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EXHIBIT 10.17
PURCHASE AGREEMENT
between
1.(a) Mr. Franz-Josef Schwarz
Rudolf-Diesel Strasse 16, 52428 Julich,
Federal Republic of Germany
(b) Marlene Lohn
Grunewald 2, 50933 Cologne-Junkersdorf
Federal Republic of Germany
acting not in her own name but as court appointed guardian for Nina
Schwarz, born September 4, 1984, Rudolf-Diesel Strasse 16, 52428
Julich, Federal Republic of Germany (Lower Court (Amtsgerichts) Julich
File No. 6 VIII 143-94).
the parties 1 (a) and (b) hereinafter collectively referred to as "Sellers",
and
2. Matthews International GmbH, Krefeld
Carl-Sonnenschein-Strasse 118, 47809 Krefeld,
Federal Republic of Germany,
hereinafter referred to as "Buyer".
WHEREAS,
1. Sellers are the sole shareholders of S+T Gesellschaft fur Reprotechnik mbH,
a company registered in the Commercial Register of the Court of Julich under
HR 305 having a nominal capital of DM 50,000 (hereinafter referred to as the
"Firm"). Seller Franz-Josef Schwarz is holding one share in the nominal value
of DM 10,000 subscribed in the Notarial Deed of Notary Herbert Drummen of
Stolberg on March 27, 1980 (Docket-No. 726/1980) [the "DM 10,000 Share"] and one
share in the nominal value of DM 15,000 [the "DM 15,000 Share"] subscribed on
December 2, 1985 subscribed by Notarial Deed of Notary Dr. Wolfgang Peter of
Julich (Docket-No. 2390P/1985) [such shares hereinafter called the "Seller
Franz-Josef Schwarz' Shares"]. Seller Nina Schwarz is holding one share in the
nominal value of DM 10,000 subscribed by Mr. Lothar Thiesen on November 6, 1987
in the Notarial Deed of Notary Herbert Drummen of Stolberg on March 27, 1980
(Docket-No. 726/1980) and one share in the nominal value of DM 15,000 subscribed
by Mr. Lothar Thiesen in Notarial Deed before Notary Dr. Wolfgang Peter, Julich
of December 2, 1985 (Docket-No. 2390P/1985), both shares acquired by Seller Nina
Schwarz from Mr. Lothar Thiesen on November 17, 1994 before Notary Dr. Wolfgang
Peter, Julich (Docket-No. 2510P/1994) [such shares hereinafter called the
"Seller Nina Schwarz' Shares"]. All shares referred to herein are fully and
properly paid-in in cash.
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2. The Firm is engaged in the production of all kinds of repro-graphic works
and prints for the paper and other industries.
3. Seller, Nina Schwarz, is interested in selling the Seller Nina Schwarz'
Shares, and Seller, Franz-Josef Schwarz, is interested in granting to Buyer a
call option for a 30% interest in the Firm, and the Buyer which is a wholly
owned subsidiary of Matthews International Corporation of Pittsburgh,
Pennsylvania, USA, based on the representations and warranties made by Sellers
and in accordance with the provisions of this Agreement, is interested in
acquiring the Seller Nina Schwarz' Shares and to get the call option for the 30%
interest in the Firm from Seller Franz-Josef Schwarz.
Annex I is the confirmation letter of Matthews International Corporation
regarding the Buyer.
NOW, THEREFORE, the parties agree as follows:
I.
Takeover Account
The Firm has prepared its financial tax statements (balance sheet and profit
and loss account) as of December 31, 1997. Such financial statements are
hereinafter called the "Takeover Accounts", and such Takeover Accounts show a
minimum net equity (Eigenkapital) of DM 3.012.688,-- as of December 31, 1997
("Balance Sheet Date") as hereby represented and warrantied (zugesichert) by the
Sellers. Sellers hereby represent and warranty also that the Takeover
Accounts are not changed in any material aspect since the Balance Sheet Date
(except the distribution of dividends of DM 700,000.--), and that the
minimum net equity as represented and warrantied above has not decreased
since then, as well as the non-adjusted EBIT of the Firm as of the end of
the business year 1997 amounts to DM 2,951,330 (in words:
Two Million-Nine-Hundred-Fifty-One-Thousand-Three-Hundred-Thirty) Deutschmarks.
II.
Indemnification
Sellers undertake to indemnify
1. the Firm, the Buyer and Matthews International Corporation against any and
all liabilities (whether accrued or contingent and including tax liabilities)
and risks existing on the Balance Sheet Date or arising from acts, omissions,
events or circumstances in the time up to and including the Balance Sheet Date
to the extent that such liabilities or risks are not shown or reserved against
in the Takeover Accounts, except those risks which are fully covered by the
Firm's insurances and which have been acknowledged by such insurers (see also
Part IX, Sec. 2);
2. the Firm and Buyer from and against all personal liabilities (including tax
liabilities) of Sellers or anyone of them to the extent that the Firm or Buyer
should, for any reason whatsoever be held responsible for such liabilities or
such responsibility should be asserted.
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If items booked in the Takeover Accounts only have to be shifted to another
business year than such of the Takeover Accounts, the indemnification by the
Sellers is restricted to those liabilities which increase the liabilities on a
consolidated basis of the respective business years.
III.
Sale of Stock, Call Option, Articles of Incorporation, Management
1. Seller Nina Schwarz sells, transfers and assigns (tritt ab) hereby to the
Buyer the Seller Nina Schwarz's Shares with all rights (Nebenrechten) thereto.
The Buyer acknowledges such sale, transfer and assignment of stock. Such sale,
transfer and assignment of the Seller Nina Schwarz's Shares is subject to
(aufschiebende Bedingung) the approval of such sale hereunder by the Custodian
Court (Vormundsgericht) at the Lower Court (Amtsgericht) of Julich. The
transfer and assignment of the Seller Nina Schwarz' Shares are further subject
to (aufschiebende Bedingung) the receipt of the Letter of Credit referred to in
Section IV/2/(b) by the Law Firm Streck Mack Schwedhelm of Cologne authorized
herewith by Marlene Lohn acting on behalf of Nina Schwarz to receive such letter
of credit and to confirm the receipt. The aufschiebende Bedingung is deemed to
have been fulfilled in any case as soon as the Law Firm Streck Mack Schwedhelm
confirm such receipt in writing to the acting notary, who then shall notify the
parties to this Agreement. The Letter of Credit shall be issued by the
respective bank within one week after the Law Firm Streck Mack Schwedhelm of
Cologne has confirmed in writing to the Buyer by telefax followed by hardcopy
as well as to the acting notary that the Custodian Court has approved the
Purchase Agreement with respect to Seller Nina Schwarz, attaching a copy of the
approval by the Custodian Court thereto.
Seller Mr. Schwarz as managing director of the Firm and he and Seller Nina
Schwarz as its shareholders, as well as the Buyer, as its future shareholder,
by waiving all formalities under statutory laws and under the Articles of
Incorporation, hereby approve the sale, transfer and assignment of the Seller
Nina Schwarz' Shares sold hereunder, pursuant to Section 5 para 1 of such
Articles of Incorporation of the Firm. Seller Mr. Schwarz hereby waives his
right of first refusal (Vorkaufsrecht) under Section 5 para 2 of the Articles
of Incorporation of the Firm.
2. Seller Mr. Schwarz hereby grants to the Buyer a call option to buy the
DM 15,000 Share from him for the consideration agreed upon below (the "Call
Option Consideration"), which call option can be exercised at any time from
today's date by notifying Seller Mr. Schwarz' representative appointed in
Section IX/5 below in writing (the "Call Option"). Within 12 (twelve) months
after the receipt of such exercise notification, and the final determination of
the Call Option Consideration Seller Mr. Schwarz is obligated to transfer and
assign the DM 15,000 Share to the Buyer or its designee. The appointment of a
designee, who has to be an affiliate of the Buyer, has to be made in writing to
Seller Mr. Schwarz' representative appointed under Section IX/5. The Call
Option granted to the Buyer is also valid and enforceable in case of the death
of Seller Mr. Schwarz against his successors.
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The Call Option has to be exercised by the Buyer at the latest by December 31,
2004.
The Buyer grants hereby the Seller Mr. Schwarz a put option (the "Put Option")
to request the Buyer to purchase and to accept the assignment of the DM 10,000
Share for the consideration agreed upon below (the "Put Option
Consideration").Such Put Option can only be exercised by Seller Mr. Schwarz or
his successor after the Buyer has exercised the Call Option, and only in case
neither Seller Mr. Schwarz nor his son, Rene Schwarz, is any longer a managing
director of the Firm.
3. Becoming effective with the notarization of the transfer and assignment of
the shares sold hereunder to the Buyer and as soon as the condition precedent
with respect to the consent by the Custodian Court has been fulfilled
("Effective Date"), Mr. Schwarz continues to serve as managing director of the
Firm, as well as Mr. Rene Schwarz as commercial executive (kaufmannischer
Leiter) of the Firm under new employment agreements as attached to this
Purchase Agreement as Exhibit III/2. and 3. The Buyer agrees that Seller Mr.
Schwarz shall be the sole managing director of the Firm until Seller Mr. Schwarz
is required to transfer and assign the DM 15,000 Share to the Buyer after
exercise of the Call Option by the Buyer.
4. The Sellers are in agreement that the Firm shall be converted into a limited
partnership under German law (Kommanditgesellschaft) with a newly-formed limited
liability company (GmbH) as general partner in which Seller Mr. Schwarz and the
Buyer shall hold 50% of the interest in the Kommanditgesellschaft and 50% of the
shares of the GmbH, and that the Call Option and Put Option referred to in
Section III/2 above shall, with the conversion into a GmbH & Co. KG apply to the
interests and shares held by Seller Mr. Schwarz and the Buyer, respectively, so
that the exercise of the Call Option applies to a partial share to be held by
Seller Mr. Schwarz in the GmbH in the nominal amount of DM 25,000 accordingly,
and Seller Mr. Schwarz 50% interest in the Kommanditgesellschaft, and that the
Put Option applies to the remaining share held by Seller Mr. Schwarz in the GmbH
and the interest in the Kommanditgesellschaft after the exercise of the Call
Option. Exhibit III/4/(a) is the Partnership Agreement for the
Kommanditgesellschaft to be executed by Seller Mr. Schwarz and the Buyer
immediately after the Effective Date, and Exhibit III/4/(b) is the Articles of
Incorporation of the GmbH to be notarized by Seller Mr. Schwarz and the Buyer
immediately after the Effective Date; the Firm shall record its assets and
liabilities in the closing balance sheet at book value (carry-over basis).
Exhibit III/2 and 3 shall then be directly concluded between Seller Mr. Schwarz
and Rene Schwarz, respectively, and the GmbH.
IV.
Purchase Price, Consideration
1. The entire consideration for the sale and transfer of the stock of the Firm
sold by Seller Nina Schwarz to Buyer pursuant to Part III above, and all
transactions described above in the recitals and all other obligations
undertaken by Seller Nina Schwarz hereunder shall be the aggregate of a purchase
price (the "Purchase Price") for such stock sold of the Firm.
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2. The Purchase Price for the Seller Nina Schwarz' Shares shall be computed and
paid as follows:
(a) The Purchase Price shall be calculated on 7,5 x adjusted EBIT as of
December 31, 1997 of the Firm minus debt other than trade debt [see Exhibit
IV/2(a)] and as adjusted pursuant to Subsection (c) below. As represented and
warrantied above by Sellers, the non-adjusted EBIT shall amount to DM 2,951,330
(in words: two million, nine hundred fifty-one thousand, three hundred and
thirty German Marks). Based thereon, the Purchase Price shall amount to
DM 11,855,500 (in words: eleven million, eight hundred fifty-five thousand and
five hundred German Marks) . Such Purchase Price shall be reduced when it
becomes due, as agreed upon hereunder,
- - by DM 600,000, if the Firm's EBIT for the business year ending December 31,
1999 is greater than DM 3,0 million,
- - by DM 300,000, if the Firm's EBIT for the business year ending December 31,
1999 is greater than DM 2.5 million but not exceeding DM 3.0 million,
- - by DM 150,000, if the Firm's EBIT for the business year ending December 31,
1999 is greater than DM 2.0 million but not exceeding DM 2.5 million, and
- - no reduction shall take place if the Firm's EBIT for the business year ending
December 31, 1999 is smaller than DM 2.0 million.
Such reduction shall compensate the Buyer for agreeing to reorganize and
transform the Firm into a GmbH & Co. KG only after the Effective Date. If
German trade tax (Gewerbesteuer) shall be abolished or reduced by December 31,
1999, the reduction amount has to be adjusted accordingly, taking into account
that the Buyer's financial disadvantages to the agreement to transform into a
GmbH & Co. KG are less than expected without a change regarding German trade
tax.
(b) Two-thirds of the Purchase Price becomes due on January 30, 2000. One-third
of the Purchase Price becomes due two weeks after Seller Mr. Schwarz has
presented to the Buyer as managing director of the Firm the balance sheet and
profit and loss statement of the Firm for the business year ending December 31,
1999 and his determination of the Firm's EBIT as of such date. The payment of
such one-third of the Purchase Price shall be accompanied by the payment of
interest thereon at an interest rate of 6% for the period of time from
January 30, 2000 to such payment by the Buyer. Buyer shall deliver to Seller
Nina Schwarz a letter of credit issued by Mellon Bank, confirmed by either
Deutsche Bank AG or Dresdner Bank AG of Germany to be drawable against such bank
in Germany, in the full amount of the Purchase Price in compliance in all
material aspects with Exhibit IV/2/b. The payment of the Purchase Price shall
only be made by drawing under such Letter of Credit, provided, that the Buyer
has to make the payment of the Purchase Price if the Letter of Credit is not
honoured.
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(c) In the event, that the EBIT of the Firm as of December 31, 1999 is less
than the EBIT as of December 31, 1997, the Buyer is authorized to deduct from
the Purchase Price an amount equal to the difference between the EBIT of 1997
and the EBIT of 1999 multiplied by 7.5, multiplied by the percentage interest
in the Firm to be sold or transferred. The Buyer is also authorized to deduct
from the Purchase Price an increase of the Firm's debt over DM 400,000,-- other
than trade debts, multiplied by the percentage interest in the Firm to be sold
or transferred. If the Firm has acquired an interest in local or foreign
companies (Subsidiaries), the Purchase Price of the Firm will be increased by
the full EBIT of the Subsidiaries corresponding to the percentage of interest
in the particular Subsidiary at that particular date multiplied by 7.5, and
then multiplied by the percentage of interest in the Firm to be sold or
transferred. This applies irrespective of, whether or when the Firm receives
revenue from these interests or have to be added according to the provisions of
the Commercial Code or the tax laws.
Seller Mr. Schwarz undertakes to prepare the balance sheet and profit and loss
statement of the Firm for the business year ending on December 31, 1999 and to
inform the Buyer accordingly (the "Statement") and to determine the EBIT of the
Firm and the Purchase Price without undue delay, and to permit Price
WaterhouseCoopers or another accounting firm designated by the Buyer ("Buyer's
Accountant") on behalf of Buyer to review and analyze all books and records of
the Firm with respect to such balance sheet and profit and loss statements of
the Firm as of December 31, 1999 and to determine, based thereon, the EBIT of
the Firm as of December 31, 1999 and the Purchase Price. Buyer's Accountant
shall also be permitted to participate in a physical inventory-taking. Seller
Mr. Schwarz will give the customary declaration of completeness for these
accounts. The Buyer has to notify Mr. Schwarz in writing one month from the
presentation of the annual statement of accounts, the calculation of the EBIT
and the Purchase Price by Mr. Schwarz whether he accepts the accounts, the EBIT
and the Purchase Price.
If the Buyer or Price WaterhouseCoopers do not confirm the accounts or the EBIT
established by Seller Mr. Schwarz within one month and if Buyer's Accountant
cannot agree with Seller Mr. Schwarz or his tax advisor or accountant on a
change of such accounts, the EBIT or the Purchase Price within one month after
having received the Statement of the Seller Mr. Schwarz, then the points at
issue shall be decided with binding effect on both, Seller Mr. Schwarz and
Buyer, by an accounting firm with international experience to be appointed by
Seller Mr. Schwarz and Buyer as arbitrator expert (Schiedsgutachter). The
Schiedsgutachter shall be Arthur Andersen & Co. Wirtschaftsprufungs-Gesellschaft
mbH of Dusseldorf. Seller Mr. Schwarz or Buyer will notify Arthur Andersen &
Co. within one week after the above mentioned confirmation by Buyer or Price
WaterhouseCoopers has been denied or has not been issued within the above
mentioned period of time. If, however, Arthur Andersen & Co. does not agree to
be appointed as Schiedsgutachter, or does not issue the above mentioned
statement to Seller Mr. Schwarz within two months after being notified, in such
a case another Schiedsgutachter shall be appointed, at the request of either
Seller Mr. Schwarz or Buyer, by the Accountant Institute of Dusseldorf (Institut
der Wirtschaftsprufer e.V., Dusseldorf). The fees of the Schiedsgutachter shall
be evenly split among the parties.
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3. The Call Option Consideration shall be determined by applying the same
principle as to the determination of the Purchase Price referred to in
Subsection 2 above (including Subsection (c)). Such EBIT of the Firm has to be
determined as of December 31 of the business year ending before the calendar
year in which Seller Mr. Schwarz is obligated, at the latest, to transfer and
assign the DM 15,000 Share to the Buyer. In case the Buyer and Seller Mr.
Schwarz do not agree on the amount of the Call Option Consideration, such Call
Option Consideration shall be determined with binding effect on Seller Mr.
Schwarz and the Buyer by the arbitrator expert, as agreed upon in Section
IV/2/(c) above. The Call Option Consideration becomes due and has to be paid
with the notarization of the transfer and assignment of the DM 15,000 Share by
Seller Mr. Schwarz to the Buyer.
4. The Put Option Consideration shall be determined by applying the same
principles as to the determination of the Purchase Price referred to in
Subsection 2 above [including Subsection (c)]. Such EBIT of the Firm has to be
determined as of December 31 of the business year ending before the calendar
year in which the Buyer is obligated to accept the transfer and assignment of
the DM 10,000 Share by Seller Mr. Schwarz upon exercise of the Put Option. In
case the Buyer and Seller Mr. Schwarz do not agree on the amount of the Put
Option Consideration, such Put Option Consideration shall be determined with
binding effect on Seller Mr. Schwarz and the Buyer by the arbitration expert,
as agreed upon in Section IV/2/(c) above. The Put Option Consideration becomes
due and has to be paid with the notarization of the transfer and assignment of
the DM 10,000 Share by Seller Mr. Schwarz to the Buyer.
5. The Call Option and the Call Option Consideration, as well as the Put Option
and the Put Option Consideration apply even if Seller Mr. Schwarz or Mr. Rene
Schwarz dies before the exercise of the Call or Put Option, respectively.
6. With the introduction of the Euro, the Purchase Price, the Call Option
Consideration and the Put Option Consideration will be determined mutatis
mutandis by the exchange ratio of the Deutschmark into the Euro, as applicable
from January 1, 1999. Neither the Buyer nor Matthews International nor the
Sellers have the right to withdraw from this Purchase Agreement or to ask for
adjustment to the Purchase Price, the Call Option Consideration or the Put
Option Consideration because of the introduction of the Euro replacing the
Deutschmark.
7. Seller Mr. Schwarz agrees that the Call Option and Put Option Considerations
shall serve as collateral for all claims of the Buyer under the indemnifications
and representations and warranties agreed hereunder against Seller Nina Schwarz,
which permits the Buyer to deduct such claims under indemnification or because
of misrepresentations or breach of warranty from such Consideration.
8. All payments to be made by Buyer with respect to the Purchase Price or with
respect to the Consideration shall be received by Seller Nina Schwarz and Seller
Mr. Schwarz, respectively, without deduction of bank charges.
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V.
Representations and Warranties
In the execution of this Purchase Agreement, Matthews International Corporation
and the Buyer rely on the accuracy of the representations and warranties made
by Sellers in the agreement and hereinafter. Sellers herewith expressly
represent and warrant as guaranteed qualities (Zusicherungen) of the Firm that
on today's date the following representations and warranties are correct:
1. (a) The information given in the Preamble hereto is complete and accurate
in all aspects.
(b) Other persons and companies than Sellers do not hold directly or indirectly
any interest in the Firm of any nature whatsoever, nor do they have a right to
such an interest. The interests in the Firm are not subject to any rights of
third parties.
(c) Sellers and their relatives (Angehorige) in the meaning of Section 15 of
the German Tax Code (Abgabenordnung) - "Relatives" - do not hold an interest
whatsoever in other enterprises in the repro graphic print business except for
stock quoted at a stock exchange.
2. Sellers have permitted Price WaterhouseCoopers ("Buyer's Accountant") on
behalf of Matthews International Corporation and of Buyer to review and analyze
the tax accounts of the Firm since December 31, 1995 These accounts submitted
by Sellers to the Buyer's Accountant (copies of which are listed in
Exhibit V/2) have been prepared with the care of a conscientious businessman in
accordance with accounting and valuation principles generally accepted in the
Federal Republic of Germany and these principles have been applied consistently
and without change as in prior fiscal years of the Firm, respectively. All
ascertainable risks, devaluations and losses have been reflected by sufficient
depreciation, adjustment in value and reserves. The said material is complete
and accurate and presents fairly and completely the financial condition of the
Firm respectively at the respective dates and the results of the operations of
their business for the periods thereby covered. All other information given to
the Matthews International Corporation, Buyer and Buyer's Accountant was true
and accurate and was not incomplete in a way as to make any information given
misleading.
3. Since December 31, 1997, there has not been in the Firm
(a) any change in the business operations or the financial conditions or the
manner of conducting the business other than changes arising in the ordinary
course of business, none of which has had a material adverse effect on the
business operations or the financial condition of the Firm;
(b) any damage, including financial damage or loss (whether covered by
insurance or not) materially adversely affecting any material asset or the
business operations of the Firm;
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(c) the termination or a material change of any material contract of the Firm;
(d) any increase in the compensation payable or to become payable by the Firm
to employees generally or individual employees or consultants over and above the
amounts paid on December 31, 1997, other than normal increases of salaries and
wages and other than listed in Exhibit V/3/d.
4. The Firm has good, unrestricted and unencumbered title to, and possession
of, all moveable property reflected in the accounts as listed in Exhibit V/2.,
and such property which has been acquired since then. All stocks are in good and
salable condition.
5. The amount shown in the accounts listed in Exhibit V/2. and to be shown in
the Takeover Accounts as receivables for services and for goods sold will be
fully collectible of their book values, minus sconti or boni to be deducted in
the ordinary course of business, without deduction or cost within the ordinary
course of business, minus DM 80,000.--, which represent the general reserve of
the Firm for uncollectible receivables.
6. Except as shown in Exhibit V/6. hereto, there is no litigation, arbitration
or administrative proceeding or investigation pending against the Firm nor are
circumstances known to exist which reasonably might be expected to result in
such litigation, arbitration, administrative proceedings or investigation, nor
is the Firm a party to any other litigation or contentious proceeding. All
financial risks connected with the litigation and other proceedings are fully
covered by sufficient provisions in the accounts listed in Exhibit V/2 and to
be listed in the Takeover Accounts. The Firm is not subject to a decision or
settlement in any legal, arbitration or in administrative proceedings which
materially restricts it in certain business measures, the acquisition or sale
of assets, in competition or in the operation of its business.
7. Exhibit V/7. hereto contains a complete and correct list of filled and
vacant real estate or rights in or to real estate, all buildings, improvements
and constructions used or to be used by the Firm.
The respective Lessors have full and unrestricted title or an unrestricted claim
to and possession of such real estate, rights, buildings, improvements and
constructions (hereinafter referred to as the "Firm's Real Estate").
The Lessors have not disposed of or taken any steps to dispose of the Firm's
Real Estate and is not under any commitment to dispose of it.
Except for those encumbrances listed in Exhibit V/7. to this Agreement, the
Firm's Real Estate is not subject to any encumbrances, restrictions or rights
of third parties, whether or not registered in the Land Register, and no
applications for the registration of any encumbrances, restrictions or rights
of third parties in the Land Register have been filed, nor have the respective
Lessors granted or are committed to grant any such rights to third parties or
have subjected or are committed to subject the Firm's Real Estate to any such
encumbrances or restrictions.
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All building improvements and constructions on the Firm's Real Estate are in
good and serviceable condition, normal wear and tear accepted. Such buildings
neither encroach on property owned by third parties nor are they in violation
of any rights of third parties or municipal zoning plans or other legal
provisions in the relevant jurisdictions.
All permits required for the buildings have been properly granted.
The condition and the present use of the Firm's Real Estate, including the
buildings thereon, do not violate the building regulations or restrictions and
are unobjectable within the meaning of the applicable administrative and other
legal provisions in the relevant jurisdictions. The Firm's Real Estate is in
each location contiguous and not split by strips or gores of land owned by third
parties or by natural divisions or hindrances.
To the best knowledge of the Sellers, there are no municipal zoning plans or
similar regulations impeding construction on the vacant or partly vacant Firm's
Real Estate in a way which would materially impair the expansion of existing or
the construction of new buildings in accordance with the normal growth of the
business of the Firm, nor would the lack of such plans or regulations have any
such consequences.
The Firm's Real Estate is fit and can be fully and unrestrictedly used for the
Firm's business in all respects.
Seller Mr. Schwarz is not aware of any defects, conditions and/or circumstances
related to the Firm's Real Estate and/or buildings thereon and the use thereof,
which could materially restrict or impair the business of the Firm.
All representations and warranties contained in this sub-paragraph apply mutatis
mutandis to the new building referred to in Exhibit V/7. at the address
Helmholzstrasse, 52428 Julich which is presently being erected and to be used
by the Firm by approximately November 1998.
8. Exhibit V/8. contains a true and complete list of all current lease
contracts of the Firm (other than the leases listed on Exhibit V/7, and all
information contained in Exhibit V/8. with respect to these contracts is
correct. These lease contracts are valid and binding on the parties thereto. The
Firm has not breached or is in default under any material obligation contained
in any of these contracts. The execution and consummation of this Agreement does
not give to the other contractual party a right of termination or the right to
an amendment of such contract.
9. Except as listed in Exhibit V/9., the Firm is not obliged - under a contract
or a promise or as a result of prior practice or for any other reason - to pay
to its respective employees or some of them any old age or disablement pension
or other old age or disablement benefits or any compensation based on the sales
and/or profits of the Firm or any particular shop or any other form of a
deferred compensation.
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10. The Firm is holding such trademarks, patents and other industrial property
rights as listed in Exhibit V/10.1 hereto; the Firm owns all copyrights to the
products sold and to be sold in the future, and such copyrights are unrestricted
and are not pledged with any rights of third parties including, without being
limited to, employees of the Firm. The Firm does not hold any other industrial
property rights. The industrial property rights listed in Exhibit V/10.1 and the
copyright referred to above constitute all such rights necessary for the conduct
of the Firm's business in the manner currently conducted by them. There do not
exist any rights of third parties, and in particular no industrial property
rights of third parties which the Firm infringes by its firm name or any part
thereof or by any name used by it or any other act within its business. The
Sellers do not own any industrial rights, especially no patent rights or
copyrights, which belong to the business of the Firm or is related thereto.
11. Exhibit V/11. hereto contains a complete and correct list of the 10 largest
customers and the ten largest suppliers of the Firm, as well as of all suppliers
of the Firm, which are the sole source of supply for goods and services of any
kind for which there is not alternative source on comparable conditions (except
for energy supply agreements and PTT services).
The Firm had no significant problems in obtaining in a timely manner and at
reasonable costs any and all materials (raw, finished and otherwise) used or to
be used in the business of the Firm, nor does the Firm have any reason to
believe that it will have any significant problems in obtaining such materials
in the future. The Firm has not received written notice of intent to terminate
any material contracts or agreements for the purchase of the products of the
Firm nor does the Firm have knowledge of any circumstances which are likely to
result in the Firm's five largest customers materially decreasing their purchase
of the Firm's products during the twelve months immediately after the Effective
Date.
12. Exhibit V/12. contains a complete list of all managing directors and other
employees, including blue collar employees presently employed with the Firm or
to be employed after the Effective Date, showing their age, date of commencement
of employment, present salary, applicable termination periods, special status
e.g., having notified the Firm as being handicapped or pregnant persons.
13. The Firm has no works council and, to the best of the Seller's knowledge,
they do not know of any intention of the Employees of the Firm to elect a works
council. The Firm is not a member of any employer's association or
representational body.
14. Exhibit V/14. hereto contains a complete and accurate list of the bank and
post-check accounts of the Firm stating the persons entitled to draw on these
accounts.
15. Exhibit V/15. hereto contains a complete and accurate list of all powers
of procuration, powers of attorney and other powers granted by the Firm (other
than bank powers see Section 16 in this respect - and other than the powers of
sales staff).
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16. The Firm has
(a) duly filed all tax returns up to and including 1998 and other reports
required under the applicable laws with tax and other authorities,
(b) made all current tax prepayments for all applicable taxes,
(c) withheld all taxes, social security charges and other charges to be
withheld and have paid them to the respective recipient.
At all times during the past ten (10) years, all holders of the Nina Schwarz
Shares and the Seller Mr. Schwarz Shares have been subject to unlimited German
taxation (unbeschrankte Steuerpflicht) and have been, and presently are,
eligible for the German imputation tax credit. The sale is a taxable
transaction for such Seller.
17. Since January 1, 1998, the Firm has, to the Sellers' best knowledge, always
carried adequate insurance and will continue to have adequate insurance until
the Effective Date and thereafter against the risks which a conscientious
businessman usually covers. All insurance contracts as completely and accurately
listed with their coverage and premiums to be paid on Exhibit V/17 are in full
force and effect and no notice for their termination has been given and all
premia due until today or until the Effective Date, respectively, have been or
will be duly paid.
18. Sellers are not aware of any particular circumstances which could in the
future materially adversely affect the business of the Firm.
In the transactions between the Firm and their respective suppliers and
customers, the Firm has not been given any preferential conditions pursuant to
a personal relationship of the other party to Sellers or anyone of them.
19. Sellers and their Relatives and companies and partnerships directly or
indirectly controlled by Sellers and/or their Relatives do not have any claims
or other rights against the Firm or in any tangible or intangible asset which
is used or destined to be used in the business of the Firm, except the
employment agreements of Seller Mr. Schwarz and Mr. Rene Schwarz with the Firm
and the Lease Agreements for the premises of the Firm referred to in Exhibit V/7
and Exhibit IX/1(b).
20. (a) Except as specifically provided in Exhibit V/20(a) hereto, the Firm
is not in default under any law or ordinance, or under any order of any court
or federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality wherever located (other than as may be
described elsewhere herein).
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(b) The Firm has operated from their inception, and will continue to operate
through the Effective Date, legally and in compliance with all conditions and
requirements of all applicable zoning laws, federal, state and local statutes,
ordinances, rules, regulations, permits, policies, guidelines, orders,
franchises, authorizations and consents, and neither the Firm nor the Sellers
have received notice of any asserted past or present failure to comply with any
law, ordinance, regulation, permit, order or requirement. The Sellers know of
no other facts or circumstances which may result in any future civil,
administrative or criminal proceedings against the Firm.
(c) Neither the Firm nor the Sellers are aware of or know of any proposed law
or regulation or any event or condition of any character which would or could
materially and adversely affect the business being sold hereunder or the future
prospects of such business.
21. Exhibit V/21. sets forth, for each of the last three fiscal years of the
Firm, and for the period ended on the date hereof, each warranty or service
claim in the amount of DM 5,000 in each case made against the Firm during such
interim period, together with a description of such claim, the status of such
claim and the expense incurred to date with respect to such claim.
There are adequate reserves reflected on the Takeover Accounts for all claims
made under product and service warranties of the Firm provided to their
customers.
22. The Firm' performances of professional services have been conducted in
accordance with standards of professional practice ordinarily exercised by the
applicable profession at the time and within the locality where the services
were performed, including, without limitation, compliance with applicable laws,
regulations and standards governing the provision of professional services to
the public.
23. Besides statutory warranties under German law, the Firm does not use any
additional warranties or extended statutory warranties (Gewahrleistungen) in its
business with its customers.
24. The certificate of the Tax Consultant Mr. Ochsenbruch, attached as Exhibit
V/24 hereto, confirms that, to the knowledge of the signor, Seller Nina Schwarz
has no liabilities except possible liabilities with respect to gift tax which
is disputed in the maximum amount of DM 852,800 plus interest. This is hereby
also represented and warrantied by Seller Mr. Schwarz. The Sellers hereby
indemnify the Buyer from all possible claims of third parties in case
liabilities are transferred to Buyer by operation of law pursuant to Section 419
of the German Civil Code; the Buyer is not required to restrict such liabilities
pursuant to Sections 1990, 1991 of the German Civil Code.
VI.
Period until the Effective Date
For the period between today and the Effective Date, the parties agree as
follows:
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1. Sellers will give Matthews International Corporation and Buyer and their
respective representatives access to the Firm's files including all their books
and records.
2. Sellers guarantee that until the date of the Effective Date, the Firm will
operate its business in the normal manner consistent with past practice and
that, without the prior written consent of Matthews International Corporation,
the Firm will not enter into any contract or assume any liability other than
contemplated herein or in the ordinary course of business or as contemplated in
Exhibit 1 (Katalog zustimmungsbedurftiger Geshafte)to the Employment Agreement
with Seller Mr. Schwarz (see Exhibit III/2.) even if such Employment Agreement
is not yet effective.
3. Sellers agree that they will not make or let any of the other persons or
companies or partnerships referred to in Part V Section 17 above make any
withdrawals from the Firm for any purpose whatsoever. For this purpose the term
"withdrawals" includes the declaration or payment of a dividend or interim
dividend, any payment to Sellers or their Relatives under lease, employment,
advisory or similar contracts and the repayment of, or the payment of interest
for, any balances on capital, loan or other accounts of Sellers to the Firm,
except those payments to be made to Seller Mr. Schwarz under his present
Employment Agreement as disclosed during due diligence and payment of salary and
other employment related benefits to Mr. Rene Schwarz under Mr. Rene Schwarz'
present Employment Agreement as disclosed during due diligence at the Firm.
VII.
Liability, Full Implementation
1. Any inspection, audit or investigation pursuant to Part I and Part VI,
Section 1 and any review, inspection or investigation made by or on behalf of
Matthews International Corporation or the Buyer before the execution of this
Agreement, shall in no way affect the representations and warranties of Sellers
contained herein or made in pursuance hereof.
2. The period of limitation for any claims hereunder shall be 36 months from
the date of the Effective Date unless a longer period of limitation is provided
for the respective claim by the laws of the Federal Republic of Germany. The
said period of limitation of no less than 36 months shall, to the extent
necessary, extend with respect to tax liabilities until the expiration of six
months after final assessment following the tax audits for the respective
periods, of all taxes of the Firm relating to the period up to the Balance Sheet
Date.
3. Seller Nina Schwarz' liability under this Agreement is capped and limited
to the Purchase Price.
4. With respect to the handling of tax matters and changes, if any, which may
result from a tax audit the following shall apply:
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(a) Buyer will notify Sellers in time of any tax audit relating to the period
until the Balance Sheet Date. Sellers are entitled to participate in any such
tax audit, to be authorized to open and to conduct any possible remedy
proceedings (Rechtsbehelfsverfahren) and to appoint consultants of their own
choice in this respect, irrespective of whether the respective tax audit
concerns business taxes or personal taxes of Sellers.
(b) If, as a result of such tax audit, there should be an increase of the taxes
of the Firm payable for the period up to the Balance Sheet Date, these taxes
shall be borne by Sellers and Sellers will, if applicable, compensate Buyer in
full for any such increase of taxes, but only once. For this purpose, no
compensation shall result if such an increase of taxes results from higher
income in an earlier taxable year with reciprocal consequences in a later
taxable year (Phasenverschiebung), for example, the acceleration of income or
lowering of depreciation. In the event of hidden profit distributions
(verdeckte Gewinnausschuttung) arising up to the Balance Sheet Date, the Sellers
will only be liable for the amount of the "distribution burden"
(Ausschuttungsbelastung) on the hidden profit distribution plus dividend
withholding tax and solidarity surcharge, if any, and also for trade taxes
(Gewerbesteuern) resulting from the disallowance of deductions. In this case,
the Firm shall issue a Tax certificate to the payee of the hidden profit
distribution (Steuerbescheinigung).
(c) The result of the tax audit shall have no other effects on the present
Agreement except those described in Paragraph (b) above. In particular, other
than under the provisions set out in the preceding Paragraph 4(b), profit
increases or profit decreases determined by the tax office shall not affect the
Purchase Price. The representation and warranties in accordance with part V
shall not be affected.
5. Sellers undertake to execute in due form and deliver at the request of Buyer
also at any time after today's date and without additional remuneration any
documents and to perform any acts which may be necessary in order to comply
fully with the purpose of this Agreement.
VIII.
Secrecy, Non-Competition Undertaking
1. Sellers undertake to keep strictly secret all operating and business secrets
of the Firm and not to use such secrets for themselves. This applies, as well,
to the Buyer who is, however, authorized to make use of such secrets limited to
the members of the affiliates of Matthews International Corporation.
2. Seller Mr. Schwarz undertakes for a period of five years from the date of
the Effective Date not to cause or influence any employee agent or adviser
(excluding lawyers, certified public accountants and tax advisers) now or since
January 1, 1998, or in the future employed or retained by the Firm, to work in
whatever way for them or for an enterprise in which they have an interest or for
a competitor.
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3. Each of Sellers undertakes for a period of five years from the date of the
Effective Date not to be engaged in any part of the geographical area of Germany
in any manner whatsoever in the operation of a repro graphic print business nor
to assist third parties in any way whatsoever, even if only in an advisory
capacity, in the operation of such a business, nor to acquire an interest of any
kind (including as a Lender) whatsoever in an enterprise which operates such a
business, unless approved by Buyer in writing. This restriction does not apply
to the acquisition of stock quoted on a stock exchange of a company which
operates such business if Sellers and their Relatives do not in the aggregate
directly or indirectly acquire shares in the nominal amount of more than 5 % of
the share capital of the respective company.
4. The Buyer and Matthews International shall not acquire a company in Europe
which would compete with the Firm and the Firm's customers, except as consented
to by Seller Mr. Schwarz in writing.
IX.
General
1. Sellers covenant to immediately apply to the Custody Court for approval to
this Purchase Agreement. In case the approval has not been granted by the
Custody Court within six (6) months from the Effective Date, the Buyer is
authorized to terminate and to withdraw from this Purchase Agreement by giving
notice to Sellers' designee appointed pursuant to Section IX/5 below. Exhibit
IX(a) is the consent of Seller Mr. Schwarz' wife to the execution of this
Purchase Agreement and the transfer and assignment of the shares sold hereunder
to the Buyer. Exhibit IX/1(b) is the Lease Agreement among the Firm and Seller
Franz-Josef Schwarz and Rene Schwarz with respect to the Firm's Real Property
and the Seller's covenant that such lease shall be terminated immediately upon
entry of the change of legal form of the Firm into a partnership into the
Commercial Register, and upon such termination the Firm shall not be obligated
to pay for repairs or to arrange for rebuildings (Ruckbauten); the deposit of
DM 100,000 (old lease) has to be applied to the deposit required under the new
lease. Exhibit IX/1/(c) is the new lease agreement for the Helmholz Strasse
premises.
2. As far as customers have raised or may raise claims against the Firm for its
works performed or other acts or omissions taken until the Effective Date and
if such claims are either not covered by sufficient reserves in the Takeover
Accounts or the Firm' liability insurance, the Buyer shall arrange that the
respective Firm shall authorize the Sellers or, if they decide so in writing,
one of them, to pursue such claim and to monitor, if necessary, the defense of
the respective Firm against such claim, provided, that any kind of increase of
the respective Firm's liability, either by countersuit or similar actions, has
to be approved by the respective Firm, and this applies also to any kind of
settlement with the respective customer. The Firm and the Sellers shall inform
each other about any step and action in such proceedings by copying all letters,
motions, briefs, etc.
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3. The costs of Sellers' Accountant and legal advisors shall be borne by
Sellers, and those of the Buyer's Accountant and its legal advisors shall be
borne by Buyer.
The notary's fees as well as transfer taxes, if any, connected with this
Agreement shall be borne by Buyer, provided that Seller Mr. Schwarz shall pay
for the notary fees or reimburse and indemnify the Buyer with respect to the
notary fees in case the Custody Court finally refuses to approve this Purchase
Agreement. With respect to this undertaking of Seller Mr. Schwarz, the
Agreements hereunder are not subject to the approval by the Custody Court but
binding and enforceable on Seller Mr. Schwarz and the Buyer.
Apart therefrom, each party shall bear the costs of its advisors and auditors.
4. Changes and amendments to this Agreement shall only be valid if in writing
or, if necessary, in notarized form. Declarations to be made under this
Agreement shall be made in writing unless expressly provided otherwise
5. Sellers on the one hand and Matthews International Corporation and Buyer on
the other shall at any time designate to the respective other party a physical
or legal person with address in Germany who is entitled to make and accept for
the respective party all declarations pursuant to this Agreement or in
connection therewith. This representative also has the power to accept service
of process. This power shall continue until the expiration of 14 days after the
respective party has designated to the other party another representative with
address in Germany who has the same rights. A change of the address of the
representative is binding upon the other party only 14 days after it has been
notified thereof in writing.
Sellers designate as such representative:
Mr. Rene Schwarz,
Heinrich-Casson-Strasse 1
52428 Julich
Buyer designates as such representative:
Joseph C. Bartolacci
Matthews International Corporation
Two NorthShore Center
Pittsburgh, PA 15212-5851
USA
Fax: (++1) 412.442.8290
6. Should any provision of this Agreement be or become invalid in whole or in
part, the validity of the other provisions shall not be affected thereby. To the
extent legally possible, the invalid provision shall be replaced by a provision
corresponding to the meaning and purpose of this Agreement.
7. This Agreement shall be governed by German law.
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8. The English version of this Agreement shall be binding.
9. Exhibit IX/9. is the Arbitration Agreement among the Sellers and the Buyer
with respect to any disputes arising among them with respect to this Purchase
Agreement and the separately to-be notarized transfer and assignment of the
shares sold hereunder.
The acting notary is requested by the parties to only issue one certified copy
of this notarial deed to Marlene Lohn for the purpose of applying for the
approval by the Custodian Court. As the Purchase Agreement is subject to two
conditions (aufschiebende Bedingungen), namely the approval by the Custodian
Court and the receipt of the Letter of Credit to be confirmed by the Law Firm
Streck Mack Schwedhelm of Cologne to the acting notary, the acting notary is
requested to bind a copy of the approval by the Custodian Court and a copy of
the confirmation by the Law Firm of Streck Mack Schwedhelm that the Letter of
Credit has been received into this notarial deed after their receipt, and only
then to issue upon request of the parties certified copies of this Deed. In the
time in between the acting notary is authorized to issue uncertified copies.
The deed, the Annex and all Exhibits thereto, except the English language parts
of the bi-lingual Exhibits which are only added for information purposes and
which do not form part of this deed, have been read aloud in the presence of the
acting notary to the persons appearing and such persons and the acting notary
approve and sign this Notarial Deed by hand as follows:
F. Schwarz
M. Lohn
J. Bartolacci
W. Schlemmer, Notary
September 19, 1998