Exhibit 2.1
A.Prot. 1994/178
NOTARIAL DEED
STOCK PURCHASE AGREEMENT
Negotiated at Basel/Switzerland this 28th (twenty-eighth) day of
November 1994 (nineteen hundred and ninety-four).
Before me, the undersigned Notary Public
STEPHAN CUENI
at Basel/Switzerland appeared today:
1. Mrs. Dorothea G. Kettendorf, in-house counsel, born August
1, 1949, German citizen, with business address at
Altendorfer Strasse 103, D-45143 Essen and private domicile
at Walter Hohmann Strasse 17, 45128 Essen identified by her
passport,
acting not in her own name but in the name and on behalf of
Fried. Krupp AG Hoesch-Krupp, a German corporation with head
office at Essen, registered with the Commercial Register at
the Commercial Court of Essen under No. HRB 9633 and
Dortmund under No. HRB 10455, according the attached power
of attorney dated November 25, 1994,
2. Dr. Wolfhard Kuppers, attorney, born July 28, 1961, German
citizen, with business address Trinkausstrasse 7, D-40213
Dusseldorf and private domicile at Herderstrasse 92, D-40237
Dusseldorf, identified by his German identity card
acting not in his own name but in the name and on behalf of
a) Cincinnati Milacron Kunststoffmaschinen Europa GmbH, a
German corporation with head office at Malterdingen,
registered with the Commercial Register at the
Commercial Court of Emmendingen under No. HRB 914,
according to the attached power of attorney dated
November 22, 1994 and according to the attached extract
from the Commercial Register dated November 10, 1994,
and
b) Cincinnati Milacron B.V., a Dutch corporation with head
office at Vlaardingen, registered with the Register of
the Kamer van Koophandel en Fabrieken voor Rotterdam en
de Beneden-Maas under No. 209768, according to the
attached power of attorney dated November 23, 1994 and
the attached extract from the aforementioned Register
dated November 4, 1994. (as far as Mr. Jan van Nooijen
should not have the power to bind the company with his
single signature, Mr. Kuppers is acting as attorney
without power of representation and insofar retaining
the right of obtaining approval)
Both parties asked for notarization in the English language. As
the acting notary speaks English and has satisfied himself that
both parties have command over the English language, the
submission of a certified translation or the assistance of a
sworn interpreter was waived.
The persons appeared asked for the Notarization of the following:
STOCK PURCHASE AGREEMENT
between
Fried. Krupp AG Hoesch-Krupp, a German corporation of Essen and
Dortmund
- hereinafter referred to as "Seller" -
on the one side
and
Cincinnati Milacron Kunststoffmaschinen Europa GmbH, a German
corporation of Malterdingen
and
Cincinnati Milacron B.V., a Dutch corporation of Vlaardingen
- hereinafter collectively referred to as "Buyer"-
on the other side.
R E C I T A L S
A. Krupp Widia GmbH, a German corporation of D-45143 Essen
(KW), is engaged in the business of manufacturing,
assembling, selling and distributing tools and wear parts of
sintered carbide and other hard materials, of magnets and of
medical engineering. The business of KW is carried out
within KW itself, within subsidiaries of KW and within
subsidiaries or divisions of Seller or other Seller's
subsidiaries which from a functional point of view are
subordinated to KW. Such subsidiaries and divisions of
Seller shall become subsidiaries of KW before Closing.
B. Seller owns all 100 % of the shares of capital stock of KW.
C. Buyer desires to purchase from Seller as set forth in Art.
1.1, and Seller desires to sell to Buyer, essentially all
stock of KW which at the time of Closing shall own the
shares of the subsidiaries defined in Art. 2.2 below
(hereinafter collectively referred to as KW group) - except
for the specific treatment of the shares in Krupp Widia
Nederland B.V. set out in this Agreement - thereby disposing
of its world-wide business regarding tools and wear parts of
sintered carbide and other hard materials and of magnets,
upon the terms and conditions set forth in this Agreement.
Therefore, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties agree as
follows:
Ar ticle 1
SA LE AND PURCHASE OF STOCK
1.1 Shares being sold and assigned
Subject to the terms and conditions of this Agreement,
Seller hereby sells and assigns, at the price and on the
terms set forth herein, shares of KW in an aggregate nominal
value of DM 124,900,000.-- to Buyer as follows.
Buyer hereby accepts this sale and assignment:
- Seller causes KW to assign to Cincinnati Milacron B.V.
upon Closing, but immediately before the assignment set
out below takes effect, all shares in Krupp Widia
Nederland B.V. against payment to KW in the amount of
DM 3,728,000.-- equalling the book value of Krupp
Widia Nederland B.V. on the books of KW
- and Seller assigns to Cincinnati Milacron Kunst-
stoffmaschinen Europa GmbH shares in KW in the nominal
amount of DM 124,900,000.--.
Prior to Closing Seller shall cause the shares in KW to be
divided in such a way as to allow for the transfers
stipulated in this agreement.
It is understood between the parties that at Closing KW will
have acquired the shares of Krupp Widia France S.A., Krupp
Widia U.K. Ltd. and the Widia Division of Krupp Hispania
S.A. which are presently held by Seller or other Krupp
subsidiaries, the Widia Division of Krupp Hispania S.A.
prior to Closing having been formed as a separate legal
entity.
It is further understood between the parties that the
separate assignment of the shares in Krupp Widia Nederland
B.V. is effected for structural reasons and that regarding
any other obligation of either party, and for purposes of
all representations, warranties, covenants and indemnities,
this Agreement shall be read as if no such separate
assignment had taken place.
1.2 Consideration
In full payment for the shares under Art. 1.1 at Closing
Buyer shall deliver, or cause to be delivered, the "Net
Transfer Price" as defined below in immediately available
funds plus interest at the rate of 6 percent p.a. as from
January 1, 1995.
The Net Transfer Price shall be calculated by adding to the
Purchase Price of
DM 149,900,000.--
- the amount received by KW for the sale of its shares of
KruppMedizintechnik GmbH pursuant to Art. 4.2 b) DM
3,000,000.--
- the amount received by KW for the sale of its shares of
HW Hartmetall und Werkzeugtechnik
Beteiligungsgesellschaft mbH pursuant to Art. 4.2c)
DM 50,000.--
and subtracting from such sum
- the amounts due from KW in consideration of achieving
the group structure pursuant to Art. 4.2 a)
- KW France DM 10,480,000.--
- KW U.K. DM 383,000.--
- Div. Hispania
(incl. Herko) DM 3,810,000.--
- the amount of the Forecasted Result of KW for 1994 as
set out in Art. 1.5
DM 25,000,000.--
Leading to a Net Transfer Price of DM 113,277,000.--
1.3 Effective Date
The transactions contemplated herein shall have economic
effect as from December 31, 1994/January 1, 1995 (the
"Effective Date"), and all product sales and other
transactions between the Effective Date and Closing shall be
deemed to be for the account of Buyer as though having
occurred subsequent to Closing.
1.4 Closing
a) The transfer and assignment of the shares ("Closing")
shall be effective not immediately upon signing of this
document, but shall be effective as of the payment of
the Net Transfer Price which will take place at Closing
to occur on the day the following conditions are
fulfilled if such day is the first day of a month or
otherwise the next first day of a month or on any other
day the parties may agree upon, provided that Closing
shall not take place before February 1, 1995:
- The German Federal Cartel Office has approved this
transaction or the transaction is deemed to have
been approved as a result of a failure of the
Federal Cartel Office to object;
- the supervisory board of Seller has approved the
execution of this Agreement;
- the boards of Buyer and their corporate parent
have ratified the execution of this Agreement.
Upon Closing simultaneously the parties shall
- execute the transfer deed necessary for the
separate purchase of Krupp Widia Nederland B.V. as
stipulated in Art. 1.1, essentially along the
lines of Schedule 1.4.1;
- the Buyer shall pay the Net Transfer Price plus
interest in accordance with Art. 1.2;
- the Seller shall transfer to Bankers Trust a share
in KW in the nominal amount of DM 100,000.--
against payment of a consideration in the amount
of DM 100,000.-- essentially along the lines of
Schedule 1.4.2.
b) The parties assume that all governmental approvals
required for countries in which the KW group is active
or marketing its products and all minority shareholders
consents, if any, will have been obtained by May 31,
1995. Should the German Federal Cartel Office not have
approved or not be deemed to have approved the
acquisition of the KW group in total relative to
Germany by that date, then this is agreed to have such
a severe impact that this Agreement is considered to be
null and void. Should, however, other markets
(including India) be affected, then the parties shall
seek to find an alternative solution which accomplishes
the purpose of this Agreement taking into account the
interest of all parties. Should for any reason Closing
not have occured by May 31, 1995, either party may
terminate this Agreement by written notice, provided
however, that no party may terminate which is in a
breach of this Agreement, if such breach caused the de-
lay of Closing. Any such termination shall not
terminate any rights or remedies a party may have
against the other for any breaches of this Agreement.
c) At Closing Seller shall confirm to Buyer in writing
that the transfer and assignment of the shares in KW
provided for herein has taken place.
d) Each party shall without undue delay provide the other
party with a written confirmation after such
approval/ratification by the Boards on its part as set
forth in Art. 1.4 a).
e) Notarial charges, as well as any applicable land
transfer tax and the costs for obtaining governmental
approvals in connection with the implementation of this
Agreement shall be borne by Buyer.
All costs, taxes (including transfer taxes) and
notarial fees, if any, for making Krupp Widia France
S.A., Krupp Widia U.K. Ltd. and the Widia Division of
Krupp Hispania S.A. subsidiaries of KW and any other
transfers set out in Art. 4.2 a), b), c) and e) shall
be borne by Seller.
Each party shall bear the costs and expenses of its own
legal, tax and other advisers.
f) Seller shall procure that as at Closing all members of
the supervisory board of KW nominated by Seller and
being employed by Seller or any of its affiliates shall
resign if and to the extent this is desired by Buyer.
The same principle shall apply if directors or
employees of Seller or any of its affiliates have been
appointed non-executive board members of any other
member of the KW group.
g) If required by Buyer and to the extent legally
possible, Seller shall procure that all auditors which
may have been appointed for any member of the KW group
in respect of years after 1994 will resign no later
than at Closing.
h) Seller shall use its best endeavours to obtain or to
assist Buyer in obtaining all necessary approvals of
governmental authorities and any relevant third parties
in and outside Germany.
1.5 Forecasted Result of the KW Group for 1994
Seller shall by means of an offset against the Purchase
Price assume the forecasted result of the KW group for the
business year 1994 in the amount of a loss of
DM 25,000,000.-- (the "Forecasted Result 1994"), this amount
being the estimated pre tax result plus an additonal loss
figure in the amount of DM 741,000.--. The Forecasted Result
1994 shall not take into account the sale of Krupp Widia
Nederland B.V. to Cincinnati Milacron B.V..
The Forecasted Result 1994 is shown in Schedule 1.5 and has
been calculated with the care of a prudent businessman
knowledgable about the business of KW and in accordance with
the Applicable Accounting Principles as defined in Art. 2.3
on a basis consistent with past practice. The facts and
assumptions upon which the Forecasted Result 1994 has been
based were collected in good faith and, to Seller's best
knowledge, are fair, accurate and complete.
Seller undertakes not to take any action until the Effective
Date that would cause any special charges to be included in
the consolidated balance sheet of the KW group for the
fiscal year 1994 except for those set forth in the Schedule
1.5, whereas the restructuring of the KW group as
contemplated in this agreement shall not be considered to
cause special charges.
Art icle 2
REP RESENTATIONS AND WARRANTIES OF SELLER
Seller makes the following representations and warranties to
Buyer, whereby the phrase "to Seller's best knowledge" shall mean
"to the best knowledge of Seller after reasonable inquiry and to
the best knowledge of the management and executives of the KW
group listed in Schedule 2".
2.1 Organization and Good Standing
a) KW is a corporation duly organized, validly existing
and in good standing under the laws of Germany. KW has
full corporate power and authority to own or lease its
properties and to carry on its business as now being
conducted. KW is duly qualified or licensed to do
business as a foreign corporation in all jurisdictions
in which the present conduct of its business requires
such qualification or licensing.
The above shall apply correspondingly to all other
companies within the KW group.
b) The copies of the Articles of Incorporation (Satzung),
shareholders agreements and Bylaws (Geschaftsordnung)
of KW and any other member of the KW group, each as
currently in effect, delivered to Buyer and listed in
Schedule 2.1, are complete and correct. There are no
voting trust agreements, sub-participation agreements,
silent participation agreements or "Unternehmensver-
trage" within the meaning of Section 291 et seq. AktG,
except for the domination and profit and loss transfer
agreement with Krupp Medizintechnik GmbH which will be
terminated as per Effective Date.
c) Schedule 2.1.2 sets forth the consents of all third
parties and governmental bodies required on the part of
Seller, KW or the other members of the KW group to
consummate the transactions contemplated by this
Agreement. Except to the extent of the required
consents listed on Schedule 2.1.2, this Agreement and
the consummation of the transactions contemplated
hereby do not and will not conflict with the Articles
of Incorporation or Bylaws of KW or any other member of
the KW group or conflict with or result in a default
under (with or without the giving of notice or the
lapse of time) any contract, mortgage, indenture or
agreement of Seller, KW or any other member of the KW
group.
2.2 Title to Shares
Seller has, and will at Closing, have good and marketable
title to all of the shares in KW, free and clear of all
liens, claims, encumbrances and restrictions. Seller has
full and unrestricted legal right, power and authority to
transfer such shares to the Buyer. The shares in the
aggregate nominal amount of DM 125,000,000.-- constitute all
the shares in KW and no other shares have been issued and
are outstanding. All these shares are validly issued, have
been paid in in full and have not been repaid.
As fully described in Schedule 2.2.1, KW will at Closing
hold either directly or indirectly or will enjoy as
beneficial owner (Treugeber) the shares as described below
in the following subsidiaries free and clear of all liens,
claims, encumbrances and restrictions (except as disclosed
in Schedule 2.2.1), all of which are validly issued, fully
paid in and nonassessable and have not been repaid:
Widia Heinlein GmbH, Lichtenau: 100 %
Meturit AG, Zug: 100 %
Krupp Widia Nederland B.V., Woerden: 100 %
Widia Iberica S.A., Vitoria
(former division of Krupp Hispania S.A.): 100 %
Herko Vitoria S.A., Vitoria: 100 %
Krupp Widia U.K. Limited, High Wycombe: 100 %
Krupp Widia S.P.A., Milano: 100 %
Krupp Widia Vertriebsgesellschaft m.b.H.,
Perchtoldsdorf: 100 %
Krupp Widia Svenska AB, Stockholm: 100 %
Krupp Widia S.E. Asia (Pte.) Limited,
Singapore: 100 %
Krupp Widia Korea Limited, Seoul: 100 %
Krupp Widia Japan Limited, Kobe: 100 %
Krupp Widia France S.A., Vernouillet: 100 %
Widia (India) Limited, Bangalore: 51 %
Widaroc India Limited, Bangalore
(shares held by Widia (India) Limited): 100 %
Widaroc India Limited in the process of
being merged upon Widia (India) Limited
without affecting the shareholding of
Meturit AG in Widia (India) Limited
The shares in Meturit AG, Krupp Widia U.K. Limited and Krupp
Widia France S.A. which will be only beneficially held by KW
are set out in Schedule 2.2.2. The trustees identified in
that Schedule can be freely instructed and directed by KW
under appropriate trust agreements.
At Closing there will be no outstanding or authorized
options, warrants, purchase agreements, subscription or pre-
emptive rights, conversion rights, exchange rights or other
contracts or commitments that could require KW or any member
of the KW group to issue, sell or otherwise cause to become
outstanding any of their shares of capital stock.
2.3 Financial Statements
Buyer has received audited financial statements for KW as
well as audited financial statements for the subsidiaries
enumerated in Art. 2.2 and unaudited consolidated balance
sheets of the KW group all as of December 31, 1992 and 1993,
except for Krupp Widia Svenska AB and the Widia division of
Krupp Hispania S.A. for which unaudited financial statements
were given to Buyer. In addition, Buyer has received un-
audited interim financial statements of the KW group as of
June 30, 1994 and September 30, 1994.
The financial statements for the German companies and the
consolidated balance sheet have been prepared in accordance
with the "Rules for preparing financial statements within
the Krupp group" which rules are in compliance with GOB
(generally accepted accounting principles in Germany)
(collectively referred to as the "Applicable Accounting
Principles"). The year end financial statements for the
foreign subsidiaries satisfy the locally applicable
generally accepted accounting principles. All these
financial statements accurately reflect the net asset
position, financial position and earnings position on the
basis of the Applicable Accounting Principles which shall
have been applied on a basis consistent with past practice
(except as disclosed in Schedule 2.3).
2.4 Taxes
KW and all other companies of the KW group have duly filed
all required tax returns. Up to December 31, 1993, a tax
union referring to corporate tax, municipal trade tax and
turnover tax existed between the Seller and KW. The
Beherrschungs- und Gewinnabfuhrungsvertrag between Seller
and KW has been terminated as of December 31, 1993 so that
the corporation tax union has expired on such date. The
V.A.T. tax union will expire on Closing.
If by a tax inspection or in some other way additional taxes
(including, but not limited to, tax deductions at source -
"Steuerabzugsbetrage" -, supplementary claims -
"Nebenforderungen" - and surcharges - "Zuschlage") or
contributions (including social security contributions) or
other public duties are imposed on KW or any of the
companies of the KW group for the period up to December 31,
1994 such tax demands in excess of provisions in the balance
sheets as at December 31, 1993 shall be fulfilled by the
Seller; Buyer and the respective member of the KW group
shall be indemnified from such imposition. Tax refunds and
refunds for social security contributions for the period
until December 31, 1994 shall be passed on to Seller upon
receipt by KW or any of its subsidiaries unless
corresponding entitlements have been capitalized in the
balance sheets as at December 31, 1993.
Buyer ensures that KW will give the opportunity to Seller or
Seller's advisers, who are subject to professional secrecy,
to participate in all tax inspections for the period up to
December 31, 1994 as appropriate to safeguard Seller's tax
position. Buyer shall also ensure that KW shall inform
Seller of the start of such tax inspections without delay.
If no agreement can be reached on the outcome of a tax
inspection Buyer shall, at the request of Seller, ensure
that KW or the appropriate member of the KW group
respectively appeal against the tax assessment and if
necessary enter into litigation at the direction of Seller.
The costs of such legal recourse shall be borne by Seller.
2.5 Compliance with Laws
To the best of Seller's knowledge, the conduct and operation
by KW or any other company within the KW group of its
business have been and are in conformity in all material
respects with all applicable laws and regulations, and the
management of the respective company has not received any
notice asserting or suggesting a failure, or potential
failure, to comply with or conform to any such law.
Furthermore, to the best of Seller's knowledge, the soil and
the buildings which are owned or used by the KW group in
Germany, Holland, Spain, France and India (but excluding
soil and buildings used and not owned by the KW group in
Essen, Germany) are not polluted or contaminated and do not
contain hazardous substances at a level going beyond what
local laws and regulations permit as at Closing.
2.6 Title to and Condition of Assets
KW and all other companies within the KW group have good and
marketable title to the assets held by it, free and clear of
all liens, pledges, encumbrances, charges, easements,
restrictions or rights or interests or other of any kind,
subject only to reservation of title rights of suppliers and
security interests of banks where the sums payable to such
suppliers or banks have been fully accounted for in the
books of KW or companies of the KW group.
All land, buildings, machinery and equipment, production
technology, know how and industrial property rights used for
the conduct of the business are either held by a company
within the KW group or can be used according to agreements
and such machinery and equipment is in good working
condition and adequate and suitable for the KW group
business, except for ordinary wear and tear.
The major patents and trademarks used by the KW group and
required for the conduct of the business as currently
conducted are listed as of May 1994 in Schedule 2.6. An
updated Schedule 2.6 which shall also include all license
agreements will be submitted by Seller to Buyer without
undue delay after signature and at the latest by December
15, 1994. All these major patents and trademarks are either
owned by and duly registered in favour of KW or will be
owned by and duly registered in favour of KW by Closing.
Except as set forth in Schedule 2.6, none of the members of
the KW group have to Seller's best knowledge infringed upon
the patent or trademark rights of any third parties and to
Seller's best knowledge no company of the KW group has
received any written notifications alleging such
infringement. Except as set forth in Schedule 2.6, to
Seller's best knowledge no third parties are infringing, or
since January 1, 1994 have infringed, upon the patent or
trademark rights of any of the members of the KW group.
The KW group sold under this Agreement includes all of
Seller's direct or indirect business in relation to tools
and wear parts of sintered carbide, of cermets, of ceramics,
of diamond, of cubic boron nitride (cbn) and of other hard
materials with similar properties and in relation to
magnets.
2.7 Contracts, Defaults
All contracts of KW and the other members of the KW group
which are in force at the Effective Date or at Closing have
been entered into on normal commercial terms (i.e. such
terms have been agreed in the interest of KW as if between
parties not being related to each other). All contracts and
commitments which have a total remaining contractual value
as from the Effective Date of more than DM 100,000.00 or the
equivalent in any other currency, have a term beyond
December 31, 1995 and cannot be terminated to expire as at
such date without having to pay a compensation for early
termination, and all contracts and commitments which have a
total remaining contractual value of DM 500,000.00 will be
listed by Seller in Schedule 2.7.1 submitted to Buyer
without undue delay after signature, and at the latest by
December 15, 1994.
KW has received no notice of default, and to Seller's best
knowledge, neither KW nor any other member of the KW group
is in default on any contract, agreement, instrument,
obligation, commitment or understanding of any kind or
nature that could have a material adverse effect on KW or
the respective member of the KW group.
2.8 Conduct of Business since January 1, 1994
In the period of January 1, 1994 until the date of this
Agreement the KW group shall have conducted its business in
accordance with the rules of ordinary course of business as
set out in Section 347 para. 1 HGB (Commercial Code) and shall not
have sold or otherwise disposed of any of its assets except
as in the ordinary course of its business, except as stated
in this Agreement and its Schedules. Except as set forth in
this Agreement or in Schedule 2.8, to the Seller's best
knowledge no member of the KW group has since January 1,
1994 declared or paid any dividend or other distribution to
any of its shareholders outside the KW group or purchased or
redeemed any of its shares. In January 1994 KW has sold its
shares in Krupp Widia Belgium S.A. for no less than its book
value and has also entered into a distribution agreement
with that former subsidiary. Since January 1, 1994, all
transactions, payments and agreements between any of the
companies of the KW group, on the one hand, and Seller or
any of its subsidiaries (other than the companies of the KW
group), on the other hand, have been concluded on an arm's
length basis, except as set forth in Schedule 2.8 or if they
are to the advantage of KW group.
2.9 Restricting Agreements
Neither KW nor any other member of the KW group has entered
into any agreements, undertakings or commitments which would
in any way prevent or restrict KW group in continuing or
further developing its business currently conducted in
Germany or any other country or would prevent or restrict
its ability to compete with other companies, except as
regards Widia (India) Limited as specified in Schedule 2.9
and except as contained in exclusive distributorship or
agency agreements.
Accordingly, inter alia, there are no agreements,
undertakings or commitments which would in any way prevent
or restrict KW group in scaling down or even closing down
existing operations nor have any subsidies been granted that
are included in the assets as at the Effective Date and have
to be given back or repaid in such event.
Seller will continue its purchases of products from the KW
group provided KW group remains competitive in price,
delivery, quality and performance.
2.10 Employment Matters
KW employs not more than approx. 1,400 people, and there is
therefore no legal restraint which would restrict Buyer from
abolishing the fully co-determined supervisory board at KW.
All the employees of the KW group are employed on terms and
conditions customary in the industry. To the best of the
knowledge of the management of KW, the German employees are
not paid according to a tariff which is lower than the
tariff in which they should be registered under the
applicable bargaining agreement.
The main terms and conditions of all contracts with managing
directors of KW and with equivalent key personnel in other
members of the KW group are correctly set out in Schedule
2.10.1, which Schedule the Buyer will keep in strict
confidence.
Since the Effective Date no commitment has been entered into
to increase the salaries, wages or other benefits of
employees, managing directors or other personnel of the KW
group except as in line with increases required under
existing bargaining agreements or increases granted in
normal commercial practice.
The principles of all benefits (other than normal salaries
and wages and the provision of company cars) to employees,
directors or other personnel of the KW group, such as
pensions, are correctly laid down in Schedule 2.10.2; where
certain employees, directors or other personnel are
receiving or have been promised significant benefits in
addition to those they would be entitled to under these
principles, these additional benefits have also been
disclosed in Schedule 2.10.2.
No employee has moved from the Seller or any of its
affiliates to KW nor has an agreement to that effect been
made since July 1, 1993, except as disclosed in Schedule
2.10.3.
The pension commitments of KW and of Widia Heinlein GmbH
have been fully provided for in the financial statements as
at December 31, 1993 in accordance with the Richttafeln 1982
of Dr. Heubeck using an interest rate of 6 % p.a. in accor-
dance with Section 6 a of the German "Einkommensteuergesetz".
There are no pension commitments or other benefits for which
any other company of the KW group is or will be liable,
except as disclosed in Schedule 2.10.4.
2.11 Litigation
Unless otherwise listed in Schedule 2.11, no initiation of
any law suits with a value of DM 100,000 or more,
administrative proceedings or investigations against KW or
any other member of the KW group affecting the business has
been notified to, or to the best knowledge of Seller
threatened to, KW or the respective group member, nor are
any circumstances known to the management of KW that would
make the initiation of any such law suits, administrative
proceedings or investigations appear likely to occur. For
the financial risks associated with the law suits known as
of December 31, 1993 accruals were made in the financial
statement as at December 31, 1993 in accordance with the
Applicable Accounting Principles and previous practice.
In respect of the legal disputes with Schlumberger, the
litigation will be conducted by KW as directed by Seller and
Seller assumes all responsibility herefor including all
costs and expenses, except that KW shall give necessary
support with its own resources without charging any non-out-
of pocket costs therefor, provided such support is
reasonably requested in due course. Any moneys received by
KW from Schlumberger for legal costs and expenses borne by
Seller shall be for the account of Seller. Any moneys pay-
able by KW to Schlumberger shall equally be for the account
of Seller. In view thereof the provision in the balance
sheet of KW as at December 1993 for this case in the amount
of DM 300,000.-- shall be treated as an intercompany
liability of KW to Seller which shall be cleared in
accordance with Art. 8 and which shall not affect the Net
Transfer Price according to Art. 1.2.
2.12 Absence of Material Adverse Changes
Except as set forth in Schedule 2.12 and in this Agreement,
since December 31, 1993, there has been no material adverse
change in the properties, business, assets, operations,
prospects, results of operations or financial condition of
the members of the KW group, taken as a whole.
2.13 U.S. Aspects
As of September 30, 1994, the assets of the KW group located
in the United States ("U.S."), if any, had an aggregate book
and fair market value of less than $ 15,000,000 and the
sales in the U.S. from the operations of the KW group were
less than $ 25,000,000 during the 12 month period ended Sep-
tember 30, 1994.
2.14 Debt
Seller will discontinue the cash clearance system with the
KW group as per the Effective Date. From the Effective Date
to the Closing Date, Seller shall secure for the KW group
financing for working capital, either directly or through
one or more banking institutions, on a short-term basis on
customary banking terms at prevailing market interest rates
for such financing (or at a rate of 6.0 % per annum, if such
financing is provided directly by Seller). Within 15
business days from Closing, Buyer shall assume any such
third-party financing, and shall secure the discharge of
Seller from any continuing obligations with respect to such
financing. Buyer and Seller shall settle all amounts owing
with respect to interim financing provided by Seller or its
affiliates at the latest within 15 business days from
Closing.
Except for trade receivables and liabilities for goods and
services incurred in the ordinary course of business on
normal commercial terms (as described in Art. 2.7), as of
the Effective Date the sum of intercompany receivables,
third party receivables, cash of the KW group and Forecasted
Result 1994 shall be equal to or exceed the sum of inter-
company liabilities and third party liabilities of the KW
group, whereby (i) intercompany receivables and liabilities
shall refer to the relationship between KW group on the one
side and Seller and its affiliates other than the KW group
on the other side and (ii) the intercompany liabilities from
purchase prices for companies and divisions according to
Art. 4.2 a), b) and c), the transfer of accruals for
pensions according to Art. 9, the transfer regarding the
Schlumberger litigation according to Art. 2.11 and the sale
of the real estate according to Art. 4.2 e) shall not be
considered.
The indebtedness of the KW group in India on the Effective
Date is the sole obligation of Widia (India) Limited and/or
Widaroc India Limited and is not guaranteed by, or otherwise
the direct or indirect obligation, of any other company of
the KW group.
2.15 Restructuring
A 1993 & 1994 restructuring of the business of the KW group
has been effected in compliance with the restructuring plan
communicated to Buyer in August 1993. The following
objectives in such plan have been achieved:
- reduction of personnel to 1960 or below of total
employees excluding India,
- no significant reduction in fixed assets other than set
out in the aforementioned restructuring plan and
- no adverse effect on (i) the capabilities and the
facilities of the KW group with respect to research and
development, (ii) the manufacturing capabilities
and/or (iii) the breadth of the product lines.
The KW group companies have entered into all necessary
agreements with, and have received all necessary approvals
of, works councils, governmental bodies, unions and other
competent bodies to allow for the completion of all
personnel reductions contemplated by the 1995 operating plan
of the KW group communicated to Buyer in November 1994; and
none of these agreements has been violated by any of the KW
group companies.
The costs of the 1993 and 1994 restructuring and the
personnel reductions contemplated by the 1995 operating plan
have been adequately reflected or reserved for in the
calculation of the Forecasted Result 1994 to be assumed by
the Seller under Section 1.5.
Article 2a
REPRESENTATIONS AND WARRANTIES OF BUYER
Schedule 2a sets forth the consents of all third parties and
governmental bodies required on the part of Cincinnati Milacron
Inc., the ultimate parent company of Buyer, Cincinnati Milacron
Marketing Company, the parent company of Cincinnati Milacron
Kunststoffmaschinen GmbH or Buyer to consummate the transactions
contemplated by this Agreement. Except to the extent of the
required consents listed on Schedule 2a, this Agreement and the
consummation of the transactions contemplated hereby do not and
will not conflict with the Articles of Incorporation or Bylaws of
Cincinnati Milacron Inc., Cincinnati Milacron Marketing Company
or Buyer or conflict with or result in a default under (with or
without the giving of notice or the lapse of time) in any con-
tract, mortgage, indenture or agreement of Cincinnati Milacron
Inc., Cincinnati Milacron Marketing Company or Buyer.
Article 3
DUE DILIGENCE
Commencing upon announcement of the signing of this Agreement,
Seller shall and shall cause all members of the KW group and
their employees to provide Buyer, its officers, employees, agents
and representatives (i) full access to all books, records,
auditors workpapers (provided the auditors agree thereto), files,
agreements and computer databases and information pertaining to
the business of the KW group or their assets and liabilities (as
well as the right to duplicate the same to the extent reasonably
requested by Buyer (subject to the confidentiality undertakings
of Buyer)) and (ii) reasonable access (taking into account the
interest of the KW group) to all the plants, facilities, offices
and other assets of the KW group and all officers, management
personnel, employees, contractors and consultants of the KW
group, in each case as Buyer shall reasonably deem appropriate
for its due diligence review of the KW group business, provided
however that Buyer shall during the month of December 1994 limit
its due diligence (i) to accounting, tax and finance, human
resources, legal matters, India, facilities and environmental
matters and (ii) to the time until December 15, 1994 and that in
the month of January 1995 full due diligence may be performed in
the last three weeks of the month.
Buyer shall notify Seller in writing without undue delay of any
facts discovered by Buyer which Buyer has concluded are
inconsistent with any representation and warranty herein together
with an initial assessment by Buyer of the impact it attributes
to such findings, (no notification being required for findings if
the aggregate amount attributed is less than DM 500,000.--);
provided, however, that any notification shall be made without
prejudice to any rights or remedies Buyer may have under Art. 2,
5 or 7 and failure to notify does not affect such rights and
remedies but shall make the party due to notify fully responsible
for any damages caused by any such failure to notify the
indemnifying party.
Upon Seller's request Buyer and Seller shall meet prior to
Closing in good faith with the objective to agree on the
underlying facts of Buyer's findings and assessment and an
appropriate remedy, if any. Failing such agreement both Buyer and
Seller may rescind this Agreement by giving written notice to the
other, but only if the aggregate value Buyer has attributed to
the impact of its findings exceeds an amount of DM 5,000,000.--.
If Buyer during the course of its due diligence becomes aware of
events or conditions which would have a material adverse effect
on the KW group, Buyer shall without undue delay inform Seller
thereof and Buyer shall have a right to rescind this Agreement by
giving written notice to Seller if no agreement between Seller
and Buyer on a solution is found in good faith discussions until
two days before Closing.
Article 4
OPERATION OF KW PENDING THE CLOSING
Pending the Closing, and except as otherwise consented to or
approved by Buyer in writing:
4.1 Regular Course of Business
Seller shall cause each company of the KW group to operate
its business strictly in the ordinary course of KW's
business and as previously conducted and to use its best
efforts to keep available to Buyer the services of the KW
group's present key employees - in particular Seller shall
not solicit any of such key employees - and to preserve for
Buyer and each company of the KW group the goodwill of its
suppliers, customers and others having business relations
with each company of the KW group. In conformity herewith,
Seller shall cause each company of the KW group to refrain
from doing any of the following without Buyer's prior
written consent:
a) making any changes in employee compensation, bonuses or
benefits, other than customary annual adjustments;
b) creating, assuming, incurring, paying or discharging
any claim, lien, encumbrance or liability other than in
the ordinary course of business;
c) purchasing, selling, assigning, leasing, exchanging or
otherwise disposing of assets of the KW group other
than in the ordinary course of business;
d) entering into, renewing, extending, modifying,
terminating, waiving any right under or incurring any
additional liability under any material contract or
commitment involving more than DM 100,000 and
commencing in or extending into a period after the
Effective Date (other than purchase orders or sales of
inventory in the ordinary course of business);
e) declaring or paying any dividends or other dis-
tributions to any of its shareholders outside the KW
group or purchasing or redeeming any of its shares;
f) making any investment in or loan to Seller or any of
its affiliates or any third party:
g) making any expenditure for, or incurring any
obligations in respect of fixed assets, fixtures and
other capital items (except those expenditures and
obligations occurring in the ordinary course of
business not exceeding DM 100,000 on any individual
item);
h) entering into any consulting agreement including
marketing;
i) entering into licensing or selling agreements on any
inventions, know how or other intellectual property.
4.2 Disposal of Shares in Subsidiaries
a) Seller procures that prior to Closing the KW group will
have been formed according to the structure set out in
the recitals to this Agreement, the costs therefor to
be borne directly by Seller. The claims of Seller or
its affiliates against KW for consideration in respect
of the acquisition of the subsidiaries or divisions of
Seller or Seller's affiliates shall be recorded as an
intercompany liability of KW to Seller as follows:
- KW France DM 10,480,000.--
- KW U.K. DM 383,000.--
- Div. Hispania
(incl. Herko) DM 3,810,000.--
which intercompany liability shall be cleared in
accordance with Art. 8. The aforementioned claims of
Seller or its affiliates shall reduce the Net Transfer
Price according to Art. 1.2.
b) Seller will ascertain that prior to Closing KW shall
have disposed of all its shares in Krupp Medizintechnik
GmbH at a price of DM 3,000,000.-- and of all its
shares in HW Hartmetall- und Werkzeugtechnik
Beteiligungsgesellschaft mbH at a price of
DM 50,000.--. The proceeds of such sales actually
received by KW shall be recorded as an intercompany
liability of Seller to KW which shall be cleared in
accordance with Art. 8. The aforementioned proceeds
received by KW shall increase the Net Transfer Price
according to Art. 1.2. Any costs and negative tax
effects for the KW group and any indemnity,
misrepresentation, price adjustment or other claims
asserted by the purchasers or other third parties (plus
costs related thereto) resulting of such sales shall be
borne directly by Seller.
c) Seller shall procure that prior to Closing KW shall
have disposed of all its shares in Krupp Informatik
GmbH, Krupp Entwicklungszentrum GmbH and Krupp Widia
Corporation. The price for the shares in Krupp
Informatik GmbH and Krupp ntwicklungszentrum GmbH,
collectively, shall be DM 312,000.-- and the price for
the shares in Krupp Widia Corporation shall be
DM 452,000.--. The proceeds of such sale shall be
treated as an intercompany liability of Seller to KW
but shall not affect the Net Transfer Price according
to Art. 1.2. Any costs and negative tax effects, if
any, for the KW group and any indemnity, misrepresenta-
tion, price adjustment or other claims asserted by the
purchaser or any third party (plus costs related
thereto) resulting from such sales shall be borne
directly by Seller.
d) It is known to Buyer that KW is party to a domination
and profit and loss sharing agreement (the Domination
Agreement) with Krupp Medizintechnik GmbH (KMT) by
which KW has undertaken to take over the profits and
losses of KMT at the end of each fiscal year. The
Domination Agreement shall be terminated by mutual
agreement as at December 31, 1994. Buyer will ascertain
that KW divests itself of any rights resulting from the
Domination Agreement including but not limited to the
right to collect a profit of KMT and agrees to take
such steps as may be necessary to secure Seller's right
to any such profit. In turn Seller undertakes to
indemnify and to hold KW harmless against any claim
that may arise against KW and any cost or loss KW may
suffer as a consequence of the existence of the
Domination Agreement or the related tax union.
e) Seller will ascertain that after the Effective Date and
prior to Closing the real estate leaseholds
(Erbbaurechte) including the buildings constituting
hall 10 and 19 located in Essen and shown in Schedule
4.2 e) currently not used and formerly used as two
production sites are sold and transferred to Seller at
book value equalling DM 7,365,000 as of the Effective
Date against effective cash payment.
Article 5
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
Each and every obligation of Buyer under this Agreement to be
performed on or before Closing shall be subject to the satis-
faction, on or before Closing, of each of the following con-
ditions, unless otherwise waived in writing by Buyer (it being
understood that Closing does not constitute a waiver of any
rights resulting from the absence of such condition):
5.1 Representations and Warranties True
The representations and warranties of Seller contained in
this Agreement and in all agreements referred to herein or
contemplated hereby shall be, in all material respects, true
and complete as of the date of Closing as though such re-
presentations and warranties were made at and as of such
date, except for changes permitted or contemplated by the
terms of this Agreement.
5.2 Performance
Seller shall have performed and complied in all material
respects with all agreements, obligations and conditions
required by this Agreement and in all agreements referred to
herein or contemplated hereby to be performed or complied
with by them or it on or prior to Closing.
Article 6
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
Each and every obligation of Seller under this Agreement to be
performed on or before Closing shall be subject to the
satisfaction, on or before Closing, of each of the following
conditions, unless otherwise waived in writing by Seller (it
being understood that Closing does not constitute a waiver of any
rights resulting from the absence of such condition):
6.1 Representations and Warranties True
The representations and warranties of Buyer contained
in this Agreement and in all agreements referred to
herein or contemplated hereby shall be, in all material
respects, true and complete as of the date when made
and as of Closing as though such representations and
warranties were made at and as of such date, except for
changes permitted or contemplated by the terms of this
Agreement.
6.2 Performance
Buyer shall have performed and complied in all material
respects with all agreements, obligations and conditions
required by this Agreement and all agreements referred to
herein or contemplated hereby to be performed or complied
with by him on or prior to Closing.
Article 7
INDEMNIFICATION AND OTHER REMEDIES
7.1 Survival of Representations and Warranties
The representations and warranties of each party contained
herein shall be true as of the Effective Date and as of the
Closing Date and shall survive until December 31, 1996;
provided that in respect of the representations regarding
taxes and social security contributions the expiry date
shall not be until 6 months after the assessment by the
respective governmental authority has become final and
binding and provided further that in respect of the warranty
under Art. 2.2, the representations and warranties shall not
expire until 10 years after the date of this Agreement and
in respect of the warranty under Art. 2.5, second sentence
the representations and warranties shall not expire until 4
years after the date of this Agreement.
The aforementioned expiry dates are deadlines (Aus-
schlussfristen) within which Buyer making a claim must have
sent a written notification of the claims explaining the
grounds herefor in reasonable detail. All remedies of Buyer
become time-barred 6 months after the deadline until which
the notification letter had to be sent, it being understood
that this 6 months period is stalled with respect to those
claims Seller remedies in accordance with Art. 7.2 until
Seller notifies Buyer in writing that Seller's remedial
action has been completed.
7.2 Notice of claims
Without delay upon discovery of any misrepresentation
contained in any of the Articles of this Agreement Buyer
shall give Seller written notice of such claims and a
statement in reasonable detail of the reasons therefor,
provided, however, that failure to notify Seller shall not
release Seller from its obligations under this Agreement
with respect to such misrepresentation, but Buyer shall be
fully responsible for any damages to Seller caused by any
such failure to so notify Seller as required above. Unless
remedial action has been initiated by Seller within 30 days
following receipt of such claim letter and has been
successful within a reasonable period of time, Buyer shall
be entitled to indemnities as per Art. 7.3.
7.3 Indemnities
a) By the Seller
Seller agrees to indemnify and hold Buyer harmless from and
against any and all claims, demands, losses, costs,
expenses, obligations, liabilities, actions, suits, damages,
including without limitation, interest and penalties,
counsel fees (all such claims, demands, losses, costs,
expenses, etc., being referred to herein collectively as
"Claims") and all amounts paid in settlement of any such
Claims which may be asserted against Buyer or any company of
KW group or which Buyer or any company of KW group shall
incur or suffer, and which arise out of or result from
(i) the breach of any representation, warranty or
agreement of Seller contained herein
(ii) the environmental condition or contamination of
any facility, site, location or business owned,
operated or leased by the KW group prior to the
Closing Date and disposed of by the KW group on or
prior to the Closing;
(iii) any off-site disposal, treatment, storage,
transportation, release or threatened release of
any hazardous or waste materials by the KW group
prior to the Closing; it being understood that
Seller shall cause KW to seal and properly dispose
of all containers etc, for hazardous or waste
materials used by any of the KW group companies
(such disposal to be at sites properly licensed if
required therefor and such sites not to be sites
owned or occupied by any KW group company)
immediately prior to Closing;
(iv) any actual or alleged health or safety claim of
employees or former employees relating to the
production or use of any product or item produced
by the KW group prior to the Closing;
(v) any claims arising from the promotion agreement
dated September 30, 1963 concluded with SAK
Industries Private Company (SAK) or any additional
agreements entered into with SAK or SAK's position
as a shareholder in Widia India Limited and raised
by SAK Industries Private Company against Buyer or
any company of the KW group and resulting from or
alleged to result from the transactions con-
templated by this Agreement or actions or
omissions by Seller or Meturit AG prior to
Closing.
Any compensation in relation to breach of warranties shall
be settled as instructed by Buyer.
b) By the Buyer
Buyer agrees to indemnify and hold Seller harmless from and
against any and all claims, demands, losses, costs,
expenses, obligations, liabilities, actions, suits, damages,
including without limitation, interest and penalties,
counsel fees (all such claims, demands, losses, costs, ex-
penses, etc., being referred to herein collectively as
"Claims") and all amounts paid in settlement of any such
Claims, which may be asserted against Seller or which Seller
shall incur or suffer, and which arise out of or result from
the breach of any representation, warranty or agreement of
Buyer contained herein, or from the operation of KW after
Closing (it being understood that any health or safety claim
of employees or former employees with respect to the
production or use of any product or item produced by the KW
group before the Closing does not arise from the operation
of KW after Closing).
c) Defense of All Claims
Promptly after receipt of notice of the commencement of any
action, or the assertion by any third party of any Claim
with respect to which Buyer or Seller is entitled to
indemnification, the party receiving the notice shall
promptly notify the other party in writing of the
commencement of such action or the assertion of such Claims,
provided however, that failure to so notify shall not
relieve the indemnifying party of its obligation to
indemnify but shall make the other party fully responsible
for any damages caused by any such failure to the
indemnifying party. The indemnifying party, at its option,
may elect to take charge of and control the defense of any
Claim, provided that the indemnifying party shall agree to
pursue the defense of such Claim in good faith by
appropriate actions or proceedings promptly taken or
instituted and diligently pursued and has acknowledged
liability under Art. 7.3 in writing. The indemnifying party
has to give reasonable consideration to the legitimate busi-
ness interest of the other party and their business. If the
indemnifying party elects to assume the defense of any such
action in accordance with the second preceding sentence, the
indemnified party shall be nevertheless entitled to
participate (at its own expense) in said defense. In all
cases, the parties shall at all times reasonably cooperate
with each other in the defense of a Claim and shall make
their respective personnel and relevant records reasonably
available to the other for purposes of defense of a Claim.
7.4 Liability Limitation
In no event, shall one party be responsible to the other for
indirect and consequential damage, except if there is a
breach of Art. 2.2 or 2.8 and except in the cases where KW
should dispose of its technology in breach of Art. 4.1 c) or
should enter into material contracts or commitments outside
its ordinary course of business in breach of Art. 4.1 d).
Neither party shall have an obligation towards the other
under a warranty or related statutory claim unless and until
the aggregate amount of such claims against such party
exceeds DM 1,000,000 or the equivalent in any other
currency, and if so, then the whole amount shall be payable
to the other party.
Except for the warranty in Art. 2.5 and Art. 7.3 (a), the
liability with regard to Contamination is exclusively dealt
with in Art. 7.6.
Neither Seller nor Buyer make any representations or
warranties except for those expressly stated in this
Agreement.
7.5 Previous Disposals of Subsidiaries
Seller shall indemnify KW group against all liabilities and
risks resulting from the disposal of former subsidiaries or
divisions of the KW group where such disposal has occurred
in the past or shall occur according to this Agreement.
Seller shall also indemnify KW group against all guarantees,
letters of comfort or similar parent-company liabilities,
where such liabilities may still exist on top of or in
support of obligations of such former subsidiaries or
divisions.
7.6 Potential Contamination Outside Essen
The parties agree that Buyer shall carry out forthwith a
cursory survey of the production facilities (land and
building) of the KW group in Lichtenau, Holland, Spain,
France and India as soon as possible. If on the basis of
such a preliminary survey Buyer concludes that there is a
risk of pollution, contamination or existence of hazardous
substances at a level going beyond what local laws and
regulations permit as at Closing (hereinafter referred to as
Contamination), then the parties shall jointly retain
appropriate experts to give an opinion on appropriate
cleanup measures and shall assess the costs which are likely
to be incurred by them. The costs of these experts shall be
shared equally between Seller on the one part and Buyer on
the other part.
The aggregate costs, as defined below in this Art. 7.6, in
connection with Contamination of the aforementioned first
four sites concerned and India pro rata to the share of KW
(51 %) shall be shared equally by Seller on the one part and
Buyer or the respective company of the KW group, as the case
may be, on the other part up to a maximum of DM 9,000,000.--
exclusive of V.A.T. or the equivalent in any other currency
Costs in excess of DM 9,000,000.-- are to be borne by Buyer
or the respective company of the KW group, as the case may
be.
The remedies of Buyer in respect of potential Contamination
outside Essen are governed by Art. 7.3 and this Art. 7.6, to
the exclusion of other clauses of this Agreement and
provisions of statutory law. However, should Seller be in
breach of the warranty in the second sentence of Art. 2.5,
Seller shall fully bear the costs for cleaning up
Contamination that in breach of the second sentence of Art.
2.5 was not disclosed and the costs thus to be borne by
Seller shall not be credited under the cost sharing scheme
which will otherwise be applicable under this Art.7.6.
Costs shall mean costs for reinstatement of land, buildings
and water to the prescribed standard in each case or, if
such a provision does not exist, to the minimum standard
acceptable to the authority concerned, but only to the
extent that such Contamination is attributable to an event
which occured prior to Closing. Where this necessitates work
on an installation or building the Costs include expenses
for reinstating the standard of the installation or building
prior to the clean-up work. The term "Cost" refers in each
case to the actual cost of cleaning and reinstatement,
including external costs for the necessary consultants,
including further external legal expertise for such in
conjunction with possible court proceedings and negotiations
with authorities. Where damage is caused by a contaminating
event that occured prior to Closing, the Costs also include
claims that may be made by an employee, some other third
party or an authority against any company of the KW group
and/or Buyer by reason of injury or damage to person or
property.
For the purpose of this Art. 7.6 all costs are to be
disregarded which are reimbursed from insurance companies.
It is further agreed that all decontamination work shall be
carried out by Buyer and/or the respective company of the KW
group only after appropriate consultation with Seller in
order to keep Seller duly informed and give Seller the
opportunity to suggest more efficient or less expensive
methods of reinstatement or to recommend other firms or
experts who may be able to undertake the work at lower cost.
7.7 Potential Contamination in Essen
Seller acknowledges and confirms that neither Buyer nor any
member of the KW group shall have any liability or
responsibility for any contamination at, or the
environmental condition of, the Essen properties and Seller
shall indemnify Buyer and its affiliates (including the KW
group) against any claims with respect to such properties,
provided however, that any contamination caused by Buyer
after Closing shall be for account of Buyer.
7.8 Undetermined Contamination
Should there be contamination which cannot be reasonably
shown to have occurred before or after Closing such
contamination shall be allocated to the time before Closing
and after Closing pro rata temporis of the time Seller
and/or the KW group has used such property before Closing
(percentage to be allocated to time before Closing) and KW
has used such property after Closing (percentage to be
allocated to time after Closing).
Art icle 8
INT ERCOMPANY LIABILITIES
The parties shall procure that as at Closing the following
intercompany liabilities between Seller or its affiliates and the
KW group, except for trade receivables and liabilities for goods
and services incurred in the ordinary course of business, shall
be listed by Seller in a schedule to be produced for Closing and
the balance shall be settled in cash whether due or not.
Intercompany Liabilities
of KW to Seller of Seller to KW
Net Receivables of KW group 10,600,000.--*
Net Loans to KW from
Seller subsidiaries 7,200,000.--*
Purchase Price for
Krupp Medizintechnik, Art. 4.2 b) 3,000,000.--
HW Hartmetall, Art. 4.2 b) 50,000.--
Krupp Entwicklungszentrum, Art. 4.2 c) 300,000.--
Krupp Informatik, Art. 4.2 c) 12,000.--
Krupp Widia Corp. (USA), Art. 4.2 c) 452,000.--
KW France, Art. 4.2 a) 10,480,000.--
KW U.K., Art. 4.2 a) 383,000.--
Div. Hispania (incl. Herko),
Art. 4.2 a) 3,810,000.--
Transfer Accruals for
Pensions (1983), Art. 9 13,105,000.--*
Schlumberger Litigation, Art. 2.11 300,000.--
*Estimate; actual value to be specified at Closing.
The parties undertake to ensure that the settlement of the balance of the
intercompany liabilities will be acknowledged by the Seller and its
affiliates and the companies of the KW group and that all respective
companies will be relieved from the respective liabilities thereby.
All obligations resulting from guarantees, letters of comfort or similar
parent-company liabilities given by Seller in favour of the KW group
described in Schedule 8 (status as of October 31, 1994) or such liabilities
given after October 31, 1994 shall be assumed by Buyer and Buyer shall use
all commercially reasonable efforts (including the offer of a bank
guarantee) to secure that Seller or such Seller's affiliates are relieved
without delay from any and all obligations under such guarantees and the
like.
All obligations resulting from guarantees, letters of comfort or similar
parent-company liabilities given by the KW group in favor of Seller, its
affiliates or any former subsidiary or division of the KW group shall be
assumed by Seller and Seller shall use all commercially reasonable efforts
(including the offer of a bank guarantee) to secure that the KW group
members are released without delay from any and all obligations under such
guarantees and the like.
Article 9
PENSION COMMITMENTS TO CERTAIN PREVIOUS EMPLOYEES
It is known to Buyer that Seller and KW have by mutual consent terminated
the provision in Article IV, 4 c of the agreement on contribution to
capital dated May 25, 1983 with effectiveness as per the Effective Date.
Therefore Seller assumes the current obligations resulting from pension
commitments or assumed pension rights concerning those employees who
already left the company before June 1, 1983. Seller shall hold Buyer and
KW harmless of any claims under such pension obligations.
Buyer agrees that the capitalized values of such pension rights calculated
in accordance with the Richttafel 1982 of Dr. Heubeck using an interest
rate of 6 percent p.a. in accordance with Section 6 a of the German "Einkommen-
steuergesetz" will be transferred to Seller as per the Effective Date by
assuming such amount as an intercompany liability of KW to Seller to be
cleared in accordance with Art. 8 and not affecting the Net Transfer Price
according to Art. 1.2.
Article 10
SERVICES AND UTILITIES, TENANCY AGREEMENT
10.1 Seller or its subsidiaries have rendered EDP and other services
for and delivered electricity, heat and other utilities to KW as
listed in Schedule 10. Seller warrants that these services will
be upheld until Closing. Seller shall procure that KW may
purchase any or all of these services until December 31, 1995,
subject to the right of KW to terminate the obligation to
purchase any or all of these services at one or more earlier
dates by giving 3 months' prior written notice to the end of a
calendar quarter in respect of any service or delivery which it
wishes to be terminated earlier. Seller undertakes (i) to
transfer to KW any software used in rendering the aforementioned
services should KW decide to terminate the services without extra
charge to KW if the software was specifically developed for KW
and (ii) to license to KW to the extent legally permissible and
against a market license fee any other such software.
Seller will ascertain that the services and utilities are made
available to KW under separate agreements until December 31, 1995
if KW so desires and at the same conditions and at the same
quality standards as existed between Seller or its subsidiaries
and KW before Closing, subject to regular price increases as
between Seller and its affiliates, provided however, that if
Buyer and KW are unable to replace such services or utilities
prior to December 31, 1995, and if so requested by Buyer, those
services and utilities shall be extended beyond December 31, 1995
to the extent necessary at market terms and conditions. Seller
has the right to transfer the obligation to deliver these
services or utilities to third parties provided they are
technically reliable. Seller will ascertain that until December
31, 1995 no disadvantages for KW will result out of such trans-
fer.
These provisions do not apply in case Seller or its subsidiaries
are not allowed to render certain services or utilities due to
the fact that KW is no longer a member of the Krupp-group. Seller
will in those cases assist KW in its negotiations with third
parties in order to achieve conditions similar to those between
Seller or its subsidiaries prior to Closing.
10.2 The parties shall agree on the terms of
- an acceptable rental agreement relating to the real estate
located in Essen and shown in Schedule 10.2.1, and
- an acceptable leasehold agreement relating to the real
estate located in Essen and shown in Schedule 10.2.2
to be entered into between KW and Seller.
10.3 A number of employees of KW currently rent their private
accomodation from Seller or one of Seller's affiliates. Seller
shall procure that the sale of shares of KW hereunder will in no
way affect their existing tenancy agreements.
Article 11
INSURANCE
Seller warrants that certain insurable risks of KW group are covered as of
the date hereof through Closing by insurance policies, as shown on Schedule
11. The insurance policy against product liability risks is on an
occurrence basis.
It is known to Buyer that the inclusion of KW in insurance coverage
provided for the whole Krupp group will automatically lapse at Closing in
respect of the fire insurance. In respect of all other insurance policies
which are not exclusively in the name of KW, the parties shall discuss
between the date of this Agreement and Closing upon which terms these
policies can be maintained for a transitional period.
Any payments received from insurance companies by Seller after the
Effective Date in respect of insured risks of the KW group shall be passed
on to KW.
If a major incident which has a critical impact on the ability to continue
the KW business happens at the plant in Essen or at any other
manufacturing facility prior to Closing and the damage inflicted upon KW is
not fully covered by insurance, then Buyer has the right to withdraw from
closing the transaction contemplated hereunder.
Article 12
NAME AND TRADEMARK
The parties agree that Seller will, prior to Closing, as directed by Buyer,
change KW's name in a way that the name part Krupp is deleted. The same
shall apply for all other companies of the KW group. Buyer agrees to
refrain from using the trademark KRUPP with or without the three interlaced
rings and Seller agrees to refrain from using the trademark WIDIA with or
without the three interlaced triangles. Seller warrants that KW or any
company of the KW group as of Closing will not have granted any right to
third parties (not belonging to the KW group) to use the trademark WIDIA
with or without the three interlaced triangles, except as set out in
Schedule 12.
Seller will procure that the name of Krupp Widia (Schweiz) and any other
company that carries the name Widia and is not transferred to Buyer as a
member of the KW group will be changed in a way that the name part Widia is
deleted.
Notwithstanding what is stated above, KW shall have the right to use
existing catalogues, packaging material etc. containing the name part Krupp
within 6 months from Closing, provided that KW shall use stickers - the
wording of which to be mutually agreed - as appropriate to indicate that KW
is no longer a member of the Seller's group. The same shall apply vice-
versa with catalogues of Seller which still list members of the KW group as
if they were members of Seller's group.
Products on stock at the date of Closing may be sold by KW group without
any time limit even though the products may be marked to show that they are
Krupp Widia products and therefore also refer to the name part Krupp.
However, as soon as possible after Closing KW shall take requisite
precautions so that the products manufactured in the future no longer bear
any reference to "Krupp". Should any customer or third party make a claim
against Seller based on the fact that after Closing products have been
marketed and sold which still bear reference to "Krupp", then Buyer shall
procure that Seller will be fully indemnified against all and any such
claims.
After Closing, Seller and its affiliates shall refrain from using the name
Widia.
Article 13
NON-COMPETE UNDERTAKING
13.1 Until December 31, 1998 Seller and its affiliates shall neither
directly nor indirectly develop, manufacture, market, sell,
purchase or otherwise deal with any such products that compete
with the products within the current product range of the KW
group, provided however, that the parties agree that the
activities described on Schedule 13 as and to the extent
presently conducted by the entity described on Schedule 13 shall
not be prohibited by this Agreement.
This non-compete undertaking shall not preclude Seller or any of
Seller's affiliates from acquiring a controlling interest in a
company or a group of companies with a business competitive to
the business of KW group in relation to tools and wear parts of
sintered carbide, of cermets, of ceramics, of diamond, of cubic
boron nitride (cbn) or of other hard materials with similar
properties or in magnets, provided that such competitive business
accounts for less than 10 % of such company's or group's total
sales and the purpose of such acquisition is not to acquire such
competitive business, subject, however, to the following
conditions: If Seller makes such an acquisition, it shall without
delay give written notice thereof to Buyer and submit to Buyer a
written offer binding for 3 months to purchase at the discounted
earnings value of such competitive business and shall during
such 3 month deal exclusively with Buyer. In the event that Buyer
does not accept the offer within the 3 months or is hindered from
consummating the transaction due to antitrust reasons, then this
Art. 13 shall not apply in respect of the anciliary competitive
business thus acquired.
13.2 Until December 31, 1996 Seller and its affiliates shall not
solicit any employees of the KW group without the prior written
consent of Buyer.
Article 14
MISCELLANEOUS PROVISIONS
14.1 Further Assurances
Each party agrees to make its best effort to cause the conditions
herein set forth to be satisfied at or prior to Closing. Each of
the parties agree to execute and deliver any and all further
agreements, documents or instruments necessary to effectuate this
Agreement and the transactions referred to herein or contemplated
hereby or reasonably requested by the other party to perfect or
evidence their rights hereunder. Each party further agrees to
make all reasonable efforts to cooperate with the other in post-
Closing matters that may arise in regard to taxes and the like
and to provide the KW group with the benefits of all contracts or
permits which may be affected by the change of control of the KW
group.
Seller shall use its best efforts to assist and to cause Seller's
independent auditors to assist (and render the audit opinion on
the financial statements described below) Buyer in preparation of
such audited financial statements for the KW group as are neces-
sary to enable Buyer to comply with the reporting requirements of
Form 8-K and Regulation S-X promulgated under the Securities and
Exchange Act of 1934, as amended, in the United States. Buyer
shall be responsible and pay for all fees to Seller's independent
auditors for such assistance; provided, however, that to the
extent that Seller's independent auditors efforts in respect of
the above financial statements are also applicable to the
preparation and certification of the Seller's regular year end
financial statements, such efforts shall be for the account
of and shall be paid by Seller.
14.2 Notices
All notices made pursuant to this Agreement shall be valid only
if made by a person authorised to receive notices as per below by
Buyer or the Seller, as the case may be, and sent by registered
mail, return receipt requested or facsimile, to the parties at
the addresses set forth below, or as set forth in any notice of
change of address given in writing in the manner prescribed
herein to all other parties.
If to Buyer: Cincinnati Milacron Inc.
4701 Marburg Avenue
Cincinnati, Ohio 45209
USA
Attn.: General Counsel
Facsimile No: 001-513-841-7166
If to Seller: Fried. Krupp AG Hoesch-Krupp
Altendorfer Strasse 103
D-45143 Essen
Germany
Attn.: General Counsel
Facsimile No: (011-49-)201-188-2233.
14.3 Choice of Law
This Agreement shall be governed by and construed in accordance
with the substantive laws of Germany.
14.4 Assignment
This Agreement may not be assigned by any party without the prior
written consent of the other party.
14.5 Waiver
No waiver of any term, provision or condition of this Agreement,
whether by conduct or otherwise, in any one or more instances,
shall be deemed to be or be construed as a further or continuing
waiver of any such term, provision or condition or as a waiver of
any other terms, provisions or conditions of this Agreement.
14.6 Severability
The invalidity or unenforceability of any provision of this
Agreement in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction or any
other provision herein. Any invalid or unenforceable provision
shall be replaced by such reasonable provision as comes closest
to what the parties wanted or would have wanted to apply in
accordance with the meaning and purpose of this Agreement if they
had considered such invalidity or unenforceability when entering
into this transaction. This shall also apply to the identifi-
cation of an obligation in terms of amount or time (period or
date). The parties further agree that they will lay down in
writing and in a proper form the rule applicable pursuant to the
aforegoing sentences by formally amending this Agreement.
14.7 Confidentiality
a) The parties shall hold in confidence the information
contained in this Agreement as per the secrecy agreement
previously concluded between them.
b) Seller undertakes to and Seller shall cause its affiliates
to, keep strictly secret all confidential matters, in
particular all business and trade secrets and confidential
know-how, of Seller or its affiliates relating to or trans-
ferred with the operations of the KW group and not to
disclose such matters and secrets to any third party, nor to
cause such disclosure by third parties, nor to abet or
justify such disclosure. Each party shall also keep strictly
secret all confidential information received from the other
party during the negotiations of this Agreement.
14.8 Announcements
Buyer and Seller shall cooperate in the preparation of any
announcements regarding the transaction contemplated by this
Agreement. Except as required by applicable law (in which case
such announcing party shall prior thereto advise the other
party), no party shall issue any announcement regarding the
transactions contemplated hereby without the prior consent
of the other, which consent shall not be unreasonably
withheld.
14.9 Entire Agreement
This Agreement (including all attachments) constitutes the
entire understanding between the parties with respect
to the subject matter hereof, supersede all negotiations,
prior discussions and preliminary agreements. Neither
party gives any warranty or accepts any liability in
addition to those expressly stated in this Agreement.
This Agreement may not be changed except by written
instrument executed by all parties. The headings of this
Agreement are not a part of this Agreement but are
for convenience purposes only.
14.10 Scrap
Seller shall cause KW to secure, that all payments received by KW
from RSR Rohstoff- Stahlhandel und Recycling GmbH under an
Agreement dated September 30, 1994 and related to the sale of
scrap (which was not taken into account in calculating the
Forecasted Result 1994) should be passed on to Seller minus all
payments made by KW resulting from the above referred agreement.
These payments shall not exceed DM 2,000,000.--. Should claims
resulting from the above referred agreement be raised against KW
after KW has passed on the payments received under such
agreement, Seller shall hold KW harmless thereof up to an amount
of DM 2,000,000.--. Art. 7.3 c) shall apply accordingly.
14.11 Arbitration
Any disputes arising out of or in connection with this Agreement
shall be finally settled by arbitration in accordance with the
rules of conciliation and arbitration of the Deutsche Institution
fur Schiedsgerichtsbarkeit e.V. by three arbitrators designated
in conformity with those rules. The arbitrators shall have the
power to rule on their competence and on the validity of the
agreement to submit to arbitration. The arbitration shall be
conducted in English. Judgement upon any award rendered may be
entered in any court for judicial acceptance of the award or an
order of enforcement as the case may be.
The proceedings shall take place and the award shall be given in
Dusseldorf, Germany.
IN WITNESS WHEREOF this Notarial Deed including the schedules hereto has
been read aloud to the persons appeared. The schedules 4.2 e, 10.2.1 and
10.2.2 have been shown to the persons appeared. The persons appeared then
confirmed and approved this Deed and its schedules and signed this Deed.
All this was done in the presence of me, the Notary Public, who also signed
this Deed and affixed my official Seal.
Basel, the 28th (twenty-eighth) day of November 1994 (nineteen hundred and
ninety-four).
Kettendorf
W. Kuppers
St. Cueni, Notary
A.Prot. 1994/178