SALE AND PURCHASE AGREEMENT among
Execution
copy
among
(1) EMVELCO
CORP. (former company name: EUROWEB INTERNATIONAL CORPORATION)
AS
VENDOR
and
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(2)
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MARIVAUX
INVESTMENTS LIMITED
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(3)
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FLEMINGHOUSE
INVESTMENTS LIMITED
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AS
PURCHASERS
relating
to
NAVIGATOR
INFORMATIKA ÜZLETI SZOLGÁLTATÓ ÉS
XXXXXXXXXXXX
XXXXXXXXXX
XXXXXX részvényTÁRSaság
This
SALE AND
PURCHASE AGREEMENT
is
concluded by and among
1.
EMVELCO CORP.
(former
company name: EUROWEB
INTERNATIONAL CORP. business
address: 000 Xxxxx Xxxxxx Xxxxx Xxxxx 000(X) Xxxxxxx Xxxxx, XX 00000, XXX;
IRS
NUMBER: 133696015) ("Vendor”)
and
2.
MARIVAUX
INVESTMENTS LIMITED (registered
seat: 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx Xxxxx, XX0000 Xxxxxxxx, Xxxxxx; Xxx.xx.
HE
160815) ("Purchaser
1");
and
3.
FLEMINGHOUSE
INVESTMENTS LIMITED (registered
seat: Xxxxxxxxxxx Xxxxxx 0, Xxxxxxxx, XX. 0000 Xxxxxx; Xxx.xx. HE 146593)
("Purchaser
2")
Purchasers
1 and Purchasers 2 will be referred to collectively as "Purchasers"
and
individually each as "Purchaser";
while
the Vendor and the Purchasers will be referred to collectively as the
"Parties"
and
individually each as a "Party".
RECITALS
| A. |
WHEREAS,
Navigator Informatika Üzleti Szolgáltató és Kereskedelmi Zártkörűen Működő
Részvénytársaság (registered seat: X-0000 Xxxxxxxx, Máriássy u. 5-7.;
registration number: Cg.01-10-044621)
(the "Company")
is engaged in the provision of business IT services. Navigator Informatika
Kft. and Navigator Engineering Kft., the former subsidiaries of the
Company (the “Merging
Companies”)
merged into the Company as of 17 October 2006, consequently the Company
operates as the legal successor of the Merging
Companies.
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| B. |
WHEREAS,
the Vendor is the owner of the 100% of the registered shares of the
Company after having exercised the option right of Vendor vis-à-vis an
individual shareholder, at the latest on the date of executing this
Agreement relating to 1 piece of a registered ordinary share, with
a
nominal value of HUF 10.000 (ten thousand Hungarian forints) issued
by the
Company.
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C.
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WHEREAS,
the
Company and Commerzbank Zártkörűen Működő Részvénytársaság (registered
seat: 0000 Xxxxxxxx, Xxxxxxxxx rkp.8.; registration number: 01-10-042115)
("Commerzbank")
concluded a loan agreement for the value of HUF 201.250.000 (two
hundred
and one million two hundred and fifty thousand Hungarian forints)
on 6
April 2005 (contract number: 2005/036) (the "Loan
Agreement").
The Vendor concluded a share-deposit agreement, respectively, with
Commerzbank in connection with the Loan Agreement (the "Share
Deposit Agreement"),
on the basis of which the Sale Shares (as defined below) are deposited
with Commerzbank.
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D.
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WHEREAS,
the Purchasers intend to buy, in accordance with the conditions set
forth
in this Agreement, all the shares in the Company at Closing. The
Vendor
intends to sell 100% of the shares in the Company to the
Purchasers.
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NOW
IT IS
HEREBY AGREED as follows:
ARTICLE
I: DEFINITIONS; INTERPRETATION
1.1 Definitions Wherever
used in this Agreement or the Schedules hereto, unless the context otherwise
requires, the following shall apply to the following terms, respectively, when
said terms are used with an upper-case first letter.
"2006
Accounts" means the financial statements of the Company prepared for the period
ended December 31, 2006, together with the unqualified auditors report
thereon;
"Accounts"
means the 2006 Accounts, the financial statement of the Company reflecting
the
Company’s business position as of the accounting date thereof, prepared for the
period ended December 31, 2006, together with the unqualified auditors report
thereon, and the Interim Account and the Final Merger Accounts;
"Affiliates"
means two or more companies, one of which directly or indirectly owns at least
50% (fifty percent) of the share capital of the other company, or which are
both
owned directly or indirectly as to at least 50% (fifty percent) of their share
capital by a third company.
"Agreed
Encumbrances" means (i) the deposit (óvadék) on the basis of the share Deposit
Agreement granted by the Vendor to Commerzbank over its shareholding interest
in
the Company in connection with the Company entering into the Loan Agreement,
and
(ii)a floating charge on all property owned by the Company granted to
Commerzbank established in the maximum principal amount of HUF 380.000.000
(three hunderd and eighty million Hungarian forints).
"Agreement"
means this Sale and Purchase Agreement and all schedules attached hereto, as
the
same may be amended or modified from time to time.
"Articles"
means the Articles of Association of the Company as at the date
hereof.
"Business
Day" means a day other than a Saturday or Sunday or public holiday in Hungary
or
the United States of America.
"Closing"
shall mean the occasion on which the Purchasers and the Vendor performs their
respective obligations subject to Article V hereof and as contemplated by
Section III hereof.
"Closing
Date" means the date upon which the Closing occurs.
"Commerzbank"
means Commerzbank Zártkörűen Működő Részvénytársaság (registered office: 0000
Xxxxxxxx, Xxxxxxxxx rkp. 8.; registration number: Cg. 01-10-042115).
"Company"
shall have the meaning as defined in Recital A hereof.
"Consideration
for the Sale Shares" means the consideration to be paid by the Purchasers to
the
Vendor as consideration for the sale of the Sale Shares as set out in Section
2.1., in the ratio as indicated in Schedule 1.
"Consideration
1 for the Sale Shares" means altogether USD
3.200.000 (three million two hundred thousand United States dollars)
to be
paid by the Purchasers to the Vendor as consideration for the sale of the Sale
Shares as set out in Section 2.1., in the ratio as indicated in Schedule
1.
"Consideration
2 for the Sale Shares" means the consideration to be calculated as
follows:
Reference
Price multiplied by the number of pieces of Transferable EMVELCO Shares (i.e.
622.531)
"Controlling
Influence" means that the controlling entity directly or indirectly owns more
than 50% of the share capital of the controlled company or is entitled to
appoint more than 50% of the management of the controlled company.
"Data
Room" means the room at the Company’s principal place of business that contained
certain information and documents in connection with the Company reviewed by
the
Purchasers.
"EMVELCO
Shares" shall mean outstanding and issued shares in EMVELCO Corp. of common
stock par value USD 0,001 each, and "EMVELCO Share" means any one of the EMVELCO
Shares.
"Final
Merger Accounts" shall mean financial statements of the Company with the Merging
Companies prepared for the period 17 October, 2006, together with the
unqualified auditors report thereon
"Financial
Information" means the financial information provided to the Purchasers, as
set
out in Shedule 3 hereto;
"Interim
Account" means the unaudited financial statement of the Company for the twelve
months period ended 31 December 2006; attached hereto as Shedule 3;
"Loan
Agreement" shall have the meaning as defined in Recital C.
"Party"
or "Parties" shall mean, collectively the Purchasers and the Vendor, and
individually any one of them.
“Reference
Price/1 Transferable EMVELCO Share” means the amount indicated in Schedule 1 of
this Agreement, i.e. the closing market price on the NASDAQ National Market
System per 1 Transferable EMVELCO Share applicable on the date of one Business
Day prior to the date of the Closing.
"Sale
Shares" shall mean the entire Share1 package and the Share2 package being
purchased by the Purchasers from the Vendor pursuant to this Agreement and
being
all the issued registered capital of the Company.
"Share
package" shall mean 9.000 pieces registered ordinary shares, each having a
nominal value of HUF 10.000 (ten thousand Hungarian forints), representing
100%
(one hundred per cent) of the issued registered capital of the Company, owned
by
Vendor, having the serial numbers 003501-012500, being sold to
Purchasers;
"Share
package 1" shall mean 4.590 pieces registered ordinary shares, each having
a
nominal value of HUF 10.000 (ten thousand Hungarian forints), representing
51%
(fifty-one per cent) of the issued registered capital of the Company, owned
by
Vendor, having the serial numbers 003501-008090, being sold to Purchaser
1;
"Share
package 2" shall mean 4.410 pieces registered ordinary shares, each having
a
nominal value of HUF 10.000 (ten thousand Hungarian forints), representing
49%
(forty-nine per cent) of the issued registered capital of the Company, owned
by
Vendor, having the serial numbers 008091-012500, being sold to Purchaser
2;
"Transferable
EMVELCO Shares" shall mean the EMVELCO Shares comprising the Transferable
EMVELCO Shares 1 and Transferable EMVELCO Shares 2.
"Transferable
EMVELCO Shares 1" shall mean 100.477 pieces of Transferable EMVELCO Shares
held
by Purchaser 1.
"Transferable
EMVELCO Shares 2" shall mean 522.054 pieces of Transferable EMVELCO Shares
held
by Purchaser 2.
1.2 Singular/Plural;
References In
this
Agreement:
(a) unless
the context otherwise requires, words denoting the singular include the plural
and vice versa, and words denoting persons include natural or juridical persons,
corporations, partnerships and legal entities;
(b) the
terms
"hereof", "hereto" and "hereunder" and similar expressions mean and refer to
this Agreement; and any particular Article, Section, Clause or Paragraph of
this
Agreement followed by a number means and refers to the specified Article,
Section, Clause or Paragraph of this Agreement.
ARTICLE
II: THE TRANSACTION
2.1 Purchase
and Sale of the Sale Shares. Subject
to the terms and conditions of this Agreement, Vendor hereby agrees to sell,
transfer and deliver the Share package 1 to Purchaser 1 and the Share package
2
to Purchaser 2; and the Purchaser 1 agrees to purchase Share package 1 at the
Closing; while Purchaser 2 agrees to purchase Share package 2 at the Closing.
In
consideration of the sale, transfer and delivery of the Sale Shares by the
Vendor, the Purchaser 1 shall pay 51% of the Consideration for Share1
package and
Purchaser 2 shall pay 49%
of Consideration
for Share2
package to
the
Vendor as
set
out below:
The
Sale
Shares endorsed to blank are deposited with Commerzbank (physically with
MKB).
| 2.1.1 |
Purchaser
1 shall pay a part of Consideration 1 and
Purchaser 2 shall pay the outstanding amount of Consideration 1 to
Vendor,
as calculated in Schedule 1, in cash by wire transfer, as set out
in
Section 3.2.1 below, at Closing;
and
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| 2.1.2 |
Purchaser
1
shall
pay a part of Consideration 2 calculated on the basis of the number
of the
Transferable EMVELCO Shares 1 while the outstanding amount of
Consideration 2 shall be paid by Purchaser 2 calculated on the basis
of
the number of the Transferable EMVELCO Shares 2 to Vendor. The Parties
agree that Consideration 2 shall be paid at Closing in Transferable
EMVELCO shares, as calculated in accordance with Section
2.2.
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The
Consideration for the Sale Shares consists of two elements: Consideration 1
payable in cash, and Consideration 2 payable in Transferable EMVELCO
Shares.
The
Parties acknowledge that the Sale Shares are issued for the previous company
name of the Company (AM-IT Informatikai Szolgáltató és Kereskedelmi
Részvénytársaság) and the Sale Shares are deposited with Commerzbank endorsed
blank.]
2.2 Calculation
of the value of Transferable EMVELCO Shares.
The
value of Transferable EMVELCO Shares shall be calculated based on the Reference
Price; i.e. the Consideration 2 shall be equal to 622.531 pieces of Transferable
EMVELCO Shares.
ARTICLE
III: CLOSING
3.1 Closing
Date, Place of the Closing The
Closing shall xxxx xxxxx xx 0000 Xxxxxxxx, Xxxxxxx at Váci út 141., 4 (four)
business days after all of the conditions precedent (set out in Article V.
hereof) have been satisfied, or on such other date as the Parties may mutually
agree.
3.2 Closing
Matters Subject
to the terms and conditions of this Agreement:
3.2.1 at
the
Closing, the Purchaser 1 and Purchaser 2 shall pay to the Vendor the
Consideration 1 in full by wire transfer of immediately available funds to
the
bank account of Vendor held at JPMorgan Chase Bank (600 Madison Avenue, New
York, NY 10022 USA), account number 026094361365 SWIFT XXXXXX00 (ABA routing
number: 021-000-021)
provided
that not later than 3 (three) Business Days preceding the Closing Date Vendor
shall be entitled to designate alternative accounts for Consideration 1.
Purchaser 1 and Purchaser 2 shall both present to Vendor a copy of each transfer
instruction on the payment; and the receipt of which instruction shall be
acknowledged by Vendor. Title to the Sale Shares shall pass if and when the
irrevocable and unconditional transfer instruction on the payment of
Consideration 1 certifying receipt by Commerzbank is presented to Vendor; who
shall immediately issue a confirmation thereon to the Purchasers.
3.2.2
at
the Closing, the Purchaser 1 and Purchaser 2 shall deliver stock certificates
representing the EMVELCO Shares together with (i) an irrevocable medallion
guaranteed stock power executed in blank, (ii) transfer instructions executed
by
Purchaser 1 and Purchaser 2 authorizing the transfer of the EMVELCO Shares
and
(iii) an executed resolution of both Purchaser 1 and Purchaser 2 authorizing
the
transfer of the EMVELCO Shares.
3.2.3 at
the
Closing, the Vendor shall
| (a) |
deliver
to the Purchasers such resignations or recalls of members of the
board of
directors and supervisory board, and the auditors of the Company
as the
Purchasers shall request;
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(b)
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upon
receipt of Consideration 1
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(i) obtain
the release from Commerzbank of the Share Deposit; and present the related
declarations of Commerzbank to Purchasers.
The
Purchasers acknowledge that said declarations are conditional upon the title
to
the Sale Shares passing to the Purchasers when Vendor receives the Consideration
1 credited on its accounts; upon the occurrence of which Vendor shall
immediately issue to the Purchasers, to Commerzbank and to Magyar
Külkereskedelmi Bank Rt ("MKB") a confirmation thereon.
(ii) the
Sale
Shares shall not be physically delivered to the Purchasers. The Sale Shares
endorsed to blank shall be deposited with Commerzbank (physically with MKB)
and
shall remain deposited therewith due to the loan obtained by the Purchasers
for
the acquisition.
Commerzbank
shall have acknowledged the sale of the Sale Shares and instructed MKB to
re-book the Sale Shares for the name of the Purchasers (on the condition of
the
title passing to the Purchasers, as referred to above). By the Vendor sending
to
Commerzbank its acknowledgement notice on receiving the irrevocable and
unconditional transfer instruction on the payment of Consideration 1 certifying
receipt by Commerzbank, thus, title to the Sale Shares passing to the
Purchasers, the Sale Shares shall be deemed duly handed over and delivered
to
the Purchasers without any further action required to be done by the
Parties.
3.2.4
Closing shall be deemed occurred and completed only if any and all actions
listed under 3.2.1-3.2.3 have been completed.
3.2.5.
Immediately following the delivery of the Sale Shares pursuant to Section 3.2.3,
the Purchasers shall be registered in the share register of the Company as
the
owners of the Sale
Shares.
ARTICLE
IV: ACTIONS PRIOR TO CLOSING
4.1 Conduct
of Business prior to Closing In
the
period as from the signing this Agreement until Closing, the following shall
apply:
(a) the
Vendor shall cause the Company to provide reasonable notice to the Purchasers
of
all significant transactions (having a value of at least HUF 10,000,000) in
which the Company is involved;
(b) the
Vendor shall cause the Company to operate in the ordinary course in all material
respects;
(c) the
Vendor shall not cause adverse change to the Company’s business;
(d) the
Parties agree that prior to the Closing; no payment of dividend shall take
place.
4.2 Further
Actions Subject
to the terms and conditions hereof, each of the Parties hereto agrees to use
all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement.
ARTICLE
V: CONDITIONS TO CLOSING
5.1 Condition
to Obligations of the Parties The
respective obligations of the Parties hereto are subject to the satisfaction
at
or prior to Closing of the following conditions precedent:
(a) the
Purchasers shall have obtained the
acquisition loan from Commerzbank pursuant to this Agreement;
(b) the
obtaining of the approval of Commerzbank to
the
change in the Company’s ownership and management structure pursuant to this
Agreement;
(c)
the
Company shall issue a declaration to the Purchasers certifying that as of the
date of this Agreement neither Vendor nor any related companies of them has
any
outstanding accounts payable vis-à-vis the Company which is overdue more than 60
days; in the form attached hereto as Schedule 2;
(d) the
Vendor shall have obtained the required authorization to execute, deliver and
perform this Agreement and approval of the Board of Directors of Vendor for
the
sale of the Company to Purchaser 1 and Purchaser 2 in consideration of the
Consideration for the Sale Shares;
(e) Purchaser
1 and Purchaser 2 shall have obtained the required authorization to execute,
deliver and perform this Agreement and approval of the Board of Directors
approving the sale of the EMVELCO Shares;
(f) the
Vendor shall have been registered as 100% shareholder in the Book of Shares
of
the Company.
5.2 Actions
Relating to the Closing Conditions
The
Parties record that the acquisition of controlling interest over the Company
by
the Purchasers do not fall under the scope of section 24 of the Act LVII of
1996
on the Prohibition of Unfair and Restrictive Market Practices (concentration
of
undertakings being subject to authorization), therefore, authorization of the
Office of Economic Competition is not required to effectuate the acquisition,
i.e. to transfer the ownership rights relating to the Shares to the Purchaser.
The
Purchasers shall use their best endeavours to obtain the acquisition loan from
Commerzbank, the provision of which may not fail because of reasons attributable
to the Purchasers and the Purchasers may not withdraw from applying to
Commerzbank for receiving the acquisition loan.
The
Parties will mutually co-operate as to obtaining of the approval of Commerzbank
to the change in the ownership and management structure of the Company.
5.3 Notices Each
Party shall give prompt written notice to the other Parties of:
(a) the
occurrence of each event or action required as a condition set forth in Section
5.1; and
(b) the
occurrence of any event or action of which it becomes aware which may reasonably
be anticipated to result in the non-satisfaction of any such condition by the
Closing Date.
For
the
purpose of this Section 5.3, notice given by Vendor to one Purchaser shall
be
deemed to be notice given by Vendor to all Purchasers.
ARTICLE
VI. REPRESENTATIONS
AND WARRANTIES
6.1 Representations
and Warranties of the Vendor The
Vendor represents and warrants to the Purchasers severally as follows (unless
the wording of the representations and warranties refer to a specific date,
the
following representations and warranties refer to both the date of the signing
of this Agreement as well as the Closing Date):
(a) Authorisation
and Validity of the Agreement The
Vendor has the legal capacity, right, power and authority to execute, deliver
and perform this Agreement and the other agreements and documents contemplated
by this Agreement. The execution, delivery and performance by the Vendor of
this
Agreement and the consummation by them of the transactions contemplated hereby
have been duly authorised by all necessary action on the part of the Vendor.
This Agreement has been duly executed and delivered by the Vendor.
(b) Capitalisation The
Sale
Shares are the whole of the issued registered capital of the Company. There
are
no rights of first refusal, pre-emptive rights or other similar agreements
(whether by the Vendor or otherwise) obligating the Company or any Vendor to
offer any Sale Shares to any person and none of the Sale Shares were issued
in
violation of any pre-emptive or similar rights.
(c) Sale
Shares The
Sale
Shares are validly issued, fully paid up and owned by and registered under
the
name of the Vendor in the Company's Book of Shares; and the Vendor made all
filings and reporting to the competent court of registration required in
connection with the acquisition and holding of the Sale Shares. Upon the Closing
the Sale Shares will be transferred to the Purchasers, free from all
encumbrances, claims and litigation except for the Agreed Encumbrances and
other
encumbrances as Commerzbank and the Purchasers may agree.
(d) Organisation
of the Company The
Company is a company limited by shares established under the laws of the
Republic of Hungary and is duly organized, validly existing and in good
standing. There are no filings made with the Court of Registry or under
procedure affecting the registered corporate data of the Company.
(e) Taxation To
the
best of the knowledge of the Vendor the Company and the Merging Companies have
lawfully performed their obligations to file all relevant tax returns and to
pay
taxes and contributions.
(f) Books To
the
best of the knowledge of the Vendor (i) the Company and the Merging Companies
have kept their books in accordance with the relevant legal rules and the
Accounts and the Merging Companies' respective financial statements present
a
true and fair view of the Company’s and the Merging Companies' financial
position in all material respects as of the date thereof and (ii) the Financial
Information are true and fair in all material respects as of the date
thereof.
6.2 Representations
and Warranties of the Purchasers The
Purchasers represent and warrant to the Vendor as follows (unless the wording
of
the representations and warranties refer to a specific date, the following
representations and warranties refer to both the date of the signing of this
Agreement as well as the Closing Date):
(a) Authorisation
and Validity of the Agreement The
Purchasers have the legal capacity, right, power and authority to execute,
deliver and perform this Agreement and the other agreements and documents
contemplated by this Agreement. The execution, delivery and performance by
the
Purchasers of this Agreement and the consummation by the Purchasers of the
transactions contemplated hereby have been duly authorised by all necessary
action on the part of the Purchasers. This Agreement has been duly executed
and
delivered by the Purchasers.
(b) Capitalisation There
are
no rights of first refusal, pre-emptive rights or other similar agreements
obligating the Purchasers or any other person to offer any Transferable EMVELCO
Shares to any person and none of the Transferable EMVELCO Shares were issued
in
violation of any pre-emptive or similar rights.
(c) Transferable
EMVELCO Shares Upon
the
Closing, the Purchasers are the lawful record and beneficial owner of all the
EMVELCO Shares, free and clear of any liens, pledges, encumbrances, charges,
claims or restrictions of any kind and have, or will have on the Closing Date,
the absolute, unilateral right, power, authority and capacity to enter into
and
perform this Agreement without any other or further authorization, action or
proceeding. There are no authorized or outstanding subscriptions, options,
warrants, calls, contracts, demands, commitments, convertible securities or
other agreements or arrangements of any character or nature whatever that relate
to the EMVELCO Shares under which the Purchasers are or may become obligated
to
issue, assign or transfer the EMVELCO Shares. Upon the delivery to Vendor on
the
Closing Date of the certificates representing the EMVELCO Shares, Vendor will
have good, legal, valid, marketable and indefeasible title to the EMVELCO
Shares, free and clear of any liens, pledges, encumbrances, charges, agreements,
options, claims or other arrangements or restrictions of any kind subject to
the
applicable law.
(d) Organisation
of the Company The
Purchasers are companies limited by shares established under the laws of Cyprus,
respectively, and are duly organized, validly existing and in good
standing.
6.3 Indemnification
by the Vendor Subject
to the limitations set forth below, the Vendor agrees to indemnify the
Purchasers against any and all losses which the Purchasers may sustain which
arise out of or result from a breach of any of the representations, warranties,
covenants or agreements of the Vendor contained in this Agreement.
The
Vendor shall not be under any obligation to indemnify or recompense the
Purchasers for any contingent or other such losses of a similar nature (unless
and to the extent that such losses become realized) and the Purchasers hereby
unconditionally waive any claim therefor.
6.4 Indemnification
by the Purchasers Subject
to the limitations set forth below, the Purchasers agree to indemnify the Vendor
against any and all losses which the Vendor may sustain which arise out of
or
result from a breach of any of the representations, warranties, covenants or
agreements of the Purchasers contained in this Agreement.
The
liability of the Purchasers for any breach of any of the obligations,
representations, warranties, covenants or agreements of any of the Purchasers
contained in this Agreement shall be joint and several.
The
Purchasers shall not be under any obligation to indemnify or recompense the
Vendor for any contingent or other such losses of a similar nature (unless
and
to the extent that such losses become realized) and the Vendor hereby
unconditionally waives any claim therefor.
6.5 Conduct
of Litigation
(a) Subject
to the limitations set forth in Section 6.6 hereof, whenever a claim for
indemnification shall arise under this Article VI, the Party (or Parties)
seeking indemnification (the "Indemnified
Party")
shall
notify, in writing, the Party (or Parties) from whom indemnification is sought
(the "Indemnifying
Party")
of
such claim, together with an estimate of the amount of such claim in reasonable
detail, and, as soon as known, the facts constituting the basis for such claim.
The Indemnified Party shall be under a duty to take commercially reasonable
efforts to mitigate the losses relating to any such claim, and any losses
incurred in such commercially reasonable mitigation efforts shall constitute
losses for purposes of this Article VI.
(b) Without
limiting the generality of Section 6.5 (a) hereof, in the event of a claim
for
indemnification hereunder resulting from or in connection with any claim or
legal proceeding by a third party (a "Third
Party Claim"),
the
Indemnified Party shall give notice to the Indemnifying Party no later than
20
(twenty) Business Days prior to the time any response to an asserted Third
Party
Claim is required. The Indemnified Party (or the Company as the case may be)
shall not make admission of liability, agreement, settlement or compromise
without the prior written consent of the Indemnifying Party, which consent
shall
not be unreasonably withheld. The Indemnifying Party may assume the defence
of
any Third Party Claim, provided, however, that no settlement shall be made
without the prior written consent of the Indemnified Party, which consent shall
not be unreasonably withheld. If an Indemnifying Party assumes the defence
of
any such Third Party Claim or related legal proceeding, the Indemnifying Party
shall be entitled to select counsel and take all steps necessary in the
settlement or defence thereof; provided, however, that the Indemnified Party
may, at its own expense, participate in any such proceeding with the counsel
of
its choice. If the Vendor as Indemnifying Party assumes the defence of any
Third
Party Claim, the Purchasers shall, and shall cause the Company to, provide
such
Vendor such access to persons and information as it may reasonably request
in
the defence of such Third Party Claim.
(c) In
the
case of any claim that is not a Third Party Claim, the Indemnifying Party shall
have 30 (thirty) Business Days within which it may respond to a notice of a
claim for indemnification given by an Indemnified Party pursuant to Section
6.5(a) hereof. If such claim is not contested, then the Indemnifying Party
shall
as soon as practicable proceed to take whatever action is required to carry
out
its indemnification obligations.
6.6 Limitations
on Indemnification
(a) The
Vendor total liability in respect of all claims under the warranties and
representations is limited to 10% (ten per cent) of the Consideration for the
Sale Shares.
(b) The
Vendor is not liable in respect of a claim under the warranties and
representations unless and until liability determined in respect of any such
claim, when aggregated with any other amount or amounts of liability determined
in respect of other claims under the warranties and representations exceeds
2%
(two per cent) of the Consideration for the Sale Shares (excluding interest,
costs, etc.) in which event all the claims under the warranties and
representations will be recoverable hereunder including those within the 2
%
threshold, provided that the other limitations contained in Section 6.6 hereof
will remain unaffected.
(c) The
Vendor is not liable in respect of a claim under the warranties and
representations unless and until liability determined in respect of any such
claim exceeds 0,2% (zero pint two per cent) of the Consideration for the Sale
Shares (excluding interest, costs, etc.).
(d) The
Vendor is not liable for a claim under the warranties and representations unless
the Purchasers have given the Vendor notice of the claim setting out full
particulars of the grounds on which such claim is based on or before the end
of
the 9th
calendar
month following the date of the Closing.
(e) The
Vendor shall not be liable under this Agreement in respect of any claim to
the
extent that a provision or reserve is made in the Accounts for the matter giving
rise to the claim.
(f) The
Purchasers shall not be entitled to recover damages or otherwise obtain
reimbursement or restitution more than once in respect of any individual breach
of the warranties and representations where the Purchasers would thereby reap
a
windfall. In particular, the Vendor shall not be liable in respect of any claim
(i) to the extent that any losses arising from such claim are covered by a
policy of insurance in force on the date of Closing or would have been so
covered had such policy of insurance been maintained beyond Closing; or (ii)
for
any losses suffered by the Purchasers or the Company to the extent of any actual
monetary savings realized by the Purchasers or the Company directly
corresponding to such losses.
(g) The
Vendor shall not be liable under this Agreement for any losses to the extent
that such losses arise out of or result from:
(i) any
act
taken by the Company after the Closing other than acts taken for the purpose
of
mitigating losses;
(ii) any
change in accounting or taxation policy, bases or practice of the Company
introduced after the Closing.
ARTICLE
VII: SUPPLY OF INFORMATION
7.1 The
Purchasers acknowledge that the Data Room and any other written, visual or
oral
information made available to the Purchasers or their advisers in connection
with its or their investigation of the Company and the purchase of the Sale
Shares (altogether the "Information")
is not
necessarily complete nor sufficient to enable them to decide whether or not
to
purchase the Sale Shares but the Purchasers have made such investigations as
it
believes necessary in order to purchase the Sale Shares.
7.2 Without
prejudice to the generality of Sections 7.1, the Purchasers acknowledge that
all
Information speaks as of the date of the document in which it is contained
or
the date on which it was otherwise given.
ARTICLE
VIII: TERMINATION
8.1 General This
Agreement may be terminated or rescinded only prior to the Closing, under the
following circumstances:
(a) by
mutual
consent of the Purchasers and the Vendor; or
(b) by
any of
the Parties if Commerzbank explicitly rejects in writing its approval to the
change of the Company’s ownership and management structure pursuant to this
Agreement.
8.2 Procedure
Upon Termination In
the
event of the termination of this Agreement pursuant to Section 8.1 by a Party
hereto, written notice thereof specifying the cause of such termination shall
promptly be given to each of the other Parties hereto and this Agreement shall
terminate and the transactions contemplated hereby shall be abandoned without
further action by any of the Parties hereto. Notwithstanding anything to the
contrary in this Article VIII, the termination of this Agreement shall not
release any Party hereto from any obligations or damages attributable to a
breach of such Party’s representations, warranties, obligations or covenants
prior to the termination of this Agreement.
8.3 Survival
of Certain Provisions Notwithstanding
Section 8.2 hereof, the respective obligations of the Parties hereto pursuant
to
Sections 10.1 to 10.3, 10.8, 10.10 and 10.12 shall survive any termination
of
this Agreement.
ARTICLE
IX: POST CLOSING OBLIGATIONS
9.1 Claims
Against Officers The
Purchasers hereby irrevocably agree that they will not and will cause the
Company not to commence any legal action or pursue any claim (other than claims
for damages caused wilfully or with gross negligence) against members of the
board of directors and supervisory board of the Company in office at any time
between the date of execution of this Agreement and the Closing Date with
respect to their activities performed for the Company prior to the Closing
as
members of the board of directors or as supervisory board members. This will
not
have an impact on the liability in accordance with the rules and limitations
contained in the Labour Code of the employees of the Company including those
who
have been also members of the board of directors for any damages caused for
the
Company, which liability will remain unaffected.
9.2 Covenants
Not to Compete Unless
acting with the Purchasers’ prior written consent, neither the Vendor or any
entity over which a Vendor has Controlling Influence will
(a) divert
from the Company any business conducted in Hungary existing as at
Closing;
(b) request
or advise any present or future customer of the Company to withdraw, curtail
or
cancel its business dealings with the Company;
(c) directly
or indirectly solicit or encourage any employee of the Company working in the
business IT services business to leave the employment of the Company;
or
(d) actively
solicit or encourage any consultant under contract with the Company to cease
work with the Company.
The
obligations under subparagraphs (a) and (b) shall apply for the period of three
(3) years immediately following the Closing, while the obligations under
subparagraphs (c) and (d) shall apply for the period of one (1) year immediately
following the Closing.
9.3
Filings
Pursuant to Securities Exchange Act of 1934 Vendor
acknowledges that Sections 13 and 16 of the Securities Exchange Act of 1934,
as
amended, oblige holders of shares of a registered class of securities to make
certain filings once the interests of such holders reach specified thresholds
and that such filing requirements may apply to Vendor upon the acquisition
of
the Transferable EMVELCO Shares.
9.4
December
31, 2006 Audit.
The
Purchasers acknowledge that the Company will provide the necessary financials
statements according to the Hungarian accounting rules (Profit and Loss
statements, Balance Sheet and other requested items) for the Vendor to fulfil
the Vendor's USGAAP based financial reporting requirements of the fiscal year
ended December 31, 2006 to be filed with the Securities and Exchange Commission.
The audit process will be carried out at the offices of the Company by Deloitte
Hungary within the framework of the signed audit contract for the year of 2006.
The Vendor has the right to require and receive financial information (including
reports and general ledgers) about December 31, 2006 financials statements
through February 28, 2007.
ARTICLE
X:
MISCELLANEOUS
10.1 Fees
and expenses Whether
or not the transactions contemplated hereby are consummated, each of the Parties
hereto shall pay its own fees and expenses incident to the negotiation,
preparation and execution of this Agreement and through Closing, including
attorneys’, accountants and other advisors’ fees and the fees and expenses of
any broker, finder or agent retained by such Party in connection with the
transactions contemplated by this Agreement. Notwithstanding the foregoing,
the
Purchasers shall be responsible for any procedure, professional or other fees
and expenses related to any filings and reporting to be made with any US
authorities or other bodies or otherwise accruing in connection with the US
legal implications of this Agreement and the transactions contemplated
hereby.
10.2 Arbitration Any
dispute, controversy or claim arising out of or in connection with this
Agreement, or the breach, termination or invalidity thereof, shall be finally
settled by arbitration in accordance with the Rules of the Permanent Arbitration
Court attached to the Hungarian Chamber of Commerce and Industry. The place
of
arbitration shall be Budapest, the number of arbitrators shall be three (3)
and
the language to be used in the arbitral proceedings shall be
English.
10.3 Notices Any
notice, request, demand, waiver or other communication to be given or made
under
this Agreement to the Parties shall be in writing. Except as otherwise provided
in this Agreement, such notice, request, demand, waiver or other communication
shall be deemed to have been duly given or made to the Party to which it is
required or permitted to be given or made at such Party’s address specified
below or at such other address as such Party shall have designated by notice
to
the Party making such notice, request, demand, waiver or other communication,
if
hand-delivered, on the date of such delivery, if sent by certified or registered
mail, on the date of receipt specified in any return receipt, if sent by telex
or telefax or other similar form of telecommunications (with receipt confirmed)
on the next working day following such transmission.
(a) If
to the
Vendor:
Address:
c/o Xxxxx Xxx Xxxxxxxx
Law
Offices of Xxxxxxxx & Associates
000
Xxxxx
Xxxxxx Xxxxx
Xxxxx
000
Xxxxxxx
Xxxxx , XX 00000
or
c/o.
Navigator Informatika Zrt.
1095
Budapest, Máriássy u. 5-7.
Fax:
x0
000 000-0000 or x00-0-000-0000
Attention:
Xxxxx Xxxxx
(b) If
to
Purchaser 1:
Attention:
Xxxxxx Xxxxxx
Address:
0000 Xxxxxxxx, Xxxxxx Xxxxx x. 00-00.
Fax:
x00-0-000-0000
If
to
Purchaser 2:
Attention:
Gyula Gansperger
Address:
x/x. Xxxxxx Xxx. 0000 Xxxxxxxx, Xxxx xx 000.
Fax:
x00-0-000-0000
or
to
such other persons, addresses and fax numbers as a Party shall specify as to
itself by notice in writing to the other Parties.
10.4 Entire
Agreement This
Agreement constitutes the entire agreement between the Parties pertaining to
the
subject matter hereof and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the
Parties.
10.5 Assignment None
of
the rights and obligations under this Agreement shall be assignable by any
of
the Parties hereto without the prior written consent of the other Parties,
except that any of the Parties may, without such consent, assign its rights
hereunder to any of its Affiliates or successors thereof.
10.6 Amendment
and Modification This
Agreement may be amended, modified and supplemented only by a written instrument
authorised and executed on behalf of each of the Parties.
10.7 Public
Announcements Within
3
(three) Business Days following the date hereof the Parties shall enter into
bona fide negotiations and will, without delay, mutually agree on the principles
of making public disclosure in respect of this Agreement. None of the Purchasers
or the Vendor shall, unless fully in compliance with such principles, make
or
issue, or cause to be made or issued, any public disclosure, announcement or
written statement concerning this Agreement or the transactions contemplated
hereby without the prior consent of the other Parties.
10.8 Language This
Agreement has been executed in the English language, which shall be the binding
and controlling language for all matters relating to the meaning or
interpretation of this Agreement.
10.9 Counterparts This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed to be an original, and all of which together shall constitute one and
the
same instrument.
10.10 Applicable
Law This
Agreement shall be governed by and construed in accordance with the laws of
the
Republic of Hungary without regard to the conflict of laws principles thereof,
provided, however, that provisions specifically referencing the laws of the
United States, any actions to be taken pursuant to or in compliance with such
laws shall be construed in accordance with US laws and matters relating to
the
legal authority or capacity of Purchasers, the issuance and nature of EMVELCO
Shares, the rights of holders of EMVELCO Shares shall be construed in accordance
with the laws of the State of Delaware.
10.11 Severability The
provisions of this Agreement will be deemed severable, and if any part of any
provision is held to be illegal, void or unenforceable in its entirety or
partially or as to any Party, for any reason, such provision may be changed
by
the applicable arbitration tribunal or court of competent jurisdiction,
consistent with the intent of the Parties hereto, to the extent reasonably
necessary to make the provision, as so changed, legal, valid, binding, and
enforceable. If any provision of this Agreement is held to be illegal, void,
or
unenforceable in its entirety or partially or as to any Party, for any reason,
and if such provision cannot be changed consistent with the intent of the
Parties hereto to make it fully legal, valid, binding, and enforceable, then
such provisions will be stricken from this Agreement, and the remaining
provisions of this Agreement will not in any way be affected or impaired, but
will remain in full force and effect.
10.12. Confidentiality Except
as
permitted or contemplated by Section 10.7 hereof, each of the Parties undertakes
to keep any and all information relating to this Agreement confidential and
not
to divulge or disclose such information to any third party without the prior
express written consent of the other Parties to this Agreement. This will not
limit any of the Parties to provide information on this Agreement to the extent
reasonably necessary to its Affiliates.
10.13.
Effective
Date After
having executed this Agreement by all Parties, this Agreement enters into effect
on the latest date of execution as indicated below.
Schedules:
Schedule
1: Consideration
payable by Purchasers
Schedule
2: Form
of
Declaration of the Company
Schedule
3: Y2006
December, Interim Account
Schedule
4: Financial
Information
|
·
|
Y2006
Final Audited Merger Balance Sheets and Final Merger Inventories
and
Comfort Letter
|
|
·
|
Y2006
Forecast Profit and Loss
|
|
·
|
Y2006
Forecast Cash Flow
|
|
·
|
Y2007
Preliminary Financial Plan
|
|
·
|
31
December 2006 General Ledger
|
IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as
set forth herein, on the day and year written below.
Name
(print): Xxxxx Xxxxx
Signature:
/s/Xxxxx Xxxxx
| Dated: |
February
9, 2007
|
Marivaux
Investments Limited:
Name
(print): Xxxxxx Xxxxxx
Signature:
/s/Xxxxxx Xxxxxx
| Dated: |
February
16, 2007
|
Fleminghouse
Investments Limited:
Name
(print): Gyula Gansperger and Xxxxxxxx Xxxxxx
Signature:
/s/ Gyula Gansperger and Xxxxxxxx Xxxxxx
| Dated: |
February
16, 2007
|
