---------------------------
STOCK PURCHASE AGREEMENT
BETWEEN
E-AUCTION GLOBAL TRADING INC.
AS "CORPORATION"
AND
ABN AMRO CAPITAL INVESTMENTS (BELGIE) N.V.
AS "INVESTOR"
JUNE 21, 2000
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STOCK PURCHASE AGREEMENT 21ST JUNE 2000 PAGE 2
e-AUCTION GLOBAL TRADING INC.
--------------------------------------------------------------------------------
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made as of June
[__], 2000, by and between e-AUCTION GLOBAL TRADING INC., a Nevada corporation
having its principal place of business at 000 Xxx Xxxxxx, Xxxxx 0000, XXX Xxxxx,
Xxxxxxx, Xxxxxxx, Xxxxxx M5J 251 (the "CORPORATION"), and ABN AMRO CAPITAL
INVESTMENTS (BELGIE), a Naamloze Vennootschap existing under the laws of
Belgium, having its registered offices at Xxxxxxxxxx 00, 0000 Xxxxxxxx
(Xxxxxxx), enrolled with the Register of Commerce of Brussels under number
622.783 (the "INVESTOR").
RECITALS
A. The Corporation and the Subsidiaries (as defined herein) are
currently engaged in the business of providing real time, electronic auction and
related financial services to auctioneers selling commodities (the "Business").
B. The Investor desires to purchase from the Corporation, and the
Corporation desires to issue and sell to the Investor, 4,072,639 shares (the
"Shares") of common stock of the Corporation, par value $.01 per share (the
"Common Stock") at a purchase price of $1.842 per share, for an aggregate
purchase price of $7,500,000 (the "Purchase Price").
AGREEMENTS
In consideration of the recitals and the mutual promises, covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. AUTHORIZATION AND SALE OF SHARES.
1.1. AUTHORIZATION. The Corporation has duly authorized the issuance to the
Investor of the Shares.
1.2. SALE OF THE SHARES TO THE INVESTOR. Subject to the satisfaction of the
terms and conditions herein set forth and in reliance upon the
respective representations and warranties of the parties set forth
herein or in any document delivered pursuant hereto, the Corporation
agrees to sell to the Investor, free and clear of any liens, claims,
charges or encumbrances whatsoever, and the Investor agrees to
purchase from the Corporation, at the Closing, the Shares at a
purchase price of $1.842 per share for an aggregate purchase price of
$7,500,000. The purchase price has been determined by arms' length
negotiation between the Corporation and the Investor taking into
account, among other things, the representations and warranties set
forth in Article IV hereof.
PAGE 3
2. CLOSING; DELIVERIES.
2.1. CLOSING. The Closing will be held at the offices of Stibbe Simont
Xxxxxxx Duhot in Brussels, Belgium or Xxx Xxxx, Xxx Xxxx 00000, on
June [__], 2000 or at such other time, date and place as may be agreed
to in writing by the Corporation and the Investor.
2.2. DELIVERIES AT CLOSING. At the Closing, the Corporation will deliver to
the Investor a certificate, duly executed and registered in the name
of the Investor, for the 4,072,639 Shares against payment by the
Investor of $7,500,000 by cashier's check drawn on a United States
domiciled bank payable to the order of the Corporation or by wire
transfer of funds to an account designated by the Corporation.
3. CONDITIONS TO CLOSING. The obligation of the Investor to purchase the
Shares at the Closing is subject to the fulfillment to the Investor's
satisfaction of each of the conditions set forth in Sections 3.1 through
3.11 on or before the Closing and the obligation of the Corporation to sell
Shares at the Closing is subject to the fulfillment to the Corporation's
satisfaction of each of the conditions set forth in Sections 3.12 and 3.13.
3.1. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The
representations and warranties made by the Corporation in Article IV
shall be true and correct when made, and shall be true and correct as
of the Closing as if made at the Closing.
3.2. PERFORMANCE OF THE CORPORATION. All covenants, agreements and
conditions contained in this Agreement to be performed or complied
with by the Corporation at or prior to the Closing shall have been
performed or complied with in all material respects.
3.3. COMPLIANCE CERTIFICATE. At the Closing, the Corporation shall
have delivered to the Investor a certificate of the Corporation,
executed by its President and Chief Executive Officer, dated the date
of the Closing, (i) certifying to the fulfillment of the conditions
specified in this SECTION 3 and (ii) stating that the representations
and warranties set forth in Article IV of the Agreement are true and
correct as of the Closing as if made at the Closing.
3.4. SECRETARY'S CERTIFICATE. At the Closing, the Corporation shall
have delivered to the Investor copies of each of the following, in
each case certified to be in full force and effect on the date of the
Closing by the Secretary of the Corporation:
3.4.1. the Certificate of Incorporation of the Corporation certified by
the Secretary of State of the State of Nevada as of a date not
more than five (5) days prior to the Closing;
3.4.2. the by-laws of the Corporation;
3.4.3. resolutions of the Board of Directors of the Corporation, the
form and substance of which are reasonably satisfactory to the
Investor, authorizing the execution,
PAGE 4
delivery and performance of this Agreement and the Stockholders'
Agreement, and the transactions contemplated hereby and thereby,
the issuance and sale of the Shares and the election of directors
as prescribed by the Stockholders' Agreement; and
3.4.4. evidence of the authority of the officer(s) of the Corporation
executing this Agreement, the Stockholders' Agreement and the
other documents and certificates delivered in connection herewith
and therewith on behalf of the Corporation, together with the
true signatures of such officers.
3.5. STOCKHOLDERS' AGREEMENT. At or prior to the Closing, the
Corporation, the Investor and the other parties thereto shall have
executed and delivered the Stockholders' Agreement in the form of
EXHIBIT A.
3.6. LEGAL OPINION. At the Closing, the Corporation shall have
delivered to the Investor the opinion of [________________], counsel
to the Corporation, dated the date of the Closing, addressed to the
Investor, and in the form of EXHIBIT B.
3.7. LEGAL INVESTMENT. As of the Closing, the purchase of the
Shares by the Investor hereunder shall be legally permitted by all
laws and regulations to which the Investor and the Corporation are
subject.
3.8. NO INJUNCTION. As of the Closing, there shall be no effective
injunction, writ, preliminary restraining order or order of any nature
issued by a court of competent jurisdiction directing that the
transactions provided for in this Agreement or the Stockholders'
Agreement can not be consummated as so provided or imposing any
conditions on the consummation of the transactions contemplated hereby
or thereby.
3.9. [Intentionally left blanc]
3.10. ELECTION OF DIRECTORS. At or prior to the Closing, Xxxx Xxxxx
shall have been appointed to the Board of Directors of the
Corporation.
3.11. PROCEEDINGS AND DOCUMENTS. As of the Closing, all corporate
and other proceedings in connection with the transactions contemplated
hereby and by the Stockholders' Agreement, and all documents and
instruments incident to such transactions, shall be reasonably
satisfactory in form and substance to the Investor, and the Investor
shall have received at or prior to the Closing all such documents as
it shall have reasonably requested.
3.12. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The
representations and warranties made by the Investor in Article V shall
be true and correct when made, and shall be true and correct as of the
Closing as if made at the Closing.
3.13. PERFORMANCE OF THE INVESTOR. All covenants, agreements and
conditions contained in this Agreement to be performed or complied
with by the Investor at or prior to the Closing shall have been
performed or complied with in all material respects.
PAGE 5
4. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION.
The Corporation represents and warrants to the Investor as follows:
4.1. ORGANIZATION.
4.1.1. The Corporation is a corporation duly incorporated, organized,
validly existing for an indefinite duration and duly registered
under the laws of the State of Nevada.
4.1.2. E-Auction Barbados is a corporation duly incorporated,
organized, validly existing for an indefinite duration and duly
registered under the laws of Barbados.
4.1.3. E-Auction Canada is a corporation duly incorporated, organized,
validly existing for an indefinite duration and duly registered
under the laws of Canada.
4.1.4. The Belgian Subsidiaries are corporations duly incorporated,
organized, validly existing for an indefinite duration and duly
registered under the laws of Belgium.
4.1.5. E-Auction Australia is a corporation duly incorporated,
organized, validly existing for an indefinite duration and duly
registered under the laws of the Australia.
4.1.6. The Corporation and its Subsidiaries have the requisite
corporate power and authority and all governmental licenses,
authorizations, consents and approvals required to own, lease or
otherwise hold the assets owned, leased or otherwise held by them
and to carry out the Business as it is presently conducted and as
it has been conducted by them.
4.1.7. SCHEDULE 4.1 contains a copy of the current version of the
Certificate of Incorporation, Articles of Association or similar
document of each of the Corporation and the Subsidiaries.
4.1.8. No action is pending or threatened to declare the Corporation
or any of its Subsidiaries bankrupt and neither the Corporation
nor any of its Subsidiaries has filed or commenced any
proceedings for judicial or extra-judicial arrangement or
settlement with its creditors.
4.1.9. The situation of the Belgian Subsidiaries is not such that
article 103 and/or 104 of the Belgian Companies Act apply to
them. The net assets of the Corporation and its Subsidiaries
other than the Belgian Subsidiaries are, considered on an
individual basis, not less than 50% (fifty percentage points) of
their share capital or, to the extent applicable, the minimum
amount of share capital required by the laws under which they
currently exist.
4.1.10. None of the Belgian Subsidiaries is and has been, at any time
in the past, a company "DIE EEN PUBLIEK BEROEP OP HET SPAARWEZEN
DOET OF HEEFT GEDAAN/FAISANT OU AYANT FAIT PUBLIQUEMENT XXXXX A
L'EPARGNE" within the meaning of article 26 of the Belgian
Companies Act. The Subsidiaries other the Belgian Subsidiaries
did, at any time in the past, not make any public offering nor do
they currently intend to make such offering.
PAGE 6
4.2 AUTHORIZATION OF AGREEMENT; BINDING OBLIGATION.
4.2.1. The Corporation has the requisite power to execute, deliver and
perform this Agreement and to consummate the transactions
contemplated hereby.
4.2.2. The execution by the Corporation of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate or other actions on
the part of the Corporation, as the case may be.
4.2.3. Assuming its due execution by the Investor, this Agreement
constitutes a valid and binding obligation of the Corporation
enforceable against it in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights in general.
4.3. NO INTEREST IN OTHER ENTITIES. Except as indicated in SECTION 4.5 of
this Agreement, no shares of any corporation or any ownership or other
investment interest in any association, partnership, joint venture or
other legal entity are owned or held by the Corporation or any of its
Subsidiaries.
4.4. NO RESTRICTIONS; REQUIRED CONSENTS.
4.4.1. The execution, delivery and performance of this Agreement by
the Corporation does not, and the performance by the Corporation
of the transactions contemplated hereby to be performed by it
will not :
4.4.1.1. conflict with the certificate of incorporation
("oprichtingsakte/acte de constitution") and/or the
Articles of Association of the Corporation and/or any of
its Subsidiaries;
4.4.1.2. conflict with or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss
of a benefit under any contract, permit, order, judgement
or decree to which the Corporation or any of its
Subsidiaries is a party or by which any of their
properties are bound;
4.4.1.3. require the consent of any party other than the Investor;
4.4.2. constitute a violation of any provision of any domestic or
foreign law or any other regulation (collectively: the "Laws")
applicable to the Corporation or any of its Subsidiaries, or
4.4.3. result in the creation of any encumbrance whatsoever upon any
of the assets of the Corporation or any of its Subsidiaries of
any nature and wherever located (the "Assets").
4.4.4. No consent, approval, order or authorization of, or
registration, declaration or filing with any domestic or foreign
governmental entity is required to be obtained or made by or with
respect to the Corporation or any of its Subsidiaries either in
connection with the execution of this Agreement by the
Corporation or the performance by the Corporation of the
transactions contemplated hereby.
PAGE 7
4.5 SHARES.
4.5.1. SCHEDULE 4.5 contains a true and complete list of the
authorized, issued and outstanding shares of the Corporation
and its Subsidiaries, the type of such shares and the ownership
of such shares.
4.5.2. All issued and outstanding shares of the Corporation and any of
its Subsidiaries have been duly authorised and validly issued,
are fully paid in, were not issued in violation of any
pre-emptive rights, and are validly owned as disclosed in
SCHEDULE 4.5. There are no other outstanding securities; there
are no outstanding rights (pre-emptive or other), subscriptions,
calls, warrants, options, (reverse) convertible bonds or other
agreements (except for this Agreement) that give any person the
right to purchase or otherwise receive or be issued any shares of
the Corporation or any of its Subsidiaries or any security
convertible into or exchangeable for any shares or other security
rights of the Corporation or any of its Subsidiaries.
4.5.3. Except if indicated otherwise in SCHEDULE 4.5, the shareholders
referred to in this SCHEDULE 4.5 own such shares free and clear
of all liens, pledges, encumbrances, "VRUCHTGEBRUIK/USUFRUIT",
claims, options, warrants and, in general, all restrictions
affecting any of the rights attached to such shares.
4.5.4. Upon purchase in accordance with the terms of this Agreement,
the Shares will be duly and validly issued to the Investor in
compliance with all Laws and fully paid in, and constitute 6.2%
(six point two percentage points) of the share capital of the
Corporation. The delivery of the Shares to the Investor in
accordance with this Agreement transfers valid title thereto,
free and clear of any liens, pledges, encumbrances,
"VRUCHTGEBRUIK/USUFRUIT", claims, options, warrants and, in
general, all restrictions affecting any of the rights attached to
such Shares.
4.6. NO THIRD PARTY OPTIONS. Except as indicated in SCHEDULE 4.6., there
are no existing agreements with, options or rights of, or commitments
to any person to acquire any of the Shares or Common Stock or any of
the Assets or any interest therein, except for those contracts for the
sale of inventory entered into in the normal course of business
consistent with past practice.
4.7. FINANCIAL STATEMENTS.
4.7.1. The Investor has received true and complete copies of the
annual accounts, comprising, for the avoidance of doubt,
balance sheets, profit and loss account and notes thereto, of:
4.7.1.1. the Corporation at 31st December 1999 (as set forth in
SCHEDULE 4.7.), (as set forth in SCHEDULE 4.7.),
4.7.1.2. SCS at 31st December 1999 (as set forth in
SCHEDULE 4.7.), (as set forth in SCHEDULE 4.7.)
4.7.1.3. the Corporation and its Subsidiaries in the consolidated
financial accounts per 31st March 2000 drawn up by the
Corporation (as set forth in SCHEDULE 4.7.),
all of which have been prepared in accordance with GAAP and with
the Corporation's and its Subsidiaries' valuation rules
consistently applied. Such annual accounts, including the related
notes, present a fair and true view of the financial
PAGE 8
position, assets and liabilities (whether accrued, absolute,
contingent or otherwise) of the Corporation and any of its
Subsidiaries at the date indicated and present the results of
operations of the Corporation and any of its Subsidiaries for the
period indicated as they were or as if they were made as end of
year annual accounts, as the case may be. References in this
Agreement to the "2000 Annual Accounts" shall mean the balance
sheet and the profit and loss account of each of the Corporation
and its Subsidiaries as referred to above.
4.7.2. The Corporation and its Subsidiaries are in the possession
of all documents relating to their business, assets and
liabilities (including without limitation all accounts, financial
records, minute books of all General Meetings and meetings of the
Board of Directors) and do not have any of their documents or
information recorded, stored, maintained, operated or otherwise
wholly or partly dependent on or held by any means which
(including all access thereto and therefrom) are not under their
exclusive ownership and direct control.
4.8. ACCOUNTS RECEIVABLE. The accounts receivable of the Corporation and
its Subsidiaries arising from their Business as set forth on the 2000
Annual Accounts or arising since the date thereof and before the
Closing date, are valid and genuine. They have arisen solely out of
bona fide sales and deliveries of goods, performance of services and
other business transactions in the ordinary course of business
consistent with past practice. They are not subject to valid defenses,
set-offs or counterclaims. They are collectible at the full recorded
amount thereof less the recorded allowance for collection losses.
4.9. INVENTORY. All inventory of the Corporation and its Subsidiaries used
in the conduct of their Business, including without limitation raw
materials, work-in-process and finished goods, reflected in the 2000
Annual Accounts or acquired since the date thereof and before date of
the Closing, was acquired and has been maintained in the ordinary
course of their Business. It consists substantially of a quality,
quantity and condition usable, leasable or saleable in the ordinary
course of their Business. It is valued at the lower of cost or market
value. It is not subject to any write-down or write-off. Neither the
Corporation nor any of its Subsidiaries is under any liability or
obligation to return any inventory - except for samples - in the
possession of wholesalers, distributors, retailers or other customers.
4.10.ABSENCE OF UNDISCLOSED LIABILITIES - ACCOUNTS PAYABLE. The Corporation
and its Subsidiaries have no liabilities or obligations with respect
to their Business, either direct or indirect, matured or unmatured or
absolute, contingent or otherwise, except:
4.10.1. those liabilities or obligations set forth on or described in
the 2000 Annual Accounts and not heretofore paid or discharged;
and
4.10.2. those liabilities or obligations incurred, consistently with
past business practice, in or as a result of the normal and
ordinary course of business since the date of the 2000 Annual
Accounts.
The accounts payable of the Corporation and its Subsidiaries arising
from their Business as set forth in the 2000 Annual Accounts or arising
since the date thereof and before the Closing date, are valid and
genuine. They have arisen solely out of bona fide purchase
PAGE 9
and receipt of goods, services and other business transactions in the
ordinary course of business consistent with past practice.
4.11. BOOKS OF ACCOUNT. The books, records and accounts of the
Corporation and its Subsidiaries maintained with respect to their
Business accurately and fairly reflect, in reasonable detail, the
transactions and the assets and liabilities of the Corporation and
its Subsidiaries with respect to their Business. Neither the
Corporation nor any of its Subsidiaries has engaged in any
transaction with respect to their Business, maintained any bank
account for their Business or used any of their funds in the conduct
of their Business except for transactions, bank accounts and funds
which are or have been reflected in the normally maintained books and
records of their Business.
4.12. CONTRACTS AND COMMITMENTS.
4.12.1. Except as set out in SCHEDULE 4.12, neither the Corporation nor
any of its Subsidiaries is a party to or is subject to any
written or oral agreement or commitment relating to their
Business which is not a contract with a supplier or customer of
the Corporation or any of its Subsidiaries, as the case may be,
acting as such and which:
4.12.1.1. involves in any one case $10,000 or more; or
4.12.1.2. continues over a period of more than three months as of
the date hereof; or
4.12.1.3. cannot be terminated by the Corporation or any of its
Subsidiaries, as the case may be, without paying
indemnities or giving more than three months' notice; or
4.12.1.4. can be terminated by the counterparty giving less than
three months' notice; or
4.12.1.5. limits the freedom of the Corporation or any of its
Subsidiaries to compete in any line of business or with
any person or in any area or which could so limit the
freedom of the Corporation or any of its Subsidiaries
after the Closing; or
4.12.1.6. is not made in the ordinary course of business; or
4.12.1.7. which will have an adverse effect on the Assets or
financial situation of the Corporation or any of its
Subsidiaries.
4.12.2. Each of the agreements, commitments, leases, plans and other
instruments, documents and undertakings listed or required to be
listed on SCHEDULE 4.12 or not required to be listed therein
because of the amount and/or term and/or ways of termination
thereof, is valid and enforceable in accordance with its terms.
Neither the Corporation nor any of its Subsidiaries is and, to
the knowledge of the Corporation, all other parties thereto are,
in compliance with the provisions thereof. Neither the
Corporation nor any of its Subsidiaries is and, to the knowledge
of the Corporation, no other party thereto is, in default in the
performance, observance or fulfillment of any obligation,
covenant or condition contained therein. No event has occurred
which with or without the giving of notice or lapse of time, or
both, would constitute a default thereunder. No such agreement,
commitment, lease, plan or other instrument, document or
undertaking, in the reasonable opinion of the
PAGE 10
Corporation, contains any contractual requirement with which
there is a reasonable likelihood the Corporation or any of its
Subsidiaries, as the case may be, or any other party thereto will
be unable to comply.
4.13. TITLE TO ASSETS. The Corporation and its Subsidiaries have
good, valid and transferable title to or, in the case of leased
property, have valid leasehold interest in their Assets free and clear
of all encumbrances of any nature whatsoever, including without
limitation licenses, leases, mortgages, collateral security
arrangements, pledges, title imperfections, defect or objection liens,
security interests, conditional and installment sales agreements,
charges, easements, encroachments or restrictions, of any kind and
other title or interest retention arrangements, reservations or
limitations of any nature (collectively: "Liens"), other than Liens
for taxes, assessments and other governmental charges which are not
yet due and payable (to be referred to hereinafter as: "Permitted
Liens").
4.14. INTELLECTUAL PROPERTY.
4.14.1. The Corporation and its Subsidiaries are the owner of, or are
entitled to the use and quiet enjoyment of all patents, patent
applications, trademarks, trademark applications, trade names,
service marks, service names, copy rights, copyright
applications, licenses, inventions, permits, know how (including
trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures)
and other similar rights and proprietary knowledge (the
"Intellectual Property") they currently use. The Corporation and
its Subsidiaries do not trade under any name other than their
own.
4.14.2. All of the Intellectual Property used by the Corporation and
its Subsidiaries is owned by or validly licensed to the
Corporation or its Subsidiaries, as the case may be, and is at
the free disposal of the Corporation or its Subsidiaries, as the
case may be. Neither the Corporation nor any of its Subsidiaries
uses any intellectual property which infringes any third party's
intellectual property rights. Neither the Corporation nor any of
its Subsidiaries has received any claim nor has it been notified
of any possible claim for infringement of any intellectual
property rights of third parties and there are no circumstances
which could give rise to such a claim.
4.14.3. None of the process and formulae, research and development
results and other know-how of the Corporation and its
Subsidiaries, the value of which to the Corporation or any of its
Subsidiaries is contingent upon maintenance of confidentiality
thereof, has been disclosed by the Corporation or any of its
Subsidiaries, as the case may be, to any person other than
employees, representatives and agents of the Corporation or any
of its Subsidiaries and then only subject to appropriate
confidentiality undertaking.
4.14.4. None of the Intellectual Property rights which are identical or
similar to the Intellectual Property rights currently used by the
Corporation or any of its Subsidiaries or required for the
conduct of their Business, are used by any person, conducting a
business which is identical or similar to their Business, in a
country in which the Corporation or any of its Subsidiaries
registered and/or uses such rights.
PAGE 11
4.14.5. The Intellectual Property rights currently used by the
Corporation or any of its Subsidiaries are the sole Intellectual
Property rights required for the due and proper conduct of their
Business.
4.14.6. The Corporation and its Subsidiaries are in a position to
obtain updates of any Intellectual Property right currently used
in the exercise of their Business, consistent with past practice.
4.15. SOFTWARE.
4.15.1. The computer software of the Corporation and its Subsidiaries
included in the Intellectual Property (collectively: the
"Software") performs in accordance with the documentation and
other written material used in connection with the Software and,
as to the Belgian Subsidiaries, is so-called EURO-compliant. It
includes all computer programs, materials, tapes, know-how,
object and source codes, other written materials, know-how and
processes related to the Software. The Corporation and its
Subsidiaries have complete and correct copies of all user
documentation related to the Software.
4.15.2. The functioning of the Assets (including without limitation the
Software) have in no way been affected by the transition to the
year 2000, meaning their functioning and performance has not been
affected that they be used before, during or after the year 2000
and in particular:
4.15.2.1. no value given to dates has lead or will lead to an
interruption of operations;
4.15.2.2. all functions based on dates have reacted and will react
in a coherent way to dates before, during or after the
year 2000;
4.15.2.3. in all interfaces and data storage, the century was and
is specified either explicitly or by means of univocal
algorithms or rules of interference; and
4.15.2.4. the year 2000 is and will be recognized as a leap year.
4.16. CONDITION OF ASSETS. All of the Assets are in good operating
condition and repair, subject to normal wear and maintenance, are
usable in the regular and ordinary course of business and conform to
all applicable laws and regulations and to all licenses,
authorizations and approvals (collectively: "Permits") issued to the
Corporation or any of its Subsidiaries by any governmental entity
relating to their construction, use and operation. The Assets
constitute all assets and rights required by the Corporation and its
Subsidiaries to operate their Business as currently conducted and as
currently contemplated to be conducted. No person other than the
Corporation or its Subsidiaries owns any equipment or other tangible
assets or properties situated on their premises other than those items
leased pursuant to agreements or commitments disclosed on SCHEDULE
4.12 and SCHEDULE 4.17.
4.17. REAL PROPERTY.
4.17.1. OWNED REAL PROPERTY. Neither the Corporation nor any of
its Subsidiaries owns any real property.
PAGE 12
4.17.2. LEASED REAL PROPERTY. There are no real property leases entered
into by the Corporation or any of its Subsidiaries and which
relate to the operation of their Business other than the leases
listed in SCHEDULE 4.17.2.
4.17.3. ZONING. The Real Property complies with all applicable zoning
and other land use requirements. There are no pending or
threatened actions or proceedings which could result in a
modification or termination of such zoning and other land use
requirements.
4.17.4. ACCESS - POSSESSION.
4.17.4.1. The Corporation and its Subsidiaries have obtained all
Permits and rights-of-way, including proof-of-dedication,
which are necessary to ensure vehicular and pedestrian
ingress and egress to and from the Real Property. There
are no restrictions on entrance to or exit from the Real
Property to adjacent public streets.
4.17.4.2. The Corporation and its Subsidiaries enjoy peaceful and
undisturbed possession of all Real Property and there are
no pending or threatened actions or proceedings which
could result in a modification or termination of such
possession.
4.17.4.3. NO VIOLATIONS. The Real Property and the present uses
thereof comply with all Laws of all governmental entities
having jurisdiction over the Real Property and all
restrictive covenants affecting the Real Property, and
neither the Corporation nor any of its Subsidiaries has
received notices, oral or written, from any governmental
entity, or has any reason to believe, that the Real
Property or any improvements erected or situated thereon,
or the uses conducted thereon or therein, violate any Laws
of the governmental entity having jurisdiction over the
Real Property or any restrictive covenants affecting the
Real Property.
4.18. INSURANCE.
4.18.1. The Corporation and its Subsidiaries have insurance policies in
full force and effect for such amounts as :
4.18.1.1. are sufficient for compliance with all requirements of
the laws and of all agreements to which the Corporation or
any of its Subsidiaries is a party or by which any of them
is bound; and
4.18.1.2. are normal and proper in relation to the Business of the
Corporation and its Subsidiaries.
Set forth in SCHEDULE 4.18 is a list of all insurance policies held by
or applicable to the Corporation and its Subsidiaries or their
Business, setting forth, in respect of each such policy, the policy
name, policy number, carrier, term, type of coverage and annual
premium.
4.18.2. All premiums payable under all such insurance policies have
been paid and the Corporation and its Subsidiaries are otherwise
in full compliance with the terms and conditions of such
insurance policies.
PAGE 13
4.18.3. No event relating to the Corporation, its Subsidiaries or the
Business has occurred which can be expected to result in an
upward adjustment in premiums, be it retroactive or prospective,
under any such insurance policies.
4.18.4. Excluding insurance policies that have expired and been
replaced in the ordinary course of business, no insurance policy
has been cancelled within the last two years, except for policies
cancelled as a result of the ordinary conduct and course of
business and which have subsequently been replaced at the best
market conditions available, and no threat has been made to
cancel any insurance policy of the Corporation or any of its
Subsidiaries during such period. All such insurance will remain
in full force and effect with respect to periods before the
Closing. No event has occurred (including without limitation the
failure by the Corporation or any of its Subsidiaries to give any
notice or information or the Corporation or any of its
Subsidiaries giving any inaccurate or erroneous notice or
information) which limits or impairs the rights of the
Corporation or any of its Subsidiaries under any such insurance
policies.
4.18.5. All coverage proceeds payable pursuant to the insurance
policies referred to in SCHEDULE 4.18 will be payable at the
benefit of the Corporation or its Subsidiaries.
4.19. Customers and Suppliers. SCHEDULE 4.19 sets forth :
4.19.1. a list of the twenty largest customers of each of the
Corporation and its Subsidiaries based on sales during the
accounting period ended on the date of the 2000 Annual Accounts,
showing the approximate total sales by each of the Corporation
and its Subsidiaries to each such customer during such period;
and
4.19.2. a list of the twenty largest suppliers of each of the
Corporation and its Subsidiaries based on purchases during the
accounting period ended on the date of the 2000 Annual Accounts,
showing the approximate total purchases by each of the
Corporation and its Subsidiaries from each such supplier during
each of such period.
Except as described on SCHEDULE 4.19, there has not been any adverse
change in the business relationship of the Corporation or any of its
Subsidiaries with any customer or supplier named in SCHEDULE 4.19 in
the period from the date of the 2000 Annual Accounts to the Closing.
No such customer or supplier has either implicitly or explicitly
indicated to the Corporation that they will alter their business
relationship with the Corporation or any of its Subsidiaries as a
result of the consummation of the transactions contemplated by this
Agreement or otherwise.
4.20. DIRECTORS - REPRESENTATION OF THE CORPORATION.
4.20.1. SCHEDULE 4.20.1 hereto contains a true and complete list of all
members of the Board of Directors of the Corporation and its
Subsidiaries.
4.20.2. SCHEDULE 4.20.2 hereto contains a true and complete list of all
financial institutions where the Corporation and its Subsidiaries
hold a financial account and/or a safe box, the relating account
numbers and, for each such account and/or safe box, the persons
empowered to have access to such accounts and/or safe box on
behalf of the Corporation or any of its Subsidiaries.
PAGE 14
4.21. PERSONNEL.
4.21.1. GENERAL.
4.21.1.1. SCHEDULE 4.21.1. hereto contains a true and complete
list of all persons employed by the Corporation and its
Subsidiaries in connection with their Business, including
date of hire, a description of financial or other
compensation arrangements other than Employee Benefit
Schemes set forth in SCHEDULE 4.21.1.2 for each such
person, a list of other terms of any and all agreements
affecting such persons, and an indication of the persons
to be regarded as material to the business ("the Key
Personnel").
4.21.1.2. Neither the Corporation nor any of its Subsidiaries is a
party to or has any obligation with respect to any
arrangement relating to financial or other material
compensation for its employees, officers or directors
other than the arrangements set forth in SCHEDULE 4.21.1
or the Employee Benefit Schemes set forth in SCHEDULE
4.21.2.
4.21.1.3. No employee identified in SCHEDULE 4.21.1 as Key
Personnel, has either implicitly or explicitly indicated
to the Corporation or any of its Subsidiaries that he or
she will terminate his or her employment with the
Corporation or any of its Subsidiaries, as the case may
be, as a result of the consummation of the transactions
contemplated by this Agreement or otherwise.
4.21.1.4. The know-how and skills of the Key Personnel being
critical to the success of the enterprise of the
Corporation and its Subsidiaries, who wish to integrate
such know-how and skills into their activities, the Key
Personnel will communicate such know-how and skill to the
Corporation and its Subsidiaries as fully, swiftly and
efficiently as is reasonably practicable, in the form of
extensive documentation.
4.21.1.5. The Corporation will use its best efforts to ensure that
none of the Key Personnel leave the Corporation or any of
its Subsidiaries, as the case may be, before 31st December
2002 and that the know-how and skills of such Key
Personnel be fully documented before their leaving the
Corporation or any of its Subsidiaries, as the case may
be.
4.21.1.6. Neither the Corporation nor any of its Subsidiaries have
or are or have been under an obligation to have a Worker's
Council or a Safety, Health and Workplace Embellishment
Committee or any similar council or committee nor has the
Corporation or any of its Subsidiaries recognised any
union representatives ("Syndicaal Afgevaardigden").
4.21.1.7. The Corporation and its Subsidiaries, with respect to
their employees,
4.21.1.7.1. have no written personnel policy applicable to
such employees;
4.21.1.7.2. are and have since their incorporation been in
compliance with all applicable Laws regarding
employment, including, for the avoidance of doubt,
social security (including without limitation, all
remuneration and monies to be paid to the employees
of the Corporation and its Subsidiaries have been
calculated and paid in conformity with the
PAGE 15
applicable Laws and all social security payments
which are due have been made in due time),
individual labor agreements, collective bargaining
agreements and employment practices and are not
engaged in any unfair labor practices;
4.21.1.7.3. have no unfair labour practice charges or
complaints pending or threatened against any of them
before any governmental entity; and
4.21.1.7.4. have no grievances pending or threatened against
them.
4.21.1.8. Neither the Corporation nor any of its Subsidiaries has
as of the date of this Agreement any unsatisfied
obligation, whether in the form of a requirement to give
notice or payment of an indemnity in lieu thereof, towards
any persons with regard to the termination of their
employment with any of them prior to or on the date of
this Agreement.
4.21.1.9. The Belgian Subsidiaries have at all times fully
complied, and continue fully to comply with the regulation
relating to the safeguarding of the competitiveness of the
country (the "Wage Moderation Decrees").
4.21.1.10. Neither the Corporation nor any of its Subsidiaries has
entered into any consultancy agreement or any other
agreement as to the providence of management services or
any other kind of services other than the agreements
referred to by SCHEDULE 4.21.1.
4.21.2. EMPLOYEE BENEFIT SCHEMES.
4.21.2.1. All employee benefit schemes of the Corporation and its
Subsidiaries (the "Employee Benefit Schemes") are listed
on SCHEDULE 4.21.2. Any Employee Benefit Scheme which
constitutes employee pension benefit plans (the "Pension
Schemes") are so designated on SCHEDULE 4.21.2.
4.21.2.2. The Employee Benefit Schemes have been maintained, in
all respects, in accordance with their terms and
applicable law, and the Corporation and its Subsidiaries
have complied with respect to each Employee Benefit
Scheme, in all respects, with the requirements of the
applicable law.
4.21.2.3. All contributions required to have been made under any
Employee Benefit Scheme have been made by the due date
thereof (including any valid extensions).
4.21.2.4. There are no pending or threatened claims against the
Corporation or any of its Subsidiaries, any Employee
Benefit Schemes or its Assets with respect to the
operation of such plan (other than routine benefit
claims).
4.21.2.5. Neither the Corporation nor any of its Subsidiaries
maintain retiree life or retiree health schemes which
provide for continuing benefits or coverage.
4.21.2.6. Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will:
4.21.2.6.1. result in any payment becoming due to any employee
(current, former or retired) of the Corporation or any
of its Subsidiaries;
PAGE 16
4.21.2.6.2. increase any benefits under any Employee Benefit
Scheme or any arrangement described in SCHEDULE
4.21.1; or
4.21.2.6.3. result in the acceleration of the time of payment
or vesting of any such benefits, it being
understood, for the avoidance of doubt, that under
Belgian law the termination of a contract of
employment may lead to an immediate claim by the
former employee of any sums to which he is entitled
under any Pension Scheme.
4.22. LITIGATION; DECREES.
4.22.1. Except as set forth in SCHEDULE 4.22 or in the 2000 Annual
Accounts there are no:
4.22.1.1. lawsuits, claims, administrative or other proceedings or
investigations relating to the conduct of the Business by
the Corporation or any of its Subsidiaries pending or
threatened by, against or affecting the Corporation or any
of its Subsidiaries; or
4.22.1.2. judgements, orders or decrees of any governmental entity
binding on the Corporation or any of its Subsidiaries or
the Assets.
4.22.2. Without limiting the generality or effect of any other
provision hereof:
4.22.2.1. Since their incorporation, there have been no claims or
allegations asserted against the Corporation or any of its
Subsidiaries that any product was defective or caused any
injury or harm to any person, including without limitation
all such claims and allegations relating to returns,
warranty claims, failure to warn, breach of warranties of
merchantability or fitness for any purpose or use or
similar matters, other than those claims or allegations
which were settled promptly and without any third party
intervention; and
4.22.2.2. No basis exists for any person to make any such claim
except as so described.
4.23. COMPLIANCE WITH LAW; PERMITS.
4.23.1. The Corporation and its Subsidiaries have complied with each
Law, judgement, order and decree of any governmental entity to
which they or their Business, operations, assets or properties
are subject and they are not currently in violation of any of the
foregoing.
4.23.2. The Corporation and its Subsidiaries own, hold, possess or
lawfully use in the operation of their Business all permits which
are in any manner necessary for them to conduct their Business as
now or previously conducted or for the ownership and use of the
Assets, free and clear of all Liens, and in compliance with all
Laws (the "Permits"). . Without limiouation to the foregoing, the
Permits include the registration of SCS as a building contractor.
4.23.3. The Permits are not threatened with suspension or cancellation,
in whole or in part, and none has expired are will expire before
the end of the term for which they have been delivered. The
Corporation and its Subsidiaries have taken all appropriate
action (including without limitation the necessary investments)
that ought to have been taken with respect to the renewal or
extension of such Permits.
PAGE 17
4.23.4. Neither the Corporation nor any of its Subsidiaries are in
default or have received any notice of any claim of default, with
respect to any such Permits.
4.23.5. None of such Permits will be adversely affected by consummation
of the transactions contemplated hereby.
4.23.6. No shareholder, director, officer, employee or former employee
of the Corporation or any of its Subsidiaries or any other
person, firm or corporation owns or has any proprietary,
financial or other interest (direct or indirect) in any Permit
which the Corporation or any of its Subsidiaries owns, possesses
or uses in the operation of the Business as now or previously
conducted.
4.24. ENVIRONMENTAL MATTERS.
4.24.1. The operation of the Business is in compliance with all
applicable environmental laws;
4.24.2. the Corporation and its Subsidiaries have obtained and
currently maintain all operational permits necessary for their
operations and are in compliance with such operational permits;
4.24.3. there are no judicial or administrative actions, proceedings or
investigations pending or threatened to revoke such operational
permits;
4.24.4. Neither the Corporation nor any of its Subsidiaries has
received a notice from any governmental entity or written notice
from any person to the effect that there is lacking any
operational permit required for the current use or operation of
any property owned, operated or leased by the Corporation or any
of its Subsidiaries;
4.24.5. there are no judicial or administrative actions, proceedings or
investigations pending or threatened against the Corporation or
any of its Subsidiaries alleging the violation of any
environmental law or operational permit;
4.24.6. none of the Corporation, any of its Subsidiaries, any
predecessor of the Corporation or any of its Subsidiaries or any
current or former owner or operator of premises currently leased
or operated by the Corporation or any of its Subsidiaries has
filed any notice under any environmental law indicating past or
present treatment, storage or disposal of or reporting a release
or threatened release of hazardous material into the environment;
4.24.7. neither the Corporation nor any of its Subsidiaries or any of
its past or current facilities and operations, or any predecessor
of the Corporation or any of its Subsidiaries, is subject to any
outstanding judgement, ruling or arbitration award or any
agreement with any governmental entity or other person, or to any
investigation, respecting (i.) environmental laws, (ii.) remedial
action, (iii.) any environmental claim or (iv.) the release or
threatened release of any hazardous material;
4.24.8. all the Real Property and all real property formerly owned,
operated or leased by the Corporation or any of its Subsidiaries
or any predecessor of the Corporation or any of its Subsidiaries
and, to the knowledge of the Corporation, all property adjacent
to the Real Property, is free of contamination by or from any
hazardous materials;
PAGE 18
4.24.9. none of the operations of the Corporation or any of its
Subsidiaries or any predecessor of the Corporation or any of its
Subsidiaries or of any current or former owner or operator of
premises currently leased or operated by the Corporation or any
of its Subsidiaries involves or previously involved the
generation, transportation, treatment, storage or disposal of
hazardous waste;
4.24.10. there is not now, nor has there been in the past, on, in or
under the Real Property or any other real property currently or
formerly owned, leased or operated by the Corporation or any of
its Subsidiaries or any of their predecessors, (i.) any
underground storage tanks, above-ground storage tanks, dikes or
impoundment, (ii.) any asbestos-containing materials, (iii.) any
polychlorinated biphenyl or (iv.) any radioactive substances; and
4.24.11. neither the Corporation nor any of its Subsidiaries is subject
to environmental costs and liabilities, and no facts or
circumstances exist which could give rise to environmental costs
and liabilities relating to soil, soil water or air pollution,
illegal waste dumping, illegal waste water discharging or illegal
waste transportation further to environmental laws, including but
not limited to civil law and, as to the Belgian Subsidiaries, the
Flemish Decree of 22 February 1995 relating to Soil Clean-Up (as
amended), with respect to third parties (including without
limitation US, Canadian, Australian, Belgian and foreign
governmental entities). Neither the Corporation nor any of its
Subsidiaries is under an obligation to proceed to any further
analysis, to take safety measures or to proceed to any clean-up.
4.25. TAXES.
4.25.1. Except as set out in SCHEDULE 4.25, All income tax returns and
all other tax returns that are required to be filed on or before
the Closing by the Corporation or any of its Subsidiaries have
been duly filed (or will be duly filed on or before the Closing)
on a timely basis under the laws of each applicable jurisdiction.
All such tax returns are complete and accurate in all respects.
All taxes which are due with respect to the Corporation and its
Subsidiaries have been timely paid by them, except taxes disputed
in good faith and for which adequate reserves have been
established on the 2000 Annual Accounts in accordance with GAAP.
With respect to any taxes which are not yet due and owing, the
Corporation and its Subsidiaries have made due and sufficient
accruals for all such taxes in their financial statements. The
Corporation and its Subsidiaries have made all payments of
estimated taxes sufficient to avoid any understatement penalties,
or have made due and sufficient provisions for such
understatement penalties.
4.25.2. No claim for assessment or collection of taxes has been
asserted against the Corporation or any of its Subsidiaries.
Neither the Corporation nor any of its Subsidiaries is a party to
any pending audit, action, proceeding or investigation by any
governmental entity for the assessment or collection of taxes,
nor is there any such threatened audit, action, proceeding or
investigation.
4.25.3. Neither the Corporation nor any of its Subsidiaries has waived
or extended any statute of limitation for the assessment or
collection of taxes. No claim has ever been made by a
governmental entity in a jurisdiction where the Corporation or
any of its Subsidiaries does not currently file tax returns that
any of them is or may be
PAGE 19
subject to taxation by that jurisdiction, nor is there any such
assertion of jurisdiction which is likely to occur. No security
interests or Liens have been imposed upon or asserted against any
of the Assets as a result of or in connection with any failure,
or alleged failure, to pay any tax.
4.25.4. The Corporation and its Subsidiaries have withheld and paid all
taxes required to be withheld in connection with any amounts paid
or owing to any employee, creditor, independent contractor or
other third party.
4.26. SUBSIDIES. Nothing has occurred and neither the Corporation
nor any of its Subsidiaries has done or agreed to do anything as a
result of which :
4.26.1. any subsidy or grant paid to the Corporation or any of its
Subsidiaries is or may be liable to be refunded as a whole or in
part; or
4.26.2. any such subsidy or grant for which application has been made
by it, will or may not be paid or may be reduced.
The execution of this Agreement and the consummation of the
transactions contemplated hereby will not require the reimbursement of
or otherwise jeopardize the Corporation's or any of its Subsidiaries'
entitlement to benefit from any subsidies or grants, in accordance with
the terms under which they were afforded to them.
4.27. COMMISSIONS OR FINDER'S FEES. Neither the Corporation nor any
of its Subsidiaries or any person or entity acting on the behalf of
the Corporation or any of its Subsidiaries has agreed to pay a
commission, finder's fee or similar payment in connection with this
Agreement or any matter related hereto to any person or entity.
4.28. CERTAIN BUSINESS PRACTICES AND REGULATIONS; POTENTIAL CONFLICTS
OF INTEREST.
4.28.1. The Corporation nor any of its Subsidiaries or any directors,
officers, agents or employees of them have, with regard to the
Business:
4.28.1.1. used any funds of the Corporation or any of its
Subsidiaries for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to
political activity;
4.28.1.2. made any unlawful payment to foreign or domestic
government officials or employees or to foreign or
domestic political parties or campaigns from the funds of
the Corporation or any of its Subsidiaries; or
4.28.1.3. made any other unlawful payment.
4.28.2. None of the shareholders, officers or directors of the
Corporation or any of its Subsidiaries or any entity controlled
by any of the foregoing and except as disclosed in SCHEDULE 4.28:
4.28.2.1. owns, directly or indirectly, any significant interest
in or is a director, officer, employee, consultant or
agent of any person which is a competitor, lessor, lessee
or customer of, or supplier of goods or services to, the
Business;
4.28.2.2. owns, directly or indirectly, in whole or in part, any
real property, leasehold interests or other property, the
use of which is necessary for the Business;
PAGE 20
4.28.2.3. has any cause of action or other suit, action or claim
whatsoever against, or owes any amount to the Corporation
or any of its Subsidiaries other than claims in the
ordinary course of business;
4.28.2.4. has sold to or purchased from the Corporation or any of
its Subsidiaries any assets or property for aggregate
consideration in excess of $10,000 since 1st January 2000;
or
4.28.2.5. is a party to any contract or participates in any
arrangement, written or oral, pursuant to which the
Business provides services of any nature to any such
individual or entity, except to such individual in his
capacity as an employee of the Business.
4.29. CONDUCT OF THE BUSINESS. In the period between the date of the
2000 Annual Accounts and the Closing, neither the Corporation nor any
of its Subsidiaries, as the case may be, has:
4.29.1. suffered any decrease of its net assets;
4.29.2. incurred any liabilities, other than liabilities incurred in
the ordinary course of business consistent with past practice, or
discharged or satisfied any lien or encumbrance, or paid any
liabilities, other than in the ordinary course of business
consistent with past practice, or failed to pay or discharge when
due any liabilities which failure has caused or will cause any
damage or risk of loss to it or any of its assets or properties;
4.29.3. sold, encumbered, assigned or transferred any assets or
properties which would have been included in the Assets, except
for the sale of inventory in the ordinary course of business
consistent with past practice and the (contemplated) transfer of
the shares in SDL Invest NV owned by SCS;
4.29.4. created, incurred, assumed or guaranteed any indebtedness for
money borrowed, or mortgaged, pledged or subjected any of its
Assets to any encumbrance of any nature whatsoever, except for
Permitted Liens;
4.29.5. made or suffered any amendment or termination of any agreement
or commitment to which it is a party or by which it is bound, or
cancelled, modified or waived any substantial claims or rights
held, whether or not in the ordinary course of business;
4.29.6. declared, set aside or paid any dividend or made or agreed to
make any other distribution or payment in respect of its shares
or redeemed, purchased or otherwise acquired or agreed to redeem,
purchase or acquire any of its own shares;
4.29.7. suffered any damage, destruction or loss, whether or not
covered by insurance, adversely affecting its Business or any
item or items carried on its books of account individually or in
the aggregate at more than $10,000, or suffered any repeated,
recurring or prolonged shortage, cessation or interruption of
supplies or utility or other services required to conduct its
Business;
4.29.8. received notice or had knowledge of any actual or threatened
labour trouble, strike or other occurrence, event or condition of
any similar character which has had or might have a adverse
effect on its Business;
PAGE 21
4.29.9. made commitments or agreements for capital expenditures or
capital additions or improvements exceeding in the aggregate
$10,000 except such as may be involved in ordinary repair,
maintenance or replacement of its assets;
4.29.10. increased the salaries or other compensation of, or made any
advance (excluding advances for ordinary and necessary business
expenses) or loan to, any of its employees or made any increase
in, or any addition to, other benefits to which any of its
employees may be entitled;
4.29.11. changed any of the accounting principles followed by it or the
methods of applying such principles;
4.29.12. entered into any transaction other than in the ordinary course
of business consistent with past practice; or
4.29.13. suffered any adverse change in its Assets, its liabilities or
its Business (financial or otherwise), other than changes
relating to the market as a whole.
4.30. DISCLOSURE. No representation or warranty by the Corporation
contained in this Agreement, and no statement contained in any
document (including without limitation the financial statements
referenced in SCHEDULE 4.7, the documents to be delivered at or prior
to the Closing pursuant to SECTION 3 and the SCHEDULES hereto),
furnished or to be furnished by or on behalf of the Corporation to the
Investor or any of its representatives in connection with the
transactions contemplated hereby, contains or will contain any untrue
statement of a fact, or omits or will omit to state any fact
necessary, in light of the circumstances under which it was or will be
made, in order to make the statements herein or therein not misleading
or necessary in order fully and fairly to provide the information
required to be provided in any such document. The Corporation has not
failed to disclose to the Investor any fact which would reasonably be
determined to have a adverse effect on the Business, or which is
otherwise material to the Business.
5. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
THE INVESTOR REPRESENTS AND WARRANTS TO THE CORPORATION AS FOLLOWS:
5.1 CORPORATE POWER. The Investor has all requisite corporate power to
enter into this Agreement and the Stockholders' Agreement, to purchase
the Shares and to carry out and perform its obligations under the terms
of this Agreement and the Stockholders' Agreement.
5.2 AUTHORIZATION. All corporate action on the part of the Investor
necessary for the authorization, execution, delivery and performance by
the Corporation of this Agreement and the Stockholders' Agreement, and
the consummation of the transactions contemplated hereby and thereby,
and for the purchase of the Shares has been taken. This Agreement and
the Stockholders' Agreement are, and will be at the Closing, legal,
valid and binding obligations of the Investor, enforceable against the
Investor in accordance with their terms, except as limited by
bankruptcy, insolvency or other laws affecting creditors' rights
generally or by the availability of equitable remedies.
5.3. ACCREDITED INVESTOR. The Investor is: (i) aware of what
constitutes an Accredited
PAGE 22
Investor as that term is defined under Regulation D as promulgated
under the Securities Act of 1933, as amended (together with the rules
and regulations promulgated thereunder, the "Act"), and under the laws,
if any, of each state governing the Investor; (ii) an Accredited
Investor for purposes of Regulation D and the laws, if any, of the
state governing the purchase of the Shares; and (iii) able to bear the
economic risks of this investment and, consequently, without limiting
the generality of the foregoing, is able to hold the Shares for an
indefinite period of time and has a sufficient net worth to sustain a
loss of the entire investment in the Corporation in the event such loss
should occur.
5.4. EVALUATION OF RISKS. The Investor has such knowledge and
experience in financial and business matters as to be capable of
evaluating the merits and risks of, and bearing the economic risks
entailed by, an investment in the Corporation and of protecting its
interests in connection with such an investment. The Investor
recognizes that the investment in the Corporation involves a high
degree of risk and the Investor may lose the entire investment in the
Corporation.
5.5. NO DISTRIBUTION. The Investor is acquiring the Shares for its own
account for investment purposes only and not with a view to or for
resale in connection with any distribution of the Shares, whether
directly or indirectly. The Investor has not offered or sold any
portion of the Shares and has no present intention of dividing the
Shares with others or of selling, distributing or otherwise disposing
of any portion of the Shares either currently or after the passage of a
fixed or determinable period of time or upon the occurrence or
non-occurrence of any predetermined event or circumstance.
5.6. NO REGISTRATION. The Investor understands that the Shares have not
been registered under the Securities Act and are being sold to the
Investor in reliance upon an exemption from the Securities Act
including, but not limited to, applicable exemptions under Section
4(2), Regulation D and Regulation S of the Securities Act. The Investor
understands that it must hold the Shares for an indefinite period of
time unless the sale or other transfer thereof is subsequently
registered under the Securities Act or an exemption from such
registration is available at that time. Without any limitation to
Section 7.7., the Investor acknowledges that it understands that the
Shares may never be registered under the Securities Act.
5.7. OFFERING OUTSIDE THE UNITED STATES. The Investor is not a "U.S.
Person" as defined in Regulation S promulgated under the Securities Act
("Regulation S"). Pursuant to Regulation S, a "U.S. Person" means: (i)
any natural person resident in the United States, (ii) any partnership
or corporation organized or incorporated under the laws of the United
States, (iii) any estate of which any executor or administrator is a
U.S. Person, (iv) any trust of which any trustee is a U.S. Person, (v)
any agency or branch of a foreign entity located in the United States,
(vi) any non-discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary for the benefit or
account of a U.S. Person, (vii) any discretionary account or similar
account (other than a estate or trust) held by a dealer or other
fiduciary organized, incorporated or (if an individual resident in the
United States, or (viii) any partnership or corporation if organized
under the laws of any foreign jurisdiction and formed by any U.S.
Person principally for the purpose of investing in securities not
registered under the Securities Act, unless it is
PAGE 23
organized or incorporated and owned by accredited investors (as defined
in Rule 501(a) under the Securities Act) who are not natural persons,
estates or trusts.
The Investor agrees not to reoffer or sell the Shares and to
cause any transferee permitted hereunder not to reoffer or sell the
Shares, within the United States, or for the account or benefit of, a
U. S. Person (i) as part of the distribution of the Shares at any time
or (ii) otherwise, unless, in either case, in a transaction meeting the
requirements of Regulation S under the Securities Act, including
without limitation: the offer (i) is not made to a person in the United
States and either (A) at the time the buy order is originated, the
buyer is outside the United States or the seller and any person acting
on its behalf reasonably believe that the buyer is outside the United
States, or (B) the transaction is executed in, on or through the
facilities of a designated offshore securities market and neither the
seller nor any person acting on its behalf knows that the transaction
has been pre-arranged with a buyer in the United States; and (ii) no
directed selling efforts shall be made in the United States by the
seller, an affiliate or any person acting on their behalf.
5.8. ADDITIONAL TRANSFER RESTRICTIONS. The Investor understands and
agrees that, in addition to the restrictions set forth in this
Agreement, the following restrictions and limitations are applicable to
its purchase of the Shares and any resale, pledge, hypothecation,
transfer or other disposition of the Shares:
The following legend reflecting all applicable restrictions
will be placed on any certificate(s) or other document(s) evidencing
the Shares and the Investor must comply with the terms and conditions
set forth in such legends prior to any resale, pledge, hypothecation,
transfer or other disposition of the Shares:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED AND MAY NOT BE TRANSFERRED UNLESS (A) THE
STOCKHOLDER WISHING TO TRANSFER SUCH SECURITIES PROVIDES AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
COUNSEL FOR _________ [Insert name of counsel to investor]
AND SUCH COUNSEL IS SATISFATORY TO THE COMPANY (THE
"CORPORATION") STATING THAT THE PROPOSED TRANSFER OF THE
CORPORATION'S SECURITIES IS EXEMPT FROM THE REGISTRATION
PROVISIONS OF ALL APPLICABLE FEDERAL, STATE OR OTHER LAWS
INCLUDING BUT NOT LIMITED TO APPLICABLE EXEMPTIONS UNDER
SECTION 4(2) OF THE SECURITIES ACT, REGULATION D OR
REGULATION S OF THE SECURITIES ACT; OR (B) THE SECURITIES
HAVE BEEN REGISTERED PURSUANT TO THE SERCURITIES ACT."
PAGE 24
Stop transfer instructions have been or will be placed on any
certificates or other documents evidencing the Shares so as to restrict
the resale, pledge, hypothecation or other transfer thereof in
accordance with the provisions hereof.
6. REPORTING AND INSPECTION.
6.1. ACCOUNTING. The Corporation will maintain and will cause each of its
Subsidiaries to maintain a system of accounting established and
administered in accordance with GAAP and all financial statements or
information delivered under Section 6.2 will be prepared in accordance
with GAAP.
6.2. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Corporation will
deliver, through the member of its Board of Director elected by the
Investor, to the Investor:
6.2.1. as soon as practicable after the end of each fiscal year of the
Corporation, and in any event within ninety (90) days thereafter,
consolidated and consolidating balance sheets of the Corporation
and the Subsidiaries, as at the end of such year, and
consolidated and consolidating statements of operations and cash
flow of the Corporation and its Subsidiaries, for such fiscal
year, prepared in accordance with GAAP and setting forth in each
case in comparative form the figures for the previous fiscal
year, all in reasonable detail and, in the case of the
consolidated statements, certified, without qualification (or
with a qualification reasonably acceptable to the Investor), by
an accounting firm selected by the Corporation and reasonably
acceptable by the Investor;
6.2.2. a copy of each financial statement, report and return that the
Corporation or any Subsidiary files with the Commission or any
stock exchange;
6.2.3. promptly upon the Corporation's learning thereof, notice of (i)
any litigation materially adversely affecting the Corporation or
any Subsidiary whether or not the claim is considered by the
Corporation to be covered by insurance, and (ii) the institution
of any suit or administrative proceeding which could be
reasonably expected to materially adversely affect the
Corporation's or any Subsidiary's business, affairs, assets,
operations, employee relations, rights or condition, financial or
otherwise;
6.2.4. promptly upon the occurrence thereof, notice of any default
under, or breach or violation of, this Agreement or the
Stockholders' Agreement; and
6.2.5. with reasonable promptness, such other data and information as
the Corporation may from time to time furnish to holders of its
securities in their capacities as such and such data and
information as the Investor may reasonably request.
6.3. INSPECTION RIGHTS. The Corporation will permit an authorized
representative designated by the Investor, at the Investor's expense,
to visit and inspect the properties of the Corporation and its
Subsidiaries, including its and their books and records (and to make
extracts therefrom or copies thereof) and to discuss its and their
affairs, finances and accounts with its and their officers and
personnel, all at such reasonable times and as often as the Investor
may reasonably request.
PAGE 25
7. COVENANTS OF THE CORPORATION.
7.1. INSURANCE. The Corporation will maintain or cause to be maintained
with financially sound and reputable insurers reasonably acceptable to
the Investor, insurance, including, without limitation, directors and
officers liability insurance and business interruption insurance, with
respect to its Assets and Business and the Assets and Business of its
Subsidiaries against loss or damage covering risks of such types and
in such amounts which are customary for similarly situated
corporations of established reputation engaged in the same or similar
businesses, in adequate amounts, and at the request of the Investor
shall furnish the Investor with evidence of the same.
7.2. PAYMENT OF TAXES AND OTHER OBLIGATIONS. The Corporation will pay or
cause to be paid all taxes, assessments and other governmental charges
levied upon any of its assets or those of its Subsidiaries or in
respect of its or their respective franchises, businesses, income or
profits, all trade accounts payable, in accordance with usual and
customary business terms, and all claims for work, labor or materials,
which if unpaid might become a Lien or charge upon any asset of the
Corporation or any of its Subsidiaries, before the same become
delinquent, except that (unless and until foreclosure, distraint, sale
or other similar proceedings shall have been commenced) no such charge
need be paid if being contested in good faith and by appropriate
measures promptly initiated and diligently conducted if (a) such
reserve or other appropriate provision, if any, as shall be required
by sound accounting practice consistent with GAAP shall have been made
therefor and (b) such contest does not have a material adverse effect
on the financial condition of the Corporation or the ability of the
Corporation to pay any Indebtedness and no Assets are in imminent
danger of forfeiture. Without limitation to the other provisions of
this Agreement, the Corporation will submit any income generated by
e-Auction Barbados in favor of the Corporation, either by way of
dividends, capital gains or otherwise, to the applicable US tax
regulation so as to avoid that the income generated by the Corporation
in favor of the Investor, either by way of dividends or capital gains,
were, under Belgian law, be excluded from the tax exemption set forth
in articles 202 and 204 of the Belgian Income Tax Code 1992 (the
so-called "Participation Exemption").
7.3. COMPLIANCE WITH LAWS. The Corporation will comply, and will cause each
Subsidiary to comply, with all Laws, rules, regulations, judgments,
orders and decrees of any governmental or regulatory authority
applicable to it and its respective Assets. Neither the Corporation
nor anyone acting on its behalf will take any action hereafter that
could cause the loss of the exemption from the registration
requirements of the Securities Act for the sale and issuance of the
Shares and the issuance of the Common Stock issuable upon conversion
of the Shares.
7.4. PRESERVATION OF CORPORATE EXISTENCE AND PROPERTY. The Corporation will
preserve, protect and maintain, and cause each Subsidiary to preserve,
protect and maintain, (a) its corporate existence, and (b) all rights,
franchises, accreditations, privileges and properties, the failure of
which to preserve, protect and maintain could have a material adverse
effect on the Business, affairs, Assets, prospects, operations,
employee relations,
PAGE 26
rights or condition, financial or otherwise, of the Corporation and
its Subsidiaries taken as a whole.
7.5. PROPRIETARY RIGHTS. The Corporation will, and will cause each of its
Subsidiaries to, possess and maintain all material proprietary rights
necessary to the conduct of their Business and own all right, title
and interest in and to, or have a valid license for, all material
proprietary rights used by the Corporation or any Subsidiary in the
conduct of its Business. The Corporation will not take any action, or
fail to take any action, and will prevent each of its Subsidiaries
from taking any action or failing to take any action, which would
result in the invalidity, abuse, misuse or unenforceability of such
proprietary rights or which would infringe upon any rights of other
Persons.
7.6. MAINTENANCE. The Corporation will, and will cause each Subsidiary to,
maintain and keep its properties in good repair, working order and
condition, subject to normal wear and tear, and from time to time make
all necessary repairs, renewals and replacements so that its Business
may be properly and advantageously conducted at all times.
7.7. REGISTRATION AND LISTING. Promptly following the Closing, the
Corporation will:
7.7.1. Prepare and file with the Commission a registration statement on
Form S-1 and/or in any other form required with respect to the
Shares and use its best efforts to cause such registration
statement to become effective as soon as practicable after such
filing and to remain effective for the period of distribution
contemplated by the Investor;
7.7.2. Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective for the period specified in
clause 7.7.1. and to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by
such registration statement until such time as the Shares
registered thereunder have been disposed of in accordance with
the intended methods of disposition by the Investor set forth in
such registration statement;
7.7.3. Furnish to the Investor such number of copies of such
registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including
each preliminary prospectus) and such other documents as the
Investor may reasonably request in order to facilitate the
disposition of the Shares owned by the Investor;
7.7.4. Use its best efforts to register or qualify such Shares under
such other securities laws of such jurisdictions as the Investor
reasonably requests and do any and all other acts and things
which may be necessary or desirable to enable the Investor to
consummate the public sale or other disposition in such
jurisdictions of the Shares;
7.7.5. Cause all such Shares to be listed on each securities exchange on
which similar securities issued by the Corporation are then
listed, or if no similar securities issued by the Corporation are
then listed on a securities exchange, a securities exchange
PAGE 27
(including without limitation the Nasdaq National Market, Inc.)
selected by the Corporation and reasonably acceptable to the
Investor;
7.7.6. Provide a transfer agent and registrar for all such Shares not
later than the effective date of such registration statement;
7.7.7. Enter into such customary agreements (including underwriting
agreements) and take all such other actions as the Investor or
the underwriters, if any, reasonably request in order to expedite
or facilitate the disposition of such Shares;
7.7.8. Make available for inspection by the Investor, any underwriter
participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent designated
by any the Investor or underwriter, all financial and other
records, pertinent corporate documents and properties of the
Corporation, and cause the Corporation's officers, directors,
employees and independent accountants to supply all information
reasonably requested by the Investor, underwriter, attorney,
accountant or agent in connection with such registration
statement;
7.7.9. Notify the Investor, promptly after it shall receive notice
thereof, of the time when such registration statement has become
effective or a supplement to any prospectus forming a part of
such registration statement has been filed;
7.7.10. Notify the Investor of any request by the Commission for the
amending or supplementing of such registration statement or
prospectus or for additional information;
7.7.11. Prepare and file with the Commission, promptly upon the request
of the Investor, any amendments or supplements to such
registration statement or prospectus which, in the opinion of
counsel to the Investor, is required under the Securities Act or
the rules and regulations thereunder in connection with the
distribution of Shares;
7.7.12. Prepare and promptly file with the Commission and promptly
notify the Investor of the filing of such amendment or supplement
to such registration statement or prospectus as may be necessary
to correct any statements or omissions if, at the time when a
prospectus relating to such securities is required to be
delivered under the Securities Act, any event shall have occurred
as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of
a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances in
which they were made, not misleading;
7.7.13. Advise the Investor, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by
the Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for
such purpose and promptly use all reasonable efforts to prevent
the issuance of any stop order or to obtain its withdrawal if
such stop order should be issued;
PAGE 28
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7.7.14. At least forty-eight hours prior to the filing of any
registration statement or prospectus or any amendment or
supplement to such registration statement or prospectus, furnish
a copy thereof to the Investor;
7.7.15. Refrain from filing any such registration statement,
prospectus, amendment or supplement to which counsel to the
Investor shall have reasonably objected on the grounds that such
amendment or supplement does not comply in all material respects
with the requirements of the Securities Act or the rules and
regulations thereunder, unless, in the case of an amendment or
supplement, in the opinion of counsel for the Corporation the
filing of such amendment or supplement is reasonably necessary to
protect the Corporation from any liabilities under any applicable
federal or state law and such filing will not violate applicable
laws; and
7.7.16. At the request of the Investor in connection with an
underwritten offering, furnish on the date or dates provided for
in the underwriting agreement: (i) an opinion of counsel,
addressed to the underwriters and the Investor, in form and
substance satisfactory to such underwriters and the Investor, and
(ii) a letter or letters from the independent certified public
accountants of the Corporation, addressed to the underwriters and
the Investor, in form and substance satisfactory to such
underwriters and the Investor, in which letters such accountants
shall state, without limiting the generality of the foregoing,
that they are independent certified public accountants within the
meaning of the Securities Act and that in the opinion of such
accountants the financial statements and other financial data of
the Corporation included in the registration statement, the
prospectus, or any amendment or supplement thereto comply in all
material respects with the applicable accounting requirements of
the Securities Act.
7.8. FEES AND EXPENSES.
7.8.1. The Corporation will bear all of its own expenses in connection
with the preparation, negotiation and execution of this Agreement
and the Stockholders' Agreement, and the transactions
contemplated hereby and thereby, and will, within one month
following the Closing, also reimburse the Investor for one-half
of any reasonable expenses the Investor incurs in an amount not
to exceed $85,000 in connection with the due diligence
investigation of the Corporation, the preparation, execution and
negotiation of this Agreement and the Stockholders' Agreement and
the transactions contemplated hereby and thereby.
7.8.2. All expenses incident to the Corporation's performance of or
compliance with Section 7.7 of this Agreement, including, but not
limited to, all registration and filing fees, fees and expenses
of compliance with federal, state and foreign securities laws,
printing expenses, messenger and delivery expenses, and fees and
disbursements of counsel for the Corporation and its independent
certified public accountants, underwriters (excluding discounts
and commissions attributable to the Shares included in such
registration) and other Persons retained by the Corporation (all
such expenses being herein called "Registration Expenses"), will
be borne by the Corporation. In addition, the Corporation will
pay its internal expenses
PAGE 29
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(including, but not limited to, all salaries and expenses of its
officers and employees performing legal or accounting duties),
the expense of any annual audit or quarterly review, the expense
of any liability insurance obtained by the Corporation and the
expenses and fees for listing the securities to be registered on
each securities exchange.
7.8.3. In connection with any registration in which Shares are included
or proposed to be included, the Corporation will reimburse the
Investor for the reasonable costs and expenses incurred by the
Investor in connection with such registration, including, but not
limited to, reasonable fees and disbursements of counsel.
7.9. LOCK UP
The Corporation will maintain and cause e-Auction Belgium to maintain
the share purchase agreement dated as of 7th January 2000 which has
been entered into by the Corporation, e-Auction Belgium, Xx Xxx
Xxxxxxxxxx and Xxx Xxxxx Xxxxxx (the "SCS Agreement"). The Corporation
will not waive and cause e-Auction Belgium not to waive any of its
rights under the SCS Agreement without the prior written approval of
the Investor.
0.00.XXXXX OPINION
Promptly after the execution of this Agreement and in any event not
later than fourteen (14) days as from the date hereof, the Corporation
will deliver to the Investor the legal opinion of its counsel, dated
not later than fourteen (14) days as from the date hereof, addressed to
the Investor, with respect to its Subsidiaries and in the form of
EXHIBIT B.
8. MISCELLANEOUS.
8.1. CONSENT TO AMENDMENTS; WAIVERS. The provisions of this Agreement may
be amended, and the Corporation may take any action herein prohibited,
or omit to perform any act herein required to be performed by it, only
if the Corporation has obtained the written consent of the Investor.
No other course of dealing between the Corporation and the Investor or
any delay in exercising any rights hereunder or under the certificate
of incorporation of the Corporation shall operate as a waiver of any
rights of any party hereto. Any waiver, permit, consent or approval of
any kind or character on the part of any party of any provisions or
conditions of this Agreement must be made in writing and shall be
effective only to the extent specifically set forth in such writing.
PAGE 30
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8.2. INDEMNIFICATION.
8.2.1. BY THE CORPORATION. The Corporation agrees to fully indemnify
the Investor against any and all losses, damages, liabilities,
claims, deficiencies, costs, expenses and expenditures
(including, to the extent permitted by the law, lawyer's fees),
all of the foregoing being referred to as "Damages", resulting
from or being a consequence of:
8.2.1.1. any breach, inaccuracy or incompleteness of any
representation or warranty of the Corporation contained in
this Agreement; or
8.2.1.2. any breach of any other covenant or obligation contained
in this Agreement or the Stockholders' Agreement of (a)
the Corporation or any Person (other than the Investor)
who is a party to the Stockholders' Agreement; or
8.2.1.3. claims asserted whether prior or subsequent to the
Closing by any Person (including tax and other
governmental authorities) against the Corporation, any of
its Subsidiaries or the Investor based upon or arising out
of facts existing or actions taken on or before the
Closing.
8.2.2. Damages as suffered by the Investor will be assumed equal to
6.2 % (six point two percentage points) of the decrease of the
net assets of the Corporation or any of its Subsidiaries, as the
case may be and without duplication, caused by one or more of the
aforementioned circumstances provided further that if the Damages
effectively suffered by the Investor exceed such assumed amount,
the Investor is entitled to claim from the Corporation full
amount of such Damages. Without any limitation to the foregoing,
parties agree that Damages as suffered by the Investor as a
consequence of breach of the covenant set forth in Section 7.10,
will be assumed equal to at least $10,000 provided further that
if the Damages effectively suffered by the Investor exceed such
assumed amount, the Investor is entitled to claim from the
Corporation full amount of such Damages.
8.2.3. OPTION. As an alternative to being indemnified in cash for
Damages in accordance with this Section 8.2, the Investor shall
be entitled to acquire from the Corporation, either by purchase
or subscription or otherwise, for $1.00 (One U.S. Dollar) a total
number of up to a maximum of X common shares of the Corporation,
it being understood that X will be determined as follows:
X = (D/SP) * N * (6.2/100)
where :
D = the amount of Damages due by the Corporation to the Investor
pursuant to this Section 8.2, it being understood that the value
of the parameter D cannot exceed the Purchase Price; and
SP = the Purchase Price; and
N= number of shares of the Corporation which are issued and
PAGE 31
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outstanding at the moment of the exercise of this option.
In the event the Investor does not exercise this option for the
entire number of X shares of the Corporation, the Investor shall
be entitled to claim vis-a-vis the Corporation the payment of the
difference between the amount of Damages due by the Corporation to
the Investor pursuant to this Section 8.2, on the one hand, and
the value Y, on the other hand, it being understood that Y will be
determined as follows:
Y = Z* SP/N
where Z = the number of shares in the Corporation for which
the Investor effectively exercised the aforementioned option.
8.2.4. TIME LIMITS. The agreements, representations and warranties of
the parties hereto contained in this Agreement or in any
certificate or other writing delivered pursuant hereto or in
connection herewith shall survive the Closing until the second
anniversary of the date of the Closing or in the case of the
agreements, representations and warranties contained in Section
4.21 and Section 4.25 until the sixth anniversary of the Closing
except if the legal statute of limitations were to provide for a
longer period of prescription in which event such longer period
extended with three months, shall apply. Notwithstanding the
preceding, any agreement, representation or warranty in respect
of which indemnity may be sought under this Section 8.2 shall
survive the time at which it would otherwise terminate pursuant
to the preceding sentence, if a Claim Notice (as defined below)
or Third Party Claim Notice (as defined below) of the inaccuracy
or breach thereof giving rise to such right to indemnity shall
have been given to the party against whom such indemnity may be
sought prior to such time.
8.2.5.PROCEDURE REGARDING NON-THIRD PARTY CLAIMS.
8.2.5.1. All claims not involving a claim or demand being asserted
against or sought to be collected by a third party under
this Section 8.2 shall be asserted and resolved as
follows.
8.2.5.2. In the event the Investor (the "Indemnified Party")
should have a claim against the Corporation (the
"Indemnifying Party") hereunder which does not involve a
claim or demand being asserted against or sought to be
collected from such Indemnified Party by a third party,
the Indemnified Party shall as promptly as practical send
a claim notice to the Indemnifying Party, specifying the
nature of and basis for the claim and (to the extent
possible) the estimated amount of damages attributable
thereto (which estimate shall not be conclusive of the
final amount of such claim) together with the supporting
documents (a "Claim Notice").
8.2.5.3. Any delay in giving such notice will not result in the
waiver or reduction of any of the Indemnified Party's
rights except to the extent the rights of the Indemnifying
Party are actually prejudiced by such failure or delay.
Such Claim Notice must in any event be given within the
relevant time periods set forth in paragraph 8.2.4.
PAGE 32
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8.2.5.4. If the Indemnifying Party fails to notify the Indemnified
Party within 60 days of receipt of such Claim Notice (the
"Notice Period") that it disputes such claim, the amount
of such claim shall be conclusively deemed a liability of
the Indemnifying Party hereunder and shall be paid to the
Indemnified Party immediately. Upon request of the
Indemnified Party, the Indemnifying Party will confirm in
writing that it does not dispute such claim.
8.2.5.5. If the Indemnifying Party disputes such claim within the
Notice Period, the parties shall use their reasonable
efforts to resolve such dispute and, in the absence of
such resolution, such dispute shall be resolved by
arbitration in the manner provided in SECTION 8.8 of this
Agreement.
8.2.6.PROCEDURE REGARDING THIRD PARTY CLAIMS.
8.2.6.1. If either the Investor (the "Indemnified Party"), the
Corporation or any of its Subsidiaries receives a notice
of assertion or commencement of any claim issued by a
third party (a "Third Party Claim") against such
Indemnified Party, the Corporation or any of its
Subsidiaries with respect to which the Corporation ("the
Indemnifying Party") is obligated to provide
indemnification under this Agreement, the Indemnified
Party shall as promptly as practical send a claim notice
to the Indemnifying Party, specifying the nature of and
basis for the claim and (to the extent possible) the
estimated amount of damages attributable thereto (which
estimate shall not be conclusive of the final amount of
such claim) together with the supporting documents (a
"Third Party Claim Notice").
8.2.6.2. Any delay in giving such notice will not result in the
waiver or reduction of any of the Indemnified Party's
rights except to the extent the rights of the Indemnifying
Party are actually prejudiced by such failure or delay.
Such Claim Notice must in any event be given within the
relevant time periods set forth in Section 8.2.4 and no
later than 30 calendar days after receipt of such notice
of such Third Party Claim.
8.2.6.3. The Indemnifying Party shall have 14 days from their
receipt of a Third Party Claim Notice (the "Third Party
Claim Notice Period") to notify the Indemnified Party :
8.2.6.3.1. whether the Indemnifying Party disputes the
Indemnified Party's right of indemnification with
respect to such Third Party Claim; and
8.2.6.3.2. if the Indemnifying Party does not dispute such
right of indemnification, whether or not it desires
to defend the Indemnified Party against such Third
Party Claim.
8.2.6.4. If the Indemnifying Party notifies the Indemnified Party
within the Third Party Claim Notice Period that :
8.2.6.4.1. the Indemnifying Party does not dispute the
Indemnified Party's right of indemnification; and
8.2.6.4.2. the Indemnifying Party desires to defend against
such Third Party Claim;
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8.2.7. then the Indemnifying Party shall have the right to assume and
control the defense of such Third Party Claim by appropriate
proceedings with counsel reasonably acceptable to the Indemnified
Party at the Indemnifying Party' sole cost and expense. The
Indemnified Party may participate in, but not control, any such
defense or settlement at its sole cost and expense.
8.2.7.1. If the Indemnifying Party:
8.2.7.1.1. disputes the Indemnified Party's right of
indemnification with respect to a Third Party Claim;
or
8.2.7.1.2. does not dispute such right of indemnification but
has not complied with the provisions of SECTION
8.2.6 and is thus not entitled to assume defense of
such Third Party Claim; or
8.2.7.1.3. does not dispute such right of indemnification but
fails to promptly assume and prosecute the defense
of such Third Party Claim; or
8.2.7.1.4. does not dispute such right of indemnification but
a conflict or potential conflict exists between the
Indemnifying Party on the one hand and the
Indemnified Party on the other hand;
8.2.8. then the Indemnified Party shall be entitled to assume and
control the defense of such Third Party Claim.
8.2.9. If the Indemnifying Party does not assume the defense of a Third
Party Claim for any reason, it may still participate in, but not
control, the defense of such Third Party Claim at its sole cost
and expense.
8.2.9.1. The party responsible for the defense of any Third Party
Claim (the "Responsible Party") shall, to the extent
reasonably requested by the other party, keep such other
party informed as to the status of any Third Party Claim
for which such party is not the Responsible Party,
including, without limitation, all settlement negotiations
and offers. With respect to a Third Party Claim for which
the Indemnifying Party is the Responsible Party, the
Indemnified Party shall make available to the Indemnifying
Party and their representatives all books and records of
the Indemnified Party relating to such Third Party Claim
and shall render to the Indemnifying Party such assistance
and access to records and the representatives of the
Indemnified Party as the Indemnifying Party and their
representatives may reasonably request, except that the
Indemnified Party shall not be required to make available
to the Indemnifying Party and their representatives any
books, records, documents or other information that the
Indemnified Party reasonably determines to be confidential
or subject to attorney-client privilege unless and until
the Indemnifying Party shall have entered into such
agreements as the Indemnified Party reasonably deem to be
necessary in light of all surrounding circumstances
(including, without limitation, the Indemnifying Party's
need for information in connection with the investigation
or defense of a Third Party Claim) to protect such
confidentiality or privilege.
8.2.9.2. Neither the Indemnifying Party, on the one hand, nor the
Indemnified Party, on the other hand, shall enter into any
settlement of any Third Party Claim
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without the prior written consent of the other party,
which consent shall not be unreasonably withheld. The
Responsible Party shall promptly notify the other party of
each settlement offer (including whether or not the
Responsible Party is willing to accept the proposed
settlement offer) with respect to a Third Party Claim.
Such other party agrees to notify the Responsible Party
with reasonable promptness whether or not such party is
willing to accept the proposed settlement offer. If an
Indemnified Party fails to consent to any settlement offer
of a Third Party Claim (whether or not the Indemnified
Party is the Responsible Party with respect to such Third
Party Claim), the Indemnified Party may continue to
contest or defend such Third Party Claim and, in such
event, the maximum liability of the Indemnifying Party
with respect to such Third Party Claim (including the
reasonable costs and expenses of contesting or defending
such Third Party Claim incurred after the Indemnified
Party fails to consent to such settlement offer) shall not
exceed the full amount of such settlement offer. If the
Indemnifying Party fails to consent to any settlement
offer of a Third Party Claim (whether or not the
Indemnifying Party is the Responsible Party with respect
to such Third Party Claim), the Indemnifying Party may
continue to contest or defend such Third Party Claim and,
in such event, the Indemnifying Party shall be liable to
the Indemnified Party for the amount of the Damages
ultimately recovered against Indemnified Party as a result
of such Third Party Claim.
8.2.10. TAXES ON INDEMNITIES.
8.2.10.1. Any indemnification payment hereunder to the Investor
shall be treated as an adjustment to the Purchase Price.
8.2.10.2. If the Investor (notwithstanding the foregoing
treatment) is effectively taxed on the receipt or accrual
of such indemnity payment, the Corporation shall indemnify
the Investor from and against such taxes (including taxes
resulting from a payment hereunder) after deduction of any
a tax benefit of whatever nature effectively realized by
the Corporation or any of its Subsidiaries, as the case
may be, as a result of the Damages suffered by them, it
being understood that "effectively taxed" under this
clause means that the taxes due on such indemnity payment
(if any) are not and to the extent that they are not
compensated by a corresponding tax decrease as a result of
the Damages pursuant to which the indemnity payment is
due.
8.2.11. INTEREST COMPUTATION. Interest shall in any event accrue at a
rate equal to EURIBOR plus 3% (three percentage points) per annum
on all amounts to be paid by either party to another party
further to Section 8.2.5 through Section 8.2.9 between the date
of the Claim Notice or the Third Party Claim Notice, as the case
may be, and the date of final payment by the Indemnifying Party
of all amounts to be paid to another party, it being understood,
for the avoidance of doubt, that no conventional interest will
accrue relating to periods for which interests of other nature,
such as legal interests, accrue or have accrued.
8.2.12. LIMITATION. Notwithstanding anything to the contrary contained
in this Section 8.2, the Corporation shall have no obligation to
indemnify the Investor under this
PAGE 35
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Section 8.2 until such time, if any, as the aggregate amount of
all Damages exceeds $50,000; provided, if the aggregate amount of
Damages equals or exceeds $50,000, the Corporation shall
indemnify the Investor for all such Damages.
8.2.13. ABSENCE OF LIMITATION OF LIABILITY. None of the limitations
contained in this Section 8.2 shall apply to any
misrepresentation or breach of any representation or warranty
under the terms of this Agreement or of any breach or non
fulfillment of any covenant or agreement made or to be performed
by the Corporation pursuant to this Agreement or the
Stockholders' Agreement which (or the delay in discovery of
which) is the consequence of fraud, willful misconduct or willful
concealment by the Corporation.
8.3. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein,
all covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto will bind and inure to the benefit
of the respective successors and assigns of the parties hereto,
whether so expressed or not. In addition, and whether or not any
express assignment has been made, the provisions of this Agreement
which are for the benefit of the Investor are also for the benefit of,
and enforceable by, any subsequent holders of such Shares.
8.4. SEVERABILITY. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of this Agreement.
8.5. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement are
inserted for convenience of reference only and do not constitute a
part of and shall not be utilized in interpreting this Agreement.
8.6. NOTICES. Any notices required or permitted to be sent hereunder shall
be delivered personally or mailed, certified mail, return receipt
requested, or delivered by overnight courier service to the following
addresses, or such other address as any party hereto designates by
written notice to the Corporation, and shall be deemed to have been
given upon delivery, if delivered personally, three business days
after mailing, if mailed, or one business day after delivery to the
courier, if delivered by overnight courier service.
8.6.1. If to the Corporation to the address set forth on the first page
hereof
8.6.2. If to the Investor to the address set forth on the first page
hereof with a copy (which shall not constitute notice) to:
Stibbe Simont Xxxxxxx Duhot
Xxx Xxxxx Xxxxxxxxxxxxxxxx 00-00
(x.0)
X-0000 Xxxxxxxx
Attention: Xxx Xxxxxxx, Esq.
Xxxxxx Xxxxxx, Esq.
PAGE 36
8.7. GOVERNING LAW. The corporate law of Nevada will govern all issues
concerning the relative rights of the Corporation and its
stockholders. All other questions concerning the construction,
validity and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by the internal law, and not the
law of conflicts of, Belgium, and the performance of the obligations
imposed by this Agreement shall be governed by the laws of the Belgium
applicable to contracts made and wholly to be performed in that
country.
8.8. ARBITRATION. Any dispute, controversy or claim arising out of or in
relation to this Agreement, including, without limitation, disputes
related to the Stockholders' Agreement, or at law, or the breach,
termination or invalidity hereof or thereof, that cannot be settled
amicably by agreement of the parties hereto, shall be finally settled
by arbitration in Brussels, Belgium (which arbitration shall be
binding and enforceable in any court of competent jurisdiction for
purposes of this Agreement only) in accordance with the rules of
CEPINA. The arbitration will be held before three (3) arbitrators
chosen in accordance with such rules and shall be conducted in
English.
8.9. CONFIDENTIALITY. Each of the parties to this Agreement shall keep it,
its precise terms and conditions and subject matter strictly
confidential and, more generally, hold the negotiations with respect
to the subject matter hereof in strict confidence, except to the
extent that disclosure shall be required by law or court or
governmental order or to obtain any consent required thereby. In such
event, to the extent that disclosure shall be required, the party
concerned shall consult with the other party regarding such disclosure
reasonably in advance thereof.
8.10. EXHIBITS AND SCHEDULES. All exhibits and schedules hereto are
an integral part of this Agreement.
8.11. EXCHANGE OF CERTIFICATE. Upon surrender by any holder to the
Corporation of any certificate or certificates evidencing any shares
of stock of the Corporation, the Corporation at its expense will issue
in exchange therefor, and deliver to such holder, a new certificate or
certificates representing such shares of stock of the Corporation, in
such denomination or denominations as may be requested by such holder.
Upon receipt of evidence satisfactory to the Corporation of the loss,
theft, destruction or mutilation of any certificate representing any
shares of stock of the Corporation, and in case of any such loss,
theft or destruction, upon delivery of an indemnity agreement
satisfactory to the Corporation, or in case of any such mutilation,
upon surrender and cancellation of such certificate, the Corporation
at its expense will issue and deliver to any such holder a new
certificate evidencing such shares of stock of the Corporation of like
tenor, in lieu of such lost, stolen, destroyed or mutilated
certificate.
8.12. BREACH OF COVENANT. Without limiting the rights of the Investor
to pursue all other legal and equitable rights available to it for
the Corporation's failure to perform any of its obligations under
this Agreement or the Stockholders' Agreement, the parties hereto
acknowledge and agree that, while the Investor will be entitled to
recover damages and to exercise all other rights granted by law, the
remedy at law for any failure
PAGE 37
by the Corporation to perform any of such obligations may be
inadequate and that the Investor will be entitled to specific
performance, injunctive relief or other equitable remedies in the
event of any such failure.
8.13. DEFINED TERMS. Unless the context otherwise requires, all
capitalized terms used herein without definition shall have the
respective meanings set forth in Annex A hereto for all purposes of
this Agreement.
8.14. RULES OF CONSTRUCTION. The following provisions shall be applied
wherever appropriate in this Agreement:
8.14.1. "herein," hereby, "hereunder," "hereof," and other equivalent
words shall refer to this Agreement as an entirety and not solely
to the particular portion of this Agreement in which any such
word is used;
8.14.2. all definitions set forth herein shall be deemed applicable
whether the words defined are used herein in the singular or the
plural;
8.14.3. wherever used herein, any pronoun or pronouns shall be deemed
to include both the singular and plural and to cover all genders;
8.14.4. all accounting terms not specifically defined herein shall be
construed in accordance with GAAP;
8.14.5. all references or citations in this Agreement to statutes or
regulations or statutory or regulatory provisions shall generally
be considered citations to such statutes, regulations or
provisions as in effect on the date hereof, except that when the
context otherwise requires, such references shall be considered
citations to such statutes, regulations or provisions as in
effect from time to time, including any successor statutes,
regulations or provisions directly or indirectly superseding such
statutes, regulations or provisions;
8.14.6. any references herein to a particular Section, Article, Exhibit
or Schedule means a Section or Article of, or an Exhibit or
Schedule to, this Agreement unless another agreement is
specified;
8.14.7. the Exhibits and Schedules attached hereto are incorporated
herein by reference and shall be considered part of this
Agreement; and
8.14.8. whenever the words "include", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by
the words " without limitation".
8.15. FINAL AGREEMENT. This Agreement, together with the Stockholders'
Agreement, constitutes the final agreement of the parties concerning
the matters referred to herein, and supersedes all prior agreements
and understandings.
PAGE 38
8.16. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which when so executed and
delivered shall be deemed an original, and such counterparts together
shall constitute one instrument.
[signature page follows]
The parties hereto have executed this Stock Purchase Agreement on the
date first set forth above.
e-AUCTION GLOBAL TRADING INC.
By:
-------------------------------------------
Name: Xx Xxxxx Xxxxxxx
Title: Officer
ABN AMRO CAPITAL INVESTMENTS (BELGIE)
By:
-------------------------------------------
Name: Xx Xxxx Xxxxx
Title: By power of attorney
[SIGNATURE PAGE TO STOCK PRUCHASE AGREEMENT]
PAGE i
ANNEX
Annex A Definitions
EXHIBITS
Exhibit A Form of Stockholders' Agreement
Exhibit B Form of Legal Opinion
SCHEDULES
Schedule 4.1 Organization
Schedule 4.5 Shares
Schedule 4.6 Third Party Options
Schedule 4.7.1 Annual Accounts
Schedule 4.12 Contracts
Schedule 4.17.2 Leased Real Property
Schedule 4.18 Insurance
Schedule 4.19 Customers and Suppliers
Schedule 4.20.1 Directors
Schedule 4.20.2 Financial Institutions
Schedule 4.21.1 Personnel - General
Schedule 4.21.2 Employee Benefit Schemes
Schedule 4.22 Litigation
Schedule 4.25 Taxes
Schedule 4.28 Conflicts of Interest
i
PAGE 1
Annex A
1.1 DEFINITIONS
""Belgium Subsidiaries" means e-Auction Belgium and SCS.
"Closing" means the closing of the purchase and sale of the Shares
pursuant to this Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock, par value $.01 per share, of the
Corporation.
"e-Auction Australia" means e-Auction Australasia Pty Limited (ACN
078.168.886), a company existing under the laws of Australia, having its
registered offices at level 18, Central Park, 000-000 Xx Xxxxxx'x Xxxxxxx,
Xxxxx, Xxxxxxx Xxxxxxxxx, Xxxxxxxxx.
"e-Auction Barbados" means e-Auction Global Trading Inc., a company
existing under the laws of Barbados, having its registered offices at Xxxxxxxx
Xxxxx, Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx.
"e-Auction Belgium" means Aucxis, a Naamloze Vennootschap existing
under the laws of Belgium, having its registered offices at 9190 Stekene,
Xxxxxxxxxxx 0 (Xxxxxxx), enrolled with the Register of Commerce of Sint-Niklaas
under number 61.208.
"e-Auction Canada" means Aucxis Corp., a corporation existing under the
laws of Canada, having its registered offices at 000 Xxx Xxxxxx, Xxxxx 0000, XXX
Xxxxx, Xxxxxxx, Xxxxxxx, Xxxxxx, X0X 251, a wholly owned subsidiary of e-Auction
Barbados.
"GAAP" means generally accepted accounting principles, consistently
applied.
"Group" means the Corporation and the Subsidiaries.
"Indebtedness" of any Person shall mean the principal of, premium, if
any, and unpaid interest on (a) indebtedness for money borrowed from others; (b)
indebtedness guaranteed, directly or indirectly, in any manner by such Person,
or in effect guaranteed, directly or indirectly in any manner by such Person
through an agreement, contingent or otherwise, to supply funds to, or in any
other manner invest in, the debtor, or to purchase indebtedness, or to purchase
and pay for property if not delivered or pay for services if not performed,
primarily for the purpose of enabling the debtor to make payment of the
indebtedness or to assure the owners of the indebtedness against loss; (c) all
indebtedness secured by any mortgage, lien, pledge, charge or other encumbrance
upon property owned by such Person, even though such Person has not in any
manner become liable for the payment of such indebtedness; (d) all indebtedness
of such Person created or arising under any conditional sale, lease (intended
primarily as a financing device) or other title retention or security agreement
with respect to property acquired by such Person even though rights and remedies
of the seller, lessor or lender under such agreement or lease in the event of
default may be limited to repossession or sale of such property; and (e)
renewals, extensions and refunding of any such indebtedness.
A-1
PAGE 2
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
"SCS" means Schelfhout Computer Systemen, a Naamloze Vennootschap
existing under the laws of Belgium, having its registered offices at 9190
Stekene, Xxxxxxxxxxx 0 (Xxxxxxx), enrolled with the Register of Commerce of
Sint-Niklaas under number 43.775, a wholly owned subsidiary of e-Auction
Belgium.
"Securities Act" means the Securities Act of 1933, as amended.
"Stockholders' Agreement" means the Stockholders' Agreement by and
among the Corporation, the Investor and the other parties thereto in the form of
Exhibit A the entering into of which is set forth as a condition to Closing.
"Subsidiaries" means:
(a) e-Auction Australia;
(b) e-Auction Barbados;
(c) e-Auction Belgium;
(d) e-Auction Canada;
(e) SCS; and
(f) any other corporation, association or other business entity of
which securities or other ownership interest representing more
than fifty percent (50%) of the ordinary voting power are, at
the time as of which any determination is being made, owned or
controlled by the Corporation or one or more Subsidiaries of
the Corporation or by the Corporation and one or more
Subsidiaries of the Corporation.
A-2
