EXHIBIT 2.1
ACQUISITION AGREEMENT
BY AND AMONG
THE
SHAREHOLDERS
OF
TAS TELEMARKETING GESELLSCHAFT FUR
KOMMUNIKATION UND DIALOG MBH,
XXXXX ENTERPRISES, INCORPORATED,
AND
XXXXX ENTERPRISES GMBH
Dated September 19, 1997
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TABLE OF CONTENTS
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1. Definitions. . . . . . . . . . . . . . . . . . . . 2
ARTICLE II - PURCHASE, SALE AND ASSIGNMENT OF SHARES . . . . . . . . . 5
Section 2.1. Purchase and Sale of Shares . . . . . . . . . . . . 5
Section 2.2. Assignment of Shares . . . . . . . . . . . . . . . . 6
ARTICLE III - DELIVERY OF PURCHASE PRICE SHARES . . . . . . . . . . . . 6
Section 3.1. Delivery of Purchase Price Shares . . . . . . . . . 6
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE SELLERS (GARANTIEN) 7
Section 4.1. Corporate Organization . . . . . . . . . . . . . . 7
Section 4.2. Capitalization . . . . . . . . . . . . . . . . . . 8
Section 4.3. Authority; Binding Effect . . . . . . . . . . . . . 9
Section 4.4. Ownership of Share Capital; Title . . . . . . . . . 9
Section 4.5. The Sellers' Consents and Approvals; No Violations 10
Section 4.6. Consents and Approvals; No Violations . . . . . . . 10
Section 4.7. Financial Statements . . . . . . . . . . . . . . . 11
Section 4.8. Undisclosed Liabilities . . . . . . . . . . . . . . 11
Section 4.9. Taxes . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.10. Title to Properties . . . . . . . . . . . . . . . . 13
Section 4.11. Absence of Changes . . . . . . . . . . . . . . . . 13
Section 4.12. Intellectual Property . . . . . . . . . . . . . . . 15
Section 4.13. Leases . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.14. Bank Accounts; Investments; Powers of Attorney . . 17
Section 4.15. Material Contracts and Customers . . . . . . . . . 17
Section 4.16. Related Transactions . . . . . . . . . . . . . . . 20
Section 4.17. Insurance . . . . . . . . . . . . . . . . . . . . . 20
Section 4.18. Labor Matters . . . . . . . . . . . . . . . . . . . 21
Section 4.19. Employee Benefit Plans . . . . . . . . . . . . . . 22
Section 4.20. Litigation . . . . . . . . . . . . . . . . . . . . 22
Section 4.21. Compliance with Laws . . . . . . . . . . . . . . . 23
Section 4.22. Books and Records . . . . . . . . . . . . . . . . . 23
Section 4.23. Copies of Documents . . . . . . . . . . . . . . . . 23
Section 4.24. Adequacy of Assets . . . . . . . . . . . . . . . . 23
Section 4.25. Grants . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.26. Accounts Receivable . . . . . . . . . . . . . . . . 24
Section 4.27. Brokers and Finders . . . . . . . . . . . . . . . . 24
Section 4.28. Investment Intent; Information Disclosures . . . . 24
Section 4.29 Pooling of Interests . . . . . . . . . . . . . . . 26
Section 4.30 Restrictive Covenants . . . . . . . . . . . . . . . 27
Section 4.31 Product Liabilities and Warranties . . . . . . . . 27
Section 4.32 Disclosure . . . . . . . . . . . . . . . . . . . . 27
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ARTICLE V - REPRESENTATIONS AND WARRANTIES OF SEI AND BUYER (GARANTIEN) 28
Section 5.1. Corporate Organization . . . . . . . . . . . . . . 28
Section 5.2. Capitalization of SEi . . . . . . . . . . . . . . . 28
Section 5.3. Authority . . . . . . . . . . . . . . . . . . . . . 28
Section 5.4. SEi's Consents and Approvals; No Violations . . . . 28
Section 5.5. Litigation . . . . . . . . . . . . . . . . . . . . 29
Section 5.6. Brokers and Finders . . . . . . . . . . . . . . . . 29
Section 5.7. SEi Information . . . . . . . . . . . . . . . . . . 29
Section 5.8 No Material Adverse Change . . . . . . . . . . . . 29
Section 5.9. Undisclosed Liabilities . . . . . . . . . . . . . . 29
Section 5.10. Compliance with Laws . . . . . . . . . . . . . . . 29
ARTICLE VI - FURTHER COVENANTS AND AGREEMENTS . . . . . . . . . . . . . 30
Section 6.1. Covenants of the Sellers Pending the Closing . . . 30
Section 6.2. Covenants of Buyer and SEi Pending the Closing . . 31
Section 6.3. Filings . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.4. Effective Time of Closing and Transfer . . . . . . 32
Section 6.5. Announcements . . . . . . . . . . . . . . . . . . . 32
Section 6.6. Costs and Expenses . . . . . . . . . . . . . . . . 33
Section 6.7. Further Assurances . . . . . . . . . . . . . . . . 32
Section 6.8. Certain Agreements . . . . . . . . . . . . . . . . 33
Section 6.9. Non-Disclosure; Covenant Not to Compete . . . . . . 34
Section 6.10. Pooling of Interests . . . . . . . . . . . . . . . 35
Section 6.11. Exclusive Dealing. . . . . . . . . . . . . . . . . 35
Section 6.12. Release of Bromkamp Guarantee . . . . . . . . . . . 35
Section 6.13. Purchase of Xxxxxx Investment . . . . . . . . . . . 35
ARTICLE VII - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.1. Termination . . . . . . . . . . . . . . . . . . . . 35
Section 7.2. Procedure and Effect of Termination . . . . . . . . 36
ARTICLE VIII - CONDITIONS TO BUYER'S AND SEI'S OBLIGATIONS . . . . . . 37
Section 8.1 The Sellers' Closing Deliveries . . . . . . . . . . 37
Section 8.2. Representations and Warranties True . . . . . . . . 37
Section 8.3. Performance . . . . . . . . . . . . . . . . . . . . 37
Section 8.4. Governmental Consents and Approvals . . . . . . . . 37
Section 8.5. No Injunction or Proceeding . . . . . . . . . . . . 38
Section 8.6. Continued Employment of Management . . . . . . . . 38
ARTICLE IX - CONDITIONS TO THE SELLERS' OBLIGATIONS . . . . . . . . . . 38
Section 9.1. Delivery of Purchase Price Shares . . . . . . . . . 38
Section 9.2. Buyer's and SEi's Closing Deliveries . . . . . . . 38
Section 9.3. Representations and Warranties True . . . . . . . . 38
Section 9.4. Performance . . . . . . . . . . . . . . . . . . . . 39
Section 9.6. Governmental Consents and Approvals . . . . . . . . 39
Section 9.7. No Injunction or Proceeding . . . . . . . . . . . . 39
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ARTICLE X - INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . 39
Section 10.1. Indemnification by the Sellers . . . . . . . . . . 39
Section 10.2. Indemnification by Buyer and SEi . . . . . . . . . 40
Section 10.3. Survival of Representations . . . . . . . . . . . . 40
Section 10.4. Indemnification Claims Procedures . . . . . . . . . 40
Section 10.5. Right of Set-Off . . . . . . . . . . . . . . . . . 42
Section 10.6. Limitation of Liability . . . . . . . . . . . . . . 42
ARTICLE XI - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 43
Section 11.1. Governing Law . . . . . . . . . . . . . . . . . . . 43
Section 11.2. Entire Understanding, Waiver, Etc . . . . . . . . . 43
Section 11.3. Severability; Gaps . . . . . . . . . . . . . . . . 43
Section 11.4. Captions . . . . . . . . . . . . . . . . . . . . . 43
Section 11.5. Notices . . . . . . . . . . . . . . . . . . . . . . 44
Section 11.6. Successors and Assigns . . . . . . . . . . . . . . 45
Section 11.7. Parties in Interest . . . . . . . . . . . . . . . . 45
Section 11.8. Counterparts . . . . . . . . . . . . . . . . . . . 45
Section 11.9. Construction of Terms . . . . . . . . . . . . . . . 45
Section 11.10. SEi Guarantee. . . . . . . . . . . . . . . . . . . 45
EXHIBITS
Exhibit A Form of Pledge and Escrow Agreement
Exhibit B Form of Registration Rights Agreement
Exhibit C Form of Employment Agreement
DISCLOSURE SCHEDULE
Section 4.1(a) Corporate Organization of the Company
Section 4.1(b) Corporate Organization of the Subsidiaries and the
Investments
Section 4.2(a) Capitalization of the Company
Section 4.2(b) Capitalization of the Subsidiaries and the Investments
Section 4.4(a) Ownership of Quotas
Section 4.4(b) Ownership of Share Capital of the Subsidiaries and the
Investments
Section 4.5 Sellers' Consents and Approvals; No Violations
Section 4.6 Consents and Approvals; No Violations
Section 4.7(a) Financial Statements
Section 4.7(b) Financial Statements Exceptions
Section 4.8 Undisclosed Liabilities
Section 4.9 Taxes
Section 4.10(a) List of Material Fixed Assets
Section 4.10(b) Title to Properties Exceptions
Section 4.10(c) Possession and Condition of Assets
Section 4.11 Absence of Changes
Section 4.12(a) List of Intellectual Property
Section 4.12(b) Fees and Royalties
Section 4.12(c) Registrations; Exclusive Rights
Section 4.12(d) Trade Secrets
Section 4.12(e) Intellectual Property Claims
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Section 4.13 Leases
Section 4.14(a) List of Accounts
Section 4.14(b) Investments
Section 4.14(c) Ownership of SEi Stock
Section 4.15(a) List of Material Contracts
Section 4.15(c) Customers and Suppliers
Section 4.16 Related Transactions
Section 4.17(a) List of Insurance Policies
Section 4.17(b) Insurance Policy Terminations
Section 4.17(c) Insurance Policy Claims
Section 4.17(d) Unpaid Insurance Claims
Section 4.18(a) Labor Matters
Section 4.18(b) List of Employees
Section 4.19 Employee Benefit Plans
Section 4.20 Litigation
Section 4.21 Compliance with Laws
Section 4.24 Adequacy of Assets
Section 4.26 Accounts Receivable
Section 4.30 Restrictive Covenants
Section 4.31 Product Liabilities and Warranties
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ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT is made and entered into as of September
19, 1997, by and among the undersigned persons (collectively, the
"Sellers"), being the holders of all the outstanding capital interests of
TAS Telemarketing Gesellschaft fur Kommunikation und Dialog mbH, a limited
liability company organized under the laws of the Federal Republic of
Germany (the "Company"), each such Seller being an individual residing in,
and a citizen of, the Federal Republic of Germany, Xxxxx Enterprises GmbH,
a limited liability company organized and existing under the laws of the
Federal Republic of Germany ("Buyer"), and XXXXX ENTERPRISES,
INCORPORATED, a corporation organized and existing under the laws of
Florida ("SEi").
RECITALS
WHEREAS, the Sellers own all of the issued capital interests of the
Company (the "Company Quotas");
WHEREAS, the Company owns sixty-four percent (64%) of the issued
capital interests of TST Teleservice Team Gesellschaft fur Dienstleistung
und Vertrieb mbH ("TST"), fifty percent (50%) of the issued capital
interests of TOP Teleshopping GmbH ("TOP") and fifty percent (50%) of the
issued capital interests of HCD Human Call Centre Design
Planungsgesellschaft mbH, each a limited liability company organized and
existing under the laws of the Federal Republic of Germany (collectively,
the "Subsidiaries," and together with the Company, the "Companies");
WHEREAS, the Company owns forty-nine percent (49%) of the issued
capital interests of KEP Call Gesellschaft fur Mehrwertdienste im
Telekommunikationsbereich mbH ("KEP") and twenty-two percent (22%) of the
issued capital interests of TAS Telemarketing Gesellschaft fur
Kommunikation, Dialog und Kooperation GmbH, each a limited liability
company organized and existing under the laws of the Federal Republic of
Germany (collectively, the "Investments");
WHEREAS, it is intended that seventeen percent (17%) of the issued
capital interest of TOP will be transferred to the Company by Xxxxxx
Xxxxxxxx, one of the Sellers ("Bromkamp"), in contemplation of the
transactions herein provided for;
WHEREAS, SEi owns all of the issued capital interests of Buyer;
WHEREAS, the Sellers desire to sell the Company Quotas in exchange
for shares of SEi's common stock, and SEi is willing to cause the Buyer to
purchase the Company Quotas from the Sellers in exchange for shares of
SEi's common stock, on the terms and subject to the conditions hereinafter
set forth; and
WHEREAS, SEi intends to treat the acquisition by the Buyer of the
Company Quotas as a "pooling of interests" for financial accounting
purposes.
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NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements hereinafter set
forth and for other good and valuable considerations, the receipt and
sufficiency of which are hereby expressly acknowledged by the Sellers,
the Buyer and SEi, and intending to be legally bound, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. The terms defined in this Article shall
have the following respective meanings for all purposes of this Agreement:
"Affiliate" means, with respect to any Person, an officer,
director or beneficial owner of five percent (5%) or more of the issued
and outstanding shares of any class of capital stock or other equity of
such Person, a family member of such Person, if an individual, and any
other Person controlling, controlled by or under common control with such
Person.
"Alternative Transaction" means any merger, consolidation, sale
of substantial assets, sale of capital interests or securities or similar
transaction involving the Company or any Subsidiary, other than the
transactions contemplated by this Agreement.
"Business" means the businesses conducted by the Company, the
Subsidiaries and the Investments, or by any of them, as of the date of
this Agreement or as of the Closing Date, in each case as the context
permits or implies, which consist of providing the following services on a
"for hire" basis:
(i) call center services;
(ii) telemarketing and teleselling services;
(iii) fulfillment services for telemarketing and call center
customers;
(iv) database development services for telemarketing and call
center customers; and
(v) consulting and training services related to the above
service categories.]
"Business Day" means any day on which banks are open for
business in New York, New York.
"Closing" means the consummation and effectuation of the
transactions contemplated herein pursuant to the terms and conditions of
this Agreement, which shall be held on the 26th day of September, 1997, at
10:00 AM in the offices of Schon Xxxxx Xxxxxxxxxxx & Xxxxx in Hamburg,
Federal Republic of Germany, or on such other date or at such other time
or place as is mutually agreed by the parties hereto.
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"Closing Date" means the date on which the Closing actually
occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Customers" shall have the meaning set forth in Section 4.15.
"Disclosure Schedule" means the disclosure schedule document
executed by Sellers as of the date hereof and previously delivered to the
Buyer and SEi, without any amendment thereto subsequent to the date
hereof.
"Employee Benefit Plan" means any pension, retirement, profit
sharing, savings, thrift, stock bonus, stock option, stock purchase,
restricted stock purchase, stock ownership, stock appreciation right,
phantom stock, deferred compensation, supplemental retirement, deferred
bonus, severance, change of control, parachute, health, medical, dental,
vision, prescription drugs, fitness, dependent care, educational
assistance, group legal services, life insurance, accidental death,
accidental dismemberment, sick pay, short-term or long-term disability,
supplemental unemployment income, training, apprenticeship, scholarship,
tuition reimbursement, employee assistance, employee discount, subsidized
cafeteria, fringe benefit, vacation, holiday, employer-sponsored
recreational facility, or other employee pension benefit or welfare
benefit plan, policy, contract, or arrangement, or other similar fringe or
employee benefit plan, program, policy, contract, or arrangement, written
or oral, qualified or nonqualified, funded or unfunded, foreign or
domestic.
"Escrow Agent" means Firstar Trust Company of Milwaukee,
Wisconsin, or such other person as SEi and the Sellers shall mutually
agree upon, in its capacity as escrow agent.
"Financial Statements" has the meaning set forth in Section 4.7.
"Form 10-Q Balance Sheet" means the unaudited balance sheet
dated June 30, 1997 (and any related notes thereto), found in the
quarterly report filed on Form 10-Q filed with the Securities and Exchange
Commission for the quarterly period ended June 30, 1997, a copy of which
is included as part of the SEi Filings.
"GGAAP" means generally accepted accounting principles as in
effect in the Federal Republic of Germany on December 31, 1996.
"Grants" means governmental grants, subsidies, guarantees and/or
loans provided to or for the benefit of a Person.
"Intellectual Property" means all intellectual property and
intellectual property rights, whether arising under the laws of the
Federal Republic of Germany or any other jurisdiction including, without
limitation, (i) all patents, patent applications, continuations in part,
divisions, reissues and patent disclosures, (ii) all copyrights, whether
registered or unregistered, and pending applications to register the same,
(iii) anything recognizable as a trademark, service xxxx or trade dress at
common law or under the laws of any country, whether registered or not,
which is used to identify the source and quality of goods or services or
to distinguish them from those of others, and all registrations and
applications for registration, including intent-to-use registrations and
applications for registration, (iv) all licenses, sublicenses and rights
to use any Intellectual Property of any other Person, (v) all names used
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to identify a particular company, business, subsidiary or division
thereof, (vi) all confidential and proprietary ideas, trade secrets, know
how, concepts, methods, processes, formulae, reports, data, customer
lists, mailing lists, business plans or other proprietary information,
including, without limitation, with respect to any Person, any formulae,
pattern, device or compilation of information which is used in such
Person's business and which derives independent commercial value from not
being generally known or readily ascertainable through independent
development or reverse engineering by other Persons who can obtain
economic value from its disclosure or use, and (vii) all other forms of
proprietary information.
"Interim Balance Sheets" means the unaudited consolidated
balance sheet of the Company and the Subsidiaries, and the unaudited
balance sheets of each of the Investments, in each case dated as of the
Interim Balance Sheet Date (and any related notes thereto), a copy of
which is included as part of the Financial Statements.
"Interim Balance Sheet Date" means July 31, 1997.
"Leased Real Property" means all real property and premises
currently leased to the Company, the Subsidiaries and the Investments.
"Material Adverse Effect" means, with respect to any Person, a
material adverse effect on the financial condition, results of operations
or business prospects of such Person.
"NASDAQ" means The Nasdaq National Stock Market, Inc.'s National
Market.
"Person" means an individual, partnership, limited liability
company, corporation, trust, unincorporated organization, association or
joint venture or a government, agency, political subdivision or
instrumentality thereof.
"Purchase Price Shares" means the 400,000 shares of SEi Stock to
be issued to the Sellers in consideration of the transfer and assignment
of the Company Quotas.
"Related Agreements" means the agreements described in Section
6.8.
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"SEC" means the United States Securities and Exchange
Commission.
"SEi Filings" means the following filings made by SEi with the
SEC: the annual report on Form 10-K for the annual period ending December
31, 1996, the quarterly reports on Form 10-Q for the quarterly periods
ending March 30, 1997, and June 30, 1997, and the Annual Report to
Stockholders and related proxy statement filed on Schedule 14A with
respect to an annual meeting of SEi's shareholders held on May 8, 1997.
"SEi Stock" means SEi's common stock, $.01 par value per share.
"Seller's Shares" means, with respect to any Seller, a number of
shares of SEi Stock equal to the product (rounded to the nearest whole
share) of (A) the Purchase Price Shares, multiplied by (B) such Seller's
percentage ownership (expressed as a decimal) in the Company as shown in
Section 2.1.
"Taxes" means all taxes, assessments, and charges imposed by any
national, federal, state, provincial, local, or foreign taxing authority,
including social security, insurance and other state-sponsored pension
funds and all interest, penalties and additions thereto.
"Transfer Agent" means Firstar Trust Company of Milwaukee,
Wisconsin, in its capacity as transfer agent for SEi Stock.
"USGAAP" means generally accepted accounting principles as in
effect in the United States on December 31, 1996.
ARTICLE II
PURCHASE, SALE AND ASSIGNMENT OF SHARES
Section 2.1. Purchase and Sale of Shares. Upon the terms and
subject to the conditions hereof, each of the Sellers hereby sells to
Buyer and Buyer hereby buys from each of the Sellers, all of such Seller's
right, title and interest in and to the Company Quotas set forth below
opposite the name of such Seller together with the right to receive
dividends with respect to such Company Quotas as of January 1, 1997, and
the applicable capital reserve, in each case in consideration for the
delivery of the Purchase Price Shares as provided in Article III below.
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Company Quotas
--------------
Share Percentage
Name Capital Interest
---- ------- ----------
Xxxxxx Xxxxxxxx DM64,400 87%
Christian Xxxxxxxx XX 9,600 13%
-------- ---
Total DM74,000 100%
======== ====
Section 2.2. Assignment of Shares. Each of the Sellers hereby
assigns and transfers such Seller's Company Quotas, as specified in
Section 2.1 together with the right to receive dividends on the such
Company Quotas as of January 1, 1997, to Buyer at the Closing and Buyer
hereby accepts such assignments. All such assignments are subject to:
(a) the delivery of the Purchase Price Shares in accordance
with Article III hereof;
(b) the non-occurrence of a termination of this Agreement in
accordance with Section 7.1 prior to the Closing; and
(c) the fulfillment or waiver of all of the conditions
precedent specified in Article VIII and Article IX.
Each of the Sellers hereby consents to the sales and transfers
effected herein and waives any preemptive rights or rights of first
refusal he may have under the Articles of Association of the Company.
ARTICLE III
DELIVERY OF PURCHASE PRICE SHARES
Section 3.1. Delivery of Purchase Price Shares. Upon the
terms and subject to the conditions hereof, SEi shall issue, and Buyer
shall deliver, the Purchase Price Shares as follows:
(a) to the Escrow Agent promptly following the Closing, a
certificate or certificates issued in the name of each Seller, each such
certificate bearing the legend provided for in Section 4.28(g) and
evidencing a number of shares equal to twenty percent (20%) of the
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applicable Seller's Shares, rounded down to the nearest whole share, to be
held in accordance with a Pledge and Escrow Agreement dated as of the
Closing Date by and among SEi, Buyer, the Sellers and the Escrow Agent
substantially in the form of Exhibit A (the "Pledge and Escrow
Agreement"); and
(b) to each of the Sellers at the Closing, a certificate
or certificates or, at SEi's option, an original or a facsimile copy of an
irrevocable letter of instructions (accompanied by an original or
facsimile of a letter from the Transfer Agent acknowledging receipt of
such letter of instructions) to the Transfer Agent for the issue and
delivery of a certificate or certificates, issued in such Seller's name,
each such certificate bearing or to bear the legend provided for in
Section 4.28(g) and evidencing or to evidence a number of shares equal to
the applicable Seller's Shares remaining after delivery of Seller's Shares
for the account of such Seller in accordance with Section 3.1(a) above.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLERS (GARANTIEN)
The Sellers hereby represent and warrant to SEi and Buyer as follows,
the representations and warranties in Sections 4.3 through 4.5 relating to
individual Sellers and their respective Company Quotas being made
severally by each such Seller, and all other representations and
warranties in this Article IV being made jointly and severally by the
Sellers:
Section 4.1. Corporate Organization.
(a) The Company is a limited liability company duly
organized and validly existing under the laws of the Federal Republic of
Germany and has the full right, power and authority to own, lease and
operate all of its properties and assets and to carry out the Business as
it is presently conducted by the Company. The Company is duly licensed or
qualified to do business and is in good standing in each jurisdiction in
which the ownership of property or the conduct of its Business requires
such qualification or license. Except for the Subsidiaries, the
Investments and as set forth in Section 4.1(a) of the Disclosure Schedule,
there are no corporations, joint ventures, partnerships or other entities
or arrangements in which the Company, directly or indirectly, owns any
capital stock or any equity interest.
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(b) Each of the Subsidiaries and, to the knowledge of the
Sellers, the Investments is a limited liability company duly organized and
validly existing under the laws of the Federal Republic of Germany with
the full right, power and authority to own, lease and operate all of its
respective properties and assets and to carry out the Business as it is
presently conducted by such Subsidiary or Investment. Each of the
Subsidiaries and, to the knowledge of the Sellers, the Investments is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the ownership of property or the conduct of its
Business requires such qualification or license. Except as set forth in
Section 4.1(b) of the Disclosure Schedule, there are no corporations,
joint ventures, partnerships or other entities or arrangements in which
any Subsidiary or, to the knowledge of the Sellers, any Investment
directly or indirectly, owns any capital stock or any equity interest.
Section 4.2. Capitalization.
(a) The aggregate stated share capital of the Company
consists of DM100,000. The Company Quotas, which represent all issued
share capital of the Company, have been duly authorized and validly
issued, are fully paid and nonassessable, were issued without violation of
any preemptive rights, and can be transferred to Buyer as provided herein
free of any preemptive rights. The Company has not repaid any stated
share capital to any of the Sellers, or to any prior holder of the
Company's share capital, or paid out any other equity capital in a manner
which would adversely affect the Company's ability to pay dividends in a
situation in which the Company would otherwise be permitted to pay
dividends according to German law. The redemption of the issued share
capital in the nominal amount of DM26,000 held by Xxxx & Partner on
September 17, 1997 has been duly and validly effected in accordance with
German law and the Company's Articles of Association. Without intending to
limit the foregoing, Section 4.2(a)(i) of the Disclosed Schedule sets
forth a true, complete and correct in all material respects computation of
the Company's capital in excess of stated share capital as of September
17, 1997. Except for this Agreement and as set forth in Section
4.2(a)(ii) of the Disclosure Schedule, there are no options, warrants or
other rights, nor any agreements, commitments or arrangements of any kind,
relating to the subscription for or the issuance, voting, acquisition,
sale, repurchase, transfer or disposition of (i) any share capital of the
Company or securities convertible into or exchangeable for share capital
of the Company, or (ii) any options, warrants or subscription rights
relating to any such share capital or other securities of the Company.
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(b) The aggregate stated share capital of the Subsidiaries
and the Investments, and the percentage and monetary amount of such share
capital owned by the Company, are set forth in Section 4.2(b) of the
Disclosure Schedule. The issued share capital set forth in Section 4.2(b)
of the Disclosure Schedule with respect to each of the Subsidiaries and,
to the knowledge of the Sellers, the Investments has been duly authorized
and validly issued, is fully paid and nonassessable, and was issued
without violation of any preemptive rights. The Subsidiaries and, to the
knowledge of the Sellers, the Investments have not repaid any stated share
capital to any holder of their respective share capital, or to any prior
holder of such share capital, or paid out any other equity capital in a
manner which would adversely affect the such Subsidiary's or Investment's
ability to pay dividends in a situation in which such Subsidiary or
Investment would otherwise be permitted to pay dividends according to
German law. Except for this Agreement and as set forth in Section 4.2(b)
of the Disclosure Schedule, there are no options, warrants or other
rights, nor any agreements, commitments or arrangements of any kind,
relating to the subscription for or the issuance, voting, acquisition,
sale, repurchase, transfer or disposition of (i) any share capital of, or
securities convertible into or exchangeable for share capital of, the
Subsidiaries or, to the knowledge of the Sellers, the Investments, or (ii)
any options, warrants or subscription rights relating to any such share
capital or other securities of the Subsidiaries or, to the knowledge of
the Sellers, the Investments.
Section 4.3. Authority; Binding Effect. Each of the Sellers
has all requisite right, power and authority to execute, deliver and
perform this Agreement and the Related Agreements to which such Seller is
a party. This Agreement and the Related Agreements to which the Sellers
are parties have been duly and validly executed and delivered by the
Sellers and constitute the legal, valid and binding obligations of each of
the Sellers, enforceable against each of the Sellers in accordance with
their respective terms.
Section 4.4. Ownership of Share Capital; Title.
(a) Except as disclosed in Section 4.4(a) of the
Disclosure Schedule, each of the Sellers owns of record and beneficially
the Company Quotas set forth beside such Seller's name in Section 2.1.
All issued share capital of the Company have been owned of record and
beneficially at all times exclusively by individual citizens of, or other
Persons organized and existing under the laws of, the Federal Republic of
Germany. Each of the Sellers has and will have, on the Closing Date,
10
good, marketable and valid title to the Company Quotas to be sold by such
Seller hereunder, free and clear of all liens, pledges, encumbrances,
claims, security interests, charges, voting trusts, voting agreements,
other agreements, rights, options, warrants or other restrictions of any
kind, nature or description, other than those referenced in Section
4.2(a)(ii) of the Disclosure Schedule. The execution, delivery,
notarization and performance of this Agreement will convey to Buyer at the
Closing good title to the Company Quotas free and clear of all claims,
liens, encumbrances, security interests, charges or restrictions on
transfer of any nature whatsoever, other than those contained in the
Company's or TOP's respective Articles of Association. No Seller is
involved in any proceedings by or against such Seller under any bankruptcy
laws or under any other insolvency or debtor's relief act.
(b) Except as disclosed in Section 4.4(b) of the
Disclosure Schedule, the Company owns of record and beneficially the share
capital in the Subsidiaries and the Investments set forth in Section
4.2(b) of the Disclosure Schedule. All issued share capital of the
Subsidiaries and, to the knowledge of the Sellers, the Investments has
been owned of record and beneficially at all times exclusively by
individual citizens of, or other Persons organized and existing under the
laws of, the Federal Republic of Germany. The Company has and will have,
on the Closing Date, good, marketable and valid title to such share
capital, free and clear of all liens, pledges, encumbrances, claims,
security interests, charges, voting trusts, voting agreements, other
agreements, rights, options, warrants or other restrictions of any kind,
nature or description, other than those referenced in Section 4.4(b) of
the Disclosure Schedule.
Section 4.5. The Sellers' Consents and Approvals; No
Violations. Except as set forth in Section 4.5 of the Disclosure
Schedule, the execution, delivery and performance by each of the Sellers
of this Agreement and the Related Agreements to which he is a party will
not (with or without the giving of notice or the passage of time, or both)
(a) violate any applicable provision of law or any rule or regulation of
any national, federal, state, provincial or local administrative agency or
governmental authority applicable to the Sellers, or any order, writ,
injunction, judgment or decree of any court, administrative agency or
governmental authority applicable to the Sellers, (b) violate or require
any consent, waiver or approval under (except for the matters
11
referenced in Section 4.5 of the Disclosure Schedule), result in a
breach, modification or termination of any provisions of, constitute a
default under, affect the rights under or enforceability of, or result in
the imposition of any pledge, security interest or other encumbrance upon
any of the Company Quotas or the share capital of the Subsidiaries or the
Investments pursuant to, any agreement, indenture, mortgage, deed of
trust, lease, license, or other instrument to which any Seller is a party
or by which any of them is bound, or any license, permit or certificate
held by any of them including, without limitation, those listed on the
Disclosure Schedule, or (c) based upon the information provided to Sellers
with respect to Buyer, require any consent or approval by, notice to or
registration with any governmental authority or other Person which is
applicable to any Seller.
Section 4.6. Consents and Approvals; No Violations. Except as
set forth in Section 4.6 of the Disclosure Schedule, the execution,
delivery and performance by each of the Sellers of this Agreement and the
Related Agreements to which he is a party will not (with or without the
giving of notice or the passage of time, or both) (a) violate any
provision of law or any rule or regulation of any national, federal,
state, provincial or local administrative agency or governmental authority
applicable to the Company, the Subsidiaries or, to the knowledge of the
Sellers, the Investments, or any order, writ, injunction, judgment or
decree of any court, administrative agency or governmental authority
applicable to the Company, the Subsidiaries or, to the knowledge of the
Sellers, the Investments, (b) violate the organizational documents of the
Company, the Subsidiaries or the Investments, (c) violate or require any
consent, waiver or approval under, result in a breach, modification or
termination of any provisions of, constitute a default under, affect the
rights under or enforceability of, result in the imposition of any pledge,
security interest or other encumbrance pursuant to, or give any Person the
right to terminate, modify or renegotiate any provision of, any agreement,
indenture, mortgage, deed of trust, lease, license, or other instrument to
which the Company, the Subsidiaries or, to the knowledge of the Sellers,
the Investments is a party or by which the Company, the Subsidiaries or,
to the knowledge of the Sellers, the Investments is bound, or any license,
permit or certificate held by the Company, the Subsidiaries or, to the
knowledge of the Sellers, the Investments including, without limitation,
those listed on the Disclosure Schedule, (d) based upon the information
provided to Sellers with respect to Buyer, require any consent or approval
by, notice to or registration with any governmental authority or other
Person which is applicable to the Company, the Subsidiaries or, to the
knowledge of the Sellers, the Investments, or (e) result in the creation
12
of any lien, claim, encumbrance or charge upon any property or assets of
the Company, the Subsidiaries or, to the knowledge of the Sellers, the
Investments.
Section 4.7. Financial Statements.
(a) Section 4.7(a) of the Disclosure Schedule contains (i)
the audited consolidated balance sheet and the related audited
consolidated income statement (including any related notes thereto) of the
Company and the Subsidiaries, and the audited balance sheet and the
related audited income statement (including any related notes thereto) of
each of the Investments, in each case as of and for the fiscal years ended
December 31, 1994, December 31, 1995 and December 31, 1996, and (ii) the
Interim Balance Sheets and the related unaudited consolidated income
statements of the Company and the Subsidiaries, and the Interim Balance
Sheets and the related unaudited income statements of each of the
Investments, in each case as of and for the seven-month period ending as
of the Interim Balance Sheet Date (including any related notes thereto)
(collectively, the "Financial Statements").
(b) Except as set forth on Section 4.7(b) of the
Disclosure Schedule and to the knowledge of the Sellers with respect to
Financial Statements relating to the Investments, the Financial Statements
(i) are true, correct and complete in all material respects; (ii) are in
accordance with the books and records of the Company, the Subsidiaries and
each of the Investments; (iii) have been prepared in accordance with
principles of orderly bookkeeping and GGAAP applied on a consistent basis
throughout the periods involved, respecting principles of prudence and
continuity; (iv) fairly present, in the case of each year-end balance
sheet and the Interim Balance Sheet, the financial positions of the
Company and the Subsidiaries, and of each of the Investments, as of the
respective dates thereof and, in the case of the related income
statements, the results of operations and earnings of the Company and the
Subsidiaries, and of each of the Investments, for the respective periods
indicated; and (v) in the case of the Interim Balance Sheets, were
prepared in accordance with principles applicable to a year-end balance
sheet and present information comparable to other balance sheets included
in the Financial Statements.
Section 4.8. Undisclosed Liabilities. Except as set forth on
Section 4.8 of the Disclosure Schedule, neither the Company, nor any the
Subsidiaries nor, to the knowledge the Sellers, any of the Investments has
any liabilities (absolute, accrued, contingent or otherwise) which are
13
required to be reflected in a balance sheet or in the notes thereto under
GGAAP, except (a) liabilities reflected or reserved against in the Interim
Balance Sheets, and (b) liabilities incurred since the Interim Balance
Sheet Date in the ordinary course of business, or which, in the aggregate,
do not exceed DM10,000 with respect to such Person.
Section 4.9. Taxes. Except as set forth in Section 4.9 of the
Disclosure Schedule, each of the Company, the Subsidiaries and, to the
knowledge of the Sellers, the Investments has timely filed all returns,
declarations, reports, information returns and statements required to be
filed by it (the"Returns") in respect of any Taxes and has paid all Taxes
currently due and payable by it. Except as set forth in Section 4.9 of
the Disclosure Schedule and to the knowledge of the Sellers with respect
to Returns relating exclusively to the Investments, the Returns accurately
and completely reflect the facts regarding the income, properties,
operations and status of any entity required to be shown thereon, and no
notice of any proposed deficiency, assessment or levy in respect of Taxes
has been received by the Company, the Subsidiaries or, to the knowledge of
the Sellers, the Investments. Except as set forth in Section 4.9 of the
Disclosure Schedule, neither the Company, nor any of the Subsidiaries,
nor, to the knowledge of the Sellers, any of the Investments is currently
or, during the past three years, has been the subject of an audit or in
receipt of a notice that it is being or will be audited by a relevant
Taxing authority, or has agreed to any extension of time of any applicable
statute of limitations period, and each of the Company, the Subsidiaries
and, to the knowledge of the Sellers, the Investments has duly withheld
from each payment from which such withholding is required by law, the
amount of all Taxes required to be withheld therefrom and has paid the
same (to the extent due) together with the employer's share of the same,
if any, to the proper Tax receiving officers. Except as set forth in
Section 4.9 of the Disclosure Schedule, the charges, accruals, and
reserves for Taxes due, or accrued but not yet due, relating to the
income, properties or operations of each of the Company, the Subsidiaries
and, to the knowledge of the Sellers, the Investments for any period prior
to or including the Closing Date as reflected on the books of each of the
Company, the Subsidiaries and, to the knowledge of the Sellers, the
Investments are adequate in all material respects to cover such Taxes, all
Tax deficiencies which have been proposed or asserted against the Company,
any Subsidiary or, to the knowledge of the Sellers, any Investment have
been fully paid or finally settled, and no issue has been raised in any
examination which, by application of similar principles, can be expected
to result in the proposal or assertion of a Tax deficiency for any other
year not so examined, neither the Company, nor any of the Subsidiaries,
14
nor, to the knowledge of the Sellers, any of the Investments has received
any Tax incentive, abatement or other credit with respect to its assets,
the Business it conducts, its employees or otherwise which contains
provisions for the repayment of any Tax benefit, and each of the Company,
the Subsidiaries and, to the knowledge of the Sellers, the Investments has
incurred liabilities for Taxes only in the ordinary course of the
Business. Neither the Company, nor any of the Subsidiaries, nor, to the
knowledge of the Sellers, any of the Investments has ever conducted
business in the United States, has ever had any assets, employees or
shareholders located or resident in the United States, or has ever made
any election with the United States Internal Revenue Service regarding
Taxes in the United States.
Section 4.10. Title to Properties.
(a) Neither the Company, nor any of the Subsidiaries, nor,
to the knowledge of the Sellers, any of the Investments owns or has ever
owned, in whole or in part, any interest in any real property. Section
4.10(a) of the Disclosure Schedule sets forth a complete and accurate list
(subdivided by Person) of all fixed assets owned by the Company, the
Subsidiaries and the Investments and used in the Business as of the
Interim Balance Sheet Date.
(b) Except for the normal reservation of title of
suppliers to the extent not paid and as set forth in Section 4.10(b) of
the Disclosure Schedule, each of the Company, the Subsidiaries and, to the
knowledge of the Sellers, the Investments has good and marketable title to
all the personal property and assets (tangible and intangible) reflected
as owned by it on the Interim Balance Sheets or acquired since the Interim
Balance Sheet Date (except for properties and assets disposed of since
such date in the ordinary course of business and consistent with past
practice), free and clear of all liens, charges, security interests or
other encumbrances of any nature whatsoever.
(c) Except as set forth on Section 4.10(c) of the
Disclosure Schedule and to the knowledge of the Sellers with respect to
the Investments, all such assets (i) are now in the possession of the
Company, the Subsidiaries or the Investments, (ii) are not subject to
claims by any other Person with a right to possession of all or any part
of such assets, (iii) are in good operating condition (ordinary wear and
tear excepted), (iv) are not, individually or in the aggregate, in need of
any repairs which individually or in the aggregate could cost in excess of
DM10,000, and (v) are located on the Leased Real Property.
15
Section 4.11. Absence of Changes. Except as set forth in
Section 4.11 of the Disclosure Schedule, since December 31, 1996, each of
the Company, the Subsidiaries and, to the knowledge of the Sellers, the
Investments has operated only in the ordinary course of the Business in
all material respects and there has not been with respect to the such
Person:
(a) any change or changes in the Business, financial
condition, properties, results of operations or assets or liabilities, or
any development or event involving a prospective change, other than
changes in the ordinary course of the Business and other than changes
which singularly or in the aggregate, have not had and will not have a
Material Adverse Effect;
(b) any material damage or destruction, loss or
other casualty, however arising and whether or not covered by insurance;
(c) any labor dispute or any other similar event or
condition of any character involving employees of such Person;
(d) any indebtedness incurred for borrowed money
(except by endorsement for collection or for deposit of negotiable
instruments received in the ordinary course of the Business it conducts);
(e) any change in the accounting methods,
procedures or practices or any change in depreciation or amortization
policies or rates theretofore adopted;
(f) any amendment or termination of any contract,
agreement, lease, franchise or license;
(g) any amendment of its organizational documents;
(h) any mortgage, pledge or other encumbering of any
property or assets;
(i) any material liability or obligation incurred,
except current liabilities incurred in the ordinary course of the Business
it conducts, or any cancellation or compromise of any material debt or
claim, or any waiver or release of any right of substantial value to the
Business it conducts;
16
(j) any sale, transfer, lease, abandonment or other
disposal of any machinery, equipment or real property with a fair market
value in excess of DM10,000 or, except in the ordinary course of the
Business it conducts, any sale, transfer, lease, abandonment or other
disposal of any portion of any other properties or assets (real, personal
or mixed, tangible or intangible);
(k) any transfer, disposal or grant of any rights
under any Intellectual Property owned by such Person, or any disposal of
or disclosure to any other Person other than representatives of Buyer or
SEi of any material trade secret, formula, process or know-how not
theretofore a matter of public knowledge; except, in each case, in the
ordinary course of the Business it conducts;
(l) any bonus or other increase in the compensation
of its officers, employees or directors, or any agreement entered into
with any officer, employee or director, except, in each case, in the
ordinary course of the Business it conducts and consistent with past
practice;
(m) any single capital expenditure made, or any
commitment to make any capital expenditure, in excess of DM10,000 for any
tangible or intangible capital assets, additions or improvements, except
in the ordinary course of the Business it conducts;
(n) any declaration, payment or reservation for
payment of any dividend or other distribution in respect of the share
capital of such Person or any other securities, or any redemption,
purchase or other acquisition, directly or indirectly, of any share
capital or other securities of such Person;
(o) any grant or extension of any power-of-attorney
or guaranty in respect of the obligation of any other Person;
(p) any forward purchase commitments involving more
than DM10,000 in the aggregate or any other purchase commitments that are
not in the ordinary course of the Business it conducts;
(q) the adoption of any ruling, law, ordinance,
statute, rule, regulation, code, or other requirement of any governmental
authority which adversely affects such Person or the Business it conducts;
or
17
(r) any entry into any binding agreement, whether in
writing or otherwise, to take any action described in this Section 4.11.
Section 4.12. Intellectual Property.
(a) Section 4.12(a) of the Disclosure Schedule contains a
list and description (including information with respect to registration)
of all Intellectual Property owned or used by the Company, any Subsidiary
or, to the knowledge of the Sellers, any Investment, subdivided by Person
and type of Intellectual Property. Each of the Company, the Subsidiaries
and, to the knowledge of the Sellers, the Investments owns or has the
right to use all Intellectual Property used by it in the conduct of the
Business as presently conducted by it. Except for the rights and licenses
granted to the Company, the Subsidiaries or the Investments under software
contracts, the Company, a Subsidiary or, to the knowledge of the Sellers,
an Investment, as indicated in Section 4.12(a) of the Disclosure Schedule,
owns all right, title and interest in the Intellectual Property required
to be identified on Section 4.12(a) of the Disclosure Schedule, free and
clear of any encumbrance. Neither the Company, nor any of the
Subsidiaries nor, to the knowledge of the Sellers, any of the Investments
has granted, transferred, or assigned any right or interest in its
Intellectual Property to any other Person.
(b) Except as disclosed in Section 4.12(b) of the
Disclosure Schedule, no fees or royalties are payable or will be payable
under any software contracts listed in Section 4.12(a) of the Disclosure
Schedule as a result of the continued use of licensed software by the
Person indicated as licensing such software in Section 4.12(a) of the
Disclosure Schedule in the ordinary course of the Business conducted by
such Person, other than fees or royalties due for upgrades and fees or
royalties that do not exceed DM20,000 per year in the aggregate.
(c) Except as disclosed in Section 4.12(c) of the
Disclosure Schedule and to the knowledge of the Sellers with respect to
the Investments, (i) all registrations for Intellectual Property required
to be identified in Section 4.12(a) of the Disclosure Schedule as being
owned by the Company, a Subsidiary or an Investment are valid and in force
and applications to register any unregistered Intellectual Property so
identified are pending and in good standing, all without challenge of any
kind and to the best knowledge of the Sellers, there is no basis for any
such challenge; and (ii) the Company, a Subsidiary or an Investment has
the exclusive right to bring actions for infringement or unauthorized use
of the Intellectual Property identified as being owned by such Person, and
18
there is, to the best knowledge of the Sellers, no basis for any such
action.
(d) Except as disclosed in Section 4.12(d) of the
Disclosure Schedule, all trade secrets of each of the Company, the
Subsidiaries and, to the knowledge of the Sellers, the Investments (i)
have at all times been maintained in confidence, and (ii) have not been
disclosed to employees, consultants or other third parties except on a
"need to know" basis in connection with their respective performance of
duties to the Company, a Subsidiary or an Investment, as applicable.
(e) Except as disclosed in Section 4.12(e) of the
Disclosure Schedule, no claims have been asserted by any Person against
the Company, any Subsidiary or, to the knowledge of the Sellers, any
Investment claiming ownership of or right to use any of the Intellectual
Property required to be disclosed on Section 4.12(a) of the Disclosure
Schedule (other than ownership of Intellectual Property licensed to the
Company, a Subsidiary or an Investment under the software contracts listed
on Section 4.12(a) of the Disclosure Schedule) nor, to the best knowledge
of the Sellers, is there any basis for any such claim. The use of the
Intellectual Property by each the Company, the Subsidiaries and, to the
knowledge of the Sellers, the Investments has not infringed on the rights
of any Person and, except as disclosed in Section 4.12(e) of the
Disclosure Schedule, no claim of infringement or any misuse or
misappropriation of any the Intellectual Property of any other Person has
been made or asserted against the Company, any Subsidiary or, to the
knowledge of the Sellers, any Investment in respect of the Business
conducted by it, nor is there, to the best knowledge of the Sellers, any
basis for any such claim.
Section 4.13. Leases. Section 4.13 of the Disclosure Schedule
contains an accurate and complete list of all leases pursuant to which the
Company, a Subsidiary or, to the knowledge of the Sellers, an Investment
leases real or personal property. Except as set forth in Section 4.13 of
the Disclosure Schedule, all such leases are in full force and effect and
are valid, binding and enforceable in accordance with their terms; there
are no existing defaults or events which, with the giving of notice or the
lapse of time or both, would constitute a default thereunder by the
Company, the Subsidiary or, to the knowledge of the Sellers, the
Investment, as applicable, or any other parties thereto. Except as set
forth in Section 4.13 of the Disclosure Schedule, all leased items of
personalty are in good operating condition, are in a state of good
maintenance and repair and are adequate and suitable for the purpose for
19
which they are presently being used. Each such lease contains terms and
conditions obtained from independent third parties and negotiated in good
faith at arms-length. None of the rights of the Company, the Subsidiary
or, to the knowledge of the Sellers, the Investment, as applicable, under
each such lease is subject to termination or modification as a result of
the transactions contemplated hereby.
Section 4.14. Bank Accounts; Investments; Powers of Attorney.
(a) Section 4.14(a) of the Disclosure Schedule sets
forth the names and locations of all banks, trust companies, savings and
loan associations and other financial institutions at which the Company, a
Subsidiary or, to the knowledge of the Sellers, an Investment maintains
safe deposit boxes or accounts of any nature and the names (and limits, if
any) of all persons authorized to draw thereon, make withdrawals therefrom
or have access thereto.
(b) Section 4.14(b) of the Disclosure Schedule sets forth
a list (subdivided by Person) and description (including interest rates
and other significant terms) of all funds, securities and other
instruments in which excess cash of the Company, the Subsidiaries and, to
the knowledge of the Sellers, the Investments was invested as of the
Interim Balance Sheet Date (the "Investments"). All such Investments are
investment grade and can be liquidated within one business day without
being discounted.
(c) Except as set forth in Section 4.14(c) of the
Disclosure Schedule and to the knowledge of the Sellers with respect to
the Investments and Affiliates exclusively of the Investments, neither the
Company, nor any of the Subsidiaries, nor any of the Investments, nor any
of their respective Affiliates beneficially or of record owns any shares
of SEi Stock.
(d) Neither the Company nor any of the Subsidiaries nor,
to the knowledge of the Sellers, any of the Investments has granted or
extended to any Person, or is otherwise subject to or bound by, any power
of attorney which remains in effect, except for the authorizations set
forth in Section 4.14(a) of the Disclosure Schedule.
Section 4.15. Material Contracts and Customers.
(a) To the knowledge of the Sellers with respect to the
Investments, Section 4.15(a) of the Disclosure Schedule contains a true
20
and correct list (subdivided by Person) of all material contracts,
agreements or other understandings or arrangements, written or oral, or
commitments therefor, relating to the Business, assets or liabilities of
Company, the Subsidiaries, or, to the Sellers' knowledge the Investments,
(collectively, the "Contracts"). Except as set forth in Section 4.15(a)
of the Disclosure Schedule, neither the Company, nor any of the
Subsidiaries, nor, to the knowledge of the Sellers, any of the
Investments, is a party to, or otherwise bound by, any written or oral,
formal or informal:
(i) purchase orders and other contracts, in each case
for the sale of goods or services, in excess of DM40,000 (net of value
added taxes) individually or, for any group of related purchase orders and
contracts, in the aggregate;
(ii) contracts, agreements or commitments for the
purchase of materials or services which are not required by such Person in
the current operation of the Business in the ordinary course, or any
agreements or commitments for the sale of goods or services which are
inadequate to recover current costs of such Person;
(iii) contracts involving the expenditure for the
purchase of material, supplies, equipment or services of more than
DM40,000 per contract;
(iv) contracts not otherwise referenced involving the
expenditure of more than DM40,000 (per contract) which are not cancelable
within thirty (30) days without penalty;
(v) contracts relating to the leasing (as lessor or
lessee) or the conditional purchase or sale by such Person of any
property, whether real, personal or mixed;
(vi) contracts to which such Person is a party or by
which any of its assets are bound and that require consent by any other
Person in connection with the transaction contemplated hereby, either to
prevent a breach or continue the effectiveness thereof;
(vii) contracts or arrangements with any
governmental body, agency or authority;
(viii) indentures, mortgages, promissory notes,
loan agreements, capital leases, security agreements or other agreements
21
or commitments for the borrowing of money, or the deferred purchase price
of assets, or which create a lien or encumbrance on any assets of such
Person;
(ix) guarantees of the obligations of third parties
or agreements to indemnify third parties (other than indemnification
provisions provided in the ordinary course to or for the benefit of the
customers of such Person);
(x) agreements which restrict such Person from doing
business in any geographic location;
(xi) policies of insurance in force and effect with
respect to such Person, the Business it conducts or its assets;
(xii) contracts or agreements not otherwise referenced
with any of the Sellers or their Affiliates;
(xiii) license agreements (as licensee or licensor)
with third parties;
(xiv) employment or consulting agreements which
vary materially from the model employment referenced in Section 4.18(b) or
which involve the payment of DM50,000 or more during any twelve-month
period;
(xv) distributor, dealer, sales, advertising, agency,
manufacturer's representative, franchise or similar contracts or any
contract relating to the payment of a commission;
(xvi) collective bargaining or other agreements
with labor unions;
(xvii) contracts or agreements for charitable
contributions by such Person;
(xviii) any contract or agreement which could
reasonably be expected to have a Material Adverse Effect on such Person;
or
(xix) other contracts outside the ordinary course
of the Business such Person conducts which are not otherwise described in
this Subsection.
22
(b) True and complete copies of each of the Contracts have
been made available to Buyer and SEi by the Sellers. Each of the
Contracts is in full force and effect and there exists no default or event
which, with the giving of notice or lapse of time or both, would
constitute a default thereunder by the Company, a Subsidiary or an
Investment, as applicable, or, to the knowledge of the Sellers, by any
other party thereto. Except as referenced in Section 4.6 of the
Disclosure Schedule, none of the rights of the Company, a Subsidiary or to
the Sellers' knowledge an Investment, as applicable, under any of the
Contracts is subject to termination or modification as a result of the
transactions contemplated hereby. No notice of termination or nonrenewal
has been given under any Contract. All Contracts contain terms and
conditions not less favorable to the Company, the Subsidiary or to the
Sellers' knowledge the Investment, as applicable, than those that would be
obtained from independent third parties and have been negotiated in good
faith at arms-length. None of the Contracts with suppliers of goods or
services to the Company, a Subsidiary or to the Sellers' knowledge an
Investment, as applicable, requires the payment of any commission,
royalty, fee, brokerage fee or other similar charge. For the purposes of
Section 4.15(a), "material" contracts means contracts described in Section
4.15(a)(i) through (xix). The amounts set forth in this Section 4.15 with
respect to the Contracts shall not be deemed to represent any standard of
"materiality" with respect to the Contracts or otherwise for any other
purpose and shall have no application to any other Section of this
Agreement.
(c) Section 4.15(c) of the Disclosure Schedule contains a
list (subdivided by Person) of the name and location of the five (5)
largest customers (the "Customers") and the five (5) largest suppliers, in
each case measured by revenues generated or amounts paid, of each of the
Company, the Subsidiaries and, to the knowledge of the Sellers, the
Investments as of the Interim Balance Sheet Date. The relationships of
each of the Company, the Subsidiaries and, to the knowledge of the
Sellers, the Investments with its respective Customers are good, and no
Seller is aware of any intention of any such Customers or suppliers to
terminate or modify any of such relationships. Neither the Company, nor
any of the Subsidiaries nor, to the knowledge of the Sellers, any of the
Investments is generally required to provide bonding or any other security
arrangements in connection with any transactions with its customers or
suppliers.
23
Section 4.16. Related Transactions.
(a) Except as set forth in Section 4.16 of the Disclosure
Schedule, neither the Company, the Subsidiaries nor, to the knowledge of
the Sellers, the Investments has any contractual relationship with, or any
obligation or liability owed to, any of its Affiliates, any Affiliate of
the Sellers, or any entity of which one or more Sellers is an Affiliate.
All such contractual relationships are on terms that are no less favorable
to the Company than would be the case with a non-affiliated party.
(b) Except as set forth in Section 4.16 of the Disclosure
Schedule, neither the Sellers nor any director or officer of the Company,
nor any director or officer of any of the Subsidiaries nor, to the
knowledge of the Sellers, any director or officer of any of the
Investments, nor any Affiliate of any of them has any interest, direct or
indirect, in any Person which (i) is a competitor, customer, subcontractor
of supplier of the Company, any of the Subsidiaries or any of the
Investments, or (ii) has an existing relationship with, or an interest in,
the Company, any of the Subsidiaries or any of the Investments, including
but not limited to lessors of real or personal property and Persons
against which rights or options are exercisable by the Company, any of the
Subsidiaries or any of the Investments.
Section 4.17. Insurance. Section 4.17(a) of the Disclosure
Schedule contains an accurate and complete list (subdivided by Person) of
all policies of insurance presently maintained with respect to the
Company, a Subsidiary or, to the knowledge of the Sellers, an Investment
including, without limitation, "key man" insurance with respect to any
employee. Such list includes a description of coverage, the amount of
coverage and the name of the insurer or an indication that the Company,
the Subsidiary or the Investment, as the case may be, has self-insured any
particular aspect of the Business. All such policies are in full force
and effect and no notice of cancellation or termination has been received
with respect to any such policy and there is, and has been, no default by
the Company, the Subsidiary, or, to the knowledge of the Sellers, the
Investment, as applicable, with respect to its obligations under any such
policy. Except as set forth in Section 4.17(b) of the Disclosure
Schedule, the Sellers, the Company, the Subsidiaries and, to the knowledge
of the Sellers, the Investments have not received during the past two (2)
years any written notice or other written communication from any insurance
company declining to write insurance with respect to the Business, or
canceling or amending any of the Company's, a Subsidiary's or an
Investment's insurance policies or proposing to do so. Section 4.17(c) of
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the Disclosure Schedule sets forth a summary of information (subdivided by
Person) pertaining to property damage, personal injury and products
liability claims filed by the Company, the Subsidiaries and, to the
knowledge of the Sellers, the Investments during the past five (5) years
which exceed DM2,000 in any instance, all of which have been paid or are
being defended by the Company's, a Subsidiary's, or an Investment's
insurance carriers and involve no exposure to the Company, the
Subsidiaries or the Investments. Section 4.17(d) of the Disclosure
Schedule sets forth a complete list of any claims that the Company, a
Subsidiary or, to the knowledge of the Sellers, an Investment has under
any of its insurance policies which have not been fully paid.
Section 4.18. Labor Matters.
(a) Except to the extent set forth in Section 4.18(a) of
the Disclosure Schedule, (i) each of the Company, the Subsidiaries and, to
the knowledge of the Sellers, the Investments is in compliance with all
rulings, laws, ordinances, statutes, rules, regulations, codes, and other
requirements of any governmental authority with respect to employment and
employment practices, (ii) there is no unfair labor practice charge or
complaint against the Company, a Subsidiary or, to the knowledge of the
Sellers, an Investment pending before or, to the best knowledge of the
Sellers, threatened to be brought before any labor grievance board,
authority or tribunal, nor has any such charge or complaint been, to the
best knowledge of the Sellers, threatened against the Company, a
Subsidiary or an Investment; (iii) there is no labor strike, dispute,
slowdown, or stoppage pending against or affecting the Company, a
Subsidiary or, to the knowledge of the Sellers, an Investment; (iv)
neither the Company, nor any of the Subsidiaries, nor, to the knowledge of
the Sellers, any of the Investments is a party to any collective
bargaining agreement or contract with any labor union and no works council
exists with respect to employees of the Company, a Subsidiary or, to the
knowledge of the Sellers, an Investment; (v) neither the Company, nor any
of the Subsidiaries, nor, to the knowledge of the Sellers, any of the
Investments has experienced any labor difficulty during the last three (3)
years; and (vi) there are no other controversies pending between the
Company, any of the Subsidiaries or, to the knowledge of the Sellers, any
of the Investments and any of their respective employees, including,
without limitation, claims arising under any labor laws. There has not
been any adverse change in relations with employees of the Company, any
Subsidiary or, to the knowledge of the Sellers, any of the Investments as
a result of any announcement or other disclosure of the transactions
contemplated by this Agreement.
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(b) Section 4.18(b) of the Disclosure Schedule sets forth
a list (subdivided by Person) of the names of all employees, consultants,
officers and directors of the Company, the Subsidiaries and, to the
knowledge of the Sellers, the Investments as of the date hereof, including
length of employment and date of birth. Except as indicated on Section
4.18(b) of the Disclosure Schedule, all employees have executed one of the
Company's, a Subsidiary's or, to the knowledge of the Sellers, an
Investment's model employment agreements, as appropriate, or an agreement
which does not vary materially from the appropriate model agreement. The
Sellers have delivered to SEi (i) copies of the model employment
agreements of each of the Company and the Subsidiaries, (ii) copies of all
written employment agreements to which the Company, a Subsidiary or, to
the knowledge of the Sellers, an Investment is a party with any of their
respective employees identified in Section 4.18(b) of the Disclosure
Schedule as having agreements which vary materially from the applicable
model employment agreements, (iii) written summaries of the terms of all
oral employment agreements that are other than at-will and which vary
materially from the applicable model employment agreements, and (iv) a
schedule (subdivided by Person) of compensation for all employees.
Section 4.19. Employee Benefit Plans.
(a) Set forth in Section 4.19 of the Disclosure Schedule
is an accurate and complete list (subdivided by Person) of each Employee
Benefit Plan (other than Employee Benefit Plans provided by statute)
maintained or contributed to by the Company, the Subsidiaries or, to the
knowledge of the Sellers, the Investments.
(b) Except as set forth in Section 4.19 of the Disclosure
Schedule, all amounts that the Company, a Subsidiary or, to the knowledge
of the Sellers, an Investment are required to have contributed to any
Employee Benefit Plan have been contributed within the time prescribed by
applicable law and all benefits, expenses, and other amounts due and
payable and all transfers or payments required to be made with respect to
any Employee Benefit Plan have been paid within the time prescribed by the
applicable documents and governing law.
(c) Except as set forth in Section 4.19 of the Disclosure
Schedule and to the knowledge of the Sellers with respect to Employee
Benefit Plans relating exclusively to the Investments, there are no claims
(other than routine claims for benefits) or lawsuits pending with respect
to any Employee Benefit Plan.
26
(d) Except as set forth in Section 4.19 of the Disclosure
Schedule and to the knowledge of the Sellers with respect to Employee
Benefit Plans relating exclusively to the Investments, the Sellers have
previously delivered or made available to Buyer and SEi true and complete
copies of the plan documents for each Employee Benefit Plan identified in
Section 4.19 of the Disclosure Schedule.
Section 4.20. Litigation. Except as set forth in Section 4.20
of the Disclosure Schedule, there are no claims, actions, suits, or
proceedings pending or, to the best knowledge of the Sellers, threatened
against the Company, any Subsidiary or, to the knowledge of the Sellers,
any Investment relating to this Agreement or the transactions contemplated
hereby or to the Business or the properties of any of them at law or in
equity or before or by any national, federal, state, provincial, local, or
foreign court or other governmental department, commission, board, agency,
instrumentality or authority, nor any arbitration proceeding, in each case
including, without limitation, any claims relating to environmental
matters. Neither the Company, nor any of the Subsidiaries nor, to the
knowledge of the Sellers, any of the Investments is subject to any adverse
judgment, order, writ, injunction or decree of any court or governmental
body.
Section 4.21. Compliance with Laws. Except as set forth in
Section 4.21 of the Disclosure Schedule, each of the Company, the
Subsidiaries and, to the knowledge of the Sellers, the Investments has
conducted the Business conducted by it so as to comply with in all
material respects, and is not in material violation of, nor has it
received any written notice claiming it is in material violation of any
order, law, ordinance, statute, rule or regulation applicable to it, or to
the Business conducted by it or any of the property or assets of it
including, without limitation, any environmental or worker safety and
protection laws and regulations. Each of the Company, the Subsidiaries
and, to the knowledge of the Sellers, the Investments has all material
licenses, permits, certificates of occupancy and authorizations necessary
to conduct the Business conducted by it.
Section 4.22. Books and Records. The books, accounts and
records of each of the Company, the Subsidiaries and, to the knowledge of
the Sellers, the Investments (a) are located at their respective
headquarters located at the addresses set forth in Section 4.22 of the
Disclosure Schedule, (b) are correct and complete in all material
respects, (c) have been maintained in accordance with law and good
business practice, and (d) constitute all the books, accounts and records
27
necessary to carry on the Business conducted by it in the manner in which
it is currently being conducted and has over the preceding twelve (12)
months been carried on. The copies of the organizational documents and of
the minutes of all Quota holder and director meetings of the Company, the
Subsidiaries and, to the knowledge of the Sellers, the Investments hereto
delivered by the Sellers to Buyer and SEi are complete and correct.
Section 4.23. Copies of Documents. Each of the Sellers, the
Company and the Subsidiaries has delivered or specifically made available
to Buyer, SEi and their advisors true, complete and correct copies of all
documents referred to in this Agreement or in any Section of the
Disclosure Schedule with the understanding and intention that Buyer and
SEi may and will rely upon the completeness and accuracy thereof.
Section 4.24. Adequacy of Assets. Except as set forth in
Section 4.24 of the Disclosure Schedule, the assets of each of the
Company, the Subsidiaries and, to the knowledge of the Sellers, the
Investments, and the facilities, assets and services to which each of the
Company, the Subsidiaries or, to the knowledge of the Sellers, the
Investments has a contractual right of use include all rights, properties,
assets, facilities and services necessary or appropriate for the carrying
on of the Business it conducts in the manner in which it is currently
being and has over the immediately preceding twelve (12) months been
carried on, and neither the Company, nor any of the Subsidiaries nor, to
the knowledge of the Sellers, any of the Investments depend in any respect
upon the use of assets owned by, or facilities or services provided by,
any of the Sellers or any Affiliate of any of them.
Section 4.25. Grants. The Company, the Subsidiaries and, to
the knowledge of the Sellers, the Investments have never received any
Grants.
Section 4.26. Accounts Receivable. Section 4.26 of the
Disclosure Schedule sets forth a true and correct list (subdivided by
Person) and aging of all unpaid accounts receivable owing to the Company,
the Subsidiaries or, to the knowledge of the Sellers, the Investments as
of the Interim Balance Sheet Date. The accounts receivable of the
Company, the Subsidiaries and, to the knowledge of the Sellers, the
Investments including, without limitation, those reflected in Section 4.26
of the Disclosure Schedule, constitute or will constitute as of the
respective dates thereof, legal, valid, binding and enforceable claims
arising from bona fide transactions in the ordinary course of the Business
and, except to the extent reserved against on the Interim Balance Sheet,
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are or will be as of the respective dates thereof collectible in the
ordinary course of the Business and are not subject to any known
counterclaims or set-offs. The reserves for doubtful accounts and
allowances with respect to the accounts receivables generated after the
Interim Balance Sheet Date and prior to the Closing will be established on
the basis of evaluation of specific accounts and age classifications in
accordance with GGAAP.
Section 4.27. Brokers and Finders. No agent, broker,
investment banker, person or firm acting on behalf of the Company, the
Subsidiaries, the Sellers or any Affiliate of any of them, or to the
knowledge of the Sellers, on behalf of the Investments or any Affiliate of
any of them, is or will be entitled to any brokers' or finders' fee or any
other commission or similar fee directly or indirectly from any of the
parties hereto in connection with the transactions contemplated hereby.
Section 4.28. Investment Intent; Information Disclosures.
(a) Each of the Sellers acknowledges that the SEi Stock to
be received by such Seller will be acquired for such Seller's own account
and without any view to the distribution of any part thereof without
registration under applicable federal and state securities laws, or the
delivery to SEi of an opinion of counsel that registration is not required
in accordance with Section 4.28(e) hereof. Each Seller represents that
such Seller does not have any agreements or arrangements to sell, transfer
or grant a participation with respect to the Purchase Price Shares.
(b) Each Seller understands that the shares of SEi Stock
constituting the Purchase Price Shares are not registered under the United
States federal or state securities laws in part on the grounds that the
transactions contemplated hereby are exempt from registration under the
Securities Act of 1933 (the "1933 Act") pursuant to Section 4(2) thereof,
and that Buyer's and SEi's reliance on such exemption is predicated on
each Seller's representations set forth herein.
(c) Each Seller represents that such Seller has such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of its investment in the
Purchase Price Shares, and has the ability to bear the economic risks of
such investment. Each Seller further represents that such Seller has had
(i) access, prior to the Closing Date, to the SEi Filings (ii) the
opportunity to ask questions of, and receive answers from, SEi concerning
SEi and the Purchase Price Shares, and (iii) the opportunity to obtain
29
additional information (to the extent SEi possessed such information or
could acquire it without unreasonable expense) necessary to verify the
accuracy of any information received or to which such Seller had access.
(d) Each Seller understands and agrees that the Purchase
Price Shares may not be sold, transferred or otherwise disposed of without
registration under the 1933 Act and applicable state laws, unless
exemptions from registration requirements are available, and that in the
absence of an effective registration statement covering the Purchase Price
Shares or an available exemption from applicable registration
requirements, the Purchase Price Shares must be held indefinitely. In
particular, the Purchase Price Shares may not be sold pursuant to Rule 144
promulgated under the 1933 Act unless all of the conditions of such rule
are met.
(e) Each Seller agrees that such Seller will not offer,
sell, mortgage, pledge or otherwise dispose of any of the Purchase Price
Shares (other than pursuant to an effective registration statement under
the 0000 Xxx) unless and until such Seller delivers an opinion of counsel
satisfactory to SEi, or SEi delivers to the Sellers an opinion of counsel,
that registration under applicable federal or state securities laws is not
required.
(f) In addition, each Seller agrees that such Seller shall
not sell, assign, pledge, encumber or otherwise transfer any of the
Purchase Price Shares (or any interest therein) unless:
(i) such transfer occurs after financial results
reflecting at least thirty days of post-Closing combined operations of the
Company and SEi have been prepared and published within the meaning of
Section 201.01 of the SEC's Codification of Financial Reporting Policies;
and
(ii) either (A) such transfer occurs after the first
anniversary of the Closing, or (B) after giving effect to the transfer,
such Seller will continue to own at least fifty percent (50%) of the
Purchase Price Shares issued to him at the Closing (adjusted to account
for any additional shares issued in respect of such shares by way of stock
splits, stock dividends or otherwise).
(g) Each Seller agrees that all certificates for Purchase Price
Shares shall bear a legend in substantially the following form:
30
The securities represented by this certificate have not been registered,
qualified, recommended, approved or disapproved under United States
federal securities law or state securities laws. The shares represented
by this certificate may not be sold, transferred or otherwise disposed of
by an investor without (i) registration under federal and state securities
laws, or (ii) delivery of an opinion of counsel satisfactory to the
corporation that neither the sale nor the proposed transfer constitutes a
violation of any United States federal or state securities law.
The securities represented by this certificate are
subject to certain transfer restrictions set forth in
an Acquisition Agreement dated as of September 19th,
1997 (a copy of which may be obtained from the Company
at its principal executive office), and may not be
sold, assigned, pledged, encumbered or otherwise
transferred except in compliance with the terms and
conditions of such agreement.
Section 4.29 Pooling of Interests. The Sellers acknowledge that SEi
intends to account for the acquisition of the Company Quotas as a pooling
of interests, and that qualifying for such accounting treatment is
dependent in part upon actions taken, or not taken, by the Company and the
Sellers both before and after the date hereof. In this regard, and with
the understanding that SEi is relying thereon in making its commitment to
enter into this transaction, the Sellers warrant that the Sellers, the
Company and their respective Affiliates have not, directly or indirectly,
taken any of the following actions, which Sellers acknowledge could
prevent SEi from obtaining such pooling accounting treatment:
(a) acquired or sold, assigned, transferred or otherwise
disposed of, or reduced any risk relative to, any Company Quotas or SEi
Stock in contemplation of the transactions provided for herein;
(b) paid or received any dividends or other distributions with
respect to the capital interests of the Company, other than distributions
in the ordinary course of the Company's Business and not in contemplation
of the transactions provided for herein;
(c) altered the relative ownership interests of the Sellers in
the Company in contemplation of the transactions provided for herein;
31
(d) disposed of any part of the assets of the Company within
the nine months preceding the date hereof or in contemplation of the
transactions provided for herein;
(e) become a party to any contract, document, instrument or any
written or oral agreement regarding the sale, assignment or transfer of,
or allowed to be created any rights or obligations for the sale,
assignment or transfer of, or explicitly or impliedly agreed to sell,
assign or transfer any of the Company Quotas held by any of the Sellers to
any other Seller or any Affiliate of any other Seller; or
(f) entered into any agreement to do any of the forgoing,
including without limitation, any agreement to distribute or dispose of
any part of the assets of the Company upon the consummation of the
transactions provided for herein.
Section 4.30 Restrictive Covenants. Except as disclosed in Section
4.30 of the Disclosure Schedule, neither the Company, nor any of the
Subsidiaries nor, to the knowledge of the Sellers, any of the Investments
is subject to, or a party to, any mortgage, lien, lease, license, permit,
agreement, contract, instrument, law, rule, ordinance, regulation, order,
judgment or decree, or any other restriction of any kind or character,
which materially adversely affects its Business practices, operations or
condition or any of its assets or properties, which restricts its ability
to acquire any property or conduct its Business in any area or which would
prevent consummation of the transactions contemplated by this Agreement,
compliance by it with the terms, conditions and provisions hereof or the
operation of its Business by it after the date hereof on substantially the
same basis as heretofore operated by it.
Section 4.31 Product Liabilities and Warranties. There are no
express or implied warranties applicable to products or services sold or
provided by the Company, the Subsidiaries or, to the knowledge of the
Sellers, the Investments except as provided by statute or disclosed on
Section 4.31 of the Disclosure Schedule. Except as set forth in Section
4.31 of the Disclosure Schedule, there is no action, suit, proceeding or
claim pending or, to the best knowledge of the Sellers, threatened against
the Company, a Subsidiary or, to the knowledge of the Sellers, an
Investment under any warranty, express or implied, and there is no basis
upon which any claim could be made. Section 4.31 of the Disclosure
Schedule also summarizes all product liability claims that have been
asserted against the Company, the Subsidiaries and, to the knowledge of
32
the Sellers, the Investments during the five (5) years preceding the date
of this Agreement.
Section 4.32 Disclosure. None of the representations or warranties
by the Sellers herein, no statement contained in any certificate, list or
other writing furnished to Buyer or SEi pursuant hereto and no statement
contained in any Section of the Disclosure Schedule, taken as a whole,
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein
or therein, in light of the circumstances in which they were made, not
misleading. There is no fact known to the Sellers which materially and
adversely affects the Business, the Company, the Subsidiaries or, to the
knowledge of the Sellers, the Investments, or the prospects or financial
condition of the Company, the Subsidiaries or, to the knowledge of the
Sellers, the Investments, which has not been set forth in this Agreement
or in a Section of the Disclosure Schedule.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF SEI AND BUYER (GARANTIEN)
SEi and Buyer, jointly and severally, hereby represent and warrant to
the Sellers as follows:
Section 5.1. Corporate Organization. Each of Buyer and SEi is
a corporation or limited liability company, as the case may be, duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has the full right, power and authority
to own, lease and operate all of its properties and assets and to carry
out its business as it is presently conducted.
Section 5.2. Capitalization of SEi. All issued and
outstanding shares of SEi Stock have been, and upon issuance the Purchase
Price Shares will be, duly authorized and validly issued, fully paid and
nonassessable. The issuance of the Purchase Price Shares is not subject to
any preemptive right or right of first refusal that has not or will not be
satisfied or waived.
Section 5.3. Authority. Each of Buyer and SEi has all
requisite right, power and authority to execute, deliver and perform this
33
Agreement. The execution, delivery and performance of this Agreement and
the Related Agreements by Buyer and SEi have been duly and validly
authorized and approved by all necessary corporate action. This Agreement
has been duly and validly executed and delivered by Buyer and SEi and,
assuming this Agreement has been duly authorized, executed and delivered
by the Sellers, constitutes the legal, valid and binding obligation of
Buyer and SEi, enforceable against each of them in accordance with its
terms.
Section 5.4. SEi's Consents and Approvals; No Violations. The
execution, delivery and performance of this Agreement by Buyer and SEi
will not (with or without the giving of notice or the passage of time, or
both), (a) violate in any material respect any applicable provision of law
or any rule or regulation of any administrative agency or governmental
authority applicable to Buyer or SEi, or any order, writ, injunction,
judgment or decree of any court, administrative agency or governmental
authority applicable to Buyer or SEi, (b) violate the organizational
documents of Buyer or the Articles of Incorporation or Bylaws of SEi, (c)
violate or require any consent, waiver or approval under, result in a
breach, modification or termination of any of any provisions of,
constitute a default under, affect the rights under or enforceability of,
result in the imposition of any pledge, security interest or other
encumbrance pursuant to, give any Person the right to terminate, modify or
renegotiate any provision of, any material agreement, indenture, mortgage,
deed of trust, lease, license, or other instrument to which Buyer or SEi
is a party or by which Buyer or SEi is bound, or any material license,
permit or certificate held by Buyer or SEi (other than any consents which
will have been obtained on or prior to the Closing Date), or (d) based
upon the information provided to Buyer with respect to Sellers, require
any material consent or approval by, notice to, or registration with any
governmental authority.
Section 5.5. Litigation. There are no claims, actions, suits,
or proceedings pending or, to the best knowledge of Buyer and SEi,
threatened, against Buyer or SEi relating to this Agreement or the
transactions contemplated hereby or to the business or property of Buyer
or SEi, at law or in equity or before or by any national, federal, state,
provincial, local, or foreign court or other governmental department,
commission, board, agency, instrumentality or authority, or any
arbitration proceeding, in each case which are likely to have a Material
Adverse Effect. Neither Buyer nor SEi is subject to any judgment, order,
writ, injunction or decree of any court or governmental body.
34
Section 5.6. Brokers and Finders. No agent, broker,
investment banker, Person or firm acting on behalf of Buyer, SEi or any
Affiliate of either of them is or will be entitled to any brokers' or
finders' fee or any other commission or similar fee directly or indirectly
from any of the parties hereto in connection with the transactions
contemplated hereby.
Section 5.7. SEi Information. SEi has delivered to the
Sellers true and complete copies of the SEi Filings. At the date hereof,
the SEi Filings, taken as a whole, do not contain any untrue statement of
a material fact or omit any material fact necessary to make the statements
contained herein, in light of the circumstances in which they were made,
not misleading.
Section 5.8 No Material Adverse Change. Since June 30, 1997,
SEi has not suffered any Material Adverse Effect.
Section 5.9. Undisclosed Liabilities. SEi has no liabilities
(absolute, accrued, contingent or otherwise) required by USGAAP to be
reflected or reserved against in the consolidated statement of assets and
liabilities of SEi except (a) liabilities reflected or reserved against in
the Form 10-Q Balance Sheet, and (b) liabilities incurred since March 30,
1997 in the ordinary course of business, and which, in the aggregate, do
not have a Material Adverse Effect.
Section 5.10. Compliance with Laws. Each of Buyer and SEi has
conducted its business so as to comply with, and is not in violation of,
nor has it received any written notice claiming it is in violation of, any
order, law, ordinance, statute, rule or regulation applicable to it, or to
its business or any of its property or assets including, without
limitation, any environmental or worker safety and protection laws and
regulations, except to the extent that such non-compliance would not have
a Material Adverse Effect. Each of Buyer and SEi has all material
licenses, permits, certificates of occupancy and authorizations necessary
to conduct its business.
35
ARTICLE VI
FURTHER COVENANTS AND AGREEMENTS
Section 6.1. Covenants of the Sellers Pending the Closing.
The Sellers covenant and agree that, pending the Closing and prior to the
termination of this Agreement, and except as otherwise agreed to in
writing by Buyer and SEi, the Sellers shall or, as appropriate shall cause
the Company or the Subsidiaries to, or use its best efforts to cause the
Investments to:
(a) conduct the Business solely in the ordinary course and
consistent with the past practices of the Company, the Subsidiaries and
the Investments;
(b) not take or intentionally omit to take any action
which would result in a breach of any of the Sellers' representations and
warranties hereunder in any material respect;
(c) continue to maintain and service the physical assets
used by the Company, the Subsidiaries and the Investments in the conduct
of the Business consistent with past practices;
(d) use its reasonable efforts to preserve the Business
and organization of the Company, the Subsidiaries and the Investments, to
keep available the services of the Company's, the Subsidiaries' and the
Investments' present employees and agents and to maintain the relations
and goodwill with the suppliers, customers (including the Customers),
distributors and any others having business relations with the Company, a
Subsidiary or an Investment in connection with the Business;
(e) use its and their reasonable efforts to cause all of
the conditions to the obligations of Buyer and SEi under this Agreement to
be satisfied on or prior to the Closing Date and to obtain, prior to the
Closing, all consents of all third parties and governmental authorities
necessary for the consummation by the Sellers, the Company, the
Subsidiaries and the Investments of the transactions contemplated hereby.
All such consents will be in writing and executed counterparts will be
delivered to Buyer and SEi at or prior to the Closing.
36
(f) cooperate with Buyer and SEi in making arrangements to
obtain licenses, permits and certificates required to conduct the Business
or own the Company Quotas at Closing;
(g) provide Buyer's and SEi's officers, employees,
counsel, accountants and other representatives with full access to, during
normal business hours, all of the books and records of the Company, the
Subsidiaries and the Investments, make available to representatives of
Buyer and SEi, knowledgeable employees of the Company, the Subsidiaries
and the Investments, for reasonable periods of time to answer inquiries of
such representatives with respect to Buyer's and SEi's investigation of
the Company, the Subsidiaries and the Investments and permit such
representatives of Buyer and SEi to consult with the officers, employees,
accountants and counsel of the Sellers; provided, that no such activities
unreasonably interfere with the operation of the Business;
(h) not grant to any Person a power of attorney or similar
authority to act for the Company, a Subsidiary or any Investment;
(i) not enter into any guarantee of the obligations of any
Person to the extent such guarantee shall survive the Closing;
(j) not amend the charter, Articles of Association or
other organizational documents of the Company, any Subsidiary or any
Investment;
(k) make no change in the amount of issued share capital
of the Company, any Subsidiary or any Investment or issue or create any
option, warrant or any other security of the Company, any Subsidiary or
any Investment;
(l) not increase the compensation payable or to become
payable to any officer, employee or agent of the Company, any Subsidiary
or any Investment other than in the ordinary course of the Business, nor
make any bonus payment or arrangement to or with any officer, employee or
agent of the Company, any Subsidiary or any Investment other than in the
ordinary course of the Business;
(m) not make any dividends or other distributions in
respect of the Company Quotas;
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(n) not sell, transfer, lease, abandon or otherwise
dispose of (or commit to do so) any fixed assets of the Company, any
Subsidiary or any Investment; and
(o) not enter into any contract or commitment calling for
payment to or by the Company, any Subsidiary or any Investment of an
aggregate amount of more than DM10,000, which is not terminable by such
Person on less than thirty (30) days' notice without penalty.
Section 6.2. Covenants of Buyer and SEi Pending the Closing.
Buyer and SEi covenant and agree that, pending the Closing and prior to
the termination of this Agreement, and except as otherwise agreed to in
writing by the Sellers, each of Buyer and SEi:
(a) shall not take or intentionally omit to take any
action which would result in a breach of any of its representations and
warranties hereunder in any material respect.
(b) shall use its reasonable efforts to cause all of the
conditions to the obligations of the Sellers under this Agreement to be
satisfied on or prior to the Closing Date and to obtain prior to the
Closing, all consents of all third parties and governmental authorities
necessary for the consummation by it of the transactions contemplated
hereby. All such consents will be in writing and executed counterparts
thereof will be delivered to the Sellers at or prior to the Closing.
(c) shall promptly disclose to the Sellers any information
relating to its representations and warranties hereunder which, because of
an event occurring after the date hereof, is incomplete or is no longer
correct in any material respect.
Section 6.3. Filings. Promptly after the execution of this
Agreement, each of the parties hereto shall prepare and make or cause to
be made any required filings, submissions and notifications under the laws
of any domestic or foreign jurisdictions to the extent that such filings
are necessary to consummate the transactions contemplated hereby and will
use its reasonable efforts to take all other actions necessary to
consummate the transactions contemplated hereby in a manner consistent
with applicable law. Each of the parties hereto will furnish to the other
party such necessary information and reasonable assistance as such other
party may reasonably request in connection with the foregoing.
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Section 6.4. Effective Time of Closing and Transfer. The
Closing shall be effective for all purposes as of the close of business on
the Closing Date.
Section 6.5. Announcements. Except as expressly contemplated
by this Agreement, the parties will mutually agree as to the time, form
and content before issuing any press releases or otherwise making any
public statements or statements to third parties with respect to
transactions contemplated hereby and shall not issue any press release or,
except as necessary to perform their respective obligations hereunder,
discuss the transactions contemplated hereby with any third party prior to
reaching mutual agreement with respect thereto, except as may be required
by law. Notwithstanding the foregoing, in the event prior to the Closing
any party hereto is required by law or the rules of any stock exchange on
which such party's securities are traded to make a statement with respect
to the transactions contemplated herein, such party shall notify in
writing the other party hereto as to the time, form and content of such
statement.
Section 6.6. Costs and Expenses. Whether or not the
transactions contemplated by this Agreement are consummated, each party
hereto shall pay its own costs and expenses (including legal fees and
expenses) incurred in connection with due diligence reviews, the
preparation, negotiation and execution of this Agreement and all other
agreements, certificates, instruments and documents delivered hereunder,
and all other matters relating to the transactions contemplated hereby.
All German transfer and intangible Taxes, if any, arising in connection
with the sale and assignment of the Company Quotas hereunder shall be paid
by the Sellers. All transfer and intangible Taxes, if any, in connection
with the sale and delivery of the Purchase Price Shares hereunder shall be
paid by SEi. All fees and charges arising from notary requirements
applicable to the sale and assignment of Company Quotas shall be paid by
the Buyer.
Section 6.7. Further Assurances.
(a) Subject to the terms and conditions herein provided,
each of the parties hereto agrees to use its reasonable efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated
by this Agreement. If at any time after the Closing Date any further
action is necessary or desirable to carry out the purposes of this
39
Agreement, the parties hereto shall take or cause to be taken all
necessary action including, without limitation, the execution and delivery
of such further instruments and documents as may be reasonably requested
by the other party for such purposes or otherwise to consummate and give
effect to the transactions contemplated hereby. If any consent or
approval required for the consummation of the transactions contemplated
hereby is waived by the parties, at the request of the Buyer the Sellers
shall cooperate with SEi, and attempt in good faith, to obtain such
consent or approval during the one year period immediately following the
Closing.
(b) From and after the Closing Date, the Buyer and/or SEi
agree to promptly inform the Sellers of any Tax audit of the Company, a
Subsidiary or, if known by the Buyer and/or SEi, an Investment by a Tax
authority and to give or, with respect to an Investment, use their best
efforts to give, the Sellers the opportunity to participate in such a Tax
audit. Furthermore, the Sellers shall be entitled to request the Buyer,
SEi, the Company, a Subsidiary or an Investment to duly and timely file
the appropriate recourse against any Tax assessment resulting in a higher
Tax burden for any period prior to the Closing Date. If such request is
not honored, the Buyer shall cause the Company, or the Subsidiary, or
shall use it best efforts to the Investment, as appropriate, upon request
by one or more of the Sellers, to file such recourse nonetheless, provided
that in this case the Sellers who have made such request shall be liable
to reimburse the Company, such Subsidiary or such Investment, as
applicable, for all fees and expense incurred in the recourse proceedings
to the extent such fees and expenses are not borne by third parties.
Section 6.8. Certain Agreements. On or before the Closing
Date, Buyer, SEi, and the Sellers will execute the Pledge and Escrow
Agreement in the form of Exhibit A, the Sellers and SEi will execute the
Registration Rights Agreement in the form of Exhibit B, and the Sellers
will execute, or cause to be executed, an employment agreement between the
Company and each of Xxxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx in the form of
Exhibit C, in each case to be effective upon the Closing Date.
Section 6.9. Non-Disclosure; Covenant Not to Compete.
(a) The parties hereto acknowledge that (i) the covenants
contained in this Section 6.9 are a material inducement to the
consummation by Buyer and SEi of the transactions contemplated by this
Agreement and (ii) Buyer and SEi would not have entered into or performed
this Agreement but for the covenants herein contained.
40
(b) Each of the Sellers agrees that, unless acting with
the prior consent of Buyer and SEi, it will not, either alone or in
conjunction with any other Person, or directly or indirectly through any
entity that it now or in the future controls, for a period of three years
from the Closing Date: (i) employ or solicit the employment of any Person
who within the month preceding the Closing Date had been an employee of
the Company, a Subsidiary or an Investment; (ii) directly or indirectly
engage or participate, whether as officer, employee, director, agent,
consultant, shareholder, partner, or otherwise, in the ownership,
management, marketing or operation of any enterprise which is engaged in
any part of the Business within Europe (other than solely through the
ownership of equity securities or equivalent interests of any entity at a
level which does not create the ability to influence or control management
of the entity); or (iii) conduct any part of the Business with any Person
that is a Customer of the Company, a Subsidiary or an Investment as of the
Closing Date.
(c) It is stipulated and agreed that the Sellers have
become acquainted with confidential and privileged information of the
Company, the Subsidiaries and the Investments relating to customer files,
customer lists, special customer matters, sales methods and techniques,
merchandising concepts and plans, new site locations, business plans,
sources of supply and vendors, special business relationships with
vendors, agents and brokers, promotional materials and information,
financial matters, mergers, acquisitions, selective personnel matters and
confidential processes, designs, formulas, ideas, plans, devices or
materials and other similar matters which are confidential (any and all
such information being referred to herein as the "Confidential
Information"); and that the use of the Confidential Information against
the Company would seriously damage the Business. As a consequence of the
above, each of the Sellers agrees that, unless acting with the prior
written consent of Buyer, such Seller shall, whether acting alone, in
conjunction with any other Person, or directly or indirectly through any
entity that such Seller now or in the future controls: not use, divulge,
publish or otherwise reveal or allow to be revealed any aspect of the
Confidential Information to any Person; refrain from any action or conduct
which might reasonably or foreseeably be expected to compromise the
confidentiality or proprietary nature of the Confidential Information; and
shall have no right to apply for or to obtain any patent, copyright, or
other form of Intellectual Property protection with regard to the
Confidential Information.
41
(d) The parties hereto acknowledge and agree that any
remedy at law for any breach of the provisions of this Section 6.9 would
be inadequate and the Sellers hereby consent to the granting by any court
of competent jurisdiction of an injunction or other suitable relief and
without the posting of any bond or the necessity of actual monetary loss
being proved, in order that such breach may be effectively restrained.
Section 6.10. Pooling of Interests. The Sellers shall not, and
shall not permit the Company, to take, any of the following actions, each
of which could result in the transfer of the Company Quotas not qualifying
to be accounted for as a pooling of interests: (a) acquiring or
transferring any capital interests of the Company or any SEi Stock during
the thirty (30) days prior to the Closing Date, and (b) selling, assigning
or transferring, or agreeing or allowing to be created any rights or
obligation for the sale, assignment or transfer of, any of the Purchase
Price Shares or any other SEi Stock in violation of the restrictions set
forth in Section 4.28(f)(i).
Section 6.11. Exclusive Dealing. During the period from the
date of this Agreement through and including the Closing Date, the Sellers
shall not, and shall not permit the Company, the Subsidiaries, the
Investments or any of their respective directors, officers, employees,
representatives or agents to, directly or indirectly, solicit, initiate or
participate in any negotiations with any Person other than SEi and the
Buyer and their respective representatives, agents and Affiliates,
concerning any Alternative Transaction. The Sellers shall immediately
notify SEi and Buyer of any proposal or offer received by, any information
requested from, or any discussions or negotiations sought to be initiated
or continued with, the Sellers, the Company, the Subsidiaries or the
Investments in respect of an Alternative Transaction and shall, in any
such notice to SEi and Buyer, indicate the terms and conditions of any
proposals or offers or the nature of any requests, discussions or
negotiations.
Section 6.12. Release of Bromkamp Guarantee. No later than
October 31, 1997, the Sellers, Buyer and SEi shall arrange for the release
of the personal guarantee of Bromkamp of obligations of the Company in the
amount of DM1,000,000 to Volksbank Essen.
Section 6.13. Purchase of Xxxxxx Investment. On or prior to
May 31, 1998, or, if earlier the date of any sale by Bromkamp of any of
his Seller's Shares, Bromkamp will purchase from the Company, and the
Company will transfer to Bromkamp, the Xxxxxx investment shown on the
42
Interim Balance Sheet, for a purchase price equal to the difference
between DM200,000 and any payments received by the Company subsequent to
Closing in respect of the Xxxxxx investment.
ARTICLE VII
TERMINATION
Section 7.1. Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by mutual written agreement executed by the Sellers,
Buyer and SEi;
(b) by the Sellers, Buyer or SEi at any time after
September 26, 1997 if, through no fault of the party seeking termination,
the Closing shall not have occurred;
(c) by the Sellers, Buyer or SEi, if any governmental or
regulatory authority, agency or commission, including courts of competent
jurisdiction, domestic or foreign, shall have issued an order, decree, or
ruling or taken other action, restraining, enjoining or otherwise
prohibiting the transactions contemplated hereby and such order, decree,
ruling or other action shall have become final and nonappealable;
(d) by Buyer or SEi, if there has been a material
violation or breach by the Sellers of any agreement or any representation
or warranty contained in this Agreement which (i) is not curable, (ii) has
rendered the satisfaction of any condition to the obligations of Buyer and
SEi impossible, and (iii) has not been waived by Buyer and SEi; or
(e) by the Sellers, if there has been a material violation
or breach by Buyer or SEi of any agreement, representation or warranty
contained in this Agreement which (i) is not curable, (ii) has rendered
the satisfaction of any condition to the obligations of the Sellers
impossible, and (iii) has not been waived by the Sellers.
Section 7.2. Procedure and Effect of Termination. In the
event of termination of this Agreement pursuant to Section 7.1 hereof,
written notice thereof shall forthwith be given to the other parties
hereto and this Agreement (other than Section 6.6 hereof and as provided
in paragraph (b) below) shall terminate and the transactions contemplated
43
hereby shall be abandoned without further action by the parties hereto.
If this Agreement is terminated as provided herein:
(a) all information with respect to the Business, the
Company, the Subsidiaries or the Investments received by and in the
possession of Buyer, SEi or any Person that directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is
under common control with Buyer or SEi shall be returned to the Sellers or
destroyed by Buyer or SEi;
(b) any termination pursuant to subparagraph (b), (c),
(d), or (e) of Section 7.1 shall not be deemed a waiver of any rights or
remedies otherwise available under this Agreement, by operation of law or
otherwise; and
(c) all filings, applications and other submissions made
pursuant to Section 6.3 hereof or prior to the execution of this Agreement
in contemplation thereof shall, to the extent practicable, be withdrawn
from the agency or other Person to which made.
ARTICLE VIII
CONDITIONS TO BUYER'S AND SEI'S OBLIGATIONS
Each and every obligation of Buyer and SEi to consummate the
transactions described in this Agreement shall be subject to the
fulfillment, or the waiver by Buyer and SEi on or before the Closing Date,
of the following conditions precedent:
Section 8.1 The Sellers' Closing Deliveries. The Sellers
shall have delivered, or caused to be delivered, to Buyer and SEi at or
prior to the Closing, unless specifically waived by Buyer and SEi in their
sole discretion, each of the following:
(a) the Registration Rights Agreement and the Pledge and
Escrow Agreement referenced in Section 6.8, in each case executed by the
Sellers and, in the case of the Pledge and Escrow Agreement, by the Escrow
Agent;
(b) the employment agreements referenced in Section 6.8
executed by the Company and each of Xxxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx;
44
(c) valid and binding consents of all Persons whose
consent or approval is required to be set forth in Sections 4.5 and 4.6 of
the Disclosure Schedule;
(d) with respect to each Seller, three separate guaranteed
stock powers duly endorsed in blank and a Certificate of Foreign Status on
Form W-8;
(e) the certificates referenced in Sections 8.2 and 8.3;
(f) the declaration of Xxxxxx Xxxxxxxx waiving any
possible claims against the Company based upon his sub-participation
agreement with Bromkamp; and
(g) evidence satisfactory to SEi that the Company is the
record owner of sixty-seven percent (67%) of the issued capital interest
of TOP.
Section 8.2. Representations and Warranties True. The
representations and warranties of the Sellers contained in this Agreement,
as modified by the Disclosure Schedule, shall have been true on the date
hereof in all material respects, and shall be true on the Closing Date in
all material respects with the same effect as though such representations
and warranties were made on and as of such date and the Sellers shall have
delivered to Buyer and SEi on the Closing Date a certificate, dated as of
the Closing Date, to such effect.
Section 8.3. Performance. The Sellers shall have, in all
material respects, performed and complied with all covenants required by
this Agreement to be performed or complied with by them prior to or at the
Closing and the Sellers shall have delivered to Buyer and SEi on the
Closing Date a certificate, dated as of the Closing Date, to such effect.
Section 8.4. Governmental Consents and Approvals. All
necessary and appropriate governmental consents, approvals and filings
shall have been obtained or made and all applicable waiting periods
(including any extensions thereof) relating thereto shall have expired or
otherwise terminated.
Section 8.5. No Injunction or Proceeding. No governmental or
regulatory authority, agency or commission, including courts of competent
jurisdiction, domestic or foreign, shall have issued an order, decree, or
ruling or taken other action, restraining, enjoining or otherwise
45
prohibiting the transactions contemplated hereby, which order, decree,
ruling or other action remains in effect.
ARTICLE IX
CONDITIONS TO THE SELLERS' OBLIGATIONS
Each and every obligation of the Sellers to consummate the
transactions described in this Agreement shall be subject to the
fulfillment, or the waiver by the Sellers, on or before the Closing Date,
of the following conditions precedent:
Section 9.1. Delivery of Purchase Price Shares. Buyer and SEi
shall have delivered or caused to be delivered the Purchase Price Shares
in accordance with Article III hereof.
Section 9.2. Buyer's and SEi's Closing Deliveries. Buyer and
SEi shall deliver, or cause to be delivered, to the Sellers at the
Closing, unless specifically waived by the Sellers in their sole
discretion, each of the following:
(a) the Registration Rights Agreement and the Pledge and
Escrow Agreement referenced in Section 6.8, executed by SEi and, in the
case of the Pledge and Escrow Agreement, the Buyer and the Escrow Agent;
(b) a certified copy of the resolutions of the Board of
Directors of SEi authorizing the execution, delivery and performance of
this Agreement and the Related Agreements and the consummation of
transactions contemplated hereby and thereby; and
(c) the certificates referenced in Sections 9.3 and 9.4
hereof.
Section 9.3. Representations and Warranties True. The
representations and warranties of Buyer and SEi contained in this
Agreement, as modified by the Disclosure Schedule, shall have been true on
the date hereof in all material respects and shall be true on the Closing
Date in all material respects, with the same effect as though such
representations and warranties were made on and as of such date, and Buyer
and SEi shall have delivered to the Sellers on the Closing Date a
certificate, dated as of the Closing Date, to such effect.
46
Section 9.4. Performance. Buyer and SEi shall have, in all
material respects, performed and complied with all covenants required by
this Agreement to be performed or complied with by them prior to or at the
Closing and Buyer and SEi shall have delivered to the Sellers on the
Closing Date a certificate, dated as of the Closing Date, to such effect.
Section 9.6. Governmental Consents and Approvals. All
necessary and appropriate governmental consents, approvals and filings
shall have been obtained or made and all applicable waiting periods
(including any extensions thereof) relating thereto shall have expired or
otherwise terminated.
Section 9.7. No Injunction or Proceeding. No governmental or
regulatory authority, agency or commission, including courts of competent
jurisdiction, domestic or foreign, shall have issued an order, decree, or
ruling or taken other action, restraining, enjoining or otherwise
prohibiting the transactions contemplated hereby, which order, decree,
ruling or other action remains in effect.
ARTICLE X
INDEMNIFICATION
Section 10.1. Indemnification by the Sellers.
(a) The Sellers severally agree, pro-rata in proportion
to the Purchase Price Shares they receive, to reimburse, indemnify and
hold SEi, the Buyer, the Company, the Subsidiaries, the Investments and
their respective officers, directors, shareholders, employees and agents
harmless from and against any and all demands, claims, actions, suits,
liabilities, damages, losses, judgments, costs and expenses (including,
without limitation, reasonable attorneys' fees) but excluding any claims
for punitive damages or consequential damages relating to, resulting from
or arising out of:
(i) any breach or inaccuracy of the representations or
warranties made hereunder by the Sellers;
(ii) any breach or violation of any covenant or
agreement made hereunder by the Sellers;
(iii) the redemption described in Section 4.2(a);
47
(iv) matters referred to in Section 4.8 of the
Disclosure Schedule in respect of Taxes payable for any period ending
prior to Closing and from the Closing until such date as TST no longer
provides services to the Company;
(v) allegations by or in right of Xxxxxxx Xxxxxxxx or
Xxxx Xxxxxxxxxx, as shareholders or employees of TST, in respect of the
arrangements between the Company and TST prior to Closing and from the
Closing until such date as TST no longer provides services to the Company;
(vi) obligations existing or alleged to exist as of
the Closing Date under any pension promise for any employee of the
Company, a Subsidiary or an Investment other than Xxxxxx Xxxxxxxx and
Xxxxxx Xxxxxxxx, or
(vii) any termination of the contracts between TOP
and QVC as a result of the consummation of the transactions contemplated
by this Agreement.
Section 10.2. Indemnification by Buyer and SEi.
(a) Buyer and SEi jointly and severally agree to
reimburse, indemnify and hold each of the Sellers harmless from and
against any and all demands, claims, actions, suits, liabilities, damages,
losses, judgments, costs and expenses (including, without limitation,
reasonable attorneys' fees but excluding any claims for punitive damages
or consequential damages) relating to, resulting from or arising out of:
(i) any breach or inaccuracy of the representations or
warranties made hereunder by Buyer and SEi; or
(ii) any breach or violation of any covenant or
agreement made hereunder by Buyer and SEi.
Section 10.3. Survival of Representations
. Except for the representations and warranties contained in Sections
4.1, 4.2, 4.4 and 4.9, the representations and warranties made pursuant to
this Agreement including, without limitation, all representations and
warranties made in any exhibit or schedule or certificate delivered
thereunder, shall survive until and through the second anniversary of the
Closing Date at which time such representations and warranties shall
expire. The representations and warranties set forth in Sections 4.1 and
4.2 of this Agreement shall survive until and through the tenth
48
anniversary of the Closing Date. The representations and warranties set
forth in Section 4.4 of this Agreement shall survive indefinitely. The
representations and warranties set forth in Section 4.9 of this Agreement
shall survive until and through six months after all amounts for Taxes
applicable to the Company, the Subsidiaries or the Investments, their
respective employees and the transactions contemplated by this Agreement,
in the case of Section 4.9 become final and non-appealable for all periods
through or including the Closing Date, at which time such representations
and warranties shall expire.
Section 10.4. Indemnification Claims Procedures. All claims
for indemnification by any party seeking indemnification (the "Indemnified
Party") from another party (the "Indemnifying Party") under Sections 10.1
and 10.2 shall be asserted and resolved as follows:
(a) In the event that any claim or demand for which the
Indemnifying Party would be liable to any Indemnified Party hereunder is
asserted against or sought to be collected from any Indemnified Party by a
third party, the Indemnified Party shall promptly notify the Indemnifying
Party (and any known pertinent insurance carrier) in reasonable detail of
such claim or demand and the amount or the estimated amount thereof to the
extent then feasible (which estimate shall not be conclusive of the final
amount of such claim and demand) (the "Claim Notice"). The Indemnifying
Party shall have thirty (30) days from the personal delivery or mailing of
the Claim Notice (the "Notice Period") to notify the Indemnified Party
whether or not the Indemnifying Party desires to defend the Indemnified
Party against such claim or demand. All costs and expenses incurred by
the Indemnifying Party in defending such claim or demand shall be a
liability of, and shall be paid by, the Indemnifying Party. In the event
that the Indemnifying Party notifies the Indemnified Party within the
Notice Period that it desires to defend the Indemnified Party against such
claim or demand and except as hereinafter provided, the Indemnifying Party
shall have the right to defend the Indemnified Party by counsel of the
Indemnifying Party's own choosing, either in the Indemnifying Party's
name, or the Indemnified Party's name by appropriate proceedings. If any
Indemnified Party desires to participate in, but not control, any such
defense or settlement it may do so at its sole cost and expense and, in
any event, the Indemnified Party shall cooperate with the Indemnifying
Party and such counsel. To the extent the Indemnifying Party shall
control or participate in the defense or settlement of any third party
claim or demand, the Indemnified Party shall give to the Indemnifying
Party and its counsel access to, during normal business hours, the
relevant business records and other documents, and shall permit them to
49
consult with the employees and counsel of the Indemnified Party to the
extent consistent with the application of relevant evidentiary privileges.
The Indemnifying Party shall keep the Indemnified Party reasonably
apprised of the course of any negotiations or proceedings and the
Indemnifying Party shall not settle any claim or demand without the
consent of the affected Indemnified Party, which consent shall not be
unreasonably withheld or unduly delayed. As soon as reasonably
practicable after the Indemnifying Party has reached a final decision as
to whether or not all or any portion of the obligations related to such
claim or demand are obligations for which the Indemnifying Party is
required to indemnify such Indemnified Party hereunder and, in any event,
prior to entering into any such settlement or other final resolution of
any claim or demand, the Indemnifying Party shall notify the Indemnified
Party in writing of its position as to whether or not all or any portion
of the obligations related to such claim or demand are obligations for
which the Indemnifying Party is required to indemnify such Indemnified
Party in accordance with this Article X.
(b) If the Indemnifying Party elects or is deemed to have
elected not to take over the defense of any such claim or demand, the
Indemnified Party shall have the right to defend, compromise and settle
such claim or demand on such terms as the Indemnified Party in his, her or
its discretion may determine, subject to the prior consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or
unduly delayed, and the Indemnifying Party shall continue to be bound to
indemnify the Indemnified Party in accordance with and to the extent
provided under the terms of this Article X. The Indemnified Party shall
or shall direct in writing its counsel to deliver to the Indemnifying
Party copies of all correspondence and other matters relating to such
claim or demand. Notwithstanding the foregoing, to the extent that the
claim or demand involves or could result in claims against, or potential
liability of, the Indemnifying Party the extent or nature of which were
not known by the Indemnifying Party as of the date the Indemnifying Party
elects or is deemed to have elected not to take over the defense of such
claim or demand, the Indemnifying Party shall, by written notice to the
Indemnified Party, be entitled to take over the defense of such claim or
demand.
(c) In the event an Indemnified Party should have a claim
against the Indemnifying Party hereunder which does not involve a claim or
demand being asserted against or sought to be collected from it by a third
party, the Indemnified Party shall promptly send a Claim Notice with
respect to such claim to the Indemnifying Party.
50
(d) The Indemnified Party's failure to give reasonably
prompt notice to the Indemnifying Party of any actual, threatened or
possible claim or demand which may give rise to a right of indemnification
hereunder shall not relieve the Indemnifying Party of any liability which
it may have to an Indemnified Party except to the extent the failure to
give such notice prejudiced the Indemnifying Party.
Section 10.5. Right of Set-Off. In addition to any other
remedy available in equity or at law, the Indemnified Party shall be
entitled to set off the amount of any obligation for which it is entitled
to be indemnified under this Article X against any amounts payable to the
Indemnifying Party hereunder or under any other agreement contemplated
hereby.
Section 10.6. Limitation of Liability.
(a) Notwithstanding any other provision of this Agreement,
neither the aggregate liability hereunder of the Buyer and SEi on the one
hand, nor the aggregate liability hereunder of the Sellers on the other
hand, shall exceed DM21,000,000, and the aggregate liability of each
Seller shall not exceed his pro rata share of such amount based upon the
ratio of his Seller's Shares to the Purchase Price Shares.
(b) In addition to the limitation set forth above in Section
10.6(a), the aggregate liability of the Sellers hereunder for claims for
indemnity under Section 10.1(a)(iii) shall be limited as follows:
(i) Sellers shall be responsible for all such claims
until the aggregate amount exceeds DM520,500;
(ii) Sellers shall have no responsibility for any additional
such claims until the aggregate amount (including amounts for which
Sellers are responsible) exceeds DM 1,041,000; and
(iii) Seller shall be responsible for fifty percent (50%) of
any claims in excess of DM 1,041,000.
(c) In addition to the limitation set forth above in Section
10.6(a), the aggregate liability of the Sellers hereunder for claims for
indemnity under Section 10.1(a)(vii) shall be limited to the sum of
anticipated profits on the contract from the termination date to the end
of the "initial period" under the contract.
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(d) The Sellers shall be liable to indemnify the Buyer for
claims on account of Taxes only to the extent additional Taxes resulting
from field audits are not compensated by lowered Tax burdens in following
years resulting from such additional Taxes. To the extent additional
capitalization of items originally treated as expenses entail additional
depreciations in future years, the liability of the Sellers on account of
additional Taxes shall be reduced by the discounted cash value of the
additional depreciation, discounted at a rate of 5% per year.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be governed by and construed in
accordance with the laws of the Federal Republic of Germany. Any disputes
arising under this Agreement shall be resolved in accordance with the
provisions of the separate Arbitration Agreement which has been executed
by the parties as of the date hereof.
Section 11.2. Entire Understanding, Waiver, Etc. This
Agreement sets forth the entire understanding of the parties and
supersedes any and all prior or contemporaneous agreements, arrangements
and understandings relating to the subject matter hereof, and the
provisions hereof may not be changed, modified, waived or altered except
by an agreement in writing signed by the party entitled to the benefit of
the provision(s) to be waived hereto. A waiver by any party of any of the
terms or conditions of this Agreement, or of any breach thereof, shall not
be deemed a waiver of such term or condition for the future, or of any
other term or condition hereof, or of any subsequent breach thereof.
Section 11.3. Severability; Gaps. If any provision of this
Agreement or the application of such provision shall be held by a court of
competent jurisdiction to be unenforceable, or otherwise be or become
invalid or unenforceable, the remaining provisions of this Agreement shall
remain in full force and effect. In addition, any gap or omission in the
terms of this Agreement shall not prejudice its validity, and the
remaining provisions of this Agreement shall remain in full force and
effect. Any gap in the terms of this Agreement, whether caused by the
invalidity or unenforceability of any provision, or by an omission or
otherwise, shall be filled by a provision which legally and economically
most closely matches the intent of the parties hereto with respect to the
52
gap. The parties hereto undertake to enter from time to time into such
amendments as are necessary or appropriate to document the provisions
filling such gaps.
Section 11.4. Captions. The captions herein are for
convenience only and shall not be considered a part of this Agreement for
any purpose, including, without limitation, the constructions or
interpretation of any provision hereof.
Section 11.5. Notices. All notices, requests, demands and
other communications (collectively, "Notices") that are required or may be
given under this Agreement shall be in writing. All Notices shall be
deemed to have been duly given or made: if by hand, immediately upon
delivery; if by telecopier or similar device, immediately upon sending,
provided notice is sent on a Business Day during the hours of 9:00 a.m.
and 6:00 p.m. at the location of the party receiving the Notice, but if
not, then immediately upon the beginning of the first Business Day after
being sent; if by FedEx, Express Mail or any other reputable overnight
delivery service, three Business Days after being placed in the exclusive
custody and control of said courier; and if mailed by certified mail,
return receipt requested, ten Business Days after mailing.
Notwithstanding the foregoing, with respect to any Notice given or made by
telecopier or similar device, such Notice shall not be effective unless
and until (i) the telecopier or similar advice being used prints a written
confirmation of the successful completion of such communication by the
party sending the Notice, and (ii) a copy of such Notice is deposited in
first class mail to the appropriate address for the party to whom the
Notice is sent. In addition, notwithstanding the foregoing, a Notice of a
change of address by a party hereto shall not be effective until received
by the party to whom such Notice of a change of address is sent. All
Notices are to be given or made to the parties at the following addresses
(or to such other address as either party may designate by Notice in
accordance with the provisions of this Section):
(a) If to the Sellers:
Xxxxxx Xxxxxxxx
Am alten Xxxxxxx 00
00000 Xxxxxxx
Xxxxxxx Xxxxxxxx of Germany
Facsimile: 011 49 20 458 50 14
53
Xxxxxxxxx Xxxxxxxx
Droste Hulshoff Xxxxxx 0
00000 Xxxxxxxx
Xxxxxxx Xxxxxxxx of Germany
Facsimile: 011 49 21 74 41 652
(b) If to SEi:
Xxxxx Enterprises, Incorporated
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Vice President-Finance
Telephone: 000 (000) 000-0000
Facsimile: 000 (000) 000 0000
(c) If to Buyer:
Xxxxx Enterprises GmbH
c/o Sykes Enterprises, Incorporated
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx,
Vice President-Finance
Telephone: 000 (000) 000-0000
Facsimile: 000 (000) 000 0000
Section 11.6. Successors and Assigns. Neither this Agreement
nor any of the rights or obligations arising hereunder shall be assignable
by any party without the prior written consent of the other parties
hereto; provided, however, that notwithstanding the foregoing SEi may
assign its rights and obligations under this Agreement to any wholly owned
subsidiary of SEi which agrees in writing to be bound by and to perform
fully all of SEi's obligations hereunder and, provided that in the event
of any such assignment by SEi, SEi shall remain liable hereunder for the
performance of SEi's obligations hereunder notwithstanding such
assignment.
Section 11.7. Parties in Interest. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, shall confer upon any Person, other than
54
the parties hereto, and their successors and permitted assigns, any rights
or remedies under or by reason of this Agreement.
Section 11.8. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but
all of which, together, shall constitute one and the same instrument.
Section 11.9. Construction of Terms. Any reference herein to
the masculine or neuter shall include the masculine, the feminine and the
neuter, and any reference herein to the singular or plural shall include
the opposite thereof. The parties to this Agreement acknowledge that each
party and counsel to each party has participated in the drafting of this
Agreement and agree that this Agreement shall not be interpreted against
one party or the other based upon who drafted it.
Section 11.10. SEi Guarantee. SEi hereby guarantees for the
benefit of the Sellers the full and prompt performance by the Buyer of all
of its obligations toward the Sellers under this Agreement.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the day and year first above written.
SELLERS:
/s/ Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxxx
/s/ Xxxxxxxxx Xxxxxxxx
Xxxxxxxxx Xxxxxxxx
SEI:
XXXXX ENTERPRISES, INCORPORATED
/s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx, Vice President - Finance
BUYER:
XXXXX ENTERPRISES GMBH
/s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx, Director
