-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ka9V/MxSORkZmg8+FoduBL2iA/PeK8HHL7n78MwPSajFn6R4AI+a8p6JN0wcJYy9 fZW5ixXYuq2yBKQ1ArfDjA== /in/edgar/work/0000912057-00-044836/0000912057-00-044836.txt : 20001017 0000912057-00-044836.hdr.sgml : 20001017 ACCESSION NUMBER: 0000912057-00-044836 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20001016 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20001016 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LYDALL INC /DE/ CENTRAL INDEX KEY: 0000060977 STANDARD INDUSTRIAL CLASSIFICATION: [2200 ] IRS NUMBER: 060865505 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-07665 FILM NUMBER: 740616 BUSINESS ADDRESS: STREET 1: ONE COLONIAL RD STREET 2: P O BOX 151 CITY: MANCHESTER STATE: CT ZIP: 06045-0151 BUSINESS PHONE: 2036461233 FORMER COMPANY: FORMER CONFORMED NAME: COLONIAL BOARD CO DATE OF NAME CHANGE: 19700115 8-K 1 a2027674z8-k.txt 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCANGE ACT OF 1934 Date of Report (Date of earliest event reported): October 16, 2000 (September 30, 2000) LYDALL, INC. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-7665 06-0865505 - ------------------------------------------------------------------------------- (State or other jurisdiction of (Commission file number) (I. R. S. Employer incorporation or organization) Identification No.) One Colonial Road, P. O. Box 151, Manchester, CT 06045-0151 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (860) 646-1233 - ------------------------------------------------------------------------------ (Registrant's telephone number, including area code) Not Applicable - ------------------------------------------------------------------------------ (Former name or former address, if changed since last report) TABLE OF CONTENTS
Page No. ITEM 2 Acquisition or Disposition of Assets 3 ITEM 7 Financial Statements and Exhibits 4 Signature 5
2 ITEM 2. ACQUSITION OR DISPOSITION OF ASSETS Effective September 30, 2000, Lydall, Inc. (the "Company") completed the disposition of substantially all the assets and certain liabilities of its injection-molding and chrome-plating operations (the "Sold Operations") in Germany to a management buyout group. The disposition was affected through a transfer of substantially all the assets and certain liabilities of the Sold Operations from Lydall Gerhardi GmbH & Co. KG to Gerhardi Kunststofftechnik GmbH, which in turn was sold to the aforementioned management buyout group for nominal consideration. The terms of the transfer of assets and liabilities and subsequent disposition are more fully described in the Spin-off and Transfer Agreement and the Purchase and Transfer Agreement, respectively. Copies of the translated agreements are attached as Exhibits 2.1 and 2.2, respectively and are incorporated by reference herein. The Company hereby undertakes to furnish to the Commission upon its request, copies of the original executed agreements, exhibits and schedules thereto, written in German, not filed with this report. The Company also issued a press release on October 2, 2000, a copy of which is attached as Exhibit 99.1 hereto and incorporated by reference herein. 3 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial statements of business acquired Not applicable. (b) Pro forma financial information The following pro forma consolidated condensed financial statements of the Company are filed with this report and are incorporated by reference in this Item 7(b): Pro Forma Consolidated Condensed Balance Sheet at June 30, 2000 (unaudited) Pro Forma Consolidated Condensed Statement of Net Income for the Year Ended December 31, 1999 (unaudited) Pro Forma Consolidated Condensed Statement of Net Income for the Six Months Ended June 30, 2000 (unaudited) The unaudited Pro Forma Consolidated Condensed Balance Sheet of the Company at June 30, 2000 reflects the financial position of the Company as if the disposition discussed in Item 2 took place on June 30, 2000. The unaudited Pro Forma Consolidated Condensed Statement of Net Income for the fiscal year ended December 31, 1999 and the six months ended June 30, 2000 assumes that the disposition occurred on January 1, 1999. These unaudited pro forma consolidated condensed financial statements are based on available information and certain assumptions that the Company believes are reasonable. The pro forma adjustments are based on preliminary information and are subject to adjustments for actual information related to the disposition. These pro forma financial statements are presented for illustrative purposes only. They do not purport to be indicative of the results of operations which actually would have resulted had the divestiture occurred on the dates indicated or which may result in the future. The Company believes it has utilized reasonable methods to conform the basis of presentation. The unaudited pro forma consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto of Lydall, Inc. (file no. 1-7665) for the year ended December 31, 1999, which have been filed on Form 10-K on March 30, 2000, pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934. (c) Exhibits: 2.1 Spin-off and Transfer Agreement (English translation) between Lydall Gerhardi GmbH and Co. KG and Gerhardi Kunststofftechnik GmbH dated September 29, 2000, effective September 30, 2000. 2.2 Purchase and Transfer Agreement (English translation) between Lydall Gerhardi GmbH and Co. KG and the management buyout group as setforth in the agreement, dated September 29, 2000, effective September 30, 2000. 99.1 Press release dated October 2, 2000 titled "Lydall Completes Sale of Chrome-Plating and Injection-Molding Operations in Germany". 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Lydall, Inc. (Registrant) Date: October 16, 2000 By: /s/ Thomas P. Smith --------------------------------------- Thomas P. Smith Vice President-Controller (On behalf of the Registrant and as Principal Accounting Officer) 5 INDEX TO FINANCIAL STATEMENTS AND EXHIBITS
Financial Statements Page - ------------------------------------- ---- Pro Forma Consolidated Condensed Balance Sheet 7 at June 30, 2000 (unaudited) Pro Forma Consolidated Condensed Statement of Net Income 8 for the Year Ended December 31, 1999 (unaudited) Pro Forma Consolidated Condensed Statement of Net Income for the Six months Ended June 30, 2000 (unaudited) 9
Exhibit No. Description ----------- ----------- 2.1 Spin-off and Transfer Agreement (English translation) between Lydall Gerhardi GmbH and Co. KG and Gerhardi Kunststofftechnik GmbH dated September 29, 2000, effective September 30, 2000. 2.2 Purchase and Transfer Agreement (English translation) between Lydall Gerhardi GmbH and Co. KG and the management buyout group as set forth in the agreement, dated September 29, 2000, effective September 30, 2000. 99.1 Press release dated October 2, 2000 titled "Lydall Completes Sale of Chrome-Plating and Injection-Molding Operations in Germany".
6 LYDALL, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET AT JUNE 30, 2000 (IN THOUSANDS) (UNAUDITED)
June 30, Pro Forma Adjustments June 30, 2000 ----------------------- 2000 ASSETS Historical Business (a) Other Pro Forma ---------- ----------- ------- --------- CURRENT ASSETS: Cash and cash equivalents .................... $ 1,686 $ 1,686 Accounts receivable, net ..................... 48,549 $ (6,607) 41,942 Inventories, net ............................. 22,327 22,327 Taxes receivable ............................. -- $9,954 (c) 9,954 Prepaid expenses ............................. 2,463 2,463 Assets held for sale ......................... 31,558 (26,378) 5,180 Deferred tax assets .......................... 2,558 2,558 ---------- ----------- ------- --------- Total current assets .................... 109,141 (32,985) 9,954 86,110 Property, plant and equipment, net ................ 80,737 (275) 80,462 Other assets, net ................................. 24,027 24,027 ---------- ----------- ------- --------- Total assets ................................. $ 213,905 $ (33,260) $9,954 $ 190,599 ========== ============== ======= ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Cash overdraft ............................... $ 2,799 $ 2,799 Current portion of long-term debt ............ 7,194 7,194 Accounts payable ............................. 21,015 $ (2,594) 18,421 Accrued taxes ................................ 1,097 1,097 Accrued payroll and other compensation ....... 6,236 2,435 8,671 Liabilities related to assets held for sale .. 7,585 (6,648) 937 Other accrued liabilities .................... 8,244 (114) $2,100(b) 10,230 ---------- ----------- ------- --------- Total current liabilities ............... 54,170 (6,921) 2,100 49,349 Long-term debt .................................... 18,302 18,302 Deferred tax liabilities .......................... 11,762 11,762 Other long-term liabilities ....................... 4,769 4,769 Commitments and contingencies STOCKHOLDERS' EQUITY: Preferred stock .............................. -- Common stock ................................. 2,191 2,191 Capital in excess of par value ............... 39,766 39,766 Retained earnings ............................ 150,077 (26,339) 7,854 131,592 Accumulated other comprehensive income ....... (5,490) (5,490) ---------- ----------- ------- --------- 186,544 (26,339) 7,854 168,059 Less: treasury stock, at cost ............... (61,642) (61,642) ---------- ----------- ------- --------- Total stockholders' equity .............. 124,902 (26,339) 7,854 106,417 ---------- ----------- ------- --------- Total liabilities and stockholders' equity ... $ 213,905 $ (33,260) $ 9,954 $ 190,599 ========= ============== ======= =========
a) To eliminate the assets and liabilities of the Sold Operations included in the Balance Sheet as of June 30, 2000. b) To record an accrual for the estimated costs associated with the divestiture. c) To adjust the income tax receivable as a result of the divestiture. 7 LYDALL, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF NET INCOME FOR THE YEAR ENDED DECEMBER 31, 1999 (IN THOUSANDS EXCEPT PER-SHARE DATA) (UNAUDITED)
DECEMBER 31, 1999 PRO FORMA DECEMBER 31, 1999 HISTORICAL ADJUSTMENTS (a) PRO FORMA ----------------- --------------- ----------------- Net sales $ 318,505 ($52,214) $266,291 Cost of sales 242,985 (52,173) 190,812 --------- --------- --------- Gross margin 75,520 (41) 75,479 Selling, product development and administrative expenses 54,827 (4,067) 50,760 --------- --------- --------- Operating income 20,693 4,026 24,719 Other (income) expense: Investment income (46) (46) Interest expense 2,612 2,612 Foreign currency transaction gain (961) (961) Other (134) (134) --------- --------- --------- 1,471 -- 1,471 --------- --------- --------- Income from continuing operations before income taxes 19,222 4,026 23,248 Income tax expense 6,270 1,409 7,679 --------- --------- --------- Income from continuing operations 12,952 2,617 15,569 Discontinued operations: Loss from operations of the Wovens Segment, net of tax (347) -- (347) Loss on disposal of the Wovens Segment, net of tax (1,830) -- (1,830) --------- --------- --------- Loss from discontinued operations (2,177) -- (2,177) --------- --------- --------- Net income $10,775 $2,617 $13,392 ======= ======= ======= Basic earnings (loss) per common share: Continuing operations $ .82 $.99 Discontinued operations (.14) (.14) ----- ----- Net income $ .68 $.85 Diluted earnings (loss) per common share: Continuing operations $ .82 $.99 Discontinued operations (.14) (.14) ----- ----- Net income $ .68 $.85 Weighted average common stock outstanding 15,715 15,715 Weighted average common stock and equivalents outstanding 15,784 15,784
a) To eliminate the pro forma results of the Sold Operations for the year ended December 31, 1999. 8 LYDALL, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF NET INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2000 (IN THOUSANDS EXCEPT PER-SHARE DATA) (UNAUDITED)
JUNE 30, 2000 PRO FORMA JUNE 30, 2000 HISTORICAL ADJUSTMENTS (a) PRO FORMA ------------- --------------- -------------- Net sales $ 159,525 ($24,411) $135,114 Cost of sales 121,403 (23,570) 97,833 ---------- -------- -------- Gross margin 38,122 (841) 37,281 Selling, product development and administrative expenses 28,208 (2,115) 26,093 ---------- -------- -------- Operating income 9,914 1,274 11,188 Other (income) expense: Investment income (158) (158) Interest expense 839 839 Foreign currency transaction loss 5 5 Gain from sale of operations (6,065) (6,065) Other (218) (218) ---------- -------- -------- (5,597) -- (5,597) ---------- -------- -------- Income from continuing operations before income taxes 15,511 1,274 16,785 Income tax expense 5,591 446 6,037 ---------- -------- -------- Income from continuing operations 9,920 828 10,748 Discontinued operations: Gain on disposal of the Wovens Segment, net of tax 71 -- 71 ---------- -------- -------- Gain from discontinued operations 71 -- 71 ---------- -------- -------- NET INCOME $ 9,991 $828 $10,819 ========== ======= ======== Basic earnings per common share: Continuing operations $ .63 $ .68 Discontinued operations - - -------- ------- Net income $ .63 $ .68 Diluted earnings per common share: Continuing operations $ .63 $ .68 Discontinued operations - - -------- -------- Net income $ .63 $ .68 Weighted average common stock outstanding 15,745 15,745 Weighted average common stock and equivalents 15,800 15,800 outstanding
a) To eliminate the pro forma results of the Sold Operations for the six months ended June 30, 2000. 9 EX-2.1 2 a2027674zex-2_1.txt EXHIBIT-2.1 Exhibit 2.1 NUMBER 895 OF THE DEED ROLE FOR 2000 D O N E at Frankfurt am Main on September 29, 2000 Before me, the undersigned notary public DR. STEFAN SCHMINCK with his business address at Schaumainkai 7 60594 Frankfurt am Main appeared, all personally known, 1. Klaus Steinweg, Bonhoefferstrasse 40, 58 511 Ludenscheid The appeared ad 1) declared not to act in his own name but acting as the managing director with single power of representation and exempted from the limitations under Section 181 Civil Code for Lydall Gerhardi Verwaltungs GmbH, Ludenscheid, registered in the commercial register of the local court Ludenscheid under HR B 15 69 - EXHIBIT A, acting in its capacity as the general partner of Lydall Gerhardi GmbH & Co KG, Ludenscheid, registered in the commercial register of the local court Ludenscheid under HR A 797 EXHIBIT B. and 2. Christoph Huberty, An der Egge 16, 58093 Hagen, and 3. Reinhard Hoffmann, Zum Tilo 20, 57413 Finnentrop-Ronkhausen. The appeared ad 2) and ad 3) declared not to act in their own names but acting as the appointed but not yet registered managing directors with single power of representation and exempted from the limitations under Section 181 Civil Code in the name of CM 00 Vermogensverwaltung 307 GmbH, registered in the commercial register of the local court Munchen under HR B 13 22 94 - EXHIBIT C, the change of the firm name to Gerhardi Kunststofftechnik GmbH, the seat moved to Ludenscheid and the change of the purpose of the company resolved according to the deed no. 893 of the deed file 2000 of the notarizing notary but not yet registered in the commercial registry. Asked whether previously having been involved in the meaning of Section 3 para 1 no 7 Notarization Act (BeurkG) the appeared stated that not to have been the case. The appeared then requested the notarization of the following: SPIN OFF AND TRANSFER AGREEMENT PREAMBLE 1. Lydall Gerhardi GmbH & Co KG is registered in the commercial register of the local court Ludenscheid under HR A 797 with its seat in Ludenscheid, hereinafter "TRANSFERRING COMPANY" The partnership capital of the TRANSFERRING COMPANY amounts to DM 1.200.000,00 (in words one million twohundredthousand Deutsche Mark). Lydall Deutschland Holding GmbH with its seat in Ludenscheid, registered in the commercial register of the local court Ludenscheid under HR B 29 15 - EXHIBIT D - - is the only limited partner in the TRANSFERRING COMPANY. Lydall Gerhardi Verwaltungs GmbH, Ludenscheid, registered in the commercial register of the local court Ludenscheid under HR B 15 69, with a stated capital of DM 100.000,00 is the only general partner in the TRANSFERRING COMPANY. According to the Articles of Association of the TRANSFERRING COMPANY the purpose of the company is the manufacturing of metal works of all kinds, the operation of a semi-finished metal works plant, the manufacturing of semi- and complete goods made out of plastic as well as trading with the above mentioned goods. The company is entitled to be active in other branches of industry, to acquire or lease other businesses or to make agreements of common interest or similar agreements with other companies or associations. 2. CM 00 Vermogensverwaltung 307 GmbH with its seat in Munich is registered in the commercial register of the local court in Munich under HR B 13 22 94 with a stated capital of Euro 25.000,00 fully paid up, hereinafter "RECEIVING COMPANY The TRANSFERRING COMPANY is the sole quotaholder of the RECEIVING COMPANY. By way of resolution, deed No 893/ 2000 of the notarizing Notary public dated September 29, 2000, not yet register in the commercial register inter alia the purpose of the RECEIVING COMPANY has been changed as follows: The purpose of the company is the manufacturing of metal works of all kinds, the operation of a semi-finished metal works plant, the manufacturing of semi- and complete goods made out of plastic as well as trading with the above mentioned goods. The company is entitled to any acts possibly serving the above mentioned purpose. The company may acquire companies of similar or equal kind and own interests therein. The company may form domestic and/or foreign branches. 3. By way of this agreement all assets and liabilities of the business units Ludenscheid and Ibbenburen of the TRANSFERRING COMPANY including all rights and obligations associated with these business units - hereinafter the "BUSINESS" - shall be spun off to the RECEIVING COMPANY with the TRANSFERRING COMPANY continuing (Sections 123 para 3 no 1 in connection with 124 ff., 138 ff., 141 ff Transfer Act - UmwG). The business unit Meinerzhagen shall remain with the TRANSFERRING COMPANY. 4. To the extent the appeared refer to Exhibits, there are included in deed no.891/2000 of the notarizing notary as of September 29, 2000, that has been available in its original during the notarization. The contents of aforementioned deed is known to the parties and they waive the reading and the attachment of the deed in question. In consideration of the above the parties agree to the following: SPIN OFF AND TRANSFER AGREEMENT SECTION 1 FIRM NAME AND SEAT OF PARTIES Lydall Gerhardi GmbH & Co KG, Ludenscheid, as the TRANSFERRING COMPANY, and CM 00 Vermogensverwaltung 307 GmbH, Munich (as mentioned above, move of corporate seat to Ludenscheid resolved but not yet registered with the commercial registry), as the RECEIVING COMPANY, are the participating companies in this spin off. SECTION 2 TRANSFER OF ASSETS The TRANSFERRING COMPANY herewith transfers the assets and liabilities listed below together with all rights and obligations to the RECEIVING COMPANY with the TRANSFERRING COMPANY continuing. The following shall apply in particular to the transfer of the assets and liabilities to the RECEIVING COMPANY: 1. Fixed assets: a) As part of the spin off the fixed assets listed in EXHIBIT 2.1.a. which economically belong to the business unit in Ibbenburen are transferred from the TRANSFERRING COMPANY to the RECEIVING COMPANY. b) As part of the spin off the fixed assets listed in EXHIBIT 2.1.b. which economically belong to the business unit in Ludenscheid are transferred from the TRANSFERRING COMPANY to the RECEIVING COMPANY. c) As part of the spin off the fixed assets listed in EXHIBIT 2.1.c. which economically belong to the business unit in Ludenscheid forming part of the administration there, are transferred from the TRANSFERRING COMPANY to the RECEIVING COMPANY. d) As part of the spin off only the patents listed in the 6th column of the list marked "Ibbenburen" and/or "Ludenscheid" EXHIBIT 2.1.d - are transferred from the TRANSFERRING COMPANY to the RECEIVING COMPANY. e) The TRANSFERRING COMPANY is the sole owner of the following real property : REAL ESTATE LUDENSCHEID:
NR. GEMARKUNG BAND BLATT FLURSTUCK GROSSE 2 HA A M - --- --------- ---- ----- --------- -------------- 1 Lud. - Stadt 1813 11 - 5 93 2 Lud. - Stadt 1813 9 - 7 98 5 Lud. - Stadt 1813 132 - 97 39 6 Lud. - Stadt 1813 131 - - 41 8 Lud. - Stadt 1813 156 - - 79 9 Lud. - Stadt 1813 10 2/8 - 01 70 10 Lud. - Stadt 1813 157 - 01 10 11 Lud. - Stadt 1813 160 - - 03 12 Lud. - Stadt 1813 159 - - 04
Encumbrances: Mortgage current. No. 7 in Section III in the amount of DM 11.000.000,- in favor of Deutsche Bank REAL PROPERTY IBBENBUREN:
NR. GEMARKUNG BAND BLATT FLURSTUCK GROSSE 2 HA A M - --- --------- ---- ----- --------- -------------- 5 Ibbenburen 7288 26 - 49 61 6 Ibbenburen 7288 74 - 26 91 7 Ibbenburen 0635 94 - 90 44 8 Ibbenburen 0635 95 - 58 15 9 Ibbenburen 0635 27 - 35 53 10 Ibbenburen 0635 28 1 11 84 11 Ibbenburen 0635 73 - 29 59
Encumbrances in Section III: Real estate register of Ibbenburen, folio 7288 under current number 5 a mortgage in the amount of DM 50.000 in favor of Fa. Karl Lohmann KG, transferred to Stadtsparkasse Ibbenburen, as well as a further mortgage in the amount of DM 350.000,00 under current no. 7 in favor of Stadtsparkasse Emsdetten, transferred to Stadtsparkasse Ibbenburen; Real estate register of Ibbenburen, folio 0635 under current no. 1 - 10, altogether 10 mortgages at DM 120.000 each, in favor of Fa. Gerhardi & Cie GmbH & Co KG, the TRANSFERRING COMPANY. As part of the spin off the above mentioned real property including the registered encumbrances and further including all statutory components of the real property, in particular any and all existing buildings thereon, are transferred to the RECEIVING COMPANY. The transfer includes any public levvies, building restrictions, possible obligations of an owner under environmental protection laws as well as obligations stemming from contamination, known or unknown, plus any right and obligation under existing lease agreements. However, any underlying obligations under registered mortgages shall not be transferred. 2. Liabilities, Claims and Contractual Relations a) As part of the spin off those supplier obligations listed in the column Ludenscheid and Ibbenburen in EXHIBIT 2.2.a. (1) and the customer receivables listed in EXHIBIT 2.2.a. (2) in the column Ludenscheid and Ibbenburen transferred from the TRANSFERRING COMPANY to the RECEIVING COMPANY. b) As part of the spin off the agreements listed in the column "Werk" and marked "L" and "I" in EXHIBIT 2.2.b shall be transferred from the TRANSFERRING COMPANY to the RECEIVING COMPANY. c) The framework agreements with customers listed in the column "WKNR" marked "4" and "005" in EXHIBIT 2.2.c. with respect to the products listed therein shall be transferred from the TRANSFERRING COMPANY to the RECEIVING COMPANY with all rights and obligations including the already manufactured non-finished products therefore. d) As part of the spin-off the licences listed in Exhibit 2.2.d are being transferred from the TRANSFERRING COMPANY to the RECEIVING COMPANY. e) As part of the spin-off possession to the items listed in Exhibit 2.2.e together with the underlying contractual relationships and the duties and rights stemming therefrom is being transferred from the TRANSFERRING COMPANY to the RECEIVING COMPANY. f) As part of the sign-off the insurance relationships listed in Exhibit 2.2.f. are transfered from the TRANSFERRING COMPANY to the RECEIVING COMPANY. 3. Inventory As part of the spin off the inventory, spare parts of any kind and ancillary material (Hilfs- und Betriebsstoffe) in the warehouses in Ludenscheid and Ibbenburen shall be transferred from the TRANSFERRING COMPANY to the RECEIVING COMPANY with all rights and obligations. 4. Employment Agreements a) As part of the spin off the employment relationships with the blue-collar employees (Arbeiter) - EXHIBIT 2.4.a - of the business unit Ludenscheid shall be transferred from the TRANSFERRING COMPANY to the RECEIVING COMPANY with all rights and obligations. b) As part of the spin off the employment relationships of the salaried employees (Angestellte) - EXHIBIT 2.4.b - of the business unit Ludenscheid shall be transferred from the TRANSFERRING COMPANY to the RECEIVING COMPANY with all rights and obligations. c) As part of the spin off the employment relationships with the blue collar employees - EXHIBIT 2.4.c - of the business unit Ibbenburen shall be transferred from the TRANSFERRING COMPANY to the RECEIVING COMPANY with all rights and obligations. d) As part of the spin off the employment relationships of the salaried employees - EXHIBIT 2.4.d - of the business unit Ibbenburen shall be transferred from the TRANSFERRING COMPANY to the RECEIVING COMPANY with all rights and obligations. e) To the extent apprentices are being listed in the Exhibits a) - d) these shall also be transferred. 5. All assets, liabilities, contractual relationships and employment relationships as well as all rights and obligations shall be transferred to the RECEIVING COMPANY to the extent they are according to the EXHIBITS, on the transfer date (see Section 4 below) economically allocable to the BUSINESS, even if they are not specifically listed in the EXHIBITs of this Section 3. This shall in particular apply to intangible goods or assets acquired and liabilities assumed until the registration of the spin off in the commercial register at the seat of the TRANSFERRING COMPANY as well as employment relationships entered into. To the extent that goods, claims and items are being sold in the regular course of business by the TRANSFERRING COMPANY after the transfer date (see Section 4 below), which according to the stipulation in Section 4. a) were supposed to be transferred to the RECEIVING COMPANY, the surrogate shall replace them. SECTION 3 ISSUANCE OF QUOTAS; SPECIFIC RIGHTS AND BENEFITS 1. As consideration for the transfer specified under Section 2 above the TRANSFERRING COMPANY shall receive additional interests in the company by way of increase of its existing quota with a nominal capital of Euro 25.000,00 by Euro 2.475.000,00 to Euro 2.500.000,00 so that the stated capital of the RECEIVING COMPANY shall then amount to Euro 2.500.000,00. The amounts stated for the transferred assets shall be at the level of the RECEIVING COMPANY at the minimum according to their book value, at the maximum to their fair market value. Any difference of the value stated in accordance with the above of the transferred assets towards the total nominal value of the quota of the RECEIVING COMPANY shall be booked into the capital reserve of the RECEIVING COMPANY. The consideration granted by way of stock increase shall provide the entitlement to profits as of the transfer date (see Section 4 below). 2. No cash payments are due. 3. No special rights and benefits for the shareholders of the TRANSFERRING COMPANY or other parties mentioned in Section 126 para 1 no. 7 and 8 Transfer Act - UmwG - were granted. SECTION 4 TRANSFER DATE 4.1 As of September 30, 2000, 11.58 p.m. any acts with respect to assets and liabilities as well as other rights and obligations transferred to the RECEIVING COMPANY in accordance with Section 2 above by the TRANSFERRING COMPANY shall be deemed to have been made on behalf of the RECEIVING COMPANY (Section 126 para 1 no 6 Transfer Act - UmwG). 4.2. With respect to the status of the content and the existence of the assets transferred according to Section 2 above the SPIN-OFF DATE is material. SECTION 5 CONSEQUENCES OF THE SPIN OFF FOR THE EMPLOYEES AND THEIR REPRESENTATIVES 1. On the basis of the spin off the employment relationships listed in EXHIBITs 2.4.a, 2.4.b, 2.4.c und 2.4.d shall be transferred from the TRANSFERRING COMPANY to the RECEIVING COMPANY. 2. The RECEIVING COMPANY shall accept all rights and obligations for the employment relationships existing at the time of transfer in light of the spin off. To the extent these rights and obligations are dealt with by a collective bargaining agreement or a collective shop agreement these shall become part of the individual employment agreement between the RECEIVING COMPANY and the respective employee and may not be altered to the detriment of the employee prior to the end of one year following the date of transfer (Section 613a para 1 Civil Code - BGB, Section 324 Transfer Act - UmwG), unless the prerequisites of the exception to the rule according to Section 613 a para 1 sentence 3 and 4 Civil Code - BGB are applicable (Section 324 Transfer Act - UmwG). According to Section 324 Transfer Act - UmwG - Section 613 a para 4 Civil Code - BGB remains unaffected by the effects of the registration of the spin off. With respect to termination Section 323 Transfer Act - UmwG applies; Section 323 Transfer Act - UmwG - stipulates that with respect to termination the position of the employee shall not detrimentally be affected for the duration of two years following the spin off, if the respective employee had been employed by the TRANSFERRING COMPANY for more than two years prior to the spin off. 3. A levying of interest - Interessenausgleich - concerning the employees listed in EXHIBITs 2.4.a., 2.4.b., 2.4.c. and 2.4.d. has been agreed upon between the TRANSFERRING COMPANY and the works councils exisiting in the company for the business unit in Ibbenburen on the one hand and in Meinerzhagen and in Ludenscheid on the other dated 29.09.2000. The document is attached as EXHIBIT 5.3. 4. The RECEIVING COMPANY has no works council until now. The TRANSFERRING COMPANY has a joint works council for the business units Ludenscheid and Meinerzhagen and a works council for the business unit in Ibbenburen. According to Section 321 Transfer Act - UmwG - the members of the works council remain in office and continue the business for those units for which they were responsible before and thus also for those business units transferred to the RECEIVING COMPANY. The works councils are required to immediately appoint an election committee. Their transitionary mandate shall end as soon as new works councils have been elected in the business units and the result of the election has been published, however, not later than six months following the registration of the spin off in the commercial register at the seat of the RECEIVING COMPANY. The wording of Section 321 Transfer Act - UmwG - does not provide for a transitional mandate for other employee representations such as company works council, economic committee, youth and apprentice representation, speaker committee, etc.. Nevertheless, the RECEIVING COMPANY accepts transitionary mandates by way of the levying of interest - Exhibit 5.3. The RECEIVING COMPANY shall regularly employ more than 500 employees and thereby more than 100 employees with the consequence that the works council respectively company works council shall establish an economic committee (Section 106 Works Council Constitution Act - BetrVerfG). The TRANSFERRING COMPANY shall regularly employ more than 100 employees; consequently, there will be an economic committee. In case separate works councils are being established for the business units in Ibbenburen and Ludenscheid at the RECEIVING COMPANY, Section 47 Works Council Constitution Act - BetrVerfG - provides for the establishment of a company works council. Units with regularly more than 5 employees which have not reached the age of 18 - - adolescent employees - or which are employed as part of their education and have not yet reached the age of 25, youth and apprentice representations shall be elected if works councils have been established in these units (Sections 60, 80 para 1 no 5 Works Council Constitution Act - BetrVerfG). As concerns the TRANSFERRING COMPANY there are no youth and apprentice employees; the RECEIVING COMPANY presently employs 5 youths and apprentices. 5. Following the spin off the RECEIVING COMPANY will regularly employ more than 500 employees. Limited liability companies - GmbH's - with more than 500 employees are required under Section 77 Works Council Constitution Act 1952 to establish a co-determined Supervisory Board consisting of 1/3 employee representatives. The RECEIVING COMPANY shall establish a co-determined Supervisory Board with 1/3 of the members being employee representatives. SECTION 6 FINANCIAL STATEMENT The spin off will be based on a spin off financial statement of the TRANSFERRING COMPANY in the form of a closing balance sheet in the meaning of Sections 125, 17 para 2 Transfer Act - UmwG as per September 30, 2000, 11.58 p.m. audited with an unqualified certificate by the CPA firm Price Waterhouse Coopers, Dortmund (PwC). SECTION 7 REAL PROPERTY, STATEMENTS CONCERNING REAL PROPERTY The TRANSFERRING COMPANY appropriates and the RECEIVING COMPANY applies for an amendment of the land registers with respect to the transfers under this spin off and transfer agreement in accordance with Section 2.1.e. The competent land registers shall receive a certified excerpt from the commercial register following the registration of the spin off in the commercial register of the TRANSFERRING COMPANY. SECTION 8 SEVERANCE CLAUSE In case one or more clauses of this deed are void or unenforceable the remaining clauses shall remain unaffected thereby. The parties undertake to replace the void or unenforceable clause by such a clause which in its economic effect comes closest to the void or unenforceable clause, however, is valid and enforceable. The same shall apply in case of omissions in this agreement. SECTION 9 EXPENSES, VAT, COPIES The cost for this deed and its consummation as well as any possible transfer taxes shall be borne by the TRANSFERRING COMPANY. To the extent any of the transactions made above trigger VAT the RECEIVING COMPANY shall owe to the legal VAT to the TRANSFERRING COMPANY. The TRANSFERRING COMPANY is obliged in that case to issue to the RECEIVING COMPANY a statement showing the VAT owed. The VAT owed shall be paid by way of transfer of the input tax claim of the RECEIVING COMPANY to the competent tax authoritiy supplied on the legal form. The RECEIVING COMPANY herewith accepts such a transfer. In case the transfer of the input tax claim cannot be effected, irrespective of the reason therefor, or in case the input tax claim cannot successfully be claimed for other reasons towards the tax authority in connection with the same VAT declaration, in which the transfer itself has been declared, the claim shall be paid by way of payment by the RECEIVING COMPANY. To the extent the transaction forms a business transfer the RECEIVING COMPANY shall take over this legal position with respect to VAT in accordance with Section 1 a Value Added Tax Act - UmstG - in lieu of the TRANSFERRING COMPANY. This means that in particular the deadlines for corrections as well as other stipulations concerning the input tax deduction according to Section 15 a VAT Act shall be continued by the RECEIVING COMPANY. In case of a correction of the input tax concerning the assets transferred under this spin off and transfer agreement in accordance with Section 15 a VAT Act due to change of use the RECEIVING COMPANY shall bare the cost for input tax repayments, potential input tax returns shall also be due the RECEIVING COMPANY. The following parties shall receive EXECUTIONS: - - The quotaholder of the TRANSFERRING COMPANY (2); - - the quotaholder of the RECEIVING COMPANY (2); - - the parties of this agreement (2 each). CERTIFIED COPIES: - - the court of registration of Ludenscheid (2); - - the court of registration of Munich (2); - - the land register in Ibbenburen; - - the land register in Ludenscheid; - - the tax office Ludenscheid, corporate income tax unit no. 3325740735 - - the tax office Ludenscheid, real property transfer tax unit. - - the tax office Ibbenburen, real property transfer tax unit SECTION 10 REMARKS The notary pointed out to the parties in particular the following: - - The spin off shall only become effective with the registration thereof in the commercial register of the TRANSFERRING COMPANY. - - At the time of registration of the capital increase in the commercial register at the seat of the RECEIVING COMPANY the net value of the assets transferred minus the liabilities transferred may not be lower than the total nominal value of the shares / quotas issued in consideration thereof of the RECEIVING COMPANY. - - The transferring company shall remain liable for any potiential shortfall amount. - - The notary pointed out the effects of the registration under Section 131 Transfer Act - UmwG - and the liability stipulations according to Section 133 Transfer Act. - - The notary further informed about Section 613 a Civil Code, the interim mandate of the works council under Section 321 Transfer Act and the rights of the employees with respect to termination under Section 323 Transfer Act. - - The notary has further informed about the potential damage claim against the representative bodies of the TRANSFERRING COMPANY under Section 25 Transfer Act. - - The notary further informed that additional liability could stem from other statutes such as Section 25 Commercial Code and Section 75 AO, Section 133 para 1 sentence 2 Transfer Act. - - The notary finally informed that the spin off could trigger real estate transfer tax and that the parties shall be jointly liable towards the tax authorities for such a tax. SECTION 11 POWER OF ATTORNEY All the appeared asked the notary to implement this deed and herewith grant a power of attorney to him and his substitute exempting them from the limitations under Section 181 Civil Code to make any statements in their name necessary for the implementation of this agreement, make amendments to this deed, in particular to the extent these are requested from the land register for the amendment of the land registers. The appeared herewith grant to the notary as well as a) Ms. Waltraud Alltmann b) Ms. Sandra Assion - - each individually - both employed by the notary in his notarial office, power of attorney with the exemption from the limitations under Section 181 Civil Code to make any statements with respect to the filing of the spin off agreement, which may be requested by the chamber of commerce and / or the courts of registration in implementing the spin off. This power of attorney shall include any changes in the mere wording of this agreement. This recording has been read by the notary, approved by the appeared and personally signed by them as follows: EX-2.2 3 a2027674zex-2_2.txt EXHIBIT-2.2 Exhibit 2.2 NUMBER 899 OF THE DEED ROLE FOR 2000 D O N E at Frankfurt am Main on September 29, 2000 Before me, the undersigned notary public Dr. Stefan Schminck Schaumainkai 7 60594 Frankfurt am Main appeared, 1. Klaus Steinweg, BonhoefferstraBe 40, 58 511 Ludenscheid - personally known to the notarizing notary acting not in his own name but as the managing director with single power of representation and exempted from the limitations under Section 181 Civil Code in the name of and for Lydall Gerhardi Verwaltungs GmbH, Ludenscheid , registered in commercial register of the local court in Ludenscheid under HR B 1569 (hereinafter "GENERAL PARTNER"), the GENERAL PARTNER acting in the name and on behalf of Lydall Gerhardi GmbH & Co KG, Ludenscheid, registered in the commercial register of the local court Ludenscheid under HR A 797 (hereinafter "SELLER") , and 2.1 Mr. Christoph Huberty, An der Egge 16, 58093 Hagen -personally known to the notarizing notary acting a) in his own name, and b) as the appointed but not yet registered managing director with single power of representation and exempted from the limitations under Section 181 Civil Code of CM 00 Vermogensverwaltung 307 GmbH, Munchen, registered in the commercial register of the local court Munich under HR B 132294, the firm name to Gerhardi Kunststofftechnik GmbH, the seat moved to Ludenscheid and the change of the purpose of the company resolved but not yet registered (hereinafter "COMPANY") 2.2 Mr. Peter Hulle, Stettiner Str. 20, 58515 Ludenscheid, 2.3 Mr. Torsten Tomaszewski, Weidengrund 1 a, 58515 Ludenscheid, 2.4 Mr. Reinhard Hoffmann, Zum Tilo 20, 57413 Finnentrop-Ronkhausen, - personally known to the notarizing notary acting a) in his own name, and b) as the appointed but not yet registered managing director with single power of representation and exempted from the limitations under Section 181 Civil Code of the COMPANY 2.5 Mr. Thomas Dinter, Am Heideberg 10, 58791 Werdohl, - hereinafter jointly referred to as ,,BUYERS " The appeared ad 2.2, 2.3, 2.5 identified themselves by their respective passports and/or personal identification cards. Asked by the acting notary public about any prior involvement in the meaning of Section 3 para 1 no 7 Notarization Act - BeurkG - the appeared declared that not to have been the case. The appeared requested the notarization of the following PURCHASE AND TRANSFER AGREEMENT PREAMBLE Lydall (Deutschland) Holding GmbH, Ludenscheid, registered in the commercial register of the local court in Ludenscheid under HR B 2915 (hereinafter "LYDALL HOLDING") had purchased the former Gerhardi business in Germany from the previous owners effective January 1, 1999 by way of acquiring all quotas in the GENERAL PARTNER and all limited partnership interests in Gerhardi & Cie GmbH & Co. KG, name changed into Lydall Gerhardi GmbH & Co. KG, the "SELLER". BUYERS have been and still are managers at the Gerhardi business, in particular the Ludenscheid and the Ibbenburen business units, and as such have extensive inside knowledge of the Gerhardi business, in particular the business being acquired by way of a management buy-out ("MBO") as laid out in the following. The Gerhardi business acquired by LYDALL HOLDING has been and still is being operated out of three operational units located in Meinerzhagen - heat and acoustic shields (hereinafter the "MEINERZHAGEN BUSINESS") - Ludenscheid - galvanization (hereinafter the "LUDENSCHEID BUSINESS") - and Ibbenburen - injection molding (hereinafter the "IBBENBUREN BUSINESS"), the LUDENSCHEID BUSINESS and IBBENBUREN BUSINESS jointly referred to as the "BUSINESS". SELLER is the sole owner of the only quota with a nominal value of EURO 25.000 of the COMPANY. The stated capital is paid. Immediately prior to the transaction under this Deed, SELLER transferred the BUSINESS out of the existing Lydall Gerhardi GmbH & Co. KG into Gerhardi Kunststofftechnik GmbH by way of a spin-off into a receiving corporate entity in accordance with Section 123 para. 3 no.1 Transfer Act - UmwG with effect as per September 30, 2000, 11.58 p.m. - the "SPIN-OFF DATE" -under notarial deeds no. 895, no. 896 and no. 897, of the deed file 2000 of the notarizing notary dated September 29, 2000 (hereinafter the "DEED"). Prior to the above-mentioned transaction Gerhardi Kunststofftechnik GmbH has had no active business. As part of the spin-off transaction the quota of the COMPANY held by the SELLER was increased by a nominal value of EURO 2.475.000. This capital increase has not yet been registered. Exhibits the appeared refer to are included in deed no.891of the deed file 2000 of the notarizing notary as of September 29, 2000, that has been available in its original during the notarization. The contents of aforementioned deed are known to the parties and they waive reading and attachment of the deed in question. BUYERS have directly and/or through their advisors actively participated in all of the transactions described above and now together with SELLER enter into the following PURCHASE AND TRANSFER AGREEMENT A R T I C L E I 1. Purchase, Sale and Transfer 1.1 SELLER is the sole owner of the sole quota in CM 00 Vermogensverwaltung 307 GmbH, registered in the commercial register of the local court Munich under HR B 132294 - the ,,COMPANY" - with a total nominal value of EURO 25.000,00 (EURO twenty-five thousand) prior to the already resolved but not yet registered capital increase - hereinafter the ,,QUOTA". 1.2 For purposes of selling the QUOTA in the COMPANY to BUYERS, each singly, SELLER herewith divides the QUOTA into the following quotas including the respective inherent capital increase amount of nominal EURO 2.475.000 with permission of the COMPANY: a) quota ad 1.2.a with a nominal value of EURO 10.000 including the inherent amount of capital increase with a nominal value of EURO 990.000; b) quota ad 1.2.b with a nominal value of EURO 3.750 including the inherent amount of capital increase with a nominal value of EURO 371.250; c) quota ad 1.2.c with a nominal value of EURO 3.750 including the inherent amount of capital increase with a nominal value of EURO 371.250; d) quota ad 1.2.d with a nominal value of EURO 3.750 including the inherent amount of capital increase with a nominal value of EURO 371.250; e) quota ad 1.2.e with a nominal value of EURO 3.750 including the inherent amount of capital increase with a nominal value of EURO 371.250; jointly referred to as the "QUOTAS" 1.3 SELLER herewith sells, assigns and transfers the respective QUOTAS with effect as of September 30, 2000, 11.59 p.m. ("TRANSFER DATE") to the respective BUYERS, each individually, who accept the sale and transfer on the terms of this AGREEMENT, i.e. the appeared ad 2.1 accepts the sale and transfer of the quota under 1.2.a) with a nominal value of EURO 10.000 including the increase amount of nominal EURO 990.000 belonging thereto, the appeared ad 2.2. accepts the sale and transfer of the quota under 1.2.b) with a nominal value of EURO 3.750 including the increase amount of nominal EURO 371.250 belonging thereto; the appeared ad 2.3 accepts the sale and transfer of the quota under 1.2.c) with a nominal value of EURO 3.750 including the increase amount of nominal EURO 371.250 belonging thereto; the appeared ad 2.4 accepts the sale and transfer of the quota under 1.2.d) with a nominal value of EURO 3.750 including the increase amount of nominal EURO 371.250 belonging thereto, and the appeared ad 2.5 accepts the sale and transfer of the quota under 1.2.e) with a nominal value of EURO 3.750 including the increase amount of nominal EURO 371.250 belonging thereto. 1.4 As consideration for the sale and transfer of the QUOTAS, the total purchase price per each of the QUOTAS shall amount to EURO 1,00 (in words Euro one) - hereinafter the ,,PURCHASE PRICE". 1.5 The PURCHASE PRICE shall be due and payable immediately in cash. 1.6 In case BUYERS, each individually or jointly, and/or the COMPANY shall divest of the BUSINESS or major parts (business units) thereof, in particular any of the real property listed under 3.3. below, or liquidate the COMPANY or the BUSINESS, the proceeds thereof shall belong to SELLER and be paid to SELLER immediately upon receipt. BUYERS and COMPANY herewith assign any claim in consideration for such a divestiture to SELLER. SELLER's claim under this clause shall decrease by 20% at the end of each year following the date of this Deed and shall cease to exist after September 30, 2005, provided, however, that any divestiture or liquidation agreed upon prior to that date shall provide SELLER with a claim under this clause, irrespective of the date of consumption thereof. The same shall apply mutatis mutandis to any disposition directed towards a shift of the assets away from the COMPANY and/or away from the quotaholders of the COMPANY, provided however that dispositions in the normal line of business of the COMPANY including normal collateral in favor of financing third parties shall remain possible. 1.7 The result of the current fiscal year shall belong to the BUYERS; the same shall apply to the profits of previous fiscal years which have not been distributed to the quotaholders. ARTICLE II 2. Compensatory Payments 2.1 SELLER shall reimburse the COMPANY the cost for vacation already earned but not yet taken (vacation pay and ficticious payment in lieu of vacation) as well as Christmas bonuses/13th month salaries/wages including the respective employer's contributions pro rata temporis until September 30, 2000, payable within 30 days upon receipt of the respective invoice agreed upon between the parties prior thereto. 2.2 SELLER shall hold COMPANY harmless from and against all liabilities appertaining to the BUSINESS due on or before September 30, 2000, unless otherwise stipulated in this AGREEMENT. SELLER assumes the liability concerning software orders, 3 PC's, final investment for Engel VI including the air conditioning tool, outstanding investments for the Galvanic business in ventilation, TUV inspection and tools up to a maximum of DM 292.500,00 incl. V.A.T. as per a corresponding statement (EXHIBIT K 2.2). SELLER shall reimburse COMPANY immediately for salaries and wages for the month of September becoming due in October to the extent not already paid, in accordance with a proper invoice. 2.3 The tools manufactured by the COMPANY until September 30, 2000 have partly not yet been invoiced and invoices in that respect have been paid only to a limited degree. The parties agree that the difference between paid expenses and payments received as of the SPIN-OFF DATE will amount to app. DM 1.500.000. In case this difference amounts to more than DM 1.500.000 COMPANY shall reimburse SELLER any surplus amount. In case the difference is less than DM 1.500.000 SELLER shall reimburse COMPANY any DM of the shortfall, however not more than DM 500.000. The respective payment shall be due immediately and payable within 10 days of receipt of a corresponding invoice plus V.A.T. as agreed upon between the parties. 2.4 Parties agree that as a result of the spin-off the agency agreement with Fa. Holczl Automotive GmbH did not transfer to COMPANY but remained with SELLER; consequently, COMPANY is free to agree on a new contract with Fa. Holczl Automotive GmbH. SELLER shall effect to COMPANY a one time payment in the amount of DM 2.200.000 in accordance with a proper invoice, and the COMPANY in return shall hold SELLER harmless from and against any and all duties from and in the context with the agency relationship with Fa. Holczl Automotive GmbH with respect to the BUSINESS. In case Fa. Holczl maintains the agreement with the COMPANY and the SELLER, the parties undertake to treat one another as if the agreement had been split up between them. ARTICLE III 3. Representations, Warranties, Indemnification BUYERS as managers of the BUSINESS are well aware of any and all aspects of the BUSINESS and the status of affairs of the COMPANY. Given this background SELLER makes the following representations and warranties: 3.1 With respect to the COMPANY, SELLER warrants to BUYERS: a. The COMPANY is duly organized and registered in the commercial register of the Court of Registration in Munchen under HR B 132294 (Exhibit C.); the COMPANY is validly existing and in full compliance with the articles of incorporation. The QUOTAS are fully paid up to the amount of EURO 25.000, reduced only by the incorporation expenses. b. SELLER has acquired the QUOTA on September 29, 2000, to the notarial deed no. ______ of the officiating notary public, and thus is the lawful owner of the QUOTA - the QUOTAS upon division for purposes of the sale - and is fully entitled to freely dispose of them. The QUOTAS are free of rights of third parties and unencumbered. c. The COMPANY has no direct or indirect equity investment in any other corporation or partnership. d. The COMPANY has until the SPIN-OFF DATE not operated any active business, and the stated capital of the COMPANY as per the SPIN-OFF DATE amounts to at least EURO 25.000 reduced by the founding expenses. 3.2 With respect to the spin-off according to the DEED, SELLER represents and warrants to BUYERS: a. No book value continuation (Buchwertverknupfung) takes place between SELLER and COMPANY. b. For the time between the SPIN-OFF DATE and the registration of the spin-off in the commercial register it shall be secured that the business of the spun-off BUSINESS shall exclusively be handled by the management of the COMPANY and any and all dispositions concerning assets of the BUSINESS shall only be effected by or with the consent of the COMPANY. c. As a result of the spin-off no bank or exchange liabilities were transferred from SELLER to the COMPANY. d. As a result of the spin-off no potential claims of the former owners of the Gerhardi business prior to the acquisition by LYDALL HOLDING have been transferred to the COMPANY. e. As a result of the spin-off no potential claims of the former owners of the Gerhardi business prior to the acquisition by LYDALL HOLDING have been established against BUYERS. f. deleted g. SELLER shall be liable for all taxes and social insurance payments allocable to the BUSINESS until the SPIN-OFF DATE. This shall in particular apply to taxes until the SPIN-OFF DATE, which are only assessed by later tax inspections, employee income tax inspections, VAT inspections or health insurance inspections. 3.3 With respect to the real property transferred under the DEED, SELLER represents and warrants: a. SELLER transferred to the COMPANY the following real estate in Ludenscheid and Ibbenburen, registration in the various real estate registers pending: Ludenscheid Real property located at Schlittenbacher Str.2, Breslauer Str. 39, 43 and Mittelstr. 2 in 58515 Ludenscheid, buildings, District Ludenscheid Stadt, parcels of land 11, 9, 132, 131, 156, 102/8, 157, 160 and 159 according to the land register folio 1813 - Exhibit K 3.3 a I) - the "LUDENSCHEID PROPERTY". Ibbenburen Real property located at St. Josephs Str. 101, 111 and Witten Riehe in 49479 Ibbenburen, buildings (District Ibbenburen, parcels of land 26 and 74 according to the land register folio 7288 and parcels of land 94, 95, 27, 28 and 73 according to the land register folio 0635 - Exhibit K 3.3 a II) - the "IBBENBUREN PROPERTY". The IBBENBUREN PROPERTY and the LUDENSCHEID PROPERTY are jointly referred to as the "REAL PROPERTY". The parties are aware of the status of the respective real estate registers. The REAL PROPERTY are encumbered as follows, in particular in Section III Mortgage in the amount of DM 11,000,000.00 registered in the real estate register of Ludenscheid folio 1813, current no. 7 in section III in favor of Deutsche Bank Ludenscheid, which mortgage shall remain registered to the benefit of the COMPANY for ist own purposes. BUYERS shall negotiate in that respect with Deutsche Bank Ludenscheid. Real estate register of Ibbenburen, folio 7288, current no. 5, section III: a mortgage in the amount of DM 50.000 in favor of Karl Lohmann KG, transferred to Stadtsparkasse Ibbenburen, as well as a further mortgage in the amount of DM 350.000 in favor of Stadtsparkasse Emsdetten, transferred to Stadtsparkasse Ibbenburen; Real estate register of Ibbenburen, folio 0635, current no. 1 - 10, altogether 10 mortgages in the amount of DM 120.000 each, in favor of Gerhardi & Cie GmbH & Co KG. The parties agree that SELLER does not hold the underlying mortgage documents, however most likely these are with the former owners of the Gerhardi business respectively the Stadtsparkasse Ibbenburen. SELLER undertakes to adequately participate in the warranted cancellation of these mortgages. c. SELLER excludes any liability with respect to REAL PROPERTY of the COMPANY. BUYERS expressly confirm to be fully aware of the state of the Real Property with respect to any environmental issues. d. SELLER disclosed the contract to be signed with the City of Ludenscheid regarding a piece of land of app. 60 m in length and 0,2 - 0,5 m width Exhibit K 3.3.d ; COMPANY shall be responsible for any rights and obligations in that respect. ARTICLE IV 4. Indemnification in case of breach of representations and warranties 4.1 In case of a breach of the representation and warranties under Article 3.1.a and b. SELLER shall indemnify BUYERS for the damage or loss occurred through relying on the correctness of the respective representation or warranty, however not more than the amount equal to the interest in the performance of this AGREEMENT. 4.2 In case of a breach of the representation and warranties under Article 3.1.c. and d., 3.2.a. and b. and 3.3.a. and b. SELLER shall put COMPANY in a position as if no case of a breach of the respective representation or warranty had occurred. 4.3 In case of a breach of a representation or warranty under Article 3.2.c. - g. SELLER shall hold COMPANY harmless. 4.4 As a prerequisite to any indemnification claim under Articles 4.1 and 4.2 BUYERS respectively the management of the COMPANY must have allowed SELLER an adequate period of time of one month to remedy the breach. 4.5 Any further or additional remedies other than the one stipulated in Articles 4.1 through 4.3, in particular the right to rescind from the AGREEMENT or damage claims, are expressly excluded, unless a case of tortious acts exists. 4.6 Any indemnification claims shall be time barred one year following the date of this Deed. In case of a breach of the representation or warranty under Article 3.2.g. claims shall be time barred 6 months following the unappealability of the respective order. ARTICLE V 5. Third Party Claims 5.1 BUYERS and COMPANY shall allow SELLER to review the books and records of the COMPANY and shall supply to SELLER all information necessary for SELLER to safeguard its interests. SELLER shall be allowed to participate in inspections/audits of the COMPANY for periods prior to December 31, 2000; the same shall apply to administrative proceedings and court proceedings. 5.2 If any action, suit, proceeding, claim, liability, demand or assessment, in particular tax assessment, shall be asserted against BUYERS in respect of which BUYERS propose to demand indemnification, BUYERS shall notify SELLER within a reasonable period of time after assertation thereof, and such notice shall include copies of all suit, service and claim documents, all other relevant documents in the possession of BUYERS, and an explanation of the BUYERS' contentions and defenses with as much specificity and particularity as the circumstances permit. The failure of BUYERS to give such notice shall not relieve SELLER of its obligation under this section if BUYERS shall have demonstrated that: (i) they acted in good faith and without unreasonable delay, and (ii) SELLER shall not have been prejudiced thereby. Subject to rights of or duties to any insurer or third party having liability therefor, SELLER shall have the right within ten (10) days after receipt of such notice to assume the control of the defense, (and, subject to the prior approval of BUYERS which shall not be unreasonably withheld) compromise or settle any such action, suit, proceeding, claim, liability, demand, or assessment, including, at its own expense, employment of counsel. If SELLER shall have exercised its right to assume such control, BUYERS: (a) may, in their sole discretion and expense, employ counsel to represent them (in addition to counsel employed by SELLER) in any such matter, and in such event counsel selected by SELLER shall be required to cooperate with such counsel of the BUYERS in such defense, compromise or settlement for the purpose of informing and sharing information with the BUYERS; and (b) shall, at their own expense, make available to SELLER those employees of the COMPANY whose assistance, testimony or presence is reasonably deemed by SELLER necessary or beneficial to assist SELLER in evaluating and in defending any such action, claim, suit, proceeding, liability, demand or assessment. Any such access shall be conducted in such manner as not to interfere unreasonably with the operations of the businesses of the COMPANY, and it being understood that SELLER shall be responsible for any travel expenses incurred by the COMPANY for its employees as part of such undertaking for the benefit of SELLER. 5.3 With respect to the environmental issues concerning the IBBENBUREN PROPERTY as dealt with in the draft agreement under public law (offentlich rechtlicher Vertrag) between the Kreis Steinfurt and the COMPANY concerning certain action with respect to clean-up and safeguarding of the property, COMPANY shall accept full responsibility externally and inter partes, and shall reimburse SELLER in case SELLER is being held responsible by any competent public authority for safeguarding and/or clean-up measures. The COMPANY shall remain responsible for the consumption of the above mentioned agreement. The status of the contamination has been established in an expert assessment by Dr. Friedhelm Hug - Exhibit K 5.3. - as well as the means for safeguarding. 5.4 With respect to any and all of the above mentioned circumstances, BUYERS herewith appoint the appeared at 2.1, Christoph Huberty, to act as their attorney-in-fact and represent any and all claims, rights, etc. on behalf of BUYERS towards SELLER including the right to be serviced documents and to be the recipient of statements and declarations. ARTICLE VI 6. Economic Ownership 6.1 The Parties to this AGREEMENT agree that economically the COMPANY shall be the owner of the BUSINESS already during the time between the SPIN-OFF DATE and the time of registration of the spin-off in the commercial register, and that the Parties shall do all that is necessary in order to achieve that attribution of ownership. 6.2 The step-up of the values of the assets transferred to the COMPANY by way of the spin-off has been effected upon initiative of BUYER and their tax advisors. 6.3 Immediately prior to the notarization of this Deed the former management of the COMPANY was terminated, released from its duties and replaced by new management by way of a resolution. Likewise, it has been resolved a change of the corporate seat to Ludenscheid and the new firm name Gerhardi Kunststofftechnik GmbH. BUYERS undertake to immediately file these changes for registration in the competent commercial register. 6.4 The Parties further agree that by way of the spin-off of the BUSINESS a transfer of all assets and contractual relationships was intended, which were exclusively allocable to the BUSINESS. In case that following the spin-off there are additional assets belonging to the BUSINESS and mandatory for the continued operation of the BUSINESS but not part of transaction under the DEED, the Parties shall agree on procedures to transfer these assets and contractual relationships taking into account the spirit of the transactions; this shall apply vice versa in case assets and/or contractual relationships were transferred, which did not belong to the BUSINESS but are mandatory for the continued operation of the MEINERZHAGEN BUSINESS. 6.5 SELLER undertakes to immediately provide any necessary confirmation from third parties with respect to the transfer of the licenses according to Section 2.2.d of the DEED. 6.6 SELLER discloses to BUYER and COMPANY that the insurance contracts listed in Exhibit 2.2.f were terminated; BUYER and COMPANY undertake to review the continuation of the insurance contracts for the BUSINESS in their own responsibility. ARTICLE VII 7. Expenses, Taxes, Confidentiality 7.1 The cost of the notarization shall be borne by SELLER. Each party shall bear its own cost and the cost of its advisors. 7.2 SELLER shall bear any possible real estate transfer taxes that may become due through the execution of this Deed. The Deed does not cause any VAT liability; nevertheless parties agree that in such a cases the statutory provisions regarding the tax debtor shall be applicable also for internal purposes. All amounts stated in this AGREEMENT are net amounts. BUYERS shall bear any personal taxes. Regarding the internal relationship of the parties SELLER shall not bear any further taxes. 7.3 BUYERS are jointly and severally liable for compliance with any and all personal obligations and liabilities arising out of or under this AGREEMENT. 7.4 BUYER, COMPANY and SELLER are obliged to keep secrecy regarding business secrets, profit margins and similar issues of confidentiality of the respective other party towards third parties. ARTICLE VIII 8. Venue, Choice of Law, Language 8.1 Legal venue shall be Ludenscheid. 8.2 This AGREEMENT shall be subject to and interpreted under the laws of Germany. 8.3 This Deed has been translated into English for convenience purposes. Only the German version is binding upon the Parties. ARTICLE IX 9. Miscellaneous 9.1 The EXHIBITS to this AGREEMENT are an integral part of this AGREEMENT. For purposes of this AGREEMENT, any information or declaration given in this AGREEMENT or any EXHIBIT thereto shall be deemed to provide sufficient disclosure for the whole AGREEMENT. 9.2 If any provision of this AGREEMENT is determined to be void or becomes invalid or unenforceable that shall not affect the enforceability with respect to the remaining provisions. The Parties shall agree to a valid provision in lieu of the invalid provision, such valid provision to be commercially as similar as possible to the invalid provision. The same shall apply to omissions. 9.3 Any changes or amendments of this AGREEMENT must be made in writing, unless notarization is required by law. The written form requirement may only be waived in writing. This Deed with Appendices was read to the appeared, was approved by them and signed by them and the notary public in their respective personal handwriting as follows: EX-99.1 4 a2027674zex-99_1.txt EX-99.1 LYDALL COMPLETES SALE OF CHROME-PLATING AND INJECTION-MOLDING OPERATIONS IN GERMANY MANCHESTER, CT - October 2, 2000 - Lydall, Inc. (NYSE: LDL) today announced the sale, on September 30, 2000, of its Gerhardi chrome-plating and injection-molding operations located in Ludenscheid and Ibbenburen, Germany to a management buyout group. The actual loss on sale and associated costs will be determined after the September results of the subject operations have been finalized. However, we expect such loss will reduce earnings in the third quarter 2000 by an estimated $1.15 to $1.22 per diluted common share. The Ludenscheid and Ibbenburen operations contributed approximately 16 percent of the Company's total sales in 1999, or $50 million, as reported in Lydall's Form 10-K, but have been unprofitable since acquisition by Lydall. Lydall retained ownership of the Gerhardi automotive heat-shield operation located in Meinerzhagen, Germany and will continue to operate it as part of its Thermal/Acoustical Group. This operation, which reported sales of approximately $25 million in 1999, has been profitable since its acquisition and is projected to be accretive to Lydall's future earnings. Christopher R. Skomorowski, president and chief executive officer of Lydall, Inc., stated, "When we acquired Gerhardi in December 1998, the company consisted of commingled automotive heat-shield, injection-molding and chrome-plating businesses. The chrome-plating and injection-molding businesses that we have now sold did not fit Lydall's long-term strategic focus on thermal/acoustical markets. Conversely, the Meinerzhagen operation clearly fits our business model and has become an important part of Lydall. Its strong performance to date, however, has been more than offset by losses generated by the Ludenscheid and Ibbenburen operations. Consequently, the combination of Meinerzhagen's earnings and the elimination of losses from the Ibbenburen and Ludenscheid operations is expected to have a significantly positive impact on Lydall's future results." Mr. Skomorowski commented further, "The acquisition of Gerhardi gave Lydall a presence in Europe that is essential to our growing participation in the trend toward "global" automotive platforms and has resulted in significant new business that would otherwise have been unavailable to us." Lydall will file a current report on Form 8-K relative to the sale of the two German operations on or before October 16, 2000. The report will contain pro forma income statements for 1999 and the six months ended June 30, 2000 and a pro forma balance sheet at June 30, 2000. - MORE - Lydall subsidiaries manufacture specialty engineered products for demanding applications primarily serving filtration/separation and thermal/acoustical markets. Stockholders are referred to Lydall's 1999 Annual Report and Form 10-K, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Information," which outlines certain risks regarding the Company's forward-looking statements. Such risks include: a major downturn of the automotive market sales which accounted for approximately 44 percent of Lydall's total second-quarter 2000 sales and significant, unforeseen changes in raw material pricing, specifically, virgin fiber used in producing the Company's materials handling slipsheets and aluminum used in most of the Company's heat-shield products. Also, the timing and degree of success of new-product programs impact Lydall's projected results. For further details on these risks and other pertinent information on Lydall, copies of the Company's Forms 10-K, 10-Q and 8-K are available on Lydall's web site (www.lydall.com). Information may also be obtained from Lydall's toll-free investor information service at 877-LDL-NYSE (535-6973). Company Contact: Carole F. Butenas, Vice President - Investor Relations, at One Colonial Road, Manchester, CT 06040; Tel. 860 646-1233, e-mail: investor@lydall.com. ### PR #584 - MORE - -----END PRIVACY-ENHANCED MESSAGE-----