EXHIBIT 2.1
Share Purchase
Agreement
International Management Group GmbH
and
KIT digital, Inc.
CONTENTS
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CLAUSE
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PAGE
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5
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7
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8
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PURCHASE PRICE
ADJUSTMENT
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9
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10
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20
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22
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24
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25
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25
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26
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27
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RESIGNATIONS
AND POST CLOSING OBLIGATIONS
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28
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30
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SCHEDULE
1
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30
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SCHEDULE
2
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36
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SCHEDULE
3
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40
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SCHEDULE
4
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41
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SCHEDULE
5
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SCHEDULE
6
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47
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SCHEDULE
7
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48
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SCHEDULE
8
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52
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SCHEDULE
9
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53
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SCHEDULE
10
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54
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SCHEDULE
11
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55
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SCHEDULE
12
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56
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SCHEDULE
13
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61
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THIS
AGREEMENT is made on 5 October 2009
AMONG:
International
Management Group GmbH, a company organised under the laws of
Germany, the registered office of which is at Cäcilienkloster
6, 50676 Cologne, registered in the commercial register of the
Local Court Cologne under HRB 66731, represented by Mr. Matthias
Pietza duly authorised for the purpose hereof (hereinafter referred
to as the "Seller" ),
KIT digital,
Inc., a company organised under the laws of Delaware, the
registered office of which is at 168 Fifth Avenue, Suite 301, New
York, New York 10010, represented by Kaleil D. Isaza Tuzman, duly
authorised for the purpose hereof (hereinafter referred to as the
"Purchaser" ),
(the Seller and
the Purchaser are hereinafter together referred to as the
"Parties" and each individually as a "Party"
)
Kaleil D. Isaza
Tuzman, Chairman and CEO of the Purchaser, and with
business address at the Purchaser (hereinafter referred
to as the “Purchaser's Guarantor” ).
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The Nunet AG, a
stock corporation organised under the laws of Germany, is
registered in the commercial register of the Local Court Cologne
under HRB 35024 (the " Company "). The registered share
capital of the Company amounts to EUR 65,005.00. The registered
share capital comprises 13,001 (in words: thirteen thousand and
one) registered shares with a nominal amount of EUR 5.00 (in words:
five Euros) each.
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The Seller
holds 13,001 (in words: thirteen thousand and one) registered
shares with a nominal amount of EUR 5.00 (in words: five Euros)
each of the Company (" Shares "). The Seller is entered in
the company's share register.
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The Company is
active in the provision of mobile and broadband video distribution
solutions (the "Business" ). The Purchaser intends to
acquire the Business from the Seller by way of acquisition of the
Shares.
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THE PARTIES
AGREE AS FOLLOWS:
"Accounting
Expert" has the meaning
as described in clause 4(d);
"Action" means any claim, action, suit, arbitration,
inquiry, proceeding or investigation by or before any governmental
authority.
"Agreement" means this Share Purchase Agreement;
“Amount Claimed”
has the meaning as described in
clause 7.7(b);
"Audited
Accounts" means the
audited financial statements for the fiscal year ending on 31
December 2008 for the Company;
"Basket" has the meaning as described in clause
7.1(b);
"Breach" has the meaning as described in clause
6.1;
"Business" has the meaning as described in the
Recitals;
"Business
Day" means any day that
is not a Saturday, a Sunday or other day on which banks are
required or authorized by applicable law to be closed in The City
of New York or Cologne;
"Cap" has the meaning as described in clause
7.2;
"Cash
Consideration" has the
meaning as described in clause 3.1(a);
"Closing" has the meaning described in clause
2.3;
"Closing
Date" has the meaning
described in clause 2.3;
"Company" has the meaning as described in the
Recitals;
"Effective
Date" has the meaning
described in clause 2.4;
"Encumbrances" means any security interest, pledge,
hypothecation, mortgage, lien (including environmental and tax
liens), violation, charge, lease, license, encumbrance, servient
easement, adverse claim, reversion, reverter, preferential
arrangement, restrictive covenant, condition or restriction of any
kind, including any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of
ownership;
"IDW
e.V." has the meaning as
described in clause 4(d);
"
Indemnification Item " has the meaning as described in
clause 7.7(a)(i);
"Indemnity
Promissory Note " means
the convertible promissory note in the principal amount of EUR
584,250 substantially in the form set out in Schedule 1-A, together
with and accompanied by a valid and binding side letter agreed
between the Parties at the Signing Date.
"Independent
Person" has the meaning
as described in clause 7.7(c).
“IP
Rights” has the
meaning as described in clause 5.10;
"Liabilities" means any and all debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent,
including those arising under any applicable law, Action or
governmental order and those arising under any contract, agreement,
arrangement, commitment or undertaking.
"Losses" has the meaning as described in clause
6.1;
“Management Accounts”
means the unaudited financial
statements of the Company for the period from 1 January 2009 to 30
August 2009 a copy of which has been provided to the Purchaser on
signature of this Agreement and initialled by the parties for
identification purposes;
"Material
Agreements" has the
meaning as described in clause 5.8;
"Neutral
Level" has the meaning as
described in clause 4(g);
"Notices" has the meaning as described in clause
16;
“Outstanding IPN Value”
has the meaning as described in
clause 7.7(b)
"Party" means the Seller or the Purchaser each
individually;
"Parties" means the Seller and the Purchaser;
"Promissory
Note" means the
convertible promissory note in the principal amount of EUR
1,662,500 substantially in the form set out in Schedule
1-B, together with and accompanied by a valid and binding
side letter agreed between the Parties at the Signing
Date.
"Promissory
Notes" means the
Promissory Note and the Indemnity Promissory Note.
"Purchaser" means KIT digital, Inc.;
" Purchaser
Claim" has the meaning as described in clause 6.1;
"Purchaser's
Certificate" has the
meaning as described in clause 7.7(a);
"
Purchaser's Guarantor" means Kaleil D. Isaza
Tuzman;
“ PG
Financial Statement ” means the statement supplied by the
Purchaser’s Guarantor to the Seller setting out the financial
standing of the Purchaser’s Guarantor, a copy of which has
been provided on signature of this Agreement and initialled by the
Seller and the Purchaser’s Guarantor for identification
purposes;
"Purchase
Price Adjustment" has the
meaning as described in clause 4;
"Purchase
Price Adjustment Amount" has the meaning as described in clause
4(g);
"Reimbursement Payments" has the meaning as described in clause
3.1(a);
"Restricted
Period" has the meaning
as described in clause 13.4(a);
"Review
Period" has the meaning
as described in clause 4(b);
"Securities
Act" means the U.S.
Securities Act of 1933, as amended.
“Seller’s
Certificate” has
the meaning as described in clause 7.7(b);
"Seller's
Knowledge" has the
meaning as described in clause 5;
"Shares" has the meaning as described in the
Recitals;
"Seller" means International Management Group
GmbH;
"Seller's
Account" has the meaning
as described in clause 3.1(a);
"Signing
Date" means the date of
this Agreement;
"Statement
of Objections" has the
meaning as described in clause 4(c);
“Tax
Returns” means any
return, declaration, report, election, claim for refund or
information return or other statement or form relating to, filed or
required to be filed with any Tax authority, including any schedule
or attachment thereto or any amendment thereof.
"Third Party
Claim" has the meaning as
described in clause 6.4;
"Threshold" has the meaning as described in clause
7.1(a);
" Working
Capital " has the meaning as described in clause
4(a);
"2006
SPA" has the meaning as
described in clause 6.4 ;
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Upon the terms
and subject to the conditions set forth in this Agreement, the
Seller sells the Shares to the Purchaser, who accepts this
sale.
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With legal
effect as of the Closing and subject to the conditions precedent
set forth in this Agreement, the Seller hereby assigns and
transfers, by way of an assignment of all membership rights, the
Shares to the Purchaser, who accepts this assignment and transfer.
Subject to the conditions precedent set forth in this Agreement,
all ancillary rights relating to the Shares transfer to the
Purchaser, including, without limitation, the right to participate
in the profits of the Company.
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Subject to the
terms and conditions of this Agreement, the transfer of the Shares
contemplated by this Agreement shall legally take place at a
closing (the “ Closing ”). Closing shall occur
upon (i) fulfilment of the conditions set forth in clause 11 (but
subject to the satisfaction or waiver of those conditions by the
Party entitled to the benefit of such condition) in accordance with
this Agreement and (ii) payment of the Purchase Price and the
Reimbursement Payments in conformity with clause 3 (
Übereignung Zug-um Zug ), unless Seller and the
Purchaser mutually agree upon another date in
writing. The date on which Closing occurs is referred to
herein as the "Closing Date" .
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Commercially,
such transfer of the Shares shall take place with economical effect
as of 1 October 2009 ( "Effective Date" ), meaning in
particular that the Seller shall be exclusively entitled to any
profits attributable to any period before the Effective Date and
the Purchaser shall be entitled to any profits attributable to any
period after and including the Effective Date.
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Closing and
Post-Closing Deliveries
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At the Closing
and upon fulfilment of the conditions set forth in clause
11,
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The Seller
shall confirm in written form the resignations, effective as of the
Closing, set forth in clause 13.1(a) and (b);
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the Purchaser
shall deliver or cause to be delivered to the Seller:
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the Cash
Consideration and the Reimbursement Payments (to the
extent this has not already been received by the Seller);
and
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an executed
copy of the Promissory Notes.
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Upon receipt of
the Cash Consideration, the Reimbursement Payments and the
Promissory Notes the ownership in the Shares and
ancillary rights are transferred to the Purchaser.
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Subject to
clauses 2.2, 2.3, and 2.5, the Purchaser shall, promptly after the
Closing Date, notify and confirm its acquisition of the Shares
towards the Company by (i) delivering an executed copy of this
Agreement to the management board of the Company; and by (ii)
delivering a copy of the Seller's written confirmation of receipt
the Purchase Price.
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The purchase
price for the Shares, which shall be subject to adjustment in
accordance with clause 4, is divided into Cash Consideration and
the Promissory Notes, together referred as the "Purchase
Price" .
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The cash
consideration for the Shares amounts to EUR
5,000,000 (in words: five million Euros) ( "Cash
Consideration" ). The Purchaser’s
reimbursement payment in consideration for the estimated working
capital amount as set forth on Schedule 3 amounts to EUR
400,000 (in words: four hundred thousand Euros) and the
Purchaser’s reimbursement payment in consideration for the
Seller’s payment of certain fees and commissions amounts to
EUR 300,000 (in words: three hundred thousand Euros)
(together, the " Reimbursement Payments "). The
Cash Consideration and the Reimbursement Payments must be
transferred at Closing free and clear of costs and charges in
immediately available funds to the following Seller's account
("Seller's Account"):
HSBC Trinkaus
& Burkhardt AG
IBAN: DE29 3003
0880 0011 3100 01
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Convertible
Promissory Notes
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At Closing, the
Purchaser shall deliver to the Seller the Promissory
Notes.
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At Closing, the
Seller shall confirm to the Purchaser the receipt of the Cash
Consideration and the Promissory Notes.
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The Purchaser
and the Seller shall pay default interest on any amounts becoming
due as from the relevant due date for payment until (and including)
the day of actual receipt of payment at the rate of 16 percent
p.a.
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Any taxes (such
as VAT, transfer taxes etc.) arising on the Purchase Price shall be
borne by the Purchaser.
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PURCHASE
PRICE ADJUSTMENT
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The Purchase
Price will be adjusted as follows ( "Purchase Price
Adjustment" ):
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As soon as
reasonably practicable, but in no event later than sixty (60) days
after the Closing Date, in the case of the Closing
Date being after 16 November 2009), the Purchaser shall cause the
independent auditors of the Company to prepare, and deliver to the
Seller, fully audited financial statements of the Company, and the
corresponding calculation of the working capital of the Company in
accordance with Schedule 3, as of 30 September 2009 close of
business ( "Working Capital" ).
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Upon receipt of
the calculation of the Working Capital, the Seller and the
Sellers’ representatives shall be permitted during the
succeeding thirty (30) days period ( "Review Period" )
reasonable access at all reasonable times, during normal business
hours, to personnel and the books and records of the Company, and,
to the extent permitted by applicable law, the work papers prepared
by the Purchaser, the Purchaser’s parent and/or their
representatives and the independent auditors of the Company, in
each case to the extent that they directly relate to the Company
and to such historical financial information relating to the
Company as the Seller may reasonably request for the purpose of
reviewing the calculation of the Working
Capital. Notwithstanding anything to the contrary in
this Agreement, neither the Company nor the Purchaser shall be
required to disclose any information to the Seller if such
disclosure would contravene any applicable mandatory
laws.
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On or prior to
the last day of the Review Period, the Seller may object to the
calculation of the Working Capital by delivering to the Purchaser a
written statement setting forth, in reasonable detail that puts the
Purchaser in a position to conduct its own review, all of the
Seller’s objections to the calculation of the Working Capital
( "Statement of Objections" ). If the Seller fails to
deliver the Statement of Objections within the Review Period, the
calculation of the Working Capital shall be deemed to have been
accepted by the Seller and the calculation of the Working Capital
shall be used in computing the Purchase Price Adjustment Amount (as
defined below). If the Seller delivers the Statement of Objections
within the Review Period, Seller and Purchaser shall negotiate in
good faith to resolve such objections, and, if the same are so
resolved, the calculation of the Working Capital with such changes
as agreed in writing by the Seller and the Purchaser shall be final
and binding and shall be used in computing the Price Adjustment
Amount. The parties agree that if they are in dispute over whether
sufficient detail is contained in an alleged Statement of
Objections, then the foregoing deemed acceptance shall not
apply.
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If the Seller
and the Purchaser fail to reach an agreement with respect to all of
the matters set forth in the Statement of Objections within 10
(ten) Business Days after the delivery of the Statement of
Objections, then such matters shall, not later than 5 (five)
Business Days after one of the Parties terminates discussions in
writing with respect to the Statement of Objections, be submitted
for resolution to Deloitte (unless such firm is then serving
as the primary external accounting firm of one of the Parties, in
which case the Parties shall mutually agree on another acceptable
firm) ( "Accounting Expert" ) who shall, acting as expert (
"Schiedsgutachter" ) and not as arbitrator, resolve the
disputes set forth in the Statement of Objections and make any
adjustments to the calculation of the Working Capital. If the
Parties do not agree to appoint an independent auditor within 3
weeks the Institute of German Auditors ( "IDW e. V." ) shall
appoint an auditor to determine the Working Capital with binding
effect.
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Subject to, and
to the extent permitted by, any applicable laws, the Seller and the
Purchaser shall each make, and cause the Company to make, readily
available to the Accounting Expert all relevant work papers and
books and records relating to the Company, and those relating to
the matters under discussion. Copies of all such materials and
information provided by a party to the Accounting Expert shall be
concurrently delivered to the other party to the
proceeding. Notwithstanding anything to the contrary in
this Agreement, neither the Company nor the Parties shall be
required to disclose any information to the Seller if such
disclosure would contravene any applicable mandatory
laws.
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The Parties
shall jointly instruct the Accounting Expert to make a
determination as soon as practicable within thirty (30) days (or
such other time as the Parties hereto shall agree in writing) after
its engagement and its resolution of the dispute and its
adjustments to the calculation of the Working Capital shall be
conclusive and binding upon the Parties hereto.
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Within five (5)
Business Days of the
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acceptance of
the calculation of the Working Capital by the Seller or
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the resolution
of the Seller's objections in connection therewith or
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the issuance
and receipt by both Parties of the Accounting Expert's
determination of the Working Capital,
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to the extent
that the Working Capital is less than or more than the neutral
level as described in Schedule 3 ( "Neutral Level"
), the Purchase Price shall, on a Euro-for-Euro basis,
be adjusted as follows:
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downward (if
the Working Capital is lower than the Neutral Level) or
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upward (if the
Working Capital is greater than the Neutral Level).
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To the extent a
downward Purchase Price Adjustment is warranted under this clause
4(g), the Purchaser shall be permitted to deduct an amount equal to
the amount of such downward Purchase Price Adjustment from the
principal amount of the Indemnity Promissory Note
and, with respect to any amount exceeding the principal amount of
the Indemnity Promissory Note , by demanding
payment of such excess directly from the Seller, and the Seller
hereby agrees to make any such payment within five (5) Business
Days of any such demand. To the extent an upward Purchase Price
Adjustment is warranted under this clause 4(g), the Purchaser shall
pay to the Seller an amount equal to the amount of such upward
Purchase Price Adjustment within five (5) Business Days
of the calculation thereof.
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The fees of the
Accounting Expert shall be divided equally between the Seller and
the Purchaser.
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Subject to the
remedies and limitations set out hereunder, in particular the
remedies and limitations set out in clauses 6 and 7, the Seller
hereby represents by way of an independent guarantee (
selbständiges Garantieversprechen ) in the meaning of
section 311 para. 1 BGB that, (i) the statements made in clauses
5.1 (Incorporation of Seller), 5.2 (Incorporation of the Company),
5.3 (No Bankruptcy), 5.4 (Capitalisation and Title), 5.7 (Ordinary
Course of Business), 5.8 (Material Agreements), 5.9
(Employees/Pensions), 5.11 (Accuracy of Information), 5.13
(Governmental Consents), 5.14 (Environmental Matters), 5.15 (Tax
Matters), 5.16 (Real Property), 5.18 (Insurance), 5.20(a) (Absence
of Residual Payment Obligations), 5.21 (No Conflict) and 5.22
(Restructuring) are true and correct as of the Signing Date and the
Closing Date, and (ii) that each and any statements made in clauses
5.5 (Audited Accounts), 5.6 (Management Accounts), 5.10 (IP/IT),
5.12 (Litigation and Permits), 5.17 (Assets), 5.19 (Unlawful
Behaviour) and 5.20 (Absence of Undisclosed Liabilities) are, to
the Seller’s Knowledge, true and correct as of the Signing
Date, it being understood that such statements shall not constitute
a quality guarantee concerning the object of the purchase within
the meaning of section 444 BGB ( keine Garantie für
die Beschaffenheit der Sache ).
To the extent
that any representation of the Seller set forth in this Agreement
is qualified by the Seller’s Knowledge (defined below), only
the personal, actual and positive knowledge ( eigenes positives
Wissen ) of Messrs Robert Ponger, Stephen Bedborough, Carmi
Zlotnik, Alexander Schaaf and Joerg Neuss and the knowledge they
should have had, applying the diligence of a prudent business man
on the Signing Date, shall be relevant ( "Seller's
Knowledge" ).
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Incorporation
of the Seller
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The Seller is a
private limited company, duly incorporated and validly existing
under the laws of Germany. The execution and performance of this
Agreement is within the corporate powers of the Seller, do not
violate its articles of association and have been duly authorised
by all necessary corporate actions. The execution and
delivery of this Agreement by the Seller, the performance by the
Seller of its obligations hereunder and the consummation by the
Seller of the transactions contemplated hereby have been duly
authorized by all requisite action on the part of the Seller and
its stockholders. This Agreement has been duly executed
and delivered by the Seller, and (assuming due authorization,
execution and delivery by the Purchaser) this Agreement
constitutes, and upon their execution the Promissory Notes shall
constitute, legal, valid and binding obligations of the Seller,
enforceable against the Seller in accordance with their respective
terms.
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Incorporation
of the Company
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The Company is
duly incorporated and validly existing under the laws of the
Federal Republic of Germany. The Company has requisite corporate
power and authority to own its respective properties and assets and
to conduct its respective business substantially in the form as
conducted at the Signing Date. Except as indicated in the Audited
Accounts, there are no other corporations, partnerships, joint
ventures, associations or other entities in which the Company owns,
of record or beneficially, any direct or indirect equity or other
interest or any right (contingent or otherwise) to acquire the
same. The Company is not a member of (nor is any part of
the Business conducted through) any partnership nor is the Company
a participant in any joint venture or similar
arrangement.
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No Bankruptcy
or Judicial Composition Proceedings
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No bankruptcy
or judicial composition proceedings concerning the Seller or the
Company have applied for, opened or rejected because of lack of
assets, and no circumstances exist which would require the
application for any bankruptcy or judicial composition proceedings
or which could pursuant to any applicable bankruptcy laws justify
the voidance of this Agreement. In particular, the Company is not
overindebted according to German Commercial Law and neither Seller
nor the Company is illiquid, nor is illiquidity pending. Neither
the Seller nor the Company have ceased or suspended
payments.
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The statements
made in the Preamble are correct. The Shares have been validly
issued and fully paid up. Any contributions in kind made are fully
valuable. No hidden contributions in kind have been made or
contributions been repaid. There are no obligations to make
additional contributions. Other than the Shares, the
Company has no other securities outstanding. There are
no options, warrants, convertible securities or other rights,
agreements, arrangements or commitments relating to the Shares or
obligating either the Seller or the Company to issue or sell any
securities or any other interest in the Company and the Shares
constitute all the issued and outstanding capital stock of the
Company and are owned of record and beneficially by the Seller free
and clear of all Encumbrances.
The Seller is
the sole owner of the Shares in legal and economic terms and owner
of all rights related to the Shares. The Seller is free to dispose
of the Shares at will, in particular without requiring the consent
of third parties or thereby adversely affecting the rights of third
parties, e.g. rights of first refusal or other preferential rights
to purchase. There exist not rights in rem or other rights of third
parties in or with regard to the Shares.
The Audited
Accounts were prepared in accordance with the books of account and
other financial records of the Company and represent in all
respects fairly the financial condition and the results of
operations of the Company respectively as at the respective date of
and for the period referred to therein, all in accordance with
German-GAAP ( HGB ), in all cases applied on a consistent
basis.
The Management
Accounts have been properly prepared in a manner consistent with
that adopted for management accounts in previous accounting periods
and, having regard to the purpose for which they are prepared, do
not materially misstate the position of the Company and do not
materially overstate or materially understate the liabilities,
profits or losses of the Company in respect of the period to which
they relate. All receivables reflected on Schedule
13 or arising from the Signing Date until the Closing are or will
be good and have been collected or will be collected without resort
to litigation or extraordinary collection activity , within 120
days after the Closing Date.
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Ordinary Course
of Business
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Except as set
forth in Schedule 4, from (i) the date of the Audited Accounts with
respect to (a) below and from (ii) the Signing Date with respect to
(b) to (m) below, each until the Closing Date, the Seller has
procured to the extent legally possible, that the business
operations of the Company have been conducted in the ordinary
course of business and substantially in the same manner as before,
and there has been no material adverse change with respect to the
business taken as a whole. Without prejudice of the foregoing the
Seller has procured to the extent legally possible that the Company
has not, other than in the ordinary course of business,
substantially in the same manner as before and without material
adverse change with respect to the business taken as a
whole:
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issued any
share capital (or any option, warrant or other right to acquire the
same), other securities or similar interest;
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declared, made
or paid any dividend or any other distribution;
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undertaken to
make any capital expenditure or entered into any contract or
commitment outside the ordinary course of business;
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acquired or
disposed of any fixed or intangible assets relating to its business
outside the ordinary course of business and other than at arm's
length conditions;
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incurred any
indebtedness vis-à-vis third parties except as in the
ordinary course of business;
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made any
advance or extended any loan to any third party outside the
ordinary course of business;
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amended or
restated any of its organizational documents
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amended,
restated or terminated any Material Agreement;
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granted or
announced any increase in the salaries, bonuses or other benefits
payable by the Company to any of the employees of the
Company;
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changed any
method of accounting or accounting practice or policy used by the
Company; or
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failed to
exercise any rights of renewal with respect to any material leased
real property that by its terms would otherwise expire;
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settled or
compromised any material claims of the Company; or
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agreed to take
any of the actions specified in clause 5.7(a) to (l), except as
contemplated by this Agreement and the Promissory Notes.
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Schedule 5
contains a list of all material agreements as described below to
which the Company, as of the date of this Agreement, is a party and
of which the main obligations have not yet been completely
fulfilled (hereinafter referred to as the "Material
Agreements" ):
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rental and
lease agreements relating to real estate, premises or tangible
assets which, individually, provide for annual payments of EUR
10,000 or more and which cannot be terminated by the Company on (i)
twelve months or less notice or (ii) without penalty;
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loan agreements
or any other instruments of debt involving any third party,
individually, an amount of EUR 5,000 or more;
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guarantees,
indemnities, and suretyships issued for any debt of any third party
;
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any continuing
obligations ( Dauerschuldverhältnisse ) which cannot be
terminated with effect as of or prior to the Effective Date and
which provide for annual obligations of the Company in excess of
EUR 60,000;
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to the Seller's
Knowledge, software contracts or any other agreements exceeding an
amount of EUR 3,000 per month ;
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customer or
supplier contracts exceeding an amount of EUR 7,500 per
month;
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insurances
which provide for annual obligations of the Company in excess of
EUR 1,000;
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contracts
between or among the Company, on the one hand, and the Seller or
any affiliate of the Seller, on the other hand;
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contracts that
limit or purport to limit the ability of the Company to compete in
any line of business or with any person or entity or in any
geographic area or during any period of time; and
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all contracts
with any governmental authority.
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Subject to any
qualification set out in Schedule 5, each of the Material
Agreements is valid and binding on the parties thereto and is in
full force and effect, and the Company have received no notice of
termination and the Company is not in any material breach of any of
the Material Agreements. To the Seller’s Knowledge, no other
party to any Material Agreement is in breach thereof or default
thereunder and none of the Seller or the Company has received any
notice of termination, cancellation, breach or default under any
Material Agreement. The Seller has made available to the
Purchaser true and complete copies of all Material
Agreements.
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Schedule 6(a)
contains a complete and correct list of the Company's board members
( Vorstände ) and employees including information
concerning the date of birth, company seniority, position and
status, all salary entitlements (including but not limited to
performance-related payments, bonuses, gratifications and any other
benefits) as of the Signing Date.
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As of the
Signing Date only:
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all employees
of the Company are listed in Schedule 6(a), and such list is
complete and correct;
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according to
the state of German law as of the Signing Date, no other employees
of the Company exist, and in particular all freelancers, sales
agents ( Handelsvertreter ), financial consultants (
Finanzberater ), other consultants and independent service
providers or other self-employed persons treated by the Company as
such are not fictitious employees ( Scheinselbständige
) and in particular no social security contributions (
Sozialbeiträge ), wage tax ( Lohnsteuer ),
liability payments ( Haftungsbeträge ) or similar tax
or wage payments have to be paid or withheld by the Company for
such freelancers, sales agents and independent service providers
for the period before the Signing date nor are any of such
freelancers, sales agents and independent service providers
eligible for any rights resulting from any employment relationship
with the Company including but not limited to any rights under the
Termination Protection Act (Kündigungsschutzgesetz) or
any other right under mandatory employment law.
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Schedule 6(b)
contains a complete and correct list of all sales
agents ( Handelsvertreter ), financial consultants (
Finanzberater ) and any other consultants, freelancers or
other self-employed persons including information concerning the
age, length of service, and average annual income as of the Signing
Date.
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The Seller does
not give any representation or warranty with respect to any
classification of sales agents ( Handelsvertreter )
financial consultants ( Finanzberater ), other consultants,
freelancers and independent service providers or other
self-employed persons as fictitious employees (
scheinselbständig ) or any cost or damage resulting
from fictitious employment ( Scheinselbständigkeit ) to
the extent that such classification or such costs or damage results
from any change of statutory law after the Signing Date.
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All contractual
claims of employees (including but not limited to salary and bonus
entitlements, lump-sum payments, special benefits, compensation
claims in respect of possible employee inventions, compensation
payments etc.) arising from and in connection with the employment
contracts with the Company's board members and employees as listed
in Schedule 6(a) as well as all contractual claims of sales agents
( Handelsvertreter ), financial consultants (
Finanzberater ), other consultants, freelancers and
independent service providers or other self-employed persons as
listed in Schedule 6(b) have been duly fulfilled by the Company as
of the Signing Date or have been duly reserved against in the
Financial Statements. This applies as well to all employment
contracts with former board members and employees of the Company as
well as to all contracts with former sales agents (
Handelsvertreter ), financial consultants (
Finanzberater ), other consultants, freelancers and
independent service providers or other self-employed persons which
had been terminated ( beendet ) prior to the Signing
Date.
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Except for as
referred to in Schedule 9 (Litigation), there are no facts based on
acts of or omissions by the Company from which a material claim by
any of the employees can be derived.
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Neither
collective bargaining agreements ( Tarifverträge ) nor
works agreements ( Betriebsvereinbarungen ) nor works
practices ( betriebliche Übung ) nor collective
promises ( Gesamtzusagen ) are applicable to the employment
contracts with board members and employees .
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No pension
claims or expectations of any kind exist except for pension schemes
financed by way of salary deductions ( Gehaltsumwandlung )
as listed in Schedule 6(a). All contributions and other payments to
employees or former employees related to any funded benefit schemes
(including defined benefit or contribution schemes and payments to
insurance companies) financed by way of salary deductions (
Gehaltsumwandlung ) are paid or deducted in a duly manner in
accordance with the requirements of any mandatory law. No such
benefit schemes financed by way of salary deductions are based on
zillmerised life insurance conditions ( gezillmerte Tarife
).
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The Company has
complied in all material respects with the requirements in matters
of social security contributions ( Sozialbeiträge ),
wage tax ( Lohnsteuer ), liability payments (
Haftungsbeträge ), or similar duties under public law
concerning board members and employees.
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No labour
disputes exist up to the Signing Date.
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Rob Ponger and
Steve Bedborough are not entitled to any renumeration or benefits
etc. resulting from their position as members of the board of
directors.
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The Board
Members Service Agreement (concluded between Mr Fröhlich and
the seller) dated 22 December 2006 is the sole existing agreement
and does contain all conditions and benefits Mr Fröhlich is
entitled to in respect of his position as member of the board of
directors. Neither additional oral or written agreements are
applicable; no Change-of-Control-Clause providing for special
rights in connection with a change-of-control (in
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