Exhibit 10.17
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STOCK PURCHASE AGREEMENT
by and between
▇▇▇▇▇▇.▇▇▇ LTD.
and
TOPICS INTERACTIVE FACTORY B.V.
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Dated July 23, 1999
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Agreement") dated July 23, 1999 by and
between ▇▇▇▇▇▇.▇▇▇ LTD., a New York corporation (the "Purchaser"); and TOPICS
INTERACTIVE FACTORY B.V., a corporation organized under the laws of The
Netherlands (the "Seller").
W I T N E S S E T H :
WHEREAS, the Seller is the owner of all of the outstanding shares of
TWINSPARK INTERACTIVE PEOPLE B.V., a corporation organized under the laws of The
Netherlands (the "Company");
WHEREAS, the Seller desires to sell, and the Purchaser desires to
purchase, all of the shares owned by the Seller, being ordinary shares of the
Company, nominal value of Dfl. 0.10 per share ("Company Shares"), pursuant to
the provisions of this Agreement; and
WHEREAS, the parties have complied with all obligations pursuant to the
Works Council Act (WET OP DE ONDERNEMINGSRADEN);
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties do hereby
agree as follows:
ARTICLE I
SALE OF THE SHARES
SECTION 1.1 SALE OF THE SHARES. Subject to the terms and conditions
herein stated, the Seller hereby sells to the Purchaser on the Closing Date (as
defined in Section 2.3), and the Purchaser hereby purchases from the Seller on
the Closing Date, the Company Shares.
ARTICLE II
PURCHASE PRICE AND CLOSING
SECTION 2.1 PURCHASE PRICE. In consideration for the purchase by the
Purchaser of the Company Shares, the aggregate purchase price (the "Purchase
Price") to be delivered by the Purchaser to the Seller on the Closing Date shall
be (a) a certificate or certificate registered in the name of the Seller
representing 1,215,292 shares of Purchaser's common stock, par value $0.001 per
share (the "Purchaser Stock"), plus (b) US$700,000. Payment of the cash portion
shall be made by wire transfer to the third party account "Stichting
Derdengelden Notarissen Amsterdam" at bank account number 51.97.61.243 of ABN
AMRO Bank N.V. at Coolsingel 119 in Rotterdam, the Netherlands, using Swift code
"ABNANL 2 R", mentioning "Agency / Twinspark". Notwithstanding anything in this
Section 2.1 to the contrary, the Purchase Price shall be subject to the
adjustments contemplated by Sections 2.2.1 and 7.1.
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SECTION 2.2 CASH PAYMENT.
2.2.1 PAYMENT. It is understood and agreed that the payment of
US$700,000 to be made to the Seller at the Closing will be subject to adjustment
to the extent (and only to the extent) that the net shareholders equity of the
Company as at June 30, 1999 is less than US$700,000, such calculation to be made
without including as assets goodwill and other like intangibles or fixed assets
not in service ("Net Shareholders Equity"); to the extent that Net Shareholder
Equity is less than US$700,000 as of June 30, 1999, the Seller shall promptly
make a payment to the Company in the amount of such shortfall.
2.2.2. DISPUTE PROCEDURE. On or prior to September 30, 1999, the
Purchaser shall deliver to the Seller a report containing an unaudited balance
sheet of the Company as at June 30, 1999, prepared in accordance with GAAP (as
defined in Section 3.4), together with a statement setting forth the Net
Shareholders Equity as of June 30, 1999 (the "Determination"). It is understood
and agreed that in connection with the preparation of the June 30, 1999 balance
sheet and Net Shareholder Equity calculation contemplated by this Section 2.2.2,
all Dutch Guilder amounts shall be converted to U.S. Dollars using the Dutch
Guilder/U.S. Dollar exchange rate as of the close of business on June 30, 1999
as quoted in The Wall Street Journal (U.S. edition). If the Seller does not
agree that the Determination correctly states the Net Shareholders Equity, the
Seller shall promptly (but not later than 30 days after the delivery of the
Determination) give written notice to the Purchaser of any exceptions thereto
(in reasonable detail describing the nature of the disagreement asserted). If
the Seller and the Purchaser reconcile their differences, the Net Shareholders
Equity calculation shall be adjusted accordingly and shall thereupon become
binding, final and conclusive upon all of the parties hereto and enforceable in
a court of law. If the Seller and the Purchaser are unable to reconcile their
differences in writing within 30 days after written notice of exceptions is
delivered to the Purchaser, the items in dispute shall be submitted to the
Amsterdam office of a mutually acceptable accounting firm selected from among
the six largest accounting firms in The Netherlands in terms of gross revenues
(the "Independent Auditors") for final determination, and the Net Shareholders
Equity calculation shall be deemed adjusted in accordance with the determination
of the Independent Auditors and shall become final and conclusive upon all of
the parties hereto and enforceable in a court of law. The Independent Auditors
shall consider only the items in dispute and shall be instructed to act within
20 days (or such longer period as the Seller and the Purchaser may agree) to
resolve all items in dispute. If the Seller does not give notice of any
exception within 30 days after the delivery of the Determination or if the
Seller gives written notification of its acceptance of the Net Shareholders
Equity prior to the end of such 30 day period, the Net Shareholders Equity set
forth in the Determination shall thereupon become binding, final and conclusive
upon all the parties hereto and enforceable in a court of law.
SECTION 2.3 CLOSING. The Closing under this Agreement (the "Closing")
is taking place simultaneously with the execution and delivery of this
Agreement, at the offices of Loeff ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Amsterdam. Such date is
herein referred to as the "Closing Date." At the Closing, (i) the Seller shall
deliver the Company Shares to the Purchaser by execution of a notarial deed of
transfer of the Company Shares, and (ii) the Purchaser shall deliver to the
Seller that portion of the Purchase Price to be delivered at Closing.
ARTICLE III
REPRESENTATIONS OF THE SELLER
The Seller hereby represents and warrants to the Purchaser as follows:
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SECTION 3.1 EXECUTION AND VALIDITY OF AGREEMENTS; RESTRICTIVE
DOCUMENTS.
3.1.1 EXECUTION AND VALIDITY. The Seller has the full corporate power
and authority to enter into this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement and the performance of
the transactions contemplated hereby have been duly authorized by all required
corporate action on the part of the Seller. This Agreement has been duly and
validly executed and delivered by the Seller and, assuming due authorization,
execution and delivery by the Purchaser, constitutes a legal, valid and binding
obligation of the Seller, enforceable against it in accordance with its terms.
3.1.2 STOCK OWNERSHIP. The Seller is the lawful, record
and beneficial owner of all of the Company Shares and all of such Company Shares
have been duly and validly authorized and issued by the Company and are fully
paid, nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof, and such ownership is free and clear of all
mortgages, liens, security interests, encumbrances, claims, charges and
restrictions of any kind or character (collectively, "Liens").
3.1.3 NO OPTIONS. Except as set forth on SCHEDULE 3.1.3 hereto, there
are no outstanding subscriptions, options, rights, warrants, calls, commitments
or arrangements of any kind to acquire any Company Shares owned by the Seller
and there are no agreements or understandings with respect to the sale or
transfer of such Company Shares.
3.1.4 NO RESTRICTIONS. There is no suit, action, claim, investigation
or inquiry by any administrative agency or governmental body, and no legal,
administrative or arbitration proceeding pending or, to the knowledge of the
Seller, threatened against the Seller or any of the Company Shares, with respect
to the execution, delivery and performance of this Agreement or the transactions
contemplated hereby or any other agreement entered into by the Seller in
connection with the transactions contemplated hereby.
3.1.5 NON-CONTRAVENTION. The execution, delivery and performance by the
Seller of its obligations hereunder and the consummation of the transactions
contemplated hereby, will not (a) result in the violation by the Seller of any
statute, law, rule, regulation or ordinance (collectively, "Laws"), or any
judgment, decree, order, writ, permit or license (collectively, "Orders"), of
any court, tribunal, arbitrator, authority, agency, commission, official or
other instrumentality of The Netherlands, any foreign country or any domestic or
foreign state, county, city or other political subdivision (a "Governmental or
Regulatory Authority"), applicable to the Seller or any of the Company Shares,
or (b) if the consents and notices set forth in SCHEDULE 3.1.6 are obtained or
given, conflict with, result in a violation or breach of, constitute (with or
without notice or lapse of time or both) a default under, or (except as set
forth in SCHEDULE 3.1.6) require the Seller to obtain any consent, approval or
action of, make any filing with or give any notice to, or result in or give to
any Person any right of payment or reimbursement, termination, cancellation,
modification or acceleration of, or result in the creation or imposition of any
lien upon any of the Company Shares, under any of the terms, conditions or
provisions of any note, bond, mortgage, security agreement, indenture, license,
franchise, permit, concession, contract, lease or other instrument, obligation
or agreement of any kind (collectively, "Instruments") to which the Seller is a
party or by which the Seller or any of the Company Shares is bound.
3.1.6 APPROVALS AND CONSENTS. Except as disclosed on SCHEDULE 3.1.6, no
consent, approval or action of, filing with or notice to any Governmental or
Regulatory Authority or other Person (as defined in Section 9.3) is necessary or
required under any of the terms, conditions or provisions of any Law or Order of
any Governmental or Regulatory Authority or any Instrument to which the Seller
is a party or by which any of the Company Shares is bound for the execution and
delivery of this Agreement by the Seller, the performance by the Seller of its
obligations hereunder or the consummation of the transactions contemplated
hereby.
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SECTION 3.2 EXISTENCE AND GOOD STANDING. The Company is duly organized
and validly existing under the laws of The Netherlands, with the full corporate
power and authority to own its property and to carry on its business all as and
in the places where such properties are now owned or operated or such business
is now being conducted. The Company is conducting business only in The
Netherlands. The Company has not been dissolved (ONTBONDEN) and no resolution to
dissolve the Company has been adopted. The Company is not a party to a merger or
split-off pursuant to Section 2:309ff. of The Netherlands Civil Code. The
Company has not been declared bankrupt and to the knowledge of the Seller no
action or request is pending to declare the Company bankrupt. The Company has
not filed for nor has it been granted a temporary suspension of payment
(SURSEANCE VAN BETALING).
SECTION 3.3 SUBSIDIARIES AND INVESTMENTS; CAPITAL STOCK.
3.3.1 SUBSIDIARIES AND INVESTMENTS. The Company does not own any
capital stock or other equity or ownership or proprietary interest in any
Person, other than investments of publicly-traded debt and equity securities
held for investment.
3.3.2 CAPITAL STOCK. The Company has an authorized capital
(MAATSCHAPPELIJK KAPITAAL) of 7,500,000 Dutch guilders consisting of 75,000,000
Ordinary Shares with a nominal value of Dfl. 0.10 per share, of which 15,000,000
Company Shares have been issued and are outstanding (GEPLAATST) . All of the
Company Shares which are issued and outstanding have been validly issued . All
issued and outstanding Ordinary Shares are fully paid up (VOLGESTORT) and no
other class of capital stock of the Company is authorized or outstanding. There
are no outstanding options, warrants, rights, calls, commitments, conversion
rights, rights of exchange, plans or other agreements of any character
(collectively "Options") providing for the purchase, issuance or sale of any
shares of the capital stock of the Company. All repurchases or redemptions of
shares of capital stock of the Company were properly completed in compliance
with all applicable regulations and corporate requirements; and no further
monies or other obligations will be due by the Company or the Seller in respect
thereof.
SECTION 3.4 FINANCIAL STATEMENTS AND NO MATERIAL CHANGES. SCHEDULE 3.4
sets forth (a) an audited balance sheet of the Company as at December 31, 1998
and the related audited statements of income, retained earnings and cash flow
for the year then ended, as reported on by ▇▇▇▇▇ en ▇▇▇▇▇▇▇, independent public
accountants, and (b) an unaudited balance sheet of the Company as at March 31,
1999 (the "Company Balance Sheet") and the related unaudited statements of
income, retained earnings and cash flow for the three months then ended. Except
as indicated on SCHEDULE 3.4.1 hereto, such financial statements, including (in
the case of the audited statements) the footnotes thereto, have been prepared in
accordance with generally accepted accounting principles consistently applied
and as applied in The Netherlands ("GAAP") throughout the periods indicated. The
Company Balance Sheet fairly presents in all material respects the financial
condition of the Company at the date thereof and fairly presents in all material
respects all claims against and all debts and liabilities of the Company, fixed
or contingent, as at the date thereof, required to be shown thereon under GAAP,
and the related statements of income, retained earnings and cash flow fairly
present in all material respects the results of operations of the Company,
retained earnings and the cash flow for the period indicated. Except as set
forth on SCHEDULE 3.23, since March 31, 1999 (the "Company Balance Sheet Date"),
there has been no material adverse change in the properties, financial
condition, business or results of operation of the Company.
SECTION 3.5 BOOKS AND RECORDS. All accounts, books, ledgers and
official and other records material to the business of the Company have been
properly and accurately kept and completed in all material respects, and there
are no material inaccuracies or discrepancies contained or reflected therein.
Except as set forth on SCHEDULE 3.5, the Company does not have any of its
records, systems, controls, data
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or information recorded, stored, maintained, operated or otherwise wholly or
partly dependent on or held by any means (including any electronic, mechanical
or photographic process, whether computerized or not) which (including all means
of access thereto and therefrom) are not under the exclusive ownership and
possession of the Seller or the Company.
SECTION 3.6 TANGIBLE PERSONAL PROPERTY; ENCUMBRANCES. The Company has
good and valid title to, or enforceable leasehold interests in or valid rights
under contract to use all the properties and assets owned or used by it (real
and personal, tangible and intangible), including, without limitation (a) all
the properties and assets reflected in the Company Balance Sheet, and (b) all
the properties and assets purchased or otherwise contracted for by the Company
since the Company Balance Sheet Date (except for properties and assets reflected
in the Company Balance Sheet or acquired or otherwise contracted for since the
Company Balance Sheet Date that have been sold or otherwise disposed of in the
ordinary course of business), except for those properties and assets which,
individually and in the aggregate, are not material to the business of the
Company, in each case free and clear of all Liens, except for Liens set forth on
SCHEDULE 3.6. The property, plant and equipment owned or otherwise contracted
for by the Company are in a state of good maintenance and repair (ordinary wear
and tear excepted) and are adequate and suitable in all material respects for
the purposes for which they are presently being used.
SECTION 3.7 REAL PROPERTY.
3.7.1 OWNED REAL PROPERTY. The Company does not own a freehold interest
in any real property or any option or right of first refusal or first offer to
acquire real property, and the Company is not obligated by contract or otherwise
to purchase any real property.
3.7.2 LEASED REAL PROPERTY. SCHEDULE 3.7.2 contains an accurate and
complete list of all real property leases to which the Company is a party (as
lessee, lessor, sublessee or sublessor), including, without limitation, leases
which the Company has subleased or assigned to a third party and as to which the
Company remains liable. Each real property lease set forth on SCHEDULE 3.7.2 (or
required to be set forth on SCHEDULE 3.7.2) (a) is valid and binding against the
Company and, to the knowledge of the Seller, in full force and effect; (b) all
rents and additional rents and other sums, expenses and charges due on each such
lease have been paid; (c) the lessee has been in peaceable possession since the
commencement of its original possession under such lease; (d) no waiver,
indulgence or postponement of the lessee's obligations thereunder has been
granted by or is required from the lessor; (e) there exists no default or event
of default by the Company or to the knowledge of the Seller, by any other party;
(f) to the knowledge of the Seller, there exists no occurrence, condition or act
(including the purchase of the Company Shares hereunder) which, with the giving
of notice, the lapse of time or the happening of any further event or condition,
would become a default or event of default by the Company; (g) there are no
outstanding claims of breach or indemnification or notice of default or
termination. Except as set forth on SCHEDULE 3.7.2, (h) the Company holds the
leasehold estate in all the real property leases free and clear of all Liens,
and (i) the Company is in physical possession and actual and exclusive
occupation of the whole of each of its leased properties. The Company does not
owe any brokerage commission with respect to any such real property leases.
SECTION 3.8 CONTRACTS. SCHEDULE 3.8 hereto contains an accurate and
complete list of the following agreements to which the Company is a party or by
or to which the Company is bound: (a) all Plans (as such term is defined in
Section 3.19); (b) any personal property lease with a fixed annual rental of
$20,000 or more; (c) any contract relating to capital expenditures which involve
payments of $30,000 or more in any single transaction or series of related
transactions; (d) any contract relating to the making of a loan or advance to,
or investment in, any other Person in an amount exceeding $10,000; (e) any
contract evidencing or relating in any way to indebtedness for money borrowed or
to be borrowed, whether directly or indirectly, by way of loan, purchase money
obligation, guarantee (other than the endorsement of
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negotiable instruments for collection in the ordinary course of business),
conditional sale, purchase or otherwise, which in any case involves $10,000 or
more; (f) any management service, employment, consulting or any other similar
type of contract which is not cancelable by the Company without penalty or other
financial obligation within 30 days, (g) any contract limiting its freedom to
engage in any line of business or to compete with any other Person, including
agreements limiting the ability of the Company or any of its affiliates to take
on competitive accounts during or after the term thereof; (h) any collective
bargaining or union agreement, (i) any contract with any of its officers or
directors (including indemnification agreements), provided that provisions
contained in the Company's charter documents or by-laws do not need to be set
forth on SCHEDULE 3.8, (j) any secrecy or confidentiality agreement (other than
standard confidentiality agreements in computer software license agreements or
agreements with clients entered into in the ordinary course of business), (k)
any contract or license with respect to Intellectual Property (as defined in
Section 3.14 below), other than "shrink wrap" and similar end-user licenses; (l)
any agreement with a client which generates annual revenues of $10,000 or more;
and (m) any joint venture agreement involving a sharing of profits not covered
by (a) through (l) above; and (n) any contract (not covered by another
subsection of this Section 3.8) which is material to the business of the Company
or which involves $20,000 or more over the unexpired term thereof and is not
cancelable by the Company without penalty or other financial obligation within
30 days. Notwithstanding the foregoing, (X) commitments to media and production
expenses which are fully reimbursable from clients, and (Y) estimates or
purchase orders given in the ordinary course of business relating to the
execution of projects, do not have to be set forth on SCHEDULE 3.8. Each
contract set forth on SCHEDULE 3.8 (or required to be set forth on SCHEDULE 3.8)
is in full force and effect, and there exists no default or event of default by
the Company or to the knowledge of the Seller, by any other party, or
occurrence, condition, or act (including the purchase and/or transfer of the
Company Shares hereunder) which, with the giving of notice, the lapse of time or
the happening of any other event or condition, would become a default or event
of default thereunder by the Company or would be a cause for premature
termination, and there are no outstanding claims of breach or indemnification or
notice of default or termination of any such contracts.
SECTION 3.9 NON-CONTRAVENTION; APPROVALS AND CONSENTS.
3.9.1 NON-CONTRAVENTION. The execution, delivery and performance by the
Seller of its obligations hereunder and the consummation of the transactions
contemplated hereby, will not (a) violate, conflict with or result in the breach
of any provision of the articles of association (or other comparable corporate
charter documents) of the Company, or (b) result in the violation by the Company
of any Laws, or Orders, of any Governmental or Regulatory Authority, applicable
to the Company or any of its assets or properties, or (c) if the consents and
notices set forth in SCHEDULE 3.9.2 are obtained or given, conflict with, result
in a violation or breach of, constitute (with or without notice or lapse of time
or both) a default under, or (except as set forth in SCHEDULE 3.9.2) require the
Company to obtain any consent, approval or action of, make any filing with or
give any notice to, or result in or give to any Person any right of payment or
reimbursement, termination, cancellation, modification or acceleration of, or
result in the creation or imposition of any lien upon any of the assets or
properties of the Company, under any of the terms, conditions or provisions of
any Instruments to which the Company is a party or by which the Company or any
of its assets or properties is bound.
3.9.2 APPROVALS AND CONSENTS. Except as disclosed on SCHEDULE 3.9.2, no
consent, approval or action of, filing with or notice to any Governmental or
Regulatory Authority or other Person is required under any of the terms,
conditions or provisions of any Law or Order of any Governmental or Regulatory
Authority applicable to the Company or any Instrument to which the Company is a
party or its assets or properties are bound for the execution and delivery of
this Agreement by the Seller, the performance by the Seller of its obligations
hereunder or the consummation of the transactions contemplated hereby.
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SECTION 3.10 LITIGATION. Except as set forth on SCHEDULE 3.10, there is
no action, suit, proceeding at law or in equity by any Person, or any
arbitration or any administrative or other proceeding by or before (or to the
knowledge of the Seller, any investigation by) any governmental or other
instrumentality or agency, pending or, to the knowledge of the Seller,
threatened, against the Company with respect to this Agreement or the
transactions contemplated hereby, or against or affecting the Company or its
properties or rights; and no acts, facts, circumstances, events or conditions
occurred or exist which are a valid basis for any such action, proceeding or
investigation. The Company is not subject to any Order entered in any lawsuit or
proceeding.
SECTION 3.11 TAXES. The Company has timely filed, or caused to be
filed, taking into account any valid extensions of due dates, completely and
accurately, all federal, state, local and foreign tax or information returns
(including estimated tax returns) required under the statutes, rules or
regulations of such jurisdictions to be filed by the Company. The term "Taxes"
means taxes, duties, charges or levies of any nature imposed by any Governmental
or Regulatory Authority, including without limitation income, gains, capital
gains, surtax, capital, franchise, capital stock, value-added taxes, taxes
required to be deducted from payments made by the payor and accounted for to any
tax authority, employees' income withholding, back-up withholding, withholding
on payments to foreign Persons, social security, national insurance,
unemployment, worker's compensation, payroll, disability, real property,
personal property, sales, use, goods and services or other commodity taxes,
business, occupancy, excise, customs and import duties, transfer, stamp and
other taxes (including interest, penalties or additions to tax in respect of the
foregoing), and includes all taxes payable by the Company pursuant to U.S.
Treasury Regulations 1.1502-6 or any similar provisions of state, local or
foreign law. All Taxes shown on said returns to be due and all additional
assessments received prior to the date hereof have been paid or are being
contested in good faith, in which case, such contested assessments are set forth
on SCHEDULE 3.11. The Company has collected all sales, use, goods and services
or other commodity Taxes required to be collected, and has withheld all amounts
required to be withheld on account of Taxes for amounts paid to employees,
directors, officers and residents and non-residents; and in each case has
remitted or will remit the same to the appropriate taxing authority within the
prescribed time periods. The amount set up as an accrual for Taxes on the
Company Balance Sheet is sufficient for the payment of all unpaid Taxes of the
Company, whether or not disputed, for all periods ended on and prior to the date
thereof. Since the Company Balance Sheet Date, the Company has not incurred any
liabilities for Taxes other than in the ordinary course of business. The Seller
has delivered to the Purchaser correct and complete copies of all income tax
returns filed with respect to the Company for all taxable periods since its
inception. Except as set forth on SCHEDULE 3.11, none of the tax returns of the
Company has ever been audited by any Governmental or Regulatory Authority. The
Company has not received notice of any audit or examination currently in
progress, or of any proposed audit or examination. No deficiency in the payment
of Taxes by the Company for any period has been asserted in writing by any
taxing authority and remains unsettled at the date of this Agreement. The
Company has not been a member of an affiliated group filing consolidated federal
income tax returns nor has it been included in any combined consolidated or
unitary state or local income tax return. The Company is not a party to any tax
allocation or tax sharing agreement nor does it have any contractual obligation
to indemnify any other person with respect to Taxes. The Company will not be
required as a result of a change in accounting method for any period ending on
or before the Closing Date to include any adjustment under Section 481 of the
U.S. Tax Code (or any similar provision of Holland or other local or foreign
income tax law) in income for any period ending after the Closing Date.
SECTION 3.12 LIABILITIES. Except as set forth in the Company Balance
Sheet or reflected in the notes thereto, the Company does not have any
outstanding claims, liabilities or indebtedness of any nature whatsoever
(collectively in this Section 3.12, "Liabilities"), whether accrued, absolute or
contingent, determined or undetermined, asserted or unasserted, and whether due
or to become due, other than (a) Liabilities specifically disclosed in any
Schedule hereto; (b) Liabilities under contracts, purchase orders and
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other agreements, arrangements and commitments of the type required to be
disclosed by the Seller on any Schedule but because of the dollar amount or
other qualifications are not required to be listed on such Schedule; (c)
Liabilities incurred in the ordinary course of business and consistent with past
practice since the Company Balance Sheet Date and (d) liabilities to the extent
covered by insurance maintained by the Company. SCHEDULE 3.8 sets forth a list
of all current arrangements of the Company for borrowed money and all
outstanding balances as of the Closing Date hereof with respect thereto. Except
as set forth on SCHEDULE 3.12, the Company is not in default in respect of the
terms or conditions of any borrowings.
SECTION 3.13 INSURANCE. SCHEDULE 3.13 is a schedule of all insurance
policies (including life insurance) or binders maintained by the Company. All
such policies are in full force and effect and all premiums that have become due
have been paid. The Company has not received any notice of cancellation or
non-renewal of any such policy or binder. Except as set forth on SCHEDULE 3.13,
within the past two years the Company has not filed for any claims exceeding
$15,000 against any of its insurance policies, exclusive of automobile policies.
SECTION 3.14 INTELLECTUAL PROPERTIES.
3.14.1. REPRESENTATIONS. The registrations of Intellectual Property
listed on SCHEDULE 3.14 are valid and subsisting, all necessary registration or
renewal fees in connection with such registrations have been made and all
necessary documents and certificates in connection with such registrations have
been filed with the relevant patent, copyright and trademark authorities for the
purposes of maintaining such registrations. Except as set forth on SCHEDULE
3.14, (a) no Person has any rights to use any Intellectual Property of the
Company; (b) the Company has not granted to any Person, nor authorized any
Person to retain, any rights in any Intellectual Property of the Company. Except
as set forth on SCHEDULE 3.14 and except for "shrink wrap" and similar
commercial end-user licenses, the Company owns and has exclusive title to each
item of Intellectual Property of the Company to use or operate under, all other
Intellectual Property of the Company. To the knowledge of the Seller, the
operation of the business of the Company as it is currently conducted does not
infringe the Intellectual Property of any other Person and the Company has not
received written notice, nor to the knowledge of the Seller oral notice, from
any Person that the operation of its business infringes the Intellectual
Property of any Person. There are no contracts or agreements between the Company
and any other Person with respect to Intellectual Property of the Company in
respect of which there is any dispute known to the Seller regarding the scope of
such agreement, or performance under such contract, including with respect to
any payments to be made or received by the Company. To the knowledge of the
Seller, no Person is infringing or misappropriating any of the Intellectual
Property of the Company.
3.14.2 DEFINITIONS. For purposes of this Agreement, the term
"Intellectual Property" shall mean any or all of the following and all rights
associated therewith: (a) all patents and applications therefor and all
reissues, divisions, renewals, extensions, continuations and
continuations-in-part thereof; (b) all inventions (whether patentable or not),
invention disclosures, improvements, trade secrets proprietary information,
know-how, technology, technical data and customer lists, rights of privacy and
publicity, and all documentation relating to any of the foregoing; (c) all
copyrights, copyright registrations and applications therefor and other rights
corresponding thereto; (d) all mask works, mask work registrations and
applications therefor; (e) all industrial designs and any registrations and
applications therefor; (f) all trade names, logos, common law trademarks and
service marks; trademark and service ▇▇▇▇ registrations and applications
therefor and all goodwill associated therewith; and (g) all computer software
including all source code, object code, firmware, development tools, files,
records and data, all media on which any of the foregoing is recorded and all
documentation related to any of the foregoing. "Intellectual Property of the
Company" shall mean any Intellectual Property (h) that is owned by, or
exclusively licensed to, the Company; or (i) which is necessary to the operation
of the Company, including the design, manufacture, use
-8-
and sale of the products or delivery of the services of the Company as it is
currently operated or is reasonably anticipated to be operated in the future and
all Intellectual Property currently owned by the Company, but shall specifically
not include any rights in or to materials created for clients as "work-for-hire"
or which are subject to an exclusive assignment or license in favor of clients
of the Company.
SECTION 3.15 COMPLIANCE WITH LAWS; LICENSES AND PERMITS.
3.15.1 COMPLIANCE. The Company is, and its business has been conducted,
in compliance with all applicable Laws and Orders, except in each case where the
failure to so comply would not reasonably be expected to have a material adverse
effect on the financial condition, results of operations, assets, properties or
business of the Company (a "Material Adverse Effect"), including without
limitation, (a) all Laws and Orders promulgated by The Netherlands equivalent of
the U.S. Federal Trade Commission or any other Governmental or Regulatory
Authority; (b) all environmental Laws and Orders; and (c) all Laws and Orders
relating to labor, civil rights, and occupational safety and health laws,
worker's compensation, employment and wages, hours and vacations, or pay equity.
The Company has not been charged with, or, to the knowledge of the Seller
threatened with or under any investigation with respect to, any charge
concerning any violation of any Laws or Orders.
3.15.2 LICENSES. The Company has all licenses and permits and other
governmental certificates, authorizations and approvals (collectively,
"Licenses") required by a Governmental or Regulatory Authority for the operation
of its business and the use of its properties as presently operated or used,
except where the failure to have such Licenses would not reasonably be expected
to have a Material Adverse Effect. All of the Licenses are in full force and
effect and no action or claim is pending, nor to the knowledge of the Seller is
threatened, to revoke or terminate any of such Licenses or declare any such
License invalid in any material respect.
SECTION 3.16 CLIENT RELATIONS. SCHEDULE 3.16 sets forth (a) the twenty
largest clients of the Company (measured by fees generated) as at December 31,
1998 and the fees from each such client and from all clients (in the aggregate)
for the year ended December 31, 1998 and (b) the clients projected to be the
twenty largest clients of the Company (measured by fees) based on the Company's
current 1999 profit plan for the year ending December 31, 1999, together with
the estimated fees for each such client and all clients (in the aggregate) for
such fiscal year. Except as set forth in SCHEDULE 3.16, no client of the Company
has advised the Company, the Seller, or any shareholder of the Seller in
writing, or has orally advised the Seller or any shareholder of the Seller or
any department heads of the Company, (a) that it is terminating or considering
the termination of the handling of its business by the Company, as a whole or in
respect of any particular product, project or service or (b) that it will not
use the Company's services in the future.
SECTION 3.17 ACCOUNTS RECEIVABLE; WORK-IN-PROCESS; ACCOUNTS PAYABLE.
The amount of all work-in-process, accounts receivable, unbilled invoices
recorded on the books of account of the Company and reflected on the Company
Balance Sheet (including without limitation unbilled invoices for services and
out-of-pocket expenses) and other debts due or recorded in the records and books
of account of the Company as being due to the Company and reflected on the
Company Balance Sheet are good and collectible in full (less the amount of any
provision, reserve or similar adjustment therefor reflected on the Company
Balance Sheet). Except as set forth on SCHEDULE 3.17, there has been no material
adverse change since the Company Balance Sheet Date in the amount or aging of
the work-in-process, accounts receivable or other debts due to the Company or
the reserves with respect thereto, or accounts payable of the Company.
SECTION 3.18 EMPLOYMENT RELATIONS. (a) The Company is not engaged in
any unfair labor practice; (b) no unfair labor practice complaint against the
Company is pending before any Governmental or Regulatory Authority; (c) there is
no organized labor strike, dispute, slowdown or stoppage actually
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pending or to the knowledge of the Seller threatened against or involving the
Company; (d) there are no labor unions or work council representing or, to the
knowledge of the Seller, attempting to represent the employees of the Company;
(e) no claim or material grievance nor any arbitration proceeding arising out of
or under any collective bargaining agreement is pending and to the knowledge of
the Seller, no such claim or grievance has been threatened; (f) no collective
bargaining agreement is currently being negotiated by the Company; and (g) the
Company has not experienced any work stoppage or similar organized labor dispute
during the past three years. There is no legal action, suit, proceeding or claim
pending or, to the knowledge of the Seller, threatened between the Company and
any of its employees, former employees, agents, former agents, job applicants or
any association or group of any of their employees, except as set forth on
SCHEDULE 3.10.
SECTION 3.19 EMPLOYEE BENEFIT MATTERS. All liabilities under any plan
or agreement required to be listed on SCHEDULE 3.8 under clause (a) of Section
3.8 were, as of the Company Balance Sheet Date and will be, as of the Closing
Date, fully funded or fully insured and adequate accruals therefor were provided
in the Company Balance Sheet; and any back service liabilities in respect of any
period prior to the date hereof have been paid in accordance with the terms and
conditions of the applicable pension plans.
SECTION 3.20 INTERESTS IN CUSTOMERS, SUPPLIERS, ETC. Except as set
forth on SCHEDULE 3.20, neither (x) the Seller nor (y) to the knowledge of the
Seller (without making any special inquiry of the Related Group, as hereinafter
defined), any director or employee of the Company, or any director or
shareholder of the Seller (collectively, the "Related Group"),:
(i) owns, directly or indirectly, any interest in (excepting less than
1% stock holdings for investment purposes in securities of publicly
held and traded companies), or received payments from, or is an
officer, director, employee or consultant of, any Person which is, or
is engaged in business as, a competitor, lessor, lessee, supplier,
distributor, sales agent, customer or client of the Company;
(ii) owns, directly or indirectly (other than through the ownership of
stock or other securities of the Company), in whole or in part, any
tangible or intangible property (including, but not limited to
Intellectual Property) that the Company uses in the conduct of
business; or
(iii) has any cause of action or other claim whatsoever against, or
owes any amount to, the Company, except for claims in the ordinary
course of business such as for accrued vacation pay, accrued benefits
under employee benefit plans, and similar matters and agreements
existing on the date hereof (including but not limited to loans and
accrued interest thereon made by the Seller or such shareholders to the
Company as reflected in the books and records of the Company).
SECTION 3.21 BANK ACCOUNTS AND POWERS OF ATTORNEY. Set forth on
SCHEDULE 3.21 is an accurate and complete list showing (a) the name of each bank
in which the Company has an account, credit line or safe deposit box and the
names of all Persons authorized to draw thereon or to have access thereto, and
(b) the names of all Persons, if any, holding powers of attorney from the
Company and a summary statement of the terms thereof.
SECTION 3.22 COMPENSATION OF EMPLOYEES. SCHEDULE 3.22 is an accurate
and complete list showing (a) the names and positions of all salaried employees
of and exclusive consultants to the Company, together with a statement of the
current annual salary or fees, and the bonus and incentive compensation paid or
payable with respect to calendar years 1998 and 1999, and any material fringe
benefits of such employees or exclusive consultants; (b) the names of all
retired employees, if any, of the Company who are receiving or entitled to
receive any healthcare or life insurance benefits or any payments from the
Company
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not covered by any pension plan to which the Company is a party, their
ages and current unfunded pension rate, if any; and (c) a description of the
severance benefits, if any, of the Company.
SECTION 3.23 NO CHANGES SINCE THE COMPANY BALANCE SHEET DATE.
Since the Company Balance Sheet Date except as specifically stated on SCHEDULE
3.23 the Company has not (i) incurred any liability or obligation of any nature
(whether accrued, absolute, contingent or otherwise), except in the ordinary
course of business, (ii) permitted any of its assets to be subjected to any
lien, (iii) sold, transferred or otherwise disposed of any assets except in the
ordinary course of business, (iv) made any capital expenditure or commitment
therefor which individually or in the aggregate exceeded $20,000, (v) declared
or paid any dividends or made any distributions on any shares of its capital
stock, or redeemed, purchased or otherwise acquired any shares of its capital
stock or any option, warrant or other right to purchase or acquire any such
shares, (vi) made any bonus or profit sharing distribution, (vii) increased or
prepaid its indebtedness for borrowed money, except current borrowings under
credit lines listed on SCHEDULE 3.8 from banks in the ordinary course of
business or made any loan to any Person, (viii) written down the value of any
work-in-process, or written off as uncollectible any notes or accounts
receivable, except write-downs and writeoffs in the ordinary course of business,
none of which individually or in the aggregate, is material to the Company, (ix)
except as set forth on SCHEDULE 3.22, granted any increase in the rate of wages,
salaries, bonuses or other remuneration of any employee who, whether as a result
of such increase or prior thereto, receives aggregate compensation from the
Company at an annual rate of $40,000 or more, or except in the ordinary course
of business to any other employees, (x) canceled or waived any claims or rights
of material value, (xi) made any change in any method of accounting procedures,
(xii) otherwise conducted its business or entered into any transaction, except
in the usual and ordinary manner and in the ordinary course of its business,
(xiii) amended in any material respect or terminated any agreement which is
material to its business, (xiv) renewed, extended or modified any lease of real
property or except in the ordinary course of business any lease of personal
property, (xv) adopted, amended in any material respect or terminated any Plan
or (xvi) agreed, whether or not in writing, to do any of the foregoing.
SECTION 3.24 CORPORATE CONTROLS. Neither the Company nor the Seller,
or, to the knowledge of the Seller, any officer, authorized agent, employee or
any other Person while acting on behalf of the Company, has, within the period
covered by any applicable statute of limitations, directly or indirectly: used
any corporate fund for unlawful contributions, gifts, or other unlawful expenses
relating to political activity; made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; established or maintained any unlawful or
unrecorded fund of corporate monies or other assets; made any false or
fictitious entry on its books or records; made any bribe, rebate, payoff,
influence payment, kickback, or other unlawful payment, or other payment of a
similar or comparable nature, to any Person, private or public, regardless of
form, whether in money, property, or services, to obtain favorable treatment in
securing business or to obtain special concessions, or to pay for favorable
treatment for business secured or for special concessions already obtained, and
the Company has not participated in any illegal boycott or other similar illegal
practices affecting any of its actual or potential customers.
SECTION 3.25 YEAR 2000 COMPLIANCE.
3.25.1. DEFINITION. The term "Y2K Compliant" shall mean: (a) the
functions, calculations and other computer processes of all computer hardware,
software and systems, including but not limited to internal and outsourced
management information systems and embedded computer features within other
systems of the Company (collectively, "Processes"), perform properly in a
consistent manner regardless of the date in time on which the Processes are
actually performed and regardless of the date of input to the software, whether
before, on or after January 1, 2000 and whether or not the dates are affected by
leap years; (b) the computer hardware, software and systems accept, calculate,
compare, sort, extract, sequence and otherwise
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process data inputs and date values, and return and display date values, in a
consistent manner regardless of the dates used, whether before, on or after
January 1, 2000; (c) the computer hardware, software and systems will function
properly without interruptions or extraordinary manual intervention caused by
the date in time on which the Processes are actually performed or by the date of
input to the software, whether before, on or after January 1, 2000; (d) the
computer hardware, software and systems accept and respond to two-digit year
data input in the Processes in a manner that resolves any ambiguities as to the
century in a defined, predetermined and appropriate manner; and (e) the computer
hardware, software and systems store and display data in the Processes in ways
that are unambiguous as to the determination of the century.
3.25.2. COMPUTER SYSTEMS. The Company has used its reasonable
commercial efforts so that, to its knowledge, the current computer hardware,
software and systems, and accompanying documentation, of the Company will be Y2K
Compliant, in a full production version, with accompanying documentation, no
later than September 30, 1999. The Company has used its reasonable commercial
efforts so that, to its knowledge, the receipt of Y2K Compliant computer
hardware, software, and systems will be provided to the Company in a timely
manner under current supplier contracts or standard maintenance and support
plans without additional fee or charge of any kind (including any installation,
freight, or other costs or fees) to the Company.
3.25.3 OTHER PRODUCTS AND SERVICES. The Company has used its reasonable
commercial efforts so that, to its knowledge, (a) its products will be delivered
and its services will be scheduled and performed in a timely manner without
material interruptions caused by the date in time on which the product is
ordered or is actually delivered or the services are scheduled or actually
performed under normal procedures in the ordinary course, whether before, on or
after January 1, 2000, and (b) it will have made appropriate inquiries to
confirm that its essential suppliers of products and services, including the
suppliers of its infrastructure systems, have Y2K compliance programs in place
to avoid interruptions in the supplier-customer trading relationship which could
have a Material Adverse Effect whether before, on or after January 1, 2000.
SECTION 3.26 BROKERS. Except as set forth on SCHEDULE 3.26, no broker,
finder, agent or similar intermediary has acted on behalf of the Seller or the
Company in connection with this Agreement or the transactions contemplated
hereby, and no brokerage commissions, finder's fees or similar fees or
commissions are payable by the Company or the Seller in connection therewith
based on any agreement, arrangement or understanding with any of them. The
Seller shall bear all brokerage commissions and finder's fees (or similar fees
or commissions) payable to the brokers, finders, agents or similar
intermediaries set forth on SCHEDULE 3.26.
SECTION 3.27 COPIES OF DOCUMENTS. The Seller has caused to be made
available for inspection and copying by the Purchaser and its advisers, true,
complete and correct copies of all documents referred to in this Article III or
in any Schedule. Summaries of all material oral contracts contained in SCHEDULE
3.8 are complete and accurate in all material respects.
ARTICLE IV
REPRESENTATIONS OF THE PURCHASER
The Purchaser, represents, warrants and agrees to and with the Seller
as follows:
SECTION 4.1 EXISTENCE AND GOOD STANDING. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York, with full corporate power and authority to own its property
and to carry on its business all as and in the places where such properties
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are now owned or operated or such business is now being conducted. The Purchaser
has not been dissolved and no resolution to dissolve the Purchaser has been
adopted. The Company is not a party to a merger or split-off. The Purchaser has
not been declared bankrupt and to the knowledge of the Purchaser no action or
request is pending to declare the Purchaser bankrupt. The Purchaser has not
filed for nor has it been granted a temporary suspension of payment (SURSEANCE
VAN BETALING).
SECTION 4.2 EXECUTION AND VALIDITY OF AGREEMENT. The Purchaser has the
full corporate power and authority to make, execute, deliver and perform this
Agreement and the transactions contemplated hereby. The execution and delivery
of this Agreement by the Purchaser and the consummation of the transactions
contemplated hereby have been duly authorized by all required corporate action
on behalf of the Purchaser and this Agreement has been duly and validly executed
and delivered by the Purchaser and assuming due authorization, execution and
delivery by the Seller constitutes a legal, valid and binding obligation of it,
enforceable against the Purchaser in accordance with its terms.
SECTION 4.3 NON-CONTRAVENTION; APPROVALS AND CONSENTS.
4.3.1 NON-CONTRAVENTION. The execution, delivery and performance by the
Purchaser of its obligations hereunder and the consummation of the transactions
contemplated hereby, will not (a) violate, conflict with or result in the breach
of any provision of the certificate of incorporation or by-laws (or other
comparable corporate charter documents) of the Purchaser, or (b) result in the
violation by the Purchaser of any Laws or Orders of any Governmental or
Regulatory Authority, applicable to the Purchaser or any of its assets or
properties, except as would not reasonably be expected to have a Material
Adverse Effect, or (c) conflict with, result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a default under, or
require the Purchaser to obtain any consent, approval or action of, make any
filing with or give any notice to, or result in or give to any Person any right
of payment or reimbursement, termination, cancellation, modification or
acceleration of, or result in the creation or imposition of any Lien upon any of
the assets or properties of the Purchaser, under any of the terms, conditions or
provisions of any Instruments to which the Purchaser is a party or by which the
Purchaser or any of its assets or properties are bound.
4.3.2 APPROVALS AND CONSENTS. No consent, approval or action of, filing
with or notice to any Governmental or Regulatory Authority or other public or
private third party is necessary or required under any of the terms, conditions
or provisions of any Law or Order of any Governmental or Regulatory Authority or
any Instrument to which the Purchaser is a party or by which the Purchaser or
any of its assets or properties is bound for the execution and delivery of this
Agreement by the Purchaser, the performance by the Purchaser of its obligations
hereunder or the consummation of the transactions contemplated hereby.
SECTION 4.4 CAPITALIZATION. The Purchaser has an authorized
capitalization consisting of 50,000,000 shares of common stock, $0.001 par value
per share, of which as of the Closing Date 25,368,874 shares are issued and
outstanding, an aggregate of 9,601,178 shares are allocated to the 1999
▇▇▇▇▇▇.▇▇▇ Stock Option/Stock Issuance Plan., and an aggregate of 7,400,000
shares are subject to issuance upon the exercise of certain warrants; in
addition, there are 1,376,446 shares subject to the issuance of options under
the Interactive Solutions and Quadris Option Plans which were assumed by the
Purchaser in April 1999. No other class of capital stock or series of any class
of capital stock or securities convertible into capital stock of Purchaser is
authorized or outstanding. Except for the shares of Purchaser Stock to be issued
and delivered pursuant to this Agreement and as specifically set forth herein,
there are no (a) outstanding subscriptions, options, warrants, rights (including
"phantom" stock rights), calls, preemptive rights, or other contracts,
commitments, understandings or arrangements, including any right of conversion
or exchange under any outstanding security, instrument, plan or agreement
(collectively, "OPTIONS"), obligating Purchaser to issue or
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sell any shares of the capital stock of Purchaser, or to grant, extend or enter
into any Option with respect thereto, or (b) outstanding Options providing for
settlement in cash.
SECTION 4.5 PURCHASER STOCK. The shares of Purchaser Stock, when issued
and delivered to the Seller pursuant to the provisions of this Agreement, will
be validly issued and outstanding, fully-paid and non-assessable, free and clear
of all Liens other than restrictions on resale arising by virtue of Federal and
state securities laws of the United States (and to the extent applicable the
provisions of the Investment Representation Certificate to be delivered by the
Seller at the Closing), and will not be subject to any preemptive right of
shareholders of Purchaser. The shares of Purchaser Stock issued to Seller,
together with 30,000 additional shares of Purchaser Stock, represent 3.5% of the
Applicable Purchaser Shares, as calculated and defined in SCHEDULE 4.5 hereto
(the "Seller's Closing Percentage").
SECTION 4.6 FINANCIAL STATEMENTS. SCHEDULE 4.6 sets forth (a) an
audited balance sheet of the Purchaser as at December 31, 1998 and the related
audited statements of income, retained earnings and cash flow for the year then
ended, as reported on by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent public accountants,
and (b) an unaudited balance sheet of the Purchaser as at March 31, 1999 and the
related unaudited statements of income, retained earnings and cash flow for the
three months then ended, and (c) unaudited balance sheet of the Purchaser,
Interactive Solutions Incorporated, Quadris Consulting Inc., and Eagle River
Interactive Inc. as at March 31, 1999 (collectively, the "Purchaser Balance
Sheet") which reflects the acquisitions by Purchaser on April 28, 1999 (in each
case effective as of April 1, 1999) of Interactive Solutions Incorporated and
Eagle River Interactive Inc. and the related unaudited statements of income,
profit and loss statements, retained earnings and cash flow for the three months
then ended. Except as indicated on SCHEDULE 4.6.1 hereto, such financial
statements, including (in the case of the audited statements) the footnotes
thereto, have been prepared in accordance with GAAP throughout the periods
indicated. The Purchaser Balance Sheet fairly presents in all material respects
the financial condition of the Purchaser at the date thereof and fairly presents
in all material respects all claims against and all debts and liabilities of the
Purchaser, fixed or contingent, as at the date thereof, required to be shown
thereon under GAAP, and the related pro forma statements of income, retained
earnings and cash flow fairly present in all material respects the pro forma
results of operation of the Purchaser. Except as set forth on SCHEDULE 4.6.2,
since March 31, 1999 (the "Purchaser Balance Sheet Date") there has been no
material adverse change in the properties, financial condition, business or
results of operations of the Purchaser.
SECTION 4.7 LITIGATION. There is no action, suit, proceeding at law or
in equity by any Person, or any arbitration or any administrative or other
proceeding by or before (or to the knowledge of the Seller, any investigation
by) any governmental or other instrumentality or agency, pending or, to the
knowledge of the Purchaser, threatened, against the Purchaser with respect to
this Agreement or the transactions contemplated hereby; and no acts, facts,
circumstances, events or conditions occurred or exist which are a valid basis
for any such action, proceeding or investigation. The Purchaser is not a party
to any legal proceedings. The Purchaser is not subject to any Order entered in
any lawsuit or proceeding.
SECTION 4.8 BROKERS. No broker, finder, agent or similar intermediary
has acted on behalf of the Purchaser or its affiliates in connection with this
Agreement or the transactions contemplated hereby, and no brokerage commissions,
finders' fees or similar fees or commissions are payable by the Purchaser or its
affiliates in connection therewith based on any agreement, arrangement or
understanding with any of them.
SECTION 4.9 DISCLOSURE. No representations or warranties by the
Purchaser in this Agreement, including the Exhibits and the Schedules delivered
by the Purchaser hereto, and no statement contained in either the financial
statements set forth as SCHEDULE 4.6 (including the footnotes thereto) or the
draft dated July 20, 1999 of the Purchaser's registration statement on Form S-1
(the "Draft Registration Statement"),
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contains any untrue statement of a material fact, or omits to state any material
fact necessary, in light of the circumstances under which it was made, in order
to make the statements contained herein or therein not misleading. There is no
fact known to the Purchaser which has or could have a material adverse effect on
the Purchaser, which has not been set forth in this Agreement (including the
Exhibits and the Purchaser's schedules hereto), the financial statements set
forth as SCHEDULE 4.6 (including the footnotes thereto) or the Draft
Registration Statement. Notwithstanding the foregoing, it is understood and
agreed that the failure of the Draft Registration Statement to include
information regarding the number of shares to be issued pursuant to the
Registration Statement or to include a number of shares which may change after
the date hereof, and to include information as to pricing of the shares of
Purchaser Stock offered thereby, shall in no event be deemed to be an untrue
statement of a material fact, or the omission of a material fact necessary, in
light of the circumstances under which it was made, in order to make the
statements contained therein not misleading.
ARTICLE V
ACTIONS AT CLOSING BY THE SELLER
Simultaneously herewith:
SECTION 5.1 REQUIRED APPROVALS, NOTICES AND CONSENTS. The Seller has
obtained or given, at no expense to the Purchaser and there have not been
withdrawn or modified, any notices, consents, approvals or other actions listed
on SCHEDULES 3.1.6 or 3.9.2 hereof (including without limitation, obtaining all
consents, approvals and/or waivers required under the contracts listed on
SCHEDULE 3.8 in order to permit the consummation of the transactions
contemplated by this Agreement without causing or resulting in a default, event
of default, acceleration event or termination event under any of such documents
and without entitling any party to any of such documents to exercise any other
right or remedy adverse to the interests of the Purchaser or the Company
thereunder). Each such consent or approval is in form reasonably satisfactory to
counsel for the Purchaser.
SECTION 5.2 SHAREHOLDERS REGISTER. The Seller has delivered to the
Purchaser: a) the original shareholders register (AANDEELHOUDERSREGISTER) of the
Company.
SECTION 5.3 DIRECTOR. The Purchaser has received a copy of a resolution
of the shareholders of the Company to the effect that the Seller shall cease to
be the director of the Company as of the moment the Company Shares are
transferred to the Purchaser and that the new director of the Company shall be
the President, Europe of the Purchaser. In addition, the Purchaser has received
a copy of a notice from Seller confirming his resignation as of that moment and
waiving any and all claims he may have against the Company in relation to such
resignation.
SECTION 5.4 INVESTMENT REPRESENTATION CERTIFICATE. The Seller delivered
to Purchaser an Investment Representation Certificate, in the form and to the
effect of EXHIBIT B hereto.
SECTION 5.5 EMPLOYMENT AGREEMENTS. Each of ▇▇▇▇▇▇ Slot, ▇▇▇▇ ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ entered into an Employment Agreement with the Company, in
the form and to the effect of EXHIBIT C hereto.
SECTION 5.6 NON-SOLICITATION AGREEMENTS. Each of ▇▇▇▇▇▇ Slot, ▇▇▇▇
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ entered into a Non-Solicitation Agreement with the
Company, in the form and to the effect of EXHIBIT D hereto.
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SECTION 5.7 REPAYMENT OF LOANS. All indebtedness of the Seller to the
Company (including for this purpose the ultimate shareholders of Seller),
together with unpaid interest thereon from the date of inception, was repaid in
full, other than routine travel expense advances in the ordinary course of
business and consistent in amount with past practice, and the Seller has
delivered to Purchaser a certificate, dated the Closing Date, to such effect.
SECTION 5.8 PROCEEDINGS. All proceedings to be taken in connection with
the transactions contemplated by this Agreement and all documents incident
thereto are reasonably satisfactory in form and substance to the Purchaser and
its counsel, and the Purchaser has received copies of all such documents and
other evidences as it or its counsel may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
ARTICLE VI
ACTIONS AT CLOSING BY THE PURCHASER
Simultaneously herewith:
SECTION 6.1 CERTIFIED RESOLUTIONS. The Purchaser has delivered to the
Seller a copy of the resolutions of the Board of Directors of the Purchaser
authorizing the execution, delivery and performance of this Agreement and the
transactions and other agreements contemplated hereby, certified to by an
officer of the Purchaser.
SECTION 6.2 PROCEEDINGS. All proceedings to be taken in connection with
the transactions contemplated by this Agreement, and all documents incident
thereto are reasonably satisfactory in form and substance to the Seller, the
Company and their counsel and the Company has received copies of all such
documents and other evidences as it or its counsel may reasonably request in
order to establish the consummation of such transaction and the taking of all
proceedings in connection therewith.
ARTICLE VII
OTHER AGREEMENTS
SECTION 7.1 RE-EXAMINATION OF CONSIDERATION. Given that the number of
shares of Purchaser Stock issued in connection with the transactions
contemplated hereby was based upon the capitalization set forth in Section 4.4,
the Purchaser hereby agrees to increase the number of shares of Purchaser Stock
issued to the Seller in connection with this transaction so that (a) in the case
of clause (i) below, the Seller's percentage ownership interest (calculated as
if an additional 30,000 shares of Purchaser Stock had been issued to Seller) is
not less than 95% of the Seller's Closing Percentage and (b) in the case of
clause (ii) below, the Seller's percentage ownership interest (calculated as if
an additional 30,000 shares of Purchaser Stock had been issued to Seller) is not
less than 85% of the Seller's Closing Percentage in the event that prior to
October 31, 1999, the Purchaser either:
(i) issues additional shares of capital stock, and such issuances
(whether individually or in the aggregate) result in a dilution in the
Seller's ownership interest in the Purchaser of greater than 5%.
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However, any dilution under this clause (i) shall be calculated
without taking into account shares issued in connection with an
initial public offering of the Purchaser's common stock, shares
issued to the employees of the Company as contemplated hereby,
shares issued upon the exercise of existing options, or shares
issued in connection with another acquisition made by the Purchaser
in good faith and, in its business judgment, for fair value. In
addition, the dilution as calculated under this clause (i) shall
give effect to the return of any shares by any stockholder of the
Purchaser in connection with or to permit any such issuance by the
Purchaser.
(ii) issues additional shares of capital stock in connection with an
initial public offering of Purchaser's common stock (including any
shares issued pursuant to "greenshoe" provisions), and the aggregate
amount of shares issued in such public offering results in a dilution
in the Seller's ownership interest in the Purchaser of more than 15%.
However, any dilution under this clause (ii) shall be calculated
independent of dilution which may arise as a result of issuances other
than in connection with an initial public offering.
Promptly following the first event that Purchaser reasonably believes would
require the issuance of shares to the Seller pursuant to this Section 7.1, and
in any event within five business days after October 31, 1999, the Purchaser
shall deliver to the Seller a report describing in reasonable detail the nature
of the subject transaction or transactions and certifying the number of shares
issued in connection with such transaction or transactions and setting forth a
calculation of the number of shares, if any, to be issued to the Seller pursuant
to this Section 7.1 (each, an "Additional Purchaser Stock Determination"). If
the Seller does not agree that an Additional Purchaser Stock Determination
correctly states the number of shares of Purchaser Stock to be issued and
delivered to the Seller pursuant to this Section 7.1, the Seller shall promptly
(but not later than 30 days after the delivery of the Additional Purchaser Stock
Determination) give written notice to the Purchaser of any exceptions thereto
(in reasonable detail describing the nature of the disagreement asserted). If
the Seller and the Purchaser reconcile their differences, the Additional
Purchaser Stock Determination shall be adjusted accordingly and shall thereupon
become binding, final and conclusive upon all of the parties hereto and
enforceable in a court of law. If the Seller and the Purchaser are unable to
reconcile their differences in writing within 30 days after written notice of
exceptions is delivered to the Seller, the items in dispute shall be submitted
to the Independent Auditors for final determination, and the Additional
Purchaser Stock Determination shall be deemed adjusted in accordance with the
determination of the Independent Auditors and shall become final and conclusive
upon all of the parties hereto and enforceable in a court of law. The
Independent Auditors shall consider only the items in dispute and shall be
instructed to act within 20 days (or such longer period as the Seller and the
Purchaser may agree) to resolve all items in dispute. If the Seller does not
give notice of any exception within 30 days after the delivery of an Additional
Purchaser Stock Determination or if the Seller gives written notification of its
acceptance of an Additional Purchaser Stock Determination prior to the end of
such 30-day period, the Additional Purchaser Stock Determination shall thereupon
become final, binding and conclusive upon all of the parties hereto and
enforceable in a court of law.
SECTION 7.2 ISSUANCE OF SHARES TO EMPLOYEES. At or promptly
following the Closing, the Purchaser shall issue an aggregate of 60,000 shares
of Purchaser Stock, to the key employees of the Company indicated on SCHEDULE
7.2 hereto, in the amounts set forth on such schedule. The wage tax due as a
result of such issue shall be withheld by the Company.
SECTION 7.3 DISCLAIMER; DISCLOSURE SCHEDULES.
7.3.1 DISCLAIMER. The Seller does not make, and has not made, any
representations or warranties relating to the Seller, the Company or the
businesses of the Company or otherwise in connection with the
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transactions contemplated hereby other than those expressly set forth herein
which are made by the Seller. Without limiting the generality of the foregoing,
the Seller has not made, and shall not be deemed to have made, any
representations or warranties in any presentation of the businesses of the
Company in connection with the transactions contemplated hereby, and no
statement made in any such presentation shall be deemed a representation or
warranty hereunder or otherwise. It is understood that any cost estimates,
projections or other predictions, any data, any financial information or any
memoranda or offering materials or presentations are not and shall not be deemed
to be or include representations or warranties of the Seller. No Person has been
authorized by the Seller or the Company to make any representation or warranty
relating to the Seller, the Company or the businesses of the Company or
otherwise in connection with the transactions contemplated hereby and, if made,
such representation or warranty must not be relied upon as having been
authorized by the Seller or the Company.
7.3.2 SCHEDULES. Certain information in the Schedules is included
solely for informational purposes any may not be required to be disclosed
pursuant to this Agreement. The disclosure of any information shall not be
deemed to constitute an acknowledgment that such information is required to be
disclosed in connection with the representations and warranties made by the
Seller in this Agreement or that it is material, nor shall such information be
deemed to establish a standard of materiality.
SECTION 7.4 INITIAL PUBLIC OFFERING.
7.4.1 FILINGS. The Purchaser acknowledges that it is its intention to
prepare and file with the United States Securities and Exchange Commission (the
"Commission") within 120 days after the Closing, and to cause to be declared and
to remain effective, a registration statement on Form S-1 and any amendments or
supplements to the registration statement or the prospectus to be used in
connection therewith as may be necessary to complete an initial public offering
of the capital stock of the Purchaser and to keep such registration statement
current and to comply with the provisions of the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the disposition of all shares
covered by such registration statement. Notwithstanding the foregoing, it is
understood that Purchaser may delay or cancel such an offering if Purchaser in
good faith believes that circumstances exist that make such a delay or
cancellation advisable.
7.4.2 COPIES OF DOCUMENTS. The Purchaser shall furnish to the Seller
such number of copies of the registration statement and each amendment or
supplement thereto (in each case including all exhibits) and such number of
copies of the prospectus included therein (including each summary, preliminary,
final, amended or supplemented prospectus), in conformity with the requirements
of the Securities Act, and such other documents incorporated by reference in the
registration statement, and such other documents as the Seller shall reasonably
request for purposes of their review or in order to facilitate the disposition
of the securities; provided, however, that the Purchaser shall not be required
to furnish copies of any exhibits or other documents incorporated by reference
into the registration statement prior to the filing thereof with the Commission.
SECTION 7.5 TRIDION REORGANIZATION. The Purchaser acknowledges and
agrees that the Seller has created a new wholly owned subsidiary named Tridion
B.V. i.o. ("Tridion") and has caused the Company to sell, transfer, convey,
deliver and assign to Tridion certain of the assets and liabilities formerly
held by the Company identified on EXHIBIT E hereto (the "Tridion Assets and
Liabilities"), and the Tridion Assets and Liabilities have become solely the
assets and liabilities of Tridion. In connection with the matters contemplated
by this Section 7.5 and EXHIBIT E, the Seller represents that there will be no
costs or consequences to the Company, and Purchaser hereby releases and waives
any and all claims or other rights to the Tridion Assets and Liabilities.
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SECTION 7.6 JOINT AND SEVERAL OBLIGATIONS. The Seller shall fully
indemnify the Purchaser and the Company and shall hold the Purchaser and the
Company harmless against (a) any and all liabilities, claims and costs incurred
by the Company in connection with any guarantees, sureties and/or statements of
(joint) liability issued by the Company on behalf of or in favor of third
parties (including any member of the Seller's group of companies) and any legal
(WETTELIJKE) or contractual liability for obligations (including tax obligations
of third parties (including any members of the Seller's group of companies), to
the extent that no sufficient provision has been included in the Balance Sheet;
and (b) rights of recourse (REGRESRECHT) of third parties (including any members
of Seller's group of companies) against the Company, to the extent that no
sufficient provision has been included in the Balance Sheet. For the avoidance
of doubt, the indemnification provided in this Section shall not be limited or
qualified in any respect by Section 8.5 of this Agreement.
ARTICLE VIII
SURVIVAL; INDEMNITY
SECTION 8.1 SURVIVAL. Notwithstanding any right of any party hereto
fully to investigate the affairs of any other party, and notwithstanding any
knowledge of facts determined or determinable pursuant to such investigation or
right of investigation, each party hereto shall have the right to rely fully
upon the representations, warranties, covenants and agreements of the other
parties contained in this Agreement and the Schedules, if any, furnished by any
other party pursuant to this Agreement, or in any certificate delivered at the
Closing by any other party. Subject to the limitations set forth in Section 8.5,
the respective representations, warranties, covenants and agreements of the
Seller and the Purchaser contained in this Agreement shall survive the Closing.
SECTION 8.2 OBLIGATION OF THE SELLER TO INDEMNIFY. Subject to the
limitations contained in Section 8.5 hereof, the Seller hereby agrees to
indemnify the Purchaser and its officers, directors, employees, agents and its
affiliates (individually a "Purchaser Indemnified Party" and collectively, the
"Purchaser Indemnified Parties") against, and to protect, save and keep harmless
the Purchaser Indemnified Parties from, and to assume liability for, payments of
all liabilities (including liabilities for Taxes), obligations, losses, damages,
penalties, claims, actions, suits, judgments, settlements, out-of-pocket costs,
expenses and disbursements (including reasonable costs of investigation, and
reasonable attorneys', accountants' and expert witnesses' fees) of whatever kind
and nature, net of any tax benefit actually realized by the Indemnified Party
(it being understood that any such benefit shall be paid in the first instance
by Indemnifying Parties and refunded by the Indemnified Party upon the
realization of the benefit) to the extent not covered by insurance the benefits
of which will inure to the applicable Indemnified Parties (as defined below)
(collectively, "Losses"), that may be imposed on or incurred by any Purchaser
Indemnified Party or the Company (collectively, the "Group") as a consequence of
or in connection with (i) any inaccuracy or breach of any representation or
warranty contained in Article III hereof or (ii) any breach of or failure by the
Seller to comply with or perform any agreement or covenant contained in this
Agreement or (iii) any Losses relating to the Tridion Assets and Liabilities.
The term "Losses" as used herein is not limited to matters asserted by third
parties against the Group but includes Losses incurred or sustained by the Group
in the absence of third party claims.
SECTION 8.3 OBLIGATION OF THE PURCHASER TO INDEMNIFY. Subject to the
limitations set forth in Section 8.5 hereof, the Purchaser hereby agrees to
indemnify the Seller and its officers, directors, employees, agents and its
affiliates (individually a "Seller Indemnified Party" and collectively, the
"Seller Indemnified Parties") against, and to protect, save and keep harmless
the Seller Indemnified Parties from and to assume liability (including
liabilities for Taxes) for any and all Losses that may be imposed on or
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incurred by the Seller Indemnified Parties as a consequence of or in connection
with (i) any inaccuracy or breach of any representation or warranty contained in
Article IV hereof or (ii) any breach of or failure by the Purchaser to comply
with or perform any agreement or covenant by the Purchaser contained in this
Agreement.
SECTION 8.4 INDEMNIFICATION PROCEDURES.
8.4.1 NOTICE OF ASSERTED LIABILITY. The Indemnified Party (as defined
below) shall promptly give notice (the "Claims Notice") to the party or parties
required to pay any amount in respect of Losses under Section 8.2 or 8.3 (the
"Indemnifying Party"), of any demand, claim or circumstances which in good faith
it believes gives rise, or with the lapse of time would or might give rise to a
claim or the commencement (or threatened commencement) of any action, proceeding
or investigation that may result in any Losses (an "Asserted Liability") without
regard to the limitations on indemnification set forth in Section 8.6 below. The
Claims Notice shall describe the Asserted Liability in reasonable detail, shall
indicate the amount (estimated, if necessary, and to the extent feasible) of the
Losses that have been or may be suffered by an Indemnified Party. For purposes
of this Section 8.4, the term "Indemnified Party" shall mean the Seller
Indemnified Party or Parties or the Purchaser Indemnified Party or Parties, as
the case may be.
8.4.2 DEFENSE OF ASSERTED LIABILITY. The Indemnifying Party may elect
to compromise, settle or defend, at its own expense and by its own counsel (such
counsel to be reasonably satisfactory to the Indemnified Party), any Asserted
Liability. If the Indemnifying Party elects to compromise, settle or defend such
Asserted Liability, it shall within 30 days (or sooner, if the nature of the
Asserted Liability so requires) notify the Indemnified Party in writing of its
intent to do so and the Indemnified Party shall cooperate, at the request and
expense of the Indemnifying Party, in the settlement or compromise of, or
defense against, such Asserted Liability. If the Indemnifying Party elects not
to compromise, settle or defend the Asserted Liability, or fails to notify the
Indemnified Party of its election as herein provided, the Indemnified Party may
pay, compromise, settle or defend such Asserted Liability at the expense of the
Indemnifying Party and the Indemnifying Party shall be bound by the results
obtained by the Indemnified Party with respect to such third party claim.
Notwithstanding the foregoing, the Indemnifying Party may not settle or
compromise any claim without the prior written consent of the Indemnified Party,
if such settlement or compromise does not include an unconditional release from
all liability without future obligation or prohibition on the part of the
Indemnified Party. If an Indemnified Party objects to a bona fide offer of
settlement which provides solely for a monetary payment and includes an
unconditional release from all liability without future obligation or
prohibition on the part of the Indemnified Party, which the Indemnifying Party
wishes to accept, the Indemnified Party may continue to pursue such matter, free
of any participation by the Indemnifying Party, at the expense of the
Indemnified Party. In such event, the obligation of the Indemnifying Party shall
be limited to the amount of the offer of settlement which the Indemnified Party
refused to accept plus the costs and expenses of the Indemnified Party incurred
prior to the date the Indemnifying Party notified the Indemnified Party of the
offer of settlement. The Indemnified Party shall have the right to employ its
own counsel in any case with respect to an Asserted Liability, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party
unless (a) the employment of such counsel shall have been authorized in writing
by the Indemnifying Party in connection with the defense of such action, (b)
such Indemnifying Party shall not have, as provided above, promptly employed
counsel reasonably satisfactory to such Indemnified Party to take charge of the
defense of such action, or (c) such Indemnified Party shall have reasonably
concluded that there may be one or more legal defenses available to it which are
different from or additional to those available to such Indemnifying Party, in
any of which events such reasonable fees and expenses shall be borne by the
Indemnifying Party and the Indemnifying Party shall not have the right to direct
the defense of such action on behalf of the Indemnified Party in respect of such
different or additional defenses. Notwithstanding anything in this Section 8.4
to the contrary, the Seller shall only reimburse the Purchaser Indemnified
Parties for the costs and expenses of one counsel for all Purchaser Indemnified
Parties, and the
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Purchaser shall only reimburse the Seller Indemnified Parties for the costs
and expenses of one counsel for all Seller Indemnified Parties, If the
Indemnifying Party chooses to defend any claim, the Indemnified Party shall
make available to the Indemnifying Party any books, records or other
documents within its control that are necessary or appropriate for such
defense. The parties hereto agree to cooperate fully with one another in the
defense, compromise or settlement of any Asserted Liability.
8.4.3 CONTROL BY THE PURCHASER. All decisions and determinations to be
made by the Purchaser and/or a Purchaser Indemnified Party under Article VIII
shall be made by the Purchaser in the name of and on behalf of the Purchaser or
such other Purchaser Indemnified Party and all such decisions and determinations
shall be binding upon the parties hereto and such Purchaser Indemnified Party.
SECTION 8.5 LIMITATIONS ON INDEMNIFICATION.
8.5.1 INDEMNITY CUSHION . No claim, action or other Asserted Liability
with respect to Losses arising out of any of the matters referred to in clause
(i) of Section 8.2 may be asserted until such time as claims, actions or other
Asserted Liabilities with respect to Losses arising out of any of the matters
referred to in clause (i) of Section 8.2 shall exceed $50,000 in the aggregate
(in which case the Seller shall be liable for all Losses in excess of $50,000);
provided, however, that this Section 8.5.1 shall not apply to Losses relating to
a breach of a representation or warranty contained in Section 3.26 nor to any
Losses relating to the Tridion Assets and Liabilities.
8.5.2 TERMINATION OF INDEMNIFICATION OBLIGATIONS OF THE SELLER. The
obligation of the Seller to indemnify under clause (i) of Section 8.2 hereof
shall terminate on June 30, 2001 except (i) as to matters as to which any
Purchaser Indemnified Party has made a claim for indemnification or given a
Claims Notice under Section 8.4 hereof on or prior to such date, (ii) with
respect to any claim for Losses pertaining to a misrepresentation or a breach of
representation or warranty under Section 3.11 or 3.19, and (iii) with respect to
any claims relating to Tridion Assets and Liabilities. The obligation to
indemnify referred to in:
(A) the preceding clause (i) shall survive the expiration of
such period until such claims are finally resolved and any obligations
with respect thereto are fully satisfied; and
(B) the preceding clauses (ii) and (iii) shall terminate 60
days after the expiration of the relevantstatute of limitations, except
as to matters as to which any Indemnified Party has made a claim for
indemnification or given a Claims Notice under Section 8.4 on or prior
to such date, in which case the right to indemnification with respect
thereto shall survive the expiration of any such period until such
claim is finally resolved and any obligations with respect thereto are
fully satisfied.
8.5.3 TERMINATION OF INDEMNIFICATION OBLIGATIONS OF THE PURCHASER. The
obligation of the Purchaser to indemnify under clause (i) of Section 8.3 hereof
shall terminate on June 30, 2001 except as to matters as to which any Seller
Indemnified Party has made a claim for indemnification or given a Claims Notice
under Section 8.4 hereof on or prior to such date, in which case the right to
indemnification with respect thereto shall survive until the related claim for
indemnification has been finally resolved and any obligations with respect
thereto are fully satisfied.
8.5.4 TREATMENT. Any indemnity payments by an Indemnifying Party to an
Indemnified Party under this Article VIII shall be treated by the parties as an
adjustment to the Purchase Price.
8.5.5 ACTUAL EXPENSES. Recovery of an Indemnified Party pursuant to
Section 8.2 or 8.3 shall be limited to actual out-of-pocket expenses and shall
in no event include any punitive, exemplary, special,
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indirect, incidental or consequential damages whatsover (which shall include,
without limitation, lost profits and sales).
8.5.6 REMEDIES. Indemnification in accordance with the provisions of
this Agreement shall be the sole and exclusive remedy of the Purchaser and the
Seller for any Losses suffered or incurred by the Indemnified Party including,
but not limited to, any and all breaches of or inaccuracies in any of the
parties' respective representations and warranties, covenants, agreements or
other obligations of the Purchaser and the Seller set forth in this Agreement or
in any other agreement or instrument contemplated thereby.
8.5.7 MAXIMUM AMOUNT. Notwithstanding anything in this Agreement to the
contrary, in no event shall the maximum aggregate liability of the Seller with
respect to Losses suffered or incurred by the Purchaser Indemnified Parties
hereunder (other than Losses relating to the Tridion Assets and Liabilities, as
to which there shall be no maximum potential liability) exceed the total of
$700,000 (or such lesser amount to the extent adjusted pursuant to Section
2.2.1) plus the shares issued to the Seller hereunder. For purposes of
indemnification hereunder, prior to the time the Purchaser shall have an
effective registration statement outstanding under the Securities Act of 1933,
as amended, the Seller shall be required to return shares of Purchaser Stock to
satisfy its indemnification obligations and each share of Purchase Stock shall
be valued at $6.81; thereafter, Seller shall have the option as to whether to
satisfy its indemnification obligations in cash or in shares of Purchaser Stock
and each share of Purchaser Stock shall be valued at its then-current market
value. In the event that the Seller shall have sold any shares of Purchaser
Stock at the time payments are due under this Article VIII, that portion of its
liability relating to the shares of Purchaser Stock shall be limited to the
total of the value of the Purchaser Stock remaining to it plus the gross sale
proceeds of the shares of Purchaser Stock sold.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 EXPENSES. Except for costs and expenses of the civil law
notary which shall be borne by the Purchaser, the parties hereto shall pay all
of their own expenses relating to the transactions contemplated by this
Agreement, including, without limitation, the fees and expenses of their
respective counsel and financial advisers.
SECTION 9.2 GOVERNING LAW. Pursuant to Section 5-1401 of the General
Obligations Law of the State of New York, this Agreement shall be governed by
the laws of the State of New York .
SECTION 9.3 "PERSON" DEFINED. "Person" shall mean and include an
individual, a company, a joint venture, a corporation, a limited liability
company, a limited liability partnership, a partnership under Dutch law
(maatSCHAP, VENNOOTSCHAP ONDER FIRMA, COMMANDITAIRE VENNOOTSCHAP) a trust, an
unincorporated organization and a government or other department or agency
thereof.
SECTION 9.4 "KNOWLEDGE" DEFINED. Where any representation and warranty
contained in this Agreement is expressly qualified by reference to the knowledge
of a party, such party confirms that it has made such due and diligent inquiry
as to the matters that are the subject of such representations and warranties as
shall be reasonable under the circumstances.
SECTION 9.5 "AFFILIATE" DEFINED. As used in this Agreement, an
"affiliate" of any Person, shall mean any Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with such Person.
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SECTION 9.6 CAPTIONS. The Article and Section captions used herein are
for reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
SECTION 9.7 PUBLICITY. Subject to the provisions of the next sentence,
no party to this Agreement shall, and the Seller shall insure that no
representative of the Company shall, issue any press release or other public
document or make any public statement relating to this Agreement or the matters
contained herein without obtaining the prior approval of the Purchaser, the
Company and the Seller. Notwithstanding the foregoing, the foregoing provision
shall not apply to the extent that Purchaser is required to make any
announcement relating to or arising out of this Agreement by virtue of the
federal securities laws of the United States or the rules and regulations
promulgated thereunder or other rules of the National Association of Securities
Dealers or other stock exchange on which the securities of the Purchaser may
then be traded, or any announcement by any party or the Company pursuant to
applicable law or regulations.
SECTION 9.8 NOTICES. Unless otherwise provided herein, any notice,
request, instruction or other document to be given hereunder by any party to any
other party shall be in writing and shall be deemed to have been given (a) upon
personal delivery, if delivered by hand, (b) the next business day if sent by
facsimile transmission (if receipt is electronically confirmed), or (c) two days
if sent by a prepaid overnight courier service, and in each case at the
respective addresses or numbers set forth below or such other address or number
as such party may have fixed by notice:
If to the Purchaser, addressed to:
▇▇▇▇▇▇.▇▇▇ Ltd.
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Seller to the address set forth on EXHIBIT A.
SECTION 9.9 PARTIES IN INTEREST. This Agreement may not be transferred,
assigned, pledged or hypothecated by any party hereto, other than by operation
of law. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
SECTION 9.10 SEVERABILITY. In the event any provision of this Agreement
is found to be void and unenforceable by a court of competent jurisdiction, the
remaining provisions of this Agreement shall nevertheless be binding upon the
parties with the same effect as though the void or unenforceable part had been
severed and deleted.
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SECTION 9.11 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which taken together shall constitute one instrument.
SECTION 9.12 ENTIRE AGREEMENT. This Agreement, including the other
documents referred to herein and the Exhibits and Schedules hereto which form a
part hereof, contains the entire understanding of the parties hereto with
respect to the subject matter contained herein and therein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
SECTION 9.13 AMENDMENTS. This Agreement may not be amended,
supplemented or modified orally, but only by an agreement in writing signed by
the Purchaser and the Seller.
SECTION 9.14 THIRD PARTY BENEFICIARIES. Each party hereto intends that
this Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto and their respective
successors and assigns as permitted under Section 9.9.
SECTION 9.15 CIVIL LAW NOTARY. The Seller hereby acknowledges that it
is aware of the provisions of Articles 8, 9, 10 and 14.2 of the "Guidelines
concerning associations between civil law notaries (NOTARISSEN) and
barristers/solicitors (ADVOCATEN)" as established by the Board of the Royal
Professional Organisation of Civil Law Notaries (KONINKLIJKE NOTARIELE
BEROEPSORGANISATIE). The Seller hereby acknowledges and agrees that Loeff ▇▇▇▇▇▇
▇▇▇▇▇▇▇ may advise and act on behalf of the Purchaser with respect to this
Agreement, and any agreements and/or any disputes related to or resulting from
this Agreement.
SECTION 9.16 ARBITRATION. Except as specifically provided in Sections
2.2 and 7.1,, any controversy or claim arising out of or relating to this
Agreement, or any breach hereof, shall be settled by arbitration in accordance
with the rules and regulations of the American Arbitration Association and
judgment upon such award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. The arbitration panel shall consist of three
arbitrators, one nominated by Purchaser, one nominated by the Seller and the
third to be selected by the other two. In the event the three arbitrators shall
not have been nominated within 30 days following a notice by either Purchaser or
the Seller to the other(s) of its intention to arbitrate, an arbitrator for the
party who has not nominated an arbitrator (if applicable) and the third
arbitrator shall be chosen by the American Arbitration Association in New York,
New York pursuant to its rules and regulations. The determination of the
arbitrators shall be not inconsistent with the terms of this Agreement and shall
be final and binding upon the parties to the arbitration without the right of
appeal. The arbitration shall be held in London, England. The costs and expenses
of the arbitrators shall be paid by the non-prevailing party or parties to the
arbitration proceeding. No party to this Agreement shall be precluded from
applying to a proper court for injunctive relief by reason of the prior or
subsequent commencement of an arbitration proceeding as herein provided.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, on
the day and year first above written.
▇▇▇▇▇▇.▇▇▇ LTD.
BY: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
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NAME: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
TITLE: VICE-PRESIDENT
TOPICS INTERACTIVE FACTORY B.V.
BY: /s/ ▇▇▇▇▇▇ SLOT
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NAME: ▇▇▇▇▇▇ SLOT
TITLE: DIRECTOR
EXHIBITS
Exhibit A: Company Shares; Address
Exhibit B: Investment Representation Certificate
Exhibit C: Form Employment Agreement
Exhibit D: Form Non-Competition Agreement
Exhibit E: Tridion Assets and Liabilities
September 1, 1999
Topics Interactive Factory B.V.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Re: AMENDMENT TO STOCK PURCHASE AGREEMENT
Dear Gentlemen:
Reference is made to the Stock Purchase Agreement dated July
23, 1999 (the "STOCK PURCHASE AGREEMENT") by and between ▇▇▇▇▇▇.▇▇▇ Ltd., a New
York corporation (the "PURCHASER"), and Topics Interactive Factory B.V., a
corporation organized under the laws of The Netherlands (the "SELLER").
Capitalized terms used herein which are not defined in this letter agreement
shall have the meanings ascribed thereto in the Stock Purchase Agreement.
This letter (the "AMENDATORY AGREEMENT") will confirm certain
agreements between us as follows:
1. The parties agree that Article II of the Stock Purchase Agreement
shall be amended and shall read in its entirety as follows with the full force
and effect as if originally included in the Stock Purchase Agreement:
"ARTICLE II
PURCHASE PRICE AND CLOSING
SECTION 2.1 PURCHASE PRICE. In consideration for the purchase
by the Purchaser of the Company Shares, the aggregate purchase price
(the "PURCHASE PRICE"), shall be calculated and paid by the Purchaser
to the Seller as set forth below:
2.1.1 CLOSING PAYMENT. At the Closing, the Purchaser shall
deliver to the Seller a certificate or certificates registered in the
name of the Seller representing 1,047,226 shares of Purchaser's common
stock, par value $0.001 per share (the "PURCHASER STOCK").
Notwithstanding anything in this Section 2.1 to the contrary, the
Purchase Price shall be subject to the adjustments contemplated by
Sections 2.2 and 7.1.
2.1.2 POST-CLOSING PURCHASER STOCK PAYMENT. If (a) 1999
Revenues (as defined in Section 2.1.5) exceed 10,018,000 (NLG) AND (b)
if ▇▇▇ (as defined in Section 2.1.4) for the period of August 1, 1999
through December 31, 1999 is a positive number, within five business
days after the Determination (as defined in Section 2.2) for calendar
year 1999 and any adjustments thereto shall have become binding on the
parties as provided in Section 2.2, the Post-Closing Purchaser Stock
Payment equal to the number of shares of Purchaser Stock equal to the
lesser of (i) 168,066 or (ii) calculated as follows (such number shall
be rounded to the nearest whole share):
Post-Closing Purchaser Stock Payment = (1999 REVENUES ) x 168,066
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( 12,821,000 )
; it being understood that if the requirements set forth in Section
2.1.2(a) AND (b) are not satisfied, the Post-Closing Purchaser Stock
Payment shall equal zero.
2.1.3 POST-CLOSING CASH PAYMENT. In the event that the
shareholders equity of the Company as at the close of business on June
30, 1999, as finally determined pursuant to Section 2.2 in accordance
with GAAP (as defined in Section 3.4), without including as assets
goodwill and other like intangibles or fixed assets not in service
("NET SHAREHOLDERS EQUITY"), is a positive number, within five business
days after the Net Shareholders Equity shall have become binding on the
parties pursuant to the procedures in Section 2.2, the Purchaser shall
pay the Seller the positive amount of Net Shareholders Equity up to
US$700,000. Payment of the cash portion shall be made by wire transfer
to the Seller's account: bank account number ▇▇.▇▇.▇▇.▇▇▇ ABN AMRO
Amsterdam, mentioning "Agency / Twinspark".
2.1.4 ▇▇▇. "▇▇▇" shall mean the consolidated net income (loss)
of the Company, after payment of or provision for all federal, state
and local income taxes for such period, for the period August 1, 1999
through December 31, 1999 determined in accordance with GAAP; provided
that in making such determinations:
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(i) neither the proceeds from nor any dividends or refunds with respect
to, nor any increases in the cash surrender value of, any life
insurance policy under which the Company is the named beneficiary or
otherwise entitled to recovery, shall be included as income, and the
premium expense related to any such life insurance policy shall not be
included as an expense; and
(ii) intercompany management fees charged by the Purchaser or any
affiliate (as defined in Section 9.5) of the Purchaser to the Company
shall not be treated as an expense; and
(iii) taxes imposed upon or measured by any income shall be computed
(A) on an accrual basis; (B) on the basis that the Company is treated
as a separate corporate taxpayer from Purchaser, not included in any
consolidated or combined return filed by Purchaser, or any affiliate of
Purchaser; and (C) except as otherwise modified as set forth in this
Section 2.1.4 in accordance with all provisions of law, including
without limitation deductions, credits and rates, applicable to the
period in question and applied to the net income of the Company
determined hereunder, regardless of any taxes actually paid by the
Company, [and without any losses or tax credits carried forward from
any period prior to August 1, 1999].
Section 2.1.5 1999 REVENUES. "1999 REVENUES" shall mean the
commissions and fees, ▇▇▇▇-ups and hourly charges earned by the Company
(excluding pass through expenses, except for licensing fees of 800,000
NLG as referenced in SCHEDULE 3.4) during calendar year 1999 for work
generated or performed by employees or contractors and charged to
clients determined in accordance with GAAP.
SECTION 2.2 ACCOUNTING PROCEDURES.
(a) The Purchaser shall cause the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP (the
"ACCOUNTANTS"), as soon as practicable after the end of calendar year
1999, to prepare in accordance with GAAP, a report containing an (x)
audited balance sheets of the Company as of the close of business on
June 30, 1999 and December 31, 1999, and related audited statements of
income of the Company for the five months ended December 31, 1999 and
the twelve months ended December 31, 1999, together with a statement of
the Accountants stating that such financial statements were prepared in
accordance with this Agreement and setting forth (x) the 1999 Revenues,
the Net Shareholders Equity as of the close of business on June 30,
1999 and the ▇▇▇ for the four months ended December 31, 1999 and (y)
all adjustments required to be made to such audited financial
statements in order to make the calculations required under this
Section 2.2 (the " DETERMINATION"). A copy of such Determination shall
be delivered to the Seller not later than 150 days after
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December 31, 1999. It is understood and agreed that in connection with
the determination of Net Shareholders Equity contemplated by this
Section 2.2, Dutch Guilder amounts shall be converted to U.S. Dollars
using the Dutch Guilder/U.S. Dollar exchange rate as of the close of
business on June 30, 1999 as quoted in The Wall Street Journal (U.S.
edition).
(b) If the Seller does not agree that the Determination
correctly states the Net Shareholders Equity, 1999 Revenues or ▇▇▇, the
Seller shall promptly (but not later than 30 days after the delivery of
the Determination) give written notice to the Purchaser of any
exceptions thereto (in reasonable detail describing the nature of the
disagreement asserted). If the Seller and the Purchaser reconcile their
differences, the Net Shareholders Equity, 1999 Revenues or ▇▇▇
calculation, as the case may be, shall be adjusted accordingly and
shall thereupon become binding, final and conclusive upon all of the
parties hereto and enforceable in a court of law. If the Seller and the
Purchaser are unable to reconcile their differences in writing within
30 days after written notice of exceptions is delivered to the
Purchaser, the items in dispute shall be submitted to the Amsterdam
office of a mutually acceptable accounting firm selected from among the
six largest accounting firms in The Netherlands in terms of gross
revenues (the "INDEPENDENT AUDITORS") for final determination, and the
Net Shareholders Equity, 1999 Revenues or ▇▇▇ calculation, as the case
may be, shall be deemed adjusted in accordance with the determination
of the Independent Auditors and shall become final and conclusive upon
all of the parties hereto and enforceable in a court of law. The
Independent Auditors shall consider only the items in dispute and shall
be instructed to act within 20 days (or such longer period as the
Seller and the Purchaser may agree) to resolve all items in dispute. If
the Seller does not give notice of any exception within 30 days after
the delivery of the Determination, or if the Seller gives written
notification of its acceptance of the Net Shareholders Equity, 1999
Revenues or ▇▇▇ prior to the end of such 30 day period, the Net
Shareholders Equity, the 1999 Revenues and the ▇▇▇ set forth in the
Determination shall thereupon become binding, final and conclusive upon
all the parties hereto and enforceable in a court of law.
SECTION 2.3 CLOSING. The Closing under this Agreement (the
"CLOSING") is taking place simultaneously with the execution and
delivery of this Agreement, at the offices of Loeff ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Amsterdam. Such date is herein referred to as the "Closing Date." At
the Closing, the Seller shall deliver the Company Shares to the
Purchaser by execution of a notarial deed of transfer of the Company
Shares."
As a result of the amendment set forth in this paragraph 1, upon the completion
of this Amendatory Agreement, the Seller shall have returned to the Purchaser
US$700,000 (1,444,108.77 NLG) and the certificate or certificates representing
1,215,292 shares of Purchaser Stock, with duly executed stock powers, in
exchange for a new certificate registered in the name of the Seller representing
1,047,226 shares of Purchaser Stock.
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2. SCHEDULE 3.4 to this Amendatory Agreement hereby replaces and
supersedes the prior SCHEDULE 3.4.
3. SCHEDULE 4.5 to this Amendatory Agreement hereby replaces and
supersedes the prior SCHEDULE 4.5. The LAST SENTENCE of Section 4.5 of the Stock
Purchase Agreement shall be deleted in its entirety and replaced with the
following sentence:
"The shares of Purchaser Stock issued to Seller (assuming
168,066 shares of Purchaser Stock are issued as the Post-Closing Stock
Payment), together with 50% of the sum of (x) the 10,000 shares of
Purchaser Stock issued pursuant to Section 7.2.1 and (y) the 75,000
shares of Purchase Stock issuable pursuant to options to be granted
pursuant to Section 7.2.2, represent 3.5% of the Applicable Purchaser
Shares, as calculated and defined in SCHEDULE 4.5 hereto (the "SELLER'S
CLOSING PERCENTAGE").
4. Each of the two parentheticals in the first paragraph of Section 7.1
of the Stock Purchase Agreement shall be deleted in their entirety and replaced
with the following:
"(calculated as if an additional 42,500 shares of Purchaser Stock
had been issued to Seller)"
5. The sentence beginning "However, any dilution under this clause (i)"
in Section 7.1(i) shall be deleted in its entirety and replaced with the
following sentence:
"However, any dilution under this clause (i) shall be
calculated without taking into account shares issued or options granted to the
employees of the Company as contemplated hereby, shares issuable upon the
exercise of options granted to the employees of the Company as contemplated
hereby, shares issued upon the exercise of existing options, or shares issued in
connection with another acquisition made by the Purchaser in good faith and, in
its business judgment, for fair value."
6. SCHEDULE 7.2 to this Amendatory Agreement hereby replaces and
supersedes the prior SCHEDULE 7.2. In addition, Section 7.2 of the Stock
Purchase Agreement shall be amended to read in its entirety as follows:
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"SECTION 7.2 ISSUANCE OF SHARES AND GRANT OF OPTIONS TO
EMPLOYEES.
7.2.1 ISSUANCE OF SHARES TO EMPLOYEES. At or promptly
following the Closing but prior to the date that the Purchaser has
closed an initial public offering of the Purchaser's common stock, the
Purchaser shall issue an aggregate of 10,000 shares of Purchaser Stock
to the key employees of the Company indicated on SCHEDULE 7.2 hereto,
in the amounts set forth on such Schedule. Each such key employee shall
be responsible for any wage taxes due as a result of such issue and the
Company shall not withhold any such wage taxes. In the event that a key
employee does not accept the additional shares of Purchaser Stock, the
Purchaser shall issue such shares to the remaining key employees or to
the Company.
7.2.2 GRANT OF OPTIONS TO EMPLOYEES. Following the Closing,
the Purchaser shall grant an aggregate of 75,000 options to purchase
Purchaser Stock, pursuant to the terms of the ▇▇▇▇▇▇.▇▇▇ 1999 Option
Plan, to the key employees of the Company indicated on SCHEDULE 7.2
hereto, in the amounts set forth on such Schedule. Each such key
employee shall be responsible for any wage taxes due as a result of
such grant and the Company shall not withhold any such wage taxes. In
the event that a key employee does not accept such options to purchase
Purchaser Stock, the Purchaser grant such options to the remaining key
employees or to the Company.
7. Section 8.5.7 of the Stock Purchase Agreement shall be amended as
follows:
Reference to "Section 2.2.1" in the first sentence shall be
changed to "Sections 2.1.3 and 2.2".
8. Notwithstanding anything herein to the contrary, (i) if a Loss
incurred by a Purchaser Indemnified Party or any adjustment to the Purchase
Price in favor of the Purchaser which is or was contemplated by the Stock
Purchase Agreement has been satisfied pursuant to the amendments set forth in
this Amendatory Agreement, all Purchaser Indemnified Parties shall be precluded
from (A) bringing a claim under Article VIII of the Stock Purchase Agreement or
(B) seeking any further adjustment to the Purchase Price and (ii) if a Loss
incurred by a Seller Indemnified Party has been satisfied pursuant to the
amendments set forth in this Amendatory Agreement, the Seller shall be precluded
from bringing a claim under Article VIII of the Stock Purchase Agreement.
9. Except as set forth above, the Stock Purchase Agreement shall remain
in full force and effect without further modification.
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Your signature below will acknowledge your agreement with the
foregoing.
Very truly yours,
▇▇▇▇▇▇.▇▇▇ LTD.
By:/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Vice President
AGREED TO AND ACCEPTED:
TOPICS INTERACTIVE FACTORY B.V.
By:/s/ ▇▇▇▇▇▇ Slot
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▇▇▇▇▇▇ Slot
Director