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Exhibit 10.1

________________________________________________

Share Purchase Agreement

regarding the sale and transfer of
the shares in
Pfaff Beteiligungs GmbH

________________________________________________

30 September 2008

 

 

 

 
 

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SALE AND PURCHASE AGREEMENT

By and between

1.
Dr. Karl-Heinz Pfaff, born 15 March 1933, Schulstr. 56, 86438 Kissing

2.
Stefan Pfaff, born 27 March 1962, Bachernstr. 43, 86438 Kissing

3.
Christoph Pfaff, born 13 June 1968, Kreuzäckerstr. 11a, 86356 Neusäß OT Steppach

4.
Constanze Glötzinger, née Pfaff, born 30 April 1964, Frankenstr. 11,

 
86368 Gersthofen

 
- nos. 1 through 4 herein collectively "Family Shareholders" -

5.
EQT Opportunity (No. 1) Limited Partnership, Isabelle Chambers, Route Isabelle,
St. Peter Port, Guernsey GY1 3RA, Guernsey, Channel Islands,

 
- herein "EQT 1" -

6.
EQT Opportunity (No. 2) Limited Partnership, Isabelle Chambers, Route Isabelle,
St. Peter Port, Guernsey GY1 3RA, Guernsey, Channel Islands,

 
- herein "EQT 2" -

7.
Investor Investment Northern Europe Limited, Canada Court, Upland Road,
St. Peter Port, Guernsey GY1 3BQ, Channel Islands,

 
- herein "EQT 3" -

8.
EQT Opportunity Limited, Isabelle Chambers, Route Isabelle, St. Peter Port,
Guernsey GY1 3RA, Guernsey, Channel Islands,

 
- herein "EQT 4" -

 
- nos. 5 through 8 herein collectively "EQT" -

9.
Bernd Wagner, born 22 May 1961, Burgstaller Str. 7a, 83703 Gmund

10.
Dr. Volker Norbert Bartelt, born 6 May 1961, Dehnerhofstr. 7, 42477 Radevormwald

 

 
2

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11.
Dr. Sven Stork, born 6 June 1940, Postfach 133, Billwil, CH-9245 Oberbüren,
Switzerland

12.
Adolf Kretzer, born 14 May 1942, Eichenallee 36, 57078 Siegen

 
- nos. 9 through 12 herein individually "Participant" and collectively
"Participants"-

 
- nos. 1 through 12 herein individually "Seller" and collectively "Sellers"-

and

13.
Yale Industrials Products GmbH, with its business address at Am Lindenkamp 31,
42549 Velbert, Germany

 
- herein "Purchaser" -

and

14.
Columbus McKinnon Corporation, with its business address at 140 John James
Audubon Parkway, Amherst, New York 14228-1197, USA

 
- herein "Guarantor" -

 
- each of Sellers, Purchaser and Guarantor herein also referred to individually
as a "Party" and collectively as "Parties"-

 

 
3

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TABLE OF CONTENTS

 page
 
 List of Definitions
5

 
 List of Exhibits
7

 
 Preamble
8

 
1.
Current Status and Transaction Dates 
8

 
2.
Sale and Transfer of Shares 
14

 
3.
Purchase Price and Rules for Payment 
16

 
4.
Scheduled Closing Date, Closing Date and Closing 
18

 
5.
Sellers’ Guarantees 
19

 
5a.1
Tax Indemnity
30

 
6.
Remedies for Breach of Sellers’ Guarantees 
34

 
7.
Limitation of Claims 
39

 
8.
Guarantees of the Purchaser and the Guarantor 
41

 
9.
[Intentionally Left Blank] 
43

 
10.
Stefan Pfaff 
45

 
11.
Phoenix’ Loan Balance 
46

 
12.
Continuation of the business after Signing and other Obligations 
47

 
13.
Merger Control Indemnity 
47

 
14.
Guarantor 
47

 
15.
Confidentiality, Announcements 
47

 
16.
Costs, Fees and Taxes 
48

 
17.
Governing Law, Arbitration 
49

 
18.
Entire Agreement and Amendments 
49

 
19.
Notices and Exercise of Rights 
50

 
20.
Miscellaneous 
51

 

 
4

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List of Definitions
 
Term
defined in
 
Term
defined in 

—A—
   
Escrow Balance
43
Agreement
8
 
Exempted Claims
39
AktG
21
 
—F—
 
Alltec GmbH
11
 
Family Shareholders
Caption
Appointee
49
 
Financial Statements 2007
23
—B—
   
Foreign Subsidiaries
13
Best Knowledge of the Sellers
29
 
—G—
 
BGB
15
 
German Subsidiaries
13
Brunnhuber Case
25
 
Group Companies
14
Business Day
17
 
Group Company
14
—C—
   
Guarantor
Caption
Claim Notice
44
 
—H—
 
Closing
18
 
HGB
23
Closing Date
14
 
—I—
 
Closing Events
18
 
Inactive Companies
13
Co-Investment Agreement
8
 
Interest Amount
16
Corresponding Tax Benefits
32
 
Investment Agreement
8
—D—
   
—J—
 
Deductible
39
 
Joint Instruction
43
De-Minimis Claims
39
 
—K—
 
Dreier GmbH
11
 
Key Employees
25
—E—
   
—L—
 
Effective Date
14
 
Liability Cap
40
EQT
Caption
 
Loan Agreement
8
EQT 1
Caption
 
Loan Payment
42
EQT 2
Caption
 
Locked-Box Claims
40
EQT 3
Caption
 
Losses
34
EQT 4
Caption
 
—M—
 
Equity Value
16
 
Material Agreements
27
Escrow Account
17
 
Material Assets
24
Escrow Agents
43
 
Material Intellectual Property Rights
23
Escrow Agreement
17
 
Monthly Reportings
24
Escrow Amount
16
     

 

 
5

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—N—
   
—R—
 
No-Direct Recourse
40
 
Relevant Tax Matter
33
—O—
   
Residual Purchase Price
16
Ordinary Course of Business
21
 
—S—
 
—P—
   
Scheduled Closing Date
18
Participant
Caption
 
Seller
Caption
Participants
Caption
 
Sellers
Caption
Parties
Caption
 
Sellers Affiliates
22
Party
Caption
 
Sellers Bank Account
17
Pension Schemes
26
 
Sellers’ Guarantee
19
Permits
25
 
Sellers’ Guarantees
19
Pfaff Benelux
12
 
Share
10
Pfaff England
11
 
Shareholder Agreements
24
Pfaff GmbH
8
 
Shares
10
Pfaff Hebezeugfabrik
10
 
Signing Date
14
Pfaff Österreich
12
 
Stefan Pfaff Loan
8
Pfaff Polen
12
 
—T—
 
Pfaff Rumänien
13
 
Tax
30
Pfaff Schweiz
11
 
Tax Authority
30
Pfaff Tax Indemnity
33
 
Tax Claims
34
Pfaff Ungarn
13
 
Tax De-Minimis
40
Pfaff Verkehrstechnik Beteiligungs GmbH
10
 
Tax Refund
30
Pfaff Verkehrstechnik KG
10
 
Tax Return
31
Phoenix
43
 
Taxes
30
Phoenix’ Loan Balance
43
 
Third Party Claim
37
Pre-Effective Date Period
30
 
Time Limitations
39
Pre-Effective Date Tax
30
 
Title Claims
39
Purchase Price
16
 
—V—
 
Purchaser
Caption
 
Verkehrstechnik Verwaltungs GmbH i.L.
13
Purchaser Claim
35
     

 

 
6

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List of Exhibits
 

Exhibit 1.5
Legal structure of the Group Companies
Exhibit 2.4
Shareholders’ resolution
Exhibit 2.6
Consents of spouses
Exhibit 3.3.1
Escrow Agreement
Exhibit 5.1.2
Third party rights to the Shares
Exhibit 5.1.4
Rights to shares in the German Subsidiaries
Exhibit 5.1.5
Rights to shares in the Foreign Subsidiaries
Exhibit 5.1.6a
List of pending resolutions of Group Companies
Exhibit 5.1.9a
Disclosures to the Ordinary Course of Business
Exhibit 5.1.10
Material Intellectual Property Rights
Exhibit 5.1.11 (i)
Exempted items of the Financial Statements 2007
Exhibit 5.1.11 (ii)
Inactive Companies (employees, assets, liabilities)
Exhibit 5.1.12
Shareholder Agreements
Exhibit 5.1.13
Monthly Reporting January to August 2008
Exhibit 5.1.14
Fixed assets (Anlagevermögen) and inventories (Vorräte) not owned or lawfully
possessed
Exhibit 5.1.15
Permits
Exhibit 5.1.16
Court proceedings including arbitration proceedings
Exhibit 5.1.17
Product Liability/Warranty Liability Claims
Exhibit 5.1.18 (i)
Key Employees
Exhibit 5.1.18 (ii)
Key Employees who have given a written termination notice
Exhibit 5.1.19
List of collective bargaining agreements
Exhibit 5.1.20
Pensions (schemes, plans and arrangements, obligations)
Exhibit 5.1.21
Real property sublease
Exhibit 5.1.24
Material Agreements
Exhibit 5.1.26
Compliance with applicable laws
Exhibit 5.1.27
Public subsidies
Exhibit 5.1.28
List of material insurance policies
Exhibit 5.4
Protocol related to the inquiry process
Exhibit 5a.7
Tax Indemnity to EQT
Exhibit 11.1
Phoenix Loan Balance
Exhibit 17.2
Arbitration Agreement

 

 
7

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Preamble
 
(A)  
The Sellers are the sole shareholders of Pfaff Beteiligungs GmbH, a limited
liability company (Gesellschaft mit beschränkter Haftung) organised under the
laws of Germany, registered with the Commercial Register of the Local Court of
Augsburg under HRB 15109 and having its registered offices in Kissing, Germany
(herein "Pfaff GmbH").

 
(B)  
EQT has acquired the majority shareholding in Pfaff GmbH pursuant to an
investment agreement (notarial deed no. 6256/2006 of the notary public Dr.
Bernhard Schaub with office at Tal 12, 80331 Munich) entered into between EQT
and the Family Shareholders on 13 October 2006 (herein "Investment Agreement")
by way of a capital increase in Pfaff GmbH.

 
(C)  
The Participants acquired their shares in Pfaff GmbH from EQT pursuant to a
co-investment agreement (notarial deed no. 1499/2007 of the notary public Dr.
Thomas Engel with office at Theatinerstraße 8/III, 80333 Munich) entered into
between EQT, the Family Shareholders and the Participants on 24 May 2007 (herein
"Co-Investment Agreement").

 
(D)  
Pfaff GmbH has a claim on Mr. Stefan Pfaff for repayment of a loan (herein the
"Stefan Pfaff Loan") shown in the Financial Statements 2007 (as defined in
Section 5.1.11 below) in the amount of EUR 1,129,587.22 (in words: one million
one hundred and twenty-nine thousand five hundred eighty-seven Euros and
twenty-two Eurocents) pursuant to several loan agreements (herein collectively
"Loan Agreement").

 
(E)  
The Sellers have concluded that they wish to sell and transfer the Shares to the
Purchaser upon the terms and conditions of this share purchase agreement (herein
"Agreement") and the Purchaser wishes to purchase and acquire all Shares from
the Sellers upon the terms and conditions of this Agreement.

 
Now, therefore, the Parties agree as follows:
 
 
1.  
Current Status and Transaction Dates

 
 
1.1  
The Sellers hold the shares (Geschäftsanteile) in Pfaff GmbH in the nominal
amounts shown below and which represent the entire stated share capital
(Stammkapital) ofPfaff GmbH in the nominal amount of EUR 3,640,000.00 (in words:
three million six hundred and forty thousand Euros):

 
 
8

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Shareholder (Gesellschafter)
shares (Geschäftsanteile) "A"
shares (Geschäftsanteile) "B"
Sum
a)       Dr. Karl-Heinz Pfaff
132,120
22,020
154,140
b)       Stefan Pfaff
36,000
61,740
16,290
114,030
c)       Christoph Pfaff
59,400
61,740
20,190
141,330
d)       Constanze Glötzinger
59,400
57,600
19,500
136,500
e)EQT Opportunity (No. 1) Limited Partnership
1,267,000
238,010
1,505,010
f)EQT Opportunity (No. 2) Limited Partnership
396,000
74,400
470,400
g)Investor Investment Northern Europe Limited
554,400
104,150
658,550
h)EQT Opportunity Limited
92,600
17,340
109,940
k)Bernd Wagner
62,000
700
62,700
l)Dr. Volker Norbert Bartelt
135,000
1,550
136,550

 

 

 
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m) Dr. Sven Stork
91,000
3,650
94,650
n)Adolf Kretzer
54,000
2,200
56,200
Sum
3,120,000
520,000
3,640,000

 
The shares described above are herein referred to individually "Share" and
collectively "Shares".
 
 
1.2  
Pfaff GmbH is the direct or indirect parent company in the following entities:

 
1.
Pfaff-silberblau Hebezeugfabrik GmbH, a limited liability company incorporated
under the laws of Germany, registered with the commercial register of the lower
court of Augsburg under registration number HRB 22844 and having its registered
office in Kissing. The stated capital of Pfaff Hebezeugfabrik amounts to
EUR 1,000,000.00.
(herein "Pfaff Hebezeugfabrik")
2.
Pfaff GmbH is the sole limited partner of Pfaff-silberblau Verkehrstechnik GmbH
& Co. KG, a limited partnership incorporated under the laws of Germany,
registered with the commercial register of the lower court of Augsburg under
registration number HRA 14760 and having its registered office in Kissing. The
sole general partner (persönlich haftender Gesellschafter) without any capital
interest (ohne Kapitalanteil) of Pfaff Verkehrstechnik KG is Verkehrstechnik
Beteiligungs GmbH.
(herein "Pfaff Verkehrstechnik KG")
3.
Pfaff GmbH holds the sole share in Pfaff-silberblau Verkehrstechnik Beteiligungs
GmbH, a limited liability company incorporated under the laws of Germany,
registered with the commercial register of the lower court of Augsburg under
registration number HRB 21445 and having its registered office in Kissing. The
stated capital of Verkehrstechnik Beteiligungs GmbH amounts to EUR 25,000.00 and
consist of one single share in this amount.
(herein "Pfaff Verkehrstechnik Beteiligungs GmbH")

 

 
10

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4.
Pfaff Hebezeugfabrik holds all shares in ALLTEC Antriebstechnik GmbH, a limited
liability company incorporated under the laws of Germany, registered with the
commercial register of the lower court of Stuttgart under registration number
HRB 104085 and having its registered office in Heilbronn. The stated capital of
Alltec GmbH amounts to EUR 500,000.00.
(herein "Alltec GmbH")
5.
Pfaff Hebezeugfabrik holds all shares in Dreier Transportgeräte, Lager- und
Betriebseinrichtungen GmbH, a limited liability company incorporated under the
laws of Germany, registered with the commercial register of the lower court of
Augsburg under registration number HRB 15048 and having its registered office in
Kissing. The stated capital of Dreier GmbH amounts to DEM 100,000.
(herein "Dreier GmbH")
6.
Pfaff Hebezeugfabrik holds all shares in Pfaff-silberblau Hebezeuge und
Antriebstechnik AG, a company incorporated under the laws of Switzerland,
registered with the commercial register of the canton Zurich under registration
number CH-020.3.920.021-1 and having its registered office in Buchs/Switzerland.
The stated capital of Pfaff Schweiz amounts to CHF 150,000.
(herein "Pfaff Schweiz")

 

 
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7.
Pfaff Hebezeugfabrik holds all shares in Pfaff-silberblau Ltd., a company
incorporated under the laws of England, registered with the commercial register
of Cardiff under registration number 1754473 and having its registered office in
Prenton/England. The stated capital of Pfaff England amounts to GBP 50,000.
(herein "Pfaff England")
8.
Pfaff Hebezeugfabrik holds 40 shares in the nominal amount of NLG 1,000 each, in
total NLG 40,000, respectively, of Pfaff-silberblau Benelux B.V., a company
incorporated under the laws of the Netherlands, registered with the commercial
register of Zuid-Limburg under registration number 14059942 and having its
registered office in Voerendaal/Netherlands. The total stated capital of Pfaff
Benelux amounts to NLG 40,000.
(herein "Pfaff Benelux")
9.
Pfaff Hebezeugfabrik holds the sole share in Pfaff-silberblau Winden und
Hebezeuge GesmbH, a company incorporated under the laws of Austria, registered
with the commercial register of the district court of Wiener Neustadt under
registration number FN 109585 f and having its registered office in
Leobersdorf/Austria. The stated capital of Pfaff Österreich amounts to
EUR 36,336.40 and consists of one single share in this amount.
(herein "Pfaff Österreich")
10.
Pfaff Hebezeugfabrik holds all shares in Pfaff-silberblau Polska Sp.z.o.o., a
company incorporated under the laws of Poland, registered with the commercial
register of Posen, Abt. 21 (Wirtschaftsangelegenheiten) under registration
number 0000213299 and having its registered office in Poznan/Poland. The stated
capital of Pfaff Polen amounts to PLN 150,000.00.
(herein "Pfaff Polen")

 

 
12

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11.
Pfaff Hebezeugfabrik holds all shares in Pfaff-silberblau Hungària Csörlök es
Emelöszközök Kereskedelmi KFT, a company incorporated under the laws of Hungary,
registered with the commercial register of Budapest under registration number
13-09- and having its registered office in Vece’s/Hungary. The stated capital of
Pfaff Ungarn amounts to HUF 6,000,000.
(herein "Pfaff Ungarn")

 
 
- nos. 1. through 5. hereinafter collectively referred to as the "German
Subsidiaries" -

 
- nos. 6. through 11. hereinafter collectively referred to as the "Foreign
Subsidiaries" -

 
1.3  
The following companies are former active subsidiaries of Pfaff GmbH:

 
1.
Pfaff-silberblau Verkehrstechnik Verwaltungs GmbH i.L., Friedberg (ehemals
Tennis-Center-Ost Derching GmbH, Friedberg)
(herein "Verkehrstechnik Verwaltungs GmbH i.L")
2.
Pfaff-silberblau Utilaje de Ridicat si Transportat S.R.L., Bucuresti/Rumänien
(herein "Pfaff Rumänien")

 
Verkehrstechnik Verwaltungs GmbH i.L. is currently in the process of
liquidation.
 
Pfaff Rumänien has been closed and is currently in the process of liquidation.
 
(Verkehrstechnik Verwaltungs GmbH i.L. and Pfaff Rumänien herein collectively
"Inactive Companies").
 
 
1.4  
Pfaff GmbH is party to (i) a domination and profit and loss pooling agreement
(Beherrschungs- und Gewinnabführungsvertrag) with Pfaff-Hebezeug­fabrik and (ii)
aprofit and loss pooling agreement with Alltec GmbH and (iii) a domination and
profit and loss pooling agreement with Dreier GmbH.

 

 

 
13

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1.5  
Pfaff GmbH, the German Subsidiaries and the Foreign Subsidiaries are herein
individually and collectively "Group Company" or the "Group Companies". The
legal structure of the Group Companies as of the Signing Date is set out in
Exhibit 1.5.

 
 
1.6  
Effective Date, Signing Date and Closing Date shall each have the following
meaning in this Agreement:

 
1.6.1  
"Effective Date" shall be 31 December 2007, 24:00 Hours.

 
1.6.2  
"Signing Date" shall be the day on which this Agreement has been duly executed
before a notary public.

 
1.6.3  
"Closing Date" shall be the day on which all, and not some only, of the Closing
Events (as defined in Section 4.4 below) shall have taken place and/or have been
duly waived, as the case may be.

 
 
2.  
Sale and Transfer of Shares

 
 
2.1  
Sale of Shares

 
The Sellers hereby sell with commercial effect (mit wirtschaftlicher Wirkung) as
of the Effective Date and subject to the terms and conditions of this Agreement
the Shares in Pfaff GmbH to the Purchaser and the Purchaser hereby purchases the
Shares from the Sellers.
 
 
2.2  
Ancillary Rights

 
The sale of the Shares shall include all rights and obligations pertaining
thereto, including the dividend rights (Gewinnbezugsrecht) to all profits not
yet distributed to the Sellers on the Closing Date except as provided otherwise
in this Agreement.
 
 
2.3  
Transfer of the Shares

 
Each Seller hereby transfers the Shares set out next to his name in Section 1.1
to the Purchaser and Purchaser accepts such transfer of the Shares. The transfer
of the Shares
 
pursuant to the foregoing sentence shall be subject (aufschiebend bedingt) to
the payment of the Purchase Price pursuant to Section 3.2 into the Sellers’
Account and the Escrow Account, respectively, and shall occur with in rem effect
(dinglicher Wirkung) as of the Closing Date, it being understood that for
purposes of this clause the Closing Event set forth in Section 4.4.1 shall not
be part of the definition of Closing Date.
 
 
14

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2.4  
Approval of Shareholders’ Meeting

 
The shareholders’ meeting of Pfaff GmbH has unanimously approved the sale and
transfer of the Shares set out in this Agreement by resolution as of todate as
set out in the shareholders’ resolution protocol, a copy of which is attached to
this Agreement as Exhibit 2.4.
 
 
2.5  
Waiver of Certain Rights

 
The Sellers hereby waive any and all rights, claims and entitlements they may
have with respect to the Shares, i.e. any pre-emption rights, rights of first
refusal, approval rights, usufruct, encumbrances and the like relating to the
transactions contemplated under this Agreement, in particular the sale and
transfer of the Shares. Dr. Karl-Heinz Pfaff expressly waives any usufruct
rights regarding the Shares held by Constanze Glötzinger, Stefan Pfaff and
Christoph Pfaff and EQT expressly waive any pledges regarding the Shares held by
the Family Shareholders. Any other rights of the Sellers against each others
pursuant to the Investment Agreement and the Co-Investment Agreement remain
unaffected.
 
 
2.6  
Approval of Spouses

 
The Family Shareholders do not require the consent of their spouses since they
either live with their spouses under the marital property regime of separation
of goods (Gütertrennung) or the sale and transfer of the Shares is exempted from
any such consent by virtue of a modified statutory marital property regime
(modifizierte Zugewinngemeinschaft). The spouses of the Participants have
consented to the execution and consummation of this Agreement, including the
sale and transfer of the Shares, in all respects, including under Section 1365
of the German Civil Code (Bürgerliches Gesetzbuch - BGB, herein "BGB"), in
particular the spouse of Mr. Wagner as trustor of the Shares held by her; copies
of the respective declarations of consent are attached to this Agreement as
Exhibit 2.6.
 

 

 
15

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3.  
Purchase Price and Rules for Payment

 
 
3.1  
Purchase Price

 
The purchase price for the Shares sold pursuant to Section 2.1 shall be the
aggregate of
 
3.1.1  
a fixed amount of

 
EUR 36,000,000.00
 
(in words: thirty six million Euros)
 
(herein "Equity Value")
 
plus
 
3.1.2  
an amount equivalent to interest on the Equity Value at a rate of 1 (one)
percent per month for the period after 15 October 2008 (if any) until, and
including, the date of payment (herein "Interest Amount");

 
(herein "Purchase Price").
 
 
3.2  
Payment

 
3.2.1  
On the Scheduled Closing Date the Purchaser shall pay the Purchase Price to the
Sellers as follows:

 
a)  
EUR 3,600,000.00 (in words: three million six hundred thousand Euros) (herein
"Escrow Amount") into the Escrow Account as defined in Section 3.3.1 below; and

 
b)  
the balance of the Equity Value minus the Escrow Amount in the amount of EUR
32,400,000.00 (in words: thirty two million four hundred thousand Euros) plus
the Interest Amount (herein "Residual Purchase Price") into the Sellers Bank
Account as defined in Section 3.3.2 below.

 
3.2.2  
Any payments to be made under this Agreement shall be made by irrevocable wire
transfer in immediately available funds, value as of the relevant due date set
out in this Agreement or otherwise provided by law, free of bank and/or any
other charges.

 
3.2.3  
Sellers and Purchaser agree that payment of the Escrow Amount into the Escrow
Account and payment of the Residual Purchase Price into Sellers’ Bank Account
shall constitute fulfilment (Erfüllung) of Purchaser’s obligation to pay and
Sellers’ claim for payment of the Purchase Price.

 

 

 
16

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3.3  
Escrow Account and Sellers’ Bank Account

 
3.3.1  
The Escrow Amount shall be paid by Purchaser into the following bank account:

 
Account
holder:                                                                           Fellmann
Christ Partner
                     Elisabethenanlage 11, 4051 Basel
Account
number:                                                                         0233-721811.60F
Bank:                                                                              UBS
AG,
         Aeschenvorstadt 1, 4051 Basel
IBAN:                                                                                  CH15
0023 3233 7218 1160 F
SWIFT-BIC:                                                                        UBSWCHZH80A

(herein "Escrow Account") solely as security for, and only recourse against the
Sellers with respect to, any Purchaser Claims (as defined in Section 6.2 below).
The Escrow Account shall be governed by the terms of the escrow agreement
attached hereto as Exhibit 3.3.1 (herein "Escrow Agreement") and the Escrow
Amount together with all interest accrued thereon shall only be released in
accordance with the terms of the Escrow Agreement.
 
3.3.2  
Any payments, except for the Escrow Amount, owed by the Purchaser to the Sellers
under this Agreement shall be paid into the following bank account or to such
other bank account of which the Sellers have notified the Purchaser at least
three (3) Business Days prior to the respective payment being due:

 
Account
holder:                                                                          
 Phoenix Holdings Guernsey Limited
Account
number:                                                                          2029
– 56298891
Bank:                                                                               Royal
Bank of Scotland
IBAN:                                                                               
GB15 RBOS 1620 2956 2988 91
SWIFT-BIC:                                                                         RBOSGGSP

(herein "Sellers Bank Account"). Sellers shall instruct the bank maintaining the
Sellers’ Bank Account to confirm receipt of the Residual Purchase Price at the
Closing via fax to Sellers and to Purchaser immediately after such payment has
been received by the bank.
 
A "Business Day" shall mean a day on which banks in Frankfurt are open for
business excluding Saturdays.
 

 

 
17

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4.  
Scheduled Closing Date, Closing Date and Closing

 
 
4.1  
Closing

 
The consummation of the transaction contemplated hereunder (herein "Closing")
shall take place on 1 October 2008 or at any other time or place as the Parties
may mutually agree (herein "Scheduled Closing Date").
 
 
4.2  
[Intentionally left blank.]

 
 
4.3  
[Intentionally left blank.]

 
 
4.4  
Closing Events

 
On the Scheduled Closing Date, the Parties shall carry out the following actions
(the "Closing Events") in the order shown below:
 
4.4.1  
Delivery by the Sellers of resignation letters signed by the members of the
board (Beirat) of Pfaff GmbH such resignations becoming effective as of the
Closing

 
4.4.2  
Payment by the Purchaser of the Escrow Amount into the Escrow Account

 
4.4.3  
Payment by the Purchaser of the Residual Purchase Price into the Sellers Bank
Account.

 
 
4.5  
Closing Confirmation

 
On the Closing Date, the Parties shall confirm that the Closing has occurred.
 
 
4.6  
Withdrawal

 
4.6.1  
[Intentionally left blank.]

 
4.6.2  
In the event the Purchaser has failed to pay either the Escrow Amount or the
Residual Purchase Price within ten (10) Business Days after the Scheduled
Closing Date, the Sellers may withdraw from this Agreement. If the Sellers
withdraw from this Agreement, then the Purchaser shall be obliged to pay a
contractual penalty in the amount of EUR 3,000,000.00 (in words: three million
Euros). The contractual penalty constitutes the Sellers minimum damage
(Mindestschaden) and shall not prejudice the Sellers in whatsoever

 

 

 
18

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form to claim further damages against the Purchaser incurred in connection with
this Agreement or the transactions contemplated under this Agreement.
 
4.6.3  
Any withdrawal by the Sellers shall be declared by EQT 1 representing all of the
Sellers by giving written notice to the Purchaser. The Sellers (except EQT 1)
hereby (i) irrevocably grant power of attorney to EQT 1 to declare the
withdrawal on behalf of the Sellers and (ii) release EQT 1 from the restrictions
of Section 181 BGB or any applicable similar provision of foreign jurisdictions,
if any.

 
4.6.4  
In case of a withdrawal, this Agreement shall be rescinded except that this
Section 4.6 and Sections 15 to 20 shall in each case survive and remain in full
force and effect.

 
 
5.  
Sellers’ Guarantees

 
 
5.1  
General

 
The Sellers hereby guarantee to the Purchaser by way of an independent guarantee
(selbständiges Garantieversprechen) pursuant to Section 311 (1) BGB and subject
to the limitations contained in this Agreement, in particular but not limited to
the remedies set out in Section 6, that the following statements are true and
correct in each case as of the Signing Date, and, unless expressly specified
otherwise herein, also as of the Closing Date (herein "Sellers’ Guarantees" or
"Sellers’ Guarantee"):
 
5.1.1  
This Agreement constitutes legally valid and binding obligations of the Sellers
enforceable under German law against the respective Seller in accordance with
its terms, except that the enforceability thereof may be limited by insolvency,
or other similar laws relating to, or affecting, the rights of creditors
generally. The Sellers have the absolute and unrestricted right, power,
authority and capacity to execute this Agreement and to perform their
obligations under this Agreement.

 
5.1.2  
Each of the Sellers declares with respect to the Shares held by him as listed in
Section 1.1 that he is the sole and unrestricted owner of these Shares.
Furthermore, each of the Sellers declares with respect to the Shares held by him
as listed in Section 1.1 that these Shares (i) have been validly issued, (ii)
are fully paid up, non-assessable and the relevant share capital has not been
repaid and that except as disclosed in Exhibit 5.1.2 or waived pursuant to
Section 2.5 of this Agreement the Shares are (i) free and clear of any third
party rights and (ii) have not been pledged,

 

 

 
19

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assigned, charged or used as security, in each case as of the Closing Date. The
total nominal share capital of Pfaff GmbH amounts to EUR 3,640,000.00 and Pfaff
GmbH does not have any shareholders other than those set forth in Section 1.1.
 
5.1.3  
The Sellers are not required to obtain any consent or governmental authorisation
in connection with the execution and consummation of this Agreement. This
section, however, does not apply to any merger control requirements in relation
to the transactions contemplated by this Agreement.

 
5.1.4  
Except as disclosed in Exhibit 5.1.4 the Sellers declare with respect to the
shares in the German Subsidiaries that these shares (i) are directly or
indirectly owned by Pfaff GmbH, (ii) are free and clear of any third party
rights and (iii) have not been pledged, assigned, charged or used as a security
for any third party (other than Group Companies) liability, (iv) have been
validly issued, (v) are fully paid-up, non-assessable and (vi) the relevant
share capital has not been repaid, it being understood that for purposes of
evaluating whether or not a breach of this clause has triggered any Losses a
mere intra-group obligation shall not constitute any Losses if the relevant
amounts to be paid remain within the Group Companies. The total nominal share
capital of the German Subsidiaries corresponds to the amounts set forth in
Section 1.2 and the German Subsidiaries do not have any shareholders other than
those set forth in Section 1.2.

 
5.1.5  
Except as disclosed in Exhibit 5.1.5, the Sellers declare with respect to the
shares in the Foreign Subsidiaries, that these shares (i) are directly or
indirectly owned by Pfaff GmbH, (ii) are free and clear of any third party
rights and (iii) have not been pledged, assigned, charged or used as a security
for any third party (other than Group Companies) liability, (iv) have been
validly issued, (v) are fully paid-up, non-assessable and (vi) the relevant
share capital has not been repaid. Except as disclosed in Exhibit 5.1.5, no
party holds any pre-emptive or option rights regarding the shares in any of the
Group Companies, it being understood that for purposes of evaluating whether or
not a breach of this clause has triggered any Losses a mere intra-group
obligation shall not constitute any Losses if the relevant amounts to be paid
remain within the Group Companies. The total nominal share capital of the
Foreign Subsidiaries corresponds to the amounts set forth in Section 1.2 and the
Foreign Subsidiaries do not have any shareholders other than those set forth in
Section 1.2.

 
5.1.6  
Each of the Group Companies is duly incorporated and validly existing under the
laws of its registered place, in particular, Pfaff GmbH is a duly incorporated
and validly existing limited liability company (Gesellschaft mit beschränkter
Haftung) under the laws of the Federal Republic of Germany with its registered
offices in Kissing and

 

 

 
20

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registered with the Commercial Register of the Local Court of Augsburg under
HRB 15109.
 
5.1.6a
Except as disclosed in Exhibit 5.1.6a, there is no resolution of any Group
Companies pending which, or the implementation of which, would require
registration in the commercial register or similar offices under non-German
jurisdictions. To the Best Knowledge of the Sellers, all corporate
restructurings with respect to any of the Group Companies have been duly and
validly carried out in all material respects.

 
5.1.7  
Except as described in Sections 1.2 to 1.4 of this Agreement, as of the Signing
Date none of the Group Companies or Inactive Companies (i) have any interests in
any other legal entities, partnerships or similar organisations, (ii) have
entered into any agreement to acquire any direct or indirect participation in
any other company, (iii) maintain any direct company (gesellschaftsrechtliche)
relationship with any third party, in particular no participation or sub
participation in any other company, and (iii) there exist no enterprise
agreements within the meaning of Sections 291 and 292 German Stock Corporation
Act (Aktiengesetz – AktG) (herein "AktG"), no agreements on any profit-sharing
(Genussrechte), no agreements on any silent partnership (stille Gesellschaft),
to which any of the Group Companies or Inactive Companies is a party or owes an
obligation to become a party.

 
5.1.8  
As of the Signing Date, no bankruptcy or judicial composition proceedings have
been applied for in respect of any Group Company during the last two years and
no circumstances exist which would require the application for any such
proceedings concerning any of the Group Companies.

 
5.1.9  
Between the Effective Date and the Signing Date, in light of the restructuring
of the Group Companies, the management has implemented various measures which
deviated from past practice and which had the intention of improving the
business operations, and, taking this into account, the business operations of
the Group Companies have been conducted in the ordinary course of business with
the standard of care of a prudent merchant (Sorgfalt eines ordentlichen
Kaufmanns) and in all material respects as described and disclosed in the
Management Presentation dated 12 August 2008, the Monthly Reportings (as defined
in Section 5.1.13) of the Group Companies (herein "Ordinary Course of
Business"). In particular, to the Best Knowledge of the Sellers, no Group
Company has, and no Seller has caused any Group Company, to enter into any
transactions between the Effective Date and the Signing Date other than in the
Ordinary Course of Business.

 

 

 
21

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5.1.9a
In particular, and except as disclosed in Exhibit 5.1.9a, no Group Company has
done, and no Seller has caused any Group Company to do, any of the following:

 
(i)  
to issue, sell, repurchase, redeem or repay any shares or interest in its
capital (including any options, bonds, warrants, conversion rights or other
similar rights) between the Effective Date and the Signing Date;

 
(ii)  
to declare or pay any dividend or to make any other distribution (whether in
cash or kind) to its respective shareholders or Seller's Affiliates between the
Effective Date and the Signing Date and will not declare, pay any such dividend
or make any such other distribution after the Signing Date, in each case expect
for dividends or other distributions to any other Group Company;

 
(iii)  
to enter into any transaction with, pay any amounts (including by way of group
charges, cash pooling arrangements, advisory fees or other expenses) to, or to
assume any costs or expenses of, Sellers or any Sellers’ Affiliates which have,
in each case, not been fully settled or paid before the Effective Date without
any remaining liability for any of the Group Companies; "Sellers’ Affiliates"
shall mean, in each case excluding the Group Companies, the affiliates
(verbundene Unternehmen) within the meaning of Section 15 AktG of Sellers, the
relatives in the meaning of Section 15 of the German Tax Code (Abgabenordnung)
of Sellers, the related persons (nahestehende Personen) within the meaning of
Section 1 (2) of the German International Tax Relations Law (Außensteuergesetz)
and, in each case, their respective directors, officers, or employees
(Mitarbeiter);

 
(iv)  
to pay or to incur, assume or otherwise become directly or indirectly liable for
the payment of any costs or fees, including any advisors’ or consultants’ fees,
in connection with the preparation, execution or consummation of this Agreement
which have, in each case, not been fully settled or paid before the Effective
Date without any remaining liability for any of the Group Companies;

 
(v)  
to make any change or amend any collective bargaining agreement, however with
the proviso, that the Group Companies are currently considering the introduction
of a performance based bonus system (Prämienlohnsystem) between the Effective
Date and the Signing Date;

 

 

 
22

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(vi)  
to make or agree to make, any capital expenditure (including leasing) with
respect to fixed as­sets in excess of an aggregate amount of EUR 500,000.00
outside the Ordinary Course of Business between the Effective Date and the
Signing Date;

 
(vii)  
to the Best Knowledge of the Sellers, to incur any actual or contingent
liability for any material off-balance sheet financial indebtedness except as
(i) entered into in the Ordinary Course of Business or (ii) shown or described
in the Monthly Reporting, in each case between the Effective Date and the
Signing Date, except for usual product warranties given to customers;

 
provided, however, that a 10% interest of Mr. Wilbert Lennartz held in Pfaff
Benelux has been sold and transferred to Pfaff Hebezeugfabrik today. The
purchase price of EUR 70,000.00 shall be paid at the latest on 2 October 2008.
 
5.1.10  
Exhibit 5.1.10 contains a list of material intellectual property rights
("Material Intellectual Property Rights") indicating the nature and owner of the
Material Intellectual Property Rights as of the Signing Date. To the Best
Knowledge of the Sellers, the Material Intellectual Property Rights are not
subject to any pending or threatened proceedings for cancellation or revocation.
To the Best Knowledge of the Sellers (i) the use of the Material Intellectual
Property Rights by the Group Companies does not infringe any third party rights
and (ii) no third party infringes any Material Intellectual Property Rights. For
the avoidance of doubt, standard software shall not be a Material Intellectual
Property Right. The Material Intellectual Property Rights represent all
intellectual property rights which are necessary and / or used by the Group
Companies to carry out their respective businesses in all material respects in
the same manner as conducted on the Signing Date and are owned or lawfully used
by the respective Group Companies.

 
5.1.11  
The Sellers have furnished the Purchaser prior to the Signing Date with a copy
of the (partly) audited financial statements of the German Subsidiaries and a
copy of the audited consolidated financial statements of Pfaff GmbH, each as of
the Effective Date, for the period starting 1 January 2007 until the Effective
Date (herein collectively "Financial Statements 2007"). The Financial Statements
2007 have been prepared by the management of the respective company and audited
by "Ebner, Stolz und Partner Wirtschaftsprüfungsgesellschaft, Hannover" in
compliance with the German Commercial Code (Handelsgesetzbuch - HGB, herein
"HGB"), HGB and the German standards on auditing adopted by the Institute of
Chartered Accountants (Institut der Wirtschaftsprüfer). Except as disclosed in
Exhibit 5.1.11 (i), the Financial

 

 

 
23

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Statements 2007 give a true and fair view of the assets, liabilities and results
for the period from 1 January 2007 to the Effective Date of the respective Group
Companies. To the Best Knowledge of the Sellers, none of the Group Companies has
as per the Effective Date any actual or contingent liability for any material
off-balance sheet financial indebtedness except as (i) entered into in the
ordinary course of business or (ii) shown or described in the Financial
Statements 2007.
 
Except as disclosed in Exhibit 5.1.11 (ii), none of the Inactive Companies
employs any employees, has any assets or liabilities (actual or contingent) or
is subject to any contracts or contractual offers.
 
5.1.12  
Exhibit 5.1.12 lists all agreements between any of the Group Companies on the
one side and any of the Sellers, any person related to any Seller or any
affiliate of any Seller on the other side with any kind of obligations for any
of the Group Companies that have not yet been fully settled prior to the Closing
Date ("Shareholder Agreements").

 
5.1.13  
The Sellers have furnished the Purchaser prior to the Signing Date with the
management accounts of the Group Companies for the period starting 1 January
2008 until 31 August 2008 ("Monthly Reportings") copies of which are attached as
Exhibit 5.1.13. The Monthly Reporting as per 31 August 2008 has been prepared by
the management of Pfaff GmbH with the care and duty of a prudent business man
and gives, to the Best Knowledge of the Sellers, a true and fair view of the
assets, liabilities and results of the Group Companies for the period starting
1 January 2008 until 31 August 2008. The Monthly Reportings have not been
audited or reviewed by any auditors.

 
5.1.14  
Except as disclosed in Exhibit 5.1.14, and to the Best Knowledge of the Sellers,
each Group Company owns or holds lawful possession of all fixed assets
(Anlagevermögen) and inventories (Vorräte) (i) necessary for carrying out its
business in substantially the same fashion and manner as of the Signing Date
(ii) which are reflected in the Financial Statements 2007 or which have been
acquired after 31 December 2007, provided, however, that such material assets
have not been sold, abandoned or otherwise disposed of outside the Ordinary
Course of Business since 31 December 2007 (herein collectively "Material
Assets"). To the Best Knowledge of the Sellers, the Material Assets are not
charged with any rights of third parties including transfer for security
purposes (Sicherungsübereignungen) except for (i) customary rights of retention
of title (handelsübliche Eigentumsvorbehalte) imposed by suppliers, liens,
pledges or other security rights in favour of suppliers, mechanics, workers,
carrier and the like, (ii) security rights granted to banks and other financial
institutions to secure

 

 

 
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any indebtedness of any of the Group Companies, (iii) statutory security rights
in favour of landlords, tax authorities or other governmental authorities to
secure any indebtedness of any of the Group Companies. To the Best Knowledge of
the Sellers, the Material Assets are in a useable condition in order to continue
the business of the Group Companies in substantially the same fashion as of the
Signing Date.
 
5.1.15  
To the Best Knowledge of the Sellers, Pfaff GmbH and the German Subsidiaries are
in possession of all material governmental approvals and permits necessary to
operate their business as it is conducted as of the Signing Date hereof and
which are material for their business taken as a whole (collectively "Permits")
except as disclosed in Exhibit 5.1.15.

 
5.1.16  
The Group Companies are, as of the Signing Date, not involved in court
proceedings including arbitration proceedings either as plaintiff or defendant
having a litigation value (Streitwert) exceeding EUR 20,000.00 (in words: twenty
thousand Euros) in the individual case and, to the Best Knowledge of the
Sellers, no such claims have been threatened in writing against any of the Group
Companies in each case except as disclosed in Exhibit 5.1.16.

 
 
Pfaff GmbH shows in its Financial Statements 2007 an accrual related to a damage
event in France (the "Brunnhuber Case") in the amount of EUR 297,780.00. The
currently known total damage resulting from the Brunnhuber Case amounts to
EUR 727,192.37 plus interest thereon as per June 2008 in the amount of
EUR 182,384.14. The insurance company Allianz will bear 70.31% and Pfaff GmbH
will bear 29.69%. The payments made in this respect by Pfaff GmbH and Allianz
are set forth in Exhibit 5.1.16.
 
5.1.17  
Except as disclosed in Exhibit 5.1.17, to the Best Knowledge of the Sellers,
none of the Group Companies has delivered any products which have triggered any
material product or warranty liability claims that are not yet fully settled or
fully covered by insurances.

 
5.1.18  
Exhibit 5.1.18 (i) contains a true and complete list of all employees employed
on a permanent basis by the Group Companies with a fixed annual base salary
(Grundgehalt) exceeding EUR 75,000.00 (in words: seventy-five thousand Euros)
and of all managing directors of any Group Company, in each case as of 1
September 2008 ("Key Employees"). Except as set forth in Exhibit 5.1.18 (ii), as
of the Signing Date, none of the Key Employees has given to any Group Company a
written notice of termination of his or her employment. The execution or
consummation of this Agreement or the transactions contemplated herein do not
trigger any rights or claims

 

 

 
25

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of any Key Employee. No Group Company is bound by any option or similar plan
relating to shares or other participations in any Group Company.
 
5.1.19  
Exhibit 5.1.19 contains a complete list of collective bargaining agreements and
material agreements with unions, workers' councils and similar organisations by
which any of the Group Companies is bound.

 
5.1.20  
All obligations for payments and contributions due with respect to pension
benefits to employees and former employees of the Group Companies in amounts as
disclosed in Exhibit 5.1.20 have been paid or have been accrued for pursuant and
in compliance with HGB or the accounting principles applicable in the respective
jurisdiction. Exhibit 5.1.20 also includes a list of all pension schemes, plans
and arrangements applicable to employees, and former employees, directors of the
Group Companies, and any dependants of any of the afore mentioned (herein
"Pension Schemes"). The Pension Schemes comply in all material aspects with and
have been in all material aspects administrated in accordance with all
applicable laws, regulations and requirements. The pension plan of Pfaff
Hebezeugfabrik has been fully closed with effect as of 31 December 2004 and no
other employees of Pfaff Hebezeugfabrik than those who participated in the
pension plan of Pfaff Hebezeugfabrik prior to its closure have gained any
pension entitlements after this date.

 
5.1.21  
Except as disclosed in Exhibit 5.1.21, as of the Signing Date, no Group Company
sub-leases any real property. The Group Companies do not own real estate or have
an inheritage building right (Erbbaurecht) or equivalent right under any
non-German jurisdiction or other real property right (grundstücksgleiches Recht)
or equivalent right under any non-German jurisdiction.

 
5.1.22  
To the Best Knowledge of the Sellers, there are no contaminations of (i) the
soil on which the business of Pfaff GmbH or the German Subsidiaries is conducted
(ii) or the buildings currently used by Pfaff GmbH or the German Subsidiaries
and which would obligate Pfaff GmbH or the German Subsidiaries under the
environmental laws in effect on the date hereof to any clean-up or to any other
remedial measures or liabilities.

 
5.1.23  
All returns and declarations required to be filed by the Group Companies and the
Inactive Companies with regard to Taxes (as defined in Section 5a.1) have been
filed in a timely manner and the Group Companies and the Inactive Companies have
paid all Taxes shown as due on the assessment for Taxes or as otherwise due. No
back-to-back financing arrangements within the meaning of Section 8a of the
German Corporate Income Tax Act (in force at each relevant point in time) with
respect to any

 

 

 
26

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third party loan agreements granted to any of the Group Companies have been or
will be in place until the Closing Date which could jeopardize the tax
deductibility of interest payments related thereto. All documents, applications
and filings regarding the transformation of Pfaff Hebezeugfabrik from a GmbH &
Co. KG into a GmbH with tax effect as of 31 December 2006 which need to be filed
with the competent tax authorities to ensure a tax neutral transformation (i.e.
a transformation at book value) have been duly and timely filed with the
competent tax authorities, in particular the application to further use the book
values after the transformation.
 
5.1.24  
As of the Signing Date, except as listed in Exhibit 5.1.24 and except agreements
between Group Companies, no Group Company is a party to, or is bound by any
pending offer to enter into, any of the agreements listed in this Section 5.1.24
("Material Agreements"):

 
(i)  
in-licence and out-licence agreements involving expected royalty payments and
other monetary consideration in the aggregate (without VAT) of more than
EUR 50,000.00 (in words: fifty thousand Euros) to be paid by or to a Group
Company per year and per license agreement individually;

 
(ii)  
loan or credit agreements where a Group Company extends a loan other than trade
payables as well as loan or credit agreements where a Group Company is granted a
loan;

 
(iii)  
agreements relating to guarantees (Garantien), sureties (Bürgschaften), bonds
(Avale), letters of comfort (Patronatserklärungen) or similar instruments
granted by any Group Company or any kind of derivative contracts, in each case
outside the ordinary course of business;

 
(iv)  
agreements by which any Group Company is obliged to acquire any real property,
hereditary building right (Erbbaurecht or equivalent right under any non-German
jurisdiction) or other real property right (grundstücksgleiches Recht) or
equivalent right under any non-German jurisdiction;

 
(v)  
lease or leasehold agreements, purchase or sale and lease-back agreements
relating to real properties involving expected rent payments and other monetary
consideration in the aggregate (excluding VAT) of more than EUR 150,000.00 (in
words: one hundred fifty thousand

 

 

 
27

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 Euros) to be paid by a Group Company per year and per agreement individually;
 
(vi)  
lease agreements for movables involving an expected monetary consideration in
the aggregate (excluding VAT) of more than EUR 50,000.00 (in words: fifty
thousand Euros) to be paid by a Group Company per year and per agreement
individually, except for company car leases;

 
(vii)  
the top ten agreements with customers of the Group Companies involving an
expected monetary consideration (excluding VAT) to be paid to a Group Company in
the year 2008;

 
(viii)  
the top ten distribution agreements of the Group Companies with third party
distributors based on the expected monetary consideration (excluding VAT) to be
paid by a Group Company to the distributor in the year 2008;

 
(ix)  
the top ten supply and top ten toll manufacturing agreements of the Group
Companies involving based on the expected monetary consideration (excluding VAT)
to be paid by a Group Company in the year 2008;

 
(x)  
agreements regarding the acquisition or disposal of any shares, business or
parts of businesses (Betrieb oder Betriebsteile);

 
(xi)  
agreements regarding joint ventures, consortia, co-operations, purchasing
associations or similar agreements;

 
it being understood that the agreements listed pursuant to Section 5.1.24 (i) –
(xi) have been disclosed to the Purchaser and his advisors during the due
diligence made by the Purchaser, excluding (vii), (viii) and (ix), which were
disclosed as “black box” contracts solely to the legal advisors of the
Purchaser.
 
5.1.25  
To the Best Knowledge of the Sellers, each of the Material Agreements is in
force and effect, and no Group Company has received or been threatened to
receive any notice of termination. To the Best Knowledge of the Sellers, none of
the parties to the Material Agreements has violated any material obligations
thereunder in any material respect or has threatened to do so in writing. This
Section 5.1.25 shall not apply to Section (vii), (viii) and (ix).

 

 

 
28

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5.1.26  
Except as disclosed in Exhibit 5.1.26, to the Best Knowledge of the Sellers,
each Group Company is conducting its business in compliance, in all material
respects, with all material applicable laws and regulations except where the
failure to do so would not reasonably be expected to have a material adverse
effect on any of the Group Companies.

 
5.1.27  
Except as disclosed in Exhibit 5.1.27, as of the Signing Date none of the Group
Companies has received or has applied for, any state aids or subsidies and there
are no pending obligations under any orders granting state aids or subsidies.
For the time before 1 January 2006, the foregoing statement is subject to the
Best Knowledge of the Sellers.

 
5.1.28  
Exhibit 5.1.28 contains a complete list of all material insurance policies to
which any of the Group Companies is a policy holder as of the Signing Date. To
the Best Knowledge of the Sellers, (i) the insurance policies listed in
Exhibit 5.1.28 are valid and in full force, (ii) all premiums due on the above
policies have been duly paid and (iii) there are no circumstances due to which
any such policy might be voidable.

 
5.1.29  
To the Best Knowledge of the Sellers, rail and road projects conducted by Pfaff
Verkehrstechnik KG before the Signing Date did not trigger any contractual
penalty payments for late delivery on Pfaff Verkehrstechnik KG.

 
5.1.30  
The former minority shareholder in Pfaff Benelux, Mr. Lennartz, has no
employment related rights or other rights vis-à-vis any of the Group Companies
which are based on, triggered or increased by the sale of his shares in Pfaff
Benelux to Pfaff Hebezeugfabrik, except for the payment of the Purchase Price in
the amount of EUR 70,000.00.

 

 
5.2  
No further Guarantees

 
No further Guarantees are given by the Sellers except those set forth in Section
5.1 of this Agreement. For the avoidance of doubt it is understood between the
Parties that all provisions of this Agreement relating to the consequences of a
breach of the Sellers’ Guarantees including but not limited to the limitation in
remedy set forth in Section 6 and Section 7 form an integral part and define the
scope of guarantees, representations and warranties which shall under no
circumstances be considered or deemed as guarantee for the quality of the
purchase object (Kaufgegenstand) within the meaning of Sections 276 (1), 443
BGB. The Sellers’ Guarantees shall not be
 

 

 
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construed or interpreted so as to provide the Purchaser with any other claims
than those set forth in this Agreement.
 
 
5.3  
No joint liability

 
The Sellers shall not be jointly and severally liable (nicht
gesamtschuldnerisch) but shall only be liable regarding a Purchaser claim
proportionally (teilschuldnerisch) pro rata of their Shares and with regard to
Section 5.1.1 and 5.1.2 solely regarding their respective shareholding.
 
 
5.4  
Best Knowledge

 
For the purpose of this Agreement "Best Knowledge of the Sellers" shall mean (i)
the actual knowledge (positive Kenntnis) of the members of the board of Pfaff
GmbH appointed by EQT, i.e. Dr. Sven Stork, Mr. Adolf Kretzer and Dr. Ernst
Ludes, which they had as of the Signing Date in relation to the Sellers’
Guarantees after due inquiry of (x) Bernd Wagner and Dr. Volker Norbert Bartelt
with respect to all Sellers' Guarantees, and (y) Harald Kröger, Eva Peter, Peter
Zeller with respect to those Sellers' Guarantees covering matters for which the
relevant individuals are responsible, as well as (ii) the actual knowledge
(positive Kenntnis) of Mr. Marc Eckerhall. The documents related to and used for
the inquiry process are attached as Exhibit 5.4.
 
 
5a.1                      Tax Indemnity
 
 
5a.1           Definitions
 
For the purposes of the Agreement,
 
"Pre-Effective Date Period" shall mean any time or time period beginning before
and ending on or before, or events occurring on or before, the Effective Date;
 
"Pre-Effective Date Tax" shall mean any Tax imposed for, or taxable events
occurring in the Pre-Effective Date Period;
 
"Tax" or "Taxes" shall mean taxes within the meaning of Section 3 German Tax
Code (AO) or comparable laws of foreign jurisdictions, customs duties, dues or
payments to a public social security system under mandatory laws of any
applicable jurisdiction, in each case together with any interest, penalties or
additions and all ancillary charges
 

 

 
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and any of the aforementioned items payable as a secondary liability
(Haftungsschuld), regardless of whether such item is imposed directly or by
virtue of joint and several liability, imposed by any governmental authority;
 
"Tax Refund" shall mean any cash effective (in form of a payment by the Tax
Authority, a reduction of a due Tax liability or a comparable manner) received
repayment of any Tax, claim for a Tax credit, and claim for repayment of any Tax
assessed;
 
"Tax Authority" shall mean any competent governmental authority or public body
in charge of imposing any Tax;
 
"Tax Return" shall mean any return, declaration or similar document relating to
any Tax and to be submitted to any Tax Authority, including any schedule or
attachment thereto.
 
 
5a.2           Indemnification
 
The Sellers shall pay to the Purchaser or, at the Purchaser’s election, to any
of the Group Companies or Inactive Companies, an amount equal to any liability
for Taxes which are imposed on, or payable by, any of the Group Companies and
Inactive Companies relating (i) to the Pre-Effective Date Period or (ii) to any
management, employee or similar participation programme related to the
investment of EQT in Pfaff GmbH or the transactions contemplated by this
Agreement.
 
 
5a.3           Exclusion of Sellers’ Liability
 
The Sellers shall not be obliged to indemnify the Purchaser, any of the Group
Companies or Inactive Companies if and to the extent that:
 
5a.3.1
the Pre-Effective Date Tax for which an indemnity is sought has been reflected
in the Financial Statements 2007 as liability (Verbindlichkeit) or provision
(Rückstellung);

 
5a.3.2
the Pre-Effective Date Tax results from (i) any act by the Purchaser or caused
by the Purchaser after the Closing Date having retroactive effect on the
Pre-Effective Date Period which is not consistent with the established
accounting practice of the Group Companies or the Inactive Companies prior to
the Closing Date or (ii) any of the following measures having retroactive effect
on the Pre-Effective Date Period which the Purchaser implements or causes to be
implemented after the Closing Date, except to the extent required by law:

 

 

 
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restructurings, any alteration of a balance sheet, changes to the method of Tax
accounting, any Tax election or optional accounting method charge, or (iii) any
amendments of Tax Returns relating to the Pre-Effective Date Period (in whole or
in part) unless such amendments are required under applicable law or done with
the prior written consent of the Sellers. For the avoidance of doubt, it is
understood that the performance of or changes to a transfer pricing study and
the adjustment, if any, of transfer prices as a result of such study for periods
beginning after the Effective Date does not constitute an act, change or
amendment within the meaning of this section;
 
5a.3.3
the Pre-Effective Date Tax for which an indemnity is sought can be offset
against Tax loss carry backs or Tax loss carry forwards that are or were
available in the relevant period to which such Tax is allocable and the
offsetting actually becomes cash effective (in form of a payment by the Tax
Authority, a reduction of a due Tax liability or in a comparable manner) until
the fifth anniversary of the Effective Date, whereby Tax losses incurred by any
Group Company or any Inactive Company after the Effective Date and carried back
into a Pre-Effective Date Period shall not be taken into account;

 
5a.3.4
the Pre-Effective Date Tax corresponds to or can be offset against Tax
reductions (Steuerminderungen), Tax Refunds or any other kind of Tax savings
arising out of or relating to the circumstance triggering the Tax
indemnification claim (other than any Tax reductions, Tax Refunds or Tax savings
considered as an asset or otherwise reflected in the Financial Statements 2007,
including, but not limited to, reciprocal effects (Wechselwirkungen) resulting,
inter alia, from the lengthening of amortisation or depreciation periods or
higher depreciation allowances (Phasenverschiebungen), a step-up in the Tax base
of assets, the non-recognition of liabilities or provisions or from transfer of
items relevant for Taxes (e.g. turnover, income, expenses, VAT payable
corresponding with a VAT refund etc.) into another calendar year or transfer of
Tax items from one entity to another entity ("Corresponding Tax Benefits"),
whereby the Corresponding Tax Benefits shall exclude a claim for indemnification
(i) in the full amount if and to the extent the Corresponding Tax Benefits
relate to a Pre-Effective Date Period and (ii) in the amount of the net present
value of the Corresponding Tax Benefits if and to the extent the Corresponding
Tax Benefits have become cash effective (in the form of a payment by the Tax
Authority, a reduction of a due Tax liability or a comparable manner) until the
fifth anniversary of the Effective Date whereby the net present value shall be
discounted at 5.5% p.a.

 

 

 
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5a.4           Indemnification Payments
 
The Sellers’ indemnification payments pursuant to Section 5a.2 shall be due no
later than three (3) Business Days prior to the day on which the respective Tax
is due for payment by the respective Group Company or Inactive Company to the
relevant Tax Authority, even if the assessment does not yet have binding effect
(formelle Bestandskraft), but no earlier than five (5) Business Days following
written notice by the Purchaser that the relevant Tax payment is due. As soon as
the relevant assessment has become finally binding, the Sellers’ indemnification
payments pursuant to Section 5a.2 shall be adjusted if and to the extent the
final assessment differs from the assessment which was decisive for the Sellers’
indemnification payments pursuant to Section 5a.2.
 
 
5a.5           Cooperation on Tax Matters
 
5a.5.1
The Purchaser and the Sellers shall, and shall, to the extent legally possible,
ensure that the Group Companies and Inactive Companies and the Group Companies’,
and the Sellers’ respective employees, if any, and advisors shall cooperate with
each other and their respective advisors in connection with any matter that
could give rise to (or increase) any Tax indemnity under Section 5a.2 and the
preparation and filing of any Tax Return or transfer pricing documentation for a
any fiscal year of the Pre-Effective Date Period (each such matter or Tax Return
a "Relevant Tax Matter"), including but not limited to the conduct of any
inquiry, examination, audit, investigation, negotiation, dispute, appeal or
litigation with respect to any such Relevant Tax Matter.

 
5a.5.2
The Purchaser and the Seller shall, to the extent legally possible, grant each
other full access to all documents and information which are necessary to fulfil
any requirements regarding Taxes that relate to any fiscal years of the
Pre-Effective Date Period, including but not limited to requirements resulting
from Tax Returns, Tax audits and Tax trials.

 
 
5a.6           Tax Audit
 
The Purchaser has the right to cause the competent tax authorities to carry out
a tax audit as soon as possible after the Closing Date regarding any and/or all
Group Companies and Inactive Companies with respect to all fiscal years which
have not yet been subject to a tax audit.
 

 

 
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5a.7           Assignment of Pfaff Tax Indemnity
 
The Family Shareholders have granted a tax indemnity to EQT in Section 6 in
conjunction with Sections 5.2, 5.7, 5.8 and 5.9 of the Investment Agreement
which is set forth in Exhibit 5a.7 ("Pfaff Tax Indemnity"). Subject to the
payment of the Purchase Price in accordance with Section 3.2, EQT herewith
assigns all their rights except the rights according to Section 6.1 Sentence 3
(of the Investment Agreement) under the Pfaff Tax Indemnity to the Purchaser and
the Family Shareholders herewith approve this assignment. Such tax indemnity
shall in any event survive the termination of the Shareholders' Agreements
referred to in Section 11.2. For the avoidance of doubt, (i) Sections 6 and 7 of
this Agreement as well as any other provisions of this Agreement that may limit
the Pfaff Tax Indemnity shall not apply to this Section 5a.7 and (ii) all
limitations of the liability of the Family Shareholders pursuant to the
Investment Agreement shall survive.
 
5a.8
Any Taxes imposed on any of the Group Companies under or in connection with the
management participation programme set up in connection with the Co-Investment
Agreement or any profit or capital distribution related thereto (be it as
primary liability, secondary liability (Haftungsschuld)) shall be borne by the
Participants and the Participants shall pay to the Purchaser any amount equal to
any such liability of any of the relevant Group Companies.

 
 
6.  
Remedies

 
 
6.1  
Remedies

 
In the event of any breach by a Seller of any of the Sellers’ Guarantees or any
other obligation of the Sellers under or in connection with this Agreement
(except for any claims pursuant to Section 5a), the Sellers shall be liable for
putting the Purchaser within sixty (60) days from receipt of a written request
by the Purchaser into the same position that it would have been if the Sellers’
Guarantee had been correct and had not been breached (Naturalrestitution). In
case the Sellers fail to remedy as set out in the foregoing sentence, then the
Sellers shall pay damages for non-performance (kleiner Schadensersatz). For
purposes of determining the liability of the Sellers, only the actual losses
incurred by the respective company or the Purchaser, as well as consequential
damages (Folgeschäden) excluding (i) lost profits (entgangener Gewinn), (ii) any
potential or actual reduction (Minderung) in the value of the Group Companies
beyond the actual damage, (iii) any frustrated expenses (frustrierte
Aufwendungen), (iv) any damages incidental to any breach or non-fulfilment of
the Sellers’ Guarantees (Schäden anlässlich einer Zusicherungs- oder
Garantieverletzung)
 

 
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or (v) any internal costs and expenses incurred by the Group Companies or the
Purchaser shall be taken into account, it being understood that all relevant
losses shall be calculated on a Euro-for-Euro basis (herein "Losses"). As to the
reimbursement of Losses, the following shall apply:
 
6.1.1  
If and to the extent damages are paid to any of the Group Companies, such
payments shall, if and to the extent legally permissible, be construed and
deemed as contributions (Einlagen) or loans (Darlehen) made by Purchaser into
the respective Group Company and shall be treated as a reduction of the Purchase
Price as between the Parties. In no event Sellers shall owe to Purchaser any
gross-up for Taxes falling due in connection with a compensation payment for
Losses received by the Group Companies from Sellers.

 

 

 
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6.2  
Purchaser Claim

 
In the event of any breach by a Seller of any Sellers’ Guarantee or any other
claim of the Purchaser under or in connection with this Agreement (the
"Purchaser Claim") the Purchaser shall give notice to the Sellers of such breach
within twenty (20) Business Days after positively knowing of such breach with
such notice stating the nature thereof and the amount involved and reasonable
details as to the facts of such breach to the extent that such amount has been
determined. Without prejudice to the validity of the Purchaser Claim or alleged
claim in question the Purchaser shall reasonably allow and shall cause the Group
Companies to reasonably allow the Sellers and its accountants and its other
professional advisors to investigate the matter or circumstances 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 the Purchaser
shall give and shall cause the Group Companies to give, subject to being paid
their reasonable out-of-pocket-costs and -expenses, such reasonable information
and reasonable assistance including access to Purchasers’ and the Group
Companies’ premises and personnel including the right to examine and copy or
photograph any asset, accounts, documents and records as Sellers or its
accountants or its other professional advisors may reasonably request.
 
 
6.3  
Exemption

 
The Sellers shall not be liable for and the Purchaser shall not be entitled to
bring any Purchaser Claim or any other claim under or in connection with this
Agreement if and to the extent that:
 
6.3.1  
the matter to which the Purchaser Claim has been taken into account in the
Financial Statements 2007 or the Monthly Reportings, by way of a provision
(Rückstellung) or depreciation (Abschreibung) or exceptional depreciation
(außerplanmäßige Abschreibung) or depreciation to reflect lower market values
(Abschreibungen auf den niedrigeren beizulegenden Wert) - this Section 6.3.1
shall not apply to Section 5a and Section 5.1.23 (“Tax Claims”);

 
6.3.2  
the amount of the Purchaser Claim is recovered or will be recoverable (legally
and commercially) from a third party or under an insurance policy;

 
6.3.3  
the payment or settlement of any item giving rise to a Purchaser Claim results
in a tax benefit to a Group Company or the Purchaser - this Section 6.3.3. shall
not apply to any of the Tax Claims;

 

 

 
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6.3.4  
the Purchaser Claim results from a failure of the Purchaser or a Group Company
to mitigate damages pursuant to Section 254 BGB (it being understood that the
Purchaser or a Group Company is not obliged to carry back or set off Tax losses
incurred after the Effective Date into any Effective Date Period in order to
reduce a Tax burden);

 
6.3.5  
the matter to which the Purchaser Claim relates was known by the Purchaser as of
the Signing Date taking into account that the Purchaser prior to entering into
this Agreement had the opportunity to thoroughly review the conditions and
documents of the Group Companies under commercial, technical, organisational,
financial, environmental and legal aspects and, in this connection to
participate in management presentations to hold discussions with the management
of the Group Companies and to visit sites of the Group Companies and to inspect
the real estate.

 
Without limiting the generality of the foregoing the Purchaser shall be deemed
to have knowledge of all matters disclosed or contained in
 
(i)  
the Information Memorandum prepared by Leonardo & Co. dated July 2008 as
disclosed to the Purchaser;

 
(ii)  
any answers in writing or textform (within the meaning of Section 126b BGB)
given by the Sellers or its representatives in connection with the question and
answer process in particular to information requests of the Purchaser;

 
(iii)  
any of the Exhibits (without limiting the disclosure and the deemed knowledge to
the respective guarantee) or elsewhere in this Agreement;

 
and the actual knowledge, as of the Signing Date, of all employees,
representatives and professional advisors of the Purchaser and its parent
company and/or managing entity who have been directly or indirectly involved in
the due diligence and/or the acquisition of the Group Companies regarding the
information described in (i) through (iii) above. A complete set of the answers,
given by the Sellers or its representatives in connection with the question and
answer process in particular to information requests of the Purchaser, shall be
set aside and preserved by the acting notary public, for purposes of providing
evidence for a period of two (2) years after the Signing Date.
 
The application of Section 442 BGB is excluded, which exclusion, however, shall
not limit the application of this Section 6.3.5. This Section 6.3.5 shall not
apply to any of the Tax Claims.
 

 

 
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6.3.6  
the Purchaser Claim results from or is increased by the passing of, or any
change in, after the date hereof, any law, statute, rule, regulation, legal or
administrative practice of any governmental department agency, court or
regulatory body including (without prejudice to the generality of the foregoing)
any increase in the rates of Taxes or any imposition of Taxes or any withdrawal
or relief from Taxes not actually (or prospectively) in effect at the date
hereof;

 
6.3.7  
the procedures set forth in Section 6.2 and 6.5 were not observed by the
Purchaser or the Group Companies and the Sellers were prejudiced thereby.

 
 
6.4  
Amount of Losses

 
When calculating the amount of Losses to be reimbursed by the Sellers under this
Agreement all advantages in connection with the relevant matter shall be taken
into account (Vorteilsausgleich) and the Sellers shall not be liable under this
Agreement in any respect of any Purchaser Claim for any losses suffered by the
Purchaser or the Group Companies to the extent of any corresponding savings by
or net benefit to the Purchaser, the Guarantor or any of the Group Companies.
This Section 6.4 shall not apply to any of the Tax Claims.
 
 
6.5  
Third Party Claim

 
If the Group Companies or the Purchaser are sued or threatened to be sued by a
third party including without limitation any government agencies or if the Group
Companies or the Purchaser are subject to any audit or examination by any tax
authority (hereinafter "Third Party Claim") which may give rise to a Purchaser
Claim the Purchaser shall give the Sellers prompt notice (in no event later than
twenty (20) Business Days after becoming aware of such Third Party Claim) of
such Third Party Claim. Subject to statutory and contractual confidentiality
obligations, the Purchaser shall ensure that the Sellers shall be provided with
all materials, information and assistance relevant in relation to the Third
Party Claim in each case reasonably necessary to evaluate the Third Party Claim,
be given reasonable opportunity to comment or discuss with Purchaser any
measures which Sellers propose to take or to omit in connection with the Third
Party Claim, and in particular Sellers shall be given reasonable opportunity to
comment on, participate in, and review any reports and all relevant audits or
other measures and receive without undue delays copies of all relevant orders
(Bescheide) of any authority, provided, however, that in cases where the above
rights are limited by contractual confidentiality obligations, the Sellers shall
have the right to appoint a professional advisor unrelated to any of the Sellers
or their
 

 

 
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affiliates who shall be granted access to the confidential information on the
basis that the advisor shall only be entitled to inform the Sellers on an
abstract basis about the relevant findings in a way that the confidentiality
obligation will not be breached. No admission of liability shall be made for or
on behalf of Purchaser or the Group Companies and the Third Party Claim shall
not be compromised, disposed of or settled without the prior written consent of
the Sellers which shall not be unreasonably withheld. Further, the Sellers shall
be entitled at their own discretion and costs to take such action (or cause the
Purchaser or the Group Companies to take such action) as shall be necessary to
defend against such Third Party Claim (including making counter claims or other
claims against Third Parties) in the name of and on behalf of the Purchaser or
the Group Companies concerned and the Purchaser will give and cause the Group
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 asset, accounts, documents and records for the purpose of
defending against any such claim or liability as the Sellers or its professional
advisors may reasonably request in each case if and to the extent that actions
set forth in this sentence will not adversely affect the Purchaser’s or the
Group Companies legitimate interests.
 
 
7.  
Limitation of Claims

 
 
7.1  
Time limitations

 
All claims of the Purchaser arising under or in connection with this Agreement
shall be time-barred on 31 December 2009. Exempted herefrom are:
 
7.1.1  
all claims of the Purchaser arising (i) from a breach of the Sellers’ Guarantee
contained in Sections 5.1.2, 5.1.4 and 5.1.6 in relation to Pfaff GmbH and the
German Subsidiaries or (ii) in relation to specific performance claims
(Erfüllungsansprüche) to transfer title to the Shares (herein collectively
"Title Claims") which shall be time-barred on 1 March 2013;

 
7.1.2  
all claims of the Purchaser arising from a breach of the Sellers’ Guarantee
contained in Sections 5.1.5 and 5.1.6 in relation to the Foreign Subsidiaries,
which shall be time barred on 1 March 2011;

 
7.1.3  
all Tax Claims which shall be time barred on 1 March 2013; and

 

 

 
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7.1.4  
all claims of the Purchaser arising as a result of wilful or intentional
breaches of Sellers’ obligations under this Agreement which shall be time-barred
in accordance with the statutory rules in Sections 195, 199 BGB;

 
(herein collectively "Time Limitations"). All claims of the Purchaser referred
to under Sections 7.1.1, 7.1.2 and 7.1.4 above are herein collectively referred
to as "Exempted Claims").
 
 
7.2  
Suspension

 
The expiry period for any claims of the Purchaser under or in connection with
this Agreement shall be suspended (gehemmt) pursuant to Section 209 BGB by any
timely demand for fulfilment pursuant to Section 6.2 above, provided that the
Purchaser commences judicial proceedings within three (3) months after the
expiry of the relevant Time Limitation, including any Third Party Claims.
Section 203 BGB shall not apply, unless the Parties agree in writing that the
expiry period shall be suspended on the basis of pending settlement
negotiations.
 
 
7.3  
De-Minimis and Deductible

 
No liability shall attach to the Sellers under this Agreement if an individual
claim is less than EUR 10,000.00 (in words: ten thousand Euros) ("De-Minimis
Claims") and until the aggregate amount of claims (excluding De-Minimis Claims,
Exempted Claims and Tax Claims) exceeds EUR 400,000.00 (Freibetrag) (in words:
four hundred thousand Euros) (herein "Deductible"). If the aggregate amount of
claims under or in connection with this Agreement (excluding De-Minimis Claims,
Exempted Claims and Tax Claims) exceeds the Deductible, Purchaser may claim only
the excess of such claims above the Deductible subject to the other provisions
of this Section 7. The limitations of this Section 7.3 shall not apply to any
claims of the Purchaser based on a breach of Section 5.1.9a (i), (ii), (iii) and
(iv) ("Locked-Box Claims") as well as to any Exempted Claims and Tax Claims. No
liability for any Tax Claims shall arise for the Sellers under this Agreement if
such Tax Claim is less than EUR 35,000.00 (in words: thirty five thousand euro)
("Tax De-Minimis ").
 
 
7.4  
Liability Cap

 
The aggregate liability of the Sellers under or in connection with this
Agreement shall not exceed the Escrow Amount (herein "Liability Cap") and
Purchaser’s only recourse for damages ("No-Direct Recourse") against Sellers
shall be the amount of funds in the Escrow Account from time to time, provided,
however, that the aggregate
 

 

 
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amount of any Tax Claims (excluding Tax Claims which do not exceed the Tax
De-Minimis) shall not exceed EUR 1,000,000.00 (in words: one million Euros) and,
for the avoidance of doubt, Tax Claims will also exclusively be satisfied from
the Escrow Account. The Liability Cap and No-Direct Recourse principle shall not
apply to any Exempted Claims or Locked Box Claims, provided, however, that
Sellers’ overall liability under and/or in connection with this Agreement,
except for claims of the Purchaser arising as a result of wilful or intentional
breaches of Sellers’ obligations under this Agreement, shall in no event exceed
the Purchase Price.
 
 
7.5  
Exclusion of further rights

 
The Parties are in agreement that the remedies which the Purchaser or any of the
Group Companies may have against the Sellers for breach of obligations set forth
in this Agreement are solely governed by this Agreement and the remedies
provided for by this Agreement shall be the exclusive remedies available to the
Purchaser or the Group Companies. Apart from the Purchaser’s rights under this
Section 7.5 (i) any claims for breach of pre-contractual obligations (culpa in
contrahendo), including but not limited to claims arising under Sections 241
(2), 311 (2) and (3) BGB or ancillary obligations (positive
Forderungsverletzung), including but not limited to claims arising under
Sections 280, 282 BGB, (ii) frustration of contract pursuant to Section 313 BGB
(Störung der Geschäftsgrundlage), (iii) all remedies of the Purchaser for
defects of the Shares under Sections 437 through 441 BGB and (iv) any and all
other statutory rights and remedies, if any, are hereby expressly excluded and
waived by the Purchaser except in case of wilful deceit (arglistige Täuschung)
or wilful misconduct (Vorsatz). For the avoidance of doubt, any claims for
specific performance (Erfüllungsanspruch) remain unaffected.
 
In case of wilful deceit (arglistige Täuschung) or wilful misconduct (Vorsatz)
the Purchaser shall only assert claims against the respective Seller.
Furthermore any liability of the Sellers under this Agreement shall not give the
Purchaser the right to rescind, cancel or otherwise withdraw from this Agreement
as a whole also in case of wilful deceit (arglistige Täuschung) or wilful
misconduct (Vorsatz) except where the damage incurred by the Purchaser as a
consequence of such wilful deceit or wilful misconduct exceeds EUR 3,000,000.00,
but the Purchaser's right shall be limited exclusively to damages either by way
of restitution in kind (Naturalrestitution) or payment of damages in money
(Schadenersatz in Geld).
 

 

 
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8.  
Guarantees of the Purchaser and the Guarantor

 
The Purchaser and the Guarantor each guarantee as of the Signing Date and the
Closing Date:
 
 
8.1  
Enforceability, No Conflict

 
This Agreement constitutes a legal, valid and binding obligation of the
Purchaser and the Guarantor enforceable against the Purchaser and the Guarantor
in accordance with its terms except as the enforceability thereof may be limited
by insolvency or other similar laws relating to or affecting the rights of
creditors generally. The Purchaser and the Guarantor have the absolute and
unrestricted right, power, authority and capacity to execute and deliver this
Agreement and to perform its obligations under this Agreement which actions have
been duly authorised and approved by all necessary corporate action of the
Purchaser and the Guarantor. The Purchaser and the Guarantor are not required to
give any notice to any person or obtain any consent or governmental
authorisation in connection with the execution and delivery of this Agreement by
the Purchaser and the Guarantor.
 
 
8.2  
Litigation

 
There is no action suit, investigation or proceeding pending against or
threatened against or affecting the Purchaser and the Guarantor before any court
or arbitrator or governmental body agency or official which in any manner
challenges or seeks to prevent, alter or materially delay the transactions
contemplated hereunder.
 
 
8.3  
Financial Capability

 
The Purchaser has or will have as of the Scheduled Closing Date sufficient
immediately available funds or binding and unconditional and irrevocable
financing commitments to pay the Purchase Price.
 
 
8.4  
No Knowledge of Breach

 
To the Purchaser's best knowledge there exists no breach of any Sellers’
Guarantee in this Agreement nor any misstatement in or omission made by the
Sellers from this Agreement. The Purchaser’s and the Guarantor’s best knowledge
shall mean the actual knowledge, after due inquiry, of all persons who have
assisted the Purchaser or the Guarantor in connection with its due diligence
investigation, negotiation and the
 

 
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 execution of this Agreement and any agreements in relation to the financing of
the Purchase Price.
 
 
8.5  
Finder’s Fees

 
Purchaser and Guarantor do not have any obligation or liability to pay any fees
or commissions to any broker, finder or agent with respect to the transactions
contemplated under this Agreement for which Sellers could become wholly or
partly liable.
 
 
8.6  
Merger Control

 
The transactions contemplated by this Agreement do not need to be cleared by any
merger control authority within the European Union.
 
 
9.  
Releases from Escrow Account

 
 
9.1  
Procedures for Release of Amounts

 
Pursuant to the Escrow Agreement the escrow agents appointed under the Escrow
Agreement ("Escrow Agents") shall release all or parts of the amount available
from time to time on the Escrow Account ("Escrow Balance") to the Purchaser or
the Sellers, as the case may be, if the Escrow Agents receive:
 
a)  
a jointly executed written notice (which may be contained in one or several
copies) by the Purchaser and the Sellers setting forth the amount to be
disbursed to the Purchaser or the Sellers as well as the account on which the
relevant release amount shall be paid (a "Joint Instruction"); or

 
b)  
a written notice from the Purchaser attaching a certified copy of an arbitral
award admitting a Purchaser Claim with declaration of enforceability
(Schiedsgerichtsurteil mit Vollstreckbarkeitserklärung) or settlement agreement
with declaration of enforceability (Vergleich mit Vollstreckbarkeitserklärung)
obtained in relation to the Purchaser Claim and setting forth the amount to be
disbursed to the Purchaser, which shall conform to the amount of the arbitral
award or settlement agreement.

 

 

 
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9.2  
Releases to the Sellers

 
The Sellers and the Purchaser shall submit Joint Instructions to the Escrow
Agent to make payments from the Escrow Account to the Sellers as follows:
 
a)  
If prior to or on 31 December 2009 (i) no Claim Notice has been submitted by the
Purchaser to the Sellers, or (ii) all Purchaser Claims under any Claim Notices
submitted prior to 31 December 2009 have been finally dismissed by a competent
court or arbitration tribunal, the Parties shall instruct the Escrow Agents by a
Joint Instruction to be received by the Escrow Agents not later than on 7
January 2010 to release the full Escrow Balance, except for EUR 1,000,000 which
shall be retained on the Escrow Account for Tax Claims notified under Claim
Notices submitted not later than on 1 March 2013, to the Sellers.

 
b)  
If and to the extent that, prior to or on 31 December 2009, one or several Claim
Notices have been submitted by the Purchaser to the Sellers and any Purchaser
Claims under such Claim Notices which are not malicious (nicht mutwillig) have
not been finally dismissed by a competent court or arbitration tribunal, the
amount of the Joint Instruction pursuant to Section 9.2 (a) above shall be
further reduced by the total amount of such Purchaser Claims which are not
malicious (nicht mutwillig) and have not been finally dismissed.

 
c)  
If and to the extent that prior to or on 1 March 2013, (i) no Claim Notice
relating to a Tax Claim has been submitted by the Purchaser to the Sellers or
all Tax Claims under any Claim Notices submitted prior to 1 March 2013 have been
finally dismissed by a competent court or arbitration tribunal, and (ii) all
other Purchaser Claims, if any, under Claim Notices submitted prior to or on 31
December 2009 have been finally dismissed by a competent court or arbitration
tribunal, the Parties shall instruct the Escrow Agents by a Joint Instruction to
be received by the Escrow Agents not later than on 4 March 2013 to release the
remaining Escrow Balance.

 
d)  
If and to the extent that, prior to or on 1 March 2013, Tax Claims under Claim
Notices submitted on or prior to 1 March 2013 or any other Purchaser Claims
under Claim Notices submitted on or prior to 31 December 2009 which are not
malicious (nicht mutwillig) have not been finally dismissed by a competent court
or arbitration tribunal, the amount of the Joint Instruction pursuant to Section
9.2 (c) above shall be reduced by the total amount of such Purchaser

 

 

 
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 Claims which are not malicious (nicht mutwillig) and have not been finally
dismissed.
 
e)  
If, after 1 March 2013, any Purchaser Claim (including, but not limited to, Tax
Claims) is finally dismissed by a competent court or arbitration tribunal, the
Parties shall instruct the Escrow Agents by Joint Instruction to be received by
the Escrow Agents within 10 Business Days after the court ruling or arbitration
has become final and binding to pay to the Sellers the amount of the Purchaser
Claim which has been finally dismissed.

 
"Claim Notice" means a written notice in accordance with Section 6.2 of the SPA
delivered by Purchaser to the Sellers with respect to any Purchaser Claims,
provided that any Claim Notice relating to Purchaser Claims other than Tax
Claims must not be submitted after 31 December 2009 and any Claim Notices
relating to Tax Claims must not be submitted after 1 March 2013.
 
 
9.3  
Releases to the Purchaser

 
If and to the extent Purchaser has submitted one or several Claim Notices in
accordance with Section 9.2 above and any Purchaser Claim under such Claim
Notices is finally admitted by a competent court or arbitration tribunal, the
Parties shall instruct the Escrow Agent by Joint Instruction to be received by
the Escrow Agent within 10 Business Days after the court ruling or arbitration
has become final and binding to pay to Purchaser the amount of the Purchaser
Claim which has been finally admitted. The Parties confirm that any Purchaser
Claims related to Exempted Claims and Locked-Box Claims which are not yet
time-barred and not malicious (nicht mutwillig) can always be satisfied from the
Escrow Account and corresponding Claim Notices are also permissible after 31
December 2009.
 
 
9.4  
Other Releases

 
In addition to the procedures set forth in Sections  9.2 and 9.3, the Escrow
Agent shall make such releases of the Escrow Balance (or parts thereof) to
Sellers or Purchaser as specified in any Joint Instruction.
 

 

 
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10.  
Stefan Pfaff

 
 
10.1  
Stefan Pfaff shall repay a part of the Stefan Pfaff Loan in the amount of
EUR 665,000.00 (in words: six hundred sixty-five thousand Euro) immediately
after the Purchase Price has been paid in accordance with Section 3.2 (the "Loan
Payment"). The Purchaser shall procure (i) that the remaining principal of the
Stefan Pfaff Loan will be waived by Pfaff GmbH, (ii) that Pfaff GmbH confirms
that no Group Company has any claims against Mr. Stefan Pfaff with respect to
the Stefan Pfaff Loan and (iii) that Pfaff GmbH releases all securities it has
been granted by Stefan Pfaff with respect to the Stefan Pfaff Loan.

 
 
10.2  
The Loan Payment shall be made by EQT on behalf of Mr. Stefan Pfaff to Pfaff
GmbH immediately after the Purchase Price has been paid in accordance with
Section 3.2.

 
 
11.  
Phoenix’ Loan Balance

 
 
11.1  
The Parties agree that Pfaff GmbH repays before or on the Closing Date the loans
provided by Phoenix Holdings Guernsey Limited (herein "Phoenix") as set out in
Exhibit 11.1 (herein the "Phoenix’ Loan Balance") plus interest accrued thereon.

 
 
11.2  
Subject to Section 5a.8 second sentence, the Sellers shall procure that all
further Shareholder Agreements in addition to the loans referred to in Section
11.1 will be terminated as of the Closing Date without any residual liability
for any of the Group Companies or Inactive Companies and the Purchaser shall
procure that Pfaff GmbH for itself and on behalf of the Group Companies and the
Inactive Companies shall confirm (i) the termination and (ii) that the Group
Companies and the Inactive Companies have no rights whatsoever vis-à-vis the
Sellers resulting from or based on the Investment Agreement or the Co-Investment
Agreement, except as provided for in this Agreement – in particular the relevant
provisions of the Investment Agreement and Co-Investment Agreement referred to
in Section 5a.7 and 5a.8 of this Agreement shall remain in full force and
effect.

 
The Sellers herewith waive any rights against any of the Group Companies under
or in connection with the Investment Agreement and the Co-Investment Agreement,
in particular pursuant to Section 16.4.3 of the Co-Investment Agreement and
confirm that no payments or other distributions based on any of these rights
pursuant to the Co-
 

 

 
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Investment Agreement or the Investment Agreement have been made by the Group
Companies after the Effective Date, nor have any of these rights been assigned
to any third parties.
 
 
12.  
Continuation of the business after Signing

 
 
For the period between the Signing Date and the Closing Date the Sellers shall
ensure that the Group Companies and Inactive Companies shall conduct their
business in the ordinary course and exclusively with the care of a prudent
business man.
 
 
13.  
Merger Control Indemnity

 
 
The Purchaser shall indemnify the Sellers and hold the Sellers harmless from and
against any liability resulting from a breach of the Purchaser's Guarantee in
Section 8.6.
 
 
14.  
Guarantor

 
 
14.1  
Guarantee

 
The Guarantor hereby unconditionally and irrevocably guarantees to the Sellers
the due and functional fulfilment of any payments and other obligations of the
Purchaser under and in connection with this Agreement.
 
 
14.2  
Waiver

 
The Guarantor hereby waives any right which it may have to require the Sellers
to proceed first against or claim payment or performance from the Purchaser to
the intent that as between the Seller and the Guarantor the latter shall be
liable as principal debtor.
 

 

 
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15.  
Confidentiality, Announcements

 
 
15.1  
Confidentiality

 
The Parties shall keep the contents of this Agreement and all ancillary
agreements, if any, and the due diligence conducted by the Purchaser in
connection therewith confidential subject to any mandatory disclosure
requirement.
 
 
15.2  
Announcements

 
Each of the Parties undertake that prior to the Closing Date it will not make,
and will cause its Affiliates not to make, any public announcement regarding
this Agreement unless (i) required by applicable law or stock exchange
regulations applicable to the respective Party or (ii) the other Party has given
its consent to such announcement, including the form of such announcement, which
consent may not be unreasonable withheld and may be subject to conditions. At
least five (5) Business Days prior to any permitted announcements the Party
wishing to make the announcement shall notify the other Parties thereof in
writing, provide to the other Parties the proposed wording and take any requests
of the other Parties into due consideration.
 
 
16.  
Costs, Fees and Taxes

 
 
16.1  
Costs

 
Each Party shall bear its own costs including fees, expenses and charges in
connection with the preparation, negotiation, execution and consummation of this
Agreement and the transactions contemplated herein, including all fees and
expenses of professional advisors. The costs for the notarization of this
Agreement and the fees for the clearance of the transaction contemplated under
this Agreement by any competent merger control authorities, if any, shall be
borne by the Purchaser.
 
 
16.2  
Taxes

 
All transfer taxes, registration duties, or similar costs under or in connection
with the transfer of the Shares under this Agreement shall be borne by the
Purchaser, and Purchaser shall indemnify and hold harmless the Sellers from any
of the foregoing. Apart therefrom, each Party to this Agreement shall bear its
own taxes connected with or resulting from the transaction contemplated under
this Agreement.
 

 

 
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17.  
Governing Law, Arbitration

 
 
17.1  
Governing Law

 
This Agreement shall be governed by and construed in accordance with the laws of
the Federal Republic of Germany without regard to principles of conflicts of
laws and without regard to the UN Convention on Contracts for the International
Sale of Goods.
 
 
17.2  
Arbitration

 
All disputes arising under or in connection with this Agreement or its validity
shall be finally settled in accordance with the arbitration agreement set forth
in Exhibit 17.2.
 
 
18.  
Entire Agreement and Amendments

 
 
18.1  
Entire Agreement

 
This Agreement and the Exhibits shall comprise the entire agreement between the
Parties concerning the subject matter hereof and shall supersede and replace all
prior oral and written declarations of intention made by the Parties in
connection with the contractual negotiations. Changes or amendments to this
Agreement (including amendments to this Section 18.1) shall be valid only if
made in writing, unless another form is required by mandatory law.
 
 
18.2  
German Terms and Headings

 
The headings in this Agreement are inserted for convenience only and shall not
affect the interpretation of this Agreement. If provisions in this Agreement
include English terms after which either in the same provision or elsewhere in
this Agreement German terms have been inserted in brackets and/or italics, the
respective German terms alone and not the English terms shall be authoritative
for the interpretation of the respective provisions.
 
 
18.3  
Exhibits

 

 

 
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All Exhibits to this Agreement constitute an integral part of this Agreement.
 
 
19.  
Notices and Exercise of Rights

 
 
19.1  
Notices

 
 
All notices and other communications hereunder shall be made in writing and
shall be sent by telefax, mail or courier to the following addresses:

 
If to the Sellers:
 
EQT Opportunity Limited
Attn.: Michael Newton
Isabelle Chambers, Route Isabelle
St. Peter Port
Guernsey GY1 3RA, Guernsey
Channel Islands
Fax: +44 (0) 1481-722442

with a copy to:
 
honert + partner
Attn.: Dr. Jochen Neumayer
Theatinerstraße 8 (Fünf Höfe)
80333 München
Germany
Fax: +49 (89) 388 38160
 
If to the Purchaser or the Guarantor:
 
Columbus McKinnon Corporation
Attn.: General Counsel
140 John James Audubon Parkway
Amherst, New York 14228-1197
USA
Fax: +1 (716) 689 5598

 
Yale Industrial Products GmbH
Attn.: Wolfgang Wegener
Am Lindenkamp 31
42549 Velbert
Germany
Fax: +49 (2051) 600184
 

 

 
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with a copy to:
 
Lovells LLP
Attn.: Dr. Patrick Kaffiné
Untermainanlage 1
60329 Frankfurt am Main
Germany
Fax: +49 (69) 96236-100

 

 
or to such other recipients or addresses which may be notified by any Party to
the other Parties in the future in writing. The receipt of copies of notices
hereunder by the Parties' advisers shall not constitute or substitute the
receipt of such notices by the Parties themselves.
 
 
19.2  
Exercise of Rights

 
Sellers hereby appoint Dr. Jochen Neumayer with the address set forth in
Section 19.1 ("Appointee") to act in their name and on their behalf to
negotiate, accept, compromise, admit to settle any Purchaser Claims arising out
of or in connection with this Agreement. Any termination of such appointment is
valid only if (a) made in writing and (b) if at the same time a new appointee is
notified to the Purchaser by the Sellers who hereby authorise EQT to exercise
this appointment also on their behalf.
 
 
20.  
Miscellaneous

 
 
20.1  
General Cooperation

 
The rights of the Parties under this Agreement notwithstanding, after the
Closing the Sellers and the Purchaser shall cooperate and use best efforts to
provide for a smooth transition of the Group Companies to the Purchaser as soon
as possible.
 
 
20.2  
No Assignment and No Set-Off Rights

 
20.2.1  
Without the written consent of the other Parties no Party shall be entitled to
assign any rights or claims under this Agreement, except for any assignments by
the Purchaser to any of its Affiliates.

 

 

 
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20.2.2  
Neither the Purchaser nor the Guarantor shall have the right to set off or
withhold any amounts due to the Sellers hereunder, except that set-off or
withholding shall be permitted with claims of the Purchaser or the Guarantor
that are

 
(i)           acknowledged in writing by the Seller or
 
(ii)           granted by a final and binding decision of a competent court or
arbitral award.
 
 
20.3  
Severability

 
In case that one or more provisions of this Agreement shall be found to be
invalid or unenforceable, this shall not affect the validity and enforceability
of the other provisions of this Agreement. In such case the Parties agree to
recognise and give effect to such valid and enforceable provision or provision
which correspond as closely as possible with the commercial intention of the
Parties associated with the invalid or unenforceable provision. The same shall
apply in the event that this Agreement contains any unintentional gaps
(unbeabsichtigte Vertragslücken).
 
 

 

 

 
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