Shareholders' Agreement
among
1. Mr Uwe Neben, resident in Holzhauser Str. 12, 34233 Fuldatal-Wilhelmshausen
2. Mr Eckhard Neben, resident inWeederstr. 43, 37073 Gottingen
3. Mr Axel Bernigshausen, resident in Greifswalder Str. 27, 37120 Bovenden
4. Mr Karl-Friedrich Kaupp, resident in Waiblinger Str. 115, 71384 Weinstadt
5. Mr Georg Kiefer, resident in Donnersbergstr. 7, 67117 Limburgerhof
6. Mrs Annemarie Kiefer, resident in Donnersbergstr. 7, 67117 Limburgerhof
7. Cybernet Internet-Services International, Inc. Delaware,
The parties 1 through 3 hereinafter are collectively referred to as the
"Managers". The parties 1 through 6 are collectively referred to as the "Old
Shareholders". The party under 7 hereinafter is referred to as "Cybernet".
Preliminary note
The Old Shareholders are the owners of all shares of i-business GmbH
(hereinafter referred to as the "Company", which has its registered office in
Gottingen, is registered in the trade register of the local court of Gottingen,
under HRB 3092. Via the merger agreement of June 28, 2000 (Document No.:
1100/2000 of the notary public Alfons Biermeier in Stuttgart) Bernigshausen &
Neben OHG which has its registered office in Gottingen and is registered in the
trade register of the local court of Gottingen, under HRAA 3237, was merged with
the Company as the entity taking over.
The Old Shareholders intend to convert the Company into a corporation "B&N
Software AG" and to continue the operations of Bernigshausen und Neben OHG in
the form of a corporation.
The Old Shareholders seek to finance growth with the intention of promoting the
growth of the Company in a manner that makes a listing on the stock exchange in
2001 seem realistic.
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As required under the Shareholders' Agreement Cybernet is prepared to provide a
25% participation in the Company amounting to EUR 3,067,600 in the form of
equity capital. Until this Shareholders' Agreement becomes effective, in any
case no later than June 30, 2001, Cybernet, in a separate contract, will provide
the Company a loan of EUR 1,000,000. The loan shall bear 6% interest per year
until December 31, 2000, 12% per year after January 1, 2001. The loan amount
reduces the issue amount which Cybernet has to provide to the shares signed by
Cybernet under this Shareholders' Agreement in the amount of EUR 3,067,500.
Cybernet upon the issue of shares will transfer the loan amount of EUR
1,000,000.00 to the voluntary reserves of the Company.
Concurrently, the Managers grant Cybernet the option to acquire 2.33% of each
Manager's shares in the Company.
Economically, Cybernet's intention to participate is based on the expectation
that the Company in the business year 2000 realized a total turnover of no more
than DM 6 million and a total turnover of approximately DM 14 million in the
business year 2001, although the parties are aware that these figures have the
character of a forecast as far as the business years from 2001 are concerned.
With regard to this participation Cybernet relies on the information about the
Company and its economic situation it received from the Managers during the
preparatory talks.
To realize their goals the parties in a trusting cooperation will perform a
transaction which includes the following major steps:
1. The Old Shareholders will convert the Company into a corporation based on
the statutes attached in Annex 1
2. Respecting the independence of the supervisory board of the corporation as
required under German Stock Corporation Law, the parties shall make efforts
to ensure that the supervisory board establishes the rules of procedure for
the managing board attached as Annex 2 establishing for themselves the
rules of procedure for the supervisory board attached as Annex 3.
3. The Managers shall conclude the employment contracts for the members of the
managing board with the corporation as attached in Annex 4.
4. This Shareholders' Agreement is subject to a condition precedent and takes
effect, if:
a) the above merger of Bernigshausen & Neben OHG with the Company is
entered into the trade register
b) the conversion of the Company has been entered into the trade register
and
c) the Company made a decision to raise its capital stock according to
Annex 5.
5. This Shareholders' Agreement expires, unless cancelled with mutual
agreement, at the time the shares of the Company are offered on the stock
exchange.
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I.
Capital increases and stock options
1. Based on the financial statements of the corporation for the year ending
December 31, 2000, the intention is to perform a capital increase from
Company funds during the first 8 months of the business year 2001 amounting
to approximately EUR 3,000,000.
2. With respect to any further capital increases Cybernet is entitled to stock
option rights, except for a capital increase which creates the capital
stock to be issued when the Company's shares are offered on the stock
exchange and where Cybernet is not entitled to stock option rights.
3. The parties among themselves are mutually committed to exercise their right
to vote in general meetings in conformity with the above commitments. The
parties reserve the right to take exception from the above capital
agreements with mutual agreement. Any invalidity of form of the agreements
made in these paragraphs regarding the capital increase shall not affect
the validity of the other provisions of this agreement.
II.
Concentration of entrepreneurial activities
1. The Managers commit themselves vis-a-vis Cybernet to focus all
entrepreneurial activities on the Company as long as the Managers and
Cybernet or the parties from 4 to 6 have an participation in the Company,
and particularly to establish no other trading companies themselves or via
third parties during this period or to acquire a participation in such
companies themselves or via third parties unless the general meeting of
shareholders of the Company expressly agreed to it.
2. Every Manager is entitled to participate in quoted companies for investment
purposes up to 1% of their relevant capital, if these companies are not
competitors of the Company.
3. The Managers warrant vis-a-vis Cybernet that at the time of concluding this
Shareholders' Agreement they themselves have no participations that would
fall under section 1, if they were established after conclusion of this
Agreement. The participation of the Managers in e-vertical GmbH (future
name: pedion medical AG) of 5% in total is known to Cybernet and is
expressly authorized by Cybernet.
4. Where one of the Managers violates the commitments from the paragraphs 1
and 2 or the warranty from paragraph 3, Cybernet is entitled to demand that
the Manager, beside discontinuing his other entrepreneurial activities,
provide compensation in such a way that the Manager positions the Company
in a way it would be positioned, had the Manager refrained from engaging in
the other entrepreneurial activities. Cybernet in particular may demand in
such a case that the Manager transfer to the Company all entrepreneurial
activities which he directly or indirectly carries or carried out himself
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or via third parties or trading companies in which he participated himself
or via third parties.
III.
Dispositions concerning shares of the Company
1. For dispositions concerning shares and subscription rights of the Company
to become valid the approval of Cybernet and of the participants 5. and 6
is required. Dispositions of the participants 5. and 6. until December 31,
2000 are admissible even without the approval of the participants 5. and 6.
The participants under 1. through 3. may violate a disposition of Cybernet
for cause, a good cause being in particular where Cybernet intends to sell
to a competitor of the Company or where a stock exchange listing is
substantially impaired.
2. The provision under 1 applies also to the fiduciary dispositions and the
granting of sub-participations in shares or subscription rights of the
Company.
3. Each Manager is entitled to transfer, once or several times, shares of a
total of 3.33% of the equity capital of the Company, even without the
approval of Cybernet and the participants 5. and 6., with the goal of
improving the creation of value of the Company to friendly enterprises,
participation companies, investors or other persons from the
entrepreneurial environment of the Company.
IV.
Invention during service
The Managers hereby grant the Company an exclusive and free right of use which
is not restricted in terms of time and space for all works created during their
employment and/or free employee relationship to works already created or to be
created in the future and capable of protection under copyright law for all
known kinds of use. The Company thereafter is particularly entitled, without
further approval from the Managers, to change, process or rearrange the works
concerned and to multiply, publish, distribute or use them in any other way in
the original or in a changed, adapted or rearranged form and to transfer the
rights of use fully or partially to third parties. The granting of the right
continues unchanged also after termination of the employment or the free
employee relationship and is paid both during and after termination of the
employment or free employee relationship in the form of a regular Manager
remuneration.
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V.
Warranties
1. The Managers and, where expressly stated, the Old Shareholders too, as
joint and severally liable debtors guarantee vis-a-vis Cybernet, by way of
an independent guaranty promise, that the following guaranties, unless
stated otherwise, are correct at the time of signing this Shareholders'
Agreement (on the assumption of the retroactively effective merger January
1, 2000):
a) The Company is a properly established company with limited liability.
b) Annex 6 contains the financial statements of the Company and of
Bernigshausen & Neben OHG for the year ending December 31, 1999. The
financial statements were established under German commercial law with
due regard to the principles of proper accounting, the constancy of
preparation of balance sheets and assessment activity and the
principle of care and convey a picture that corresponds to the actual
situation in terms of the proprietary, financial and profit situation
of the Company.
c) The Old Shareholders are the legal owners of all shares of the
Company. These shares are free from the rights of third parties.
Particularly there are no rights or preemption rights resulting from
the statutes. And there are no trust relationships concerning the
shares except for those indicated in Annex 6a.
d) Annex 7 is a true and complete list of all rental, leasing and similar
agreements concluded by the Company and which give rise to the annual
payment commitment of more than EUR 50,000 in an individual case
annually.
e) Annex 8 is a correct and complete list of all software products,
patents, brands and other industrial property rights the Company is
entitled to and of all agreements with third partners concerning such
software products, patents or other commercial property laws.
Furthermore, Annex 8 contains all licensing agreements (active and
passive) which refer to such software products, commercial property
rights or know-how.
f) Annex 9 contains a correct and complete list of all distribution,
representation, consulting and cooperation agreements (active and
passive) of the Company.
g) Annex 10 contains a correct and complete list of all major contracts
concerning the purchase of goods and products and orders given to
third parties the purpose of which is the purchase of assets of more
than EUR 50,000.00 by the Company in an individual case.
h) The Company granted no guaranty to its customers which exceeded the
customary guaranties to customers.
i) Annex 11 contains a correct and complete list of all service
agreements based on which the Company owes the provision of service
and maintenance jobs
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vis-a-vis its customers (e.g. agreements concerning the support,
upgrades and updates).
j) Annex 12 contains a correct and complete list of all staff members of
the Company including the important data of their occupation (annual
salary, management bonus, commencement of employment, length of notice
to terminate the contract of employment, details of prohibitions to
compete and holiday entitlements). Annex 12 further lists all plant
agreements (between employer and works council) that are applicable to
the staff members. Annex 12 finally contains an overview of all
pension entitlements of the employees of the Company and all Company
pension schemes.
k) The Company signed no control, profit-transfer or management
agreements with third parties.
l) The Company, besides those shown in Annex 13, used no bank credits and
loan or credit contracts with banks, savings banks or other persons or
institutions. Nor did the Company enter into any commitments as
issuers, drawees or endorsers of bills of exchange and signed no
futures or option contracts.
m) The Company with the exception of the usual reservations of ownership
furnished no collateral and issued no sureties, guaranties or letters
of comfort to suppliers.
n) Annex 14 contains a correct and complete list of all court,
administrative and arbitration proceedings and all other legal
proceedings (active or passive) which have been pending in favour of
or against GmbH or have been threatened. The Managers at this point in
time do not assume that the initiation of such proceedings has to be
reckoned with, except for the legal disputes in connection with those
from Annex 14.
o) Annex 15 contains a correct and complete list of all insurance
contracts concluded by the Company.
p) The operations of the company in its present scope, also under the
future company name of B&N Software AG, to the best knowledge and in
the fair judgement of the Managers, violate no copyright laws,
patents, industrial designs, brands or other commercial property
rights of third parties.
q) The tangible and intangible assets of the Company including the rented
objects are in a proper condition and suffice to carry on the
operations of the Company in the current scope. The Company in
particular has all rights including the program codes/sources in all
versions and the total licensing rights to the whole product family.
The assets of the Company are essentially free from defects.
r) The operations of the Company, to the best knowledge and in the fair
judgement of the Managers, in their current scope are in full
conformity with all public-legal permits and licences and all
applicable laws and regulations.
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s) The Company issued all tax returns within the agreed time limit and
paid all taxes, public levies and other associated costs punctually
when due.
t) The Company, without Cybernet approval, will exclusively operate
within the customary business until the Shareholders' Agreement
becomes effective. Cybernet will respond to any written inquiries from
the Company within two weeks and refuse a request for approval only
for a good cause. Where Cybernet fails to respond within these four
weeks, the approval shall be deemed given.
2. Where one of the above guaranties are incorrect or are violated, the
Managers shall position Cybernet in the way Cybernet would be positioned
had the guaranty been correct or had it not been violated. If Cybernet
elects so, this shall be performed by way of a restitution in kind or via a
financial compensation. Cybernet may raise any claims resulting from this
figure until December 31, 2001. To stay within the deadline, informing the
Managers of these claims in writing shall suffice. After receipt of such
communication a limitation period of six months will commence.
3. Cybernet may not claim compensation which would exceed the amount of DM
25,000.00.
4. Compensation claims against the Managers resulting from or in connection
with this Agreement are restricted to the amount of DM 750,000.00 in total.
This liability restriction does not apply to the deliberate conduct of the
Managers.
VI.
Managing board and supervisory board of the corporation
Respecting the independence of the members of the supervisory board, the parties
within the legally admissible scope shall see to it that the Managers are
appointed as members of the managing board. The employment contracts for the
members of the managing board shall have the contents shown in Annex 4. The
parties further agree - within the scope permitted under stock corporation law -
that two of the Old Shareholders and one person appointed by Cybernet are
appointed as members of the supervisory board.
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VII.
Restriction on sale in the event of a stock exchange listing
The parties commit themselves mutually and vis-a-vis the Company, in the event
of a stock exchange listing, to accept the relevant sale restrictions (lock-ups)
demanded by the relevant stock exchange or of the supporting bank. The parties,
at the request of the Company, are committed to issue this commitment also to
third parties any time or to repeat it for presentation to third parties based
on a special certificate or to confirm it.
VIII.
Transfer of information
The Company authorizes Cybernet to give information which the Company has access
to as a corporation shareholder to the governmental offices and authorities it
is legally required to deliver such information to. Furthermore, Cybernet may
publicly announce such information if it is committed to do so due to legal
requirements or commitments to governmental authorities which supervise
Cybernet.
IX.
Cancellation of option agreement and preliminary agreements
1. With the registration of the implementation of the capital increase
according to Annex 5 in the trade register, the option agreement between
the Managers and Cybernet of December 28, 1999, the agreement of April 3,
2000 and the framework agreement of May 24, 2000 shall be deemed finally
settled and concluded.
2. The legal consequence of the above item 11 occurs also if Cybernet, within
one month from receipt (i) of an authorized transcript of the decision to
raise the capital in accordance with Annex 5 and ii) of a subscription slip
in accordance with Annex 16 fails to return this subscription slip duly
signed and in two copies to the Company and to pay the amount of issue of
EUR 2,067.500 into the bank account of the Company indicated in the
subscription slip. In this case this Shareholders' Agreement shall also
expire.
3. The cooperation-software licensing agreement of December 28, 1999 between
Cybernet and Bernigshausen und Neben OHG in any event shall not be
affected.
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X.
Cybernet option to acquire another 7%
The Managers are committed to Cybernet until June 30, 2001 to sell to Cybernet
at its first request 2 1/3% of its shares in the Company at the nominal value
and by paying the amount of EUR 286,323.54 less the nominal value of shares into
the reserves of the Company (the same applies based on a participation of Old
Shareholders of 75% and of Cybernet of 25%).
XI.
Final provisions
1. Cybernet is entitled to transfer the rights to which it is entitled under
this Agreement to other companies fully or partially, if these enterprises
are connected to Cybernet according to ss.ss. 15 and the following under
German Stock Corporation Law.
2. The parties participating in this Shareholders' Agreement commit themselves
mutually to impose the duties resulting from this Shareholders' Agreement
on any singular successors of theirs in such a way that these singular
successors are bound to the commitments from this Shareholders' Agreement
in such a way, as if they had entered into these commitments themselves.
This applies also to the commitment adopted from this item to impose
commitments from this Shareholders' Agreement on any singular successors.
3. For changes and additions to this Shareholders' Agreement to become valid
the written form is required unless authentication by a notary public is
required. The same applies to any waiver of the written form requirement.
4. The mandatory legal or statutes-related rights of executive bodies of the
Company are not to be interfered with by this Shareholders' Agreement. If
individual provisions of this Shareholders' Agreement are or become invalid
or unenforceable or where this Shareholders' Agreement contains gaps, the
validity of the other provisions of this Shareholders' Agreement is not
affected. Instead of the invalid, unenforceable or missing provision a
valid provision shall be deemed agreed as the parties would have reasonably
agreed had they been aware of the invalidity, unenforceability or the
missing of the relevant provision at the time of concluding this
Shareholders' Agreement. Where a provision of this Shareholders' Agreement
is or becomes invalid owing to the scope of services agreed therein, the
scope of services as agreed in the provision shall be adapted to the
legally admissible standard.
5. This Shareholders' Agreement shall be treated confidentially by the
parties.
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6. This Agreement is subject to the law of the Federal Republic of Germany.
Munich, August 17, 2000
----------------------------
Uwe Neben
----------------------------
Eckhard Neben
----------------------------
Axel Bernigshausen
----------------------------
Karl-Friedrich Kaupp
----------------------------
Georg Kiefer
----------------------------
Annemarie Kiefer
----------------------------
Cybernet Internet Services
International, Inc.
