UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) as of March 31, 1997
Commission file number 000-21725
THE TRANSLATION GROUP LTD.
--------------------------
(Exact name of registrant as specified in its charter)
Delaware State 23-3382869
- ------------------------------- -----------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
44 Tanner Street
Haddonfield, NJ 08033
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(609) 795-8669
------------------------------------------
(Registrant's telephone number, including area code)
---------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial statements of business acquired - This filing
contains the Audited Financial Statements of The Word House
Companies Amsterdam for the years ended December 31, 1996 and
1995. The Translation Group, LTD. acquired 100% of The Word
House Companies Amsterdam as of March 31, 1997. The closing
for this transaction took place as at June 30, 1997.
(b) Pro forma financial information - The pro forma (unaudited)
effect of this acquisition was included in a footnote to the
Consolidated Financial Statements of The Translation Group,
LTD. for the years ended March 31, 1997 and 1996. These
financial statements were filed with the Company's Form 10-K
for the fiscal year ended March 31, 1997.
(c) Exhibits - Agreement by and Among the The Translation Group,
LTD. and Edouard Prisse and d'Avennes B.V. (as Shareholders of
the World House Companies Amsterdam).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
The Translation Group, LTD.
By: /s/ Charles D. Cascio
-----------------------------
President
Date December 11, 1997 /s/ Charles D. Cascio
------------------------ -----------------------------
(Signature)
Charles D. Cascio
<PAGE>
STEENHOF & DINKGREVE
ACCOUNTANTS EN BELASTINGADVISEURS
Accountants:
W. Steenhof AA
P.C.J. Dinkgreve RA
H. den Dulk AA
M.J. Pol AA
Belastingadviseurs:
N.A.J. Carriere FB
Mr. M.F.M. Cliteur
INDEPENDANT AUDITOR'S REPORT
We have audited the accompanying consolidated balance sheets of The Word House
Companies Amsterdam as of December 31, 1996 and December 31, 1995 and the
related consolidated statements of operations, and shareholders' equity for the
years ended December 31, 1996 and December 31, 1995, and cash flows for the year
ended December 31, 1996. These financial statements are the responsibility of
the entity's management. Our responsability is to express an opinion on these
financial statements based on our audits.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial stamements. An audit
also includes assessing the accounting principles used and significant estimate
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material aspects, the financial position of the Word House
Companies Amsterdam as of December 31, 1996 and December 31, 1995 and the
results of their operations for the years ended December 31, 1996 and December
31, 1995 and their cash flows for the year ended December 31, 1996 in conformity
with generally accepted accounting principles in the United States.
Date: June 30, 1997
Steenhof & Dinkgreve
Accountants en Belastingadviseurs
/s/ P.C.J. Dinkgreve RA
- ----------------------------------
P.C.J. Dinkgreve RA
Gemeenschapspolderweg 36-40 1382 GR Weesp
Correspondentie-adres: Postbus 322 1380 AH Weesp Telefoon 0294-416767
Telefax 0294-412625 Postbank 433844 Rabobank Weesp 48.49.78.179
<PAGE>
Word House Companies
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER (after appropriation of the
results)
ASSETS
1996 1995
------------------ ------------------
$ $
FIXED ASSETS
- ------------
INTANGIBLE FIXED ASSETS
Software 6,571 3,632
TANGIBLE FIXED ASSETS
Buildings 273,666 -
Conversions - 49,539
Vehicles 14,328 7,039
Hardware 30,990 24,236
Machinery and equipment 57,402 43,269
-------- -------
376,386 124,083
FINANCIAL FIXED ASSETS
Security deposits 2,271 1,850
CURRENT ASSETS
- --------------
RECEIVABLES AND OTHER ASSETS
Accounts receivable 250,998 186,128
Turnover tax 88,363 -
Deferred tax assets 36,621 14,531
Work in progress 129,344 11,598
Sickness benefit - 3,620
Prepayments and accruals 37,574 46,346
-------- -------
542,900 262,223
CASH, AND CASH EQUIVALENTS 224,301 91,240
-------- --------
1,152,429 483,028
========= ========
-1-
<PAGE>
Word House Companies
LIABILITIES
1996 1995
------------------ -------------------
$ $
SHAREHOLDERS' EQUITY
Common stock 85,714 85,714
Paid-in capital 256,610 -89,803
Cumulative exchange adjustment -7,282 -53,420
Retained earnings -270,797 -564,717
--------- ---------
64,245 -622,226
PROVISIONS
Provision social security charges 57,205 -
LONG-TERM LIABILITIES
Loan Port O 'Call B.V. - 68,523
Loan J. van Marissing - 4,672 73,195
--------- ---------
CURRENT LIABILITIES
Accounts payable 85,048 43,906
Notes payable 510,073 336,732
Turnover tax - 3,285
Wage tax and social security
contributions 35,742 6,480
Industrial insurance board 27,667 36,167
Current account D 'Avennes B.V. 160,174 505,800
Purchase Building S.C.I. 33,781 -
Deferred income and accruals 178,494 99,689
1,030,979 1,032,059
--------- ---------
1,152,429 483,028
--------- ---------
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<PAGE>
Word House Companies
STATEMENT OF INCOME
1996 1995
--------------- ---------------
$ $
REVENUE 3,326,775 1,850,080
Less: Cost of sales 1,196,876 579,451
--------- ---------
GROSS PROFIT 2,129,899 1,270,629
========= =========
Less: Wages and salaries 1,059,994 884,947
Social security charges 240,149 122,462
Other personnel costs 49,133 28,646
Depreciation 79,308 90,223
Car expenses 11,810 10,744
Accommodation expenses 22,489 10,527
Computer expenses 30,021 20,138
General expenses 242,678 223,056
Selling expenses 69,273 32,073
--------- ---------
TOTAL COSTS 1,804,855 1,422,816
========= =========
OPERATING INCOME 325,044 -152,187
Interest expense and interest inome 34,259 35,139
--------- ---------
INCOME BEFORE TAXES 290,785 -187,326
Provision for income taxes -101,192 91
--------- ---------
INCOME AFTER PROVISION FOR TAXES 189,593 -187,417
Recovery income taxes 104,327 -
--------- ---------
NET INCOME 293,920 -187,417
========= =========
-3-
<PAGE>
Word House Companies
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED
DECEMBER 31, 1995 AND 1996
<TABLE>
<CAPTION>
Common Additional Currency Retained Shareholders'
shares paid-in translation earnings equity
capital adjustment
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994 85,714 -89,803 394 -377,300 -380,995
Accumulated effects of exchanged differences -53,814 -53,814
Net loss -187,417 -187,417
------------------------------------------------------------
Balance at December 31, 1995 85,714 -89,803 -53,420 -564,717 -622,226
Accumulated effects of exchanged differences 46,138 46,138
Net income 293,920 293,920
Remission loan Port O 'Call B.V. 91,528 91,528
Remission Current account D'Avennes B.V. 254,885 254,885
------------------------------------------------------------
Balance at December 31, 1996 85,714 256,610 -7,282 -270,797 64,245
============================================================
</TABLE>
-4-
<PAGE>
Word House Companies
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
$
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income 293,920
Depreciations 79,308
Provision 57,205
CHANGE IN OPERATING ASSETS AN LIABILITIES:
Short-terms receivables -280,677
Current liabilities -1,080
---------
Net cash flows provided by (used for) operating activities: 148,676
=========
CASH FLOWS (USED FOR) INVESTING ACTIVITIES:
Purchase of property and equipment -330,200
=========
CASH FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES:
Remission current account D' Avennes B.V. 254,885
Remission Loan Port o 'Call B.V. 91,528
Reduction of debt -73,195
Effect of exchange rate changes on cash and cash equivalents -10,437
Other 51,804
---------
Net cash flows provided by (used for) financing activities 314,585
=========
Net increase (decrease) in cash and cash equivalents 133,061
Cash and cash equivalents, beginning of the year 91,240
---------
Cash and cash equivalents, end of the year 224,301
=========
</TABLE>
-5-
<PAGE>
Word House Companies
GENERAL NOTES TO THE ACCOUNTS
PRINCIPLES OF CURRENCY TRANSLATION
The assets and liabilities in foreign currencies are translated at the exchange
rates on the balance sheet date, except the intangible and tanglible fixed
assets which are translated at the historical rate. The profit and loss accounts
of foreign participating interests are translated at the average exchange rates.
The trading results from translating foreign currencies are included in the
profit and loss account.
PRINCIPLES OF THE VALUATION
Intangible fixed assets are valued at the acquisition price less depreciation.
Depreciation is calculated based on a fixed percentage of the acquisition price.
Tangible fixed assets are valued at the acquisition price or the manufacturing
cost less depreciation determined on the basis of the estimated life of the
fixed asset. Depreciation is a fixed percentage of this acquisition price or
manufacturing cost, taking a possible residual value into account.
Work in progress and finished products are valued at the manufacturing cost.
Losses incurred for work in progress and finished products are taken into
account as soon as they are foreseeable.
Receivables, liquid funds, debts and prepayments and accruals are included at
nominal value; a downward value adjustment is made for doubtful debts based on
an individual assessment.
Provisions are included at nominal value.
-6-
<PAGE>
Word House Companies
GENERAL NOTES TO THE ACCOUNTS
PRINCIPLES OF THE DETERMINATION OF THE RESULTS
Profit or loss is determined as being the difference between the net turnover
and the corresponding costs incurred in the year under review, adhering to the
aforementioned valuation principles. Profits are accounted for in the year in
which goods and services are supplied or rendered. Losses are accounted for in
the year in which they are foreseeable.
Corporation tax is calculated on the basis of the operating result, taking tax
allowances into account. If taxation involves movements in valuation differences
between the detemmination of profit for tax purposes and for reporting purposes,
the amount concerned will be credited or debited to the provision for deferred
tax.
COMBINATION
This annual account concerns a combined financial statement of the following
interests.
Name Place of business
- --------------------------------- -------------------------
Word House Europe B.V. Amsterdam
Word House Netherlands B.V. Amsterdam
Word House Associates B.V. Amsterdam
Word House France S.A.R.L. Craponne (France)
Van Doorn's Aannemersbedrijf B.V. Amsterdam
Intercompany relationships are eliminated from the combined documents.
-7-
<PAGE>
Word House Companies
NOTES TO THE BALANCE SHEET
Due to the standard conditions applicable to the tax unit subject to corporation
tax, D'Avennes B.V., Word House Europe B.V. and Word House Netherlands B.V. are
reciprocally liable for debts by virtue of corporation tax which is due because
of the combination before 1 January 1997.
INTANGIBLE FIXED ASSETS
The development of this balance sheet item is specified as follows:
Software
--------
$
Book value as at 1 January 3,632
Investments 5,681
---------
9,313
Depreciation 2,742
---------
Book value as at 31 December 6,571
---------
The rate of depreciation is 25% of the purchased software.
TANGIBLE FIXED ASSETS
The development of these balance sheet items is specified as follows:
Buildings Conversions
--------- -----------
$ $
Book value as at 1 January - 49,539
Investments 273,666 28,831
--------- ---------
273,666 78,370
Transfer to D'Avennes B.V. - 67,591
Depreciation - 10,779
--------- ---------
Book value as at 31 December 273,666 -
--------- ---------
The percentage is as follows: 3 10
Vehicles Hardware
--------- -----------
$ $
Book value as at 1 January 7,039 24,236
Investments 10,155 37,494
--------- ---------
17,194 61,730
Depreciation 2,866 30,740
--------- ---------
Book value as at 31 December 14,328 30,990
--------- ---------
The percentage is as follows: 25 50
-8-
<PAGE>
Word House Companies
NOTES TO THE BALANCE SHEET
Machines
and
equipment
--------
$
Book value as at 1 January 43,269
Investments 46,391
---------
89,660
Disinvestments 77
Depreciation 32,181
---------
Book value as at 31 December 57,402
---------
The percentage is as follows: average 25
Depreciation is carried out based on the original acquisition value.
AGREEMENT
BY AND AMONG
the
THE TRANSLATION GROUP, LTD.
and
EDOUARD PRISSE AND d'AVENNES B.V.
Dated: June 30, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
PAGE NO.
ARTICLE 1...........................................................DEFINITIONS
ARTICLE 2.....................................................TERMS OF EXCHANGE
2.1 Obligation to Exchange...............................................3
2.2 Exchange of Shares...................................................3
2.3 Lock-Up Periods......................................................3
2.4 Management of the Word House Entities................................4
2.5 Management of TTGL...................................................4
ARTICLE 3....................................................EXCHANGE CLOSING 3
----------------
ARTICLE 4. REPRESENTATIONS AND WARRANTIES BY
D'AVENNES ....................................................................4
4.1 Organization, Structure and Standing.................................4
4.2 Capitalization.......................................................5
4.3 Ownership of Shares..................................................5
4.4 Corporate Records....................................................5
4.5 Authority............................................................6
4.6 Judgments, Agreements or Court Orders................................6
4.7 Loans and Obligations................................................6
4.8 Commercial Activity..................................................6
4.9 Absence of Changes...................................................7
4.10 Taxes................................................................7
4.11 Properties...........................................................7
4.12 Assets...............................................................7
4.13 Litigation...........................................................8
4.14 Agreements...........................................................8
4.15 Competing Interests..................................................8
4.16 Pension or Benefit Plans.............................................8
4.17 Collective Bargaining Agreements.....................................9
4.18 Patents, Trademarks, etc.............................................9
4.19 Compliance with Law..................................................9
4.20 Brokers .............................................................9
4.21 Financial Statements.................................................9
4.22 Employees...........................................................10
4.23 Key Persons, Key Independent Contractors and Key Entities ..........10
4.24 Key Customers.......................................................10
4.25 Key Suppliers.......................................................10
4.26 Insurance...........................................................11
4.27 Contracts...........................................................11
4.28 Disclosure..........................................................12
4.29 Changes to Schedules................................................12
ARTICLE 5.REPRESENTATIONS AND WARRANTIES BY TTGL
5.1 Organization and Standing...........................................13
5.2 Capitalization......................................................13
5.3 Authority...........................................................13
5.4 Absence of Changes..................................................13
5.5 Approvals...........................................................13
5.6 Litigation..........................................................13
5.7 TTGL Shares.........................................................14
i
<PAGE>
5.8 Compliance with Law.................................................14
5.9 No Law Suits, Agreements or Court Orders............................14
5.10 Taxes...............................................................14
5.11 Pension or Benefit Plans............................................14
5.12 Collective Bargaining Agreements....................................14
5.13 Corporate Records...................................................14
5.14 Financial Statements................................................15
5.15 Agreements..........................................................15
5.16 Future Intentions...................................................15
ARTICLE 6. CONDUCT OF BUSINESS OF WORD HOUSE
ENTITIES
PRIOR TO THE EXCHANGE CLOSING DATE...........................................15
6.1 Negative Covenants..................................................15
6.2 Affirmative Covenants...............................................16
ARTICLE 7. CONDUCT OF BUSINESS OF TTGL PRIOR TO
THE EXCHANGE CLOSING DATE....................................................16
7.1 Negative Covenants..................................................16
7.2 Affirmative Covenants...............................................17
ARTICLE 8.........CONDITIONS PRECEDENT TO TTGL'S OBLIGATIONS 17
ARTICLE 9. CONDITIONS PRECEDENT TO D'AVENNES 'S
OBLIGATIONS HEREUNDER........................................................18
ARTICLE 10........INVESTMENT REPRESENTATION RESTRICTED PERIOD 19
ARTICLE 11. RECEIPT OF INFORMATION BY D'AVENNES
AND TTGL.....................................................................19
ARTICLE 12........INDEMNIFICATION AND REIMBURSEMENT 20
ii
<PAGE>
ARTICLE 13. MISCELLANEOUS 21
13.1 Survival...............................................................21
13.2 Parties in Interest....................................................21
13.3 Assignment.............................................................21
13.4 Expenses of Agreement..................................................21
13.5 Governing Law; Submission to Jurisdiction..............................21
13.6 Entire Agreement.......................................................21
13.7 Schedules..............................................................22
13.8 Waiver.................................................................22
13.9 Further Assurances.....................................................22
13.10 Counterparts...........................................................22
13.11 Headings...............................................................22
13.12 Notices................................................................22
13.13 Remedies and Specific Performance......................................23
</TABLE>
iii
<PAGE>
EXCHANGE AGREEMENT
AGREEMENT (hereinafter called "Agreement") made as of this
30th day of June 1997, by and among - The Translation Group, Ltd. (hereinafter
called "TTGL"), a Delaware corporation with an office at 332 Haddon Avenue,
Westmont, New Jersey, 08108, - d'Avennes (hereinafter called "d'Avennes") with
an office at Rijksstraatweg 121-B, NL - 1396 JJ Baambrugge, the Netherlands and
- - Edouard Prisse (hereinafter called "Prisse"), an individual having an address
at Rijksstraatweg 121-A, NL-1396 JJ Baambrugge, the Netherlands.
W I T N E S E T H:
WHEREAS, incorporating in these recitals, the definitions set forth in
Article 1 of this Agreement; and
WHEREAS TTGL, Prisse and d'Avennes desire to effect the Exchange; and
WHEREAS d'Avennes presently owns One Hundred Percent (100%) of all the
issued and outstanding shares of Word House Europe B.V., Mosanta B.V. and Van
Doorn's Aan. Bedr. B.V., and Ninety Five Percent (95%) of the issued and
outstanding shares of Word House France s.a.r.l. (collectively sometimes
referred to herein as the "Word House Entities"); and
WHEREAS WORD HOUSE Europe B.V. owns all issued and outstanding shares
of WORD HOUSE Nederland B.V. and 50% of the issued and outstanding shares of
Word House UK Ltd.; Van Doorn's Aan. Bedr. B.V. owns 3,999 shares (or
participation rights) of SCI AB Ouest 1; and
WHEREAS Prisse owns 50% of the issued and outstanding shares of Word
House UK Ltd., 5% of the issued and outstanding shares of Word House France
s.a.r.l. and one share (or participation right) of SCI AB Ouest 1,
NOW, THEREFORE, in consideration of the mutual agreements, covenants
and representations and warranties hereinafter set forth, the aforementioned
parties hereby agree as follows:
ARTICLE 1. DEFINITIONS
As used herein the following terms shall have the following respective
meanings:
"Act" means United States Securities Act of 1933, as amended.
"Affiliate(s)" means any person who controls, is controlled by or under
common control with another person.
"d'Avennes" means d'Avennes B.V.
"Exchange" means the exchange of all of the issued and outstanding
shares (or the appropriate equivalent) of Mosanta B.V., Word House Europe B.V.,
Van Doorn's Aan.Bedr.B.V. and Word House France s.a.r.l., Word House Nederland
B.V., Word House UK Ltd., SCI AB Ouest 1, Word House UK Ltd. and Word House
Nederland B.V. for Three Hundred Eighty-Five Thousand (385,000) shares of TTGL
Common Stock, par value $.001 ("TTGL Common Stock") in
2
<PAGE>
accordance with the terms and conditions of this Agreement.
"Exchange Closing" means the Closing provided for in Article 3 of this
Agreement.
"Knowledge" or variations thereof mean if a person or an entity
actually know or knew of such facts and circumstances.
"Shares" means the shares of each of the Word House Entities and each
of the Word House Affiliates owned by Sellers that are to be transferred
hereunder.
"TTGL" means the Translation Group, Ltd., a Delaware corporation, and
its wholly owned subsidiary, the Bureau of Translation
Services, Inc.
"TTGL Common Stock" means Common Stock of TTGL, $.001 par value.
"Word House Affiliates" Word House UK Ltd., Word House Nederland B.V.
AND SCI AB Ouest 1.
Terms defined elsewhere in this Agreement shall have the respective
meanings set forth therein.
ARTICLE 2. TERMS OF EXCHANGE
2.1 Obligation to Exchange. TTGL and d'Avennes and Prisse hereby agree
to exchange Three Hundred Eighty-Five Thousand (385,000) shares of TTGL Common
Stock for all of the issued and outstanding shares of the Word House Entities
and the Word House Affiliates (collectively, the "Word House Entities"), upon
the terms and conditions contained herein.
2.2 Exchange of Shares. At the Exchange Closing, d'Avennes and Prisse
shall transfer and deliver, or cause to transfer and deliver, to TTGL,
certificates for all of the Shares duly endorsed (or accompanied by duly
executed separate stock powers) and with all required government approvals,
documentary and/or stamp taxes affixed at its expense or shall sign as
transferor a notarial deed of transfer of Shares before Mr J.W. Gmelich Meyling,
civil law notary in Amsterdam, the Netherlands ("the Notary") as the case may
be, so as to make TTGL the sole owner thereof, free and clear of all liens,
claims and encumbrances whatsoever. In exchange therefor, at the Exchange
Closing, TTGL shall give irrevocable instructions to its transfer agent to issue
and deliver to the Notary, in escrow, certificates, in the aggregate,
representing Three Hundred Eighty-Five Thousand (385,000) shares of restricted
(as defined herein) TTGL Common Stock, so as to make d'Avennes the sole owner
thereof, free and clear of all liens, claims and encumbrances whatsoever. Such
issuance of the TTGL Common Stock will not be registered under the Act. Each
party hereto understands that the process to actually deliver their required
securities may take up to ... weeks to complete. TTGL, d'Avennes and Prisse
hereby grant irrevocable powers-of-attorney to the Notary, with the right of
substitution, to execute on their behalf the notarial deeds of transfer of the
Shares of Mosanta B.V., Word House Europe B.V., van Doorn's Aan. Bedr. B.V. and
to fulfill all formalities, including execution of any other documents, in
relation to the transfer of the Shares and to do everything which the Notary
deems necessary or useful in connection with the foregoing.
2.3 Lock-Up Period. Each of d'Avennes, Mr. Dreesmann and Ms. van
Marissing (collectively "the Holders") agrees to hold
3
<PAGE>
and not sell, transfer, hypothecate or pledge the TTGL Common Stock received
hereunder for a period of two (2) years from the date of this Exchange Closing
(the "Lock-up Period") unless the prior written consent of Werbel-Roth
Securities, Inc. And TTGL are obtained; provided further said lock-up period
shall not apply to up to 35,000 Shares of TTGL which Shares d'Avennes shall use
for the payment of a broker fee as defined herein; provided however, that
d'Avennes, Mr. Dreesmann and Ms. Van Marissing shall be permitted to include its
TTGL Common Stock issued hereunder in any registration statement filed by TTGL
that registers any Common Stock owned by Charles Cascio and Theodora Landgren;
provided further that the number of shares of TTGL Common Stock owned by
d'Avennes, Mr. Dreesmann and Ms. Van Marissing permitted to be registered
hereunder shall not exceed the number of shares to be actually sold within
fifteen days thereafter.
2.4 Management of the Word House Entities. Immediately following the
Exchange Closing, the Directors and Officers of the Word House Entities shall be
as set forth in Schedule "A" incorporated herein by reference and annexed
hereto. Following the Exchange Closing and until one year after the Lock-up
Period and for a period to coincide with Edouard Prisse's Employment Agreement
(or d'Avennes' Management Agreement as the case may be) with the Word House
Entities (and guaranteed by TTGL), appended as Exhibit "1" and incorporated
herein by reference, TTGL's Directors will cause the Boards of Directors of the
Word House Entities to consist of a single member and shall at all times appoint
Prisse or d'Avennes as the sole Director for an annual salary (or management
fee, as appropriate) of $100,000. The office of Secretary and other
officerships, but not directorships, which may be created from time to time
shall be filled as agreed upon between TTGL and d'Avennes.
2.5 Management of TTGL. Immediately following the Exchange Closing the
Directors and Officers of TTGL shall be as set forth in Schedule "B"
incorporated herein by reference and annexed hereto. At the next annual meeting
and for a period to coincide with Edouard Prisse's (or d'Avennes') Employment
Agreement with TTGL, TTGL's Board of Directors shall nominate Edouard Prisse as
a Board Member of TTGL. It shall not be an obligation for Edouard Prisse to
accept the seat on the Board.
ARTICLE 3. EXCHANGE CLOSING
The Exchange Closing shall take place at 11:00 A.M., New York time, on
June 30, 1997, at the offices of Heller, Horowitz & Feit, P.C., 292 Madison
Avenue, New York, New York 10017, counsel to TTGL, or at such time and/or place
agreed to by the parties.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES BY SELLERS
d'Avennes hereby represents and warrants as to itself and as to each of
the Word House Entities, and Prisse solely as to Articles 4.3 and 4.15, as
follows:
4.1 Organization, Structure and Standing. Each of d'Avennes and The
Word House Entities is a company duly incorporated and organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or
4
<PAGE>
organization; has all requisite corporate power and authority to own or lease
its properties and to enter into and carry out the provisions of this Agreement;
and, is duly qualified to carry on its business as now being conducted, except
in such countries, states, provinces and/or jurisdictions in which failure to so
qualify will not result in it being adversely impacted in a material way.
Set forth in Schedule "C", incorporated herein by reference and annexed
hereto, for each of the Word House Entities is a detailed summary of the
corporate structure including, but not limited to, the name of the corporation
(including any trade names and/or fictitious names), the place of incorporation,
the date of incorporation, the number of authorized shares and the par value of
the same, the number of issued and outstanding shares and the costs of the same,
the Board of Directors, its Officers and their titles, and all shareholders
including the number of shares and percent owned by each.
4.2 Capitalization. All of the issued and outstanding Shares of the
Word House Entities are duly authorized, validly issued, fully paid and
non-assessable. There are outstanding no other securities of the Word House
Entities, nor securities on which the Word House Entities are or may become
liable, nor any securities that are or may become required to be issued by
reason of any warrants, rights, options, calls, commitments, subscriptions,
contracts, demands, convertible securities or other agreement presently
outstanding.
4.3 Ownership of Shares.
(a) Prisse and d'Avennes, as the case may be, are the registered and
beneficial owners (directly or indirectly) of all of the issued and outstanding
shares of the Word House Entities free of all liens, claims, encumbrances,
charges, agreements (including, without limitation, voting or voting trust
agreements) or claims by or on the part of any person, company, corporation,
partnership, firm, organization or other entity, and they have good and
marketable title thereto with full right and unrestricted power to assign,
transfer and deliver such Shares to TTGL as provided in this Agreement.
(b) Following the Exchange Closing (or within 28 days thereafter), TTGL
will be the sole owner (directly or indirectly) of all of the issued and
outstanding shares of the Word House Entities free of all liens, claims,
encumbrances, charges, agreements (including, without limitation, voting or
voting trust agreements) for claims by or on the part of any person, company,
corporation, partnership, firm, organization or other entity, and will have good
and marketable title thereto with full right and unrestricted power to assign,
transfer and deliver such shares.
4.4 Corporate Records. Copies of the complete and current Articles of
Association, registration at Chamber of Commerce and shareholder registers of
each of d'Avennes and the Word House Entities (with any amendments), certified
by the appropriate public regulatory authority of the place of their
organization, and copies of by-laws certified by the appropriate corporate
secretary will be delivered to TTGL at the Exchange Closing. Each of the
foregoing, as so delivered, will be complete, true and correct on the Exchange
Closing Date. The
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minute books of the Word House Entities contain complete, true, current and
accurate records of all material actions taken by them, and the stock books
(shareholder registers) of the Word House Entities reflect accurately the names
of record shareholders and the number of shares by each shareholder. Complete
copies of each such minute book and stock book will be delivered to TTGL at the
Exchange Closing. Each of the foregoing, as so delivered, will be complete,
true, current and accurate on the Exchange Closing Date.
4.5 Authority. The execution, delivery and performance of this
Agreement and the consummation of all the transactions contemplated herein, will
not violate any provision of the Articles of Association or by-laws or any
provision thereof of d'Avennes or any of the Word House Entities, or result in
the acceleration of any obligation under any agreement, indenture, instrument,
lease, contract or other undertaking to which the Word House Entities are a
party or are bound, and which violation would have a material adverse impact.
4.6 Judgments, Agreement or Court Orders. Except as disclosed in this
Agreement, neither d'Avennes nor any of the Word House Entities are party to or
subject to or bound by any agreement or any judgment, order, writ, injunction or
decree of any court or governmental body which contains any provision which
could operate to materially impair the continued operation of their business or
the carrying out of this Agreement or any of the transactions contemplated
hereby.
4.7 Loans and Obligations. Neither d'Avennes nor any of the Word House
Entities are in default in the payment of principal or interest on any
obligation. The Word House Entities have fully complied with all other material
covenants, obligations and conditions and/or all material indebtedness for
borrowed money outstanding (excluding purchase credit terms), if any, except for
defaults which have or will be cured, waived, modified or amended prior to the
Exchange Closing Date, and evidence thereof in form and substance reasonably
satisfactory to TTGL's counsel shall have been delivered prior to the Exchange
Closing Date, and evidence thereof in form and substance reasonable satisfactory
to TTGL's counsel shall have been delivered prior to the Exchange Closing Date.
The Word House Entities have no outstanding mortgages, loan agreements or
indebtedness for borrowed money (excluding purchase credit terms) of any kind,
nature or description except as disclosed in this Agreement.
It being specifically provided further that it is agreed that all loans
and interest thereon made by d'Avennes to the Word House Entities will be
expressly waived by d'Avennes. The waivers referred to above shall be evidenced
by validly executed and legally binding Waiver Agreements as set forth in
Schedule "D".
4.8 Commercial Activity. Other than in the normal course of business
since March 31, 1997, the Word House Entities have not engaged in any material
commercial activity or incurred any material obligations or liabilities, whether
accrued, absolute, contingent or otherwise, with respect to contracts,
agreements and/or commitments which arose or arise after March 31, 1997. All
material liabilities and all obligations of the
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Word House Entities since March 31, 1997 and prior to the date hereof, were or
will be incurred only in the ordinary course of business.
4.9 Absence of Changes. Since March 31, 1997, the businesses of the
Word House Entities have been operated, and, as of the Exchange Closing Date,
will be operated in all material respects, only in the ordinary course of
business, and, without limiting the generality of the foregoing, none of the
Word House Entities have:
4.9.1 Suffered any material damage or loss not covered by insurance or
material adverse change in their financial condition, assets, liabilities,
prospects, operations or business.
4.9.2 Granted any general wage or salary increase to employees.
4.9.3 Mortgaged, pledged or subjected to any material lien, charge or
other encumbrance or restriction any of their assets, property or business
except for purchase money obligations incurred in the ordinary course of
business.
4.9.4 Sold, leased or transferred any assets in any material amount
except inventory sold in the ordinary course of business, or canceled any
material debts or claims, except as set forth herein, or waived any right of
value.
4.9.5 Declared any distribution or dividend with respect to its capital
stock.
4.9.6 Instituted, settled or agreed to settle any litigation, action or
proceeding before any court or governmental body.
4.10 Taxes. All required tax returns of the Word House Entities,
whether under national, state, provincial, municipal or local law or the law of
any foreign jurisdiction, have been timely filed and are accurate in all
material respects and all taxes shown thereon as taxes required to be paid have
been or will be paid. The Word House Entities have not been delinquent in the
payment of any tax assessment or governmental charge and have no tax deficiency
outstanding, proposed or assessed, against them and have not executed any waiver
of any tax.
Set forth in Schedule "E" are all material tax documents for no less
than three (3) years ending December 31, 1996, for the Word House Entities.
4.11 Properties. The Word House Entities have good and marketable title
to all properties owned by them. All of such properties are in good repair and
conform to all known applicable building, zoning and other laws, ordinances,
orders and regulations and applicable public and private covenants or
restrictions and other laws or requirements; and all material fixtures and
improvements to real property, and uses of real property, conform to all known
applicable building, zoning and other laws, ordinances, orders and regulations
and applicable public and private covenants or restrictions and other laws or
requirements.
4.12 Assets. The Word House Entities have good and marketable title to
all assets with an individual value exceeding $10,000 owned by them as at the
Financial statement of March 31, 1997. All of such assets are in good repair,
good
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operating condition and conform to all known applicable ordinances, regulations
and other laws or requirements.
Set forth in Schedule "F" is a detailed summary of all bank accounts
owned or that are in force for the benefit of the Word House Entities, including
but not limited to, the name and address of the bank where the account is
maintained, the name or names on the account, the account balance as of June 30,
1997, the account number, the type of account, the authorized signatures, and
any overdraft or loan agreements relating to the account.
4.13 Litigation. There are no claims, legal actions, suits,
arbitrations or other legal or administrative proceeding, or any governmental
investigations in progress, or to d'Avennes' knowledge pending or threatened,
against and/or relating to d'Avennes or any of the Word House Entities, their
properties, assets or business; d'Avennes has no knowledge of any facts which
might result in any such material claim, action, suit, arbitration or other
proceeding against and/or relating to the Word House Entities. In the event that
d'Avennes becomes aware that any of the Word House Entities are, or may become,
a defendant in any suit or proceeding, pending or threatened, it shall promptly
set forth the parties involved, the venue, a summary of the claim and potential
liability.
4.14 Agreements. No persons have given notice that the Word House
Entities are in material default under any contract or commitment, other than
immaterial defaults which have not resulted or will not result in any material
liability, except those which may be cured, waived, modified or amended prior to
the Exchange Closing.
4.15 Competing Interests. Neither d'Avennes nor any of the Word House
Entities owns, directly or indirectly, a material interest in any company,
corporation, partnership, firm, organization or other entity which is a
competitor, customer and/or supplier of the Word House Entities and/or TTGL.
Each of Prisse and d'Avennes consents and agrees that it will not own, directly
or indirectly, a material interest in any company, corporation, partnership,
firm, organization or other entity which is a competitor, customer and/or
supplier of the Word House Entities and/or TTGL for a period of two years
following the termination of his employment (or d'Avennes' management position)
with the Word House Entities, except in his capacity as a stockholder of TTGL.
4.16 Pension or Benefit Plans. The Word House Entities have no written
or unwritten pension, profit-sharing plans, stock option plans, bonus plans,
benefit plans, retirement plans, welfare plans, and/or arrangements of any kind
whatsoever, or agreements with any person, employee, consultant, free-lance
worker or agent for the making or granting of any pension, profit-sharing, bonus
payments, benefits, "perks" or any stock options, and no person, employee,
consultant or agent is currently receiving any benefit, pension, retirement or
disability pay from the Word House Entities.
4.17 Collective Bargaining Agreements. The Word House Entities are not
party to any collective bargaining agreement
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and there are no unions or collective bargaining agents for any Word House
Entity employee, and the Word House Entities are not currently involved in any
employment grievances, disputes or controversies and there are no threats of
strikes or work stoppages or demands for the recognition of any union or
bargaining agent for any employees of the Word House Entities.
4.18 Patents, Trademarks, etc. To d'Avennes' knowledge, the Word House
Entities are not infringing upon or otherwise acting adversely to any
copyrights, trademarks, trademark rights, patents, patent rights or licenses
owned by any person or persons and if such infringement were to cease it should
have an adverse effect on the business of Word House Entities and there are no
such claims or actions pending or threatened, with respect thereto.
The Word House Entities have no trademark registration and no patents
issued or pending patent applications, and no copyrights or applications
therefor, and are not licensees of any of the foregoing.
4.19 Compliance with Law. The Word House Entities have complied in all
material respects with all applicable laws, rules, regulations, ordinances and
orders applicable to their business and/or properties. No action of the Word
House Entities, including without limitation, the issuances and transfers of
their capital stock required any registration under the laws of any
jurisdiction, which has not been effected.
4.20 Brokers. d'Avennes shall be responsible for the payment of broker
commission arising because of this Agreement provided that such liability for
the brokers' commission shall not exceed thirty five thousand (35,000) shares of
TTGL Common Stock.
4.21 Financial Statements. d'Avennes has delivered to TTGL audited
Balance Sheets and Profit and Loss Statements as of December 31, 1996, for the
Word House Entities. Such Balance Sheets and Profit and Loss Statements give, in
all material respects, a true and fair view of the assets, liabilities and
financial position of the Word House Entities as at the date thereof, and fairly
present the results of operations for the periods therein referred to, all in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved.
Prior to the Exchange Closing, d'Avennes shall deliver to TTGL
unaudited Balance Sheets and Profit and Loss Statements as of March 31, 1997,
for the Word House Entities. Such Balance Sheets and Profit and Loss Statements
shall give in all material respects, a true and fair view of the assets,
liabilities and financial position of the Word House Entities as at the date
thereof, and fairly presents the results of operations for the periods therein
referred to, all in accordance with generally accepted accounting principles
consistently applied throughout the periods involved.
At the Exchange Closing, d'Avennes shall deliver to TTGL audited
Financial Statements that are required by current SEC reporting requirements for
the years 1995 and 1996 so that TTGL may comply with SEC regulations applicable
to this Agreement.
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The audited and unaudited Balance Sheets and Profit and Loss Statements
and Financial Statements referred to in this section shall be incorporated
herein by reference and annexed hereto as Schedule "G".
4.22 Employees. Other than as previously disclosed to TTGL or as
contained in the Disclosure Letter, the Word House Entities have no outstanding
commitment or agreement to effect any general wage or salary increase for, or to
modify the conditions or terms of employment of, any grade, class or group of
its employees, consultants free-lance workers or agents, and all employees of
Word House Entities may be terminated at will without any liability or
obligation, except as may be required by law.
Set forth in Schedule "H", incorporated herein by reference and annexed
hereto, is a list of all employees of Word House Entities as well as a detailed
summary concerning each said employee which shall include, but not be limited
to, the employee's name, the employee's title and job description, the place of
employment, the dates of employment, the employee's salary and the date of the
employee's most recent salary review, and any employment agreements (or other
compensation agreements) and, if any, the material terms of such agreements.
Appended to schedule "H" are all material documents that relate to
Schedule "H".
4.23 Key Persons, Key Independent Contractors and Key Entities. "Key
Persons", "Key Independent Contractors" or "Key Entities" are defined as any
person or entity that is not otherwise listed in section 4.22 that was paid more
than $50,000 in 1995 and/or 1996, or that was paid or earned more than $10,000
in the first three months of 1997 by the Word House Entities.
Within thirty days of the Exchange Closing d'Avennes will Set
forth in Schedule "I" a list of all Key Persons, Key Independent Contractors
and/or Entities, and a detailed summary for each Key Person or Entity identified
which shall include, but not be limited to, name and address, a description of
the service provided or work performed, the dates of service or work, and any
compensation agreements, and, if any, the material terms of such agreements.
Appended to Schedule "I" will be all material documents that
relate to, refer to or embody in any way to those things set forth in Schedule
"I".
4.24 Key Customers. "Key Customers" are defined as any
customer that accounted for more than 3% of the total sales of the Word House
Entities in 1995, 1996 and/or the first six months of 1997.
Set forth in Schedule "J", incorporated herein by reference
and annexed hereto, is a list of all Key Customers and a reasonable summary for
each Key Customer identified which shall include, but not be limited to, name
and address, a description of the service provided or work performed, the dates
of service or work, and any agreements and, if any, the material terms of such
agreements.
Appended to Schedule "J" are all material documents that
relate to, refer to or embody in any way to those things
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set forth in Schedule "J".
4.25 Key Suppliers. "Key Suppliers" are defined as any
supplier that was paid more than $50,000 in 1995 and/or 1996, or that was paid
more than $12,500 in the first three months of 1997 by Word House Entities for
goods and/or services.
Set forth in Schedule "K", incorporated herein by reference
and annexed hereto, is a list of all Key Suppliers and a detailed summary for
each Key Supplier identified which shall include, but not be limited to, name
and address, a description of the goods and/or services supplied, the dates that
the goods and/or services were supplied, and any compensation agreements and, if
any, the material terms of such agreements.
4.26 Insurance. The Word House Entities maintain insurance
policies to preserve their assets, business and properties in the kind and
amounts that are usual and customary for its industry and location.
Schedule "L", incorporated herein by reference and annexed
hereto, sets forth all insurance policies that are owned by the Word House
Entities or that are in force for their benefit, including but not limited to,
property insurance, personalty insurance, errors and omissions insurance,
liability insurance, automobile insurance, workers compensation insurance,
disability insurance, private pension insurance, health insurance, life
insurance and any other insurance policies. A detailed summary is set forth for
each such insurance policy identified which shall include, but not be limited
to, the policy owner, the beneficiary(ies), the amount of coverage, the location
of the policy, the policy terms, the policy number, the agent procuring the
policy, the underwriter and the cost of the policy.
4.27 Contracts. Schedule "M", incorporated herein by reference
and annexed hereto, sets forth all of the following instruments, unless set
forth elsewhere in this Agreement, to which any of the Word House Entities are a
party or by which the Word House Entities are or may be found affected and which
are material to the Word House Entities (the "Listed Instruments"):
(a) Corporate finance agreements (written or oral);
(b) Non-competition, confidential information or similar
agreements;
(c) Agreement, contracts, resolutions or policies relating to
indemnification of employees or fiduciaries with regard to liability which might
be imposed on such persons by reason of their position as such or arising out of
the operation of any employee benefit plan; and
(d) Any other material contracts, agreements, commitments or
understandings of a Word House Entity.
The Listed Instruments and all other material contracts,
agreements, commitments or understandings of the Word House Entities identified
and/or set forth elsewhere in this Agreement are collectively referred to herein
below as "Instruments".
Except as set forth in the Disclosure Letter, or as would not
have a material adverse effect on the Word House Entities, the Word House
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Entities have not given or received notice that there exists (i) any default or
event of default under any of the Instruments or (ii) any event or condition
which, with notice or lapse of time or both, would constitute an event of
default under any of the Instruments by a Word House Entity, or by any other
party of any of the Instruments. None of the Instruments, except as would not
have a material adverse effect on the Word House Entities, requires obtaining
the consent or approval, not previously obtained, of any third party in
connection with the execution of, or the consummation of the transactions
contemplated by, this Agreement.
4.28 Full Disclosure. The Financial Statements, certificates,
documents and/or other writings furnished or to be furnished to TTGL or any of
its representatives pursuant to the provisions hereof or in connection with the
transactions contemplated hereby, are in all respects accurate and complete and
no representations, warranties or statements contained in this Agreement and no
statement contained in any document made a part of this Agreement contains or
will contain any untrue statement of material fact or omits or will omit to
state any material fact necessary, in light of the circumstances under which it
was made, in order to make the statements herein or therein not misleading.
4.29 Disclosure Letter Schedule "Z", incorporated herein by
reference and annexed hereto, reflects any fact, occurrence or condition
contrary to the representations and warranties contained in this Agreement. Such
disclosure of facts, occurrences or conditions constitutes exceptions to the
representations and warranties contained in this Agreement. Other than as stated
on Schedule Z, there are no exceptions to the representations and warranties and
any such other material exceptions shall be deemed a material breach of the
representations and warranties.
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ARTICLE 5. REPRESENTATIONS AND WARRANTIES BY TTGL
TTGL represents and warrants as follows:
5.1 Organization and Standing. TTGL is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own or lease its
properties, to carry on its businesses now being conducted and to enter into
this Agreement and to carry out the transactions contemplated by this Agreement.
TTGL is duly qualified to do business in all states and jurisdictions in which
it owns its properties and conducts its business as presently conducted, except
such states in which failure to so qualify will not result in a material adverse
impact on the financial condition of TTGL.
5.2 Capitalization. The duly authorized capital stock of TTGL
consists of 15,000,000 shares of TTGL Common Stock, of which 1,930,000 shares
are issued and outstanding and 1,000,000 shares of Preferred Stock, none of
which are issued or outstanding. All of such shares of Common Stock are duly
authorized, validly issued, fully paid and non-assessable. The description of
TTGL's securities is accurate as described in the Prospectus for its initial
public offering dated December 2, 1996 (the "Prospectus") previously delivered
to d'Avennes.
5.3 Authority. The execution, delivery and performance of this
Agreement by TTGL and the consummation of all the transactions contemplated
herein have been duly and validly authorized by all requisite corporate action
and will not violate any provision of the Certificate of Incorporation or
by-laws of TTGL or any provision of, or result in the acceleration of any
obligation under, any agreement, indenture, instrument, lease, contract or other
undertaking to which TTGL is a party or by which it is bound which would have a
materially adverse effect upon TTGL.
(b) Following the Exchange Closing (or within 28 days
thereafter), d'Avennes, Mr. Dreesmann and Mrs. Van Marissing will be the sole
owner (directly or indirectly) of all 385,000 issued and outstanding shares of
TTGL Common Stock, free of al liens, claims, encumbrances, charges, agreements
(including, without limitation, voting or voting trust agreements) for claims by
or on the part of any person, company, corporation, partnership, firm,
organization or other entity, and will have good and marketable title thereto
with full right and unrestricted power to assign, transfer and deliver such
shares, except for the escrow provision as stated in article 13.13.
5.4 Absence of Changes. There have been no material adverse
changes in the business or financial condition of TTGL as reported in the
Prospectus. TTGL has no material obligations, liabilities or commitments except
as set forth in the Prospectus, other than the absorption of expenses related to
the initial public offering of TTGL. TTGL is a holding company, with no revenues
or expenses from operations, other than a $12,000.00 monthly management fee from
the Bureau of Translation Services Inc., and corporate salaries expense, and its
existing contracts and commitments remain in full force and effect and no
material default of events which may lead to material default have occurred.
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5.5 Approvals. The transactions contemplated hereby have been
duly and fully approved by all corporate action, which is and will at the
Exchange Closing be in full force and effect without amendment.
5.6 Litigation. Other than as disclosed on Schedule "T",
incorporated herein by reference and annexed hereto, there are no claims, legal
actions, suits, arbitrations or other legal or administrative proceedings, or to
its knowledge, any governmental investigations in progress or pending or
threatened, against or relating to it, its properties, assets or business, and
it does not know or have reason to be aware of any facts which might result in
any such material claim, action, suit, arbitration or other proceeding.
5.7 TTGL Shares. All of the outstanding shares of TTGL Common
Stock are, and when issued at the Exchange Closing, the shares of TTGL Common
Stock to be issued to d'Avennes, will be, duly authorized, validly issued, fully
paid and non-assessable.
5.8 Compliance with Law. TTGL has complied in all material
respects with all applicable laws, rules, regulations, ordinances and orders
applicable to its business or properties. No act of TTGL, including without
limitation the issuances and transfers of the capital stock of TTGL required any
registration under the Act, which has not been effected.
5.9 No lawsuits, Agreements or Court Orders. Other than as
disclosed on Schedule "T" incorporated herein by reference and annexed hereto,
TTGL is not a defendant in a material suit or proceeding pending or threatened
against it, nor is it a party to or subject to or bound by any agreement or any
judgment, order, writ, injunction or decree of any court or governmental body
which contains any provisions which could operate to materially impair the
continued operation of its business or the carrying out of this Agreement and
any of the transactions contemplated hereby.
5.10 Taxes. All required tax returns of TTGL, whether under
federal, state, municipal or local law or the law of any foreign jurisdiction,
have been filed and are accurate in all material respects and all taxes shown
thereon as taxes required to be paid, have been or will be paid. TTGL has not
been delinquent in the payment of any tax assessment or governmental charge and
has no tax deficiency outstanding, proposed or assessed against it nor has
executed any waiver of any tax. TTGL has not had its federal income tax returns
audited by the Internal Revenue Service.
5.11 Pension or Benefit Plans. Other than as described in the
Prospectus and than as disclosed on Schedule "U" incorporated herein by
reference and annexed hereto, TTGL has no formal or informal written or
unwritten pension, profit-sharing, bonus plan, employee benefit, retirement,
welfare plans or arrangements of any kind whatsoever, or agreements with any
person for the making or granting of any pension, profit-sharing, bonus payments
or benefits. No person is currently receiving any pension or retirement or
disability pay from TTGL.
5.12 Collective Bargaining Agreements. TTGL is not a party to
any collective bargaining agreements and there is no
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union or collective bargaining agent for any of its employees, and it has no
employment grievances, disputes or controversies and there are no threats of
strikes or work stoppages or demands for the recognition of any union or
bargaining agent for any employees.
5.13 Corporate Records. A copy of the Certificate of
Incorporation (with any amendments), certified by the appropriate public
regulatory authority of the place of its organization as of a recent date, and a
copy of its by-laws certified by the Corporate Secretary as of a recent date
will be delivered to d'Avennes, and, as so delivered, will be complete, true and
correct on the Exchange Closing Date. TTGL's minute books contain complete and
accurate records of all material actions taken by the stockholders and
directors, and TTGL's stock book reflects accurately the names of its record
stockholders and the number of securities held by each of its security holders.
Complete copies of each such minute book and stock book will be delivered to
d'Avennes.
5.14 Financial Statements. TTGL has delivered, or will deliver
prior to the Exchange Closing, to d'Avennes the Prospectus, TTGL's 10-QSB's,
TTGL's 10KSB when available, an organization chart of TTGL, a printout of TTGL's
sales by customer and TTGL's classification of employees and payroll records.
Such Financial Statements are, in all material respects, true, complete and
accurate and fairly present the assets, liabilities and financial condition of
TTGL as at the date thereof, and fairly presents the results of operations for
the periods therein referred to, all in accordance with generally accepted
accounting principles consistently applied throughout the periods involved.
5.15 Agreements. TTGL is not in material default under any
contract or commitment, other than immaterial defaults which have not resulted
or will not result in any material liability, except those which may be cured,
waived, modified or amended prior to the Exchange Closing.
ARTICLE 6. CONDUCT OF BUSINESS OF THE WORD HOUSE ENTITIES
PRIOR TO THE EXCHANGE CLOSING DATE
6.1 Negative Covenants. d'Avennes agrees that between the date
hereof and the Exchange Closing Date, and except as contemplated by this
Agreement or permitted by the prior written consent of TTGL, the Word House
Entities will not take, or permit to be taken, any of the following actions: (a)
alter or amend their Articles of Incorporation or by-laws or increase the
membership of its Board of Directors, (b) issue or become obligated to issue any
notes or other equity or debt securities of any kind, (c) enter into any option,
call or commitment with respect to their securities, (d) declare or pay any
dividend or other distribution with respect to their capital stock or
securities, (e) incur any liability or obligation except current liabilities in
the ordinary course of business and obligations under contracts entered into in
the ordinary course of business, (f) pay or accrue any salaries, fees,
commissions or other compensation to their officers or directors at a rate in
excess of the rate of compensation in effect as to such individual,
respectively, on the date hereof, (g) make any profit sharing, incentive,
pension or retirement
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payment, or grant any stock options, (h) grant any general wage increase to
their employees or adopt any bonus, profit sharing, pension, retirement, health
or welfare plan or any other employee benefit plan of any nature whatsoever, (i)
enter into any contract or commitment which is not in the ordinary course of
their business (including, without limitation, any employment or consulting
agreement), (j) borrow funds except in the ordinary course of business, (k)
accept, amend or grant any license, patent or trademark, or settle the
infringement of any trademark or patent, (1) compromise or settle any
litigation, proceeding or governmental investigation against them or their
properties or business, (m) mortgage, pledge or subject to or suffer any lien,
charge or other encumbrance or restriction on any of their assets, property or
business except for purchase money obligations in the ordinary course of
business, or (n) sell, lease or transfer any of their assets in any material
amount, except inventory in the ordinary course of business, or cancel any debts
or claims or waive any right of value.
6.2 Affirmative Covenants. d'Avennes agrees that, other than
as contemplated by the terms of this Agreement, between the date hereof and the
Exchange Closing Date, the Word House Entities;
6.2.1 Will conduct their business only in the ordinary course
and at the place or places where said business is presently conducted.
6.2.2 Will maintain the insurance policies presently in force
or insurance policies providing substantially the same coverage, under which
they are the insured or the beneficiary.
6.2.3 Will use their reasonable efforts to preserve their
assets and properties in good condition and repair, to preserve their business
and organization substantially intact, to keep available the services of their
present officers and employees and to preserve the good will of their suppliers,
customers and others having business relations with any of them. 6.2.4 Will
afford to TTGL and its counsel, accountants and other representatives full but
reasonable access during normal business hours throughout such period to all of
their properties, books, minute books, contracts, commitments and records, and
during said period furnish all information which TTGL may reasonably request.
ARTICLE 7. CONDUCT OF BUSINESS OF TTGL PRIOR TO THE
EXCHANGE CLOSING DATE
7.1 Negative Covenants. TTGL agrees that between the date
hereof and the Exchange Closing Date and except as contemplated by this
Agreement or the Prospectus or permitted by the prior written consent of
d'Avennes, TTGL will not take, or permit to be taken, any of the following
actions: (a) alter or amend its Certificate of Incorporation or by-laws; (b)
enter into any option, call or commitment with respect to its capital stock; (c)
declare or pay any dividend or other distribution with respect to its capital
stock or securities; (d) incur any liability or obligation except current
liabilities in the ordinary course of business, (e) pay or accrue any salaries,
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fees, commissions or other compensation to its officers or directors at a rate
in excess of the rate of compensation in effect as to such individual,
respectively, on the date hereof; (f) make any profit sharing, incentive,
pension or retirement payment; (g) grant any general wage increase to its
employees or adopt any bonus, profit sharing, pension, retirement, health or
welfare plan or any other employee benefit plan of any nature whatsoever; (h)
enter into any contract or commitment which is not in the ordinary course of its
business or which materially adversely affects its business; or (i) borrow funds
except in the ordinary course of business.
7.2 Affirmative Covenants. TTGL agrees that, other than as
contemplated by the terms of this Agreement or as contemplated in the Prospectus
between the date hereof and the Exchange Closing Date:
7.2.1 It will conduct its business only in the ordinary course
and at the place or places said business is conducted.
7.2.2 It will maintain the insurance policies, if any,
presently in force or insurance policies providing substantially the same
coverage, under which TTGL is the insured or the beneficiary.
7.2.3 It will preserve its assets and not expend any of such
assets except to discharge present liabilities or liabilities arising in the
ordinary course.
7.2.4 It will afford to d'Avennes and its counsel, accountants
and other representatives full access during normal business hours throughout
the period prior to the Exchange Closing to all of its properties, books, minute
books, contracts, commitments and records, and during said period furnish all
information which d'Avennes may reasonably request.
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ARTICLE 8.CONDITIONS PRECEDENT TO TTGL'S OBLIGATIONS
TTGL's obligations under this Agreement with regard to the
Exchange are subject to the fulfillment prior to the Exchange Closing of each of
the following conditions:
8.1 The representations and warranties contained in this
Agreement and in any certificate or document (including the Financial Statements
and materials already provided) delivered to TTGL pursuant hereto shall be
deemed to have been made again at and as of the time of the Exchange Closing and
shall then be true in all material respects; d'Avennes, Prisse and the Word
House Entities shall have performed and complied with all agreements and
conditions required by this Agreement to be performed or complied with prior to
or at the Exchange Closing; and TTGL shall have been furnished with a
certificate from d'Avennes dated as of the Exchange Closing Date, certifying in
such detail as TTGL may reasonably request to the fulfillment of the foregoing
conditions.
8.2 All proceedings taken in connection with the transactions
contemplated herein and all instruments and documents required to carry out this
Agreement or incident thereto shall be reasonably satisfactory in form and
substance to Heller, Horowitz & Feit, P.C., counsel for TTGL.
8.3 d'Avennes may modify any Schedule to the extent necessary
to make it complete and accurate. In the event of a material modification
thereof, without a breach hereof by d'Avennes otherwise, TTGL may either choose
to close the transaction on the terms hereof or terminate this Agreement, in
either case, without any liability for any breach hereof. In any other such
event, this Agreement shall close on the terms hereof.
8.4 Neither d'Avennes nor any of the Word House Entities shall
have incurred any materially adverse change in its assets, liabilities financial
condition, business, prospects or operations.
8.5 Prisse / d'Avennes shall have executed and delivered to
TTGL a general release, releasing any claims he or it has, or may ever have,
against the Word House Entities (or any successor) for events arising prior to
the Exchange Closing Date, which releases must be accepted and signed by each of
the Word House Entities, except for non paid salary to d'Avennes or Edouard
Prisse for June and/or July.
8.6 Execution of the Investment Letter attached hereto as
Exhibit X by each of the Holders.
ARTICLE 9. CONDITIONS PRECEDENT TO PRISSE'S AND D'AVENNES'
OBLIGATIONS HEREUNDER
All obligations of Prisse and d'Avennes under this Agreement
with regard to the Exchange are subject to the fulfillment prior to the Exchange
Closing of each of the following conditions:
9.1 TTGL's representations and warranties contained in this
Agreement shall be deemed to have been made again at and as of the time of the
Exchange Closing and shall then be true in all material respects; TTGL shall
have performed and complied with all agreements and conditions required by this
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Agreement to be performed or complied with by it prior to or at the Exchange
Closing and d'Avennes shall have been furnished with a certificate from TTGL,
dated the Exchange Closing Date, certifying in such detail as d'Avennes may
reasonably request to the fulfillment of the foregoing conditions.
9.2 All proceedings taken in connection with the transactions
contemplated herein and all instruments and documents required to carry out this
Agreement or incident thereto shall be reasonably satisfactory to d'Avennes.
9.3 TTGL shall not have incurred any materially adverse change
in its assets, liabilities, financial condition, business, prospects or
operations.
9.4 TTGL may modify any Schedule to the extent necessary to
make it complete and accurate. In the event of a material modification thereof,
without a breach hereof by TTGL otherwise, d'Avennes may either choose to close
the transaction on the terms hereof or terminate this Agreement, in either case,
without any liability for any breach hereof. In any other such event, this
Agreement shall close on the terms hereof.
ARTICLE 10. INVESTMENT REPRESENTATION RESTRICTED PERIOD
d'Avennes shall represent to TTGL that it is not acquiring the
shares of TTGL Common Stock being delivered to it at the Exchange Closing with a
view to the sale, transfer, encumbrance or distribution thereof; and TTGL shall
represent to d'Avennes that it is not acquiring the Shares being delivered to it
at the Exchange Closing with a view to the sale, transfer, encumbrance or
distribution thereof. d'Avennes agrees and consents that the shares of TTGL
Common Stock received in the Exchange will be non-transferable until two (2)
years following the Closing of this Agreement and that the certificates for such
shares of Common Stock shall contain a legend setting forth such restriction and
requiring an opinion of TTGL's counsel before such shares may be transferred
without registration under the Act and that transfer of such certificates shall
be "stop ordered" on the records of the transfer agent. d'Avennes shall deliver
to TTGL a similar representation from the other Holders as a condition to TTGL
issuing them stock. The representation shall be in the form set forth as Exhibit
X.
ARTICLE 11. RECEIPT OF INFORMATION BY D'AVENNES AND TTGL
Each of Prisse and d'Avennes on the one hand and TTGL on the
other hand hereby acknowledge to one another that:
(a) They have received and read copies of the Prospectus,
documents identified in this Agreement and documents appended to the Schedules
annexed hereto.
(b) They have been afforded the opportunity to ask any and all
questions as to the affairs of TTGL, d'Avennes and the Word House Entities and
they have availed themselves of the opportunity to do so to the extent that they
have
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desired to do so. Prisse, d'Avennes and TTGL further acknowledge to one another
that they rely on no representations except such as are expressly set forth in
this Agreement and that they have availed themselves of the use of their own
counsel to the extent they so desire.
ARTICLE 12. INDEMNIFICATION AND REIMBURSEMENT
12.1 d'Avennes hereby agrees to protect, defend and indemnify
TTGL and hold it harmless against and in respect of (i) all liabilities and
obligations to be paid, performed or discharged by Prisse- or d'Avennes pursuant
to the provisions of this Agreement; (ii) all liability, loss, damage or
deficiency resulting from any misrepresentation, breach of warranty, covenant or
agreement made by d'Avennes in this Agreement or any certificate or other
instrument furnished or to be furnished to TTGL under or in connection with this
Agreement (except for any immaterial inconsistencies or incompleteness in or of
the schedules); and (iii) all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses incident to any of the foregoing
provisions of this Section 12.1, including without limitation any legal or other
expenses reasonably incurred in investigating, defending, or preparing to defend
any such action, suit, proceeding or claim or in enforcing this indemnity.
If any claim shall be asserted against TTGL in respect of
which TTGL proposes to demand indemnification, d'Avennes shall be notified to
that effect with reasonable promptness after such assertion and it shall have
the right to assume entire control of the defense, compromise or settlement of
any such claim through its own attorney and at its own expense, and in
connection therewith TTGL shall cooperate fully to make available to d'Avennes
all pertinent information under its control relating thereto.
12.2 TTGL agrees to protect, defend and indemnify d'Avennes
and hold it harmless against and in respect of (i) all liabilities and
obligations of TTGL to be paid, performed or discharged by TTGL pursuant to the
provisions of this Agreement; (ii) all liability, loss, damage or deficiency
resulting from any misrepresentation, breach of warranty, covenant or agreement
by TTGL made in this Agreement or in any certificate or other instrument
furnished or to be furnished by it under or in connection with this Agreement;
and (iii) all actions, suits, proceedings, claims, demands, assessments,
judgments, costs and expenses incident to any of the foregoing provisions of
this Section 12.2, including, without limitation, any legal or other expenses
reasonably incurred in investigating, defending, or preparing to defend any such
action, suit, proceeding or claim or in enforcing this indemnity.
If any claim shall be asserted against d'Avennes in respect of
which d'Avennes proposes to demand indemnification, TTGL shall be notified to
that effect with reasonable promptness after such assertion, and TTGL shall have
the right to assume entire control of the defense, compromise or settlement of
any such claim through its own attorney and at its own expense, and in
connection therewith, d'Avennes shall cooperate fully to make available to TTGL
all pertinent information under its control relating thereto.
12.3 Notwithstanding the foregoing, the obligations
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of the indemnifying parties, d'Avennes, on the one hand, and TTGL, on the other,
to the indemnified parties under this Article 12, are qualified as follows: (i)
any particular item of damage giving rise to liability hereunder must exceed
$5,000; (ii) all such items of damages must exceed $25,000 in the aggregate
before there is any liability for indemnification hereunder (in which case the
obligation to indemnify will not include the initial $25,000); and (iii) the
indemnifying party shall have no obligation as to any indemnification unless the
indemnified party shall have given notice of the indemnification claim prior to
two years from the Exchange Closing Date.
12.4 The parties hereto agree that Prisse shall not be deemed
to have made any representations and warranties hereunder, except (i) as set
forth in sections 4.3 and 4.15 and (ii) to the extent that any of the
representations and warranties contain any fraudulent and intentional
misrepresentations.
ARTICLE 13. MISCELLANEOUS
13.1 Survival. All representations, warranties, indemnities,
covenants and agreements made by d'Avennes or TTGL in this Agreement or in any
schedule, certificate or instrument delivered by or on behalf of any of them
pursuant hereto shall survive the execution and delivery of this Agreement and
the Exchange Closing hereunder to the extent limited by Section 12.3.
13.2 Parties in Interest. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by each party hereto and its
successors.
13.3 Assignment. This Agreement and the rights and obligations
hereunder shall not be assigned or transferred by any party hereto other than by
operation of law.
13.4 Expenses of Agreement. TTGL and d'Avennes shall bear
their respective expenses relating to this Agreement and the performance
thereof. However, accounting and legal expenses incurred by d'Avennes with
regard to this Agreement may be paid by the Word House Entities.
13.5 Governing Law. This agreement shall be governed by and
construed in accordance with the law of the Netherlands. Any action, proceeding
or claim arising out of, or relating in any way to, this Agreement shall be
settled by arbitration in accordance with the rules of the Netherlands
Arbitration Institute ("Nederlands Arbitrage Instituut"). Thereby the following
shall apply:
- - the arbitration panel shall consist of one arbitrator;
- - the arbitration shall be conducted in Amsterdam, the Netherlands;
- - the arbitration panel shall decide in accordance with the applicable legal
rules ("naar de regelen des rechts"); and the arbitration shall be conducted
in the English language.
13.6 Entire Agreement. This Agreement contains the entire
understanding of the parties hereto with respect to the subject matter herein
contained and no amendment or modification of this Agreement shall be valid
unless expressed in a written instrument executed by the parties hereto or their
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respective successors. This Agreement supersedes all prior written or verbal
agreements or understandings between d'Avennes on the one hand, and TTGL on the
other hand, including, without limitation, any "letter of intent" or similar
document. There are no representations, warranties, covenants or understandings,
including without limitation, representations or warranties as to the business,
financial condition, assets, liabilities, plans or prospects of TTGL or
d'Avennes past, present or future, except as expressly set forth in this
Agreement or in a document supplied by any such party.
13.7 Schedules. All Schedules to this Agreement or other
certificates or documents delivered pursuant to this Agreement shall be deemed
to be a part of this Agreement, whether or not required to be annexed hereto.
Other than Schedule 4.29 (the Disclosure Letter), each party hereto may deliver
any schedule, certificate, letter, representation or other required document up
to forty five (45) days following the date hereof. It shall be deemed a material
breach of this Agreement if any such schedule, certificate, letter,
representation or other required document is not delivered within such forty
five-(45) day period.
13.8 Waiver. No waiver of any provision of, or any breach or
default of this Agreement, shall be considered valid unless in writing and
signed by, the party giving such waiver, and no waiver shall be deemed a waiver
of any other provision or any subsequent breach or default of a similar nature.
13.9 Further Assurances. Each party to this Agreement will, at
the request of the other, execute and deliver to such other party all further
endorsements and documents as such other party shall reasonably request in order
to consummate and perfect the transactions contemplated by this Agreement.
13.10 Counterparts. This Agreement may be executed in two or
more counterparts, and all counterparts so executed shall constitute one
agreement binding on all parties hereto.
13.11 Headings. Article, section and paragraph headings are
contained in this Agreement only for purposes of convenience of reference and
shall not affect the interpretation of this Agreement or modify any of its terms
or provisions.
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13.12 Notices. Any notice of other communication permitted or
required to be given hereunder shall be in writing and shall be deemed to have
been given upon (I) mailing by first class registered mail or certified mail,
return receipt requested and postage prepaid, (ii) personal delivery, (iii)
delivery by Federal Express or other overnight courier or (iv) delivery by
telefax (with a copy sent by any one of the other three methods specified
above), in each case addressed to the parties as set forth below:
IF TO D'AVENNES TO: IF TO TTGL TO:
d'Avennes B.V. Charles D. Cascio
Rijksstraatweg 121-B The Translation Group, Ltd.
1396 JJ Baambrugge 332 Haddon Avenue
The Netherlands Westmont, New Jersey 08108
Fax: (609) 858-4522
WITH A COPY TO;
---------------
Heller, Horowitz & Feit,
P.C. 292 Madison Avenue
New York, New York 10017
Each of the foregoing shall be entitled to specify a different
or additional address by giving notice as aforesaid to the other parties.
13.13 Escrow Provisions. The parties hereto agree that the
shares of TTGL Common Stock delivered as part of the Exchange shall be placed in
escrow with the Notary. Upon receipt by TTGL of the Word House Entities' Shares
from the Notary, the Notary may deliver the shares of TTGL Common Stock in the
names of Mr. Dreesmann and Ms. Van Marissing. Without prejudice to article 2.3,
the remaining shares shall remain in escrow for two years from the date hereof.
At such time, the Notary shall release 240,000 shares and retain the remaining
shares (59,500) until such time as the potential fiscal problems (in connection
with the termination of the fiscal unity of the Word House Entities and
d'Avennes) are resolved to TTGL's satisfaction. In the event such situation is
resolved within two years, all of the escrowed shares shall be released at the
end of such two-year period. The parties agree to enter into the form of Escrow
Agreement attached hereto as Exhibit , with such changes therefrom as shall be
required by the Notary. If the Notary is unwilling or unable to act as the
escrow agent the parties shall choose a mutually acceptable person or entity to
act as escrow agent and if no mutually acceptable agent can be agreed upon, the
parties shall request the advice of the Notary. In the event (i) of a material
breach of any part of this Agreement, TTGL shall be able to retrieve that number
of its shares then in escrow necessary to reflect the actual value of material
breach.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement and Plan of Reorganization to be duly executed as of the day and year
first written above.
THE TRANSLATION GROUP, LTD.
By: /s/ Charles Cascio
-----------------------------------
CHARLES CASCIO, President
d'AVENNES B.V.
By: /s/ Edouard Prisse
-----------------------------------
Edouard Prisse, Managing Director
/s/ Edouard Prisse
--------------------------------------
Edouard Prisse, Individually,
only as to articles 2.1, 4.3 and 4.15
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