<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: January 19, 2000
SPIGADORO, INC.
----------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
DELAWARE
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(State of other jurisdiction of incorporation)
0-22101 13-3920210
- ------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
70 East 55th Street, 24th Floor, New York, New York 10022
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(Address of principal executive offices) (Zip Code)
Registrant's telephone no. including area code: 212-754-4271
------------
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(Former Address, if changed since Last Report) (Zip Code)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Under a Stock Purchase Agreement dated as of January 19, 2000 (the
"Agreement"), Spigadoro, Inc. (the "Company") sold its 80% equity interest in
FSE Computer-Handel GmbH & Co. KG and its 100% equity interest in FSE Computer
Handel-Verwaltung GmbH (collectively, "FSE") to Frank Strauss (the founder of
FSE) and the other parties named therein, some of whom are employees or former
employees of FSE (the "Purchasers"). In addition, Dr. Alfred Simmet, the former
Chief Operating Officer of FSE, sold his 20% equity interest in FSE
Computer-Handel GmbH & Co. KG to the Purchasers. FSE was responsible for the
marketing of the Company's high performance personal computers in Germany. Under
the terms of the Agreement, the Purchasers assumed all of the outstanding third
party liabilities of FSE (aggregating approximately $1.4 million) and agreed to
pay the Company up to an aggregate of approximately $263,000 (DM 500,000) based
upon the "cash flow" of FSE (as defined in the Agreement) over the next several
years. Of the purchase, up to approximately $53,000 (DM 100,000) was
attributable to Dr. Simmet's ownership and under the terms of the Agreement, Dr.
Simmet transferred his right to receive the approximately $53,000 to the Company
to satisfy a portion of Dr. Simmet's obligations to the Company. The purchase
price will be paid as follows:
o 5% of the "cash flow" of FSE for the fiscal year ending December
31, 2000;
o 15% of the "cash flow" of FSE for the fiscal year ending December
31, 2001; and
o 25% of the "cash flow" of FSE for the fiscal years ending December
31, 2002 through 2004.
The Company has made customary representations and warranties in the
Agreement and under the terms of the Agreement, the Company has agreed to
indemnify the Purchasers for any breaches of these representations and
warranties and the covenants of the Company contained in the Agreement;
provided, that the Company's liability is limited to the amount of the purchase
price paid by the Purchasers to the Company.
The Company also intends to sell Columbus Computer Handel and its
affiliates (collectively, "Columbus"). Columbus distributes personal computer
components, peripherals and software, as well as personal computers, in Germany.
The Company has commenced discussions relating to the sale of Columbus, but no
agreement has been reached with any party regarding the terms of a potential
transaction and the Company cannot predict whether it will be able to sell this
business on terms favorable to the Company or at all.
The Stock Purchase Agreement is attached hereto as Exhibit 10.78 and is
incorporated herein by reference.
-2-
<PAGE>
Statements in this report that are not descriptions of historical facts
are forward-looking statements that are subject to risks and uncertainties. Such
statements, including those regarding among other things, the Company's strategy
and future prospects, are dependent on any number of factors, including market
conditions, competition and the availability of financing, many of which are
outside of the Company's control. Actual results could differ materially from
those currently anticipated due to a number of factors, including those set
forth in the Company's Securities and Exchange Commission filings under "Risk
Factors", including the following: we are operating a new business; if we do not
successfully sell our computer business, the combined company may be adversely
affected; Vertical Financial Holdings and its affiliates have the power to
control Spigadoro; our strategy of acquiring other companies for growth may not
succeed and may adversely affect our financial condition and results of
operations; we are subject to numerous risks related to foreign operations; and
other risks.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits.
(b) Pro Forma Financial Information
SPIGADORO, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
<S> <C>
Pro Forma Financial Information..................................................................................F-1
Unaudited Pro Forma Condensed Consolidated Balance Sheet September 30, 1999......................................F-2
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Nine
Months Ended September 30, 1999.........................................................................F-4
Unaudited Pro Forma Condensed Consolidated Statement of Operations for Year Ended
December 31, 1998.......................................................................................F-5
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.........................................F-6
</TABLE>
(c) Exhibits
10.78 Stock Purchase Agreement dated as of January 19, 2000 by
and between the Company and the other parties named therein.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SPIGADORO, INC.
By: /s/ Klaus Grissemann
-------------------------------
Klaus Grissemann
Chief Financial Officer
Date: February 1, 2000
-4-
<PAGE>
PRO FORMA FINANCIAL INFORMATION
Spigadoro, Inc. (formerly IAT Multimedia, Inc.) (the "Company" or "Spigadoro")
entered in a transaction with Gruppo Spigadoro, NV. ("GSNV") in December 1999,
whereby the Company acquired 100% of the outstanding common stock of Petrini
from GSNV. GSNV entered into an agreement during 1998 to acquire 67% of the
outstanding common stock of Petrini and later entered into an agreement to
acquire the additional 33% of the outstanding common stock from the minority
shareholder. At the time of the acquisition, the Company changed its name from
IAT Multimedia Inc. to Spigadoro, Inc.
In December 1999, in conjunction with the acquisition of Petrini, the Company
decided to discontinue the computer businesses previously operated by the
Company. These businesses had been the major source of the Company's revenues.
The computer businesses consisted of FSE Computer-Handel GmbH & Co. KG ("FSE")
and Columbus Computer Handels-und Vetrieb, branch office of IAT Multimedia GmbH
("Columbus"). In January 2000, the Company sold FSE for net proceeds of
approximately $200,000. The Company is currently seeking a buyer for Columbus.
The following unaudited pro forma condensed consolidated financial statements
are based on the historical statements of the Company and Petrini which give
effect to the following:
o the acquisition of 100% of the outstanding common stock of Petrini by the
Company,
o the push-down accounting adjustments relating to the acquisition of 100% of
the outstanding common stock of Petrini by GSNV,
o the sale of FSE, and the discontinuance of the computer business of
Columbus.
The unaudited pro forma condensed consolidated statements of operations give
effect to the events described above as if they occurred as of January 1, 1998,
and the unaudited pro forma condensed consolidated balance sheet gives effect to
the events described above as if they occurred as of September 30, 1999. The
events described above and the related adjustments are described in the
accompanying notes. The pro forma adjustments are based upon available
information and certain assumptions that management believes are reasonable. The
pro forma financial information do not purport to represent what Spigadoro's
results of operations or financial condition would actually have been had the
events described above in fact occurred on such dates or to project Spigadoro's
results of operations or financial condition for any future period or date.
F-1
<PAGE>
SPIGADORO, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Spigadoro Petrini Pro Discontinuance of
Historical Petrini Forma Adjustments Computer Businesses Pro forma
------------------------ ----------------- ------------------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $5,102 $110 ($373)(A) $ 4,839
Marketable securities 746 746
Securities held for sale 2,940 2,940
Accounts receivable, net 1,965 35,909 (1,965)(A) 35,909
Taxes receivable 7,207 7,207
Deferred income taxes 532 ($532)(B)
Inventories 1,713 12,495 (1,713)(A) 12,495
Cash to factor 4,422 4,422
Other current assets 176 1,212 (126)(A) 1,262
--------------------- -------- ------- --------
Total current assets 12,642 61,887 (532) (4,177) 69,820
--------------------- -------- ------- --------
Equipment and improvements, net 391 26,125 15,380 (B) (391)(A) 41,505
--------------------- -------- ------- --------
Other assets:
Intangible assets 4,253 606 (B) 4,859
Excess of cost over net assets
acquired 3,437 5,923 (B) (3,437)(A) 5,923
Deferred income taxes 3,095 (3,095)(B)
200 (A)
Other assets 1,126 2,652 (1,067)(A) 2,911
Assets held for disposition 2,600 (A) 2,600
--------------------- -------- ------- --------
Total other assets 4,563 10,000 3,434 (1,704) 16,293
--------------------- -------- ------- --------
Total assets $17,596 $98,012 $18,282 ($6,272) $127,618
===================== ======== ======= ========
</TABLE>
F-2
<PAGE>
SPIGADORO, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Spigadoro Petrini Pro Discontinuance of
Historical Petrini Forma Adjustments Computer Businesses Pro forma
------------------------ ----------------- ------------------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $356 $21,945 ($356)(A) $21,945
Current portion of long-term debt 2,473 $7,388 (D) 9,861
Liability to factor 4,422 4,422
Accounts payable and other (183)(E)
current liabilities 2,861 23,164 600 (E) (2,465)(A) 23,977
--------------------- -------- ------- --------
Total current liabilities 3,217 52,004 7,805 (2,821) 60,205
--------------------- -------- ------- --------
Long-term debt, net of current portion 7,355 12,115 (D) 19,470
Employee termination indemnities 8,333 8,333
Other liabilities 27 3,709 3,022 (B) (27)(A) 6,731
------- ------- -------- ------- --------
Total long-term liabilities 27 19,397 15,137 (27) 34,534
------- ------- -------- ------- --------
Total liabilities 3,244 71,401 22,942 (2,848)(A) 94,739
------- ------- -------- ------- --------
Convertible debentures 2,848 (2,848)(E) 0
------- ------- -------- ------- --------
Stockholders' Equity
Preferred stock
(21,085)(C)
Common stock 101 21,569 25 (E) 610
15,260 (B)
(12,878)(C)
(19,503)(D)
Capital in excess of par 32,595 2,781 2,406 (E) 20,661
Step up adjustments (11,751) 11,751 (C) 0
Accumulated other comprehensive income 404 30 (404)(C) 30
Treasury stock (2,204) (2,204)
Retained earnings (19,392) 13,982 22,616 (C) (3,424)(A) 13,782
------- ------- -------- ------- --------
Total stockholders' equity 11,504 26,611 (1,812) (3,424) 32,879
------- ------- -------- ------- --------
Total liabilities and stockholders'
equity $17,596 $98,012 $18,282 ($6,272) $127,618
======= ======= ======== ======= ========
</TABLE>
F-3
<PAGE>
SPIGADORO, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Spigadoro Petrini Pro Discontinuance of
Historical Petrini Forma Adjustments Computer Businesses Pro forma
------------------------ ----------------- ------------------- ---------
(in thousands except for per share information)
<S> <C> <C> <C> <C> <C>
Net sales $31,164 $103,224 ($31,143)(A) $103,245
Cost of sales 29,445 74,214 $668 (F) (29,445)(A) 74,882
----------------------- -------- -------- --------
Gross profit 1,719 29,010 (668) (1,698) 28,363
----------------------- -------- -------- --------
Operating expenses:
Selling expenses 1,825 19,332 (1,825)(A) 19,332
General & administrative expenses 1,897 5,768 245 (F) (1,114)(A) 6,796
----------------------- -------- -------- --------
Total operating expenses 3,722 25,100 245 (2,939) 26,128
----------------------- -------- -------- --------
Operating income (loss) (2,003) 3,910 (913) 1,241 2,235
(3,440)(E)
110 (E)
Other income (expense) 3,593 (1,132) (728)(G) (83)(A) (1,680)
----------------------- -------- -------- --------
Income (loss) before income taxes 1,590 2,778 (4,971) 1,158 555
Income taxes (benefit) 1,961 (285)(H) 1,676
----------------------- -------- -------- --------
Income (loss) from continuing operations $1,590 $817 ($4,686) $1,158 ($1,121)
======================= ======== ======== ========
Income/(loss) per common share - basic $0.17 ($0.02)
========= ========
diluted $0.16 ($0.02)
========= ========
Weighted average number of
common shares outstanding - basic 9,332 60,150
========= ========
diluted 10,614 60,150
========= ========
</TABLE>
F-4
<PAGE>
SPIGADORO, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31,1998
<TABLE>
<CAPTION>
Spigadoro Petrini Pro Discontinuance of
Historical Petrini Forma Adjustments Computer Businesses Pro forma
---------- ----------------------------- ------------------- ---------
(in thousands except for per share information)
<S> <C> <C> <C> <C> <C>
Net sales $38,340 $141,127 ($38,315)(A) $141,152
Cost of sales 35,465 104,347 $891 (F) (35,465)(A) 105,238
------------------------------------ -------- --------
Gross profit 2,875 36,780 (891) (2,850) 35,914
------------------------------------ -------- --------
Operating expenses:
Selling expenses 2,821 24,480 (2,821)(A) 24,480
General & administrative expenses 2,112 7,800 326 (F) (972)(A) 9,266
------------------------------------ -------- --------
Total operating expenses 4,933 32,280 326 (3,793) 33,746
------------------------------------ -------- --------
Operating income (loss) (2,058) 4,500 (1,217) 943 2,168
75 (E)
Other income (expense) (97) (2,160) (971)(G) (85)(A) (3,238)
------------------------------------ -------- --------
Income (loss) before income taxes (2,155) 2,340 (2,113) 858 (1,070)
Income taxes (benefit) (412) 1,901 (380)(H) 412(A) 1,521
------------------------------------ -------- --------
Income (loss) from continuing operations ($1,743) $439 ($1,733) $446 ($2,591)
==================================== ======== ========
Income/(loss) per common share - basic
and diluted ($0.19) ($0.04)
========= ========
Weighted average number of
common shares outstanding - basic
and diluted 9,327 60,145
========= ========
</TABLE>
F-5
<PAGE>
SPIGADORO, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(A) The Pro Forma Financial Statements give effect to the discontinuance of the
computer businesses of Spigadoro and the disposal of FSE for net proceeds
of approximately $200,000. The unaudited pro forma condensed consolidated
balance sheet reflects the elimination of the FSE assets and liabilities
sold and the reclassification of the assets and liabilities of the
remaining computer business (Columbus) to assets held for disposition. The
amounts recorded have been adjusted to give effect to management's estimate
of their net realizable value resulting in an estimated loss on disposal of
$3,424,000. The unaudited pro forma condensed consolidated statements of
operations reflect the reclassification of the operations of these computer
businesses to discontinued operations resulting in a loss from discontinued
operations for the nine months ended September 30, 1999 and the year ended
December 31, 1998 of $1,158,000 and $446,000, respectively. The total
assets of FSE as of September 30, 1999 were $3,886,000. The net sales of
FSE for the nine months ended September 30, 1999 and the year ended
December 31, 1998 were $11,279,000 and $31,922,000, respectively. The loss
before income taxes of FSE for the nine months ended September 30, 1999 and
the year ended December 31, 1998 was $1,024,000 and $965,000, respectively.
(B) The unaudited pro forma condensed consolidated balance sheet gives effect
to the acquisition of Petrini by Spigadoro by combining the historical
balance sheet of Petrini and the historical balance sheet of Spigadoro,
adjusted for the sale of FSE and the discontinued operations as mentioned
in (A) above and the purchase accounting adjustments in (E) below, at
September 30, 1999. The Petrini transaction was accounted for as a reverse
acquisition, whereby Petrini was the accounting acquirer and Spigadoro
(formerly IAT Multimedia, Inc.) was the legal acquirer, using the purchase
method of accounting. During September 1998, GSNV entered into a
transaction to acquire 67% of the outstanding common stock of Petrini from
Carlo Petrini and received an option to acquire the remaining 33% interest
from the bankruptcy receiver of the minority shareholder of Petrini. The
option to purchase the remaining 33% was exercised prior to the
consummation of the acquisition by Spigadoro in December 1999. Since GSNV
owned 100% of Petrini prior to Spigadoro's acquisition of Petrini, the
purchase accounting adjustments are "pushed-down" to Petrini and are
included within the pro forma adjustments in the accompanying Pro Forma
Financial Statements. The purchase price for Petrini paid by GSNV,
including cash paid at closing and the issuance of debt, aggregated
$44,360,000 and was allocated as follows:
F-6
<PAGE>
(IN THOUSANDS)
Cash, notes and common stock issued $ 44,360
Petrini liabilities assumed 82,073
---------
$ 126,433
=========
Allocated to assets as follows: September 30, 1998
----------------------------------
FMV Historical Adjustment
----------------------------------
Current assets $ 68,261 $ 68,793 $ (532)
Equipment and improvements 46,645 31,265 15,380
Intangibles 5,935 5,329 606
Other assets 2,691 5,786 (3,095)
Deferred tax liability (3,022) (3,022)
Goodwill 5,923 5,923
--------- --------- --------
$ 126,433 $ 111,173 $ 15,260
========= ========= ========
The above adjustment was included in the pro forma condensed consolidated
balance sheet in the Petrini pro forma adjustment column.
(C) The unaudited pro forma condensed consolidated balance sheet was adjusted
to reflect the issuance of 48,366,530 shares of Spigadoro common stock to
GSNV, in exchange for 100% of the outstanding common stock of Petrini. As a
result of the reverse acquisition, the unaudited pro forma condensed
consolidated balance sheet was adjusted to reflect the historical equity of
Petrini. The historical retained earnings of Petrini has been carried
forward and the remaining equity accounts of Petrini have been reclassified
to reflect the par value of the Spigadoro stock issued with any differences
reflected as paid-in capital. In addition, paid-in capital of Petrini has
been increased by an amount equal to the excess of cost over book basis of
net assets acquired and reduced by the amount of the Predecessor's debt
assumed by Spigadoro. The pro forma condensed consolidated balance sheet
also reflects the reclassification of Spigadoro's equity accounts exclusive
of common stock and treasury stock to paid-in capital.
(D) In connection with the Petrini transaction, Spigadoro assumed certain debt
of GSNV related to its acquisition of Petrini in the amount of $19,503,000
(face value of approximately $20 million), resulting in an increase in
liabilities and a decrease in paid-in capital. Certain notes have a stated
interest rate of 5% per annum and certain other notes have no stated
interest rate and were discounted at an average rate of 5%. The notes
require principal payments of $7,388,000 and $12,115,000 for the years
ended September 30, 2000 and 2001, respectively.
F-7
<PAGE>
(E) The unauidted pro forma condensed consolidated balance sheet reflects
Spigadoro's assets at their fair market value and the conversion of the
Series A convertible debentures and accrued interest into 2,452,000 shares
of common stock which was completed in November and December 1999. The
unaudited pro forma condensed consolidated statements of operations reflect
the elimination of $3,440,000 gain realized by Spigadoro on the sale of
intellectual property during the nine months ended September 30, 1999 to
give effect to the adjustment of Spigadoro's assets to fair value as of
January 1, 1998. The unaudited condensed consolidated statements of
operations also reflects the elimination of interest related to the
convertible debentures for the nine months ended September 30, 1999 and the
year ended December 31, 1998 of $110,000 and $75,000, respectively. In
addition, Spigadoro recorded an accrual of $600,000 relating to estimated
costs to be incurred in the Petrini acquisition which has been charged to
paid-in capital.
(F) The purchase accounting for the acquisition of Petrini by GSNV resulted in
an increase in the basis of equipment and improvements of $15,380,000 and
trademarks of $606,000 as well as the recording of $5,923,000 of goodwill.
The increase in the basis of assets acquired is being depreciated and
amortized over the estimated useful lives ranging from 10 to 33 years. The
goodwill is being amortized over twenty years. The unaudited pro forma
condensed consolidated statements of operations reflect depreciation and
amortization expense recorded in cost of sales and general and
administrative expenses for the nine months ended September 30, 1999 and
the year ended December 31, 1998 of $668,000 and $891,000, respectively,
and $245,000 and $326,000 respectively.
(G) Interest expense in the unaudited pro forma condensed consolidated
statements of operations, has been adjusted to reflect the increase in
interest relating to the debt assumed in the acquisition as if it occurred
on January 1, 1998. The amount of interest expense recorded for the nine
months ended September 30, 1999 and the year ended December 31, 1998 was
$728,000 and $971,000, respectively.
(H) Income taxes (benefit) in the pro forma condensed consolidated statements
of operations have been adjusted to reflect the tax effect of the pro forma
adjustments relating to the additional depreciation and amortization on
purchase accounting adjustments made to fixed assets and trademarks using
the company's effective tax rate of 41.25%.
F-8
<PAGE>
NOTARIAL DEED NR. 36/2000
January 19, 2000
on the premises of Attorneys Doser, Amereller, Noack/Baker & McKenzie,
Bethmannstrasse 50-54, 60311 Frankfurt am Main, to which the Notary Public
went upon request,
1. Attorney DR. LAURENTI KISZCZUK, born on August 10, 1964, acting,
pursuant to his own statement, not in his own name but as
representative without a power of attorney of SPIGADORO, INC., 70 East
55th Street, 24th floor, New York, New York 10022 (previously IAT
Multimedia, Inc., Vogelsang-Turgi, Switzerland), promising to
subsequently present the statement of approval, but without assuming
any responsibility for it,
- hereinafter referred to as "Seller 1" -
2. Attorney KLAUS BAIER, born on February 12, 1969, acting, pursuant to
his own statement, not in his own name but as authorized representative
in the name and by order of DR. ALFRED SIMMET, Finkenweg 30, 66869
Kusel,
- hereinafter referred to as "Seller 2" -
- Sellers 1 and 2 will hereinafter also
be referred to jointly as "Sellers" -
3. Mr. FRANK STRAUSS, born on January 23, 1962 Am Palmenkreuz 6a, 67685
Weilerbach, acting, pursuant to his own statement, in his own name
- hereinafter referred to as "Buyer 1" -
4. Mrs. CORNELIA STRAUSS, born on February 12, 1963, Am Palmenkreuz 6a,
67685 Weilerbach, acting, pursuant to her own statement, in her own
name
- hereinafter referred to as "Buyer 2" -
<PAGE>
5. Mr. BERND SCHRODER, born on May 23, 1963, Tirolerstr. 27, 66954
Pirmasens, acting, pursuant to his own statement, in his own name,
- hereinafter referred to as "Buyer 3" -
6. Mr. MARTIN BERGHANEL, born on December 21, 1961, Weisenheimerstr. 24,
67245 Lambsheim, acting, pursuant to his own statement, in his own
name,
- hereinafter referred to as "Buyer 4" -
7. Mr. HERIBERT ANTONI, born on March 19, 1961, Im Glockenacker 6, 66879
Kottweiler-Schwanden, acting, pursuant to his own statement, in his own
name,
- hereinafter referred to as "Buyer 5" -
8. Mr. VOLKER POTSCHKE, born on July 23, 1958, Eisennacherstr. 1, 67663
Kaiserslautern, acting, pursuant to his own statement, in his own name,
- hereinafter referred to as "Buyer 6" -
9. Mr. PETER HAUFE, born on November 15, 1972, Antonisstr. 1, 68723
Schwetzingen, acting, pursuant to his own statement, in his own name,
- hereinafter referred to as "Buyer 7" -
10. Mr. PETER SCHMIDT, born on July 20, 1963, Schumannstr. 7, 67655,
Kaiserslautern, acting, pursuant to his own statement, in his own name,
- hereinafter referred to as "Buyer 8" -
Deponent No. 1 is known personally to the acting Notary Public. Deponents 2 to
10 identified themselves by valid ID documents. Deponent 2 submitted the fax
copies of the notarized, certified power of attorney from Dr. Alfred Simmet,
whom he represents, and the substitute power of attorney, and promised to submit
the originals subsequently, with the request that they be attached to this
document.
The Notary Public inquired about a prior transaction pursuant to Art. 3 para 1
No. 7 BeurkG [Verification law]. There was none.
The deponents declared the following, for purposes of notarization:
2
<PAGE>
I. CONTRACT COVERING THE SALE OF PARTNERSHIP SHARES
1. PRELIMINARY REMARKS
Sellers 1 and 2 are the sole limited partners of the limited partnership FSE
COMPUTER-HANDEL GMBH & CO. KG, headquartered in Pirmasens, entered in the
Commercial Register of the Lower Court of Pirmasens under HRA No. 3427
(hereinafter referred to as the "Company). Seller 1 participates in the company
as limited partner with a fixed capital share of DM 200,000 (in words, two
hundred thousand deutschmark), corresponding to 80% of the fixed capital. Seller
2 participates in the company as limited partner with a fixed capital share of
DM 50,000 (in words, fifty thousand deutschmark), corresponding to 20% of the
fixed capital. The capital shares of Sellers 1 and 2 are fully paid up.
2. SALE AND TRANSFER
2.1 Effective immediately, Seller 1 hereby, under contract, sells the
following partnership shares from his partnership share of DM 200,000
(in words, two hundred thousand deutschmark):
a) to Buyer 2, DM 17,600 (in words, seventeen thousand, six
hundred deutschmark);
b) to Buyer 4, DM 33,800 (in words, thirty-three thousand, eight
hundred deutschmark);
c) to Buyer 5, DM 33,800 (in words, thirty-three thousand, eight
hundred deutschmark);
d) to Buyer 7, DM 33,800 (in words, thirty-three thousand, eight
hundred deutschmark);
e) to Buyer 3, DM 27,000 (in words, twenty-seven thousand
deutschmark);
f) to Buyer 6, DM 27,000 (in words, twenty-seven thousand
deutschmark);
g) to Buyer 8, DM 27,000 (in words, twenty-seven thousand
deutschmark).
2.2 Effective immediately, Seller 2 hereby sells the following partnership
shares from his partnership share of DM 50,000 (in words, fifty
thousand deutschmark) to Buyers:
a) to Buyer 1, DM 33,800 (in words, thirty-three thousand, eight
hundred deutschmark);
3
<PAGE>
b) to Buyer 2, DM 16,200 (in words, sixteen thousand, two hundred
deutschmark).
2.3 All the Buyers accept the sales. The real transfers of the above
partnership shares are subject to the suspensive condition of the entry
of the Buyers as limited partners in the Commercial Register, on the
basis of a privileged succession. Claims or obligations of the Sellers
under their settlement accounts are included in the sale and transfer.
The Sellers waive any claim to repayment by the Company of investments,
or of claims in the amount of DM 2,467,878.71 (in words, two million,
four hundred sixty-seven thousand, eight hundred seventy-eight
deutschmark and seventy-one pennies).
2.4 The Sellers approve each other's sales and transfers of partnership
shares indicated in this clause.
3. PURCHASE PRICE
3.1 In compensation for the partnership shares sold and transferred
pursuant to clause 2, the Buyers shall provide to Seller 1 with a
specific share of 80% of their annual cash flow (as defined in para
3.2) of the Company, and Seller 2 with 20% of same, namely
Fiscal year Portion of annual cash flow
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2000 5%
2001 15%
2002 25%
2003 25%
2004 25%.
3.2 Cash flow is defined as after-tax profits plus depreciation minus
preliminary profits and profit shares paid to partners who have
rendered a service to the Company and do not receive any other
compensation which is listed among the Company's expenses. Any
preliminary profits paid as profit sharing or fees may not exceed
salaries which are customary on the market.
3.3 The payment to be made for fiscal years 2000 through 2004 may not
exceed a maximum of DM 500,000.
3.4 The Buyers guarantee that by June 30 of each year a preliminary annual
balance sheet of the Company, and by September 30 a final ("closing
balance sheet"), will be issued, and that the final balance sheet will
be given to Seller 1. Seller 1 is authorized and obligated to have a
copy of the final balance sheet given to Seller 2. The final balance
sheet shall contain the estimate and evaluation of the assets and
liabilities, according to the regular bookkeeping principles generally
known in Germany, maintaining continuity of balance sheets and
evaluation
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criteria, and assuming unchanged continuation of the Company's business
activity. The final balance sheet must give a true and fair picture of
the assets, finances and earnings of the Company, and must be complete
and correct. The share of the profits of each fiscal year shall be paid
out by September 30 of the following year, by transfer to the accounts
to be designated by the Sellers.
3.5 Any disputes related to the final balance sheet shall be settled
amicably. If no agreement is reached within six weeks after Seller 1
has notified at least one of the Buyers in writing that he does not
accept the final balance sheet, an expert, appointed by the Institut
der Wirtschaftsprufer e.v. [Accountants' Institute] in Dusseldorf, will
decide the dispute, and the decision shall be binding on all parties.
The relative costs shall be borne by the person who ordered the expert
opinion.
3.6 Seller 2 hereby assigns all his claims pursuant to this clause 3 to
Seller 1, in partial settlement of the claim to compensation of Seller
1 against Seller 2 based on and in connection with the violation of the
guarantees contained in Art. 5.3 of the purchase contract concluded by
the Buyer and the Seller on November 13, 1997 by means of a notarized
instrument, UR No. Z 851/1997 of Notary Public Roger Zatzsch, Frankfurt
am Main. The Buyers guarantee that all payments to be made to Seller 2
pursuant to this clause No. 3 shall be made exclusively to Seller 1,
until the latter gives different written instructions to the Buyers.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Buyers had opportunity to view the books and business records of
the Company, except for certain specific documents. A draft of a
preliminary final balance sheet as of December 31, 1999 was available.
Seller 1 gave them all the information they requested. Seller 1 states
that the information was issued in correct manner.
For the sake of privacy protection, no examination was permitted of
employment contracts. But the relevant data concerning the employment
contracts were given to the Buyers.
4.2 The Sellers guarantee that no business shares are encumbered by third
party rights. At present, neither employees nor other persons have
options or other rights which would entitle them to acquire additional
shares of the Company. Nor were such business shares issued.
4.3 Seller 1 guarantees that the Company has punctually submitted all
required tax returns and statements on fringe benefits for each year up
to the present, and has paid the assessed taxes and fringe benefits.
Taxes include business taxes and duties of all kinds plus interest,
delay penalties, etc., which are to be paid by the Company pursuant to
law.
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4.4 Claims to compensation for violation of the guarantees and assurances
given under this contract may be asserted only if they exceed the
amount of DM 100,000 ("deductible"). Unless expressly mentioned in this
contract, other claims under it, regardless of the legal grounds, are
excluded, unless a legally binding liability exists due to intentional
or gross negligence.
4.5 Claims for violation of assurances and guarantees must be reported to
the Sellers in writing and are statute-barred after nine (9) months
after the conclusion of this contract.
4.6 The Buyers shall inform Seller 1 of the scheduling of an external tax
audit, if the latter covers the years 1995 to 1999. The Buyers shall
inform Seller 2 of the scheduling of an external tax audit if it also
covers the years 1995 to 1997. The Buyers shall give the Sellers the
opportunity to discuss matters dating to the years 1995 to 1999 with
the auditor on Company premises, and to participate in the final
discussion. But Seller 2 may exercise this right only pursuant to the
stipulations of the purchase contract concluded among the Sellers on
November 13, 1997. The Buyers shall have a copy of the audit report of
the Finance Office given to the Sellers or their representatives
immediately upon receipt, if the audit concerns the periods up to 1999.
In addition, the Buyers shall give copies of amended tax decisions for
the years 1995 to 1999 to the Sellers immediately upon receipt.
4.7 Upon request of Seller 1, the Buyers shall have the Company protest tax
decisions for the years 1997 through 1999 and, if appropriate, file a
complaint with the competent financial court. At the request of Seller
2, the Buyers shall have the Company protest tax decisions for the
years 1995 through 1997 and, if appropriate, file a complaint with the
competent financial court. The Buyers shall then have the Company
appoint a tax consultant, auditor or attorney nominated by Seller 1 to
represent its interests in the protest and court proceeding. The
relative costs are to be divided among the Sellers pursuant to clause
5. There shall be no obligation to protest if the legal proceeding
appears to be obviously hopeless or frivolous.
5. TAXES AND SOCIAL SECURITY EXPENSES
Until now, tax audits of the Company have been held by the competent finance
office only until 1994. The following applies if tax arrears must be paid on the
basis of any future audits for the years 1995 through 1999:
Tax arrears for the period up to 11/13/97 shall be paid by Seller 2. For this
purpose, Seller 1 assigns his liability claims under the purchase contract
between Seller 2 and Seller 1, dated 11/13/97, to the Buyers, who accept the
assignment. Seller 1 assures that there are no offset agreements between the
Company, Seller 1 and Seller 2, and no circumstances are known
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which would invalidate or reduce these liability claims. Any costs for court
proceedings in the assertion of this liability against Seller 2 shall be borne
by the Buyers. Payment of tax arrears for the period from 11/14/97 to December
31, 1999 shall be made by Seller 1, and offset against the share of the profit
pursuant to clause 3; it shall be limited to the amount paid as the share of the
profits. The same applies to arrears payable for social security expenses,
duties and social security contributions, such as IHK [Chamber of Industry and
Commerce] fees, professional association memberships, and any incidental
expenses, such as interest and penalties.
6. LIMITED LIABILITY
The liability of Seller 1 pursuant to or in connection with this contract, in
particular clauses 4 and 5, shall be limited to the amount of the purchase price
designated in clause 3, due and paid to Seller 1.
7. RIGHT TO PROFIT SHARING
Effective January 1, 2000, the right to profit sharing is assigned to the
Buyers.
8. MISCELLANEOUS
The Sellers confirm that there was no outflow of moneys or other assets of the
Company after 12/31/1999, except as necessary in general business activity. The
Sellers confirm that the manager of the general partner, FSE Computer-Handel
Verwaltungsgesellschaft mbH headquartered in Mainz, entered in the Commercial
Register of the Lower Court of Mainz under HRB No. 5812, Mr. Nicolas Hildebrand,
is dismissed effective today, and that he has no more claims against the
Company.
9. COSTS AND TAXES
Each party shall bear its own share of the costs and taxes and the costs of its
own legal counsel.
10. FINAL STIPULATIONS
10.1 Amendments and supplements to this contract must be notarized. This
also applies to the elimination of the requirement to have them put in
writing.
10.2 If individual stipulations of this contract are found to be, or become,
ineffective, the remaining stipulations shall be valid. Ineffective
stipulations shall be replaced by those which are effective and closest
in content and goal to the ineffective ones.
10.3 The company's headquarters are the site of jurisdiction. German law
shall govern this contract.
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II. DIVISION OF A BUSINESS SHARE
Seller 1 owns a business share in the face value of DM 50,000 in FSE
COMPUTER-HANDEL VERWALTUNGSGESELLSCHAFT MBH headquartered in Mainz, entered in
the Commercial Register of the Lower Court of Mainz under HRB No. 5812
(hereinafter referred to as "FSE GmbH").
There are no other partners of FSE GmbH.
For the purpose of the sales documented in No. III below, the Seller divides his
business share in FSE GmbH in the face value of DM 50,000 into a total of eight
(8) business shares with the following face values:
a) three (3) business shares with a face value of DM 5,400 (in
words: five thousand, four hundred deutschmark) each;
b) three (3) business shares with a face value of DM 6,800 (in
words, six thousand, eight hundred deutschmark) each;
c) two (2) business shares with a face value DM 6,700 (in words,
six thousand, seven hundred deutschmark) each.
III. CONTRACT COVERING THE SALE AND TRANSFER OF BUSINESS SHARES
1. ITEM PURCHASED
1.1 Seller 1 owns a total of eight (8) fully paid business shares of the
FSE GbmH, with the following face values:
a) three (3) shares with a face value of DM 5,400 (in words, five
thousand, four hundred deutschmark) each;
b) three (3) shares with a face value of DM 6,800 (in words, six
thousand, eight hundred deutschmark) each;
c) two (2) shares with a face value of DM 6,700 (in words, six
thousand, seven hundred deutschmark) each.
He thus holds 100% of the entire capital stock of FSE GbmH, DM 50,000 (in words,
fifty thousand deutschmark).
2. SALE AND TRANSFER
2.1 Effective immediately, Seller 1 hereby sells and transfers the business
shares listed under clause 1 above to the Buyers as follows:
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a) Buyer 1, one partnership share with a face value of DM 6,800
(in words, six thousand, eight hundred deutschmark);
b) Buyer 2, one partnership share with a face value of DM 6,800
(in words, six thousand, eight hundred deutschmark);
c) Buyer 5, one partnership share with a face value of DM 6,800
(in words, six thousand, eight hundred deutschmark);
d) Buyer 3, one partnership share with a face value of DM 5,400
(in words, five thousand, four hundred deutschmark);
e) Buyer 6, one partnership share with a face value of DM 5,400
(in words, five thousand, four hundred deutschmark);
f) Buyer 8, one partnership share with a face value of DM 5,400
(in words, five thousand, four hundred deutschmark);
g) Buyer 4, one partnership share with a face value of DM 6,700
(in words, six thousand, seven hundred deutschmark);
h) Buyer 7, one partnership share with a face value of DM 6,700
(in words, six thousand, seven hundred deutschmark).
All the Buyers accept the sale and transfer of the business shares
listed under paragraphs a) to h) above. The business shares are
transferred with all inherent rights and duties, including the right to
any profits retained in previous fiscal years.
2.2 If additional documents or actions are necessary or appropriate for the
transfer, Seller 1 and the Buyers will collaborate to the best of their
ability to obtain the documents or perform the actions.
3. PURCHASE PRICE
3.1 The purchase price of the business shares sold pursuant to No. 2 above
amounts to a total of DM 50 (in words, fifty deutschmark); it is
divided among the Buyers as follows:
a) Buyer 1: DM 6.80 (in words, six deutschmark and eighty
pennies);
b) Buyer 2: DM 6.80 (in words, six deutschmark and eighty
pennies);
c) Buyer 5: DM 6.80 (in words, six deutschmark and eighty
pennies);
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d) Buyer 3: DM 5.40 (in words, five deutschmark and forty
pennies);
e) Buyer 6: DM 5.40 (in words, five deutschmark and forty
pennies);
f) Buyer 8: DM 5.40 (in words, five deutschmark and forty
pennies);
g) Buyer 4: DM 6.70 (in words, six deutschmark and seventy
pennies);
h) Buyer 7: DM 6.70 (in words, six deutschmark and seventy
pennies).
3.2 The purchase price is payable within five (five) days, into an account
to be designated by Seller 1.
4. ASSURANCES
Seller 1 assures the Buyers that, effective today:
All the business shares of FSE GmbH are fully paid up. Seller 1 is the absolute
owner of the sold business shares. All the business shares of FSE GmbH are
unencumbered by rights of third parties. Seller 1 may freely dispose of his
business shares.
5. COSTS AND TAXES
Each party shall pay the costs and taxes due by it and the costs of its own
legal counsel.
6. FINAL STIPULATIONS
6.1 Amendments and supplements to this contract must be notarized. The same
applies to the elimination of the requirement to have them put in
writing.
6.2 If individual stipulations of this contract are found to be, or become,
ineffective, the remaining stipulations shall be valid. Ineffective
stipulations shall be replaced by those which are effective and closest
in content and goal to the ineffective ones.
6.3 The head office of FSE GmbH is the site of jurisdiction. German law
shall govern this contract.
The Company shall pay the cost of this document.
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This instrument was read to the deponents by the Notary Public; they approved
and signed it in their own hands, as follows:
/s/ Cornelia Straub
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/s/ Frank Straub
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/s/ Bernard Schroder
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/s/ Martin Berghanel
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/s/ Heribert Antoni
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/s/ Volker Potschke
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/s/ Peter Haufe
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/s/ Peter Schmidt
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/s/ Klaus Baier
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on behalf of Dr. Alfred Simmet
/s/ Laurenti Kiszczuk
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on behalf of SPIGADORO, Inc.
/s/ Klaus Engfer
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Notary Public
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