EXHIBIT 10.60
PURCHASE AGREEMENT
between
IAT Multimedia, Inc.
Geschaftshaus Wasserschloss
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CH-5300 ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇
- hereinafter referred to as the "Purchaser" -
and
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▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇
- hereinafter referred to as the "Vendor" -
PREAMBLE
1. The Vendor was the sole limited partner with a par value interest of DM
250,000.00 in FSE Computer-Handel GmbH & Co. KG, entered in the Commercial
Register of the Pirmasens District Court under HR A 3472 (hereinafter
referred to as the "KG"). The sole general partner of the KG is FSE
Computer-Handel Verwaltungs GmbH (hereinafter referred to as the "GmbH")
with a capital stock of DM 50,000.00, entered in the Commercial Register
of the Mainz District Court under HR B 5812. The Vendor was also the sole
shareholder of the GmbH.
2. By way of a Purchase Agreement dated November 13, 1998 (Record No. Z
851/1997) of Notary Public, ▇▇▇▇▇ Zatzsch, with offices in Frankfurt am
Main) (hereinafter referred to as the "Purchase Agreement") the Vendor
sold to the Purchaser 80% of his shares in the KG and his entire holding in
the GmbH.
3. Under (section) 5.3 of the Purchase Agreement, the Vendor gave a guarantee
to the Purchaser (hereinafter referred to as the "Profit Guarantee") that
the KG's EBITDA (profit before interest, taxes on earnings and
depreciation) for the 1998 financial year would exceed DM 2,500,000.00.
Under (section) 6.1 a) of the Purchase Agreement, the Vendor gave an
undertaking to the Purchaser to pay as final compensation the difference
between the KG's actual EBITDA for the 1998 financial year and DM
2,500,000.00 in the event that the Profit Guarantee was not fulfilled.
4. The KG maintained a shareholder's clearing account (hereinafter referred
to as the "Shareholder's Clearing Account") for the Vendor as its
shareholder. The credit balance on the Shareholder's Clearing Account,
which ceased to earn interest as of January 1, 1998 by virtue of a
resolution of the KG's partner, totaled DM 1,373,640.32 on December 31,
1998.
5. The KG kept a loss carry-forward account (hereinafter referred to as the
"Loss Carry-Forward Account") for the Vendor as its shareholder. On
December 31, 1998 the Loss Carry-Forward Account showed a loss
carry-forward of DM 54,062.89.
6. The Vendor now intends to sell to the Purchaser, in two equal halves, his
interest in the KG with a par value of DM 50,000.00, namely one half of
his interest (hereinater referred to as "Share A") with a par value of DM
25,000.00 with financial effect as of December 31, 1999 or December 31,
2000, at the option of the Vendor, and the other half of his interest
(hereinafter referred to as "Share B") with a par value of DM 25,000.00
with financial
effect as of December 31, 2000. The Purchaser intends to acquire Share A
and Share B.
7. The Parties also intend to fix the Purchaser's claim against the Vendor
for compensation due to the non-fulfillment of the Profit Guarantee at DM
2,400,000.00. The Vendor shall satisfy the claim for compensation by
assigning his present claim against the KG for payment of the credit
balance on the Shareholder's Clearing Account as of December 31, 1998, by
assigning his future claims against the KG for payment of any credit
balance to the Shareholder's Clearing Account, and by offsetting his claim
for payment of the purchase price for Share A and Share B.
This having been stated by way of Preamble, the Parties agree as follows:
(SECTION) 1 PURCHASE AND TRANSFER
1.1 Subject to (section) 1.2 and (section) 1.3 below, the Vendor hereby sells
and transfers Share A and Share B to the Purchaser who accepts same.
1.2 The transfer in rem of Share A is conditional upon the following:
a) payment of the purchase price in accordance with (section) 3.1 a); and
b) entry of the Purchaser in the Commercial Register.
1.3 The transfer in rem of Share B is conditional upon the following:
i) payment of the purchase price in accordance with (section) 3.1 b);
and
ii) entry of the Purchaser in the Commercial Register.
1.4 By way of a statement in writing to the Vendor, the Purchaser may waive
the conditions set forth in (section) 1.2 b) and (section) 1.3 (ii).
Share A and Share B shall be sold and transferred by assignment.
1.5 The KG's consent, which is required for the sale and transfer of Share A
and Share B, is attached hereto in Schedule 1.5 for purposes of proof.
(SECTION) 2 CLOSING DATE/NOTICE TO COMMERCIAL REGISTER
2.1 At the option of the Vendor, which must be made within 2 weeks after the
presentation of the audited financial statements as of December 31, 1999
and declared to the Purchaser by registered letter by that date as being
binding, Share A shall be transferred with financial effect as of
December 31, 1999 or December 31, 2000. Share B shall be transferred with
financial effect as of December 31, 2000.
2.2 Notices of the change of limited partners to be sent to the Commercial
Register and signed by the Vendor, the GmbH and the Purchaser shall be
signed by the parties concerned as soon as possible.
(SECTION) 3 PURCHASE PRICE
3.1 Sum A1 (if the Vendor opts for the sale of Share A with financial effect
as of December 31, 1999 pursuant to (section) 2.1) or Sum A2 (if the
Vendor opts for the sale of Share A with financial effect as of December
31, 2000 pursuant to (section)2.1) shall be paid as the purchase price
for Share A and Sum B as the purchase price for Share B:
Sum A1 = KG's EBITDA for the 1999 financial year x 4.5/10 - Vv
Sum A2 = KG's EBITDA for the 2000 financial year x 4/10 - Vv
Sum B = KG's EBITDA for the 2000 financial year x 4.5/10 - Vv
and Vv shall be deemed to be the particular loss carried forward to the
Loss Carry-Forward Account on the date on which the purchase price is
calculated.
The Parties also agree that if a negative figure is produced by the
calculation of the purchase price for Share A and/or Share B using the
above formulas, the purchase price for that Share shall be DM 0.
3.2 The EBITDA which determines the purchase price of Share A and Share B
shall be derived from a hypothetical profit and loss statement of the KG
for the financial year in question. For that purpose, the Vendor and the
Purchaser shall prepare a balance sheet and profit and loss statement of
the KG in accordance with the continuity principle, basing it upon the
pertinent annual financial statements of the KG and retaining the
accounting and valuation principles applied for the annual balance sheets
at December 31, 1996 and December 31, 1997. From the profit and loss
statement of the KG established in this manner, the EBITDA shall be
ascertained as follows:
EBITDA = net income for the year/deficit
plus the following items:
-- taxes on income and earnings;
-- interest expense;
-- depreciation;
-- expenses affecting the net income and occasioned by the
restructuring measures caused solely by the integration of the
KG into the group or by a restructuring of the Purchaser's
group, therefore expenses which would not have been incurred if
the KG were not an enterprise affiliated with the Purchaser;
less the following items:
-- interest income;
-- income affecting the net income and occasioned by the
restructuring measures caused solely by the integration of the KG
in the group or by a restructuring of the Purchaser's group,
therefore expenses which would not have been incurred if the KG
were not an enterprise affiliated with the Purchaser.
On the basis of the annual financial statements prepared by the KG's
management, the EBITDA as defined herein shall be calculated annually by
the auditor auditing the pertinent annual financial statements, and
presented to the Parties for their approval. The calculation shall be deemed
binding for the Parties four weeks after presentation of the EBITDA
calculation unless within that period one of the Parties advises the other
Party that he/it refuses to approve that calculation. If approval is refused
within the required period, at the request of the Purchaser or Vendor, the
EBITDA for the year in question shall be calculated with binding effect upon
the Parties and on the basis of the within contractual provisions by an
international auditing company acting as arbitrator and designated by the
Pirmasens Chamber of Industry and Commerce. The arbitrator's decision shall
be binding upon the Parties unless that decision is patently wrong. The
arbitrator shall also decide upon the allocation of costs in accordance with
(sections) 91 ff. of the Code of Civil Procedure.
3.3 The purchase price shall be payable as follows:
a) Sum A1 ((section) 3.1), five business days after the calculation of
the KG's EBITDA for the 1999 financial year has become binding upon
the Parties;
b) Sum A2 ((section) 3.1), five business days after the calculation of
the KG's EBITDA for the 2000 financial year has become binding upon
the Parties.
3.4 Any payments to the Vendor pursuant to (section) 3 shall be remitted to
the Vendor's account with Kreissparkasse ▇▇▇▇▇, Branch Code No. 540 515
50, Account No. 500-216650.
(SECTION) 4 CLAIMS FOR COMPENSATION FOR NON-FULFILLMENT OF PROFIT GUARANTEE
4.1 The Parties agree that the KG's guaranteed EBITDA was not achieved in the
1998 financial year, that this result was not caused by a substantial
change in the KG's business and activities induced by the Purchaser and
that, as a
consequence, the Vendor has not fulfilled the Profit Guarantee. In view
of the legal remedy available to the Purchaser by reason of the
non-fulfillment of the Profit Guarantee in accordance with (section) 6.1
a) of the Purchase Agreement, the Parties agree that the Purchaser has a
claim for compensation (hereinafter referred to as the "Claim for
Compensation") against the Vendor in the amount of DM 2,400,000.00, and
that the Claim for Compensation is due immediately.
4.2 As partial settlement of the Claim for Compensation and on account of
performance, the Vendor hereby assigns to the Purchaser (i) his claim
against the KG for payment of the credit balance on the Shareholder's
Clearing Account as at December 31, 1998, and (ii) possible future claims
to payment of a credit balance on his Shareholder's Clearing Account and
(iii) possible future claims of the purchase price ((section) 3). Should
the above mentioned claims assigned by the Vendor to the Purchaser not be
sufficient to fully pay for the Claim for Compensation, then the Vendor
shall settle the remaining amount in cash.
4.3 A respite for payment for the Claim for Compensation in the amount of DM
1,026,359.68 is granted according to (section) 4.2. No interest is due on
this amount.
(SECTION) 5 ASSURANCES AND WARRANTIES
By way separate warranty promise given today and on the date of the transfer
in rem of Share A and Share B, the Vendor undertakes and warrants:
5.1 that he is the sole owner of Share A and Share B and that they are free
from any encumbrances;
5.2 that he is free to dispose of Share A and Share B,
5.3 that for the Vendor, the disposition of Share A and Share B is not a
transaction within the meaning of (section) 419 of the German Civil Code,
and that his right to
dispose of his assets is not restricted within the meaning of (section)
1365 of the German Civil Code.
(SECTION) 6 LEGAL REMEDY
6.1 If one or more of the undertakings or warranties or obligations assumed
under this Agreement are inapplicable or not fulfilled, the Purchaser
shall be entitled to demand that the Purchaser and KG be placed in the
position in which they would have been had the undertaking or warranty
been applicable, or had the obligation been fulfilled.
6.2 The statutory limitation period shall apply in respect of any claims
under (section) 6.
6.3 The running of the limitation period in respect of any claims by the
Purchaser shall be suspended by a written request for fulfillment or by a
written notice of default in accordance with (section) 202 of the German
Civil Code, in conjunction with (section) 205 of the German Civil Code,
subject to the proviso that the Purchaser, in order to preserve its
claims, must assert said claims by way of court action within twelve
months of delivery of the written request for fulfillment or notice of
default, but not before the expiry of the relevant limitation period
referred to in (section) 6.2.
6.4 (sections) 460 and 464 of the German Civil Code and (sections) 377 ff of
the German Commercial Code shall have no application to this Agreement.
(SECTION) 7 COOPERATION
7.1 The Vendor covenants and agrees to deliver to the Purchaser all business
documents and records belonging to the KG.
7.2 If, following the closing date, an external tax audit of the KG is
conducted in relation to the assessment periods prior to the closing date,
the Vendor shall be given an opportunity to take part in the examination,
and in particular in the
final discussions, through an authorized representative sworn to
professional secrecy. Upon his request and at his expense, all
information required to protect his interests shall be provided to
the Vendor. The Vendor may also, at his expense, demand that the KG
enter an appeal against a tax assessment notice. Proceedings shall
then be conducted by the Vendor at his expense.
(SECTION) 8 PROVISIONS OF PURCHASE AGREEMENT
For purposes of clarification, the Parties covenant and agree that none of
the provisions contained in the Purchase Agreement shall be affected by the
provisions contained in this Agreement.
(SECTION) 9 FEDERAL ANTITRUST AUTHORITIES
If necessary, the Purchaser shall, at its expense, take care of giving notice
of this merger to the Federal Antitrust Authorities. The Purchaser warrants
that conditions requiring notification do not exist.
(SECTION) 10 CONFIDENTIALITY
10.1 The Parties shall treat the conclusion of this Agreement and its
provisions as strictly confidential unless disclosure to a third party
is required by law or the applicable rules of a stock exchange, or is
necessary to provide adequate information to the employees of the KG and
its chosen representatives.
10.2 Any statements to the press shall be coordinated jointly.
(SECTION) 11 COSTS, MISCELLANEOUS PROVISIONS
11.1 All of the schedules to this Agreement shall form an integral part of
this Agreement insofar as they are attached not solely for the purpose
of proof.
11.2 Amendments and supplements to this Agreement must be in writing unless a
stricter formality is required by law.
11.3 Should any provision or provisions of this Agreement be or become
invalid, the validity of the other provisions of the Agreement shall
remain unaffected. The same shall apply in the event that there should
prove to be a gap in the provisions of this Agreement. The invalid or
impracticable provision or provisions shall be replaced, or the gap
remedied, by an appropriate provision which, insofar as possible by law,
approximates as closely as possible the intentions of the Parties to the
Agreement.
11.4 This Agreement shall be governed by the laws of Germany.
Turgi, February 12, 1999
S/IAT Multimedia Pirmasens, February 12, 1999
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