EXHIBIT 99.1
SHARE PURCHASE AGREEMENT
BY AND AMONG:
OPTELECOM, INC.
NKF ELECTRONICS, B.V.
NKF VASTGOED B.V.
DRAKA HOLDING N.V.
MARCH 8, 2005
TABLE OF CONTENTS
Page
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SHARE PURCHASE AGREEMENT
ARTICLE 1 THE ACQUISITION..................................................... 2
1.1 The Acquisition................................................. 2
1.2 Closing......................................................... 2
1.3 Acquisition Consideration....................................... 2
1.4 Adjustment to Acquisition Consideration......................... 3
ARTICLE 2 REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY............... 5
2.1 Organization and Qualification.................................. 5
2.2 Authority Relative to this Agreement............................ 5
2.3 Capitalization.................................................. 6
2.4 Subsidiaries.................................................... 6
2.5 Directors and Officers.......................................... 7
2.6 No Conflicts.................................................... 7
2.7 Company Financial Statements.................................... 7
2.8 Books and Records; Organizational Documents..................... 8
2.9 Absence of Changes.............................................. 8
2.10 No Undisclosed Liabilities...................................... 11
2.11 Taxes........................................................... 11
2.12 Legal Proceedings............................................... 14
2.13 Compliance with Laws and Orders................................. 15
2.14 Employee Benefits............................................... 15
2.15 Real Property................................................... 16
2.16 Tangible Personal Property...................................... 17
2.17 Intellectual Property........................................... 17
2.18 Contracts....................................................... 20
2.19 Insurance....................................................... 21
2.20 Affiliate Transactions.......................................... 21
2.21 Employees; Labor Relations...................................... 22
2.22 Environmental Matters........................................... 23
2.23 Substantial Customers and Suppliers............................. 24
2.24 Accounts Receivable............................................. 24
2.25 Inventory....................................................... 24
2.26 Other Negotiations; Brokers; Third Party Expenses............... 24
2.27 Banks and Brokerage Accounts.................................... 24
2.28 Warranty Obligations............................................ 25
2.29 Corrupt Practices............................................... 25
2.30 Assignment and Transfer of Assets and Properties ............... 25
2.31 Approvals....................................................... 25
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ARTICLE 2A REPRESENTATIONS AND WARRANTIES CONCERNING SELLERS................................. 26
2A.1 Ownership of Company Capital Shares........................................... 26
2A.2 Organization and Qualification................................................ 26
2A.3 Authority Relative to this Agreement.......................................... 26
2A.4 No Conflicts.................................................................. 26
2A.5 Agreements.................................................................... 27
ARTICLE 3 REPRESENTATIONS AND WARRANTIES CONCERNING PURCHASER............................... 28
3.1 Organization and Qualification................................................ 28
3.2 Authority Relative to this Agreement.......................................... 28
3.3 Other Negotiations; Brokers; Third Party Expenses............................. 28
3.4 SEC Compliance................................................................ 29
3.5 No Conflicts.................................................................. 30
3.6 No Undisclosed Liabilities.................................................... 31
3.7 Legal Proceedings............................................................. 31
3.8 Compliance with Laws and Orders............................................... 31
3.9 Approvals..................................................................... 31
ARTICLE 4 ADDITIONAL AGREEMENTS............................................................. 32
4.1 Covenant Not to Compete....................................................... 32
4.2 Confidentiality............................................................... 32
4.3 Expenses...................................................................... 34
4.4 Public Disclosure............................................................. 34
4.5 Additional Documents and Further Assurances; Cooperation...................... 34
4.6 Employee Matters.............................................................. 35
4.7 Financial Statements.......................................................... 37
4.8 Certain Tax Matters........................................................... 37
4.9 Inter-Company Debt............................................................ 38
4.10 Divestment of Spanish Cable Business.......................................... 38
4.11 Ongoing Strategic Relationship................................................ 39
4.12 Spanish Cable Receivables .................................................... 39
4.13 Service Level Arrangements.................................................... 39
4.14 Tax Step Up................................................................... 41
ARTICLE 5 CONDITIONS TO CLOSING............................................................. 43
5.1 Conditions to Obligations of Each Party to Effect the Acquisition............. 43
5.2 Additional Conditions to Obligations of Sellers............................... 43
5.3 Additional Conditions to the Obligations of Purchaser......................... 44
ARTICLE 6 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS; INDEMNIFICATION.. 46
6.1 Survival of Representations, Warranties, Covenants and Agreements............. 46
6.2 Indemnification............................................................... 46
6.3 Indemnification Procedures.................................................... 48
6.4 Right of Offset............................................................... 49
6.5 No Consequential Damages; Sole Remedy......................................... 49
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ARTICLE 7 MISCELLANEOUS PROVISIONS.......................................................... 50
7.1 Notices....................................................................... 50
7.2 Entire Agreement.............................................................. 51
7.3 Further Assurances; Post-Closing Cooperation.................................. 51
7.4 Waiver........................................................................ 51
7.5 Third Party Beneficiaries..................................................... 51
7.6 No Assignment; Binding Effect................................................. 51
7.7 Headings...................................................................... 51
7.8 Invalid Provisions............................................................ 52
7.9 Governing Law, Submission to Jurisdiction..................................... 52
7.10 WAIVER OF TRIAL BY JURY....................................................... 52
7.11 Construction.................................................................. 52
7.12 Counterparts.................................................................. 53
7.13 Specific Performance.......................................................... 53
ARTICLE 8 DEFINITIONS....................................................................... 53
8.1 Definitions................................................................... 53
8.2 Construction.................................................................. 61
EXHIBITS:
Exhibit A: Notarial Deed
Exhibit B: Subordinated Note
Exhibit C: Pledge Agreement
Exhibit D: Opinion of Karp, Frosh, Xxxxxxx, Wigosky & Norwind, P.A.
Exhibit E: Opinion of Xxxxx Xxxxx LLP
Exhibit F: Trademark License
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SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT, (this "Agreement") dated as of March 8,
2005, by and among (i) OPTELECOM, INC., a Delaware corporation ("Purchaser");
(II) DRAKA HOLDING, N.V., a limited liability company, incorporated in the
Netherlands, with corporate seat in Amsterdam, and address at Xxxxxxxxxx 0, 0000
XX, Xxxxxxxxx, xxx Xxxxxxxxxxx ("Draka"); (III) NKF VASTGOED B.V., a private
company with limited liability, incorporated in the Netherlands, with corporate
seat in Delft, and address at Xxxxxxxxx Xxxxxxxx 00, 0000 XX Xxxxx, xxx
Xxxxxxxxxxx, a direct wholly-owned subsidiary of Draka ("Vastgoed" and together
with Draka, the "Sellers"); and (IV) NKF ELECTRONICS B.V., a private company
with limited liability, incorporated in the Netherlands, with corporate seat in
Amsterdam, and address at Xxxxxxxxx Xxxxxxxx 00, 0000 XX, Xxxxx, xxx
Xxxxxxxxxxx, a direct wholly-owned subsidiary of Vastgoed (the "Company").
Capitalized terms used and not otherwise defined herein have the meanings
set forth in Article 8.
RECITALS
A. Vastgoed owns all of the issued and outstanding capital shares of the
Company.
B. Purchaser desires to purchase and acquire from Sellers, and Sellers
desire to sell and transfer to Purchaser, all of the shares of "Company Capital
Shares" (as defined in Section 2.3(a)) which are issued and outstanding
immediately prior to the "Closing" (as defined in Section 1.2) for the
consideration, and upon the terms and subject to the conditions set forth in
this Agreement and the related documents to be executed and delivered in
connection herewith (the "Acquisition").
C. The Company, Sellers and Purchaser desire to make certain
representations and warranties and to enter into certain covenants and
agreements in connection with the Acquisition.
D. The Sellers and the Purchaser have complied with the provisions of
Chapter II of the Social and Economic Council Merger Regulation (SER- Besluit
Fusiegedragsregels 2000 ter bescherming van de belangen van werknemers) and the
works council of the Company has rendered positive advice regarding the sale of
the Company Capital Shares as defined below) to the Purchaser.
NOW, THEREFORE, in consideration of the covenants, representations and
warranties set forth herein, intending to be legally bound hereby, the parties
agree as follows:
ARTICLE 1
THE ACQUISITION
1.1 The Acquisition. Upon the terms and subject to the conditions set
forth in this Agreement and upon the representations and warranties made herein
by each of the parties to the other, on the Closing (as defined in Section 1.2),
Purchaser hereby purchases and acquires from Sellers, and Sellers hereby sell
and transfer to Purchaser, all shares of Company Capital Shares issued and
outstanding immediately prior to the Closing for and in exchange of the
"Acquisition Consideration" (as defined in Section 1.3). Transfer of the
aforesaid Company Capital Shares shall be effected by means of the execution of
a notarial deed of transfer of shares, materially in the form attached hereto as
Exhibit A (the "Notarial Deed") before one of the civil law notaries of De Brauw
Blackstone Westbroek (the "Notary"). Following the Closing, Purchaser shall own
all of the issued and outstanding equity and any other ownership interests of
the Company.
1.2 Closing. The closing of the Acquisition (the "Closing"), which is
expected to take place on or about March 8, 2005, will take place upon
satisfaction or waiver of the conditions set forth in Article 5 of this
Agreement, at the offices of De Brauw Blackstone Westbroek, Xxxxxxxxxxxxxxxxx
000, 0000 XX Xxxxxxxxx, Xxx Xxxxxxxxxxx, unless another place or time is agreed
to by Purchaser and Draka.
1.3 Acquisition Consideration. On the terms and subject to the conditions
set forth in this Agreement, Purchaser agrees to (i) pay the amounts set forth
in clauses (a) and (b) of this Section 1.3 to bank account(s) identified on
Schedule 1.3(a) attached hereto on the date scheduled for Closing, and,
immediately pursuant to the execution of the Notarial Deed (ii) procure the
execution and delivery of the Subordinated Note (as defined below) set forth in
clause (c) of this Section 1.3 (paragraphs (a) through (c) being collectively
referred to as the "Acquisition Consideration"). The Acquisition Consideration
shall be subject to post-closing adjustment in accordance with Section 1.4, and
shall be payable as follows:
(a) Six Million Nine Hundred Twelve Thousand Euro ((euro) 6,912,000)
(the "Cash Payment") shall be deemed to have been paid to Sellers upon receipt
of a wire transfer of immediately available funds in such amount in accordance
with the instructions set forth on Schedule 1.3(a) attached hereto.
(b) Four Million Eighty Eight Thousand Euro ((euro)4,088,000) shall
be deemed to have been paid to Sellers as payment and satisfaction in full of
all Inter-Company Debt (as defined in Section 4.9) owed to Sellers by the
Company, upon receipt of a wire transfer of immediately available funds in such
amount in accordance with the instructions set forth on Schedule 1.3(a) attached
hereto.
(c) A Subordinated Promissory Note in the principal amount of Nine
Million Euro ((euro)9,000,000) (the "Subordinated Note"), a copy of which is
attached hereto as Exhibit B, shall be executed by Purchaser and delivered to
Draka immediately pursuant to the execution of the Notarial Deed.
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1.4 Adjustment to Acquisition Consideration.
(a) Within forty-five (45) days after the Closing Date, Purchaser
shall prepare and deliver to Draka a balance sheet of the Company as of the
Closing Date (the "Final Balance Sheet"). The Final Balance Sheet shall be
prepared in accordance with Dutch GAAP (except for the absence of notes and
normal year-end adjustments) and in a manner consistent with the Company's past
accounting practices and conventions and with the preparation of the balance
sheet of the Company as of September 30, 2004, prepared in accordance with Dutch
GAAP, a copy of which is attached as Schedule 1.4 hereto (the "September Balance
Sheet"), provided that the Final Balance Sheet shall reflect the repayment of
the Company's Inter-Company Debt immediately after the Closing. If within thirty
(30) days following delivery of the Final Balance Sheet, Draka does not give
Purchaser written notice of its objection to the Final Balance Sheet (such
notice must contain a statement of the basis of Draka's objection), then the
assets and liabilities reflected on the Final Balance Sheet shall be used in
computing any adjustment in the Acquisition Consideration pursuant to Sections
1.4(c) and (d). Purchaser shall provide Draka with reasonable access, subject to
the obligations of Sellers under Section 4.2(b) hereof, to all pertinent books
and records of the Company for a period of thirty (30) days following delivery
of the Final Balance Sheet solely for use in connection with Draka's review of
the Final Balance Sheet and shall cooperate, and shall use commercially
reasonable efforts to cause its independent public accountants to cooperate,
promptly with the reasonable requests of Draka in connection with such review.
(b) If Draka gives Purchaser a timely written notice of objection to
the Final Balance Sheet, then Draka and Purchaser shall negotiate in good faith
to resolve the dispute and agree upon the Final Balance Sheet. If Draka and
Purchaser are not able to resolve such dispute within twenty (20) days after
Draka gives Purchaser written notice of its objection to the Final Balance
Sheet, the issue(s) in dispute will be submitted to an independent public
accounting firm of national standing in The Netherlands mutually agreed upon by
Purchaser and Draka (the "Auditor") for resolution. The determination of the
Auditor shall be set forth in a written notice delivered to Purchaser and Draka
by the Auditor and will be binding and conclusive on the parties. Purchaser and
Draka will each bear 50% of the fees and expenses of the Auditor for such
determination and shall each use all commercially reasonable efforts to cause
the Auditor to deliver its written notice of such determination not more than
thirty (30) days after submission of the matter to the Auditor. For purposes of
this Agreement, the term "Final Adjustment Date" shall mean either (i) the date
that is thirty (30) days after the delivery of the Final Balance Sheet if Draka
does not object to the Final Balance Sheet, or (ii) if Draka objects to the
Final Balance Sheet, the date that is ten (10) Business Days after the earlier
of (A) the date Purchaser and Draka mutually resolve such dispute, or (B) the
date the Auditor delivers written notice of its determination pursuant to this
Section 1.4(b).
(c)For purposes of this Agreement, the term "Net Working Capital"
means the amount by which the current assets of the Company (excluding current
assets related to the Spanish Cable Business or the Solar Inverter Business and
excluding cash, current deferred tax assets and receivables over ninety (90)
days past invoice date) exceed the current liabilities of the Company (excluding
current liabilities related to the Spanish Cable Business or the Solar Inverter
Business and excluding the Company's Inter-Company Debt), all as shown on the
September Balance Sheet and the Final Balance Sheet, as applicable.
Notwithstanding the
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foregoing, any cash received by the Company on or after March 4, 2004 and prior
to Closing shall serve to reduce any adjustment in the Acquisition Consideration
in respect of any Negative Working Capital Amount (as defined in Section
1.4(c)(i)) and increase any adjustment in the Acquisition Consideration in
respect of any Positive Working Capital Amount (as defined in Section
1.4(c)(ii)).
(i) At such time as the Final Balance Sheet is finalized per
the foregoing provisions, if the Net Working Capital shown on the Final Balance
Sheet is less than the Net Working Capital shown on the September Balance Sheet
(such shortfall, if any, the "Negative Working Capital Amount"), the Acquisition
Consideration shall be decreased post-Closing by amending the Subordinated Note
to reduce the principal amount of the Subordinated Note in an amount equal to
the Negative Working Capital Amount.
(ii) At such time as the Final Balance Sheet is finalized per
the foregoing provisions, if the Net Working Capital shown on the Final Balance
Sheet is greater than the Net Working Capital shown on the September Balance
Sheet (such excess, if any, the "Positive Working Capital Amount"), the
Acquisition Consideration shall be increased post-Closing by amending the
Subordinated Note to increase the principal amount of the Subordinated Note in
an amount equal to the Positive Working Capital Amount.
(d)For purposes of this Agreement, the term "Non-Current Assets"
means the amount by which the total assets of the Company (excluding assets
related to the Spanish Cable Business or the Solar Inverter Business and
excluding receivables over 90 days past invoice date) exceed the current assets
of the Company included in the calculation of Net Working Capital, all as shown
on the September Balance Sheet and the Final Balance Sheet, as applicable.
(i) At such time as the Final Balance Sheet is finalized per
the foregoing provisions, if the Non-Current Assets shown on the Final Balance
Sheet is less than the Non-Current Assets shown on the September Balance Sheet
(such shortfall, if any, the "Negative Non-Current Asset Amount"), the
Acquisition Consideration shall be decreased post-Closing by amending the
Subordinated Note to reduce the principal amount of the Subordinated Note in an
amount equal to the Negative Non-Current Asset Amount.
(ii) At such time as the Final Balance Sheet is finalized per
the foregoing provisions, if the Non-Current Assets shown on the Final Balance
Sheet is greater than the Non-Current Assets shown on the September Balance
Sheet (such excess, if any, the "Positive Non-Current Asset Amount"), the
Acquisition Consideration shall be increased post-Closing by amending the
Subordinated Note to increase the principal amount of the Subordinated Note in
an amount equal to the Positive Non-Current Asset Amount.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY
Sellers, jointly and severally, hereby represent and warrant to Purchaser,
except as set forth in the disclosure schedule and schedule of exceptions (the
"Seller Disclosure Schedule") delivered herewith, as follows:
2.1 Organization and Qualification. The Company is a private company with
limited liability duly organized, validly existing and in good standing under
the Laws of the Netherlands, and has requisite corporate power and authority to
conduct its business as now conducted and to own, use, license and lease its
Assets and Properties. Each of the Subsidiaries of the Company is a corporation
duly organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation or formation, and has full corporate power and
authority to conduct its business as now conducted and to own, use, license and
lease its Assets and Properties. The Company and each of its Subsidiaries is
duly qualified, licensed or admitted to do business and is in good standing as a
foreign corporation in each jurisdiction in which the ownership, use, licensing
or leasing of its Assets and Properties, or the conduct or nature of its
business, makes such qualification, licensing or admission necessary. Section
2.1 of the Seller Disclosure Schedule sets forth each jurisdiction where the
Company and each of its Subsidiaries is so qualified, licensed or admitted to do
business and separately lists each other jurisdiction in which the Company or
any of its Subsidiaries owns, uses or leases from third parties substantial
tangible Assets and Properties, or has employees.
2.2 Authority Relative to this Agreement. The Company has requisite
corporate power and authority to execute and deliver this Agreement and the
other agreements which are attached (or forms of which are attached) as exhibits
hereto (the "Ancillary Agreements") to which the Company is a party, to perform
its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The Company's board of directors has approved
this Agreement. The execution and delivery by the Company of this Agreement and
the Ancillary Agreements to which the Company is or will become a party and the
consummation by the Company of the transactions contemplated hereby and thereby,
and the performance by the Company of its obligations hereunder and thereunder,
have been duly and validly authorized by all necessary action by the board of
directors of the Company, and no other action on the part of the board of
directors of the Company is required to authorize the execution, delivery and
performance of this Agreement and the Ancillary Agreements to which the Company
is or will become a party and the consummation by the Company of the
transactions contemplated hereby and thereby. This Agreement and the Ancillary
Agreements to which the Company is or will become a party have been or will be,
as applicable, duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery hereof (and, in the case
of the Ancillary Agreements to which Purchaser is a party, thereof) by, and
enforceability against, Purchaser, each constitutes or will constitute, as
applicable, a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its respective terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws relating to the
enforcement of creditors' rights generally and by general principles of equity.
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2.3 Capitalization.
(a) Shares; Equity Rights. Section 2.3(a) of the Seller Disclosure
Schedule sets forth, as of the date hereof, (i) the total number of authorized
shares (maatschappelijk kapitaal) of each class of shares of the Company (the
"Company Capital Shares"), (ii) the total number of issued and outstanding
shares (geplaatst kapitaal) of each class of Company Capital Shares, and (iii)
the names and addresses of all shareholders (aandeelhouders) of the Company,
together with the number of such issued and outstanding shares of Company
Capital Shares issued to and owned or controlled by each shareholder, whether
jointly, beneficially or otherwise. All of the issued and outstanding shares of
the Company Capital Shares (x) have been duly authorized and validly issued, and
are fully paid and non-assessable, (y) were issued or transferred in compliance
in all material respects with all applicable Laws, and (z) were issued in
compliance with any preemptive rights or rights of first refusal. There are no
outstanding share appreciations, phantom stock, profit participation or other
similar rights with respect to the Company or any of its Subsidiaries. Neither
the Company nor any of its Subsidiaries is obligated to redeem or otherwise
acquire any of its outstanding shares of capital stock.
(b) There are no outstanding or authorized rights, Options,
convertible securities, subscription rights, conversion rights, exchange rights
or other agreements or commitments of any kind that could require the Company or
the Sellers to issue or sell any shares of the Company Capital Shares (or
securities convertible into or exchangeable for shares of the Company Capital
Shares) and no such rights or commitments of any kind arise by virtue of or in
connection with the transactions contemplated hereby.
(c) Except as required by Law there are no preemptive rights or
rights of first refusal agreements, arrangements or understandings with respect
to the Company Capital Shares created by the Governing Documents of the Company
or any agreement or other arrangement to which the Company is a party (written
or oral) or to which it is bound; and there are no agreements, arrangements or
understandings to which the Company is a party (written or oral) pursuant to
which the Company has the right to elect to satisfy any Liability by issuing
Company Capital Shares or Equity Equivalents, and no such rights arise by virtue
of or in connection with the transactions contemplated hereby.
(d)Neither the Company nor any of its Subsidiaries is a party or
subject to any agreement or understanding, and there is no agreement,
arrangement or understanding between or among any Persons, which affects,
restricts or relates to voting, giving of written consents, dividend rights or
transferability of shares with respect to the Company Capital Shares or any
securities (however denominated) of any Subsidiary of the Company, including any
voting trust agreement or proxy. No debt securities of the Company or any of its
Subsidiaries are issued and outstanding.
2.4 Subsidiaries. Except as disclosed in Section 2.4 of the Seller
Disclosure Schedule, the Company has no Subsidiaries and does not otherwise hold
any equity, membership, partnership, joint venture or other ownership interest
in any Person. The Company owns all of the outstanding capital stock of the
Subsidiaries set forth in Section 2.4 of the Seller Disclosure Schedule, free
and clear of any and all Liens and there are no outstanding Options to purchase
any of the capital stock or the securities of any such Subsidiary. For purposes
of this Agreement, each of the Company and its Subsidiaries listed in Section
2.4 of the Seller Disclosure Schedule
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shall be deemed to be a "Constituent Company" and collectively, shall be
referred to as the "Constituent Companies."
2.5 Directors and Officers. The names of each director and officer of each
of the Constituent Companies on the date hereof, and his or her position with
such Constituent Company are listed in Section 2.5 of the Seller Disclosure
Schedule.
2.6 No Conflicts. The execution and delivery by the Company of this
Agreement and the Ancillary Agreements to which the Company is a party does not,
and the performance by the Company of its obligations under this Agreement and
the Ancillary Agreements to which the Company is a party and the consummation of
the transactions contemplated hereby and thereby do not and will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the Governing Documents of any Constituent
Company;
(b) subject to obtaining the consents, approvals and actions, making
the filings and giving the notices disclosed in Section 2.6(b) of the Seller
Disclosure Schedule, if any, conflict with or result in a violation or breach of
any Law or Order applicable to any Constituent Company or any of its Assets and
Properties;
(c) except as disclosed in Section 2.6(c) of the Seller Disclosure
Schedule or as would not be material to the Constituent Companies, taken as a
whole, (i) conflict with or result in a violation or breach of, (ii) constitute
a default (or an event that, with or without notice or lapse of time or both,
would constitute a default) under, (iii) require any Constituent Company to
obtain any consent, approval or action of, make any filing with or give any
notice to any Person as a result or under the terms of (except such consents
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable state or federal securities laws); (iv) result
in or give to any Person any right of termination, cancellation, acceleration or
modification in or with respect to, (v) result in or give to any Person any
additional rights or entitlement to increased, additional, accelerated or
guaranteed payments or performance under, (vi) result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any
Constituent Company or any of its Assets and Properties under or (vii) result in
the loss of any benefit under, any of the terms, conditions or provisions of any
Contract or License to which any Constituent Company is a party or by which any
of the Assets and Properties of any Constituent Company is bound.
2.7 Company Financial Statements. The Company Financials are included in
Section 2.7 of the Seller Disclosure Schedules. The Company Financials have been
prepared in accordance with Dutch GAAP and, with respect to the Audited
Financial Statements, have been audited by KPMG, LLP, the independent auditors
of the Company, and, to the knowledge of the Company have been prepared in
accordance with U.S. GAAS. The Company Financials present fairly the financial
condition and operating results of the Company as of the dates and during the
periods indicated therein.
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2.8 Books and Records; Organizational Documents. Copies of the minute
books and share record books (aandeelhoudersregisters) of the Company and each
of the other Constituent Companies (a) have been provided or made available to
Purchaser or its counsel prior to the execution of this Agreement, and (b) are
complete and correct in all material respects. Such minute books contain a true
and complete record of all material actions taken at all meetings and by all
written consents in lieu of meetings of the directors, shareholders and
committees of the board of directors of each Constituent Company from the more
recent of (i) the applicable date of the incorporation or (ii) January 1, 1999
through the date hereof. The Company has prior to the execution of this
Agreement delivered to Purchaser or its counsel copies of the Governing
Documents of each Constituent Company, each as amended through the date hereof,
which copies are complete and correct. No Constituent Company is in violation in
any material respect of any provisions of its Governing Documents.
2.9 Absence of Changes. Since the Financial Statement Date, except as set
forth in Section 2.9 of the Seller Disclosure Schedule or as reflected in the
Audited Financial Statements (including the notes to such Audited Financial
Statements), there has not been any occurrence or event which, individually or
in the aggregate, has had or is reasonably expected to have any material adverse
effect upon the Business or Condition of the Company. In addition, without
limiting the generality of the foregoing, except as expressly contemplated by
this Agreement or except as disclosed in Section 2.9 of the Seller Disclosure
Schedule, since the Financial Statement Date neither the Company nor any other
Constituent Company has:
(a) entered into any Contract, commitment or transaction, other than
with Purchaser, or incurred any Liabilities outside of the ordinary course of
business consistent with past practice;
(b) entered into any Contract, other than with Purchaser, as part of
a Business Combination;
(c) altered or entered into any Contract or other commitment to
alter, its interest in any corporation, association, joint venture, partnership
or business entity or activity in which any Constituent Company directly or
indirectly holds any interest on the date hereof;
(d) entered into any strategic alliance, joint development or joint
marketing Contract;
(e) amended or modified (or agreed to do so) or violated in any
material respect any of the terms of, any of the Contracts set forth or
described in the Seller Disclosure Schedule;
(f) entered into any material transaction, with any officer,
director, shareholder, Affiliate or Associate of any Constituent Company other
than pursuant to any Contracts disclosed to Purchaser pursuant to Sections 2.18
and 2.20 of the Seller Disclosure Schedule or other than pursuant to any
Contract of employment listed pursuant to Section 2.21 of the Seller Disclosure
Schedule; or made any other material change in employment terms of any of its
officers and employees outside the ordinary course of business and inconsistent
with past practice;
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(g) entered into or amended in any material respect any Contract
pursuant to which any other Person is granted any material manufacturing,
marketing, distribution, licensing or similar rights with respect to any
products of any Constituent Company or any Company Intellectual Property, other
than as contemplated by the Contracts and Licenses disclosed in the Seller
Disclosure Schedule;
(h) other than a dividend of the Company's distributable reserves in
an amount not in excess of Two Million Euro ((euro)2,000,000), declared or set
aside or paid any dividends on or made any other distributions (whether in cash,
shares or property) in respect of any Company Capital Shares, securities
(however denominated) of any Subsidiary of the Company, or Equity Equivalents,
or effected or approved any split, combination or reclassification of any
Company Capital Shares, securities (however denominated) of any Subsidiary of
the Company, or Equity Equivalents or issued or authorized the issuance of any
other securities in respect of, in lieu of or in substitution for shares of
Company Capital Shares, securities (however denominated) of any Subsidiary of
the Company, or Equity Equivalents, or repurchased, redeemed or otherwise
acquired, directly or indirectly, any shares of Company Capital Shares,
securities (however denominated) of any Subsidiary of the Company, or Equity
Equivalents;
(i) (I) issued, granted, delivered, sold or offered to issue, grant,
deliver or sell, or purchased or offered to purchase, any shares of Company
Capital Shares, securities (however denominated) of any Subsidiary of the
Company, or Equity Equivalents, (II) modified or amended the rights of any
holder of any outstanding shares of Company Capital Shares, securities (however
denominated) of any Subsidiary of the Company, or Equity Equivalents, or (III)
entered into any agreements, arrangements, plans or understandings obligating
any Constituent Company to make any such modification or amendment;
(j) amended any Constituent Company's Governing Documents;
(k) [Intentionally Omitted]
(l) made or agreed to make any material disposition or sale of,
waiver of rights to, license or lease of, or incurrence of any Lien on any
Assets and Properties of any Constituent Company other than dispositions of
inventory, or nonexclusive licenses of Assets or Properties in the ordinary
course of business of such Constituent Company consistent with past practice;
(m) made or agreed to make any purchase of any Assets and Properties
of any Person other than (i) acquisitions of inventory, or licenses of Assets or
Properties, in the ordinary course of business of the Constituent Company
consistent with past practice, and (ii) other acquisitions in an amount not
exceeding seventy-five thousand Euro ((euro)75,000) in the case of any
individual item or one hundred twenty thousand Euro ((euro)120,000) in the
aggregate;
(n) made or agreed to make any capital expenditures or commitments
for additions to property, plant or equipment of any Constituent Company, in the
aggregate in an amount exceeding sixty-five thousand Euro ((euro)65,000);
9
(o) made or agreed to make any write-off or write-down, any
determination to write off or write-down, or revalue, any of the Assets and
Properties of any Constituent Company or change any reserves or Liabilities
associated therewith, in the aggregate in an amount exceeding forty thousand
Euro ((euro)40,000);
(p) made or agreed to make payment, discharge or satisfaction, in an
amount in excess of thirty-five thousand Euro ((euro)35,000), in any one case,
or one hundred thousand Euro ((euro)100,000) in the aggregate, of any claim,
Liability or obligation (whether absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction in
the ordinary course of business of Liabilities reflected or reserved against in
the Audited Financial Statements and other than Liabilities incurred in the
ordinary course of business since the Financial Statement Date;
(q) failed to pay or otherwise satisfy any material Liability
presently due and payable of any Constituent Company (other than delays in the
ordinary course of such Constituent Company's business consistent with past
practices that will not have a material adverse effect on the Business or
Condition of the Company), except any such Liability which is being contested in
good faith by appropriate means or procedures;
(r) issued or sold any debt securities (other than securities
evidencing the Inter-Company Debt) of any Constituent Company or guaranteed any
debt securities of others;
(s) granted any severance or termination pay to any director,
officer employee or consultant, except payments made pursuant to written
Contracts, copies of which have been delivered to Purchaser and which are
disclosed in Section 2.9(s) of the Seller Disclosure Schedule;
(t) granted or approved any increase of greater than five percent
(5%) in salary, rate of commissions, rate of consulting fees or any other
compensation of any current or former officer, director, shareholder, employee,
independent contractor or consultant of any Constituent Company, or paid or
agreed or made any commitment to pay any discretionary or stay bonus;
(u) paid or approved the payment of any consideration of any nature
whatsoever to any current or former officer, director, shareholder, employee,
independent contractor or consultant of any Constituent Company (other than
salary, commissions or consulting fees and customary benefits paid, in the
ordinary course of business consistent with past practice, to any current or
former officer, director, shareholder, employee, independent contractor or
consultant of any Constituent Company) in an amount in excess of twenty-five
thousand Euro ((euro)25,000) in any individual case or fifty thousand Euro
((euro)50,000) in the aggregate;
(v) adopted, entered into, amended, modified or terminated
(partially or completely) any Plan;
10
(w) made any change in accounting policies, principles, methods,
practices or procedures (including for bad debts, contingent liabilities or
otherwise, respecting capitalization or expense of research and development
expenditures, depreciation or amortization rates or timing of recognition of
income and expense);
(x) commenced or terminated, or made any material change in, any
line of business or products;
(y) incurred any physical damage, destruction or other casualty loss
(whether or not covered by insurance) affecting any of the real or personal
property or equipment of any Constituent Company in the aggregate in an amount
exceeding ten thousand Euro ((euro)10,000); or
(z) entered into or approved any contract, arrangement or
understanding or acquiesced in respect of any arrangement or understanding to
do, engage in, or cause or having the effect of any of the foregoing, including
with respect to any Business Combination not otherwise restricted by the
foregoing paragraphs.
2.10 No Undisclosed Liabilities. Except as reflected or reserved against
in the Audited Financial Statements (including the notes thereto) there are no
material Liabilities of the Constituent Companies or material Liabilities or
Liens affecting any of their respective Assets and Properties (other than the
Inter-Company Debt and Liabilities incurred in the ordinary course of business
consistent with past practice).
2.11 Taxes.
(a) All Tax Returns required to have been filed by or with respect
to any Constituent Company have been duly and timely filed (including any
extensions), all notices have been given, all other information required to be
supplied has been supplied to all relevant Tax Authorities and all records
required to be maintained for Tax purposes have been maintained by the Company
and each other Constituent Company. Each Tax Return correctly and completely
reflects the Tax Liabilities in all material respects and all other information
required to be reported thereon. All such Tax Returns are true, complete and
correct in all material respects and so far as the Sellers are aware are not
likely to reveal any transactions which may be the subject of any dispute with,
or any enquiry raised by, any Tax Authority. All Taxes due and payable by any
Constituent Company, whether or not shown on any Tax Return, or claimed to be
due by any Tax Authority, for periods (or portions of periods) covered by the
Company Financials, have been paid or accrued on the balance sheet included in
the Audited Financial Statements.
(b)Since the Financial Statement Date:
(i) no Constituent Company has incurred any material Liability
for Taxes other than Tax Liabilities incurred in the ordinary
course of such Constituent Company's business.
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(ii) no expense has been paid or accrued by any Constituent
Company which will not be deductible for the purpose of
Corporate Income Tax, either in computing the profits of such
Constituent Company or in computing the Corporate Income Tax
or corresponding Tax chargeable on it.
(iii) no disposal has taken place or other Event occurred
which has or may have the effect of causing the recognition of
a Tax Liability which, if such disposal or Event had been
planned or predicted at the Last Company Financials Date,
should have been reflected in the provision for deferred Tax
contained in the Last Company Financials.
(iv) No Event has occurred which has or may have the effect of
prejudicing any Relief taken into account in computing or
eliminating the provision for deferred Tax contained in the
Last Company Financials. The unpaid Taxes of the Constituent
Companies did not, as of the Last Company Financials Date,
exceed by any material amount the reserve for Liability for
Corporate Income Tax (other than the reserve for deferred
Taxes established to reflect timing differences between book
and tax income) or other Tax set forth in the balance sheet
included in the Last Company Financials.
(c) None of the Constituent Companies is a party to any agreement
extending the time within which to file any Tax Return, other than standard
extensions of filing dates. No claim has ever been made by a Tax Authority of
any jurisdiction in which any Constituent Company does not file Tax Returns that
such Constituent Company is or may be subject to taxation by that jurisdiction.
(d) All amounts payable to any Tax Authority in respect of any
employee (including executive directors (bestuurders) and non-executive
directors (commissarissen), and including any Tax deductible from any amounts
paid to a (deemed) employee, and any national insurance, social fund or similar
contributions required to be made in respect of employees) due and payable by
any Constituent Company up to the date hereof have been duly paid and the
Constituent Company has made all such deductions and retentions as should have
been made under applicable laws or regulations.
(e) None of the Constituent Companies is involved in any current
dispute with any Tax Authority. So far as Sellers or the Company is aware, there
is no planned investigation, audit or visit by any Tax Authority and there are
no facts that might cause such an investigation, audit or visit to be
instituted. Section 2.11(e) of the Seller Disclosure Schedule indicates those
Tax Returns, if any, of any Constituent Company that have been audited or, to
Sellers' or the Company's knowledge, examined by Tax Authorities, and indicates
those Tax Returns of any Constituent Company that currently are the subject of
audit or examination. The Company has delivered to Purchaser complete and
correct copies of all Tax Returns filed by or with respect to, and all Tax
examination reports and statements of deficiencies assessed against or agreed to
by or with respect to, the Constituent Companies.
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(f) There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any Tax Returns required to be
filed by, or which include or are treated as including, any Constituent Company
or with respect to any Tax assessment or deficiency affecting any Constituent
Company.
(g) None of the Constituent Companies has received any special
arrangement (being an arrangement which is not directly based on relevant
legislation, even if based on published practice, including rulings and
agreements with the Tax Authorities) or entered into any agreement with, a Tax
Authority relating to Taxes.
(h) None of the Constituent Companies is and none will become liable
to pay, or make reimbursement or indemnity in respect of, any Tax in consequence
of the failure by any other Person to discharge that Tax within any specified
period or otherwise, where such Tax relates to income, profits or gains, earned,
accrued or received, or to any Event, transaction or circumstance occurring or
arising or deemed to occur or arise (whether wholly or partly) prior to Closing.
(i) None of the Constituent Companies is a party to or bound by any
obligations under any tax sharing, tax allocation, tax indemnity or similar
agreement or arrangement.
(j) No Relief has been claimed by and/or given to any Constituent
Company, or taken into account in determining or eliminating any provision for
Tax or deferred Tax in the Last Company Financials, which could or might be
effectively withdrawn, postponed, restricted or otherwise lost as a result of
the sale and purchase hereunder or any other Event or circumstance occurring or
arising at any time after the Last Company Financials Date.
(k) None of the Constituent Companies has been a party to any
transaction or series of transactions which is or forms part of a scheme for the
avoidance of Tax or which can reasonably be considered as such.
(l) All losses, interest and other sums of an expense nature paid,
payable or accruable by any Constituent Company and all sums payable or
accruable under any obligation incurred by such Constituent Company prior to
Closing and which will continue to bind the Constituent Company after Closing,
have been and will continue to be deductible for the purposes of Corporate
Income Tax, either in computing the profits of the Constituent Company or in
computing the Corporate Income Tax chargeable on it.
(m) No claim has been made by any of the Group Companies for the
depreciation and amortisation of any asset for Tax purposes, which is likely to
be disallowed.
(n) All material transactions between any Constituent Company and a
related company as mentioned in article 8b Corporate Income Tax Act, have been
and are on fully arm's length terms. There are no circumstances that could cause
any Tax Authority to make any adjustment for Tax purposes, or require any such
adjustment to be made, to the terms on which any such transaction is treated as
taking place, and no such adjustment has been made or attempted in fact.
13
(o) Each of the Constituent Companies is registered for the purposes
of VAT, has been so registered at all times that it has been required to be
registered by VAT legislation, and such registration is not subject to any
conditions imposed by or agreed with the relevant Tax Authority. Each
Constituent Company obtains credit for all input Tax paid or suffered by it.
None of the Constituent Companies is or has been treated as a member of a group
for the purposes of VAT legislation, and none has applied for such treatment,
nor is it or has it been subject under VAT legislation to any penalty, fine or
surcharge, or any warning or notice which could (whether with or without other
Events) lead to the imposition of any penalty, fine or surcharge, and has not
been required to give any security as a condition of making supplies for the
purposes of VAT.
(p) All duties, fees and penalties payable in respect of the capital
of each Constituent Company (including any premium over nominal value at which
any share was issued) have been duly accounted for and paid, and there are no
circumstances under which any Relief obtained against payment of any such amount
could be withdrawn, in particular but not limited to a Relief claimed under
Article 37 of the Legal Transfer Taxes Act except as would not be material in
amount.
(q) Since its respective inception, no Constituent Company or any
director or officer of any Constituent Company (in his capacity as such) has
paid or become liable to pay, and there are no circumstances by reason of which
it or they may become liable to pay to any authority, any penalty, fine,
surcharge or interest in respect of Tax, including in respect of any failure to
make any return, give any notice or supply any information to any relevant Tax
Authority, or any failure to keep or preserve any records or to pay Tax on the
due date for payment and including circumstances where any such penalty, fine,
surcharge or interest in respect of Tax would have been due but for the reason
that (i) it concerned a first time event or (ii) the relevant Tax Authority
waived its right to impose the penalty, fine, surcharge or interest.
(r) No transaction in respect of which any consent or clearance was
required or sought from any Tax Authority has been entered into or carried out
by any Constituent Company.
2.12 Legal Proceedings. Except as set forth in Section 2.12 of the Seller
Disclosure Schedule:
(a) there are no Actions or Proceedings pending or, to the knowledge
of Sellers or the Company, threatened, against or adversely affecting any
Constituent Company or any of its Assets and Properties;
(b) Neither Sellers nor the Company has received written notice or
otherwise has knowledge of any Orders outstanding against any Constituent
Company;
(c) Section 2.12(c) of the Seller Disclosure Schedule sets forth all
Actions or Proceedings pending against, or, to the knowledge of Sellers or the
Company, threatened against, any Constituent Company, or any of its Assets and
Properties during the three-year period prior to the date hereof.
14
2.13 Compliance with Laws and Orders. Except as disclosed in Section 2.13
of the Seller Disclosure Schedule, since the incorporation of the Company or
such other Constituent Company, neither the Company nor any of the other
Constituent Companies nor any of their respective directors, officers,
Affiliates, agents or employees has violated in any material respect or is
currently in default or violation in any material respect under, any Law or
Order applicable to any Constituent Company or any of its Assets and Properties,
and the Company has not received written notice of any claim of violation, or of
any actual violation, of any such Laws and Orders by any Constituent Company
since the incorporation or formation of such Constituent Company other than
matters resolved finally pursuant to appropriate legal proceedings. Except as
set forth in Section 2.13 of the Seller Disclosure Schedule, each Constituent
Company has obtained all Approvals from Governmental or Regulatory Authorities
necessary to conduct the business conducted by such Constituent Company in the
manner as it is currently being conducted and there has been no written notice
received by any Constituent Company of any material violation or non-compliance
with any such Approvals. All Approvals from Governmental or Regulatory
Authorities necessary to conduct the business conducted by each Constituent
Company as it is currently being conducted are set forth in Section 2.13 of the
Seller Disclosure Schedule.
2.14 Employee Benefits.
(a)The plans and arrangements listed in Section 2.14(a) of the
Seller Disclosure Schedule constitute all of the retirement benefit arrangements
applicable to the employees employed by the Constituent Companies (the "Company
Pension Plans").
(b)All of the Plans of the Company and any other Constituent Company
are listed on Section 2.14(a) of the Seller Disclosure Schedule. Copies of all
such Plans have been provided to Purchaser. Each Plan has been maintained and
administered in compliance in all material respects with its terms and with the
requirements prescribed by any and all Laws applicable to such Plan, including,
without limitation, government taxation or funding requirements. No Action or
Proceeding (excluding claims for benefits incurred in the ordinary course of
Plan activities) has been brought, or to the knowledge of Sellers or the
Company, is threatened, against or with respect to any such Plan. All
contributions, reserves or premium payments required to be made or accrued as of
the date hereof to the Plans have been made or accrued. All material reports,
returns, forms and notices required to be filed with any Government or
Regulatory Authority or furnished to participants or beneficiaries with respect
to the Plans under any applicable Law have been so filed and furnished.
(c) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including without limitation severance, unemployment compensation,
bonus or otherwise) becoming due to any director, officer or employee of any
Constituent Company under any Plan or otherwise, (ii) result in a payment or
benefit becoming due to any director, officer or employee of any Constituent
Company under any Plan, (iii) materially increase any benefits otherwise payable
under any Plan, or (iv) result in the acceleration of the time of payment or
vesting of any such benefits.
15
(d) With respect to each Company Pension Plan: (i) the Company
Pension Plan complies in all material respects with the applicable Laws of The
Netherlands; (ii) all past service commitments and pension contributions have
been paid as of the date hereof; (iii) Section 2.14(d) of the Seller Disclosure
Schedule lists all of the Company employees who are participants in the Company
Pension Plans; (iv) no waivers have been signed by employees of the Company
indicating that they do not want to participate in the Company Pension Plan; (v)
there are no Actions or Proceedings concerning pensions pending and, to the
knowledge of Sellers or the Company, there are no such Actions or Proceedings
threatened; (vi) male and female employees at all times have been treated equal
under the Company Pension Plan; and (vii) the Company Pension Plan has not been
amended since its inception.
2.15 Real Property.
(a) Neither the Company nor any Constituent Company owns any real
property. Section 2.15(a) of the Seller Disclosure Schedule contains a true and
correct list of (i) each parcel of real property leased and/or operated by the
Company and any other Constituent Company (the "Company Real Property").
(b) The Company or other pertinent Constituent Company has a valid
leasehold interest in each of the leased real properties. Each lease referred to
in Section 2.15(a) is a legal, valid and binding agreement, enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar Laws relating to the enforcement of creditors' rights generally
and by general principles of equity, against the Company or other pertinent
Constituent Company, and, to the knowledge of the Company and Sellers, of each
other Person (other than any Constituent Company) that is a party thereto, and
there is no, and the Company has not received written notice of any, default (or
any condition or event which, after notice or lapse of time or both, would
constitute a default) thereunder.
(c) All improvements on the Company Real Property (i) comply with
and are operated in accordance in all material respects with applicable Laws
(provided that this representation does not apply to Environmental Laws, which
matters are covered under Section 2.22 hereof) and all applicable Liens,
Approvals, Contracts, covenants and restrictions and (ii) are in good operating
condition and in a state of good maintenance and repair, ordinary wear and tear
excepted, and such improvements are adequate and suitable for the purposes for
which they are presently being used and there are no condemnation or
appropriation proceedings pending or, to the knowledge of Sellers or the
Company, threatened against any of such real property or the improvements
thereon.
(d) Copies of the documents under which the Company Real Property is
leased, subleased (to or by any Constituent Company), utilized, and/or operated
(the "Real Property Documents") have been delivered to Purchaser and such copies
are complete and
16
correct in all material respects. The Real Property Documents are unmodified and
in full force and effect against the Constituent Company a party thereto and, to
the Company's knowledge, against each other party thereto, and there are no
other Contracts between any Constituent Company or any other Affiliate of
Sellers and any third party(ies) claiming an interest in the Company Real
Property or otherwise relating to the use and occupancy of the Company Real
Property, other than as disclosed in Section 2.15(d) of the Seller Disclosure
Schedule.
2.16 Tangible Personal Property. The Company is in possession of and has
valid title to, or has valid leasehold interests in or valid rights under
Contract to use, all tangible personal property used in the conduct of its
business, including all tangible personal property reflected on the Company
Financials and tangible personal property acquired since the date of the Company
Financials, other than property disposed of since such date in the ordinary
course of business consistent with past practice. Except for purchase money
liens on equipment purchases or product purchases in the ordinary course of the
Company's business for which the purchase price is not yet due and payable, all
such tangible personal property (including plant, property and equipment) is
free and clear of all Liens and is suitable in all material respects for the
conduct by each Constituent Company of its business as presently conducted, and
is in good working order and condition, ordinary wear and tear excepted, and its
use complies in all material respects with all applicable Laws.
2.17 Intellectual Property.
(a) Section 2.17(a) of the Seller Disclosure Schedule lists all
Company Registered Intellectual Property and lists any proceedings or actions
pending as of the date hereof before any Governmental or Regulatory Authority
related to any of the Company Registered Intellectual Property.
(b) The Company has all requisite right, title and interest in or
valid and enforceable rights under Contracts or Licenses to use all Company
Intellectual Property. Each item of Company Intellectual Property of the
Company, including all Company Registered Intellectual Property listed in
Section 2.17(a) of the Seller Disclosure Schedule, is owned exclusively by the
Company (excluding Intellectual Property licensed to the Company under any
License) and is free and clear of any Liens. The Company (i) own exclusively or
has sufficient right to use all trademarks, service marks and trade names used
by the Company in connection with the operation or conduct of the business of
the Company as presently conducted, including the sale of any products or
technology or the provision of any services by the Company; provided, however,
that the Company may use trademarks, service marks and trade names of third
parties which are licensed to the Company or are in the public domain, and (ii)
own exclusively or has sufficient right to use each copyrighted work that is a
Company product and each other work of authorship that the Company otherwise
purports to own or to have the right to use.
(c) To the extent that any Company Intellectual Property has been
developed or created by any Person other than the Company, the Company has a
written agreement with such Person with respect thereto and the Company has
either (i) obtained ownership of, and is the exclusive owner of, all such
Intellectual Property by operation of law or by valid assignment
17
of any such rights or (ii) has obtained a License under or to such Intellectual
Property.
(d) Since its inception, the Company has not transferred ownership
of or granted any License of or other right to use or authorized the retention
of any rights to use any Company Intellectual Property that is necessary to the
conduct of the business as presently conducted..
(e) The Company Intellectual Property constitutes all the
Intellectual Property used in and/or necessary to the conduct of the Company's
business as currently conducted, including the design, development,
distribution, marketing, manufacture, use, import, license, and sale of the
products, technology and services of the Company.
(f) Section 2.17(f) of the Seller Disclosure Schedule lists all
Contracts and Licenses (including all inbound Licenses) to which the Company or
any other Constituent Company is a party with respect to any Intellectual
Property. No Person other than the Company has ownership rights to improvements
made by the Company in Intellectual Property which has been licensed to the
Company or any other Constituent Company.
(g) Section 2.17(g) of the Seller Disclosure Schedule lists all
Contracts, Licenses and agreements between any Constituent Company and any other
Person wherein or whereby the Constituent Company has agreed to, or assumed, any
obligation or duty to warrant, indemnify, reimburse, hold harmless, guaranty or
otherwise assume or incur any obligation or Liability, or provide a right of
rescission, with respect to the infringement or misappropriation by the
Constituent Company or such other Person of the Intellectual Property of any
Person other than the Constituent Company.
(h) The operation of the business of the Company and each other
Constituent Company as currently conducted, including the design, development,
use, import, manufacture and sale of the products, technology or services
(including products, technology or services currently under development) of the
Company and each other Constituent Company, does not (i) infringe or
misappropriate the Intellectual Property of any Person, (ii) violate any
material term or provision of any License or Contract concerning such
Intellectual Property, (iii) violate the rights of any Person (including rights
to privacy or publicity), or (iv) constitute unfair competition or an unfair
trade practice under any Law. The Company has not received written notice from
any Person claiming that such operation or any act, product, technology or
service (including products, technology or services currently under development)
of the Company or any other Constituent Company infringes or misappropriates the
Intellectual Property of any Person or constitutes unfair competition or trade
practices under any Law, including notice of infringement of third-party patent
or other Intellectual Property rights from a potential licensor of such rights.
(i) To the Company's knowledge, each item of Company Registered
Intellectual Property which has been registered is valid and subsisting. All
necessary registration, maintenance, renewal fees, annuity fees and taxes in
connection with such Registered Intellectual Property have been paid and all
necessary documents and certificates in connection with such Registered
Intellectual Property have been filed with the relevant patent,
18
copyright, trademark or other authorities in the United States, the Netherlands
or any other jurisdictions, as the case may be, for the purposes of maintaining
such Registered Intellectual Property. Section 2.17(i) of the Seller Disclosure
Schedule lists all actions that must be taken by the Company within ninety (90)
days from the date hereof, including the payment of any registration,
maintenance, renewal fees, annuity fees and taxes or the filing of any
documents, applications or certificates for the purposes of maintaining,
perfecting or preserving or renewing any Company Registered Intellectual
Property. Except as set forth in Section 2.17(i) of the Seller Disclosure
Schedule, the Company has registered the copyright with the relevant
Governmental or Regulatory Authority for each product or technology of any
Constituent Company that constitutes or includes a copyrightable work. In each
case in which a Constituent Company has acquired by written assignment ownership
of any Intellectual Property from any Person, the Constituent Company has
obtained an assignment sufficient to irrevocably transfer all rights in such
Intellectual Property to such Constituent Company in accordance with applicable
Laws, and the Constituent Company has recorded each such assignment of
Registered Intellectual Property with the relevant Governmental or Regulatory
Authority.
(j) There are no Contracts or Licenses between any Constituent
Company and any other Person with respect to Company Intellectual Property under
which there is any dispute (or, to Sellers' or the Company's knowledge, facts
that may reasonably lead to a dispute) regarding the scope of such Contract or
License, or performance under such Contract or License, including with respect
to any payments to be made or received by the Constituent Company thereunder.
(k) To the Company's knowledge, no Person is infringing or
misappropriating any Company Intellectual Property.
(l) Each Constituent Company has taken commercially reasonable steps
to protect its rights in confidential information and trade secrets of such
Constituent Company or provided by any other Person to such Constituent Company
subject to a duty of confidentiality. Without limiting the generality of the
foregoing, each Constituent Company has, and enforces, a policy requiring each
employee, consultant and independent contractor to execute proprietary
information, confidentiality and invention and copyright assignment agreements
substantially in the form set forth in Section 2.17(l) of the Seller Disclosure
Schedule, and all current and former employees, consultants and independent
contractors of such Constituent Company have executed such an agreement and
copies of all such agreements have been provided to Purchaser or made available
to Purchaser for review.
(m) No Company Intellectual Property or product, technology or
service of the Company or any other Constituent Company is subject to any Order,
Action or Proceeding that restricts, or that is reasonably expected to restrict
in any manner, the use, transfer or licensing of any Company Intellectual
Property by the Company or such other Constituent Company or that may affect the
validity, use or enforceability of such Company Intellectual Property.
(n) No (i) product, technology, service or publication of any
Constituent Company, (ii) material published or distributed by any Constituent
Company, or (iii) conduct or statement of any Constituent Company constitutes
obscene material, a defamatory statement or
19
material, false advertising or otherwise violates any Law.
(o) Neither this Agreement nor any transactions to be accomplished
pursuant to this Agreement will result in Purchaser's granting any rights or
licenses with respect to the Intellectual Property of Purchaser to any Person
pursuant to any Contract to which any Constituent Company is a party or by which
any of its Assets and Properties are bound.
(p) Section 2.17(p) of the Seller Disclosure Schedule sets forth a
list of (i) all software which any Constituent Company has licensed from any
third party which is used by the Constituent Company in its products or
otherwise in its business (other than off-the-shelf software) and (ii) a list of
all "freeware" and "shareware" incorporated into any product now or heretofore
shipped by any Constituent Company. Such Constituent Company has all rights
necessary to the use of such software, "freeware" and "shareware".
(q) The products of each Constituent Company comply with all
applicable standards and with the feature specifications and performance
standards set forth in the product data sheets of the Constituent Company. There
are no outstanding claims (or facts known to the Company that are likely to lead
to a claim) for breach of warranties by any Constituent Company in connection
with the foregoing. All material product performance comparisons heretofore
furnished by any Constituent Company to customers or Purchaser are accurate in
all material respects as of the dates so furnished (except that, in the case of
product performance comparisons made as of a specified earlier date, such
comparisons shall be accurate in all material respects as of such specified
earlier date, and, in the case of product performance comparisons superseded by
a subsequent product performance comparison furnished to the customer before the
customer's acquisition of a product or License on the product covered by the
superseded comparison, the superseding comparison shall be accurate in all
materials respects and the superseded comparison shall be disregarded).
(r) Each Constituent Company has taken all commercially reasonable
steps to protect and preserve ownership of Company Intellectual Property. Each
Constituent Company has secured valid written assignments from all consultants
and employees who contributed to the creation or development of the Company
Intellectual Property. In the event that the consultant is concurrently employed
by any Constituent Company and a third party, the Constituent Company has taken
reasonable steps to ensure that any Company Intellectual Property developed by
such a consultant does not belong to the third party or conflict with the third
party's employment agreement.
2.18 Contracts.
(a) Section 2.18(a) of the Seller Disclosure Schedule contains a
true and complete list of each of the Contracts (true and complete copies or, if
none, reasonably complete and accurate written descriptions of which, together
with all amendments and supplements thereto and all waivers of any terms
thereof, have been made available to Purchaser prior to the execution of this
Agreement except as listed in Section 2.18(a) of the Seller Disclosure Schedule)
to which any Constituent Company is a party or by which any of its Assets and
Properties are bound and pursuant to which any such Constituent Company is
obligated to make
20
payments or to deliver products or services having a fair market value in excess
of ten thousand Euro ((euro)10,000) (other than purchase orders received in the
ordinary course of business).
(b) Each Contract disclosed in Section 2.18(a) of the Seller
Disclosure Schedule constitutes a legal, valid and binding agreement of the
pertinent Constituent Company and, to the knowledge of the Company and Sellers,
of each other Person (other than any Constituent Company) which is a party
thereto, enforceable in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar Laws relating to the enforcement of creditors'
rights generally and by general principles of equity. To the Company's
knowledge, each Contract in Section 2.18(a) of the Seller Disclosure Schedule is
in full force and effect. To the knowledge of Sellers or the Company no other
party to such Contract is in material violation or breach of or default under
any such Contract (or with notice or lapse of time or both, would be in material
violation or breach of or default under any such Contract).
(c) None of the Constituent Companies is a party to or bound by any
Contract that (i) automatically terminates or allows termination by the other
party thereto upon consummation of the transactions contemplated by this
Agreement or (ii) contains any covenant or other provision which limits any
Constituent Company's ability to compete with any Person in any line of business
or in any area or territory.
2.19 Insurance.
(a) The Constituent Companies have been, and at all times prior to
the Closing Date will be, insured pursuant to policies that are in amounts and
which provide coverages that are reasonable and customary for Persons engaged in
similar businesses and operations and having similar Assets and Properties.
(b) Since January 1, 2002, there have not been any claims made under
any insurance policies covering any Constituent Company.
2.20 Affiliate Transactions. Except as disclosed in Section 2.9(f) or
Section 2.20(a) of the Seller Disclosure Schedule and other than inter-company
purchases and sales in the ordinary course of business conducted on arm's length
terms, (i) there are no Contracts or Liabilities between any Constituent
Company, on the one hand, and (A) any current or former officer, director,
shareholder, or any Affiliate or Associate of any Constituent Company or (B) any
Person who is an Associate of any such officer, director, shareholder or
Affiliate, on the other hand, (ii) no Constituent Company provides or causes to
be provided any Assets and Properties, services or facilities to any such
current or former officer, director, shareholder, Affiliate or Associate, (iii)
neither any Constituent Company, nor any such current or former officer,
director, shareholder, Affiliate or Associate provides or causes to be provided
any Assets and Properties, services or facilities to Constituent Company and
(iv) none of the Constituent Companies beneficially owns, directly or
indirectly, any Investment Assets of any such current or former officer,
director, shareholder, Affiliate or Associate.
21
2.21 Employees; Labor Relations.
(a) There are no unfair labor practice, labor arbitration or court
proceedings pending with respect to any Constituent Company, or to the knowledge
of Sellers or the Company, threatened, against any Constituent Company with
respect to any material claim relating to any Constituent Company's labor
practices. To the knowledge of the Company, there are no organizational efforts
presently underway or threatened involving any employees of any Constituent
Company. There has been no work stoppage, strike or other concerted action by
employees of any Constituent Company nor has the Company received written notice
of any pending or threatened work stoppage, strike or other concerted action by
employees.
(b) Section 2.21(b) of the Seller Disclosure Schedule sets forth a
list of the unions which represent employees of the Constituent Companies.
Section 2.21(b) of the Seller Disclosure Schedule sets forth, individually, the
date of birth of each officer and employee together with such person's date of
commencement of service. The completion of the transactions contemplated by this
Agreement will not result in any payment or increased payment becoming due from
any Constituent Company to any current or former officer, director, or employee
of such Constituent Company.
(c) Since each Constituent Company's inception, there have been no
claims based on sex, sexual or other harassment, age, disability, race or other
discrimination or other employment claims, including claims of wrongful
termination, against such Constituent Company by any employees of such
Constituent Company. Each Constituent Company has complied in all material
respects with all Laws related to the employment of employees and, within the
last three (3) years, no Constituent Company has received any written notice
from a Governmental or Regulatory Authority of any claim that it has not
complied with any Laws relating to the employment of employees, including any
provisions thereof relating to wages, hours, collective bargaining, the payment
of social security and similar Taxes, equal employment opportunity, employment
discrimination, employee safety, or that it is liable for any arrearages of
wages or any Taxes or penalties for failure to comply with any of the foregoing.
(d) Sellers have provided to Purchaser copies of all written
policies and/or employee handbooks or manuals of the Constituent Companies,
which copies are complete and correct in all material respects.
(e) No officer or employee of any Constituent Company is obligated
under any Contract or other agreement or subject to any Order or Law that
interferes with the Constituent Company's business as currently conducted.
Neither the execution nor delivery of this Agreement, nor the carrying on of the
Company's business as presently conducted nor any activity of such officers,
employees or consultants in connection with the carrying on of the Company's
business as presently conducted, will conflict with or result in a breach of the
terms, conditions or provisions of, constitute a default under, or trigger a
condition precedent to any rights under any Contract or other agreement under
which any of such officers, employees or consultants is now bound.
22
2.22 Environmental Matters.
(a) Each Constituent Company possesses any and all material
Environmental Permits necessary to or required for the operation of its
businesses.
(b) Each Constituent Company is in compliance in all material
respects with (i) all terms, conditions and provisions of its Environmental
Permits; and (ii) all applicable Environmental Laws.
(c) Since January 1, 2002, none of the Constituent Companies has
received any written notice of alleged, actual or potential responsibility for,
or any inquiry regarding, (i) any Release or threatened or suspected Release of
any Hazardous Material, or (ii) any violation of Environmental Law.
(e) No releases of Hazardous Material(s) have occurred at, from, in,
to, on, or under any Site during the period in which a Constituent Company
leased or operated such Site which is reasonably likely to result in material
Liability to any Constituent Company for investigation or clean up.
(f) None of the Constituent Companies has transported or arranged
for the treatment, storage, handling, disposal or transportation of any
Hazardous Material at or to any location, except in material compliance with
Environmental Law.
(g) To the knowledge of the Company, there are no Liens under or
pursuant to any Environmental Law on any Company Real Property.
(h) To the Company's knowledge, there is no (i) underground storage
tank, active or abandoned, (ii) polychlorinated biphenyl containing equipment,
(iii) asbestos-containing material, (iv) radon, (v) lead-based paint or (vi)
urea formaldehyde at any Site.
(i) To the knowledge of the Company and Sellers, there have been no
environmental investigations, studies, audits, tests, reviews or other analyses
conducted with respect to any Site.
(j) Except as disclosed in Section 2.22 of the Seller Disclosure
Schedule and for this Agreement, no Constituent Company is a party, whether as a
direct signatory or as successor, assign, third-party beneficiary, guarantor or
otherwise, to any lease or other contract under which any Constituent Company is
obligated by any representation, warranty, covenant, restriction,
indemnification or other undertaking respecting Hazardous Materials or under
which any other person is or has been released respecting Hazardous Materials.
(k) The Constituent Companies have provided all material
notifications and warnings, made all reports, and kept and maintained all
records required pursuant to Environmental Laws except where the failure to do
so would not be reasonably expected to result, individually or in the aggregate,
in a material Liability to the Constituent Companies, taken as a whole.
23
2.23 Substantial Customers and Suppliers. Section 2.23 of the Seller
Disclosure Schedule lists the fifteen (15) largest customers of the Company and
each of the other Constituent Companies on the basis of revenues collected or
accrued for the Company Financials. Section 2.23 of the Seller Disclosure
Schedule lists the ten (10) largest suppliers of the Company and each of the
other Constituent Companies on the basis of cost of goods or services purchased
for the Company Financials. Except as disclosed in Section 2.23 of the Seller
Disclosure Schedule, no such customer or supplier has ceased or materially
reduced its purchases from or sales or provision of services to any Constituent
Company since September 30, 2004 or has threatened in writing to cease or
materially reduce such purchases or sales or provision of services after the
date hereof.
2.24 Accounts Receivable. Except as set forth in Section 2.24 of the
Seller Disclosure Schedule, the accounts and notes receivable of the Constituent
Companies reflected on the Company Financials, and all accounts and notes
receivable arising subsequent to the Financial Statement Date, arose from bona
fide sales transactions in the ordinary course of business, consistent with past
practice and are payable on ordinary trade terms, all of such accounts
receivable existing as of the date hereof (less the reserve for bad debts
reflected on the balance sheet dated as of December 31, 2004 included in the
Audited Financial Statements) are valid and enforceable claims, are collectible
and are not subject to offset or counterclaim. Section 2.24 of the Seller
Disclosure Schedule lists the accounts receivables of any Constituent Company
that were over 90 days past invoice date as of the Financial Statement Date and
December 31, 2004.
2.25 Inventory. Except to the extent reserved or provided for in the
Company Financials, all inventory of the Company reflected on the balance sheet
included in the Company Financials consisted, and all such inventory acquired
since the Financial Statement Date consists, of a quality and quantity usable
and saleble in the ordinary course of business. Except as disclosed in the notes
to the Company Financials, all items included in the inventory of the Company
are the property of the Company free and clear of any Lien.
2.26 Other Negotiations; Brokers; Third-Party Expenses. Neither the
Company, any other Constituent Company, nor to the knowledge of the Company, any
of their respective officers, directors, employees, agents, shareholders or
Affiliates (nor any investment banker, financial advisor, attorney, accountant
or other Person retained by or acting for or on behalf of the Company, or any
such Affiliate) has entered into any Contract that conflicts with any of the
transactions contemplated by this Agreement. No broker, investment banker,
financial advisor or other Person is entitled to any broker's, finder's,
financial advisor's or similar fee or commission in connection with this
Agreement and the transactions contemplated hereby based on arrangements made by
or on behalf of any Constituent Company.
2.27 Banks and Brokerage Accounts. Section 2.27 of the Seller Disclosure
Schedule sets forth (a) a true and complete list of the names and locations of
all banks, trust companies, securities brokers and other financial institutions
at which any Constituent Company has an account or safe deposit box or maintains
a banking, custodial, trading or other similar relationship, (b) a true and
complete list and description of each such account, box and relationship,
indicating in each case the account number and the names of the respective
officers, employees, agents or other similar representatives of the Constituent
Company having signatory power with respect thereto and (c) a list of each
Investment Asset, the name of the record and
24
beneficial owner thereof, the location of the certificates, if any, therefor,
and any share or bond powers or other authority for transfer granted with
respect thereto.
2.28 Warranty Obligations.
(a) Section 2.28(a) of the Seller Disclosure Schedule sets forth a
list of all forms of written warranties, guarantees and written warranty
policies of the Constituent Companies in respect of any of a Constituent
Company's products and services, which are currently in effect (the "Warranty
Obligations"). True and correct copies of the forms of Warranty Obligations have
been delivered to Purchaser prior to the execution of this Agreement.
(b) There have not been any deviations from the Warranty
Obligations, and no salesperson, employee or agent of any Constituent Company
other than corporate officers is authorized to undertake warranty obligations to
any customer or other Person in excess of such Warranty Obligations or as has
not had and would not reasonably be expected to have a material adverse effect
on the Business or Condition of the Company. The balance sheet included in the
Company Financials reflects reasonable reserves for Warranty Obligations.
2.29 Corrupt Practices. Neither the Company, any other Constituent
Company, nor to the knowledge of Sellers or the Company, any agent, employee or
other Person acting on behalf of any Constituent Company has, directly or
indirectly, used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, made
any unlawful payment to foreign or domestic government officials or employees or
to foreign or domestic political parties or campaigns from corporate funds, or
made any bribe, rebate, payoff, influence payment, kickback or other similar
unlawful payment.
2.30 Assignment and Transfer of Assets and Properties. Except as set forth
in Section 2.30 of the Seller Disclosure Schedule, there are no Intellectual
Property, Contracts or other Assets and Properties necessary to the business of
the Company or any other Constituent Company as currently conducted that are
owned or leased by any Seller or its Affiliates that have not been or will not
have been legally and validly assigned to Purchaser or the Company at or prior
to the Closing.
2.31 Approvals. Section 2.31 of the Seller Disclosure Schedule contains a
list of all Approvals known to the Company which are required to be given to or
obtained by any Constituent Company from any and all third parties, including,
without limitation, Governmental or Regulatory Authorities, in connection with
the consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements.
25
ARTICLE 2A
REPRESENTATIONS AND WARRANTIES CONCERNING SELLERS
Sellers, jointly and severally, hereby represent and warrant to Purchaser
as follows:
2A.1 Ownership of Company Capital Shares and Vastgoed capital shares.
(a) Vastgoed owns of record and beneficially all of the issued and
outstanding shares of Company Capital Shares. When delivered by Seller to
Purchaser pursuant to this Agreement, such shares will be free and clear of any
and all Liens, except as contemplated by this Agreement.
(b) Draka owns of record and beneficially all of the issued and
outstanding shares of Vastgoed.
2A.2 Organization and Qualification. Draka is a limited liability company
duly organized, validly existing and in good standing under the Laws of the
Netherlands and has requisite power and authority to conduct its business as now
conducted and to own, use, license and lease its Assets and Properties. Vastgoed
is a private company with limited liability duly organized, validly existing and
in good standing under the Laws of the Netherlands and has requisite power and
authority to conduct its business as now conducted and to own, use, license and
lease its Assets and Properties.
2A.3 Authority Relative to this Agreement. Each Seller has requisite power
and authority to execute and deliver this Agreement and the Ancillary Agreements
to which such Seller is a party, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery by each Seller of this Agreement and the Ancillary
Agreements to which it is a party and the consummation by such Seller of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary company action of such Seller, and no other action
on the part of such Seller is required to authorize the execution, delivery and
performance of this Agreement and the Ancillary Agreements to which it is a
party and the consummation by such Seller of the transactions contemplated
hereby and thereby. This Agreement and the Ancillary Agreements to which a
Seller is or will become a party have been or will be, as applicable, duly and
validly executed and delivered by such Seller and, assuming the due
authorization, execution and delivery hereof (and, in the case of the Ancillary
Agreements to which Purchaser is a party, thereof) by, and enforceability
against, Purchaser, each constitutes or will constitute, as applicable, a legal,
valid and binding obligation of such Seller enforceable against it in accordance
with its respective terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar Laws relating to the enforcement of creditors' rights generally
and by general principles of equity.
2A.4 No Conflicts. The execution and delivery by each Seller of this
Agreement and the Ancillary Agreements to which it is a party does not, and the
performance by such Seller of its obligations under this Agreement and the
Ancillary Agreements to which it is a party and the consummation of the
transactions contemplated hereby and thereby do not and will not:
26
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the Governing Documents of such Seller;
(b) conflict with or result in a violation or breach of any Law or
Order applicable to such Seller;
(c) except as would not have a Material Adverse Change of the
Company, (i) conflict with or result in a violation or breach of, (ii)
constitute a default (or an event that, with or without notice or lapse of time
or both, would constitute a default) under, (iii) require such Seller to obtain
any consent, approval or action of, make any filing with or give any notice to
any Person as a result or under the terms of, (iv) result in or give to any
Person any right of termination, cancellation, acceleration or modification in
or with respect to, (v) result in or give to any Person any additional rights or
entitlement to increased, additional, accelerated or guaranteed payments or
performance under, (vi) result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of such Seller's Assets and
Properties under or (vii) result in the loss of any material benefit under, any
of the terms, conditions or provisions of any Contract to which such Seller is a
party or by which any of such Seller's Assets and Properties is bound.
2A.5 Agreements. Except as set forth in Section 2A.5 of the Seller
Disclosure Schedule, neither Seller owns, directly or indirectly, on an
individual or joint basis, any material interest in, or serves as an officer or
director of, any customer, competitor or supplier of the Company, or any
organization which has a contract or arrangement with the Company other than
Affiliates of Seller.
27
ARTICLE 3
REPRESENTATIONS AND WARRANTIES CONCERNING PURCHASER
Purchaser represents and warrants to Sellers, subject to such exceptions
as are specifically disclosed in the disclosure schedule and schedule of
exceptions (the "Purchaser Disclosure Schedule") delivered herewith, as follows:
3.1 Organization and Qualification. Purchaser is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware. Purchaser has full corporate power and authority to conduct its
business as now conducted and as currently proposed to be conducted and to own,
use and lease its Assets and Properties. Purchaser is duly qualified, licensed
or admitted to do business and is in good standing in each jurisdiction in which
the ownership, use, licensing or leasing of its Assets and Properties, or the
conduct or nature of its business, makes such qualification, licensing or
admission necessary.
3.2 Authority Relative to this Agreement. Purchaser has full corporate
power and authority to execute and deliver this Agreement, the Subordinated Note
and each other Ancillary Agreements to which it is a party, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by Purchaser of this
Agreement, the Subordinated Note and each other Ancillary Agreements to which it
is a party and the consummation by Purchaser of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action of Purchaser and no other corporate action on the part of
Purchaser is required to authorize the execution, delivery and performance of
this Agreement, the Subordinated Note and each other Ancillary Agreements to
which it is a party and the consummation by it of the transactions contemplated
hereby and thereby. This Agreement, the Subordinated Note and each other
Ancillary Agreements to which Purchaser is or will become a party have been or
will be, as applicable, duly and validly executed and delivered by Purchaser
and, assuming the due authorization, execution and delivery hereof (and in the
case of Ancillary Agreements to which the Company and/or a Seller is a party,
thereof) by, and enforceability against, the Company and/or a Seller, each
constitutes or will constitute, as applicable, a legal, valid and binding
obligation of Purchaser, enforceable against it in accordance with its
respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar Laws relating to the enforcement of creditors' rights generally
and by general principles of equity.
3.3 Other Negotiations; Brokers; Third-Party Expenses. Neither Purchaser
nor any of its officers, directors, managers, employees, agents, shareholders,
members or Affiliates (nor any investment banker, financial advisor, attorney,
accountant or other Person retained by or acting for or on behalf of Purchaser
or any such Person) has entered into any Contract that conflicts with any of the
transactions contemplated by this Agreement. Except as set forth in Section 3.3
of the Purchaser Disclosure Schedule, no broker, investment banker, financial
advisor or other Person is entitled to any broker's, finder's, financial
advisor's or similar fee or commission in connection with this Agreement and the
transactions contemplated hereby based on arrangements made by or on behalf of
Purchaser.
28
3.4 SEC Compliance.
(a) Purchaser has timely filed all reports, schedules, forms,
statements and other documents with the Securities and Exchange Commission (the
"SEC") required to be filed by it on or after January 1, 2000 (such reports,
schedules, forms, statements and other documents, collectively with all other
reports, schedules, forms, statements and other documents filed, or required to
be filed, by the Purchaser with the SEC, if any, being hereinafter referred to
as the "Purchaser SEC Documents").
(b) As of their respective dates, the Purchaser SEC Documents
complied with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the Xxxxxxxx-Xxxxx Act of 2002 (the "Xxxxxxxx-Xxxxx Act")
and the rules and regulations of the SEC promulgated thereunder, to the extent
applicable to such Purchaser SEC Documents. No Subsidiary of the Purchaser is
required to file any forms, reports or other documents with the SEC pursuant to
Section 12 or 15 of the Exchange Act.
(c) The consolidated financial statements of Purchaser included in
the Purchaser SEC Documents comply as to form with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, including all applicable requirements of the Xxxxxxxx-Xxxxx Act, have
been prepared in accordance with U.S. GAAP (except, in the case of unaudited
quarterly statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may otherwise be
indicated in the notes thereto) and fairly present the financial position of
Purchaser as of the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited quarterly
statements, to normal year-end audit adjustments).
(d) Purchaser and each of its Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that:
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(e) Purchaser has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15 and 15d-15 under the Exchange
Act) and such disclosure controls and procedures are designed to ensure that
material information relating to Purchaser, including its consolidated
subsidiaries, is made known to Purchaser's Chief Executive Officer and its Chief
Financial Officer by others within those entities, and such disclosure controls
and procedures are effective to perform the functions for which they were
established; Purchaser's auditors and the Audit Committee of the Board of
Directors of Purchaser have been advised by Purchaser's Chief Executive Officer
and Chief Financial Officer of (i) any significant deficiencies in the design or
operation of Purchaser's internal control over financial reporting which are
reasonably likely to adversely affect Purchaser's ability to record, process,
summarize, and report financial information and (ii) any fraud, whether or not
material,
29
that involves management or other employees who have a significant role in
Purchaser's internal control over financial reporting; any material weaknesses
in Purchaser's internal control over financial reporting have been identified
for Purchaser's auditors; and since the date of the most recent evaluation of
such disclosure controls and procedures, there has been no change in Purchaser's
internal control over financial reporting or in other factors that has
materially affected, or is reasonably likely to materially affect, Purchaser's
internal control over financial reporting.
(f) Since July 30, 2002, Purchaser has not, directly or indirectly,
including through any Subsidiary (i) extended credit, arranged to extend credit,
or renewed any extension of credit, in the form of a personal loan, to or for
any director or executive officer of Purchaser, or to or for any family member
or affiliate of any director or executive officer of Purchaser or (ii) made any
material modification, including any renewal thereof, to any term of any
personal loan to any director or executive officer of Purchaser, or any family
member or affiliate of any director or executive officer, which loan was
outstanding on July 30, 2002.
3.5 No Conflicts. The execution and delivery by Purchaser of this
Agreement and the Ancillary Agreements to which Purchaser is a party does not,
and the performance by Purchaser of its obligations under this Agreement and the
Ancillary Agreements to which it is a party and the consummation of the
transactions contemplated hereby and thereby do not and will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the Governing Documents of Purchaser;
(b) subject to obtaining the consents, approvals and actions, making
the filings and giving the notices disclosed in Section 3.5(b) of the Purchaser
Disclosure Schedule, if any, conflict with or result in a violation or breach of
any Law or Order applicable to Purchaser or any of its Assets and Properties;
(c) except as disclosed in Section 3.5(c) of the Purchaser
Disclosure Schedule, (i) conflict with or result in a violation or breach of,
(ii) constitute a default (or an event that, with or without notice or lapse of
time or both, would constitute a default) under, (iii) require Purchaser to
obtain any consent, approval or action of, make any filing with or give any
notice to any Person as a result or under the terms of; (except such consents
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable state or federal securities laws); (iv) result
in or give to any Person any right of termination, cancellation, acceleration or
modification in or with respect to, (v) result in or give to any Person any
additional rights or entitlement to increased, additional, accelerated or
guaranteed payments or performance under, (vi) result in the creation or
imposition of (or the obligation to create or impose) any Lien upon Purchaser or
any of its Assets and Properties under or (vii) result in the loss of any
material benefit under, any of the terms, conditions or provisions of any
Contract or License to which Purchaser is a party or by which any of its Assets
and Properties are bound.
30
3.6 No Undisclosed Liabilities. Except as reflected or reserved against in
the financial statements contained in the Purchaser SEC Documents (including the
notes thereto) or as disclosed in Section 3.6 of the Purchaser Disclosure
Schedule, there are no material Liabilities of Purchaser or material Liabilities
or Liens affecting any of its Assets and Properties (other than Liabilities
incurred in the ordinary course of business consistent with past practice).
3.7 Legal Proceedings. Except as set forth in Section 3.7 of the Purchaser
Disclosure Schedule:
(a) there are no Actions or Proceedings pending or, to the knowledge
of Purchaser, threatened, against or adversely affecting Purchaser or any of its
Assets and Properties;
(b) Purchaser has not received written notice or does not otherwise
have knowledge of any Orders outstanding against Purchaser;
(d) Section 3.7(d) of the Purchaser Disclosure Schedule sets forth
all Actions or Proceedings against, or, to the knowledge of Purchaser,
threatened against, Purchaser or any of its Assets and Properties during the
three-year period prior to the date hereof.
3.8 Compliance with Laws and Orders. Except as disclosed in Section 3.8 of
the Purchaser Disclosure Schedule, since January 1, 1999, neither Purchaser nor
any of its Subsidiaries nor any of their respective directors, officers,
Affiliates, agents or employees has violated in any material respect or is
currently in default or violation in any material respect under, any Law or
Order applicable to Purchaser or any such Subsidiary or any of its respective
Assets and Properties, and Purchaser is not aware of any claim of violation, or
of any actual violation, of any such Laws and Orders by Purchaser or any such
Subsidiary since the incorporation or formation of Purchaser or such Subsidiary
other than matters finally resolved pursuant to appropriate legal proceedings.
Except as set forth in Section 3.8 of the Purchaser Disclosure Schedule,
Purchaser and each of its Subsidiaries has obtained all Approvals from
Governmental or Regulatory Authorities necessary to conduct the business
conducted by Purchaser or such Subsidiary in the manner as it is currently being
conducted and there has been no written notice received by Purchaser or any such
Subsidiary of any material violation or non-compliance with any such Approvals.
3.9 Approvals. Section 3.9 of the Purchaser Disclosure Schedule contains a
list of all Approvals known to Purchaser which are required to be given to or
obtained by Purchaser from any and all third parties, including, without
limitation, Governmental or Regulatory Authorities, in connection with the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements.
31
ARTICLE 4
ADDITIONAL AGREEMENTS
4.1 Covenant Not to Compete.
(a) For a period commencing with the Closing Date and ending on the
third (3rd) anniversary of the Closing Date, neither of the Sellers nor any of
their respective Subsidiaries shall directly or indirectly, (i) interfere with
the Company's or Purchaser's relationships with the customers and potential
customers of the Company with respect to the business of the Company or any
Constituent Company as conducted as of the date hereof, (ii) solicit for
employment, hire or employ, or cause any other Person to solicit, hire or employ
any employee or contractor then retained or employed by the Company or Purchaser
or retained or employed by the Company or Purchaser within the one-year period
immediately prior to such solicitation, hiring or employment, or (iii) engage or
participate, directly or indirectly, either as principal, agent, employee,
employer, consultant, shareholder, director, officer, partner or in any other
individual or representative capacity whatsoever, in the conduct or management
of, or own any stock or other proprietary interest in, any business or
enterprise that conducts business or operations which are the same as or
substantially similar to the business of the Company as of the date hereof
unless such Seller or any such Subsidiary shall have obtained the prior written
consent thereto of Purchaser; provided, however, that (x) notwithstanding clause
(ii) of this Section 4.1(a), nothing herein shall be deemed to limit such Seller
and its Subsidiaries from conducting general solicitations for applications for
employment or from hiring any respondent to any such general solicitation, and
(y) notwithstanding clause (iii) of this Section 4.1(a), each Seller and its
respective Subsidiaries shall be free without such consent to make reasonable
investments in any such company which is publicly-owned so long as its ownership
of securities of such company does not exceed one percent (1%) of the
outstanding amount of any class of any securities.
(b) Each of the covenants in this Section 4.1 is severable and
separate, and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. Moreover, in the event any court of competent
jurisdiction shall determine that any specific covenant or the scope, time or
territorial restrictions thereof are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and this Agreement shall thereby be reformed.
4.2 Confidentiality.
(a) Purchaser. Purchaser acknowledges and agrees that it has had in
the past, currently has, and in the future may possibly have, access to certain
information of Sellers that does not relate to the business of the Company, has
not been disclosed to the public and which constitutes confidential and
proprietary business information (the "Confidential Information of Seller"),
including but not limited to, in each case, client and customer lists, software,
data, formulae, processes, inventions, trade secrets, marketing information and
plans, business strategies and other information about products and services
offered or developed or planned to be offered or developed. Notwithstanding the
foregoing, Confidential Information of Seller does
32
not include any information (A) that is or becomes publicly available, other
than as a result of a disclosure by Purchaser or any of its Affiliates in
violation of this Agreement, (B) which must be disclosed by Purchaser or any of
its Affiliates under applicable Laws or by Order of any Governmental or
Regulatory Authority, or (C) which Purchaser reasonably believes is required to
be disclosed in connection with the defense of a lawsuit against Purchaser or
any of its Affiliates. In the event Purchaser or any of its Affiliates is
requested or required (including but not limited to by oral questions,
interrogatories, requests for information or documents in a legal proceeding,
subpoena, civil investigative demand or other similar process) to disclose any
Confidential Information of Seller as described in subpart (B) or subpart (C) of
the immediately preceding sentence, Purchaser shall provide Draka with prompt
written notice of any such request or requirement so that Draka may seek a
protective order or other appropriate remedy, at Draka's sole expense, and/or
waive compliance with the provisions of this Agreement. If, in the absence of a
protective order or other remedy or the receipt of a waiver from Draka,
Purchaser or any of its Affiliates is nonetheless, in the written opinion of
counsel, legally compelled to disclose Confidential Information of Seller to any
tribunal or else stand liable for contempt or suffer other censure or penalty,
Purchaser or its Affiliate may, without liability hereunder, disclose to such
tribunal only that portion of the Confidential Information of Seller which such
counsel advises Purchaser is legally required to be disclosed, provided that
Purchaser exercises its best efforts to preserve the confidentiality of such
information, including without limitation by cooperating with Draka to obtain an
appropriate protective order, at Draka's sole expense, or other reliable
assurance that confidential treatment will be accorded such information by such
tribunal. Purchaser agrees, on behalf of itself and each of its Affiliates,
that, without the prior written consent of Draka, from and after the date
hereof, neither Purchaser nor its Affiliates shall in any manner directly or
indirectly disclose to any Person or use any Confidential Information of Seller
for any purpose or reason.
(b) Sellers. Each Seller acknowledges and agrees that it has had in
the past, currently has, and in the future may possibly have, access to (i)
certain information of the business of the Company that has not been disclosed
to the public and which constitutes confidential and proprietary business
information (the "Confidential Information of the Company"), and (ii) certain
information of Purchaser that has not been disclosed to the public and which
constitutes confidential and proprietary business information (the "Confidential
Information of Purchaser"), including but not limited to, in each case, client
and customer lists, software, data, formulae, processes, inventions, trade
secrets, marketing information and plans, business strategies and other
information about products and services offered or developed or planned to be
offered or developed. Notwithstanding the foregoing, Confidential Information of
the Company and Confidential Information of Purchaser does not include any
information (A) that is or becomes publicly available, other than as a result of
a disclosure by a Seller or any of its Affiliates in violation of this
Agreement, (B) which must be disclosed by a Seller or any of its Affiliates
under applicable Laws or by Order of any Governmental or Regulatory Authority,
or (C) which a Seller reasonably believes is required to be disclosed in
connection with the defense of a lawsuit against a Seller or any of its
Affiliates. In the event a Seller or any of its Affiliates is requested or
required (including but not limited to by oral questions, interrogatories,
requests for information or documents in a legal proceeding, subpoena, civil
investigative demand or other similar process) to disclose any Confidential
Information of the Company or Confidential Information of Purchaser as described
in subpart (B) or subpart (C) of the immediately preceding
33
sentence, Draka shall provide Purchaser with prompt written notice of any such
request or requirement so that Purchaser may seek a protective order or other
appropriate remedy, at Purchaser's sole expense, and/or waive compliance with
the provisions of this Agreement. If, in the absence of a protective order or
other remedy or the receipt of a waiver from Purchaser, a Seller or any of its
Affiliates is nonetheless, in the written opinion of counsel, legally compelled
to disclose Confidential Information of the Company or Confidential Information
of Purchaser to any tribunal or else stand liable for contempt or suffer other
censure or penalty, such Seller or such Affiliate may, without liability
hereunder, disclose to such tribunal only that portion of the Confidential
Information of the Company or Confidential Information of Purchaser, as the case
may be, which such counsel advises Seller is legally required to be disclosed,
provided that Seller exercises its best efforts to preserve the confidentiality
of such information, including without limitation by cooperating with Purchaser
to obtain an appropriate protective order, at Purchaser's sole expense, or other
reliable assurance that confidential treatment will be accorded such information
by such tribunal. Each Seller agrees that, on behalf of itself and each of its
Affiliates, without prior written consent of Purchaser, from and after the date
hereof, neither Seller nor any of its Affiliates shall in any manner directly or
indirectly disclose to any Person or use any Confidential Information of the
Company or Confidential Information of Purchaser for any purpose or reason.
4.3 Expenses. All fees and expenses incurred by the Company and by Sellers
in connection with the negotiation and effectuation of the terms and conditions
of this Agreement and the transactions contemplated hereby, including all legal,
accounting (other than accounting fees and expenses related to services to
reconcile the Audited Financial Statements to US GAAP performed in connection
with auditing the financial records of the Company as set forth in Sections
4.7(a), which shall be paid by the Purchaser), financial advisory, consulting,
success and all other fees and expenses of third parties (the "Company
Expenses"), shall be the obligation of Sellers. All fees and expenses incurred
by Purchaser in connection with the negotiation and effectuation of the terms
and conditions of this Agreement and the transactions contemplated hereby,
including all legal, accounting, financial advisory, consulting and all other
fees and expenses of third parties, shall be the obligation of Purchaser.
4.4 Public Disclosure. Purchaser and Draka shall issue a joint press
release relating to this Agreement to be prepared jointly by Purchaser and Draka
(the "Joint Press Release"). Thereafter, unless otherwise required by Law
(including federal and state securities Laws and the rules and regulations of
The Nasdaq Stock Market), no disclosure (whether or not in response to any
inquiry) of the existence of any subject matter of, or the terms and conditions
of, this Agreement shall be made by either party unless approved by the other
party prior to release; provided, however, that such approval shall not be
unreasonably withheld or delayed.
4.5 Additional Documents and Further Assurances; Cooperation. Each party
hereto, at the request of the other party hereto and at the expense of the
requesting party, shall execute and deliver such other instruments and do and
perform such other acts and things (including all action reasonably necessary to
seek and obtain any and all Approvals of any Governmental or Regulatory
Authority or Person required in connection with the Acquisition; provided,
however, that neither party shall be obligated to consent to any divestitures or
operational limitations or activities in connection therewith and no party shall
be obligated to make a payment of money as
34
a condition to obtaining any such Approval, other than customary filing fees) as
may be necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby.
4.6 Employee Matters.
(a) The parties acknowledge and agree that Purchaser may cause the Company
to negotiate and enter into employment agreements with certain key employees of
the Company identified on Schedule 4.6(a) attached hereto (the "Key Employees")
on such terms as may be mutually agreed by Purchaser and such Key Employees;
provided that the effectiveness and enforceability of any such employment
agreements shall be contingent upon the consummation of the transactions
contemplated by this Agreement. Sellers shall not take any action, directly or
indirectly, to prevent or discourage any such Key Employee or any other employee
of the Company from being employed by the Company as of the Closing Date and
shall not solicit, invite or induce or entice any employees of the Company,
including, without limitation, the Key Employees, to remain in the employ of
either Seller or their respective Affiliates or otherwise attempt to retain the
services of any such employees, except with the prior written consent of
Purchaser.
(b) As of the Closing, Draka Fileca-Foptica S.A. ("Draka France") employs
the individuals listed on Schedule 4.6(b) hereto (the "France Employees"), whose
primary responsibilities involve services rendered to or on behalf of the
Company. Draka agrees that Draka France shall continue to employ the France
Employees from the Closing until such time as requested by Purchaser, but in no
event later than the date that is ninety (90) days after the date of Closing
(the "Transitional Employment Period"). Draka France shall employ the France
Employees during the Transitional Employment Period on the same terms and
conditions as prior to the Closing, consistent with past practice, and shall be
responsible for payment of all salaries, taxes, benefits and other costs related
to the France Employees, including any and all regulatory compliance relating
their employment (the "France Employee Costs"). Draka shall issue an invoice to
the Company monthly listing, in reasonable detail, all France Employee Costs and
the Company shall reimburse Draka for all France Employee Costs not more than
fifteen (15) days after the delivery of such invoice. Not more than eighty (80)
days after the Closing, Purchaser shall, with respect to each France Employee,
either (i) notify Draka and the applicable France Employee that it does not
intend to offer employment to such France Employee, or (ii) offer employment, or
cause an Affiliate of Purchaser to offer employment, to such France Employee on
substantially the same terms and conditions, including (without limitation as to
compensation, benefits, and duties and responsibilities) as such France Employee
is employed by Draka France immediately prior to Closing. In the event of the
termination of employment of any France Employee (whether in connection with
Purchaser's failure to offer any such person employment as contemplated hereby
or as a result of any France Employee's election not to accept Purchaser's offer
of employment or otherwise), Seller shall deliver to Purchaser a statement
setting forth in reasonable detail all costs and expenses incurred by Seller in
connection with such termination, and Purchaser shall reimburse Seller for all
of such costs and expenses not more than fifteen (15) days after the delivery of
such statement.
35
(c) As of the Closing, Draka Comteq USA, Inc. ("Draka USA") employs the
individuals listed on Schedule 4.6(c) hereto (the "U.S. Employees"), whose
primary responsibilities involve services rendered to or on behalf of the
Company. Draka agrees that Draka USA shall continue to employ the U.S. Employees
during the Transitional Employment Period. Draka USA shall employ the U.S.
Employees during the Transitional Employment Period on the same terms and
conditions as prior to the Closing, consistent with past practice, and shall be
responsible for payment of all salaries, taxes, benefits and other costs related
to the U.S. Employees, including any and all regulatory compliance relating
their employment (the "U.S. Employee Costs"). Draka shall issue an invoice to
the Company monthly listing, in reasonable detail, all U.S. Employee Costs and
the Company shall reimburse Draka for all U.S. Employee Costs not more than
fifteen (15) days after the delivery of such invoice. Not more than eighty (80)
days after the Closing, Purchaser shall, with respect to each U.S. Employee,
either (i) notify Draka and the applicable U.S. Employee that it does not intend
to offer employment to such U.S. Employee, or (ii) offer employment, or cause an
Affiliate of Purchaser to offer employment, to such U.S. Employee on
substantially the same terms and conditions, including (without limitation as to
compensation, benefits, and duties and responsibilities) as such U.S. Employee
is employed by Draka USA immediately prior to Closing. In the event of the
termination of employment of any U.S. Employee (whether in connection with
Purchaser's failure to offer any such person employment as contemplated hereby
or as a result of any U.S. Employee's election not to accept Purchaser's offer
of employment or otherwise), Seller shall deliver to Purchaser a statement
setting forth in reasonable detail all costs and expenses incurred by Seller in
connection with such termination, and Purchaser shall reimburse Seller for all
of such costs and expenses not more than fifteen (15) days after the delivery of
such statement.
(d) Each of the parties hereto shall cooperate and take such mutually
agreed upon actions as are necessary to cause the portion of the insurance
contract for the non-contributory pension in the NKF Kabel Pension Fund
attributable to employees of the Company to be transferred to the Company, a new
pension fund established by the Company or a pension insurance company
designated by the Company.
(e) Prior to Closing, employees of the Company have been insured under the
following Contracts of Vastgoed: (i) Collective Medical Insurance (contract
collectieve ziektekostenverzekering), dated 28 September 1999, by and between
NKF Kabel B.V. (as contractant) and Onerlinge GEOVE u.a. (as insurance company),
and (ii) Collective WAO Insurance Contract (Contract WAO (excedent)verzekering),
dated 13-04-2004, by and between NKF Kabel B.V. (as contractant) and Nationale
Nederlanden Verzekeringmaatschappij N.V. (as insurance company) (together, the
"Collective Policies"). Draka and Vastgoed agree that the Company employees
shall continue to be insured under the Collective Policies, upon the same terms
and conditions as immediately prior to the Closing, for a period of not more
than ninety (90) days after the Closing. Vastgoed shall issue an invoice to the
Company monthly listing, in reasonable detail, all costs and expenses incurred
by Vastgoed under the Collective Policies in connection with continuing to
insure the Company employees pursuant to this Section 4.6(e) and the Company
shall reimburse Vastgoed for all such costs and expenses not more than fifteen
(15) days after the delivery of such invoice.
36
4.7 Financial Statements.
(a) Audited Financial Statements. Prior to the date hereof, Draka,
at its expense, shall have caused to be delivered to Purchaser the balance sheet
of the Company as of December 31, 2004 and 2003 and the related statement of
operations, statement of shareholders' equity and statement of cash flows of the
Company for the years ended December 31, 2004 and 2003, prepared in accordance
with Dutch GAAP and audited by KPMG in accordance with U.S. GAAS (the "Audited
Financial Statements"). Additionally, prior to the date hereof, Purchaser, at
Purchaser's expense, shall have caused the Audited Financial Statements to be
reconciled to U.S. GAAP.
(b) Additional Assistance. Sellers will use commercially reasonable
efforts to cause its management and KPMG to (i) provide such information and
assistance as reasonably required by Purchaser in connection with the
preparation by Purchaser and its independent accountants of pro forma financial
statements required under applicable Laws, (ii) facilitate the review of any
Company audit or review work papers, including the examination of selected
interim financial statements and data, and (iii) deliver such representations as
may be reasonably requested by KPMG or Purchaser's independent accountants.
Purchaser shall reimburse Draka or KPMG for all costs and expenses (including
professional fees) incurred in connection with services or assistance provided
by Sellers or KPMG pursuant to this Section 4.7(b).
4.8 Certain Tax Matters
(a) Pre-Closing Tax Affairs. Draka shall prepare and file (or cause
the Company to file) all Tax Returns relating to the Company that relate solely
to periods ending on or before Closing, and with respect to Tax Returns which
have not been filed as of the date of the Closing, Seller shall provide to
Purchaser prior to the filing of such Tax Returns an abstract of information set
forth on such Tax Returns relating setting forth in reasonable detail material
information regarding the Company. For the avoidance of misunderstanding, the
Purchaser (i) shall have sole conduct of all Tax affairs of the Company for
periods that start on or after Closing, (ii) shall be entitled to deal with Tax
affairs relating to any period beginning on or after the date of the Closing in
any way in which it, in its absolute discretion, considers fit, and (iii) shall
be responsible for filing all Tax Returns other than those referred to in the
first sentence.
(b) Cooperation on Tax Matters.
(i) Purchaser, the Company and Sellers shall cooperate, as and
to the extent reasonably requested by the other party and at the expense of the
requesting party, in connection with the filing of Tax Returns for all periods
that begin before the Closing and any audit, litigation or other Action or
Proceeding with respect to Taxes. Such cooperation shall include the provision
of records and information which are reasonably relevant to any such Tax
Returns, audit, litigation or other Action or Proceeding and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Company and Sellers agree
(A) to retain all Books and Records with respect to Tax matters pertinent to the
Company relating to any taxable period beginning before the Closing until the
expiration of the statute of limitations (and, to the extent notified in writing
by Purchaser or Sellers, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered into with any
Tax Authority, and (B) to give the other
37
party reasonable written notice prior to transferring, destroying or discarding
any such Books and Records and, if the other party so requests, the Company or
Sellers, as the case may be, shall allow the other party to take possession of
such Books and Records at the requesting party's expense.
(ii) Purchaser and Sellers further agree, upon request, to use
their commercially reasonable efforts to obtain any certificate or other
document from any Governmental or Regulatory Authority or any other Person as
may be necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including without limitation any Tax with respect to the transactions
contemplated hereby).
(c) Tax Sharing Agreements. All Tax sharing agreements or similar
agreements with respect to or involving the Company and Sellers or any of their
respective Affiliates shall be terminated as of the Closing Date and, after the
Closing Date, the Company shall not be bound thereby or have any Liability
thereunder.
(d) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement, shall be paid by the party
legally responsible therefore when due, and such party will, at their or its own
expense, file all necessary Tax Returns and other documentation with respect to
all such transfer, documentary, sales, use, stamp, registration and other such
Taxes and fees, and, if required by applicable Law, each of Purchaser, the
Company and Sellers will, and will cause its Affiliates to, join in the
execution of any such Tax Returns and other documentation.
4.9 Inter-Company Debt. The parties acknowledge and agree that as of the
Closing Date, the entire Indebtedness and Liabilities (other than obligations
incurred in the ordinary course of business as currently conducted) of the
Company to Draka and/or any of Draka's Affiliates shall consist of inter-company
Indebtedness in the amount of Four Million Eighty Eight Thousand Euro
((euro)4,088,000) (the "Inter-Company Debt"), as set forth in Schedule 4.9
attached hereto. The parties agree that upon or immediately following the
Closing, Purchaser and the Company shall cause the Inter-Company Debt to be paid
in full to Draka in accordance with Section 1.3(b). In the event the Company is
liable or otherwise obligated to Draka or any of Draka's Affiliates for any
Indebtedness or other Liabilities other than the Inter-Company Debt, Draka
agrees, on behalf of itself and its Affiliates, that neither the Company nor
Purchaser or any of Purchaser's Affiliates shall have any Liability for such
Indebtedness or other Liabilities other than obligations incurred in the
ordinary course of business as currently conducted.
4.10 Customer Contact. The Seller consents to reasonable telephone contact
between the Purchaser and six (6) of the Company's customers identified on in
Section 2.23 of the Seller Disclosure Schedule; provided that (i) such contact
shall be solely for the purpose of Purchaser's due diligence regarding the
Company and (ii) Xxxxxx Overwijn shall participate in all such telephone calls.
38
4.11 Solar Inverter Claim. With respect to that certain pending claim
described on Schedule 4.11 hereto relating to the Solar Inverter Business (the
"Solar Inverter Claim"), the Company shall provide all commercially reasonable
services, including, without limitation, providing reasonable access to the
Company's books and records and making appropriate personnel reasonably
available to the attorneys, accountants or other agents of the Sellers or an
Affiliate of the Sellers as may be reasonably requested in connection with the
defense of such Solar Inverter Claim. Sellers shall reimburse the Company for
all reasonable third party costs and expenses incurred by the Company with
Seller's prior consent (which shall not be unreasonably delayed or withheld) in
connection with services or assistance provided by the Company pursuant to this
Section 4.11.
4.12 Spanish Cable Receivables. Schedule 4.12 attached hereto sets forth
the accounts receivable of Sellers' Spanish Cable Business as of January 31,
2005 (the "Spanish Cable Receivables"). Purchaser agrees that from and after the
Closing and until the first to occur of (i) the collection and remission to
Draka of the Spanish Cable Receivables and (ii) December 31, 2005, Purchaser
shall serve as collection agent for Sellers with respect to the Spanish Cable
Receivables outstanding as of Closing, shall hold all amounts received in
payment of the Spanish Cable Receivables in trust for Seller and shall pay, or
shall cause the Company to pay, an amount equal to the amounts actually received
by the Company or Purchaser, or any of their respective Affiliates, in payment
of the Spanish Cable Receivables. The Company shall use commercially reasonable
efforts consistent with its generally applicable collection practices to collect
the Spanish Cable Receivables, and neither Purchaser nor the Company shall agree
to discount, settle or otherwise compromise any Spanish Cable Receivable without
the prior written consent of Draka. As of December 31, 2005 (the "Assignment
Date"), Purchaser or the Company shall assign to Draka, without further
consideration, any Spanish Cable Receivables that have not been collected as of
such date. In the event that, after the Assignment Date, the Company receives
any amount in respect of any Spanish Cable Receivable, the Company shall remit
such amount to the Seller not more than fifteen (15) days after such receipt.
4.13 Service Level Arrangements.
(a) Singapore Office Space. Prior to Closing, Far East Pte. Ltd
("Draka Singapore") has provided the Company with certain office space located
at 00 Xxxxxx Xxxx Xxxx, Xxxxxx Xxxx, Xxxxxxxxx (the "Singapore Office Space").
Draka agrees that Draka Singapore will continue to sublease the Singapore Office
Space to the Company for use and occupancy by the Company, upon the same terms
and conditions as have been provided to the Company prior to the Closing, from
the Closing until the earlier of (i) the date that is thirty (30) days after the
date the Company provides Draka with written notice that it intends to terminate
its sublease of the Singapore Office Space, or (ii) the date that is one (1)
year after the date of Closing. The parties agree that the fee for this sublease
of the Singapore Office Space is Singapore $1,940 per month.
(b) France Office Space. Prior to Closing, Draka France has provided
the Company with certain office space located at Xxxxx Xxxxxxxxx x 0, 00000
Xxxxx Xxxxxxxxx, Xxxxxx (the "France Office Space"). Draka agrees that Draka
France will continue to sublease the France Office Space to the Company for use
and occupancy by the Company, upon the same terms and conditions as have been
provided to the Company prior to the Closing, from the Closing until the earlier
of (i) the date that is thirty (30) days after the date the Company
39
provides Draka with written notice that it intends to terminate its sublease of
the Singapore Office Space, or (ii) the date that is one (1) year after the date
of Closing. The parties agree that the fee for this sublease of the France
Office Space is One Thousand Six Hundred Euro ((euro)1,600) per month.
(c) U.S. Office Space. Prior to Closing, Draka USA has provided the
Company with certain office space located at 0 Xxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxxxxxx, X.X.X. (the "U.S. Office Space"). Draka agrees that Draka USA
will continue to sublease the U.S. Office Space to the Company for use and
occupancy by the Company, upon the same terms and conditions as have been
provided to the Company prior to the Closing, from the Closing until the earlier
of (i) the date that is thirty (30) days after the date the Company provides
Draka with written notice that it intends to terminate its sublease of the U.S.
Office Space, or (ii) the date that is one (1) year after the date of Closing.
The parties agree that the fee for this sublease of the U.S. Office Space is One
Thousand Three Hundred Thirty Seven Dollars ($1,337) per month.
(d) Service Level Agreement Between the Company and Vastgoed. The
parties acknowledge and agree that the Company and Vastgoed are parties to that
certain Service Level Agreement with a commencement date of July 1, 2004 (the
"NKF Service Agreement"). The parties agree that the NKF Service Agreement shall
continue for a term of one (1) year after the date of Closing upon the same
terms and conditions, subject to the following amendment: Vastgoed shall
continue to provide the Company with the services relating to payroll and
personnel and organization for a period of three (3) months after the Closing
(and the annual fees for such services shall be prorated based on such 3-month
period).
(e) Management Services Agreement Between the Company and Draka USA.
The parties acknowledge and agree that the Company and Draka USA are parties to
that certain Management Services Agreement dated April 24, 2003 (the "U.S.
Service Agreement"). The parties agree that the U.S. Service Agreement shall
continue for a term of ninety (90) days after the date of Closing upon the same
terms and conditions, subject to the following amendments:
(i) Section 2(a) of the U.S. Service Agreement shall be
terminated effective upon Closing and the employment of the U.S. Employees shall
be governed by Section 4.6(c) hereof.
(ii) Section 4 of the U.S. Service Agreement shall be amended
to provide that the U.S. Service Agreement shall terminate ninety (90) days
after the date of Closing.
(f) Cost Sharing Service Agreement Between the Company and Draka.
The parties acknowledge and agree that the Company and Draka are parties to that
certain Cost Sharing Service Agreement dated December 16, 2004 (the "Draka
Service Agreement"). The parties agree that the Draka Service Agreement shall
terminate and have no further force and effect immediately upon Closing.
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4.14 Tax Step Up.
(a) Fiscal Revaluation. If at any time after the execution of this
Agreement, the Tax Authority in The Netherlands (the "Dutch Tax Authority")
finds that section 14(1) of the Corporate Income Tax Act 1969 is not applicable
to the spin-off by Vastgoed of part of its business activities to the Company in
2004 and, therefore, as a result the book value for Dutch corporate income tax
purposes of the assets of the Company are increased (such increase hereinafter
referred to as the "Fiscal Revaluation"), then subject to Sellers providing
Purchaser with a copy of the official notice of the Dutch Tax Authority, if any,
and/or such information as is necessary to independently validate the Fiscal
Revaluation, and subject to the limitations set forth in Section 4.14(b) below,
the Purchase Price shall be increased by the resulting Cash Tax Benefit
(hereinafter defined) less any applicable withholding or Taxes. Notwithstanding
the foregoing, Sellers covenant and agree to continue to report that section
14(1) of the Corporate Income Tax Act 1969 is applicable to the spin-off by
Vastgoed of part of its business activities to the Company in 2004 and that in
the event such position is challenged by the Dutch Tax Authority, they will use
commercially efforts to defend against such challenge.
(b) Use of Tax Benefit and Payment. With respect to any taxable year
ending after the date hereof until December 31, 2012, Xxxxx Xxxxxxxx LLP or any
successor thereto approved by Purchaser's senior secured creditor will provide
an independent validation of the Fiscal Revaluation and increased cash tax
benefit by calculating (i) Purchaser's worldwide corporate income tax liability
that would be payable with respect to such taxable year (A) without giving
effect to the Fiscal Revaluation, and (B) after giving effect to the Fiscal
Revaluation, and (ii) the Company's stand alone Dutch Tax liability or, if the
Company is included in a fiscal unity for Dutch corporate income Tax purposes,
the Dutch Tax liability of such fiscal unity, that would be payable with respect
to such taxable year (A) without giving effect to the Fiscal Revaluation, and
(B) after giving effect to the Fiscal Revaluation. For the avoidance of doubt,
Purchaser's worldwide corporate income tax liability means the sum of the
corporate income tax liability of Purchaser in the United States with respect to
such taxable year plus the corporate income tax liability of its Associates
(including the Company) in their respective countries of residence for such
taxable year. To the extent that Purchaser's worldwide corporate income Tax
liability actually paid to the applicable Tax Authorities with respect to such
taxable year is reduced by an amount (but not below zero) by giving effect to
the Fiscal Revaluation less the expenses incurred in connection with the
calculation referred to in this Section 4.14(b) (such amount being a "Worldwide
Cash Tax Benefit") and/or the Company's Dutch corporate income Tax liability or,
if the Company is included in a fiscal unity for Dutch corporate income Tax
purposes, the Dutch Tax liability of such fiscal unity, actually paid to the
Dutch Tax Authority with respect to such taxable year is reduced by an amount
(but not below zero) by giving effect to the Fiscal Revaluation less the
expenses incurred in connection with the calculation referred to in this Section
4.14(b) (such amount being a "Dutch Cash Tax Benefit"), then Purchaser agrees to
pay to Sellers an amount in Euros equal to the lesser of (I) the Worldwide Cash
Tax Benefit divided by the spot foreign exchange rate at the time of payment, or
(II) the Dutch Cash Tax Benefit (such lesser amount, the "Cash Tax Benefit"),
provided that to the extent that such payment is subject to any withholding or
other Taxes, the payment to be made by Purchaser shall be reduced by such
withholding or Taxes. In the event that any taxable year begins prior to the
date hereof, but ends after the date hereof (a "Straddle Year") the Cash Tax
Benefit shall be payable only with respect to that portion of any Cash Tax
Benefit attributable to that portion of the Straddle Year beginning on the date
hereof. Sellers and Purchaser agree that the aggregate amount Purchaser may be
required to pay with respect to the
41
Cash Tax Benefit shall not exceed the lesser of (x) the aggregate Cash Tax
Benefit actually realized by Purchaser, or (y) Three Million Six Hundred
Thousand Euros ((euro)3,600,000). Seller's sole remedy for Purchaser's failure
to pay amount due in connect with the Cash Tax Benefit shall be a cause of
action for breach of this Agreement.
(c) Payment. The due date for any Cash Tax Benefit for any taxable
year shall be five (5) Business Days after the sooner of (i) the last date on
which the corporate income Tax assessment relating to the taxable year as
referred to in Section 4.14(b) has been finally and irrevocably determined by
any applicable Tax Authority, or (ii) the expiration of any applicable statute
of limitations.
(d) Obligation Ceases on Sale. Any obligation hereunder shall cease
on sale of the Company, provided the purchaser in such sale is not an entity or
person that is an Affiliate or Associate of Purchaser.
42
ARTICLE 5
CONDITIONS TO CLOSING
5.1 Conditions to Obligations of Each Party to Effect the Acquisition. The
respective obligations of each party to this Agreement to effect the Acquisition
shall be subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) Governmental and Regulatory Approvals. Approvals from any
Governmental or Regulatory Authority (if any) necessary for consummation of the
transactions contemplated hereby shall have been obtained.
(b) No Injunctions or Regulatory Restraints; Illegality. No
temporary restraining order, preliminary or permanent injunction or other Order
issued by any court of competent jurisdiction or other Governmental or
Regulatory Authority or other legal or regulatory restraint or prohibition
preventing the consummation of the Acquisition shall be in effect; nor shall
there be any Law or Order applicable to the Acquisition or the other
transactions contemplated by the terms of this Agreement that would prohibit the
consummation of the Acquisition or require Purchaser to hold separate the assets
of the Company.
5.2 Additional Conditions to Obligations of Sellers. The obligations of
Sellers to consummate the Acquisition and the other transactions contemplated by
this Agreement shall be subject to the satisfaction at or prior to the Closing
of each of the following conditions, any of which may be waived, in writing,
exclusively by Draka:
(a) Representations and Warranties. The representations and
warranties of Purchaser contained in this Agreement shall be accurate in all
material respects (except for those representations and warranties that are by
their terms qualified by a standard of materiality, which representations and
warranties shall be true and correct in all respects) as of the date of this
Agreement and as of the Closing as if made on and as of the Closing (other than
any such representations and warranties which by their express terms are made
solely as of a specified earlier date, which shall be accurate as of such
specified earlier date).
(b) Performance. Purchaser shall have delivered the Cash Payment as
specified in Section 1.3(a), paid and satisfied in full the Inter-Company Debt
as specified in Section 1.3(b), caused the Subordinated Note to be executed and
delivered as specified in Section 1.3(c), and otherwise performed and complied
in all material respects with each agreement, covenant and obligation required
by this Agreement to be so performed or complied with by Purchaser at or before
the Closing.
(c) Closing Certificate. Purchaser shall have delivered to Sellers a
certificate, dated the date of the Closing and executed by a duly authorized
officer, to the effect that each of the conditions specified in Sections 5.2(a)
and (b) above is satisfied in all respects.
43
(d) Ancillary Agreements.
(i) Purchaser shall have executed a notarial deed of pledge in
the form attached hereto as Exhibit C, granting Draka a first priority lien in
35% of the Company Capital Shares to secure the obligations of Purchaser under
the Subordinated Note ( the "Pledge Agreement").
(ii) Purchaser shall have executed and delivered to Draka the
Subordinated Note.
(e) Legal Opinion. Draka shall have received a legal opinion from
Karp, Frosh, Xxxxxxx, Wigosky & Norwind, P.A., counsel to Purchaser, in the form
set forth in Exhibit D attached hereto.
(f) Material Adverse Change. There shall have not have occurred any
Material Adverse Change of Purchaser since the date of the financial statements
included in its most recent quarterly report on Form 10-Q filed with the
Securities and Exchange Commission.
5.3 Additional Conditions to the Obligations of Purchaser. The obligations
of Purchaser to consummate the Acquisition and the other transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions, any of which may be waived,
in writing, exclusively by Purchaser:
(a) Representations and Warranties. The representations and
warranties of Sellers contained in this Agreement shall be accurate in all
material respects (except for those representations and warranties that are by
their terms qualified by a standard of materiality, which representations and
warranties shall be true and correct in all respects) as of the date of this
Agreement and as of the Closing as if made on and as of the Closing (other than
representations and warranties which by their express terms are made as of a
specified earlier date, which shall be accurate as of such specified earlier
date).
(b) Performance. The Company and Sellers shall have performed and
complied with in all material respects each agreement, covenant or obligation
required by this Agreement to be so performed or complied with by the Company or
either Seller, as the case may be, at or before the Closing.
(c) Closing Certificate. Each Seller shall have delivered to
Purchaser a certificate, dated the date of the Closing, to the effect that each
of the conditions specified in Sections 5.3(a) and (b) above is satisfied in all
respects.
(d) Subordinated Note. Draka shall have executed and delivered to
Purchaser the Subordinated Note.
(e) Company Financials. Draka shall have delivered or caused to be
delivered to Purchaser the Audited Financial Statements.
(f) Notarial Deed. Sellers shall have executed the Notarial Deed
before the Notary.
44
(g) Legal Opinion. Purchaser shall have received a legal opinion
from Xxxxx & Xxxxx LLP, in the form set forth in Exhibit E attached hereto.
(h) Fairness Opinion. Purchaser shall have received from Xxxxxx
Xxxxx Xxxxx an opinion that the transactions contemplated by this Agreement are
fair, from a financial point of view, to the stockholders of Purchaser.
(i) Approvals. (i) Approvals, if any, from any Person other than a
Governmental or Regulatory Authority necessary for consummation of the
transactions contemplated hereby shall have been obtained, including any
Approvals required to be disclosed in Section 2.6(c) of the Seller Disclosure
Schedule (other than the assignment to the Company of the Contracts identified
on Schedule 2.6(c)); and (ii) at and after the Closing, the Company shall have
and be entitled to exercise all of its rights under the Contracts listed on
Section 2.18(a) of the Seller Disclosure Schedule, including, without
limitation, the lease for the Company Real Property located in Gouda, The
Netherlands, without the payment of any additional amounts or consideration
other than ongoing fees, royalties or payments that the Company would otherwise
be required to pay had the transactions contemplated by this Agreement not
occurred.
(j) Delivery of Share Ledger and Minute Book of the Company. Draka
shall have delivered the Company's share ledgers and minute books to Purchaser.
(k) Resignations of Directors of the Company. Draka shall have
delivered or caused to be delivered to Purchaser resignations of the directors
of each Constituent Company.
(l) Material Adverse Change. There shall have not have occurred any
Material Adverse Change of the Company since the Financial Statement Date.
(m) [Intentionally Omitted].
(n) Completion of Due Diligence. Except as provided in Section
5.3(o) below, Purchaser shall have completed, to its satisfaction, its due
diligence review of the Company on or before January 31, 2005.
(o) Customer Diligence. Purchaser shall have completed, to its
reasonable satisfaction, (i) its diligence review of information provided by
Sellers on customers of the Company, and (ii) due diligence calls with six (6)
of the Company's customers identified on Section 2.23 of the Seller Disclosure
Schedule.
(p) Trademark License. Purchaser and Sellers shall have executed and
delivered a Trademark License regarding the use by Purchaser of the trademark
"NKF" in the form attached hereto as Exhibit F.
45
ARTICLE 6
SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS; INDEMNIFICATION
6.1 Survival of Representations, Warranties, Covenants and Agreements.
Notwithstanding the provisions of any representation, warranty, covenant or
agreement contained herein, in the event that prior to Closing either (i)
Sellers have actual knowledge of one or more breach of any representation,
warranty, covenant or agreement by Purchaser, or (ii) Purchaser has actual
knowledge of any breach of a representation, warranty, covenant or agreement by
the Company or Sellers, and notwithstanding such actual knowledge such party
proceeds to Closing, the party having such actual knowledge shall be deemed to
have waived such party's right to make any claim hereunder with respect to such
breach and shall be forever estopped from making any claim with respect thereto.
Except for the representations and warranties set forth in Section 2.3(b) and
2A.1(a) (Ownership of Company Capital Shares) (which shall survive the Closing
and continue until the applicable statute of limitations has expired), and
Section 2.11 (Taxes) (which shall survive the Closing and continue for a period
of five (5) years), all of the representations and warranties contained in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Closing and continue until the date which is eighteen (18) months
after the date of Closing. For the avoidance of doubt, each provision of Article
1 and Article 6 and all Schedules shall survive until the satisfaction of all
obligations described therein, and each provision of Article 7 and Article 8
shall survive so long as it is relevant to any other surviving provision. No
Action or Proceeding may be instituted to enforce, or seek damages or other
remedies with respect to the breach of any representation or warranty after the
expiration of the period of survival for such representation or warranty as
described above.
6.2 Indemnification.
(a) After the Closing and subject to the limitations set forth
herein, Purchaser and its Affiliates (including, after the Closing, the Company)
officers, directors, employees, agents, successors and assigns (each, a
"Purchaser Indemnified Party") shall be indemnified and held harmless by
Sellers, jointly and severally, for any and all Liabilities, losses, damages of
any kind, claims, costs, expenses, fines, fees, deficiencies, interest, awards,
judgments, amounts paid in settlement and penalties (including, without
limitation, attorneys', consultants' and experts' fees and expenses and other
costs of defending, investigating or settling claims) actually suffered or
incurred by them (including, without limitation, in connection with any action
brought or otherwise initiated by any of them) , (hereinafter, "Loss(es)")
arising out of or resulting from:
(i) any inaccuracy in or breach (or any claim by any third
party alleging or constituting an inaccuracy or breach) of any representation or
warranty of Sellers, as of the date of this Agreement, contained in this
Agreement or in the Ancillary Agreements or any other instrument delivered
pursuant to this Agreement;
(ii) any breach of any covenant or agreement made by a Seller
in this Agreement or in the Ancillary Agreements or any other instrument
delivered pursuant to this Agreement;
(iii) any Company Expenses required to be paid by Sellers
pursuant to Section 4.3; or
46
(iv) the Spanish Cable Business or the Solar Inverter
Business, including, with limitation, the Solar Inverter Claim.
(b) Notwithstanding any provision hereof to the contrary, the
determination of any Purchaser Indemnified Party's Losses shall take into
account any and all present or future Tax benefits or detriments (based on such
Purchaser Indemnified Party's actual tax rate (on a consolidated basis, if
applicable) in the applicable year relating to the Loss), and after offsetting
any related recoveries or proceeds received by such Purchaser Indemnified Party
from applicable insurance policies or similar arrangements, or from third
parties, in connection with such Loss.
(c) The Purchaser will not be entitled to assert a claim for
indemnification under this Agreement until such time as the aggregate Losses
incurred by it for which indemnification may be available hereunder exceed One
Hundred Thousand Euro ((euro)100,000) (the "Threshold"), in which event the
Purchaser will be entitled to recover indemnifiable Losses only to the extent
that such Losses exceed the Threshold; provided however, that any Losses (i)
based on fraud, (ii) arising from any inaccuracy in or breach (or any claim by
any third party alleging or constituting an inaccuracy or breach) of any
representation or warranty of Sellers contained in Section 2.3(b) or 2A.1(a)
hereof, (iii) indemnifed under Section 6.2(a)(ii) hereof, or (iv) indemnified
under Section 6.2(a)(iv) hereof shall not be subject to the Threshold and shall
be indemnifiable from the first dollar of Loss.
(d) The aggregate amount of the Seller's indemnification obligation
hereunder shall not exceed Five Million Five Hundred Thousand Euro
((euro)5,500,000) (the "Indemnification Cap"); provided, however, any Losses (i)
based on fraud, (ii) arising from any inaccuracy in or breach (or any claim by
any third party alleging or constituting an inaccuracy or breach) of any
representation or warranty of Sellers contained in Section 2.3(b) or 2A.1(a)
hereof, (iii) indemnifed under Section 6.2(a)(ii) hereof, or (iv) indemnified
under Section 6.2(a)(iv) hereof shall not be subject to the Indemnification Cap
and shall be indemnifiable to the full extent of such indemnifiable Loss.
(e) After the Closing, Seller and its Affiliates, officers,
directors, employees, agents, successors and assigns (each, a "Seller
Indemnified Party") shall be indemnified and held harmless by Purchaser for any
and all Losses arising out of or resulting from:
(i) any inaccuracy in or breach (or any claim by any third
party alleging or constituting an inaccuracy or breach) of any representation or
warranty of Purchaser, as of the date of this Agreement, contained in this
Agreement or in the Ancillary Agreements or any other instrument delivered
pursuant to this Agreement;
(ii) any breach of any covenant or agreement made by Purchaser
in this Agreement or in the Ancillary Agreements to which Seller is a party or
any other instrument delivered pursuant to this Agreement; or
(iii) the operation of the Company's business after Closing.
47
(f) Notwithstanding any provision hereof to the contrary, the
determination of any Seller Indemnified Party's Losses shall take into account
any and all present and future Tax benefits or detriments (based on such Seller
Indemnified Party's actual tax rate (on a consolidated basis, if applicable) in
the applicable year relating to the Loss), and after offsetting any related
recoveries or proceeds received by such Seller Indemnified Party from applicable
insurance policies or similar arrangements, or from third parties, in connection
with such Loss.
(g) The Sellers will not be entitled to assert a claim for
indemnification under this Agreement until such time as the aggregate Losses
incurred by them for which indemnification may be available hereunder exceed the
Threshold, in which event the Sellers will be entitled to recover indemnifiable
Losses only to the extent that such Losses exceed the Threshold; provided
however, that any Losses (i) based on fraud, (ii) indemnifed under Section
6.2(e)(ii) hereof, or (iii) indemnified under Section 6.2(e)(iii) hereof shall
not be subject to the Threshold and shall be indemnifiable from the first dollar
of Loss.
(h) The aggregate amount of Purchaser's indemnification obligation
hereunder shall not exceed the Indemnification Cap; provided, however, any
Losses (i) based on fraud, (ii) indemnifed under Section 6.2(e)(ii) hereof, or
(iii) indemnified under Section 6.2(e)(iii) hereof shall not be subject to the
Indemnification Cap and shall be indemnifiable to the full extent of such
indemnifiable Loss.
6.3 Indemnification Procedures.
(a) The obligations and Liabilities of an Indemnifying Party under
this Article 6 with respect to Losses arising from claims of any third party
which are subject to the indemnification provided for in this Article 6 ("Third
Party Claims") shall be governed by and contingent upon the terms and conditions
set forth in this Section 6.3. If any Person entitled to indemnification
pursuant to Section 6.2(a) or 6.2(b) (an "Indemnified Party") shall receive
notice of any Third Party Claim, the Indemnified Party shall give the
Indemnifying Party notice of such Third Party Claim within ten (10) days of the
receipt by the Indemnified Party of such notice; provided, however, that the
failure to provide such notice shall not release the Indemnifying Party from any
of its respective obligations under this Article 6 except to the extent that the
Indemnifying Party is materially prejudiced by such failure. The notice of claim
shall describe in reasonable detail the facts known to the Indemnified Party
giving rise to such indemnification claim, and the amount or good faith estimate
of the amount arising therefrom.
(b) The Indemnifying Party shall be entitled to assume and control
the defense of a Third Party Claim at its expense and through counsel of its
choice (such counsel to be reasonably acceptable to the Indemnified Party) if it
gives notice of its intention to do so to the Indemnified Party within fifteen
(15) days after the receipt of such notice from the Indemnified Party; provided,
however, if there exists or is reasonably likely to exist a conflict of interest
that would make it inappropriate for the same counsel to represent both the
Indemnified Party and the Indemnifying Party, then the Indemnified Party shall
be entitled to retain its own counsel, in each jurisdiction for which counsel is
required, at the expense of the Indemnifying Party. In the event that the
Indemnifying Party exercises the right to undertake any such defense against any
48
such Third Party Claim as provided above, the Indemnifying Party shall conduct
the defense of the Third Party Claim actively and diligently and the Indemnified
Party shall cooperate with the Indemnifying Party in such defense and make
available to the Indemnifying Party at the Indemnifying Party's expense, all
witnesses, pertinent records, materials and information in the Indemnified
Party's possession or under the Indemnified Party's control relating thereto as
is reasonably required by the Indemnifying Party. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the defense against any
such Third Party Claim, the Indemnifying Party shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party,
at the Indemnifying Party's expense, all such witnesses, records, materials and
information in the Indemnifying Party's possession or under the Indemnifying
Party's control relating thereto as is reasonably required by the Indemnified
Party. No such Third Party Claim may be settled by any party conducting the
defense against such claim without the prior written consent of the other party,
which consent shall not be unreasonably delayed or withheld.
6.4 Right of Offset. In the event any amounts have been finally determined
to be payable and are due and payable by Sellers pursuant to this Article 6,
subject to the Indemnification Cap, Purchaser may offset such amounts from the
principal and interest due under the Subordinated Note. No limitation on such
right of offset shall otherwise affect any Indemnified Party's rights hereunder
or otherwise. The remedy of offset shall be in addition to and not in limitation
of any injunctive relief or other rights or remedies to which any Indemnified
Party is or may be entitled, at law or in equity.
6.5 No Consequential Damages; Sole Remedy. Notwithstanding anything
contained in this Agreement to the contrary, no indemnified party hereunder
shall be entitled to Losses in the nature of incidental or consequential
damages. Further, the provisions of this Article 6 shall be the sole recourse of
the indemnified parties hereunder, except with respect to any equitable remedy
to which any such party may be entitled, except for the exercise by Draka of its
rights under the Subordinated Note, and except as provided in Section 7.13.
49
ARTICLE 7
MISCELLANEOUS PROVISIONS
7.1 Notices. All notices, requests and other communications hereunder must
be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission against facsimile confirmation or mailed
by a nationally recognized overnight courier prepaid, to the parties at the
following addresses or facsimile numbers:
If to Purchaser or the Company (after Closing) to:
Optelecom, Inc.
00000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: President
with a copy (which shall not constitute notice) to:
Xxxxxxx LLP
0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxxxx X. Xxxxxx
If to Sellers or the Company (prior to closing):
Draka Holding NV
Xxxxxxxxxx 0
0000 XX Xxxxxxxxx
X.X. Xxx 000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Facsimile No.: 00-00-000-00-00
Attn: General Counsel
with a copy (which shall not constitute notice) to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Xx.
All such notices, requests and other communications will (a) if delivered
personally to the address as provided in this Section 7.1, be deemed given upon
delivery, (b) if delivered by
50
facsimile transmission to the facsimile number as provided for in this Section
7.1, be deemed given upon facsimile confirmation, and (c) if delivered by
overnight courier to the address as provided in this Section 7.1, be deemed
given on the earlier of the first Business Day following the date sent by such
overnight courier or upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other Person to whom a
copy of such notice is to be delivered pursuant to this Section 7.1). Any party
from time to time may change its address, facsimile number or other information
for the purpose of notices to that party by giving notice specifying such change
to the other party hereto.
7.2 Entire Agreement. This Agreement and the Exhibits and Schedules
hereto, including the Seller Disclosure Schedule, constitute the entire
Agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof (including specifically,
without limitation, the Letter of Intent dated December 28, 2004, as amended, by
and among Draka and Purchaser).
7.3 [Intentionally Omitted].
7.4 Waiver. Any term or condition of this Agreement may be waived at any
time by the party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed by or
on behalf of the party waiving such term or condition. No waiver by any party of
any term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or condition
of this Agreement on any future occasion. All remedies, either under this
Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
7.5 Third-Party Beneficiaries. Except as expressly provided herein, the
terms and provisions of this Agreement are intended solely for the benefit of
each party hereto and their respective successors or permitted assigns, and it
is not the intention of the parties to confer third-party beneficiary rights,
and this Agreement does not confer any such rights, upon any other Person other
than any Person entitled to indemnity under Article 6.
7.6 No Assignment; Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned (by operation of law or
otherwise) by any party without the prior written consent of the other party and
any attempt to do so will be void, except that the collateral assignment of
Purchaser's rights under this Agreement to Manufacturers and Traders Trust
Company (the "Bank") pursuant to that certain Financing and Security Agreement
by and among Purchaser, the Company and the Bank shall be permitted without the
consent of any party hereto. Subject to the preceding sentence, this Agreement
is binding upon, inures to the benefit of and is enforceable by the parties
hereto and their respective successors and assigns.
7.7 Headings. The headings and table of contents used in this Agreement
have been inserted for convenience of reference only and do not define or limit
the provisions hereof.
51
7.8 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
7.9 Governing Law, Submission to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the state of Delaware
as applied to contracts entered into by Delaware residents and performed
entirely in Delaware, without giving effect to its principles or rules regarding
conflicts of laws, other than such principles directing application of the laws
of Delaware. Each party hereto irrevocably agrees that any legal action or
proceeding with respect to this Agreement or for recognition and enforcement of
any judgment in respect hereof brought by another party hereto or its successors
or assigns shall be brought and determined by either (i) a state court or
federal court sitting in the state of Delaware or (ii) an appropriate court
sitting in Amsterdam, The Netherlands and each party hereto hereby irrevocably
submits with regard to any such action or proceeding for itself and in respect
to its property, generally and unconditionally, to the exclusive jurisdiction of
the aforesaid courts. Each party hereto hereby irrevocably waives, and agrees
not to assert, by way of motion, as a defense, counter claim or otherwise, in
any action or proceeding with respect to this Agreement, (a) any claim that it
is not personally subject to the jurisdiction of the above-named courts for any
reason other than the failure to serve process in accordance with this Section
7.9, (b) that it or its property is exempt or immune from jurisdiction of any
such court or from any legal process commenced in such courts (whether through
service of notice, attachment prior to judgment, attachment in aid of execution
of judgment, execution of judgment or otherwise), and (c) to the fullest extent
permitted by applicable Law, that (i) the suit, action or proceeding in any such
court is brought in an inconvenient forum, (ii) the venue of such suit, action
or proceeding is improper and (iii) this Agreement, or the subject matter
hereof, may not be enforced in or by such courts.
7.10 WAIVER OF TRIAL BY JURY. IN ANY ACTION OR PROCEEDING ARISING
HEREFROM, THE PARTIES HERETO CONSENT TO TRIAL WITHOUT A JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST THE OTHER OR
THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT, REGARDLESS OF THE FORM OF ACTION OR PROCEEDING.
7.11 Construction. The parties hereto agree that this Agreement is the
product of negotiation between sophisticated parties and individuals, all of
whom were represented by counsel, and each of whom had an opportunity to
participate in and did participate in, the drafting of each provision hereof.
Accordingly, ambiguities in this Agreement, if any, shall not be construed
strictly or in favor of or against any party hereto, but rather shall be given a
fair and reasonable construction without regard to the rule of contra
proferentem.
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7.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
7.13 Specific Performance. Each party shall have the right to seek an
injunction or injunctions to prevent breaches of Sections 4.1 and 4.2 of this
Agreement and to enforce specifically the terms and provisions thereof.
Notwithstanding Section 7.9, it is agreed that the parties shall be entitled to
an injunction or injunctions under this section 7.13 in any court having
jurisdiction. Nothing in Article 6 shall be construed or interpreted to limit
this Section 7.13.
ARTICLE 8
DEFINITIONS
8.1 Definitions. As used in this Agreement, the following defined terms
shall have the meanings indicated below:
"Actions or Proceedings" means any action, suit, complaint,
subpoena, petition, investigation, proceeding, arbitration, mediation,
litigation or Governmental or Regulatory Authority investigation, audit,
document request or other proceeding, whether civil or criminal, in law or in
equity, or before any arbitrator or Governmental or Regulatory Authority.
"Affiliate" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with,
that Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by", and "under
common control with") as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person, whether through ownership of voting securities or
by contract or otherwise.
"Agreement" means this Share Purchase Agreement, including (unless
the context otherwise requires) the Exhibits, the Schedules (including the
Seller Disclosure Schedule and the Purchaser Disclosure Schedule) and the
certificates and instruments delivered in connection herewith, or incorporated
by reference, as the same may be amended or supplemented from time to time in
accordance with the terms hereof.
"Approval" means any approval, authorization, consent, novation,
permit, qualification or registration, or any waiver of any of the foregoing,
required to be obtained from or made with, or any notice, statement or other
communication required to be filed with or delivered to, any Governmental or
Regulatory Authority or any other Person.
"Assets and Properties" of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, whether absolute, accrued,
contingent, fixed or otherwise and wherever situated), including the goodwill
related thereto, operated, owned, licensed or leased by such Person, including
cash, cash equivalents, Investment Assets, accounts and notes receivable,
chattel
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paper, documents, instruments, general intangibles, real estate, equipment,
inventory, goods and Intellectual Property.
"Associate" means, with respect to any Person, any corporation or
other business organization of which such Person is an officer or partner or is
the beneficial owner, directly or indirectly, of ten percent (10%) or more of
any class of equity securities, any trust or estate in which such Person has a
substantial beneficial interest or as to which such Person serves as a trustee
or in a similar capacity and any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person.
"Books and Records" means all files, documents, instruments, papers,
books and records relating to the Business or Condition of any Constituent
Company, including financial statements, internal reports, Tax Returns and
related work papers and letters from accountants, budgets, pricing guidelines,
ledgers, journals, deeds, title policies, minute books, share certificates and
books, share transfer ledgers, Contracts, Licenses, customer lists, computer
files and programs (including data processing files and records), retrieval
programs, operating data and plans and environmental studies and plans,
excluding, however, in all cases any materials that contain any confidential
information of any third party (other than the Company or Purchaser) that is
restricted by agreement or applicable Law from being disclosed to Purchaser
and/or any other Persons.
"Business Combination" means, with respect to any Person, (a) any
merger, consolidation, share exchange, reorganization or other business
combination transaction to which such Person is a party, (b) any sale, or other
disposition of all or substantially all of the capital shares or other equity
interests of such Person (except for issuances of capital shares upon conversion
of preferred shares outstanding on the date hereof or the exercise of options or
warrants outstanding on the date hereof or issued in accordance with this
Agreement), (c) any tender offer (including a self tender), exchange offer,
recapitalization, restructuring, liquidation, dissolution or similar or
extraordinary transaction, (d) any sale, dividend or other disposition of all or
a substantial portion of the Assets and Properties of such Person (including by
way of exclusive license or joint venture formation) other than sales of
inventory and the granting of licenses in the ordinary course of such Person's
business and consistent with past practice, or (e) the entering into of any
agreement or understanding, the granting of any rights or options, or the
acquiescence of such Person, to do any of the foregoing.
"Business Day" means a day other than Saturday, Sunday or any day on
which banks located in the State of Delaware or in the country of The
Netherlands are authorized or obligated to close.
"Business or Condition of the Company" means the business, condition
(financial or otherwise), results of operations, or Assets and Properties of the
Company and each other Constituent Company, taken as a whole.
"Business or Condition of Purchaser" means the business, condition
(financial or otherwise), results of operations or Assets and Properties of
Purchaser and its subsidiaries, taken as a whole.
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"Company Financials" means the Audited Financial Statements and the
September Balance Sheet.
"Company Intellectual Property" shall mean any Intellectual Property
that (a) is owned by the Company and any other Constituent Company; (b) is
licensed to Company or any other Constituent Company; or (c) is used in or
necessary for the conduct of the business of the Company or any other
Constituent Company as presently conducted.
"Company Options" means any Option to purchase or otherwise acquire
Company Capital Shares.
"Company Registered Intellectual Property" means all Registered
Intellectual Property owned by the Company or any other Constituent Company.
"Contract" means any note, bond, mortgage, contract, license, lease,
sublease, covenant, commitment, power of attorney, proxy, indenture, or other
agreement or arrangement, oral or written, including any Government Contract.
"Corporate Income Tax" means vennootschapsbelasting as imposed under
the Corporate Income Tax Act or any other corporate income taxes imposed by
other jurisdictions.
"Corporate Income Tax Act" means Wet op de vennootschapsbelasting
1969.
"Dutch GAAP" means generally accepted accounting principles in the
Netherlands, as in effect from time to time.
"Environmental Law" means any federal, state, local or foreign
environmental or other Law relating to Hazardous Materials.
"Environmental Permit" means any permit, license, approval, consent
or authorization required under or in connection with any Environmental Law and
includes any and all orders, consent orders or binding agreements issued by or
entered into with a Governmental or Regulatory Authority.
"Equity Equivalents" means securities (including Options to purchase
any shares of Company Capital Shares) which, by their terms, are or may be
exercisable, convertible or exchangeable for or into common stock, preferred
stock or other securities at the election of the holder thereof.
"Event" means any transaction, event, act or omission and any
transaction, event, act or omission deemed to have occurred for tax purposes.
"Financial Statement Date" means September 30, 2004.
55
"Governing Documents" means the certificate or articles of
incorporation or association, the bylaws, and any similar corporate,
organizational or governing documents of any Person.
"Government Contract" means any Contract to which any Constituent
Company is a party with any Governmental or Regulatory Authority or any Contract
to which any Constituent Company is a party that is a subcontract (at any tier)
with another Person that holds either a prime contract with any Governmental or
Regulatory Authority or a subcontract (at any tier) under such a prime contract.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, bureau, board, commission, department, official
or other instrumentality of the United States, the Netherlands, any other
foreign country or domestic or foreign state, county, city or other political
subdivision, and shall include any stock exchange, quotation service and the
National Association of Securities Dealers.
"Hazardous Material" means (a) any petroleum or petroleum products,
or (b) any chemicals, materials, substances or wastes which are now defined as
or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants" or words of similar import under
any Environmental Law.
"Income Tax Act" means the Wet inkomstenbelasting 2001.
"Income Tax Act 1964" means the Wet inkomstenbelasting 1964.
"Indebtedness" of any Person means all obligations of such Person
(a) for borrowed money, (b) evidenced by notes, bonds, debentures or similar
instruments, (c) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(d) under capital leases classified as such under U.S. GAAP and (e) in the
nature of guarantees of the obligations described in clauses (a) through (d)
above of any other Person.
"Intellectual Property" means all trademarks and trademark rights
(whether or not registered), trade names and trade name rights, service marks
and service xxxx rights (whether or not registered), service names and service
name rights, patents and patent rights, utility models and utility model rights,
copyrights (statutory or registered), mask work rights, moral rights, brand
names, trade dress, product designs, product packaging, business and product
names, logos, slogans, rights of publicity, trade secrets, inventions (whether
patentable or not), invention disclosures, improvements, processes, formulae,
industrial models, processes, designs, specifications, technology,
methodologies, techniques, computer software (including all source code and
object code), firmware, development tools, flow charts, annotations, all Web
addresses, sites and domain names, all data bases and data collections and all
rights therein, any right to enforce confidential treatment of information,
whether or not subject to statutory registration, and all related technical
information, manufacturing, engineering and technical drawings, know-how and all
pending applications for, registrations of any of the foregoing, and the sole
and
56
exclusive right to file for and apply for patents, utility models, trademarks,
service marks, domain names, and copyrights, and the sole and exclusive right to
xxx for past infringement, if any, in connection with any of the foregoing, and
all documents, disks, records, files and other media on which any of the
foregoing is stored.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Investment Assets" means all debentures, notes and other evidences
of Indebtedness, stocks, securities (including rights to purchase and securities
convertible into or exchangeable for other securities), interests in joint
ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets.
"Last Company Financials" means the Company Financials as of
December 31, 2004.
"Last Company Financials Date" means December 31, 2004.
"Legal Transfer Taxes Act" means the Wet op belastingen van
rechtsverkeer.
"Law" or "Laws" means any law, statute, order, decree, consent
decree, judgment, rule, regulation or ordinance whether in the United States,
the Netherlands, any other foreign country, or any other domestic or foreign
state, county, city or other political subdivision or of any Governmental or
Regulatory Authority.
"Liability" or "Liabilities" means all Indebtedness, obligations and
other liabilities of a Person, whether absolute, accrued, contingent (or based
upon any contingency), known or unknown, fixed or otherwise, or whether due or
to become due.
"License" means any Contract that grants a Person the right to use
or otherwise enjoy the benefits of any Intellectual Property (including any
covenants not to xxx with respect to any Intellectual Property).
"Liens" means any mortgage, pledge, assessment, security interest,
lease, lien, easement, license, covenant, condition, restriction, levy, charge,
option, equity, adverse claim or restriction or other encumbrance of any kind,
or any conditional sale Contract, title retention Contract or other Contract to
give any of the foregoing, except for any restrictions on transfer generally
arising under any applicable federal or state securities Law.
"Material Adverse Change of the Company" means any event, fact,
circumstance or condition that, individually or in the aggregate with any other
such events, facts, circumstances or conditions, has had or would be reasonably
expected to have, a material adverse effect on the Business or Condition of the
Company, other than any event, change, fact, circumstance or condition arising
out of or resulting from (i) any adverse change to the economy of The
Netherlands in general or the economy of any foreign country in general in which
the Constituent Companies operate (provided that such change does not affect the
business, results
57
of operations, or financial condition of any Constituent Company in a materially
disproportionate manner), (ii) any adverse change in general to the industries
in which the Constituent Companies operate (provided that such change does not
affect the operations or financial condition of any Constituent Company in a
materially disproportionate manner), (iii) any adverse change to financial,
banking or securities markets generally (including any disruption thereof and
any decline in the price of any security or any market index), (iv) the
announcement of the Agreement and/or the announcement of any of the transactions
contemplated hereunder, the fulfillment of the parties' obligations hereunder or
the consummation of the transactions contemplated by this Agreement, or (v) any
outbreak or escalation of hostilities or act of terrorism involving The
Netherlands or any declaration of war by The Netherlands.
"Material Adverse Change of Purchaser" means any event, fact,
circumstance or condition that, individually or in the aggregate with any other
such events, facts, circumstances or conditions, has had or would be reasonably
expected to have, a material adverse effect on the Business or Condition of
Purchaser, other than any event, change, fact, circumstance or condition arising
out of or resulting from (i) any adverse change to the United States economy in
general or the economy of any foreign country in general in which Purchaser
operates (provided that such change does not affect the business, results
of operations, or financial condition of Purchaser in a materially
disproportionate manner), (ii) any adverse change in general to the industries
in which Purchaser operates (provided that such change does not affect the
operations or financial condition of Purchaser in a materially disproportionate
manner), (iii) any change in the market price or trading volume of Purchaser's
stock after the date hereof or any adverse change to financial, banking or
securities markets generally (including any disruption thereof and any decline
in the price of any security or any market index), (iv) the announcement of the
Agreement and/or the announcement of any of the transactions contemplated
hereunder, the fulfillment of the parties' obligations hereunder or the
consummation of the transactions contemplated by this Agreement, or (v) any
outbreak or escalation of hostilities or act of terrorism involving the United
States or any declaration of war by the United States.
"Option" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract that
gives the right to (a) purchase or otherwise receive or be issued any shares of
capital stock or other equity interests of such Person or any security of any
kind convertible into or exchangeable or exercisable for any shares of capital
stock or other equity interests of such Person or (b) receive any benefits or
rights similar to any rights enjoyed by or accruing to the holder of shares of
capital stock or other equity interests of such Person, including any rights to
participate in the equity, income or election of directors of such Person.
"Order" means any writ, judgment, decree, injunction or similar
order of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"Person" means any natural person, corporation, general partnership,
limited partnership, limited liability company or partnership, proprietorship,
other business organization, trust, union, association or Governmental or
Regulatory Authority.
58
"Plan" means (a) each of the Company Pension Plans, and (b) any
other employment, severance or other arrangement or policy of any Constituent
Company providing for health, life, vision or dental insurance coverage
(including self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits or retirement
benefits, fringe benefits, or for profit sharing, deferred compensation,
bonuses, stock options, stock appreciation or other forms of incentive
compensation or post-retirement insurance, compensation or benefits.
"Purchaser Disclosure Schedule" means the schedules delivered to
Sellers by or on behalf of Purchaser, containing all lists, descriptions,
exceptions and other information and materials as are required to be included
therein in connection with the representations and warranties made by Purchaser
in Article 3 or otherwise.
"Purchaser's Group" means the Purchaser and any other company or
companies which either are or will be after Closing treated as members of the
same group as, or otherwise connected or associated in any way with, the
Purchaser for any tax purpose.
"Purchaser's Relief " means (a) any Relief arising to any
Constituent Company to the extent that it either arises in respect of an Event
occurring or period after Closing, or was included in the Company Financials as
an asset; or (b) any Relief arising to any member of the Purchaser's Group
(other than any Constituent Company).
"Registered Intellectual Property" shall mean all United States,
international and foreign: (a) patents and patent applications (including
provisional applications); (b) registered trademarks and service marks,
applications to register trademarks and servicemarks, intent-to-use
applications, or other registrations or applications to trademarks or
servicemarks; (c) registered copyrights and applications for copyright
registration; (d) any mask work registrations and applications to register mask
works; (e) registered domain names and applications to register domain names,
and (f) any other Intellectual Property that is the subject of an application,
certificate, filing, registration or other document issued by, filed with, or
recorded by, any Governmental or Regulatory Authority.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing of a
Hazardous Material into the environment.
"Relief" includes, unless the context otherwise requires, any
allowance (including amortisation or depreciation), credit, deduction, exemption
or set-off in respect of any tax or relevant to the computation of any income,
profits or gains for the purposes of any tax, or any right to repayment of or
saving of tax and any reference to the use or set off of Relief shall be
construed accordingly.
"Seller Disclosure Schedule" means the schedules delivered to
Purchaser by or on behalf of Sellers, containing all lists, descriptions,
exceptions and other information and materials as are required to be included
therein in connection with the representations and warranties made by Seller in
Article 2 and Article 2A or otherwise.
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"Site" means any of the real properties currently or previously
owned, leased or operated by any Constituent Company, including all soil,
subsoil, surface waters and groundwater located thereon.
"Solar Inverter Business" means the discontinued business of the
Company, conducted when the Company was a business unit of Vastgoed, in which it
developed, manufactured and sold solar energy inverters, electronic devices
which transform electrical currents.
"Spanish Cable Business" means the business previously conducted by
NKF Electronics Iberica S.L., a Subsidiary of the Company, relating to the
marketing and distribution to third party purchasers of cable and cable
accessories manufactured by entities owned by Draka.
"Subsidiary" means any Person in which the Company or Purchaser, as
the context requires, directly or indirectly through Subsidiaries or otherwise,
beneficially owns at least fifty percent (50%) of either the equity interest in,
or the voting control of, such Person, whether or not existing on the date
hereof.
"Tax" or "Taxes" means all forms of taxation whether direct or
indirect and whether levied by reference to income, profits, gains, net wealth,
net worth, equity, asset values, turnover, gross receipts, added value or other
reference, and statutory, governmental, state, provincial, local governmental or
municipal impositions, duties, contributions, rates and levies (including sales
and use taxes, social security contributions and any other payroll taxes),
whenever and wherever imposed (whether imposed by way of a withholding or
deduction for or on account of tax or otherwise) and in respect of any person,
and all penalties, charges, costs and interest relating thereto.
"Tax Authority" means any taxing or other authority (whether within
or outside the Netherlands) competent to impose any Tax Liability.
"Tax Liability" or "Tax Liabilities" means (a) a liability of any
Constituent Company to make or suffer an actual or increased payment of or in
respect of Tax; and (b) the use or set off of any Purchaser's Relief in
circumstances where, but for such use or set off, a Constituent Company would
have had an actual tax liability in respect of which the Purchaser would have
been able to make a claim against Sellers under this Agreement (the amount of
the tax liability for these purposes being deemed to be equal to the amount of
the actual liability to Tax that is saved by the use of set off of the
Purchaser's Relief); provided that for the purposes of this Agreement it shall
be assumed that Reliefs other than any Purchaser's Relief are, to the extent
allowed by law, used in priority to any Purchaser's Relief, and if it cannot be
determined whether a Purchaser's Relief or another Relief is so used, it shall
be assumed that another Relief is used in priority to any Purchaser's Relief.
60
"Tax Returns" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"U.S. GAAP" means generally accepted accounting principles in the
United States, as in effect from time to time.
"U.S. GAAS" means generally accepted auditing standards in the
United States, as in effect from time to time.
"VAT" means within the European Union such Tax as may be levied in
accordance with (but subject to derogations from) the Directive 77/338/EEC and
outside the European Union any Tax levied by reference to added value, sales
and/or consumption.
8.2 Construction.
(a) Unless the context of this Agreement otherwise requires, (i)
words of any gender include each other gender and the neuter, (ii) words using
the singular or plural number also include the plural or singular number,
respectively, (iii) the terms "hereof," "herein," "hereby" and derivative or
similar words refer to this entire Agreement as a whole and not to any
particular Article, Section or other subdivision, (iv) the terms "Article" or
"Section" or other subdivision refer to the specified Article, Section or other
subdivision of the body of this Agreement, (v) the phrases "ordinary course of
business" and "ordinary course of business consistent with past practice" refer
to the business and practice of the Company, (vi) the words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation," and (vii) when a reference is made in this Agreement to Exhibits,
such reference shall be to an Exhibit to this Agreement unless otherwise
indicated. All accounting terms used herein and not expressly defined herein
shall have the meanings given to them under GAAP. When used herein, the terms
"party" or "parties" refer to Purchaser, on the one hand, and the Company (prior
to the Closing) and Sellers, on the other, and the terms "third party" or "third
parties" refers to Persons other than Purchaser, the Company or Sellers.
(b) When used herein, the phrase "to the knowledge of the Company"
(or words of similar import) and the phrase "to the knowledge of Sellers" (or
words of similar import) means to the actual knowledge of Xxxxxx Overwijn, Xxxx
Hooghiesmstra, Xxxxxx Xxxxxxxxxxxx and/or Xxxx V.D. Hoome. When used herein, the
phrase "to the knowledge of the Purchaser" (or words of similar import) mean to
the actual knowledge of Xxxxxx Xxxxxx and/or Xxxxx Xxxxxxxxx.
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[SIGNATURE PAGES FOLLOW]
62
IN WITNESS WHEREOF, Purchaser, the Company and Sellers, have caused
this Agreement to be signed by their duly authorized representatives, all as of
the date first written above.
OPTELECOM, INC.
By: /s/ Xxxxxx Xxxxxx
------------------------------------
Name: Xxxxxx Xxxxxx
Title: President and CEO
DRAKA HOLDING, N.V.
By: /s/ Xxxxx X.X. Xxxxxxxx
------------------------------------
Name: Xxxxx X.X. Xxxxxxxx
Title: Holder of a power of attorney
NKF VASTGOED B.V.
By: /s/ Xxxxx X.X. Xxxxxxxx
------------------------------------
Name: Xxxxx X.X. Xxxxxxxx
Title: Holder of a power of attorney
NKF ELECTRONICS, B.V.
By: /s/ Xxxxx X.X. Xxxxxxxx
------------------------------------
Name: Xxxxx X.X. Xxxxxxxx
Title: Holder of a power of attorney
