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EXHIBIT 2.1
Yamaha
Corporation
Steinberg Media
Technologies GmbH
Share Purchase and Transfer
Agreement
dated December 20,
2004
Mainzer Landstraße 16
D-60325 Frankfurt am Main
Postfach 17 01 11
D-60075 Frankfurt am Main
Telephone (49-69) 7 10 03-0
Facsimilie (49-69) 7 10
03-333
Share Purchase and
Transfer Agreement
between
| (1) |
Pinnacle Systems GmbH , |
Frankfurter Straße. 3c,
38122 Braunschweig, Germany
- hereinafter referred to as
“ Seller ” -,
and
10-1 Nakazawa-cho,
Hamamatsu-shi, Shizuoka-ken, 430-8650, Japan
- hereinafter referred to
as “ Purchaser ” -
and
| (3) |
Steinberg Media Technologies GmbH, |
Neuer Höltigbaum 22-32,
22143 Hamburg, Germany
- hereinafter referred to as
the “ Company ”
and
| (4) |
Pinnacle Systems, Inc. |
280 North Bernardo
Avenue
Mountain View, CA 94043,
USA
- hereinafter referred to as
“ Pinnacle, Inc. ”
solely for the purpose of its
own obligations pursuant to Clauses 4.6, 5.25, 6.2.2, 9.6, 9.7,
10.1, 10.2, 10.3, 10.4.2 and 12.
Any reference in this Agreement to
“ Parties ” shall only refer to parties named
under (1) and (2) above.
2
Index
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| 1 |
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Sale and
Transfer of Share and Inter-Company Loans |
|
4 |
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|
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| 2 |
|
Consideration |
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5 |
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|
|
| 3 |
|
Closing |
|
6 |
|
|
|
| 4 |
|
Period up
to Closing |
|
10 |
|
|
|
| 5 |
|
Statements of the Seller |
|
11 |
|
|
|
| 6 |
|
Indemnification for Taxes, other Public Charges and Employment
Claims |
|
24 |
|
|
|
| 7 |
|
[Intentionally left blank] |
|
28 |
|
|
|
| 8 |
|
Statements of the Purchaser |
|
28 |
|
|
|
| 9 |
|
Performance and Liability |
|
29 |
|
|
|
| 10 |
|
Covenants |
|
31 |
|
|
|
| 11 |
|
[Intentionally left blank] |
|
35 |
|
|
|
| 12 |
|
Miscellaneous |
|
36 |
3
PREAMBLE
| (A) |
The Company is a limited liability company under German law
with registered seat in Hamburg, registered in the commercial
register of the lower court of Hamburg under HRB 86534. The share
capital of the Company amounts to EUR 6,891,310 which is divided
into one share with a par value of EUR 6,891,310 (the “
Share ”). |
| (B) |
The Company develops software and hardware for digital audio
recording, editing and publishing and renders services related to
its products (the “ Steinberg Business ”). The
Company forms an integrated part of a group of companies, the
ultimate parent company of which is Pinnacle, Inc., seated in
Mountain View, California. As result of such integration, (i)
several legal and factual relations exist among the Company and
other companies directly or indirectly controlled by Pinnacle, Inc.
(the “ Pinnacle Group ”) as specified in more
detail in Clause 10.4 hereof and (ii) Pinnacle, Inc. conducts / has
conducted certain business activities that are related to the
Steinberg Business in the United States (the “ Steinberg
US Business ”), in particular distribution activities for
products of the Company. |
| (C) |
The Seller is part of the Pinnacle Group and the sole
shareholder of the Company and holds the Share with a par value of
EUR 6,891,310. |
| (D) |
The Seller has made available to the Company (i) a subordinated
loan with a principle amount of up to EUR 2,000,000 pursuant to a
loan agreement dated January 2, 2003 and (ii) a further
subordinated loan with a principle amount of up to EUR 850,000
pursuant to a loan agreement dated February 3, 2003; both of these
loans have been drawn fully by the Company (hereinafter
collectively the “ Inter-Company Loans ”).
According to the terms of the loan agreements, the Inter-Company
Loans shall bear interest at a fluctuating interest rate equal to
the applicable EURIBOR at the last day of the previous calendar
year plus 1%. As of November 26, 2004, the accrued and not paid
interest amounted to EUR15,698.76. |
| (E) |
The Purchaser is a limited liability company under Japanese law
with registered seat in Hamamatsu. Since its founding in 1987, the
Purchaser has developed, manufactured, and sold musical instruments
and software while also broadening its operational scope to include
audio video (AV) equipment, semiconductor products, and diverse
other business fields. |
| (F) |
The Seller is interested in selling and the Purchaser is
interested in acquiring the Steinberg Business, including, without
limitation, the Steinberg US Business, and the Share in the Company
on the terms and conditions set forth in this Agreement (the
“ Transaction ”). |
Now, thereupon, the Parties, Pinnacle,
Inc. and the Company agree as follows:
| 1 |
Sale and Transfer of Share and Inter-Company
Loans |
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1.1 |
Sale and Transfer of Share |
On the terms and subject to
the conditions set forth in this Agreement, the Seller hereby sells
to the Purchaser and the Purchaser hereby purchases from the Seller
the Share together with all ancillary rights including all rights
to profits of the current fiscal year and all non-distributed
profits of previous fiscal years. The Seller hereby assigns and
transfers the Share conditionally upon signing of the Closing
Memorandum the form of which is attached hereto as Exhibit
1.1 (the “ Closing Memorandum ”) by both
Parties on Closing. The Purchaser accepts such conditional
assignment and transfer of the Share.
4
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1.2 |
Sale and Transfer of the Inter-Company Loans |
On the terms and subject to
the conditions set forth in this Agreement, the Seller hereby sells
to the Purchaser and the Purchaser hereby purchases from the Seller
the Inter-Company Loans together with all ancillary rights
including all rights to any accrued and not paid interest. The
Seller hereby assigns and transfers the Inter-Company Loans
conditionally upon signing of the Closing Memorandum by both
Parties on Closing. The Purchaser accepts such conditional
assignment and transfer of the Inter-Company Loans and the Company
hereby consents to the sale and transfer of the Inter-Company Loans
to the Purchaser.
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2.1 |
Aggregate Purchase Price |
The aggregate consideration
to be paid by the Purchaser to the Seller for the sale and transfer
of the Share and the sale and transfer of the Inter-Company Loans
and the Returned Products (as defined in Clause 10.4.2 (i)) shall
be an amount of US$ 28,470,000 (in words: Twenty-Eight Million Four
Hundred Seventy Thousand United States Dollars) (the “
Aggregate Purchase Price ”).
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2.2 |
Allocation of the Purchase Price |
The consideration to be paid
by the Purchaser to the Seller for the sale and transfer of the
Share shall be the Aggregate Purchase Price minus the Loan Purchase
Price as converted from Euro into United States Dollars on the
business day immediately preceding the Closing and minus the
Product Purchase Price as converted from Euro into United States
Dollars on the business day of the respective delivery (the “
Share Purchase Price ”).
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2.3 |
Purchase Price for the Inter-Company Loans |
The consideration to be paid
by the Purchaser to the Seller for the sale and transfer of the
Inter-Company Loans shall be the outstanding principal amount (in
Euro) of the Inter-Company Loans plus all accrued and unpaid
interest thereon (in Euro) as of the Closing (as defined below)
(the “ Loan Purchase Price ”).
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2.4 |
Product Purchase Price for the Returned
Products |
The consideration to be paid
for the sale and delivery of the Returned Products pursuant to
Clause 10.4.2 (i) (b) by the Purchaser (or by the Purchaser on
behalf of its designee) to the Seller on behalf of that Affiliated
Company that has sold the Returned Product to the Purchaser or the
Company, as the case may be) for the sale and delivery of the
Returned Products shall be the aggregate of the material costs of
the Returned Products sold and delivered to the Purchaser or its
designee pursuant to Clause 10.4.2 (i) (b) (as the case may be)
(the “ Product Purchase Price ”). Material cost
in the meaning of the preceding sentence shall be the price per
unit calculated pursuant to the US-Distribution Agreement (as
defined in the Company Separation Agreement), consistent with the
past practice.
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2.5 |
Payment of Aggregate Purchase Price |
The Aggregate Purchase Price
shall be due on Closing and shall be paid by the Purchaser to the
Seller by money transfer into the bank account of the Seller on or
before Closing. Seller shall notify Purchaser in writing about bank
and account details at a time reasonably in advance of the Closing
Date.
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The Parties understand that
the sale and transfer of the Share and the Inter-Company Loans is
not subject to value added tax (“ VAT ”). If, to
the contrary, VAT is payable, it shall increase the Aggregate
Purchase Price accordingly and shall be due as soon as the
Purchaser has received from the Seller proof of assessment of VAT
and a respective invoice which conforms to the provisions of sec.
14 German Value Added Tax Act. In case the sale and delivery of
Returned Products pursuant to Clause 10.4.2 (i) (b) is subject to
VAT with the Seller or any of its Affiliates, the Seller or any of
its Affiliates is obliged to submit a corrected invoice matching
the respective legal requirements, which allows Purchaser to claim
for a refund of the respective VAT in the respective
jurisdiction.
Closing shall take place at
the offices of Linklaters Oppenhoff & Rädler in Frankfurt
am Main at 10:00am on the second business day immediately after the
day on which the last Closing Condition in Clauses 3.1 and 3.2 has
been satisfied, but within the timeframe as provided by Clauses
4.8.1 (ii) and 4.8.2 or at any other time and place as the Parties
may mutually agree (the “ Closing Date ”) if the
following conditions (“ Closing Conditions ”)
have been met (the “ Closing ”):
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3.1 |
Purchaser’s Closing Conditions |
The Purchaser shall only be
obligated to close as provided in Clause 3.3 if all of the
following Closing Conditions have been met:
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3.1.1 |
(i) All of the Statements of Seller and Pinnacle, Inc., where
applicable, contained in this Agreement are true and correct on and
as of the Closing as if made on and as of the Closing (except for
such representations and warranties that speak specifically as of
the date hereof or as of another date, which shall be true and
correct as of such date), and (ii) Seller and Pinnacle, Inc., as
applicable, shall have performed or complied or delivered, as the
case may be, all covenants, agreements, conditions or documents
required by this Agreement to be performed, complied with or
delivered by Seller or Pinnacle, Inc., as applicable, prior to or
on the Closing, except in each case of clause (i) or (ii) of the
foregoing, which has not caused or would not reasonably be expected
to cause a Material Adverse Change. |
Notwithstanding the
foregoing, there shall not exist a breach of a representation or
warranty on the part of Seller (a) regarding legal rights (Rechte),
title (Eigentum) or economic interest (wirtschaftliches Eigentum)
that would impair Purchaser’s ability to acquire by this
Transaction the Share free and clear from any encumbrances, liens
or any other rights or interests of third parties of any type
whatsoever and to become sole and unrestricted shareholder of the
Company or (b) that would materially and adversely affect the right
or power of Purchaser or the Company to own and operate the
Steinberg Business or the Steinberg US Business or
6
create a material adverse
restriction, impediment or cessation of the manufacture and/or
marketing of any material product presently manufactured and/or
marketed by the Company, in each case which shall not have been
cured within ten (10) business days following receipt by Seller of
written notice of such breach from Purchaser;
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3.1.2 |
there shall not be instituted and pending or threatened any
action before any court or governmental entity to restrain or
prohibit this Agreement or the consummation of the transactions
contemplated hereby; and no preliminary or permanent injunction or
other order issued by any court of competent jurisdiction
preventing consummation of the sale of the Share to Purchaser shall
be in effect; |
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3.1.3 |
Pinnacle, Inc. and the Purchaser (or any party as designated by
the Purchaser) have entered into an Asset Purchase and Sale
Agreement relating to the Steinberg US-Business, the form of which
is attached hereto as Exhibit 3.1.3 (the “ Asset
Purchase and Sale Agreement ”) and the transactions
contemplated thereby shall have been consummated concurrently with
Closing hereunder; |
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3.1.4 |
the Company Separation Agreement, the form of which is attached
hereto as Exhibit 3.1.4 (the “ Company Separation
Agreement ”) has been duly executed by the parties
thereto and the transactions contemplated thereby to occur on or
prior to the Closing shall have occurred prior to or simultaneously
with the Closing; |
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3.1.5 |
the IP Cross License Agreement, the form of which is attached
hereto as Exhibit 3.1.5a (the “ IP Cross License
Agreement” ), the OEM Distribution Agreement, the form of
which is attached hereto as Exhibit 3.1.5b (the “
OEM Agreement ”), and the Transitional Services
Agreements, the form of which is attached hereto as Exhibit
3.1.5c (the “ Transitional Services Agreement
”) have been duly executed by the respective parties
concurrently with the Closing; |
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3.1.6 |
the German Federal Cartel Office ( Bundeskartellamt )
has served a written notice to the Seller and/or the Purchaser
declaring that it will not prohibit the Transaction or,
alternatively, fails to notify the Seller and/or the Purchaser
within one month after the pre-merger filing pursuant to Section 40
para 1 sentence 1 of the German Act Against Constraints on
Competition ( GWB ) that it has commenced a formal
investigation of the Transaction, or finally, the German Federal
Cartel Office fails to issue an order pursuant to Section 40 para 2
sentence 1 GWB within the required time periods pursuant to Section
40 para 2 GWB. Neither Party shall grant its consent to any
extension to the aforementioned time periods without the prior
written approval of the respective other Party; and |
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3.1.7 |
the Seller has provided a copy of a shareholders’
resolution by which Oliver Hellmold and Christoph Schwieter are
removed from office as Managing Directors of the Company as of the
Closing Date; this shareholders’ resolution may include an
approval of their management of the Company, which shall not,
however, reduce the Seller’s obligations under this
Agreement. |
7
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3.2 |
Seller’s Closing Conditions |
The Seller shall only be
obligated to close as provided in Clause 3.3 if all of the
following Closing Conditions have been met:
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3.2.1 |
(i) All of the Statements of Purchaser contained in this
Agreement are true and correct on and as of the Closing as if made
on and as of the Closing (except for such representations and
warranties that speak specifically as of the date hereof or as of
another date, which shall be true and correct as of such date), and
(ii) Purchaser shall have performed or complied or delivered, as
the case may be, all covenants, agreements, conditions or documents
required by this Agreement to be performed, complied with or
delivered by Purchaser prior to or on the Closing, except, in each
case of clause (i) or (ii) of the foregoing, which has not caused
or would not reasonably be expected to cause a Material Adverse
Change; |
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3.2.2 |
there shall not be instituted and pending or threatened any
action before any governmental entity to restrain or prohibit this
Agreement or the consummation of the transactions contemplated
hereby; and no preliminary or permanent injunction or other order
issued by any court of competent jurisdiction preventing
consummation of the sale of the Share to Purchaser shall be in
effect; |
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3.2.3 |
Pinnacle, Inc. and the Purchaser (or any party as designated by
the Purchaser) have entered into the Asset Purchase and Sale
Agreement and the transactions contemplated thereby shall have been
consummated concurrently with Closing hereunder; |
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3.2.4 |
the IP Cross License Agreement, the OEM Agreement and the
Transitional Services Agreement have been duly executed by the
respective parties concurrently with the Closing; and |
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3.2.5 |
the Closing condition contained in Clause 3.1.6 has been
fulfilled. |
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3.3 |
Closing Actions and Obligations |
At Closing Purchaser shall
pay the Aggregate Purchase Price according to Clause 2.5 and
simultaneously ( Zug-um-Zug ) the Parties, including
Pinnacle, Inc., shall sign the Closing Memorandum to confirm that
the Closing Conditions have been satisfied, sign the Assignment
Agreement (evidencing assignment of the Inter Company Loans), the
form of which is attached hereto as Exhibit 3.3 (the “
Assignment Agreement ”) and take the following
actions:
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3.3.1 |
Seller’s Deliveries |
On Closing, the Seller shall
deliver, or cause to be delivered, to the Purchaser, the
following:
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(i) |
the Seller shall confirm in writing the receipt of the
Aggregate Purchase Price and the receipt of the payments payable
under Article 2 of the Asset Purchase Agreement; and |
8
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(ii) |
all other documents, certificates, instruments or writings
required to be delivered by the Seller on Closing in order to
consummate the transactions contemplated by this
Agreement. |
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3.3.2 |
Purchaser’s Deliveries |
On Closing, the Purchaser
shall deliver, or cause to be delivered, to Seller, all other
documents, certificates, instruments or writings required to be
delivered by the Purchaser on Closing in order to consummate the
transactions contemplated by this Agreement.
The Closing Conditions to be
effected by the Seller or by the Purchaser, as the case may be,
shall be fulfilled simultaneously ( Zug-um-Zug ) with the
Closing Conditions to be effected by the respective other
Party.
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3.4.1 |
The Parties shall use their respective best efforts to promptly
prepare and file any filings necessary to notify the German Federal
Cartel Office of the Transaction (the “ Cartel Filings
”); the Cartel Filings shall be made by the Purchaser and the
Seller jointly in close cooperation. The text of the respective
filings shall be prepared by Purchaser and agreed upon between the
Parties provided that the Seller and the Purchaser agree not to
unreasonably delay any such filings. For the purpose of expediting
consummation of the Transaction, the Parties shall promptly respond
to any request for additional information made by the German
Federal Cartel Office with respect thereto. The Purchaser shall be
responsible for filing fees relating to the Cartel Filings. All
other costs and expenses (including, without limitation, all legal
fees and expenses) incurred in connection with the Cartel Filings
shall be paid for by the Party incurring the same. |
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3.4.2 |
In the event the German Federal Cartel Office has (i) finally
and absolutely prohibited or (ii) finally and absolutely permitted
the Transaction only under certain conditions or requirements, the
Parties shall conduct negotiations in good faith to determine
whether the Transaction agreed upon in this Agreement can be
realized in another way while furthering the economic interests of
both Parties. If no agreement can be reached concerning a joint
proceeding within three months after the Parties receive the
above-described decision of the German Federal Cartel Office, each
Party shall be entitled to withdraw from this Agreement and the
Related Agreements to which it is a party by written statement
submitted to the respective other Party. In case the Parties agree
to file an objection to the prohibition or to the permission
granted the Parties shall jointly decide on such objection or
remedy and the content thereof. |
9
For the period between the
date hereof (“ Signing ”) and Closing, the
Seller covenants and agrees with the Purchaser as
follows:
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4.1 |
the Seller shall use all commercially reasonable efforts to
cause the management of the Company to operate the Company
diligently and in good faith with due skill and care of a prudent
business man and only in the ordinary course of business, in the
manner as previously conducted and consistent with past management
and business practices. |
| |
4.2 |
the Seller shall use all commercially reasonable efforts to
cause the Company to (i) maintain, preserve, renew and keep in full
force and effect the existing rights of the Company, (ii) maintain
the assets in good working order, (iii) not allow the disposal or
lapse of any Intellectual Property Rights (as defined in Clause
5.11), (iv) preserve for Purchaser the present Company’s
relationships with suppliers, distributors, vendors, manufacturers,
customers, communities and all others having business relations
with the Company, and (v) not to allow any event or occurrence
within Seller’s control which might, individually or in the
aggregate, have a Material Adverse Change on the
Company. |
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4.3 |
if the Seller becomes aware of any internal or external
measures, events or occurrences, whether within the Seller’s
control or not, which might, individually or in the aggregate, have
a Material Adverse Change on the Company or its business, the
Seller shall without undue delay notify the Purchaser about such
measure, event or occurrence. |
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4.4 |
unless as provided for in Clause 10.4 or elsewhere in this
Agreement, the Seller shall not pass any shareholders’
resolution with respect to the Company without prior written
consent of the Purchaser and refrain from any other actions or
transactions which might have any negative impact on the financial
condition, operating results and cash flows of the Company or its
businesses. |
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4.5 |
the Seller shall use all commercially reasonable efforts to
cause the management of the Company to operate the Company and its
business in such manner that the statements in Clause 5.9 will be
correct also for the period from Signing to Closing unless agreed
otherwise in writing with Purchaser or as provided for in this
Agreement. |
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4.6 |
the Seller shall cause the Company to use commercially
reasonable efforts to enter into confidentiality agreements with
Ralf Kürschner, Michael Michaelis, Roland Mange, Dave
Nicholson, Werner Kracht and Wolfgang Kundrus prior to the
Closing. |
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4.7 |
Pinnacle, Inc. shall use commercially reasonable efforts to (i)
maintain, preserve, renew and keep in full force and effect the
Steinberg US Business, (ii) not allow the disposal or lapse of any
Intellectual Property Rights (as defined in Clause 5.11), (iii)
preserve for the Purchaser the present relationships of the
Steinberg US Business with distributors, vendors, customers and all
others having business relations with the Steinberg US Business,
and (v) not allow any event or occurrence within Pinnacle,
Inc.’s control which might, individually or in the aggregate,
have a Material Adverse Change on the Steinberg US Business and/or
the Intellectual Property Rights. |
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4.8 |
Termination of Agreement |
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4.8.1 |
The Purchaser may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing
if |
10
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(i) |
the Seller does not comply with the covenants as set forth in
this Clause 4, or Pinnacle, Inc. does not comply with Clause 4.7,
and such noncompliance results in or could reasonably be expected
to result in a Material Adverse Change (as defined in Clause
4.8.3), or |
| |
(ii) |
any of the Closing Conditions set out in Clause 3.1. have not
been fulfilled within 2 months from the Signing Date and if the
Cartel Office commences formal investigations, within 6 months from
Signing, or |
| |
(iii) |
a Material Adverse Change (as defined in Clause 4.8.3) has
occurred since Signing. |
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4.8.2 |
The Seller may terminate this Agreement by giving written
notice to the Purchaser at any time prior to the Closing if any of
the Closing Conditions set out in Clause 3.2 have not been
fulfilled within 2 months from the Signing Date and if the Cartel
Office commences formal investigations, within 6 months from
Signing. |
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4.8.3 |
“ Material Adverse Change ” shall mean any
change, circumstance or effect which, individually or in the
aggregate, is materially adverse to the business, operations,
assets, affairs or condition (financial or otherwise) of the
Company or the Steinberg US Business; provided, however, that none
of the following shall be a Material Adverse Change: (i) changes in
the industry or markets in which the Steinberg Business and the
Steinberg US Business operates; (ii) changes resulting from the
permitted disclosure of this Agreement or by the transactions
contemplated hereby; (iii) changes in the U.S., German or world
economy or business condition and (iv) not achieving any estimated
or projected results of the Steinberg Business; |
| 5 |
Statements of the Seller |
The Seller hereby guarantees
by way of an independent guaranty agreement pursuant to § 311
BGB with legal consequences as conclusively set forth in Clause 9
that the following statements are, subject to the disclosures made
pursuant to this Clause 5 and the Exhibits to this Clause 5, true
and correct as of Signing and will be true and correct as of the
Closing, unless expressly otherwise provided hereunder. The Parties
expressly agree that these statements shall not constitute a
quality guarantee concerning the purchase object within the meaning
of the Sections 443 and 444 BGB ( Garantie für die
Beschaffenheit eines Kaufgegenstandes ).
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5.1 |
Organization and Authority of the Seller |
The Seller is duly
incorporated and validly existing under German Law and has the
corporate power to own its respective properties and to carry on
its businesses as now being conducted. It has all requisite power
and authority to enter into this Agreement and any related
agreement (each a “ Related Agreement ”) to
which it is a party and to consummate the transactions contemplated
hereby and thereby.
11
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5.2 |
Execution and Delivery |
This Agreement and any
Related Agreement to which the Seller is a party has been duly
executed and delivered by it and, assuming the due authorization,
execution and delivery by the other Parties hereto and thereto,
constitute valid and binding obligations of the Seller enforceable
in accordance with their respective terms, subject to the laws of
general application relating to bankruptcy, insolvency and the
relief of debtors and to rules of law governing specific
performance, injunctive relief or other equitable
remedies.
Except as set forth in
Exhibit 5.3 , the execution and delivery of this Agreement
and any Related Agreement to which the Company is a party do not,
and, the consummation of the transactions contemplated hereby and
thereby will not, conflict with, or result in a conflict with, or
default under (with or without notice or lapse of time, or both),
or give rise to a right of termination, cancellation, modification
or acceleration of any obligation or loss of any benefit under (any
such event, a “ Conflict ”) (i) any mortgage,
indenture, lease, contract or other agreement or instrument,
permit, concession, franchise or license to which the Company or
the Seller is subject, or (ii) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the
Company or the Seller or their respective properties or
assets.
The Seller has obtained all
necessary corporate consents and taken all necessary corporate
action, if any, required for the consummation of the transactions
contemplated by this Agreement. Except as set forth in Exhibit
5.4 , no consent, waiver, approval, order or authorization of,
or registration, declaration or filing with, any court,
administrative agency or commission or federal, state, county,
local or other foreign governmental authority, instrumentality,
agency or commission or any third party, is required by or with
respect to the Seller or the Company, as applicable, in connection
with the execution and delivery of this Agreement and any Related
Agreement to which it is a party or the consummation of the
transactions contemplated hereby and thereby. The Seller has or
will have obtained all such consents, waivers, approvals and
authorizations prior to Closing.
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5.5 |
Due Existence of the Company and the Shares |
The statements of the
Preamble with respect to the Company are correct in every
respect.
| |
5.5.1 |
The Company
is duly established and validly existing under German law as
limited liability company which has been formed by change in legal
form pursuant to Secs. 190 et seq. of the German Transformation Act
( Umwandlungsgesetz) . The change in legal form (
Umwandlung ) has been validly resolved and registered. The
Company is not and will not be insolvent on or immediately after
the Closing, in particular but without limitation, due to the
implementation of this Agreement and the Related Agreements. None
of the Company, its Managing Directors or a third party has applied
for insolvency proceedings with respect to the Company, and there
are no facts or reasons known to the Seller which would require the
filing of insolvency proceedings. No hidden or open
repayment
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12
of capital (
Einlagenrückgewähr ) has occurred. The Company has
the corporate power to own its properties and to carry on its
business as now being conducted. The certified excerpt of the
commercial register of the Company attached hereto as Exhibit
5.5.1a fully and correctly reflects the legal status of the
Company. The articles of association dated March 5, 2003 and
attached hereto as Exhibit 5.5.1b (“ Articles of
Association ”) are the currently valid Articles of
Association of the Company. No shareholder resolution has been
passed or action taken or is pending which would change the
Articles of Association or the content of the certified excerpt of
the commercial register attached as Exhibit 5.5.1a.
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5.5.2 |
The Share is existing, fully paid in by conversion of the
former stock corporation under the name STEINBERG Media
Technologies AG in a limited liability company, without additional
payment obligations (Nachschusspflichten) and except as set
out in the current Articles of Association of the Company free of
ancillary ( Nebenpflichten ) or other obligations or
restrictions. |
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5.5.3 |
No resolution to liquidate the Company has been adopted, nor is
there any action or request pending to accomplish such liquidation.
Further, the Company has not been terminated and no resolution to
redeem or to transfer the Share has been adopted except for a
resolution with respect to this Transaction. |
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5.5.4 |
All shareholders’ resolutions required by law or by the
Articles of Association of the Company have duly been passed in
accordance with the law and the Company’s Articles of
Association, in particular, but not limited to resolutions
regarding the appropriation of profits and the adoption of the
annual financial statements. |
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5.5.5 |
The Company is in compliance with all legal requirements with
respect to the filing and the maintaining of corporate documents
and to the filing of respective notifications to the commercial
register. No resolutions have been passed or filed with the
commercial register which have not yet been registered and which
are not reflected in Exhibit 5.5.1a. |
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5.6 |
Title to Share and Interests in the Company |
The statement of the Preamble
about the Seller’s shareholding in the Company is complete
and correct in every respect.
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5.6.1 |
The Seller holds all legal rights ( Rechte ), title (
rechtliches Eigentum ) and economic interest (
wirtschaftliches Eigentum ) in and to the Share, free and
clear from any encumbrances, liens or any other rights or interests
of third parties of any type whatsoever and there are no claims for
the granting of such rights or transfer of the Share. |
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5.6.2 |
The Company has not granted any direct or indirect equity
interest of any type whatsoever in the Company other than the Share
nor granted any right to participate in the turnover, profits or
assets of the Company, and there are no rights, options or claims
for the granting of any such interests or rights. The Company has
not issued any financial instruments in addition to the
Inter-Company Loans entered into with the Seller. |
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5.6.3 |
With the transfer of the Share to the Purchaser at Closing, the
Purchaser will acquire full, unrestricted and unencumbered title to
the transferred Share at its free disposal and all of the
outstanding shares of ( alle ausstehenden
Geschäftsanteile ) and equity interests in (
Beteiligungen an ) the Company. |
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5.6.4 |
Neither the Seller, nor any Affiliated Company holds any equity
interest in any enterprise which is developing, marketing,
distributing or selling products similar to the products currently
developed, marketed, distributed and sold by the Company. “
Affiliated Company ” shall mean Pinnacle, Inc., PS
Miro Holdings Inc. & Co. KG and any further affiliates of these
companies and/or Seller in the meaning of Sections 15 et seq. of
the German Stock Corporation Act ( Aktiengesetz ), excluding
the Company. For purposes of this Agreement, any reference to the
Seller and its Affiliated Companies shall be deemed to be the same
as a reference to the “companies of the Pinnacle Group”
with the exclusion of the Company. |
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5.6.5 |
Except for the Articles of Association of the Company (
Gesellschaftsvertrag ) dated March 5, 2003 as well as other
agreements, resolutions and promises specifically referenced in
Exhibit 5.6.5 and this Agreement, there are no agreements,
resolutions or promises concerning the relationship between the
Seller and the Affiliated Companies on the one hand and the Company
on the other hand or any obligations to enter into such agreements,
resolutions or promises. |
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5.7.1 |
The Company does not have any places of business, offices,
branches or divisions outside of its principal place of business at
Neuer Höltigbaum 22-32 in 22143 Hamburg. |
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5.7.2 |
The Company does not hold any direct or indirect equity
interest in any other enterprises. |
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5.7.3 |
The Company is not party to an agreement between undertakings
in the sense of Section 291 et seq. German Stock Corporation Act
(AktG) ( Unternehmensvertrag ). |
The Company’s financial
statement as of June 30, 2003 ( “Financial Statement
2003” ) and the Company’s financial statement as of
June 30, 2004 ( “Financial Statement 2004”)
(together with the Financial Statement 2003 the “Financial
Statements” ), which are attached as Exhibit 5.8a and
5.8b to this Agreement have been prepared with the care of a
prudent businessman on the basis of proper book-keeping and in
accordance with accounting, valuation and depreciation principles
generally accepted in Germany and such principles have been applied
consistently and without change as in the preceding accounting
period. All risks, devaluations and losses ascertainable at the
time of the preparation of the respective financial statements have
been duly provided for by sufficient depreciations, changes of
evaluation or reserves or have been provided for in one of the
aforesaid Financial Statements. The Company does not have any
pension or similar obligation. The Financial
14
Statements are complete and
correct in all material respects and present completely and
correctly the financial condition, net assets, operating results
and cash flows of the Company or of the Company and its
consolidated subsidiaries, respectively, as of the dates and for
the periods indicated therein in all material respects.
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5.9 |
Ordinary Course of Business |
Except as stated specifically
in Exhibit 5.9 , or elsewhere in this Agreement or its
Exhibits, since June 30, 2004 until Closing, the Company has been
and will be operated in the ordinary course of business with the
due skill and care of a prudent business man, in
particular
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5.9.1 |
the Company has carried on its business in the ordinary and
usual course and without entering into any transaction, assuming
any liability or making any payment which is not in the ordinary
course of its business and without any interruption or alteration
in the nature, scope or manner of its business; |
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5.9.2 |
there have been no distributions of any kind to the Seller or
Affiliated Companies nor has any such distribution been
authorized; |
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5.9.3 |
the Company has not sold or otherwise transferred to the Seller
or Affiliated Companies or any third party any part or line of its
business or any corporate opportunities; |
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5.9.4 |
there has been no sale, lease, license or other disposition of
any of the assets or properties of the Company, except in the
ordinary course of business, or any creation of any security
interest in such assets or properties; |
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5.9.5 |
there has been no damage or loss, whether or not covered by
insurance, which materially affects the value of the
Company’s assets or the operation of their
businesses; |
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5.9.6 |
there has been no material deterioration in the financial
condition, net assets, prospects or turnover of the
Company; |
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5.9.7 |
there has been no increase of the credit lines of the Company
and no credit or loan facilities have been taken up by the
Company; |
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5.9.8 |
there has been no waiver or release of any right or claim of
the Company, including any write-off or other compromise of any
account receivable of the Company; |
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5.9.9 |
there has been no change in pricing or royalties relating to
the Company’s products or charged by the Company to its
customers or licensees or in pricing or royalties set or charged by
persons who have licensed intellectual property to the Company
which is not in the ordinary course of business; |
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5.9.10 |
the Company has not effected a change in the number or
composition of the Company’s employees or the salaries, wages
or other remuneration payable to them which is not in the ordinary
course of business; and |
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5.9.11 |
there has been no notification by any customer of the Company
of termination of its relationship with the Company (except for
customers generating less than US$ 20,000 in revenues during last
12 months prior to Closing). |
If any of the statements
contained in Clauses 5.9.6 and 5.9.11 would in fact be correct as
of the Signing but incorrect as of the Closing, this shall not be
deemed to be an Incorrect Statement (as defined in Clause 9.1) if
(i) the incorrectness is based on a fact that occurs after the
Signing and is not under Seller’s or the Company’s
control, this fact has occurred notwithstanding that the Seller has
acted duly and in accordance with Clause 4 and the Seller has
informed the Purchaser about the occurrence of such fact without
undue delay after becoming aware of such fact or (ii) the Purchaser
has agreed in writing to the particular measure or transaction that
triggered such incorrectness, provided that these exceptions shall
not reduce or limit any of the guarantees set forth in any other
subsection of this Clause 5 or other statements, covenants or
warranties of the Seller or Pinnacle, Inc. elsewhere in this
Agreement.
To the Best Knowledge of the
Seller, by the acquisition of the Company pursuant to this
Agreement and the agreements set forth in Clause 10.4.1, the
Purchaser will be able to continue the business of the Company as
it has been conducted until Closing including, without limitation,
the Steinberg US Business. On Closing the Company will have full,
unrestricted and unencumbered title to, and possession of, all
tangible assets which serve or are destined to serve its business
which are listed in Exhibit 5.10d , including those tangible
assets which are being transferred to the Company by the Affiliated
Companies prior to Closing as listed in Exhibit 5.10a (the
“ Returning Tangible Assets ”) and except for
those tangible assets which are leased from persons and companies
other than the Seller and the Affiliated Companies in the ordinary
course of business on normal market terms under leases listed in
Exhibit 5.10b (the “ Leased Tangible Assets
”) and those listed in Exhibit 5.10c which are still
subject to usual reservations of title by suppliers and conditional
upon payment ( Eigentumsvorbehalt ). Exhibit 5.10d
contains a true and complete list of all fixed assets of the
Company except for low value assets ( geringwertige
Wirtschaftsgüter) as of November 26, 2004 (“
Tangible Assets ”).
The Tangible Assets together
with the Returning Tangible Assets and the Leased Tangible Assets
comprise all of the material tangible assets of the Company used by
the Company to conduct its business as it has been conducted until
Signing and will be conducted until Closing, and as contemplated to
be conducted by the Company, as described in any product roadmaps,
business plans or the like existing as of Closing. The Tangible
Assets together with the Returning Tangible Assets and the Leased
Tangible Assets have been well maintained and are in good and
serviceable condition, exempt from normal wear and tear.
All inventories of the
Company that existed on June 30, 2004 are reflected in the
Financial Statement 2004 on the basis of the principles generally
accepted in Germany and such principles have been applied
consistently and without changes as in the preceding accounting
period. The present inventories will be, by quantity and quality,
usable and saleable in the ordinary course of business, taking into
consideration
16
any devaluation made in
respect thereof in the Financial Statement 2004 and which would be
made by an diligent business man in the ordinary course of business
for the period commencing after June 30, 2004.
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5.11 |
Intangible Assets / Intellectual Property
Rights |
Exhibit 5.11 contains
a complete and correct list of patents, utility models, design
patents, trademarks and respective applications and a list of all
other material intellectual property rights and a list of all
licenses granted to the Company or being transferred to the Company
by Affiliated Companies prior to or on Closing pursuant to Clause
10.4.1 which licenses are necessary for the Steinberg Business to
continue operating as it is currently being operated, except for
such licenses granted to the Company by third parties for (i)
software which is used for administrative purposes and (ii) general
software tools, such as assemblers, compilers, source code editors,
run-time modules, libraries, test programs and the like, which are
readily available on the market, provided that, in the case of (i)
and (ii) above, the market price of which (and in absence the of a
market price, the replacement cost of which) does not exceed EUR
10,000 in the individual case, which shall not apply for any
software relating to the SAP System (together the “
Intellectua
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