EXHIBIT 2.2
ACQUISITION AGREEMENT
BY AND AMONG
THE
SHAREHOLDER
OF
TAS XXXX XXXXXXX GMBH TELEMARKETING
UND KOMMUNIKATIONSKONZEPTE,
XXXXX ENTERPRISES, INCORPORATED,
AND
XXXXX ENTERPRISES GMBH
Dated September 25, 1997
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TABLE OF CONTENTS
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Definitions. . . . . . . . . . . . . . . . . . . . 1
ARTICLE II PURCHASE, SALE AND ASSIGNMENT OF SHARES . . . . . . . . . . 5
Section 2.1. Purchase and Sale of Shares . . . . . . . . . . . . 5
Section 2.2. Assignment of Shares . . . . . . . . . . . . . . . . 5
ARTICLE III DELIVERY OF PURCHASE PRICE SHARES. . . . . . . . . . . . . 6
Section 3.1. Delivery of Purchase Price Shares . . . . . . . . . 6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLER (GARANTIEN). . 6
Section 4.1. Corporate Organization . . . . . . . . . . . . . . 6
Section 4.2. Capitalization . . . . . . . . . . . . . . . . . . 7
Section 4.3. Authority; Binding Effect . . . . . . . . . . . . . 7
Section 4.4. Ownership of Share Capital; Title . . . . . . . . . 7
Section 4.5. The Seller's Consents and Approvals; No Violations 7
Section 4.6. Consents and Approvals; No Violations . . . . . . . 8
Section 4.7. Financial Statements . . . . . . . . . . . . . . . 8
Section 4.8. Undisclosed Liabilities . . . . . . . . . . . . . . 9
Section 4.9. Taxes . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.10. Title to Properties . . . . . . . . . . . . . . . . 10
Section 4.11. Absence of Changes . . . . . . . . . . . . . . . . 10
Section 4.12. Intellectual Property . . . . . . . . . . . . . . . 12
Section 4.13. Leases . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.14. Bank Accounts; Investments; Powers of Attorney . . 13
Section 4.15. Material Contracts and Customers . . . . . . . . . 14
Section 4.16. Related Transactions . . . . . . . . . . . . . . . 16
Section 4.17. Insurance . . . . . . . . . . . . . . . . . . . . . 16
Section 4.18. Labor Matters . . . . . . . . . . . . . . . . . . . 17
Section 4.19. Employee Benefit Plans . . . . . . . . . . . . . . 18
Section 4.20. Litigation . . . . . . . . . . . . . . . . . . . . 18
Section 4.21. Compliance with Laws . . . . . . . . . . . . . . . 18
Section 4.22. Books and Records . . . . . . . . . . . . . . . . . 18
Section 4.23. Copies of Documents . . . . . . . . . . . . . . . . 19
Section 4.24. Adequacy of Assets . . . . . . . . . . . . . . . . 19
Section 4.25. Grants . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.26. Accounts Receivable . . . . . . . . . . . . . . . . 19
Section 4.27. Brokers and Finders . . . . . . . . . . . . . . . . 20
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Section 4.28. Investment Intent; Information Disclosures . . . . 20
Section 4.29 Pooling of Interests . . . . . . . . . . . . . . . 21
Section 4.30 Restrictive Covenants . . . . . . . . . . . . . . . 22
Section 4.31 Product Liabilities and Warranties . . . . . . . . 22
Section 4.32 Disclosure . . . . . . . . . . . . . . . . . . . . 23
ARTICLE V REPRESENTATIONS AND WARRANTIESOF SEI AND BUYER (GARANTIEN) . 23
Section 5.1. Corporate Organization . . . . . . . . . . . . . . 23
Section 5.2. Capitalization of SEi . . . . . . . . . . . . . . . 23
Section 5.3. Authority . . . . . . . . . . . . . . . . . . . . . 23
Section 5.4. SEi's Consents and Approvals; No Violations . . . . 24
Section 5.5. Litigation . . . . . . . . . . . . . . . . . . . . 24
Section 5.6. Brokers and Finders . . . . . . . . . . . . . . . . 24
Section 5.7. SEi Information . . . . . . . . . . . . . . . . . . 24
Section 5.8 No Material Adverse Change . . . . . . . . . . . . 24
Section 5.9. Undisclosed Liabilities . . . . . . . . . . . . . . 24
Section 5.10. Compliance with Laws . . . . . . . . . . . . . . . 25
ARTICLE VI FURTHER COVENANTS AND AGREEMENTS. . . . . . . . . . . . . . 25
Section 6.1. Covenants of the Seller Pending the Closing . . . . 25
Section 6.2. Covenants of Buyer and SEi Pending the Closing . . 26
Section 6.3. Filings . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.4. Effective Time of Closing and Transfer . . . . . . 27
Section 6.5. Announcements . . . . . . . . . . . . . . . . . . . 27
Section 6.6. Costs and Expenses . . . . . . . . . . . . . . . . 27
Section 6.7. Further Assurances . . . . . . . . . . . . . . . . 28
Section 6.8. Certain Agreements . . . . . . . . . . . . . . . . 28
Section 6.9. Non-Disclosure; Covenant Not to Compete . . . . . . 28
Section 6.10. Pooling of Interests . . . . . . . . . . . . . . . 29
Section 6.11. Exclusive Dealing. . . . . . . . . . . . . . . . . 30
Section 6.12. Release of Collateral. . . . . . . . . . . . . . . 30
Section 6.13. Use of the Seller's Name. . . . . . . . . . . . . . 30
ARTICLE VII TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.1. Termination . . . . . . . . . . . . . . . . . . . . 30
Section 7.2. Procedure and Effect of Termination . . . . . . . . 31
ARTICLE VIII CONDITIONS TO BUYER'S AND SEI'S OBLIGATIONS . . . . . . . 31
Section 8.1 The Seller' Closing Deliveries . . . . . . . . . . 32
Section 8.2. Representations and Warranties True . . . . . . . . 32
Section 8.3. Performance . . . . . . . . . . . . . . . . . . . . 32
Section 8.4. Governmental Consents and Approvals . . . . . . . . 32
Section 8.5. No Injunction or Proceeding . . . . . . . . . . . . 32
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ARTICLE IX CONDITIONS TO THE SELLER'S OBLIGATIONS. . . . . . . . . . . 33
Section 9.1. Delivery of Purchase Price Shares . . . . . . . . . 33
Section 9.2. Buyer's and SEi's Closing Deliveries . . . . . . . 33
Section 9.3. Representations and Warranties True . . . . . . . . 33
Section 9.4. Performance . . . . . . . . . . . . . . . . . . . . 33
Section 9.6. Governmental Consents and Approvals . . . . . . . . 33
Section 9.7. No Injunction or Proceeding . . . . . . . . . . . . 34
ARTICLE X INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . 34
Section 10.1. Indemnification by the Seller . . . . . . . . . . . 34
Section 10.2. Indemnification by Buyer and SEi . . . . . . . . . 34
Section 10.3. Survival of Representations . . . . . . . . . . . . 34
Section 10.4. Indemnification Claims Procedures . . . . . . . . . 35
Section 10.5. Right of Set-Off . . . . . . . . . . . . . . . . . 36
Section 10.6. Limitation of Liability . . . . . . . . . . . . . . 36
ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 37
Section 11.1. Governing Law . . . . . . . . . . . . . . . . . . . 37
Section 11.2. Entire Understanding, Waiver, Etc . . . . . . . . . 37
Section 11.3. Severability; Gaps . . . . . . . . . . . . . . . . 37
Section 11.4. Captions . . . . . . . . . . . . . . . . . . . . . 37
Section 11.5. Notices . . . . . . . . . . . . . . . . . . . . . . 38
Section 11.6. Successors and Assigns . . . . . . . . . . . . . . 39
Section 11.7. Parties in Interest . . . . . . . . . . . . . . . . 39
Section 11.8. Counterparts . . . . . . . . . . . . . . . . . . . 39
Section 11.9. Construction of Terms . . . . . . . . . . . . . . . 39
Section 11.10. SEi Guarantee. . . . . . . . . . . . . . . . . . . 39
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 Corporate Organization
Section 4.2 Capitalization
Section 4.4 Ownership of Quotas
Section 4.5 Sellers' Consents and Approvals; No Violations
Section 4.6 Consents and Approvals; No Violations
Section 4.7(a) Financial Statements
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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
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 4.25(a) Grants
Section 4.25(b) Grants Exceptions
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
25, 1997, by and among the undersigned person (the "Seller"), being the
holder of all the outstanding capital interests of TAS Xxxx Xxxxxxx GmbH
Telemarketing und Kommunikationskonzepte, a limited liability company
organized under the laws of the Federal Republic of Germany (the
"Company"), 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 Seller owns all of the issued capital interests,
consisting of one share in the nominal amount of DM50,000, of the Company
(the "Quotas");
WHEREAS, SEi owns all of the issued capital interests of Buyer;
WHEREAS, the Seller desires to sell the Quotas in exchange for shares
of SEi's common stock, and SEi is willing to cause the Buyer to purchase
the Quotas from the Seller 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
Quotas as a "pooling of interests" for financial accounting purposes.
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 Seller, 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
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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, other than the transactions
contemplated by this Agreement.
"Business" means the business conducted as of the date of this
Agreement or as of the Closing Date, as the context permits or implies, by
the Company, which consists 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 & Clemm 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.
"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 the Seller 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,
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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 Seller 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
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
4
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 balance sheet of
the Company 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.
"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 180,000 shares of SEi Stock to
be issued to the Seller in consideration of the transfer and assignment of
the Quotas pursuant to this Agreement.
"Related Agreements" means the agreements described in Section
6.8.
"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.
"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.
5
"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, the Seller hereby sells to Buyer and
Buyer hereby buys from the Seller, all of the Seller's right, title and
interest in and to the Quotas, together with the right to receive
dividends with respect to the 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.
Section 2.2. Assignment of Shares. The Seller hereby assigns and
transfers the Quotas as specified in Section 2.1, together with the right
to receive dividends on the 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.
The Seller hereby consents to the sale and transfer effected herein
and waives any preemptive rights or rights of first refusal she 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:
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(a) to the Escrow Agent promptly following the Closing, a
certificate or certificates issued in the name of the Seller, each such
certificate bearing the legend provided for in Section 4.28(g) and
evidencing a number of shares equal to ten percent (10%) of the Purchase
Price 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 Seller and the Escrow Agent substantially in
the form of Exhibit A (the "Pledge and Escrow Agreement"); and
(b) to the Seller 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 in case of a facsimile
copy 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 the 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 Purchase Price Shares remaining after delivery of
Purchase Price Shares for the account of the Seller in accordance with
Section 3.1(a) above.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER (GARANTIEN)
The Seller hereby represents and warrants to SEi and Buyer as
follows:
Section 4.1. Corporate Organization. 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 as
set forth in Section 4.1 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.
Section 4.2. Capitalization. The aggregate stated share
capital of the Company consists of DM50,000. The 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 the Seller, 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. Except for this Agreement and as set
forth in Section 4.2 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,
7
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.
Section 4.3. Authority; Binding Effect. The Seller has all
requisite right, power and authority to execute, deliver and perform this
Agreement and the Related Agreements to which the Seller is a party. This
Agreement and the Related Agreements to which the Seller is a party have
been duly and validly executed and delivered by the Seller and constitute
the legal, valid and binding obligations of the Seller, enforceable
against the Seller in accordance with their respective terms.
Section 4.4. Ownership of Share Capital; Title. Except as
disclosed in Section 4.4 of the Disclosure Schedule, the Seller owns of
record and beneficially all of the Quotas. All issued share capital of
the Company 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 Seller
has and will have, on the Closing Date, good, marketable and valid title
to the Quotas, 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 of the
Disclosure Schedule. The execution, delivery, notarization and
performance of this Agreement will convey to Buyer at the Closing good
title to the 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 Articles of
Association. The Seller is not involved in any proceedings by or against
the Seller under any bankruptcy laws or under any other insolvency or
debtor's relief act.
Section 4.5. The Seller's Consents and Approvals; No
Violations. Except as set forth in Section 4.5 of the Disclosure
Schedule, the execution, delivery and performance by the Seller of this
Agreement and the Related Agreements to which she 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 Seller, or any order, writ,
injunction, judgment or decree of any court, administrative agency or
governmental authority applicable to the Seller, (b) violate or require
any consent, waiver or approval under (except for the matters 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 Quotas pursuant to, any agreement, indenture, mortgage, deed of
trust, lease, license, or other instrument to which the Seller is a party
or by which she is bound, or any license, permit or certificate held by
her including, without limitation, those listed on the Disclosure
Schedule, or (c) based upon the information provided to the Seller with
respect to Buyer, require any consent or approval by, notice to or
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registration with any governmental authority or other Person which is
applicable to the 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 the Seller of this Agreement and the Related
Agreements to which she 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 or any order, writ, injunction, judgment or decree of any court,
administrative agency or governmental authority applicable to the Company,
(b) violate the organizational documents of the Company, (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 is a party or by which
the Company is bound, or any license, permit or certificate held by the
Company including, without limitation, those listed on the Disclosure
Schedule, (d) based upon the information provided to the Seller 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, or (e) result in the creation of any lien,
claim, encumbrance or charge upon any property or assets of the Company.
Section 4.7. Financial Statements.
(a) Section 4.7(a) of the Disclosure Schedule contains (i)
the audited balance sheet and the related audited income statement
(including any related notes thereto) of the Company as of and for the
fiscal years ended December 31, 1994, December 31, 1995 and December 31,
1996, and (ii) the Interim Balance Sheet and the related unaudited income
statements of the Company 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, 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; (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 position of the Company
as of the respective dates thereof and, in the case of the related income
statements, the results of operations and earnings of the Company for the
respective periods indicated; and (v) in the case of the Interim Balance
Sheet, 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.
9
Section 4.8. Undisclosed Liabilities. Except as set forth on
Section 4.8 of the Disclosure Schedule, the Company has no liabilities
(absolute, accrued, contingent or otherwise) which are 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
Sheet, 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 the Company.
Section 4.9. Taxes. Except as set forth in Section 4.9 of the
Disclosure Schedule, the Company 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, 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. Except as set forth in Section 4.9 of the Disclosure
Schedule, the Company is not currently nor, 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
the Company 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 the Company for
any period prior to or including the Closing Date as reflected on the
books of the Company are adequate in all material respects to cover such
Taxes, all Tax deficiencies which have been proposed or asserted against
the Company 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, the Company has not received any Tax
incentive, abatement or other credit with respect to its assets, the
Business, its employees or otherwise which contains provisions for the
repayment of any Tax benefit, and the Company has incurred liabilities for
Taxes only in the ordinary course of the Business. The Company has never
conducted business in the United States, has never had any assets,
employees or shareholders located or resident in the United States, and
has never made any election with the United States Internal Revenue
Service regarding Taxes in the United States.
Section 4.10. Title to Properties.
(a) The Company does not own and never has 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 of all fixed
assets owned by the Company and used in the Business as of the Interim
Balance Sheet Date.
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(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, the Company has good and marketable title to all
the personal property and assets (tangible and intangible) reflected as
owned by it on the Interim Balance Sheet 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, all such assets (i) are now in the possession of the
Company, (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.
Section 4.11. Absence of Changes. Except as set forth in
Section 4.11 of the Disclosure Schedule, since December 31, 1996, the
Company has operated only in the ordinary course of the Business in all
material respects and there has not been with respect to the Company:
(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 the Company;
(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);
(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;
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(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, 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;
(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, 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 the Company, 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;
(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 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;
(n) any declaration, payment or reservation for
payment of any dividend or other distribution in respect of the Quotas or
any other securities, or any redemption, purchase or other acquisition,
directly or indirectly, of any Quotas or other securities of the Company;
(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;
(q) the adoption of any ruling, law, ordinance,
statute, rule, regulation, code, or other requirement of any governmental
authority which adversely affects the Company or the Business; or
12
(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, subdivided by
type of Intellectual Property. The Company 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 under software contracts, the Company 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. The Company has not 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
Company in the ordinary course of the Business, 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, (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 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 Seller, there is no basis for any such challenge; and
(ii) the Company has the exclusive right to bring actions for infringement
or unauthorized use of the Intellectual Property identified as being owned
by the Company, and there is, to the best knowledge of the Seller, no
basis for any such action.
(d) The Company has promulgated and used its best efforts
to enforce a trade secret protection program. To the best knowledge of
the Seller, there has been no violation of any such program by any Person.
Except as disclosed in Section 4.12(d) of the Disclosure Schedule, all
trade secrets of the Company (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.
(e) Except as disclosed in Section 4.12(e) of the
Disclosure Schedule, no claims have been asserted by any Person against
the Company claiming ownership of or right to use any of the Intellectual
Property required to be disclosed on Section 4.12(a) of the Disclosure
13
Schedule (other than ownership of Intellectual Property licensed to the
Company under the software contracts listed on Section 4.12(a) of the
Disclosure Schedule) nor, to the best knowledge of the Seller, is there
any basis for any such claim. The use of the Intellectual Property by the
Company 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 of the Intellectual
Property of any other Person has been made or asserted against the Company
in respect of the Business, nor is there, to the best knowledge of the
Seller, 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 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 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 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 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
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 and description (including interest rates and other significant
terms) of all funds, securities and other instruments in which excess cash
of the Company 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, neither the Company nor any of its Affiliates
beneficially or of record owns any shares of SEi Stock.
(d) The Company has not granted or extended to any Person,
nor is the Company 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.
14
Section 4.15. Material Contracts and Customers.
(a) Section 4.15(a) of the Disclosure Schedule contains a
true and correct list of all material contracts, agreements or other
understandings or arrangements, written or oral, or commitments therefor,
relating to the Company, the Business, or the assets or liabilities of
Company (collectively, the "Contracts"). Except as set forth in Section
4.15(a) of the Disclosure Schedule, the Company is not 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 the Company 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 the Company;
(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 the Company of any
property, whether real, personal or mixed;
(vi) contracts to which the Company 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
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 the
Company;
(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 the Company);
15
(x) agreements which restrict the Company from doing
business in any geographic location;
(xi) policies of insurance in force and effect with
respect to the Company, the Business or its assets;
(xii) contracts or agreements not otherwise
referenced with the Seller or her Affiliates;
(xiii) license agreements (as licensee or licensor)
with third parties;
(xiv) employment or consulting agreements which
vary materially from the model employment agreements 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 the Company;
(xviii) any contract or agreement which could
reasonably be expected to have a Material Adverse Effect on the Company;
or
(xix) other contracts outside the ordinary course
of the Business which are not otherwise described in this Subsection.
(b) True and complete copies of each of the Contracts have
been made available to Buyer and SEi by the Seller. 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 or, to the knowledge of the Seller, by
any other party thereto. Except as referenced in Section 4.6 of the
Disclosure Schedule, none of the rights of the Company 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 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 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
16
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 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 the Business as of the Interim
Balance Sheet Date. The relationships of each of the Company with the
Customers are good, and the Seller is not aware of any intention of any
such Customers or suppliers to terminate or modify any of such
relationships. The Company is not generally required to provide bonding
or any other security arrangements in connection with any transactions
with its customers or suppliers.
Section 4.16. Related Transactions.
(a) Except as set forth in Section 4.16 of the Disclosure
Schedule, the Company has no contractual relationship with, or any
obligation or liability owed to, any of its Affiliates, any Affiliate of
the Seller, or any entity of which the Seller 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 Seller nor any director or officer of the Company,
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, or (ii) has an existing relationship with, or an interest
in, the Company including but not limited to lessors of real or personal
property and Persons against which rights or options are exercisable by
the Company.
Section 4.17. Insurance. Section 4.17(a) of the Disclosure
Schedule contains an accurate and complete list of all policies of
insurance presently maintained with respect to the Company 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 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 with respect to its obligations under any such
policy. Except as set forth in Section 4.17(b) of the Disclosure
Schedule, the Seller and the Company 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 insurance policies
or proposing to do so. Section 4.17(c) of the Disclosure Schedule sets
forth a summary of information pertaining to property damage, personal
injury and products liability claims filed by the Company 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 insurance carriers and
17
involve no exposure to the Company. Section 4.17(d) of the Disclosure
Schedule sets forth a complete list of any claims that the Company has
under any of its insurance policies which have not been fully paid to the
Company.
Section 4.18. Labor Matters.
(a) Except to the extent set forth in Section 4.18(a) of
the Disclosure Schedule, (i) the Company 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 pending before or, to the best knowledge of
the Seller, 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 Seller, threatened against the Company; (iii) there
is no labor strike, dispute, slowdown, or stoppage pending against or
affecting the Company; (iv) the Company is not 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; (v) the Company has not
experienced any labor difficulty during the last three (3) years; and (vi)
there are no other controversies pending between the Company and any of
its employees including, without limitation, claims arising under any
labor laws. There has not been any adverse change in relations with
employees of the Company as a result of any announcement or other
disclosure of the transactions contemplated by this Agreement.
(b) Section 4.18(b) of the Disclosure Schedule sets forth
a list of the names of all employees, consultants, officers and directors
of the Company 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 model
employment agreements. The Seller has delivered to SEi (i) copies of the
Company's model employment agreements, (ii) copies of all written
employment agreements to which the Company is a party with any of its
employees identified in Section 4.18(b) of the Disclosure Schedule as
having agreements which vary materially from the 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 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 of each Employee Benefit Plan (other than
Employee Benefit Plans provided by statute) maintained or contributed to
by the Company.
(b) Except as set forth in Section 4.19 of the Disclosure
Schedule, all amounts that the Company is required to have contributed to
18
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, there are no claims (other than routine claims for benefits) or
lawsuits pending with respect to any Employee Benefit Plan.
(d) Except as set forth in Section 4.19 of the Disclosure
Schedule, the Seller has 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 Seller, threatened
against the Company relating to this Agreement or the transactions
contemplated hereby or to the Business or the properties of the Company 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. The Company is not 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, the Company has conducted the
Business 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 or any of the property or
assets of it including, without limitation, any environmental or worker
safety and protection laws and regulations. The Company has all material
licenses, permits, certificates of occupancy and authorizations necessary
to conduct the Business.
Section 4.22. Books and Records. The books, accounts and
records of the Company (a) are located at its headquarters at, Xxxxxxxxxx
Xxxxxx 00, 00000 Xxxxxxxxx, Xxxxxxx Xxxxxxxx xx Xxxxxxx, (x) 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 necessary to carry on the Business 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 hereto delivered by the Seller to Buyer and SEi are complete
and correct.
19
Section 4.23. Copies of Documents. Each of the Seller and the
Company 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 the Company and the
facilities, assets and services to which the Company has a contractual
right of use include all rights, properties, assets, facilities and
services necessary or appropriate for the carrying on of the Business in
the manner in which it is currently being and has over the immediately
preceding twelve (12) months been carried on, and the Company does not
depend in any respect upon the use of assets owned by, or facilities or
services provided by, the Seller or any of her Affiliates.
Section 4.25. Grants.
(a) Section 4.25(a) of the Disclosure Schedule sets forth
a true, correct and complete description of all Grants received by the
Company during the past five years, including (i) all amounts paid to the
Company to date, and (ii) all conditions to the receipt of payments by the
Company with respect to such Grants.
(b) The consummation of the transactions contemplated
hereby will not affect the right of the Company to retain the Grants.
Except as set forth in Section 4.25(b) of the Disclosure Schedule, no
facts or circumstances exist that could, directly or indirectly, (i) cause
or contribute to the revocation of any of the Grants, (ii) cause or
contribute to an obligation of the Company to repay any Grants or (iii)
otherwise cause or contribute to the failure of the Company to receive the
full amounts of the Grants.
Section 4.26. Accounts Receivable. Section 4.26 of the
Disclosure Schedule sets forth a true and correct list and aging of all
unpaid accounts receivable owing to the Company as of the Interim Balance
Sheet Date. The accounts receivable of the Company 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, 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. The Seller has not entered
into any arrangement with any agent, broker, investment banker, person or
firm acting on behalf of the Company, the Seller or any Affiliate of any
of them pursuant to which any Person is or will be entitled to any
20
brokers' or finders' fee or any other commission or similar fee directly
or indirectly from the Company, the Buyer or SEi in connection with the
transactions contemplated hereby.
Section 4.28. Investment Intent; Information Disclosures.
(a) The Seller acknowledges that the SEi Stock to be
received by the Seller will be acquired for the 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. The Seller represents that the
Seller does not have any agreements or arrangements to sell, transfer or
grant a participation with respect to the Purchase Price Shares.
(b) The 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 the
Seller's representations set forth herein.
(c) The Seller represents that the 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. The Seller further represents that the 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
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 the Seller had access.
(d) The 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) The Seller agrees that the 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 the Seller delivers an opinion of counsel
satisfactory to SEi, or SEi delivers to the Seller an opinion of counsel,
that registration under applicable federal or state securities laws is not
required.
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(f) In addition, the Seller agrees that the 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,
the Seller will continue to own at least fifty percent (50%) of the
Purchase Price Shares issued to her 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) The Seller agrees that all certificates for Purchase Price
Shares shall bear a legend in substantially the following form:
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 25, 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 Seller acknowledges that SEi
intends to account for the acquisition of the 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 Seller
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 Seller warrants that the Seller, the
Company and their respective Affiliates have not, directly or indirectly,
taken any of the following actions, which Seller acknowledges could
prevent SEi from obtaining such pooling accounting treatment:
22
(a) acquired or sold, assigned, transferred or otherwise
disposed of, or reduced any risk relative to, any 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 Seller in
the Company in contemplation of the transactions provided for herein;
(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 Quotas held by the 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, the Company is not 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 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 Seller, threatened against
the Company 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 during the five (5) years preceding the date
of this Agreement.
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Section 4.32 Disclosure. None of the representations or warranties
by the Seller 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 Seller which materially and
adversely affects the Business, the Company, or the prospects or financial
condition of the Company, 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 Seller 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
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 Seller, 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
24
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 the Buyer with respect to the Seller,
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.
Section 5.6. Brokers and Finders. Neither SEi nor the Buyer
has entered into any arrangement with any agent, broker, investment
banker, Person or firm acting on behalf of Buyer, SEi or any Affiliate of
either of them pursuant to which any Person is or will be entitled to any
brokers' or finders' fee or any other commission or similar fee directly
or indirectly from the Seller in connection with the transactions
contemplated hereby.
Section 5.7. SEi Information. SEi has delivered to the Seller
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
25
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.
ARTICLE VI
FURTHER COVENANTS AND AGREEMENTS
Section 6.1. Covenants of the Seller Pending the Closing. The
Seller covenants and agrees 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 Seller shall or, as appropriate shall cause
the Company to:
(a) conduct the Business solely in the ordinary course and
consistent with the past practices of the Company;
(b) not take or intentionally omit to take any action
which would result in a breach of any of the Seller's representations and
warranties hereunder in any material respect;
(c) continue to maintain and service the physical assets
used by the Company in the conduct of the Business consistent with past
practices;
(d) use its reasonable efforts to preserve the Business
and organization of the Company, to keep available the services of the
Company's 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 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
26
necessary for the consummation by the Seller and the Company 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.
(f) cooperate with Buyer and SEi in making arrangements to
obtain licenses, permits and certificates required to conduct the Business
or own the 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, make
available to representatives of Buyer and SEi, knowledgeable employees of
the Company for reasonable periods of time to answer inquiries of such
representatives with respect to Buyer's and SEi's investigation of the
Company and permit such representatives of Buyer and SEi to consult with
the officers, employees, accountants and counsel of the Seller; 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;
(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;
(k) make no change in the amount of issued share capital
of the Company or issue or create any option, warrant or any other
security of the Company;
(l) not increase the compensation payable or to become
payable to any officer, employee or agent of the Company 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 other than in the
ordinary course of the Business;
(m) not make any dividends or other distributions in
respect of the Quotas;
(n) not sell, transfer, lease, abandon or otherwise
dispose of (or commit to do so) any fixed assets of the Company; and
(o) not enter into any contract or commitment calling for
payment to or by the Company of an aggregate amount of more than DM10,000,
which is not terminable by the Company on less than thirty (30) days'
notice without penalty.
27
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 Seller, 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 Seller 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 Seller at or prior to the Closing.
(c) shall promptly disclose to the Seller 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.
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.
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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 Quotas hereunder shall be paid by the
Seller. 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 the 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
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 prior to Closing, at the request of Buyer
the Seller 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 Seller of any Tax audit of the Company by a
Tax authority and to give the Seller the opportunity to participate in
such a Tax audit. Furthermore, the Seller shall be entitled to request
the Buyer, SEi and/or the Company 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, upon request by the Seller, to file such
recourse nonetheless, provided that in this case the Seller shall be
liable to reimburse the Company 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 Seller will execute the Pledge and Escrow
Agreement in the form of Exhibit A, the Seller and SEi will execute the
Registration Rights Agreement in the form of Exhibit B, and the Seller
will execute, or cause to be executed, an employment agreement between the
Company and the Seller in the form of Exhibit C, in each case to be
effective upon the Closing Date.
29
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.
(b) The Seller 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; (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 as of the
Closing Date.
(c) It is stipulated and agreed that the Seller has become
acquainted with confidential and privileged information of the Company
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, the Seller agrees that, unless acting with the prior written
consent of Buyer, the Seller shall, whether acting alone, in conjunction
with any other Person, or directly or indirectly through any entity that
the 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.
(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 Seller hereby consents 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.
30
Section 6.10. Pooling of Interests. The Seller 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 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 Seller
shall not, and shall not permit the Company 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 Seller
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 Seller or the Company 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 Collateral. No later than October 31,
1997, the Seller, Buyer and SEi shall arrange for the release of the
following collateral granted to Deutsche Bank AG by the Seller as
collateral for the Company's obligations:
(a) a capital life insurance policy;
(b) a risk life insurance policy;
(c) an insurance policy at the Sparkassenversicherung; and
(d) a personal guarantee in the amount of DM430,000.
Section 6.13. Use of the Seller's Name. The Seller agrees
that, so long as and only so long as the Company is owned by SEi, the
Company has and will continue to have the right to use "Xxxx Xxxxxxx" as a
part of its name.
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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 Seller,
Buyer and SEi;
(b) by the Seller, 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 Seller, 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 Seller 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 Seller, 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 Seller
impossible, and (iii) has not been waived by the Seller.
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
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 or the
Company 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 Seller 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
32
(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 Seller's Closing Deliveries. The Seller
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
Seller 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 the Seller;
(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) three separate guaranteed stock powers duly endorsed
in blank and a Certificate of Foreign Status on Form W-8; and
(e) the certificates referenced in Section 8.2 and 8.3.
Section 8.2. Representations and Warranties True. The
representations and warranties of the Seller 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 Seller 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 Seller 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 Seller shall have delivered to Buyer and SEi on the
Closing Date a certificate, dated as of the Closing Date, to such effect.
33
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
prohibiting the transactions contemplated hereby, which order, decree,
ruling or other action remains in effect.
ARTICLE IX
CONDITIONS TO THE SELLER'S OBLIGATIONS
Each and every obligation of the Seller to consummate the
transactions described in this Agreement shall be subject to the
fulfillment, or the waiver by the Seller, 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 Seller at the Closing,
unless specifically waived by the Seller in her 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 Seller on the Closing Date a
certificate, dated as of the Closing Date, to such effect.
34
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 Seller 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 Seller.
(a) The Seller agrees to reimburse, indemnify and hold
SEi, the Buyer, the Company, 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 Seller;
(ii) any breach or violation of any covenant or
agreement made hereunder by the Seller.
Section 10.2. Indemnification by Buyer and SEi.
(a) Buyer and SEi jointly and severally agree to
reimburse, indemnify and hold the Seller 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:
35
(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, 4.9
and 4.25, 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
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 Sections 4.9 and 4.25 of this
Agreement shall survive until and through six months after all amounts for
Taxes applicable to the Company, their respective employees and the
transactions contemplated by this Agreement, in the case of Section 4.9,
and all amounts for Grants from the government in the case of Section
4.25, 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
36
relevant business records and other documents, and shall permit them to
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
37
party, the Indemnified Party shall promptly send a Claim Notice with
respect to such claim to the Indemnifying Party.
(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 Seller on the other hand, shall exceed
DM9,200,000.
(b) The Seller 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 Seller 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
38
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
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 Seller:
Xx. Xxxx Xxxxxxx
Xxxxxxxxxxxxxx. 00
00000 Xxxxxxxxx
Xxxxxxx Xxxxxxxx of Germany
Telephone: 000 00 000 00 00 00
Facsimile: 011 49 711 93 97 95 91
39
(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
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
40
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 Seller the full and prompt performance by the Buyer of all
of its obligations toward the Seller under this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the day and year first above written.
SELLER:
/s/ Xxxx Xxxxxxx
Xxxx Xxxxxxx
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
