PURCHASE AGREEMENT
BY AND BETWEEN
IAT MULTIMEDIA, INC.,
A DELAWARE CORPORATION,
GESCHAFTSHAUS WASSERSCHLOSS,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇,
▇▇ - 5300 ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇,
hereinafter referred to as the "buyer,"
and
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ - 19,
D - 66953 PIRMASENS,
hereinafter referred to as the "seller."
PREFACE
The seller is the only limited partner of FSE Computer-Handels GmbH & Co. KG
(hereinafter referred to as "limited partnership"), which is registered in the
commercial register of the District Court, Pirmasens, under the number HR A
3472, with a fixed capital contribution of DM 250,000.00. FSE Computer-Handel
Verwaltungs GmbH (hereinafter referred to as "limited liability company"),
which is registered in the commercial register of the District Court, Mainz,
under the number HR B 5812, and has a capital stock of DM 50,000.00, is the
only general partner of the limited partnership. The seller is also the only
shareholder of the limited liability company. The seller intends to sell
eighty (80) percent of his shares in the limited partnership, as well as all
his shares in the limited liability company (hereinafter jointly referred to
as the "companies") to the buyer. The buyer intends to acquire these shares.
The parties to this agreement therefore stipulate the following:
SS. 1
PURCHASE AND TRANSFER
1.1 The seller sells and hereby transfers, subject to the provisions of
ss. 1.2, the limited partner's capital contribution to the limited partnership
set forth below and the share in the limited liability company (hereinafter
jointly referred to as the "shares") to the buyer, who hereby accepts such
sale and transfer:
a) a limited partner's capital contribution at a nominal value
of DM 200,000.00;
b) a share in the limited liability company at a nominal value
of DM 50,000.00.
1.2 The material transfer of the limited partner's capital contribution
to the limited partnership is subject to the following condition
precedent:
a) payment of the purchase price in accordance with ss. 3.2
items a) and b), and
b) registration of the buyer in the commercial register.
The buyer may waive his right, in writing, relative to the seller to
enforce the condition precedent set forth in item 1.2 b).
Both the sale and the transfer of the limited partner's capital
contribution shall be effected by way of special legal succession.
1.3 The material transfer of the share in the limited liability company
is subject to the condition precedent of payment of the purchase
price in accordance with ss. 3.2 items a) and b).
1.4 The sale of the shares of the limited liability company shall include
any and all unappropriated retained earnings. The seller has not
distributed or withdrawn any profits of the limited liability
company.
1.5 The sale and the transfer of the shares in the limited partnership at
the nominal value of DM 200,00.00 shall not include a transfer of the
credit balance in the partner offset account. The buyer and the
seller agree that the seller may withdraw the entire credit balance
from his partner offset account as of the date of this agreement.
Such withdrawal shall be effected subject to the provisions of ss.12.
The parties to this agreement agree that the ban on withdrawals set
forth in the articles of incorporation of the limited partnership
shall not apply pursuant to ss.10 (1.3).
1.6 The approvals required for both the sale and the transfer are
attached to this agreement as Appendices 1.6 a) through d) as
evidence:
a) Approval of the limited partnership regarding the transfer
of shares [Appendices 1.6 (a)];
b) Approval of the limited liability company regarding the
transfer of shares [Appendix 1.6 (b)];
c) Written approval of the Mittelstands-Beteiligungsgesellschaft
Rheinland Pfalz mbH [Appendix 1.6 (c)]; and
d) Written confirmation of the Kreissparkasse ▇▇▇▇▇ that the
shares are no longer subject to a lien of the Kreissparkasse
▇▇▇▇▇ and/or written confirmation that
the lien will be released once certain liabilities have been
paid [Appendices 1.6 (d)].
SS. 2
DATE OF THIS AGREEMENT
2.1 The shares shall be transferred to take economic effect as of the
date of this agreement. Profits earned in the current fiscal year
shall be distributed as of the precise date pro rata temporis
relative to the period preceding and following the date of this
agreement and shall be posted to the partners' offset accounts. In
addition, the annual surplus shall be allocated to the individual
months on the basis of the annual financial statement for 1997
(ss. 11), at the ratio of the respective monthly gross sales to the
gross sales for the year.
2.2 The applications regarding the change in the registration of the
limited partner in the commercial register shall be executed by the
seller, the limited liability company, and the buyer on the date of
this agreement. The buyer shall notify the management of the limited
liability company pursuant to ss. 16 para 1 GmbHG [Gesetz betreffend
die Gesellschaften mit beschrankter Haftung - law regulating limited
liability companies] on the date of this agreement that the shares
therein were transferred.
2.3 The date of this agreement in the sense of this agreement shall be
today's date.
SS. 3
PURCHASE PRICE
3.1 The total purchase price for the shares set forth in ss. 1.1 a) and
1.1 b) shall be DM 6,400,000.00 (in words: six million four hundred
thousand deutsche marks).
3.2 The purchase price shall be paid as follows:
a) DM 3,200,000.00, the first instalment, shall be
paid in cash (first instalment);
b) A specific number of shares of common stock of the buyer
(hereinafter referred to as "common stock") valued at DM 1,600,00.00,
however, not more than the maximum number of common stock set forth
in ss. 3.7;
c) DM 1,600,000.00, the second instalment, shall be paid in cash
(second installment).
3.3 The purchase price shall be due and payable as follows:
a) The first instalment shall be due and payable on
November 18, 1997; in the event of late payment, late payment
interest of four (4) percent above the
discount rate of the Deutsche Bundesbank shall be added to the first
instalment.
b) 144,145 shares shall be transferred as of the date of this
agreement; this transfer shall equal a corresponding credit
posted to a deposit account of the seller with the bank set
forth in ss. 3.9. The seller confirms that he has received
the share certificate regarding the buyer's 144,145 shares.
c) The remaining shares, which shall equal the difference
between the total number of shares pursuant to ss. 3.4 and
the shares transferred on the date of the agreement, shall
be transferred two (2) weeks following the date of the
agreement; this transfer shall equal a corresponding credit
posted to a deposit account of the seller with the bank set
forth in ss. 3.9. If the number of shares transferred on the
date of the agreement exceeds the number of shares to be
transferred pursuant to ss. 3.4, the number of shares
corresponding to the difference between the shares
transferred on the date of the agreement and the total
number of shares pursuant to ss. 3.4 shall be transferred
back to the buyer by the seller within two (2) weeks of the
date of the agreement.
d) The second instalment shall be due and payable 120 days
after the date of this agreement.
3.4 The amount of common stock to be transferred as partial consideration
in accordance with ss. 3.2 item b) shall be equal to the quotient of
the dollar amount that equals DM 1,600,000.00 at the official average
exchange rate of the Frankfurt Foreign Exchange (hereinafter referred
to as "average foreign exchange rate") as of the date of the
agreement, divided by the average purchase price in dollars. The
average purchase price shall be the respective average last sale
price of the common stock as quoted on Nasdaq in New York, where the
common stock was traded for a period of 45 trading days ending on
11/6/97.
3.5 The seller undertakes relative to the buyer not to sell or transfer
the common stock acquired by him pursuant to ss. 3.2 item b) for one
year of the date of this agreement. To this end, the seller
undertakes to conclude a shareholder agreement with the shareholders
of the buyer.
3.6 If the seller sells or transfers the common stock which he acquired
pursuant to ss. 3.2 item b) after the first and before the third
anniversary of the date of this agreement, and if the prevailing
market price in dollars of the common stock at the given time,
multiplied by the number of shares of common stock, yields a figure
below the amount in dollars that equals DM 1,600,000.00 at the
average foreign exchange rate as of the date of the agreement, the
buyer shall transfer to the seller that number of new shares of
common stock that is required to ensure that the product of the then
prevailing market price, multiplied by the total number of shares of
common stock which were transferred to the seller in accordance
with ss. 3.2 item b) and ss. 3.6, equals the amount in dollars that
equals DM 1,600,000.00 at the average foreign exchange rate as of the
date of the agreement.
3.7 In order to ensure compliance with the guidelines of the U.S.
Securities and Exchange Commission ("SEC") and Nasdaq, the maximum
number of shares of common stock, which are transferred pursuant to
ss. 3.2 item b) and ss. 3.6, is fixed at 400,000 shares.
3.8 As collateral for the second instalment, the buyer shall provide to
the seller a bank guaranty for DM 1,600,000.00, a copy of which is
attached to this agreement as Appendix 3.8 as evidence. The seller
confirms that he has received the original bank guaranty.
3.9 Any and all payments to the seller pursuant to ss. 3 shall be made to
the account of the seller with the Kreissparkasse ▇▇▇▇▇, bank routing
number 540 515 50, account number 500-216650, provided the seller
does not designate another account number.
SS. 4
DISCLOSURE
The seller shall provide the following documents to the buyer:
4.1 The articles of incorporation
a) of the limited partnership, in the last amended version of
11/28/96, and
b) of the limited liability company, in the last amended
version of 7/26/96.
4.2 Both the annual and interim financial statements of the limited
partnership as of 12/31/94, 12/31/95, 09/30/96, 12/31/96, and
09/30/97 (hereinafter referred to as "annual and interim financial
statements"), including a confirmation issued by the auditing firm
Munck, with the exception of 12/31/94, as well as the business plan.
The interim financial statement per 09/30/97 is attached to this
agreement as Appendix 4.2 a) as evidence. The exact text of the
auditor's confirmation, which is to be revised, is attached as
Appendix 4.2 b).
4.3 The following agreements and documents pertaining to the companies:
(a) the employment or work contracts set forth in Appendix
4.3(A) that stipulate an annual compensation in excess of DM
100,000.00; an enumeration of the shop agreements,
agreements concerning a reconciliation of interests, and
social plans, as well as special union contracts, if any;
(b) the license agreements and other agreements enumerated in
Appendix 4.3(B) regarding industrial property rights that
stipulate, in individual cases, license payments of more
than DM 25,000.00 per year;
(c) the agreements enumerated in Appendix 4.3(C) with customers
and/or suppliers that stipulate an annual business volume in
excess of DM 100,000.00, as well as any and all agreements
that stipulate special
discounts, cash discounts, trade discounts, advance payments,
or allowances for advertising costs;
(d) the rental and lease agreements enumerated in Appendix
4.3(D), provided the annual rent or lease exceeds DM
24,000.00 (excluding value-added tax);
(e) the obligations enumerated in Appendix 4.3(E) under loans,
guarantees, bills, warranty obligations, and collateral of
any type, as well as any and all bank loans and loans
granted to a third party by one of the companies;
(f) the agreements enumerated in Appendix 4.3(F) with sales
representatives and authorized dealers;
(g) the agreements of the company [sic] enumerated in Appendix
4.3(G) that stipulate obligations relative to the seller or
persons related to him (ss. 15 AO [Abgabenordnung - tax
code]) or relative to companies of which one or more of
these persons has an interest that exceeds five percent;
(h) the list of agreements and obligations enumerated in
Appendix 4.3(h) that entail liabilities for the company
[sic], individually or cumulatively, in excess of DM
100,000.00 overall per year or that stipulate services to be
rendered beyond 01/01/2000, provided these agreements have
not been enumerated in any of the other appendices; as well
as
(i) the agreements enumerated in Appendix 4.3(I) concerning the
establishment of a silent partnership.
4.4 The buyer is aware of the fact that the reserves required pursuant to
ss. 10 (1.3) of the articles of incorporation of the limited
partnership were never created The provisions of ss. 10 (1.3) shall
also not apply to the determination of the credit balance in the
partner offset account as of the date of the agreement.
SS. 5
UNDERTAKINGS AND WARRANTIES
5.1 The seller undertakes and warrants to the buyer by way of an
independent guaranty
a) that any and all statements made in this ss. with regard to
the companies as of today's date are true and complete;
b) that he has informed the buyer completely and
comprehensively, to the best of his knowledge, with regard
to any and all matters known to him that are pivotal to an
assessment of the companies' situation in terms of assets
and earnings;
c) that with regard to the future development of the companies'
businesses, the
seller is unaware of any pivotal and negative aspects that
differ fundamentally from preceding years, with the exception
of general economic or sectorspecific trends.
5.2 In addition, the seller undertakes and warrants to the buyer by way
of an independent guaranty
5.2.1 with regard to the legal relationships of both the limited
partnership and the limited liability company
- that the companies were established in legally
effective ways;
- that the entire fixed capital or capital stock was
paid in full and at full value in cash and was not
granted back to the payor, as well as that there are
no obligations to make additional contributions or
obligations to pay outstanding contributions;
- that the shares to be transferred represent eighty
(80) percent of the fixed capital of the limited
partnership and one hundred (100) percent of the
capital stock of the limited liability company;
- that the shares belong exclusively to the seller and
that they are free of third party rights; this
applies especially to rights of lien, if any, of the
Kreissparkasse ▇▇▇▇▇ to the shares of the companies;
- that the seller has the right to dispose freely of
the shares, in particular, that he is not bound by
reservations of consent on the part of both the
Mittelstands Beteiligungsgesellschaft Rheinland Pfalz
mbH and the Sudwestdeutsche Genossenschafts-Zentralbank
AG with regard to the sale of the shares and the
effective transfer thereof to the buyer;
- that the statements made in the preface and in ss. 1.4
are complete and true; and
- that the companies do not have any subsidiaries.
5.2.2 with regard to ss. 419 BGB
- that for the seller the disposition of the shares
does not represent a transaction in the sense of ss.
419 BGB [Burgerliches Gesetzbuch - German Civil
Code].
5.2.3 with regard to the absence of appeals
- that the assets of the companies are not subject to
any petitions for bankruptcy or conciliation
proceedings and
- that there are no circumstances which would justify
any appeals against this purchase agreement under the
provisions of the bankruptcy or conciliation code and
the Anfechtungsgesetz [appeals code].
5.2.4 with regard to agreements
- that, with the exception of the agreements and
obligations set forth in ss. 4,
- the companies have not entered into any other
significant agreements or obligations that
would be pivotal to its financial or business
situation;
- the agreements set forth in ss. 4 continue to
apply unchanged, unless they are terminated in
the course of normal business;
- the seller, to the best of his knowledge, is
unaware of any circumstances, not even in
consequence of implementing the present
agreement, which would undermine or endanger
the continuation of these agreements.
5.2.5 with regard to the performance of agreements
- forth in ss. 4 or that up to the present day they have
done everything that is necessary to enable
themselves to satisfy all obligations under these
agreements as stipulated. There are no performance
defects with regard to these agreements.
5.2.6 with regard to industrial property rights
- that all industrial property rights utilized by the
companies in connection with their current and
currently planned business activities (especially
patents, utility models, copyrights, trademarks, and
know- how), including trade secrets, methods, and
licenses, as well as any and all use rights deriving
therefrom, are enumerated in Appendix 5.2.6 of this
purchase agreement and
(i) that the companies alone are entitled to these
rights, without restrictions, and that third
parties do not have any rights to these
industrial property rights and use rights or
with regard to the utilization thereunder;
(ii) that third parties have not appealed these
industrial property rights, that as far as the
seller knows such appeals are not to be
anticipated, and that the seller also has no
knowledge of any other reasons that might
result in a cancellation or voidance of these
industrial property rights;
(iii) that these industrial property rights or the
utilization thereunder do not violate the
industrial property rights of third parties;
(iv) that all fees, as well as all other measures
required for maintaining the industrial
property rights, were paid or effected,
respectively, in full and in due time; and
(v) that, to the seller's best knowledge, the
operations of the companies do not violate
industrial property rights belonging to third
parties.
5.2.6a with regard to insurance policies
- that the companies, as the insured, currently
maintain valid insurance policies against fire,
theft, and other operational risks, with the
exception of an insurance policy covering
interruptions of operations, for appropriate or
customary amounts and terms that run until at least
August 31, 1998.
5.2.7 with regard to franchises and permits
- that all permits, as well as construction and
operating permits and licenses, including those
pertaining to environmental protection, required for
the companies' operations were obtained and that the
companies possess all other permits which, according
to governmental agencies, were necessary to date for
the companies to conduct their businesses, and
- that all these franchises and permits are in full
force and effect and not subject to any restrictions.
The seller has no knowledge of any circumstances that
might justify a revocation or restriction of any of
these franchises or permits or that would result in
additional requirements as a consequence of this
purchase agreement.
5.2.8 with regard to compliance with environmental regulations
- that the companies have not caused or permitted,
neither knowingly nor unknowingly, the discharge of
environmentally hazardous substances and materials on
the property utilized by the companies or outside
thereof;
- that both the seller and the companies have done
everything in their power to ensure that all waste
and other materials or substances, whether hazardous
or harmless, that were deposited, treated, or stored
outside of the real property utilized by the
companies were deposited, treated, stored, or burned
in accordance with all laws and regulations; and
- that to the seller's best knowledge there are no
contaminated sites (contamination of the soil or of
the ground water) in or under the real
property belonging to the companies or utilized by
them, and that there are no other environmentally
hazardous substances thereon.
5.2.9 with regard to litigation and compliance with regulations
- that the companies are not threatened by any civil,
criminal, or administrative claims and that the
companies are not subject to any judicial or official
investigations. There are no judicial judgments or
official findings that prohibit or restrict the
companies from carrying out certain activities or
from directing certain activities, which would
significantly limit the companies' operations, or
that stipulate that the companies have violated laws
or regulations. The companies are not party to any
legal actions with an amount in controversy exceeding
DM 25,000.00 and no such legal action is threatened
at the present time; and
- that for all intents and purposes the companies'
operations essentially comply with all regulations
under public law.
5.2.10 with regard to the ownership of assets
- that unless they were sold since 9/30/97 in the
course of the companies' normal business, all assets
shown in the interim financial statement as of
09/30/97 continue to form an integral part of the
assets under civil law and
- that, with the exception of customary reservations of
title, the inventories are not subject to any third
party rights, including chattel mortgages on the
companies' assets.
5.2.11 with regard to the annual financial statements
- that both the annual financial statements and the
interim financial statements provide a realistic
picture of the situation of the companies in terms of
finances, assets, liabilities (even if these are
qualified or limited), equity, and earnings and that
these financial statements were prepared in
accordance with generally accepted bookkeeping and
accounting principles, subject to the continuity of
accounting and valuation principles, and that they
are accurate and complete;
- that the inventories shown in both the annual
financial statements and the interim financial
statements were valued on the basis of the lowest
value principle pursuant to commercial law, in
consideration of valuation allowances on items that
are obsolete or cannot be sold for other reasons;
- that the receivables from deliveries and services
shown in both the annual financial statements and the
interim financial statements that have not been
settled as of today may be collected by, at the
latest, June 30,
1998, less any flat valuation allowances as well as,
depending on the nature of the receivable in question,
individual valuation allowances;
- that as of 9/30/97 the companies had future, payable,
or threatened liabilities of any kind and nature only
to the extent shown on the basis of their cash value
in both the annual financial statements and the
interim financial statements or to the extent that
they are covered by reserves. The pension liabilities
were deferred in accordance with the principles set
forth in ss. 6a EStG [Einkommensteuergesetz - income
tax law]. No additional payments are required; and
- that there were no hidden distribution of profits.
5.2.12 with regard to tax returns
- that the companies have submitted any and all
required tax returns to the respective tax agencies;
and
- that the companies are not in default with regard to
the payment of taxes, duties, and social security
payments, and that both the annual financial
statements and the interim financial statements
contain sufficient reserves for all taxes, duties,
and social security payments which must be paid by
the companies for the period up to 12/31/97.
5.2.13 with regard to the condition of the tangible assets
- that both the tangible and intangible assets of the
companies are in useable condition, taking into
account customary wear and tear, age, and required
maintenance work, which to date was carried out
regularly.
5.2.14 with regard to products and product liability
- that products manufactured or distributed by the
companies comply with any and all material
regulations under public and private law. Any and all
products and services are sold subject to customary
warranties. The seller has no knowledge of any
warranty claims that might result in claims against
the companies for amounts exceeding DM 10,000.00.
There were no defective deliveries as of the date of
this agreement that might result in warranty claims
against the companies; and
- that as of the date of this agreement the companies
did not deliver or sell any products or services in
regards to which third parties might derive any
product liability claims.
5.2.15 with regard to the absence of significant changes
- that since 1/1/97 until the present day
(i) the companies pursued their activities only in
the context of due business operations; this
applies, in particular, to investment
principles, inventories and procurement,
production methods, payment patterns, and
collection of receivables;
(ii) that none of the companies' significant
agreements were modified or terminated;
(iii) that the compensation payable to the
companies' executives, representatives, or
consultants was not increased above and beyond
customary raises;
(iv) that no retirement benefits, bonuses, profit
sharing plans, or similar payments were
introduced for the companies' executives and
white-collar or blue-collar workers, or that
any existing commitments of this type were
increased;
(v) that the companies did not enter into any
significant obligations and that they did not
sell any significant assets outside of the
course of normal operations; and
(vi) that there have been no significant negative
changes with regard to the companies'
situation in terms of finances, assets,
liabilities, equity, or operating results.
5.2.16 with regard to liquidity
- that as of the date of this agreement the companies'
liquidity is secured in terms of carrying out current
business, even after both the credit balance in the
seller's partner offset account and the silent
partner's participation have been deducted, without
requiring any additional financing on the part of the
buyer or third parties. The liquid funds required for
maintaining and establishing the liquidity of the
companies shall amount to at least DM 700,000.00,
excluding the repayment obligations under the silent
partnership; liquid funds in the sense of this
agreement refer to all short-term bank balances less
any bank liabilities.
5.3 The seller warrants to the buyer that the EBITA of the limited
partnership (profits before interest, corporate income taxes, and
depreciation) in fiscal year 1998 shall exceed DM 2,500,000.00. This
warranty shall not apply if, in consequence of decisions made by the
buyer, both the business and the activities of the companies undergo
significant changes. Such significant changes in the companies'
business and activities comprise, in particular, the sale of
important assets of the companies, mergers or transformations in
terms of legal structure, or acquisition of interests in other
companies. For the purpose of this profit warranty, a one-time charge
for expenses in connection with the acquisition of products, which
are manufactured or distributed by the buyer and which shall be
distributed by the limited partnership, shall be taken against EBITA
(profits before interest, corporate income taxes, and depreciations).
SS. 6
LEGAL REMEDIES
6.1 If one or more of the undertakings or warranties made or given,
respectively, in this agreement or any obligations undertaken
hereunder are inapplicable or are not performed, the buyer shall have
the right, at its discretion,
a) to demand that the buyer and the companies are placed in a
position as if the undertaking or warranty in question were
applicable or as if the obligation had been performed (in
the case of ss. 5.3 this means that the difference between the
actual EBITA of the limited partnership (profits before
interest, corporate income taxes, and depreciations) in
fiscal year 1998 and DM 2,500,000.00 shall be paid by the
seller to the buyer as conclusive damages);
or/and
b) to demand compensation for the damages sustained or to be
sustained in the future by the buyer and/or the companies;
or/and
c) to claim a reduction of the purchase price in deviation
from ss. 472 BGB that is equal to the reduction in assets
incurred by the buyer and/or the companies.
6.2 The damages may be claimed only once if the damages incurred were
reflex damages, i.e. damages that merely reflect the damages
sustained on one level on the other level.
6.3 Irrespective of other stipulations in this agreement, the seller
undertakes to release the buyer or, at the latter's request, the
companies, as of the respective due date, from any and all
liabilities and other attendant disadvantages, if any (including
interest and fees, as well as disadvantages resulting from a
reclassification of the equity that may be utilized under tax law in
the sense of ss. 28, ss. 29 KstG [Korperschaftssteuergesetz - law on
corporate taxation]) relating to the periods up to the date of this
agreement and are not covered by liabilities in the annual financial
statements and interim financial statements. In connection therewith,
the buyer shall have all rights set forth in ss. 6.1 Should
comprehensive tax audits or additional tax assessments of the
companies result in additional tax demands, an offset of advantages
and disadvantages, if any, resulting from tax savings that stem from
shifts in periods or subsequent capitalizations shall be carried out
only at that point in time at which the respective tax savings
affects the companies or their respective legal successors.
6.4 The statute of limitations for any claims pursuant to ss. 6 shall be
determined as follows:
a) With the exception of claims for damages in connection with
defects in title (ss. 5.2.1), environmental claims
(ss. 5.2.8), and product liability claims (ss. 5.2.14), as
well as with the exception of claims for damages or claims
for reimbursement in connection with claims relating to
taxes and social security obligations (ss. 5.2.12 and ss.
6.3), all claims pursuant to ss.6.1 shall be barred by
statute of limitations as of December 31, 1999.
b) The statutory statute of limitations shall apply to any
claims for damages in connection with defects in title (ss.
5.2.1).
c) Claims for damages in connection with environmental
liabilities (ss. 5.2.8) and product liability (ss. 5.2.14)
shall be barred by statute of limitation as of December 31,
2002.
d) Claims for damages in connection with any violation of
undertakings and warranties regarding both tax and social
security liabilities (ss. 5.2.12 and ss. 6.3) shall be barred
by statute of limitations within six months of the date on
which the social security assessments or tax assessments
became could no longer be appealed.
6.5 The statute of limitations with regard to any claims on the part of
the buyer shall be suspended on the basis of a written demand for
performance or a written notification of defect in title analogously
to ss. 202 BGB in connection with ss. 205 BGB, with the proviso that in
order to maintain its claims the buyer shall enforce these by legal
process within twelve months of the date of the demand for
performance or the notification of defect in title, however, not
before the respective statute of limitations pursuant to ss. 6.4 has
run out.
6.6 Articles 460 and 464 BGB, as well as ss. 377 ff. HGB [Handelsgesetzbuch
- German Commercial Code] shall not apply.
6.7 Unless the respective statements of the seller are expressly set
forth elsewhere in this agreement, the seller shall not provide any
warranties above and beyond the obligations set forth above with
regard to the companies' legal and economic and with regard to the
continuation of the companies' previous situation in terms of assets
and profits after the date of this agreement.
6.8 Claims on the part of the buyer pursuant to this ss. 6 shall be
entertained only if the amount or the value of the claim, or the sum
total of the claims, attains at least DM 50,000.00. If these limits
are exceeded, the full amount shall be due and payable. In the case
of claims related to taxes and social security, the sum total of any
and all additional taxes shall apply.
6.9 In case of violations against the undertakings pursuant to ss. 5.2.16
(warranty of liquidity) and ss. 5.3 (warranty of profits), the buyer
shall be paid the monetary amount required for attaining liquidity or
for replenishing the profits by way of a reimbursement of the
purchase price.
6.10 To the extent that the seller's liability is limited, by the best of
his knowledge or by his knowledge, to specific facts, he shall be
liable for the due diligence of a business person pursuant to ss. 43
para 1 GmbhG. The best knowledge or the knowledge of the companies'
managing director and the executives with full power of attorney
shall be attributed to the seller.
SS. 7
COOPERATION
7.1 The seller undertakes to provide to the buyer all business records
and documents belonging to the companies, as well as to provide, at
the request of the buyer, unlimited information, free of charge,
concerning the affairs of the companies during the time preceding the
date of this agreement, to the extent that this is necessary in the
interest of the companies or the buyer.
7.2 If the companies are subject to an external tax audit after the date
of this agreement in connection with assessment periods preceding the
date of this agreement, the seller shall be given the opportunity to
participate in the audit and especially in the final meetings; in
connection therewith the seller shall be represented by a person
sworn to confidentiality by virtue of his or her profession. At his
request and at his expense, the seller shall be given any and all
information required to protect his interests. In addition, the
seller may request, at his expense, that the company affected by the
respective tax assessment shall seek legal recourse. Any and all
actions in connection therewith shall be pursued by the seller at his
expense.
SS. 8
PROHIBITION OF COMPETITION
8.1 The seller undertakes not to compete, himself and in conjunction with
the companies affiliated with him, either directly or indirectly,
with the companies until 12/31/01 and not to establish a company,
participate in a company, or advise or support such company in any
manner, either directly or indirectly, that would compete with the
companies' current operations. In geographical terms, the prohibition
of competition shall be restricted to the territory in which the
companies are active at the present time. Excepted from this
stipulation are interests on the part of the seller in publicly
traded companies, with the proviso that such participation may not
exceed two (2) percent of the capital stock of the publicly traded
company concerned.
8.2 If the seller violates the prohibition of competition set forth
above, he shall be liable for a penalty of DM 500,000.00 for each
violation. In case of continued violations of the prohibition of
competition set forth above, each week of violation that has begun
shall be considered an individual violation. Neither the enforcement
of claims for damages caused by such violation nor the enforcement of
claims for performance shall be affected thereby.
SS. 9
OPTIONS
9.1 The buyer shall have the right to acquire an additional share in the
limited partnership at the nominal value of DM 25,000 [ten (10)
percent of the shares of the limited partnership at the present
value) without having to transfer a corresponding credit to the
partner offset account. The purchase price shall be one million DM,
unless a different amount is stipulated pursuant to ss. 9.2. This
option may be exercised relative to the seller at any time after the
date of this agreement on the basis of a written statement. The
shares in question shall be transferred in writing within four weeks
of receipt of the notification.
9.2 If the EBITA of the limited partnership (profits before interest,
corporate income taxes, and depreciations) in fiscal year 1998 exceed
DM 3,250,000.00, the purchase price to be paid by the buyer in case
the option is exercised pursuant to ss. 9.1 shall be determined on the
basis of the product of ten (10) percent of EBITA of the limited
partnership (profits before interest, corporate income taxes, and
depreciations) in the fiscal year that precedes the fiscal year
during which the option expires, multiplied by a factor of 3.5.
9.3 If the buyer exercises its options in accordance with ss. 9.1, the
son of the seller, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, may claim a right of first
refusal (agreement to the benefit of third parties). Such right of
first refusal shall be exercised by ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ relative to both
the seller and the buyer, in writing, within 60 days. This time
period shall expire on the date on which the buyer notifies the
person entitled to the right of first refusal, in writing, of both
the exercise of the option and the purchase price to be paid pursuant
to ss. 9.1 or ss. 9.2. This right of first refusal is tied to the
person of ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇; it cannot be assigned and shall expire
upon the death of ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇.
9.4 The seller shall have the right to sell his remaining share in the
limited partnership at the nominal value of DM 25,000.00 [ten (10) percent of
the present value of the limited partnership) to the buyer, provided the EBITA
of the limited partnership (profits before interest, corporate income taxes,
and depreciations) exceeds DM 3,250,000.00 in the fiscal year preceding the
fiscal year during which the option is exercised. The purchase price for the
share in the limited partnership at the nominal value of DM 25,000.00 shall be
equal to the product of ten (10) percent of the EBITA of the limited
partnership (profits before interest, corporate income taxes, and
depreciations) in the year which precedes the fiscal year during which the
option is exercised, multiplied by a factor of 3.5. This option on the part of
the seller to sell may be exercised only between March 31, 1999, and March 31,
2001. This option to sell shall be exercised relative to the buyer on the
basis of a written declaration of the seller. The shares in the limited
partnership shall be transferred in writing within four weeks of receipt of
the notification that the option is being exercised.
9.5 The EBITA of the limited partnership (profits before interest,
corporate income taxes, and depreciations), in connection with the
options set forth in ss. 9.4 and ss. 10.4, shall be computed on the
basis of an annual financial statement and the accounting principles
that were used to prepare the annual financial statement per
December 31, 1996
9.6 The parties hereby approve the transfers of the limited partner
shares in accordance with the provisions of this ss. 9. The approvals
of both the limited liability company in its capacity as the general
partner and the limited partnership are attached to this agreement as
Appendices 9.6 a) and b) as evidence.
SS. 10
MANAGEMENT OPTION
10.1 The buyer and the seller undertake, in their capacities as future
shareholders of the limited partnership, to offer to the executives
of the limited partnership the ability to participate in the limited
partnership as limited partners at a total nominal value of DM
25,000.00, without transferring the credit balances in the respective
partner offset accounts. To this end, the seller undertakes to
transfer to the respective executives, at the request of the buyer,
from his share in the limited partnership, limited partner shares at
a total nominal value of DM 25,000.00 [ten (10) percent of the
shares]. The price for the limited partner share under this
management option shall be DM 3,200.00 per DM 100.00 of each limited
partner share, yielding a total price of DM 800,000.00.
10.2 The option to be offered to the executives of the companies shall be
exercised within six months after the conditions for such management
option were stipulated. The executives who wish to exercise their
options shall notify the seller, in writing, that they intend to
exercise their option. The shares in question shall be transferred,
in writing, within four weeks of receipt of the notification. The
executives who are entitled to this management option, as well as the
scope of their option rights, shall be stipulated by the seller
within one month of the date of this agreement. The seller shall not
have the right to grant options to himself or relatives in the sense
of ss. 15 AO.
10.3 If the options offered under the management option plan are not
exercised by the executives entitled thereto, the buyer shall have
the right to purchase the respective shares from the seller without
transferring the respective credit to the partner offset accounts.
The purchase price shall correspond to the purchase price offered to
the executives entitled to such option for the limited partner
shares. The seller shall notify the buyer, in writing, one week after
the expiration of the management option plan pursuant to ss. 10.2,
how many shares it may purchase as a result of the nonexercise of the
management option plan. The buyer shall exercise this right to buy,
in writing, within six (6) months of receiving the seller's
notification. The shares in question shall be transferred, in
writing, within four weeks of receipt of the written exercise of the
right to buy on the part of the buyer.
10.4 The seller shall have the right to sell to the buyer the shares in
the limited partnership that were not sold to the executives in
connection with the management option plan. The purchase price to be
paid by the buyer per DM 100.00 of each limited partner share shall
be equal to the product of 0.04 percent of the EBITA of the limited
partnership (profits before interest, corporate income taxes, and
depreciations) in the fiscal year in which the option is exercised
pursuant to ss. 10.4, multiplied by a factor of 3.5. This option may
be exercised only within two weeks upon termination of the seller's
employment contract with the limited liability company. The buyer
shall be notified, in writing, that this option will be exercised.
The shares in question shall be transferred in writing within four
weeks of receipt of the notification.
The purchase price shall be due and payable within eight (8) days of
the date of the annual financial statement.
10.5 The parties hereby approve the transfers of the limited partner
shares in accordance with the provisions of this ss. 10. The approvals
of both the limited liability company in its capacity as the general
partner and the limited partnership are attached to this agreement as
Appendices 10.5 a) and b) as evidence.
SS. 11
FINANCIAL STATEMENTS
The companies shall prepare the annual financial statements for fiscal year
1997 on the basis of the accounting principles utilized to prepare the annual
financial statements in preceding years.
SS. 12
DISTRIBUTION OF THE CREDIT BALANCES IN THE PARTNER OFFSET ACCOUNTS
The seller's credit balance in his partner offset account shall be paid in
accordance with the situation of the companies in terms of liquidity. The
extent of the required liquidity shall be calculated on the basis of ss.
5.2.16. Subject to ss. 12 sentence 1 of this agreement, DM 500,000.00 shall be
paid to the seller as an advance payment two weeks after the effective date of
transfer of the shares in the companies in the form of a withdrawal from his
partner offset account. The seller may request payment of the remaining credit
balance in his partner offset account, taking into account the situation of
the company in terms of liquidity, two weeks after the annual financial
statement for 1997 is completed and after the profits have been distributed
pursuant to ss. 2.1. Payment of the seller's credit balance in his offset
account, which derives from profits achieved in years preceding the date of
this agreement, shall have priority over other payments related to partner
offset accounts.
SS. 13
BUNDESKARTELLAMT
The buyer shall, at his expense, notify the Bundeskartellamt [Federal Cartel
Authority] of the impending merger, to the extent necessary. The buyer
warrants that there is no obligation to report the merger.
SS. 14
CONFIDENTIALITY
14.1 The parties to this agreement shall maintain strict confidentiality
with regard to the conclusion of this agreement and the provisions
thereunder, unless disclosure relative to third parties is required
by law or the applicable rules of a stock exchange or is necessary to
adequately inform the employees of the companies and their elected
representatives.
14.2 The buyer shall not use any knowledge of the companies' business
activities that was gained during "due diligence" to the detriment of
the companies.
14.3 The parties to this agreement shall discuss any and all press
releases.
SS. 15
RELEASE
The buyer and the seller shall jointly work to ensure that the seller is
released from the guarantees he furnished to the banks that granted loans to
the companies.
SS. 16
COSTS, MISCELLANEOUS PROVISIONS
16.1 The costs of certification of this agreement, if any, shall be borne
by the buyer. Any and all other costs shall be distributed in
accordance with the agreement of 10/16/97, which is attached to this
agreement as Appendix 16.1. Unless stipulated otherwise in both this
agreement and the agreement of 10/16/97, each party to this agreement
shall be responsible for the costs incurred by him or it,
respectively.
16.2 Any and all appendices to this agreement shall form an integral part
thereof, to the extent that they do not serve merely as evidence. The
parties to this agreement advise that the articles of incorporation
of the limited partnership were modified prior to the conclusion of
this agreement. See Appendix 16.2, which is attached to this
agreement as evidence.
16.3 Any modifications of and supplements to this agreement shall be made
in writing, unless the applicable laws set forth more stringent
requirements.
16.4 This agreement represents the entire agreement between the parties.
Any and all earlier agreements between the parties are voided hereby.
16.5 The current or future ineffectiveness of any provisions of this
agreement shall not affect the effectiveness of the remaining
provisions of the agreement. The same shall apply to lacunae, if any.
The parties shall replace the ineffective provision or shall close
the lacuna by a provision which, to the extent permissible in law,
approximates as closely as possible the original intent of the
parties to this agreement.
16.6 This agreement shall be subject to German law.
Record book Nr. Z 851/1997
/seal/
NEGOTIATED
IN FRANKFURT AM MAIN ON NOVEMBER 13, 1997
Before me, the undersigned notary public
▇▇▇▇▇ ZATZSCH
in the district of the Oberlandesgerichts [higher regional court]
Frankfurt am Main with official residence in Frankfurt am Main
appeared today:
1. ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Citizen of Germany
business residence ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇-▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
identity proven on the basis of his valid official identity card of the
Federal Republic of Germany bearing a photograph
2. ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Citizen of Switzerland
business residence in Geschaftshaus Wasserschloss, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇-▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
identity proven on the basis of his valid official identity card of
the Swiss Confederation bearing a photograph
hereinafter acting not in his own name, but for
IAT Multimedia, Inc., Geschaftshaus Wasserschloss,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
on the basis of a written power of attorney, presented as facsimile
copy at the notarization, whose original Mr. Grissemann promised to
file subsequently and which will be attached as enclosure to this
record.
This premised, the parties requested the certification of the Agreement of the
purchase and the transfer of limited liability company shares and of a limited
partnership ("Purchase Agreement"), attached in Appendix I hereto, and the
Appendices referred to in the Purchase Agreement whose content shall become
part of the declaration of intention of the parties.
The Appendices 1.6 a) to d), 3.8, 4.2 a), 9.6 a) and b), 10.5 a) and b) as well
as 16.2 of the Purchase Agreement are enclosed to the Purchase Agreement solely
for the purpose of evidence.
The parties declare that the limited liability company possesses no real estate
property.
The notary public pointed out to the parties that
- the parties are jointly liable for the costs of this certificate
without prejudice to the regulations in this certificate;
- he is bound according to ss. 54 EstDV [Einkommensteuer-
Durchfuhrungsverordnung -- income tax implementing regulation] to
present a copy of this certificate to the fiscal authorities.
The aforementioned negotiation including the Appendices (with the exclusion of
the Appendices attached to the Purchase Agreement solely for the purpose of
evidence 1.6 a) to d), 3.8, 4.2 a), 9.6 a) and b), 10.5 a) and b) as well as
16.2) were read aloud to the persons appearing in the presence of the notary
public, were approved by them and signed in person by them and the notary
public as follows:
/signature/ /signature/
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
/signature/
▇▇▇▇▇ Zatzsch, notary public
/stamp/
APPENDICES
Appendix 1.6 a) Approval of the limited partnership regarding the
transfer of shares
Appendix 1.6 b) Approval of the limited liability company regarding
the transfer of shares
Appendix 1.6 c) Written approval of the
Mittelstands-Beteiligungsgesellschaft Rheinland Pfalz mbH
Appendix 1.6 d) Written confirmation of the Kreissparkasse ▇▇▇▇▇
regarding the release of the lien
Appendix 3.8 Bank guaranty
Appendices 4.2 a) Interim financial statement as of 09/30/97
Appendix 4.2 b) Text of the confirmation of the auditors, which is
to be revised, regarding the interim financial statement per
09/30/97
Appendix 4.3 a) Enumeration of the employment or work contracts that
stipulate an annual compensation in excess of DM 100,000.00;
enumeration of the shop agreements, agreements concerning a
reconciliation of interests, and social plans, as well as special
union contracts, if any
Appendix 4.3 b) Enumeration of the licensing and other agreements
regarding industrial property rights that stipulate, in
individual cases, license payments of more than DM 25,000.00 per
year
Appendix 4.3 c) Enumeration of the agreements with customers and/or
suppliers that stipulate an annual business volume in excess of
DM 100,000.00 in each case, as well as any agreements that do not
stipulate the usual special discounts, cash discounts, trade
discounts, advance payments, or allowances for advertising costs
Appendix 4.3 d) Enumeration of the rental and lease agreements,
provided the annual rent or lease exceeds DM 24,000.00
(excluding value-added tax)
Appendix 4.3 e) Enumeration of the obligations under loans,
guarantees, bills, warranty obligations, and collateral of any
type, as well as any and all bank loans and loans granted to a
third party by one of the companies
Appendix 4.3 f) Enumeration of the agreements with sales
representatives and authorized dealers
Appendix 4.3 g) Enumeration of the agreements of the company
stipulating
obligations relative to the seller or persons related to him
(ss. 15 AO) or relative to companies in which one or more of these
persons has an interest that exceeds five (5) percent
Appendix 4.3 h) Enumeration of the agreements or obligations that
entail liabilities for the companies, individually or
cumulatively, in excess of DM 100,000.00 overall per year or that
stipulate services to be rendered beyond 01/01/2000, provided
these agreements have not been enumerated in any of the other
appendices listed herein
Appendix 4.3 i) Enumeration of the agreements concerning the
creation of a silent partnership
Appendix 5.2.6 Enumeration of the industrial property rights
Appendix 9.6 a) Approval of the limited liability company regarding
the transfer of the limited partner shares in connection with the
option pursuant to ss. 9
Appendix 9.6 b) Approval of the limited partnership regarding the
transfer of limited partner shares in connection with the option
pursuant to ss. 9
Appendix 10.5 a) Approval of the limited liability company regarding
the transfer of limited partner shares in connection with the
management option
Appendix 10.5 b) Approval of the limited partnership regarding the
transfer of limited partner shares in connection with the
management option
Appendix 16.1 Agreement regarding the allocation of costs
Appendix 16.2 Modification of the limited partnership agreement