SALES CONTRACT
between
Herr Dirk Pfeil
receiver of
Hofmann Maschinenbau GmbH
Werner-von-Siemens-Strasse 2, 64319 Pfungstadt
Eschersheimer Landstrasse 60
60332 Frankfurt/Main
-Seller-
and
B U R - Vermoegensverwaltung GmbH
(registered at the court of Mannheim under HRB 16085)
in future registered under the name
Schmitt Hofmann Systems GmbH
represented by its Geschaeftsfuehrer Wayne Case
who has the right for exclusive representation
Mannheimer Strasse 66
68782 Bruehl
-Buyer-
PRELIMINARY STATEMENT
On 1 October 1996, follow-up bankruptcy proceedings were initiated against
Hofmann Maschinenbau GmbH ("Common Debtor") in Pfungstadt. The Amtsgericht
Darmstadt appointed Seller as the trustee in bankruptcy. Buyer acknowledges
that within the framework of the bankruptcy proceedings, Seller will continue
the business of the Common Debtor. The "Schwingungsmesstechnik" division that
Buyer intends to take over forms part of the business of the Common Debtor.
Subject of this sales contract are the rights and goods and equipment that
directly pertain to the "Schwingungsmesstechnik" division of the Common Debtor's
business located in Pfungstadt. Buyer acknowledges that the Common Debtor does
not own any real estate. The present facility is rented from Wegmann & Co and
therefore is not part of the sales contract. Furthermore, Buyer acknowledges
that Seller's knowledge of the business is only from carrying on the business
within the framework of the bankruptcy proceedings. Seller does not make any
guarantees that are not mentioned in this contract.
On the basis of this understanding, the two parties have made the following
agreement:
Page 12
1. Buyer will acquire the following rights and goods and equipment that
pertain to the business of the Common Debtor in Pfungstadt for the
"Schwingungsmesstechnik" division:
a. All machinery, tools and pieces of furniture set forth in the list
provided to Buyer. Items sold to the Buyer also include items used
exclusively for this division by Seller.
b. Raw materials, auxiliary materials and factory supplies as well as
unfinished goods and finished goods as set forth in the list provided
to Buyer.
c. Available trade/manufacturing expertise shall be made available by
handing over all documents, plans, technical drawings, piece lists,
work plans, list of customers, purchasing documents, calculations,
customer documents etc. available in Pfungstadt from the Common Debtor
as set forth in the list provided to Buyer.
d. Commercial patent rights that can be transferred and that are in
possession of the Common Debtor as set forth in the list provided to
Buyer. If a formal transfer of the patent rights to Buyer is not
possible, Seller grants Buyer unlimited, irrevocable and exclusive
usufructuary rights. In this case Buyer will bear the cost for the
maintenance of the patent rights.
Seller warrants that all items and rights sold are freely disposable and
can be transferred free from rights of third parties. However, Seller
points out that with respect to the patent rights, the employee inventors
have a legal preemptive right.
2. The purchase price for the objects and rights mentioned under Section 1 of
this contract is DM 750,000.00 plus 15% value-added tax ("VAT"), if this tax
must be paid. The net purchase price of DM 750,000.00 is payable at 2 December
1996. The purchase price will be paid into the following bankruptcy deposit
account:
Number: 26 001008
with B H F Bank, AG, Frankfurt/Main
bank code number: 500 202 00.
It is the opinion of both parties that all items are sold within the
framework of a sale of a whole business according to Section 1 Sec. 1 a of
the VAT law and that consequently no VAT has to be paid. If this opinion
is not correct, Buyer shall be obligated to pay the VAT at the current
rate, which is 15% of the purchase price to Seller.
Seller only has to pay VAT if and so long as the financial authorities in
charge of Buyer's affairs accept VAT as an reimbursement for Buyer. In
this case, Seller will prepare an invoice on which VAT is shown separately
for Buyer.
Page 13
If the financial authorities do not have any counterclaims which can be set
off against Seller, Buyer transfers his right for VAT-refund from the
financial authorities, which may exist because of this sales contract, to
Seller. Consequently Seller can set off the transferred right for
VAT-refund against his VAT liability to the financial authorities due to
this sales contract according to Section 46 Sec. 2 AO. The rights are to
be transferred on an official form. If the financial authorities do not
agree with the transfer or if a transfer is not possible for other reasons,
the whole amount of the value-added- tax must be paid to Seller by
15 January 1997.
If Buyer does not pay the complete purchase price as of the required date,
interest of 10% per annum must be paid from the date when payment was due.
3. The acquired rights and items are taken over by the Buyer as inspected; he
acknowledges their condition. Warranty claims, defects and other
warranties of any kind are excluded. The Buyer renounces any possible
warranties for cancellation, reduction of the sales price, compensation
payment or an eventual right of rescission from this contract. The right
of rescission mentioned in Section 16 of this contract is not affected
hereby.
4. The transfer is valid effective from 1 December 1996 on, provided Seller
receives the net sales price of DM 750.000,00 by 2 December 1996. Seller
retains title to the items sold until complete payment of the sales price
has been effected. Buyer has the right to assemble the goods in stock in
the ordinary course of business and to sell them as long as he does not
delay payment. Assembly or change always takes place for Seller as a
producer, but without obligations for him. Buyer hereby fully transfers
any claims resulting from reselling goods under reservation of ownership to
the Seller.
5. Seller will make sure that the normal course of business is continued until
the date of transfer. Buyer agrees to process orders received until the
date of transfer and to carry out the orders properly. This is also valid
for orders submitted to suppliers by Seller, etc. Seller will be
reimbursed by Buyer for eventual prepayments for goods that have not yet
been delivered or for services that have not yet been rendered. Incoming
invoices for services already rendered at the date of transfer or goods
already received will be paid by the Seller.
6. Both parties agree to discuss all present contracts immediately after
signing this contract. They will decide which contracts will be terminated
by Seller before the date of transferral.
7. Buyer takes over those warranty and guarantee obligations (reworking and
delivery of spare parts) which result from orders processed after the
opening of the bankruptcy proceedings or of orders which had been in
process.
Page 14
8. A list of orders received at the "Schwingungsmesstechnik" division as of
18 November 1996 has been provided to Buyer. Orders which have been
completed as of the date of the transfer and services that had been
rendered at that time will be dealt with between Seller and customer.
Deliveries and services which took place after the transferral will be
dealt with between Buyer and customer. Both parties will do their best in
order to transfer the orders received as of the date of transfer from
Seller to Buyer in accordance with the customer.
9. Seller shall continue the initiated legal proceedings against Dionys
Hofmann and his companies, respectively, concerning the
"Schwingungsmesstechnik" division. To the best of his abilities, Seller
will also support Buyer in any similar future conflicts with Dionys Hofmann
or one of his companies.
10. Buyer acknowledges that the Common Debtor employs 20 people in the
"Schwingungsmesstechnik" division in Pfungstadt. However, Buyer is only
willing to employ a maximum of 14 people. Therefore, Buyer is granted the
right to ask Seller to pay DM 35,000.00 for each additional person Buyer
has to employ according to the regulations of Section 613 a BGB. Buyer
may decide which employees he intends to continue to employ. Seller shall
regulate all claims of continuing employees existing at the date of
transfer within the framework of the bankruptcy proceedings so that no
obligations for Buyer may result. All claims arising after the date of
transfer will be dealt with by Buyer. Holiday entitlements and holiday pay
of the continuing employees will be established as of the date of transfer.
Seller has no pension obligations to the continuing employees.
11. Buyer has the right to use the current facilities for the
"Schwingungsmesstechnik" division until 31 January 1997, at the latest, for
which payment of a monthly flat rate of DM 10,000.00 plus VAT is due.
Seller has no warranty obligations for these facilities.
12. In the future, Buyer will pass orders to Seller for part "zerspanende
Fertigung." Buyer or third persons named by Buyer will have the
opportunity to observe the execution of these orders in order to get
fabrication know-how. Seller hereby agrees to help Buyer and will ensure
that Buyer's competitors will not have access to this know-how.
13. Both parties will engage an outside EDP-company to transfer the technical
and trading data concerning the objects sold to Buyer and remove them from
the EDP-system of Seller. The costs therefor shall be borne by Buyer.
Existing backup copies will be handed over to Buyer.
14. Seller allows Buyer to remove tools with a maximum value of DM 5,000.00
from the tools in stock in Pfungstadt.
Page 15
15. Seller has the right to withdraw from this sales contract if the Buyer
delays payment for more than three days. Written withdrawal from the
contract must be given to Buyer.
16. Buyer has the right to withdraw from this contract if Mr. Menigat does not
renounce his preemptive right according to the employee invention law. The
right for withdrawal must be carried out by 26 November 1996 by written
notice to Seller.
17. If any provision of this contract is or becomes invalid, the validity of
the whole contract is not affected. Both parties will do their best to
correct any invalid provision so that it complies legally and economically
and comes as close as possible to the intention of the original provision.
18. Place of performance and jurisdiction is Frankfurt/Main.
Frankfurt/Main, 19 November 1996
- ----------------------------------- -----------------------------------
- -Seller- -Buyer-
Page 16