial Statements means the consolidated financial statements of the
Subsidiary as of and for the period ended December
31, 2001, as audited by Deloitte&Touche, attached
hereto as Schedule 3(f).
Funded Debt means all indebtedness of the Companies for
borrowed money (and accrued interest thereon) and
including both the current and long term portion
thereof, and includes, without limitation, (i)
bank overdrafts, bank advances, revolving credit
facilities, term loans, equipment loans,
mortgages, deeds of trust, security deeds, lease
obligations (other than lease obligations under
leases for real property), notes and guarantees;
(ii) the deferred purchase price of property or
services other than trade payables arising in the
ordinary course of business in accordance with
customary trade terms; (iii) indebtedness
evidenced by notes, bonds, debentures or similar
instruments or letters of credit; (iv) accrued
interest, prepayment premiums and any other fees,
expenses or penalties payable on or relating to
such indebtedness (and the refinancing thereof),
including without limitation termination fees or
penalties; (v) debt convertible into equity of the
Company or Subsidiaries, as identified in Schedule
3(t), (vi) an amount equal to those accounts
payable related to the Consumer Business which, at
the Closing Date, are overdue and exceed in the
aggregate the sum of 1.8 million Euro, and (vii)
all liabilities associated to the employees
transferred to the Company after the De-merger as
listed in Schedule 3(w).
Italian GAAP means the generally accepted accounting principles
as practiced in Italy, and including all rules,
pronouncements, methods and practices as based
mainly by the Civil Code, Legislative Decree no.
127 of April 9, 1991, the principles of the
Commissione per la Statuizione dei Principi
Contabili of the Xxxxxxxxx Nazionale dei Dottori
Commercialisti e dei Ragionieri and regulations of
Consob.
Page 16 of 41
IMBDA Means with regard to the Consumer Business as
conducted by the Companies in 2002, the industrial
margin before depreciation and amortization and
shall be computed as follows: Gross Sales (i) less
the sum of (x) variable sales expenses, (y) total
variable manufacturing expenses and (z) total
fixed manufacturing expenses and (ii) plus all sum
of depreciation amortization and costs of any
industrial leases included in industrial margin
Indemnified Party means a party to this Agreement seeking
indemnification pursuant to Article 6 and Annex 6
of this Agreement.
Indemnifying Party means a party to this Agreement against whom
indemnification is sought pursuant to Article 6
and Annex 6 of this Agreement.
Intellectual Property means any software, firmware, copyright,
trademark, trade- name, service xxxx and the Xxxxx
Trademarks, patent, proprietary manufacturing
process, proprietary intellectual property and any
applications relating to any of the foregoing
(including, without limitation, proprietary
manufacturing process, proprietary computer
software, whether in object or source form,
processes and related documentation) whether owned
or licensed, used by any of the Companies in the
business.
Inventory means the inventories of the Company, the
Subsidiary and of the Xxxxx Slovakia Business (if
any), including without limitation, finished
goods, work-in-process, raw materials, supplies
and other materials, inventories in transit and/or
at locations other than the Company's or
Subsidiary's premises.
Lease means any lease, sublease or similar written or
oral agreement, together with all options, rights
and interests thereunder of the lessee or
sub-lessee, as the case may be, under which the
Company or the Subsidiary hold or otherwise have
rights in Real Property, Assets or Equipment of a
third party.
Lien means, with respect to any Asset any claim,
mortgage, lien, pledge, charge, security interest,
burden or encumbrance of any kind or any right of
a third party in respect of the same. For purposes
of the Agreement, an Asset shall be deemed to be
subject to a Lien if such Asset is subject to the
interests of a vendor or a lessor under any
conditional sale agreement, capital lease or other
title retention agreement relating to the same.
Page 17 of 41
Material Adverse Change means any damage, loss, liability and expense or
any other adverse or negative event incurred or
suffered by Xxxxx, in relation to its Consumer
Business, the Company and/or the Subsidiary which
impaired or could impair the ability of the
Company or the Subsidiary to conduct their
ordinary business or which materially and
adversely modifies the Company's and the
Subsidiary's present or future situation, assets,
financial condition or results of operations.
Overhead Expenses means fixed selling, research and development
expenses, depreciation of non-production assets,
overhead expenses R&D personnel and overhead
personnel expenses incurred in 2002 in the
Consumer Business in the order to operate the
Consumer Business as it was operated in 2002 and
necessary to conduct the Companies' business as
currently conducted. For purposes of clarity, this
means all operating costs that are not reflected
in industrial margin and are not extraordinary
expenses as defined by the Calculation Method.
Person means an individual, a corporation, a partnership,
an association, a trust or any other entity or
organization, including a government or political
subdivision or an agency or instrumentality
thereof.
Real Property means any real property or interest therein
(excluding any leased property) together with all
buildings, improvements, fixtures, easements,
licenses, options, rights to unpaid insurance
proceeds, rights to unpaid condemnation awards and
all other rights in or appurtenant thereto.
Records means any books and records, personnel records,
Tax and financial records in printed form or other
media and computer software and data in computer
readable and human readable form, in each case
used to maintain such books and records together
with the media on which such software and data are
stored and all documentation relating thereto.
Required Consents means any and all consents or approvals of any
public body or authority and any and all consents
or waivers from any parties to leases, licenses,
franchises, permits, indentures, agreements and
other instruments which are required for the
consummation of the transactions contemplated in
the Agreement.
Schedules means all annexes to the Agreement.
Tax means with respect to any Person:
Page 18 of 41
(i) any net income, gross income, gross
receipts, sales, use, ad valorem,
franchise, VAT, profits, license,
withholding, payroll, social
security, employment, excise,
severance, stamp, business,
occupation, premium or property
tax, custom duty tariff or other
tax, contribution, fee, assessment
or charge of any kind whatsoever,
together with any interest and any
penalty, addition to tax or
additional amount imposed by any
taxing authority (domestic or
foreign) imposed on such Person;
and
(ii) any liability of such Person for
the payment of any amount of the
type described in the immediately
preceding clause as a result of
such Person's membership within an
affiliated or combined group.
Tax Returns means all returns, reports, declarations, and
information returns and statements relating to
Taxes, including any amendments or supplements
thereto and the term "Tax Return" means any one of
the foregoing.
Technitrol Group means Technitrol, Inc. with registered offices in
Trevose, Pennsylvania (USA) and all Persons
directly or indirectly controlled by it.
Page 19 of 41
ANNEX 2 - Purchaser's Representations and Warranties
1.1 The Purchaser represents and warrants to Seller as follows:
(a) Existence and Corporate Authorization. Purchaser is a company duly
organized and validly existing under the laws of Singapore and has full
power and authority to enter into and perform its obligations under the
Agreement and the other contemplated transactions. The execution and
performance of the Agreement have been duly authorized by all necessary
corporate action of Purchaser and, upon execution and delivery, the
Agreement constitutes a valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms. All Required
Consents have been duly obtained.
(b) No Default, No Contravention, Binding Effect. The execution, delivery and
performance by Purchaser of the Agreement do not contravene, or constitute
default under, any provision of applicable law or regulation of the
Articles of Incorporation or By-laws of Purchaser or of any agreement,
judgment, injunction, order, decree or other instrument binding upon
Purchaser.
Page 20 of 41
ANNEX 3 - REPRESENTATIONS AND WARRANTIES OF SELLER
ANNEX 3
1.1 Representations and Warranties. The Seller represents and warrants to
Purchaser as follows:
(a) Legal Status and Authority. Each of the Company and Subsidiary is
duly organized and validly existing companies under the laws of
their respective jurisdictions, and they have the corporate and
legal capacity to conduct their business in the manner in which it
has been conducted up to now according to their Articles of
Incorporation and By-laws or other governing documents, which govern
them and are annexed to this Agreement as Schedule 3(a). Any
Extraordinary Transaction to which any of the Companies, or all
them, have been a party has been performed pursuant to and in
compliance with applicable laws.
The Companies are not and have not been subject to any liquidation
procedure, voluntary or not, bankruptcy procedure or similar
procedures, nor is the Seller aware that any such procedure has been
threatened or initiated by any third party.
The execution of this Agreement and the consummation of the
transactions contemplated herein have been duly approved by the
appropriate corporate bodies of Seller. Upon execution and delivery,
this Agreement constitutes a valid and binding obligation of Seller
enforceable against Seller in accordance with its terms. All
Required Consents have been duly obtained.
The execution, delivery and performance by Seller of the Agreement
do not contravene, or constitute a default under, any provision of
applicable law or regulation or of any agreement, judgment,
injunction, order, decree or other instrument binding upon Seller.
(b) Capitalization / Full Ownership of the Interest / Representative
Powers. The present corporate capital of the Company is equal
to(euro)4,394,040.00 fully paid up. The Quota of the Company being
transferred to Purchaser hereunder represents 100% of the corporate
capital of the Company as indicated in the preamble of the
Agreement. The Quota has been validly issued and are fully paid-in
and non assessable and issued in compliance with all laws. There are
no options, warrants, convertible bonds, subscription rights or
other rights of third parties, including former shareholders,
agreements or commitments of any kind obligating the Seller to issue
or sell any new quotas, or to repurchase or redeem the Quota (or any
part thereof) and no authorization therefore has been given.
Seller and the Other Shareholder are the exclusive owners in
aggregate of the Quota (as indicated in the preamble of this
Agreement), including all rights
Page 21 of 41
related thereto, free and clear of any Lien and, upon consummation
of the purchase and sale of the Quota at the Closing according to
Article 2 of the Agreement, Purchaser will be the exclusive owner of
the Quota, including all rights related thereto, free and clear of
any Lien.
The Quota is freely transferable, with no limitations, subject to
the first refusal right contained in Article 7 of the Company's
By-Laws which is not applicable to the sale of the Quota to
Purchaser hereunder. There is no shareholders' agreement or similar
instrument governing the relationship among the shareholders of the
Company and/or the Subsidiary.
Only the Members of the Board of the Company and Subsidiary and the
individuals listed in Schedule 3(b) have been granted powers to
represent and bind the Company or the Subsidiary and no other
individual has been granted similar powers in any form whatsoever,
whether through Board resolutions or special and general powers of
attorney.
(c) Subsidiary. Schedule 3(c) correctly sets forth the name, the form of
legal entity, jurisdictions of organization, the present corporate
capital, chief executive offices and principal places of business of
the Company's Subsidiary. The Company is the record and beneficial
owner of 99.68% of the issued and outstanding stock and equity
interests in the Subsidiary, and Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxxx,
Xxxx Xxxxx and Xxxxx Xxxxx (the "Other Subsidiary Shareholders") are
the record and beneficial owners of the remaining issued and
outstanding capital stock of or equity interests in the Subsidiary.
The capital stock and/or equity interests in the Subsidiary owned by
Other Subsidiary Shareholders will be transferred to Purchaser's
designees, free and clear of all Liens, by virtue of the Shares
Transfer Statement provided in Section 7.2 (R) hereof. All of the
shares of capital stock and equity interests so owned by the Company
and the Other Subsidiary Shareholders are (i) duly authorized,
validly issued, fully paid and non assessable and issued in
compliance with all Laws and (ii) free and clear of all Liens. There
are no options, warrants, convertible bonds, subscription rights or
other rights of third parties, including former shareholders,
agreements or commitments of any kind obligating the Company or
Subsidiary to issue or sell any new shares or any class of any
shares convertible into or exchangeable for any of the shares, or to
repurchase or redeem any of the shares and no authorization
therefore has been given.
(d) Authorizations and Permits. The Companies have obtained all
necessary licenses, permits and authorizations, including licenses,
permits and authorizations of governmental authorities, to conduct
any material part of their business operations as presently being
conducted and they are in compliance with the terms thereof in all
material respects. All such licenses, permits and authorizations are
fully valid, in effect and fully paid. Schedule 3(d) lists all such
licenses, permits and authorizations obtained by the Company or
Subsidiary, including without limitation the license to operate in
the free trade zone in Izmir, Turkey and thereby obtain the benefits
under Turkish Law 3218.
Page 22 of 41
(e) Affiliates. The Company's only Affiliate is the Subsidiary and such
Affiliate is in good standing. The Company does not own any equity
security or have any investment in loans or advances to, or other
interests in, directly or indirectly, any joint venture,
partnership, firm, corporation, consortium or other Person,
including rights or obligations to acquire any such interest.
(f) Records and Financial Statements. The Companies have kept and keep
their Records and accounts (including those kept for Tax purposes)
in sufficient detail to reflect fairly and correctly the
transactions and dispositions of their assets and liabilities.
The Overhead Expenses, whether reflected or not in the Records, will
not exceed 9.35 million Euros for the year ended December 31, 2002.
Such Records and accounts are in full compliance with all applicable
laws. The minute books of the Companies contain complete and
accurate records of all of the shareholders', directors' and
statutory auditors' meetings and of all corporate action taken by
said shareholders and directors which are required under any
applicable law to be reflected in minutes of the shareholders' or
directors' meetings. The meetings of shareholders and directors
referred to in such minutes were duly held and the resolutions
appearing in such books were duly adopted. The signatures appearing
on all documents contained in such minute books are the true
signatures of the persons purporting to have signed the same. The
shareholders' books have been duly and correctly updated. The
statutory auditors' books have been duly and correctly updated.
The Financial Statements and the De-merger Balance Sheet, attached
to the Agreement as Schedule 3(f) are true and correct and present
fairly the financial position of the Companies and the results of
their operations at the dates and for the periods covered thereby.
The Financial Statements and De-merger Balance Sheet were prepared
in accordance with all applicable laws and the Accounting Principles
applied on a consistent basis throughout the periods involved
(except as may be indicated in any notes thereto). As of the dates
of the Financial Statements and the De-merger Balance Sheet (a) the
Companies have no material liabilities or debts of any nature known
or unknown, contingent or otherwise, which were not reflected in the
Financial Statements and the De-merger Balance Sheet (as the case
may be), (b) all allowances and reserves indicated in the Financial
Statements and the De-merger Balance Sheet (as the case may be) are
adequate and in accordance with the Accounting Principles, and (c)
there are no contingent losses of any nature which are not
assessable on the basis of the Companies' statements and documents,
in accordance with the Accounting Principles. The Financial
Statements have been duly approved by the shareholders at a legal
meeting and have been filed in compliance with applicable laws.
Since the dates of the Financial Statements and the De-merger
Balance Sheet (as the case may be) up through the Closing Date the
business of the Companies has been managed in the ordinary course
consistent with past practices and no event has ever occurred or is
reasonably expected to occur that might impact in
Page 23 of 41
any material adverse way on the condition (financial or otherwise),
business, operations, liquidity, property, assets, liabilities or
obligations of the Companies as indicated in the Financial
Statements, the De-merger Balance Sheet and/or to be inferred from
the statements and documents of the Companies, except for the
transfer to the Company after the De-merger of the Employees listed
in Schedule 3(w) and except for the transactions contemplated in
this Agreement.
(g) Inventory. The Inventory of the Companies which is reflected on the
Financial Statements and the De-merger Balance Sheet, as the case
may be, (as well as Inventory which has been purchased from January
1, 2002 to the Closing Date, including any Inventory related to the
Xxxxx Slovakia Business) are valued according to the Calculation
Method. The Inventory consists of parts which are good, saleable and
useable in the ordinary course and which comply with their written
specifications. The Inventory of the Companies and Xxxxx Slovakia on
hand at Closing is sufficient to operate the Consumer Business in
the ordinary course consistent with past practices.
(h) Dividends. The Companies are not committed to pay to any Person any
part of their own profits (whether in the form of dividend or
account on dividend, director's fees, profit sharing for promoters,
broker's fees or under any other profit sharing or incentive plan or
similar) or to return any part of their capital and they have not
paid any apart from the dividends, if any, distributed as a
consequence of the approval of the Financial Statements as of and
for the period ending December 31, 2001 and the Company's financial
statements as of and for the period ending December 31, 2002.
(i) Account Receivables. All account receivables related to the Consumer
Business reflected in the Financial Statements and the De-merger
Balance Sheet (as well as all accounts receivables which have arisen
or will arise from January 1, 2002 through the Closing Date)
represent sales effectively made or services effectively rendered,
are collectible in the ordinary course consistent with past
practices, at their full stated amount, (and are not subject to any
refunds or other adjustments or to any defence, right of set-off,
assignment, restriction, encumbrance or condition enforceable by a
third party or counterclaim), less the applicable reserves for
doubtful accounts receivable within 60 days after the date at which
each receivable becomes payable. For purposes of the preceding
sentence a "receivable becomes payable" on the due date for payment
of invoices as provided in a written agreement between the customer
and the Companies or, if no such written agreement exists, the date
shown on the invoice as the date in which payment is due, all of
which is set forth by customer on Schedule 3(i) hereto. There are no
facts and circumstances which may result in any material increase in
the uncollectability of such receivables in excess of such reserves.
Xxxxx Slovakia has no accounts receivable related to the Consumer
Business.
With the exception of what is provided for in the Toll Production
Agreement, Seller will cause inter-company accounts receivables
(i.e. account receivables from Persons belonging to the Xxxxx Group)
to be paid in full before the Closing Date, through set off or
actual cash payment, at the Seller's option. Purchaser
Page 24 of 41
acknowledges and agree that the inter-company receivable between the
Company and the Izmir branch of the Subsidiary will be converted
into equity for the amount and with the procedures already
established by the Companies' corporate bodies .
The accounts receivable of the Consumer Business collected since
January 1, 2002 were collected in the ordinary course and no
extraordinary measures were taken to accelerate their collection.
Since January 1, 2002, the Companies have not (i) granted their
respective debtors any extension or change of the payment's term of
the accounts receivables as resulting from the relevant agreement,
or (ii) changed any other term with any customer or third party or
granted, paid or agreed to pay or grant any incentive, kickback,
discount, rebate or other promotion to any third party for the
purpose of causing or which was likely to cause any customer or
third party to accelerate its purchases of products and/or services
from any of the Companies or was in any way not in the ordinary
course of business consistent with past practices or (ii) make or
agreed to make any bribe, kickback or other payment of any kind or
enter into any transaction that is in violation of any laws
applicable to any of the Companies.
(j) Accounts Payable. All accounts payable related to the Consumer
Business as reflected in the Financial Statements or arising
thereafter through the Closing Date (i) arose in the ordinary course
of business and reflect the actual purchases of goods or services in
arm's length transactions with independent third parties, except as
otherwise set forth on Schedule 3 (j) (which sets forth the
aggregate amount paid to the related party in 2002 and the fair
value of the goods or services received by the Companies); (ii) are
payable in accordance with their stated terms and were paid in
accordance with past practices in the ordinary course of business.
(k) Real Property / Leases. The Companies own the Real Property listed
in Schedule 3(k) The Companies have good title to such Real
Property, which is free and clear from any Lien, including
restrictions on transfer to anyone at any time. The Real Property
has been constructed in accordance with all applicable building and
cadastral regulations. The architectural drawings and specifications
related to the premises owned by the Companies in Izmir have been
delivered to the Purchaser.
Schedule 3(k) sets forth a true and complete list of each lease of
premises executed by or binding upon any of the Companies as lessee,
sub-lessee, tenant or assignee in addition to the Sublease (the
"Leased Premises") setting forth in each case a brief description of
the premises covered thereby, the rental payable thereunder and the
term (including any extensions available) thereunder. Each such
lease is in full force and effect on the date hereof without any
default or breach thereof by any of the Companies or any other party
thereto and constitutes a valid and binding obligation on the part
of the Companies and all other parties thereto, enforceable in
accordance with its terms.
Page 25 of 41
Neither the Company nor the Subsidiary or the Seller have received
any notice of or writing referring to any requirements or
recommendations by any insurance company which has issued a policy
covering any part of any Leased Premises or Real Property or by any
board of fire underwriters or earthquake specialists or other body
exercising similar functions, requiring or recommending any repairs
or work to be done on any part of any Leased Premises or Real
Property. Each of the Companies enjoy peaceful and undisturbed
possession of the Leased Premises. There is no outstanding and
unobserved or unperformed material obligation with respect to the
Leased Premises necessary to comply with the requirements of any
Governmental Entity. The transactions contemplated by the Agreement
will not result in the termination of any Lease on Real Property
entered into by the Companies and, immediately after the Closing
Date, all Leases will continue in full force and effect in
accordance with the law and the terms and provisions of the
respective lease agreements. None of the Companies has received
notice of and, to the Seller's Best Knowledge, no portion of the
Real Property or Leased Premises is subject to, any pending
condemnation proceeding by any public or quasi-public authority and,
there is no threatened condemnation proceeding with respect thereto.
Each of the properties constituting the Real Property and Leased
Premises is supplied with utilities and other services necessary for
the operation of the facilities located thereon as presently
conducted. Except as set forth on Schedule 3(k), none of the
Companies has sublet, underlet or assigned any portion of the Real
Property or Leased Premises and no third party is in possession of
any portion of the Real Property or Leased Premises. The structures,
improvements and fixtures at or upon the Real Property and Leased
Premises, including, but not limited to, roofs and structural
elements thereof and the electrical, plumbing, heating, ventilation,
air conditioning and similar units and systems, have to date been
maintained in a reasonable manner for the conduct of the Business
and are in reasonable operating condition to allow the Business to
continue to be conducted as heretofore conducted, subject to the
provision of usual and customary maintenance and repair performed in
the ordinary course of business consistent with past practice.
None of the Companies has received written notice of any
assessments, and has any knowledge of any pending assessments,
affecting the Leased Premises or Real Property. Except as set forth
on the Schedule 3(k) hereto, the use of the Leased Premises and Real
Property conforms in all material respects with all covenants and
restrictions and all applicable building, zoning, environmental,
land use and other Laws and no failure of the Leased Premises or
Real Property or their use to so conform will have a Material
Adverse Change on any of the Companies.
(l) Assets and Contracts. The Companies have good title to all Assets
related to the Consumer Business whether or not reflected in the
Financial Statements and the De-merger Balance Sheet (as the case
may be) and such Assets are all that are necessary for the conduct
of the Company's business in the ordinary course as conducted in
2002 free and clear of any Lien.
All Equipment of the Companies, including the Equipment of Xxxxx
Slovakia
Page 26 of 41
Business is in good repair and working condition (normal wear and
tear excepted), is under standard suppliers recommended maintenance
programs and is fit to work for their current use. Seller has
delivered to Purchaser the Equipment Designs. The Equipment Designs
constitute all of the documents necessary to build, rebuild or
service the Equipment. All the Assets comprised in the Consumer
Business formerly used to conduct the business of Xxxxx Slovakia
have been or will be transferred to the Companies in accordance with
the Toll Production Agreement.
Xxxxx Slovakia is not a party to any Contract relating to the
Consumer Business other than Contracts with the Company. Schedule 3
(l) lists each Contract to which the Company or the Subsidiary is a
party or to which the Company, the Subsidiary, or any of their
respective properties is subject or by which any thereof is bound,
that is deemed a Material Contract (as defined in the next
succeeding sentence). Each such Contract was entered into in the
ordinary course of business. A Material Contract for the purposes of
this subsection is each contract that (A) obligates the Company or
the Subsidiary to pay more than 35,000 Euros in any 12 month period,
(B) is not cancellable without penalty or liability within sixty
(60) days, (C) contains a covenant not to compete, (D) provides for
the extension of credit other than in the ordinary course of
business and other than consistent with normal credit terms for
companies carrying out businesses comparable to the Consumer
Business, (E) limits the ability of the Company or the Subsidiary to
conduct its business, including as to manner or place, (F) provides
for a guaranty or indemnity by the Company or the Subsidiary except
for any product warranty in the ordinary course of business, (G)
grants a power of attorney, agency or similar authority to another
person or entity except for those contracts granting powers of
attorney to the Person listed in Schedule 3(l), (H) contains an
option or a right of first refusal, (I) contains a right or
obligation of or to any Affiliate, officer or director, or of the
Company or the Subsidiary, including, without limitation,
agreements, commitments or arrangements pursuant to which any
amounts may become payable by the Company or the Subsidiary (whether
currently or in the future) to current or former officers, directors
or employees of the Company or other Persons as a result of the
change of control of the Company as contemplated by this Agreement,
(J) constitutes a union or collective bargaining agreement or
provides for severance benefits to any officer, director or employee
of the Company or the Subsidiary other than those severance benefits
provided under any national collective bargaining agreement or law
and rules applicable to the Company or the Subsidiary and their
respective employees, (K) relates to product sale and distribution
(such as a frame or similar Contract or distribution agreement), (L)
involves joint marketing or product development, (M) relates to
manufacturing, evaluation or testing or regulatory compliance by
other parties with respect to products of the Company or its
Subsidiaries, (N) is a joint venture or partnership agreement or
arrangement, (O) is a consignment or similar agreement relating to
inventory or equipment, or (Q) was not made in the ordinary course
of business and consistent with the Company's past custom and
practices, as reasonably determined by Seller.
True, correct and complete copies of the Material Contracts
appearing on
Page 27 of 41
Schedule 3(l), including all amendments and supplements, have been
delivered or made available to Purchaser. Schedule 3(l) designates
each Contract for which a Consent is required to execute this
Agreement or consummate the transaction contemplated by this
Agreement. All required Consents have been obtained.
Each Contract is valid and in full force and effect; the Company or
the Subsidiary and each other party to the Contract have duly
performed all its obligations thereunder to the extent that such
obligations to perform have accrued; and no breach or default,
alleged breach or default, or event which would (with the passage of
time, notice or both) constitute a breach or default thereunder by
the Company or any Subsidiary, as the case may be (or, to the
knowledge of the Seller, any other party or obligor with respect
thereto), has occurred or as a result of this Agreement or its
performance will occur. The consummation of the transactions
contemplated by this Agreement will not (and will not give any
person a right to) terminate or modify any rights of, or accelerate
or augment any obligation of the Company or any Subsidiary under,
any of the Contracts or Material Contracts so listed except for
those listed in Schedule3(l).
None of the Contracts entered into by the Companies violate
antitrust provisions or are instruments for unlawful competition.
(m) Intellectual Property. Schedule 3(m) sets forth a complete and
correct list as of the Closing Date of all Intellectual Property and
proprietary rights owned by, licensed to, or otherwise used by the
Companies and material to the conduct of each of their respective
business as currently conducted. Schedule 3(m) further sets forth a
description of whether such Intellectual Property is owned
(exclusively or jointly) or licensed by / to the Companies, and
lists such ownership/licensing by Company. Except as set forth on
the Schedule 3(m) hereto (i) to the Best Knowledge of the Seller,
neither the Company nor the Subsidiary, nor Xxxxx nor Xxxxx Slovakia
(to the extent that such infringement has a negative impact on the
Companies) infringes or otherwise violates the Intellectual Property
or proprietary rights of any third party; (ii) no claim has been
asserted or threatened in writing by any person with respect to the
ownership, validity, license or use of, or any infringement
resulting from, any of the Intellectual Property or proprietary
rights used by the Company or the Subsidiary or the production,
provision or sale of any services or products by the Company or the
Subsidiary and, to the Best Knowledge of the Seller there is no
basis for any such claims; (iii) each of the Companies has the right
to produce, provide and sell the services and products produced,
provided and sold by it and to conduct the business as heretofore
conducted, and the consummation of the transactions contemplated
hereby will not terminate, alter or impair any such rights; and (iv)
neither the Seller, Xxxxx or any of their Affiliates, nor any
officer, director or employee of the Company or the Subsidiary own
or have any interest in any Intellectual Property or proprietary
rights used by the Company or the Subsidiary in connection with the
business.
All Intellectual Property licensed or jointly owned by third parties
is being
Page 28 of 41
utilized by the Companies in full compliance with any license,
distribution, commercialization or development agreements. All the
Intellectual Property listed in Schedule3(m) is being validly used
by the Companies and to the Best Knowledge of the Seller, the
Companies have complied with all obligations relating to its
registration and they do not breach or infringe any third parties'
rights except as indicated in Schedule 3(m). To the Best Knowledge
of the Seller, there is no reason to believe that the use of the
Intellectual Property after the Closing will give rise to claims of
third parties.
Seller is not aware of any illegal, unauthorized or unwanted
disclosures relating to any trade secret or confidential information
relating to Intellectual Property.
(n) Taxes. Except as provided on Schedule 3(n):
i. The Companies have filed all Tax Returns required to be filed
and has filed then when due. All Tax Returns filed under
applicable laws and regulations by or on behalf of the
Companies were in all material respects true, complete and
correct. The Companies have paid all Taxes due within the time
and in the manner prescribed by law, whether or not shown on
such returns.
ii. The Companies have each complied in all material respects with
all applicable laws, rules and regulations relating to the
payment and withholding of Taxes or similar provisions under
any applicable laws (foreign or domestic) and have, within the
time and in the manner prescribed by law, withheld from
employee wages and paid over to the proper governmental
authorities all amounts required to be so withheld and paid
over under all applicable laws.
iii. None of the Companies has any liability for unpaid Taxes,
whether asserted or unasserted, contingent or otherwise,
except for Taxes which will be payable in the future for 2002
which shall not exceed 350,000 Euros in the aggregate.
iv. There are no Tax grouping arrangements in place in respect of
any of the Companies nor have any been in place during the six
years prior to the Closing Date. There is no dispute or
disagreement outstanding nor at the date of the Agreement does
any of the Companies contemplate commencing any dispute or
disagreement with any revenue authority regarding a liability
or potential liability to any Tax (including in penalties or
interest) or recovery from any of the Companies or regarding
the availability of any relief from Tax and there are no
circumstances which make it likely that any such dispute or
disagreement will commence.
v. No assessments or written notices of deficiency have been
received by the Companies (nor to their knowledge are any
threatened) with respect to any Tax Returns which the
Companies have filed with respect to taxable periods ended on
or before the Closing Date.
Page 29 of 41
vi. There are no liens for Taxes (other than for current Taxes not
yet due and payable) upon the Assets of the Companies.
vii. No audit or other examination of any Tax Return of the
Companies is presently in progress, nor has the Companies been
notified in writing of, nor has there been, any request for
such an audit or other examination with respect to any taxable
period of the Companies ending on or prior to the Closing
Date.
viii. The Companies have not executed any waiver of any statute of
limitations on or extended the period for the assessment or
collection of any Tax. None of the Companies is a party to any
Tax Sharing Agreement or arrangement, written or oral.
ix. There are no rulings, requests for rulings or closing
agreements with any taxing authority which could affect the
Taxes of the Companies for any period after the Closing Date.
x. The Companies are resident in the respective jurisdictions in
which they have their registered offices and none of the
Companies has a permanent establishment or branch as defined
by Tax regulations outside of its jurisdiction of residence,
except for the branch of the Subsidiary located in the free
tax zone of Izmir.
xi. Any Extraordinary Transaction undertaken by the Companies has
been correctly accounted for and Tax duly and timely paid in
accordance with applicable laws and regulations.
xii. All transactions to which any or all of the Companies are
parties consummated in the period up to the Closing Date have
been conducted on the basis of arm's length terms, as defined
by, and in compliance with applicable laws and regulations.
xiii. None of the Companies has any liability to Tax in respect of
any income, profits or gains which it has been deemed for the
purposes of any Tax legislation to have earned, accrued or
received but which it has not actually earned, accrued or
received or which can be imputed pursuant to controlled
foreign company or similar legislation of any jurisdiction.
xiv. Each of the Companies are entitled to benefit from the
exemptions of tax listed in Schedule 3(n) (which schedule
shall include details of Turkish exemption and eligibility).
All clearances, consents and permits relating to Tax obtained
by Seller, Xxxxx or any of the Companies have been properly
obtained and all information supplied to the appropriate Tax
authority in connection with such clearance, license consent
and permit was complete and accurate in all material respects;
and any transaction for which such clearance, license, permit
or consent was obtained has been carried out only in
accordance with the terms thereof and the
Page 30 of 41
application on which the clearance, license, permit or consent
was based.
xv. The Companies have timely made all claims necessary to obtain
relief from double Tax under any relevant bilateral convention
relating to double taxation in respect of income, profits or
gains or payments accrued in their accounts or earned,
received or made prior to the Date of Closing.
xvi. The values of the assets and liabilities shown in the
Financial Statements and De-merger Balance Sheet represents
the values for tax purposes;
xvii. Any Extraordinary Transaction to which any of the Seller,
Xxxxx and the Companies has been party has been undertaken for
good and valid business purposes, has not and will not give
rise to any liability, contingent or otherwise, including but
not limited to Tax liabilities or liabilities towards
Employees, to be borne by the Company or the Subsidiary.
The Assets listed in the De-merger Balance Sheet, and in any event
all Assets transferred by Xxxxx to the Company as a result of any
Extraordinary Transaction, comprise all the Assets necessary to
conduct the Consumer Business as presently conducted. All tax
credits and other tax attributes have been allocated to the Company
in accordance with all applicable tax regulations and consistent
with the allocation of assets and liabilities on the Company's De
merger balance sheet.
(o) Employees, Consultants and Agents. The names of the Employees of the
Companies are set forth on Schedule 3(o), together with all the
relevant information (including terms of employment, category of the
Employee, qualification, seniority within the Companies and eventual
benefits granted). These employees are all those who are needed to
conduct the Consumer Business.
All employment relationships of the Companies, whether concerning
former or present Employees of the Companies, are governed by the
applicable national collective bargaining agreements and the
Employees have not been granted economic conditions or indemnities
which are lower than the applicable national collective bargaining
agreements or than the law. All agreements with temporary workers
entered into by the Companies in the past have been converted into
indefinite term agreements or have expired. All existing agreements
with temporary workers have been entered into in compliance with
law. No special treatment of any kind has been granted in the past
by the Companies to any of their former or present Employees nor
have they executed specific and special agreements with any former
or present Employee (including Contratti Aziendali). No employees or
agents working for any of the Companies receive compensation
proportional to profits or turnover except for those compensation
provided by any applicable law. No written or oral commitment or
undertaking has been made to employees of any of the Companies with
Page 31 of 41
respect to any future increase of salaries, compensation, or other
benefits other than those deriving by any applicable national
collective bargaining agreements and/or by law. No group dismissals
or resignations are currently in progress among the employees. No
stock option plan or special compensation or severance pay
arrangement that would be effective upon the change of control of
the Company has been concluded with or promised to any employees or
directors of any of the Companies.
The Companies are in compliance with all obligations deriving from
such employment relationships, whether relating to the compensation
or to the aspects of employment (including, but not limited to,
severance indemnity, paid holidays and social security, duties
relating to hiring disabled workers, secondments, etc.). In
particular, the Companies have complied with all the training
obligations related to the apprenticeship agreements they have
entered into. Moreover, no former or existing Employee of the
Companies has any right or claim towards the Companies concerning
the termination, conclusion or any other aspect of his employment
relationship, including but not limited to paid vacations, charges,
qualification and injuries, with the Companies, apart from the
claims listed in Schedule 3(p) (Litigation) and except for any right
accrued as of the Closing Date and resulting from any Companies'
Records.
There have been no disputes between the Companies and the Trade
Unions within the past three years. The Companies have not entered
into nor have made any application in respect to any lay-off
procedure such as "cassa integrazione" or "mobilita" or similar
procedures concerning the Employees.
All consulting or service agreements entered into by the Companies
with individuals and/or other entities are valid, not voidable and
binding agreements for the services provided for therein. Neither
the Companies nor the counterpart has defaulted under the above
agreements or has grounds for claiming the other party's default.
The Companies have fully complied with the agreements entered into
with consultants or service providers, including but not limited to
the payment of contractual considerations and Taxes. No consulting
or service agreements entered into by the Companies may be deemed as
employment or agency contracts.
The Companies have fully complied with the agreements entered into
with the agents comprised in their sales force, including but not
limited to the payment of commissions and Taxes. Such agreements are
fully valid and binding and not voidable in any way. No agreements
entered into with the agents comprised in their sales force may be
deemed as employment contracts.
All salaries, bonuses and/or other payments to employees of the
Companies are accurately reflected on the books and Records of the
Companies and no payments for service to or on behalf of any of the
Companies was made to any employee of the Companies by any third
party.
(p) Litigation, disputes and arbitration. The Companies are parties to
the pending
Page 32 of 41
litigation indicated in Schedule 3(p) There is no other litigation
pending nor is there any litigation threatened in writing, whether
before national or foreign court, by or against the Companies,
including but not limited to, (a) claims by any third parties which
could adversely affect the rights of the Companies to use any
Intellectual Property, (b) judicial or administrative proceedings
having as an object the ascertainment or the enforcement of
liabilities of the Companies for Tax, (c) judicial or administrative
proceedings concerning environmental aspects, or (d) Material
Contracts. Except otherwise set forth in Schedule 3(p), there are no
outstanding disputes with customers, vendors, employees, tax
authorities, municipal authorities or others which if not resolved
in favour of the other party, could result in future litigation.
(q) Compliance with Law. The Companies are not in violation of, and no
authority has asserted such a violation against either of the
Companies, any applicable laws and regulations, including but not
limited to Law no. 675 of December 31, 1996 on data protection and
consequent regulations, Decree no. 518 of December 29, 1992 on
software protection, laws and regulations concerning safety at the
workplace (including Legislative Decree no. 626 of 1994) and
applicable pollution and environmental laws and regulations in
general relating to emissions, discharges and releases in the
environment of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes.
To the Best Knowledge of Seller no laws have been enacted that set
new disciplines or standards, in any way applicable to Companies,
that would determine a Material Adverse Change.
The Companies are not obliged by applicable laws or regulations to
make substantial investments or repairs of any of their Assets that
could have a Material Adverse Change on the Companies.
(r) Relationships with Interested Parties and Inter-company
Transactions. No current or former shareholder (whether direct or
indirect) or Affiliate of the Companies, or, to the Best Knowledge
of Seller, officer or director of same, transacts any business,
either directly or indirectly, with the Companies nor owns or has
any interest, except as indicated in Schedule 3(r), directly or
indirectly, in whole or in part, in any Assets used by the
Companies. Transactions among and between the Companies have always
been entered into on an arm's length basis and on terms no less
favourable than could have been obtained from an unaffiliated third
party.
Moreover, no current or former shareholder (whether direct or
indirect) or Affiliate of the Companies or, to the Best Knowledge of
Seller, officer, director, Employee of the same has any interest of
whatsoever nature in any competitor, supplier or customer of the
Companies with respect to the Consumer Business.
All transactions to which any or all of the Companies are parties
consummated
Page 33 of 41
in the period up to the Closing Date have been conducted on the
basis of arm's length terms and in compliance with applicable laws
and regulations.
(s) Product liability and insurance. There are no liabilities, actual or
contingent, of any type and amount, with respect to any products
manufactured, sold, distributed or otherwise traded by the
Companies, Xxxxx and/or Xxxxx Slovakia and all such products conform
to their specifications and were manufactured in accordance with
their designs and drawings and are saleable in the ordinary course
of business and contain no manufacturing or design defects.
Schedule 3(s) lists all insurance policies presently carried by the
Companies or currently in force with respect to its business and
properties (showing as to each policy or binder the carrier, policy
number, coverage limits, expiration dates, annual premiums and a
general description of the type of coverage provided). The existing
insurance is and will continue to be, in respect of the nature of
the risks insured against and the amount of coverage provided, in
full force and effect up to the Closing Date and until its natural
renewal/expiry date. All insurance policies are issued by insurers
of recognized responsibility and are fully paid as to all premiums
as of the Closing Date.
The Companies have not failed to give any notice or file any claim
under such insurance policies in a timely fashion, such that all
claims will be paid by the insurer, nor has it received any
notification of cancellation of any such policies or that any of
them will not be renewed. There is no claim, demand or offset, or
any state of facts or occurrence of events which might form the
basis of any claim, demand or offset, which may increase the
premiums or impair the full value of said insurance policies or
result in non-payment of an insurance claim.
(t) Bank Accounts, Loans, Credit Facilities. Schedule 3(t) indicates the
name and locations of all banks in which the Companies have an
account or safe deposit, and lists such accounts or boxes together
with the authorized proxies thereto.
Except for the Funded Debt listed on Schedule 3(t) the Companies are
not a party to any loan agreements, overdrafts, factoring, leasing
or similar short term or long term borrowing facilities or other
credit facilities. The Company shall have no Funded Debt on the
Closing Date except as indicated in Schedule 3(t) which shall be
treated according to Section 3.3.3. hereof.
The Companies have not made any loan to any third parties except for
accounts receivable arising from the sale of goods or services to
unaffiliated third parties in the ordinary course of business.
Schedule 3(t) lists all the guarantees, comfort letters, letters of
credit and similar agreements or undertakings issued by the
Companies and outstanding to third parties. Schedule 3(t) lists all
the guarantees, comfort letters, letters of credit and similar
agreements or undertakings issued by any third party for the benefit
of the Companies and all such undertakings and agreements are in
full force and effect. There are no other guarantees, comfort
letters, letters of credit and similar agreements or undertakings
except for those listed in Schedules 3(t). The consummation of the
transactions contemplated in this Agreement will not
Page 34 of 41
lead to the termination, interruption, suspension or revocation of
the instruments listed in Schedule 3(t).
At the Closing, the Companies shall be cash free; provided, however,
all of the Companies' bank accounts shall remain in existence on the
Closing Date.
(u) Products. The products designed, produced, manufactured, distributed
or sold by the Companies comply with all Laws, regulations and
standards applicable to them in the countries where the Companies
sell or distribute the same. To the Best Knowledge of Seller there
has been no default or violation of the Companies or Xxxxx Slovakia
under the Laws, regulations and standards applicable to them.
(v) Information Technology. The Companies' information technology
together with the information technology being supplied to the
Companies pursuant to the IT Agreement and Sublease Agreement are
adequate to conduct the business of the Companies as currently
conducted and requires no investment in order to allow it to
continue to operate in such a manner.
(w) Extraordinary transactions / Consumer Business. The Employees
transferred from Xxxxx to the Company as a result of any
Extraordinary Transaction, comprise all and only the Employees
previously substantially dedicated to the Consumer Business of
Xxxxx, except for Employees listed in Schedule 3(w) who have been
transferred to the Company after the De-merger. The Employees
transferred from Xxxxx to the Company as a result of any
Extraordinary Transaction and those listed in Schedule 3(w) comprise
all and only the Employees previously substantially dedicated to the
Consumer Business.
(x) Loss Contracts. Except as disclosed on Schedule 3(x), to the Best
Knowledge of Seller, the Company is not a party to any Contract
pursuant to which it is obliged to furnish the products covered by
such Contract, taken as a whole, at an actual gross margin loss.
(y) No Governmental Approvals Required. Other than as set forth on
Schedule 3(y) (collectively, the "Company Regulatory Filings"), no
authorization, consent, approval, order, license or permit from, or
filing, registration or qualification with, any government or
governmental agency is required to authorize or permit the execution
and delivery of this Agreement by the Seller and the consummation by
the Seller of the transactions contemplated hereby.
(z) Disclosure. To the Best Knowledge of Seller, no representation or
warranty made by Seller, in this Agreement contains or will contain
an untrue statement of a material fact or omits or will omit a
material fact necessary to make the statements contained therein, in
light of the circumstances in which they were or are made, not false
or misleading.
Page 35 of 41
ANNEX 4 - COVENANTS
ARTICLE 1 - SELLER'S COVENANTS
1.1 Tax Matter; Tax Disputes. Seller shall meet all its obligations with
regard to the payment of any Tax due as a consequence of the sale of the
Quota and transactions contemplated herein. In the event the Companies are
required, in connection with Tax disputes, to provide the fiscal
authorities with any guarantees or security originating from pre-Closing
circumstances until final settlement of such disputes, Seller hereby
agrees, at its option, to either directly provide such guarantees and
security required by the fiscal authorities instead of the Companies
concerned or to provide the Companies with bank guarantees or other
security acceptable to the Companies for an equal amount, on the terms and
conditions designated by the Companies.
If Seller requests that the Purchaser cause the relevant Company to adhere
to any available Tax amnesty, Purchaser shall have the option of (i)
agreeing to cause the relevant Company to participate in the Tax amnesty,
in which case, Seller shall advance to Purchaser or its designee all funds
required pursuant to the Tax Amnesty program plus an amount equal to the
amount of Taxes, if any, which any of the Companies has to pay as a result
of receiving such funds (collectively, the "Tax Amnesty Amount") prior to
the Tax amnesty deadline or (ii) refusing Seller's request, in which case
Purchaser shall only be entitled to make an indemnification claim against
the Seller for Tax liabilities up to the Tax Amnesty Amount, provided and
to the extent that participation would have eliminated such Tax
liabilities.
1.2 Credit Collection. Without prejudice to provisions of Annex 6, following
the Closing, Seller and Xxxxx, if requested by Purchaser, will assist the
Company and Subsidiary which will bear all related cost and expenses, in
collecting their eventual outstanding account receivables. In the event
account receivables of either of the Companies are paid to Seller or Xxxxx
or any of their Affiliates after the Closing Date, Seller and Xxxxx will
hold them in trust for the Companies and will pay them to the Companies
promptly upon receipt.
1.3 Form 8-K. In the event the Purchaser determines that Technitrol, Inc. is
required to file a Form 8-K with the U.S. Securities and Exchange
Commission ("SEC") pursuant to Item 2 of such Form 8-K (the "Form 8-K") as
a result of the consummation of the transactions contemplated in this
Agreement (which determination shall be made as soon as practicable after
Purchaser receives the information reasonably requested by it from Seller
in order to make such determination), Seller agrees to deliver to the
Purchaser such consolidated financial statements for the Company, audited
by Eldor's independent public accountants in accordance with U.S.
generally accepted auditing standards and prepared in accordance with or
reconciled to GAAP, as required pursuant to Item 7 of the Form 8-K, in
sufficient time for the Purchaser to timely file the Form 8-K with the
SEC. All costs and fees (if any) which may be incurred by the Seller for
the above purposes will be promptly anticipated and, in any event,
reimbursed by the Purchaser. In any other event shall be borne directly by
the Purchaser.
Page 36 of 41
1.4 Tax Matters. After the Closing Date, the parties will provide and will
cause their Affiliates to provide the other party with such cooperation
and information as either of them reasonably may request of the other in
filing any Tax Return, amended Tax Return, determining a liability for
Taxes or participating in or conducting any audit or other proceeding in
respect of Taxes. Without limiting the scope of the foregoing, the parties
shall each make available to the other, as reasonably requested, all
information, records or documents in their possession relating to all Tax
matters and Tax Returns of the Companies for all taxable periods prior to
or including the Closing Date and shall preserve all such information,
records and documents until 60 days after the expiration of any applicable
Tax statute of limitations or extensions thereof.
1.5 Reserved.
1.6 Seller's Mandatory Liquidity. Seller covenants and agrees to maintain (a)
until the first anniversary of the Closing Date aggregate liquid assets
(as defined below) of 20 million euros; (b) thereafter and until the
expiration of eighteenth month after the Closing Date aggregate liquid
assets (as defined below) of 10 million euros, and (c) thereafter and
until the third anniversary of the Closing Date aggregate liquid assets
(as defined below) of 5 million euros. For purposes of this Section, the
term "liquid assets" means:
A) As to not less than 80% of the aggregate liquid assets at the end of
any fiscal quarter:
1. cash investments;
2. A bond rated A- or better by Standard and Poors or A3 or better by
Moody's which matures within one year of investment by Seller and
are sold by 3 or more dealers who are willing to provide price
quotes (the pricing of the bond on a given date would be determined
by averaging the quote of 2 or more dealers provided the dealers
quotes don't vary by more than 5% and if the quotes vary by more
than 5%, an additional quote must be obtained);
3. Investments which are restricted to maturities of one year or less
and (a) direct obligations of sovereign governments or (b)
euro-commercial paper or floating rate notes issued by corporations
rated at least A-1 by Standard & Poor's or P-1 by Moody's or (c)
euro certificates of deposit or euro time deposits issued by
commercial banks with short term ratings of at least A-1 by Standard
& Poor's or P-1 by Moody's or (d) euro money market funds rated AAA
by Standard & Poor's Aaa by Moody's (The money market funds must
have daily redemption privileges and must have the stated goal of
principal protection); and/or
4. the ABN AMRO Global Liq Euro - Inst; Xxxxxxx Sachs Euro Liq Resv
Fund; or JPMF Euro Liquidity Fund/Dist;
B) As to not more than 20% of the aggregate liquid assets at the end of
any fiscal quarter, shares of companies listed on a national Stock
Exchange and for
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which quotations are available on a daily basis.
At the end of each fiscal quarter (March 31, June 30, September 30 and
December 31), during the above periods, the Seller shall execute and
deliver a certificate to Purchaser certifying that it currently is, and
has been since the Closing, in compliance with the covenants contained in
this Section and such certificate shall be accompanied by copies of
brokerage or similar statements indicating the assets held and the value
thereof as of the last day of the fiscal quarter to which such certificate
relates. To the extent any of the covenants in this Section have been
breached and Purchaser has sought indemnification from Seller pursuant to
Section 6 of the Agreement, Seller shall also be liable to indemnify
Purchaser in full for any and all Losses caused by a breach of this
Section.
Seller shall and/or shall cause its Affiliates to deliver copies of all
Equipment Designs to Purchaser or its designee within thirty (30) days of
the Closing Date. In addition, Seller shall and/or shall cause its
Affiliates after Closing to, transfer to the Company or its designee any
additional Equipment Designs that are necessary to build, rebuild or
service the Equipment to the extent it did not properly transfer title to
any such Equipment Designs to the Company before Closing and shall
immediately provide copies of such Equipment Designs to Purchaser or its
designee upon request by the Purchaser.
1.7 Seller shall or shall cause its Affiliates to sell and transfer the
Slovakian Assets (as defined in the Toll Production Agreement), in
accordance with the terms of the Toll Production Agreement.
ARTICLE 2 - PURCHASER'S COVENANTS
2.1 Liabilities. Purchaser undertakes to cause the Company or Subsidiary, as
may be the case, to duly pay, perform and discharge all liabilities they
are subject to, including the liabilities identified in the De-Merger
Balance Sheet (unless they are being contested in good faith) and which
are not liabilities for which they are entitled to indemnification from
Seller under this Agreement.
ARTICLE 3 - PURCHASER'S AND SELLER'S COVENANTS
3.1 Best Efforts and Further Assurances. Each of the parties to this Agreement
shall use its reasonable best efforts to effectuate the transactions
contemplated hereby. Each party hereto, at the reasonable request of
another party hereto, shall execute and deliver such other instruments and
do and perform such other acts and things as may be necessary or desirable
for effecting completely the consummation of the transactions contemplated
hereby.
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ANNEX 6 - INDEMNIFICATION
1.1 Notice. If the Indemnified Party intends to seek indemnification under
Article 6 of the Agreement it will give reasonably prompt written notice
to the Indemnifying Party of the assertion of any claim, or the
commencement of any action, suit or proceeding, or the finding out of any
misrepresentation or breach of any representation, warranty, covenant or
condition made by the Indemnifying Party in respect of which indemnity may
be sought, no later than 60 (sixty) Business Days after the Indemnified
Party actually knows with reasonable particularity, of the existence of
the event from which may derive the Loss giving rise to such a claim; but
in any event no later than the time limitations set forth in Article 6.
Any notice given by the Indemnified Party shall contain brief details of
the relevant event and an estimate (if possible) of the Loss(es) which may
derive from such event; it being understood that the Indemnified Party
will give the Indemnifying Party such information as the Indemnifying
Party may reasonably request. No failure to give such information will
relieve the Indemnifying Party of any liability, except to the extent the
Indemnifying Party has suffered actual prejudice by such failure.
1.2 Indemnification Pursuant to the Commencement of a Legal or Administrative
Procedure. If the Indemnified Party seeks indemnification as a consequence
of a legal, arbitral or administrative procedure commenced against it or
that it intends to commence as a consequence of a breach or
misrepresentation of any representation, warranty or covenant contained in
the Agreement, the Indemnified Party will so notify the Indemnifying Party
within the term stated in section 1.1. of this Annex 6, requesting the
appointment of a legal counsel amongst a list of three indicated in the
Indemnified Party's notice; it being understood that the indicated legal
counsels will be of different law firms. If the Indemnifying Party fails
to appoint the legal counsel within five days from the receipt of the
notice or if the Indemnifying Party appoints a legal counsel other than
one of those indicated in the Indemnified Party's notice, then the
Indemnified Party will have the right to appoint its own legal counsel
directly.
As a consequence of the above, the Indemnifying Party may or may not
participate in the defense of any such procedure, but, in any case, it
will bear the costs of such defense, including, but not limited to, the
reasonable legal expenses of the Indemnified Party.
The parties will cooperate in the defense or prosecution thereof and will
furnish such records, information and testimony, and attend at such
conferences, hearings, trials and appeals as may reasonably be requested
in connection therewith.
The Indemnifying Party will be liable for any outcome of the legal,
arbitral or administrative procedure, including the consequences of any
settlement previously approved in writing by the Indemnified Party, and
will hold the Indemnified Party harmless of any damage and expense related
thereto, provided that the outcome derives from a definitive or not
appealable or not challengeable judgment, decision, award, decree or
order. The parties however agree that, should a non definitive or
appealable or challengeable judgment, decision, award, decree or order,
including those originating from Tax disputes, require the Companies to
post a bond, surety or any
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other kind of collateral guaranty, the Seller will post such bond, surety
or other kind of collateral guaranty or provide the Companies with cash
funds for doing so. With respect to any settlements, the Indemnified Party
will seek the Indemnifying Party's prior consent, which will not be
unreasonably refused. The Indemnified Party will give notice to the
Indemnifying Party of the conclusion of the legal or administrative
procedure requesting the payment of the eventual indemnity, if any.
1.3 Indemnification in any Other Event. Should an indemnity become due under
Article 6 of the Agreement for any event other than the commencement of a
legal or administrative procedure, the Indemnified Party will so notify
the Indemnifying Party, giving written evidence and requesting the
indemnity to be paid by the Indemnifying Party in accordance with the
terms and conditions set forth in section1.1 of this Annex 6.
1.4 Payment. The payment of any indemnity due pursuant to Article 6 and this
Annex 6 will be made within 15 days after any Losses become finally
assessed pursuant to: (i) an acceptance by the Indemnifying Party; or (ii)
an agreement between the Parties; or (iii) an arbitration award in
accordance with Section 8.8 hereof. Should the payment of an indemnity be
refused by the Indemnifying Party, and such refusal is not upheld in its
entirety in a subsequent arbitration proceeding according to the terms of
Section 8.8 of this Agreement, the Indemnified Party will be entitled to
received interest on the amount of the indemnity as awarded, from the date
of the request and until the date of effective payment, at the Prime Rate.
In the event payment is not made within the above term and if the
Indemnified Party is a Purchaser Indemnified Party, Purchaser will be
entitled alternatively to cash the Bank Guarantee and/or act in order to
collect the indemnity.
1.5 Indemnification concerning receivables. Notwithstanding any contrary
provisions set forth in Article 6 and this Annex 6, the following
provisions shall apply only in case of any indemnification due with
respect to any commercial accounts receivables not being collected by the
Company or the Subsidiary within the terms set forth in Section 1.1(i) of
Annex 3, provided that the relevant creditor has carried out its
commercially reasonable best efforts consistent with past practices of
Xxxxx Group to collect such receivables provided such creditor shall in no
event be required to bring a legal action against any such customer or
third party (hereinafter referred to as the "Non Collected Receivables"):
(i) on a monthly basis, Purchaser or its designee communicate to Seller
in writing the list of the Non Collected Receivables during the
month preceding such notice, the known or presumed reason for non
payment and the actions taken by the relevant creditor (hereinafter
referred to as the "Report");
(ii) within 90 days after the submission of each Report to Seller, the
Purchaser or its designee will deliver a written notice to Seller
identifying which of the Non-Collected Receivables identified in
such Report that Seller is required to purchase without recourse
("pro-soluto") for an amount equal to the face value thereof (the
"Purchase Notice");
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(iii) Seller or its designee shall within and not later than ten (10) days
after the receipt of each Purchase Report, purchase without recourse
("pro-soluto") the Non Collected Receivables identified in the
Purchase Notice for an amount equal to the face value thereof;
(iv) unless otherwise requested by the Seller, the assignment to the
Seller (or its Affiliate) of the Non Collected Receivables shall not
be notified to the debtor and the relevant creditor shall continue
in its efforts to collect the Non Collected Receivables; it being
understood that if any Non Collected Receivable is collected by the
relevant creditor (i.e. the Company or the Subsidiary) at any time
after assignment to the Seller (or any its Affiliate), the amount so
collected shall immediately be credited to the Seller or the
Affiliate which will have purchased the Non Collected Receivables at
the same value as of the date of actual payment by the relevant
debtor; and
(v) For the purposes of this Section 1.5, it is agreed upon by the
Parties that the Non Collected Receivables shall not include any
receivable not collected in accordance within the term set forth in
section 1.1(i) of Annex 6 by reason of any proceedings started by
the relevant debtor against the Company or the Subsidiary owing such
receivable to the extent such proceeding by the debtor relates to
products manufactured by the Companies after the Closing.
1.6 Mitigation. The Indemnified Party shall comply with Article 1227 of the
Italian Civil Code.
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