EXHIBIT 10.20
Acquisition Agreement, dated as of June 15, 2000, by and among Xxxxxxx Xxxxx,
Xxxxxx Xxxxxx Xxxxx, Xxxxxxx Xxxxxxx Xxxxx, a civil partnership and the
Registrant.
Deed Roll No. 956/2000J
STUTTGART
done this 15th day of June 2000
(in words: fifteenth day of June two thousand)
Before me,
Notary Xx. Xxxx Xxxxx with offices at XxxxxxxxxxxxxXx 0X, 70174 Stuttgart, is
appearing today at XxxxxxxxxxxXx 0, 00000 Xxxxxxxxx, whence I was summoned:
1. Xx. Xxxxxxx Xxxxx, managing director, born on 11 September 1941, resident at
Xxxxxxxxx 0, 00000 Xxxxxxxxxxxx, who proved his identity by means of his
German passport.
Xx. Xxxxxxx Xxxxx declares that he is acting
a) in his own name,
b) as shareholder of the civil partnership under the German Civil Code (GbR)
consisting of Xxxxxxx Xxxxx, Xxxxxx Xxxxxx Xxxxx and Xxxxxxx Xxxxxxx Xxxxx
(hereinafter referred to as the "Civil Partnership").
2. Xx. Xxxxxx Xxxxxx Xxxxx, student, born on 26 June 1973, resident at Xxxxxxxxx
0, 00000 Xxxxxxxx, who proved his identity by means of his German passport.
Xx. Xxxxxx Xxxxxx Xxxxx declares that he is acting
a) in his own name,
b) as shareholder of the Civil Partnership.
3. Xx. Xxxxxxx Xxxxxxx Xxxxx, student, born on 4 July 1974, resident at
Xxxxxxx-xxx-Xxxxx-Xxx 0, 00000 Xxxxxxxxx, who proved his identity by means of
his German identity card.
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Xx. Xxxxxxx Xxxxxxx Xxxxx declares that he is acting
a) in his own name,
b) as shareholder of the Civil Partnership.
4. Xx. Xxxx Xxxxxx, businessman, born on 16 November 1946, who proved his
identity by means of his Israeli passport.
Xx. Xxxx Xxxxxx declares that he is acting not in his own name but as
President and CEO with power of sole representation of On Track Innovations
Ltd., a public company duly organized and existing under the laws of the
State of Israel (Reg. No.: 52-004268-2), whose ordinary shares are admitted
for trading in the Neuer Markt of the Frankfurt Stock Exchange (Frankfurter
Wertpapierborse) hereinafter referred to as "Neuer Markt"), having its
principal place of business at X.X.X. X.X., Xxxx Xxxx 00000, Xxxxxx
(hereinafter referred to as "OTI"). As proof of his power of sole
representation, Xx. Xxxxxx presents a legal opinion issued by the law offices
of Bach, Arad, Xxxxxx & Co. which was presented at the notarisation in the
original and will be submitted, in certified copy, to the protocol.
The persons appearing deny on question any prior involvement in the sense of
section 3 para. 1 sentence 1 no. 7 BeurkG (law pertaining to notarial
authentications).
The persons appearing hereby request this Notarial Deed to be executed in the
English language for the convenience of the party represented by the person
appearing at 4, and waive the presence of an interpreter. The Notary who himself
has a sufficient command of the English language verified that the persons
appearing also have a sufficient command of the English language.
The persons appearing hereby declare for notarisation:
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I. AGREEMENT
between
Xxxxxxx Xxxxx, Xxxxxx Xxxxxx Xxxxx, Xxxxxxx Xxxxxxx Xxxxx, the Civil Partnership
(the "Shareholders")
and
OTI
("OTI")
(the Shareholders and OTI are hereinafter collectively referred to as
the "Parties")
Whereas: The Shareholders own the entire ownership interest or are entitled by
way of call options granted by Xx. Xxxxxx Xxxxxxx to acquire the
remaining shareholding in (i) InterCard K, registered in the Commercial
Register of the local court Villingen-Schwenningen under No. HRB 603
and having its offices at Xxx xxx Xxxxx 0, 00000
Xxxxxxxxx-Xxxxxxxxxxxx, and (ii) InterCard S, registered in the
Commercial Register of the local court Villingen-Schwenningen under No.
HRB 532 and havings its offices at XxxxxxxxxxXx 0, 00000 Xxx Xxxxxxxx
(hereinafter referred to as the "Call Options"); and
Whereas: InterCard is engaged in the business of the development, manufacture,
marketing and sale of magnetic stripe cards, contact and contactless
smart cards and systems, particularly to customers in Europe; and
Whereas: OTI is a world leader in contactless smart cards and readers
technology, and develops, manufactures and markets certain products,
applications and solutions based on its proprietary technology; and
Whereas: InterCard K has a nominal capital of DM 1,100,000 which consists of the
following ownership interests (Geschafisanteile):
* held by Xx. Xxxxxxx Xxxxx: ownership interests in the nominal amounts
of DM 200,000, DM 200,000, DM 50,000, DM 50,000, DM 4,000, DM 6,000;
* held by Xxxxxx Xxxxxx Xxxxx: ownership interests in the nominal
amounts of DM 32,000, DM 8,000, DM 10,000, DM 24,000, DM 6,000;
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* held by Xxxxxxx Xxxxxxx Xxxxx: ownership interests in the nominal
amounts of DM 32,000, DM 8,000, DM 10,000, DM 24,000, DM 6,000;
* held by the Civil Partnership: ownership interests in the nominal
amounts of DM 100,000 and DM 170,000;
* held by Xxxxxx Xxxxxxx: ownership interests in the nominal amounts of
DM 94,000 and DM 66,000 which the Civil Partnership is entitled to
acquire by way of Call Options; and
Whereas: InterCard S has a nominal capital of DM 600,000 which consists of the
following ownership interests:
* held by Xx. Xxxxxxx Xxxxx: ownership interests in the nominal amounts
of DM 108,500, DM 16,500, DM 1,500, DM 3,500, DM 10,000, DM 2,500, DM
112,500;
* held by Xxxxxx Xxxxxx Xxxxx: ownership interests in the nominal
amounts of DM 20,000, DM 1,500, DM 13,500, DM 5,000;
* held by Xxxxxxx Xxxxxxx Xxxxx: ownership interests in the nominal
amounts of DM 20,000, DM 1,500, DM 13,500, DM 5,000;
* held by the Civil Partnership: ownership interests in the nominal
amounts of DM 85,000 and DM 100,000;
* held by Xxxxxx Xxxxxxx: ownership interests in the nominal amount of
DM 16,500 and DM 63,500 which the Civil Partnership is entitled to
acquire by way of Call Options,
(the ownership interests in InterCard S and InterCard K hereinafter the
"Shareholding"), and;
Whereas: The Shareholders intend to sell and transfer to OTI a 51% (fifty one
percent) interest in Intercard and OTI intends to accept such offer
subject to the terms and conditions set forth in this Agreement
following which OTI shall have full control of InterCard as a majority
shareholder in accordance with the German Act on Limited Liability
Companies (GmbH-Gesetz) and the Articles of Association of InterCard.
NOW THEREFORE, the Parties agree as follows:
1. Definitions
In this Agreement, unless the context otherwise requires, the following terms
shall have the following meanings:
Affiliates means all enterprises which are related enterprises (verbundene
Unternehmen) within the meaning of section 271 paragraph (2) HGB;
Bank means X.X. Xxxxxxx & Co KGaA or any other bank on which the Parties
agree upon;
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Companies means InterCard K and InterCard S;
Contamination means any material pollution or contamination of the ground,
ground-water, ground-air or surface water or buildings caused by Hazardous
Substances;
Fiscal Charges means all fiscal charges (Abgaben), including taxes according
to section 3 paragraph (1) sentences 1 and 2 of the German Tax Act
(Abgabenordnung (the "AO")), special levies (Sonderabgaben); public charges
and fees (Beitrage und Gebuhren) of any kind (including social security
contributions), charges by associations (Verbandslasten) (including payments
due to the German Mutual Benefit Association for Pension Security
(Pensionsicherungsverein)) as well as incidental tax payments (steuerliche
Nebenleistungen) pursuant to section 3 paragraph (3) of the AO as well as all
other comparable obligations in connection with other fiscal charges, in each
case both in Germany and abroad and irrespective of:
(a) whether the Shareholders or the Companies is itself the debtor in respect
of the relevant Fiscal Charge;
(b) whether the Shareholders or the relevant Company (or both) are merely
liable for ensuring the fulfillment of all obligations in connection with the
Fiscal Charge;
(c) how the Fiscal Charge is imposed;
(d) whether or not a repayment of any amount paid in respect of the Fiscal
Charge can be claimed from any third party (including the relevant tax
authorities).
Hazardous Substances means all solid or fluid substances as well as gases
which are radioactive, toxic or harmful or which may otherwise have a
material adverse effect on human beings or objects;
InterCard means InterCard K and InterCard S;
InterCard K means the German limited liability company (GmbH) with the
company name InterCard GmbH Kartensysteme registered in the Commercial
Register of the local court Villingen-Schwenningen under No. HRB 603 having
its offices at Xxx xxx Xxxxx 0, 00000 Xxxxxxxxx-Xxxxxxxxxxxx;
InterCard S means the German limited liability company (GmbH) with the
company name InterCard GmbH Systemelectronic registered in the Commercial
Register of the local court Villingen-Schwenningen under No. HRB 532 having
its offices at XxxxxxxxxxXx 0, 00000 Xxx Xxxxxxxx.
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2. Division of Shareholding in InterCard K and InterCard S
InterCard K
2.1 The ownership interest in the nominal amount of DM 200,000, held by Xxxxxxx
Xxxxx, acquired from Xxxxxxxx Xxxxxx by Sale and Purchase Agreement dated
December 18, 1997, is hereby divided into an ownership interest in a nominal
amount of DM 95,000 and into an ownership interest in a nominal amount of DM
105,000.
2.2 InterCard K approves the aforegoing division of the ownership interests as
detailed in Exhibit 2.2. Copies of the divisions are attached to this deed.
InterCard S
2.3 The ownership interest in the nominal amount of DM 112,500, held by Xxxxxxx
Xxxxx, acquired from Xxxxxxxx Xxxxxx by Sale and Purchase Agreement dated
December 18, 1997, is hereby divided into an ownership interest in the
nominal amount of DM 40,000 and into an ownership interest in the nominal
amount of DM 72,500.
2.4 The ownership interest in the nominal amount of DM 13,500, held by Xxxxxx
Xxxxxx Xxxxx, acquired from Xxx Xxxxxx by Sale and Purchase Agreement dated
December 18, 1997, is hereby divided into an ownership interest in the
nominal amount of DM 8,000 and into an ownership interest in the nominal
amount of DM 5,500.
2.5 The ownership interest in the nominal amount of DM 112,500, held by Xxxxxxx
Xxxxxxx Xxxxx, acquired from Xxx-Xxxxxx Xxxxxx by Sale and Purchase
Agreement dated December 18, 1997, is hereby divided into an ownership
interest in the nominal amount of DM 8,000 and into an ownership interest in
the nominal amount of DM 5,500.
2.6 InterCard S approves the aforegoing division of the ownership interests as
detailed in Exhibit 2.2.
3. Sale and Transfer
3.1 With regard to:
3.1.1 InterCard K:
Xxxxxxx Xxxxx hereby sells and transfers to OTI the following ownership
interests:
* one ownership interest in the nominal amount of DM 95,000 as divided in
Section 2.1;
* one ownership interest in the nominal amount of DM 200,000 which came into
existence as a result of a division (dated December 20, 1996) of an
ownership interest in an amount of originally DM 264,000;
Xxxxxx Xxxxxx Xxxxx hereby sells and transfers to OTI the following
ownership interests:
* one ownership interest in the nominal amount of DM 32,000 which was
acquired from Xxxxxxx Xxxxx by Agreement dated December 20, 1996;
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* one ownership interest in the nominal amount of DM 10,000 which was
acquired from Xxxxxxx Xxxxxx by Sale and Purchase Agreement dated December
18, 1997;
* one ownership interest in the nominal amount of DM 6,000 which was
acquired from Xxx Xxxxxx by Sale and Purchase Agreement dated December 18,
1997.
Xxxxxxx Xxxxxxx Xxxxx hereby sells and transfers to OTI the following
ownership interests:
* one ownership interest in the nominal amount of DM 32,000 which was
acquired from Xxxxxxx Xxxxx by Agreement dated December 20, 1996;
* one ownership interest in the nominal amount of DM 10,000 which was
acquired from Xxxxxxx Xxxxxx by Sale and Purchase Agreement dated December
18, 1997;
* one ownership interest in the nominal amount of DM 6,000 which was
acquired from Xxx-Xxxxxx Xxxxxx by Sale and Purchase Agreement dated
December 18, 1997;
* the Civil Partnership hereby sells and transfers to OTI one ownership
interest in the nominal amount of DM 170,000 which was acquired from
Xxxxxx Xxxxxxx by Sale and Purchase Agreement dated December 18, 1997.
OTI accepts all of the aforementioned sales and transfers (the sold and
transferred ownership interests in InterCard K collectively hereinafter
referred to as "InterCard K Sold Interest").
3.1.2 InterCard S:
Xxxxxxx Xxxxx hereby sells and transfers to OTI the following ownership
interests:
* one ownership interest in the nominal amount of DM 40,000 as divided in
Section 2.3 above;
* one ownership interest in the nominal amount of DM 108,500 which came into
existence as a result of a division (dated December 20, 1996) of an
ownership interest in an amount of originally DM 148,500;
* one ownership interest in the nominal amount of DM 16,500 which was
acquired from InterCard K by Sale and Purchase Agreement dated January 2,
1996.
Xxxxxx Xxxxxx Xxxxx hereby sells and transfers to OTI the following
ownership interests:
* one ownership interest in the nominal amount of DM 20,000 which was
acquired from Xxxxxxx Xxxxx by Agreement dated December 20, 1996;
* one ownership interest in the nominal amount of DM 8,000 as divided in
Section 2.4 above.
Xxxxxxx Xxxxxxx Xxxxx hereby sells and transfers to OTI the following
ownership interests:
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* one ownership interest in the nominal amount of DM 20,000 which was
acquired from Xxxxxxx Xxxxx by Agreement dated December 20, 1996;
* one ownership interest in the nominal amount of DM 8,000 as divided in
Section 2.5 above.
The Civil Partnership hereby sells and transfers to OTI one ownership
interest in the nominal amount of DM 85,000 which was acquired from Xxxxxx
Xxxxxxx by Sale and Purchase Agreement dated December 18, 1997.
OTI accepts all of the aforementioned sales and transfers (the sold and
transferred ownership interests in InterCard S hereinafter referred to as
"InterCard S Sold Interest" and InterCard K Sold Interest and InterCard S
Sold Interest hereinafter collectively referred to as the "Sold Interest").
3.2 The sale and transfer of the Sold Interest shall include all rights
connected therewith, in particular rights to receive profits.
3.3 In the event that OTI fails to effect the Registration and to transfer the
OTI Trust Shares to the Escrow Account (as defined respectively in Section
6.1 and Section 6.2 below) without any right of recall of OTI whatsoever
within 90 days as of the Closing Date (the Closing Date being the first day
in this calculation), the Shareholders will have a right to terminate this
Agreement forthwith by written notice to the undersigned notary public, with
a copy to OTI, and effective from the date of receipt by the notary (the
"Termination Date"). For purposes of this Section proof of the transfer of
the OTI Trust Shares to the Escrow Account shall be a confirmation by the
Bank that the Allotted Shares (as defined in Section 5.7 below) have been
irrevocably deposited in the Escrow Account (as defined in Section 6.2
below) without any right of recall of OTI whatsoever. The provisions of this
Section shall not prejudice the entitlement of OTI pursuant to Section 6.4
to the remainder of the OTI Trust Shares once all transfers of the Allotted
Shares from the Escrow Account to the Shareholders have been carried out in
accordance with this Agreement.
3.4 In the event that the Shareholders exercise their right to terminate this
Agreement pursuant to Section 3.3 then the Shareholders will have the right
that the Sold Interest shall be retransferred (ruckabgetreten) to the
Shareholders without the need for any further action on the part of OTI and
conversely any OTI Shares, deposited with the Bank, shall be in the sole
ownership and possession of OTI and the Shareholders shall have no rights or
claims with respect thereto. The Parties therefore agree that both the Sold
Interest and such OTI Shares are retransferred (ruckabgetreten) with effect
from the Termination Date.
4. Waiver Regarding Pre-emption Rights
Xx. Xxxxxxx has waived its pre-emption right with regard to the Sold Interest in
two declarations both dated June 3, 2000, certified copies of which are attached
as Exhibit 4-A and 4-B.
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5. Purchase Price and Shareholder's Price Protection
5.1 As purchase price
5.1.1 for InterCard K Sold Interest OTI shall pay a total amount of DM
3,750,000,00 (hereinafter referred to as the "InterCard K Basic
Price"), and
5.1.2 for InterCard S Sold Interest OTI shall pay a total amount of DM
1,250,000,00 (hereinafter referred to as the "InterCard S Basic
Price", the InterCard S Basic Price and the InterCard K Basic Price
collectively hereinafter referred to as "InterCard Basic Price" or
"Shareholders Amount"),
i.e. a total of DM 5,000,000 (five million Deutsche Xxxx) for the Sold
Interest. The whole Shareholders Amount shall be paid in ordinary shares of
NIS 0.01 n.v. each of OTI (hereinafter referred to as the "OTI Shares"),
subject to the terms and conditions hereinafter set forth in this Agreement.
Xxxxxxx Xxxxx is irrevocably authorized by the other shareholders (the
"Other Shareholders") to receive the entire Shareholders Amount whereas the
Other Shareholders are not entitled to claim the Shareholders Amount.
Payment to Xxxxxxx Xxxxx or any third party designated by Xxxxxxx Xxxxx is
deemed to be payment to all Shareholders. The distribution of the
Shareholders Amount among the Shareholders pursuant to their respective
portions in the Shareholding in the Companies shall be the internal
responsibility of the Shareholders alone.
5.2 The Shareholders Amount shall be paid in 5 (five) equal instalments (the
"Instalments"), each totalling DM 1,000,000 (one million Deutsche Xxxx).
These are payable in OTI Shares subject to the provisions of Clauses 5.3 and
5.4 below, as follows:
5.2.1 The first Instalment (the "First Instalment") shall be paid on July
15, 2000 (the "First Instalment Date"),
5.2.2 The second Instalment (the "Second Instalment") shall be paid on
August 15, 2000 (the "Second Instalment Date"),
5.2.3 The third Instalment (the "Third Instalment") shall be paid on
September 15, 2000 (the "Third Instalment Date"),
5.2.4 The fourth Instalment (the "Fourth Instalment") shall be paid on
October 15, 2000 (the "Fourth Instalment Date"),
5.2.5 The fifth Instalment (the "Fifth Instalment") shall be paid on
November 15, 2000 (the "Fifth Instalment Date");
(and the First, Second, Third and Fourth Instalments shall be referred to
collectively as the "First Instalments"; and the First, Second, Third,
Fourth and Fifth Instalment Dates shall be referred to collectively as the
"Instalment Dates").
5.3 It is agreed that the number of OTI Shares transferred to the Shareholders
as payment of the Shareholders Amount for each of the Instalments shall be
determined in accordance with the average closing price of an OTI Share in
the Neuer Markt (Frankfurt am Main) in the 3 (three) trading days prior to
the relevant Instalment Date. In the event that these instalments as
calculated above do not result in a whole number of OTI Shares, then these
shall be rounded up accordingly.
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5.4 Prior to the Fifth Instalment the Bank shall make a calculation of the
aggregate Deutsche Xxxx value of each of the First Instalments according to
20 (twenty) trading days average closing price (durchschnittlicher
SchluBkurs) following the relevant Instalment Date of each of them (the
"Aggregate Value"). The Deutsche Xxxx amount of the Fifth Instalment shall
be calculated as the difference between the Shareholders Amount (i.e. DM 5
million) less the Aggregate Value, and shall be paid in OTI Shares in
accordance with the provisions of Section 5.3 above.
5.5 On December 15, 2001 (the "Sixth Instalment Date"), the Bank shall make a
calculation to the effect that the amount of the Aggregate Value and the
value of the Fifth Instalment according to 20 trading days average market
price following the Fifth Instalment Date shall be added together (the
"Final Value"). If the Final Value amounts to less than DM 5 million, the
amount of difference shall be paid by OTI to Xxxxxxx Xxxxx in OTI Shares in
accordance with the provisions of Section 5.3 above. If the Final Value
amounts to more than DM 5 million, the amount of difference shall be paid by
Xxxxxxx Xxxxx to OTI in cash within 20 business days into an account to be
specified by OTI.
5.6 If the OTI Trust Shares are not transferred to the Bank in accordance with
Section 6.2 on or before the First Instalment Date, the First Instalment
Date is moved to the business day following the date of transfer of the OTI
Trust Shares to the Bank; the other Instalment Dates and Sixth Instalment
Date are moved correspondingly. In the event that any of the Instalments has
not been paid until the 15th of the calendar month following the month in
which the respective Instalment Date was due then such instalment shall bear
interest at a rate of 6% p.a. from the first of the calendar month following
the respective Instalment Date until payment in accordance with this
Agreement is effected.
5.7 The entirety of the OTI Shares to be transferred to the Shareholders in
compliance with this Agreement (hereinafter the "Allotted Shares")
constitute the full, final and absolute consideration for the Sold Interest.
6. Provisions to secure the completion of the transactions
6.1 Following the signing of this Agreement OTI shall, at its own expenses: (i)
apply for admission to trading (Zulassung zum Borsenhandel) of OTI Shares at
an aggregate value of DM 5,500,000 (five million and five hundred thousand
Deutsche Xxxx) at Deutsche Borse AG in the Neuer Markt according to the
average price of an OTI Share in the Neuer Markt in the trading days of May
29 to 31, 2000 (the "OTI Trust Shares"), (ii) apply for quotation of the OTI
Trust Shares at Deutsche Borse AG (Antrag auf Notierungsaufnahme) and (iii)
deposit a global certificate with regard to the OTI Trust Shares at
Clearstream Banking AG ("Clearstream", the procedure (i) - (iii) hereinafter
referred to as "Registration").
6.2 Once Registration is effected, OTI shall instruct Clearstream to transfer
the OTI Trust Shares to the Bank, which shall hold the OTI Trust Shares in a
special escrow account in the name of OTI (the "Escrow Account"). As long as
any OTI Trust Shares are held by the Bank they shall be "frozen" (as
understood in accordance with the Israeli Companies Law), i.e. the OTI Trust
Shares shall not have any of the rights attached to an OTI Share
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under OTI's Articles of Association, in particular the right to vote and the
right to receive profits. For the avoidance of doubt it is understood that
any OTI Trust Shares to be transferred from the Bank to Xxxxxxx Xxxxx shall
not be frozen.
6.3 Subject to the above provisions, at each of the Instalment Dates, the Bank
shall transfer to Xxxxxxx Xxxxx the amount of the OTI Trust Shares which is
required to be transferred in accordance with the above provisions. If the
Bank does not have enough OTI Shares to transfer to the Shareholders
pursuant to the provisions hereof then OTI shall either allot to the
Shareholders the additional shares required or pay the Shareholders the
difference in cash.
6.4 The remainder, if any, of the OTI Trust Shares once all transfers of the
Allotted Shares from the Escrow Account to the Shareholders have been
carried out in accordance with this Agreement, shall be held by the Bank in
trust for OTI, and the Bank shall act with respect to such remainder in
accordance with OTI's instructions.
7. Authorization/Indemnity
7.1 In order to ensure that the Sold Interest and the rights and claims
connected therewith are transferred free of encumbrances, as required by
this Agreement, the Shareholders hereby waive all rights and claims and give
all consents necessary to ensure that OTI obtains unencumbered sole
ownership of the Sold Interest including the rights and claims referred to
in Clause 3.2.
7.2 The Shareholders shall indemnify OTI against all claims, liabilities and
damage arising as a result of the fact that the contributions (Einlagen)
owed in relation to the Sold Interest may not have been fully paid (or may
have been repaid) or may be deemed vis-a-vis creditors of the Companies not
to have been paid. The Shareholders are obliged to pay up the contributions
(Stammeinlagen) of DM 75,000 to each of the Companies arising from the share
capital increases of the Companies, each dated December 18, 1998, prior to
December 31, 2000.
7.3 The Shareholders are obliged vis-a-vis OTI to pay an amount of DM 142,000 to
InterCard K as compensation for the fact that InterCard K distributed
dividends although the 20% equity ratio as set forth in the financial
covenant agreement between the Shareholders and InterCard K and Deutsche
Xxxx AG has not been met. The amount is due at July 20, 2000 or five days
after the date on which the First Instalment has been paid, whichever day is
later (the "Due Date"). The Shareholders shall be liable to InterCard K for
any damage as a result of non-payment by the Shareholders by the Due Date.
8. Closing/Immediate Post Closing
Closing
8.1 The Closing shall take place on June 15, 2000 (the "Closing Date") at a
mutually acceptable place (the "Closing").
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Agreements
8.2 At Closing the Parties shall
(a) enter into the Share Pledge Agreement as attached in Annex 8.2-A;
(b) agree to enter into a Escrow Agreement basically in the form as attached
in Annex 8.2-B;
(c) ensure that service or employment agreements with Xx. Xxxxxxx Xxxxx, Xx.
Xxxxxx Xxxxxx, Xx. Xxxxx Xxxxxxxxxxxx and Xx. Xxxxxxx Xxxxxxxx are
entered into; and
(d) execute a power of attorney in favour of the lawyers of the Frankfurt
office of White & Case irrevocably enabling such lawyers to exercise the
Call Options on behalf of the Shareholders;
(e) execute a Power of Attorney in favour of Xxxx Xxxxxx as attached in
Annex 8.2-E.
Immediately Post Closing
8.3 Immediately post Closing
(a) the Shareholders and OTI shall procure for a call of a general meeting
of each of the Companies and
(aa) shall pass a resolution regarding the amendment of the Articles of
Association of the Companies to the effect that an advisory board
(Beirat) is established in each of the Companies whose members can be
appointed by the shareholders' simple majority and Messrs. Xxxx Xxxxxx,
Xxxx Xxxx, Xxxxxx Xxxxxx and the present two managing directors
(Geschaftsfuhrer) of each of the Companies are appointed as members of
the advisory board; and
(bb) shall pass a resolution regarding the amendment of the Articles of
Association of the Companies resolving that ownership interests in the
Companies can only be transferred with the approval of two thirds of the
shareholders' votes cast.
(cc) enter into a shareholders and joint venture agreement pursuant to
which OTI shall receive industrial lead over InterCard;
(b) the Shareholders shall deliver certified copies of the Call Options;
(c) Xx. Xxxxx shall enter into an agreement with a bank regarding Sections
15.1 and 15.2.
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9. Tax
Shareholders' Risk
9.1 The parties agree that the Shareholders shall bear the full risk that the
relevant authorities conclude that any of the Companies and/or the
Shareholders (in relation to any of the Companies) have not complied fully,
correctly and on time with any obligations regarding Fiscal Charges for
periods up to and including the Closing Date.
Indemnity
9.2 The Shareholders shall be obliged to pay to the fiscal authorities a sum in
the amount of all liabilities of the Companies and Subsidiaries in
connection with Fiscal Charges (each a Fiscal Charge Liability) for which
the Shareholders bear the risk according to Section 9.1 and to indemnify and
hold harmless OTI and the Companies insofar against all Fiscal Charge
Liabilities. The obligation of the Shareholders shall not apply if and to
the extent that the Fiscal Charge Liability has been taken into account by
way of a special fiscal charge provision (Ruckstellung) in the accounts of
the relevant Companies or Subsidiaries.
Tax Savings
9.3 Tax savings realised by InterCard as a result of tax audits for the time
period up to December 31, 1999, will be set off against Fiscal Charge
Liabilities (for which the Shareholders bear the risk according to Section
9.1) to be paid by the Companies or the Subsidiaries for periods up to
December 31, 1999; the same applies if tax savings or additional tax
payments are owed for different fiscal years for the time up to December 31,
1999. Any tax savings remaining in accordance with this Section shall not be
paid to the Shareholders.
Audits
9.4 The Shareholders are entitled to participate in tax audits and other
proceedings under the General Tax Code (Abgabenordnung), the Tax Court Code
of Procedure (Finanzgerichtsordnung), or foreign laws which are initiated or
continued after the Closing Date and relate to tax periods prior to the
Closing Date.
Notice
9.5 To the extent the Shareholders are entitled to participate in proceedings
under Article 9.4, the Shareholders shall be given notice within a
reasonable period of time in order to enable them to take part in such
proceedings by sending one or several professionals, who under professional
codes of conduct are under a duty not to disclose confidential information.
The Shareholders' representatives are entitled to participate in preliminary
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and final meetings. At the Shareholders' reasonable request, OTI will cause
the Shareholders to be provided with all information necessary to protect
the Shareholders' interests. Upon the Shareholders' reasonable request, OTI
will cause the Companies or the Subsidiaries to appeal tax assessments or
rulings by the fiscal authorities. The costs of such appeals, including any
required advance fees, or the costs of extra judicial proceedings which OTI
conducts subject to the instructions of the Shareholders shall be borne by
the Shareholders.
Access to Information
9.6 OTI will cause the Companies and the Subsidiaries to grant to the
Shareholders reasonable access to all records of the Companies and the
Subsidiaries and provide the Shareholders with all information, provided
that such records and information are required by the Shareholders for
reasonable purposes related to Fiscal Charges. The Shareholders shall have
this right of access to information from the Closing Date for a period of 10
years provided that OTI is still in control of the Companies or the
Subsidiaries at the time of the request.
Tax Guarantee
9.7 The Shareholders warrant to OTI and guarantee to OTI by way of an
independent contractual obligation (in this Agreement also referred to as
the "Tax Guarantee") that each of the statements contained in sections 9.7
(1) to (3) below (each a "Tax Statement" and together the "Tax Statements")
is correct as of the Closing Date:
(1) The Companies have fulfilled all declaration and information obligations
in connection with any Fiscal Charges, in particular all tax returns
(Steuererklarungen) as well as self-assessments (Steueranmeldungen) have
been filed within the periods required under the respective law or
determined by the respective authorities. All Fiscal Charges have been
paid on time. All information incorporated in the tax returns and tax
balance sheets for the fiscal years until December 31, 1999 comply with
the actual facts, and the contents are complete and correct, in
particular all tax relevant facts and circumstances have been disclosed
vis-a-vis the relevant authorities as required by law.
(2) Hidden profit distributions (verdeckte Gewinnausschuttungen) did not
take place at the level of the Companies and no transactions or
activities (active or passive) have been effected which will be treated
as a hidden profit distribution by the tax authorities.
(3) The place of actual management, the legal seat as well as the
administrative centre of each of the Companies are in the same country.
The Companies do not maintain a permament establishment for tax purposes
(steuerliche Betriebsstatte), a taxable presence or a branch office
(Zweigniederlassung) in a country other than the one in which the legal
seat of the Companies is located.
Time-Bar
9.8 Claims of OTI under this Clause 9 shall become time-barred on the expiry
of December 31, 2002.
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10. Guarantees and Warranties
Guarantees
10.1 The Shareholders guarantee by way of an independent contractual
obligation (in this Agreement also referred to as the "Guarantee") the
following (as provided in sections 10.2 to 10.20 (each a "Statement" and
together the "Statements") as of the Closing Date.
10.2 Organization
10.2.1 InterCard K and InterCard S have been duly formed and are validly
existing as German limited liability companies (GmbHs), registered
in the commercial register of the local court Villingen
Schwenningen.
10.2.2 The ownership interests (Geschaftsanteile) in InterCard K and
InterCard S as detailed in Section 3.1 are with effect as of
division of the ownership interests correctly described. It shall
not be considered a breach of this Section if the division of
ownership interests is in fact incorrect provided that the sums of
the ownership interests transferred to OTI according to Section 3.1
of each of the Companies remain the same. The ownership interests in
InterCard K and InterCard S are free of any rights of third parties
and encumbrances of any nature whatsoever, especially any options,
rights of first refusal or similar rights, other than those which
are provided for in the Articles of Associations.
10.2.3 The Articles of Association of the Companies have been lastly
amended on 18 December 1997. No further amendments have been made
since 18 December 1997. The Articles of Association of UNICARD NORGE
AS have not been amended since 24 June 1999. The Articles of
Association of InterCard International Inc. have not been amended
since 8 December 1995.
10.2.4 With the exception of the contributions to be paid by the
Shareholders according to Section 7.2, the capital contributions
(Stammeinlagen) of InterCard have been fully and validly paid up,
and none of the assets required to maintain InterCards' nominal
share capital have been repaid to shareholders within the meaning of
section 30 of the German Act on Limited Liability Companies.
10.2.5 There is no person or entity (including InterCard's Shareholders)
holding any right whatsoever to receive shares, or other securities
or rights, in InterCard or in the Subsidiaries, whether by virtue of
options or by virtue of the holding of convertible securities or by
virtue of any other rights whatsoever with the exception of option
agreements between the Shareholders and Xx. Xxxxxxx.
10.2.6 InterCard owns two wholly owned subsidiaries: UNICARD NORGE AS, an
Aksjeelskap incorporated under the laws of Norway and INTERCARD
INTERNATIONAL INC., a corporation incorporated under the laws of
Florida (collectively the "Subsidiaries").
10.3 Transfer of the Sold Interest
Following Closing Date, OTI shall hold 51% of the ownership interest of
InterCard and shall have full control as a majority shareholder in
accordance with the German Act on Limited Liability Companies (GmbH-Gesetz)
and the Articles of Association of InterCard.
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10.4 Intellectual Property Rights
Annex 10.4 hereto contains a complete and correct list of all patents,
utility-patents (Gebrauchsmuster), design patents, trademarks and
respective applications (the "Intellectual Property Rights") of the
Companies and the Subsidiaries (the "InterCard Intellectual Property
Rights"). Unless shown otherwise in Annex 10.4 hereto, the InterCard
Intellectual Property Rights are free from all rights of third parties and
are not subject to cancellation or total or partial nullification nor to
any material rights of prior users. Unless shown otherwise in Annex 10.4
hereto, InterCard and the Subsidiaries are also not restricted in their
sole and exclusive use of the InterCard Intellectual Property Rights. To
the best of the Shareholders' knowledge, none of the InterCard Intellectual
Property Rights are infringed by third parties.
To the best knowledge of the Shareholders, neither the Companies nor the
Subsidiaries materially violate any Intellectual Property Rights of third
parties by manufacturing and/or marketing their present products or by any
other act within their business.
Unless shown otherwise in Annex 10.4, InterCard and the Subsidiaries have
not granted any license to any third party with respect to any of the
InterCard Intellectual Property Rights.
10.5 Title to Assets
10.5.1 Annex 10.5.1 contains separate lists (Anlagespiegel and
Umlaufvermogens-ubersicht) as of 31 December 1999 of all fixed and
current assets owned by or used by InterCard, for the purpose of, or
in connection with their business (the "InterCard Assets").
10.5.2 Unless shown otherwise in Annex 10.5.2, the InterCard Assets are,
subject to wear and tear, in satisfactory working order commensurate
with age, have been adequately maintained and are suitable for the
purposes used.
10.5.3 Unless shown otherwise in Annex 10.5.3, InterCard and the
Subsidiaries have full, unrestricted and unencumbered title (free of
third party rights whatsoever) to, and possession of, all InterCard
Assets which serve or are destined to serve their business except
for those InterCard Assets which are leased from third party persons
or which are subject to usual reservations of title
(Eigentumsvorbehalte, Sicherungseigentum).
10.6 Real Property
10.6.1 Annex 10.6.1 contains an extract of the Land Register of all real
property owned by InterCard (the "Real Property"). There are no
third party rights on the Real Property other than those shown in
the extract.
10.6.2 There are no leases of Real Property by InterCard with the exception
of the lease agreement between InterCard K and Ralf GropengieBer
dated November 30, 1997/December 8, 1997, and a lease agreement
between InterCard K and
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InterCard S in relation to the Real Property. InterCard and the
Subsidiaries are not in default or in breach of any material
provision of their respective lease agreements with respect to real
property.
10.7 Loans
Annex 10.7 hereto contains correct details of all the loans (whether short
or long term) and credit facilities (Kreditfazilitaten) (other than any
commercial practices of InterCard whereby extensions of time are granted
for performance of a party's obligations (Zahlungsziele)) with third
parties with an outstanding amount of more than DM 10,000, which InterCard
or the Subsidiaries received, specifying in respect of each such loan or
credit facility, the lender's name, the principal amount, interest rate,
period and securities granted. If the aggregate amount of the loans and
credit lines with third parties with an outstanding amount of less than DM
10,000 exceeds a total amount of DM 50,000 all loans and credit facilities
lines are listed in Annex 10.7.
10.8 Guarantees
10.8.1 Annex 10.8.1 contains a list of all outstanding guarantees of
InterCard and the Subsidiaries in favour of each other and third
parties and with a potential liability in excess of DM 10,000 or
with a potential aggregate liability in excess of DM 50,000.
10.8.2 Unless otherwise stated in Annex 10.8.2, no guarantees with a
potential liability in excess of DM 10,000 or with a potential
aggregate liability in excess of DM 50,000 were given by third
parties (including by the Shareholders) to secure InterCard's and
the Subsidiaries' commitments to other(s).
10.9 Contracts and Commitments
10.9.1 Annex 10.9.1 hereto contains a complete list of all of InterCard's
and the Subsidiaries' contracts relating to an obligation or benefit
in excess of DM 100,000 at one time or per year (the "Material
Contracts").
10.9.2 Unless otherwise disclosed in Annex 10.9.2 hereto, the Material
Contracts are in full force and effect, InterCard and the
Subsidiaries fulfilled all of their material obligations under the
Material Contracts which are due up to the Closing Date hereof, and
to the best of the knowledge of the Shareholders, none of the other
parties to the Material Contracts has any ground to cancel or
rescind the Material Contract.
10.10 Customers
All customers of InterCard who have purchased goods representing more than
5% of the Annual Turnover for the years 1998 and 1999 or who have
purchased in the first quarter of the year 2000 goods representing more
than 5% of the turnover of the first quarter of the year 2000 are listed
in Annex 10.10.
10.11 Warranty for Products
Except for a contract with Broward Public Library in the USA granting a
five year warranty, InterCard and the Subsidiaries have not offered to any
of their customers warranties for a period of more than thirty-six months
which have not yet expired.
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10.12 Litigation
Except for the disputes set forth in Annex 10.12 hereto, InterCard is not,
as of the Closing Date, a party to, or threatened by, any litigation,
administrative proceedings or investigations with an amount in dispute
(Streitwert) payable by InterCard likely to be more than DM 20,000 (in
words Deutsche Xxxx twenty thousand) or with an aggregate amount in
dispute payable by InterCard likely to be more than DM 50,000. Except for
a contract with Broward Public Library in the USA granting a five year
warranty, InterCard is not subject to any judgement, decree or settlement
in any legal or administrative proceedings which materially restrict or
impair it in certain business measures, in the acquisition or disposal of
assets, in competition or in the operation of its business.
10.13 Compliance with Laws
10.13.1 InterCard and the Subsidiaries have complied in all material
respects with all laws currently in force and which relate in any
way to the operation of their businesses.
10.13.2 InterCard and the Subsidiaries carry on the business described in
the preamble to this Agreement, and have all licenses and
approvals legally required to allow them to do their business as
and where currently conducted.
10.14 Financial Statements and Conduct of the InterCard's Business
10.14.1 Annex 10.14.1 contains InterCard's audited financial statements
for the financial year ended December 31, 1998 (the "1998
Financial Statements", for the financial year ended December 31,
1999 (the "1999 Financial Statements") and InterCard's figures for
the first quarter 2000 (Quartalszahlen) (the "First Quarter 2000
Figures"). The 1998 and the 1999 Financial Statements were
prepared on the basis of proper bookkeeping, in compliance with
German GAAP in accordance with paragraph 264 et seq. of the German
Commercial Code (HGB) and in accordance with the principle of
formal and material balance sheet continuity (formelle and
materielle Bilanzkontinuitat). The First Quarter 2000 Figures
fairly reflect the respective business situation of InterCard.
10.14.2 InterCard and the Subsidiaries do not have any material
liabilities or obligations which might materially adversely affect
their businesses, except as set forth in this Agreement and in the
1998 Financial Statements and the 1999 Financial Statements.
10.14.3 Between December 31, 1999 and the Closing Date InterCard and the
Subsidiaries have conducted their business only in the ordinary
course of business and did not take any action to materially
change their business or financial situation.
10.15 Employees
Annex 10.15 - A contains a complete and accurate list of all employees of
InterCard as at the Closing Date including information as to age, salary,
date of employment, job title. Unless specified in Annex 10.15 - B,
InterCard has no pension obligations.
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10.16 Interested Parties; Shareholders
With the exception of the service agreement, a group accident insurance, a
life insurance contract and a pension entitlement between Xxxxxxx Xxxxx
and InterCard and the Agreements already listed in this Agreement, there
are no agreements in force between the Shareholders on the one side and
InterCard or its Subsidiaries on the other.
10.17 Indebtedness
InterCard and the Subsidiaries are not indebted to any third party in
amounts which were not expressly mentioned in this Agreement or any of its
Annexes or have been occurred in the ordinary course of business, or
otherwise listed in Annex 10.17 hereto.
10.18 Insurance
10.18.1 InterCard and the Subsidiaries carries insurance against material
risks which are normally covered in this type of business,
including a business interruption insurance. The insurance
contracts are in full force and effect and all premiums due until
the Closing Date have been paid. Annex 10.18.1 hereto details the
true and complete list of all insurance policies for the benefit
of InterCard.
10.18.2 InterCard and the Subsidiaries have not done nor neglected to do
anything which has rendered any policies of insurance taken out by
them void. InterCard and the Subsidiaries have not violated any
material conditions attached to such policies.
10.19 Environmental. The Real Property is free of material Hazardous Substances
which might result in an adverse effect on the current use of the Real
Property or human beings or in obligations or liabilities according to the
Federal Soil Protection Act (Bundesboden-schutzgesetz). No material
Hazardous Substances are released therefrom under violation of any law,
regulation or public decree by any public authority. InterCard is neither
subject to, nor aware of any circumstances which might result in, material
liabilities resulting from emissions, Contamination, or the transport,
storage, treatment or deposit of Hazardous Substances.
10.20 Full Disclosure. The information and statements furnished to OTI and its
advisors do not contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements made therein not
misleading. The Shareholders are not aware of any material facts or
circumstances which were not disclosed by the Shareholders to OTI and its
advisors and which, had they been so disclosed, would have prevented OTI
from entering into this Agreement.
11. Breach of Guarantee and Tax Guarantee
Breach of Guarantee
11.1 If and to the extent the Shareholders breach the Guarantees (pursuant to
Section 10) or the Tax Guarantee (pursuant to Section 9.7), the
Shareholders shall put InterCard in the same position they would have been
in had the Guarantees or the Tax-Guarantees been true. OTI is entitled to
compensation in cash as a reduction of the Purchase Price only if (i) OTI
has previously set the Shareholders a reasonable time limit of thirty (30)
days minimum
19
("Cure Period") for the restoration to a state in compliance with the
provisions of this agreement ("Curing the Defect") and the Shareholders
have not cured the defect within the Cure Period or (ii) if Curing the
Defect should prove to be impossible.
Knowledge
11.2 To the extent that any references are made in this Agreement to the
knowledge of the Shareholders, the Shareholders shall be deemed to have the
knowledge of the Managing Directors and of the Prokurist of the Companies
and the Subsidiaries and such knowledge they and the aforementioned persons
would have if they had exercised rights of information and inspection.
11.3 The Shareholders shall not be liable for a breach of a Guarantee or Tax
Guarantee if and to the extent that OTI or its advisers has positive
knowledge of facts entitling it to asseert claims under Section 11.1 of
this Agreement on the basis of written information made available to OTI by
the Shareholders, it being understood that OTI will provide the
Shareholders by Closing with copies of the due diligence reports prepared
by OTI's advisors for the benefit of OTI.
De Minimis Rule
11.4 Claims for breach of a Guarantee or a Tax-Guarantee may be asserted only if
and to the extent the aggregate amount of these claims exceeds a threshold
of DM 50,000 (in words Deutsche Xxxx fifty thousand). In such a case the
Shareholders shall be liable for the entire amount and not only for the
amount exceeding the sum of DM 50,000.
Limitation
11.5 The liability of the Shareholders for claims under Section 11.1 shall be
limited to the payment of a sum in the maximum amount of 50% of the amount
of the InterCard Basic Price. This shall not apply with regard to claims
under Section 11.1 in connection with the Statements 10.2.1, 10.2.2 and
10.2.4.
Exclusion of further Remedies and further liability
11.6 Unless otherwise provided in this Agreement, the remedies of OTI under this
Agreement are exclusively provided for in this Section 11. Any more
extensive Guarantee and indemnification claims, in particular any right of
rescission or any other claims regardless on which legal grounds such
claims may be based are excluded to the extent legally permitted.
Time-Bar
11.7 Unless expressly provided for otherwise in this Agreement, any claim under
the Guarantee shall be time-barred (verjahrt) on September 30, 2001. This
shall not apply to claims brought by OTI according to Sections 10.2.1,
10.2.2 and 10.2.4.
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No Double Payment
11.8 OTI shall not be entitled to obtain payment more than once with respect of
any set of circumstances which give rise to claims under the Guarantee, the
Tax-Guarantee, the indemnification as set out in Section 7 and 9.2 or any
other provision of this Agreement.
12. Announcements
None of the parties shall without the prior written consent of the other
parties disclose the existence and/or the contents of this Agreement to
third parties or make any information relating thereto available to third
parties. This shall not, however, apply to announcements and disclosures
which any party may be obliged to make under applicable laws or regulations
(including the rules of relevant stock exchanges) or which any party makes
in the course of the ordinary and regular course of its business (e.g. to
banks). The right of the parties to disclose matters to advisers who are
bound by a professional duty of confidentiality shall remain unaffected.
After consultation with the Shareholders OTI will announce all statements
regarding the transaction required under the Listing Rules of the Frankfurt
Exchange.
13. Costs
13.1 Each party shall bear its own costs incurred or to be incurred in
connection with the preparation, negotiations and implementation of this
Agreement. The costs incurred in connection with the notarisation of this
Agreement and the pledge agreement as provided for in the Annex shall be
borne by OTI 50% and the Shareholders 50% equally.
13.2 Reasonable expenses incurred by the Bank in relation to the Escrow
Agreement shall be borne by OTI 50% and the Shareholders 50% equally.
14. Non Competitioln
14.1 Non Competition
Xxxxxxx Xxxxx shall not for a period of three (3) years after the Closing
Date compete (whether directly or indirectly, alone or jointly with third
parties or in an employed or self-employed capacity) by selling, promoting
the sale, distributing, instructing, manufacturing or developing competing
or similar products to the products of OTI or InterCard in the smart card
industry and magnetic stripe cards industry (the "Products"), or represent
or agree to represent any third party in respect to any product competing
or similar to the Products.
14.2 No Solicitation
The Shareholders shall not during a period of three (3) years after the
Closing Date, directly or indirectly, offer employment to or endeavor to
entice away any senior employees (including store managers) of the
Companies.
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14.3 Confidentiality
The Shareholders undertake to keep confidential all confidential business
information, trade secrets and technical know-how of InterCard (the
"Confidential Information"), as long as the Confidential Information is not
in the public domain, (provided that the Confidential Information did not
reach the public domain as result of a breach of a colnfidentiality
undertaking by the Shareholders) for a period of 5 (five) years following
the Closing Date. The Shareholders may disclose the Confidential
Information if required by statutory law, regulation or decision of a
court, or binding order of an administrative agency or any other public
authority. Prior to disclosure the Shareholders shall notify the Companies
of the disclosure demand and upon reasonable request of OTI or the
Companies the Shareholders shall appeal such a demand at the expense of the
Companies.
14.4 Contractual Penalty
For each case of a breach of the above obligations, the Shareholders shall
pay OTI a contractual penalty in accordance with the following provisions:
(a) in the event of a breach of Section 14.1 a contractual penalty in the
amount of DM 150,000 (in words: Deutsche Xxxx one hundred fifty thousand).
In the event of a continuing breach, a contractual penalty in the amount of
DM 20,000 (in words: twenty thousand Deutsche Xxxx) shall be paid for each
week or part of a week during which the breach continues;
(b) in the event of a breach of Section 14.2 a contractual penalty in the
amount of two times the annual salary or fee of the relevant person shall
be paid; and
(c) in the event of a breach of Section 14.3 the contractual penalty shall
amount to DM 150,000 (in words: Deutsche Xxxx one hundred fifty thousand).
In addition, OTI shall remain entitled to assert any further claims or rights it
may have against the Shareholders.
15. Special Account
15.1 For the purpose of securing claims under the Guarantee, the Tax Guarantee,
and the indemnification pursuant to Section 9.2 Xxxxxxx Xxxxx as a
representative of the Shareholders shall instruct his bank to hold 10% (ten
percent) of the DM value of each instalment made to it in a special account
in the name of the Shareholders (the "Special Account"). The Special
Account shall be pledged to OTI for the period commencing on the First
Instalment Date and ending on 30.9.2001 ("Pledge Period 1"). Thereafter,
the number of OTI Shares or the sums deposited in the Special Account
subject to the pledge shall be reduced by 17% and the remainder shall be
pledged until 31.12.2002 ("Pledge Period 2"). It is understood that the
Pledge Period 1 and the Pledge Period 2 shall be extended by the time
period by which the period of limitation on the liabilities is interrupted
(Verjahrungsunterbrechung) or suspended (Verjahrungshemmung), subject to
the terms and conditions set forth in the Escrow Agreement (which shall
include a
22
provision relating to the sole right of the Shareholders to give the bank
instructions to invest the monies deposited in the Special Account,
provided that such instructions are for reasonably secure investments, such
as short term deposits, government bonds, etc).
15.2 For the purpose of securing the shareholders' obligations pursuant to
Sections 7.2 and 7.3 above, the parties shall instruct the Bank as follows:
(i) if by January 10, 2001 Xx. Xxxxxxx Xxxxx has not provided the Bank with
written confirmations of InterCard's bank that an amount of DM 75,000
has been deposited by him in each of the Companies' accounts - the Bank
shall sell OTI Shares deposited in the Special Account, in an aggregate
value of DM 150,000 according to the average official closing price of
an OTI Share in the Neuer Markt, traded in Frankfurt at the Xetra
system, in the 3 (three) days prior to January 10, 2001, and transfer
half of the consideration to InterCard K's account and half to
InterCard S's account.
(ii) if by July 31, 2000 or five days after the date on which the First
Instalment has been paid, whichever is the later, Xx. Xxxxxxx Xxxxx has
not provided the Bank with a written confirmation of InterCard K's bank
that an amount of DM 142,000 has been deposited by him in the said
account, the Bank shall sell OTI Shares deposited in the Special
Account, in an aggregate value of DM 142,000 according to the average
official closing price of an OTI Share in the Neuer Markt, traded in
Frankfurt at the Xetra system, in the 3 (three) days prior to July 31,
2000, and transfer the consideration to InterCard K's account.
15.3 For the purpose of securing claims in connection with the Call Options,
Xxxxxxx Xxxxx as representative of the Shareholders undertakes vis-a-vis
OTI to instruct the Bank in the Escrow Agreement to hold an amount of DM
800,000 (the "Secured Amount") in a special account in the name of Xx.
Xxxxx and OTI (the "Xxxxxxx Account"). The Secured Amount shall be taken
from the amount of the Fifth Instalment or the last Instalment effected in
the year 2000. The Xxxxxxx Account shall be set up on the basis of the
terms and conditions set forth in the Escrow Agreement (which shall include
provisions setting out the conditions pursuant to which Xx. Xxxxx may
dispose of (verfugen uber) the Xxxxxxx Account alone and provisions
relating to the release of the Secured Amount upon exercise of the Call
Options and payment by Xx. Xxxxx to Xx. Xxxxxx Xxxxxxx of an amount equal
to the Secured Amount.
16. Guarantees and Warranties of OTI
16.1 Guarantees
OTI guarantees to the Shareholders by way of an independent contractual
obligation (in this Agreement also referred to as the "OTI Guarantee") the
following (as provided in Sections 16.1 (1) to (3)).
(1) As of Closing: OTI has been duly formed and is validly existing as a
corporation under the laws of the State of Israel (Reg. No.:
52-004286-2).
23
(2) As of the relevant Instalment Date: The OTI Trust Shares are free of any
rights of third parties and encumbrances of any nature whatsoever unless
otherwise provided for in this Agreement. OTI Trust Shares are admitted
to trading in the Neuer Markt.
(3) As of the relevant Instalment Date: Upon transfer of the Sold Interest
the Allotted Shares have been fully and validly paid up and have not
been repaid.
Breach of Guarantee
16.2 If and to the extent OTI breaches the OTI Guarantees, OTI shall put the
Shareholders in the same position they would have been in had the OTI
Guarantees been true. The Shareholders are entitled to compensation in cash
only if (i) the Shareholders have previously set OTI a reasonable time
limit of thirty days minimum (the "Cure Period") for the restoration to a
state in compliance with the provisions of this Agreement ("Curing the
Defect") and OTI has not cured the defect within the Cure Period or (ii) if
Curing the Defect should prove to be impossible.
Knowledge
16.3 OTI shall not be liable for a breach of an OTI Guarantee if and to the
extent that the Shareholders have positive knowledge of facts entitling
them to assert claims under 16.2 of this Agreement on the basis of written
information made available to the Shareholders by OTI.
Exclusion of further Remedies and further liability
16.4 Unless otherwise provided in this Agreement, the remedies of the
Shareholders under this Agreement are exclusively provided for in this
Article 16. Any more extensive warranty claims, in particular any right of
rescission or any other claims regardless on which legal grounds such
claims may be based are excluded to the extent legally permitted.
Double Payment
16.5 The Shareholders shall not be entitled to obtain payment more than once
with respect of any set of circumstances which give rise to claims under
the OTI Guarantee or any other provision of this Agreement.
17. Miscellaneous
17.1 Survival. The Guarantees, Tax Guarantees, the indemnifications and the OTI
Guarantees contained herein shall survive the Closing hereunder.
17.2 Additional Actions. Without derogating from the other parties' obligations
under this Agreement, each of the parties undertakes to sign all documents
and carry out all actions which signing or execution by the parties are
required to give effect to the provisions of this Agreement and implement
them.
17.3 Assignments. With the exception of the assignment by the Shareholders of
the right to receive the Allotted Shares to Baden-Wurtembergische Bank AG
up to an amount equal
24
to DM 2,000,000, no party to this Agreement shall be entitled to transfer
or assign to other or others its rights or obligations under this
Agreement or arising therefrom, unless with the prior written consent of
the other party.
17.4 Governing Law. This Agreement shall be governed by the laws of the Federal
Republic of Germany without regard to its conflict of law provisions.
17.5 Arbitration. (i) The Parties shall endeavor to settle any dispute,
questions or differences which may arise under this Agreement, or in
connection with this Agreement or in connection with the transactions
contemplated hereunder ("Dispute"). (ii) In the event that the parties are
unable to reach a settlement within 30 (thirty) days, then, upon the
written request of either party (the "Request"), the Dispute shall be
referred to arbitration before a sole arbitrator in the International
Chamber of Commerce (ICC), in Geneve, Switzerland, in accordance with its
rules. The arbitration shall be conducted in the English language. The
jurisdiction of the ordinary courts shall be ousted.
17.6 Entire Agreement. This Agreement, including all annexes attached hereto
constitutes the entire understanding of the Parties and supersedes all
oral or written representations or agreements or understandings between
the Parties.
17.7 Amendments. No modification or amendment of this Agreement may be made
except in a written instrument duly signed by all Parties if no other form
is statutorily required.
17.8 Partial Invalidity. If one or more provisions of this Agreement should be
or become wholly or partially invalid, void or impracticable, the validity
of the other provisions of this Agreement shall not be affected thereby.
The same shall apply if it should transpire that this Agreement contains a
gap. In place of the invalid, void or impracticable provision (or, as the
case may be, in order to fill the gap) the parties to this Agreement shall
agree on an appropriate provision which comes as close as legally possible
to what the parties were trying to achieve with the invalid, void or
impracticable part thereof). In the event that a gap in this Agreement
needs to be filled, a provision shall be agreed upon which, in view of the
purpose and intent of this Agreement, comes as close as possible to what
the parties would have agreed if they had been aware of the gap at the
time that this Agreement was concluded.
17.9 Waivers. A waiver by a party of any of its rights under this Agreement
shall not be effective unless made by a written instrument duly signed by
such party (unless a specific form is required under applicable statutory
law), and shall not be deemed a waiver of any other right hereunder.
17.10 Joint and Several Creditor/Debtor. Xxxxxx Xxxxxx and Xxxxxxx Xxxxxxx Xxxxx
shall be liable for the obligations and liabilities under this Agreement
in proportion to their share in the Sold Interest. This also applies to
their obligations and liabilities arising from their membership in the
Civil Partnership. Unless otherwise provided in this Agreement the
Shareholders shall be joint and several creditors in respect of all rights
and claims to which they are entitled under this Agreement. All facts
within the meaning of section 425 and 429 BGB and any knowledge of the
Shareholders shall have effect for and against any of the Shareholders.
Any rights to alter this Agreement by unilateral declaration
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(Gestaltungsrechte) may only be exercised by the Shareholders jointly and
only with effect for and against both of them.
17.11 Undertaking. OTI undertakes as from the Closing Date until 31 December
2003 to refrain from removing the name "InterCard" from the company names
of InterCard K and InterCard S.
17.12 Preferred Employment Consideration. OTI will cause the Companies that
preferred employment consideration should be given to Xxxxxxx Xxxxxxx
Xxxxx and to Xxxxxx Xxxxxx Xxxxx if there is a need of the Companies and
if they are qualified according to the needs of the Companies.
17.13 Advisory Board Membership of Xxxxxxx Xxxxx. OTI shall procure that Xxxxxxx
Xxxxx is not removed from the advisory boards of the Companies as long as
he is a managing director of the Companies.
17.14 Headings. The headings in this Agreement are inserted only as a matter of
convenience, and shall not be taken into consideration in the
interpretation of this Agreement.
17.15 Preamble and Annexes. The preamble and annexes to this Agreement shall
constitute an integral part thereof (and the term "this Agreement")
appearing herein shall be interpreted as to include this document and all
annexes thereto). The persons appearing waive the right to have the
annexes read aloud with the exception of Annexes 8.2-A, 8.2-B and 8.2-E.
The contents of the Annexes is known to the persons appearing. The annexes
were presented to the persons appearing and signed by them.
17.16 Notices. Unless otherwise provided for in this Agreement, all notices and
declarations of will (Willenserklarungen) in connection with this
Agreement shall be made in writing (facsimile being sufficient) and sent
to the addresses set out in section 17.17.
17.17 Addresses. The Parties' addresses for the purpose of this Agreement are as
set forth below, unless otherwise notified in writing to all parties:
Shareholders:
Address: Xxxxxxx Xxxxx, Xxxxxxxxx 0, 00000 Xxxxxxxxxxxx
Tel: 07731 / 97 86 15
Fax: 07731 / 97 86 06
Copy to Gleiss Xxxx Hootz Xxxxxx:
Attn.: Xx. Xxxxxxx Xxxxxx
Address: XxxxxxxxxxxXx 0, X-00000 Xxxxxxxxx
Tel: xx00-000-00000
Fax: xx00-000-000000
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OTI
Address: X.X.X. X.X., Xxxx Xxxx 00000, Xxxxxx
Tel: xx000-0-0000000
Fax: xx000-0-0000000
Copy to White & Case
Address: Xxxxxxxxxxxx XxxxxxxxXx 00-00, 00000 Xxxxxxxxx xx Xxxx
Tel: xx00-00-000 770
Fax: xx00-00-000 77 100
II. Notification of Company
The Notary is hereby requested to notify to the Companies the transfer of the
shares sold and transferred in accordance with this Agreement pursuant to
section 16 GmbHG (German Act on Limited Liability Companies).
III. Notification of the Commercial Register/List of shareholders
The Notary is requested to submit on behalf of the Companies' managing directors
new shareholder lists to the Commercial Register pursuant to section 40 GmbHG
and thereby to notify the Commercial Register of the transfer of the Shares.
IV. Real Property
InterCard K owns a piece of real property at Xxxxxxxxx. 0, 00000 Xxx Xxxxxxxx,
registered in the Land Registry office of Bad Durrheim (Grundbucharnt Bad
Durrheim, Amtsgerichtsbezirk Villingen-Schwenningen) land registry of Biesingen
(Grundbuch von Biesingen) under No. 20006 (Xxxxx).
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