EXHIBIT 10.25
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into on December _____, 1999 among IFS INTERNATIONAL, INC., a corporation
organized and existing under the laws of the State of New York (the "Buyer");
GLOBAL INSIGHT GROUP, LTD., a corporation organized and existing under the laws
of the United Kingdom (the "Company"), and DAVID STANLEY COLE, GEOFFREY ALAN
DOWN and GEOFFREY LENNOX DURHAM (collectively, the "Sellers") and IFS
INTERNATIONAL INC a corporate organized and existing under the laws of Delaware
("IFS").
RECITALS:
A. The Company is engaged in the business of providing consulting
services, business and technical support to the card payment industry,
including strategic consulting, software selection, implementation and
development services, and training.
B. The Company and its subsidiaries use certain premises located at
Collingwood House, Schooner Court, Crossways, Dartford, Kent, United
Kingdom DA2 6QQ.
C. Sellers desire to sell and convey all of the issued and options on
the outstanding stock of the Company (the "Shares") to Buyer, and the Buyer
desires to purchase such Shares, all in accordance with the terms and
conditions set forth herein.
NOW THEREFORE, in view of the "Recitals" and in consideration of the
promises, covenants, representations and warranties contained herein, the
parties agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
1.1 For purposes of this Agreement, the following terms are defined
terms and shall have the meanings set forth below:
"Affiliate" means, with respect to any entity, all directors and
officers of such entity, all persons and entities controlling, controlled
by or under common control with such entity and all directors and officers
of Affiliates.
"Agreement" refers to this entire Agreement, including the exhibits,
schedules and certificates referred to herein.
"Assets" means all of the tangible and intangible property of The
Company of every kind and description, wherever located, including, without
limitation, the Intellectual Property and the Business Records.
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"Business Records" means all records, information, files and papers of
the Company, including, without limitation, client reports, functional
specifications, recorded knowledge, surveys, manuals, catalogues, research data,
formulae, inventions, processes, proprietary information, know-how, technical
data, performance data, trade and business secrets, sales data and other
information relating to the consulting services of the Company, all art work,
photographs, slides, color separations, plates and other back-up material
relating to brochures, literature and similar materials, and all sales and
advertising materials, customer and supplier lists, including addresses,
telephone numbers and principal contacts, other customer and supplier records
and files, sales and purchase correspondence, sales reports, personnel records
and books of account.
"Change In Control" shall mean an acquisition of control by an
acquiring person or persons where, immediately after the acquisition of the
Buyer or IFS, such acquiring person(s) holds beneficial ownership of more than
fifty percent (50%) of the total combined voting power of the Buyer's or IFS'
then outstanding voting securities.
"Closing" shall mean the consummation of the transactions contemplated
by this Agreement.
"Closing Date" shall mean the date on which the Closing takes place.
"Consideration Shares" shall mean all shares of IFS common stock to be
issued to the Sellers as consideration for the sale of their Shares in the
Company, including any "Buy-out Shares" issued under the provisions of
Subsection 3.1(b) and any "Earn-out Shares" issued under subsection 3.1(c) of
this Agreement.
"Government Entity" means any country, state, province, or local or
municipal government, or any court of competent jurisdiction, administrative
agency or commission, board, bureau or other governmental authority or
instrumentality.
"IFS" means the Buyer's parent company known as IFS International Inc.,
a corporation organized and existing under the laws of the State of Delaware.
"including" means including, without limitation.
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"Intellectual Property" means all rights, if any, in all United Kingdom
and foreign trademarks (common law and registered) and service marks, trademark
and service mark registrations and applications, trade names, copyrights,
copyright registrations, proprietary technology, trade secrets, know-how,
licenses, computer software, inventions used by the Company in conducting its
business.
"Inter-Company Work" means any work performed for Buyer that is
directly funded by Buyer. But for the avoidance of doubt, directly funded work
does not include work commissioned by a customer of the Buyer.
"knowledge of the Company" means the knowledge after reasonable
inquiry of any director of the Company. ------------------------
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"knowledge of Buyer" means the knowledge after due inquiry of any
director of Buyer or IFS. ------------------
"material" means, when used in connection with the Company, Sellers or
Buyer, means material to the business, financial condition or results of
operations of such party and any of its subsidiaries taken as a whole, and the
term "materially" has a correlative meaning.
"person" means any individual, firm, corporation, partnership, limited
liability company, trust, joint venture, Governmental Entity or other entity.
"receivables" means all trade accounts receivable and other receivables
of the Company existing on the Closing Date.
1.2 Index of Definitions. Other definitions are set forth in the various
sections or subsections to which they apply. Set forth below is a list or
index of those definitions which are used generally throughout this
Agreement, with a reference to the section or subsection in which such
terms are defined:
Buy-out Shares -ss.3.1(b) Company Material Adverse Effect -ss.4.4 Contracts
-ss.4.5 Earnings -ss.3.1(d) Earn-out Shares - ss. 3.1(c) Financial Statements -
ss.4.8 force majeure - ss.13.9 Law - ss.4.16 Lien - ss.4.4 Notice - ss.12.4
Order - ss.4.16 Return - ss.4.12 Shares - Recital C "Tax" and "Taxes" - ss.4.12
ARTICLE 2
PURCHASE AND SALE OF THE SHARES
2.1 On the terms and subject to the conditions of this Agreement, each Seller
shall sell, transfer and deliver to Buyer, and Buyer shall purchase from
such Seller, the Shares owned by such Seller. The basic provisions
concerning the purchase price, adjustments thereto and payment terms are
set forth in Article 3 hereof.
2.2 If any Seller shall fail or refuse to deliver any of the Shares to be sold
hereunder, such failure or refusal shall not relieve the other Sellers of
any obligation under this Agreement, and the Buyer, at its option and
without prejudice to its rights against the defaulting Seller, may either
(i) terminate its obligations under this Agreement, or (ii) purchase the
remaining Shares which it is entitled to purchase hereunder, with an
appropriate pro-rata adjustment of the purchase price.
2.3 Closing. The Closing of the purchase and sale of the Shares shall be on or
before 31st December 1999 after Buyer completes its due diligence
investigation as referenced in section 7.1, unless the Sellers and the
Buyer mutually agree in writing to extend such deadline. The Closing may be
accomplished via exchange of documents transmitted via courier and/or
facsimile, unless the parties mutually agree to an in-person closing.
2.4 Instruments of Transfer.
(a) Delivery of Certificates. Each Seller shall deliver or cause to be
delivered to Buyer certificates representing the Shares to be sold by such
Seller hereunder, together with the duly completed deed of transfer of such
shares in the correct form and waives any pre-emption rights he may have
relating to the shares.
(b) Further Assurances. At any time after the Closing, at the Buyer's
request and without further consideration, the Sellers shall forthwith
execute and deliver such other and further instruments of sale, transfer,
conveyance and assignment, and take such actions as in the Buyer's
reasonable opinion may be necessary to complete, perfect or more
effectively assign, transfer and deliver to the Buyer, and to confirm the
Buyer's title to, the Shares, or to otherwise put the Buyer in actual
possession and operating control of the business and Assets of the Company,
and to assist the Buyer in exercising all rights with respect thereto.
ARTICLE 3
PURCHASE PRICE; ADJUSTMENTS
3.1 Purchase Price. The purchase price to be paid in consideration for all
Shares to be sold and conveyed hereunder consists of the following:
a. IFS Stock to be Issued at Closing. At Closing, Buyer shall deliver
to the Sellers three (3) shares of the common capital stock of IFS. The IFS
shares to be issued at Closing shall be fully paid and nonassessable
shares.
b. Additional Contingent Payment (the Buy-out Shares). In addition to
the base number of IFS shares to be issued at Closing, the Sellers will
receive additional shares of IFS common stock, based upon the performance
and any other activities of the Company after the Closing. IFS shall issue
to the Sellers shares having a value equal to four (4) times the Earnings
realized from operation of the Company's business during calendar year
2000. Refer to subsection 3.1(d) for the definition of "Earnings",
subsection 3.1(f) for terms relating to the manner of valuing the IFS
shares, to subsection 3.1(g) for the cap or maximum limit on all amounts to
be paid as consideration for purchase of the Shares, and to subsection
3.1(h) for procedures governing issuance.
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c. Three Year Earn-Out (the Earn-out Shares). In addition to the
shares issued pursuant to subsection 3.1b, the Sellers will receive
additional shares of IFS common stock based upon the performance of the
Company during the three (3) calendar years 2000, 2001 and 2002 (such
shares to be known as the "Earn-out Shares"). There shall be three separate
potential issuances of Earn-out Shares, the first being based upon the
Earnings realized from the operation of the Company during calendar year,
2000, the second being based upon the Earnings realized from operation of
the Company during calendar year, 2001, and the third being based upon the
Earnings realized from the operation of the Company during calendar year,
2002. Refer to subsection 3.1(d) for the definition of "Earnings", to
subsection 3.1(e) for the earn-out formula, subsection 3.1(f) for terms
relating to the manner of valuing the IFS shares, to subsection 3.1(g) for
the cap or maximum limit on all amounts to be paid as consideration for
purchase of the Shares, and to subsection 3.1(h) for procedures governing
issuance.
d. Definition of Earnings. For purposes of calculating the
Consideration Shares to be issued to Sellers under Subsections 3(b) and
3(c), the term "Earnings" shall mean the pre-tax profits of the Company,
less the net profits allowance determined in accordance with the
requirements of, and subject to the adjustments set forth in this
subsection 3.1d. The parties agree that the Earnings of the Company shall
be computed in the following manner:
(i) Initial Calculation of Pre-Tax Profits. The Company's
accountant shall calculate the pretax profits of the Company in
accordance with the law and applicable accounting standards,
principles and practices generally accepted in the United Kingdom.
(ii) No Overhead Allocation. In determining pre-tax profits, the
accountants shall not allocate any IFS, IFS Affiliate, Buyer or Buyer
Affiliate overhead to the expenses of the Company. Sellers acknowledge
that IFS may allocate home office overhead to the results of
operations of the Company for purposes of tax returns, financial
statements or other reports delivered or published to any Government
Entity or other third party, but such allocation shall not have any
effect for the purposes of calculating Earnings and Consideration
Shares owing and payable to Seller under Subsections 3(b) and 3(c) of
this Agreement.
(iii) Net Profits Allowance. There shall be subtracted from
pre-tax profits a net profits allowance equal to twenty percent (20%)
of pre-tax profits. The net profits allowance may be varied by mutual
agreement which must be in writing and signed by representatives of
both Buyer and Sellers.
(iv) Inter-Company Work. For work done by the Company for IFS,
the Buyer or any subsidiary or Affiliate of either IFS or the Buyer,
the pricing is to be based upon the Company's list prices, less a
discount of twenty-five percent (25%) which equates to approximately
the weighted Company cost for the provision of the resource plus ten
percent (10%).
e. Formula For Consideration Shares. In calculating the number of
Consideration Shares to be issued for each of the three (3) years, the
following procedures shall be utilized:
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(i) The IFS accountants shall verify the Earnings of the "Company
for the relevant year, using the procedures and adjustments set forth
in subsection 3.1(d) above.
(ii) The IFS accountants shall determine the dollar amount equal
to the Earnings so computed. The Exchange Rate between the United
States Dollar (USD) and UK Sterling ((pound)) used in calculations
under this Agreement will be the prevailing rate as at the 31st
December in each calendar year of this Agreement. If this Exchange
Rate during the last 30 days prior to it use is more than twenty
percent (20%) above or below the average Exchange Rate for the
previous 12 month period then the Exchange Rate will be calculated as
the average Exchange Rate for the previous 12 months.
(iii) (A) In the case of the Buy-out Shares, the amount so
determined shall be paid via issuance of additional shares of IFS
common stock, with the stock to be valued as provided in subsection
3.1(f), below.
(B) In the case of the Earn-out Shares, the Earnings as
determined above shall be reduced to fifty percent (50%),
and the resulting amount shall be paid via issuance of
additional shares of IFS common stock, with the stock to be
valued as provided in subsection 3.1(f) below.
f. Method of Valuing IFS Stock.
(i) General Provisions. The value of IFS shares shall be
determined by computing the mean or average price of IFS common stock
for the thirty (30) last trading days occurring in any calendar year
for which a computation is required. All prices used for making the
calculations shall be closing prices, and if no closing price is
reported, the reported final "asked" prices. Notwithstanding the
foregoing-
(A) If (i) the reported prices for transactions in IFS
shares during the last 30 trading days of any calendar year are
more than twenty percent (20%) below the average prices for the
full calendar year , and (ii) during such 30 days, there has
occurred a general decline in the NASDAQ stock market of more
than ten percent (10%), then the IFS shares shall be valued at
the average price for all trading days during such calendar year,
with each trading day to have an equal basis (i.e., such share
valuation not to be made on a volume-weighted basis), and
(B) If (i) the reported prices for transactions in IFS
shares during the last 30 trading days of any calendar year are
more than twenty percent (20%) above the average prices for the
full calendar year , and (ii) during such 30 days, there has
occurred a general increase in the NASDAQ stock market of more
than ten percent (10%), then the IFS shares shall be valued at
the average price for all trading days during such calendar year,
with each trading day to have an equal basis (i.e., such share
valuation not to be made on a volume-weighted basis).
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(ii) "Floor" on Consideration Share Prices. Notwithstanding the
valuation provisions set forth in this subsection 3.1f, the parties
mutually agree that in no event shall any Consideration Shares be
valued at less than Three and 25/100 Dollars ($3.25) per share, based
on the stock structure at Closing. The parties fully understand that
the actual price may be below the minimum set forth above, but they
have agreed to place a lower limit or "floor" on IFS' stock price for
purposes of valuing all Consideration Shares to be paid pursuant to
this Agreement.
g. Limits on Amounts Paid to Sellers.
(i) Soft Cap. Subject only to clause (ii) below, the total dollar
value of all IFS' Consideration Shares to be issued to and received by
Sellers under subsection 3.1(b) and 3.1(c) shall not exceed the sum of
One Million, Two Hundred Thousand Dollars ($1,200,000). The total
dollar value shall be calculated based on the value of the shares at
the end of each relevant year.
(ii) Changes to Formula. Once the value of the Consideration
Shares distributed to Sellers under subsection 3.1(b) and 3.1(c)
exceed $ 1,200,000, then additional IFS shares may be issued
thereafter, but such shares may be issued only as Earn-out Shares
under subsection 3.1(c), and in making the computations set forth
therein, the references in clause (iii)(B) of subsection 3.1(e) to
fifty percent (50%) shall be changed to thirty percent (30%) , such
that any IFS shares to be issued in excess of the cap shall be based
upon 30% of the Earnings for the relevant time period. The total
dollar value shall be calculated based on the value of the shares at
the end of each relevant year.
h. Procedures for Issuance of Additional Shares. Any additional
Consideration Shares to be issued pursuant to subsections 3.1b and 3.1c
shall be issued in accordance with the procedures set forth below:
(i) After the conclusion of each of the calendar years 2000, 2001
and 2002, and within thirty (30) days after the Company's independent
certified public accountants having delivered to Buyer the year-end
financial statements for the Company, and in any event within 90 days
of the 31st December in each of the calendar years 2000, 2001 and
2002, Buyer will verify the amount of Earnings for such calendar
periods and will further calculate the number of shares that Buyer
proposes to issue with respect thereto.
(ii) Buyer will transmit to Sellers a written report either
agreeing to the Earnings or providing Buyer alternative calculated
Earnings.
(iii) Seller shall have a period of sixty (60) days to review the
calculations and to send notice to Buyer of their agreement or
disagreement with such calculations. Each Seller may act independently
for purposes of this provision and the agreement of any one or more
Sellers shall not bind any other Seller. If Sellers are in agreement
with the calculations reported by Buyer, then they shall so notify
Buyer and the shares shall be issued within twenty (20) days
thereafter.
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(iv) If any of the Sellers disagrees, the dispute regarding the
calculation of Earnings and/or the dispute with respect to the
valuation of the IFS Shares shall be referred to binding arbitration
to an independent certified public accountant mutually agreeable to
the Buyer and the Seller(s) who raised the dispute. If the parties are
unable to agree on the selection of a single accountant, each party
shall choose one independent accountant and the two so chosen shall
select a third. The decision of the accountant (or if three
accountants are used, the decision of a majority) shall be binding and
conclusive upon both parties in the absence of manifest arithmetical
error, undisclosed relationship to a party or other proven fraud.
(v) In the event that the Company is merged into Buyer or IFS, or
otherwise made part of any internal reorganization or
recapitalization, the Buyer agrees that it will nevertheless calculate
the Consideration Shares based upon the results of operation of the
Company for the periods in question, and Buyer agrees to cause
separate records to be kept showing the results of operation of the
Company during the three year period following the closing.
3.2 Transaction Taxes. Subject to Buyer receiving and accepting written opinion
of the value of the documentary stamp from the Seller prior to Closing,
Buyer shall pay any documentary stamp or other transfer taxes due upon or
with respect to the sale of the Shares to Buyer pursuant to this Agreement,
excluding taxes levied upon Sellers' gross or net income or capital gains.
3.3 Taxes Upon Operations.
a. Except as provided in subsection 3.3(b), below, the Sellers will
cause the Company to pay when due all Taxes (as defined in subsection
4.12(a)) including Taxes based upon sales, income or value-added amounts,
accruing with respect to the operation of the Company prior to the Closing,
and the Sellers agree to indemnify Buyer from any liability Buyer may incur
with respect to the failure to pay such Taxes.
b. With respect to income and/or value-added taxes for calendar year
1999, the total taxes shall be determined, and paid, when due, in a timely
fashion by the Company.
3.4 Calendar Year 1999 Results. Sellers covenant that the Company will be
profitable(i.e., it will have positive after-UK tax net income) for the
twelve months of calendar year 1999. If the Company's income statement
(profit and loss) for calendar year 1999 shows a net loss, then the Sellers
shall (prorata as among them) refund to the Company an amount equal to the
amount of the net after-tax loss plus One Dollar ($1.00). Such refund shall
be made in cash within 30 days after the calendar year 1999 results are
available. Between the Closing Date and December 31, 1999 the accountants
shall not allocate any IFS, Buyer or Affiliate overhead to the expenses of
the Company.
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3.5 Right of Offset. Buyer and IFS may offset, against their obligation to
issue IFS stock as consideration for acquisition of the Shares, any amounts
due and owing by Sellers by reason of any material breach of any warranty,
representation or covenant made by one or more of the Sellers in this
Agreement. Refer to subsection 6.6 for time limits on such claims. Nothing
contained in this paragraph shall be construed as limiting the Buyer's
rights under Article 6 hereof to the above-mentioned rights of offset, and
nothing in this clause shall entitle the Buyer to cancel or rescind any
shares of IFS previously issued to Sellers.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Sellers each severally warrant and represent to Buyer, and covenant
with Buyer (subject to matters set forth in the disclosure schedules referenced
in certain subsections of this Article 4) as follows:
4.1 Corporate Status and Powers. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the
United Kingdom, and has the corporate power necessary to own the Assets and
to carry on its business as presently conducted by it and to enter into and
perform this Agreement and the transactions contemplated hereunder.
4.2 Due Authorization of this Agreement. The Company has taken all requisite
corporate action to authorize and approve the execution and delivery of
this Agreement and the consummation of the transactions contemplated
hereunder, and this Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms. No consent or
approval by any third party is required in connection with the execution
and delivery by the Company of this Agreement or the consummation by the
Company of the transactions contemplated hereby. More specifically, but
without limiting the generality of the foregoing, the execution of this
Agreement and the performance of its terms has been authorized by the
Company's board of directors and by unanimous vote of all of the Sellers.
4.3 Good Title. The Company is the sole owner of, and has good and marketable
title to, all of the Assets reflected on the Closing Balance Sheet. As of
the Closing Date, all of such Assets will be free and clear of all
liabilities, liens and encumbrances, except those specifically identified
on the Closing Balance Sheet.
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4.4 No Conflicts. The execution and delivery of this Agreement by the Company
and the Sellers does not, and the consummation of the transactions
contemplated hereby and compliance with terms hereof by the Company and the
Sellers will not conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any lien,
claim, encumbrance, security interest, option, charge or restriction of any
kind ("Lien") upon any of the Assets of the Company under any provision of
(i) the Certificate of Incorporation or Memorandum & Articles of
Association of the Company, (ii) any material note, bond, mortgage,
indenture, deed of trust, license, lease, Contract or arrangement to which
the Company is a party or by which any of its Assets are bound or (iii) any
Order or Law applicable to the Company or its Assets, other than, in the
case of clauses (ii) and (iii) above, any such items that, individually or
in the aggregate, would not have a material adverse effect on the business,
assets, financial condition or results of operations of the Company and/or
its subsidiaries taken as a whole, or on the ability of the Company to
consummate the transactions contemplated hereby (a "Company Material
Adverse Effect").
4.5 Existing Contracts.
The Company has entered into no contract, consulting services agreement,
lease or other agreement or binding promise (a "Contract") whether oral or
written, relating to the operation of the Company or the use of its Assets,
except: (i) Contracts which have expired or which have been fully performed
by the Company before the date of this Agreement, and (ii) executory
Contracts (i.e., those Contracts under which the Company has remaining
obligations of payment or performance), all of which are identified in
Schedule 4.5. Schedule 4.5 will be amended and updated as of the Closing
Date.
To the best knowledge of the Sellers, the Company has not breached or
violated any of the Contracts listed on Schedule 4.5, and has not received
notice of any breach or violation of any Contract which was fully performed
by the Company prior to the date of this Agreement. All Contracts listed on
the updated Schedule 4.5 will be valid, enforceable and in full force and
effect as of the Closing Date.
4.6 Government Consents. To the best knowledge of the Sellers, there are no
filings with, notices to, consents, authorizations, licenses, permits,
registrations and approvals of, and exemptions and other actions by, any
Governmental Entity required in connection with the execution, delivery or
performance of this Agreement by the Sellers or the Company.
4.7 Capital Stock of the Company and the Subsidiaries. The authorized capital
stock of the Company consists of One Hundred Thousand (100,000) ordinary
shares of One Pound Each (1 Pound Sterling par value), three (3) of which
have been issued and which are owned beneficially and of record as follows:
David Cole - One (1) Share
Geoffrey Down - One (1) Share
Geoffrey Durham - One (1) Share
All of such issued stock, constituting the Shares, are duly authorized and
validly issued and outstanding, fully paid and nonassessable. There are no
other shares of capital stock or other equity securities of the Company
outstanding. The Shares have not been issued in violation of, and none of
the Shares are subject to, any purchase option, call, right of first
refusal, preemptive, subscription or similar rights under any applicable
Law, the Certificate of Incorporation or Memorandum and Articles of
Association of the Company, any contract, agreement or instrument to which
the Company is subject, bound or a party or otherwise. There are no
outstanding warrants, options, rights, "phantom" stock rights, agreements,
convertible or exchangeable securities or other commitments (other than
this Agreement) pursuant to which any of the Sellers or the Company is or
may become obligated to issue, sell, purchase, return or redeem any shares
of capital stock or other securities of the Company. There are no
outstanding bonds, debentures, notes or other indebtedness having the right
to vote on any matters on which stockholders of the Company may vote.
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4.8 Financial Statements. The Company has delivered to Buyer certain financial
statements, including accountant-prepared statements for the year ended
12/31/98, and other internally generated financial statements, copies of
which are annexed to this Agreement as Exhibit "A". At the Closing, the
Sellers shall deliver to Buyer an unaudited balance sheet of the Company as
of October 31, 1999 prepared by the Company (the "Closing Balance Sheet").
The Closing Balance Sheet shall be attached to this Agreement as Exhibit
"B", and is hereby incorporated herein by reference. The Closing Balance
Sheet and the other financial statements given to Buyer are hereinafter
called the "Financial Statements". All Financial Statements delivered to
Buyer are and will be complete and correct in all material respects, are in
accordance with all books, records and accounts of the Company, have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods indicated, and fairly present
the financial condition of the Company as of the respective dates thereof
and the results of its operations for the respective periods covered
thereby.
The Closing Balance Sheet will be complete and correct in all material
respects, will be in accordance with all books, records and accounts of the
Company and will be prepared in accordance with generally accepted
accounting principles consistently applied and fairly present the financial
condition of the Company as of October 31, 1999.
In the event that there are any material changes to the Company's Balance
Sheet between October 31, 1999 and the Closing Date, the Seller shall
prepare and attach to this Agreement a Schedule 4.8, which shall itemize
any such changes, in reasonable detail.
4.9 Liabilities. As of the Closing Date, the Company had no liabilities of any
nature, whether known or unknown, absolute, accrued, contingent or
otherwise, except: (i) liabilities disclosed in the Closing Balance Sheet,
and (ii) obligations for future performance under the Contracts as listed
on Schedule 4.5.
4.10 Receivables. The Company's Receivables as listed in the Closing Balance
Sheet represent bona fide indebtedness arising out of the ordinary course
of business and to the best knowledge and belief of the Sellers will be
collectible within any reserves or allowances shown on the Closing Balance
Sheet. At the Closing, the Sellers will furnish Buyer with a detailed list
of Receivables, duly aged, in accordance with the Company's past practices.
4.11 Employment Matters. There are no contracts of employment between the
Company and any particular employee of the Company whether oral or written,
which cannot be terminated by the Company at will, subject to any rights
such employees may have under UK law and such contract. Sellers shall
identify on Schedule 4.11 any contracts which provide for any severance or
other amount payable upon termination. The directors will waive any rights
concerning employment that they may have under English law at the Closing.
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4.12 Taxes.
(a) For purposes of this Agreement, the following definitions shall
apply:
(i) The terms "Tax" or "Taxes" shall mean all taxes, however
denominated, including any interest, penalties or other additions to
tax that may become payable in respect thereof, (A) imposed by any
domestic or foreign Governmental Entity, which taxes shall include,
without limiting the generality of the foregoing, all income or profit
taxes, value-added taxes, payroll and employee withholding taxes,
unemployment insurance, social security taxes, sales and use taxes, ad
valorem taxes, excise taxes, environmental taxes, franchise taxes,
gross receipts taxes, business license taxes, occupation taxes, real
and personal property taxes, stamp taxes, transfer taxes, workers'
compensation and other governmental charges, and other obligations of
the same or of a similar nature to any of the foregoing, which are
required to be paid, withheld or collected, (B) any liability for the
payment of amounts referred to in clause (A) as a result of being a
member of any affiliated, consolidated, combined or unitary group, or
(C) any liability for amounts referred to in (A) or (B) as a result of
any obligations to indemnify another Person.
(ii) The terms "Return" or "Returns" shall mean all reports,
estimates, declarations of estimated tax, information statements and
returns relating to, or required to be filed in connection with, any
Taxes, including information returns or reports with respect to
withholding and other payments to third parties.
(b) Except as set forth in Schedule 4.12 (i) all Returns required to
be filed by or on behalf of the Company have been duly filed on a timely
basis (giving account to any extensions obtained) and such Returns are
true, complete and correct, (ii) all Taxes shown to be payable on such
Returns or on subsequent assessments with respect thereto, and all payments
of estimated Taxes required to be made by or on behalf of the Company have
been paid in full on a timely basis or have been accrued on the Financial
Statements, and no other Taxes are payable by the Company with respect to
items or periods covered by such Returns (whether or not shown on or
reportable on such Returns) or with respect to any completed tax fiscal
year prior to the date of this Agreement, (iii) the Company has withheld
and paid over all Taxes required to have been withheld and paid over, and
complied with all information reporting and withholding requirements,
including maintenance of required records with respect thereto, in
connection with amounts paid or owing to any employee, creditor,
independent contractor, or other third party, (iv) there are no liens on
any of the Assets of the Company with respect to Taxes, other than liens
for Taxes not yet due and payable or for Taxes that the Company is
contesting in good faith through appropriate proceedings and for which
appropriate reserves have been established, (v) the amount of the Company's
liability for unpaid Taxes (whether actual or contingent) for all periods
through the Closing Date does not, in the aggregate, exceed the accruals
for Taxes reflected on the Closing Balance Sheet, (vi) each of the
Financial Statements properly accrues all liabilities for Taxes payable
after the date of such Financial Statement attributable to transactions and
events occurring prior to such date, in accordance with generally accepted
accounting principles, and (vii) all Taxes arising in or attributable to
the period from January 1, 1999 until the Closing Date will be paid for by
Company.
<PAGE>
(c) The Company has made or will make available to Buyer true, correct
and complete copies of (i) relevant portions of income tax audit reports,
statements of deficiencies, closing or other agreements received by or on
behalf of the Company relating to Taxes under which the Company has any
remaining liability or obligation, and (ii) all income or value-added tax
Returns and sales and use tax Returns for or including the Company for the
periods ending on and after December 31, 1997 and 1998. The Company does
not derive income from any country which is taxable by such country, other
than countries for which Returns have been duly filed and made available to
Buyer.
(d) The Returns of or including the Company for the years ending on or
after December 31, 1997 and 1998 have not been audited by a government or
taxing authority, nor is any such audit in process, pending or, to the
knowledge of the Company, threatened, (ii) no deficiencies exist or have
been asserted (either in writing or verbally) or are expected to be
asserted, with respect to Taxes of the Company, and the Company has not
received any notice (either in writing or verbally) nor expects to receive
notice that it has not filed a Return or paid Taxes required to be filed or
paid, (iii) the Company is not a party to any action or proceeding for
assessment or collection of Taxes, nor has such event been asserted or
threatened (either in writing or verbally) against the Company, and (iv) no
waiver or extension of any statute of limitations is in effect with respect
to Taxes or Returns of the Company.
4.13 Equity Interests. The Company has three (3) subsidiaries, being (i) Card
Insight Ltd., (ii) Training InsightLtd., and (iii) Resource Insight Ltd.,
all of which are corporations organized and existing under the laws of the
United Kingdom. Except as set forth in Schedule 4.13, the Company does not
directly or indirectly own any capital stock or other equity interests in
any other corporation, limited liability company or other entity which
limits the liability of its owners, and the Company is not a member of or
participant in any partnership, joint venture or similar entity.
4.14 Condition of Assets. All equipment included within the Assets listed on the
Closing Balance Sheet are in reasonably good repair and operating
condition, are suitable for the operations for which they are being used by
the Company, and will be in good working order as of the Closing Date.
4.15 Absence of Changes. Since December 31, 1998 there has not been; and during
the period (if any) between the date this Agreement is signed and the
Closing Date there will not be:
(i) Any change in the business , results of operations, earnings,
backlog, prospects, properties, Assets, liabilities or condition,
financial or otherwise, of the Company other than changes in the
ordinary course of business, none of which, individually or in the
aggregate, has been materially adverse.
(ii) Any damage, destruction or loss (whether or not covered by
insurance) materially affecting the Company or the Assets.
(iii) Except in the ordinary course of business for full and fair
value received, any sale, assignment, transfer or other disposition of
any tangible or intangible Asset.
<PAGE>
(iv) Any amendment, termination or waiver of any governmental
permit or permission or of any right relating to the Company under any
contract or agreement, except matters occurring in the ordinary course
of business, none which will be materially adverse to the Company or
its business.
(v) Any material adverse change in the Company's business.
(vi) Any change in the accounting practices, procedures or
methods of the Company.
4.16 Compliance with Laws. Insofar as the Sellers are aware, the Company is not
in violation of any statute, ordinance, rule, regulation, or case law
authority ("Law") or any judgment, decree or order ("Order") affecting the
Company or the Assets and promulgated by any Governmental Entity violation
of which may have a Material Adverse Effect on the financial condition or
the results of operations of the Company. The Company has not received any
notice of an alleged violation of any Law or Order affecting the Company or
the Assets which has not been timely cured. Any such notice received after
the date of this Agreement will be cured as of the Closing Date. There is
no Order outstanding and affecting the Company or the Assets that requires
or will require a material change in the manner of conducting the Company's
business or materially increase expenditures by or on behalf of the
Company.
4.17 Litigation and Claims.
a. In General. Except as disclosed in Schedule 4.17 hereof there is no
legal action, claim or controversy, or governmental proceeding or
investigation pending or, to the knowledge of Sellers, threatened against
the Company or involving any of the Assets that: (i) as to cases seeking
money damages, individually involves a demand for damages greater than the
Company's existing insurance coverages or in the aggregate involve demands
for damages greater than the Company's existing insurance coverages; (ii)
seeks declaratory, injunctive or other non-monetary relief; or (iii)
questions the validity of this Agreement or seeks to prohibit or enjoin or
otherwise challenge the transaction contemplated hereby.
b. Errors and Omissions. Sellers further warrant and represent that
neither Sellers nor the Company have received any notice that the Company
has incurred any liability to clients, customers or other persons for
errors or omissions (i.e. malpractice) in connection with consulting work
done prior to the Closing Date, and that, to the best of Sellers'
knowledge, no state of facts exist which would give rise to such a claim.
Neither the Sellers nor the Company have received any written or oral
notification from any customer, client or other person ( or anyone
representing a customer, client or other person) which could or might lead
to a claim against the Company for alleged errors and omissions in
connection with the performance of consulting work.
4.18 Benefit Plans. The Company is not a party to or bound by any collective
bargaining agreements, union contracts, labor agreements, conciliation
agreements or contracts with any labor union or other representative of
employees, nor any pension, profit-sharing, bonus, commission, retirement,
stock option, other employee benefit or welfare plans or other similar
plans or arrangements.
<PAGE>
4.19 Intellectual Property. The Company does not own or license the use of any
patents in the conduct of its business. The Company owns (or possesses
adequate licenses or other rights to use without payment of royalties) all
copyrights, trademarks, trade names, service marks, processes, designs,
computer software, inventions, trade secrets, know-how, technology and the
like necessary to carry on the Company's business. Schedule 4.19 is a list
and brief description (including, if applicable, date of application,
filing or registration and registration or application number) of all of
the Intellectual Property. The Company has not infringed and is not
infringing, and has not engaged and is not engaging in the unauthorized use
or misappropriation of, any patent, patent application, copyright,
trademark, service mark, trade name, process, design, computer software,
invention, trade secret, know-how or technology owned by or belonging to
any third party. There are no actual or, to the Sellers' knowledge,
threatened claims against the Company relating to the Company's ownership
or use of any Intellectual Property.
4.20 Disclosure. In connection with the negotiation and execution of this
Agreement, neither the Company, the Sellers nor any of their
representatives have made any untrue statement of material fact, nor have
they omitted to state any material fact, if known to the Sellers at the
date hereof necessary to make any of their statements not misleading. To
the best knowledge of the Sellers after diligent inquiry, none of the
information included in this Agreement (including the Exhibits hereto) or
any other written document furnished or to be furnished by the Company or
Sellers pursuant to this Agreement is false or misleading in any material
respect or omits to state a fact necessary in order to make any of the
statements therein not misleading in any material respect. To the best
knowledge of the Sellers after diligent inquiry, there is no fact that has
a material adverse effect or in the future might reasonably be expected to
have a material adverse effect with respect to the Assets, properties,
business, profits or financial condition of the Company in any respect that
has not been set forth or referred to in this Agreement (including the
Exhibits and Schedules hereto).
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
Buyer hereby represents and warrants to, and covenants and agrees with
Sellers as follows:
5.1 Buyer is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of New York, is duly qualified and has
the corporate power to enter into and perform its obligations under this
Agreement and the transactions contemplated hereunder.
5.2 IFS is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, is duly qualified and has
the corporate power to issue the IFS shares to be delivered to Sellers
under this Agreement.
<PAGE>
5.3 Buyer has taken all requisite corporate action to authorize and approve the
execution and performance of this Agreement and the consummation of the
transactions contemplated hereunder, and this Agreement has been duly
executed and delivered by Buyer and constitutes a valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its
terms. No consent or approval by any third party is required in connection
with the execution and delivery by the Buyer of this Agreement or the
consummation by the Buyer of the transactions contemplated hereby.
5.4 The making of this Agreement by Buyer does not violate the terms of any
other agreement to which Buyer is a party, nor does it violate the
provisions of any court judgment or order, arbitration award or other order
or process of any governmental agency.
5.5 Buyer covenants to use its best endeavors to assist Company to sell the
Company's products and services and develop the business of the Company.
Further, Buyer covenants that Buyer will pass relevant introductions to
Company as to persons who may need services of the type in which the
Company specializes. During the three year period following the Closing,
neither the Buyer nor IFS shall (directly or indirectly through any
subsidiary or Affiliate) conduct a consulting practice except through the
Company.
ARTICLE 6
SURVIVAL OF WARRANTIES; CLAIMS: RISK OF LOSS; INDEMNITY
6.1 Warranties to Continue Effective. All of the representations and warranties
made by or on behalf of the Company and the Sellers, as well as those made
by the Buyer herein, are intended to be made not only as of the date of
execution of this Agreement, but also as of the Closing Date. All parties
to this Agreement shall take all such action as may be required to ensure
that such representations and warranties remain true and complete as of the
Closing Date, and each party shall deliver at Closing a written certificate
sworn to by such party, such certificates to state that the representations
and warranties of such party, made in this Agreement, are then true and
continue in full force and effect.
6.2 Warranties to Survive Closing. All of the obligations, representations and
warranties made by the Company and the Sellers, as well as those made by
the Buyer in this Agreement shall survive the Closing and any investigation
made by or on behalf of either party, and shall not merge in the execution
and delivery of the shares and the stock powers (assignments of stock) and
any other documents of transfer. Refer to Section 6.6 hereof for express
limitation periods on claims made for breach of warranties or
representations after the Closing.
6.3 Sellers' Indemnification. The Sellers hereby jointly and severally
indemnify and agree to defend and hold Buyer and Buyer's successors and
assigns free and harmless from and against any and all liabilities, losses,
damages and expenses suffered as a result of:
(i) Any failure by the Company to pay any Taxes due with respect
to operation of the Company's business prior to the Closing Date.
(ii) Any material breach or nonfulfillment by the Company or any
of Sellers of any of the covenants, terms and conditions of this
Agreement to be performed or observed by the Company or any Seller, or
as a result of material inaccuracy or nonfulfillment of any warranty
or representation made by the Company and/or any Seller herein.
<PAGE>
6.4 Buyer's Indemnification. Buyer hereby indemnifies and agrees to defend and
hold Sellers free and harmless from and against losses, expenses and
damages suffered by Sellers as a result of:
(i) Any failure by the Company to pay any Taxes due with respect
to operation of the Company's business after to the Closing Date,
provided such failure was not due to any act or omission to act on the
part of the Sellers or any of them.
(ii) Any material breach or nonfulfillment by the Buyer of any of
the covenants, terms and conditions of this Agreement to be performed
or observed by the Buyer, or as a result of material inaccuracy or
nonfulfillment of any warranty or representation made by the Company.
6.5 Procedures. With respect to claims for which either party seeks
indemnification, the following provisions shall apply:
a. The indemnified party shall give written notice of any claim it may
have under the foregoing indemnities within a reasonable time after
learning of such claim, and the indemnifying party shall undertake the
defense, of any such matter. The indemnified party shall have the right to
participate in such defense at its own expense.
b. Except as provided in subsection (c) below, a settlement may only
be made with the consent of both Buyer and the Sellers.
c. Either party shall have the right, without obtaining the other
party's consent, to compromise and settle any such claim, provided such
party does so at its own cost and expense on the basis that such compromise
or settlement waives the right to indemnity from the other party, and
further provided that such settlement does not involve any covenant,
agreement or restriction which would adversely impact continuation of the
Company's business by the Buyer after the settlement.
d. In the event any claim should become actually enforceable against a
party by reason of a final judgment, award or assessment (or settlement
made with both parties' written consent), the indemnifying party shall pay
the same within ninety (90) days of the date it becomes enforceable.
6.6 Limitations on Indemnity Obligations.
(a) Time Limits. Neither Buyer nor Sellers shall be liable for any
claim for indemnity unless (i) the party sought to be made liable has
received written Notice from the party seeking indemnification (the
"aggrieved party") identifying its claim in reasonable detail, and, if
practical, the aggrieved party's estimate of the amount involved, not later
than three (3) years from the Closing Date, and (ii) unless such claim is
earlier settled, the aggrieved party has commenced legal proceedings within
three (3) years after the Closing Date.
<PAGE>
(b) Thresholds. Neither Buyer nor Sellers shall be liable with respect
to any individual claim unless the amount of such claim exceeds (pound)
5000 or, when aggregated with all other claims made on the same occasion or
previously exceeds (pound) 10,000, in which case the party liable for
indemnification shall be liable for the whole amount, and not simply the
excess.
(c) Maximum Dollar Limits. No individual Seller shall be liable for an
amount in excess of the total value of the consideration paid and payable
to such Seller as consideration for purchase of his Shares under this
Agreement. In calculating the amount of such limit, the Consideration
Shares of stock in IFS shall be valued in the manner provided in subsection
3.1(g) (i.e., as of the end of each relevant year). The parties mutually
acknowledge that it may not be possible to calculate the maximum limit of
liability until after completion of the three year period following the
Closing. The obligations of each Seller under this Article 6 shall be
several and not joint and several, so that no Seller shall be required to
pay an amount in excess of the value of the Consideration Shares paid and
payable to such Seller. Buyer shall likewise not be liable to indemnify
Sellers for any amount in excess of the total value of the consideration
due Sellers for purchase of their Shares under this Agreement.
(d) Disclosed Claims.Sellers shall not be liable for any claim(s) to
the extent that such claims (or the nature of any potential claims) were
specifically disclosed on the Closing Balance Sheet or in the disclosure
schedules attached hereto, unless the amount of such claim(s) exceed the
reserves for such claims on the Closing Balance Sheet, in which case the
Sellers shall be liable only for such excess.
(e) Other Limits on Sellers' Liability.Sellers shall not be liable to
the extent that any claim by Buyer is attributable to or arises as a result
of:
(i) any voluntary act or omission of Buyer or its successors
after the Closing outside the ordinary course of business and other
than pursuant to a legally binding obligation entered into by the
Company before Closing; or
(ii) the retrospective imposition of any tax or increase in the
rate of any tax, or by a change in law occurring after the Closing, or
the withdrawal after Closing of any published concession or general
practice previously made by a tax authority.
(f) Other Limits. Neither Buyer nor Sellers shall be liable:
(i) to the extent that the aggrieved party is reimbursed against
any loss or damage suffered by it under the terms of any insurance
policy;
(ii) for liabilities that are contingent or future or
unascertainable, in which case such party shall not be liable to
recompense the aggrieved party until such time as the aggrieved party
shall have actually suffered the loss or incurred the liability in
question in a measurable amount (but this provision shall not prevent
an aggrieved party from giving written Notice of claim or commencing
legal proceedings on a timely basis as contemplated in subsection
6.6(a) above;
<PAGE>
(iii) to reimburse an aggrieved party more than once in respect
of any one claim.
(g) Neither the Sellers nor the Company shall be liable for any work
undertaken by the Company for the Buyer or IFS prior to the closing.
ARTICLE 7
FURTHER AGREEMENTS OF THE COMPANY AND SELLERS
Sellers hereby jointly and severally covenant to and agree with Buyer
as follows:
7.1 Buyer's Investigations. Buyer, at its expense, may make such evaluations,
inspections and other due diligence investigations with respect to the
Company's business and the Assets as Buyer may desire provided that such
evaluations, inspections and investigations shall not unreasonably
interfere with the operations of the Company's business. Sellers shall make
available to all authorized representatives of Buyer, free and full access,
during normal business hours and upon reasonable notice, to the offices,
properties and Business Records of every kind, including, without
limitation, the Company's monthly balance sheets and income and operating
statements, and Sellers will furnish Buyer with all additional financial
and operating data and other information as to its business and properties
that is from time to time reasonably requested. Sellers shall authorize and
direct the Company's independent auditors to make available to Buyer any
information, including access to work papers, requested by Buyer. Buyer
shall keep all information it obtains as a result of such access
confidential and shall only use the same for the purposes of effectuating
the transactions contemplated by this Agreement. This confidentiality
provision is in addition to, and does not alter or terminate any separate
agreement imposing confidentiality/non-disclosure obligations upon Buyer
and Buyer's agents and Affiliates in connection with this transaction.
7.2 Operations Prior to Closing.
a. After the date of this Agreement and prior to the Closing Date,
Sellers shall conduct the Company's business substantially as it has been
conducted prior to the date of this Agreement. Sellers shall use its best
efforts to preserve existing relations with the Company's employees,
subcontractors, subconsultants and customers. Sellers shall promptly notify
Buyer of any material matter affecting the Assets or the Company's business
that arises from the date of this Agreement to the Closing Date.
b. The Company has not, since 12/31/98, and will not, after the date
this Agreement is signed and prior to the Closing Date, declare or pay any
dividend or make any distribution on any of its Shares or purchase, redeem,
or otherwise acquire or retire for value any of its Shares.
7.3 Obtaining Consents and Approvals. Sellers shall use reasonable and diligent
efforts to obtain any governmental and third party consents and approvals
necessary to complete the transactions contemplated by this Agreement.
<PAGE>
7.4 Truth of Representations. From the date hereof until the Closing Date,
Sellers shall, except as Buyer otherwise consents in writing, use their
best efforts to cause all representations and warranties made by the
Company and/or Sellers in this Agreement to be true and correct on and as
of the Closing Date. Sellers shall notify Buyer promptly if any such
representation or warranty ceases to be true and correct.
7.5 Repairs. Sellers shall cause the Company to keep the Assets in reasonably
good repair and sound condition, normal use, wear and tear excepted until
the Closing Date, or the earlier termination of this Agreement.
7.6 Continued Compliance. The Sellers will use their best efforts to cause the
Company to conducts its business up until the Closing Date in accordance
with all applicable Laws and Orders promulgated by any Governmental Entity
having jurisdiction over the operation of the Company's business or any
aspect thereof.
7.7 Normal Conduct of Business. The Sellers shall conduct the Company's
business up to Closing Date in the normal and regular manner, shall not
increase the rate of compensation of any employees or subconsultants
without Buyer's written consent. Without making any commitment on Buyer's
behalf, Sellers shall use their best efforts to keep available to the Buyer
the services of the Company's present employees and to preserve the
goodwill of the Company's customers, independent contractors,
subconsultants and others having business relations with the Company.
7.8 Access. Sellers shall allow Buyer and Buyer's representatives full access
during normal business hours to any existing Business Records.
7.9 No Violations of Agreements. Sellers shall not intentionally do, or suffer
or permit to be done, any acts or things that will cause any equipment
lease, any Contracts with clients, customers, independent contractors or
suppliers, or any other Contracts involving the operation of the Company's
business to be materially breached, and will continue to perform and/or
observe all of the Company's obligations under all such Contracts, so as to
preserve to Buyer the benefits thereof on and after the Closing.
7.10 Change in Fiscal Year. After the Closing, Sellers shall cause the Company
to change its fiscal year to coincide with the fiscal year IFS.
Accordingly, the Company shall file a tax return for the calendar year 1999
and shall file a short period return for the fiscal period from January 1,
2000 through April 30, 2000. Thereafter, the Company shall at all times
maintain a fiscal year which coincides with the fiscal year of IFS.
However, consideration payable to Sellers shall continue to be measured by
earnings achieved during calendar years as referred to in Article 3.
<PAGE>
ARTICLE 8
CONDITIONS TO CLOSING
8.1 Conditions of Buyer's Obligation. The obligation of Buyer to purchase and
pay for the Shares is subject to the satisfaction (or waiver by Buyer) as
of the Closing of the following conditions:
(a) Warranties Still True. Subject to any written disclosures made by
the Sellers in the updated Schedules to this Agreement, the
representations, the representations and warranties of the Company and/or
the Sellers made in this Agreement shall be true and correct in all
material respects, as of the date hereof and as of the Closing Date, except
to the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties shall be
true and correct in all material respects, on and as of such earlier date).
(b) Performance of Obligations. The Company and each Seller shall have
performed or complied in all material respects with all obligations and
covenants required by this Agreement to be performed or complied with by
them at or prior to the Closing.
(c) No Restraints. No Law or Order enacted, promulgated or issued by
any Governmental Entity, or other legal restraint or prohibition preventing
the purchase and sale of the Shares shall be in effect.
(d) Incorporation and Memorandum and Articles of Association
Certificate. The Sellers shall have delivered to the Buyer a certificate of
incorporation and memorandum and articles of association with respect to
the Company, issued by Company's House.
<PAGE>
(e) Independent Opinions. The Company shall have delivered to the
Buyer an opinion of the Company's independent public accountants (or,
alternatively, the separate opinions of its accountants and legal counsel),
opining that (A) the Company's corporate existence and good standing are as
stated in this Agreement, (B) they do not know or have any reasonable
grounds to know of any litigation, proceeding or governmental investigation
pending or threatened against, or relating to, the Company, its Assets or
its business, or which affects title to the Shares or the ability of
Sellers to transfer such Shares free of all claims and encumbrances, or
which relates to the validity and enforceability of this Agreement, or
seeks to restrain the closing of the transactions envisioned by this
Agreement, (C) this Agreement, and any closing certificates, other
documents or instruments delivered by the Company and/or the Sellers
pursuant hereto, constitute the binding, legal obligations of the Company
and/or the Sellers, enforceable against them except as such enforceability
may be limited by bankruptcy laws or general principles of equity; (D) they
do not know or have any reasonable grounds to know of any litigation,
proceeding or governmental investigations pending or threatened against, or
relating to, the Company, its properties or business which could result in
a Company Material Adverse Effect, except as previously disclosed in the
schedules to this Agreement, (E) the authorized capital stock of the
Company consists of one hundred thousand (100,000) ordinary shares of One
Pound Each (1 Pound Sterling par value), of which three (3) such shares are
issued to and held by the Sellers as described in Section 4.7 hereof, all
of which outstanding shares are validly issued, fully paid and
nonassessable; (F) counsel is not aware, after due inquiry, of any existing
options, calls or commitments of any character whatsoever, or agreements to
grant the same, relating to authorized or issued shares of the Company's
capital stock, or any outstanding securities convertible into or
exercisable for such shares, or any options, calls or commitments of any
character whatsoever, with respect to the issuance or sale of any such
convertible securities, and (G) each Seller is the record owner, and to the
best knowledge of counsel based on diligent inquiry (including a review of
the stock books and minute books of the Company), the beneficial owner of
the Shares referenced in Section 4.7 hereof, has duly endorsed certificates
or stock powers relating to such Shares, and is delivering good and
marketable title to such Shares to the Buyer, free and clear of all Liens
and claims.
(f) Share Certificates. The Sellers will deliver certificates as set
out in clause 2.4(a).
(g) No Material Adverse Change. The updated Schedules delivered to
Buyer shall not disclose any liability or obligation which (i) was not
disclosed in the original Schedules delivered to Buyer upon execution of
this Agreement, and (ii) was incurred without obtaining Buyer's consent or
contrary to the provisions of this Agreement, and (iii) constitutes or
could have a Company Material Adverse Effect.
(h) No Litigation. No suit, investigation, action or other proceeding
shall be threatened or pending before any court or other agency of any
Governmental Entity that (i) specifically seeks the restraint or
prohibition of, or damages or other relief in connection with, this
Agreement or the consummation of the transaction contemplated by this
Agreement, or (ii) seeks to restrain or limit the nature and/or scope of
business being conducted by the Company, or (iii) seeks money damages from
the Company for alleged malpractice, negligence, breach of contract, breach
of warranty or other legal wrong committed by the Company in the
performance of any work for a client or customer of the Company.
(i) SubContractor Agreements. Buyer shall have satisfied itself that
all the Sellers are willing to become and continue as subcontractors of the
Company on the terms of their agreements in the form of Exhibit "C" hereof
and the Buyer covenants with each of the Sellers and Vice Versa to enter
into the said Agreements on closing.
(j) Resignations.
<PAGE>
(i) At Closing, Sellers shall deliver the written resignations of
any of the Company's officers and directors that Buyer shall specify
in writing are not to remain in such capacity after the Closing. The
Sellers shall remain as officers of the Company after the Closing, to
serve as officers at the pleasure of the Board of Directors, their
service as subcontractors to be for the terms set forth in their
respective SubContractor Agreements (in the form of Exhibit "C"
hereof). After the Closing and for the duration of the three year
period following the Closing, the Company's Board of Directors shall
be comprised of the three (3) Sellers, and up to three (3)
representatives nominated by the Buyer. In the event of any deadlock
concerning any vote or other action taken by the Board of Directors,
the Chairman of the Board shall be entitled to cast an additional vote
to break the deadlock. During the three year period following the
Closing, the Chairman of the Board of Directors shall always be one of
the Sellers.
(ii) Notwithstanding the foregoing, in the event that any
deadlock concerns the proposed termination of the engagement of any of
the Sellers for a breach of his Consultancy Agreement with the
Company, the Seller whose engagement is proposed to be terminated
shall abstain from voting (although such Seller may participate in the
discussion) and the determination shall be made by majority vote of
the remaining directors.
(iii) After three years have elapsed following the Closing, the
Company's Board of Directors shall be elected by vote of the
shareholders in accordance with the applicable provisions of English
corporate law, so long as the company remains a separate corporate
entity. Nothing contained in this last sentence shall be construed as
requiring that the Buyer or IFS maintain the Company as an English
corporation after conclusion of the three year period following the
Closing, provided that neither the Buyer nor IFS may take any action
which would adversely affect the Sellers' entitlement to Consideration
Shares.
8.2 Conditions Precedent to the Sellers' Obligations. The obligations of
Sellers to consummate the transactions contemplated hereby shall be
subject, in each instance, to the fulfillment by Buyer, or written waiver
by the Company, of each of the following conditions at or prior to the
Closing:
(a) Warranties Still True. The representations and warranties of Buyer
made in this Agreement shall be true and correct in all material respects,
as of the date hereof and as of the time of the Closing as though made as
of such time, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations and
warranties shall be true and correct in all material respects, on and as of
such earlier date), in each case except for breaches as to matters that,
individually or in the aggregate, are not reasonably likely to have a
materially adverse effect on the Buyer.
(b) Performance of Obligations. Buyer shall have performed or complied
in all material respects with all obligations and covenants required by
this Agreement to be performed or complied with by Buyer by the time of the
Closing.
(c) Closing Certificate. Buyer shall have delivered to Sellers a
certificate dated the Closing Date and signed by an authorized officer of
Buyer confirming the foregoing.
(d) No Restraints. No applicable Law or Order enacted, entered,
promulgated, enforced or issued by any Governmental Entity or other legal
restraint or prohibition preventing the purchase and sale of the Shares
shall be in effect.
<PAGE>
(e) Legal Opinion. Buyer shall have delivered to Sellers the written
opinion of Buyer's counsel, Harris Beach & Wilcox, LLP, opining to the
effect that the Buyer's and IFS' corporate existence and good standing are
as set forth in Sections 5.1 and 5.2 of this Agreement, and that they do
not know or have any reasonable grounds to know of any litigation,
proceeding or governmental investigation pending or threatened against the
Buyer, which seeks to enjoin the closing of the transactions envisioned by
this Agreement. Such legal opinion shall be in the form of Exhibit "D"
hereto.
(f) No Litigation. No suit, investigation, action or other proceeding
shall be threatened or pending before any court or governmental agency that
specifically seeks the restraint or prohibition of, or the obtaining of
damages or other relief in connection with, this Agreement or the
consummation of the transaction contemplated by this Agreement.
ARTICLE 9
TERMINATION; EXPENSES
9.1 Termination. This Agreement may be terminated at any time prior to the
Closing Date:
a. By the mutual consent of Buyer and the Sellers.
b. By Sellers, if any of the Buyer's representations or warranties
contained in or made pursuant to this Agreement were not true and complete
in all material respects when made or if Buyer fails to perform or comply
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by Buyer.
c. By Buyer, if any representations or warranties of the Company or
the Sellers contained in or made pursuant to this Agreement were not true
and complete in all material respects when made, or if the Company or any
Seller fails to perform or comply in all material respects with all
agreements and covenants required by this Agreement to be performed or
complied with by the Company or such Seller.
d. By either party if this Stock Purchase Agreement does not close by
December 31, 1999.
9.2 Notice of Termination. In the event of termination of this Agreement
pursuant to Section 9.1 hereof, Notice shall promptly be given by the
terminating party to the other parties to this Agreement.
9.3 Expenses Upon Termination. Except in the event of any willful breach by any
party hereto of its obligations under this Agreement or of any willful
misrepresentations herein or hereunder by any party hereto, if this
Agreement is terminated as provided in Section 9.1, neither Buyer, the
Company, the Sellers nor any Affiliate of any of them shall have any
liability to any of the others for costs, expenses (including without
limitation, legal and accounting fees and expenses), loss of anticipated
profits or otherwise; it being understood that in the event of such
termination, each party shall bear its own legal and accounting and other
fees, costs, losses and expenses.
<PAGE>
ARTICLE 10
SELLERS' INVESTMENT REPRESENTATIONS
Sellers hereby represent and warrant to the Buyer and IFS that they are
acquiring the shares of IFS common stock to be issued under section 3.1 (the
"Restricted Securities") for their own account with the present intention of
holding such securities for purposes of investment, and that they have no
intention of selling such Restricted Securities in a public distribution in
violation of the United States securities laws or any applicable state
securities laws; provided that nothing contained herein shall prevent any Seller
and subsequent holders of Restricted Securities from transferring such
securities in compliance with the provisions of the such laws and any applicable
rules or regulations promulgated thereunder, including without limitation, Rule
144 and (to the extent applicable, Rule 145) of the United States Securities and
Exchange Commission.
Each certificate for Restricted Securities shall be imprinted with a
legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
ON _______________, 1999, AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THE TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED
IN THE STOCK PURCHASE AGREEMENT, DATED NOVEMBER, 1999, BETWEEN A
SUBSIDIARY OF IFS INTERNATIONAL, INC. (DELAWARE) AND CERTAIN INVESTORS,
AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH
SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO
SUCH TRANSFER. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE
COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE."
If the holder of the Restricted Securities delivers to IFS an opinion
of legal counsel that no subsequent transfer of such Restricted Securities shall
require registration under the Securities Act, and if such opinion is acceptable
in form and substance to IFS' legal counsel, then the Buyer shall cause IFS to
promptly deliver new certificates for such Restricted Securities which do not
bear the Securities Act legend set forth in this Article 10.
ARTICLE 11
TAKE OVER SCENARIO
11.1 Change in Control at IFS. In the event of a Change in Control of IFS or
Buyer, then Buyer, as soon as it is able, and in any event within sixty
(60) days, shall issue shares of stock to Sellers as described in Section
3, up to the Sum of the Soft-Cap limit regardless of the performance of the
Company.
<PAGE>
ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1 Confidentiality.
a. This Agreement, the terms of the transactions contemplated hereby
(including without limitation the Purchase Price), and any information
heretofore or hereafter disclosed by any party hereto relating to the
Assets, the Company's business, the transactions contemplated by this
Agreement or otherwise concerning the business, operations, affairs or
financial condition of any party hereto, shall be kept confidential, except
if: (i) disclosure is required by subpoena or other legal process; (ii)
such information is or hereafter becomes lawfully obtainable from other
sources, (iii) such duty as to confidentiality is waived in writing by the
party to whom the confidential information relates, or (iv) as to
information concerning the Company, the Closing occurs.
b. If this Agreement is terminated pursuant to Article 9, all
documents, if any, of a confidential nature, and copies thereof delivered
by the Company to Buyer or its Affiliates or their respective
representatives or delivered by Buyer to the Company or its representatives
shall be immediately returned.
c. The obligations of the parties under this Section as to
confidentiality shall survive termination or abandonment of this Agreement
for 5 years.
12.2 Publicity. No press releases shall be issued, nor shall the terms of this
Agreement be disclosed to third parties, other than the representatives of
the parties, without the prior written consent of the Company and Buyer,
unless required by law.
12.3 Brokerage. The parties agree that no broker brought about this transaction.
Each party warrants and represents that his participation in this
transaction was not the result of the activities of any broker or finder.
12.4 Notices. All notices requests, demands or other communications (a "Notice")
required or permitted to be sent pursuant to this Agreement shall be in
writing and shall be deemed properly given if either (i) delivered
personally, or (ii) sent by registered or certified mail, return receipt
requested, (iii) sent by telex or other facsimile transmission, if
confirmed within one day by ordinary mail; or (iv) sent by Federal Express
or other overnight courier service providing written evidence of delivery.
Any such Notice shall be addressed to the parties at the following
addresses:
<PAGE>
TO THE BUYER: TO THE COMPANY:
------------ --------------
IFS International, Inc. Global Insight Group, Ltd.
300 Jordan Road 1a High Street
Rensselaer Technology Park Epsom, Surrey KT19 8DA
Troy, New York 12180 United Kingdom
Attn: David Hodge, CEO
with copy to: TO THE SELLERS:
------------ --------------
Harris Beach & Wilcox, LLP David Stanley Cole
20 Corporate Woods Boulevard c/o Global Insight Group, Ltd.
Albany, New York 12208 1a High Street
Attn: Roland M. Cavalier Epsom, Surrey KT19 8DA
United Kingdom
Geoffrey Alan Down
As for David Stanley Cole above
Geoffrey Lennox Durham
As for David Stanley Cole above
With copy to:
Cheyney Goulding Solicitors
34/36 Chertsey Street
Guildford, Surrey GUI 4HD
United Kingdom
Attn: J C Goulding
Any party may change address for receipt of Notice by Notice given to
all other parties.
12.6 Further Assurances. Each party agrees that subsequent to the Closing, at
the request of any other party, such party will execute and deliver, or
cause to be executed and delivered, such further instruments of transfer
and conveyance, and take such other action as may be necessary to carry out
the transfer of the Shares and the consummation of the transactions
contemplated by this Agreement.
12.7 Expenses. Except to the extent any item of expense is otherwise expressly
provided for in this Agreement, each of the parties hereto shall bear the
expenses incurred by that party incident to this Agreement and the
transactions contemplated hereby, including without limitation all fees and
disbursements of counsel and accountants retained by such party, whether or
not the transactions contemplated hereby shall be consummated.
<PAGE>
12.8 Modification or Waiver.
a. Modification. This Agreement may not be changed, modified or
rescinded orally. Any change, modification or rescission need be in writing
and signed by all parties.
b. Waiver. Any waiver of the provisions of this Agreement shall not be
effective unless made in a writing signed by the person against whom the
enforcement of any such waiver is sought. A waiver given in any case shall
only apply with respect to that particular act or omission, and shall not
be effective as to further acts or omissions, regardless of whether they be
of the same or similar nature.
12.9 Force Majeure. No party shall be liable for any failure of or delay in
performance of its obligations under this Agreement to the extent such
failure or delay is due to circumstances beyond its reasonable control,
including, without limitation, acts of God, acts of a public enemy, fires,
floods, wars, civil disturbances, sabotage, accidents, insurrections,
blockades, embargoes, storms, explosions, damage to its plants, labor
disputes (whether or not the employees' demands are reasonable and within
the party's power to satisfy), acts of any governmental body (whether civil
or military, foreign or domestic) delay of third parties or governmental
bodies to grant or deliver any licenses, permits or consents (collectively
referred to herein as "Force Majeure"), nor shall any such failure or delay
give the other party the right to terminate this Agreement. Each party
shall use its best efforts to minimize the duration and consequences of any
failure of or delay in performance resulting from a Force Majeure event.
12.10Third Party Beneficiaries This Agreement does not create, and shall not be
construed as creating, any rights enforceable by any person not a party to
this Agreement.
12.11Assignment; Binding Effect; Benefits. Buyer may assign its rights under
this Agreement to any Affiliate of Buyer. Such assignment shall not relieve
Buyer of its obligations under this Agreement. Except for the foregoing,
neither this Agreement nor any right, remedy, obligation or liability
arising hereunder shall be assignable by any party to this Agreement
without the prior written consent of the other parties. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of
the parties to this Agreement and their respective successors and assigns.
12.12 Interpretation and Miscellaneous Terms.
a. Entire Agreement. This Agreement and all Exhibits and Schedules
attached hereto or incorporated by reference, collectively contain the
entire agreement and understanding of the parties concerning sale of the
Shares. There are no other understandings, terms, or conditions, oral or
written, and neither party has relied upon any representation, whether oral
or written, express or implied, not contained herein. All prior
understandings, terms, conditions, or agreements are deemed superseded
and/or merged in this Agreement.
b. Binding Effect. This Agreement shall bind and inure to the benefit
of the parties, their respective heirs, personal representatives,
successors (by merger, consolidation or otherwise) and any permitted
assigns.
<PAGE>
c. Severability. If any parts of this Agreement are found to be void
or unenforceable, the remaining provisions of the Agreement shall
nevertheless be binding with the same effect as though the void parts were
deleted, unless to do so would deprive a party of substantially the entire
benefit of his bargain.
d. Resolution of Disputes. All disputes arising under this Agreement,
including, without limitation, disputes related to meaning or
interpretation of any provision of this Agreement (except disputes under
Subsection 3.1(h)(iv)) shall be subject to binding arbitration, to be
conducted in accordance with the then-prevailing rules of the American
Arbitration Association. The arbitration proceeding shall be held in
London, England, unless the parties mutually agree to another location.
Disputes under Subsection 3.1(h)(iv) shall be determined by reference to
independent accountants, as provided in such subsection.
Nothing contained herein shall be construed as a waiver or modification of
any party's rights to seek enforcement of any arbitration award by resort
to the courts or other Government Agency having jurisdiction over the party
against whom enforcement is sought. Without limiting the generality of the
foregoing, the party receiving an award may seek to confirm such award or
convert it into a judgment in accordance with applicable Laws.
e. Governing Law. This Agreement shall be governed by the substantive
laws of the State of New York, without giving effect to the conflicts of
laws principles of such state. All parties hereby irrevocably consent to
the non-exclusive jurisdiction of the courts of the State of New York, of
any federal court located in such State and of the courts of the United
Kingdom in connection with any action or proceeding to confirm and/or
enforce any arbitration award.
f. Grammatical Usage. In construing this Agreement, feminine pronouns
shall be substituted for those masculine in form (and vice versa), and
plural terms shall be substituted for singular and singular for plural, in
any place or situation where the context so requires.
g. Exhibits and Schedules. All Exhibits and Schedules referred to in
this Agreement are deemed to be a part hereof, and are incorporated by
reference, regardless of whether the same are actually attached hereto at
or after execution. All disclosure Schedules referenced in Article 4 shall
be updated as of the Closing Date.
h. Captions. The captions to this Agreement are inserted only for
purposes of convenient reference and in no way define, limit or prescribe
the scope or intent of this Agreement or any part hereof.
i. Counterparts. This Agreement may be executed in several
counterparts. Any counterpart signed by all parties may be introduced into
evidence in any action or proceeding without having to produce or account
for the others. Alternatively, any number of counterparts which,
collectively, are signed by all parties and which are otherwise
substantially identical in their terms, may be introduced to establish the
parties' agreement.
<PAGE>
j. Facsimile Signatures. The parties agree that any one or more of
them may execute a photocopy or facsimile copy of this Agreement and may
transmit such signature via facsimile, and that such signature shall have
the same effect for all purposes as a manually signed original.
[The balance of this page is left intentionally blank.]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement.
THE COMPANY: BUYER:
----------- -----
GLOBAL INSIGHT GROUP, LTD. IFS INTERNATIONAL, INC.
(a New York corporation)
By: By:____________________________
----------------------------------
David Stanley Cole Simon Theobald
Executive Vice President
----------------------------
Geoffrey Alan Down
----------------------------
Geoffrey Lennox Durham
IFS International, Inc. (the Delaware parent company) also signs this
Agreement, solely for purposes of agreeing to issue the Shares of the parent
company common stock to be issued pursuant to subsections 3.1(a), (b) and (c) of
this Agreement.
IFS INTERNATIONAL, INC.
(a Delaware Corporation)
By:_________________________
David L. Hodge, CEO
<PAGE>
LIST OF EXHIBITS AND SCHEDULES
Exhibit A Historical Financials
Exhibit B Closing Balance Sheet
Exhibit C Form of Consultancy Agreement for Sellers
Exhibit D Buyers' Counsel's Legal Opinion
Schedule 4.5 Existing Contracts
Schedule 4.8 Material Changes to October 31, 1999 Balance Sheet
Schedule 4.11 Employee Contracts which provide severance or other
post-employment benefits.
Schedule 4.12 Tax Matters [if applicable]
Schedule 4.13 Subsidiaries & Other Equity Interests [if applicable]
Schedule 4.17 Pending and Threatened Litigation & Claims
Schedule 4.19 List of Copyrights, Trademarks & Other Intellectual
Property
Schedule 4.20 Disclosures Against Warranties and Indemnities
Exhibit A Historical Financials
Exhibit B Closing Balance Sheet
Exhibit C Form of Consultancy Agreement for Sellers
Exhibit D Buyers' Counsel's Legal Opinion
Schedule 4.5 Existing Contracts
Schedule 4.8 Material Changes to October 31, 1999 Balance Sheet
Schedule 4.11 Employee Contracts which provide severance or other
post-employment benefits.
Schedule 4.12 Tax Matters [if applicable]
Schedule 4.13 Subsidiaries & Other Equity Interests [if applicable]
Schedule 4.17 Pending and Threatened Litigation & Claims
Schedule 4.19 List of Copyrights, Trademarks & Other Intellectual
Property
Schedule 4.20 Disclosures Against Warranties and Indemnities
