EXHIBIT 2.01
SHARE PURCHASE AGREEMENT
by and among
TECHTEAM GLOBAL, INC.,
TECHTEAM GLOBAL NV/SA,
AKELA INFORMATIQUE SRL
and
Lucian Ionut Xxxxxxx
Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx Xxxxxx
Xxxxxxxx Xxxxxx
Alain Xxxxxx Xxxxxxx Kremeur
Xxxxxx Xxxxx
dated as of
OCTOBER 3, 2005
SHARE PURCHASE AGREEMENT
Share Purchase Agreement, dated as of October 3, 2005, by and among:
TechTeam Global, Inc., an American legal entity, incorporated under the
laws of the State of Delaware, with its head office in 00000 Xxxx 00 Xxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, Xxxxxx Xxxxxx of America, with a Federal Tax ID
number 00-0000000;
TechTeam Global NV/SA, a Belgian limited liability entity, with its head
office at Xxxxxxxxxxxxxxxxxxxx 00, 0000 Xxxxxxxx, Xxxxxxx, registered with
Brussels Trade Register under number 604800; (together the "Purchasers"),
Akela Informatique SRL, whose registered office is at 000, Xxx. Xxxxxxx
Xxx., 0xx Xxxxxxxx, Xxxxxxxxx, Xxxxxxx, registered with the Bucharest Trade
Registry under the no. J40/5206/1998, tax registration code 10629858, tax
attribute R, (the "Company"), and
Lucian Ionut Xxxxxxx, Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx Xxxxxx, Xxxxxxxx
Xxxxxx, Xxxxx Xxxxxx Xxxxxxx Xxxxxx and Xxxxxx Xxxxx who are the holders of all
of the registered capital of the Company in the percentages set forth on Exhibit
A (each a "Shareholder" and collectively, the "Shareholders"). Certain
capitalized terms used in this Agreement have the meanings assigned to them in
Article IX.
WHEREAS, each of the Shareholders has approved, and deems it advisable and
in the best interests of such Shareholder to consummate, the acquisition of the
Company by Purchasers; and
WHEREAS, the Board of Directors of TechTeam Global, Inc. has approved, and
deems it advisable and in the best interests of the Purchasers to consummate the
acquisition of the Company, which acquisition is to be effected by the purchase
of all shares of the registered capital of the Company by Purchasers upon the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein,
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
Section 1.1 Sale and Transfer of Shares. Subject to the terms and conditions of
this Agreement, at the Closing, each Shareholder shall sell, convey, assign,
transfer and deliver to Purchasers the number of Shares set forth opposite such
Shareholder's name on Exhibit A hereto, free and clear of all Encumbrances.
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Section 1.2 The Purchase Price. Subject to the terms and conditions of this
Agreement, in consideration of the aforesaid sale, conveyance, assignment,
transfer and delivery to Purchasers of the Shares, subject to certain
adjustments and off-sets as set forth in Sections 1.3 and 1.4 of this Agreement,
Purchasers shall (i) pay to the Shareholders the aggregate cash amount of Two
Million Four Hundred and Fifty Thousand Euros (euro2,450,000) (the "Cash
Consideration"); and (ii) issue to the Shareholders the aggregate number of
shares of Team Common Stock equal to two Hundred and Fifty Thousand Euros
(euro250,000) in accordance with Section 1.3(c) of this Agreement (the "Stock
Consideration" and together with the Cash Consideration, the "Initial
Consideration").
Section 1.3 Payment of the Purchase Price.
(a) Cash Escrow Account. At the Closing, Purchasers shall pay to
the accounts designated in writing by the Shareholders the amount equal to the
Cash Consideration less (i) the amount of One Hundred Thirty-Five Thousand Euros
(euro135,000), which Purchasers shall deposit into the Account as the working
capital escrow (the "Working Capital Escrow"), and which shall be held in
accordance with the terms set forth in Section 1.6 hereof and (ii) the amount of
One Hundred Thirty-Five Thousand Euros (euro135,000), which Purchasers shall
deposit into the Account as the cash indemnity escrow (the "Cash Indemnity
Escrow"), and which shall be held in accordance with the terms of Section 1.6
hereof. The Cash Consideration less the amounts of the Working Capital Escrow
and the Cash Indemnity Escrow, i.e., the amount of Two Million One Hundred
Eighty Thousand Euros (euro2,180,000), is referred to as the "Closing Cash
Consideration".
(b) Stock Escrow Account. On the fourth Business Day following
the Closing Date, Purchasers shall retain the stock certificates representing
the shares of Team Common Stock (the "Stock Indemnity Escrow"), which shall be
held in accordance with the terms set forth in Section 1.6 hereof.
(c) Calculation of Number of Team Common Stock Constituting the
Stock Consideration. The number of shares of Team Common Stock constituting the
Stock Consideration shall be calculated by (i) converting the Stock
Consideration from Euros to Dollars using the euro/US$ spot exchange rate
published by the Wall Street Journal on the date three (3) Business Days prior
to the Closing Date (the result being the "Dollar Stock Consideration"); and
(ii) dividing the Dollar Stock Consideration by the average closing share price
of Team Common Stock as listed on the NASDAQ Stock Market for the three (3)
Business Days prior to, and the three (3) Business Days following, the Closing
Date (the "Average Closing Price"). No fractional shares of Team Common Stock
will be issued in connection with the Transaction. In lieu of any such
fractional shares, each Shareholder who would otherwise have been entitled to a
fraction of a share of Team Common Stock shall be entitled to receive a cash
payment in lieu of such fractional share determined by multiplying (A) the
Average Closing Price of a whole share of Team Common Stock by (B) the
fractional share interest to which such holder would otherwise be entitled,
which amount shall be delivered into the Stock Indemnity Escrow together with
the Team Common Stock constituting the Stock Consideration.
(d) Allocation of Purchase Price. The Initial Consideration, as
it
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may be adjusted, and any future consideration paid by Purchasers pursuant to
Section 1.5 of this Agreement shall be allocated to the Shareholders in
proportion to the percentage of the total registered share capital represented
by such Shares, as set forth opposite each Shareholder's name under the heading
"% of Company Capital" on Exhibit A hereto. Each Shareholder's share of the
Closing Cash Consideration is set forth in Exhibit A. The Closing Cash
Consideration or other amounts payable by Purchasers under this Agreement shall
be paid by the Purchasers to the accounts designated by the Shareholders in
accordance with this Agreement.
Section 1.4 Purchase Price Adjustment. The Initial Consideration shall be
adjusted following the Closing as follows:
(a) if the amount of the Working Capital of the Company
(determined in accordance with this Section 1.4(b)) as of the Closing Date is
less than One Hundred Sixty-nine Thousand Four Hundred Eight Euros
(euro169,408), the Initial Consideration shall be decreased by an amount equal
to such difference ("Working Capital Deficit"). Any Working Capital Deficit
shall be paid to Purchasers from the Working Capital Escrow, and in the event
the Working Capital Deficit exceeds the amount of the Working Capital Escrow,
the Shareholders shall pay to Purchasers the difference between the Working
Capital Deficit and the Working Capital Escrow within five (5) Business Days
after the amount of Working Capital is agreed to by the Shareholders and
Purchasers. After payment to Purchasers of any Working Capital Deficit, any
remaining amounts in the Working Capital Escrow shall be released to the
Shareholders in accordance with the terms of Section 1.6; and
(b) if the amount of the Working Capital of the Company
(determined in accordance with this Section 1.4(b)) as of the Closing Date is
greater than One Hundred Sixty-Nine Thousand Four Hundred Eight Euros
(euro169,408), the Initial Consideration shall be increased by an amount equal
to such difference (the "Working Capital Surplus"). Any Working Capital Surplus
shall be paid by Purchasers by wire transfer of immediately available funds to
the accounts specified by the Shareholders within five (5) Business Days after
the amount of Working Capital is agreed to by the Shareholders and Purchasers.
In addition, in the event of a Working Capital Surplus, the Working Capital
Escrow shall be released to the Shareholders in accordance with the terms of
Section 1.6.
(c) As used herein, the term "Working Capital" shall mean, as
reflected on the Working Capital Statement, "current assets" less "current
liabilities", which includes all indebtedness for borrowed money regardless of
maturity and excludes any and all fees incurred by Shareholders or the Company
in connection with this Transaction, plus Fifty-Five Thousand Dollars
(US$55,000). The term "Working Capital Statement" shall mean the statement of
Working Capital of the Company to be prepared by Purchasers as of the Closing
Date in accordance with this Section 1.4 and to be delivered to the Shareholders
no later than 90 days after the Closing Date. The Working Capital Statement
shall be prepared by Purchasers using accounting principles, procedures,
policies and methods generally accepted in the United States ("GAAP").
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(d) The Working Capital Statement shall be final and binding on
the parties unless, within 10 days after delivery to the Shareholders, written
notice is given by the Shareholders to Purchasers of their objection setting
forth in reasonable detail the Shareholders' basis for objection. The
Shareholders may dispute items reflected on the Working Capital Statement only
on the basis that such items were not arrived at in conformity with the GAAP. If
notice of objection is given, the parties shall consult with each other with
respect to the objection. Any amount that is not in dispute will promptly be
paid by the party obligated to make such payment hereunder to the party entitled
to receive such payment hereunder. If the parties are unable to reach agreement
within 15 days after the notice of objection has been given, the dispute shall
be submitted, as promptly as practicable, for resolution to Jan Glas of Quintus
(the "Accountants"). Each party agrees to execute, if requested by the
Accountants, a reasonable engagement letter. The Accountants will make a
determination, based solely on presentations by the Shareholders and the
Purchasers and not by independent review, as to (and only as to) each of the
items in dispute, which determination will be (i) in writing, (ii) furnished to
each of the parties hereto as promptly as practicable after the items in dispute
have been referred to the Accountants, (iii) made in accordance with this
Agreement and (iv) conclusive and binding upon each of the parties hereto. In
connection with their determination of the disputed items, the Accountants will
be entitled to rely on the accounting records and similar materials prepared in
connection with the preparation of the Working Capital Statement, and the fees
and expenses of the Accountants will be paid one-half by the Purchasers and
one-half by the Shareholders. Each of Purchasers and the Shareholders will use
reasonable efforts to cause the Accountants to render their decision as soon as
reasonably practicable (but in no event later than 20 days following the
expiration of the 15-day period provided above for Purchasers and the
Shareholders to resolve disputes prior to submission to the Accountants),
including without limitation by promptly complying with all reasonable requests
by the Accountants for information, books, records and similar items.
Section 1.5 Future Consideration. The Purchaser shall also pay to the
Shareholders the amounts earned by the Shareholders by meeting the targets set
forth below:
(a) In the event the Company's Gross Profit for fiscal year 2006
equals or exceeds One Million Three Hundred Thirty Thousand Euros
(euro1,330,000) ("the 2006 Target"), Purchasers shall pay to the Shareholders
the aggregate amount of One Hundred Thousand Euros (euro100,000) no later than
March 31, 2007 to the accounts designated in writing by the Shareholders. If the
Company's Gross Profit for the fiscal year 2006 is between 80% and 90% of the
2006 Target, Purchasers shall pay Shareholders Fifty Thousand Euros
(euro50,000). If the Company's Gross Profit for the fiscal year 2006 is between
90% and 100% of the 2006 Target, Purchasers shall pay Shareholders Seventy-five
Thousand Euros (euro75,000);
(b) In the event the Company's Gross Profit for fiscal year 2007
equals or exceeds Two Million One Hundred Thousand Euros (euro2,100,000) ("the
2007 Target"), Purchasers shall pay to the Shareholders the aggregate amount of
Two Hundred Thousand Euros (euro200,000) no later than March 31, 2008 to the
accounts designated in
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writing by the Shareholders. If the Company's Gross Profit for the fiscal year
2007 is between 80% and 90% of the 2007 Target, Purchasers shall pay
Shareholders One Hundred Thousand Euros (euro100,000). If the Company's Gross
Profit for the fiscal year 2006 is between 90% and 100% of the 2007 Target,
Purchasers shall pay Shareholders One Hundred Fifty Thousand Euros
(euro150,000); and
(c) In the event the Company's aggregate Gross Profit for the
fiscal years 2006 and 2007 equals or exceeds Four Million One Hundred Thousand
Euros (euro4,100,000), Purchasers shall pay, no later than March 31, 2008, (a)
Fifty Thousand Euros (euro50,000) to the Shareholders, and (b) One Hundred
Thousand Euros (euro100,000) contingent compensation to Key Employees in such in
such amounts as the Company's Board of Directors determines. In order to receive
a payment under this provision, a Key Employee must be employed by the Company
on March 1, 2008.
Section 1.6 Account and Release. At or prior to the Closing, the Purchasers
shall deposit the Working Capital Escrow and the Cash Indemnity Escrow into an
interest bearing account or accounts ("Account") with a financial institution in
the United States of the Purchasers' choosing ("Bank"). Purchasers shall release
the Working Capital Escrow from the Account in accordance with the terms set
forth in Section 1.4 above. The funds in the Cash Indemnity Escrow and the Team
Common Stock in Stock Indemnity Escrow will be released in accordance with the
following terms and conditions:
(a) From time to time on or before the expiration of the Cash
Indemnity Escrow and the Stock Indemnity Escrow in accordance with subsection
(e) below, if the Purchasers have given notice to Shareholders of any claim
under Section 8.2 of the Purchase Agreement, the Purchasers may give further
notice to the Shareholders specifying in reasonable detail the nature and dollar
amount of any claim it may have under Section 8 of this Agreement, and
Purchasers shall notify the Shareholders Representative of its intention to
release funds or Team Common Stock from the Cash Indemnity Escrow or the Stock
Indemnity Escrow ("Release Notice").
b) If Shareholder's Representative gives notice to Purchasers
disputing any Release Notice ("Counter Notice") within 30 days following
delivery by the Purchasers of the Release Notice, Purchasers shall not release
any amount from escrow until it has obtained: (i) the written agreement of the
Shareholder's Representative; or (ii) a final non-appealable order of a court of
competent jurisdiction substantiating the amount of the claim set forth in the
Release Notice.
(c) If no Counter Notice is received by Purchasers within the
30-day period set forth in subsection (b) above, then the Purchasers may release
a payment to the Purchasers in the amount of the claim. If the amount of money
held in the Cash Indemnity Escrow insufficient to reimburse the Purchasers for
the claim, the Shareholders hereby authorize Purchasers to redeem the number of
Team Common Stock equal to the unpaid amount of the claim, as calculated in
accordance with subsection (d) below) set forth in the Release Notice as payment
for the claim.
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(d) To determine the amount of Team Common Stock to be released
pursuant to subsection (b) and (c) above, the Purchasers shall divide the amount
of the claim set forth in the Release Notice by the closing price of the Team
Common Stock on the date of the Release Notice, or if the NASDAQ stock market is
closed on the date of the Release Notice, the closing price on the first day
after the Release Notice that the NASDAQ stock market is open.
(e) The Purchasers shall distribute the Team Common Stock held in
the Stock Escrow Account for the Shareholder, and pay the amount of the funds to
Shareholders that has not been released in accordance with this Agreement in the
Working Capital Escrow or the Cash Escrow Account, as applicable, in the
proportions set forth in 1.3(d) on the following dates:
(i) in the case of a Working Capital Escrow, within five (5)
business days after the amount of the Working Capital is agreed by the
Shareholders and the Purchasers or otherwise determined in accordance with
Section 1.4 above.
(ii) in the case of the Cash Escrow Account, within five (5)
business days of the first-year anniversary of the Closing Date ("Cash
Escrow Account Termination Date");
(iii) in the case of the Stock Escrow Account, within five
(5) business days of the second-year anniversary of the Closing Date
("Stock Escrow Account Termination Date").
(f) Notwithstanding subsection (e) above, if any claims pursuant
to Section 8 are then pending at the time of the Cash Escrow Account Termination
Date or the Stock Escrow Account Termination Date, an amount equal to (i) the
aggregate amount of such claims (as shown in the relevant notices of such
Claims) or (ii) with respect to any claim which the Purchasers are unable to
specify the amount of the claim in the Release Notice, the entire then current
amount in the Case Escrow Account or the Stock Escrow Account shall be retained
in the Account until the mutual written agreement of the Purchasers and the
Shareholders with respect to such claim or a final non-appealable order of a
court of competent jurisdiction with respect to the claim has been obtained as
contemplated by Section 1.6(b).
Section 1.7. Conduct of Company's Business Post Acquisition. Purchaser agrees
that during the period from the Closing through December 31, 2007, Purchaser
will maintain the Company as a separate entity owned by TechTeam Global, Inc. or
an Affiliate and will exercise good faith and fair dealing the its transactions
with the Company, including in respect to the Company's efforts to meet the
targets in Section 1.5 and receive the payments set forth therein.
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ARTICLE II
THE CLOSING
Section 2.1 The Closing. The sale and transfer of the Shares by the Shareholders
to Purchasers shall take place at the offices of TechTeam Global SRL at 2:00
p.m., Romanian time, on October 3, 2005, provided that all of the conditions to
close have been satisfied or on such date (other than conditions which can be
satisfied only be the delivery of certificates or other documents at Closing).
Section 2.2 Deliveries by Shareholders. At the Closing, each Shareholder shall
deliver to Purchasers:
(a) an original resolution of the general meeting of the
shareholders, in form and in substance satisfactory to the Purchasers, approving
the sale of the Shares; the election of the new directors of the Company; and
changes to the charter of the Company in accordance with the Additional Act, to
take effect on Closing.
(b) the original, signed and notarized powers of attorney
referred to in Section 2.6.
(c) the following executed agreements, in form and substance
satisfactory to Purchasers:
(i) LB Arrangements;
(d) all of the books and records of Shareholders relating to the
Company;
(e) the Shareholders' Certificate referred to in Section 6.2(b)
(f) the Officers' Certificate referred to in Section 6.2(c)
hereof;
(g) copies of all records, including all signature or
authorization cards, pertaining to the bank accounts listed in the Appendix
2.2(g);
(h) a general release in favor of the Company in the form of
Exhibit B hereto, duly executed by such Shareholder;
(i) documentation, in form and substance satisfactory to the
Purchasers, evidencing the acquisition of the portion of Akela LLC owned by Core
E-Business Solutions LLP.
Section 2.3 Deliveries by Purchasers. Purchasers shall deliver at the Closing:
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(a) to the Shareholders the Closing Cash Consideration, by wire
transfer in immediately available funds to accounts designated in writing by the
Shareholders;
(b) to the Bank, the Working Capital Escrow and the Cash
Indemnity Escrow to the Account; and
Section 2.4 Post-Closing Deliveries:
(a) Purchasers shall deliver to Shareholders any amount of cash
payable for a fractional share of stock as calculated under Section 1.3 (c), and
(b) Shareholders shall deliver to Purchasers to the Stock Power
in the form attached as Appendix 2.4 signed in blank.
(c) Shareholders, at Purchasers' request, will deliver to
Purchasers additional Stock Power, signed in blank, in the event a claim is made
after the Stock Indemnity Escrow has been used to pay another claim.
Section 2.5 Joint Obligations. On the Closing Date, the Purchasers and the
Shareholders shall register the Purchasers as the owner of the Shares in the
Company's Shareholders Register.
Section 2.6 Registration. On the Closing Date, each of the Shareholders shall
give to the Purchasers a notarized power of attorney, in the form set forth in
Exhibit C, enabling the Purchasers to act on behalf of the Shareholders without
the direct involvement of the Shareholders in relation to the registration of
the Additional Act with the Commercial Registry, on the same day, or, if the
Commercial Registry is then closed, on the next day on which the Commercial
Registry is open for acceptance of filing of the Additional Act. The
Shareholders shall take any other act necessary to vest Purchasers with full and
unconditional ownership of the Shares, including, without limitation, the
registration of the transfer of ownership of the Shares, by the Purchasers,
together with the Shareholders, with the Commercial Registry, as well as any
other act or procedure required under Romanian law to vest the Purchasers with
full and unconditional ownership of the Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders, severally and not jointly, represent and warrant to
Purchasers that all of the statements contained in Appendix 3 are true and
complete as of the date of this Agreement (or, if made as of a specified date,
as of such date), and will be true and complete as of the Closing Date as though
made on the Closing Date, except as specifically set forth in the Schedules to
Appendix 3.
ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Purchasers represents and warrants to the Shareholders that:
Section 4.1 Organization.
(a) TechTeam Global, Inc. is a corporation duly organized, validly
existing and in good standing under the laws of Delaware and has all
requisite corporate or other power and authority and all necessary
governmental approvals to own, lease and operate its properties and to
carry on its business as now being conducted, except where the failure
to be so organized, existing and in good standing or to have such
power, authority, and governmental approvals would not have,
individually or in the aggregate, a material adverse effect on its
ability to consummate the Transactions.
(b) TechTeam Global NV/SA is a limited liability company duly organized,
validly existing and duly registered under the laws of Belgium and has
all requisite corporate or other power and authority and all necessary
governmental approvals to own, lease and operate its properties and to
carry on its business as now being conducted, except where the failure
to be so organized, existing and duly registered or to have such
power, authority, and governmental approvals would not have,
individually or in the aggregate, a material adverse on its ability to
consummate the Transactions.
Section 4.2 Authorization; Validity of Agreement. Purchasers have full corporate
power and authority to execute and deliver this Agreement and to consummate the
Transactions. The execution, delivery and performance by Purchasers of this
Agreement and the consummation of the Transactions have been duly authorized by
the Board of Directors of each of the Purchasers, and no other corporate action
on the part of Purchasers are necessary to authorize the execution and delivery
by Purchasers of this Agreement or the consummation of the Transactions. This
Agreement has been duly executed and delivered by Purchasers, and, assuming due
and valid authorization, execution and delivery hereof by the Company and each
of the Shareholders, is a valid and binding obligation of Purchasers,
enforceable against Purchasers in accordance with its terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws of general application affecting
enforcement of creditors' rights generally and (ii) the availability of the
remedy of specific performance or injunctive or other forms of equitable relief
may be subject to equitable defenses and would be subject to the discretion of
the court before which any proceeding therefore may be brought.
Section 4.3 Consents and Approvals; No Violations. Except for the filings,
permits, authorizations, consents and approvals contemplated by this Agreement
or as may be
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required under, and other applicable requirements of, U.S. securities or blue
sky laws, none of the execution, delivery or performance of this Agreement by
Purchasers, the consummation by Purchasers of the Transactions or compliance by
Purchasers with any of the provisions hereof will (i) conflict with or result in
any breach of any provision of the certificate of incorporation or by-laws of
Purchasers, (ii) require any filing with, or permit, authorization, consent or
approval of, any Governmental Entity, (iii) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration) under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which Purchasers are a party or by which any of them or any of its properties
or assets may be bound, or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Purchasers or any of their properties
or assets, excluding from the foregoing clauses (ii), (iii) and (iv) such
violations, breaches or defaults which would not, individually or in the
aggregate, have a material adverse effect on Purchasers' ability to consummate
the Transactions or which arise from the regulatory status of the Company.
Section 4.4 Issuance of Securities. The shares of Stock Consideration have been
duly and validly authorized for issuance, offer and sale pursuant to this
Agreement and, when issued and delivered as provided hereunder against payment
in accordance with the terms hereof, shall be valid and binding obligations of
the TechTeam Global, Inc. enforceable in accordance with their respective terms.
Section 4.5 Brokers or Finders. Neither Purchasers nor any of its Affiliates has
entered into any agreement or arrangement entitling any agent, broker,
investment banker, financial advisor or other firm or Person to any broker's or
finder's fee or any other commission or similar fee in connection with any of
the Transactions.
ARTICLE V
COVENANTS
Section 5.1 Notification of Certain Matters. The Company and each Shareholder
shall give notice to Purchasers promptly after becoming aware of (i) the
occurrence or non-occurrence of any event whose occurrence or non-occurrence
would be likely to cause either (A) any representation or warranty contained in
this Agreement to be untrue or inaccurate on the Closing Date or (B) any
condition set forth in Article VI to be unsatisfied in any material respect on
the Closing Date and (ii) any material failure of any Shareholder or the Company
or any officer, director, employee or agent thereof, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
section shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
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Section 5.2 Shareholders' Non-Compete. Without the express prior written consent
of Purchasers, none of the Shareholders shall, at any time during the two-year
period immediately following the Closing Date, directly or indirectly, own,
manage, control or participate in the ownership, management or control of, or be
related or otherwise affiliated in any manner with, any business similar to that
engaged in by the Company in the territory of Romania. Each Shareholder agrees
that such Shareholder and such Shareholder's Affiliates will not, for a period
of two years after the Closing Date, seek to employ any person now employed by
the Company or any Company Subsidiary.
Section 5.3 Subsequent Actions. If at any time after the Closing, Purchasers
will consider or be advised that any deeds, instruments of conveyance,
assignments, assurances or any other actions or things are necessary or
desirable (i) to vest, perfect or confirm ownership (of record or otherwise) in
Purchasers, its right, title or interest in, to or under any or all of the
Shares, (ii) to vest, perfect or confirm ownership (of record or otherwise) in
the Company and the Company Subsidiary, any of its rights, properties or assets
or (iii) otherwise to carry out this Agreement, the Shareholders and the Company
shall execute and deliver all deeds, bills of sale, instruments of conveyance,
powers of attorney, assignments and assurances and take and do all such other
actions and things as may be requested by Purchasers in order to vest, perfect
or confirm any and all right, title and interest in, to and under such rights,
properties or assets in Purchasers or the Company or any Company Subsidiary or
otherwise to carry out this Agreement.
Section 5.4 Publicity. The initial press release with respect to the execution
of this Agreement shall be a joint press release acceptable to Purchasers and
the Shareholders. Neither the Shareholders, the Company, Purchasers nor any of
their respective Affiliates shall issue or cause the publication of any press
release or other public announcement with respect to this Agreement or the other
Transactions without prior consultation with the other party, except as may be
required by law or by any listing agreement with a national securities exchange
or trading market.
Section 5.5. Restriction on the Sale of Stock Consideration. Each Shareholder
agrees that the stock certificates representing the Stock Consideration are not
registered, cannot be sold by the Shareholder for two-years following the date
of this Agreement, and shall bear the following legend:
These securities have not been registered, qualified, recommended,
approved or disapproved under the United States federal securities law
or state security law. The shares represented by this certificate may
not be sold, transferred or otherwise disposed of by an investor
without (i) registration under United States federal securities law,
or (ii) delivery of an opinion of counsel satisfactory to the TechTeam
Global, Inc. that neither the sale nor the proposed transfer
constitutes a violation of any United States federal or state
securities law. The shares represented by this certificate are the
subject of a lock-up agreement between TechTeam Global, Inc. and [the
Shareholder] and, in accordance with that agreement, these shares may
not be sold prior to October 3, 2007, with out the prior written
consent of TechTeam Global, Inc.
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ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Obligations of both the Purchasers and the
Shareholders to Affect the Closing. The obligations of either of the parties to
consummate the Closing shall be subject to the satisfaction on or prior to the
Closing Date of each of the following conditions:
(a) No Governmental Entity shall have issued any order, decree or
ruling or taken any other action, and there shall not be any statute, rule or
regulation, restraining, enjoining or prohibiting the consummation of the
Transactions and there shall not be overtly threatened or pending any suit,
action or proceeding by any Governmental Entity to enjoin, restrain or prohibit
the Transactions, or that would be reasonably likely to prevent or make illegal
the consummation of the transactions contemplated by this Agreement.
(b) There shall not have occurred any material adverse change (or
any development that, insofar as can be foreseen, is likely to result in any
material adverse change) in the consolidated financial condition, businesses,
results of operations or prospects of the Company (and the Company Subsidiary)
or of the Purchasers.
Section 6.2 Conditions to Obligations of Purchasers to Affect the Closing. The
obligations of Purchasers to consummate the Closing shall be subject to the
satisfaction on or prior to the Closing Date of each of the following
conditions:
(a) All of the representations and warranties of the Shareholders
set forth in this Agreement shall be true and complete in all respects as of the
date of this Agreement and as of the Closing Date.
(b) The Shareholders shall have delivered to Purchasers at the
Closing a certificate signed by each of the Shareholders, dated the Closing
Date, in form and substance satisfactory to Purchasers, to the effect that, as
of the Closing Date, (x) all of the representations and warranties of the
Shareholders set forth in this Agreement are true and complete, (y) there has
not occurred any material adverse change (or any development that, insofar as
reasonably can be foreseen, is reasonably likely to result in any material
adverse change) in the consolidated financial condition, businesses, results of
operations or prospects of the Company and the Company Subsidiary, taken as a
whole and (z) the Shareholders have performed all obligations required under
this Agreement to be performed by it at or prior to the Closing.
(c) The Company shall have delivered to Purchasers at the Closing
a certificate signed by the director of the Company and by the highest ranking
financial person in the Company, dated the Closing Date, in form and substance
satisfactory to Purchasers, to the effect that, as of the Closing Date, (x) all
of the
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representations and warranties of the Shareholders regarding the Company set
forth in this Agreement are true and complete, (y) there has not occurred any
material adverse change (or any development that, insofar as reasonably can be
foreseen, is reasonably likely to result in any material adverse change) in the
consolidated financial condition, businesses, results of operations or prospects
of the Company and the Company Subsidiary, taken as a whole and (z) the Company
has performed all obligations required under this Agreement to be performed by
it at or prior to the Closing.
(d) There shall not have occurred any material adverse change (or
any development that, insofar as can be foreseen, is likely to result in any
material adverse change) in the consolidated financial condition, businesses,
results of operations or prospects of the Company and the Company Subsidiary.
(e) There shall have been passed an original resolution of the
general meeting of the shareholders, in form and substance satisfactory to the
Purchasers, approving the sale of the Shares; the election of the new directors
of the Company; and changes to the charter of the Company in accordance with the
Additional Act, to take effect on Closing.
(f) The Shareholders shall have delivered the original, signed
and notarized powers of attorney referred to in Section 2.6.
(g) The Purchasers shall have received copied of the following
executed agreements, in form and substance satisfactory to Purchasers:
(i) LB Arrangements;
(h) The Purchasers shall have received a general release in favor
of the Company in the form of Exhibit B hereto, duly executed by such
Shareholder;
(i) The Purchasers shall have received documentation, in form and
substance satisfactory to the Purchasers, evidencing the acquisition of the
portion of Akela LLC owned by Core E-Business Solutions LLP.
(j) None of the Shareholders or the Company shall have failed to
perform in any material respect any obligation or to comply in any material
respect with any agreement or covenant to be performed or complied with by such
Shareholder or the Company under this Agreement.
The foregoing conditions are for the sole benefit of Purchasers, may be waived
in writing by Purchasers, in whole or in part, at any time and from time to time
in the sole discretion of Purchasers. The failure by Purchasers at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right.
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Section 6.3. Conditions to Obligations of the Shareholders to Affect the
Closing. The obligations of the Shareholders to consummate the Closing shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions:
(a) All of the representations and warranties of the Purchasers set forth
in this Agreement shall be true and complete in all respects as of the date of
this Agreement and as of the Closing Date.
(b) The Purchasers shall have performed and complied in all material
respects with any agreement or covenant to be performed or complied with by it
under this Agreement.
(c) If any are required, all notices by Purchasers to, and declarations,
filings and registrations by Purchasers with, and consents, approvals and
waivers from any Governmental Entity or regulatory authorities, required by
applicable laws to consummate the transactions contemplated hereby or required
under this Agreement to have been obtained prior to Closing other than routine
post-closing notifications or filings, shall have been made or obtained and any
required waiting period shall have elapsed.
The foregoing conditions are for the sole benefit of the Shareholders, and may
be waived in writing by the Shareholders Representative, in whole or in part, at
any time and from time to time in the sole discretion of the Shareholders
Representative. The failure by the Shareholders at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right.
ARTICLE VII
TERMINATION
Section 7.1 Termination. The Transactions contemplated herein may be terminated
or abandoned at any time prior to the Closing by the Purchasers if any
Shareholder or the Company shall have breached any representation, warranty,
covenant or other agreement contained in this Agreement which would give rise to
the failure of a condition set forth in Article VI.
Section 7.2 Effect of Termination. In the event of the termination or
abandonment of the Transactions pursuant to the terms of this Agreement, written
notice thereof shall forthwith be given to the other Shareholders specifying the
provision hereof pursuant to which such termination or abandonment of the
Transactions is made, and there shall be no liability or obligation thereafter
on the part of Purchasers, the Shareholders or the Company except (a) for fraud
or for breach of this Agreement prior to such termination or abandonment of the
Transactions and (b) as set forth in Section 10.1.
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ARTICLE VIII
INDEMNIFICATION
Section 8.1 Indemnification; Remedies.
(a) Each Shareholder shall indemnify, defend and hold harmless
the Purchasers Indemnified Persons from and against and in respect of 100% of
all Purchasers Losses.
(b) In addition to the provisions of (a) of this Section 8.1, and
notwithstanding any Schedules to the representations and warranties contained in
or made by or pursuant to this Agreement, each Shareholder shall indemnify,
defend and hold harmless the Purchasers Indemnified Persons from and against and
in respect of 100% of any and all Taxes imposed upon the Company relating to the
operations of the Company or the Company Subsidiary prior to the Balance Sheet
Date (other than any amount for Taxes specifically identified and reflected as a
liability for unpaid Taxes on the Balance Sheet), including without limitation
any Taxes imposed on the Company.
Section 8.2 Notice of Claim; Defense. Purchasers shall give each Shareholder
prompt notice of any third-party claim that may give rise to any indemnification
obligation under this Article VIII, together with the estimated amount of such
claim. The Shareholders shall have the right to assume the defense (at the
Shareholders' expense) of any such claim through counsel satisfactory to
Purchasers in its sole discretion, and approved in writing by the Purchasers.
Failure to give such notice shall not affect the indemnification obligations
hereunder in the absence of actual and material prejudice. If, under applicable
standards of professional conduct, a conflict with respect to any significant
issue between any Purchasers Indemnified Person and any Shareholder exists in
respect of such third-party claim, the Shareholders shall pay the reasonable
fees and expenses of such additional counsel as may be required to be retained
in order to resolve such conflict. The Shareholders shall be liable for the fees
and expenses of counsel employed by Purchasers for any period during which the
Shareholders have not assumed the defense of any such third-party claim (other
than during any period in which Purchasers will have failed to give notice of
the third-party claim as provided above). If the Shareholders assume such
defense, Purchasers shall have the right to participate in the defense thereof
and to employ counsel, at its own expense, separate from the counsel employed by
the Shareholders, it being understood that the Shareholders shall control such
defense. If the Shareholders choose to defend or prosecute a third-party claim,
Purchasers shall cooperate in the defense or prosecution thereof, which
cooperation shall include, to the extent reasonably requested by the
Shareholders, the retention, and the provision to Shareholders, of records and
information reasonably relevant to such third-party claim, and making employees
of the Company available on a mutually convenient basis to provide additional
information and explanation of any materials provided hereunder. If the
Shareholders choose to defend or prosecute any third-party claim, Purchasers
shall agree to any settlement, compromise or discharge of such third-party claim
that the Shareholders may recommend and that, by its terms, discharges
Purchasers and the Purchasers Affiliates from the full amount of liability in
connection with such third-party claim; provided, however, that, without the
consent of
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Purchasers, the Shareholders shall not consent to, and Purchasers shall not be
required to agree to, the entry of any judgment or enter into any settlement
that (i) provides for injunctive or other non-monetary relief affecting
Purchasers or any Affiliate of Purchasers or (ii) does not include as an
unconditional term thereof the giving of a release from all liability with
respect to such claim by each claimant or plaintiff to each Purchasers
Indemnified Person that is the subject of such third-party claim.
Section 8.3 Survival of Indemnification Claims; Release from Escrow, Set-off.
The indemnification obligations set forth in this Article VIII shall survive the
Closing and shall first be satisfied by the Cash Indemnity Escrow and the Stock
Indemnity Escrow. If the amounts of the Cash Indemnity Escrow and/or the Stock
Indemnity Escrow are insufficient or have been released to the Shareholders in
accordance with Section 1.6, the Shareholders indemnification obligations may be
satisfied in whole or in part, by: (a) offset against obligations of Purchasers
under this Agreement, including any future consideration payments under Section
1.5 of this Agreement; or (b) if the future consideration has been paid in its
entirety, the Shareholders paying to the Purchasers the difference of the amount
claimed by the Purchasers within five (5) business days of notification by the
Purchasers of such deficiency.
Section 8.4 Tax Effect of Indemnification Payments. All indemnity payments made
by Shareholders to Purchasers Indemnified Persons, or by Purchasers Indemnified
Persons to Shareholders, pursuant to this Agreement shall be treated for all Tax
purposes as adjustments to the consideration paid with respect to the Shares.
Section 8.5 Effect of Investigation. The right to indemnification, payment of
Purchasers Losses or for other remedies based on any representation, warranty,
covenant or obligation of any Shareholder or the Company contained in or made
pursuant to this Agreement or the Closing Documents shall not be affected by any
investigation conducted with respect to, or any knowledge acquired (or capable
of being acquired) at any time, whether before or after the execution and
delivery of this Agreement or the date the Closing occurs, with respect to the
accuracy or inaccuracy of or compliance with, any such representation, warranty,
covenant or obligation. The waiver of any condition to the obligation of
Purchasers to consummate the Transactions, where such condition is based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, shall not affect the right to
indemnification, payment of Purchasers Losses, or other remedy based on such
representation, warranty, covenant or obligation.
Section 8.6 Limitations On Amount. Shareholders will have no liability for
indemnification under this Article VIII until the total amount of all claims
with respect to such matters exceeds Twenty-Five Thousand Euros (euro25,000),
and then only for the amount in which the total amount of such claims exceed
Twenty-Five Thousand Euros (euro25,000). The maximum amount for which the
Shareholders may be liable shall be euro1,000,000.
Section 8.7 Survival of Covenants, Representations and Warranties. Each of the
covenants, representations and warranties of the Shareholders in this Agreement
or in any
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appendix, schedule, instrument or other document delivered pursuant to this
Agreement shall survive the Closing Date and shall continue in force thereafter.
Section 8.8. Time Limitation. Except for a claim under Section 1.31, Tax
Matters, of Appendix 3, no Shareholder will have any liability for
indemnification or otherwise with respect to any representation or warranty
contained in Article III unless on or before October 3, 2007, Purchasers
notifies Shareholders Representative of a claim specifying the factual basis of
that claim in reasonable detail to the extent then known by Purchaser. A claim
under Section 1.31 may be made by the Purchasers at any time prior to 30 days
after the expiration of the applicable statute of limitation for such claim.
ARTICLE IX
DEFINITIONS AND INTERPRETATION
Section 9.1 Definitions. For all purposes of this Agreement, except as otherwise
expressly provided or unless the context clearly requires otherwise:
"Account" has the meaning set forth in Section 1.6.
"Additional Act" means the additional act to the constitutive
documents of the Company substantially in the form agreed as set forth in
Exhibit D.
"Affiliate" shall mean a Person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with, the Person specified.
"Agreement" or "this Agreement" shall mean this Share Purchase
Agreement, together with the Exhibits, Appendices and Schedules hereto.
"Balance Sheet" shall mean the most recent audited balance sheet of
the Company and its consolidated subsidiaries included in the Financial
Statements.
"Balance Sheet Date" shall mean 31 December 2004.
"Bank" has the meaning set forth in Section 1.6.
"Business Days" shall mean a day other than a Saturday or Sunday or a
public holiday when the banks are not open in Romania and the United States.
"Butnaru" shall mean Lucian Xxxxx Xxxxxxx whose domicile is at 2-6
Xxxxx Xxxxxxxxx Str., bl. 3B, apt. 31, 1st District, Bucharest, Romania, CNP
1780806080030.
"Cash Consideration" has the meaning set forth in Section 1.2.
"Cash Indemnity Escrow" has the meaning set forth in Section 1.3(a).
Page 18 of 50
"Charter" shall mean the certificate of incorporation and memorandum
and articles of association or articles of incorporation, bylaws, statutes,
operating agreement and all other constitutional documents (as applicable) of
the Company or any Company Subsidiary, as in effect at the relevant time;
"Closing" shall mean the closing referred to in Section 2.1.
"Closing Cash Consideration" has the meaning set forth in Section
1.3(a).
"Closing Date" shall mean the date on which the Closing occurs.
"Commercial Registry" means the commercial registry maintained by the
Commercial Registry Office of the Bucharest Tribunal operating under the
authority of the National Commercial Registry Office.
"Company" has the meaning set forth in the Preamble.
"Company Agreement" shall mean any Indebtedness in the principal
amount of euro100,000 or more or which requires total payments equal to or in
excess of such sum, any Lease, lease of personal property calling for annual
payments in excess of euro50,000 per annum, any material license, other material
contract, or agreement or other material instrument or obligation to which the
Company or any Company Subsidiary is a party or by which any of them or any of
their properties or assets may be bound.
"Company Intellectual Property" shall mean all Intellectual Property
that is currently owned by the Company or any Company Subsidiary used in the
business of the Company or any Company Subsidiary or that is necessary or useful
to conduct the business of the Company or the Company Subsidiary as presently
conducted or as currently proposed to be conducted.
"Company Subsidiary" shall mean each Person which is a Subsidiary of
the Company, and in particular, Akela LLC.
"Computer Software" shall mean computer software programs, databases
and all documentation related thereto.
"Computer System" means the computer hardware, computer data and
Computer Software used by the Company in the conduct of its business;
"Copyrights" shall mean registered and unregistered copyrights
(including those in computer software and databases), rights of publicity and
all registrations and applications to register the same.
"Defect" shall mean a defect or impurity of any kind, whether in
development, design, manufacture, processing, or otherwise, including any
dangerous propensity associated with any reasonably foreseeable use of a
product, or the failure to
Page 19 of 50
warn of the existence of any defect, impurity, or dangerous propensity.
"Disclosure Schedule" shall mean the disclosure schedules delivered by
Shareholders to Purchasers concurrently with the exectution and delivery of this
Agreement and attached as an integral part hereof to Appendix 3 hereto.
"Encumbrances" shall mean any and all liens, charges, security
interests, options, claims, mortgages, pledges, proxies, voting trusts or
agreements, obligations, understandings or arrangements or other restrictions on
title or transfer of any nature whatsoever.
"Environmental Claim" shall mean any claim, action, cause of action,
investigation or notice (written or oral) by any Person alleging actual or
potential liability for investigatory, cleanup or governmental response costs,
or natural resources or property damages, or personal injuries, attorney's fees
or penalties relating to (i) the presence, or release into the environment, of
any Materials of Environmental Concern at any location owned or operated by the
Company or any Company Subsidiary, now or in the past, or (ii) circumstances
forming the basis of any violation, or alleged violation, of any Environmental
Law.
"Environmental Law" shall mean Romanian state and local law and
regulation relating to pollution, protection or preservation of human health or
the environment including ambient air, surface water, ground water, land surface
or subsurface strata, and natural resources, and including each law and
regulation relating to emissions, discharges, releases or threatened releases of
Materials of Environmental Concern, or otherwise relating to the manufacturing,
processing, distribution, use, treatment, generation, storage, containment
(whether above ground or underground), disposal, transport or handling of
Materials of Environmental Concern, or the preservation of the environment or
mitigation of adverse effects thereon and each law and regulation with regard to
record keeping, notification, disclosure and reporting requirements respecting
Materials of Environmental Concern.
"euro" or "Euro" shall mean the Euro, the legal currency of the
European Monetary Union.
"Exchange Act" shall mean the U.S. Securities Exchange Act of 1934, as
amended.
"Financial Statements" shall mean (a) the consolidated balance sheets
of the Company and the Company's consolidated Subsidiaries as of 31 December in
each of the years 2003 through 2004 together with consolidated statements of
income, shareholders' equity and cash flows for each of the years then ended,
including the notes thereto, all as certified by Mazars Romania SRL, independent
certified public accountants, whose reports thereon are included therein, and
(b) the unaudited consolidated balance sheet of the Company and the Company's
consolidated Subsidiaries as of 31 December and unaudited consolidated
statements of income, shareholders' equity and cash flows for the quarterly
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period then ended 30 June 2005, including the notes thereto.
"GAAP" has the meaning set forth in Section 1.4(a).
"Governmental Entity" shall mean a court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency in any country.
"Gross Profit" shall mean "gross profit" as defined by generally
accepted accounting principles in the United States for reporting purposes under
the rules and regulations of the SEC. However, Gross Profit will not include any
revenue or expense related to any inter-company transactions billed by the
Company to the Purchasers or their Affiliates.
"Key Employees" shall mean the persons as determine in the discretion
of the Company's Board of Directors.
"Indebtedness" shall mean (i) all indebtedness for borrowed money or
for the deferred purchase price of property or services (other than current
trade liabilities incurred in the ordinary course of business and payable in
accordance with customary practices), (ii) any other indebtedness that is
evidenced by a note, bond, debenture or similar instrument, (iii) all
obligations under financing leases, (iv) all obligations in respect of
acceptances issued or created, (v) all liabilities secured by any lien on any
property and (vi) all guarantee obligations.
"Initial Consideration" has the meaning set forth in Section 1.2.
"Intellectual Property" shall mean all of the following: means
Patents, utility models, xxxxx patents, Trademarks, design rights, trade names,
service names, business names, Copyrights, rights in the nature of copyright,
resale rights, rental rights, lending rights, moral rights, database rights,
domain names, semi-conductor topography rights, know-how, rights in Trade
Secrets and confidential information, Licenses, rights protecting reputation and
goodwill, rights in unfair competition and all other intellectual property
rights and analogous rights as may exist anywhere in the world for the full term
of the rights concerned together with all reversions, revivals, extensions and
renewals of such rights (whether registered or not); all registrations and
pending registrations relating to any such rights, the benefit of any pending
applications for any such registrations and the right to apply for registrations
of such rights; and all rights of action, powers or benefits belonging or
accrued in relation to such rights (including the right to xxx for and recover
damages for past infringements);
"Knowledge" an individual will be deemed to have (a) knowledge of a
particular fact or other matter if such individual is actually aware of such
fact or other matter and (b) such knowledge that a prudent individual would have
after reasonable inquiry. The Company will bee deemed to have "Knowledge" of a
particular fact or other matter if any
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individual who is serving, or who has served, as a director or officer of the
Company has, or at any time had, knowledge of such fact or other matter.
"LB Arrangements" shall mean the management agreement between the
Company and Xxxxxx Xxxxxxx and the Confidentiality, Invention Assignment and
Non-Competition Agreement between Butnaru and the Company.
"Lease" shall mean each lease pursuant to which the Company or any
Company Subsidiary leases any real or personal property.
"Licenses" shall mean all licenses and agreements pursuant to which
the Company has acquired rights in or to any Trademarks, Patents or Copyrights,
or other Intellectual Property Rights or licenses and agreements pursuant to
which the Company has licensed or transferred the right to use any of the
foregoing.
"Materials of Environmental Concern" shall mean chemicals; pollutants;
contaminants; wastes; toxic or hazardous substances, materials and wastes;
petroleum and petroleum products; asbestos and asbestos-containing materials;
polychlorinated biphenyls; lead and lead-based paints and materials; and radon.
"Non-competition Addenda" shall mean the non-competition addenda to
the employment agreement of the following employees of the Company entered into
with the Company prior to Closing:
(i) Xxxxx Xxxxxx; and
(ii) Xxxxxx Xxxxx.
"Parties" shall mean the Purchasers, the Company, and the
Shareholders.
"Patents" shall mean all issued patents and pending patent
applications, patent disclosures, and any and all divisions, continuations,
continuations-in-part, reissues, reexaminations, and extension thereof, any
counterparts claiming priority there from, utility models, patents of
importation/confirmation, certificates of invention and like statutory rights.
"Person" shall mean a natural person, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Entity or other entity
or organization.
"Purchasers" has the meaning set forth in the Preamble.
"Purchasers Indemnified Persons" shall mean Purchasers and each of its
Affiliates.
"Purchasers Losses" shall mean any and all actual losses, liabilities,
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damages, judgments, settlements and expenses (including interest and penalties
recovered by a third party with respect thereto and reasonable attorneys' fees
and expenses and reasonable accountants' fees and expenses incurred in the
investigation or defense of any of the same or in asserting, preserving or
enforcing any of the rights of Purchasers arising under Article VIII) incurred
by the Company or any of the Purchasers Indemnified Persons that arise out of:
(i) any breach by any Shareholder of any of such
Shareholder's representations and warranties contained in or made by or
pursuant to this Agreement; and
(ii) any breach by any Shareholder of any of such
Shareholder's covenants in this Agreement that survive the Closing;
provided, however, that the term "Purchasers Losses" shall not include the
matters referred to in Section 8.1(b) hereof. All statements contained in any
appendix or schedule or other writing delivered by any Shareholder pursuant
hereto or in connection with the Transactions shall be deemed representations
and warranties.
"Real Property" shall mean all real property that is owned or used by
the Company or any Company Subsidiary or that is reflected as an asset of the
Company or any Company Subsidiary on the Balance Sheet.
"XXX" shall mean the lawful currency of Romania.
"Securities Act" shall mean the U.S. Securities Act of 1933, as
amended.
"SEC" shall mean the United States Securities and Exchange Commission.
"Shareholder" has the meaning set forth in the Preamble.
"Shares" shall means 100 % of the ownership interests (parti sociale)
issued by the Company amounting to XXX 157,820.00, and representing all the
share capital and rights and interest attaching thereto.
"Stock Consideration" has the meaning set forth in Section 1.2.
"Stock Indemnity Escrow" has the meaning set forth in Section 1.3(b).
"Subsidiary" shall mean, with respect to any Person, any corporation
or other organization, whether incorporated or unincorporated, of which (a) at
least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person or by
any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries or (b) such Person or any other Subsidiary of such Person is a
general partner (excluding any such partnership where such Person or any
Subsidiary of such party does
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not have a majority of the voting interest in such partnership).
"Tax" or "Taxes" shall mean all taxes, charges, fees, duties, levies,
penalties or other assessments imposed by any federal, state, local or foreign
Governmental Entity (including, without limitation, Romania), including income,
gross receipts, excise, property, sales, gain, use, license, custom duty,
unemployment, capital stock, transfer, franchise, payroll, withholding, social
security, minimum estimated, profit, gift, severance, value added, disability,
premium, recapture, credit, occupation, service, leasing, employment, stamp and
other taxes, and shall include interest, penalties or additions attributable
thereto or attributable to any failure to comply with any requirement regarding
Tax Returns.
"Tax Return" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any such
document prepared on a consolidated, combined or unitary basis and also
including any schedule or attachment thereto, and including any amendment
thereof.
"Team Common Stock" shall mean the common stock, par value
US$0.01 per share, of TechTeam Global, Inc.
"Trademarks" shall mean registered and unregistered trademarks, trade
dress, service marks, logos, trade names, corporate names and all registrations
and applications to register the same.
"Trade Secrets" shall mean all trade secrets including business
information.
"Transactions" shall mean all the transactions provided for or
contemplated by this Agreement.
"Transfer Taxes" shall mean all sales (including bulk sales), use,
transfer, recording, ad valorem, privilege, documentary, gains, gross receipts,
registration, conveyance, excise, license, stamp, duties or similar Taxes and
fees.
"Transfer Tax Payor" shall mean the party which has primary legal
responsibility for the payment of any particular Transfer Tax.
"US$" or "Dollars" shall mean the United States dollar, the lawful
currency of the United States of America.
"Working Capital" has the meaning set forth in Section 1.4(c).
"Working Capital Deficit" has the meaning set forth in Section 1.4(a).
"Working Capital Escrow" has the meaning set forth in Section 1.3(a).
"Working Capital Statement" has the meaning set forth in Section
1.4(c).
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"Working Capital Surplus" has the meaning set forth in Section 1.4(b).
Section 9.2 Interpretation.
(a) When a reference is made in this Agreement to a section or
article, such reference shall be to a section or article of this Agreement
unless otherwise clearly indicated to the contrary.
(b) Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation."
(c) The meaning assigned to each term defined herein shall be
equally applicable to both the singular and the plural forms of such term, and
words denoting any gender shall include all genders. Where a word or phrase is
defined herein, each of its other grammatical forms shall have a corresponding
meaning.
(d) A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and permitted
assigns.
(e) As used in this Agreement, any reference to any event, change
or effect being material or having a material adverse effect on or with respect
to any entity (or group of entities taken as a whole) means such event, change
or effect is materially adverse to (i) the prospects, consolidated financial
condition, businesses or results of operations of such entity as a whole (or, if
used with respect thereto, of such group of entities taken as a whole) or (ii)
the ability of such entity (or group) to consummate the Transactions.
(f) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Fees and Expenses. All costs and expenses incurred in connection
with this Agreement and the consummation of the Transactions shall be paid by
the party incurring such expenses, except as specifically provided to the
contrary in this Agreement and except as follows:
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(a) The Shareholders shall bear (and shall reimburse the Company
at or prior to the Closing for) all legal, accounting and other fees and
expenses incurred by the Company and each Company Subsidiary in connection with
the negotiation, execution and closing of the Transactions;
(b) All Transfer Taxes arising out of, in connection with or
attributable to the transactions effected pursuant to this Agreement shall be
borne and paid by Shareholders individually. The Transfer Tax Payor shall
prepare and timely file all relevant Tax Returns required to be filed in respect
of such Transfer Tax, pay the Transfer Tax shown on such Tax Return, and notify
the other parties in writing of the Transfer Tax shown on such Tax Return and
how such Transfer Tax was calculated, and if the Transfer Tax Payor is
Purchasers or its Affiliates (including the Company Subsidiary after the Closing
Date), the Shareholders shall reimburse the Transfer Tax Payor for the amount of
such Transfer Tax in immediately available funds within ten (10) business days
of receipt of such notice.
Section 10.2 Amendment and Modification. This Agreement may be amended, modified
and supplemented in any and all respects, but only by a written instrument
signed by all of the parties hereto expressly stating that such instrument is
intended to amend, modify or supplement this Agreement.
Section 10.3 Appointment of Shareholder Representative. The Shareholders hereby
appoint Butnaru as his agent and attorney-in-fact, with full power and authority
(including power of substitution), except as otherwise expressly provided in
this Agreement, in the name of and for and on behalf such Shareholder, or in
such person's own name as the Shareholders Representative, to take all actions
required or permitted under this Agreement (including giving and receiving all
accountings, reports, notices and consents, and negotiating, entering into
settlements and compromises of, and demanding arbitration and complying with
orders of courts and awards of arbitrators with respect to claims under this
Agreement). The authority conferred under this Section 10.3 shall be an agency
coupled with an interest, and all authority conferred hereby is irrevocable and
not subject to termination by the Shareholders, or any of them, or by operation
of law, whether by the death or incapacity of any Shareholder, the termination
of any trust or estate or the occurrence of any other event. If Butnaru dies or
becomes legally incapacitated and unable to serve as the Shareholders
Representative, the successor Shareholders Representative shall be designated in
writing by Butnaru's estate or legal representative. If any individual
Shareholder should die or become incapacitated, if any trust or estate should
terminate or if any other such event should occur, any action taken by the
Shareholders Representative pursuant to this Section 10.3 shall be as valid as
if such death or incapacity, termination or other event had not occurred,
regardless of whether or not the Shareholders Representative shall have received
notice of such death, incapacity, termination or other event. Any notice given
to the Shareholders Representative pursuant to Section 10.4 shall constitute
effective notice to the Shareholders. Any other party to this Agreement or any
other Person may rely on any notice, consent, election or other communication
received from the Shareholders Representative as if such notice, consent,
election or other communication had been received from all Shareholders. The
Shareholders Representative will not be liable to any Shareholder for any act
done or omitted hereunder as Shareholders Representative while
Page 26 of 50
acting in good faith and in the exercise of reasonable judgment. The other
Shareholders will severally indemnify and hold harmless the Shareholders
Representative, against any and all loss, liability or expense incurred without
negligence or bad faith on the part of the Shareholders Representative and
arising out of or in connection with the acceptance or administration of the
Shareholders Representative's duties hereunder.
Section 10.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered personally, telecopied (which
is confirmed) or sent by an overnight courier service, such as Federal Express,
to the parties at the following addresses (or at such other address for a party
as shall be specified by such party by like notice):
if to Purchasers, to:
TechTeam Global, Inc.
00000 X. 00 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Xxxxxx Xxxxxx
Attention: Xxxxxxx X. Xxxxx, Xx.
Telephone: 000-000-0000
Telecopy: 000-000-0000
with a copy to:
TechTeam Global, Inc.
00000 X. 00 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Xxxxxx Xxxxxx
Attention: Xxxxxxx X. Xxxxx
Telephone: 000-000-0000
Telecopy: 000-000-0000
and
if to the Shareholders, to Butnaru, as representative of the Shareholders, or if
to a particular Shareholder, to the address set forth opposite such
Shareholders' name on Exhibit A.
Section 10.5 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 10.6 Further Assurances. The Parties agree (a) to furnish upon request
to each other such further information (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably
Page 27 of 50
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
Section 10.7 Entire Agreement; No Third Party Beneficiaries. This Agreement (a)
constitutes the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof; except that the binding provisions of the
Letter of Intent between the Company and Purchasers, dated August 2, 2005, shall
survive in accordance with their terms and (b) are not intended to confer any
rights or remedies upon any Person other than the parties hereto and thereto.
Section 10.8 Severability. Any term or provision of this Agreement that is held
by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction. If the final judgment of a court of competent
jurisdiction or other authority declares that any term or provision hereof is
invalid, void or unenforceable, the parties agree that the court making such
determination shall have the power to reduce the scope, duration, area or
applicability of the term or provision, to delete specific words or phrases, or
to replace any invalid, void or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision.
Section 10.9 Governing Law. This Agreement and the legal relations between the
parties hereto arising hereunder shall be governed by and construed in
accordance with the laws of the State of Michigan, U.S.A., except that solely to
the extent required to effect the ministerial transfer of the Shares, Romanian
law shall apply to the transfer of the Shares in such a manner so as not to
alter the substantive obligations of the parties hereto.
Section 10.10 Enforcement; Venue. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Michigan or in Michigan state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of Michigan or
any Michigan state court in the event any dispute arises out of this Agreement
or any of the Transactions, (b) agrees that it shall not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court and (c) agrees that it shall not bring any action relating to this
Agreement or any of the Transactions in any court other than a Federal or state
court sitting in the State of Michigan.
Section 10.11 Time of Essence. Each of the parties hereto hereby agrees that,
with regard to all dates and time periods set forth or referred to in this
Agreement, time is of the
Page 28 of 50
essence.
Section 10.12 Extension; Waiver. At any time prior to the Closing Date, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties of the other parties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) waive compliance
by the other parties with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
Section 10.13 Election of Remedies. Neither the exercise of nor the failure to
exercise a right, including any right of set-off, or the giving or failure to
give notice of a claim under this Agreement will constitute an election of
remedies or limit Purchasers or any of the Purchasers Indemnified Persons in any
manner in the enforcement of any other remedies that may be available to any of
them, whether at law or in equity. The representations and warranties made by
Shareholders pursuant hereto are in addition to, and not in lieu of, any
representation or warranty which the Shareholders make, or are deemed to have
made, by law.
Section 10.14 Assignment. Neither this Agreement nor any of the rights (except
for the ownership right of the Purchasers), interests or obligations hereunder
shall be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties, except that
Purchasers may assign, in its sole discretion, any or all of its rights and
interests hereunder to any direct or indirect wholly owned Subsidiary of
Purchasers. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
Page 29 of 50
IN WITNESS WHEREOF, Purchasers, the Company and each of the
Shareholders have executed this Agreement or caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
TECHTEAM GLOBAL, INC.
By /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------------
Title: V. P. Operations EMEA
---------------------------------
TECHTEAM GLOBAL NV/SA
By /s/ Xxxxxx Xxxxx Xxxxx
-------------------------------------
Name: Xxxxxx Xxxxx Xxxxx
----------------------------------
Title: European Controler
---------------------------------
AKELA INFORMATIQUE SRL
By /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------
Title: Administrator
---------------------------------
/s/ Lucian Xxxxx Xxxxxxx
----------------------------------------
Lucian Xxxxx Xxxxxxx
/s/ Xxxxx Xxxxxx Xxxxxxxxx
----------------------------------------
Xxxxx Xxxxxx Xxxxxxxxx
/s/ Xxxxx Xxxxxx
----------------------------------------
Xxxxx Xxxxxx
/s/ Xxxxxxxx Xxxxxx
----------------------------------------
Xxxxxxxx Xxxxxx
/s/ Alain Xxxxxx Xxxxxxx Kremeur
----------------------------------------
Alain Xxxxxx Xxxxxxx Kremeur
/s/ Xxxxxx Xxxxx
----------------------------------------
Xxxxxx Xxxxx
Page 30 of 50
EXHIBIT A
SHAREHOLDER DATA
NAME AND
ADDRESS NUMBER OF % OF COMPANY AMOUNT OF CLOSING
OF SHAREHOLDER SHARES CAPITAL CONSIDERATION PAID
-------------- --------- ------------ ------------------
Lucian Xxxxx Xxxxxxx- Xx. 0-0 Xxxxx Xxxxxxxxx Xxxxxx; Xxxxx 0X, 0xx
Xxxxxxxxx, Xxx. 00, Xxxxxxxx 1, Bucharest 10,319 85% euro1,853,000
Xxxxx Xxxxxx Xxxxxxxxx - 000 Xxxx Xxxxxx, Xxxxx Xxxxx, Xxx Xxxx 00000 607 5% euro109.000
Xxxxx Xxxxxx - Ciresu Village, Cateasca Commune, Arges County 364 2,99835 euro65,364.03
Xxxxxxxx Xxxxxx - 00 Xxx Xxxxxxxx, Xxxxx, Xxxxxx 315 2,595% euro56,571
Alain Xxxxxx Xxxxxxx Kremeur - No. 42 Maior Athanasie Ionescu, district
2, Bucharest 292 2,405% euro52,429
Xxxxxx Xxxxx - Xx. 0 Xxxxx Xxxxxxx Xxxxxx, Xxxxx A 4, C Staircase, App. 32,
District 6, Bucharest 243 2,00165% euro43,635.97
Page 31 of 50
[TO INSERT OTHER EXHIBITS]
Page 32 of 50
APPENDIX 3
Representations and Warranties of the Company and Shareholders
Except as set forth in the Disclosure Schedules, the Company and each
Shareholder represents and warrants to Purchasers as follows:
Section 1.1 Share Ownership. Each Shareholder is the record and beneficial
owner of the number of Shares set opposite such Shareholder's name on Exhibit A
hereto. No Shareholder owns any securities issued by, or other obligations of,
the Company or any Company Subsidiary which are not listed on Exhibit A hereto.
Section 1.2 Legal Power; Organization; Qualification of Shareholders. Each
Shareholder is competent and has all requisite power and authority to execute
and deliver this Agreement and to consummate the Transactions.
Section 1.3 Binding Agreement. This Agreement has been duly executed and
delivered by each Shareholder and, assuming due and valid authorization,
execution and delivery by Purchasers, this Agreement constitutes a legal, valid
and binding obligation of each Shareholder, enforceable against such Shareholder
in accordance with its terms.
Section 1.4 No Shareholder Conflict or Default. Neither the execution and
delivery of this Agreement nor the consummation by any Shareholder of any of the
Transactions will result in a violation of, or a default under, or conflict
with, or require any consent, approval or notice under, any contract, trust,
commitment, agreement, obligation, understanding, arrangement or restriction of
any kind to which any Shareholder is a party or by which any Shareholder is
bound or to which the Shares are subject. Consummation by each Shareholder of
the Transactions will not violate, or require any consent, approval or notice
under, any provision of any judgment, order, decree, statute, law, rule or
regulation applicable to any Shareholder, the Shares.
Section 1.5 Ownership and Possession of Shares. The Shares are owned by
each Shareholder and held by each Shareholder, free and clear of all
Encumbrances whatsoever.
Section 1.6 Good Title Conveyed. The documents to be executed and delivered
by the Shareholders to Purchasers at the Closing will be valid and binding
obligations of the Shareholders, enforceable in accordance with their respective
terms, and will effectively vest in Purchasers good, valid and marketable title
to, and ownership of, all the Shares to be transferred to Purchasers pursuant to
and as contemplated by this Agreement free and clear of all Encumbrances. No
action is or will be required on the part of any person in order to effect the
conveyance to Purchasers of each Shareholder's right, title and interest in the
Shares free and clear of any Encumbrance.
Section 1.7 Authorization; Validity of Agreement; Company Action. The
Company has full corporate power and authority to execute and deliver this
Agreement, and to consummate the Transactions. The execution, delivery and
performance by the Company of this Agreement and the consummation by it of the
Transactions have been
Page 33 of 50
duly authorized by the Company, and except as set forth herein no other
corporate action on the part of the Company is necessary to authorize the
execution and delivery by the Company of this Agreement or the consummation by
it of the Transactions. This Agreement has been duly executed and delivered by
the Company and, assuming due and valid authorization, execution and delivery
thereof by Purchasers, this Agreement is a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.
Section 1.8 Approvals Regarding Transactions. The general meeting of the
shareholders of the Company ("GMS"), at a meeting duly called and held, has (i)
determined to waive any rights the Company may have under any agreement or
otherwise to object to the transfer to Purchasers of any Shares held by the
Shareholders and (ii) consented to the transfer to Purchasers of all such
Shares, and none of the aforesaid actions by the GMS has been amended, rescinded
or modified.
Section 1.9 Capitalization. i.The issued capital stock of the Company
consists of 12,140 Shares. As of the date hereof, no Shares are owned by any
Person who is not a Shareholder. All the outstanding shares of the Company's
capital stock are duly authorized, validly issued, fully paid and
non-assessable. Except as set forth above and except for the Transactions, as of
the date hereof, (i) there are no shares of capital stock of the Company
authorized, issued or outstanding; (ii) there are no existing options, warrants,
calls, pre-emptive rights, subscriptions or other rights, agreements,
arrangements or commitments of any character, relating to the issued or unissued
capital stock of the Company or any Company Subsidiary, obligating the Company
or any Company Subsidiary to issue, transfer or sell or cause to be issued,
transferred or sold any shares of capital stock, or other equity, the Company or
any Company Subsidiary or securities convertible into or exchangeable for such
shares or equity interests, or obligating the Company or any Company Subsidiary
to grant, extend or enter into any such option, warrant, call, subscription or
other right, agreement, arrangement or commitment; and (iii) there are no
outstanding contractual obligations of the Company or any Company Subsidiary to
repurchase, redeem or otherwise acquire any Shares, or other capital stock of
the Company, or any Company Subsidiary or Affiliate of the Company or to provide
funds to make any investment (in the form of a loan, capital contribution or
otherwise) in any Company Subsidiary or any other entity.
(a) There are no voting trusts or other agreements or
understandings to which any Shareholder, the Company or any Company Subsidiary
is a party with respect to the voting of the capital stock of the Company or any
of the Subsidiaries.
Section 1.10 Organization; Qualification of Company. The Company (i) is a
corporation duly organized, validly existing and in duly registered under the
laws of Romania; (ii) has full corporate power and authority to carry on its
business as it is now being conducted and to own the properties and assets it
now owns; and (iii) is duly qualified or licensed to do business in every
jurisdiction in which ownership of property or the conduct of its business
requires such qualification. The Company has heretofore
Page 34 of 50
delivered to Purchasers complete and correct copies of the Charter of the
Company as presently in effect.
Section 1.11 Subsidiaries and Affiliates. Schedule 1.11 sets forth the
name, jurisdiction of incorporation and authorized and outstanding capital of
each Company Subsidiary and the jurisdictions in which each Company Subsidiary
is qualified to do business. The Company does not own, directly or indirectly,
any capital stock or other equity securities of any corporation or have any
direct or indirect equity or ownership interest in any business except as set
forth in Schedule 1.11 to this Appendix, which also sets forth the ownership
interest of the Company. Each Company Subsidiary (i) is duly organized, validly
existing and in good standing under the laws of the state of organization; (ii)
has full power and authority to carry on its business as it is now being
conducted and to own the properties and assets it now owns; and (iii) is duly
qualified or licensed to do business in good standing in every jurisdiction in
which such qualification is required. The Company has heretofore delivered to
Purchasers complete and correct copies of the Charter of each Company
Subsidiary, as presently in effect.
Section 1.12 Consents and Approvals; No Violations. The delivery or
performance of this Agreement by the Company, the consummation by the Company of
any of the Transactions or compliance by the Company with any of the provisions
hereof will not (i) conflict with or result in any breach of any provision of
the Charter of the Company or any Company Subsidiary, (ii) require any filing
with, or permit, authorization, consent or approval of, any Governmental Entity
or other Person (including consents from parties to loans, contracts, leases and
other agreements to which any Shareholder, the Company or any Company Subsidiary
is a party), except as set forth in Schedule 1.12, (iii) require any consent,
approval or notice under, or result in a violation or breach of, or constitute
(with or without due notice or the passage of time or both) a default (or give
rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any Company Agreement, or
(iv) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company, any Company Subsidiary or any of their properties or
assets.
Section 1.13 Financial Statements. True and complete copies of the
Financial Statements, together with the related auditor's reports have been
provided to the Purchasers on or prior to the Closing. The Financial Statements
have been prepared from, are in accordance with and accurately reflect, the
books and records of the Company and the Company Subsidiaries, fully comply with
applicable accounting requirements, applied on a consistent basis during the
periods involved (except as may be stated in the notes thereto), are true and
correct and fairly present the consolidated financial position and the
consolidated results of operations and cash flows (and changes in financial
position, if any) of the Company and the Company Subsidiaries as of the times
and for the periods referred to therein (subject, in the case of unaudited
statements, to normally recurring year-end audit adjustments which are not
material either individually or in the aggregate).
Section 1.14 Books and Records. The books of account, minute books, Share
register and other capital registers or records of the Company and the Company
Page 35 of 50
Subsidiaries are complete and correct and have been maintained in accordance
with sound business practices, including the maintenance of an adequate system
of internal controls. The minute books of the Company contain accurate and
complete records of all meetings of, and corporate action taken by, the
Shareholders, the directors or managers, as applicable, and no meeting of any of
such Shareholders, the directors of manager has been held for which minutes have
not been prepared and are not contained in such minute books. True and complete
copies of all minute books and all Share registers or capital registers of the
Company and each Company Subsidiary have heretofore been delivered to
Purchasers.
Section 1.15 No Undisclosed Liabilities. Except (a) as disclosed in the
Financial Statements and (b) for liabilities and obligations incurred in the
ordinary course of business and consistent with past practice since the Balance
Sheet Date pursuant to the terms of this Agreement, neither the Company nor any
Company Subsidiary has any liability or obligation of any nature, whether or not
accrued, contingent or otherwise, that has, or would be reasonably likely to
have, a material adverse effect on the Company and the Company Subsidiaries,
taken as a whole. The reserves reflected in the Financial Statements are
adequate, appropriate and reasonable and have been calculated in a consistent
manner.
Section 1.16 Accounts Receivable All accounts receivable of the Company and
each Company Subsidiary, whether reflected in the Balance Sheet or otherwise,
represent sales actually made in the ordinary course of business and are current
and collectible net of any reserves shown on the Balance Sheet. Subject to such
reserve, each such account receivable either has been collected in full or will
be collected in full, without any set-off, within 120 days after the day on
which it became due and payable.
Section 1.17 Disputed Accounts Payable. There are no unpaid invoices or
bills representing amounts alleged to be owed by the Company or alleged to be
owed by any Company Subsidiary, or other alleged obligations of the Company or
any Company Subsidiary, which the Company or any Company Subsidiary has disputed
or determined to dispute or refuse to pay.
Section 1.18 Absence of Certain Changes. Since the Balance Sheet Date, the
Company and each Company Subsidiary has conducted its respective business only
in the ordinary and usual course and consistent with past practice, and neither
the Company nor any Company Subsidiary has:
(a) suffered any material adverse change in its working capital,
financial condition, results of operation, assets, liabilities (absolute,
accrued, contingent or otherwise), reserves, business, operations or prospects;
(b) incurred any liability or obligation (absolute, accrued,
contingent or otherwise) except immaterial items incurred in the ordinary course
of business and consistent with past practice, none of which exceeds euro15,000
(counting obligations or liabilities arising from one transaction or a series of
similar transactions, and all periodic installments or payments under any lease
or other agreement providing for periodic installments or payments, as a single
obligation or liability), or increased, or
Page 36 of 50
experienced any change in any assumptions underlying or methods of calculating,
any bad debt, contingency or other reserves;
(c) paid, discharged or satisfied any claim, liability or
obligation (whether absolute, accrued, contingent or otherwise) other than the
payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities and obligations reflected or
reserved against in the Balance Sheet or incurred in the ordinary course of
business and consistent with past practice since the Balance Sheet Date;
(d) permitted or allowed any of its property or assets (real,
personal or mixed, tangible or intangible) to be subjected to any mortgage,
pledge, lien, security interest, encumbrance, restriction or charge of any kind,
except for liens for current taxes not yet due;
(e) written down the value of any inventory (including
write-downs by reason of shrinkage or xxxx-down) or written off as uncollectible
any notes or accounts receivable;
(f) cancelled any debts or waived any claims or rights of
material value;
(g) sold, transferred, or otherwise disposed of any of its
properties or assets (real, personal or mixed, tangible or intangible), except
in the ordinary course of business and consistent with past practice;
(h) disposed of or permitted to lapse any rights to the use of
any Intellectual Property, or disposed of or disclosed to any Person other than
representatives of Purchasers any trade secret, formula, process, know-how or
other Intellectual Property not theretofore a matter of public knowledge;
(i) granted any general increase in the compensation of
directors, managers, officers or employees (including any such increase pursuant
to any bonus, pension, profit-sharing or other plan or commitment) or any
increase in the compensation payable or to become payable to any officer or
employee, and no such increase is customary on a periodic basis or required by
agreement or understanding;
(j) made any single capital expenditure or commitment in excess
of E10,000 for additions to property, plant, equipment or intangible capital
assets or made aggregate capital expenditures and commitments in excess of
E50,000 for additions to property, plant, equipment or intangible capital
assets;
(k) declared, paid or set aside for payment any dividend, other
than pursuant to a dividend authorized by the Shareholders in December 2004, or
other distribution in respect of its capital stock or redeemed, purchased or
otherwise acquired, directly or indirectly, any shares of capital stock or other
securities of the Company or any Company Subsidiary;
Page 37 of 50
(l) made any change in any method of accounting or accounting
practice;
(m) paid, loaned or advanced any amount to, or sold, transferred
or leased any properties or assets (personal or mixed, tangible or intangible)
to, or entered into any agreement or arrangement with, any of its officers or
directors or any Affiliate of any of its officers or directors except for
directors' fees and compensation to officers at rates not exceeding the rates of
such fees and compensation paid during the year ended 31 December 2004; or
(n) agreed, whether in writing or otherwise, to take any action
described in this section.
Section 1.19 Title to Properties; Encumbrances. Except for property having
an aggregate book value not in excess of euro25,000, sold since the Balance
Sheet Date in the ordinary course of business and consistent with past practice,
each of the Company and each Company Subsidiary has good, valid and marketable
title to all the properties and assets that it purports to own (tangible and
intangible) free and clear of all Encumbrances, including all the properties and
assets reflected in the Balance Sheet and all such properties and assets
purchased by the Company or any Company Subsidiary since the date of the Balance
Sheet, which subsequently acquired personal properties and assets (other than
inventory and short term investments) are listed in Schedule 1.20. All
properties and assets reflected in the Balance Sheet have a fair market or
realizable value at least equal to the value thereof as reflected therein. The
rights, properties and other assets presently owned, leased or licensed by the
Company or the Company Subsidiaries and described elsewhere in this Agreement
include all such rights, properties and other assets necessary to permit the
Company and the Company Subsidiaries to conduct their respective businesses in
all material respects in the same manner as such businesses have been conducted
prior to the date hereof.
Section 1.20 Real Property. The Disclosure Schedule sets forth a complete
list and the location of all Real Property owned by the Company. True and
complete copies of (i) all deeds relating to the Real Property and (ii) all
documents evidencing all Encumbrances upon the Real Property have heretofore
been furnished to Purchasers. There are no proceedings, claims, disputes or
conditions affecting any Real Property that might curtail or interfere with the
use of such property. Neither the whole nor any portion of the Real Property nor
any other assets of the Company or any Company Subsidiary is subject to any
governmental decree or order to be sold or is being condemned, expropriated or
otherwise taken by any public authority with or without payment of compensation
therefore, nor has any such condemnation, expropriation or taking been proposed.
Neither the Company nor any Company Subsidiary is a party to any lease,
assignment or similar arrangement under which the Company or any Company
Subsidiary is a lessor, assignor or otherwise makes available for use by any
third party any portion of the Real Property.
Section 1.21 Leases. The Schedule 1.21 contains an accurate and complete
description of the terms of each Lease. A true and complete copy of each Lease
has
Page 38 of 50
heretofore been delivered to Purchasers. Each Lease is valid, binding and
enforceable in accordance with its terms and is in full force and effect. The
leasehold estate created by each Lease is free and clear of all Encumbrances.
There are no existing defaults by the Company or any Company Subsidiary under
any of the Leases. No event has occurred that (whether with or without notice,
lapse of time or the happening or occurrence of any other event) would
constitute a default under any Lease. No Shareholder has received notice, or has
any other any reason to believe, that any lessor under any Lease will not
consent (where such consent is necessary) to the consummation of the
Transactions without requiring any modification of the rights or obligations of
the lessee thereunder.
Section 1.22 Plant and Equipment. The offices, structures and equipment,
including but not limited to computer equipment, owned or used by the Company
and each Company Subsidiary have no known defects and are in good operating
condition and repair and are adequate for the uses to which they are being put.
None of such offices, structures or equipment are in need of maintenance or
repairs except for ordinary, routine maintenance and repairs which are not
material in nature or cost. Neither the Company nor any Company Subsidiary has
received notification that it is in violation of any applicable building,
zoning, health or other law, ordinance or regulation in respect of their
operations.
Section 1.23 Environmental Matters.
(a) Each of the Company and the Company Subsidiaries is in full
compliance with all Environmental Laws. Such compliance includes, but is not
limited to, the possession by the Company and each of the Company Subsidiaries
of all permits and other governmental authorizations required under all
applicable Environmental Laws, and compliance with the terms and conditions
thereof.
(b) There is no Environmental Claim by any Person that is pending
or threatened against the Company or any Company Subsidiary.
Section 1.24 Contracts and Commitments.
(a) Neither the Company nor any Company Subsidiary has any
agreements, contracts, commitments or restrictions which are material to its
business, operations or prospects or which require the making of any payment not
set forth in the relevant agreement.
(b) No purchase contracts or commitments of the Company or any
Company Subsidiary that are in excess of the normal, ordinary and usual
requirements of business or at any excessive price.
(c) There are no outstanding contracts, commitments or proposals
of the Company or any Company Subsidiary which will result in any loss to the
Company or any Company Subsidiary upon completion or performance thereof, after
allowance for direct distribution expenses nor are there any outstanding
contracts, bids or sales or service proposals quoting prices which will not
result in a normal profit.
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(d) Neither the Company nor any Company Subsidiary has any
outstanding contracts with Shareholders, directors, officers, employees, agents,
consultants, advisors, salesmen, sales representatives, distributors or dealers
that are not cancelable by it on notice of not longer than 180 days and without
liability, penalty or premium or any agreement or arrangement providing for the
payment of any bonus or commission based on sales or earnings, except as set
forth in Appendix 1.25(d).
(e) Neither the Company nor any Company Subsidiary is in default
under or in violation of, nor is there any valid basis for any claim of default
under or violation of, any contract, commitment or restriction to which it is a
party or by which it is bound.
(f) Neither the Company nor any Company Subsidiary is restricted
by agreement from carrying on its business anywhere in the world.
(g) Neither the Company nor any Company Subsidiary has
outstanding any agreement to acquire any debt obligations of others.
(h) Neither the Company nor any Company Subsidiary has any
outstanding loan to any Person.
(i) Neither the Company nor any Company Subsidiary has any power
of attorney outstanding or any obligations or liabilities (whether absolute,
accrued, contingent or otherwise), as guarantor, surety, co-signer, endorser,
co-maker, indemnitor or otherwise in respect of the obligation of any Person,
corporation, partnership, joint venture, association, organization or other
entity.
(j) Except (i) as set forth in the Financial Statements or (ii)
for the Transactions, as of the date hereof, neither the Company nor any Company
Subsidiary has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) which, individually or in the aggregate,
could reasonably be expected to have a material adverse effect on the Company.
Section 1.25 Customers and Suppliers. There has not been any material
adverse change in the business relationship of the Company or any Company
Subsidiary with any customer or any supplier. Since June 30, 2005, no material
licensor, or licensee of the Company or any Company Subsidiary has cancelled or
otherwise modified its relationship with the Company or any Company Subsidiary
and, to the Knowledge of the Shareholders, (a) no such Person has any intention
to do so and (b) the consummation of the Transactions will not adversely affect
any of such relationships.
Section 1.26 Insurance. The Schedule 1.26 sets forth (a) a true and
complete list and description of all insurance policies, other insurance
arrangements and other contracts or arrangements for the transfer or sharing of
insurance risks by the Company or the Company Subsidiaries in force on the date
hereof with respect to the business or assets of the Company or the Company
Subsidiaries, together with a statement of the aggregate amount of claims paid
out, and claims pending, under each such insurance policy or other arrangement
through the date hereof and (b) a description of such risks that the Company
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or the Company Subsidiaries, or the respective Board of Directors or officers
thereof, have designated as being self-insured. All such policies are in full
force and effect, all premiums due thereon have been paid by the Company or the
Company Subsidiaries, and the Company and the Company Subsidiaries are otherwise
in compliance in all material respects with the terms and provisions of such
policies. Furthermore, (a) neither the Company nor any Company Subsidiary has
received any notice of cancellation or non-renewal of any such policy or
arrangement nor is the termination of any such policies or arrangements
threatened, and (b) there is no claim pending under any of such policies or
arrangements as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or arrangements.
Section 1.27 Casualties. Since the Balance Sheet Date neither the Company
nor any Company Subsidiary has been affected in any way as a result of flood,
fire, explosion or other casualty (whether or not material and whether or not
covered by insurance). The Company is not aware of any circumstance which is
likely to cause it or any Company Subsidiary to suffer any adverse change in its
business, operations or prospects.
Section 1.28 Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any court or governmental or other regulatory or
administrative agency or commission pending or, to the Knowledge of the
Shareholders, threatened against or involving the Company or any Company
Subsidiary, or which questions or challenges the validity of any Company
Intellectual Property right of use of any Intellectual Property by the Company
or any action taken or to be taken by the Company or any Company Subsidiary
pursuant to this Agreement or in connection with the Transactions; and there is
no valid basis for any such action, proceeding or investigation. Neither the
Company nor any Company Subsidiary is subject to any judgment, order or decree
which may have an adverse effect on its business practices or on its ability to
acquire any property or conduct its business in any area.
Section 1.29 Compliance with Laws; Privacy.
(a) The Company and the Company Subsidiaries have complied in a
timely manner and in all material respects with all laws, rules and regulations,
ordinances, judgments, decrees, orders, writs and injunctions of any national,
federal, state, local Governmental Entity in any country and agencies thereof
(including Romania) that affect the business, properties or assets of the
Company or any Company Subsidiary, and no notice, charge, claim, action or
assertion has been received by the Company or any Company Subsidiary or has been
filed, commenced or, to the Knowledge of the Shareholders, threatened against
the Company or any Company Subsidiary alleging any violation of any of the
foregoing. No Governmental Entity has at any time challenged or questioned the
legal right of the Company or any Company Subsidiary to design, market, offer or
sell any of its services or products in the present manner or style thereof.
(b) The Company and each Company Subsidiary have at all times
complied with all applicable laws relating to privacy, data protection and the
collection and use of personal information and user information gathered or
accessed in the course of the operations of the Company and any Company
Subsidiary. The Company and each
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Company Subsidiary have at all times complied in all respects with all rules,
policies and procedures established by the Company or any Company Subsidiary
from time to time with respect to privacy, data protection or collection and use
of personal information and user information gathered or accessed in the course
of the operations of the Company or any Company Subsidiary. No claims have been
asserted or threatened against the Company or any Company Subsidiary by any
person or entity alleging a violation of such person's or entity's privacy,
personal or confidentiality rights under any such rules, policies or procedures.
The consummation of the Transactions will not breach or otherwise cause any
violation of any law related to privacy, data protection or the collection and
use of personal information and user information gathered or accessed from then
current users (at the time of consummation of the Transactions) in the course of
the operations of the Company or any Company Subsidiary.
(c) With respect to all personal and user information described
in subsection (b) above, the Company and each Company Subsidiary have at all
times taken all steps reasonably necessary (including, without limitation,
implementing and monitoring compliance with adequate measures with respect to
technical and physical security) to ensure that such information is protected
against loss and against unauthorized access, use, modification, disclosure or
other misuse. There has been no unauthorized access to or other misuse of that
information. The Company maintains systems and procedures reasonably intended to
respond to complaints received alleging violation of third party content rights.
Section 1.30 Employee Benefit Plans
(a) The Company has heretofore delivered to Purchasers a true and
complete copy of each Plan and any amendments thereto.
(b) Each Plan has been operated and administered in all material
respects in accordance with its terms and applicable law.
(c) The consummation of the Transactions will not, either alone
or in combination with another event, (i) entitle any current or former
employee, director, manager or officer of the Company or any Company Subsidiary
to severance pay, unemployment compensation or any other payment, except as
expressly provided in this Schedule 1.31(d) or (ii) accelerate the time of
payment or vesting, or increase the amount of compensation due any such
employee, director or officer.
(d) Except for routine claims for benefits, there are no pending,
threatened or anticipated claims by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such Plan.
Section 1.31 Tax Matters.
(a) The Company and each of the Company Subsidiaries have duly
filed all Tax Returns that are required to be filed and have duly paid or caused
to be duly paid in full or made provision in accordance with the relevant tax
authorities (or there has been paid or provision has been made on their behalf)
for the payment of all Taxes for
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all periods or portions thereof ending through the date hereof. All such Tax
Returns are correct and complete and accurately reflect all liability for Taxes
for the periods covered thereby.
(b) There are no liens for Taxes upon any property or assets of
the Company or any Company Subsidiary thereof;
(c) Neither the Company nor any Company Subsidiary has made any
change in accounting methods, received a ruling from any taxing authority or
signed an agreement with respect thereto or signed any closing agreement with
respect to any Tax year;
(d) The Company and each Company Subsidiary have complied in all
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes, and have, within the time and the manner prescribed by
law, withheld and paid over to the proper taxing authorities all amounts
required to be so withheld and paid over under applicable laws;
(e) No Governmental Entity audits, examinations, investigations
or other administrative proceedings or court proceedings are presently pending
with regard to any Taxes or Tax Returns of the Company or any Company
Subsidiary. There are no pending Tax audits or proceedings concerning the
Company or any Company Subsidiary;
(f) All Tax deficiencies that have been claimed, proposed or
asserted against the Company or any Company Subsidiary have been fully paid or
finally settled, and no issue has been raised in any examination by any taxing
authority that, by application of similar principles, could reasonably be
expected to result in the proposal or assertion of a Tax deficiency for another
year not so examined;
(g) There are no outstanding requests, agreements, consents or
waivers to extend the statutory period of limitations applicable to the
assessment of any Taxes or deficiencies against the Company or any Company
Subsidiary;
(h) No power of attorney has been granted by or with respect to
the Company or any Company Subsidiary with respect to any matter relating to
Taxes;
(i) There are no unresolved questions or claims concerning Tax
liability of the Company or any Company Subsidiary;
(j) Other than any Tax Returns that have not yet been required to
be filed, the Company has made available to Purchasers true, correct and
complete copies of the Tax Return for any applicable jurisdiction.
(k) The Company has delivered or made available to Purchasers
complete and accurate copies of each of (i) all audit reports, letter rulings,
technical advice memoranda and similar documents issued by any Governmental
Entity relating to the any country with respect to any Taxes due from or with
respect to the Company or any
Page 43 of 50
Company Subsidiary and (ii) all closing agreements entered into by the Company
or any Company Subsidiary with any taxing authority in each case existing on the
date hereof.
(l) Neither the Company nor any Company Subsidiary has any
liability with respect to income, franchise or similar Taxes relating to the
operation of the Company and the Company Subsidiaries prior to the Balance Sheet
Date in excess of the amounts that are accrued with respect thereto and are
reflected in the Financial Statements, and since the date of the Financial
Statements, none of the Company or any Company Subsidiary has incurred any
liability for Taxes, except with respect to operations in the ordinary course of
business after the Balance Sheet Date. All Taxes owed and due by the Company and
each Company Subsidiary relating to operations on or prior to the Balance Sheet
Date (whether or not shown on any Tax Return) have been paid on a timely basis.
(m) Neither the Company nor any Company Subsidiary has received
written notice of any claim made by an authority in a jurisdiction where neither
the Company nor any Company Subsidiary file Tax Returns, that the Company is or
may be subject to taxation by that jurisdiction.
(n) No audits, examinations or other administrative proceedings
of any Governmental Entity have been commenced or, to the Knowledge of the
Shareholders, are pending with regard to any Taxes or Tax Returns of the Company
or of any Company Subsidiary. No written notification has been received by the
Company or by any Company Subsidiary that such an audit, examination or other
proceeding is pending or threatened with respect to any Taxes due from or with
respect to or attributable to the Company or any Company Subsidiary or any Tax
Return filed by or with respect to the Company or any Company Subsidiary. To the
Knowledge of the Shareholders, there is no dispute or claim concerning any Tax
liability of the Company, or any Company Subsidiary either claimed or raised by
any taxing authority in writing.
1.32 Intellectual Property
(a) Schedule 1.32 sets forth a true and complete list of all
patents and patent applications, trademark registrations and applications,
service xxxx registrations and applications, Computer Software, Copyright
registrations and applications, material unregistered trademarks, service marks,
and Copyrights, and Internet domain names used or held for use in connection
with the business of the Company or any Company Subsidiary, together with all
licenses related to the foregoing, whether the Company or any Company Subsidiary
is the licensee or licensor thereunder.
(b) The Company or the Company Subsidiaries are the sole and
exclusive owners or valid licensees of all Company Intellectual Property, free
and clear of all Encumbrances.
(c) All registrations and applications for Intellectual Property
that are owned by the Company or any Company Subsidiary and that are used in and
are material to the conduct of the businesses of the Company or the Company
Subsidiaries as
Page 44 of 50
currently conducted (i) are valid, subsisting, in proper form and enforceable,
and have been duly maintained, including the submission of all necessary filings
and fees in accordance with the legal and administrative requirements of the
appropriate jurisdictions and (ii) have not lapsed, expired or been abandoned,
and no registration or application therefore is the subject of any opposition,
interference, cancellation proceeding or other legal or governmental proceeding
before any Governmental Entity in any jurisdiction.
(d) Each of the Company and the Company Subsidiaries owns or has
the valid right to use all of the Intellectual Property used by it or held for
use by it in connection with its business. There are no conflicts with or
infringements of any Company Intellectual Property by any third party. The
conduct of the businesses of the Company and the Company Subsidiaries as
currently conducted does not conflict with or infringe in any way on any
proprietary right of any third party. There is no claim, suit, action or
proceeding pending or threatened against the Company or any Company Subsidiary
(i) alleging any such conflict or infringement with any third party's
proprietary rights or (ii) challenging the ownership, use, validity or
enforceability of the Intellectual Property owned or used by the Company or any
Company Subsidiary.
(e) The Computer Software used by the Company or any Company
Subsidiary in the conduct of their businesses was either (i) developed by
employees of the Company or such Company Subsidiary, (ii) developed on behalf of
the Company or any Company Subsidiary by a third party, and all ownership rights
therein have been assigned or otherwise transferred to or vested in the Company
or such Company Subsidiary, as the case may be, pursuant to written agreements
or (iii) licensed or acquired from a third party pursuant to a written license,
assignment, or other contract that is in full force and effect and of which
neither the Company nor any Company Subsidiary is in breach.
(f) All consents, filings, and authorizations by or with
Governmental Entities or third parties necessary with respect to the
consummation of the Transactions, as they may affect the Company Intellectual
Property, have been obtained.
(g) Neither the Company nor any Company Subsidiary has entered
into any consent, indemnification, forbearance to xxx, settlement agreement or
cross-licensing arrangement with any Person relating to the Company Intellectual
Property or, to the Knowledge of the Shareholders, any Intellectual Property
licensed by the Company or any Company Subsidiary, or the Intellectual Property
of any third party, except as contained in any license agreements listed in the
Schedule 1.33(g).
(h) Neither the Company nor any Company Subsidiary is, nor will
it be as a result of the execution and delivery of this Agreement or the
performance of its obligations under this Agreement, in breach of any license,
sublicense or other agreement relating to the Company Intellectual Property.
1.33 Computer System
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(a) The Company is the legal and beneficial owner free from
Encumbrances of the Computer System, and no other Person has any claims or
rights in respect of any element of the Computer System.
(b) The Computer System is not wholly or partly dependent on any
facilities which are not under the exclusive ownership or control of or licensed
or leased to a Group Company except normal use of external services such as
services provided by Internet Service Providers.
(c) The Computer System: has been and is being properly and
regularly maintained and replaced and has the benefit of appropriate maintenance
and support agreements; and has the capacity and is of a suitable technical
specification necessary to fulfill the present and foreseeable requirements of
the business of the Company for operating the business of the Company as
currently conducted.
(d) The Computer System comprises all computer hardware,
firmware, software (including source code and object code) manuals, supporting
materials and accessories which are necessary to enable the Company to carry on
business of the Company.
(e) The rights of the Company to use the Computer System will not
be affected by the execution of this Agreement or the completion of the
Transactions contemplated herein.
1.34 Labor Matters
(a) There is no labor strike, dispute, corporate campaign,
slowdown, stoppage or lockout actually pending, or, to the Knowledge of the
Shareholders, threatened against or affecting the Company or any Company
Subsidiary and during the past three years there has not been any such action.
(b) Neither the Company nor any Company Subsidiary is a party to
or bound by any collective bargaining or similar agreement with any labor
organization or work rules or practices agreed to with any labor organization or
employee association applicable to employees of the Company or any Company
Subsidiary.
(c) No collective bargaining agreement exists with the Company's
employees which is binding on the Company or any Company Subsidiary restricts
any of them from relocating or closing any of their operations.
(d) A true and complete copy of each written personnel policy,
rule and procedure applicable to employees of the Company or any Company
Subsidiary has been provided to the Purchasers.
(e) Each of the Company and each of the Company Subsidiaries is,
and has at all times been, in compliance, in all material respects, with all
applicable laws respecting employment and employment practices, terms and
conditions of employment,
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wages, hours of work and occupational safety and health, and is not engaged in
any unfair labor practices, as defined in any applicable laws.
(f) There is no unfair labor practice charge or complaint against
the Company or any Company Subsidiary is pending or is threatened.
(g) There is no presently pending grievance arising out of any
collective bargaining agreement or other grievance procedure.
(h) Neither the Company nor any Company Subsidiary has received
notice of the intent of Governmental Entity responsible for the enforcement of
labor or employment laws to conduct an investigation with respect to or relating
to the Company or any Company Subsidiary, and no such investigation is in
progress.
(i) There are no complaints, lawsuits or other proceedings
pending or threatened in any forum by or on behalf of any present or former
employee of the Company or any Company Subsidiary, any applicant for employment
alleging breach of any express or implied contract of employment, any laws
governing employment or the termination thereof or other discriminatory,
wrongful or tortious conduct in connection with the employment relationship.
Section 1.35 Personnel. Schedule 1.35 sets forth a true and complete list
of (i) the names and current salaries of all directors and elected and appointed
officers of each of the Company and the Company Subsidiaries; and (ii) the wage
rates for non-salaried and non-executive salaried employees of each of the
Company and the Company Subsidiaries by classification. Neither the Company nor
any Company Subsidiary is in default with respect to any of its obligations
referred to in the preceding sentence. To the Knowledge of the Shareholders, no
officer, key employee or group of employees has any plans to terminate
employment with the Company or any Company Subsidiary as a result of the
Transactions or otherwise.
Section 1.36 Potential Conflict of Interest. No Shareholder nor any officer
or director of the Company or any Company Subsidiary owns or holds, directly or
indirectly, any interest in, or is an officer, director, employee or consultant
of any Person that is, a competitor, lessor, lessee, customer or supplier of the
Company or which conducts a business similar to any business conducted by the
Company. No Shareholder nor any officer or director of the Company or any
Company Subsidiary (a) owns or holds, directly or indirectly, in whole or in
part, any Company Intellectual Property, (b) has any claim, charge, action or
cause of action against the Company or any Company Subsidiary, except for claims
for reasonable unreimbursed travel or entertainment expenses, accrued vacation
pay or accrued benefits under any employee benefit plan existing on the date
hereof, (c) has made, on behalf of the Company or any Company Subsidiary, any
payment or commitment to pay any commission, fee or other amount to, or to
purchase or obtain or otherwise contract to purchase or obtain any goods or
services from, any other Person of which any Shareholder, officer or director of
the Company or any Company Subsidiary (or, to the Knowledge of the Shareholders,
a relative of any of the foregoing) is a partner or shareholder or (d) owes any
money to the Company or any Company Subsidiary or (e)
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other than the lease of Company's current headquarters by Butnaru has any
material interest in any property, real or personal, tangible or intangible,
used in or pertaining to the business of the Company or any Company Subsidiary.
Section 1.37 Propriety of Past Payments. (a) No unrecorded fund or asset of
the Company or any Company Subsidiary has been established for any purpose, (b)
no accumulation or use of corporate funds of the Company or any Company
Subsidiary has been made without being properly accounted for in the books and
records of the Company or such Subsidiary, (c) no payment has been made by or on
behalf of the Company or any Company Subsidiary with the understanding that any
part of such payment is to be used for any purpose other than that described in
the documents supporting such payment and (d) none of the Company, any Company
Subsidiary, any director, officer, employee or agent of the Company or any
Company Subsidiary or any other Person associated with or acting for or on
behalf of the Company or any Company Subsidiary has, directly or indirectly,
made any illegal contribution, gift, bribe, rebate, payoff, influence payment,
kickback or other payment to any Person, private or public, regardless of form,
whether in money, property or services, (i) to obtain favorable treatment for
any Shareholder, the Company, any Company Subsidiary or any Affiliate of the
Company in securing business, (ii) to pay for favorable treatment for business
secured for any Shareholder, the Company, any Company Subsidiary or any
Affiliate of the Company, (iii) to obtain special concessions, or for special
concessions already obtained, for or in respect of any Shareholder, the Company,
any Company Subsidiary or any Affiliate of the Company or (iv) otherwise for the
benefit of any Shareholder, the Company, any Company Subsidiary or any Affiliate
of the Company in violation of any law or other administrative order,
constitution, ordinance, regulation, statute or other such norm. Neither the
Company nor any Company Subsidiary nor any current director, officer, agent,
employee or other Person acting on behalf of the Company or any Company
Subsidiary, has accepted or received any unlawful contribution, payment, gift,
kickback, expenditure or other item of value.
Section 1.38 Liability. There are not presently pending or threatened, and,
there is no basis for, any civil, criminal or administrative actions, suits,
demands, claims, hearings, notices of violation, investigations, proceedings or
demand letters relating to any Defect in design, manufacture, materials or
workmanship, including any failure to warn or alleged breach of express or
implied warranty or representation, relating to any product developed, licensed,
distributed or sold by or service provided by or on behalf of the Company or any
Company Subsidiary. Neither the Company nor any Company Subsidiary has extended
to any of its customers any written, non-uniform product warranties,
indemnifications or guarantees.
Section 1.39 Bank Accounts. Schedule 1.39 sets forth the names and
locations of all banks, trust companies, savings and loan associations and other
financial institutions at which the Company or any Company Subsidiary maintains
safe deposit boxes, checking accounts or other accounts of any nature and the
names of all Persons authorized to draw thereon, make withdrawals there from or
have access thereto.
Section 1.40 Investment in the Team Common Stock
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(a) By reason of the business and financial experience of each
Shareholder and such Shareholder's financial advisors, each Shareholder has the
capacity to evaluate the merits and risks of accepting the Team Common Stock to
be transferred to such Shareholder and to protect such Shareholder's interests
in connection with the Transactions.
(b) Each Shareholder is acquiring the Team Common Stock to be
transferred to such Shareholder for investment for Shareholder's own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof in violation of the Securities Act. Each
Shareholder understands that the Team Common Stock have not been, and will not
be registered under the Securities Act by reason of a specific exemption from
the registration provisions of the Securities Act, the availability of which
depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of Shareholder's representations as expressed herein.
(c) Each Shareholder has been given full access to all material
information concerning the condition, business, operations, proposed operations
and prospects of Purchasers, including (i) the Annual Report on Form 10-K most
recently filed with the SEC by Purchasers, (ii) all Quarterly Reports on Form
10-Q filed with the SEC by Purchasers since the date of such Annual Report,
(iii) all Reports on Form 8-K filed with the SEC by Purchasers since the date of
such Annual Report and (iv) the Proxy Statement most recently filed with the SEC
by Purchasers (receipt of copies of each of which is hereby acknowledged by each
Shareholder).
(d) Each Shareholder and each Shareholder's advisors, if any,
have had an opportunity to ask questions of, and to receive information from,
Purchasers concerning the condition, business, operations, proposed operations
and prospects of Purchasers and the terms and conditions of Shareholder's
investment in Purchasers, and to obtain any additional information material to
such Shareholder's decision to accept the Team Common Stock to be transferred to
such Shareholder or necessary to verify the accuracy of other information and
data received by Shareholder in connection with the Transactions. Each
Shareholder believes that there is no material information concerning the
condition, business, operations, proposed operations and prospects of Purchasers
of which such Shareholder is unaware.
(e) Each Shareholder has made either alone or together with such
Shareholder's advisors, if any, such independent investigation of Purchasers and
related matters as (i) such Shareholder deems to be, or such Shareholder's
advisors, if any, have advised to be, necessary or advisable in connection with
Shareholder's acceptance of the Team Common Stock to be transferred to such
Shareholder and (ii) each Shareholder and such Shareholder's advisors, if any,
believe to be necessary in order to reach an informed decision as to the
advisability of accepting such Team Common Stock.
(f) Each Shareholder is able to bear the economic risk of an
investment in Team Common Stock to be acquired hereunder, and at the present
time, is able to afford a complete loss of such investment.
Page 49 of 50
(g) Each Shareholder who is not a citizen of the United States
("Foreign Shareholder") understands and acknowledges that (A) the shares of
Stock Consideration have not been registered under the Securities Act, are being
sold in reliance upon an exemption from registration afforded by Regulation S;
and that such shares of Stock Consideration have not been registered with any
state securities commission or authority; (B) pursuant to the requirements of
Regulation S, the shares of Stock Consideration may not be transferred, sold or
otherwise exchanged unless in compliance with the provisions of Regulation S
and/or pursuant to registration under the Securities Act, or pursuant to an
available exemption hereunder; and (C) Each Foreign Shareholder is under no
obligation to register the shares of Stock Consideration under the Securities
Act or any state securities law, or to take any action to make any exemption
from any such registration provisions available.
Each Foreign Shareholder is not a U.S. person and is not acquiring the
shares of Stock Consideration for the account of any U.S. person.
Each Foreign Shareholder is purchasing the shares of Stock
Consideration for its own account and risk and not for the account or
benefit of a U.S. Person and no other person has any interest in or
participation in the shares of Stock Consideration or any right,
option, security interest, pledge or other interest in or to the
shares of Stock Consideration.
Each Foreign Shareholder acknowledges that the shares of Stock
Consideration will bear a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN OFFERED AND SOLD IN AN
"OFFSHORE TRANSACTION" IN RELIANCE UPON REGULATION S AS PROMULGATED BY THE
SECURITIES AND EXCHANGE COMMISSION. ACCORDINGLY, THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT") AND MAY NOT BE TRANSFERRED OTHER THAN IN ACCORDANCE WITH
REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE CANNOT BE THE SUBJECT OF HEDGING
TRANSACTIONS UNLESS SUCH TRANSACTIONS ARE CONDUCTED IN COMPLIANCE WITH THE
SECURITIES ACT.
Section 1.41 Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any brokers'
or finder's fee or any other commission or similar fee in connection with any of
the Transactions.
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