EXHIBIT 10.1
A.Prot.
2001/154
SaleAndPurchAgt A Prot 2001 154 Cu VER1
dated May 28/29, 2001
of the Notary Stephan Cueni
at Basel, Switzerland
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SALE AND PURCHASE AGREEMENT
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regarding the
sale and purchase of the
Dental Business
of the Degussa Group
1
Table of Contents
Exhibits / Schedules..........................................3
Definitions...................................................4
A. CURRENT STATUS............................................. 9
1. Current Status........................................... 9
B. SALE, PURCHASE AND ASSIGNMENT, PURCHASE PRICE..............13
2. Sale, Purchase and Assignment of the German Limited
Partnership Interest, the Foreign Shares and the Brazilian
Local Management Shares......................................13
3. Sale, Purchase and Assignment of the Japanese
Shareholder's Loan; Interim Financing Facility...............14
4. Purchase Price...........................................15
C. EFFECTIVE DATE ACCOUNTS, SIGNING DATE, EFFECTIVE DATE,
CLOSING DATE AND CLOSING.......................................18
5. Effective Date Accounts..................................18
6. Signing Date, Effective Date, Closing Date and Closing...20
D. REPRESENTATIONS AND WARRANTIES, REMEDIES AND INDEMNITIES...22
7. Representations and Warranties of Sellers................22
8. Representations and Warranties of Purchasers
and Guarantor 31
9. Remedies.................................................33
10. Environmental Indemnity..................................36
11. Tax Indemnity............................................39
12. Expiration of Claims; Limitation of Claims...............41
E. COVENANTS, NON-COMPETE UNDERTAKING.........................42
13. Covenants / Purchasers' Indemnity........................42
14. Non-Compete Undertaking..................................45
F. MISCELLEANOUS..............................................46
15. Restriction of Announcement, Cooperation and
Confidentiality..............................................46
16. Notices..................................................48
17. Guarantor's Guarantee 49
18. Miscellaneous............................................50
2
Exhibits / Schedules
Exhibit 1.1 Current Status
Exhibit 1.5.1.3 Probem shareholders
Exhibit 1.5.3 List of Elephant Subsidiaries
Exhibit 1.5.4 Sankin shareholders
Exhibit 2.5 Brazilian Share Transfer Instruments
Exhibit 2.7.1 Consent of the partners' meeting of DD KG
Exhibit 2.7.2 Consent of board of directors of Sankin
Exhibit 2.7.3 Waiver of right of first refusal by Mr.
Niemeyer
Exhibit 2.7.4 Consent of the shareholder's meeting of DD
Austria
Exhibit 2.7.5 Consent of the shareholders' meeting of DHZ
Exhibit 4.1.2 List of Consolidated Companies
Exhibit 4.1.4 Sample calculation of Working Capital as
per December 31, 2000
Exhibit 4.3 Allocation of Purchase Price
Exhibit 6.6.3
(1)-(4) Foreign Share transfer agreements
Exhibit 6.6.4 List of the board members
Exhibit 6.6.6 Name and trademark agreement between
Degussa and DD KG
Exhibit 7.1.16 List of Historic Consolidated Companies
Exhibit 8.6 Purchasers' management and advisors
Exhibit 10.2.2 Real Estate
Exhibit 13.3 Guarantees, comfort letters and other
securities
Exhibit 14.1 Permitted Activities
Exhibit 15.1 Guarantor's letter dated May 18, 2001
Schedule 7.1.5 List of Material Agreements
Schedule 7.1.6 Compliance with all Material Agreements
Schedule 7.1.7 Material Intellectual Property Rights
Schedule 7.1.8 Intellectual Property Proceedings
Schedule 7.1.9 Insurance
Schedule 7.1.10 Material Assets
Schedule 7.1.11 Permits
Schedule 7.1.12 Litigation
Schedule 7.1.14 List of certain collective bargaining
agreements
Schedule 7.1.15 Pensions
Schedule 7.1.17 Compliance with laws
Schedule 7.1.18 Material adverse changes, conduct of
business
Schedule 7.1.20.1 Properties
Schedule 7.1.20.2 Maintenance of Properties
Schedule 7.1.20.3 Not registered encumbrances
Schedule 7.1.20.6 Leases and subleases
3
Definitions
Administrative Charges as defined in Section 7.1.20-4
Affiliates as defined in Section 6.5.5
Austrian Financial Statements as defined in Section 7.1.16
Austrian Share as defined in Section 1.5.6
Base Amount as defined in Section 4.1.1
Best Knowledge as defined in Section 7.3
Bios GmbH as defined in Section 1.3
Brazilian Local Management Shares as defined in Section 1.5.1.5
Brazilian Shares as defined in Section 1.5.1
Brazilian Subsidiaries as defined in Section 1.5.1.4
Brazilian Share Transfer as defined in Section 2.5
Instruments
Business as defined in Recital (E)
Business Days as defined in Section 18.8
Cash as defined in Section 4.1.3
Cash Management Agreements as defined in Section 1.8
Closing as defined in Section 6.5
Closing Conditions as defined in Section 6.2
Closing Date as defined in Section 6.1.3
Closing Events as defined in Section 6.6
Companies as defined in Section 1.6
Company as defined in Section 1.6
Competing Business as defined in Section 14.2
Consolidated Companies as defined in Section 4.1.2
Consolidated Financial Statements as defined in Section 7.1.16
DD Amazonia as defined in Section 1.5.1.1
DD Austria as defined in Section 1.5.6
DD GmbH as defined in Section 1.2
DD KG as defined in Section 1.3
DD Ltda. as defined in Section 1.5.1
Defradental as defined in Section 1.5.5
Degpar as defined in Section 1.5.1.2
Degussa shall mean Degussa AG
Degussa Guarantees as defined in Section 13.3
Degussa-IP Rights as defined in Section 15.2
Degussa-Ney as defined in Section 1.5.2
De-minimis Claims as defined in Section 12.3
DHZ shall mean DH Zweite
Vermogensverwaltungs-GmbH
Disclosure Schedules as defined in Section 7.2
4
Ducera GmbH as defined in Section 1.3
Dutch Business as defined in Section 7.1.5
Dutch Cash Management Agreement as defined in Section 1.8
Dutch Shares as defined in Section 1.5.3
Effective Date as defined in Section 6.1.2
Effective Date Accounts as defined in Section 5.1
Elephant as defined in Section 1.5.3
Elephant Subsidiaries as defined in Section 1.5.3
Environmental Laws as defined in Section 10.2.3
Environmental Liabilities as defined in Section 10.2.1
Environmental Matters as defined in Section 10.2.5
Environmental Threshold Amount as defined in Section 12.3.2
EURIBOR as defined in Section 4.2
Existing Confidential Information as defined in Section 15.3
Existing Environmental Condition as defined in Section 10.2.2
Expert as defined in Section 5.4
Facility Amount as defined in Section 4.2
Financial Debt as defined in Section 4.1.2
Financial Statements as defined in Section 7.1.16
Foreign Companies as defined in Section 1.6
Foreign Shares as defined in Section 1.6
German Business as defined in Section 7.1.5
German Cash Management Agreement as defined in Section 1.8
German Limited Partnership as defined in Section 1.3
Interest
German Share as defined in Section 1.2
Guarantor shall mean Dentsply
International Inc.
Hazardous Materials as defined in Section 10.2.4
Historic Consolidated Companies as defined in Section 7.1.16
HSR Filing as defined in Section 6.2.1
Interim Financing Facility as defined in Section 3.3
Italian Third Party Shareholder as defined in Section 1.5.5
Italian Shares as defined in Section 1.5.5
Japanese Business as defined in Section 7.1.5
Japanese Shareholder's Loan as defined in Section 1.7
Japanese Shares as defined in Section 1.5.4
Material Adverse Effect as defined in Section 7.1.5
Material Agreements as defined in Section 7.1.5
Material Assets as defined in Section 7.1.10
Material Intellectual Property as defined in Section 7.1.7
Rights
Mr. Niemeyer as defined in Section 1.5.1
Object of Sale as defined in Section 4.1
5
Objections as defined in Section 5.4
Partner's Accounts as defined in Section 2.2
Party / Parties shall mean individually or
collectively Degussa, DHZ,
Purchasers and the Guarantor
Permitted Activities as defined in Section 14.1
Permits as defined in Section 7.1.11
Preliminary Purchase Price as defined in Section 4.2
Probem as defined in Section 1.5.1.3
Properties as defined in Section 7.1.20
Proprietary Information as defined in Section 15.3
Purchase Price as defined in Section 4.1
Purchase Price Adjustment as defined in Section 4.4
Purchaser 1 shall mean Dentsply Hanau GmbH
& Co. KG
Purchaser 2 shall mean Dentsply Research
and Development Corporation
Purchaser 3 shall mean Dentsply EU S.a.r.l.
Purchaser Claim as defined in Section 9.2
Purchasers shall mean collectively
Dentsply Hanau GmbH & Co KG,
Dentsply Research and
Development Corporation and
Dentsply EU S.a.r.l.
Purchasers' Auditor as defined in Section 5.2
Real Estate as defined in Section 10.2.2
Revised Effective Date Accounts as defined in Section 5.3
Sankin as defined in Section 1.5.4
Scheduled Closing Date as defined in Section 6.5
Sellers shall mean collectively Degussa
AG and DH Zweite
Vermogensverwaltungs-GmbH
Sellers' Auditor as defined in Section 5.1
Signing Date as defined in Section 6.1.1
Taxes as defined in Section 11.1
Tax Threshold Amount as defined in Section 12.3.3
Threshold Amount as defined in Section 12.3.1
Third Party Claim as defined in Section 9.5
US Business as defined in Section 7.1.5
US Cash Management Agreement as defined in Section 1.8
US GAAP as defined in Section 5.1
US GAAS as defined in Section 13.7
6
US Shares as defined in Section 1.5.2
Working Capital as defined in Section 4.1.4
7
RECITALS
(A) WHEREAS, Degussa is a stock corporation under German law
(Aktiengesellschaft), having its domicile in Dusseldorf,
Germany, and being registered with the commercial register
maintained at the lower court of Dusseldorf under docket
no. HRB 39635.
(B) WHEREAS, DHZ is a limited liability company under German
law (Gesellschaft mit beschrankter Haftung), having its
domicile in Hanau, Germany, and being registered with the
commercial register maintained at the lower court of Hanau
under docket no. HRB 6861.
(C) WHEREAS, Purchaser 1 is a German Limited Partnership,
having its domicle at Hanau Wolfgang; Purchaser 2 is a
stock corporation under Delaware, USA law, having its
domicile at Milford, Delaware, USA; Purchaser 3 is a
Luxembourg Limited Liability Company, having its domicile
at Luxembourg, Grand-Duchy of Luxembourg.
(D) WHEREAS, Guarantor is a stock corporation under Delaware,
USA law, having its domicile at York, Pennsylvania, USA.
(E) WHEREAS, Degussa is, amongst others, engaged in the
development, production, marketing and distribution of
products and systems, equipment and consumables for
conservative, restorative and orthodontic dental treatment
(herein collectively "Business") through (i) Degussa
Dental GmbH & Co. KG and its German subsidiaries on the
one hand and through (ii) the foreign, direct and
indirect, subsidiaries of DHZ on the other hand.
(F) WHEREAS, Degussa, after a strategic review of its business
portfolio, has decided to concentrate on its special
chemicals business and to dispose of the Business.
(G) WHEREAS, Sellers intend to dispose of the Business by
selling and transferring the Business to the Purchasers
subject to the terms and conditions of this Agreement and
Purchasers wish to acquire the Business subject to such
terms and conditions.
NOW, THEREFORE, the Parties agree as follows:
8
A. CURRENT STATUS
1. Current Status
1.1 The present structure of the directly and indirectly held
subsidiaries of Degussa engaged in the Business is
attached as Exhibit 1.1.
1.2 Degussa Dental Verwaltungs-GmbH is a limited liability
company (Gesellschaft mit beschrankter Haftung) having its
domicile in Hanau, Germany, and is registered with the
commercial register maintained at the lower court of Hanau
under docket no. HRB 6844 (herein "DD GmbH"). Degussa is
the sole shareholder of DD GmbH holding the only share
(Geschaftsanteil) issued by DD GmbH in the nominal amount
of Euro 25,000.00 (herein "German Share") representing all
of the stated nominal capital (Stammkapital) of DD GmbH in
the nominal amount of Euro 25,000.00.
1.3 Degussa Dental GmbH & Co. KG is a limited partnership
(Kommanditgesellschaft) having its domicile in Hanau,
Germany, and is registered with the commercial register
maintained at the lower court of Hanau under docket no.
HRA 5530 (herein "DD KG"). Degussa is the sole limited
partner (Kommanditist) of DD KG, holding a registered
limited partnership interest (Kommanditeinlage as well as
Hafteinlage) in DD KG in the nominal amount of Euro
25,565,000.00 (herein "German Limited Partnership
Interest"). The sole general partner (Komplementar) in DD
KG is DD GmbH which does not hold a capital interest
(Kapitalanteil) in the fixed capital (Festkapital) of DD
KG. DD KG in turn holds all shares of Bios Dental GmbH, a
limited liability company (Gesellschaft mit beschrankter
Haftung) having its domicile in Bohmte, Germany, and being
registered in the commercial register maintained at the
lower court of Osnabruck under docket no. HRB 0054 (herein
"Bios GmbH") and all shares of Ducera Dental Verw. GmbH, a
limited liability company (same as above) having its
domicile in Rosbach, Germany and being registered in the
commercial register maintained at the lower court of
Friedberg under docket no. HRB 746 (herein "Ducera GmbH").
1.4 By notarial deed of the notary public Dr. Joachim Treeck,
Frankfurt am Main (no. 106 of the roll of deeds for 2000)
dated June 29, 2000, Degussa contributed its German
activities relating to the Business to DD KG.
1.5 DHZ holds direct participations in the foreign companies
Degussa Dental Ltda., Degussa-Ney Dental Inc., Elephant
Dental B.V., Sankin Kogyo K.K., Defradental S.p.A. and
Degussa Dental Austria GmbH as follows:
9
1.5.1Degussa Dental Ltda. is a limited liability company
formed and validly existing under the laws of Brazil
having its domicile in Sao Paulo, Brazil and it is
registered with the Corporate Taxpayer's Registry of
the Brazilian Ministry of Finance (CNPJ/MF) under no.
03.757.350/0001-95 (herein "DD Ltda."). DHZ is the
majority shareholder of DD Ltda. holding 14,821,009
shares issued by DD Ltda. in the nominal amount of R$
1.00 each (herein collectively "Brazilian Shares"),
representing about 99.99% of the nominal stated
capital of DD Ltda. in the nominal amount of
R$ 14,821,010.00. The remaining share in the nominal
amount of R$ 1.00 is held by Mr. Ernesto Helmuth
Niemeyer Filho, managing director of DD Ltda. (herein
"Mr. Niemeyer").
1.5.1.1 DD Ltda. holds 9,998 shares in the nominal amount of R$
1.00 each, being all shares except for two (2) shares, of
Degussa Dental da Amazonia Ltda., a limited liability
company formed and validly existing under the laws of
Brazil having its domicile in Manaus, State of Amazonas,
Brazil, and being registered with the Corporate Taxpayer's
Registry of the Brazilian Ministry of Finance (CNPJ/MF)
under no. 04.032.335/0001-42 (herein "DD Amazonia"). Each
Mr. Niemeyer and Mr. Joao Aparecido de Beni, members of
the management of DD Amazonia, hold one (1) share of DD
Amazonia in the nominal amount of R$ 1.00.
1.5.1.2 DD Ltda. holds all shares, except for one (1) share, of
Degpar - Participacoes e Empreendimentos S.A., a joint
stock corporation formed and validly existing under the
laws of Brazil having its domicile in Sao Paulo, Brazil,
and being registered with the Corporate Taxpayer's
Registry of the Brazilian Ministry of Finance (CNPJ/MF)
under no. 02.074.038/0001-34 (herein "Degpar"). The one
(1) share in Degpar not held by DD Ltda. is held by Mr.
Niemeyer.
1.5.1.3 Degpar holds 60% of the nominal stated capital, of Probem
Laboratorio de Prudutos Farmaceuticos e Odontologicos
S.A., a joint stock corporation formed and validly
existing under the laws of Brazil having its domicile in
Catanduva, Brazil, and being registered with the Corporate
Taxpayer's Registry of the Brazilian Ministry of Finance
(CNPJ/MF) under no. 45.841.137/0001-07 (herein "Probem").
The remaining shares of Probem are held by the
shareholders identified on Exhibit 1.5.1.3. who are not
affiliated with Sellers.
10
1.5.1.4 DD Amazonia and Probem are herein collectively referred to
as "Brazilian Subsidiaries". For the avoidance of doubt,
Degpar shall not be referred to as Brazilian Subsidiary.
1.5.1.5 The shares held by Mr. Niemeyer of DD Ltda., DD Amazonia
and Degpar and the share held by Mr. Beni of DD Amazonia
are herein collectively referred to as "Brazilian Local
Management Shares".
1.5.2Degussa-Ney Dental Inc., is a corporation formed and
validly existing under the laws of Delaware, USA, and
having its domicile at 65 West Dudley Town Road,
Bloomfield, CT 06002-1316, USA (herein
"Degussa-Ney"). DHZ is the sole shareholder of
Degussa-Ney holding 100 no par value shares of common
stock issued by Degussa-Ney (herein collectively "US
Shares").
1.5.3Elephant Dental B.V., is a limited liability company
formed and validly existing under Dutch law having
its domicile in Hoorn, The Netherlands, with business
address at 1628 PM Hoorn, Venlengde Lageweg 10, The
Netherlands, registered with the Chamber of Commerce
for West-Friesland en Waterland, The Netherlands,
under no. 36006373 (herein "Elephant"). DHZ is the
sole shareholder of Elephant holding 30,000 shares
issued by Elephant in the nominal amount of NLG
100.00 each (herein collectively "Dutch Shares"),
representing the entire stated capital of Elephant in
the nominal amount of NLG 3,000,000.00. Elephant
holds 100% of the stated share capital of the
companies listed in Exhibit 1.5.3 (herein
collectively "Elephant Subsidiaries").
1.5.4 Sankin Kogyo K.K. is a joint stock company
formed and validly existing under Japanese law having
its domicile in Ohtawara City, Tochigi Prefecture,
with business address at 14-9, Yushima 3-chome,
Bunkyo-ku, Tokyo 113-0034, Japan (herein "Sankin").
DHZ holds 1,261,102 shares of common stock issued by
Sankin in the nominal amount of JPY 500.00 each
(herein collectively "Japanese Shares"), representing
94.4% of the capital of Sankin in the amount of JPY
680,809,000.00. The remaining shares are held by
various shareholders not affiliated with Degussa as
identified in Exhibit 1.5.4.
1.5.5Defradental S.p.A. is a stock corporation and validly
existing under Italian law having its domicile in
Verona, Italy (herein "Defradental"), with business
address at Via Catania, 3, Verona, Italy, and it is
registered in C.C.I.A.A. di Verona al n. 256943 and
in Registro delle Imprese di Verona
11
at no. 208412/96. DHZ holds 1,065,539 shares issued
by Defradental in the nominal amount of Euro 1.00
each (herein "Italian Shares"), representing 45% of
the nominal stated capital of Defradental in the
nominal amount of Euro 2,367,420.00. To the knowledge
of Sellers, the remaining shares are held by Fraccari
S.p.A. with domicile in Verona, Italy (herein
"Italian Third Party Shareholder").
1.5.6Degussa Dental Austria GmbH is a limited liability
company formed and validly existing under the laws of
Austria having its domicile in Vienna, Austria, with
business address at Liesinger-Flur-Gasse 2C, 1235
Vienna, Austria, and being registered with the
commercial register in Vienna, Austria, under FN
207061 b (herein "DD Austria"). DHZ holds one share
issued by DD Austria in the nominal amount of Euro
500,000.00 (herein "Austrian Share"), representing
100% of the nominal stated capital of DD Austria in
the nominal amount of Euro 500,000.00.
1.6 DD Ltda., Degussa-Ney, Elephant, Sankin and DD Austria are
herein collectively referred to as the "Foreign
Companies". For the avoidance of doubt, Defradental shall
not be referred to as Foreign Company. DD GmbH, DD KG,
Bios GmbH, Ducera GmbH, the Foreign Companies, the
Brazilian Subsidiaries and the Elephant Subsidiaries are
herein collectively referred to as the "Companies" and
individually as "Company". The Brazilian Shares, the US
Shares, the Dutch Shares, the Japanese Shares, the
Austrian Share and the Italian Shares are herein
collectively referred to as the "Foreign Shares".
1.7 A Shareholder's loan has been granted and drawn as of the
Signing Date (as defined in Section 6.1.1 below) in the
amount JPY 250,000,000.00 to Sankin by Degussa pursuant to
a certain credit agreement dated December 6, 2000 (herein
"Japanese Shareholder's Loan"). There exist no shareholder
loans other than those identified in this Section 1.7 on
the Effective Date and the Closing Date.
1.8 Degussa has entered into a cash management agreement
relating to the cash pooling of funds of DD KG, Bios GmbH
and other German affiliates of Degussa (herein "German
Cash Management Agreement"). Furthermore, Degussa has
entered into a cash management agreement relating to the
cash pooling of funds of Elephant and other Dutch
affiliates of Degussa (herein "Dutch Cash Management
Agreement"). Finally, Degussa-Ney has entered into a cash
management agreement with Degussa Corporation, a US
subsidiary of Degussa (herein "US Cash Management
Agreement"). The German Cash Management Agreement, the
Dutch Cash Management Agreement and the US Cash Management
Agreement shall herein collectively referred to as "Cash
Management Agreements". Degussa shall terminate and, with
respect to the US Cash Management Agreement,
12
procure termination, of the Cash Management Agreements
with respect to the Companies being party to such
agreements in writing with economic effect as of the
Effective Date. Upon termination of the Cash Management
Agreements any outstanding balances thereunder owing from
or owing to the Companies shall be settled by the parties
to the Cash Management Agreements on, or prior to the
Closing Date.
B. SALE, PURCHASE AND ASSIGNMENT, PURCHASE PRICE
2. Sale, Purchase and Assignment of the German Limited
Partnership Interest, the Foreign Shares and the Brazilian
Local Management Shares
2.1 Degussa hereby agrees, with commercial effect
(wirtschaftlicher Wirkung) as of the Effective Date (as
defined in Section 6.1.2 below) to cause DD GmbH on the
Scheduled Closing Date to withdraw and discontinue as a
partner in DD KG.
2.2 Degussa hereby sells with commercial effect as of the
Effective Date and hereby assigns with effect as of the
Closing Date (as defined in Section 6.1.3 below) to
Purchaser 1 (i) the German Limited Partnership Interest
with all rights and obligations pertaining thereto, and
(ii) all partner's accounts of DD KG
(Gesellschafterkonten) (herein collectively "Partner's
Accounts"), such Partner<180>s Accounts being comprised of (a)
the capital account (Festkapitalkonto, Kapitalkonto I),
(b) the partner's clearing account
(Gesellschafter-Verrechnungskonto, Kapitalkonto II), (c)
the loss carry forward account (Verlustvortragskonto), and
(d) the reserve account (Rucklagenkonto). Purchaser 1
hereby purchases from Degussa the German Limited
Partnership Interest and the Partner's Accounts and hereby
accepts the assignment of the German Limited Partnership
Interest and the Partner's Accounts in accordance with the
foregoing sentence.
2.3 DHZ hereby sells with commercial effect as of the
Effective Date to Purchaser 2 and undertakes to assign on
the Scheduled Closing Date to Purchaser 2 the US Shares,
Brazilian Shares and the Japanese Shares with all rights
and obligations including any dividend rights pertaining
thereto with effect as of the Closing Date. Purchaser 2
hereby purchases from DHZ the US Shares, Brazilian Shares
and the Japanese Shares and hereby undertakes to accept
the assignment on the Scheduled Closing Date as provided
for under Section 6.6 below in accordance with the
foregoing sentence.
2.4 DHZ hereby sells with commercial effect as of the
Effective Date to Purchaser 3 and undertakes to assign on
the Scheduled Closing Date to Purchaser 3 the Dutch
13
Shares and the Italian Shares with all rights and
obligations including any dividend rights pertaining
thereto with effect as of the Closing Date. Purchaser 3
hereby purchases from DHZ the Dutch Shares and Italian
Shares and hereby undertakes to accept the assignment on
the Scheduled Closing Date as provided for under Section
6.6 below in accordance with the foregoing sentence.
2.5 Seller shall procure that Mr. Niemeyer and Mr. Beni each
sell with commercial effect as of the Effective Date and
assign on the Scheduled Closing Date the Brazilian Local
Management Shares to Purchaser 2, or any of its Affiliates
designated by Purchaser 2 prior to the Scheduled Closing
Date, by executing the instruments set out in the form as
set forth in Exhibit 2.5 in the Portugese language (herein
"Brazilian Share Transfer Instruments").
2.6 DHZ hereby sells with commercial effect as of the
Effective Date and hereby assigns subject to all of the
Closing Conditions (as defined in Section 6.2 below)
having been fulfilled and all of the Closing Events (as
defined in Section 6.6 below) having taken place or having
been duly waived with effect as of the Closing Date to
Purchaser 3 the Austrian Share. Purchaser 3 hereby
purchases and accepts the assignment of the Austrian Share
in accordance with the forgoing sentence.
2.7 The following consents all of which comply with and
satisfy all local legal and contractual requirements have
been given on, or prior to, the Closing Date to the sale,
assignment and transfer of the German Limited Partnership
Interest and the Foreign Shares:
2.7.1 Consent of the partners' meeting of DD KG as
attached in Exhibit 2.7.1;
2.7.2 Consent of the board of directors of Sankin as
attached in Exhibit 2.7.2;
2.7.3 Waiver of Mr. Niemeyer of his right of first
refusal with respect to the transfer of shares in
DD Ltda. as attached in Exhibit 2.7.3;
2.7.4 Consent of the shareholder's meeting of DD Austria
as attached in Exhibit 2.7.4;
2.7.5 Consent of the shareholder's meeting of DHZ as
attached in Exhibit 2.7.5.
3. Sale, Purchase and Assignment of the Japanese
Shareholder's Loan; Interim Financing Facility
14
3.1 Degussa hereby sells with commercial effect as of the
Effective Date and hereby assigns, subject to Section 3.2
below, with effect as of the Closing Date to Purchaser 2
the Japanese Shareholder's Loan. Purchaser 2 hereby
purchases, in partial consideration of the Purchase Price,
from Degussa the Japanese Shareholder's Loan and accepts
the assignment in accordance with the foregoing sentence.
3.2 The assignment of the Japanese Shareholder's Loan is
subject to all of the Closing Conditions (as defined in
Section 6.2 below) having been fulfilled and all of the
Closing Events (as defined in Section 6.6 below) having
taken place or having been duly waived.
3.3 To ensure financing of the Companies after termination of
the Cash Management Agreements as set out in Section 1.8
above, Degussa shall provide to the Companies interim
financing facilities for the period between the Effective
Date and the Closing Date in amounts reasonably required
for funding the Business in accordance with past practice
and projected financing needs of the Business during the
aforementioned period (herein "Interim Financing
Facility"). The Interim Financing Facility shall be
redeemed at the Closing Date in accordance with Section
4.2 below.
4. Purchase Price
4.1 The purchase price for (i) the German Limited Partnership
Interest, (ii) the Partner's Accounts, (iii) the Foreign
Shares, (iv) the Brazilian Local Management Shares, and
(v) the Japanese Shareholder's Loan (herein collectively
"Object of Sale") shall be an amount calculated as follows:
4.1.1 A fixed amount of Euro 576,000,000 (in words: Euro
five hundred seventy six million) (herein "Base
Amount");
minus
4.1.2 the consolidated nominal amount of any interest
bearing debt obligations of the Consolidated
Companies listed in Exhibit 4.1.2 (herein
"Consolidated Companies") to banks, financial or
other similar institutions, including any amounts
owed by the Consolidated Companies under the
respective Cash Management Agreements prior to
their termination (herein "Financial Debt"), each
existing as per the Effective Date, excluding for
the avoidance of doubt (a) the Japanese
Shareholder's Loan, (b) any unfunded pension
liabilities of the Consolidated Companies and (c)
the Fa
15
cility Amount (as defined in Section 4.2 below);
plus
4.1.3 the consolidated amount of cash and cash
equivalents (within the meaning of Section 266 (2)
(B) (III) (3) and (IV) German Commercial Code (HGB)
of the Consolidated Companies including any amounts
to be paid to the Consolidated Companies under the
respective Cash Management Agreements prior to
their termination (herein "Cash"), each existing as
per the Effective Date;
plus
4.1.4 the consolidated amount, if any, by which the
balance of (i) the amount of the inventory
(excluding the palladium stock) within the meaning
of Section 266 (2) (B) (I) German Commercial Code
(HGB) (Vorrate) plus the trade accounts receivables
within the meaning of Section 266 (2) (B) (II) (1)
German Commercial Code (HGB) (Forderungen aus
Lieferungen und Leistungen) including inter-company
trade accounts receivables, and (ii) the amount of
the trade accounts payable within the meaning of
Section 266 (3) (C) (IV) (4) German Commercial Code
(HGB) (Verbindlichkeiten aus Lieferungen und
Leistungen) including inter-company trade accounts
payable, for the Historic Consolidated Companies
including DD Austria (herein "Working Capital")
each existing as per the Effective Date, exceeds *
* * * * * * * * * * * *; a sample calculation of
the Working Capital as per December 31, 2000 being
attached hereto as Exhibit 4.1.4 and it being
understood that for such purposes DD Austria was,
or shall be, respectively included on the basis of
the Austrian Financial Statements (excluding the
palladium stock);
minus
4.1.5 the amount, if any, by which the Working Capital
existing as per the Effective Date falls short of *
* * * * * * * * * * * *;
minus
4.1.6 the amount of * * * * * * * * * * * * * only in the
event that the waiver of the Italian Third Party
Shareholder of its right of first refusal with
respect to the transfer of the shares in
Defradental shall not have been obtained or shall
not be deemed to have been obtained prior to the
date on which the Effective Date Accounts become
binding on the Parties in accordance
16
with Section 5 below;
plus interest at the rate of 6.5% p.a. since the Effective
Date (herein "Purchase Price").
4.2 On the Scheduled Closing Date, Purchasers shall pay to
Sellers (i) an amount of Euro 548,000,000 (in words: Euro
five hundred forty eight million) (herein "Preliminary
Purchase Price") and (ii) for the account of the
Companies, the aggregate amount owed to Degussa by the
Companies under the Interim Financing Facility including
interest thereon at the rate of 6.5% p.a. accrued from the
calendar day subsequent to Effective Date (inclusive)
until the Closing Date (exclusive) (herein "Facility
Amount"). "EURIBOR" for purposes of this Agreement shall
mean the interest rate for Euro deposits with interest
periods of three (3) months, as quoted on the Bridge
Telerate Screen 248 at 11 a.m. C.E.T. two (2) banking days
in Frankfurt am Main prior to Effective Date. The
Preliminary Purchase Price and the Facility Amount shall
be paid by Purchasers free of costs and charges in
immediately available funds by wire transfer into the
account of Sellers set forth in Section 4.6 below.
4.3 The Parties agree that the Preliminary Purchase Price, and
any subsequent Purchase Price Adjustment (as provided for
in Section 4.4 below) shall be allocated to the Object of
Sale as set out in Exhibit 4.3.
4.4 If on the basis of the Effective Date Accounts prepared in
accordance with the provisions set forth in Section 5.1
below, the Purchase Price exceeds the Preliminary Purchase
Price, Purchasers shall pay to Sellers an amount equal to
the amount by which the Purchase Price is higher than the
Preliminary Purchase Price and, if, on the basis of the
Effective Date Accounts, the Preliminary Purchase Price
exceeds the Purchase Price, Sellers shall pay to
Purchasers an amount equal to the amount by which the
Preliminary Purchase Price is higher than the Purchase
Price. Any such amount to be paid by either Purchasers or
Sellers (herein "Purchase Price Adjustment") shall be paid
as follows:
4.4.1 Any Purchase Price Adjustment owed by Purchasers
shall be paid by Purchasers free of costs and
charges in immediately available funds by wire
transfer ten (10) banking days in Frankfurt am Main
after the Effective Date Accounts have become final
and binding upon the Parties in accordance with
Section 5 below to the account of Degussa set forth
in Section 4.6 below.
4.4.2 Any Purchase Price Adjustment owed by Sellers shall
be paid by Sellers free of costs and charges in
immediately available funds by wire transfer
17
ten (10) banking days in Frankfurt am Main after
the Effective Date Accounts have become final and
binding upon the Parties in accordance with Section
5 below to the account of Purchaser 1 set forth in
Section 4.7 below.
4.5 Except as provided otherwise in this Agreement, Purchasers
and Sellers owe the other party interest (Verzugszinsen)
on any amounts becoming due and payable to Sellers or
Purchasers, as the case may be, under this Agreement as
from the respective payment dates, to, but not including,
the day of payment at the rate of 700 basis points over
EURIBOR.
4.6 All payments owed by Purchasers to Sellers under this
Agreement shall be paid by Purchasers by wire transfer to
the bank account of Degussa kept with Degussa Bank GmbH,
Frankfurt am Main, sort code (Bankleitzahl) 500 107 00,
account number 390053, SWIFT: DEGUDEFF.
4.7 All payments owed by Sellers to Purchasers under this
Agreement shall be paid by Sellers by wire transfer to
Purchaser 1's bank account the details of which shall be
communicated to Sellers by Purchasers, if and when
requested by Sellers.
C. EFFECTIVE DATE ACCOUNTS, SIGNING DATE, EFFECTIVE DATE,
CLOSING DATE AND CLOSING
5. Effective Date Accounts
5.1 The Financial Debt, the Cash and the Working Capital, each
existing as of the Effective Date, as well as any Purchase
Price Adjustment resulting therefrom, shall be determined
on the basis of pro-forma consolidated accounts as of the
Effective Date for the Consolidated Companies which shall
be prepared by DD KG in co-operation with Degussa and
reviewed by KPMG Deutsche Treuhand Aktiengesellschaft
Wirtschaftsprufungsgesellschaft, Frankfurt am Main (herein
"Sellers' Auditor") in accordance with US generally
accepted principles of accounting and preparation of
annual accounts (herein "US GAAP"), subject to utilizing
and continuing the same capitalization, election rights,
valuation and consolidation principles as used in
preparation of the Financial Statements (as defined in
Section 7.1.16 below) on the basis of Degussa's accounting
and consolidation standards, a complete copy of which was
delivered to Purchasers prior to the Signing Date (herein
"Effective Date Accounts").
5.2 Sellers shall until the Closing Date and Purchasers shall
after the Closing Date instruct the management of each of
the Consolidated Companies to effectively assist
18
Sellers' Auditor in reviewing the Effective Date Accounts,
in particular, by providing all information and
documentation requested by Sellers. The Effective Date
Accounts prepared by DD KG in co-operation with Degussa
and reviewed by Sellers' Auditor shall be delivered to
PriceWaterhouseCoopers, Philadelphia (herein "Purchasers'
Auditor") no later than ninety (90) days after the
Effective Date. Purchasers' Auditor shall receive all
necessary assistance and shall be given reasonable access
to the management of the Consolidated Companies, and to
all relevant documentation, necessary for reviewing the
Effective Date Accounts, including the working papers of
Sellers' Auditor, subject, however to Sellers' Auditor's
approval which Sellers shall use best efforts to obtain
prior to the Closing Date.
5.3 The Effective Date Accounts submitted by Sellers shall be
final and binding upon the Parties, and the calculation of
the Financial Debt, the Cash and the Working Capital shall
be based on the Effective Date Accounts, unless Purchasers
provide Sellers within forty five (45) days after the
receipt of the Effective Date Accounts with a written
report asserting that the Effective Date Accounts received
from Sellers do not meet the provisions of this Agreement
by way of stating specific objections to that effect.
Such written report shall be submitted to Sellers within
the forty-five (45) days' period mentioned before which
shall take into account the changes that are necessary in
Purchasers' Auditor's view (herein "Revised Effective Date
Accounts"). If no objections are raised by Sellers within
four (4) weeks following the delivery of the Revised
Effective Date Accounts by Purchasers' Auditor, then the
Revised Effective Date Accounts shall be final and binding
on the Parties.
5.4 If Sellers timely raise objections (herein "Objections")
to the Revised Effective Date Accounts and Sellers and
Purchasers cannot agree on changes to the Revised
Effective Date Accounts within four (4) weeks following
the delivery of the Objections each of Sellers and
Purchasers shall be entitled to refer such dispute for
decision to an independent international leading firm of
public accountants (big five) other than Sellers' Auditor
and Purchasers' Auditor (herein "Expert") which shall
determine the correct amount of the Financial Debt, the
Cash and the Working Capital, if and to the extent such
positions are in dispute between Sellers and Purchasers.
If the Parties cannot agree within two (2) weeks on who
shall be the expert, the Institute of Chartered
Accountants in Germany (Institut der Wirtschaftsprufer in
Deutschland e.V.), Dusseldorf, shall appoint the Expert.
The Expert shall decide as expert arbitrator
(Schiedsgutachter) on the issues in dispute in accordance
with the principles set out in Section 5.1 above. The
Expert shall give Sellers and Purchasers adequate
opportunity to present their views in writing and at a
hearing or hearings to be held in the presence of Sellers
and Purchasers and their respective advisors. The Parties
shall instruct the Expert to deliver its written opinion
to them no later than four weeks after the remaining
differences are
19
referred to it. The Expert shall give reasons for its
decision in writing on all issues which are in dispute
between Sellers and Purchasers. The costs and expenses
incurred by the Expert shall be borne equally by Sellers
on the one hand and Purchasers on the other hand. The
Effective Date Accounts as determined by the Expert shall
be final and binding on the Parties subject to Section 319
German Civil Code (BGB). Each Party shall give the Expert
full access to information required for its decision.
6. Signing Date, Effective Date, Closing Date and Closing
6.1 Signing Date, Effective Date and Closing Date shall each
have the following meaning in this Agreement:
6.1.1 "Signing Date" shall be the day on which this
Agreement has been duly executed before a notary
public.
6.1.2 "Effective Date" shall be the first calendar day
0:00 hours of the month in which the Closing of
this transaction as contemplated under Section 6.5
shall occur.
6.1.3 "Closing Date" shall be the day on which the
Closing Events shall take place.
6.2 This Agreement shall be closed (erfullt) pursuant to
Section 6.5 below only, if the following conditions are
fulfilled (herein collectively "Closing Conditions"):
6.2.1 The merger control approvals under (i) ss.ss. 35 et
seq. German Antitrust Act (GWB), and (ii) the Dutch
1975 Merger Code granted by the Dutch Committee for
Merger Affaires, and (iii) the Austrian Cartel Act,
(iv) the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, and (v) Title VII, Chapter I, Articles
54-56 of Law No. 8884 Brazilian Antitrust Act
(unless Purchasers determine that the Brazilian
Antitrust Act is not applicable to the Closing)
have been obtained or if for other reasons the
transactions provided for in this Agreement may be
consummated under the above merger law regimes
(e.g. lapse of waiting periods) or Closing is
permitted before clearance is received or waiting
periods are lapsed.
6.2.2 No enforceable judgment, injunction, order or decree by
any court or governmental authority in Germany or
the USA has prohibited the consummation of the
transactions contemplated in this Agreement as of
the day the condition pursuant to Section 6.2.1 is
fulfilled and no action is
20
pending in such respect.
6.3 The Parties undertake to use all reasonable endeavors and
to render to each other all reasonably necessary support
and cooperation to ensure that the Closing Conditions are
fulfilled as soon as possible after the Signing Date. In
particular, though each Party remains responsible for
preparing and making its own required filings, Purchasers
shall take the lead on such filings and Sellers and
Purchasers shall cooperate with one another in preparing
and making the merger control filings listed under Section
6.2.1 above and in furnishing information regarded as
necessary by one of the Parties and/or required in
connection therewith. The Parties shall provide any such
information promptly and shall inform each other in
writing without undue delay as soon as any or all of the
Closing Conditions shall have been fulfilled. Purchasers
shall undertake or cause to be undertaken all steps to
remove any impediments, restrictions, or conditions that
may affect the Closing Conditions, including, but not
limited to, Purchasers' selling or divesting of tangible
or intangible assets or business operations necessary to
receive the approval or clearance of competition or
antitrust authorities in all jurisdictions referred to in
Section 6.2, or to remove any decision, order, decree,
complaint, injunction, or other impediment or restriction
which impedes or threatens to impede the Closing of this
transaction.
6.4 In the event that not all Closing Conditions have been
fulfilled within 6 (six) months after the Signing Date,
each Party may withdraw from this Agreement (Rucktritt) by
giving written notice to the other Parties, unless at that
time the Party withdraws from this Agreement the Closing
Conditions have been fulfilled.
6.5 Closing (herein "Closing") shall occur within five (5)
Business Days (as defined in Section 18.8 below) after all
of the Closing Conditions have been fulfilled (herein
"Scheduled Closing Date"), but in no event prior to July
1, 2001. Sellers shall notify Purchasers of the Facility
Amount payable to Sellers within two (2) Business Days
after the receipt by Sellers of the communication that all
Closing Conditions have been fulfilled.
6.6 This Agreement shall be closed on the Scheduled Closing
Date, or any other day as agreed between the Parties,
unless a Party shall have withdrawn from this Agreement
pursuant to Section 6.4 above. On the Scheduled Closing
Date the Parties shall take, or cause to be taken, at the
offices of Mayer, Brown & Platt-Gaedertz, Frankfurt, or
such other place as agreed between the Parties the
following actions (except for those having been duly
waived) (herein "Closing Events"):
6.6.1 Payment of the Preliminary Purchase Price and the
Facility Amount into the account of Sellers as set
forth in Section 4.6 above;
21
6.6.2 Execution and delivery of a stock power to transfer
the US Shares to Purchaser 2 and execution and
delivery by Degussa and DD GmbH of a duly certified
application to the commercial register for
registration of the termination of DD KG by
succession to title (Gesamtrechtsnachfolge durch
Anwachsung) by operation of law;
6.6.3 Execution of the share transfer agreements
regarding the Foreign Shares in the form as set
forth in Exhibits 6.6.3 (1)-(4);
6.6.4 Submission by Sellers of signed resignation letters
of the board members representing Sellers which are
listed in Exhibit 6.6.4 and board resolutions
discharging such board members of their duties as
of the Effective Date of their respective
resignations;
6.6.5 Delivery by Purchaser 2 of (i) evidence
satisfactory to Sellers that the Degussa Guarantees
(as defined in Section 13.3) provided by Degussa
and its affiliates within the meaning of Section 15
German Stock Corporation Act (AktG) (herein
"Affiliates") other than the Companies in favor of
the Business have been replaced or (ii) a bank
guarantee in the aggregate amount of the
outstanding Degussa Guarantees; in each case in
accordance with Section 13.3 below;
6.6.6 Execution of a name and trademark agreement between
Degussa and DD KG in the form as set forth in
Exhibit 6.6.6;
6.6.7 Execution of the Brazilian Share Transfer
Instruments.
D. REPRESENTATIONS AND WARRANTIES, REMEDIES AND INDEMNITIES
7. Representations and Warranties of Sellers
7.1 Sellers hereby represent (sichern zu) and warrant
(garantieren) by way of a separate promise of guarantee
pursuant to Section 305 of the Civil Code (BGB) as of the
Signing Date and the Effective Date, unless expressly
specified otherwise:
7.1.1 Enforceability, No Conflict. As of the Signing Date
and Closing Date, Degussa is a stock corporation
(Aktiengesellschaft) and DHZ is a limited liability
company (Gesellschaft mit beschrankter Haftung),
duly incorpo
22
rated and validly existing under German law. As per
the Closing Date, this Agreement constitutes the
legal, valid, and binding obligation of Sellers,
enforceable under German laws against Sellers in
accordance with its terms, except as the
enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium,
or other similar laws relating to or affecting the
rights of creditors generally and except that the
remedy of specific performance and injunctive
relief and other forms of equitable relief may be
subject to equitable defenses and to the discretion
of the court before which any proceeding therefor
may be brought. As per the Signing Date and Closing
Date, each of Sellers has the absolute and
unrestricted right, power, authority, and capacity
to execute this Agreement and to perform its
obligations under this Agreement, which actions
have been duly authorized and approved by all
necessary corporate action of Sellers. Except for
the merger control approvals required pursuant to
Section 6.2 above, Sellers are not required to give
any notice to any person or obtain any consent from
any third party or governmental authorization in
connection with the execution of this Agreement by
Sellers. Neither the execution of this Agreement
nor the consummation or performance of any of the
transactions contemplated thereby will as per the
Closing Date directly or indirectly (with or
without notice or lapse of time), contravene or
conflict of (i) any governmental authorization,
legal requirement or order to which Sellers are
bound or subject; (ii) any provision of Sellers'
organizational documents, or any resolution adopted
by the respective boards of directors or
shareholders of Sellers.
7.1.2 Existence of Companies; Ownership of Shares, German
Limited Partnership Interest and the Brazilian
Local Management Shares. Each of the Companies is,
as of the Signing Date and Closing Date, duly
incorporated and validly existing under the laws of
its jurisdiction. As of the Closing Date, the
German Share, the Partnership Interests, the
Foreign Shares and the Brazilian Local Management
Shares (i) exist in the amounts set out herein,
(ii) are fully paid-up and have not been repaid,
and (iii) the ownership and all rights pertaining
to the German Share, the German Limited Partnership
and the Foreign Shares are owned as described in
Section 1 of this Agreement and are free and clear
of any third party rights and have not been
pledged, assigned, charged or used as a security
and, except for a right of first refusal granted to
Dental Farma regarding the shares held by DD Ltda.
in Probem, there exist no rights of preemption,
purchase options or call options of third parties.
7.1.3 Bankruptcy or Judicial Composition Proceedings. As
of the Closing
23
Date, no bankruptcy or judicial composition
proceedings concerning Sellers or the Companies
have been applied for, and to the Best Knowledge of
Sellers no circumstances exist which would require
the application for any bankruptcy or judicial
composition proceedings and to the Best Knowledge
of Sellers no circumstances exist pursuant to any
applicable bankruptcy laws which could justify the
avoidance of this Agreement.
7.1.4 Affiliates, Enterprise Agreements. As of the
Closing Date, except as disclosed in Section 1
above, DD GmbH, DD KG and DHZ have no affiliated
companies within the meaning of Section 15 German
Stock Corporation Act (AktG) nor do they maintain
any direct company relationship with any third
party, in particular hold no participation or
sub-participation in any other company and there
exist no enterprise agreements within the meaning
of Sections 291 and 292 German Stock Corporation
Act (AktG).
7.1.5 Material Agreements. Except for the agreements and
commitments listed or disclosed on Schedule 7.1.5
the Companies are not a party to the following
agreements and commitments which have not yet been
completely fulfilled and the existence of which, or
the termination of which, could have a Material
Adverse Effect (as defined below) (herein
collectively "Material Agreements")
(i) loan and credit agreements, or other agreements
or instruments evidencing indebtedness of any
of the Companies in excess of Euro 1,000,000.00
or securing such indebtedness such as pledges,
guarantees, securities (Burgschaften) or
letters of comfort (Patronatserklarungen) and
that will continue in effect or with respect to
which any of the Companies will have any
liabilities after the Closing Date;
(ii)non-compete, restrictive covenants or other
agreements that restrict any of the Companies
from operating the Business as conducted on the
Signing Date except for vertical restrictions
under customary distributorship, agency,
license agreements and alike agreements all of
which are in compliance with applicable
national or EU law;
(iii) research and development agreements
involving an amount in excess of Euro
100,000.00 p.a.;
24
(iv)trademark, patent and know how license
agreements which involve an amount in excess of
Euro 100,000.00 p.a.;
(v) agreements relating to toll manufacturing of
any product involving an amount in excess of
Euro 500,000.00 p.a.;
(vi)agreements relating to the acquisition or sale
of interest including assets, in other
companies or businesses;
(vii) lease agreements relating to Real Estate
(as defined in Section 10.2.2 below) which,
individually, provide for annual payments of
Euro 500,000.00 or more;
(viii) contracts or other agreements relating to
construction or acquisition of fixed assets or
other capital expenditures involving an amount
in excess of Euro 200,000.00 p.a.;
(ix)contracts and other agreements to purchase,
sell, lease or otherwise dispose of any assets
owned by the Companies other than in the
ordinary course of business involving an amount
in excess of Euro 500,000.00;
(x) contracts providing for a payment obligation in
excess of Euro 250,000.00 p.a. that would
terminate or could be terminated as a result of
the consummation of the transaction
contemplated under this Agreement;
(xi)liabilities to employees arising from employee
inventions (Arbeitnehmererfindungen and the
like) in excess of Euro 100,000.00 per person
per invention; and
(xii) contracts or commitments giving any party
with rights thereunder the right to terminate,
modify, accelerate or otherwise change the
existing rights or obligations of a
Consolidated Company.
For the purpose of this Agreement, "Material
Adverse Effect" means any change or effect that is
materially adverse to the financial condition,
results of operations, business operations or
assets of either (i) the Business of any of the
Companies as conducted in Germany (herein "German
Business") taken as a whole or (ii) the Business of
the Companies as conducted in the Netherlands
(herein "Dutch Business") taken as a
25
whole or (iii) the Business of the Companies as
conducted in the United States (herein "US
Business") taken as a whole or (iv) the Business of
the Companies as conducted in Japan (herein
"Japanese Business") taken as a whole.
7.1.6 Compliance with Material Agreements. Except as
disclosed in Schedule 7.1.6, , each of the
Companies have complied with their obligations
under the Material Agreements, except for any
default or breach which would not cause a Material
Adverse Effect. To the Best Knowledge of Sellers,
none of the Material Agreements has been terminated
by any Party, nor has any party given written
notice about its intention to terminate a Material
Agreement. To the Best Knowledge of Sellers, the
Material Agreements are valid and in full force as
of the Signing Date.
7.1.7 Material Intellectual Property Rights. The
Companies own and to the Best Knowledge of Sellers,
lawfully use all such patents, design models, and
trade marks which are material to carry on the
German Business, or the Dutch Business, or the US
Business or the Japanese Business, each as
conducted as of the Signing Date and each taken as
a whole (except for licenses of, and similar rights
in, application software) (herein collectively
"Material Intellectual Property Rights"). Schedule
7.1.7 contains a true and complete list of all
Material Intellectual Property Rights owned and/or
used by the Business indicating (i) the nature and
owner of the Material Intellectual Property Rights
and (ii) if applicable, the jurisdiction in which
such Material Intellectual Property Rights have
been registered and registration information.
7.1.8 Proceedings Relating to Material Intellectual
Property Rights and Products related to
Intellectual Property. Except as disclosed in
Schedule 7.1.8, the (i) Material Intellectual
Property Rights are not subject to any pending or
threatened proceedings for opposition,
cancellation, revocation or rectification, (ii) to
the Best Knowledge of Sellers the use of the
Material Intellectual Property Rights does not
infringe any rights of third parties, and (iii)
are, subject to customary expiry, duly administered
and renewed. To the Best Knowledge of Sellers, the
products and services currently offered for sale or
sold by the Business do not infringe any
intellectual property rights of third parties.
7.1.9 Insurance. The Companies maintain in full force and
effect for their own benefit policies of insurance
until the Closing Date against fire, water, theft
and other usually insured business risks which are
listed in Schedule 7.1.9. In addition, Schedule
7.1.9 contains the correct and complete
26
description of the Companies' product liability
loss history for the last five (5) years prior to
the Signing Date exceeding in each individual case
Euro 50,000.00.
7.1.10 Material Assets. Except as disclosed in Schedule
7.1.10, the Companies own, or hold lawful
possession of, all fixed assets (Anlagevermogen)
and inventories (Vorrate) (i) necessary and
material for carrying out the Business in
substantially the same fashion and manner as of the
Signing Date and (ii) which are reflected in the
Financial Statements (as defined in Section 7.1.16
below) or which have been acquired after December
31, 2000, except for such assets which were sold,
abandoned or otherwise disposed of in the ordinary
course of business since December 31, 2000 (herein
collectively "Material Assets"). The Material
Assets are not charged with any rights of third
parties including the transfer for security
purposes (Sicherungsubereignungen) except for (i)
customary rights of retention of title
(handelsubliche Eigentumsvorbehalte), liens,
pledges or other security rights in favor of
suppliers, mechanics, workers, carriers and the
like; (ii) security of rights granted to banks and
other financial institutions in respect of debt
reflected in the Financial Statements or in the
Effective Date Accounts; (iii) statutory security
rights in favor of tax authorities or other
governmental entities. The Material Assets are in a
useable condition in order to continue the Business
substantially in the same fashion as conducted as
of the Signing Date. Neither the execution of this
Agreement nor the consummation or performance of
any of the transactions contemplated thereby shall
result in the creation of any lien security
interest, charge or encumbrance upon the Material
Assets of the Consolidated Companies. The palladium
stock as per the Effective Date shall * * * * * * *
* * * * * *.
7.1.11 Permits. To the Best Knowledge of Sellers, the
Companies are in possession of all material
governmental approvals, licenses and permits
necessary to operate the business of each Company
as it is conducted as of the Effective Date and
which are material for the German Business, or the
Dutch Business, or the Japanese Business, or the US
Business each taken as a whole (herein collectively
"Permits") except as disclosed in Schedule 7.1.11.
To the Best Knowledge of Sellers no circumstances
exist which would reasonably be expected to result
in a revocation or limitation of the Permits or
which would reasonably be expected to lead to the
imposition of conditions to the Permits which would
cause a Material Adverse Effect.
7.1.12 Litigation. The Companies are not involved in court
or administrative
27
proceedings, including arbitration proceedings,
either as plaintiff or defendant having a
litigation value (Streitwert) exceeding Euro
250,000.00 in the individual case except as
disclosed in Schedule 7.1.12. There are no product
liability claims pending or to the Best Knowledge
of Sellers threatened against the Companies with a
litigation value exceeding Euro 250,000.00 in the
individual case.
7.1.13 Tax Returns, Notices. All tax returns required to
be filed by the Companies on or before the
Effective Date have been filed and the Companies
have paid all amounts due and owing with respect to
such tax returns.
7.1.14 Collective Bargaining Agreements. Schedule 7.1.14
includes all individual or collective employment
agreements (i.e. agreements which are entered into
between a Company and a group of employees or a
representative body of employees of a company,
unless such agreements repeat mandatory statutory
law only) which contain (i) benefit or incentive
plans relating to a change of control of a Company;
(ii) limitations to terminate employment
agreements, including providing for severance
payments; and/or (iii) obligations of a company to
make specific investments or to guarantee a certain
number of employees.
7.1.15 Pensions. All obligations, whether arising by
operation of law, by agreement or past custom, for
due payments and due and payable contributions with
respect to direct or indirect pension and
retirement benefits to the employees and former
employees of the Companies pertaining to periods
prior to the Effective Date have been paid, or
shall be paid, or have been sufficiently accrued
for in the Financial Statements except as set forth
in Schedule 7.1.15, and as it regards DD KG in
accordance with German generally accepted
accounting principles.
7.1.16 Financial Statements. The pro-forma consolidated
financial statements of the Companies listed in
Exhibit 7.1.16 (herein collectively "Historic
Consolidated Companies") for the fiscal year ended
on December 31, 2000 (herein "Consolidated
Financial Statements") as examined and audited by
Sellers' Auditor, have been prepared in accordance
with US GAAP. The Consolidated Financial Statements
present a true and fair view of the assets and the
financial condition of the Historic Consolidated
Companies as per December 31, 2000. The
Consolidated Financial Statements are based on
accounts which have been prepared by the Historic
Consolidated Companies, in accordance with local
GAAP, on the basis of Sellers' accounting and
consolidation standards which are referred to in
Section 5.1. The part of the spin-off balance sheet
relating to
28
the assets and liabilities to be spun off by
Degussa-Huls CEE GmbH as per December 31, 2000 into
DD Austria (herein "Austrian Financial Statements")
as examined and audited by Sellers' Auditor, has
been prepared in accordance with Austrian GAAP on
the basis of Sellers' accounting and consolidation
standards which are referred to in Section 5.1. The
Austrian Financial Statements present a true and
fair view of the assets and the financial
condition of DD Austria as per December 31, 2000 as
it had been in existence at such date. The
Consolidated Financial Statements and the Austrian
Financial Statements are herein collectively
referred to as "Financial Statements".
7.1.17 Compliance With Laws. Except as disclosed in
Schedule 7.1.17 the Business is conducted, and will
be conducted from the date of the Financial
Statements until the Closing Date in the ordinary
course and substantially in compliance with all
applicable laws and Permits except where the
failure so to comply would not have a Material
Adverse Effect. To the Best Knowledge of Sellers,
all products of the Companies fulfill the current
technical, biological, clinical and medical
standards known and reasonably applied in Germany
and as the case may be the US. Products sold by the
Companies prior to the Closing Date and returned to
the Companies shall not exceed in the aggregate,
based on the sales price of such products, 0.25% of
the gross sales during the sixty (60) day period
immediately preceding the Closing Date.
7.1.18 Material Adverse Changes after Signing Date,
Conduct of Business. Except as disclosed in
Schedule 7.1.18, and apart from general
developments in the marketplace, during the period
from January 1, 2001 until the Closing Date
7.1.18.1no material adverse changes in the assets,
liabilities, financial conditions or the
results of operations of the Companies
taken as a whole have occurred with a
financial impact on the Companies taken as
a whole exceeding Euro 2,000,000.00 (in
words: Euro two million); and
7.1.18.2the Companies have continued to conduct
their respective business operations in all
material respects in the ordinary course of
business in a manner consistent with past
practice except for transactions reflected
in this Agreement.
7.1.19 Investment Grants. No investment grants or
subsidies exceeding an
29
amount of Euro 50,000.00 shall be repayable as a
consequence of the performance of this Agreement or
any events or circumstances which were in existence
on or before the Closing Date.
7.1.20 Properties. With respect to the real property
formerly and/or presently owned or leased by the
Companies (herein "Properties") effective as of the
Effective Date and the Closing Date:
7.1.20.1Schedule 7.1.20.1 completely lists the
Properties of which the Company is the
owner. The Companies have good title to all
of the Properties listed in Schedule
7.1.20.1. The Companies' occupation and use
of the Properties listed in Schedule
7.1.20.1 and the Companies' conduct therein
of the Business do not violate any law,
rule, regulation or zoning or use ordinance
of any governmental agency or authority
resulting in a Material Adverse Effect.
The Properties which are owned or leased as
per the Signing Date comprise all the real
properties used for the operation of the
Business as conducted as of the date of the
Financial Statements and as prior to the
Effective Date.
7.1.20.2 Except as listed in Schedule
7.1.20.2, the buildings are properly
maintained until the Closing Date and the
structures and buildings on the Properties
have no defects which would materially
impair a normal continuation of the
operations of the business of the Companies.
7.1.20.3 The properties are free of any liens,
encumbrances or claims of any kind except
for the encumbrances registered in the
applicable land register as of the Signing
Date or as shown in Schedule 7.1.20.3.
7.1.20.4 Except as reflected in the Financial
Statements there will be no taxes or other
administrative dues and fees outstanding
for payment, including development charges
(herein "Administrative Charges") with
respect to the Properties. All
Administrative Charges which are allocable
to the time prior to the Effective Date -
irrespective of the fact when they will
become due - shall be reflected in the
Financial Statements.
7.1.20.5 The principal means of access to the
Properties is over public roads, which are
maintained at the public expense, or is se
30
cured by rights of way over private
property registered in the land registry
and are not subject to the rights of
termination by any third party. The
Properties making up the site of the
Companies enjoy the main services of water,
drainage, electricity and gas.
7.1.20.6 Schedule 7.1.20.6 lists and describes
briefly all real property leased or
subleased to the Companies. Sellers have
delivered or made available to Purchasers
correct and complete copies of the leases
and subleases listed in Schedule 7.1.20.6.
To the Best Knowledge of Sellers each such
lease and sublease is in full force and
effect against the lessee or sublessee
thereunder in all material respects.
7.1.21 Purchasers shall have no obligation or liability to
pay on behalf of Sellers any fees or commissions to
any broker, finder or agent with respect to the
transaction contemplated hereunder.
7.2 All Schedules referred to in Section 7.1 are collectively
referred to as the "Disclosure Schedules". No further
representations and warranties are given other than those
made or given by Sellers in this Agreement.
7.3 For the purpose of this Agreement, "Best Knowledge" of
Sellers shall mean the actual knowledge of any of the
members of the Executive Board (Vorstand) of Degussa, the
Management Board (Geschaftsfuhrung) of DHZ or Mr. Gerd
Schulte, Mr. Rudolf Lehner or Mr. Rainer Krau(beta) after due
inquiry of the current management of the Companies in
relation to the representations and warranties contained
in Section 7.1 above.
8. Representations and Warranties of Purchasers and Guarantor
Purchasers and Guarantor each represents and warrants as
of the Signing Date and the Effective Date:
8.1 Enforceability, No Conflict. This Agreement constitutes
the legal, valid and binding obligation of Purchasers and
Guarantor, enforceable against Purchasers and Guarantor in
accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating
to or affecting the rights of creditors generally and
except that the remedy of specific performance and
injunction relief and other forms of equitable relief may
be subject to equitable defenses and to the discretion of
the court
31
before which any proceeding therefor may be brought. The
Purchasers and Guarantor have the absolute and
unrestricted right, power, authority, and capacity to
execute this Agreement and to perform its obligations
under this Agreement, which actions have been duly
authorized and approved by all necessary corporate action
of Purchasers and Guarantor. Except for the merger control
approvals required pursuant to Section 6.2 above,
Purchasers and Guarantor are not required to give any
notice to any person or obtain any consent or governmental
authorization in connection with the execution of this
Agreement by Purchasers and Guarantor. Neither the
execution of this Agreement nor the consummation or
performance of any of the transactions contemplated
thereby will directly or indirectly violate the
certificate of incorporation or by-laws or any contract of
Purchasers and Guarantor or violate any applicable law,
rule, regulation, judgment, injunction, order or decree in
Germany or any other country where the Purchasers and
Guarantor are domiciled.
8.2 Litigation. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of
Purchasers and Guarantor, as of the Signing Date,
threatened against or affecting Purchasers and Guarantor
before any court or arbitrator or governmental body,
agency or official which in any manner challenges or seeks
to prevent, enjoin, alter or materially delay the
transaction contemplated hereunder.
8.3 Financial Capability. Purchasers have sufficient
immediately available funds or binding and unconditional
and irrevocable financing commitments to pay the Purchase
Price for the Business pursuant to Section 4.1 above.
8.4 Finders' Fees. Sellers shall have no obligation or
liability to pay on behalf of Purchasers any fees or
commissions to any broker, finder or agent with respect to
the transaction contemplated hereunder.
8.5 Acquisition at Own Account. Purchasers are acquiring the
Business for investment at Purchasers' own account, and
neither as a nominee nor agent nor with a view to the
resale or distribution of any part thereof within six (6)
months after the Closing Date, and Purchasers have no
present intention of selling, granting any participation
in, or otherwise distributing the Business. Purchasers
have not entered into any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with
respect to the Business or any part thereof.
8.6 No Knowledge of Breach. To Purchasers' and Guarantors'
knowledge, there exists no breach of any representation
and warranty made by Sellers in this Agreement, which
would give rise to a claim under Section 9 of this
Agreement. For the purpose of this Section 8 Purchasers'
and Guarantors' knowledge shall mean the actual
32
knowledge of the management of Purchasers and Guarantor
and individuals who have assisted Purchasers in connection
with its due diligence investigation and the negotiation
and the execution of this Agreement, as identified on
Exhibit 8.6.
9. Remedies
9.1 In the event of any breach or non-fulfillment by Sellers
of any of the covenants, representations or warranties
contained in this Agreement, Sellers shall be liable as
joint and several debtors (Gesamtschuldner) for putting
Purchasers, or at the election of Sellers, if it is
possible, the respective Company into the same position
that it would have been in if the representations and
warranties contained in Section 7.1 above had been true
and correct or had not been breached (Naturalrestitution),
or, at the election of Sellers, to pay damages for
non-performance (kleiner Schadenersatz). Sellers shall be
liable for any consequential damages (Folgeschaden) and
lost profits (entgangener Gewinn) provided that such
damages or lost profits were adequately caused (adaquat
kausal verursacht) by such breach of the representation or
warranty. Sellers shall not account for any internal costs
and expenses incurred by the Companies or Purchasers. If
and to the extent a Purchaser Claim (as defined in Section
9.2 below), other than a claim as to ownership of shares
relates to damages or losses incurred (i) by Sankin,
Sellers<180> obligation under Section 9.1 shall be limited to
94 % of the amount of actual damage or loss or (ii) by
Defradental, Sellers' obligation under Section 9.1 shall
be limited to 45 % of the amount of actual damage or loss
or (iii) by Probem, Sellers' obligation under Section 9.1
shall be limited to 60 % of the amount of actual damage or
loss.
9.2 In the event of any breach or non-fulfillment by Sellers
of any representations or warranties contained in this
Agreement (herein "Purchaser Claim"), Purchasers shall
give Sellers notice of such breach or non-fulfillment,
with such notice stating the nature thereof and the amount
involved, to the extent that such amount has been
determined at the time when such notice is given promptly
after discovery of such breach or non-fulfillment. The
failure to give such notice shall not preclude or bar such
claims but shall reduce such claims to the extent of
prejudice to the Sellers. Without prejudice to the
validity of the Purchaser Claim or alleged claim in
question, Purchasers shall allow, within thirty (30) days
of Purchasers' notice and shall cause the Companies to
allow, Sellers and their accountants and their
professional advisors to investigate the matter or
circumstance alleged to give rise to such Purchaser Claim,
and whether and to what extent any amount is payable in
respect of such Purchaser Claim and, for such purpose,
Purchasers shall give and shall cause the Companies to
give, subject to their being paid their reasonable
out-of-pocket costs and expenses, such information and
assistance, including access to Purchasers' and the
Companies' premises and personnel and including the right
to
33
examine and copy or photograph any assets, accounts,
documents and records, as Sellers or their accountants or
professional advisors may reasonably request.
9.3 Sellers shall not be liable for, and Purchasers shall not
be entitled to bring, any Purchaser Claim or any other
claim under or in connection with this Agreement, if and
only to the extent that:
9.3.1 the matter to which the Purchaser Claim relates has
been taken into account in the Financial Statements
by way of a provision (Ruckstellung), or
depreciation (Abschreibung), or exceptional
depreciation (au(beta)erplanma(beta)ige Abschreibung), or
depreciation to reflect lower market values
(Abschreibung auf den niedrigeren beizulegenden
Wert);
9.3.2 the matter to which the Purchaser Claim relates has
been taken into account in the Effective Date
Accounts for the determination of the Working
Capital;
9.3.3 the amount of the Purchaser Claim is recovered from
a third party or an insurance policy in force on
the Effective Date;
9.3.4 the Purchaser Claim results from a failure of
Purchaser or the Companies to mitigate damages
pursuant to Section 254 German Civil Code (BGB);
9.3.5 the matter which gives rise to the Purchaser Claim
, was known by any of the Purchasers or Guarantor
as of the Signing Date; in this regard, Purchasers
acknowledge the receipt of (i) the Information
Memorandum prepared by UBS Warburg AG, Frankfurt,
dated
March 12, 2001, including the two (2) correction
statements referring thereto (ii) the final draft
financial due diligence report Volume 1a- Summary
prepared by PricewaterhouseCoopers GmbH
Wirtschaftsprufungsgesellschaft, Frankfurt, dated
March 28, 2001, and (iii) the final draft
environmental due diligence report prepared by
ENVIRON Germany GmbH, Essen, dated March 2001;
9.3.6 the Purchaser Claim results from or is increased by
the passing of, or any change in, after the
Effective Date, any law, statute, ordinance, rule,
regulation, common law rule or administrative
practice of any government, governmental
department, agency or regulatory body including
(without prejudice to the generality of the
foregoing) any increase in the rates of Taxes (as
defined in Section 11.1 below) or any imposition of
Taxes or any withdrawal or relief from Taxes not
actually (or prospectively) known to Sellers or in
effect at the Effective Date;
34
9.3.7 the procedures set forth in Sections 9.5 and/or
11.4 were not observed by Purchasers or the
Companies and Sellers were prejudiced thereby.
9.4 Sellers shall not be liable for any Purchaser Claim, if
and to the extent either Purchasers or the Companies have
caused (verursacht oder mitverursacht) such Purchaser
Claim after the Effective Date.
9.5 If the Companies or any of Purchasers is sued or
threatened to be sued by a third party, including without
limitation any government agencies, or if the Companies or
Purchasers are subjected to any audit or examination by
any tax authority (herein "Third Party Claim"), which may
give rise to a Purchaser Claim or a claim under Section 11
below, Purchasers shall give Sellers prompt notice of such
Third Party Claim. Purchasers, at Sellers expense, shall
ensure that Sellers shall be provided with all materials,
information and assistance relevant in relation to the
Third Party Claim, be given reasonable opportunity to
comment or discuss with Purchasers any measures which
Sellers propose to take or to omit in connection with a
Third Party Claim, and in particular Sellers shall be
given an opportunity to comment on, participate in, and
review any reports and all relevant tax and social
security audits or other measures and receive without
undue delay copies of all relevant orders (Bescheide) of
any authority. No admission of liability shall be made by
or on behalf of the Purchasers or the Companies and the
Third Party Claim shall not be compromised, disposed of or
settled without the prior written consent of the Sellers
which consent shall not be unreasonably withheld. Further,
Sellers shall be entitled at their own discretion to take
such action (or cause the Purchasers or the Companies to
take such reasonable action) as they shall deem necessary
to avoid, dispute, deny, defend, resist, appeal,
compromise or contest such Third Party Claim (including
making counter claims or other claims against third
parties) in the name of and on behalf of the Purchasers or
the Companies concerned and the Purchasers will give and
cause the Companies to give, subject to them being paid
all reasonable out-of-pocket costs and expenses, all such
information and assistance, as described above, including
access to premises and personnel and including the right
to examine and copy or photograph any assets, accounts,
documents and records for the purpose of avoiding,
disputing, denying, defending, resisting, appealing,
compromising or contesting any such claim or liability as
Sellers or their professional advisors may reasonably
request. Sellers agree to use all such information
confidentially and only for such purpose. All costs and
expenses reasonably incurred by Sellers in defending such
Third Party Claim shall be borne by Sellers.
9.6 The Parties are in agreement that the remedies which the
Purchasers, or any of the Companies, may have against
Sellers for breach of obligations set forth in this
35
Agreement are solely governed by this Agreement, and the
remedies provided for by this Agreement shall be the
exclusive remedies available to Purchasers, or any of the
Companies. Apart from the rights of Purchasers under
Section 6.4 above, this Section 9 and Sections 10 and 11
below (i) any right of Purchasers to withdraw (Wandlung)
or rescind (Rucktritt) from this Agreement or to require
the winding up of the transaction contemplated hereunder
(e.g. by way of gro(beta)er Schadenersatz), and (ii) any claims
for breach of pre-contractual obligations (culpa in
contrahendo), or ancillary obligations (positive
Forderungsverletzung), except claims for willful deceit
(arglistige Tauschung), are hereby expressly excluded and
waived by Purchasers.
10. Environmental Indemnity
10.1 Sellers shall, subject to the provisions contained in this
Section 10, as joint and several debtors indemnify, defend
and hold harmless Purchasers from and against all
Environmental Liabilities (as defined in Section 10.2.1
below) resulting from (i) a final (bestandskraftig) and
enforceable (vollziehbar) order, decree or demand issued
by any governmental authority (Behorde), or (ii) an
imminent danger to the well-being or health (unmittelbare
Gefahr fur Leib oder Leben), or (iii) a final court
judgment rendered in connection with a private party or
governmental claim, in each case relating to an Existing
Environmental Condition (as defined in Section 10.2.2
below). Section 9.1 fourth sentence shall apply
accordingly.
10.2 Environmental Liabilities, Existing Environmental
Condition, Environmental Laws, Hazardous Materials and
Environmental Matters shall each have the following
meaning:
10.2.1 "Environmental Liabilities" means the amount of all
losses, costs and expenses including reasonable
legal fees, expenses and disbursements in
connection with (i) an investigation (Ma(beta)nahmen der
Gefahrerkundung, Untersuchungsma(beta)nahmen) in
connection with the identification of or in
anticipation of a remediation of an Existing
Environmental Condition, (ii) a clean up
(Sanierung) within the meaning of applicable
Environmental Laws of an Existing Environmental
Condition, (iii) protective containment measures
(Schutz-, Sicherungs und Beschrankungs-ma(beta)nahmen)
within the meaning of applicable Environmental
Laws, relating in each case to an Existing
Environmental Condition, or (iv) measures to
eliminate, reduce or otherwise remedy an imminent
danger to the well-being or the health (Ma(beta)nahmen
zur Abwehr von unmittelbaren Gefahren fur Leib
oder Leben) resulting from an Existing Environ
36
mental Condition.
10.2.2 "Existing Environmental Condition" means (i) the
pollution or contamination of the soil, ground or
air within the meaning of any applicable
Environmental Laws of the Real Estate currently or
previously owned or used by the Companies, the
currently used or owned Real Estate being
identified in Exhibit 10.2.2 (herein "Real
Estate"), (ii) the contamination of the groundwater
beneath the Real Estate, (iii) the disposal of any
Hazardous Materials used, generated or stored by
the Companies at any on site or offsite location,
provided, however, in each case such Existing
Environmental Condition existed at, or prior to,
the Closing Date, or (iv) any violation of the
applicable Environmental Law arising out of the
operations of the Business prior to Closing Date.
10.2.3 "Environmental Laws" mean all applicable laws,
ordinances, rules, regulations relating to
Environmental Matters and being applicable anytime
prior to and as of the Closing Date in (i) Germany
as it regards the German operations, (ii) the
United States as it regards the US operations,
(iii) Brazil as it regards the Brazilian
operations, (iv) Japan as it regards the Japanese
operations, (v) Italy as it regards the Italian
operations, (vi) The Netherlands as it regards the
Dutch operations, and (vii) Austria as it regards
the Austrian operations.
10.2.4 "Hazardous Materials" mean any pollutants,
contaminants or toxic substances that are defined
as such in the Environmental Laws or give rise to
actions by competent authorities under
Environmental laws.
10.2.5 "Environmental Matters" mean any matter relating to
pollution or contamination or protection of the
soil, ground water, surface water, land surface or
ground air.
10.3 Sellers' obligation to indemnify and hold harmless
Purchasers pursuant to Section 10.1 above shall apply
only, if and to the extent that the costs and expenses in
relation to the relevant Environmental Liability are
incurred by Purchasers prior to the fourth (4th)
anniversary of the Effective Date and have been notified
to Sellers in writing prior to such date. Provided that
the Environmental Threshold Amount (as defined in Section
12.3.2 below) is exceeded, any Environmental Liabilities
exceeding the Environmental Threshold Amount up to an
amount of Euro 1,000,000.00 (in words: Euro one million)
shall be shared between Sellers on the one hand and
Purchasers on the other hand on a 80:20 split. Any
Environmental Liability exceeding the Environmental
Threshold Amount plus the amount of Euro
37
1,000,000.00 (in words: Euro one million) shall be borne
by Sellers in accordance with the terms of this Agreement.
Further, the obligation to indemnify and hold harmless
Purchasers shall be excluded, if and to the extent the
respective Environmental Liability:
10.3.1 is incurred as a result of investigations,
preparatory or exploratory measures or
notifications after the Closing Date which
Purchasers were not obliged to carry out under the
applicable laws, ordinances, rules, regulations
under the respective jurisdiction which (i) relate
directly to Environmental Matters, and (ii) are
applicable at the time when the respective
Environmental Liability was incurred it being
understood however, that any environmental audits
conducted in accordance with Purchasers normal
practice as applied to its other properties shall
not exclude Sellers' indemnification obligation
hereunder and pursuant to Section 10.1 above;
10.3.2 is incurred as a consequence after the Closing
Date of (i) grossly negligent omissions to take
actions required to be taken by the Companies under
the applicable laws, ordinances, rules, regulations
under the respective jurisdiction relating directly
to Environmental Matters and being applicable at
the time when the respective Environmental
Liability was incurred, or (ii) activities outside
of the ordinary course of business of the Companies
(as conducted as of the Effective Date) after the
Closing Date, or (iii) any grossly negligent act or
omission of an employee or other representative of,
or service provider to, the Companies after the
Closing Date;
10.3.3 results from any failure to take reasonable
measures to minimize risks (dem jeweiligen Stand
der Technik entsprechende Ma(beta)nahmen der
Gefahrenabwehr) or to apply reasonable
environmental and safety standards (dem jeweiligen
Stand der Technik entsprechende Umwelt- und
Sicherheitsstandards) which, in each case, should
have been reasonably taken by a prudent businessman
after the Closing Date;
10.3.4 results from the coming into force of, or the
change in, any Environmental Laws after the Closing
Date except to the extent such results relate to
actions taken by the Companies prior to the Closing
Date;
10.3.5 the procedures set forth in Section 10.4 have not
been complied with, but only to the extent Sellers
were prejudiced for the non-compliance with such
procedures.
Apart from the foregoing, Section 9.3 shall apply
accordingly.
38
10.4 If any of Purchasers becomes aware of any circumstances
which might give rise to an Environmental Liability of
Sellers under Section 10.1 above, then Purchasers shall
inform Sellers in writing thereof without undue delay and
any measures within the meaning of Section 10.2.1 (i)-(iv)
shall be conducted solely in consultation with Sellers.
Sellers shall be given access at their own expense to the
Real Estate and the books and records of Purchasers (or
any of its successors, as the case may be) to the extent
that such access is reasonably necessary to assess any
Environmental Liability being incurred. Purchasers shall
ensure that for as long as Sellers may be held liable
under Section 10.1, copies of all documents relating to
the Real Estate which, as of the Closing Date are in the
possession of the Companies will be kept available for
inspection by Sellers at the premises of the Companies
upon Sellers' reasonable request. Section 9.5 shall apply
accordingly.
11. Tax Indemnity
11.1 Sellers shall as joint and several debtors indemnify,
defend and hold harmless Purchasers or, at the discretion
of Purchasers, the Companies, against any taxes customs
obligations, obligations relating to levies and any social
security obligations, including interest and penalties
thereon (herein collectively "Taxes") imposed under the
applicable laws and relating to the Companies for periods
ending on or before the Effective Date, to the extent such
Taxes (i) have not been reserved for in the Financial
Statements, and (ii) have become non-appealable. Section
9.1 fourth sentence shall apply accordingly.
11.2 In relation to tax accruals, tax releases, tax benefits
and changes in the accounting practices the following
shall apply:
11.2.1 Accruals made for Taxes of the Companies in the
Financial Statements may be applied and credited
against any claim by the Purchasers under Section
11.1 irrespective of whether such accrual or
reserve was made for the Tax giving rise to such
claim, provided that the total amount of the Taxes
is not in excess of the total amount of the
accruals made for Taxes of the Companies in the
Financial Statements.
11.2.2 If the Companies or their Affiliates are entitled
to or receive any benefits by refund, set-off or
reduction of Taxes as the result of an adjustment
or payment giving rise to a claim for
indemnification of Taxes, then the corresponding
benefit shall reduce the claim for indemnification
of any such Tax. This shall in particular but
without limitation apply to any Tax benefits after
the Effective Date resulting from the lengthening
of any amorti
39
zation or depreciation periods, higher depreciation
allowances or carry forwards of losses or
deductions.
11.2.3 Sellers shall not be responsible for any Tax
liabilities attributable to periods ending on or
before the Effective Date resulting from any change
in the accounting and taxation principles or
practices of the Companies (including methods of
submitting taxation returns) introduced after the
Closing Date, except if required under mandatory
law.
11.3 Any additional profit and loss allocations resulting from
any tax audit relating to taxable periods ending on or
before the Effective Date shall not entitle Sellers to any
additional profit distribution nor the Purchasers or
Sellers to any Purchase Price Adjustment, however, the Tax
indemnity of Section 11.1 shall remain unaffected.
11.4 Purchasers shall keep Sellers fully informed regarding the
commencement of any tax audit or other proceeding which
may give rise to a claim under Section 11.1 above, and
Sellers may take such actions as provided in Section 9.5.
and Section 9.2 shall apply mutatis mutandis.
11.5 Sellers shall be entitled to any refunds of Taxes received
by the Companies attributable to any taxable period ending
on or before the Effective Date.
11.6 In relation to the preparation of tax returns the
following shall apply:
11.6.1 Sellers shall file (or cause the Companies to file)
all tax returns which (i) are due to be filed by or
on behalf of the Companies on or before the Closing
Date, or (ii) are filed on a consolidated, combined
or unitary basis and which include the Companies
for taxable periods ending on or before the Closing
Date. Purchasers shall file (or cause the Companies
to file) all tax returns other than those referred
to in the preceding sentence.
11.6.2 Sellers shall be provided a copy of any tax return
to be filed by Purchasers or a Company after the
Closing Date relating to a taxable period beginning
before the Effective Date when such return is
completed by Purchasers.
11.6.3 With respect to any tax return to be filed by
Sellers which includes any periods ending after the
Effective Date, after review and approval by
Purchasers, which approval may not be unreasonably
withheld, Purchasers shall pay Sellers no later
than ten (10) days prior to the due date of such
tax return an amount equal to its Tax liability for
such periods de
40
termined on a "stand alone" basis.
11.7 The Parties agree to fully cooperate with each other in
connection with any matter relating to Taxes including the
preparation of any tax return, conduct of any audit,
investigation or contest. Such cooperation shall include,
without limitation, providing or making available all
relevant books, records and documentation and the
assistance of officers and employees. The Purchasers agree
to retain all books, records and documentation relating to
the Companies that may be relevant in connection with any
audit or investigation for which the Sellers may be
responsible hereunder until the expiration of any
applicable statute of limitation. Further, the Purchasers
shall cause the Companies to furnish to Sellers all such
information as may be necessary or helpful for Sellers to
prepare any tax return to be filed after the Closing Date,
provided that Sellers shall reimburse Purchasers' costs
which are more than de minimis for furnishing such
information.
12. Expiration of Claims; Limitation of Claims
12.1 All claims of Purchasers arising under this Agreement are
time-barred within twenty four (24) months after the
Signing Date, except for:
12.1.1 all claims of Purchasers arising under Section 10
above (Environmental Indemnity) which shall be time
barred on the fourth (4th) anniversary of the
Effective Date;
12.1.2 all claims of Purchasers arising under Section 11
above (Tax Indemnity) which shall be time barred
for each Tax six (6) months after the date of the
final, non-appealable assessment concerning the
respective Tax;
12.1.3 all claims of Purchasers in respect of liabilities
for defects of title arising from a breach in
respect of Section 7.1.2 above which shall be time
barred on the tenth (10th) anniversary of the
Effective Date;
12.1.4 Claims based on fraud, which shall have no time limit.
12.2 The aforesaid limitations periods for any claims of
Purchasers shall be interrupted pursuant to Section 208
German Civil Code (BGB) by any timely demand for
fulfillment pursuant to Section 9.2, Section 10.4 or
Section 11.1 above, as the case may be, provided that
Purchasers commence judicial proceedings within six (6)
months after the expiration of the relevant period set
forth in Section 12.1 above, or through timely notice of
acknowledgment of claim (Anerkenntnis).
41
12.3 Sellers' aggregate liability under Sections 7, 9, 10 and
11 shall not exceed
Euro 40,000,000.00 (in words: Euro forty million). No
liability shall attach to Sellers
12.3.1 under Section 7 and Section 9 unless and until the
aggregate of all claims (excluding any De-minimis
Claims) exceed Euro 5,000,000.00 (in words: Euro
five million) (herein "Threshold Amount");
12.3.2 under Section 10 unless and until the aggregate of
all claims (excluding any De-minimis Claims) exceed
Euro 1,000,000.00 (in words: Euro one million)
(herein "Environmental Threshold Amount");
12.3.3 under Section 11 unless and until the aggregate of
all claims (excluding any De-minimis Claims) exceed
Euro 1,000,000.00 (in words: Euro one million)
(herein "Tax Threshold Amount").
Purchasers shall not be entitled to pursue any claim and
no liability shall attach to Sellers under this Agreement
in regard to any claims of less than Euro 50,000.00 (in
words: Euro fifty thousand) (herein "De-minimis Claims").
If either (i) the Threshold Amount, or (ii) the
Environmental Threshold Amount, or (iii) the Tax Threshold
Amount is exceeded, Purchasers shall be entitled to the
payment of damages pursuant to this Agreement only in the
exceeding amount (Freibetrag). The limitations provided
for in this Section 12.3 shall not apply to any claims
against Sellers under Section 7.1.1 and 7.1.2.
E. COVENANTS, NON-COMPETE UNDERTAKING
13. Covenants / Purchasers' Indemnity
13.1 Sellers shall ensure that the Business will be managed in
the ordinary course between the Signing Date and the
Closing Date consistent with past practice prior to the
Signing Date.
13.2 For the period between the Signing Date and the Closing
Date, Sellers shall ensure that the Companies shall (i)
preserve their customer and employee relationships, (ii)
preserve the assets of the Business in good working
condition, reasonable wear and tear excepted, (iii) keep
the existing amounts of insurance for the Business in
place, (iv) maintain accounting procedures and its books
and records consistent with past practice, (v) not make
any dividend payments or other distributions of
42
such kind to Sellers or their Affiliates, (vi) maintain
and protect all of its Material Intellectual Property,
(vii) comply with applicable legal requirements and
contractual obligations (viii) continue to conduct its
operations at all locations at which operations are
presently conducted, in the ordinary and usual course of
business consistent with past practices, (ix) permit
Purchasers and their employees, agents and accounting and
legal representatives to have access to the records,
personnel and facilities of the Companies. Further, for
the period between the Signing Date and the Closing Date,
Sellers shall ensure that the Companies will not without
the consent of Purchasers, except in the ordinary course
of business and consistent with past practice (i) permit
any of the Material Assets (as defined in Section 7.1.10
above) to be subjected to any mortgage, pledge, lien,
security, interest, encumbrance, restriction, or charge of
any kind, except for those arising by operation of law,
(ii) make any material capital expenditure (i.e. exceeding
an amount of Euro 500,000.00) or commitment therefor or
enter into any material contract, agreement or commitment
with onerous terms which are not consistent with past
practices, (iii) grant any increase in wages, salaries,
bonus or other remuneration of any employee, (iv) cancel
or waive any claims or rights which may have a Material
Adverse Effect, (v) authorize or issue any shares of
capital stock of the Companies or any options or warrants
with respect thereto, or declare or pay any dividends or
make any distributions upon or acquire or redeem any of
its equity securities, (vi) agree, whether or not in
writing, to do any of the foregoing.
13.3 With effect as of the Closing Date, Purchaser 2 (i) hereby
assumes at the terms set out hereinafter the guarantees,
comfort letters and other guarantees of any kind (all of
which are listed in Exhibit 13.3) (herein collectively
"Degussa Guarantees") which Degussa or any of their
Affiliates (other than the Companies) have provided in
favor of the Companies with respect to the Business, to
banks, other financial institutions, suppliers, customers
or other third parties, and (ii) shall indemnify and hold
harmless Degussa and all such Affiliates from all
obligations and liabilities arising after the Closing Date
out of or in connection with the Degussa Guarantees.
Purchaser 2 shall further, prior to or on the Closing
Date, either (i) replace the Degussa Guarantees and any
additional guarantees, comfort letters and other
guarantees of any kind which may be provided in favor of
any Company with respect to the Business after the Signing
Date (provided that Degussa shall notify Purchaser 2
thereof at least ten (10) business days before the Closing
Date), so that Degussa and the Affiliates are fully
released from such Degussa Guarantees as of the Closing
Date; or (ii) provide, on or prior to the Closing Date, an
unconditional bank guarantee (issued by a first class
German bank) payable upon first demand for each of the
relevant Degussa Guarantees in an aggregate amount equal
to the aggregate amount of the outstanding obligations
secured by such Degussa Guarantee as notified to
Purchasers by Degussa at least ten (10) business days
before the Closing Date.
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13.4 If after the Closing Date Sellers are held liable for any
liability arising in connection with the conduct of the
Business by a third party, including but not limited in
connection with any Environmental Matter, then Purchasers
and Guarantor, jointly and severally shall indemnify and
hold harmless Sellers in respect of the relevant
liability, unless and to the extent Purchasers have the
right to claim indemnification from Sellers in respect of
the relevant liability under the terms of this Agreement.
Purchasers and Guarantor, jointly and severally shall in
particular indemnify and hold harmless Sellers, and their
respective Affiliates, officers, directors, shareholders,
employees and agents against any and all liability, loss,
damage or injury, together with all reasonable
out-of-pocket costs and expenses relating thereto,
including reasonable legal fees, expenses and
disbursements, arising out of, connected with, or
resulting from any such third party claim. Section 9.5
shall apply mutatis mutandis.
13.5 Purchasers shall see to it that each of the Companies
shall support and assist Degussa, at Degussa's expense, in
connection with any litigation or any other proceedings
brought or initiated against Degussa in connection with
the Business sold and transferred to Purchasers under this
Agreement.
13.6 Degussa represents and warrants (garantiert) by way of a
separate promise of guarantee pursuant to Section 305
German Civil Code that as of the Closing Date (i) an
irrevocable offer by Degussa Pensionskasse in favor of DD
KG to waive its hereditary building right (Erbbaurecht)
relating to the real estate in Hanau-Wolfgang, Germany, on
which the administration building of DD KG is located, in
consideration of a total purchase price not exceeding
DM 20,000,000.00 (in words: Deutsche Mark twenty million)
validly exists and (ii) any necessary official permits for
such waiver of the hereditary building right had been
obtained including the consent of Degussa Pensionskasse
according to Section 70 of the Act on State Supervision of
Insurance Companies (Versicherungsaufsichtsgesetz).
13.7 Sellers shall co-operate on a reasonable basis at
Purchasers' cost, including instructing Sellers' Auditors
in connection with the procurement by Purchasers with
pro-forma consolidated financial statements of the
Business for the fiscal years ended on December 31, 1998
and December 31, 1999 and the period ending in 2001 on the
Closing Date which are reconciled or are prepared in
accordance with US GAAP and US Generally Accepted Auditing
Standards (herein "US GAAS").
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14. Non-Compete Undertaking
14.1 Sellers agree not to engage, directly or indirectly, as a
proprietor, shareholder, partner, employee, independent
contractor or otherwise in any business which would
compete in any way with the Business as defined herein,
except for the activities described in Exhibit 14.1
(herein "Permitted Activities") for three (3) years from
the Closing Date. Sellers further agree not to solicit
directly or indirectly outside of the Permitted Activities
for a period of three (3) years from the Closing Date or
otherwise contact any present or past customers of the
Business, for themselves or any other person, firm or
corporation, for the purpose of obtaining business in
competition with the Business as it exists on the Closing
Date other than Permitted Activities. It is hereby agreed
that the covenant not to compete of this Section 14.1
applies mutatis mutandis to any disclosure by the Sellers
of confidential information relating to the Business or
the Companies except if and to the extent the information
is or becomes public knowledge, is disclosed to Sellers in
good faith from another source, is discovered by Sellers
otherwise than by disclosure from the Companies or is
required to be disclosed by Sellers to a governmental
authority.
14.2 Nothing in Section 14.1 above shall prohibit (i) Sellers
from acquiring ownership of an equity interest not greater
than ten percent (10%) of any class of securities or the
voting rights in a publicly held company engaged in a
business in competition with the Business, or (ii) Sellers
from offering employment to any employee of any customer
of the Business, or (iii) from engaging in the Permitted
Activities. Nothing in Section 14.1 shall prevent Sellers
from acquiring, directly or indirectly, shares in or the
undertaking or assets of any company which carries on a
business which competes with the Business as carried out
on the Closing Date (herein "Competing Business"), if
Sellers shall cease to carry on or have such interest in
the Competing Business or the company carrying on the same
within one (1) year from completion of the relevant
acquisition disposed of. But nothing in Section 14.1 above
shall require the Sellers to cease to carry on the
Competing Business or to dispose of the same or such
interest within one (1) year as provided, if such
Competing Business or interest is acquired by the Sellers
as part of a larger acquisition and the value properly
attributable to the Competing Business did not at the date
of acquisition amount to more than twenty percent (20%) of
the value of such larger acquisition taken as a whole.
14.3 Without waiving the Purchasers' rights to monetary
damages, all Parties acknowledge that the breach of the
obligations contained in Section 14.1 above would result
in substantial but indeterminable harm, that the
restraints imposed are reasonable, that there is no
adequate remedy at law for a breach of such obligations,
and
45
therefore, that injunctive relief, specific performance or
other equitable remedies are appropriate to enforce the
obligations undertaken in Section 14.1. In the event that
a court finds that the terms of this covenant not to
compete are so broad as to be unlawful and unenforceable,
the Parties further agree that a reformation of the terms
of Section 14.1 may be appropriate in order to protect the
value of the Business being conveyed pursuant to this
Agreement as a going concern, and the value of the
non-competition covenant, and to provide for the
enforceability of the obligations contained in Section
14.1 to the fullest extent permitted by law.
F. MISCELLEANOUS
15. Restriction of Announcement, Cooperation and
Confidentiality
15.1 Each of the Parties undertakes that upon execution of this
Agreement the parties will make an announcement in
connection with this Agreement through prior consultation
with the other Parties, provided that the provisions of
the letter of Guarantor dated May 18, 2001, a copy of
which is attached hereto as Exhibit 15.1, shall remain
unaffected.
15.2 Sellers shall procure immediately after the Closing Date
the transfer of all patents, trademarks, utility models,
copyrights and any applications therefor or similar such
rights owned and /or registered in the name of Degussa or
other Degussa group companies not being subject of this
Agreement, which are pertaining to the Business (herein
"Degussa-IP Rights"). Degussa shall give all necessary
declarations or shall procure that the registered owners
of such Degussa-IP Rights give such declarations in order
to effect the transfers of such Degussa-IP Rights to the
Purchasers or any other corporate entity named by
Purchasers. Subsequent to the Signing Date, Sellers shall
provide Purchasers with such information and access to
Sellers' facilities and records relating to the Business
for transition planning and preparation and with such
assistance as may reasonably be requested by Purchasers,
including but not limited to a list of the Managing
Directors and, to the Best of Sellers Knowledge, the
procurated officers of the Companies, the location of bank
accounts and lock boxes and a list of authorized
signatories on behalf of the Companies. Such assistance
shall include (i) making employees available on a mutually
convenient basis to provide additional information and
explanation of any material provided hereunder and (ii)
providing all information necessary for all filings and
submissions to governmental authorities reasonably
necessary to complete the transaction contemplated
hereunder.
15.3 For the purpose of this Agreement, confidential or
proprietary information (herein
46
"Proprietary Information") shall mean the confidential
business information relating to the Business existing
through the Closing Date (herein "Existing Confidential
Information") and the information created, transferred,
recorded or employed as part of, or otherwise resulting
from the activities undertaken pursuant to this Agreement
or the Schedules and Exhibits hereto which constitutes the
confidential, proprietary or trade secret information of
the disclosing Party. Such information may be of, but not
limited to, a business, organizational, technical,
financial, marketing, operational, regulatory or sales
nature and shall include, without limitation, any and all
source codes and information relating to services, methods
of operation, price lists, customer lists, technology,
designs, specifications or other proprietary information
of the business or affairs of a Party or its Affiliate.
Proprietary Information may either be in a written form,
with notices of its proprietary nature affixed, or in an
oral form, reduced to writing and affixed with appropriate
notice of proprietary nature within seven days of oral
presentation, and distributed to both Parties for the
matter of record, but indicated as such at the time of
presentation in an oral fashion.
15.4 The Parties understand and agree that all Proprietary
Information shall be treated as confidential. The
receiving Party shall use the same degree of care as it
uses with regard to its own Proprietary Information to
prevent disclosure, use or publication of the disclosing
Party's Proprietary Information. Proprietary Information
of the originating Party shall be held confidential by the
receiving Party above unless it is or has been:
15.4.1 obtained legally and freely from a third party
without restriction as to the disclosure of such
information;
15.4.2 independently developed by the receiving Party at a
prior time or in a separate and distinct manner
without benefit of any of the Proprietary
Information of the disclosing Party, and documented
to be as such;
15.4.3 made available by the disclosing Party for general
release independent of the receiving Party;
15.4.4 made public as required by law, applicable
regulations or court proceedings or stock exchange
requirements; or
15.4.5 within the public domain or later becomes part of
the public domain as a result of acts by someone
other than the receiving Party and through no fault
or wrongful act of the receiving Party.
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15.5 A receiving Party may disclose Proprietary Information of
a disclosing Party to directors, officers, and employees
of the receiving Party or agents of the receiving Party
including their respective brokers, lenders, insurance
carriers or prospective purchasers who have specifically
agreed in writing to nondisclosure of the terms and
conditions hereof. Any disclosure hereof required by legal
process shall only be made after providing the disclosing
Party with notice thereof in order to permit the
disclosing Party to seek an appropriate protective order
or exemption. Violation by a Party or its agents of the
foregoing provisions shall entitle the disclosing Party,
at its option, to obtain injunctive relief without showing
of irreparable harm or injury and without bond. The
provisions of this Section will be effective for a period
of three (3) years after the Closing Date.
15.6 The provisions of Section 15.4 and Section 15.5 shall
apply only to Sellers with respect to the Existing
Confidential Information.
16. Notices
All notices and other communications hereunder shall be
made in writing and shall be delivered or sent by
registered mail or courier to the addresses below or to
such other addresses which may be specified by any Party
to the other Parties in the future in writing:
If to the Sellers, to:
Degussa AG
General Counsel
Bennigsenplatz 1
D-40474 Dusseldorf
Germany
with a copy to:
Baker & McKenzie
Dr. Hans-Jorg Ziegenhain
Neuer Zollhof 3
D-40221 Dusseldorf
Germany
48
If to the Purchasers, to:
relevant Purchaser
c/o DENTSPLY International Inc.
570 West College Avenue
York, PA 17404, USA
Attention: Secretary
with a copy to:
Mayer, Brown & Platt-Gaedertz
Mr. Werner Lutzke
Bockenheimer Landstrasse 98-100
D - 60323 Frankfurt am Main
Germany
If to the Guarantor, to:
DENTSPLY International Inc.
570 West College Avenue
York, PA 17404
Attention: Secretary
with a copy to:
Mayer, Brown & Platt-Gaedertz
Mr. Werner Lutzke
Bockenheimer Landstrasse 98-100
D - 60323 Frankfurt am Main
Germany
17. Guarantor's Guarantee
Guarantor hereby unconditionally and irrevocably
guarantees to Sellers the due and punctual performance of
the payment of the Purchase Price, including for the
avoidance of doubt the payment of any Purchase Price
Adjustment. The Guarantor hereby waives any rights which
it may have to require the Sellers to proceed first
against or claim payment from Purchasers to the extent
that as between Sellers and the Guarantor the latter shall
be liable as principal debtor as if it had entered into
49
the undertaking to pay the Purchase Price, including for
the avoidance of doubt the Purchase Price Adjustment,
jointly and severally with Purchasers.
18. Miscellaneous
18.1 If and to the extent a conflict arises between the
contents of this Agreement and any agreement entered into
in connection with this Agreement (including, but not
limited to, local share transfer agreements as provided
for in Section 6.6.2 and 6.6.3 above), the terms of this
Agreement shall prevail.
18.2 All expenses, costs, fees and charges in connection with
the transactions contemplated under this Agreement
including without limitation, legal services, shall be
borne by the Party commissioning the respective expenses,
costs, fees and charges. All notarial fees incurred by the
notarization of this Agreement as well as all fees charged
by the cartel authorities in connection with the merger
clearances required under this Agreement shall be borne by
Purchasers. Purchasers shall be responsible for the
payment of any sales, transfer or stamp taxes, or other
similar charges, payable by reason of the transactions
contemplated by this Agreement.
18.3 All Exhibits and Schedules (including, in particular, the
Disclosure Schedules) to this Agreement constitute an
integral part of this Agreement.
18.4 This Agreement and the Exhibits and Schedules referred to
under Section 18.3 above comprise the entire agreement
between the Parties concerning the subject matter hereof
and supersede and replace all oral and written
declarations of intention made by the Parties in
connection with the contractual negotiations. Changes or
amendments to this Agreement (including this Section 18.4)
must be made in writing by the Parties or in notarial
form, if required.
18.5 In this Agreement the headings are inserted for
convenience only and shall not affect the interpretation
of this Agreement; where a German term has been inserted
in quotation marks and/or italics it alone (and not the
English term to which it relates) shall be authoritative
for the purpose of the interpretation of the relevant
English term in this Agreement.
18.6 No Party shall be entitled to assign any rights or claims
under this Agreement without the written consent of the
other Parties, unless otherwise specified, except that
Purchasers may assign its rights under this Agreement,
including its rights to purchase the shares, to a
wholly-owned subsidiary pursuant to an assumption
agreement reasonably acceptable to Sellers.
50
18.7 Interest payable under any provision of this Agreement
shall be calculated on the basis of actual days elapsed
divided by 360 and shall exclude the day of payment.
18.8 "Business Days" (Werktage) referred to in this Agreement
shall be any day other than Sunday or public holidays in
Frankfurt am Main.
18.9 This Agreement shall not grant any rights to, and is not
intended to operate for, the benefit of third parties
unless otherwise explicitly provided for herein.
18.10 No Party, except as provided otherwise herein, shall be
entitled (i) to set-off
(aufrechnen) any rights and claims it may have against any
rights or claims any other Party may have under this
Agreement, or (ii) to refuse to perform any obligation it
may have under this Agreement on the grounds that it has a
right of retention (Zuruckbehaltungsrecht) unless the
rights or claims of the relevant Party claiming a right of
set-off (Aufrechnung) or retention (Zuruckbehaltung) have
been acknowledged (anerkannt) in writing by the relevant
other Party/Parties or have been confirmed by final
decision of a competent court (Gericht) or arbitration
court (Schiedsgericht).
18.11 Any currency conversions shall be determined using
prevailing exchange rates prevailing two banking days in
Frankfurt am Main prior to the date on which the
respective payments become due and payable. The European
Central Bank fixing rates shall be used which are
published both by electronic market information providers
(e.g. Reuters page ECB37) and on the ECB's website
www.ecb.int shortly after 2.15 p.m. CET. When such rates
are not available on such date, Reuters world spot rates
(mid rate on page FX=) taken as close as possible to 2.15
p.m. CET shall be used.
18.12 This Agreement shall be governed by, and be construed in
accordance with, the laws of the Federal Republic of
Germany, without regard to principles of conflicts of
laws. All disputes arising in connection with this
Agreement or its validity shall be finally settled by
three arbitrators in accordance with the Arbitration Rules
of the German Institution of Arbitration e.V. (DIS)
without recourse to the ordinary courts of law. The venue
of the arbitration shall be Frankfurt am Main. The
language of the arbitral proceedings shall be English.
18.13 In the event that one or more provisions of this Agreement
shall, or shall be deemed to, be invalid or unenforceable,
the validity and enforceability of the other provisions of
this Agreement shall not be affected thereby. In such
case, the Parties hereto agree to recognize and give
effect to such valid and enforceable provision or
provisions which correspond as closely as possible with
the commercial intent of
51
the Parties. The same shall apply in the event that this
Agreement contains any gaps (Vertragslucken).
18.14 This Agreement is subject to the condition precedent that
Degussa shall not notify the undersigned notary in writing
by fax by Tuesday May 29, 2001 24:00 hours that the
supervisory board (Aufsichtsrat) of Degussa has not
approved this Agreement. The undersigned notary shall
confirm to the Parties without undue delay whether or not
he has received such notice from Degussa. The original of
the notification from Degussa containing notarised
signature and notarial confirmation of power shall be sent
to the undersigned notary immediately by courier service.
(continued on next page)
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