EXHIBIT 10.33
___________________________________________________________________________
STOCK PURCHASE AGREEMENT
by and between
COMMUNICADE INC.
and
SPRAY VENTURES AB
___________________________________________________________________________
Dated as of October 1, 1998
TABLE OF CONTENTS
ARTICLE I
SALE OF THE PURCHASED SHARES
Section 1.1 Sale of the Purchased Shares................................... 1
ARTICLE II
PURCHASE PRICE AND CLOSING
Section 2.1 Purchase Price................................................. 2
2.1.1 Calculation of Purchase Price.................................. 2
Section 2.2 Payment of the Purchase Price.................................. 2
Section 2.3 Closing........................................................ 2
ARTICLE III
REPRESENTATIONS OF THE STOCKHOLDER
Section 3.1 Execution and Validity of Agreements; Restrictive Documents.... 2
3.1.1 Execution and Validity......................................... 3
3.1.2 Stock Ownership................................................ 3
3.1.3 No Options..................................................... 3
3.1.4 No Restrictions................................................ 3
Section 3.2 Existence...................................................... 3
Section 3.3 Subsidiaries and Investments; Capital Stock.................... 3
3.3.1 Subsidiaries and Investments................................... 3
3.3.2 Capital Stock.................................................. 4
Section 3.4 Financial Statements and No Material Changes................... 4
Section 3.5 Books and Records.............................................. 5
Section 3.6 Title to Properties; Encumbrances.............................. 5
Section 3.7 Real Property.................................................. 5
3.7.1 Owned Real Property............................................ 5
3.7.2 Leased Real Property........................................... 5
Section 3.8 Contracts...................................................... 6
Section 3.9 Non-Contravention; Approvals and Consents...................... 7
3.9.1 Non-Contravention.............................................. 7
3.9.2 Approvals and Consents......................................... 7
Section 3.10 Litigation..................................................... 7
Section 3.11 Taxes.......................................................... 8
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Section 3.12 Liabilities.................................................. 8
Section 3.13 Insurance.................................................... 8
Section 3.14 Intellectual Properties...................................... 8
3.14.1 Definitions.................................................. 9
3.14.2 Representations.............................................. 9
Section 3.15 Compliance with Laws; Licenses and Permits................... 10
3.15.1 Compliance................................................... 10
3.15.2 Licenses..................................................... 10
Section 3.16 Client Relations............................................. 10
Section 3.17 Accounts Receivable; Work-in-Process; Accounts Payable....... 11
Section 3.18 Employment Relations......................................... 11
Section 3.19 Employee Benefit Matters..................................... 11
Section 3.20 Interests in Customers, Suppliers, Etc....................... 11
Section 3.21 Bank Accounts and Powers of Attorney......................... 12
Section 3.22 Compensation of Employees.................................... 12
Section 3.23 No Changes Since the Balance Sheet Date...................... 12
Section 3.24 Corporate Controls........................................... 13
Section 3.25 Brokers...................................................... 13
Section 3.26 Disclosure................................................... 13
ARTICLE IV
REPRESENTATIONS OF THE PURCHASER
Section 4.1 Existence and Good Standing................................... 14
Section 4.2 Execution and Validity of Agreement........................... 14
Section 4.3 Non-Contravention; Approvals and Consents..................... 14
4.3.1 Non-Contravention............................................. 14
4.3.2 Approvals and Consents........................................ 14
Section 4.4 Brokers....................................................... 15
Section 4.5 Disclosure.................................................... 15
ARTICLE V
MUTUAL COVENANTS
Section 5.1 Best Efforts.................................................. 15
Section 5.2 Conduct of Business Pending the Closing....................... 15
Section 5.3 Access to Information......................................... 17
Section 5.4 Notices of Certain Events..................................... 17
Section 5.5 No Solicitation............................................... 20
Section 5.6 Waiver of Lien on Purchased Shares............................ 20
Section 5.7 Fulfillment of Conditions..................................... 18
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ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PURCHASER
Section 6.1 Representations and Warranties................................ 19
Section 6.2 Performance................................................... 19
Section 6.3 Certified Resolutions......................................... 19
Section 6.4 Certified Charter Documents................................... 19
Section 6.5 Surrender and Issuance of Certificates........................ 19
Section 6.6 No Injunctions or Restraints.................................. 19
Section 6.7 Simultaneous Closings......................................... 20
Section 6.8 Stockholders Agreement........................................ 20
Section 6.9 Proceedings................................................... 19
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE STOCKHOLDER
Section 7.1 Representations and Warranties................................ 20
Section 7.2 Good Standing Certificates.................................... 20
Section 7.3 Performance................................................... 20
Section 7.4 Certified Resolutions......................................... 20
Section 7.5 No Injunctions or Restraints.................................. 20
Section 7.6 Simultaneous Closings......................................... 21
Section 7.7 Stockholders Agreement........................................ 21
Section 7.8 Proceedings................................................... 21
ARTICLE VIII
SURVIVAL; INDEMNITY
Section 8.1 Survival...................................................... 21
Section 8.2 Obligation of the Stockholder to Indemnify.................... 21
Section 8.3 Obligation of the Purchaser to Indemnify...................... 22
Section 8.4 Indemnification Procedure for Third Party Claims.............. 22
Section 8.5 Limitations on Indemnification................................ 24
8.5.1 Indemnity Cushion and Cap..................................... 24
8.5.2 Termination of Indemnification Obligations of the Stockholder. 24
8.5.3 Termination of Indemnification Obligations of the Purchaser... 26
8.5.4 Treatment..................................................... 26
8.5.5 Tax Effects................................................... 26
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8.5.6 Exceptions................................................... 26
8.5.7 Control by Omnicom........................................... 26
ARTICLE IX
TERMINATION
Section 9.1 Grounds for Termination...................................... 26
Section 9.2 Effect of Termination........................................ 27
ARTICLE X
MISCELLANEOUS
Section 10.1 Expenses..................................................... 27
Section 10.2 Governing Law................................................ 27
Section 10.3 Arbitration.................................................. 27
Section 10.4 Person Defined............................................... 28
Section 10.5 Knowledge Defined............................................ 28
Section 10.6 Affiliate Defined............................................ 28
Section 10.7 Captions..................................................... 28
Section 10.8 Publicity.................................................... 28
Section 10.9 Notices...................................................... 28
Section 10.10 Parties in Interest.......................................... 29
Section 10.11 Severability................................................. 29
Section 10.12 Counterparts................................................. 29
Section 10.13 Entire Agreement............................................. 30
Section 10.14 Amendments................................................... 30
Section 10.15 Third Party Beneficiaries.................................... 30
Section 10.16 Use of Terms................................................. 30
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INDEX OF DEFINED TERMS
----------------------
Acquisition Transaction................................................... 18
Affiliate................................................................. 28
Agreement................................................................. 1
Balance Sheet............................................................. 4
Balance Sheet Date........................................................ 5
Closing................................................................... 2
Closing Date.............................................................. 2
Company................................................................... 1
Dachis.................................................................... 1
Defense Counsel........................................................... 23
Defense Notice............................................................ 23
Effective Date............................................................ 1
Environmental Laws and Orders............................................. 10
GAAP...................................................................... 4
Governmental or Regulatory Authority...................................... 7
Group..................................................................... 22
Indemnified Party......................................................... 23
Indemnifying Party........................................................ 23
Instruments............................................................... 7
Intellectual Property..................................................... 9
Intellectual Property of the Company...................................... 9
Kanarick.................................................................. 1
Knowledge................................................................. 28
Laws...................................................................... 7
Liabilities............................................................... 8
Licenses.................................................................. 10
Liens..................................................................... 3
Losses.................................................................... 22
Material Adverse Effect................................................... 10
Omnicom................................................................... 1
Options................................................................... 3
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Orders.................................................................... 7
Person.................................................................... 28
Plans..................................................................... 12
Purchase Price............................................................ 2
Purchased Shares.......................................................... 1
Purchaser................................................................. 1
Purchaser Indemnified Parties............................................. 22
Razorfish................................................................. 1
Real Property Leases...................................................... 5
Related Group............................................................. 12
Shares.................................................................... 1
Stockholder............................................................... 1
Stockholder Indemnified Parties........................................... 23
Stockholders Agreement.................................................... 1
Subscription and Exchange Agreement....................................... 1
Subsidiary................................................................ 3
Taxes..................................................................... 8
Third Party Claim......................................................... 23
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EXHIBITS
--------
Exhibit A Stockholder Certificate
Exhibit B Purchaser Certificate
Exhibit C Stockholders Agreement
SCHEDULES
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Schedule 3.3.1 Subsidiaries
Schedule 3.4(A) Financial Changes and No Material Changes
Schedule 3.4(B) GAAP Exceptions
Schedule 3.7.2 Leased Real Property
Schedule 3.8 Contracts
Schedule 3.14 Intellectual Properties
Schedule 3.16 Client Relations
Schedule 3.19 Employee Benefit Matters
Schedule 3.20 Interests in Customers, Suppliers, Etc.
Schedule 3.21 Bank Accounts and Powers of Attorney
Schedule 3.22 Compensation of Employees
Schedule 3.23 No Changes Since the Balance Sheet Date
vii
STOCK PURCHASE AGREEMENT
------------------------
STOCK PURCHASE AGREEMENT (the "AGREEMENT") dated October 23, 1998 and
effective as of October 1, 1998 (the "EFFECTIVE DATE"), by and among COMMUNICADE
INC., a Delaware corporation (the "PURCHASER"), a wholly-owned subsidiary of
Omnicom Group Inc., a New York corporation ("OMNICOM"), and SPRAY VENTURES AB, a
corporation organized and existing under the laws of the Kingdom of Sweden with
identification number 556506-7997 (the "STOCKHOLDER").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Stockholder owns 2,815 shares representing 100% of the issued
and outstanding shares of common stock, nominal value SEK 100 per share (the
"SHARES"), of Spray Network AB, a corporation incorporated under the laws of the
Kingdom of Sweden with identification number 556503-3247 (the "COMPANY");
WHEREAS, the Stockholder desires to sell, and the Purchaser desires to
purchase 563 Shares representing 20% of the issued and outstanding Shares as of
the date hereof (the "PURCHASED SHARES") pursuant to the provisions of this
Agreement; and
WHEREAS, simultaneous with the execution and delivery of this Agreement and
the sale of the Purchased Shares: (i) the Purchaser shall purchase additional
shares of Razorfish, Inc., a Delaware corporation ("RAZORFISH"), from ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ ("DACHIS") and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("KANARICK"), increasing the Purchaser's
ownership interest in Razorfish, (ii) the Stockholder, the Company, the
Purchaser and Razorfish shall enter into a subscription and exchange agreement
(the "SUBSCRIPTION AND EXCHANGE AGREEMENT") pursuant to which Razorfish will
purchase all of the issued and outstanding shares of capital stock of the
Company, and (iii) Razorfish, the Purchaser, the Stockholder, Dachis and
Kanarick shall enter into a stockholders agreement (the "STOCKHOLDERS
AGREEMENT") with respect to Razorfish;
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 II
SALE OF THE PURCHASED SHARES
----------------------------
SECTION 1.1 Sale of the Purchased Shares. Subject to the terms and
----------------------------
conditions herein stated, the Stockholder agrees to sell, assign, transfer and
deliver to the Purchaser on the Closing Date (as defined in Section 2.3), and
the Purchaser agrees to purchase from the Stockholder on the Closing Date, the
Purchased Shares. All certificates representing the Purchased Shares shall
be duly endorsed by the Stockholder transferring the same, with all necessary
transfer tax and other revenue stamps, acquired at the Stockholder's expense,
affixed and canceled.
ARTICLE II
PURCHASE PRICE AND CLOSING
--------------------------
SECTION 2.1 Purchase Price.
--------------
2.1.1 Calculation of Purchase Price. In full consideration for the
-----------------------------
purchase by the Purchaser of the Purchased Shares, the purchase price of
US$12,000,000 (the "PURCHASE PRICE") shall be paid by the Purchaser at the
Closing.
SECTION 2.2 PAYMENT OF THE PURCHASE PRICE. Payment of the Purchase Price
-----------------------------
shall be made by the Purchaser by direct wire transfer to the account of the
Stockholder pursuant to the written instructions of the Stockholder.
SECTION 2.3 CLOSING. The Closing under this Agreement (the "CLOSING")
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shall take place at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 A.M. on the date when each of the
conditions set forth in Articles VI and VII have been satisfied. The date of
such Closing is herein referred to as the "CLOSING DATE".
ARTICLE III
REPRESENTATIONS OF THE STOCKHOLDER
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A. The Stockholder represents, warrants and agrees to and with the
Purchaser, as follows:
SECTION 3.1 Execution and Validity of Agreements; Restrictive Documents.
2
3.1.1 Execution and Validity. The Stockholder has the full legal right and
----------------------
capacity to enter into this Agreement and to perform its obligations hereunder.
This Agreement has been duly and validly executed and delivered by the
Stockholder and, assuming due authorization, execution and delivery by the
Purchaser, constitutes a legal, valid and binding obligation of the Stockholder,
enforceable against the Stockholder in accordance with its terms.
3.1.2 Stock Ownership. The Stockholder is the legal and beneficial owner
---------------
of the Shares and all of such Shares have been duly and validly authorized and
issued and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof, except as such liability
may be imposed pursuant to applicable laws, and such ownership is free and clear
of all mortgages, pledges, liens, levies, security interests, leases,
encumbrances, claims, charges, any conditional sale agreement or other title
retention agreement and restrictions of any kind or character (collectively,
"LIENS").
3.1.3 No Options. There are no outstanding subscriptions, options, rights
----------
(including "phantom stock rights"), warrants, calls, commitments,
understandings, arrangements, plans or other agreements of any kind
(collectively, "OPTIONS"), to acquire any Shares from the Stockholder and there
are no agreements or understandings with respect to the sale or transfer of any
Shares by the Stockholder.
3.1.4 No Restrictions. There is no suit, action, claim, investigation or
---------------
inquiry by any Governmental or Regulatory Authority (as defined in Section 3.1.5
below), and no legal, administrative or arbitration proceeding pending or, to
the Stockholder's knowledge, threatened against the Stockholder or any of the
Stockholder's 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 Stockholder in connection with the transactions contemplated
hereby.
SECTION 3.2 EXISTENCE. The Company is duly formed and organized and
---------
validly subsisting under the laws of the Kingdom of Sweden, 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 and as
such business is now being conducted.
SECTION 3.3 SUBSIDIARIES AND INVESTMENTS; CAPITAL STOCK.
-------------------------------------------
3.3.1 Subsidiaries and Investments. The term "SUBSIDIARY" as used in the
----------------------------
Agreement shall mean any Person in which the Company, directly or indirectly
through subsidiaries or otherwise, beneficially owns or controls fifty percent
or more of either the equity interests in, or the voting control of, such Person
(as defined in Section 10.4 below). SCHEDULE 3.3.1 contains a true and complete
list of all of the Company's Subsidiaries. Except as set forth in SCHEDULE
3.3.1, neither the Company nor any Subsidiary owns any capital stock or other
equity or ownership or proprietary interest in any corporation, partnership,
limited liability company, trust, joint venture or other entity (other than
investments of publicly traded debt and equity securities held for investment).
SCHEDULE 3.3.1 also sets forth the name, jurisdiction of organization and
number of outstanding shares of each of the Subsidiaries, and a list of all of
the stockholders of each Subsidiary (indicating the number of shares owned by
each such stockholder). The Company or
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another Subsidiary owns of record and beneficially and has valid title to that
percentage of the issued and outstanding shares of capital stock of each
Subsidiary as set forth on SCHEDULE 3.3.1, free and clear of any Lien. Each
Subsidiary is a corporation or limited liability entity and is duly incorporated
or formed and organized, validly existing and in good standing under the laws of
its jurisdiction of organization, with the full corporate power and authority to
own its properties 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. Except as set forth on SCHEDULE 3.3.1, no Subsidiary has been
incorporated outside of Sweden. No Subsidiary has any employees, leases or owns
any real property or maintains any bank accounts outside of its jurisdiction of
incorporation. All of the outstanding shares of capital stock of or equity
interest in each Subsidiary have been duly authorized and validly issued (if
such interests are of a kind that is issued or certificated) and are fully paid
and non-assessable, and have not been issued in violation of any preemptive
rights of stockholders or other equity interest holders. Except as set forth on
SCHEDULE 3.3.1, there are no (a) outstanding Options obligating the Company or
any Subsidiary to purchase, issue or sell any shares of the capital stock of any
Subsidiary or other entity in which the Company or one of its Subsidiaries owns
an equity interest or outstanding agreement or commitment to grant, extend or
enter into any Option with respect thereto or (b) voting trusts, proxies or
other commitments, understandings, restrictions or arrangements in favor of any
Person other than the Company or a Subsidiary with respect to the voting of or
the right to participate in dividends or other earnings on any capital stock of,
or any other equity interest in, any Subsidiary.
3.3.2 Capital Stock. The Company has an authorized capitalization
-------------
consisting of 2,815 shares of common stock, nominal value SEK 100 per share, of
which 2,815 shares are issued and outstanding. All such shares have been duly
authorized and validly issued, are fully paid and non-assessable, and have not
been issued in violation of any preemptive rights of stockholders. No other
class of capital stock of the Company is authorized or outstanding. There are no
outstanding Options providing for the purchase, issuance or sale of any shares
of the capital stock of the Company by the Company or any Subsidiary. Neither
the Company nor any of its Subsidiaries has at any time acquired any of its
capital stock.
SECTION 3.4 Financial Statements and No Material Changes. Schedule
--------------------------------------------
3.4(A) sets forth the following: (a) an audited consolidated balance sheet of
the Company and its subsidiaries as at December 31, 1997 and the related audited
consolidated statement of income for the calendar year then ended reported on by
Deloitte & Touche, and (b) an audited consolidated balance sheet of the Company
and its subsidiaries as at June 30, 1998 (the "Balance Sheet") and the related
consolidated statement of income for the six months then ended. Such financial
statements have been prepared in accordance with Swedish generally accepted
accounting principals, consistently applied ("GAAP"), throughout the periods
indicated, except as set forth on Schedule 3.4(B) hereto. Each consolidated
balance sheet fairly presents the financial condition of the Company and its
subsidiaries at the respective date thereof and reflects all claims against and
all debts and liabilities of the Company and its subsidiaries, fixed or
contingent, as of the date thereof, required to be shown thereon under GAAP, and
the related consolidated statement of income accurately present the results of
operations of the Company and its subsidiaries for the respective periods
indicated. Since June 30, 1998 (the "Balance Sheet Date"), there has been no
material adverse change in the assets or liabilities, or in the business or
4
condition, financial or otherwise, or in the results of operations of the
Company and its subsidiaries taken as a whole.
SECTION 3.5 BOOKS AND RECORDS. All accounts, books, ledgers and other
-----------------
records material to the Company and its Subsidiaries of whatsoever kind have
been properly and accurately kept and completed in all material respects, and
there are no material inaccuracies or discrepancies of any kind contained or
reflected therein. The Company and each of its Subsidiaries has unrestricted
access to all records of the Company or such Subsidiary, including without
limitation, any accountant's work papers.
SECTION 3.6 TITLE TO PROPERTIES; ENCUMBRANCES. The Company and its
---------------------------------
Subsidiaries have 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 Balance Sheet, and
(b) all the properties and assets purchased or otherwise contracted for by the
Company and its Subsidiaries since the Balance Sheet Date (except for properties
and assets reflected in the Balance Sheet or acquired or otherwise contracted
for since the Balance Sheet Date that have been sold or otherwise disposed of in
the ordinary course of business), in each case free and clear of all Liens,
except for such Liens which, individually or in the aggregate, will not have a
Material Adverse Effect (as defined in Section 3.15.1) on such properties or
assets, or on the Company's use or enjoyment thereof. The property and equipment
owned or otherwise contracted for by the Company or any Subsidiary is in a state
of good maintenance and repair (ordinary wear and tear excepted) and is adequate
and suitable for the purposes for which they are presently being used.
SECTION 3.7 REAL PROPERTY.
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3.7.1 Owned Real Property. Neither the Company nor any Subsidiary owns any
-------------------
real property (including ground leases) or holds any option or right of first
refusal or first offer to acquire any real property, and neither the Company nor
any Subsidiary is 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, subleases, licenses and other
occupancy agreements, including without limitation, any modification, amendment
or supplement thereto and any other related document or agreement executed or
entered into by the Company or any Subsidiary (each individually, a "REAL
PROPERTY LEASE" and collectively, the "REAL PROPERTY LEASES") to which the
Company or any Subsidiary is a party (including, without limitation, any Real
Property Leases which the Company or any Subsidiary has subleased or assigned to
another Person and as to which the Company or any Subsidiary 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, binding and in full force and effect;
(b) all rents and additional rents and other sums, expenses and charges due to
date have been paid thereon; (c) the lessee has been in peaceable possession
since the commencement of the original term thereof; (d) no waiver, indulgence
or postponement of the lessee's obligations thereunder has been granted by the
lessor; (e) there exists no default or event of default by the
5
Company or any Subsidiary or to the knowledge of the Stockholder, by any other
party thereto; (f) there exists no occurrence, condition or act (including the
purchase of the Purchased 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 or any Subsidiary
thereunder; and (g) there are no outstanding claims of breach or indemnification
or notice of default or termination thereunder. The Company and its Subsidiaries
hold the leasehold estate on all Real Property Leases free and clear of all
Liens, except the liens of any mortgagee of the real property in which such
leasehold estate is located.
SECTION 3.8 CONTRACTS. SCHEDULE 3.8 hereto contains an accurate and
---------
complete list of the following agreements, contracts and commitments to which
the Company or any Subsidiary is a party: (a) any agreement, contract or
commitment, other than employment agreements, which involves SEK 500,000 or
which is for a term of longer than one year and is not cancelable by the Company
or any Subsidiary without financial or other obligation within 90 days; (b) any
agreement, contract or commitment relating to the making of a loan or advance to
or investment in, any other Person; (c) any agreement, instrument or arrangement
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 negotiable instruments for
collection in the ordinary course of business), conditional sale, purchase or
otherwise; (d) any agreement, contract or commitment limiting the Company's or
any Subsidiary's freedom to engage in any line of business or to compete with
any other Person, including agreements limiting the ability of the Company, any
Subsidiary or any of their respective affiliates (as defined in Section 10.6
below) to service competitive accounts during or after the term thereof; (e) any
collective bargaining or union agreement; (f) any agreement, contract or
commitment with any of its officers or directors or any stockholder of the
Company or any of its Subsidiaries (including indemnification agreements); (g)
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); (h) any agreement with respect
to any Intellectual Property of the Company or any Subsidiary (as defined in
Section 3.14 below) other than "shrink-wrap" and similar end-user licenses; (i)
any agreement with a client required to be listed on SCHEDULE 3.16; (j) any
agreement, indenture or other instrument which contains restrictions with
respect to the payment of dividends or other distributions in respect of the
Shares; and (k) any joint venture agreement involving a sharing of profits not
covered by clauses (a) through (j) above. 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 agreement, contract and commitment of the Company and its
Subsidiaries, including without limitation, those 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 any Subsidiary or to the knowledge of the
Stockholder, by any other party, or occurrence, condition, or act (including the
purchase of the Purchased 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 any Subsidiary, and
there are no outstanding claims of breach or indemnification or notice of
default or termination of any such agreement, contract and commitment.
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SECTION 3.9 NON-CONTRAVENTION; APPROVALS AND CONSENTS.
-----------------------------------------
3.9.1 Non-Contravention. The execution, delivery and performance by the
-----------------
Stockholder 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 of the Company or
the Stockholder, any charter documents of any Subsidiary or any resolution
adopted by the stockholders or board of directors of the Company, any Subsidiary
or the Stockholder, (b) result in the violation by the Stockholder, the Company
or any Subsidiary 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 Sweden, any foreign country or
any domestic or foreign state, county, city or other political subdivision (a
"GOVERNMENTAL OR REGULATORY AUTHORITY"), applicable to the Stockholder, the
Company or any Subsidiary or any of their respective assets or properties, 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
Stockholder, the Company or any Subsidiary 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 Stockholder, the Company or any
Subsidiary, 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 Stockholder, the Company or any
Subsidiary is a party or by which the Stockholder, the Company or any Subsidiary
or any of their respective assets or properties are bound.
3.9.2 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 Stockholder, the Company or any Subsidiary is a
party or by which their respective assets or properties are bound for the
execution and delivery of this Agreement by the Stockholder, the performance by
the Stockholder of its obligations hereunder or the consummation of the
transactions contemplated hereby.
SECTION 3.10 LITIGATION. There is no action, suit, proceeding at law or in
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equity by any Person, or any arbitration or any administrative or other
proceeding by or before (or to the knowledge of the Stockholder, any
investigation by) any Governmental or Regulatory Authority, pending or, to the
knowledge of the Stockholder, threatened, against the Company or any Subsidiary
with respect to this Agreement or the transactions contemplated hereby, or
against or affecting the Company or any Subsidiary or their properties or
rights; and no acts, facts, circumstances, events or conditions occurred or
exist which are a basis for any such action, proceeding or investigation.
Neither the Company nor any Subsidiary is subject to any Order entered in any
lawsuit or proceeding.
7
SECTION 3.11 TAXES. The Company and its Subsidiaries have filed, or
-----
caused to be filed within the times and within the manner prescribed by law, all
tax or information returns and tax reports required under all applicable
statutes, rules or regulations to be filed by the Company and its Subsidiaries
with respect to income, franchise, capital stock, employees' income withholding,
withholding on payments to foreign persons, social security, unemployment,
disability, real property, personal property, custom duties, sales, use, goods
and services, excise, transfer and other taxes (including but not limited to
interest, penalties or additions to tax in respect of the foregoing) whether
disputed or not (all of the foregoing collectively referred to as "TAXES"). All
Taxes shown on said returns to be due and all additional assessments received
prior to the date hereof have been paid. The amounts set up as accruals for
Taxes on the financial statements of the Company or any of its Subsidiaries
referred to in Section 3.4 hereof are sufficient for the payment of all accrued
and unpaid Taxes of the Company and its Subsidiaries whether or not disputed,
for all periods ended on and prior to the respective dates thereof. Neither the
Company nor any Subsidiary has received notice of any proposed audit or
reassessment from any taxing authorities and no examination by the appropriate
taxing authority of any return of the Company or any Subsidiary is currently in
progress. No deficiency in the payment of Taxes by the Company or any Subsidiary
for any period has been asserted in writing by any taxing authority and remains
unsettled at the date of this Agreement. There are no outstanding agreements or
waivers extending the statutory period of limitation for assessment applicable
to any tax return of the Company or any Subsidiary.
SECTION 3.12 LIABILITIES. Except as set forth in the Balance Sheet,
-----------
neither the Company nor any Subsidiary has 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 other agreements, leases,
licenses, arrangements and commitments of the type required to be disclosed by
the Stockholder on any Schedule and so disclosed or which because of the dollar
amount or other qualifications are not required to be listed on such Schedule;
and (c) Liabilities incurred in the ordinary course of business and consistent
with past practice since the Balance Sheet Date not involving borrowings by the
Company or any Subsidiary.
SECTION 3.13 INSURANCE. All insurance policies (including life insurance)
---------
or binders maintained by the Company or any Subsidiary are in full force and
effect and all premiums that have become due have been currently paid. None of
such policies shall lapse or terminate by reason of the transactions
contemplated hereby. Neither the Company nor any Subsidiary has received any
notice of cancellation or non-renewal of any such policy or binder. Within the
last two years neither the Company nor any Subsidiary has filed for any claims
exceeding SEK 200,000 against any of its insurance policies, exclusive of
automobile policies.
SECTION 3.14 INTELLECTUAL PROPERTIES.
-----------------------
8
3.14.1 Definitions. For purposes of this Agreement, the following terms
-----------
have the following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following and all
---------------------
rights associated therewith: (a) all domestic and foreign 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 (if registered outside of Sweden), and all other rights corresponding
thereto throughout the world; (d) all mask works, mask work registrations and
applications therefor; (e) all industrial designs/patterns and any registrations
and applications therefor; (f) all trade names, business names, logos,
registered and unregistered 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 that: (a) is owned by or exclusively licensed to the Company or any
Subsidiary, or (b) which is necessary to the operation of the Company or any
Subsidiary, including the design, manufacture and use of the products of the
Company or any Subsidiary as it currently is operated or is reasonably
anticipated to be operated in the future, but shall specifically not include any
rights in or to materials created for clients as "work-made-for-hire" or which
are subject to an exclusive assignment or license in favor of clients of the
Company or any Subsidiary.
3.14.2 Representations. All registered Intellectual Property is listed on
---------------
SCHEDULE 3.14. Except as set forth on SCHEDULE 3.14, all registrations with
respect to such Intellectual Property are valid and subsisting, all necessary
registration and 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 in Sweden (except for copyright) or other jurisdiction for the
purposes of maintaining such Intellectual Property registrations. Except as set
forth in SCHEDULE 3.14, (a) no Person has any rights to use any of the
Intellectual Property of the Company or any of its Subsidiaries; and (b) neither
the Company nor any Subsidiary has granted to any Person, or authorized any
Person to retain, any rights in the Intellectual Property of the Company or any
of its Subsidiaries. Except as set forth on SCHEDULE 3.14 and for "shrink wrap"
and similar commercial end-user licenses, the Company or one if its Subsidiaries
owns and has good and exclusive title to each item of Intellectual Property of
the Company or any of its Subsidiaries, free and clear of any Lien and the
Company or one if its Subsidiaries owns, or has the right, pursuant to a valid
contract to use or operate under, all other Intellectual Property of the Company
and any of its Subsidiaries. To the knowledge of the Stockholder, the operation
of the business of the Company and its Subsidiaries as it currently is conducted
does not infringe the Intellectual Property of any other Person, and neither the
Company nor any Subsidiary has received notice from any Person that the
operation of its business infringes the Intellectual Property of any Person.
There are no contracts, licenses
9
and agreements between the Company or one of its Subsidiaries and any other
Person with respect to the Intellectual Property of the Company or any of its
Subsidiaries in respect of which there is any dispute known to the Company or
one if its Subsidiaries regarding the scope of such agreement, or performance
under such agreement, including with respect to any payments to be made or
received by the Company or any Subsidiary. To the knowledge of the Stockholder,
no Person is infringing, misappropriating or opposing any of the Intellectual
Property of the Company or its Subsidiaries.
SECTION 3.15 COMPLIANCE WITH LAWS; LICENSES AND PERMITS.
------------------------------------------
3.15.1 Compliance. The Company and each of its Subsidiaries are, and their
----------
businesses have been conducted, in compliance with all applicable Laws and
Orders, except in each case (other than with respect to compliance with Laws and
Orders relating to the regulation or protection of the environment, hereinafter
referred to as "ENVIRONMENTAL LAWS AND ORDERS") where the failure to so comply
would not reasonably be expected to have a Material Adverse Effect (as defined
below), including without limitation: (a) all Laws and Orders promulgated by any
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. Neither the Company nor any Subsidiary has been
charged with, or, to the knowledge of the Stockholder, threatened with or under
any investigation with respect to, any charge concerning any violation of any
Laws or Orders. For purposes of this Agreement, "MATERIAL ADVERSE EFFECT" shall
mean any material and adverse effect on the condition (financial or otherwise),
liabilities, results of operations, assets, properties, prospects or business of
the Company and its Subsidiaries taken as a whole.
3.15.2 Licenses. The Company and its Subsidiaries have all licenses,
--------
permits and other governmental certificates, authorizations and approvals
(collectively, "LICENSES") required by any 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 Stockholder 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 for the Company
----------------
and its Subsidiaries taken as a whole the 10 largest clients (measured by
revenues) for the thirteen months ended September 30, 1998 and the revenues from
each such client and from all clients (in the aggregate) for the twelve months
ended December 31, 1997. No client of the Company or any Subsidiary has advised
the Company, any Subsidiary or the Stockholder in writing that it is (a)
terminating or considering terminating the handling of its business by the
Company or any Subsidiary as a whole or in respect of any particular product,
project or service, or (b) planning to reduce its future spending with the
Company or any Subsidiary in any material manner; and to the knowledge of the
Stockholder, no client has orally advised the Company, any Subsidiary or the
Stockholder of any of the foregoing events.
10
SECTION 3.17 ACCOUNTS RECEIVABLE; WORK-IN-PROCESS; ACCOUNTS PAYABLE. The
------------------------------------------------------
amount of all work-in-process, accounts receivable, unbilled invoices (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 and the Subsidiaries as being due to the Company or any Subsidiary and
reflected on the Balance Sheet represent or will represent valid obligations
arising from sales actually made or services actually performed in the ordinary
course of business and will be good and collectible in full (less the amount of
any provision, reserve or similar adjustment therefor reflected on the Balance
Sheet) in the ordinary course of business. There has been no material adverse
change since the Balance Sheet Date in the amount or aging of the work-in-
process, accounts receivable, unbilled invoices, or other debts due to the
Company or any Subsidiary, or the reserves with respect thereto, or accounts
payable of the Company and its Subsidiaries taken as a whole.
SECTION 3.18 EMPLOYMENT RELATIONS. (a) Neither the Company nor any
--------------------
Subsidiary is engaged in any unfair labor practice; (b) no unfair labor practice
complaint against the Company or any Subsidiary is pending before any
Governmental or Regulatory Authority; (c) there is no organized labor strike,
dispute, slowdown or stoppage actually pending or, to the knowledge of the
Stockholder, threatened against or involving the Company or any Subsidiary; (d)
no claim or grievance nor any arbitration proceeding arising out of or under any
collective bargaining agreement is pending and, to the knowledge of the
Stockholder, no such claim or grievance has been threatened; (e) neither the
Company nor any Subsidiary has any collective bargaining agreements nor is any
collective bargaining agreement currently being negotiated by the Company nor
any Subsidiary; and (f) neither the Company nor any Subsidiary has experienced
any work stoppage or similar organized labor dispute during the last three
years. There is no legal action, suit, proceeding or claim pending or, to the
knowledge of the Stockholder, threatened between the Company or any Subsidiary
and any of their employees, former employees, agents, former agents, job
applicants or any association or group of any of their employees.
SECTION 3.19 EMPLOYEE BENEFIT MATTERS. Set forth separately in Schedule
------------------------
3.19 is an accurate and complete list of all plans, contracts and agreements,
oral or written, including pension, profit sharing and other employee benefit
plans or agreements whereunder the Company or any Subsidiary has any obligations
(other than obligations to make current wage or salary payments terminable on
notice of 30 days or less or such greater period of notice required by law) to
its officers and employees or their beneficiaries, or whereunder any of such
persons owes money to the Company or any Subsidiary ("Plans"). All liabilities
under any pension, deferred compensation, profit sharing or employee benefit
plan of the Company or any Subsidiary were, as of the Balance Sheet Date, fully
funded or adequate therefore made on the Balance Sheet.
SECTION 3.20 INTERESTS IN CUSTOMERS, SUPPLIERS, ETC. Except as set forth
--------------------------------------
on Schedule 3.20, (x) neither the Stockholder nor any Person controlled by the
Stockholder nor (y) to the knowledge of the Stockholder (without making any
inquiry of any member of the Related Group, as hereinafter defined), any
officer, director, or employee of the Company or any Subsidiary, any parent,
brother, sister, child or spouse of any such officer, director or employee
(collectively, the "Related Group"), or any entity controlled by anyone in the
Related Group:
11
(i) with respect to officers and directors of the Stockholder and
the Company only, owns, directly or indirectly, any interest in
(excepting for ownership, directly or indirectly of less than 1/4 of
1% of the issued and outstanding shares of any class of securities of
a publicly held and traded company), or received or has any right to
receive 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 or any Subsidiary;
(ii) owns, directly or indirectly (other than through the ownership
of Shares), in whole or in part, any tangible or intangible property
(including, but not limited to Intellectual Property), that the
Company or any Subsidiary uses in the conduct of the business of the
Company or any Subsidiary, other than immaterial personal items owned
and used by employees at their work stations; or
(iii) has any cause of action or other claim whatsoever against, or
owes any amount to, the Company or any Subsidiary, 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.
SECTION 3.21 Bank Accounts and Powers of Attorney. Set forth in
------------------------------------
Schedule 3.21 is an accurate and complete list showing (a) the name of each bank
in which the Company or any Subsidiary 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 or any Subsidiary.
SECTION 3.22 Compensation of Employees. Schedule 3.22 is an accurate and
-------------------------
complete list showing: the names and positions of all employees and exclusive
consultants who are currently being compensated by the Company or any Subsidiary
with a salary or at an annualized rate of SEK 600,000 or more, together with a
statement of the current annual salary, and the material fringe benefits of such
employees and exclusive consultants not generally available to all employees of
the Company or its Subsidiaries. Neither the Company nor any Subsidiary has,
because of past practices or previous commitments with respect to its employees,
established any rights on the part of any of its employees to additional
compensation with respect to any period after the Closing Date (other than wage
increases in the ordinary course of business).
SECTION 3.23 No Changes Since the Balance Sheet Date. Since the Balance
---------------------------------------
Sheet Date except as specifically stated on Schedule 3.23, neither the Company
nor any Subsidiary has: (a) incurred any liability or obligation of any nature
(whether accrued, absolute, contingent or otherwise), except in the ordinary
course of business; (b) permitted any of its assets to be subjected to any Lien;
(c) sold, transferred or otherwise disposed of any assets except in the ordinary
course of business; (d) made any capital expenditure or commitment therefor
which individually or in the aggregate exceeded SEK 200,000; (e) decided to make
or made any dividends or any distributions on any shares of its capital stock,
or redeemed, purchased or
12
otherwise acquired any shares of its capital stock or any option, warrant or
other right to purchase or acquire any shares of its capital stock; (f) made any
bonus or profit sharing distribution; (g) increased or prepaid its indebtedness
for borrowed money, except current borrowings under credit lines listed on
Schedule 3.8, or made any loan to any Person other than to any employee for
normal travel and expense advances; (h) written down the value of any work-in-
process, or written off as uncollectible any notes or accounts receivable,
except write-downs and write-offs in the ordinary course of business, none of
which individually or in the aggregate, is material to the Company and its
Subsidiaries taken as a whole; (i) 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 or any Subsidiary with a salary of SEK 600,000 or more, or except in the
ordinary course of business to any other employees; (j) canceled or waived any
claims or rights of material value; (k) made any change in any method of
accounting procedures; (l) otherwise conducted its business or entered into any
transaction, except in the usual and ordinary manner and in the ordinary course
of its business; (m) amended or terminated any agreement which is material to
its business; (n) renewed, extended or modified any Real Property Lease or
except in the ordinary course of business, any lease of personal property; (o)
adopted, amended or terminated any Plan; or (p) agreed, whether or not in
writing, to do any of the actions set forth in any of the above clauses.
SECTION 3.24 CORPORATE CONTROLS. Neither the Stockholder, nor, to the
------------------
knowledge of the Stockholder, any officer, authorized agent, employee or any
other Person while acting on behalf of the Company or any Subsidiary, has,
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 or
entity, 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 neither the Company nor any
Subsidiary has participated in any illegal boycott or other similar illegal
practices affecting any of its actual or potential customers.
SECTION 3.25 BROKERS. No broker, finder, agent or similar intermediary
-------
has acted on behalf of the Stockholder, the Company or any Subsidiary 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, any Subsidiary or the Stockholder in connection therewith based
on any agreement, arrangement or understanding with any of them.
SECTION 3.26 DISCLOSURE. To the knowledge of the Stockholder, no
----------
representation or warranty of the Stockholder contained in this Agreement, and
no statement contained in any Schedule or in any certificate, list or other
writing furnished by the Stockholder to the Purchaser pursuant to any provision
of this Agreement (including without limitation any financial statements),
contains any untrue statement of a material fact or omits to state a material
fact
13
necessary in order to make the statements herein or therein, in the light of the
circumstances under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS OF THE PURCHASER
--------------------------------
The Purchaser, represents, warrants and agrees to and with the Stockholder,
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 Delaware, 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 are
now owned or operated or such business is now being conducted.
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. This Agreement has been duly and validly executed
and delivered by the Purchaser and assuming due execution and delivery by the
Stockholder, constitutes a legal, valid and binding obligation of the Purchaser,
enforceable against it 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 of the
Purchaser; (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; 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
14
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 BROKERS. No broker, finder, agent or similar intermediary has
-------
acted on behalf of the Purchaser or any of 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 any of its affiliates in connection therewith based on any
agreement, arrangement or understanding with any of them.
SECTION 4.5 DISCLOSURE. No representation or warranty of the Purchaser
----------
contained in this Agreement, and no statement contained in any Schedule or in
any certificate, list or other writing furnished by the Purchaser to the
Stockholder pursuant to any provision of this Agreement, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements herein or therein, in the light of the
circumstances under which they were made, not misleading.
ARTICLE V
MUTUAL COVENANTS
----------------
SECTION 5.1 BEST EFFORTS. The Purchaser and the Stockholder shall
------------
cooperate in good faith and use their respective reasonable best efforts to
close and make effective the transactions contemplated hereby as expeditiously
as possible, including using their respective reasonable best efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary or desirable under applicable laws and regulations to consummate the
transactions contemplated hereby, executing and delivering such other documents,
certificates, agreements and other writings and taking such other actions as may
be reasonably necessary or desirable in order to consummate and make effective
the transactions contemplated hereby as soon as possible. Each of the Purchaser
and the Stockholder shall use its best efforts prior to the Closing not to take
any action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue or result
in a breach of any covenant made by it in this Agreement.
SECTION 5.2 CONDUCT OF BUSINESS PENDING THE CLOSING. From and after the
---------------------------------------
Effective Date through and including the Closing Date, unless the Purchaser and
the Stockholder shall otherwise agree in writing, or as otherwise expressly
contemplated by this Agreement, the Stockholder shall cause the Company and its
Subsidiaries to conduct their businesses, only in the ordinary and usual course
consistent with past practice, and the Stockholder shall cause the Company and
its Subsidiaries to use their best efforts to maintain their respective assets
in substantially their current state of repair, preserve intact their present
business organization, keep available the services of their present officers and
key employees, and preserve their existing business relationships and goodwill
with customers, suppliers, independent contractors, employees and other Persons
material to the operation of their businesses. Without limiting the generality
of the foregoing, prior to the Closing, the Stockholder shall not permit the
Company or any of its Subsidiaries to:
15
(i) (A) amend its memorandum of association, articles of
association, articles of incorporation, by-laws or other
organizational documents, (B) split, combine or reclassify any shares
of its outstanding capital stock, (C) declare, set aside or pay any
dividend or other distribution payable in cash, stock or property, or
(D) directly or indirectly redeem or otherwise acquire any shares of
its capital stock;
(ii) authorize for issuance, issue or sell, deliver or agree to
issue or sell any shares of, or rights to acquire or convertible into
any shares of, its capital stock (whether through the issuance or
granting of options, warrants, convertible or exchangeable securities,
commitments, subscriptions, rights to purchase or otherwise), or amend
any of the terms of any such capital stock;
(iii) (A) merge, combine or consolidate with another entity, (B)
acquire or purchase an equity interest in or a substantial portion of
the assets of another corporation, partnership or other business
organization or otherwise acquire any assets outside the ordinary
course of business and consistent with past practice or otherwise
enter into any material contract, commitment or transaction outside
the ordinary course of business and consistent with past practice or
(C) sell, lease, license, waive, release, transfer, encumber or
otherwise dispose of any of its material assets outside the ordinary
course of business and consistent with past practice;
(iv) (A) incur, assume or prepay any indebtedness or any other
liabilities in excess of SEK 784,000 individually, or in excess of SEK
3,920,000 in the aggregate (other than trade payables), (B) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other
Person or (C) make any loans, gifts, advances or capital contributions
to, or investments in, any other Person;
(v) pay, satisfy, discharge or settle any claim, liabilities or
obligations (absolute, accrued, contingent or otherwise) against the
Company or any of its Subsidiaries, or any of their directors,
officers, employees or agents in excess of SEK 784,000 individually,
or in excess of SEK 3,920,000 in the aggregate;
(vi) modify or amend, or waive any benefit of, any non-
competition agreement to which the Company or any of its Subsidiaries
is a party; (vii) authorize or make capital expenditures in excess of
SEK 784,000 individually, or in excess of SEK 3,920,000 in the
aggregate;
(viii) permit any insurance policy naming the Company or any of its
Subsidiaries as a beneficiary or a loss payee to be canceled or
terminated other than in the ordinary course of business;
(ix) (A) adopt, enter into, terminate or amend in any material
respect any plan, trust, fund, agreement or other arrangement for the
current or future benefit or
16
welfare of any director, officer or employee, (B) except in the
ordinary course of business, increase in any manner the compensation
or fringe benefits of, or pay any bonus to, any director, officer or
employee or (C) take any action to fund or in any other way secure, or
to accelerate or otherwise remove restrictions with respect to, the
payment of compensation or benefits under any employee plan,
agreement, contract, arrangement other than in the ordinary course of
business;
(x) take any action that would fail to preserve and protect the
Intellectual Property of the Company;
(xi) make any material change in its accounting or tax policies
or procedures;
(xii) make any Tax elections or settle or compromise any Tax
liability or waive or extend the statute of limitations in respect of
any such Taxes;
(xiii) make any payments to or authorize any transaction with any
Affiliate, except in the ordinary course of business;
(xiv) take any action, or enter into or authorize any contract or
transaction, other than in the ordinary course of business;
(xv) waive, release or cancel any claims against third parties or
debts owing to it, or any rights which have any value;
(xvi) terminate, modify, amend or otherwise alter or change any of
the terms or provisions of any contract listed on SCHEDULE 3.8 in any
material respect; or
(xvii) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing.
SECTION 5.3 ACCESS TO INFORMATION. The Stockholder shall cause the
---------------------
Company to afford and to cause its officers, directors, employees, auditors and
agents to afford, to the Purchaser and to its officers, employees, financial
advisors, legal counsel, accountants, consultants and other representatives
unrestricted access during normal business hours throughout the period prior to
the Closing to all of its books and records and its properties, plants,
technology rights and personnel and information with respect to current
customers, prospects and any third parties which may claim a proprietary right
to their property (including telephone interviews and site visits). The
Stockholder shall cause the Company to make the officers and employees of the
Company available to the Purchaser and its representatives as the Purchaser and
its representatives shall from time to time reasonably request.
SECTION 5.4 NOTICES OF CERTAIN EVENTS. Until the Closing or the
-------------------------
termination of this Agreement, each of the Purchaser and the Stockholder shall
promptly notify the other of (i) any notice or other communication from any
Governmental or Regulatory Authority in connection with the transactions
contemplated hereby, and (ii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of their respective knowledge, threatened
against such
17
party relating to the consummation of the transactions contemplated hereby.
Until the Closing, each of the Purchaser and the Stockholder will promptly
disclose in writing to the other party any matter hereafter arising which, if
existing, occurring or known at the date of this Agreement would have been
required to be disclosed to such other party or which would render inaccurate
any of the representations, warranties or statements set forth herein. No
information provided to a party pursuant to this Section shall be deemed to cure
any breach of any representation, warranty or covenant made in this Agreement.
SECTION 5.5 NO SOLICITATION. From the date hereof until the Closing,
---------------
neither the Stockholder nor its Subsidiaries or affiliates, nor any of the
respective directors, officers, employees, agents or representatives of the
foregoing, will, directly or indirectly, (a) solicit, initiate (including by way
of furnishing or disclosing non-public information), encourage or respond
favorably to any inquiries or the making of any proposal with respect to any
merger, change of control, consolidation or other business combination involving
the Company or any of its Subsidiaries or the acquisition of all or any
significant part of the assets or capital stock of the Company or any of its
Subsidiaries (an "ACQUISITION TRANSACTION") or (b) negotiate, explore or
otherwise engage in discussions with any Person (other than the Purchaser and
Razorfish, Inc. and their representatives) with respect to any Acquisition
Transaction, or which may reasonably be expected to lead to a proposal for an
Acquisition Transaction or enter into any agreement, arrangement or
understanding with respect to any such Acquisition Transaction or which would
require such Person to abandon, terminate or fail to consummate the transactions
contemplated by this Agreement.
SECTION 5.6 Waiver of Lien on Purchased Shares. The Purchaser
----------------------------------
acknowledges and agrees to waive any inability of the Stockholder to state that
the Stockholder's representations and warranties are true and correct as of the
Closing Date solely with respect to the Lien on the Purchased Shares resulting
from a Pledge Agreement by and between the Stockholder and Omnicom Finance Inc.
provided that there are no other Liens with respect to the Purchased Shares.
SECTION 5.7 Fulfillment of Conditions. Each of the Stockholder and the
-------------------------
Purchaser will (a) execute and deliver at the Closing each agreement that either
of them is required hereby to execute and deliver as a condition to the Closing,
(b) proceed diligently and in good faith and use best efforts to satisfy each
other condition to the obligations of the Stockholder or the Purchaser, as the
case may be, contained in this Agreement and (c) not take or fail to take any
action that reasonably could be expected to result in the nonfulfillment of any
such condition.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PURCHASER
------------------------------------------
The obligations of the Purchaser hereunder to purchase the Purchased Shares
on the Closing Date are subject to the fulfillment, at or before the Closing, of
each of the following conditions, all or any of which may be waived in whole or
in part by the Purchaser, in its sole discretion:
18
SECTION 6.1 Representations and Warranties. The representations and
------------------------------
warranties made by the Stockholder in this Agreement, or in any Schedule
delivered pursuant hereto, shall be true and correct in all material respects on
and as of the Closing Date with the same force and effect as though made on and
as of the Closing Date or, in the case of representations and warranties made as
of a specified date earlier than the Closing Date, on and as of such earlier
date, and the Company shall have delivered to the Purchaser a certificate
substantially in the form of Exhibit A hereto, dated the Closing Date, to such
effect.
SECTION 6.2 PERFORMANCE. The Stockholder shall or shall have caused the
-----------
Company to have performed and complied with the agreements, covenants and
obligations required by this Agreement to be so performed or complied with by
the Stockholder at or before the Closing, and the Stockholder shall have
delivered to the Purchaser a certificate substantially in the form of EXHIBIT A
hereto, dated the Closing Date, to such effect.
SECTION 6.3 CERTIFIED RESOLUTIONS. The Stockholder shall have delivered
---------------------
to the Purchaser copies of resolutions of its Board of Directors authorizing the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby, certified to by at least two members of the Board of
Directors of the Stockholder.
SECTION 6.4 CERTIFIED CHARTER DOCUMENTS. The Stockholder shall have
----------------------------
delivered to the Purchaser a copy of the Company's Articles of Association,
including all amendments, certified by the Swedish Company Register (PRV).
SECTION 6.5 SURRENDER AND ISSUANCE OF CERTIFICATES. The Stockholder
--------------------------------------
shall have delivered to the Purchaser certificates representing the Purchased
Shares, duly endorsed, together with such other documents and instruments, if
any, as may be necessary to permit the Purchaser to acquire the Purchased
Shares, free and clear of any and all Liens or voting or other restrictions of
any kind whatsoever adverse to the Purchaser.
SECTION 6.6 NO INJUNCTIONS OR RESTRAINTS. There shall not be pending any
----------------------------
litigation, proceeding, investigation, arbitration or claim by any Person or
Governmental or Regulatory Authority or the existence of any injunction or Order
(whether temporary, preliminary or permanent) then in effect, and which in any
case has or could reasonably have the effect of making illegal or otherwise
restricting, preventing or prohibiting consummation of the purchase and sale of
the Purchased Shares or the other transactions contemplated by this Agreement.
SECTION 6.7 SIMULTANEOUS CLOSINGS. All of the closing conditions and
---------------------
deliveries pursuant to the Subscription and Exchange Agreement shall have been
satisfied or waived.
SECTION 6.8 STOCKHOLDERS AGREEMENT. The Stockholder, Dachis, Kanarick
----------------------
and Razorfish shall have executed and delivered the Stockholders Agreement,
substantially in the form of EXHIBIT C hereto.
SECTION 6.9 PROCEEDINGS. All proceedings to be taken in connection with
-----------
the transactions contemplated by this Agreement and all documents incident
thereto were reasonably satisfactory in form and substance to the Purchaser and
its counsel, and the Purchaser received
19
copies of all such documents and other evidences as it or its counsel reasonably
requested in order to effectuate the consummation of such transactions and the
taking of all proceedings in connection therewith.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE STOCKHOLDER
--------------------------------------------
The obligations of the Stockholder hereunder to sell the Purchased Shares
are subject to the fulfillment, at or before the Closing, of each of the
following conditions, all or any of which may be waived in whole or in part by
the Stockholder in its sole discretion):
SECTION 7.1 REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------
warranties made by the Purchaser in this Agreement, or in any Schedule delivered
pursuant hereto, shall be true and correct in all material respects on and as of
the Closing Date with the same force and effect as though made on and as of the
Closing Date, or, in the case of representations and warranties made as of a
specified date earlier than the Closing Date, on and as of such earlier date,
and the Purchaser shall have delivered to the Stockholder a certificate
substantially in the form of EXHIBIT B hereto, dated the Closing Date, to such
effect.
SECTION 7.2 GOOD STANDING CERTIFICATES. The Purchaser shall have
--------------------------
delivered to the Stockholder certificates from the Secretary of State of the
States of New York and Delaware to the effect that the Purchaser is in good
standing in New York and Delaware, respectively.
SECTION 7.3 PERFORMANCE. The Purchaser shall have performed and complied
-----------
with the agreements, covenants and obligations required by this Agreement to be
so performed or complied with by the Purchaser at or before the Closing, and the
Purchaser shall have delivered to the Stockholder a certificate, substantially
in the form of EXHIBIT B hereto, dated the Closing Date, to such effect.
SECTION 7.4 CERTIFIED RESOLUTIONS. The Purchaser shall have delivered to
---------------------
the Stockholder 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 7.5 NO INJUNCTIONS OR RESTRAINTS. There shall not be pending any
----------------------------
litigation, proceeding, investigation, arbitration or claim by any Person or
Governmental or Regulatory Authority or the existence of any injunction or Order
(whether temporary, preliminary or permanent) then in effect, and which in any
case, has or could reasonably have the effect of making illegal or otherwise
restricting, preventing or prohibiting consummation of the purchase and sale of
the Purchased Shares or the other transactions contemplated by this Agreement.
SECTION 7.6 SIMULTANEOUS CLOSINGS. All of the closing conditions and
---------------------
deliveries pursuant to the Subscription and Exchange Agreement shall have been
satisfied or waived.
20
SECTION 7.7 STOCKHOLDERS AGREEMENT. The Purchaser, Dachis, Kanarick and
----------------------
Razorfish shall have executed and delivered the Stockholders Agreement,
substantially in the form of EXHIBIT C hereto.
SECTION 7.8 PROCEEDINGS. All proceedings to be taken in connection with
-----------
the transactions contemplated by this Agreement, and all documents incident
thereto were reasonably satisfactory in form and substance to the Stockholder
and its counsel and the Stockholder 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 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 Sections
8.5.2, 8.5.3 and 8.5.5, the respective representations, warranties, covenants
and agreements of the Stockholder and the Purchaser contained in this Agreement
shall survive the Closing.
SECTION 8.2 OBLIGATION OF THE STOCKHOLDER TO INDEMNIFY. Subject to the
------------------------------------------
limitations contained in Sections 8.5.1 and 8.5.2, the Stockholder hereby agrees
to indemnify the Purchaser and its affiliates, shareholders, officers,
directors, employees, agents, representatives and successors, permitted
assignees of the Purchaser and their 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 pay on behalf of or reimburse in United States dollars the
Purchaser Indemnified Parties as and when actually incurred for, any and all
liabilities (including liabilities for Taxes), obligations, losses, damages,
penalties, demands, claims, actions, suits, judgments, settlements, penalties,
interest, 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 (collectively, "Losses"), that may
be imposed on or incurred by any Purchaser Indemnified Party, the Company or any
Subsidiary (collectively, the "Group") as a consequence of, in connection with,
incident to, resulting from or arising out of or in any way related to or by
virtue of: (a) any misrepresentation, inaccuracy or breach of any warranty or
representation contained in Article III hereof or in any certificate delivered
by the Stockholder at the Closing; (b) any breach or failure by the Stockholder
to comply with, perform or discharge any obligation, agreement or covenant by
the Stockholder contained in this Agreement; and (c) any action, demand,
proceeding, investigation or claim by any third party (including any
Governmental or Regulatory Authority) against or affecting any member of the
Group. The Purchaser Indemnified Parties shall not be
21
entitled to recover under this Section 8.2 to the extent of any recovery of any
Purchaser Indemnified Party under insurance policies held for the benefit of any
Purchaser Indemnified Party (net of any retrospective premium cost resulting
from such recovery), it being understood that the Purchaser Indemnified Parties
shall in good faith pursue recovery against the insurers with the same degree of
diligence as they use to pursue claims against their insurers generally in the
conduct of their business. 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. For purpose of
clarification, the parties agree that (i) the Loss to the Purchaser in respect
of a Loss imposed on or incurred by the Company or any member of the Group shall
be equal to 20% of such Loss; (ii) the Loss to a Purchaser Indemnified Party in
respect of a Loss imposed on such Purchaser Indemnified Party shall be equal to
100% of such Loss and (iii) new business opportunities unable to be pursued or
exploited by a Purchaser Indemnified Party as a consequence of the matters set
forth in clauses (a), (b) or (c) of this Section 8.2 shall not be considered a
Loss hereunder.
SECTION 8.3 OBLIGATION OF THE PURCHASER TO INDEMNIFY. Subject to the
----------------------------------------
limitations set forth in Section 8.5.3 hereof, the Purchaser hereby agrees to
indemnify the Stockholder and its affiliates, shareholders, officers, directors,
employees, agents, representatives and successors, permitted assignees of the
Stockholder and their affiliates (individually a "Stockholder Indemnified Party"
and collectively, the "Stockholder Indemnified Parties") against, and to
protect, save and keep harmless the Stockholder Indemnified Parties from and to
pay on behalf of or reimburse in United States dollars the Stockholder
Indemnified Parties as and when actually incurred for any and all Losses that
may be imposed on or incurred by any Stockholder Indemnified Party as a
consequence of, in connection with, incident to, resulting from or arising out
of or in any way related to or by virtue of: (a) any misrepresentation,
inaccuracy or breach of any warranty or representation of the Purchaser
contained in Article IV hereof or in any certificate delivered by the Purchaser
at the Closing; or (b) any breach or failure by the Purchaser to comply with,
perform or discharge any obligation, agreement or covenant by the Purchaser
contained in this Agreement. For purpose of clarification, the parties agree
that new business opportunities unable to be pursued or exploited by a
Stockholder Indemnified Party as a consequence of the matters set forth in
clauses (a) and (b) of this Section 8.3 shall not be considered a Loss
hereunder.
SECTION 8.4 INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS. In the
------------------------------------------------
event that any Person entitled to indemnification under this Agreement (an
"Indemnified Party") asserts a claim for indemnification or receives notice of
the assertion of any claim or of the commencement of any action or proceeding by
any Person who is not a party to this Agreement or an affiliate of a party to
this Agreement (a "Third Party Claim") against such Indemnified Party, against
which a party to this Agreement is required to provide indemnification under
this Agreement (an "Indemnifying Party"), the Indemnified Party shall give
written notice together with a statement of any available information (other
than privileged information) regarding such claim to the Indemnifying Party
within 30 days after learning of such claim (or within such shorter time as may
be necessary to give the Indemnifying Party a reasonable opportunity to respond
to such claim). The Indemnifying Party shall have the right, upon written
notice to the Indemnified Party (the "Defense Notice") within 15 days after
receipt from the Indemnified Party
22
of notice of such claim, which notice by the Indemnifying Party shall specify
the counsel it will appoint to defend such claim ("Defense Counsel"), to conduct
at its expense the defense against such claim in its own name, or if necessary
in the name of the Indemnified Party; provided, however, that the Indemnified
Party shall have the right to approve the Defense Counsel, which approval shall
not be unreasonably withheld or delayed, and in the event the Indemnifying Party
and the Indemnified Party cannot agree upon such counsel within 10 days after
the Defense Notice is provided, then the Indemnifying Party shall propose an
alternate Defense Counsel, which shall be subject again to the Indemnified
Party's approval which approval shall not be unreasonably withheld or delayed.
If the parties still fail to agree on the Defense Counsel, then, at such time,
they shall mutually agree in good faith on a procedure to determine the Defense
Counsel.
(a) In the event that the Indemnifying Party shall fail to give the
Defense Notice within such 15 day period, it shall be deemed to have
elected not to conduct the defense of the subject claim, and in such
event the Indemnified Party shall have the right to conduct the
defense and to compromise and settle the claim without prior consent
of the Indemnifying Party and the Indemnifying Party will be liable
for all reasonable costs, expenses, settlement amounts or other Losses
paid or incurred in connection therewith.
(b) In the event that the Indemnifying Party does deliver a Defense
Notice and thereby elects to conduct the defense of the subject claim,
the Indemnifying Party shall be entitled to have the exclusive control
over the defense and settlement of the subject claim and the
Indemnified Party will cooperate with and make available to the
Indemnifying Party such assistance and materials as it may reasonably
request, all at the expense of the Indemnifying Party; the Indemnified
Party shall have the right at its expense to participate in the
defense assisted by counsel of its own choosing. In such an event, the
Indemnifying Party will not settle the subject claim without the prior
written consent of the Indemnified Party, which consent will not be
unreasonably withheld or delayed.
(c) Without the prior written consent of the Indemnified Party, the
Indemnifying Party will not enter into any settlement of any Third
Party Claim or cease to defend against such claim, if pursuant to or
as a result of such settlement or cessation, (i) injunctive relief or
specific performance would be imposed against the Indemnified Party,
or (ii) such settlement or cessation would lead to liability or create
any financial or other obligation on the part of the Indemnified Party
for which the Indemnified Party is not entitled to indemnification
hereunder.
(d) If an Indemnified Party refuses to consent to a bona fide offer
of settlement which provides for a full release of the Indemnified
Party and its affiliates and solely for a monetary payment 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 sole expense of the Indemnified Party. In
such an 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
23
the Indemnified Party incurred prior to the date the Indemnifying Party
notified the Indemnified Party of the offer of settlement.
(e) Notwithstanding clause (b) above, the Indemnifying Party shall not
be entitled to control, but may participate in, and the Indemnified Party
shall be entitled to have sole control over, the defense or settlement of
any claim (i) that seeks a temporary restraining order, a preliminary or
permanent injunction or specific performance against the Indemnified Party,
(ii) to the extent such claim involves criminal allegations against the
Indemnified Party, (iii) that if unsuccessful, would set a precedent that
would materially interfere with, or have a material adverse effect on, the
business or financial condition of the Indemnified Party or (iv) if such
claim would impose liability on the part of the Indemnified Party for which
the Indemnified Party is not entitled to indemnification hereunder. In such
an event, the Indemnifying Party will still have all of its obligations
hereunder provided that the Indemnified Party will not settle the subject
claim without the prior written consent of the Indemnifying Party, which
consent will not be unreasonably withheld or delayed.
(f) Any final judgment entered or settlement agreed upon in the manner
provided herein shall be binding upon the Indemnifying Party, and shall
conclusively be deemed to be an obligation with respect to which the
Indemnified Party is entitled to prompt indemnification hereunder.
(g) A failure by an Indemnified Party to give timely, complete or
accurate notice as provided in this Section 7.4 will not affect the rights
or obligations of any party hereunder except and only to the extent that,
as a result of such failure, any party entitled to receive such notice was
deprived of its right to recover any payment under its applicable insurance
coverage or was otherwise directly and materially damaged as a result of
such failure to give timely notice.
SECTION 8.5 LIMITATIONS ON INDEMNIFICATION.
------------------------------
8.5.1 Indemnity Cushion and Cap. Subject to Section 8.5.6 below, the
-------------------------
Stockholder shall not have any liability to any Purchaser Indemnified Party with
respect to Losses arising out of any of the matters referred to in Section 8.2
until such time as the amount of such liability shall exceed US$100,000 in the
aggregate; provided, however, that this Section 8.5.1 shall not apply to Losses
relating to a breach of a representation or warranty contained in Sections 3.1
and 3.26. Notwithstanding anything to the contrary set forth herein, the
aggregate liability of the Stockholder for indemnity payments arising out of any
of the matters referred to in clauses (a) and (c) of Section 8.2 shall not
exceed US$6,000,000.
8.5.2 Termination of Indemnification Obligations of the Stockholder. The
-------------------------------------------------------------
obligation of the Stockholder to indemnify under Section 8.2 hereof shall
terminate on June 30, 2000, except (a) as to matters as to which the Purchaser
Indemnified Party has made a claim for indemnification under Section 8.4 hereof
on or prior to such date and (b) with respect to any claim for Losses pertaining
to a misrepresentation or a breach of representation or warranty
24
under Sections 3.11 or 3.19 or any other Section of Article III of this
Agreement relating to Taxes. The obligation to indemnify referred to in:
(i) the preceding clause (a) shall survive the expiration of such
period until such claim for indemnification is finally resolved and
any obligations with respect thereto are fully satisfied; and
(ii) the preceding clause (b) shall terminate 60 days after the
expiration of the relevant national, state or local statute of
limitations (taking into account any extensions or waivers thereof),
except as to matters as to which any Indemnified Party has made a
claim for indemnification under Section 8.4 above 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 for
indemnification is finally resolved and any obligations with respect
thereto are fully satisfied.
25
8.5.3 Termination of Indemnification Obligations of the Purchaser . The
------------------------------------------------------------
obligation of the Purchaser to indemnify under Section 8.3 hereof shall
terminate on June 30, 2000, except as to matters as to which any Stockholder
Indemnified Party has made a claim for indemnification under Section 8.4 above
on or prior to such date, in which case the right to indemnification with
respect thereto shall survive such period until such claim for indemnification
is 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 Tax Effects. An indemnity payment due and payable by an Indemnifying
-----------
Party under this Article VIII shall be decreased to the extent of any net actual
reduction in Taxes payable by the Indemnified Party upon its payment of Losses,
determined at an assumed marginal tax rate equal to the highest marginal tax
rate then in effect for corporate taxpayers in the relevant jurisdiction, and
taking into account the tax consequences to the Indemnified Party of the receipt
of any indemnity payment due and payable by the Indemnifying Party under this
Article VIII.
8.5.6 Exceptions. Each of the limitations set forth in this Section 8.5
----------
shall in no event (a) apply to any Losses incurred by a Purchaser Indemnified
Party which relate, directly or indirectly, to (i) any fraudulent acts committed
by the Company, any Subsidiary or the Stockholder (including without limitation,
fraud in connection with the transaction contemplated hereby and any fraudulent
acts by any officer, director, employee, agent or stockholder of the Company or
any Subsidiary); (ii) any indemnification obligation under Section 8.2(b); and
(iii) the Stockholder's obligations set forth in Section 10.1 to pay certain
expenses; or (b) apply to any Losses incurred by a Stockholder Indemnified Party
which relate, directly or indirectly, to (i) any indemnification obligation
under Section 8.3(b); and (ii) the Purchaser's obligations set forth in Section
10.1 to pay certain expenses.
8.5.7 Control by Omnicom. All decisions and determinations to be made by
------------------
the Purchaser and/or a Purchaser Indemnified Party under this Article VIII shall
be made by Omnicom in the name of and on behalf of the Purchaser or such other
Purchaser Indemnified Party.
ARTICLE IX
TERMINATION
-----------
SECTION 9.1 GROUNDS FOR TERMINATION. This Agreement may be terminated at
-----------------------
any time prior to the Closing:
(i) by mutual written agreement of the Purchaser and the Stockholder;
26
(ii) by the Stockholder if the Stockholder has not obtained a tax
deferral ruling from Swedish tax authorities on or before 60 days
after the date hereof;
(iii) by either the Purchaser or the Stockholder if any permanent
injunction, order, decree or ruling by any Governmental or Regulatory
Authority of competent jurisdiction preventing the consummation of the
transaction contemplated hereby or in the Stock Purchase Agreement
shall have become final and nonappealable; provided, however, that the
-------- -------
party seeking to terminate this Agreement pursuant to this Section
9.1(iii) shall have used reasonable best efforts to remove such
injunction or overturn such action; or
(iv) by either the Purchaser or the Stockholder if the Closing has
not occurred on or before April 30, 1999.
Termination pursuant to clause (ii) will be effective upon delivery of a
written notice of termination by the Stockholder to the Purchaser.
SECTION 9.2 EFFECT OF TERMINATION. If this Agreement is terminated as
---------------------
permitted by Section 9.1, such termination shall be without liability of any
party (or any stockholder, affiliate, director, officer, employee, agent,
consultant or representative of such party) to any other party to this
Agreement.
ARTICLE X
MISCELLANEOUS
-------------
SECTION 10.1 EXPENSES. 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 advisors.
SECTION 10.2 GOVERNING LAW. The interpretation and construction of this
-------------
Agreement, and all matters relating hereto, shall be governed by the laws of the
State of New York without reference to its conflict of laws provisions.
SECTION 10.3 ARBITRATION. Any dispute or controversy which cannot be
-----------
amicably settled, shall be solely and finally settled by arbitration pursuant to
the Uncitral Arbitration Rules, as at present in full force which rules are
deemed to be incorporated by reference into this Section 10.3. The place of the
arbitration shall be Geneva, Switzerland. The appointing authority shall be the
International Chamber of Commerce in Geneva. The number of arbitrators shall be
three. The language to be used in the arbitration shall be English. The award of
the arbitrator(s) shall be the sole and exclusive remedy among the parties
regarding any and all claims and counterclaims with respect to the subject
matter of such a dispute or controversy and shall be binding and conclusive upon
the parties, their successors and assigns, and each shall comply in good faith
with any and all rulings of the arbitrators. Judgment upon the award of the
arbitrators may be entered in any court of competent jurisdiction.
Notwithstanding the foregoing, prior to
27
seeking arbitration, the party proposing to seek arbitration shall provide
written notice to the other stating its intention to seek arbitration and
providing for a 30-day cure period.
SECTION 10.4 "PERSON" DEFINED. "PERSON" shall mean and include an
----------------
individual, a company, a joint venture, a corporation (including any non-profit
corporation), an estate, an association, a trust, a general or limited
partnership, a limited liability company, a limited liability partnership, an
unincorporated organization and a government or other department or agency
thereof.
SECTION 10.5 "KNOWLEDGE" DEFINED. Where any representation and warranty
-------------------
contained in this Agreement is expressly qualified by reference to the knowledge
of the Stockholder, such term shall be limited to the actual knowledge of the
Stockholder and unless otherwise stated such knowledge that would have been
discovered by the Stockholder after reasonable inquiry.
SECTION 10.6 "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.
SECTION 10.7 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 10.8 PUBLICITY. Subject to the provisions of the next sentence, no
---------
party to this Agreement shall, and the Stockholder shall insure that no
representative of the Company or any of its Subsidiaries 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 and the Stockholder. Notwithstanding the foregoing, the
foregoing provision shall not apply to the extent that Omnicom 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 New York Stock Exchange, or any
announcement by any party or the Company or any Subsidiary pursuant to
applicable law or regulations.
SECTION 10.9 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) three days after the date of
deposit in the mails, postage prepaid, if mailed by certified or registered
mail, or (c) the next business day if sent by facsimile transmission (if receipt
is electronically confirmed) or 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:
Communicade Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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Attention: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
------
Omnicom Group Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Secretary
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
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▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Stockholder to:
Spray Ventures AB
▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: Per ▇▇▇▇▇▇▇
Fax: +46-8-660 15 95
with a copy to:
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▇▇▇▇▇▇▇▇▇▇ Swartling Advokatbyra
▇▇▇▇▇▇▇▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇
▇▇-▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
Fax: +46-8-613 55 01
SECTION 10.10 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 10.11 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.
SECTION 10.12 COUNTERPARTS. This Agreement may be executed in two or more
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counterparts, all of which taken together shall constitute one instrument.
29
SECTION 10.13 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 10.14 AMENDMENTS. This Agreement may not be amended,
----------
supplemented or modified orally, but only by an agreement in writing signed by
the Purchaser and the Stockholder.
SECTION 10.15 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 10.10
SECTION 10.16 USE OF TERMS. Whenever the context so requires or permits,
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all references to the masculine herein shall include the feminine and neuter,
all references to the neuter herein shall include the masculine and feminine,
all references to the plural shall include the singular and all references to
the singular shall include the plural.
30
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, on the
day and year first above written.
COMMUNICADE INC.
BY: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
_______________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
TITLE: CHIEF FINANCIAL OFFICER
SPRAY VENTURES AB
BY: /s/ Per ▇▇▇▇▇▇▇
_______________________________
Name: Per ▇▇▇▇▇▇▇
TITLE: CHIEF EXECUTIVE OFFICER
31
EXHIBIT A
OFFICER'S CERTIFICATE
The undersigned, ____________________, the ________________ of Spray
Ventures AB, a corporation organized and existing under the laws of the Kingdom
of Sweden (the "Stockholder"), pursuant to Sections 6.1 and 6.2 of the Stock
Purchase Agreement, effective as of October 1, 1998 (the "Agreement") (terms
defined in the Agreement being used herein as so defined), by and among the
Stockholder and Communicade, Inc., a Delaware corporation (the "Purchaser"),
certify, on behalf of the Stockholder that:
1. The representations and warranties made by the Stockholder in the
Agreement, and in any Schedule delivered thereto, are true and correct in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date or, in the case of representations
and warranties made as of a specified date earlier than the Closing Date, on and
as of such earlier date.
2. The Stockholder has or has caused Spray Network AB to have performed
and complied with the agreements, covenants and obligations required by the
Agreement to be so performed or complied with by the Stockholder at or before
the Closing.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of
_______________, 1998.
SPRAY VENTURES AB
By:_______________________
EXHIBIT B
OFFICER'S CERTIFICATE
The undersigned, ____________________, the ________________ of Communicade,
Inc., a Delaware corporation (the "Purchaser"), pursuant to Sections 7.1 and 7.3
of the Stock Purchase Agreement, effective as of October 1, 1998 (the
"Agreement") (terms defined in the Agreement being used herein as so defined),
by and among the Purchaser and Spray Ventures AB, a corporation organized and
existing under the laws of the Kingdom of Sweden (the "Stockholder"), certify,
on behalf of the Purchaser that:
1. The representations and warranties made by the Purchaser in the
Agreement, and in any Schedule delivered thereto, are true and correct in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date or, in the case of representations
and warranties made as of a specified date earlier than the Closing Date, on and
as of such earlier date.
2. The Purchaser has performed and complied with the agreements,
covenants and obligations required by the Agreement to be so performed or
complied with by the Purchaser at or before the Closing.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of
_______________, 1998.
COMMUNICADE, INC.
By:_______________________