<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): March 5, 1998
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IAT MULTIMEDIA, INC.
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(Exact name of registrant as specified in charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 0-22486 13-3920210
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(State or Other Jurisdiction (Commission File No.) (IRS Employer Identification No.)
of Incorporation)
Geschaftshaus Wasserschloss, Aarestrasse 17, CH-5300 Vogelsang-Turgi, Switzerland
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(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (011)(41)(56) 223-5022
----------------------------
N/A
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
IAT Multimedia, Inc. (the "Company") has completed the restructuring of
its German subsidiary and has entered into agreements to restructure its Swiss
subsidiary. These transactions were effected through the (i) Participation
Agreement dated as of March 5, 1998 by and among IAT Communication Systems GmbH
(Germany) ("Communication Systems"), IAT AG (Switzerland), Dr. Viktor Vogt, and
Hanseatische Industrie-Beteiligungen GmbH (Germany) ("HIBEG"), (ii) Spinoff
Agreement dated March 5, 1998 by and among IAT Deutschland GmbH Interaktive
Mediensysteme (Germany) ("IAT GmbH") and Communication Systems, (iii) Agreement
concerning the Assignment and Transfer of Corporate Shares dated as of March 5,
1998 by and among HIBEG, IAT GmbH, and IAT AG, (iv) Loan Transfer Agreement
dated as of March 5, 1998 by and among HIBEG, IAT GmbH, and Communication
Systems, (v) Option Agreement dated as of March 5, 1998 by and among Dr. Viktor
Vogt and HIBEG, (vi) Spinoff Agreement dated as of March 11, 1998 by and among
the Company, Dr. Viktor Vogt, and IAT Communication AG, (vii) Transfer Agreement
dated as of March 11, 1998 by and among the Company, Dr. Viktor Vogt, and IAT
Communication AG, (viii) Agreement on the Acquisition of Assets dated as of
March 18, 1998 between IAT AG and IAT Communication AG, (ix) the Restructuring
Agreement dated as of March 5, 1998 by and among IAT GmbH, IAT AG, Dr. Vogt and
HIBEG and (x) the Articles of Association of Communication Systems. The
following summary of the terms of such agreements is qualified in its entirety
by reference to such agreements, copies of each of which are attached hereto.
German Restructuring. On March 5th and 6th, the Company spun off
substantially all of the assets and the liabilities (other than intercompany
amounts) of its majority-owned subsidiary, IAT GmbH, which has provided the
Company's research and development and has functioned as the Company's sales and
marketing arm for multimedia products in Germany, into a newly formed company,
Communication Systems. The transfer will be given economic effect from January
1, 1998.
Communication Systems will initially be owned jointly by HIBEG, a
development agency of the Federal State of Bremen, Germany (2%), Dr. Viktor Vogt
(78%), the Company's wholly-owned subsidiary, IAT AG (15%), and Mr. Arno Lubben
(in trust for the employees of Communication Systems to be selected later by Dr.
Vogt) (5%). IAT AG, Dr. Vogt and HIBEG will each have a veto over all
shareholder resolutions of Communication Systems.
In connection with the restructuring, HIBEG will transfer all of its
approximately 25% interest in IAT GmbH to IAT AG for a purchase price of
DM175,700, and thereafter IAT GmbH will become an wholly-owned subsidiary of IAT
AG. In addition, IAT AG has agreed that it will contribute its 80% ownership of
FSE Computer Handel GmbH (Germany) ("FSE") to IAT GmbH, that IAT GmbH will
continue to operate in Breman and an that IAT AG will not to transfer IAT GmbH's
corporate seat without the consent of HIBEG.
In connection with the German restructuring, the Company will
contribute approximately $650,000 to IAT GmbH which will be transferred, along
with other assets of IAT GmbH, to Communication Systems. The Company's
contribution of approximately $650,000, together with the other assets
transferred to Communication Systems, will equal the liabilities of IAT GmbH
assumed by Communication Systems. Dr. Vogt has agreed to contribute
approximately $600,000 to Communication Systems. These funds, along with funds
that Communication Systems hopes to raise from other sources, will be used to
continue research & development, sales and marketing of multimedia and
compression/decompression products. Communication Systems will assume
substantially all of the liabilities of IAT GmbH (other than intercompany
amounts). IAT GmbH has represented and warranted that the liabilities assumed by
Communication Systems will not be more than the assets transferred to
Communication Systems and IAT GmbH has agreed to pay Communication Systems an
amount equal to the nominal value of such shortfall. The Company has no further
obligation to make future contributions to Communication Systems.
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The core business of Communication Systems involves systems, system
kits, and software system solutions for visual communications, with a focus on
tele-medicine and industrial solutions (tele-service). Communication Systems
intends to cooperate with IAT AG with regard to the Swiss, French, and other
markets. IAT AG undertakes to make components and know-how available to
Communications Systems at market rates and reasonable conditions, as they are
offered to third parties. Swiss Newco (as defined below) will assume these
obligations in the Swiss restructuring.
In connection with the German restructuring, Dr. Vogt has granted HIBEG
an option to acquire approximately 23% of the outstanding shares in
Communication Systems at their nominal (par) value. HIBEG may exercise its
option at any time until May 31, 1998.
Communication Systems has also assumed all rights and obligations under
a credit agreement dated December 19, 1995 between HIBEG, as creditor, and IAT
GmbH, as debtor, relating to a loan in the aggregate principal amount of
DM750,000.
IAT GmbH has agreed not to compete for a period of five years with the
present core business of Communication Systems (systems, system kits and
software system solutions for visual communications) within Germany.
Swiss Restructuring. The Company has reached agreements with Dr. Vogt
to transfer certain of the assets and liabilities of IAT AG, other than, among
others, the Company's intellectual property and the ownership interests in IAT
GmbH, to a newly formed Swiss corporation IAT Communication AG ("Swiss Newco")
which is expected to be owned jointly by Dr. Vogt (70%), other key managers of
Swiss Newco (15%) and IAT AG (15%). The Company expects to close this
transaction on or about Tuesday, March 24, 1998 (the "Closing Date").
Swiss Newco will give IAT AG its three year note (the "Purchase Price
Note"), denominated in U.S. Dollars, with an aggregate principal amount equal to
the book value of the transferred assets less the book value of the assumed
liabilities as of the January 1, 1998 plus the pro-rata portion of any prepaid
expenses and any portion of the Assumed Liabilities paid by IAT AG prior to the
Closing Date. The Purchase Price Note will have an aggregate principal amount of
approximately $325,000 (less certain expenses of IAT AG to be paid by Swiss
Newco). The Purchase Price Note will pay interest at the rate of 3% per annum,
payable semi-annually on March 1 and September 1 beginning September 1, 1998.
The Purchase Price Note will be due and payable on the third anniversary of the
Closing Date. The Purchase Price Note may be pre-paid at any time without
penalty.
The Company will lend Swiss Newco $250,000 (the "IAT Loan") which will
be evidenced by Swiss Newco's note (the "IAT Note"). The IAT Note will pay
interest at the rate of 3% per annum, payable semi-annually on March 1 and
September 1 beginning September 1, 1998. The IAT Note will be due and payable on
the earlier of (i) the third anniversary of the Closing Date and (ii) the date
on which Swiss Newco closes one or more funding transactions resulting in
issuance of Swiss Newco's (A) debt with an aggregate principal amount of
SF1,000,000 or more, (B) capital stock for consideration of SF1,000,000 or more,
or (C) any combination of (A) or (B) amounting to SF1,000,000 or more. The IAT
Note may be pre-paid at any time without penalty. The Company has no further
obligation to make future contributions to Swiss Newco.
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Dr. Vogt will lend Swiss Newco $250,000 (the "Vogt Loan") which will be
evidenced by Swiss Newco's note (the "Vogt Note"). The Vogt Note will pay
interest at the rate of 3% per annum, payable semi-annually on March 1 and
September 1 beginning September 1, 1998. The Vogt Note will be due and payable
on the third anniversary of the Closing Date. The Vogt Note may be pre-paid at
any time without penalty; provided, however, that the Vogt Note may not be paid
prior to the time that the IAT Note and the Purchase Price Note are paid in
full. The Vogt Note shall be subordinated in all respects to the IAT Note and
the Purchase Price Note.
The Company will maintain its ownership of all intellectual property
developed for its multimedia and compression/decompression hardware and software
products and expects, through its subsidiary IAT AG, to derive future revenue
through licensing fees and royalty generation associated with its technology. In
connection with such Swiss restructuring, the Company has granted Swiss Newco a
non-exclusive five-year license to use IAT AG's intellectual property for
multimedia and compression/decompression applications. Swiss Newco has the right
to grant sublicenses to Communication Systems and other affiliates. In most
cases, the royalty varies between 10% and 20% of the sales price of the software
sold. Swiss Newco has a five-year option to purchase a 50% co-ownership of IAT
AG's intellectual property for $1 million. Upon the exercise of such option, the
royalty paid by Swiss Newco to IAT AG will be cut in half and IAT AG would pay
Swiss Newco half of the royalties received by IAT AG from third-parties. In
addition, after exercise of the option, Swiss Newco can grant sub-licenses to
third-parties or transfer the license or co-ownership interest, in each case
subject to the consent of IAT AG.
Subsidiaries. After the restructurings, the Company will own 80% of FSE
Computer Handel GmbH (Germany) ("FSE"), 100% of IAT AG and IAT GmbH and 15% of
each of Communication Systems and Swiss Newco. The Company will transfer its
80% ownership ofFSE to IAT GmbH and Swiss Newco.
Dr. Vogt. In connection with the restructuring of IAT AG and IAT GmbH,
Dr. Vogt has resigned from his positions as Co-Chairman and CEO of the Company
and from management positions in the Company's subsidiaries. Dr. Vogt continues
to provide services to the Company as a director and a consultant. In addition,
Dr. Vogt and the Company have agreed to a three-year consulting contract whereby
Dr. Vogt will provide the Company with his services in respect of (i) evaluation
and analysis of technology issues, (ii) identification, evaluation and
integration of acquisitions for the Company and (iii) such other matters as the
Board of Directors of the Company may request and Dr. Vogt may agree to. In
connection with such consulting agreement, Dr. Vogt will be entitled to receive
the sum of $2,000 per month for his normal duties. The Company and Dr. Vogt will
negotiate fees for services above Dr. Vogt's normal duties. In addition, the
Company will reimburse Dr. Vogt for his reasonable expenses in connection with
his work for the Company. The Company expects that Dr. Vogt will also enter into
a consulting agreement with FSE to help integrate IAT and FSE and expects that
FSE will pay Dr. Vogt $2000 per month, plus reimbursement of reasonable
expenses, for such services.
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Registration Statement. In light of the restructuring of the Company's
Germany operations and expected restructuring of its Swiss operations, the
Company has requested the Securities and Exchange Commission's consent to
withdraw its registration statement relating to the Company's convertible notes.
The Company is evaluating its financing needs and options in light of these
restructurings.
The statements in this current report contain forward-looking
statements which are subjected to risks and uncertainties. Such statements,
including those regarding, among other things, the Company's strategy, the
ability of the Company, Swiss Newco or Communication Systems to raise necessary
financing, are dependent on a number of factors, including market conditions and
availability of financing, only some of which are within the Company's control.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
Pro Forma financial statements, which give effect to the dispositions
by the Company as described in Item 2 will be filed within 60 days of the filing
of this Current Report on Form 8-K.
(c) Exhibits
10.1 Participation Agreement dated as of March 5, 1998 by and among
Communication Systems IAT AG, Dr. Viktor Vogt, and HIBEG.
10.2 Spinoff Agreement dated March 5, 1998 by and among IAT GmbH and
Communication Systems
10.3 Agreement concerning the Assignment and Transfer of Corporate Shares
dated as of March 5, 1998 by and among HIBEG, IAT GmbH, and IAT AG.
10.4 Loan Transfer Agreement dated as of March 5, 1998 by and among HIBEG,
IAT GmbH, and Communication Systems.
10.5 Option Agreement dated as of March 5, 1998 by and among Dr. Viktor Vogt
and HIBEG.
10.6 Spinoff Agreement dated as of March 11, 1998 by and among the
Company, Dr. Viktor Vogt, and Swiss Newco.
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10.7 Transfer Agreement dated as of March 11, 1998 by and among the
Company, Dr. Viktor Vogt, and Swiss Newco.
10.8 Agreement on the Acquisition of Assets dated as of March 18, 1998
between IAT AG and Swiss Newco.
10.9 Restructuring Agreement dated as of March 5, 1998 by and among
IAT GmbH, IAT AG, Dr. Vogt and HIBEG.
10.10 Articles of Association of Communication Systems.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereto duly authorized.
IAT MULTIMEDIA, INC.
By: /s/ Klaus Grissemann
_____________________________________________
Name: Klaus Grissemann
Title: Chief Financial Officer and Director
Date: March 20, 1998
<PAGE>
Appendix 2 1.3
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To the document prepared
by Rolf Werther, Notary Public,
Bremen, dated 5 March 1998
PARTICIPATION AGREEMENT
by and between
1. IAT Communication Systems GmbH, Bremen, Federal Republic of Germany,
hereinafter referred to as "IAT-new,"
and
2. IAT AG, Turgi, Switzerland,
hereinafter referred to as "IAT Switzerland,"
and
3. Dr. Viktor Vogt, Rieden, Switzerland,
hereinafter referred to as "Dr. Vogt,"
on the one hand,
and
4. Hanseatische Industrie-Beteiligungen GmbH, Bremen, Federal Republic of
Germany,
hereinafter referred to as "HIBEG,"
on the other hand.
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1. IAT-new was established in Bremen in 1998 by way of an acquisition of a
stock GmbH with subsequent modification of the by-laws. It is the business
purpose of IAT-new to develop, produce, and distribute interactive narrow
band and wide band communication systems.
2. IAT-new is located in the "Fahrenheithaus" in Bremen. Dr. Vogt and IAT
Switzerland are the shareholders of IAT-new.
3. HIBEG intends to participate in IAT-new as a shareholder. In order to
stipulate the parties' mutual rights and duties with regard to the
envisioned participation of HIBEG in IAT-new, IAT-new, IAT Switzerland, and
HIBEG conclude the following
Participation Agreement:
------------------------
Section 1
Participations
1. At the time this participation agreement is executed, the capital stock of
IAT-new is DM 50,000.00. IAT Switzerland holds a participation with a
nominal value of DM 15,000.00 and Dr. Vogt holds a participation with a
nominal value of DM 35,000.00.
2. Following an increase of the capital stock of IAT-new from DM 50,000.00 by
DM 50,000.00 to DM 100,000.00, the participation ratios shall be structured
as follows:
a) Dr. Vogt DM 78,000.00 78%
b) IAT Switzerland DM 15,000.00 15%
c) HIBEG DM 2,000.00 2%
d) Mr. Arno Lubben DM 5,000.00 5%
(in trust for the representatives
of IAT-new to be appointed by
Dr. Vogt)
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3. IAT Switzerland and Dr. Vogt undertake to ensure that HIBEG shall be
permitted to acquire an initial contribution at a nominal value of DM
2,000.00 once the capital stock has been increased, without being required
to pay a premium thereon.
4. The new initial contribution of HIBEG shall share in the profits of IAT-new
beginning on 01/01/98.
5. HIBEG shall acquire the new initial contribution, whose acquisition is
permitted pursuant to Section 1 item 3 of this participation agreement, on
the basis of a notarized document.
6. HIBEG shall pay its new initial contribution to IAT-new immediately upon
execution of the declaration of acquisition.
7. The aforementioned capital increase of DM 50,000.00 shall be registered with
the Handelsregister [Commercial Registry] immediately following the
acquisition.
8. IAT-new undertakes to maintain the substance of the payments for the initial
contribution until the capital increase has been registered with the
Commercial Registry.
9. Once the capital increase has been effected, the capital stock of IAT-new of
DM 100,000.00 shall be allocated as set forth above in item 2.
Section 2
Covenants and Warranties
As far as the entrepreneurial and business considerations are concerned, which
led HIBEG to decide to participate in IAT-new, HIBEG is dependent on the actual
statements of IAT-new or the actual statements of Dr. Vogt and IAT Switzerland.
Dr. Vogt, IAT-new, and IAT Switzerland are aware of the fact that the
information set forth in this participation agreement forms the basis for the
participation of HIBEG in IAT-new. Dr. Vogt, IAT-new, and IAT Switzerland hereby
warrant that the following facts are correct and that the following
characteristics and circumstances exist:
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1. Establishment and Development of IAT-new:
IAT-new was established in Bremen as a stock GmbH on 06.02.1998 and was
acquired by Dr. Vogt and IAT Switzerland on 05.03.1998. IAT-new is a legally
effective limited liability company pursuant to the provisions of the German
laws regarding limited liability companies and is headquartered in Bremen.
2. Purpose of IAT-new Pursuant to the Articles of Incorporation in Effect:
It is the purpose of the company to develop, produce, and distribute
interactive narrow band and wide band communication systems. The company may
engage in all businesses related to this activity, both at home and abroad.
The company may acquire other companies of the same or a similar nature; it
may participate in such companies and may assume their representation. The
company may also establish branch offices and offices at home and abroad.
In the past, IAT Switzerland shifted important core activities - such as
marketing, distribution, and portions of the development work - from IAT
Switzerland to IAT Germany in the Federal Republic of Germany. Subsequently,
IAT Switzerland merged the entire business operations of IAT Germany GmbH
(hereinafter referred to as "IAT-old"), including all its assets and
liabilities and the aforesaid core activities, into IAT-new. The core
activities that were shifted to IAT-new, as well as the business operations
of IAT-old that were merged into IAT-new, may be shifted from IAT-new to
another entity only with the consent of HIBEG.
3. Commercial Registry:
IAT-new is registered with the Commercial Registry of the Amtsgericht
[District Court] Bremen, department B No. 17886.
4. Managing Director:
At the time this participation agreement is concluded Dr. Vogt shall serve
as the managing director of IAT-new with the right to represent the company
alone, until another experienced entrepreneur/manager has been adequately
prepared to assume this position.
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5. Capital Stock:
The capital stock of IAT-new is DM 100,000.00. It has been paid in full; no
repayments have been made.
6. Shareholders:
Dr. Vogt and IAT Switzerland hold their shares in IAT-new as sole owners in
their own names and on their own account. The shares held by IAT
Switzerland, in particular, have not been pledged and are not subject to any
liens; they are also not encumbered by any sub-participations or otherwise.
With the exception of the obligations resulting from the articles of
incorporation of IAT-new, there are no obligations with regard to the
shares, especially no rights of first refusal, options, or other third party
rights.
7. No Insolvency/Excess of Liabilities Over Assets:
IAT-new is neither insolvent nor do its liabilities exceed its assets. At no
time has an application for bankruptcy or settlement proceedings regarding
the assets of IAT-new been filed, nor has a resolution been adopted to
liquidate the company.
8. Annual Financial Statement:
Not applicable.
9. Products and Rights to Products:
Rights to software purchase/development for the system business.
10. Agreements:
Not applicable.
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11. Official Directives:
IAT-new has satisfied all statutory requirements, as well as all directives
and duties imposed by the competent authorities, relative to the company and
its operations, in particular, all requirements of the Gewerbeaufsichtsamt
[Trade Supervisory Office] and the Berufsgenossenschaft [Employers'
Liability Insurance Association].
12. Official and Public Permits:
IAT-new has been granted all official and public permits required for the
conduct of its business operations; these permits are not subject to any
temporal restrictions.
13. Lawsuits, Administrative Proceedings, Defaults:
Not applicable.
14. Loans Owed and Collateral:
Not applicable.
15. Insurance:
Not applicable.
16. Employees of IAT-new:
Not applicable.
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17. Office Address of IAT-new:
IAT-new is headquartered in the "Fahrenheithaus" at Fahrenheitstrasse 9,
28359 Bremen, [Federal Republic of Germany].
18. Conduct Relative to IAT Group Companies:
Both IAT Switzerland and Dr. Vogt undertake, in their capacity as joint and
several debtors, to ensure at all times that IAT-new, on the one hand, and
IAT-old and/or the Swiss Company to which the business of IAT Switzerland
was transferred ("IAT Switzerland-new"), on the other hand, are always
clearly separated. They undertake, furthermore, to ensure that any exchange
of goods and/or services between IAT-new and its employees and/or
executives, on the one hand, and IAT Switzerland and IAT-old, on the other
hand, shall be carried out subject to conditions as they are stipulated with
external third parties, unless stipulated otherwise.
19. Miscellaneous Facts:
IAT-new and IAT Switzerland are not aware of any other facts that might be
relevant to the present participation agreement but that were not disclosed
here.
Section 3
Liability
Dr. Vogt, IAT-new, and IAT Switzerland shall be jointly and severally liable for
the covenants and warranties set forth in Section 2 of this agreement.
Section 4
Articles of Incorporation
Not applicable.
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Section 5
Employment Contracts
IAT-new shall conclude employment contracts with its executives that are
identical, in substantive terms, to the contracts previously concluded with
IAT-old.
Section 6
Management of the Company
1. IAT Switzerland and Dr. Vogt undertake not to resolve or effect dividend
payments prior to the effectiveness of the capital increase and the
modification of the by-laws and to adopt shareholder resolutions only to the
extent necessary for the due management of the company.
2. It is intended for Communication Systems to develop into a company that is
independent of IAT AG within 12 months, capable of offering its products
worldwide without any limitations. The core business of Communication
Systems involves systems, system kits, and software system solutions, with a
focus on tele-medicine and industrial solutions (tele-service). Both the OEM
business and the business with currently available products are considered
ancillary businesses. Communication Systems intends to cooperate with IAT
AG with regard to the Swiss, French, and other markets. IAT AG undertakes to
make components and know-how available to IAT-new at market rates and
reasonable conditions, as they are offered to external third parties.
Section 7
Facilities
Not applicable.
8
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Section 8
Miscellaneous Provisions
1. This participation agreement shall be subject to the (material) laws of the
Federal Republic of Germany.
2. The ineffectiveness of individual provisions of this participation agreement
shall not affect the effectiveness of its other provisions. Ineffective
provisions shall be replaced, subject to mutual agreement, by provisions
that approximate the intended economic effect as closely as possible. The
same shall apply analogously to contractual lacunae, if any.
3. Modifications of and amendments to this participation agreement shall be
made in writing, unless more stringent forms are required by law. The
writing requirement may be invalidated only on the basis of a written accord
of all parties to this agreement.
4. Bremen (i.e. the courts of the City of Bremen) shall be the exclusive place
of jurisdiction for all disputes arising from the participation set forth in
this agreement.
Bremen, on this 5th day of March 1998
IAT Communication Systems GmbH
Signed: Vogt
____________________________
(Dr. Viktor Vogt)
IAT AG
Signed: Vogt
____________________________
(Dr. Viktor Vogt)
____________________________
(Dr. Viktor Vogt)
Hanseatische Industrie-Beteiligungen GmbH
Signed: M. Pleis
____________________________
(Manfred Pleis)
Enclosures Signed: Werther, Notary Public
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9
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Appendix 6.1
To the document prepared
by Rolf Werther, Notary Public,
Bremen, dated 5 March 1998
Corporation Acquisition Agreement
(Spin-Off-Agreement)
by and between
1. IAT Deutschland GmbH Interaktive Mediensysteme, Fahrenheitstrasse 9, 28359
Bremen, Federal Republic of Germany,
(hereinafter referred to as "IAT-Germany")
and
2. IAT Communication Systems GmbH, Fahrenheitstrasse 9, 28359 Bremen, Federal
Republic of Germany,
(hereinafter referred to as "IAT-Communications").
Preamble:
1. IAT-Germany is a corporation engaged in the development, production, and
distribution of interactive narrow-band and wide-band communication systems. In
the future, IAT-Germany plans to become active as a holding company, among other
things, i.e. to extend its scope of activities to the acquisition,
administration, and sale of shares in companies.
2. Until now IAT-Communications was a so-called Vorrats-GmbH [limited liability
stock company]. Following the modification of its by-laws, the business purpose
of IAT-Communications extends to the development, production, and distribution
of interactive narrow-band and wide-band communication systems.
3. IAT-Germany and IAT-Communications intend to transfer to IAT-Communications,
in connection with a restructuring of the IAT Group, IAT-Germany's division for
the development, production, and distribution of interactive narrow-band and
wide-band communication systems (hereinafter referred to as the "Division") by
way of an assignment of all assets, liabilities, and contractual relationships
attendant thereto.
NOW, THEREFORE, the parties to this agreement stipulate the following:
- 1 -
<PAGE>
Section 1
Object of Purchase
1. IAT-Germany herewith sells to IAT-Communications, effective 01/01/98 at 00:00
hours (hereinafter referred to as the "effective date"), any and all fixed
assets which form an integral part of the Division in the sense of Section
266 para 2 A HGB [Handelsgesetzbuch - commercial code] as well as the
revolving assets in the sense of Section 266 para 2 B, including all
inventories belonging to the division in the sense of Section 266 para 2 B I
HGB, all accounts receivable and other assets belonging to the Division in
the sense of Section 266 para 2 B II HGB as of the effective date, as well as
those accounts receivable that form the basis for accrued and deferred items
in the sense of Section 266 para 2 C HGB as well as cash on hand and cash in
banks as of 1/1/98.
2. The assets sold pursuant to the preceding paragraph comprise, in particular,
the assets set forth in the asset lists of IAT-Germany, which are appended to
this agreement as Appendix 1.2.1 (Fixed Assets) and Appendix 1.2.2 (Revolving
Assets). The aforementioned asset list was prepared as of 12/31/97. Any
assets set forth in the asset list that were sold in the course of its
customary business during the period between the effective date and the date
on which this agreement was concluded or that were withdrawn from the company
in any other manner are not sold in accordance with this agreement. Any
assets that were produced, acquired, or assumed by the company in any other
manner in the course of its customary business during the period between the
effective date and the date on which this agreement is concluded to replace
or supplement the assets set forth in the asset list are sold pursuant to
this agreement.
3. The asset lists contained in Appendices 1.2.1 and 1.2.2 were prepared on the
basis of the inventory forming the basis of the audited balance sheet, which
is an integral part of IAT-Germany's annual financial statement per 12/31/97,
which is attached to this agreement as Appendix 1.3. Irrespective thereof,
all of the company's assets that were not counted as part of the inventory
due to their nature are considered an integral part of the assets sold
pursuant to para 1 above.
4. The assets sold pursuant to ss. 1 para 1 of this agreement also comprise the
intellectual and industrial property rights set forth in Appendix 1.4 of this
agreement (patents, utility models, and design patents, as well as
trademarks) and pending applications for such intellectual/industrial
property rights, as well as use rights pertaining to the company's property
rights and copyrights.
5. Immediately upon execution of this agreement, the parties thereto shall
endeavor to have both the extant intellectual/industrial property rights and
the pending applications for such rights that were sold pursuant to this
agreement registered in the name of the new owner.
6. The parties to this agreement concur that the assets sold in accordance with
Section 1
- 2 -
<PAGE>
para 1 of this agreement also comprise all rights to inventions of IAT
Germany, technical know-how, business secrets, procedures/methods,
formulas, and all other types of intangible assets not covered by
intellectual property rights, as well as any and all embodiments of
such objects, such as, for example, written descriptions, sample
drawings, plans, and so forth. In addition thereto, the assets sold in
accordance with Section 1 para 1 of this agreement comprise all rights
to use the rights set forth in the preceding sentence and similar
rights.
7. The parties to this agreement concur that the assets sold in accordance with
Section 1 para 1 of this agreement also comprise all rights to commercial
know-how, business secrets, and administrative and distribution procedures,
as well as any and all embodiments of such objects, such as, for example,
documents concerning the structure of both administration and distribution,
records and correspondence pertaining to both suppliers and customers, and
other pertinent business records.
Section 2
Transfer of Ownership / Assignment of Receivables
1. IAT-Germany and IAT-Communications stipulate herewith that the ownership of
the assets sold in accordance with Section 1 para 1 of this agreement shall
be transferred from IAT-Germany to IAT-Communications upon execution of this
agreement. To the extent that and as long as the ownership of the assets
transferred pursuant to Section 1 para 1 of this agreement remains with
IAT-Germany, IAT-Germany declares hereby that it shall serve as the custodian
of the assets concerned on behalf of IAT-Communications upon execution of
this agreement.
2. Furthermore, IAT-Germany assigns to IAT-Communications, effective as of the
effective date, all rights subject to Section 1 para 1 and para 4 of this
agreement. IAT-Communications hereby accepts such assignment. These rights
also comprise any vested rights of IAT-Germany in assets subject to third
party reservations of title.
Section 3
Assumption of Liabilities
1. IAT-Communications herewith assumes from IAT-Germany, by way of an assumption
of debts that releases IAT-Germany from the obligations concerned, all
obligations of the company as per the effective date, which are set forth in
the list attached to this agreement as Appendix 3.1 and for which IAT-Germany
did not until now create any reserves, as well as the liabilities and
potential liabilities set forth in the aforementioned Appendix.
2. Aside from the obligations, liabilities, and potential liabilities set forth
in Appendix 3.1 to this agreement, IAT-Communications shall not assume any
other obligations of IAT-Germany. IAT-Germany shall continue to be liable for
any obligations, liabilities, and potential liabilities not set forth in the
aforementioned Appendix.
- 3 -
<PAGE>
Section 4
Assumption of Rights and Duties Under Agreements and Contractual Offers
1. IAT-Communications hereby assigns all agreements and contractual offers
belonging to it as per the effective date, which are set forth in Appendix
4.1 to this agreement, i.e. IAT-Communications assumes from IAT-Germany all
rights and duties under these agreements and contractual offers by entering
into these agreements or offers in a manner releasing IAT-Germany from any
obligations in relation thereto.
2. Agreements and contract offers not set forth in the aforementioned Appendix
are not acquired by IAT-Communications.
Section 5
Transfer of Employment Relationships
1. The parties to this agreement declare that existing employment contracts
concluded with IAT-Germany pursuant to Section 613a BGB [Burgerliches
Gesetzbuch - German civil code], including all rights and duties pertaining
thereto, are transferred to IAT-Communications as of the effective date.
2. Aside from the employment contracts with current employees, the obligations
of IAT-Germany under its company pension plan are also transferred to
IAT-Communications.
Section 6
Third Party Consent
1. The parties to this agreement shall endeavor to bring about the consent of
third parties, to the extent that such consent is required for the transfer
of the assets, the assumption of the obligations, liabilities, and potential
liabilities, and the assumption of agreements and contractual offers,
especially the consent of debtors, specific creditors, and contractual
partners.
2. If it is impossible or impractical to obtain such consent, the parties to
this agreement shall behave and agree to be treated internally as if the
transfer of the obligations and liabilities, as well as the assumption of
contractual relationships and offers was carried out in an effective manner
as of the effective date. In such cases, externally the seller shall continue
to be considered the owner of the respective assets, the debtor of the
respective obligation, liability, or potential liability, and the contractual
party to the respective contractual relationship or contractual offer;
internally, however, the seller shall possess or hold the respective assets,
obligations, liabilities, or potential liabilities, or the respective
agreements or contractual offers on the account of the buyer.
- 4 -
<PAGE>
Section 7
Purchase Price
The purchase price for the acquisition and the transfer of the Division,
including all liabilities, shall be DM 1.00 (one deutsch mark). The purchase
price has already been paid to IAT-Germany.
Section 8
Warranties of IAT-Germany
1. IAT-Germany hereby warrants by way of an independent promise of guarantee
that the value of the liabilities assumed by the buyer in accordance with
Section 3 of this agreement does not exceed the value of the assets sold in
accordance with ss. 1 para 1 and para 4 of this agreement. IAT-Germany
undertakes relative to IAT-Communications to balance any such discrepancy in
terms of value by paying an amount equivalent to the nominal value of the
discrepancy.
2. The value of the assets sold in accordance with Section 1 para 1, para 4 of
this agreement and of the liabilities assumed shall be ascertained on the
basis of IAT-Germany's balance sheet per 12/31/97. Assets that existed per
12/31/97 but did not have to be shown in the balance sheet shall not be taken
into account in the valuation of the assets. Assets that were created after
12/31/97 shall be included in the valuation of the assets, provided they have
to be shown in the balance sheet. If IAT-Germany and IAT-Communications
cannot agree as to whether the liabilities exceed the assets or to the extent
of such discrepancy, the matter shall be submitted to an expert (certified
accountant, auditor, or auditing company) who shall serve as the arbitrating
expert. If IAT-Germany and IAT-Communications cannot agree on the expert,
such expert shall be designated by the president of the Chamber of Commerce,
Bremen. Both IAT-Germany and IAT-Communications shall have the right to refer
the matter independently to the president of the Chamber of Commerce.
3. Moreover, all statutory provisions regarding warranties shall apply.
4. The claims of IAT-Communications in connection with undertakings and
warranties shall be subject to a statute of limitations of two (2) years,
which shall begin to run as of the date of execution of this agreement.
Section 9
Prohibition of Competition
1. IAT-Germany undertakes to refrain from any activities for the duration of
five (5) years from the effective date in the territory of the Federal
Republic of Germany which would bring it into direct or indirect competition
with the company's core business operations (systems, system kits and
software system solutions in the
- 5 -
<PAGE>
field of Telemedicine and industrial solutions (Teleservice)) or which would
directly or indirectly engender such competition. IAT-Germany shall ensure
that the prohibition of competition pursuant to the preceding paragraph [sic]
is not violated by any company connected to it or its majority shareholder.
2. If IAT-Germany and/or a company connected to IAT-Germany or its majority
shareholder violates the prohibition of competition stipulated in para 1 of
this article, and if the party committing such violation does not cease and
desist therefrom despite being reprimanded by IAT-Communications, the
violating party shall pay a fine of DM 100,000 (in words; DM
one-hundred-thousand) to IAT-Communications. If the violation continues, the
party committing the violation shall pay a fine of DM 50,000 (in words; DM
fifty thousand) to IAT-Communications for each month during which the
violation continues. The right of IAT-Communications to make claims for
additional damages incurred by it and to demand cessation of the violation
shall not be affected thereby.
Section 10
Closing Provisions
1. The costs of this agreement shall be borne by IAT-Germany.
2. Any modifications of or supplements to this agreement, including this
paragraph, shall be made in writing; any requirements as to notarization
shall be satisfied. This shall also apply to any waiver of the written
requirement.
3. The potential ineffectiveness or unenforceability, in whole or in part, of a
provision of this agreement shall not affect the effectiveness or
enforceability of all remaining provisions of this agreement. The ineffective
or unenforceable provision shall be considered as having been replaced by an
effective and enforceable provision that approximates most closely the
economic intent of the parties.
Bremen,
IAT Deutschland GmbH IAT Communications
Interaktive Mediensysteme Systems GmbH
- ------------------------ ------------------------
(Dr. Viktor Vogt) (Dr. Viktor Vogt)
signed M. Pleis
signed Vogt
signed Grissemann
signed Werther Notary Public
- 6 -
<PAGE>
Appendix 5
----------
to the document prepared
by Rolf Werther, Notary Public,
Bremen, dated 5 March 1998
Agreement Concerning the Assignment and Transfer of Corporate Shares
by and between
1. the limited liability company within Hanseatische Industrie-Beteiligungen
GmbH, Bremen, [Federal Republic of Germany],
hereinafter referred to as "HIBEG";
2. IAT Deutschland GmbH Interaktive Mediensysteme, Bremen, [Federal Republic
of Germany],
hereinafter referred to as "IAT-old";
and
3. IAT AG, Turgi, Switzerland, a corporation subject to Swiss law
hereinafter referred to as "IAT Switzerland."
Preamble:
1. HIBEG is a shareholder of IAT Deutschland GmbH, which is registered with
department B of the Commercial Registry of the Amtsgericht [District
Court] Bremen under registry number HRB 13294 (hereinafter referred to as
the "company"). The company's capital stock is DM 700,000.00. The capital
stock has been paid in full. HIBEG holds a share in the company's capital
stock at a nominal value of DM 175,700.00 (hereinafter referred to as the
"share").
2. HIBEG wishes to sell and transfer its share in the company having a
nominal value of DM 175,700.00 to IAT Switzerland.
3. Now, therefore, HIBEG and IAT Switzerland stipulate the following to
attain their common objective:
- 1 -
<PAGE>
Section 1
Sale and Assignment of the Share, Profit-sharing Right
1. HIBEG herewith sells and assigns to IAT Switzerland its share in the
company. IAT Switzerland herewith accepts such sale and assignment. The
assignment of the share in the company is subject to the condition
precedent of payment of the purchase price for the share.
2. IAT Switzerland shall be entitled to the profits generated by the company
in the current fiscal year, as well as to any profits generated in prior
fiscal years that were not distributed to the shareholders, i.e. any
profits carried forward and any profits in prior fiscal years not subject
to shareholder resolutions regarding the application thereof.
Section 2
Purchase Price
1. The total purchase price for the share (hereinafter referred to as the
"purchase price") is DM 175,700.00 (in words: one hundred seventy five
thousand and seven hundred Deutsche Marks).
2. IAT Switzerland undertakes to deposit the purchase price into HIBEG's
account number 2125 with Bankhaus Neelmeyer AG (bank routing number: 290
200 00) within ten calendar days of the notarization of this agreement, at
the latest.
Section 3
Warranties of HIBEG
HIBEG warrants relative to IAT Switzerland in the form of an independent promise
of guarantee that the following statements are true and correct as of the date
of notarization of this agreement:
1. The statements set forth in the preamble to this agreement are correct.
2. The company is a limited liability company which was established pursuant
to the laws of the Federal Republic of Germany and which effectively
exists in accordance with the partnership agreement by which it is
governed.
3. HIBEG is the legal and economic owner of the share. The share is free of
encumbrances of any kind, as well as of any rights created for the benefit
of third parties. HIBEG has the right to freely dispose of the share, and
such disposal does not violate any third party rights.
- 2 -
<PAGE>
Section 4
Legal Consequences
1. If one or more statements relative to which HIBEG has assumed a guarantee
in accordance with Section 3 of this agreement turn out to be incorrect,
IAT Switzerland and the company shall have the right to demand that HIBEG
create the condition, which would be extant if the statement or statements
were true, within a reasonable time period, at the latest, however, within
four (4) weeks of the date on which HIBEG receives such demand. If HIBEG
does not create the contractual condition within the period stipulated, or
if it cannot create the respective contractual condition, IAT Switzerland
and the company shall have the right to claim monetary damages from HIBEG.
The legal thought embodied in Sections 460, 464 BGB [Burgerliches
Gesetzbuch - German civil code] shall not apply.
2. All claims of HIBEG under the warranty pursuant to Section 3 shall be
subject to a statute of limitations of two (2) years. In deviation from
the aforesaid, the statutory statute of limitations shall apply to any
legal defects with respect to the share sold. Both statutes of limitations
shall begin to run as of the date on which this agreement is notarized.
3. Any other claims for damages or claims under warranties of any kind,
especially claims for rescinding this agreement, are excluded.
Section 5
Annulment of the Participation Agreement
1. HIBEG, IAT Switzerland, and the company concluded a participation
agreement on 12/19/95, setting forth the rights and duties of the parties
to the participation agreement relative to the participation of HIBEG in
the company (hereinafter referred to as the "participation agreement").
2. HIBEG, IAT Switzerland, and IAT-old hereby agree to annul the
participation agreement. The annulment of the participation agreement
shall be subject to the condition precedent of the transfer of the share
of HIBEG to IAT Switzerland.
3. Any and all mutual claims of the parties to the participation agreement of
any kind, whether current or future, shall be null and void as soon as the
annulment of the participation agreement takes effect. HIBEG, IAT
Switzerland, and IAT-old waive all mutual claims at the time the
participation agreement is annulled, and each party concerned accepts the
waiver of the other parties.
- 3 -
<PAGE>
Section 6
Miscellaneous Provisions
1. Each party to this agreement shall bear the costs of its consultants. The
costs of notarizing this agreement, as well as the transfer costs
resulting from the conclusion and implementation of this agreement,
including any transfer taxes for which the parties may be liable, shall be
borne by IAT Switzerland.
2. The potential ineffectiveness or unenforceability, in whole or in part, of
individual provisions of this agreement shall not affect the effectiveness
or enforceability of the remaining provisions of this agreement. The
ineffective or unenforceable provision shall be considered as having been
replaced by an effective and enforceable provision that approximates most
closely the economic intent of the parties.
Bremen, on this 5th day of March 1998
On behalf of
Hanseatische Industrie-Beteiligungen GmbH
Signed: M. Pleis
- --------------------------
(Manfred Pleis)
IAT Deutschland GmbH
Interaktive Mediensysteme
Signed: Vogt
- --------------------------
(Dr. Viktor Vogt)
IAT AG
Signed: Vogt Signed: Grissemann
- --------------------------- --------------------------
(Dr. Viktor Vogt) (Klaus Grissemann)
- 4 -
<PAGE>
Appendix 2 2.2 To the document
prepared by Rolf Werther, Notary
Public, Bremen, dated 5 March 1998
Loan Transfer Agreement
between,
on the one hand,
Hanseatische Industrie-Beteiligungen GmbH, Martinistrasse 34, 28195 Bremen,
[Federal Republic of Germany],
hereinafter referred to as "Creditor";
IAT Deutschland GmbH Interaktive Mediensysteme, Bremer Innovations- und
Technologiezentrum, 28209 Bremen, [Federal Republic of Germany],
hereinafter referred to as "Old Debtor";
and,
on the other hand,
IAT Communication Systems GmbH, Fahrenheitstrasse 9, 28359 Bremen, [Federal
Republic of Germany],
hereinafter referred to as "New Debtor."
Preamble:
1. WHEREAS the creditor and the old debtor concluded a loan agreement on
19.12.1995 regarding the granting of a loan in the amount of DM 750,000.00
(hereinafter referred to as "loan agreement"). The aforesaid loan was paid
out to the old debtor in full;
<PAGE>
2. WHEREAS the new debtor has acquired all business operations of the old
debtor in connection with a restructuring of the IAT Group in Germany;
3. WHEREAS the parties to this agreement wish to have the new debtor enter into
all rights and duties of the old debtor under the aforementioned loan
agreement;
NOW, THEREFORE, the parties to this agreement stipulate the following to attain
their goal:
Section 1
Assumption of the Loan by the New Debtor
The new debtor hereby enters into the loan agreement, replacing the old debtor.
The new debtor enters into all rights and duties of the old debtor under the
loan agreement, effective 01/01/98 at 00:00 hours in terms of liability under
the law of obligations. Specifically, the new debtor assumes the old debtor's
obligation to make payments on both principal and interest for the loan
previously paid out to the old debtor.
Section 2
Withdrawal of the Old Debtor
IAT-old shall cease to be a party to the loan agreement effective 12/31/97 at
24:00 hours.
Section 3
Further Stipulations
The other rights and duties of the parties, including rights and duties arising
from the Restructuring Agreement concluded today (including HIBEG's duty of
postponement) are not affected by this contract and remain as before.
Section 4
Closing Provisions
1. The costs of this agreement shall be borne by the new debtor.
<PAGE>
2. The potential ineffectiveness or unenforceability, in whole or in part, of
individual provisions of this agreement shall not affect the effectiveness
or enforceability of the remaining provisions of this agreement. The
ineffective or unenforceable provision shall be considered as having been
replaced by an effective and enforceable provision that approximates most
closely the economic intent of the parties.
3. Bremen shall be the place of performance for all obligations under this
agreement.
Bremen, on this 5th day of March 1998
On behalf of
Hanseatische Industrie- IAT Deutschland GmbH
Beteiligungen GmbH Interaktive Mediensysteme
Signed: M. Pleis Signed: Vogt
- ------------------------ ------------------------
(Manfred Pleis) (Dr. Viktor Vogt)
IAT Communication Systems GmbH
Signed: Vogt
------------------------
(Dr. Viktor Vogt)
Signed: Werther,
Notary Public
Signed: Grissemann Signed: Vogt
Signed: Werther, Notary Public Signed M. Pleis
<PAGE>
Appendix 2.1.6
--------------
of the record of
Notary Public Rolf Werther,
Bremen, of March 5, 1998
Option agreement
by and between
1. Dr. Viktor Vogt, Boldistrasse 12, 5415 Rieden b. Nussbaumen, Switzerland
- hereinafter referred to as "Dr. Vogt" -
and
2. the limited liability company in Firma Hanseatische Industrie-Beteiligungen
GmbH, Martinistr. 34, 28195 Bremen, Federal Republic of Germany
- hereinafter referred to as "HIBEG" -
Preliminary note:
1. Dr. Vogt holds a share in the nominal amount of DM 43,000.- in IAT
Communication Systems GmbH (hereinafter referred to as the "company"),
entered in the commercial register of the lower court of Bremen under HRB
17886.
2. HIBEG holds a share in the company in the nominal amount of DM 2,000.-.
3. For the holding of the shares, we refer to No. IV of document 68/1998 of the
recording notary public, dated today.
4. Dr. Vogt intends to grant HIBEG an option to acquire his partial business
share in the amount of DM 23,100.-.
On the basis of the foregoing, the contractual parties agree on the following,
in order to attain their common goal:
1
<PAGE>
2
<PAGE>
Art. 1
Formation of partial business shares
1. Dr. Vogt pledges to divide the share he holds in the nominal amount of DM
43,000, into two partial business shares with a nominal value of DM 23,100
and DM 19,900, respectively.
2. Dr. Vogt shall meet this obligation as soon as HIBEG has exercised the
option granted under this contract.
Art. 2
Option
1. Dr. Vogt hereby sells to HIBEG his partial business share in the nominal
amount of DM 23,100.-(hereinafter referred to as the "business share") and
assigns the business share to HIBEG. The sale and assignment of the business
share are subject to the essential conditions that
a) HIBEG declares to Dr. Vogt that it wishes to acquire Dr. Vogt's
business share (hereinafter referred to as "the exercise of the
option") and
b) HIBEG and the company have reached an agreement on the
participation by HIBEG in the future financing of the company on
the basis of a business plan.
2. HIBEG may declare its exercise of the option to Dr. Vogt in writing at any
time until 5/31/98 (the "option period") if HIBEG wishes to exercise the
option. After the expiration of the option period, the right of HIBEG to
exercise the option is extinguished.
Art. 3
Purchase price
1. The full purchase price of the business share (hereinafter referred to as
the "purchase price") shall amount to
DM 23,100.-
(in words: twenty-three thousand, one hundred deutschmarks).
2. HIBEG pledges to pay the purchase price within 10 calendar days after it
has exercised the option, into the account indicated by Dr. Vogt to HIBEG
in writing.
3
<PAGE>
Art. 4
Guarantees
1. Dr. Vogt guarantees to HIBEG, in the form of an independent warranty
promise, that the following statements are correct and accurate at the time
of the assignment of the business share after the exercise of the option:
a) The preliminary statements in this contract are correct.
b) The company is legally established under the laws of the Federal
Republic of Germany and is an effectively existing limited
liability company pursuant to the deed of partnership.
c) The business share is fully paid up. The business share is free
of any encumbrance or rights registered in favor of third
parties.
2. These assurances are subject to a two-year statute of limitations, which
begins to run on the date of the exercise of the option by HIBEG.
Art. 5
Concluding stipulations
1. Each contractual party shall bear the cost of the consultant it has
retained. HIBEG shall bear the expenses for the notarization and other
assignment fees caused by the conclusion and implementation of this
contract, including any transfer tax payable by the parties.
2. If a stipulation of this contract is entirely or partially invalid or
impractical, the validity and practicality of the remaining stipulations of
this contract shall not be affected. The invalid or impractical stipulation
shall be considered to have been replaced by a valid, practical one which
comes closest to the financial goal pursued by the contractual parties
through the invalid or impractical clause.
Bremen, March 5, 1998
signed Vogt
____________________________
(Dr. Viktor Vogt)
4
<PAGE>
Hanseatische Industrie-Beteiligungen GmbH
as agent
signed M. Pleis
____________________________
(Manfred Pleis)
signed Werther, Notary Public
signed Vogt
signed Grissemann
signed M. Pleis
signed Werther, Notary Public
5
<PAGE>
SPINOFF AGREEMENT
This Spinoff Agreement (the "Agreement") dated as of March 11, 1998 by
and among IAT Multimedia, Inc., a corporation organized under the laws of
Delaware ("IAT"), IAT AG, a corporation organized under the laws of Switzerland
and wholly-owned subsidiary of IAT ("AG"), Dr. Viktor Vogt, a German citizen
("Dr. Vogt") and IAT Communication AG, in formation represented by one of its
founding shareholders, Dr. Vogt ("Swiss Newco").
W I T N E S S E T H:
WHEREAS, AG is selling and assigning all of the assets and certain of
the liabilities of its subsidiary IAT Deutschland GmbH Interaktive Medien
Systeme, a corporation organized under the laws of the Republic of Germany ("IAT
Germany"), to IAT Communication Systems GmbH, a corporation organized under the
laws of the Republic of Germany ("German Newco"), pursuant to the
Umstrukturierungsvereinbarung (together with the agreements referred to therein,
the "German Spinoff Agreement") dated as of March 5 and 6, 1998 by and among AG,
IAT Germany, HIBEG and German Newco;
WHEREAS, Dr. Vogt is currently the Co-Chairman and Chief Executive
Officer of IAT and the Managing Director and President of AG;
WHEREAS, Dr. Vogt and AG wish to initially own approximately 70% and
15%, respectively, of the outstanding ordinary shares of Swiss Newco;
WHEREAS, IAT believes that it is in the best interests of IAT to sell
and assign the business and certain of the assets and liabilities of AG to Swiss
Newco;
WHEREAS, IAT wishes to sell and assign to Swiss Newco the business and
certain of the assets of AG in exchange for the assumption by Swiss Newco of the
Assumed Liabilities (as hereinafter defined) as specified in this Agreement;
WHEREAS, Swiss Newco is willing to assume such Assumed Liabilities and
wishes to receive the business and certain of the assets of AG as specified in
this Agreement; and
WHEREAS, IAT, AG, Swiss Newco, and Dr. Vogt have determined that it is
necessary and desirable to set forth the principal corporate transactions
required to effect the Spinoff (as hereinafter defined) and assignment and to
set forth other agreements that will govern certain other matters in connection
therewith;
1
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein and intending to be legally bound, the
undersigned hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 General. As used in this Agreement, capitalized terms
defined immediately after their use shall have the respective meanings thereby
provided and the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
Accountants: Rothstein Kass & Company, the independent certified public
accountants for IAT, and Giroud Treuhand AG, the independent certified public
accountants for AG.
Action: any action, claim, suit, arbitration, inquiry, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal.
Affiliate: with respect to any specified person, a person that,
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, such specified person.
Assumed Liabilities: shall have the meaning set forth in the Transfer
Agreement.
Books and Records: the books and records of AG (or true and complete
copies thereof), including all computerized books and records owned by AG, which
relate principally to the Transferred Businesses and are necessary for Swiss
Newco to operate the Transferred Businesses, including, without limitation, all
such books and records relating to Employees, the purchase of materials,
supplies and services, the sale of products by the Transferred Businesses or
dealings with customers of the Transferred Businesses and all litigation files
relating to any Action being assumed by Swiss Newco as part of the Assumed
Liabilities.
Conveyancing and Assumption Instruments: shall have the meaning set
forth in the Transfer Agreement.
Employee: shall have the meaning set forth in the Transfer Agreement.
Indemnifiable Losses: with respect to any claim by an Indemnitee for
indemnification authorized pursuant to this Agreement, all losses, Liabilities,
claims, damages, obligations, payments, costs and expenses (including, without
limitation, the costs and expenses of any and all
2
<PAGE>
Actions, demands, assessments, judgments, settlements and compromises relating
thereto and reasonable attorneys' fees and expenses in connection therewith)
suffered by such Indemnitee with respect to such claim.
Indemnifying Party: any party who is required to indemnify any other
person pursuant to this Agreement.
Indemnitee: any party who is entitled to receive indemnification from
an Indemnifying Party pursuant to this Agreement.
Indemnity Payment: the amount an Indemnifying Party is required to pay
an Indemnitee pursuant to this Agreement.
Intellectual Property: all of the intellectual property of AG
including, without limitation, all patents, patent applications, copyrights,
licenses, trademarks, trademark registrations, service marks, service mark
registrations, inventions, trade secrets, as of the Closing Date.
Insurance Program: collectively, the series of property and casualty
policies pursuant to which various insurance carriers provide insurance coverage
to AG in respect of claims or occurrences relating to, without limitation,
property damage, business interruption, transit, fire, extended coverage,
fiduciary, fidelity, environmental impairment, employee crime, general
liability, products' liability, automobile liability and employer's liability.
Liabilities: any and all debts, liabilities and obligations, whether or
not accrued, contingent, known or unknown, or reflected on a balance sheet,
including, without limitation, those arising under any law, rule, regulation,
Action, order or consent decree of any governmental entity or any judgment of
any court of any kind or any award of any arbitrator of any kind, and those
arising under any contract, commitment or undertaking.
Purchase Price Note: shall have the meaning set forth in the Transfer
Agreement.
Retained Liabilities: shall have the meaning set forth in the Transfer
Agreement.
Spinoff: the transfer of the Transferred Assets, the assumption of the
Assumed Liabilities and the grant of the License.
Spinoff Date: January 1, 1998.
Spinoff Employees: shall have the meaning set forth in the Transfer
Agreement.
Transfer Agreement: the Transfer Agreement dated as of March 4, 1998 by
and among IAT, AG, Swiss Newco and Dr. Vogt.
3
<PAGE>
Transferred Assets: shall have the meaning set forth in the Transfer
Agreement.
Transferred Business: shall have the meaning set forth in the Transfer
Agreement.
ARTICLE 2
SPINOFF AND RELATED TRANSACTIONS
Section 2.1 The Spinoff. Subject to the terms and conditions of this
Agreement and the Transfer Agreement, the parties shall cause all of AG's right,
title and interest in and to the Transferred Assets to be conveyed, assigned,
transferred and delivered to Swiss Newco as of the Spinoff Date, free and clear
of all liens or encumbrances in favor of AG or IAT or their subsidiaries, and
all of AG's duties, obligations and responsibilities under the Assumed
Liabilities to be assumed by Swiss Newco. Such transfer and assumption shall be
effected by means of the Transfer Agreement and, if necessary, the Conveyancing
and Assumption Instruments which shall be executed and delivered by each of AG
and Swiss Newco on or prior to the Closing Date (as hereinafter defined).
Subject to Article 3 and Section 7.1 hereof, to the extent that any such
conveyances, assignments, transfers and deliveries shall not have been so
consummated on the Closing Date, the parties shall cooperate to effect such
consummation as promptly thereafter as shall be practicable, it nonetheless
being understood and agreed by all of the parties that none of them shall be
liable in any manner to any person who is not a party to this Agreement for any
failure of any of the transfers contemplated by this Article 2 to be consummated
on or subsequent to the Closing Date. Whether or not all of the Transferred
Assets or the Assumed Liabilities shall have been legally transferred to, or
assumed by, Swiss Newco as of the Spinoff Date, the parties agree that, as of
the Spinoff Date, Swiss Newco shall have, and shall be deemed to have acquired,
complete and sole beneficial ownership over all of the Transferred Assets,
together with all of AG's rights, powers and privileges incident thereto, and
shall be deemed to have assumed all of the Assumed Liabilities and all of AG's
and its subsidiaries' duties, obligations and responsibilities incident thereto
in accordance with the terms of this Agreement.
Section 2.2 Funding.
(a) IAT agrees to lend Swiss Newco, on the Closing Date, $250,000
(the "IAT Loan") which will be evidenced by Swiss Newco's note (the "IAT Note"
and, together with the Purchase Price Note, the "Notes"). The IAT Note will pay
interest at the rate of 3% per annum, payable semi-annually on March 1 and
September 1 beginning September 1, 1998. The IAT Note will be due and payable on
the earlier of (i) the third anniversary of the Closing Date and (ii) the date
on which Swiss Newco closes one or more funding transactions resulting in
issuance of Swiss Newco's (A) debt with an aggregate principal amount of
SF1,000,000 or more, (B) capital stock for consideration of SF1,000,000 or more
, or (C) any combination of (A) or (B) amounting to SF1,000,000 or more. The IAT
Note may be pre-paid at any time without penalty.
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(b) Dr. Vogt agrees to lend Swiss Newco, on or prior to the Closing
Date, $250,000 (the "Vogt Loan") which will be evidenced by Swiss Newco's note
(the "Vogt Note"). The Vogt Note will pay interest at the rate of 3% per annum,
payable semi-annually on March 1 and September 1 beginning September 1, 1998.
The Vogt Note will be due and payable on the third anniversary of the Closing
Date. The Vogt Note may be pre-paid at any time without penalty; provided,
however, that the Vogt Note may not be paid prior to the time that the IAT Note
and the Purchase Price Note are paid in full. The Vogt Note shall be
subordinated in all respects to the IAT Note and the Purchase Price Note.
(c) The parties agree that, aside from the IAT Loan, IAT and AG have
no obligation to fund Swiss Newco or German Newco and that providing, or cause
others to provide, any future funding of Swiss Newco or German Newco will be
solely the responsibility of Dr. Vogt who will use his best efforts to provide,
or cause others to provide, such funding.
(d) Swiss Newco will be organized with an initial share capital of
1000 ordinary shares (Namenaktien), with a nominal value of SF100 each ("New
Shares"). In connection with the organization of Swiss Newco, Dr. Vogt and AG,
severally and not jointly, agree to subscribe and pay for 700 and 150 New
Shares, respectively, at a price per New Share equal to their nominal value and
Swiss Newco agrees to issue such New Shares to Dr. Vogt and AG, respectively, at
such price. Upon such issuance, the New Shares will be fully paid and
non-assessable. The obligation of Dr. Vogt to subscribe for New Shares is
conditioned on the subscription of New Shares by AG and the obligation of AG to
subscribe for New Shares is conditioned on the subscription of New Shares by Dr.
Vogt. In addition, Dr. Vogt will cause employees of Swiss Newco to subscribe for
an aggregate of 150 New Shares at a price per share equal to their nominal value
prior to AG's subscription of its New Shares.
Section 2.3 Construction of Agreements. Notwithstanding any other
provisions in this Agreement to the contrary, in the event and to the extent
there shall be a conflict between the provisions of this Agreement and the
Transfer Agreement or any Conveyancing and Assumption Instrument or other
instrument of assumption entered into pursuant to this Agreement, the provisions
of Transfer Agreement or such Conveyancing and Assumption Instrument or other
instrument of assumption entered into pursuant to this Agreement shall control.
Section 2.4 Compliance. The Spinoff shall be effected in compliance
with IAT's and AG's certificates of incorporation and by-laws and in material
compliance with all applicable laws and shall be subject to obtaining all
applicable consents, if any, of governmental entities.
Section 2.5 Fairness Opinion. On or prior to the Closing Date, the
Board of Directors of IAT will obtain the opinion of Royce Investment Group that
the Spinoff is fair to the shareholders of IAT. IAT will bear the costs of such
fairness opinion.
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ARTICLE 3
[RESERVED]
ARTICLE 4
INTELLECTUAL PROPERTY
Section 4.1 License of the Intellectual Property. AG hereby grants
Swiss Newco a worldwide license (the "License") to the Intellectual Property
necessary to allow Swiss Newco to make, have made, use or sell products
incorporating or embodying the Intellectual Property; provided, however, that if
AG and IAT are unable with commercially reasonable efforts to obtain any
necessary consents from licensors or other owners of any of the Intellectual
Property for the transfer of such Intellectual Property to Swiss Newco pursuant
to Section 7.1, then License shall not include such Intellectual Property and
the term "Intellectual Property" shall not include such intellectual property.
Subject to Section 4.6, the License shall run from the Closing Date until the
fifth anniversary of the Closing Date.
Section 4.2 Royalty.
(a) Subject to Section 4.3, Swiss Newco will pay AG a royalty (the
"Royalty") at the of rate set forth in Annex I hereto on the sales, exclusive of
shipping sales taxes, ad valorem taxes and returns, with respect to any products
sold or services by Swiss Newco or any of its Affiliates (including, without
limitation, German Newco and Algo Vision GmbH ("Berlinco")) which embody or
incorporate any of the Intellectual Property and any products or services sold
by Swiss Newco or any of its Affiliates (including, without limitation, German
Newco and Berlinco ) which embody or incorporate any technology related to the
Intellectual Property, including, without limitation, development of AG's
multimedia and compression/decompression technologies after the Closing Date
("Improvements").
(b) The Royalty shall be payable within 15 calender days of the end of
each quarter with respect to products sold within such quarter. Along with the
payment of the Royalty, Swiss Newco will provide a schedule showing the
calculation of the amount of such payment.
(c) In addition to the rights of access to Information (as hereinafter
defined) related to the License provided in Article 8 hereto, AG shall have the
right to audit such calculations of the amount of the Royalty payments at its
own expense; provided, however, that if the correct amount of the royalty as
determined by such audit is more than 5% above the amount set forth in Swiss
Newco's schedule, then Swiss Newco shall pay the fees and expenses of such
audit.
Section 4.3 Co-ownership. AG hereby grants Swiss Newco an option (the
"Option") to purchase a 50% co-ownership of the Intellectual Property upon
payment in full of a fee of $1 million
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(the "Fee"); provided, however, that if AG and IAT are unable with commercially
reasonable efforts to obtain any necessary consents from licensors or other
owners of any of the Intellectual Property for such transfer of co-ownership of
such Intellectual Property to Swiss Newco pursuant to Section 7.1, then Swiss
Newco shall not be the co-owner of such Intellectual Property and the term
"Intellectual Property" when discussing the co-owned Intellectual Property shall
not include such intellectual property; provided, further, that the License with
respect to such intellectual property will, subject to Section 4.6, be
perpetual. Upon exercise of the Option, the Royalty payable pursuant to Section
4.2 shall be cut in half. The option may be exercised at anytime on or prior to
the fifth anniversary of the Closing Date. Upon exercise of the option and for
the term of the License, AG will pay Swiss Newco one half of all royalties
received by AG (other than royalties received pursuant to the this Agreement).
The co-ownership interest is subject to Section 4.6. The occurrence of any of
the events described in Section 4.6(a)(iv) or (v) shall immediately and
automatically terminate the co-ownership and all ownership in the Intellectual
Property will revert to AG.
Section 4.4 Sub-Licenses. Swiss Newco shall have the right to grant
sub-licenses with respect to the Licensed Intellectual Property only to German
Newco, Berlinco and other entities controlled by Swiss Newco; provided, however,
that if Swiss Newco pays the Fee, then Swiss Newco shall have the right to grant
further sub-licenses with respect to the Intellectual Property. Swiss Newco
shall pay AG the same Royalty with respect to sales by German Newco and Berlinco
as if such sales had been made by Swiss Newco. Such sub-licenses shall
automatically terminate upon the termination of the License pursuant to Section
4.6 and shall be terminable by AG upon the occupance of any event with respect
to the sub-licensee which could result in the termination of the License
pursuant to Section 4.6 if such event occurred to Swiss Newco (including,
without limitation, violations by such sub-licensee of the restrictions on
transfers contained in Section 4.5).
Section 4.5 Transfers of the License.
(a) Prior to the exercise of the Option, Swiss Newco shall not sell,
assign or otherwise transfer the License or any portion of the License without
the consent of AG.
(b) Upon exercise of the Option, Swiss Newco can sell, assign or
otherwise transfer its co-ownership interest or the License or any portion
thereof with the consent of AG.
Section 4.6 Termination of the License.
(a) The License or the co-ownership may be terminated by AG upon the
occurrence of any of the following events (whatever the reason for such event
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
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(i) failure to make any quarterly payment of the Royalty when
it becomes due and payable and the continuance of such default
for a period of 90 days;
(ii) any default in the performance, or breach, by Swiss Newco
of any of the terms of the License set forth in this Article 4
and elsewhere in this Agreement and the continuance of such
default or breach for a period of 90 days after AG has given
Swiss Newco a written notice specifying such default or
breach;
(iii) any default in the payment of the Notes when they become
due and payable or any other default in the performance, or
breach, by Swiss Newco of any other term of the Notes or the
Pledge and the continuance of such default for a period of 90
days;
(iv) the entry of a decree or order by a competent court
adjudging Swiss Newco or any of its subsidiaries a bankrupt or
insolvent, or the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding
under any bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding, in respect of Swiss
Newco or any of its subsidiaries, and, if such case or
proceeding is not commenced by Swiss Newco or any of its
subsidiaries or converted to a voluntary case, such case or
proceeding shall be consented to or acquiesced in by Swiss
Newco or such subsidiary or shall result in the entry of an
order for relief or shall remain for 60 days undismissed; or
(v) Swiss Newco or any of its subsidiaries shall apply for,
consent to, or acquiesce in, the appointment of a trustee,
receiver, sequestrator, liquidator, custodian or similar
official for Swiss Newco or any of its subsidiaries or any
property of any thereof, or, in the absence of such
application, shall consent to, acquiesce in or permit or
suffer to exist the appointment of a trustee, receiver,
sequestrator, liquidator or other custodian for Swiss Newco or
any of its subsidiaries or for any substantial part of the
property of any thereof, and such trustee, receiver,
sequestrator, liquidator, custodian or other similar official
shall not be discharged within 30 days; or Swiss Newco or any
of its subsidiaries shall make a general assignment for the
benefit of creditors or admit in writing its inability to pay
its debts generally as they become due, or shall take
corporate action in furtherance of any of the foregoing.
The occurrence of any of the events described in paragraphs (iv) and (v) shall
immediately and automatically terminate the License (and any sublicenses) unless
AG shall rescind such termination.
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(b) No forbearance, delay or omission of AG to exercise any right or
remedy accruing upon the occupance of any event described in Section 4.6(a)
shall impair any such right or remedy or constitute a waiver of any such event
or an acquiescence therein. All rights and remedies may be exercised at any
time.
Section 4.7 Transfers of the Intellectual Property by AG. Nothing
herein shall prohibit AG from (i) granting other licenses to the Intellectual
Property, (ii) assigning its rights and obligations under the License, or (iii)
subject to the rights granted by the License and the Option, selling or
otherwise transferring the Intellectual Property.
Section 4.8 Improvements.
(a) Swiss Newco and German Newco will invest at least a total of
$1,000,000 in Improvements in accordance with the business plans of Swiss Newco
and German Newco approved by IAT.
(b) In the event Swiss Newco or any of its employees shall make or
acquire any Improvements essentially based on the Intellectual Property, Swiss
Newco shall forthwith disclose and communicate such Improvement to AG and shall
grant a non-exclusive, non-cancelable royalty-free license to make, have made,
use and sell products incorporating such Improvements to AG. With the approval
of Swiss Newco, AG has the right to grant licenses and sublicenses to third
parties regarding the Improvement.
(c) In the event AG or any of its employees shall make or acquire any
Improvements essentially based on the Intellectual Property, AG shall forthwith
disclose and communicate such Improvement to Swiss Newco and shall grant Swiss
Newco a license on such Improvements to Swiss Newco on the same terms as the
License. The Option will include all Improvements described in the prior
sentence made prior to the date of exercise of the Option.
Section 4.9 Patent Applications. Swiss Newco and AG will cooperate in
prosecuting any patent applications related to Intellectual Property.
Section 4.10 Existing Licenses. The parties acknowledge that AG has
previously granted licenses with regard to the Intellectual Property.
ARTICLE 5
SURVIVAL; MUTUAL RELEASE AND INDEMNIFICATION
Section 5.1 Survival and Indemnification.
(a) Except as specifically provided herein to the contrary, all
covenants and agreements of the parties contained in this Agreement shall
survive the Closing Date.
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(b) Except as specifically provided herein, the indemnification
provisions of this Article 5 shall terminate and be of no further force and
effect on (i) in the case of AG, the sixth anniversary of the Closing Date, and
(i) in the case of Swiss Newco, the later of (A) the termination date of the
License or (B) the sixth anniversary of the Closing Date; provided, however,
that such provisions shall survive thereafter as to any claims for
indemnification asserted prior to such termination date or the sixth
anniversary, as the case may be. Such termination of the indemnification
provisions shall in no way limit the obligations of Swiss Newco with respect to
the Assumed Liabilities or the obligations of AG with respect to the Retained
Liabilities and related indemnification rights under this Agreement, and the
Transfer Agreement which shall survive indefinitely.
(c) The obligations of the parties under this Article 5 shall survive
the sale or other transfer by either of them of any assets or businesses or the
assignment by either of them of any Liabilities. To the extent Swiss Newco
transfers to another party any of the Assumed Liabilities (except for such
amounts of Assumed Liabilities which are not material individually or in the
aggregate), Swiss Newco will cause the transferee of such Assumed Liabilities to
assume specifically its obligations with respect thereto under this Agreement
and the Transfer Agreement and will cause such transferee to fulfill its
obligations related to such Assumed Liabilities. In the event the transferee of
the Assumed Liabilities does not fulfill its obligations with respect thereto,
Swiss Newco, shall fulfill its obligations with respect thereto.
(d) The parties agree that indemnification pursuant to the Transfer
Agreement shall be governed by the indemnification procedures set forth in this
Article 5.
Section 5.2 Indemnification.
(a) AG shall indemnify, defend and hold harmless Swiss Newco from and
against any and all Indemnifiable Losses (other than income tax liabilities) to
which Swiss Newco may be or become subject that (i) relate to the Retained
Liabilities of AG whether arising prior to, concurrent with or after the Spinoff
or (ii) result from a breach by AG of any representation, warranty or covenant
contained in this Agreement, the Transfer Agreement or any related agreement.
(b) Swiss Newco shall indemnify, defend and hold harmless IAT and AG
from and against any and all Indemnifiable Losses (other than income tax
liabilities) to which may be or become subject that (i) relate to the
Transferred Businesses, Transferred Assets, License, the IP Pledge, the Pledge,
assets, business, operations, debts or Liabilities of Swiss Newco or (ii) result
from a breach by Swiss Newco of any representation, warranty or covenant
contained in this Agreement, the Transfer Agreement or any related agreement.
(c) IAT will indemnify the other founding shareholders of Swiss Newco
for Swiss Newco's pre-incorporation activities.
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(d) The amount which any party (an "Indemnifying Party") is required to
pay to any other party (an "Indemnitee") pursuant to Section 5.2(a), Section
5.2(b) or Section 5.2(c) shall be reduced (including, without limitation,
retroactively) by any insurance proceeds and other amounts actually recovered by
such Indemnitee in reduction of the related Indemnifiable Loss. Amounts required
to be paid are hereafter sometimes collectively called "Indemnity Payments" and
are individually called an "Indemnity Payment." If an Indemnitee shall have
received an Indemnity Payment in respect of an Indemnifiable Loss and shall
subsequently actually receive insurance proceeds or other amounts in respect of
such Indemnifiable Loss, then such Indemnitee shall pay to such Indemnifying
Party a sum equal to the lesser of the amount of such insurance proceeds or
other amounts actually received or the net amount of Indemnity Payments actually
received previously. The Indemnitee agrees that the Indemnifying Party shall be
subrogated to such Indemnitee under any insurance policy and that the Indemnitee
shall not waive any right of subrogation.
Section 5.3 Procedure for Indemnification.
(a) If an Indemnitee shall receive notice of the assertion by a person
who is not a party to this Agreement of any claim or of the commencement by any
such person of any Action (a "Third Party Claim") with respect to which an
Indemnifying Party is or may be obligated to make an Indemnity Payment, such
Indemnitee shall give such Indemnifying Party prompt notice thereof after
becoming aware of such Third Party Claim, specifying in reasonable detail the
nature of such Third Party Claim and the amount or estimated amount thereof to
the extent then feasible (which estimate shall not be conclusive of the final
amount of such claim); provided, however, that the failure of any Indemnitee to
give notice as provided in this Section 5.3 shall not relieve the related
Indemnifying Party of its obligations under this Article 5, except to the extent
that such Indemnifying Party is actually prejudiced by such failure to give
notice.
(b) An Indemnifying Party may elect to defend, at such Indemnifying
Party's own expense and by such Indemnifying Party's own counsel (which counsel
shall be reasonably satisfactory to the Indemnitee), any Third Party Claim. If
an Indemnifying Party elects to defend a Third Party Claim, it shall, within 10
days of notice of such Third Party Claim (or sooner, if the nature of such Third
Party Claim so requires), notify the related Indemnitee of its intent to do so,
and such Indemnitee shall cooperate in the defense of such Third Party Claim.
Such Indemnifying Party shall pay such Indemnitee's actual out-of-pocket
expenses (other than officers' or employees' salaries) reasonably incurred in
connection with such cooperation. After notice from an Indemnifying Party to an
Indemnitee of its election to assume the defense of a Third Party Claim, such
Indemnifying Party shall not be liable to such Indemnitee under this Article 5
for any legal or other expenses subsequently incurred by such Indemnitee in
connection with the defense thereof; provided, however, that such Indemnitee
shall have the right to employ separate counsel to represent such Indemnitee if,
in such Indemnitee's reasonable judgment, a conflict of interest between such
Indemnitee and such Indemnifying Party exists in respect of such claim, and in
that event the reasonable fees and expenses of such separate counsel shall be
paid by such Indemnifying Party. Except as so provided, if an Indemnitee desires
to participate
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in the defense of a Third Party Claim, it may do so but it shall not control the
defense and such participation shall be at its sole cost and expense. If an
Indemnifying Party elects not to defend against a Third Party Claim, or fails to
notify an Indemnitee of its election as provided in this Section 5.3, such
Indemnitee may defend, compromise and settle such Third Party Claim; provided,
however, that no such Indemnitee may compromise or settle any such Third Party
Claim without prior written notice to such Indemnifying Party and except by
payment of monetary damages or other money payments. No Indemnifying Party shall
consent to entry of any judgment or enter into any compromise or settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnitee of a release from all Liability in
respect to such Third Party claim.
(c) If an Indemnifying Party chooses to defend any claim, the
Indemnitee shall make available to such Indemnifying Party any personnel or any
books, records or other documents within its control that are necessary or
appropriate for such defense (the cost of copying thereof to be paid by the
Indemnifying Party).
(d) Notwithstanding the foregoing provisions of this Section 5.3, there
may be Third Party Claims which reasonably could result in both (i) AG or IAT
and (ii) Swiss Newco being liable to the other under indemnification provisions
of this Agreement. In any such events, the parties shall endeavor, acting
reasonably and in good faith, to agree upon a manner of conducting the defense
of or settlement of the Third Party Claim with a view to minimizing the legal
expenses and associated costs that might otherwise be incurred by the parties,
including to the use of the same legal counsel for the defense of such claim.
(e) Except to the extent expressly provided otherwise in this Section
5.3, the indemnification provided for by this Section 5.3 shall not inure to the
benefit of any third party or parties and shall not relieve any insurer who
would otherwise be obligated to pay any claim of the responsibility with respect
thereto or, solely by virtue of the indemnification provisions hereof, provided
any subrogation rights with respect thereto.
(f) Any claim on account of an Indemnifiable Loss which does not result
from a Third Party Claim shall be asserted by written notice given by the
related Indemnitee to the related Indemnifying Party. Such Indemnifying Party
shall have a period of 60 days within which to respond thereto. If such
Indemnifying Party does not respond within such 60-day period, such Indemnifying
Party shall be deemed to have accepted responsibility to make payment and shall
have no further right to contest the validity of such claim. If such
Indemnifying Party does respond within such 60-day period and rejects such claim
in whole or in part, such Indemnitee shall be free to pursue mediation as
provided in Article 10 hereof.
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ARTICLE 6
RELATED AGREEMENTS
Section 6.1 Dr. Vogt.
(a) Dr. Vogt will immediately resign as the Chief Executive Officer and
Co-Chairman of IAT and as the Managing Director and the President of AG. Dr.
Vogt will continue to serve as a Director of IAT until his successor is elected
and qualified.
(b) Dr. Vogt's current employment agreement with IAT will terminate as
of April 1, 1998 and Dr. Vogt will continue to be an employee of IAT until such
date. Dr. Vogt and IAT agree that IAT will pay Dr. Vogt his salary and other
periodic remuneration through such termination date but will not be liable for
any severance or other payments.
(c) Dr. Vogt agrees to act as a consultant to IAT and IAT agrees to
hire Dr. Vogt as consultant for a period of three years from April 1, 1998;
provided that, 30 days before each April, 1, Dr. Vogt and IAT mutually agree to
extend this arrangement for the coming year (the "Consulting Contract"). Dr.
Vogt will provide IAT with his services in respect of (i) evaluation and
analysis of technology issues, (ii) identification, evaluation and integration
of acquisitions for IAT and (iii) such other matters as the Board of Directors
of IAT may request and Dr. Vogt may agree to. In connection with such consulting
agreement, Dr. Vogt will be entitled to receive the sum of $2,000 per month for
his normal duties. IAT and Dr. Vogt will negotiate fees for services above Dr.
Vogt's normal duties. In addition, IAT will reimburse Dr. Vogt for his
reasonable expenses in connection with his work for IAT. IAT and Dr. Vogt agree
that the Consulting Agreement is not an employment contract (Arbeitsvertrag) as
that term is defined in Art. 319 of the Swiss Code of Obligations.
(d) Dr. Vogt will be entitled to receive options for 50,000 shares of
the common stock of IAT. Such options will be issued pursuant to IAT's stock
option plan and shall have an exercise price of $5.00 per share. Dr. Vogt may
not exercise any such options until the options vest. The options shall vest
accordingly to the following schedule:
DATE NUMBER OF SHARES
Closing Date 16,666
First Renewal of the
Consulting Contract 16,667
Second Renewal of the
Consulting Contract 16,667
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(e) If Dr. Vogt introduces an acquisition candidate to IAT and IAT
acquires such candidate, Dr. Vogt will be entitled to receive, at the closing of
such acquisition, a brokerage commission equal to 3% of the value of IAT's
interest in such acquisition.
Section 6.2 German Spinoff Agreement. On or prior to the Closing Date,
German Newco, IAT Germany, AG will enter into the German Spinoff Agreement on
mutually acceptable terms.
Section 6.3 Use of Swiss Newco Personnel. From time to time, IAT or AG
may request the use, help or assistance of certain of employees of Swiss Newco
in connection with administrative matters. Swiss Newco will make such employees
available to IAT or AG. IAT or AG, as the case may be, will pay Swiss Newco
$100,000 per annum in arrears for the use of such employees. Such amount will be
deducted from the amounts payable by Swiss Newco pursuant to the Purchase Price
Note or the License. This employee sharing arrangement shall last for a period
of three years from the Closing Date; provided, that, 30 days before each
anniversary of the Closing Date, IAT and Swiss Newco mutually agree to extend
this arrangement for the coming year.
ARTICLE 7
CERTAIN ADDITIONAL MATTERS
Section 7.1 Further Assurances; Subsequent Transfers.
(a) Each of Dr. Vogt, AG, IAT and Swiss Newco will execute and deliver
such further instruments of conveyance, transfer and assignment and will take
such other actions as each of them may reasonably request of the other in order
to effectuate the purposes of this Agreement and the Transfer Agreement and to
carry out the terms hereof and thereof. Without limiting the generality of the
foregoing, at any time and from time to time after the Closing Date, at the
request of Swiss Newco, AG will execute and deliver to Swiss Newco such other
instruments of transfer, conveyance, assignment and confirmation and take such
action as Swiss Newco may reasonably deem necessary or desirable in order to
more effectively transfer, convey and assign to Swiss Newco and to confirm Swiss
Newco's title to all of the Transferred Assets, to put Swiss Newco in actual
possession and operating control thereof and to permit Swiss Newco to exercise
all rights with respect thereto (including, without limitation, rights under
contracts and other arrangements as to which the consent of any third party to
the transfer thereof shall not have previously been obtained) and AG will take
such actions as Swiss Newco may reasonably request in order to prepare and
implement appropriate plans, agreements and arrangements for the Employees and
Swiss Newco will execute and deliver to AG all instruments, undertakings or
other documents and take such other action as AG may reasonably request in order
to have Swiss Newco properly assume and discharge the Assumed Liabilities and
relieve AG of any Liability or obligations with respect thereto and evidence the
same to third parties, including, without limitation, any publication pursuant
to Art. 181 of the Swiss Code of Obligations. Notwithstanding the foregoing, AG
and Swiss Newco shall not be obligated, in connection with the foregoing, to
expend monies other than reasonable out-of-pocket expenses and attorneys' fees
(which expenses and fees shall be reimbursed by the requesting party).
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(b) The parties will use their commercially reasonable efforts to
obtain any consent required to assign all agreements, leases, permits, licenses
and other rights of any nature whatsoever relating to the Transferred Assets and
the grant of the License to Swiss Newco; provided, however, that neither AG nor
IAT shall be obligated to pay any consideration therefor to the third party from
whom such consents, approvals and amendments are requested. In the event and to
the extent that IAT or AG is unable to obtain any such required consent, IAT or
AG shall continue to be bound thereby and unless not permitted by law or the
terms thereof, Swiss Newco shall pay, perform and discharge fully all the
obligations of IAT or AG thereunder from and after the Spinoff Date and
indemnify IAT or AG for all Indemnifiable Losses arising out of such performance
by Swiss Newco in accordance with Article 5. IAT and AG shall, without further
consideration therefor, pay, assign and remit to Swiss Newco promptly all
monies, rights and other considerations received in respect of such performance.
IAT and AG shall exercise or exploit its rights and options under all such
agreements, leases, licenses and other rights and commitments referred to in
this Section 7.3(b) only as reasonably directed by Swiss Newco and at Swiss
Newco's expense. If and when any such consent shall be obtained or such
agreement, lease, license or other right shall otherwise become assignable or
able to be novated, IAT and AG shall promptly assign and novate all its rights
and obligations thereunder to Swiss Newco without payment of further
consideration and Swiss Newco shall, without the payment of any further
consideration therefore, assume such rights and obligations.
(c) The parties will use their commercially reasonable efforts to
obtain any consent required to assign all agreements, leases, permits, licenses
and other obligations of any nature whatsoever relating to the assumption of the
Assumed Liabilities by Swiss Newco and the release of AG or IAT, as the case may
be, as the obligor on the Assumed Liabilities; provided, however, that neither
AG nor IAT shall be obligated to pay any consideration therefor to the third
party from whom such consents, approvals and amendments are requested. In the
event and to the extent that IAT or AG is unable to obtain any such required
consent, IAT or AG shall continue to be bound thereby and unless not permitted
by law, Swiss Newco shall pay, perform and discharge fully all the obligations
of IAT or AG thereunder from and after the Spinoff Date and indemnify IAT or AG
for all Indemnifiable Losses arising out of such performance by Swiss Newco in
accordance with Article 5. IAT and AG shall exercise or exploit its rights and
options under all such agreements, leases, licenses and other obligations and
commitments referred to in this Section 7.1(c) only as reasonably directed by
Swiss Newco and at Swiss Newco's expense. If and when any such consent shall be
obtained or such agreement, lease, license or other obligation shall otherwise
become assignable or able to be novated, IAT and AG shall promptly assign and
novate all its rights and obligations thereunder to Swiss Newco without payment
of consideration and Swiss Newco shall, without the payment of any further
consideration therefore, assume such rights and obligations.
Section 7.2 Sales and Transfer Taxes.
(a) Swiss Newco, Dr. Vogt, IAT and AG agree to cooperate to determine
the amount of sales, transfer or other taxes or fees (including, without
limitation, all real estate, patent, copyright and trademark transfer taxes and
recording fees) payable in connection with the transactions contemplated by this
Agreement (the "Transaction Taxes"). AG agrees to file promptly and timely
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the returns for such Transaction Taxes with the appropriate taxing authorities
and remit payment of the Transaction Taxes, and Swiss Newco will join in the
execution of any such tax returns or other documentation and will promptly
reimburse AG for the payment of the Transaction Taxes.
(b) All payments, royalties, license fees or any other charges and
amounts mentioned in this Agreement are understood as being net of Swiss or
foreign Value Added Tax. In case Swiss or foreign Value Added Tax has to be
levied on these payments, royalties, license fees or any other charges and
amounts mentioned in this Agreement, it is understood that the Value Added Tax
at the pertinent rate will be added by the payor to the payments, royalties,
license fees or any other charges and amounts mentioned in this Agreement.
ARTICLE 8
ACCESS TO INFORMATION AND SERVICES
Section 8.1 Provision of Corporate Records. As soon as practicable
after the Closing Date, AG shall deliver to Swiss Newco all Books and Records in
its possession. Such Books and Records shall be the property of Swiss Newco, but
shall be retained and made available to AG for review and duplication until the
earlier of notice from AG that such records are no longer needed by AG or the
tenth anniversary of the Closing Date.
Section 8.2 Access to Information. From and after the Closing Date, AG
and Swiss Newco shall afford to each other and to each other's authorized
accountants, counsel and other designated representatives reasonable access and
duplicating rights (with copying costs to be borne by the requesting party)
during normal business hours to all Books and Records and other data and
information (collectively, "Information") within each other's possession
relating to the Transferred Assets, the Transferred Businesses, the License, the
Assumed Liabilities and the Employees, insofar as such access is reasonably
required by AG or Swiss Newco, as the case may be (and shall use reasonable
efforts to cause persons or firms possessing relevant information to give
similar access). Information may be requested under this Article 8 as reasonably
necessary for, without limitation, audit, accounting, claims, litigation and tax
purposes, as well as for purposes of fulfilling disclosure and reporting
obligations.
Section 8.3 Retention of Records. Except as otherwise required for a
longer period by law or agreed to in writing, AG and Swiss Newco shall retain,
for a period of at least 20 years following the Closing Date, all material
information relating to the Transferred Businesses. Notwithstanding the
foregoing, in lieu of retaining any specific Information, AG or Swiss Newco may
offer in writing to deliver such information to the other and, if such offer is
not accepted within 90 days, the offered information may be destroyed or
otherwise disposed of at any time. If a recipient of such offer shall request in
writing prior to the scheduled date for such destruction or disposal that any of
the information proposed to be destroyed or disposed of be delivered to such
requesting party, the party proposing the destruction or disposal shall promptly
arrange for delivery of such of the information as was requested (at cost of
requesting party).
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Section 8.4 Confidentiality. Each of the parties shall hold, and shall
cause its officers, employees, agents, consultants and advisors to hold, in
strict confidence, unless compelled to disclose by judicial or administrative
process or, in the opinion of its legal counsel, by other requirements of law
(including, without limitation, any requirements imposed under state and federal
securities laws and stock exchange rules), all non-public information concerning
the other party furnished it by such other party or its representatives pursuant
to this Agreement (except to the extent that such information can be shown to
have been available to such party on a non-confidential basis prior to this
disclosure by the other party, in the public domain through no fault of such
party or later lawfully acquired from other sources by the party to which it was
furnished), and each party shall not release or disclose such information to any
other person, except its auditors, attorneys, financial advisors, bankers and
other consultants and advisors who shall be bound by the provisions of this
Section 8.4. Each party shall be deemed to have satisfied its obligation to hold
confidential information concerning or supplied by the other party if its
exercises the same care as it takes to preserve confidentiality for its own
similar information. The parties agree with each other that each will maintain,
preserve and assert, unless waived in writing by the other parties, all
attorney-client and work product privileges applicable to documents and other
Information which relates, directly or indirectly, to the Transferred Businesses
for any period prior to the Spinoff Date.
Section 8.5 Privileged Matters. Anything herein notwithstanding, the
transactions contemplated hereby shall not be deemed to transfer to or vest in
Swiss Newco or Dr. Vogt any right to waive, nor shall they be deemed to waive,
any attorney-client privilege between IAT or AG and their legal counsel, with
respect to legal advice concerning the business or operations of AG including,
without limitation, the transactions contemplated by this Agreement concerning
privileged communications (or work product related thereto) at any time prior to
the Closing Date.
ARTICLE 9
INSURANCE
Section 9.1 General. IAT and AG shall keep in effect all policies under
their Insurance Program in effect as of the date hereof insuring the Transferred
Assets and operations of the Transferred Businesses until 11:59 PM Swiss time on
the Closing Date, unless Swiss Newco shall have earlier obtained appropriate
coverage and notified IAT and AG in writing to that effect. In so far as any
claims made or accrued under policies under the Insurance Program prior to the
Closing Date relate to Swiss Newco, IAT or AG, as the case may be, shall use its
reasonable efforts to assure that Swiss Newco can continue to make and/or pursue
such claims under the policies, or that IAT or AG, as the case may be, can
continue to make and/or pursue such claims on behalf of Swiss Newco,
notwithstanding assignment or transfer of the policies; provided that, Swiss
Newco shall reimburse IAT or AG, as the case may be, for any reasonable
out-of-pocket expenses incurred by IAT or AG, as the case may be, in connection
therewith. From and after the Closing Date, Swiss Newco shall be responsible for
obtaining and maintaining insurance coverage for its own account. Following the
Closing Date, each of the parties shall cooperate with and assist the other
parties in the prevention of conflicts or gaps in insurance coverage and/or
collection proceeds.
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Section 9.2 Certain Insured Claims. AG or IAT, as the case may be, will
assert and pursue, for the benefit of Swiss Newco, claims against the Insurance
Program for any losses resulting, directly or indirectly, from claims made or
deemed made under the applicable Insurance Program which relate to the
Transferred Business and which arise from or relate to events or occurrences
prior to the Spinoff Date. Swiss Newco shall pay all costs incurred by AG or
IAT, as the case may be, after the Spinoff Date in defending or pursuing any
such claims under an insurance policy relating to the Transferred Businesses,
including the salaries of employees based on the portion of time spent on such
claims and Swiss Newco shall make available to AG or IAT, as the case maybe,
such of its employees as AG or IAT, as the case may be, may reasonably request
as witnesses or deponents in connection with AG's or IAT's, as the case may be,
defense or pursuit of any such claims, at Swiss Newco's sole cost and expense.
ARTICLE 10
CONDITIONS
Section 10.1 Conditions. The Spinoff will be consummated on the Closing
Date. The obligations of the parties to consummate the Spinoff shall be subject
to the fulfillment or waiver of each of the following conditions:
(a) the Board of Directors of IAT shall have formally approved
the Spinoff;
(b) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the Spinoff shall
be in effect;
(c) each of the covenants and provisions in this Agreement
required to be performed or complied with prior to the Closing Date shall have
been performed or complied with; and
(d) Swiss Newco shall have been formed and be properly registered
with the Commercial Register of Canton of Aargau.
Any determination by the Board of Directors of IAT prior to the
Closing Date concerning the satisfaction or waiver of any or all of the
conditions set forth in this Section shall be conclusive.
Section 10.2 Closing Date.
(a) The closing for the Spinoff shall occur at 10:00 AM (New York time)
on [Tuesday, March 17,] 1998, or such other time as the parties may mutually
agree (the "Closing Date").
(b) On the Closing Date the parties will deliver
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(i) executed copies of the German Spinoff Agreement
(ii) executed copies of the Conveyancing and Assumption
Instruments
(iii) executed copies of all consents obtained pursuant to Section
7.1
(iv) executed copies of the Transfer Agreement
(c) On the Closing Date IAT will deliver
(i) the IAT Loan by wire transfer to an account or accounts
specified by Swiss Newco at least 24 hours prior to the
Closing Date;
(ii) the fairness opinion.
(d) On the Closing Date Dr. Vogt will deliver
(i) the Vogt Loan by wire transfer to an account or accounts
specified by Swiss Newco at least 24 hours prior to the
Closing Date;
(e) On the Closing Date Swiss Newco will deliver
(i) the IAT Note, the Purchase Price Note and the Vogt Note
(ii) a statement that it is assuming all of its pre-incorporation
liabilities.
Section 10.3 Notice. Promptly after the Closing Date, AG and Swiss
Newco will publish, or cause to be published, the notices required pursuant to
Art. 181 of the Swiss Code of Obligations.
ARTICLE 11
GOVERNING LAW AND DISPUTE RESOLUTION
Section 11.1 Mediation and Binding Arbitration. If a dispute arises
between (i) IAT and AG, on the one hand, and (ii) Swiss Newco and Dr. Vogt, on
the other hand, as to the interpretation or the implementation of this Agreement
or any agreement entered into pursuant hereto, including, without limitation,
any matter involving an Indemnifiable Loss, the parties agree to use the
following procedures, in lieu of any party pursuing other available remedies and
as the sole remedy, to resolve the dispute.
Section 11.2 Initiation. A party seeking to initiate the procedures
shall give written notice to the other parties describing briefly the nature of
the dispute. A meeting shall be held between the parties within 10 days of the
receipt of such notice, attended by individuals with decision-making authority
regarding the dispute, to attempt in good faith to negotiate a resolution of the
dispute.
Section 11.3 Submission to Mediation. If, within 30 days after such
meeting, the parties have not succeeded in negotiating a resolution of the
dispute, they agree to submit the dispute to
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mediation in accordance with the Mediation Rules (Schlichtungsverfahren) of the
Zurich Chamber of Commerce and to bear equally the costs of the mediation.
Section 11.4 Selection of Mediator. The parties will jointly appoint a
mutually acceptable mediator, seeking assistance in such regard from the Zurich
Chamber of Commerce or another mutually agreed-upon organization if they have
been unable to agree upon such appointment within 20 days from the conclusion of
the negotiation period.
Section 11.5 Mediation. The parties agree to participate in good faith
in the mediation and negotiations related thereto for a period of 30 days
following the initial mediation session. If the parties are not successful in
resolving the dispute through the mediation by the end of such 30-day period,
then the parties agree to submit the matter to binding arbitration in accordance
with the International Arbitration Rules of the Zurich Chamber of Commerce, by a
sole arbitrator selected in accordance with the provisions of Section 11.6
hereof.
Section 11.6 Selection of Arbitrator. The parties shall have 10 days
from the end of the mediation period to agree upon a mutually acceptable neutral
person not affiliated with either of the parties to act as arbitrator. If no
arbitrator has been selected within such time, an arbitrator shall be selected
for the parties by the Zurich Chamber of Commerce.
Section 11.7 Cost of Arbitration. The costs of arbitration shall be
apportioned between the parties as determined by the arbitrator in such manner
as the arbitrator deems reasonable taking into account the circumstances of the
case, the conduct of the parties during the proceeding, and the result of the
arbitration.
Section 11.8 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of Switzerland (regardless of
the laws that might otherwise govern under applicable principles of conflicts
law) as to all matters, including, without limitation, matters of validity,
construction, effect, performance and remedies.
ARTICLE 12
MISCELLANEOUS
Section 12.1 Complete Agreement. This Agreement, including the Annexes
and exhibits, the Transfer Agreement, including the annexes and exhibits, and
the agreements and other documents referred to herein and therein, shall
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter.
Section 12.2 Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on the party to
whom notice is given, on the day of transmission if sent via
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facsimile transmission to the facsimile number given below, on the expected
delivery date for delivery by an overnight courier service or the Express Mail
service maintained by the United States Postal Service, provided receipt of
delivery has been confirmed, or on the fifth day after mailing provided receipt
of delivery is confirmed, if mailed to the party to whom notice is to be given,
by first class mail, registered or certified, postage prepaid, properly
addressed and return-receipt requested, to the party as follows:
If to IAT or AG:
Geschaftshaus Wasserschloss
Aarestrasse 17
CH-5300 Vogelsang-Turgi
Switzerland
Telecopy No.: 011-41-56-223-5023
Attention: Jacob Agam
with a copy to:
Baker & McKenzie
805 Third Avenue, Floor 30
New York, NY 10022
UNITED STATES OF AMERICA
Telecopy No.: (212) 759-9133
Attention: Francis Fitzpatrick
If to Swiss Newco:
Geschaftshaus Wasserschloss
Aarestrasse 17
CH-5300 Vogelsang-Turgi
Switzerland
Telecopy No.: 011-41-56-223-5023
Attention: Dr. Viktor Vogt
with a copy to:
Bernasconi & Bernasconi
CH-8023 Zurich
Kuttelgasse 1/Rennweg 25
Telecopy No.: 011-41-1-212-53-54
Attention: Dr. Bruno Bernasconi
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If to Dr. Vogt:
c/o IAT Communication AG
Geschaftshaus Wasserschloss
Aarestrasse 17
CH-5300 Vogelsang-Turgi
Switzerland
Telecopy No.: 011-41-56-223-5023
Attention: Dr. Viktor Vogt
with a copy to:
Bernasconi & & Bernasconi
CH-8023 Zurich
Kuttelgasse 1/Rennweg 25
Telecopy No.: 011-41-1-212-53-54
Attention: Dr. Bruno Bernasconi
Any party may change its address by giving the other party written notice of its
new address in the manner set forth above.
Section 12.3 Amendment and Modification. This Agreement may be amended,
modified or supplemented only by written agreement of the parties.
Section 12.4 Termination. This Agreement may be terminated and the
Spinoff abandoned at any time prior to the Closing Date by and in the sole
discretion of IAT without the approval of any other party. In the event of such
termination, no party shall have any Liability of any kind to any other party.
Section 12.5 Successor and Assigns. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either party without the prior written consent of the other party.
Section 12.6 No Third Party Beneficiaries. Except for the
indemnification rights under this Agreement of any Indemnity in their capacity
as such and except for the mutual releases provided for in this Agreement, this
Agreement, the Exhibits hereto and the agreements contemplated hereby are solely
for the benefit of the parties hereto and are not intended to confer upon any
other person except the parties hereto any rights or remedies hereunder.
Section 12.7 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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Section 12.8 Interpretation. The Article and Section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. As used in this Agreement, the term "person"
shall mean and include an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
Section 12.9 Annexes, Etc. The annexes shall be construed with and as
an integral part of this Agreement to the same extent as if the same had been
set forth verbatim herein.
Section 12.10 Legal Enforceability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the day and year first above written.
IAT MULTIMEDIA, INC.
By: _____________________________________
Name: ___________________________________
Title: __________________________________
IAT AG
By: _____________________________________
Name: ___________________________________
Title: __________________________________
IAT COMMUNICATION AG in formation,
represented by Dr. Viktor Vogt
By: _____________________________________
Name: Dr. Viktor Vogt
Title: Founding Shareholder
DR. VIKTOR VOGT
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Annex I
ROYALTY SCHEDULE
Vision & Live 3.X 10% on sales price of the
software price in the
systems
Vision & Live light 10% ditto
MSI 2.X 20% on sales price of software
H.32X lib. 20% of sales price
Wonderboard DM 50. --per piece sold
A4 Codec DM 50. --per piece sold
Wavelet 20% on software sales price or
customer license
Wavelet new products on 10% on software sales price or
patent pending customer license
I-1
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TRANSFER AGREEMENT
This Transfer Agreement (the "Agreement") dated as of March 11, 1998 by
and among IAT Multimedia, Inc., a corporation organized under the laws of
Delaware ("IAT"), IAT AG, a corporation organized under the laws of Switzerland
and wholly-owned subsidiary of IAT ("AG"), Dr. Viktor Vogt, a German citizen
("Dr. Vogt") and IAT Communication AG in formation, represented by one of its
founding shareholders, Dr. Vogt ("Swiss Newco").
W I T N E S S E T H:
WHEREAS, AG is selling and assigning all of the assets and certain of
the liabilities of its subsidiary IAT Deutschland GmbH Interaktive Medien
Systeme, a corporation organized under the laws of the Republic of Germany ("IAT
Germany"), to IAT Communication Systems GmbH, a corporation organized under the
laws of the Republic of Germany ("German Newco"), pursuant to the
Umstrukturierungsvereinbarung (together with the agreements referred to therein,
the "German Spinoff Agreement") dated as of March 5 and 6, 1998 by and among AG,
IAT Germany, HIBEG and Dr. Vogt;
WHEREAS, Dr. Vogt and AG wish to initially own approximately 70% and
15%, respectively, of the outstanding ordinary shares of Swiss Newco;
WHEREAS, IAT believes that it is in the best interests of IAT to sell
and assign the business and certain of the assets and liabilities of AG to Swiss
Newco;
WHEREAS, IAT wishes to sell and assign to Swiss Newco the business and
certain of the assets of AG in exchange for the assumption by Swiss Newco of the
Assumed Liabilities (as hereinafter defined) as specified in this Agreement; and
WHEREAS, Swiss Newco is willing to assume such Assumed Liabilities and
wishes to receive the business and certain of the assets of AG as specified in
this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein and intending to be legally bound, the
undersigned hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 General. As used in this Agreement, capitalized terms
defined immediately after their use shall have the respective meanings thereby
provided and the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
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Accountants: Rothstein Kass & Company, the independent certified public
accountants for IAT, and Giroud Treuhand AG, the independent certified public
accountants for AG.
Action: any action, claim, suit, arbitration, inquiry, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal.
Affiliate: with respect to any specified person, a person that,
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, such specified person.
Assumed Liabilities: collectively, all of the Liabilities and other
obligations of AG listed on Annex I hereto.
Books and Records: the books and records of AG (or true and complete
copies thereof), including all computerized books and records owned by AG, which
relate principally to the Transferred Businesses and are necessary for Swiss
Newco to operate the Transferred Businesses, including, without limitation, all
such books and records relating to Employees, the purchase of materials,
supplies and services, the sale of products by the Transferred Businesses or
dealings with customers of the Transferred Businesses and all litigation files
relating to any Action being assumed by Swiss Newco as part of the Assumed
Liabilities.
Conveyancing and Assumption Instruments: collectively, the various
additional agreements, instruments and other documents, if any, to be entered
into in order to effect the transfer to Swiss Newco of Transferred Assets, and
the assumption by Swiss Newco of the Assumed Liabilities in the manner
contemplated by this Agreement, each of which shall be in a form reasonably
satisfactory to IAT.
Employee: the Transfer Employees and any employee shown on the records
of AG as being employed by AG and assigned to the Transferred Businesses as of
the Transfer Date, including any laid-off Employee or any Employee on leave of
absence.
Indemnifiable Losses: with respect to any claim by an Indemnitee for
indemnification authorized pursuant to this Agreement, all losses, Liabilities,
claims, damages, obligations, payments, costs and expenses (including, without
limitation, the costs and expenses of any and all Actions, demands, assessments,
judgments, settlements and compromises relating thereto and reasonable
attorneys' fees and expenses in connection therewith) suffered by such
Indemnitee with respect to such claim.
Indemnifying Party: any party who is required to indemnify any other
person pursuant to this Agreement.
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Indemnitee: any party who is entitled to receive indemnification from
an Indemnifying Party pursuant to this Agreement.
Intellectual Property: all of the intellectual property of AG
including, without limitation, all patents, patent applications, copyrights,
licenses, trademarks, trademark registrations, service marks, service mark
registrations, inventions, trade secrets.
Liabilities: any and all debts, liabilities and obligations, whether or
not accrued, contingent, known or unknown, or reflected on a balance sheet,
including, without limitation, those arising under any law, rule, regulation,
Action, order or consent decree of any governmental entity or any judgment of
any court of any kind or any award of any arbitrator of any kind, and those
arising under any contract, commitment or undertaking.
Retained Liabilities: all Liabilities and obligations of AG other than
the Assumed Liabilities.
Transfer: the transfer of the Transferred Assets and the assumption of
the Assumed Liabilities.
Transfer Date: January 1, 1998.
Transfer Employees: the employees of AG listed in Annex II hereto.
Transferred Assets: collectively, all of the assets and properties of
AG identified on Annex III hereto.
Transferred Business: collectively, the Transferred Assets, the Assumed
Liabilities and the business of AG related thereto.
ARTICLE 2
TRANSFER AND RELATED TRANSACTIONS
Section 2.1 The Transfer. Subject to the terms and conditions of this
Agreement, the parties shall cause all of AG's right, title and interest in and
to the Transferred Assets to be conveyed, assigned, transferred and delivered to
Swiss Newco as of the Transfer Date, free and clear of all liens or encumbrances
in favor of AG or IAT or their subsidiaries, and all of AG's duties, obligations
and responsibilities under the Assumed Liabilities to be assumed by Swiss Newco.
Such transfer and assumption shall be effected by means of this Agreement and,
if necessary, the Conveyancing and Assumption Instruments which shall be
executed and delivered by each of AG and Swiss Newco on or prior to the Closing
Date (as hereinafter defined). Subject to Article 3 and Section 5.3 hereof, to
the extent that any such conveyances, assignments, transfers and deliveries
shall not have been so consummated on the Closing Date, the parties shall
cooperate to effect such consummation as promptly thereafter as shall be
practicable, it nonetheless being understood and
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agreed by all of the parties that none of them shall be liable in any manner to
any person who is not a party to this Agreement for any failure of any of the
transfers contemplated by this Article 2 to be consummated on or subsequent to
the Closing Date. Whether or not all of the Transferred Assets or the Assumed
Liabilities shall have been legally transferred to, or assumed by, Swiss Newco
as of the Transfer Date, the parties agree that, as of the Transfer Date, Swiss
Newco shall have, and shall be deemed to have acquired, complete and sole
beneficial ownership over all of the Transferred Assets, together with all of
AG's rights, powers and privileges incident thereto, and shall be deemed to have
assumed all of the Assumed Liabilities and all of AG's and its subsidiaries'
duties, obligations and responsibilities incident thereto in accordance with the
terms of this Agreement.
Section 2.2 Value.
(a) AG will prepare, and the Accountants will audit, a statement of the
value of the Transferred Assets and the Assumed Liabilities on the Books and
Records as of the Transfer Date determined using Swiss generally accepted
accounting principles.
(b) To the extent that the book value of the Transferred Assets exceeds
the book value of the Assumed Liabilities as of the Transfer Date, Swiss Newco
will, on the Closing Date, give AG its three year note (the "Purchase Price
Note"), denominated in U.S. Dollars, with an aggregate principal amount equal to
the value of such difference, subject to Section 3.3. The Purchase Price Note
will pay interest at the rate of 3% per annum, payable semi-annually on March 1
and September 1 beginning September 1, 1998. The Purchase Price Note will be due
and payable on the third anniversary of the Closing Date. The Purchase Price
Note may be pre-paid at any time without penalty.
Section 2.3 Construction of Agreements. Notwithstanding any other
provisions in this Agreement to the contrary, in the event and to the extent
there shall be a conflict between the provisions of this Agreement and any
Conveyancing and Assumption Instrument or other instrument of assumption entered
into pursuant to this Agreement, the provisions of such Conveyancing and
Assumption Instrument or other instrument of assumption entered into pursuant to
this Agreement shall control.
Section 2.4 Employees. Effective as of the March 1, 1998, Swiss Newco
shall assume all obligations arising under any employment agreement or
arrangement (written or oral) between IAT, AG or any of their subsidiaries and
the Transfer Employees. IAT, AG and their subsidiaries, effective as of the
Transfer Date, shall be indemnified by Swiss Newco from all obligations arising
under such employment agreements or arrangements. No party shall, directly or
indirectly, solicit the employment of any employees of the other party or its
subsidiaries (other than as a result of a general solicitation for employment).
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Section 2.5 Compliance. The Transfer shall be effected in compliance
with IAT's and AG's certificates of incorporation and by-laws and in material
compliance with all applicable laws and shall be subject to obtaining all
applicable consents, if any, of governmental entities.
ARTICLE 3
ASSUMPTION AND RETENTION OF LIABILITIES
Section 3.1 Assumed Liabilities. Upon the terms and subject to the
conditions set forth in this Agreement and in addition to any other Liabilities
otherwise expressly assumed by Swiss Newco pursuant to this Agreement or any
other agreement contemplated by this Agreement, Swiss Newco assumes all Assumed
Liabilities and agrees with AG to pay, perform and discharge in due course any
and all Assumed Liabilities.
Section 3.2 Retained Liabilities. Upon the terms and subject to the
conditions set forth in this Agreement and in addition to any other Liabilities
otherwise expressly retained by AG pursuant to this Agreement or any other
agreement contemplated by this Agreement, AG hereby agrees with Swiss Newco that
AG shall pay, perform and discharge in due course any and all Retained
Liabilities.
Section 3.3 Liabilities Prior to the Closing Date and Assumption of
New Obligations. AG shall pay the operating expenses of the business to be
transferred to Swiss Newco and any Liabilities, including, without limitation,
the salaries of employees, which become due and payable prior to the Closing
Date. On and after the Closing Date, neither AG nor IAT shall be responsible for
such operating costs. The principal amount of the Purchase Price Note shall be
increased by the (i) pro-rata portion of any prepaid expenses and any portion of
the Assumed Liabilities paid by AG prior to the Closing Date. A schedule of all
such payments will be provided by AG at the Closing.
ARTICLE 4
SURVIVAL; MUTUAL RELEASE AND INDEMNIFICATION
Section 4.1 Survival. Except as specifically provided herein to the
contrary, all covenants and agreements of the parties contained in this
Agreement shall survive the Closing Date.
Section 4.2 Pre-Incorporation Activities. IAT will indemnify the
other founding shareholders of Swiss Newco for Swiss Newco's pre-incorporation
activities.
5
<PAGE>
ARTICLE 5
CERTAIN ADDITIONAL MATTERS
Section 5.1 Conveyancing and Assumption Instruments. In connection
with the transfer, conveyance, assignment and delivery of the Transferred Assets
and the assumption of Liabilities contemplated by this Agreement, AG and Swiss
Newco agree to execute or cause to be executed by the appropriate parties and to
deliver to each other, as appropriate, the Conveyancing and Assumption
Instruments.
Section 5.2 No Representations or Warranties. Each of Dr. Vogt and
Swiss Newco understands and agrees that AG and IAT shall not be deemed or
implied to be, representing or warranting in any way as to the value or freedom
from encumbrance of, or any other matter concerning, any Transferred Assets or
the Transferred Business or as to the legal sufficiency to convey title to any
Transferred Assets or the execution, delivery and filing of the Conveyancing and
Assumption Instruments, IT BEING AGREED AND UNDERSTOOD THAT ALL SUCH ASSETS ARE
BEING TRANSFERRED "AS IS, WHERE IS" and that Swiss Newco shall bear the economic
and legal risk that any conveyances of such assets shall prove to be
insufficient or that Swiss Newco's title to any such assets shall be other than
good and marketable and free from encumbrances.
Section 5.3 Further Assurances; Subsequent Transfers.
(a) Each of Dr. Vogt, AG, IAT and Swiss Newco will execute and deliver
such further instruments of conveyance, transfer and assignment and will take
such other actions as each of them may reasonably request of the other in order
to effectuate the purposes of this Agreement and to carry out the terms hereof.
Without limiting the generality of the foregoing, at any time and from time to
time after the Closing Date, at the request of Swiss Newco, AG will execute and
deliver to Swiss Newco such other instruments of transfer, conveyance,
assignment and confirmation and take such action as Swiss Newco may reasonably
deem necessary or desirable in order to more effectively transfer, convey and
assign to Swiss Newco and to confirm Swiss Newco's title to all of the
Transferred Assets, to put Swiss Newco in actual possession and operating
control thereof and to permit Swiss Newco to exercise all rights with respect
thereto (including, without limitation, rights under contracts and other
arrangements as to which the consent of any third party to the transfer thereof
shall not have previously been obtained) and AG will take such actions as Swiss
Newco may reasonably request in order to prepare and implement appropriate
plans, agreements and arrangements for the Employees and Swiss Newco will
execute and deliver to AG all instruments, undertakings or other documents and
take such other action as AG may reasonably request in order to have Swiss Newco
properly assume and discharge the Assumed Liabilities and relieve AG of any
Liability or obligations with respect thereto and evidence the same to third
parties, including, without limitation, any publication pursuant to Art. 181 of
the Swiss Code of Obligations. Notwithstanding the foregoing, AG and Swiss Newco
shall not be obligated, in connection with the foregoing, to expend monies other
6
<PAGE>
than reasonable out-of-pocket expenses and attorneys' fees (which expenses and
fees shall be reimbursed by the requesting party).
(b) The parties will use their commercially reasonable efforts to
obtain any consent required to assign all agreements, leases, permits, licenses
and other rights of any nature whatsoever relating to the Transferred Assets to
Swiss Newco; provided, however, that neither AG nor IAT shall be obligated to
pay any consideration therefor to the third party from whom such consents,
approvals and amendments are requested. In the event and to the extent that IAT
or AG is unable to obtain any such required consent, IAT or AG shall continue to
be bound thereby and unless not permitted by law or the terms thereof, Swiss
Newco shall pay, perform and discharge fully all the obligations of IAT or AG
thereunder from and after the Transfer Date and indemnify IAT or AG for all
Indemnifiable Losses arising out of such performance by Swiss Newco. IAT and AG
shall, without further consideration therefor, pay, assign and remit to Swiss
Newco promptly all monies, rights and other considerations received in respect
of such performance. IAT and AG shall exercise or exploit its rights and options
under all such agreements, leases, licenses and other rights and commitments
referred to in this Section 7.3(b) only as reasonably directed by Swiss Newco
and at Swiss Newco's expense. If and when any such consent shall be obtained or
such agreement, lease, license or other right shall otherwise become assignable
or able to be novated, IAT and AG shall promptly assign and novate all its
rights and obligations thereunder to Swiss Newco without payment of further
consideration and Swiss Newco shall, without the payment of any further
consideration therefore, assume such rights and obligations.
(c) The parties will use their commercially reasonable efforts to
obtain any consent required to assign all agreements, leases, permits, licenses
and other obligations of any nature whatsoever relating to the assumption of the
Assumed Liabilities by Swiss Newco and the release of AG or IAT, as the case may
be, as the obligor on the Assumed Liabilities; provided, however, that neither
AG nor IAT shall be obligated to pay any consideration therefor to the third
party from whom such consents, approvals and amendments are requested. In the
event and to the extent that IAT or AG is unable to obtain any such required
consent, IAT or AG shall continue to be bound thereby and unless not permitted
by law, Swiss Newco shall pay, perform and discharge fully all the obligations
of IAT or AG thereunder from and after the Transfer Date and indemnify IAT or AG
for all Indemnifiable Losses arising out of such performance by Swiss Newco. IAT
and AG shall exercise or exploit its rights and options under all such
agreements, leases, licenses and other obligations and commitments referred to
in this Section 7.3(c) only as reasonably directed by Swiss Newco and at Swiss
Newco's expense. If and when any such consent shall be obtained or such
agreement, lease, license or other obligation shall otherwise become assignable
or able to be novated, IAT and AG shall promptly assign and novate all its
rights and obligations thereunder to Swiss Newco without payment of
consideration and Swiss Newco shall, without the payment of any further
consideration therefore, assume such rights and obligations.
7
<PAGE>
Section 5.4 Sales and Transfer Taxes.
(a) Swiss Newco, Dr. Vogt, IAT and AG agree to cooperate to determine
the amount of sales, transfer or other taxes or fees (including, without
limitation, all real estate, patent, copyright and trademark transfer taxes and
recording fees) payable in connection with the transactions contemplated by this
Agreement (the "Transaction Taxes"). AG agrees to file promptly and timely the
returns for such Transaction Taxes with the appropriate taxing authorities and
remit payment of the Transaction Taxes, and Swiss Newco will join in the
execution of any such tax returns or other documentation and will promptly
reimburse AG for the payment of the Transaction Taxes.
(b) All payments, future royalties, license fees or any other charges
and amounts mentioned in this Agreement are understood as being net of Swiss or
foreign Value Added Tax. In case Swiss or foreign Value Added Tax has to be
levied on these payments, royalties, license fees or any other charges and
amounts mentioned in this Agreement, it is understood that the Value Added Tax
at the pertinent rate will be added by the payor to the payments, royalties,
license fees or any other charges and amounts mentioned in this Agreement.
ARTICLE 6
CONDITIONS
Section 6.1 Conditions. The parties will consummate the Transfer on
the Closing Date. The obligations of the parties to consummate the Transfer
shall be subject to the fulfillment or waiver of each of the following
conditions:
(a) the Board of Directors of IAT shall have formally approved the
Transfer;
(b) no temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Transfer shall be in
effect;
(c) each of the covenants and provisions in this Agreement required to
be performed or complied with prior to the Closing Date shall have been
performed or complied with; and
(d) Swiss Newco shall have been formed and be properly registered with
the Commercial Register of the Canton of Aargau.
Any determination by the Board of Directors of IAT prior to the Closing
Date concerning the satisfaction or waiver of any or all of the conditions set
forth in this Section shall be conclusive.
8
<PAGE>
Section 6.2 Closing Date.
(a) The closing for the Transfer shall occur at 10:00 AM (New York
time) on [Tuesday, March 17] 1998, or such other time as the parties may
mutually agree (the "Closing Date").
(b) On the Closing Date the parties will deliver
(i) executed copies of the Conveyancing and Assumption
Instruments, if any
(ii) executed copies of all consents obtained pursuant to Section
7.3
(c) On or before the Closing Date, Swiss Newco will deliver to its
founding shareholders a statement that it is assuming all of its
pre-incorporation liabilities.
(d) On or before the Closing Date, AG will deliver the schedule
referred to in Section 3.3 and a schedule showing the Assumed Assets and the
Assumed Liabilities.
Section 6.3 Notice. Promptly after the Closing Date, AG and Swiss
Newco will publish, or cause to be published, the notices required pursuant to
Art. 181 of the Swiss Code of Obligations.
ARTICLE 7
GOVERNING LAW AND DISPUTE RESOLUTION
Section 7.1 Mediation and Binding Arbitration. If a dispute arises
between (i) IAT and AG, on the one hand, and (ii) Swiss Newco and Dr. Vogt, on
the other hand, as to the interpretation or the implementation of this Agreement
or any agreement entered into pursuant hereto, including, without limitation,
any matter involving an Indemnifiable Loss, the parties agree to use the
following procedures, in lieu of any party pursuing other available remedies and
as the sole remedy, to resolve the dispute.
Section 7.2 Initiation. A party seeking to initiate the procedures
shall give written notice to the other parties describing briefly the nature of
the dispute. A meeting shall be held between the parties within 10 days of the
receipt of such notice, attended by individuals with decision-making authority
regarding the dispute, to attempt in good faith to negotiate a resolution of the
dispute.
Section 7.3 Submission to Mediation. If, within 30 days after such
meeting, the parties have not succeeded in negotiating a resolution of the
dispute, they agree to submit the dispute to mediation in accordance with the
Mediation Rules (Schlichtungsverfahren) of the Zurich Chamber of Commerce and to
bear equally the costs of the mediation.
9
<PAGE>
Section 7.4 Selection of Mediator. The parties will jointly appoint a
mutually acceptable mediator, seeking assistance in such regard from the Zurich
Chamber of Commerce or another mutually agreed-upon organization if they have
been unable to agree upon such appointment within 20 days from the conclusion of
the negotiation period.
Section 7.5 Mediation. The parties agree to participate in good faith
in the mediation and negotiations related thereto for a period of 30 days
following the initial mediation session. If the parties are not successful in
resolving the dispute through the mediation by the end of such 30-day period,
then the parties agree to submit the matter to binding arbitration in accordance
with the International Arbitration Rules of the Zurich Chamber of Commerce, by a
sole arbitrator selected in accordance with the provisions of Section 7.6
hereof.
Section 7.6 Selection of Arbitrator. The parties shall have 10 days
from the end of the mediation period to agree upon a mutually acceptable neutral
person not affiliated with either of the parties to act as arbitrator. If no
arbitrator has been selected within such time, an arbitrator shall be selected
for the parties by the Zurich Chamber of Commerce.
Section 7.7 Cost of Arbitration. The costs of arbitration shall be
apportioned between the parties as determined by the arbitrator in such manner
as the arbitrator deems reasonable taking into account the circumstances of the
case, the conduct of the parties during the proceeding, and the result of the
arbitration.
Section 7.8 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of Switzerland (regardless of
the laws that might otherwise govern under applicable principles of conflicts
law) as to all matters, including, without limitation, matters of validity,
construction, effect, performance and remedies.
ARTICLE 8
MISCELLANEOUS
Section 8.1 Complete Agreement. This Agreement, including the Annexes
and exhibits and the agreements and other documents referred to herein, shall
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter.
Section 8.2 Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on the party to
whom notice is given, on the day of transmission if sent via facsimile
transmission to the facsimile number given below, on the expected delivery date
for delivery by an overnight courier service or the Express Mail service
maintained by the United States Postal Service, provided receipt of delivery has
been confirmed, or on the fifth day after mailing
10
<PAGE>
provided receipt of delivery is confirmed, if mailed to the party to whom notice
is to be given, by first class mail, registered or certified, postage prepaid,
properly addressed and return-receipt requested, to the party as follows:
If to IAT or AG:
Geschaftshaus Wasserschloss
Aarestrasse 17
CH-5300 Vogelsang-Turgi
Switzerland
Telecopy No.: 011-41-56-223-5023
Attention: Jacob Agam
with a copy to:
Baker & McKenzie
805 Third Avenue, Floor 30
New York, NY 10022
United States of America
Telecopy No.: (212) 759-9133
Attention: Francis Fitzpatrick
If to Swiss Newco:
Geschaftshaus Wasserschloss
Aarestrasse 17
CH-5300 Vogelsang-Turgi
Switzerland
Telecopy No.: 011-41-56-223-5023
Attention: Dr. Viktor Vogt
with a copy to:
Bernasconi & Bernasconi
CH-8023 Zurich
Kuttelgasse 1/Rennweg 25
Telecopy No.: 011-41-1-212-53-54
Attention: Dr. Bruno Bernasconi
11
<PAGE>
If to Dr. Vogt:
c/o IAT Communication AG
Geschaftshaus Wasserschloss
Aarestrasse 17
CH-5300 Vogelsang-Turgi
Switzerland
Telecopy No.: 011-41-56-223-5023
Attention: Viktor Vogt
with a copy to:
Bernasconi & & Bernasconi
CH-8023 Zurich
Kuttelgasse 1/Rennweg 25
Telecopy No.: 011-41-1-212-53-54
Attention: Dr. Bruno Bernasconi
Any party may change its address by giving the other party written notice of its
new address in the manner set forth above.
Section 8.3 Amendment and Modification. This Agreement may be
amended, modified or supplemented only by written agreement of the parties.
Section 8.4 Termination. This Agreement may be terminated and the
Transfer abandoned at any time prior to the Closing Date by and in the sole
discretion of IAT without the approval of any other party. In the event of such
termination, no party shall have any Liability of any kind to any other party.
Section 8.5 Successor and Assigns. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either party without the prior written consent of the other party.
Section 8.6 No Third Party Beneficiaries. Except for the
indemnification rights under this Agreement of any Indemnity in their capacity
as such and except for the mutual releases provided for in this Agreement, this
Agreement, the Exhibits hereto and the agreements contemplated hereby are solely
for the benefit of the parties hereto and are not intended to confer upon any
other person except the parties hereto any rights or remedies hereunder.
Section 8.7 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12
<PAGE>
Section 8.8 Interpretation. The Article and Section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement. As used in this Agreement, the term
"person" shall mean and include an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
Section 8.9 Annexes, Etc. The annexes shall be construed with and as
an integral part of this Agreement to the same extent as if the same had been
set forth verbatim herein.
Section 8.10 Legal Enforceability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the day and year first above written.
IAT MULTIMEDIA, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
IAT AG
By:_________________________________
Name:_______________________________
Title:______________________________
IAT COMMUNICATION AG in formation,
represented by Dr. Viktor Vogt
By:_________________________________
Name: Dr. Viktor Vogt
Title: Founding Shareholder
DR. VIKTOR VOGT
____________________________________
14
<PAGE>
Annex I
LIABILITIES OF AG WHICH ARE
ASSUMED LIABILITIES
-------------------
Swiss Francs
------------
Accounts payable 207,051.65
Social security payable 39,846.20
Accrued liabilities 151,274.75
----------
398,172.60
Loan payable Multimedia, Inc. 130,486.90
----------
528,659.50
==========
I-1
<PAGE>
Annex II
TRANSFER EMPLOYEES
Germann Monica
Grandjean Michel
Hofstetter Rolf
Krumrey Ulrich
Lieberherr Elisabeth
Muller Franz
Paulus Czeslaw
Plaar Mirjam
Stockli Marc
Winter Andre
Yuksel Sema
Dr. Zurcher Hannes
II-1
<PAGE>
Annex III
ASSETS OF AG WHICH ARE
TRANSFERRED ASSETS
------------------
Swiss Francs
------------
Inventories 228,000.00
Equipment and Leasehold improvements 279,000.00
Deposits and prepaid expenses 21,659.50
----------
528,659.50
==========
III-1
<PAGE>
IAT AG,
Balance Sheet of the business of IAT AG - January 1, 1998
Acquisition Balance Sheet
ASSETS
Account
- -------
Fixed assets net off accumulated depreciation
14.0010 office furniture and machines 60'000.00
14.0020 EDP hardware and software 79'000.00
14.0000 installations, assembly, and internal cable network 139'000.00
14.0035 demonstration systems 1'000.00
----------
279'000.00
----------
Inventory
1235 production material 20'500.00
1260 products IAT 135'500.00
1261 third party products 72'000.00
----------
228'000.00
----------
Deposits and prepaid expenses
1191 rent 12'084.00
1191 electricity/BAG Turgi 1'000.00
1191 customs/custom authority Bern 1'000.00
1191 leasing/car for Dr. Vogt, Franz Muller 6'800.00
1300 other prepaid expenses 775.50
----------
21'659.50
----------
TOTAL ASSTS 528'659.50
----------
- 1 -
<PAGE>
LIABILITIES
Account
- -------
Accounts payable for deliveries and services
2000
2001 (separate break down)
2002 ----------
207'051.65
----------
Social security/pension fund
2010 mandatory - state retirement insurance 13'927.25
- private retirement
2020 insurance 14'922.15
2030 occupational insurance 5'362.90
2050 tax withheld at source 5'633.90
----------
39'846.20
----------
2300 Provisions
Giroud (auditing annual balance) 15'000.00
Baker & McKenzie 33'000.00
other legal - and consultancy expenses 30'000.00
telephone 9'500.00
taxes 32'100.00
bonus MG/VV 25'000.00
travel expenses 4'000.00
others 2'674.75
----------
151'274.75
----------
2565 Loan IAT Multimedia Inc. 130'486.90
----------
TOTAL LIABILITIES 528'659.50
----------
- 2 -
<PAGE>
AGREEMENT
on the Acquisition of Assets
between
transferring party: IAT AG, Aarestrasse 17, 5412 Gebenstorf/AG, represented by
its director Franz Muller, Glattfelden and Monica Germann,
Baden-Dattwil, holder of procuration, both authorized to
sign jointly for the company
and
acquiring party: IAT Communication AG ("being established"), Aarestrasse 17,
5412 Gebenstorf/AG, represented by Dr. Viktor Vogt, Rieden
bei Nussbaumen, acting as co-founder of the company, being
in the process of incorporation.
* * *
According to the arrangements stipulated in the Transfer Agreement between the
parties dated March 13, 1998, namely its Sec. 2.1., 2.2., and attachments I and
III, and the arrangements between IAT Multimedia, Inc. and Dr. Viktor Vogt, the
parties enter into the following agreement:
IAT Communication AG takes over from IAT AG its business, comprised of parts of
its assets in the amount of CHF 528'659.50 and parts of its liabilities in the
amount of CHF 528.659.50 on the basis of the enclosed acquisition balance sheet
"balance sheet of the business of IAT AG as of January 1st, 1998 (partial
balance sheet of IAT AG, Gebenstorf)", that is an integral part of this
agreement. This agreement shall be effective as of January 1, 1998. A
consideration for the transfer is not due.
5412 Gebenstorf, March 18th 1998 5412 Gebenstorf, March 18th 1998
- ---------------------------- -----------------------------
IAT AG IAT Communications AG
- 3 -
<PAGE>
Appendix 2
to the minutes dated March 5, 1998,
of Rolf Werther, notary public,
Bremen
Restructuring Agreement
by and between
1. IAT Deutschland GmbH Interaktive Mediensysteme, Fahrenheitstrasse 8,
28359 Bremen, Federal Republic of Germany,
hereinafter referred to as "IAT-old,"
2. IAT AG, Aarestrasse 17, 5300 Vogelsang-Turgi, Switzerland,
hereinafter referred to as "IAT Switzerland,"
3. Dr. Viktor Vogt, Boldistrasse 12, 5415 Rieden bei Nussbaumen,
Switzerland,
hereinafter referred to as "Dr. Vogt,"
and
4. Hanseatische Industrie-Beteiligungen GmbH, Martinistrasse 34, 28195
Bremen, Federal Republic of Germany,
hereinafter referred to as "HIBEG."
Preamble
1. IAT-old is a corporation headquartered in Bremen that is organized and
registered in accordance with German law. The capital stock of IAT-old
is DM 700,000.00; 74.9% of the capital stock is owned by IAT
Switzerland, 25.1% is owned by HIBEG.
2. IAT-old started its business activities in 1990. Since then, the
company has suffered losses. IAT Switzerland intends to provide fresh
funds to IAT-old on the basis of a loan agreement between IAT
Switzerland and IAT-old, as well as to contribute interests of IAT
Switzerland/IAT Multimedia, Inc. in companies belonging to the computer
industry to IAT-old by way of a capital contribution. The shareholder
HIBEG does not intend to
<PAGE>
participate in the aforementioned capital contributions on the part of
IAT Switzerland/IAT Multimedia, Inc. to IAT-old.
3. IAT Switzerland and HIBEG intend to transfer the current operations of
IAT-old --including all of the company's assets and liabilities, but
excluding its liabilities relative to IAT Switzerland -- to IAT
Communication Systems GmbH (hereinafter referred to as "IAT-new"), a
new corporation to be established pursuant to German law by way of
acquiring a Vorrats-GmbH [a limited liability stock company].
Subsequently, HIBEG shall withdraw as a shareholder of IAT-old and
become a shareholder of IAT-new.
4. Besides Dr. Vogt, who shall own 78% of the shares of IAT-new; IAT
Switzerland, which shall own 15% of the shares; and HIBEG, which shall
own 2% of the shares, Mr. Arno Lubben shall acquire 5% of the shares of
IAT-new in trust for staff members of IAT-new to be appointed by Dr.
Vogt. A portion of the shares belonging to Dr. Vogt shall be
transferred to HIBEG once HIBEG has exercised the respective option.
5. The loan granted by HIBEG to IAT-old shall be transferred to IAT-new.
The guarantee, which HIBEG originally provided on behalf of IAT-old,
shall now be provided on behalf of IAT-new.
6. Finally, the parties to this agreement intend to fold the operative
business of IAT Switzerland into a new Swiss company (hereinafter
referred to as IAT Switzerland-new"). Upon payment of a reasonable
licensing fee (sale license) for rights to technology owned by IAT
Switzerland, IAT Switzerland-new shall be granted the right to
manufacture products itself or to have products manufactured by third
parties, to further the development of products, as well as to use and
to sell such products. Furthermore, IAT Switzerland-new shall be
granted the right to grant sub-licenses and to become a co-owner of
industrial property rights, if any, upon payment of reasonable
compensation (purchase price). Dr. Vogt shall be the majority
shareholder of IAT Switzerland-new. In the following, the totality of
the measures set forth herein with regard to IAT Switzerland-new shall
be jointly referred to as the "restructuring of IAT Switzerland."
7. Now, therefore, Dr. Vogt, IAT Switzerland, IAT-old, as well as HIBEG,
conclude the following restructuring agreement to set forth their
mutual rights and duties:
ss. 1
Founding of IAT-new
1. IAT Switzerland and Dr. Vogt undertake, immediately upon execution of
the present restructuring agreement, to establish IAT-new as a company
headquartered in Bremen, Federal Republic of Germany, by acquiring
shares at a nominal value of DM 15,000.00 (IAT Switzerland) and DM
35,000.00 (Dr. Vogt) in a so-called Vorrats-GmbH [limited liability
stock company] having a capital stock of DM 50,000.00 and subsequently
to
- 2 -
<PAGE>
modify the by-laws of such company, Dr. Vogt is hereby appointed the
managing director of IAT-new.
2. IAT Switzerland and Dr. Vogt shall ensure that the draft agreement
attached hereto as Appendix 1.2 shall be concluded by and between Mr.
Lubben and Dr. Vogt and other staff members to be appointed by Dr.
Vogt, according to which Mr. Lubben shall hold any shares in IAT-new
which he acquires in the future in trust for Dr. Vogt and/or for staff
members to be appointed by Dr. Vogt.
3. Dr. Vogt, IAT Switzerland, and HIBEG undertake to conclude the
participation agreement attached hereto as Appendix 1.3 before HIBEG
acquires a capital contribution in IAT-new at a nominal value of DM
2,000.00.
4. Subsequently, Dr. Vogt and IAT Switzerland shall undertake to increase
the capital stock of IAT-new of DM 50,000.00 by DM 50,000.00 to DM
100,000.00. Dr. Vogt and IAT Switzerland undertake, furthermore, to
permit the following persons and entities to acquire new capital
contributions at the nominal value:
- Dr. Vogt, a capital contribution at the nominal value of
DM43,000.00 (DM35,000.00 + DM43,000.00 = DM78,000.00);
- HIBEG, a capital contribution at the nominal value of DM
2,000.00; and
- Mr. Lubben or another staff member of IAT-old to be designated
by Dr. Vogt, a capital contribution at a nominal value of DM
5,000.00, to be held in trust for Dr. Vogt and/or for future
staff members of IAT-new to be appointed by Dr. Vogt.
5. Dr. Vogt and IAT Switzerland shall ensure that the articles of
incorporation of IAT-new shall be identical to the draft articles of
incorporation attached hereto as Appendix 1.4, at ------------ the
latest, after the capital stock of IAT-new has been increased from DM
50,000.00 by DM 50,000.00 to DM 100,000.00. The aforementioned articles
of incorporation were drawn up by the shareholders concerned on the
basis of the assumption that HIBEG's interest in IAT-new would not be
limited to two percent but would amount to a share of 25.1%, as
intended. Should the participation of HIBEG in IAT-new not amount to
25.1% by 05/31/98, at the latest, for whatever reason, HIBEG shall
undertake to cooperate in modifying the Articles of Incorporation of
IAT-new in order to arrive at a redefinition of HIBEG's rights as a
shareholder of IAT-new in a manner that is commensurate with its two
percent share.
6. HIBEG and Dr. Vogt undertake to conclude the option agreement attached
hereto as Appendix 1.6 which gives HIBEG the right to acquire a share
of IAT-new at a nominal value of DM 23,100.00 from Dr. Vogt.
- 3 -
<PAGE>
7. Dr. Vogt, IAT Switzerland, and HIBEG shall immediately commence
negotiations regarding the participation of HIBEG in matters of
financing.
8. The parties to this agreement intend to invite suitable industrial
partners to participate in IAT-new in the future. Details shall be
negotiated at the given time.
ss. 2
Transfer of the Loan from IAT-old to IAT-new
1. Pursuant to a loan agreement dated 12/19/95, HIBEG granted a loan
totaling DM750,000.00 to IAT-old.
2. Immediately upon conclusion of this restructuring agreement, HIBEG,
IAT-old, and Dr. Vogt shall jointly ensure that the draft agreement
attached hereto as Appendix 2.2 regarding the assumption, by IAT-new,
of the rights and duties of IAT-old as the beneficiary of the
aforementioned loan agreement is executed forthwith.
3. If HIBEG does not exercise the option granted to it pursuant to ss. 1
para 6 of that agreement, HIBEG shall provide a new declaration of
subordination with regard to the loan originally granted to IAT-old and
subsequently transferred to IAT-new. In addition to the previous
declaration of subordination, such new declaration of subordination
shall also extend to all liabilities of IAT-new, including all
liabilities that are incurred after January 1, 1998, in terms of loans.
ss. 3
Guarantee for the Benefit of IAT-new
1. Pursuant to the guarantee declaration of 01/04/96, HIBEG guarantees the
claims of Volksbank Sottrum eG against IAT-old up to a total amount of
DM350,000.00.
2. HIBEG, IAT-old, and Volksbank Sottrum eG conclude the agreement
attached hereto as Appendix 3.2 according to which, effective
immediately, HIBEG's guarantee shall be limited exclusively to IAT-new.
HIBEG and IAT-old shall endeavor, to a reasonable extent, to obtain the
consent of Volksbank Sottrum eG to the aforesaid agreement (Appendix
3.2).
- 4 -
<PAGE>
ss. 4
Recapitalization of IAT-old
1. At the time this participation agreement [sic] is concluded, the
financial statement of IAT-old shows an excess of liabilities over
assets. The shareholders' equity of IAT-old has been spent. The
liabilities of IAT-old exceed its assets by about DM3,511,000.00 as per
the company's balance sheet dated 12/31/97.
2. Immediately upon conclusion of this restructuring agreement, IAT
Switzerland undertakes relative to HIBEG and IAT-old to make
DM1,164,000.00 of IAT-old in the form of a shareholder contribution or
a shareholder loan available and to bring the interest of IAT
Multimedia, Inc. in FSE-Computer-Handel GmbH + Co. KG, Pirmasens, into
IAT-old in order to recapitalize IAT-old.
ss. 5
Withdrawal of HIBEG as a Shareholder of IAT-old
Following the recapitalization of IAT-old by IAT Switzerland in accordance with
ss. 4 of this restructuring agreement, HIBEG and IAT Switzerland shall
immediately conclude the share purchase and transfer agreement attached hereto
as Appendix 5 pursuant to which the share of HIBEG in IAT-old shall be sold and
transferred to IAT Switzerland at the share's nominal value, effective 12/31/97
in personam.
ss. 6
Folding the Current Business Operations of IAT-old into IAT-new
1. IAT Switzerland shall ensure that the entire current business
operations of IAT-old-- including all its assets and its liabilities
toward banks, HIBEG, and other parties, but excluding the liabilities
of IAT-old toward IAT Switzerland - are effectively transferred from
IAT-old to IAT-new immediately upon conclusion of this restructuring
agreement. The total assets shall conform to the total liabilities,
taking into account the respective shareholder loans and/or shareholder
contributions pursuant toss.4 para 2. IAT Switzerland, IAT-old, and
IAT-new shall ensure that the Purchase and Transfer Agreement designed
to transfer the business operations of IAT-old to IAT-new conforms to
the agreement attached hereto as Appendix 6.1. The parties to this
restructuring agreement shall immediately agree on the substance of the
appendices to the agreement attached hereto as Appendix 6.1. If the
parties are unable to arrive at such an agreement, the auditor of
IAT-old shall determine the respective appendices; such determination
shall be conclusive and binding on all parties.
- 5 -
<PAGE>
2. IAT Switzerland and IAT-old shall reasonably endeavor to obtain any and
all third party permits required for transferring the business
operations of IAT-old to IAT-new.
3. Dr. Vogt and IAT-old shall ensure relative to HIBEG that the business
operations transferred from IAT-old to IAT-new shall remain with
IAT-new permanently and that IAT Switzerland does not compete with
IAT-new in the areas of business defined in the participation agreement
(Appendix 1.3).
ss. 7
Continuation of IAT-old
1. IAT Switzerland shall ensure that the business operations of IAT-old
are continued in Bremen. Any relocation of the business operations of
IAT-old from Bremen shall require the prior written approval of HIBEG.
2. Following the withdrawal of HIBEG as a shareholder of IAT-old, IAT
Switzerland shall ensure that IAT-old shall perform the following
functions, in particular, within IAT Multimedia, Inc. and both its
current and future subsidiaries and second-tier subsidiaries:
It shall serve
a) as the central office charged with coordinating all activities
of the subsidiaries, second-tier subsidiaries, and holding
companies of IAT Switzerland in the Federal Republic of
Germany and
b) as the holding company for all interests of IAT Switzerland,
as well as of its subsidiaries, second-tier subsidiaries, and
holding companies, in companies headquartered in the Federal
Republic of Germany, with the exception of IAT-new,
3. IAT Switzerland undertakes to transfer the share of IAT Multimedia,
Inc. in FSE-Computer-Handel GmbH & Co. KG, Pirmasens (hereinafter
referred to as FSE"), as well as the shares held by its personally
liable shareholder, to IAT-old.
ss. 8
Restructuring of IAT Switzerland
1. Dr. Vogt shall inform HIBEG immediately about the details of any and
all measures required in accordance with the restructuring of IAT
Switzerland.
- 6 -
<PAGE>
2. HIBEG is aware of the fact that folding the operative business of IAT
Switzerland into IAT Switzerland-new, as well as the operative business
of IAT-old into IAT-new (spin-off), may also affect the interests of
the shareholders of IAT Multimedia, Inc. (hereinafter referred to as
"IAT Multimedia"). HIBEG shall not object if an independent third
party, such as, for instance, an international investment bank, is
asked whether folding the operative business of IAT Switzerland into
IAT Switzerland-new and the operative business of IAT-old into IAT-new
(spin-off) places the shareholders of IAT Multimedia at a disadvantage.
Moreover, HIBEG shall not object if the measures in question are
evaluated by an independent third party (so-called fairness opinion).
If such third party concludes in its fairness opinion that folding the
operative business of IAT Switzerland into IAT Switzerland-new and the
operative business of IAT-old into IAT-new places the shareholders of
IAT Multimedia at a disadvantage, HIBEG shall be prepared, without
acknowledging any legal obligation in relation thereto, to enter into
negotiations with the other parties to this restructuring agreement
designed to determine whether and to which extent the legal
transactions stipulated in this restructuring agreement and its
appendices might be adjusted in order to reduce or eliminate any
inappropriate disadvantaging of IAT Multimedia's shareholders. HIBEG
shall not be obliged in any manner to achieve a specific outcome in
these negotiations.
ss. 9
Duration
1. This restructuring agreement shall take effect as soon as it has been
executed. It shall end on the date on which HIBEG does not or no longer
participates in IAT-new.
2. This restructuring agreement cannot be terminated in the context of an
ordinary termination. However, this restructuring agreement may be
terminated, effective immediately, for important reasons. IAT
Switzerland and IAT-old shall only be able to terminate this
restructuring agreement relative to HIBEG jointly. HIBEG, in turn, may
terminate this restructuring agreement only if such termination is
declared relative to both IAT Switzerland and IAT-old.
3. Any termination shall be given in writing to be effective.
ss. 10
Costs
The costs of having this agreement notarized and executed shall be borne by
IAT-old. Each party to this agreement shall bear the costs of its advisers.
- 7 -
<PAGE>
ss. 11
General Provisions
1. This agreement shall be notarized in order to be legally effective. Any
formal lacunae shall be cured by the notarized execution of the
agreements pursuant to the appendices attached hereto.
2. This restructuring agreement shall be subject to the laws of the
Federal Republic of Germany.
3 Any and all appendices set forth herein shall form an integral part of
this agreement.
4. The ineffectiveness of provisions of this agreement shall not affect
the effectiveness of the remaining provisions. Any ineffective
provision shall be replaced, subject to mutual agreement of the
parties, by a provision that approximates, as closely as possible, the
intended economic goal. The same shall apply analogously to any
contractual lacunae.
5. Any modifications of or supplements to this agreement shall be made in
writing, unless statutory laws mandate more stringent forms. The
writing requirement may be voided or modified only pursuant to a
written agreement between all parties to this agreement,
6. Bremen (i.e. the courts of the City of Bremen) shall be the exclusive
place of jurisdiction for any disputes arising out of the rights and
duties stipulated in this agreement.
Bremen, March 5, 1998
- 8 -
<PAGE>
IAT AG Hanseatische Industrie-Beteiligungen GmbH
By power of attorney
signed Grissemann signed M. Pleis
- ---------------------------------------------- -------------------------
(Dr. Viktor Vogt) (K. Grissemann) (Manfred Pleis)
IAT Deutschland GmbH Dr. Viktor Vogt
Interactive Media Systems
signed Vogt signed Vogt
- -------------------------------------- -----------------------------------
(Dr. Viktor Vogt)
Appendices
signed Werther Notary
- 9 -
<PAGE>
Appendix 2 1.4
--------------
To the document prepared
by Rolf Werther, Notary Public,
Bremen, dated 5 March 1998
ARTICLES OF INCORPORATION
of
IAT Communication Systems GmbH
[IAT-new]
************
Section 1
Company, Headquarters, Fiscal Year
----------------------------------
1. The company's name is:
IAT Communication Systems GmbH.
2. The company is headquartered in Bremen, [Federal Republic of Germany].
3. The calendar year is the fiscal year.
Section 2
Purpose of the Company
----------------------
1. The company's purpose is to develop, produce, and distribute interactive
narrow band and wide band communication systems.
2. The company may engage in any and all businesses related to this activity,
both at home and abroad. The company may acquire companies of an identical
or similar nature, as well as acquire an interest in such companies and
represent them. The company may establish branch offices and offices both
at home and abroad.
1
<PAGE>
Section 3
Share Capital
-------------
1. The share capital of the company is DM 100,000.00 (in words: one hundred
thousand Deutsche Marks).
2. The following natural persons and entities participate as follows therein:
Dr. Viktor Vogt: initial contributions of DM
10,000.00 DM 25,000.00
DM 43,000.00
IAT AG, Turgi, Switzerland,
a corporation subject to Swiss law
(hereinafter referred to as "IAT Switzerland"):
an initial contribution of DM 15,000.00
Mr. Arno Lbben: an initial
contribution of DM
5,000.00
Hanseatische Industrie-Beteiligungen GmbH,
a limited liability company subject to German law
(hereinafter referred to as "HIBEG"):
an initial contribution of DM
2,000.00
-------------
DM 100,000.00
3. At the founders meeting held on 6 February 1998 the following entities
assumed a participation in the share capital:
the limited liability company within
TDB Treuhandgesellschaft fr Darlehen
und Beteiligungen mbH, Ganderkesee:
an initial contribution of DM 25,000.00
the limited liability company within
SLH Verwaltungsgesellschaft fr
Darlehen und Beteiligungen mbH, Ganderkesee:
an initial contribution of DM 25,000.00
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<PAGE>
At present half of these initial contributions have been paid in.
4. At the shareholders meeting held on 5 March 1998 the company s share
capital was increased from DM 50,000.00 by DM 50,000.00 to DN 100,000.00,
and the following natural persons and entities have assumed a participation
therein:
Dr. Viktor Vogt, Vogelsang:
an initial contribution of DM 43,000.00
Mr. Arno Lbben, Bremen:
an initial contribution of DM 5,000.00
Hanseatische Industrie-Beteiligungen GmbH, Bremen:
an initial contribution of DM 2,000.00
These initial contributions have been paid in full.
Section 4
Management and Representation
-----------------------------
1. The company has one or more managing directors.
2. If only one managing director has been appointed, s/he shall represent the
company alone. If several managing directors have been appointed, the
company shall be represented by two managing directors jointly or by one
managing director along with a Prokurist [executive with power of
attorney]. The shareholders' meeting shall have the right to grant
individual managing directors the right to represent the company alone.
3. The company's managing directors may be exempted from the restrictions of
181 BGB [Brgerliches Gesetzbuch - German civil code] by a resolution of the
shareholders' meeting.
4. The managing directors are both appointed and recalled by the shareholders'
meeting. The shareholders' meeting concludes the employment contracts with
the managing directors and is responsible for modifying, annulling, and
terminating such employment contracts.
5. The managing directors are charged with conducting the company's business
with the due diligence and care expected of businesspersons in accordance
with the guidelines and instructions of the shareholders' meeting. The
managing directors shall undertake to comply with the restrictions imposed
on them by law, these Articles of Incorporation, their individual
employment contracts, or the Geschftsordnung [internal rules] adopted by
the shareholders' meeting.
3
<PAGE>
6. Two (2) months prior to the termination of a given fiscal year, at the
latest, the managing directors shall submit to the shareholders' meeting
the business plan for the subsequent business year. Such business plan
shall comprise the company's projections with regard to gross sales,
results, investments, finances, and personnel (hereinafter referred to as
"annual business plan"). The business plan shall be submitted along with an
application for approval of same by a resolution of the shareholders'
meeting.
7. The authority of the managing directors to manage the company's affairs
shall extend to all acts pertaining to operations of a commercial nature
involving the company. The managing directors are required to seek the
approval of the shareholders' meeting for any acts on their part that
exceed the aforesaid authority. This shall apply, in particular, to the
following acts by managing directors:
(1) Establishment of the annual business plan and modifications thereof;
(2) Acquisition, sale, and encumbrance of real property and equivalent
rights;
(3) Acquisition, sale, and encumbrance of goods and chattels (with the
exception of automobiles) valued at more than DM 100,000.00 (excluding
value-added tax);
(4) Purchase and sale of automobiles valued at more than DM 25,000.00
(excluding value-added tax), as well as conclusion of lease agreements for
automobiles having an annual object value in excess of DM 25,000.00
(excluding value-added tax);
(5) Acquisition, sale, and shutdown of operations or facilities, as well as
construction of buildings and other corporate installations;
(6) Establishment and dissolution of branch offices, offices, and corporate
production facilities;
(7) Expansion into new areas of business and abandonment or substantial
reduction of existing lines of business;
4
<PAGE>
(8) Conclusion, modification, and termination of agreements pertaining to
the distribution of profits, profit pool agreements, and cooperation
agreements;
(9) Conclusion, modification, and termination of purchase agreements having
an object value of DM 500,000.00 (excluding value-added tax), as well as
conclusion, modification, and termination of agreements pertaining to
employment, services, licensing, know-how, rentals, leases, and so forth
(with the exception of automobile lease agreements) having an annual object
value in excess of DM 150,000.00 (excluding value-added tax) or a fixed
stipulated duration of more than twelve (12) months;
(10) Conclusion and modification of loan or credit agreements, as well as
credit line agreements pertaining to checking accounts or the acceptance of
notes;
(11) Granting of loans or credit lines outside of customary business
transactions;
(12) Granting of collateral for third parties, as well as assumption of
guaranties, warranties, and obligations with regard to notes payable;
granting of undertakings where the obligation is created by the promise
itself, as well as any assumption of liability exceeding customary business
transactions;
(13) Acquisition, sale, and termination of the company's interests in other
companies, including acquisition, sale, and termination of shares or
interests belonging to other companies;
(14) Granting of profit and/or gross sales sharing agreements, as well as
of retirement and disability plans of any kind;
(15) Promises to grant rights or the establishment of claims comprising a
share in the company's profits;
(16) Conclusion of agreements pertaining to silent partnerships or loans
that include profit sharing;
(17) Legal transactions with shareholders, their spouses, siblings, and
lineal descendants, or the latter's spouses (hereinafter jointly referred
to as "close persons");
5
<PAGE>
(18) Pursuit of active litigation with an amount in controversy in excess
of DM 25,000.00; this shall not apply to the collection of receivables;
(19) Granting and revoking of power of attorney and agency agreements;
(20) Any other acts which are subject to the prior approval of the
shareholders' meeting by way of a resolution.
8. Acts on the part of the managing directors in connection with an approved
annual business plan need not be approved separately pursuant to the
provisions of the preceding paragraph of this Article.
9. The shareholders' meeting may adopt resolutions requiring prior approval by
the shareholders' meeting of other acts on the part of the managing
directors.
Section 5
Share holders' Meeting
----------------------
1. The shareholders' meeting shall approve or disapprove all decisions
reserved to it under these Articles of Incorporation and/or by law.
2. Shareholders' meetings shall be convened by the management of the company.
3. The shareholders shall be invited, in writing, to shareholders' meetings at
the seat of the company; such written invitations shall set forth the
agenda. There shall be a period of fourteen (14) days between the date on
which the invitation is mailed and the date for which the shareholders'
meeting is scheduled, not counting either day. This period of invitation
may be reduced to three (3) business days if, in the view of the company's
management, urgent matters to be resolved by the shareholders' meeting so
require.
4. The annual ordinary shareholders' meeting shall be convened within the
first six (6) months of a given fiscal year. This shareholders' meeting
shall
- accept the balance sheet, including appendices and profit and loss
statements (annual financial statement) for the fiscal year elapsed;
- allocate profits;
6
<PAGE>
- appoint the auditor for the current fiscal year;
as well as
- approve the acts of the managing directors.
5. Extraordinary shareholders' meetings shall be convened if necessary in the
interest of the company or if a resolution of the shareholders' meeting is
required by law or under these Articles of Incorporation, provided such
resolution cannot be delayed until the next scheduled ordinary
shareholders' meeting without harming the company.
6. The management may also convene an extraordinary shareholders' meeting if
so requested, in writing, by one shareholder holding at least ten (10)
percent of the company's share capital. Such written shareholder's request
shall set forth the items to be placed on the agenda, with the proviso
that pursuant to 50 para 3 GmbH-Gesetz [law on limited liability
companies] shareholders may convene shareholders' meetings themselves if
the request to convene a shareholders' meeting is not satisfied within one
month of receipt thereof.
7. Unless the shareholders' meeting resolves otherwise, the shareholders'
meeting shall be chaired by the managing director with seniority.
8. The shareholders' meeting shall constitute a quorum if 75 of one hundred
of the existing share capital of the company are represented. If a duly
convened shareholders' meeting does not constitute a quorum, a new
shareholders' meeting having the same agenda shall be convened
immediately, subject to a period of invitation in accordance with para 3
of this article. The shareholders' meeting thus convened shall constitute
a quorum regardless of the percentage of shareholders present. The
invitation to such shareholders' meeting shall make particular mention of
this fact.
9. Shareholders may be represented at shareholders' meetings by another
shareholder pursuant to a written authorization or by an agent pursuant to
a proxy statement. The agent shall be another shareholder, a managing
director, an executive of the shareholder, or a person who, by virtue of
his or her profession, is sworn to confidentiality. S/he must be in
possession of a written authorization.
10. Minutes setting forth the outcome of the shareholders' meeting shall be
signed by the chairperson of the shareholders' meeting and a secretary, if
any, and shall be sent to the shareholders immediately. Any and all
resolutions adopted by the shareholders' meeting shall be quoted verbatim
in the minutes.
7
<PAGE>
11. At the request of the company's management and to the extent permitted
under law, resolutions of the shareholders' meeting may also be adopted,
without convening a shareholders' meeting, in writing or via fax, provided
no shareholder objects to this form of vote. The originals of resolutions
adopted in writing or via fax shall be kept in the company's files by its
management. Copies of resolutions adopted in writing or via fax shall be
sent to the shareholders immediately.
12. Resolutions shall be adopted by the simple majority of the vote, including
the votes of HIBEG, Dr. Vogt and IAT Switzerland, in order to take effect,
unless these Articles of Incorporation or statutory requirements prescribe
a qualified majority. The provisions of 47 para 4 GmbHG are contracted
out, to the extent permitted by law.
Section 6
Challenging the Resolutions of a Shareholders' Meeting
------------------------------------------------------
1. Resolutions adopted by a shareholders' meeting may be challenged by
recourse to the courts in accordance with 5 para 10 or 11 of these
Articles of Incorporation within three (3) months of the date on which the
documents concerning the resolution were mailed to the shareholders. The
same shall apply to any claims alleging that a resolution adopted by the
shareholders' meeting is ineffective.
2. Compliance with the aforementioned period during which a resolution may be
challenged is given only if the arbitration proceeding stipulated in these
Articles of Incorporation is initiated or if a lawsuit is filed with the
competent court, if necessary.
Section 7
Annual Financial Statement / Management Report
----------------------------------------------
1. The managing directors shall prepare the company's annual financial
statement (balance sheet, including profit and loss statement and
appendices) and the management report pursuant to 289 HGB
[Handelsgesetzbuch - German commercial code] within three (3) months of
the end of a given fiscal year; both the annual financial statement and
the management report shall be signed by all managing directors.
8
<PAGE>
2. All accounting procedures shall comply with applicable tax laws, taking
into account the statutory requirements of the commercial code.
3. Both the annual financial statement and the management report shall be
audited by an independent auditor or auditing company pursuant to 316 ff.
HGB. This shall also apply as long as the company is considered a small
entity in the sense of 267 para 1 HGB. Furthermore, the auditor shall
prepare a special report regarding all legal transactions of the company
with companies in which shareholders of the company or persons close to
them hold an interest, directly or indirectly.
4. The Free Hanseatic City of Bremen shall have all rights pursuant to 53 of
the law of August 19, 1969, regarding both the Federal government's and
the states' budgetary principles (Haushaltsgrundstzegesetz - law on
budgetary principles]. The Rechnungshof [Audit Office] of the Free
Hanseatic City of Bremen shall have all rights granted to it under 54 of
the law on budgetary principles.
5. The management of the company shall immediately transmit to the
shareholders copies of both the annual financial statement and the
management report, including the auditor's report.
Section 8
Allocation of Profits
---------------------
1. The application of profits shall be subject to a resolution of the
shareholders' meeting in accordance with 29 of the GmbHG and in
consideration of the principle that the shareholders are entitled to
distribution of one half of the annual surplus, plus unappropriated
earnings carried forward, if any, less losses carried forward, if any,
provided the shareholders do not elect, by a simple majority of all votes
cast (including those of HIBEG and Dr. Vogt) to apply this portion of the
annual surplus in another manner.
2. The company shall not have the right to grant special consideration of any
kind to a shareholder or a person close to a shareholder above and beyond
customary profit distributions. Any legal transactions in violation of
this provision shall be ineffective, at least as far as the internal
relationship of the shareholders is concerned. The so advantaged
shareholder or person close to such shareholder shall undertake to return
any such special consideration to the company immediately or to reimburse
it for the value thereof.
9
<PAGE>
Section 9
Transfer and Encumbrance of Shares
----------------------------------
1. Transfers and encumbrances of shares or of portions thereof to persons
other than the company's shareholders, transfers and encumbrances of
shareholders' pecuniary claims against the company (in both cases
irrespective of the legal ground therefor), as well as grants of
sub-interests in shares or the establishment of legal relationships
whereby a shareholder enters into a position of trust relative to his or
its share(s) or the obligation to bind the exercise of his or its
shareholder rights to the consent of a third party, shall be subject to
the prior written consent of all shareholders.
2. The declaration of consent required pursuant to the preceding paragraph is
herewith considered given in connection with any transfers of shares from
one shareholder of the company to another.
Section 10
Redemption of Shares
--------------------
1. It is permissible to redeem (amortize) shares.
2. The compulsory redemption (compulsory amortization) of a shareholder's
share(s) shall be permitted in the following cases:
a) if the shareholder has grossly violated his or its shareholder
obligations;
b) if a share is attached and if such attachment is not revoked within
one month;
c) if a shareholder applies for bankruptcy or if such bankruptcy
application has been rejected for lack of assets; or
d) if the shareholder has submitted a statement in lieu of an oath
pursuant to 807, 899 ff. ZPO [Zivilprozeordnung - German Rules of Civil
Procedure].
3. If a share belongs jointly to several shareholders, the compulsory
redemption shall be permitted even if the conditions set forth in para 2
of this Article apply to only one of the shareholders concerned.
4. The company shall be continued by the remaining shareholders if shares
have been subject to redemption or compulsory redemption.
10
<PAGE>
5. Shares shall be redeemed or subject to compulsory redemption for due
consideration. The amount of the compensation to be paid by the company
and the manner of such payment shall be subject to the provisions of 14
and 15 of these Articles of Incorporation.
6. Shares shall be redeemed or subjected to compulsory redemption by a
resolution of the shareholders' meeting. The shareholder concerned shall
not have the right to vote on such resolution.
7. The management of the company shall notify the shareholder concerned, in
writing, of the redemption or compulsory redemption of his or its shares.
The redemption or compulsory redemption shall take effect as of the date
on which such writing is received by the shareholder.
8. If the compensation to be paid has not been determined within one year of
receipt, by the shareholder concerned, of the resolution to redeem his or
its share(s) pursuant to 14 para 1 of these Articles of Incorporation, the
shareholder concerned may demand that the company be dissolved.
Section 11
Withdrawal of a Shareholder on Special Grounds
----------------------------------------------
1. If
a) a shareholder grossly violates his or its shareholder duties;
b) the shares(s) of a shareholder has or have been attached and if such
attachment has not been revoked within one month;
c) the shareholder has applied for bankruptcy or if his or its
bankruptcy petition has been rejected due to lack of assets; or
d) a shareholder has submitted a statement in lieu of an oath pursuant
to 807, 899 ff. ZPO,
the shareholder concerned shall undertake, subject to the respective
unanimous resolution of the shareholders' meeting (at which he or it shall
not have the right to vote), to transfer his or its share(s) to the
remaining shareholders, at the ratio of their current participation in the
company's share capital. The other shareholders shall undertake to accept
such transfers. Any fractional shares that cannot be distributed shall be
transferred to that shareholder of the remaining shareholders who until
now has been the company's largest shareholder.
11
<PAGE>
2. In partial deviation of the provisions set forth in para 1 of this
Article, the remaining shareholders may resolve unanimously that the
shareholder concerned shall transfer his or its share(s) to one or several
shareholders or to one or several third parties.
3. If several shareholders are jointly entitled to a share and if the
preconditions set forth in para 1 of this Article apply to only one of the
shareholders concerned, all shareholders jointly holding the respective
share(s) shall be subject to the duties set forth in the preceding
paragraphs of this Article.
4. The recipient(s) of the share(s) transferred by the withdrawing
shareholder shall pay consideration for such share(s) to such shareholder.
The amount of such compensation and the manner of payment thereof shall be
subject to the provisions of 14, 15, and 16 of these Articles of
Incorporation.
5. If the compensation to be paid has not been determined within one year of
the withdrawal of the shareholder concerned pursuant to 14 para 1 of these
Articles of Incorporation, the shareholder concerned may demand that the
company be dissolved.
Section 12
Duration of the Company / Termination
-------------------------------------
1. The company is established for an unlimited duration.
2. The company may be terminated by any one of its shareholders, subject to a
period of notice of twelve (12) months, effective at the end of a fiscal
year; the company may not be terminated prior to 12/31/2003.
3. Any termination of the company shall be set forth in writing and sent to
the company via certified mail. The company's management shall undertake
to notify the remaining shareholders of the termination immediately in
writing.
4. If a shareholder has terminated the company, any remaining shareholder
shall have the right to join in such termination within one month upon
receipt of the notice from the company's management that the company was
terminated by a shareholder. The notice of termination of the shareholder
joining the initial termination shall also be set forth in writing and
sent to the company via certified mail. The management of the company
shall notify the remaining shareholders of the second termination
immediately in writing. The second termination shall be effective as of
the date of the initial termination.
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5. If the company is terminated by a shareholder, it shall enter into
liquidation at the time the termination takes effect unless the remaining
shareholders resolve unanimously to continue the company.
6. If the remaining shareholders resolve to continue the company upon its
termination, each terminating shareholder shall undertake to transfer his
or its share(s) to the remaining shareholders, at the ratio of their
current participation in the company's share capital. The remaining
shareholders shall undertake to accept such transfers. Any fractional
shares that cannot be distributed shall be transferred to that shareholder
of the remaining shareholders who until now has been the company's largest
shareholder.
7. In partial deviation of the provisions set forth in para 6 of this
Article, the remaining shareholders may resolve unanimously that the
withdrawing shareholder shall transfer his or its share(s) to one or
several shareholders or to one or several third parties.
8. The recipient(s) of the share(s) transferred by the withdrawing
shareholder(s) shall pay consideration for such share(s) to such
shareholder(s). The amount of such compensation and the manner of payment
thereof shall be subject to the provisions of 14, 15, and 16 of these
Articles of Incorporation.
9. If the compensation to be paid has not been determined within one year of
the withdrawal of the shareholder concerned pursuant to 14 para 1 of these
Articles of Incorporation, the shareholder concerned may demand that the
company be dissolved.
Section 13
Death of a Shareholder
----------------------
1. If a shareholder who is natural person dies, the company shall not be
continued with the heir(s) of the deceased shareholder or with such person
to whom the shareholder bequeathed his or its share(s), unless the company
declares relative to such heir(s), pursuant to a unanimous resolution of
the remaining shareholders, that the company relationship will be
continued with him or them. In case of several heirs or beneficiaries,
such declaration may be made relative to one or some of the persons
concerned. The declaration must be made within three (3) months of the
date on which the heir(s) and/or beneficiaries have proven their
legitimacy to the company.
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2. To the extent and if the company does not issue a declaration pursuant to
para 1 of this Article, the heir(s) and/or beneficiaries of the deceased
shareholder, who are not invited into the company, shall undertake to
transfer their share(s) to the remaining shareholders, effective as of the
date of death of the deceased shareholder, at the ratio of their current
participation in the company's share capital. The remaining shareholders
shall undertake to accept such transfers. Any fractional shares that
cannot be distributed shall be transferred to that shareholder of the
remaining shareholders who until now has been the company's largest
shareholder.
3. In partial deviation of the provisions set forth in para 2 of this
Article, the remaining shareholders may resolve unanimously that the
heir(s) and/or beneficiaries shall transfer their share(s) to one or
several shareholders or to one or several third parties.
4. The recipient(s) of the share(s) so transferred shall pay consideration
therefor. The amount of such compensation and the manner of payment
thereof shall be subject to the provisions of 14, 15, and 16 of these
Articles of Incorporation.
5. If the compensation to be paid has not been determined within one year of
the withdrawal of the respective heir(s) and/or beneficiaries pursuant to
14 para 1 of these Articles of Incorporation, the heir(s) and/or
beneficiaries who have withdrawn may demand that the company be dissolved.
Section 14
Valuation of the Shares of Withdrawing Shareholders
---------------------------------------------------
1. If a shareholder withdraws from the company because his or its share(s)
has or have been redeemed or transferred, and if such withdrawing
shareholder is entitled to compensation for his or its share(s) pursuant
to the provisions of these Articles of Incorporation, absent other
stipulations between the withdrawing shareholder and the remaining
shareholders, the company's management shall undertake immediately to have
the company's value determined as of the date of withdrawal, in accordance
with all tax laws applicable to such valuation in effect at the time these
Articles of Incorporation are revised (so-called Stuttgart procedure). If
a shareholder withdraws from the company, the date governing such
valuation shall not be the date of withdrawal but the end of the company's
prior fiscal year. The company shall be valued by such auditor or auditing
company who or which audited the company's last annual financial
statement, which shall serve as the basis for the valuation. The company
shall send the auditor's valuation report to the shareholders immediately
upon receipt thereof, via certified mail, return receipt requested.
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2. If the withdrawing shareholder disagrees with the findings of the auditor
as to the company's value, such shareholder may charge another auditor or
auditing company, at his or its expense, with performing a second
valuation of the company in accordance with the principles set forth in
para 1 of this Article (so-called second valuation). The withdrawing
shareholder shall undertake to send such second valuation report to the
company, at the latest, within six (6) months of receiving the auditor's
valuation report. If the second valuation deviates from the valuation
submitted by the company's auditor, the stipulated court of arbitration
shall determine the company's value, provided one of the parties to the
dispute seeks recourse with such court of arbitration. If the stipulated
court of arbitration is not called upon within three (3) months of the
date on which the company receives the second valuation, the company value
as determined by the first auditor shall be binding on all parties.
3. The management of the company shall determine the value of the share(s) of
the withdrawing shareholder (hereinafter referred to as "value of the
share(s) of the withdrawing shareholder") by prorating the value of the
company, as previously determined, without any deductions to the share(s)
of the withdrawing shareholder that are to be valued, at the ratio of all
shareholders' participation quotas.
Section 15
Compensation of Shareholders Who Have Withdrawn
-----------------------------------------------
1. If a shareholder who has withdrawn is entitled to compensation for his or
its share(s) pursuant to the provisions of 14 of these Articles of
Incorporation, such compensation shall equal the value of the respective
shareholder's share(s), as previously determined. If the principles
governing the determination of the compensation to be paid to the
withdrawing shareholder are or become ineffective, on whatever legal
grounds, because the compensation determined in accordance therewith is
too low, the lowest permissible compensation shall be considered as having
been stipulated with the withdrawing shareholder in such a case in order
to warrant and ensure the company's continued existence and development,
to the greatest extent possible.
2. Absent provisions in these Articles of Incorporation or agreements among
the parties concerned to the contrary, the compensation shall be paid to
the shareholder concerned within twelve (12) months of his or its
withdrawal. If the amount of the compensation has not been finally
determined at the time the compensation is due and payable, the
shareholder who has withdrawn shall be entitled to an on-account payment
equal to the undisputed amount of compensation.
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3. The remaining compensation shall bear interest, as of the date of the
shareholder's withdrawal, of three (3) percent above the discount rate of
the Deutsche Bundesbank, at a minimum, however, of six (6) percent per
annum. The discount rate of the Deutsche Bundesbank, as published at the
beginning of the fiscal year for which the interest is due, shall apply.
The interest shall be paid semi-annually.
4. The company may elect to pay the entire compensation or portions thereof
at an earlier date to the shareholder who has withdrawn.
5. If it is determined in connection with a tax audit of the company's books
that its profits or losses for the period until the withdrawal of the
respective shareholder were higher or lower, such revisions shall not
affect the compensation of the withdrawing shareholder.
Section 16
Collateral
----------
1. If a shareholder withdrawing from the company is entitled to compensation
for his or its share(s) pursuant to the provisions of these Articles of
Incorporation, the shareholder concerned shall be entitled to collateral
for his or its claim for compensation, plus interest pursuant to 15 para 3
of these Articles of Incorporation. This shall not apply if the
shareholder's share(s) was or were redeemed.
2. The collateral shall be created, at the time the shareholder withdraws, by
the party to whom the share(s) of the withdrawing shareholder will be
transferred.
3. If the amount of compensation payable to the withdrawing shareholder has
not yet been finally determined pursuant to the provisions of 14 and 15 of
these Articles of Incorporation, the amount of collateral shall be
estimated and determined by the company's auditor charged with valuing the
company pursuant to 14 para 1 of these Articles of Incorporation. Such
determination of collateral shall be binding on all parties.
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4. The withdrawing shareholder shall not be entitled to collateral for a
claim, if any, for release from liability for the company's debts.
Section 17
Dissolution of the Company
--------------------------
1. The company may be dissolved if it has been terminated by a shareholder
(see 12 para 2 ff. of these Articles of Incorporation) or if the
shareholders' meeting adopts a resolution in regard thereto.
2. The managing director(s) of the company shall carry out the liquidation.
3. The shareholders shall adopt a resolution regarding the determination of
the financial statements to be prepared by the liquidators, as well as
regarding approval of the liquidators' acts.
4. The assets of the company that remain after its creditors have been
satisfied shall be distributed among the shareholders at the ratio of
their shareholdings.
5. The liquidators shall consign the records and files of the company to a
shareholder or third party; such shareholder or third party shall serve as
the custodian thereof for a period of ten (10) years.
Section 18
Notifications
-------------
The notifications of the company shall be published exclusively in the
Bundesanzeiger [Official Gazette of the Federal Republic of Germany].
Section 19
Court of Arbitration
--------------------
Any and all disputes - between shareholders and/or their assigns within the
company, on the one hand, and the company, on the other hand, or among
shareholders and/or their assigns in the company - stemming from these
Articles of Incorporation with regard to their effectiveness, interpretation,
or implementation shall be resolved by a court of arbitration, located at the
seat of the company, to be stipulated in a separate document, unless the
exclusive jurisdiction of the competent court applies by mandatory law. There
shall be no recourse to the courts.
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Section 20
Deadlines
---------
The provisions of 193 BGB shall apply to the deadlines stipulated in these
Articles of Incorporation.
Section 21
Partial Ineffectiveness
-----------------------
The invalidity, challengeability, or ineffectiveness in any other respect, in
whole or in part, of individual provisions of these Articles of Incorporation
shall not affect the legal effectiveness of the remaining provisions of these
Articles of Incorporation. The ineffective portion of these Articles of
Incorporation shall be replaced by a permissible provision which the parties
would have selected if they had known of the ineffectiveness of the original
provision. The same shall apply to lacunae, if any, in these Articles of
Incorporation. Any and all disputes in regards hereto shall be resolved by the
court of arbitration stipulated in 19 of these Articles of Incorporation, to
constitutive effect.
Bremen, on this 5th day of March 1998
Signed: Vogt
- --------------------- Signed: Breithaupt
(Dr. Viktor Vogt)
IAT AG
Signed: Vogt
- ---------------------
(Dr. Viktor Vogt)
Signed: Arno Lbben
- ---------------------
(Arno Lbben)
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on behalf of
Hanseatische Industrie-Beteiligungen GmbH
Signed: M. Pleis
- ----------------------
(Manfred Pleis)
Signed Werther, Notary Public
19
