-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RfTqPziZfV68Xg7ml558Sm3gFFcVJw19Tbiybo7OAIDpZ0ZyuWhRlNdkGSxWpJgS nggMd6LIy3Dx1ssGTbkDUw== 0000950116-01-000368.txt : 20010307 0000950116-01-000368.hdr.sgml : 20010307 ACCESSION NUMBER: 0000950116-01-000368 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 32 CONFORMED PERIOD OF REPORT: 20000619 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010305 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVA INTERNATIONAL INC CENTRAL INDEX KEY: 0000807732 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 161284228 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-16341 FILM NUMBER: 1560830 BUSINESS ADDRESS: STREET 1: 6 WOODCROSS DR CITY: COLUMBIA STATE: SC ZIP: 29212 BUSINESS PHONE: 8034073044 MAIL ADDRESS: STREET 1: 6 WOODCROSS DR CITY: COLUMBIA STATE: SC ZIP: 29212 FORMER COMPANY: FORMER CONFORMED NAME: ADVANCED MEDICAL PRODUCTS INC DATE OF NAME CHANGE: 19920703 8-K 1 0001.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported): June 19, 2000 ADVA International Inc. ----------------------- (Exact name of registrant as specified in its charter)
Delaware 0-16341 16-1284228 -------- ------- ---------- (State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.) incorporation)
6 Woodcross Drive, Columbia, SC 29212 -------------------------------------- (Address of principal executive offices/Zip Code) Registrant's telephone number, including area code: 803.407.3044 Former name, former address, and former fiscal year, if changed since last report: N/A EXPLANATORY NOTE ADVA International, Inc. ("ADVA"), Biotel, Inc. ("Biotel"), Global Information Group USA, Inc. ("GIG") and the stockholders of GIG (the "Stockholders") consummated a transaction pursuant to an Agreement of Stock Exchange dated June 19, 2000, as amended (the "Agreement"). Under the terms of the Agreement, the Stockholders exchanged all the issued and outstanding shares of GIG owned by them and received in return an aggregate of 12,468,750 shares of ADVA common stock, par value $0.001 ("Common Stock"), representing a 94.57% equity interest in ADVA. GIG accordingly became a wholly-owned subsidiary of ADVA (the "Stock Exchange"). The remaining ADVA shares continue to be owned by the current stockholders of ADVA. The parties to the Agreement executed Amendments to the Agreement of Stock Exchange providing for the Closing Date to be extended to March 2, 2001. Following the administration of the Chapter 11 bankruptcy estate of ADVA (then known as "Advanced Medical Products, Inc."), the directors approved and recommended certain changes in ADVA's Certificate of Incorporation in order to better position ADVA to seek a share exchange or reverse merger with a privately held company in an attempt to recover some value for ADVA's stockholders. Toward this end, ADVA entered into the Agreement. GIG is a Delaware corporation which develops and markets applications software for the Linux Operating System, specifically, a three-dimensional ("3D") solid modeling, animation and rendering system for use by digital media professionals in the production of film and video special effects, animation, CAD and scientific visualization, website and print graphics, game development and virtual television. The Agreement includes representations and warranties of the Stockholders, the Company and ADVA of the type normally included in agreements of this nature. In addition, the Agreement contains various covenants including covenants by ADVA that ADVA's Common Stock is, at the Closing Date, qualified for and included on the OTC Bulletin Board, and that ADVA pay up to $300,000 to the creditors of Advanced Medical Products, Inc., should the Bankruptcy Court so require. Prior to the Closing Date, the Board of Directors of ADVA amended the Bylaws to provide that the Board shall consist of six directors. Three of the directors were selected by GIG. Unless otherwise indicated or the context otherwise requires, use of the terms "Company", "we", "our" or "us" in this report refers to GIG. Unless otherwise indicated or the context otherwise requires, this Report gives effect to the completion of the Stock Exchange described above. The Company GIG develops and markets applications software running on the Linux operating system (the "Linux OS"). Our present software product, first developed for the UNIX operating system, is believed to be the only complete 3D solid modeling, animation and rendering system currently available on the Linux OS. Our software has been designed for use by digital media professionals in the production of film and video special effects, animation, CAD and scientific visualization, Internet web site and print graphics, game development and virtual television. -2- The Linux OS is "open-source" software, i.e., it can be copied, modified and distributed without any associated fee and with few restrictions. It is distributed free on the Internet and via established market channels. An international community of programmers in cooperation with organizations such as Linux.org, VA Linux (LNUX), Red Hat (RHAT), Silicon Graphics (SGI), IBM and other major computer industry concerns continuously develops, debugs and improves the Linux OS. The stability, high performance, low cost and broad developer support of the Linux OS has caused it to emerge as a viable alternative to proprietary or internally developed operating systems. As the popularity of the Linux OS grows, applications developers have begun to market for sale Linux-compatible versions of well-known software applications. Although these applications run on the open source Linux OS, the applications are not themselves open source software. For example, Corel Corporation markets a Linux version of its well-known WordPerfect(R) Office Suite. The Company, in keeping with the Linux community culture, intends to distribute its basic 3D toolset for free to all registered users. However, like other developers of software applications that run on the Linux OS, GIG will offer more advanced software applications for sale to consumers rather than distribute them free of charge. Although the Company is exploring the feasibility of releasing certain parts of its source code under an open source license, it plans to keep its source code proprietary for the foreseeable future. -3- GLOSSARY Set forth below are definitions of certain specialized terms found in this Report. Computer Aided Design ("CAD"): A combination of hardware and software that enables engineers and architects to design everything from furniture to the space station. Until the mid 1980s, all CAD systems were specially constructed computers. CAD software that runs on general-purpose workstations and personal computers is now widely available. Computer Aided Engineering ("CAE"): Computer systems that analyze engineering designs and convert them into usable 3D models. CAE systems test a design under a variety of conditions to see if it will function as expected under real -world conditions. Constructive Solid Geometry ("CSG"): The process of building solid objects from other solids. The three basic CSG operators are Union, Intersection, and Difference. Each operator acts upon two objects and produces a single object result. By combining multiple levels of CSG operators, complex objects can be produced from simple ones. FTP or File Transfer Protocol is a facility for transferring to and from remote computer systems. Usually the user transferring a file needs authority to login and access files on the remote system. GNU General Public License ("GNU" pronounced "guh-NEW"). The license under which the Linux operating system ("Linux OS") is written and distributed. The terms of the license provide, among others, that the source code of the Linux OS is freely-distributed and available to the general public. "GNU" is a recursive acronym stands for "GNU's not Unix". Kernel: The fundamental part of a program, typically an operating system, that resides in memory at all times and provides the basic services. It is the part of the operating system that is closest to the machine and may activate the hardware directly or interface to another software layer that drives the hardware. Legacy application: An older software application which is still in use. Typically, legacy applications are database management systems running on mainframes or minicomputers. An important feature of new software products is the ability to work with a company's legacy applications, or at least be able to import data from them accurately. Modeling: Any method of precisely representing a 3-dimensional object as a set of mathematical equations on a computer. Object code: The machine language representation of programming source code. Object code is created by a compiler and is then turned into executable code for use by the computer. Polygonal Modeling: The construction of computer-generated models utilizing two-dimensional shaded polygonal shaped surfaces (generally triangles). Polygonal modeling is employed by most of the popular 3D graphics applications in use for special effects and animation today. Compare solid modeling (below) where mathematical solids are used to build models. Porting: To rewrite or otherwise enable a program written for one type of computer to be moved to another. To port an application, sections that are machine dependent must be rewritten and then recompiled (re-translated from source code (the code written by the programmers) into object code (the intermediary computer language produced by running source code through a compiler)) on the new computer. -4- Rendering: Refers to the process of adding attributes to a computer graphics model by adding qualities such as lighting, reflectivity, texture and color. One technique for rendering graphics is called ray tracing. Another type of rendering is scanline rendering, which renders images one vertical line at a time instead of object-by-object as in ray tracing. In general, scanline rendering doesn't produce as good results as ray tracing, but it is used frequently in animation packages where the image quality of each individual frame isn't so important. Other types of rendering include radiosity and reflection mapping. Raytrace Rendering: In computer graphics, an advanced technique for adding realism to an image by including variations in shade, color intensity, and shadows that would be produced by having one or more light sources on an image. Raytrace software works by simulating the path of a single light ray as it would be absorbed or reflected by various objects in the image and the human eye. To work properly, the artist must specify parameters of the light source (intensity, color, etc.) as well as all the objects (how reflective or absorbent the materials are). In the past, Raytrace rendering required enormous computational resources, and was supported by only the most advanced graphics systems. Today, raytrace rendering can be performed on many desktop workstations and personal computers. Render Farm: A network of computers specifically dedicated to the rendering function. Solid Modeling: A method of modeling in which solid shapes or primitives (such as cubes or spheres) are added to or subtracted from one another, or modified to create a resulting solid shape. In solid modeling, single objects of high complexity can be created through a series of simple steps. Compare Polygonal Modeling in which polygonal surfaces are used to construct the modeled object. Source code: Programming statements and instructions written by a human programmer. Source code is not directly executable by the computer but must be converted into machine language by compilers, assemblers or interpreters before a computer can make the program functional for the end-user of the software. Visualization: The use of rendering tools to visualize by giving textural, lighting, reflective, and/or refractive qualities to a dataset or model. This process is often used by CAD professionals to test the visual impact of their designs in the ongoing process of product design and by digital media artists to preview the effects of work done on their computer generated imagery. Visualization is also used to translate complex data, scientific and other types, into graphical form for ease-of-understanding. -5- Item 1. CHANGES IN CONTROL OF REGISTRANT Pursuant to an Agreement of Stock Exchange, as amended, (the "Agreement") dated as of June 19, 2000 among ADVA International, Inc. ("ADVA"), Biotel, Inc. ("Biotel"), Global Information Group USA, Inc. ("GIG" or the "Company") and the stockholders of GIG (the "Stockholders"), 94.57% of ADVA's issued and outstanding common stock has been exchanged for all the issued and outstanding shares of the Company (the "Exchange") in a transaction whereby the Company became a wholly-owned subsidiary of ADVA. The Agreement was adopted by the unanimous consent of the Board of Directors of ADVA on June 5, 2000. The Agreement was adopted by the unanimous written consent of the Board of Directors of the Company on July 17, 2000. No approval of the stockholders of ADVA or the Company was required under applicable state corporate law or under the applicable rules of the OTC Bulletin Board, however, the Stockholders have, by unanimous written consent dated July 17, 2000, approved the transaction. ADVA is authorized to issue 20,000,000 shares of common stock. Prior to the Closing Date of the Agreement, ADVA had outstanding 716,250 shares of common stock. On the Closing Date, ADVA issued an additional 12,468,750 shares to the Stockholders in exchange for all the issued and outstanding shares of the Company. As a result, the Stockholders now own 94.57% of the outstanding ADVA Common Stock and the remaining ADVA shares (716,250) continue to be owned by the pre-Exchange ADVA stockholders. In connection with the Exchange, the Stockholders and certain others were granted registration rights with respect to the shares of ADVA Common Stock that they received. The Registration Rights Agreement dated as of March 2, 2000 is attached hereto as Exhibit 4.1. On the Closing Date, three designees of the Company were appointed as new directors, bringing the total number of ADVA directors to six. Mr. Anthony E. Mohr was appointed President, Chief Executive Officer and Chairman of the Board. See "Directors and Executive Officers, Promoters and Control Persons", below. A copy of the Agreement of Stock Exchange is attached hereto as an Exhibit. -6- The following table describes, as at the Closing Date, the ownership of ADVA's outstanding Common Stock by (i) each person who is known to own more than 5% of ADVA's outstanding Common Stock; (ii) each officer and director; and (iii) all of ADVA's officers and directors as a group:
Amount of Beneficial Name of Beneficial Owner Ownership Percent of Class - ------------------------------------------------------- --------------------------- ------------------------ Anthony E. Mohr 3,542,621 26.87 7000 Boulevard East, Apt. 39E Guttenberg, NJ 07093 USA Heydael B.V. 1,048,630 7.95 Engweg 21 1251 LK Laren The Netherlands Hendrik Smit Engeweg 21 1,048,630 (1) 7.95 1251 LK Laren The Netherlands Hacken Investments Limited 769,230 (2) 5.83 Aleman Cordero Galindo & Lee Trust PO Box 3175 Road Town Tortola, British Virgin Islands Sybren Ijtsen Zeilstra 800,000 6.07 Koninginnegracht 49 2514 AE The Hague The Netherlands Meijer Lavino 800,000 6.07 2 Vosholdal 2930 Brasschaat Belgium Prof. Dr. Ruud A. M. Pruijm "Leeuwenflat" 's-Lands Werf 137 7,500 (3) * 3063 GD Rotterdam The Netherlands Philip L. van Wijngaarden Van Blankenburgstraat 66 -0- -0- 2517 XS The Hague The Netherlands
-7-
Amount of Beneficial Name of Beneficial Owner Ownership Percent of Class - ------------------------------------------------------- --------------------------- ------------------------ Ronald G. Moyer 360,000 (4) 2.73 6 Woodcross Drive Columbia, SC 29212 C. Roger Jones 330,000 (5) 2.50 3050 Briarcliffe Rd. Winston-Salem, NC 27106 George L. Down 36,576 (6) * 6 Woodcross Drive Columbia, SC 29212 Philip Ayoub -0- -0- 276 Palmer Road Riverside, CT 06878 Officers and Directors as a Group (9 Persons) 3,946,697 29.9%
*Less than one percent of the outstanding shares. - ------------- 1 Hendrik Smit is deemed the beneficial owner of these shares through his voting and dispositive power of those shares. 2 The capital stock of Hacken Investments Limited is beneficially owned 50% by Valerij Remmele and 45% by Benno P. Hafner, each of whom has voting and dispositive power of his shares. Mr. Hafner is also a director of Koenig Invest AG, one of the lenders to GIG. See "Executive Compensation and Other Information -- Certain Relationships and Related Transactions". 3 Dr. Pruijm is an advisory board member of Chatelin Capital Partners Limited, a firm providing investment banking, advisory and related services to GIG, and a director of ADVA. See "Executive Compensation and Other Information --- Certain Relationships and Related Transactions". 4 Ronald G. Moyer has sole dispositive power over 30,000 shares and is deemed the beneficial owner of 330,000 shares owned of record by Biotel, Inc. through his control over the voting power of those shares. See "Executive Compensation and Other Information -- Certain Relationships and Related Transactions". 5 C. Roger Jones is deemed the beneficial owner of these shares through his control as a director of Biotel, Inc. over the voting power of those shares. 6 Includes 8,647 shares owned of record by the Helen L. Down Trust (Helen Down is the mother of Mr. Down) for which Mr. Down serves as trustee, and (ii) 1,208 shares owned of record by members of Mr. Down's family. See "Executive Compensation and Other Information --- Certain Relationships and Related Transactions". -8- RISK FACTORS Set forth below are certain risks and uncertainties relating to our business. These are not the only risks and uncertainties we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business. If any of the following risks actually occur, our business, operating results or financial condition could be materially adversely affected. Risks Associated With Forward-Looking Statements And Industry Projections This Form 8-K contains certain "forward-looking statements". These statements are not historical facts but rather estimates or predictions made by the Company's management and others. All forward-looking statements involve risks and uncertainties. The Company cautions that the important factors discussed below have, or could, both (1) affect the Company's performance, and/or (2) cause actual performance to differ materially from our predictions. While the Company believes that the assumptions underlying the forward-looking statements contained in this Form 8-K are reasonable, nonetheless, they may be inaccurate. Accordingly, the Company cannot provide any assurances that these forward-looking statements will, in fact, be correct. This Form 8-K also contains citations to industry sources on which market projections are based. These projections are based in part on assumptions about technological developments, software trends and emerging consumer preferences, among other things, and are subject to change due to a number of factors, including economic and market conditions, technological advancements and changes in customer preferences. As a result, we cannot assure you that these market projections will actually be realized. Risks Related To Our Business Because we have a limited operating history and operate in a new industry, it is difficult to evaluate our business and prospects. The Company was formed in 1998 and has conducted only limited business activities since formation. Furthermore, we operate in the Linux industry, which has only recently exhibited significant growth. As a result of operating as an early stage company in the new and rapidly evolving Linux products and services market, we will encounter certain risks and difficulties. Certain factors that may affect us include: [] the evolving and unpredictable nature of our business model; [] the uncertain rate of growth in usage and acceptance of the Linux OS and other open source software; [] the uncertain demand for our products; [] the need to expand our sales, professional services and customer support organizations; [] acquiring businesses and technologies; [] increased competition in the Linux industry, particularly from larger, more established companies with greater resources; [] our ability to attract and retain qualified personnel; If we fail to adequately address any of these risks or difficulties, our business strategy may not be successful, our revenues may fail to grow and we may not achieve profitability. -9- We may not be able to successfully compete with other companies. In the market for 3D computer graphics and visualization software, we face significant competition from larger companies who market technologically advanced, feature-rich and market leading products, have greater financial resources, more established direct and indirect sales channels, larger installed bases and greater name recognition than the Company. These companies include Autodesk/Discreet, SGI/Alias-Wavefront, Avid/Softimage, Newtek, Side Effects, mental ray, Advanced Render Technology, NeoGeo/Blender and many others. In nearly all cases, these companies primarily sell 3D graphics systems that run on proprietary operating systems, such as Microsoft Windows and variants of UNIX. However, some of them, notably NeoGeo, Side Effects, and Alias-Wavefront and Softimage, have ported certain segments of their products to the Linux OS or have announced their intention to do so. These companies may have larger and more established service organizations to support these products and operating systems. These companies may be able to leverage their existing organizations, including their service organizations, to provide a wider offering of products and higher level of support on a more cost-effective basis than we can. In addition, these companies may be able to undertake more extensive promotional activities, adopt more aggressive pricing policies and offer more attractive terms to their customers than we can. A number of large, international software and hardware vendors, such as thelinuxmall.com, VA Linux, Red Hat, Debian, Caldera and Suse have recently announced intentions to begin marketing third-party Linux-based software applications. There is a risk that they may begin marketing and/or supporting 3D graphics software other than the Company's, which have greater functionality and lower prices than ours. Even if the functionality of the standard features of these products is equivalent to ours, we face a substantial risk that a significant number of customers will choose not to purchase products from a less well-known vendor, regardless of the competitiveness of our solutions. Furthermore, our competitors in the 3D graphics market segment who lack Linux-compatible applications could bring considerable pressure to bear on the reseller channel not to sell GIG's product line. We also face competition in narrow, vertical markets from limited purpose "plug-in" vendors that offer products that are carefully tailored for specific applications that better address the needs of certain customers. Furthermore, because Linux can be downloaded from the Internet for free or purchased at a nominal cost and is open source licensed, traditional barriers to new developers are reduced compared to UNIX or Windows(R) development. Accordingly, it is possible that new competitors or alliances among existing competitors may emerge and rapidly acquire significant market share in the Linux market segment. Any pricing pressures or loss of potential customers resulting from our failure to compete effectively would reduce our revenues and profitability. We have not been profitable, we expect to incur net losses for the foreseeable future and we may never achieve profitability. Our business has not yet generated a profit. If our revenues fail to grow at the rate we anticipate, or if our spending levels exceed our expectations or cannot be adjusted to reflect slower revenue growth, we may not achieve or sustain profitability or generate positive cash flow. We anticipate incurring significant expenses in connection with developing our products, hiring and training personnel, expanding our market reach and building awareness of our brand. We forecast our future expense levels based on our current operating plans and our estimates of future revenues. We may find it necessary to accelerate beyond our current expectations expenditures relating to product development and support and our sales and marketing efforts, or otherwise increase our financial commitment to creating and maintaining brand awareness among potential customers. All or any of these factors could adversely impact our future profitability. We may be unable to develop, expand and maintain a customer base. Our future revenue depends on our success in attracting customers and then successfully maintaining customer relationships. Our ability to attract customers and retain them will depend on a variety of factors, including the performance, quality, breadth and depth of our current and future product. We believe the principal factors on which we must compete are: o Product functionality; o User learning curve and ease-of-use issues; o Photo-realistic quality of rendered output; o Quality of product and product support; o Cost of getting product to market; o Price versus performance considerations; o File import/export compatibility with competing products, both legacy and new; o Efficiency of sales and distribution; and o Branding and name recognition. -10- To be competitive, GIG must respond promptly and effectively to the challenges of technological advancement, evolving standards and the innovations of competitors by continuing to enhance our products and to grow our sales and services organization. Our failure to remain competitive will result in an inability to add new customers or to maintain successful relationships with existing customers thus reducing our revenues. We and other Linux application providers could be prevented from selling or developing new products if the GNU General Public License and similar licenses under which the Linux OS is run and developed are not enforceable, or not effectively policed. Such an event could lead to a decrease in the use of Linux and have negative consequences on the ability of the Company to develop and market its products. The Linux kernel and the Linux OS have been developed and licensed under the GNU General Public License and similar open source licenses. These licenses require that any software program licensed under them may be copied, used, modified and distributed freely, so long as all modifications are also freely made available and licensed under the same conditions. We know of no instance in which a party has challenged the validity of these licenses or in which these licenses have been interpreted in a legal proceeding. To date, all compliance with these licenses has been voluntary. It is possible that parties may refuse to comply with the terms of these licenses. One resulting risk is that entities with the legal right to enforce theses licenses against non-complying parties might not be able to enforce these licenses effectively, because of a lack of financial resources or otherwise. Even with vigorous enforcement action, it is possible that a court would hold one or more of these licenses to be unenforceable in the event that someone were to file a claim asserting proprietary rights in a program developed and distributed under them. Any ruling by a court that these licenses are not enforceable, or that Linux-based operating systems, or significant portions of them, may not be copied, modified or distributed freely would have the effect of preventing us from selling or developing our applications, unless we are able to negotiate a license for the use of the code, or replace the affected code. In the event that we obtained such a license, we would likely be required to pay royalties for our applications covered by the license. Such payments would harm our operating results. We may not be able to obtain such a license. In the event we had to replace portions of the software code, which could be time consuming and lead to higher development costs, our operating results would be harmed. We may be unable to protect our intellectual property rights from misuse by third parties. Our software library and our trademarks comprise our business. The protective steps we have taken or will take may be inadequate to deter misappropriation of our proprietary rights. We acquired our software library and trademarks indirectly through a series of transactions from ElectroGIG Nederland B.V., now bankrupt. We are currently engaged in updating the records of the relevant national offices (for example, the United States Patent and Trademark Office) to correctly reflect that these trademarks are owned by us. However, this process is not complete. Failure to adequately protect our intellectual property rights could damage our brand identity and impair our ability to effectively compete in the market for our applications. Furthermore, defending or enforcing our intellectual property rights could result in the expenditure of significant financial and managerial resources. We are particularly vulnerable to claims that our applications infringe third-party intellectual property rights because (1) our applications were acquired indirectly from the bankrupt Dutch company that developed them, and (2) our applications may incorporate code developed in part by independent third parties in the open source community. Any resulting claims against us could be costly to defend or subject us to significant damages. -11- We may be exposed to future litigation based on claims that our applications infringe the intellectual property rights of others, or that we lack clear title to our intellectual property. This risk is made higher by the fact that most of the code in our products was developed by parties who were not employees of the Company. The great majority of our code was written by developers who were employed by two separate Dutch companies, both of which went through bankruptcy proceedings in the Netherlands in 1996-97. Significant Company resources could be expended if lawsuits were initiated against the Company attacking the validity of, or our title to, our intellectual property. Moreover, certain code in our applications may have been developed by members of the open source community over whom we exercise no supervision or control and who themselves might not have the same financial resources as we do to pay damages to a successful litigant. For example, developers may incorporate code into the Linux OS or kernel under the GNU General Public License without proper third party consents. These developers are unlikely to perform patent or other searches and may therefore unwittingly infringe third party rights. Third parties may accordingly join us as defendants in infringement suits and we may become subject to claims for monetary damages or an injunction against shipment of our applications. In addition, employees may utilize proprietary information from former employers without our knowledge. Any litigation, with or without merit, could be time consuming to defend, result in high costs, divert the attention of management and other resources or cause shipment delays. We also could be compelled to remove or replace infringing technology. We are not aware that our applications infringe any proprietary rights of third parties. We may be subject to litigation as a result of information published on, posted on or otherwise accessible from, our Internet sites. We may be subject to claims of defamation, negligence, copyright or trademark infringement (including contributory infringement) or other claims relating to the information on our Internet sites, whether written by us or by third parties. Such claims have been brought against online services in the past and can be costly to defend regardless of the merit of the lawsuit. Although recent federal legislation protects online services from certain claims when the material is written by third parties, this protection is limited. Moreover, the law in this area remains in flux and varies from state to state. In the event a claim is made against us in the future, our business could be seriously harmed. If we were prohibited from using the LINUX trademark in connection with our products and/or advertising, our business could be adversely affected. Like numerous other companies, GIG develops and markets Linux-based software. GIG does not own the registered trademark "LINUX" and, while we intend to seek the consent of the trademark owner to use the mark in connection with our goods and services, we have not yet done so. GIG believes that the continued efficacy and use of the LINUX trademark is important to its business. If the LINUX trademark is invalidated through a legal action, or if GIG is not permitted to use the mark, our business could suffer. In addition, GIG has no control over the use of the LINUX trademark, and use by others may lead to confusion as to source, quality, reputation and dependability of the Linux OS, which may harm GIG's business. We may not be able to raise sufficient capital to execute our business strategy. While we have secured financing which management believes is sufficient to fund anticipated operations through March 2002, we expect to require additional funds to support planned expansion, respond to competitive pressures, acquire complementary businesses or technologies and respond to unanticipated developments. Additional funding may not be available to us in amounts or on terms acceptable to us. If sufficient funds are not available, or are not available on acceptable terms, our ability to fund our expansion, execute our strategy, take advantage of acquisition opportunities, develop or enhance our services or products, or otherwise respond to competitive pressures would be significantly limited. -12- We have not yet completed the hiring of our management team. We need to hire additional members of our management team. Competition for such personnel is intense. We have experienced, and we expect to continue to experience in the future, difficulty in hiring highly skilled employees with the appropriate qualifications. If we do not succeed in attracting new personnel, our business could be adversely affected. Our management team will be new and if they are unable to work together effectively, our business could be seriously harmed. Our business is highly dependent on the ability of our management team to work together effectively to meet the demands of our business plan and expected growth. The members of our management team are not yet confirmed, but the selected team will not have previously worked together as a management team and will have only limited experience managing a rapidly growing company on either a public or private basis. Our productivity and the quality of our applications may be adversely affected if we do not integrate and train the team quickly and effectively. Our management team may have no or only limited experience operating a public company. The members of our management team may have no or only limited significant experience in leadership roles in a public company. We cannot assure you that the management team as eventually identified will be able to successfully lead a public company. The failure of the management team to adequately handle this challenge could have a material adverse effect on the Company's business. We may be unable to hire or retain key technical, marketing or sales personnel. We intend to hire a significant number of sales, marketing, technical and other personnel during fiscal 2001. Competition for these individuals is intense and we may not be able to attract, hire and/or retain highly qualified personnel. Our future success and ability to achieve revenue growth also depends upon the continued service of these key personnel. Competition for such personnel in our industry is extremely intense and characterized by high and rapidly increasing salaries, which may increase our operating expenses and/or hinder our ability to recruit qualified candidates. We depend on the continued services of our founder and other key personnel whose knowledge of our business and technical expertise would be difficult to replace. Our products and technologies are complex and we are substantially dependent upon the continued services of our Chief Executive Officer, Anthony Mohr. The loss of Mr. Mohr, or other key personnel, particularly to a competitor, could adversely affect our business, reduce our market share, slow our product development process and diminish our brand identity. Our products may contain defects that could be costly to correct, delay market acceptance of our products and/or expose us to litigation. Although we engage in comprehensive product testing, errors may be found in our applications after commencement of commercial shipments. Third parties over whom we exercised no supervision or control developed the majority of the software code in our products. Moreover, should we develop future Linux-based applications, a portion of the software code in these new product may also be developed by uncontrolled third parties. If errors are discovered, we may have to make significant expenditures of capital to eliminate them and yet may not be able to correct them in a timely manner, if at all. Errors and/or failures in our applications could result in a loss of, or delay in, market acceptance of our products and could damage our reputation and our ability to convince commercial users of the quality and dependability of our applications. -13- Errors or failures of our applications could cause our customers to assert warranty and other claims for substantial damages against us. Although our warranties typically contain provisions designed to limit our exposure to potential product liability and warranty claims, it is possible that these provisions may not be effective or enforceable under the laws of some jurisdictions. Our insurance policies may not provide sufficient coverage to adequately limit our exposure to this type of claim. These claims, even if unsuccessful, could be costly and time consuming to defend. If the market's acceptance of the Linux OS slows or stops, our ability to grow our business could be severely curtailed. We expect that substantially all our revenues for the foreseeable future will be derived from Linux-based applications and the provision of enhancements, services and support for these applications. The Linux OS has only recently gained broad market acceptance. This acceptance has been mostly limited to Internet infrastructure applications and scientific research environments. Our success depends on the continued and increased rate of adoption of Linux in these and additional markets. If this does not occur, our business will suffer. Even if Linux is widely accepted, the Linux OS and kernel is an open source software product, which users are licensed to freely copy, use, modify and distribute. Accordingly, anyone may download the Linux OS and numerous compatible software applications from the Internet, or otherwise copy without cost and use such applications. Our success depends on customers purchasing our Linux-based applications. If multiple and incompatible distributions of Linux achieve sufficient market acceptance, our operating expenses could increase and demand for our products could decline. If multiple, incompatible versions of Linux are developed, customers may become less likely to purchase Linux products, and our sales would suffer. In addition, we may be required to offer and support more distributions of Linux. This would result in increased operating expenses. Alternatively, if GIG software ran only on a single Linux distribution that was not the predominant Linux distribution, GIG's sales and revenue growth would suffer. If existing, and future, Linux OS companies fail to support us, refuse to enter into co-marketing arrangements with us, or otherwise react negatively to our business strategy or product line, our business will be harmed. Most of the software we plan to bring to market for the foreseeable future will be dependent on the support and success of hardware and software manufacturers and developers in the Linux community. We plan to enter into co-marketing arrangements with these companies to "bundle" our basic software into, for example, entry-level software-hardware packages. These companies, upon whom we also will rely to develop and maintain the Linux OS and sell Linux-based hardware, may not support us, our product promotions or our corporate or operating decisions. If these third parties fail to support us for any reason, or refuse to enter into "bundling" arrangements with us, we would be forced to rely to a significantly greater extent on our own development and marketing efforts, which would require us to hire additional developers, increase our expenses and adversely impact product release schedules. If existing, and future, Linux OS companies do not succeed in achieving increased sales of their respective products, demand for our products will decline. The worldwide market for computer operating systems is dominated by the Microsoft Windows(R) and UNIX families of software. If the companies that manufacture, develop and sell Linux-based computers and operating systems do not steadily increase their market share against the dominant systems, particularly in the desktop and workstation segments, the market for our products will not grow and demand for our products will decline, negatively impacting revenues and profitability. -14- Because we plan to rely heavily on the Internet for the marketing, sales, delivery and support of our software, disruptions such as viruses would be harmful to our business. We will rely on the Internet via regionally mirrored websites, FTP sites and intranets to market, sell and support GIG products. Such reliance accordingly extends to third party service providers, for example, internet service providers, web hosting service providers and others. If our third-party service providers experience an unforeseen problem or downtime and the Company's Internet presence is significantly impaired as a result, we may lose sales and our customer relationships could suffer. "Hackers" could crack the key generation system for our software or reverse engineer our applications and provide them for free to our customer base. If illegal copying and use of GIG software became widespread and well-known, it would adversely impact our ability to market our software and maintain sales, and would be harmful to our business. Our product sales and revenue growth depend on the continued popularity and acceptance of the Internet, which may decline if new laws and government regulations surrounding the Internet are enacted. If the popularity and acceptance of the Internet as an effective medium of commerce does not continue to grow, or declines, our product sales and revenue growth may be harmed. We will be significantly dependent on the Internet to process the marketing, sales and support of our products. As the use of the Internet continues to evolve, increased regulation by federal, state or foreign governments in areas including user privacy, pricing, content and quality of products and services becomes more likely. Our e-commerce activities might subject us to the jurisdiction of the legal systems of other countries. Taxation of Internet commerce, or other charges imposed by government agencies or private organizations may also be imposed. Laws and regulations applying to the solicitation, collection, processing of personal or consumer information could also be enacted. Any of these regulations could result in a decline in the use or popularity of the Internet as a medium for commerce, which could have an adverse effect on our future sales and revenue growth. We are vulnerable to unexpected network interruptions caused by system failures, which may result in reduced visitor traffic on our network, decreased revenue and harm to our reputation. Substantially all of our communications hardware and other hardware related to our web sites will be in only two to three locations. Fire, floods, hurricanes, tornadoes, earthquakes, power loss, telecommunications failures, break-ins and similar events could damage these systems. In addition, our servers are vulnerable to computer viruses, electronic break-ins, human error and other disruptions that could adversely affect our systems and web sites. We could lose revenue and suffer damage to our reputation if any of these occurrences affected our systems. Our insurance policies may not adequately compensate us for losses due to such failures or interruptions. If we fail to introduce new products and services in a timely manner, our products will become obsolete and our operating results will suffer. The computer software market is characterized by rapid technological change, frequent new product enhancements, uncertain product life cycles, changes in consumer preferences and evolving industry standards. Our products could be rendered obsolete if we lack the resources or ability to keep pace with such changes. Because advanced computing environments are highly complex, we cannot accurately estimate the life cycles of our products. New products and product enhancements can require long development and testing periods, which would require us to recruit, hire and retain increasingly scarce, technically competent 3D graphics and Linux-trained personnel. Significant delays in new product releases or significant problems in installing or implementing new products could seriously damage our business. It is impossible to predict our success in attracting and retaining the requisite talent to remain competitive. -15- Our timely delivery of new and/or enhanced products depends in part upon the open source community, the members of which are not employees of the Company and accordingly are not under the Company's control or direction. Any failure to timely identify and deliver new products and product enhancements will harm the Company's revenues and business prospects. Our ability to introduce new products or product enhancements will be impaired if Linux developers do not continue to enhance the core source code of the Linux OS and develop other Linux-based applications. As open source software, the Linux OS source code is open to the public and can be copied, modified and distributed without an associated fee. Our success depends in part on the continued efforts of the open source development community to enhance the source code of the Linux OS and Linux-based utilities and applications to make Linux compatible for use across multiple software and hardware platforms. If Linus Torvalds, the creator of Linux, and other third-party developers slow or stop the development and improvement of Linux functionality or the introduction of new open source software or software enhancements, our ability to market our existing and future Linux products and services would suffer. In this event, we would be forced to rely to a greater extent on our own development efforts or the development efforts of third-party consultants, which would significantly increase our costs. If the Linux developer community fails to support us or reacts negatively to our business strategy, our business will be harmed. Some members of the open source community have criticized the commercialization of the open source movement through activities such as licensing proprietary versions of open source software and providing services to the users of open source software. This type of negative reaction by third parties in the Linux developer community could harm our reputation, diminish our brand and result in lower revenues and profitability. To be competitive, we must strengthen our brand. We must have a strong brand in order to successfully compete in the market. In order to develop, promote and maintain our brand identity and to attract and retain customers, we have developed and will implement an advertising and promotional campaign. Our strategies may not be successful however. If we are unable to design and implement effective marketing campaigns, or we otherwise fail to promote and maintain our brand, our sales will not meet projected levels. Our business may also be harmed if we incur significant expense in an attempt to promote and maintain our brand without a corresponding increase in revenue. Our products are dependent in part upon the efforts of members of the open source community. The quality of future applications is dependent in part on the efforts and the expertise of members of the open source community. If we do not work productively with this community, our ability to provide quality applications and product enhancement will be harmed, which would harm our revenues and compromise our reputation in the open source community and with customers. In seeking to expand our operations outside the United States, we will become subject to a variety of risks. We intend to begin selling our products overseas during fiscal year 2002, initially in Europe. We anticipate that as we expand our international sales, we will fulfill orders through international resellers and the Internet. The Company is subject to risks inherent in operating outside of the United States, which include, but are not limited to, the imposition of governmental controls, exposure to different legal standards (particularly with respect to intellectual property protection), burdens of complying with a variety of foreign laws, export license requirements, future import and export restrictions, unexpected changes in regulatory requirements, foreign technical standards, political, social and economic instability, trade restrictions, changes in tariffs, difficulties in staffing and managing operations, difficulties in collecting receivables and in repatriating foreign earnings, and potentially adverse tax consequences. Demand for our products could also be adversely affected by seasonality of international sales and economic conditions in the Company's international markets. Moreover, should the value of the U.S. dollar increase relative to the value of other currencies, the Company's products could be less competitive in international markets. There can be no assurance that the risks associated with the Company's international operations will not materially adversely affect the Company's business, financial condition and results of operations in the future or require the Company to significantly modify its business practices. -16- Risks Relating to Our Stock The market for technology-related stocks has recently been extremely volatile. Recently, the capital markets have experienced extreme price fluctuations, including pronounced drops in share values and market capitalizations, particularly in technology and technology-related stocks. Should the market continue to experience such extremes and depressed stock values, our ability to raise additional capital on acceptable terms could be curtailed resulting in our inability to implement or realize our business plan. Our inability to proceed with our expansion plans would severely affect our stock price and the value of an investment in our stock. We expect to experience volatility in our share price, which could negatively affect the value of an investment. An active trading market for our shares may not develop or be sustained. The market price of the shares may fluctuate significantly in response to the following factors, most of which are beyond our control: o Variations in our quarterly operating results; o Changes in securities analysts' estimates of our financial performance; o Changes in market valuations of similar companies; o Announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; o Loss of a major customer or other failure to complete significant license transactions; and o Addition or departure of key personnel. The market for technology and Internet-related companies has experienced extreme volatility and pronounced drops in share values and market capitalization often have been unrelated to the operating performance of a given company. These fluctuations and depressed stock values may adversely affect the trading price of our shares, regardless of our actual operating performance. As a result, stockholders may be unable to sell their shares, or may sell them at a loss. Acquisitions could result in dilution to our stockholders, operating difficulties and other harmful consequences. We expect to acquire or invest in additional businesses, products, services and technologies that complement our service and product offerings and intended customer base. We plan to pursue discussions with companies regarding strategic acquisitions or investments. There can be no assurance that these discussions will result in actual acquisitions. To succeed in this strategy, we need to identify suitable acquisition candidates. In the event future acquisitions are consummated, we will face additional financial and operational risks, including: o Difficulty in assimilating the operations, technology and personnel of an acquired company; o Disruptions to our business due to allocation of resources to consummate these transactions, and the diversion of management's attention from our core business; o Difficulty in retaining key technical and managerial personnel from acquired companies; o Dilution of our stockholders, if we fund these acquisitions by issuing equity; o Assumption of the acquired company's operating losses, increased expenses and liabilities; o Weakening or termination of our relationships with existing employees, customers and business partners; o One-time in-process research and development charges and ongoing expenses associated with amortization of goodwill and other purchased intangible assets. -17- Concentration of ownership may prevent new investors from influencing significant corporate decisions. Upon consummation of the Agreement of Stock Exchange, our executive officers, directors and principal shareholders will beneficially own, in the aggregate, approximately 29.8% of our outstanding shares. As a result, these shareholders, if acting together, will be able to exercise control over all matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions. This concentration of control could disadvantage other shareholders with interests different from those of our officers, directors and principal shareholders. For example, our officers, directors and principal shareholders could delay or prevent an acquisition or merger even if the transaction would benefit other shareholders. See "Item 1 - Changes in Control of Registrant". The sale of ADVA Common Stock in the public market could cause stock prices to fall. The Stockholders hold 12,468,750 newly issued shares of ADVA Common Stock (representing 94.57% of ADVA's outstanding share capital) that will eventually be eligible for sale in the public market. Sales of a substantial number of shares could significantly reduce the market price of the Common Stock. Even the perception that the Stockholders might sell Common Stock could depress the trading price for these shares. These sales, and the possibility of these sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate. We are at risk of securities class action litigation due to our expected share price volatility and market price declines. In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially acute for us because technology companies have experienced greater than average share price volatility in recent years and, as a result, have been subject to, on average, a greater number of securities class action claims than companies in other industries. We may in the future be the target of similar litigation. Securities litigation could result in substantial costs and divert management's attention and resources, and could seriously harm our business. We may be unable to raise additional capital thus reducing our ability to compete and lowering revenues. We anticipate raising additional capital in the coming months to meet our needs for expansion of operations. However, additional funds may not be available at acceptable terms, if at all. If additional funds are raised through the issuance of equity securities, the percentage ownership of our then current stockholders would be reduced and the value of their investment might decline. In addition, any new securities issued might have rights, preferences or privileges senior to those of the securities held by our stockholders. If we raise additional funds through the issuance of debt, we might become subject to restrictive covenants. If we are unable to raise additional capital in a timely fashion and on acceptable terms, we may not be able to, among other things: o Develop or enhance our products and/or services; o Acquire new technologies, products or businesses; o Expand operations, in the United States or internationally; o Hire, train and retain employees; or o Respond to competitive pressures or unanticipated capital requirements. Our failure to do these things as needed could result in lower revenues and could cause serious harm to our business. -18- DESCRIPTION OF BUSINESS OVERVIEW For all intents and purposes, all of the operations of ADVA (a holding company) are through GIG, its wholly-owned subsidiary. GIG develops and markets applications software running on the Linux OS (the "Linux OS"). Our present software product, first developed for the UNIX operating system, is believed to be the only complete 3D solid modeling, animation and rendering system currently available on the Linux OS. Our software has been designed for use by digital media professionals in the production of film and video special effects, animation, computer-aided design ("CAD") and scientific visualization, Internet web site and print graphics, game development and virtual television. The Linux OS is "open-source" software, i.e., it can be copied, modified and distributed without any associated fee and with few restrictions. It is distributed free on the Internet and via established market channels. An international community of programmers in cooperation with companies such as VA Linux (LNUX), Red Hat (RHAT), Silicon Graphics (SGI), IBM and other major computer industry concerns continuously develops, debugs and improves the Linux OS. The stability, high performance, low cost and broad developer support of the Linux OS has caused it to emerge as a viable alternative to proprietary or internally developed operating systems. As the popularity of the Linux OS grows, applications developers have begun to market for sale Linux-compatible versions of well-known software applications. Although these applications run on the open source Linux OS, the applications are not themselves open source software. For example, Corel Corporation markets a Linux version of its well-known WordPerfect(R) Office Suite. The Company, in keeping with the Linux community culture, intends to distribute its basic 3D toolset for free to all registered users. However, like other developers of software applications which run on the Linux OS, GIG will offer our more advanced software applications for sale to consumers rather than distribute them free of charge. The Company plans to keep its source code proprietary for the foreseeable future. THE TECHNOLOGY GIG markets to Linux users a professional-quality 3D solid modeling, animation and rendering software suite. The software and rights to all ancillary intellectual property were acquired from a prior owner and ported from UNIX to Linux. The cost of acquisition was a fraction of the total development cost of the technology and therefore has enabled the Company to price our products aggressively in an increasingly competitive market. Our flagship product, GIG3DGO, is a 3D graphics system built upon a modeler with 3D solid geometry core technology, an important feature since the use of polygonal modeling is considered by many users as less effective for the construction of products or buildings in real world environments. Using a wide range of animation tools, the user can then animate the models. We believe our raytrace renderer to be among the best available in the industry. The software includes a set of dedicated converters thus enabling users to import files and models from competitive and complementary programs, rendering them to near-photographic quality. The sister products to GIG3DGO are described below. The Linux OS has recently been ported to the IBM/Motorola Power PC and Compaq/DEC ALPHA chips. The Company anticipates that this technological development, together with certain re-compiling work to be done on our products, will allow our software to run on over 90% of the world's workstations, desktops and laptops. -19- Our Products Throughout our existence, our UNIX legacy applications as originally developed by ElectroGIG Nederland B.V. have been in use in the market by a limited number of end-users. Since mid-1999, we have sold in a Linux beta version a limited number of copies of our flagship GIG3DGO product. These sales were primarily for testing purposes and resulted in minimal revenue to the Company. GIG expects to make available by August 2001 its Linux-compatible products for distribution through resellers, original equipment manufacturers and direct through the Internet. GIG's products all share certain core technology and are therefore expected to be relatively simple to maintain and/or upgrade in conjunction with upgrades of the Linux OS. The Company anticipates that the most basic version of GIG3DGO will be bundled with Linux OS releases and will be made available for Internet download free of charge. It is contemplated that subsequent upgrades and products will continue to be competitively priced in light of the advantage of our lower development/acquisition costs. GIG3DGO Our flagship product is a 3D animation system consisting of a constructive solid geometry modeler, a set of advanced animation tools and a photorealistic renderer that can be configured according to the end-user's desired output needs. GIG3DGO will provide professional 3D graphics tools to Linux users at an entry level price which we anticipate will be well below the lowest priced comparable packages on UNIX and Windows NT(R). GIGVIZ GIGVIZ is a visualization tool that enables the modeling, lighting and rendering of 3D models constructed in most popular Computer Aided Design ("CAD") packages and scientific data generation formats presently being utilized. Through a set of dedicated converters, users of CAD packages may use GIGVIZ to import their models and render them to near-photographic quality. GIGSTAR GIGSTAR is a raytrace renderer, to be made available as a stand-alone product, which will enable GIG users to distribute large render projects over a network of inexpensive Linux computers. As rendering is a time-intensive function, GIGSTAR on Linux will enable end-users to cut rendering time at a cost-effective price. Animations can consist of between 25 - 30 data-rich frames per second of animation. One such frame, depending on its content, can take anywhere from minutes to dozens of hours to render the complex visual effects encompassing the animation's lighting, motion and other variables. The ability to distribute this function over a network of computers reduces the total amount of time necessary to finish the project. However, this solution can increase the total cost of the system by a significant factor when using UNIX or Windows(R) computers. By employing a Linux-based render dedicated network (or "render farm"), this increase in system cost may be substantially reduced. The Company anticipates that the GIGSTAR product will also be priced substantially below both the full versions of GIG3DGO or GIGVIZ and less than competitive products thereby allowing the Linux user to deploy greater render power at a more cost-effective price. GIGPOWER3D GIGPOWER3D provides one tool kit to the professional digital content creator containing the features of GIG3DGO, GIGVIZ and GIGSTAR together with user-enabled software development tools to customize the software. Like its component products, it will be available at highly competitive prices. GIGTIME & GIG "A LA CARTE" PRODUCT DELIVERY In addition to the products listed above, end-users will be able to purchase individual upgrades to their basic packages "a la carte" through our website. Upon confirmation of the user's desired configuration and payment information, an e-mail software key will be sent within minutes to the end-user allowing users to access and download the software, configuring the license according to individual requirements. -20- Product Pricing The Company anticipates that its products will be priced significantly lower than those of its competitors. This policy is in keeping with the Company's reasonable cost of acquisition and development and the custom of the Linux open source community. Product Delivery E-Mail Software Keys Through a system of password keys, we intend to make our products available to end-users on a "timed" basis for those who may only need certain application features for certain limited time periods. For example, an end-user with a heavily rendered animation project and a tight deadline may wish only to "rent" a set of GIGSTAR render licenses for the project at hand. Without the intervention of sales staff, an end-user can then remotely set the time period for the licenses, choose the features needed and pay for the license, using and paying for only the software needed during the time period required by the end-user. Product Support Technical support will be handled primarily through the Internet. For a small annual fee, end-users will receive access to a member-only intranet which will provide them with direct interaction with technical support staff via instant messaging technology such as ICQ, e-mail support and access to a community of users. Members may log onto topic-specific areas to discuss experiences, "tips and tricks" and other solutions using GIG's software. The discussion pages will also provide content for the "frequently asked questions" section of the website. The site will feature searchable on-line manuals, artwork galleries, bug reporting, "how-to" features and tutorials. The site will also feature download and streaming videos of key functions in the software demonstrated by technical staff and experienced end-users. An Internet-based support function will help reduce staff costs thus enabling cost-efficient world-wide support and will allow us to monitor end-user reactions, problems and input to help us identify areas in the software requiring upgrading and/or fixing. We anticipate that our website will be on-line in the first quarter of fiscal 2002 and we expect to phase in the more advanced functions through the remainder of the year. Sales And Marketing The Company plans to utilize three main resources as sales channels: o The worldwide network of Linux resellers; o Bundling arrangements with manufacturers of Linux-compatible hardware and OS manufacturers; and o Direct sales via the Internet on the GIG website and on existing Linux Internet shopping sites such as thelinuxmall.com. The Company plans to market its products and generate interest in its sales channels by: o Worldwide trade show marketing in cooperation with Linux distributors and hardware manufacturers such as VA Linux, SGI, Compaq, Red Hat and Mandrake Linux. GIG software was successfully demonstrated in conjunction with VA Linux at the 1999 San Jose Linux World Expo; o Direct advertising in major Linux and computer graphics periodicals such as LinuxWorld Linux Journal and CGI; o Banner advertising on high-traffic Linux websites such as slashdot.com and linux.com; o Free distribution to all colleges, universities and vocational schools with a Linux or 3D graphics curriculum; o Entering into co-marketing arrangements with market-leading Linux companies for seminars, bundling arrangements, trade show participation, etc.; o The GIG website, which will offer specials, trade show and seminar information and video advertising; -21- Our strategy for distribution and sales relies heavily on the construction and maintenance of a global network of regionally mirrored websites combined with FTP sites for efficient software downloads. Furthermore, GIG will distribute its software free via both manufacturer bundles and Linux resellers. Once the full software package is in the possession of the end-user, the end-user will be able to work with the basic version, with limited features and rendering power, free of charge. Should the end-user desire to purchase expanded features, converters, higher render power, technical support or any other GIG product, the customer-enabled Company website will allow the end-user to make selections, pay for purchases and receive configured upgrades via e-mail in under three minutes. Research And Development In 1999 and 2000 the Company conducted limited research and development activities to enhance existing products and develop new features based on the licensed technology to which it then held the rights. For the two fiscal years ended March 31, 1999 and March 31, 2000, the Company incurred research and development expenditures of approximately $56,000 and $34,000, respectively. As a percentage of operating expenses, research and development was approximately 19% in 1999 and 11% in 2000. The decrease in expenditures was due to attrition of engineering personnel, the use of university internships which reduced man-hour costs, and the Company's decision to close the Netherlands office. The Company has recently recruited and hired developers who are currently enhancing the compatibility of the product line with the latest distributions of the Linux OS. We believe a significant level of investment in research and development will be required in order for the Company to be competitive. Accordingly, in the foreseeable future, we expect research and development expenses to increase both in absolute dollars and as a percentage of expenses. The Company plans to continue research and development at steadily increasing levels to update GIG products to the latest Linux kernel release, to produce further Linux-compatible application products and to analyze and assimilate other technologies which the Company believes will have potential in the Linux market space. STRATEGY The current products GIG offers on Linux are the first step in our plan to become a principal developer and marketer of Linux-compatible applications. Through association, acquisition and assimilation, we plan to begin offering a wide range of Linux-compatible products over the next two years, thereby helping to fill the current void in the market for Linux desktop/workstation products. GIG believes that the number of potential competitors developing quality applications will also increase rapidly over the next one to three years. Our primary objective is to become the leading provider of low cost, high quality Linux 3D graphics and visualization tools for the rapidly expanding market surrounding the Linux OS. We plan to exploit our advantages of low development/acquisition cost, time to market and price/performance to gain market share. Concurrently, the Company is engaged in research to help define enabling technologies and related applications with which to further exploit the existing code stream into new products on the Linux platform. -22- GIG has targeted for particular strategic emphasis the growing international market for Linux products and new Linux OS users (and Linux "converts"). This includes customers in regions whose markets have not previously been dominated by GIG's major competitors in the market for 3D graphics products running on UNIX or the Windows(R) operating systems. Coincidentally, these regions, which include Asia, South America and Eastern Europe, among others, are showing great promise as target markets for many of the Linux OS and hardware manufacturers. We expect that this market segment will continue to be the primary focus of our 3D graphics sales efforts. An associated focus will be on the growing worldwide market demand for the increasingly realistic visualization of 3D graphics from medical, scientific and CAD datasets. Based on our market surveys industry commentary and past awards; and end-user input, GIG believes it possesses one of the most photorealistic raytrace rendering systems available today, one which runs across multiple platforms and, due to its modular design, may be converted into a standalone product for direct use with the 3D graphics software offerings of other vendors. In the second phase of its development, GIG plans to market and develop an expanded roster of application products in the Linux market, initially for the 3D market space. Although the rapid growth of the Linux market has been heretofore largely attributable to increases in the sales of network servers/applications, GIG, as well as many industry professionals, believes the growth in desktop/workstation sales has been limited by a lack of application development for this market segment. The Company is actively researching and negotiating the possible acquisition of the rights to other applications that will be suitable for porting to Linux and marketing in the Linux market space. Since many companies have begun development of Linux products for the desktop and workstation segments, GIG believes a market is growing for desktop products. In order for GIG to succeed, both the Linux OS desktop/workstation market and the demand for our existing 3D graphics and new applications must continue to grow. Based on independent market research, we believe these markets will experience steady growth for the next three to five years. Jon Peddie Associates, a leading market research firm reporting on the 3D Visualization & Simulation Market (the market for our product line) , predicted in late 1999 that the market for 3D tools (including hardware, software and services) will triple in size - growing from an estimated $8.1 billion at the end of 2000 to $24.8 billion by the year 2005. Growth in Linux use has also been well documented by many respected analysts such as IDC and Dataquest and both these companies project rapid growth over the next five years. INTELLECTUAL PROPERTY RIGHTS Our products are based on a set of proprietary algorithms, data interpreters and software code built in commonly used computer languages. Our proprietary rights in this technology are protected by a system of copyright, trade secret and other measures taken to prevent reverse engineering of the products from their salable form (CD-ROM and Internet download). Although the Company believes that no hacking of its software has taken place to date, it can not guarantee that such activity will not be successful in the future. Historical Background The original GIG technology was developed at an estimated cost of approximately $15 million by ElectroGIG Nederland BV ("ElectroGIG"), which filed for bankruptcy in 1996. Through a series of transactions, ElectroGIG's technology and intellectual property rights were subsequently transferred to Belport Informatica e Electronicas, Importacao e Exportacao, Unipessoal LDA, a Portuguese company ("Belport"). In February 2000, in exchange for a one-time payment, Belport transferred to the Company all right, title and interest in and to the ElectroGIG technology and other intellectual property, including the software, the source code, copyright, know-how and technology, all trademarks, service marks, logos, logotypes, domain name registrations and other proprietary rights created by ElectroGIG and to which Belport held title. The Company plans to file in the United States Patent and Trademark Office and the offices of equivalent overseas bodies assignment documents relating to this acquired intellectual property. -23- COMPETITION Our 3D graphics products face competition from a variety of professionally accepted, well-funded and recognized firms. Competition is based on product characteristics including ease of use, feature sets and rendered output, price, cost-of-ownership, upgrade paths, maintenance and service. Numerous firms market software designed for 3D computer graphics production, many of which are publicly traded companies that have substantially greater financial and human resources and much greater recognition than the Company. The Company believes its principal competitors in the Linux-based 3D modeling/animation/rendering market are Side Effects, SGI/Alias-Wavefront, Avid/Softimage and NeoGeo. In the visualization market, the Company's principal competitors are Autodesk, mental images, Alias-Wavefront and numerous others, although none of these firms currently markets a Linux-based visualization tool. Companies in the broader 3D market include Autodesk/Discreet, Side Effects, SGI/Alias-Wavefront and Avid/Softimage. While these companies currently direct their efforts to a market segment other than our own, it is possible that they could target GIG's market in the future. The Company believes there is presently no other complete 3D solid modeling, animation and rendering system available on Linux, although NeoGeo currently markets a polygonal modeling/animation/rendering system that runs on the Linux OS. GIG expects significant growth in competition as several of the above companies have announced their plans to port their products to Linux in the future. EMPLOYEES, CONSULTANTS AND ORGANIZATION ADVA has no employees. In connection with the Chapter 11 bankruptcy proceedings, all ADVA employees were terminated effective May 12, 1999. Since September 15, 1999 the Company has had only one full-time employee, the Chief Executive Officer, augmented by several consultants in the areas of technology, finance and corporate development and part-time employees. Prior to ceasing operations in the Netherlands in early 2000, the Company employed six to nine persons, consisting of a Managing Director, Lead Technical Developer, two technical staff, a marketing intern and an administrative assistant. The Chief Executive Officer and three part-time administrative/research staff were located in the United States while the other employees were based in the Netherlands office. The Company is currently under the guidance of its Chief Executive Officer, Anthony E. Mohr, the Company's founder and largest individual shareholder. In May 2000, the Company engaged Philip Ayoub as interim acting Chief Financial Officer on a limited basis while the Company conducts a search for a full-time Chief Financial Officer. The Company also currently utilizes the services of several freelance programmers. The Company is recruiting and/or negotiating employment arrangements with persons to fill the roles of Vice President - Operations and Vice President - Marketing and other positions, and expects to hire several employees shortly after the Closing. LEGAL PROCEEDINGS The Chapter 11 bankruptcy estate of Advanced Medical Products, Inc. has been fully administered. There are no material pending legal proceedings to which ADVA is a party or to which any of its property is subject, nor is ADVA aware of any material proceedings to which any officer, director or affiliate of ADVA or a beneficial owner of more than 5% of ADVA's outstanding securities, or any associate of any such person, is a party adverse to ADVA or has a material interest adverse to ADVA. GIG is not a party to any material legal proceedings. We may from time to time become a party to various legal proceedings arising in the ordinary course of our business. FACILITIES ADVA leased a 10,080 square foot building located at 6 Woodcross Drive, Columbia, South Carolina 29212 for a term of five years commencing on November 1, 1996. Pursuant to the acquisition of ADVA assets and assumption of ADVA liabilities by Biotel, Inc. ("Biotel") in connection with the Chapter 11 bankruptcy proceedings, Biotel assumed all ADVA's obligations under the lease and subsequently entered into a lease agreement directly with the landlord, eliminating any obligation the Company may have had regarding this lease. -24- GIG was party to a two year lease for office space in Amsterdam, the Netherlands, with the Stichting Vastgoedfonds N.V., which terminated on September 15, 1999. The Company is currently a party to a monthly lease agreement with the Netherlands Chamber of Commerce, Inc. (the "Landlord"), pursuant to which the Company leases a small amount of office space, telecommunications services, business services and administrative staff services at One Rockefeller Plaza, Suite 1420, New York, New York 10020. This lease was for a one year term with option to renew and commenced May 1, 1998. As of May 1, 2000, the Company and the Landlord agreed to a month-to-month leasing arrangement in anticipation of the Stock Exchange and a subsequent move to new office space. The Company expects to enter into a new lease for office space within the Charlotte, North Carolina metropolitan area during the spring of 2001 and anticipates that site will become the corporate headquarters. At that time the office in New York shall be closed and the lease terminated. GIG's CORPORATE HISTORY GIG is a Delaware corporation which was founded on April 2, 1998. The Company originally had offices in New York and Amsterdam, the Netherlands. The Netherlands office has now been closed and the Company has wound down all operations and other matters relating to the existence of the Amsterdam office. For the period from April 2, 1998 (inception) through March 31, 1999 and the fiscal year ended March 31, 2000, the Company generated nominal revenues of $1,540 and $6,944, respectively, and incurred net losses of $(287,851) and $(339,034), respectively. Prior to giving effect to the Agreement of Stock Exchange, the Company had authorized 10,000 shares of common stock of which 1,189.04 were issued and outstanding. During the first two years of the Company's existence, management focused upon building our source code base through licensing and development, surveying the world market for Linux products (particularly 3D graphics applications), engaging in targeted test marketing and seeking funding for our operations. Most of these activities were carried out from the Company's Amsterdam office, which we have since closed. In select market testing during mid-1999, GIG recognized from Linux resellers worldwide a significant potential for its range of 3D graphics products. In response, the Company conducted further testing and enhancement of its products using a small group of in house technical personnel in the Netherlands. During fiscal years 1999 and 2000, GIG sought and received a total of $600,000 in seed capital investment (half from equity investment and half from loans), which was used primarily for costs of personnel, research and development, operations and consulting fees. During the first quarter of fiscal 2000, the Company closed a round of financing comprised of loans from two lenders in an aggregate amount of $1.5 million (which includes the $300,000 loan described in the preceding paragraph), proceeds of $450,000 from the exercise of certain share options ($1.2 million, net of $750,000 of investment and other advisory fees) and the exercise of a subscription option for one per cent (1%) of the Company's issued stock in return for $300,000. See "Executive Compensation and Other Information --- Certain Relationships and Related Transactions" for a complete description of the Company's financing activities. The Company also completed the acquisition of its software portfolio, source code, trademarks and other intellectual property for a total cost of $200,000. The acquisition provided the Company with all right, title and interest in and to the portfolio of software to which it previously held an exclusive license and enabled the Company to pursue a technical development strategy without the need to pay royalties. -25- The Company plans to utilize its position as a publicly traded company to attract top industry talent for employment, secure additional financing to help fund operations and finance possible acquisitions of other promising Linux-based technologies which will help to expand the Company's product portfolio and open additional marketing opportunities over the mid to long-term. This planned growth will require the Company to obtain additional funding. The Company estimates that it will seek to raise approximately $10 million over the next two years. Also, for the foreseeable future we may incur significant losses as we build our infrastructure, implement our marketing strategy and ramp up our sales. The Company is also undertaking recruitment to acquire additional key staff. -26- PLAN OF OPERATION The following discussion should be read in conjunction with the Financial Statements and Notes thereto appearing elsewhere in this Form 8-K. Some of the statements under "Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of Operations", "Business" and elsewhere in this report constitute forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "could", "expects", "plans", "intends", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of such terms and other comparable terminology. These statements involve known and unknown risks, uncertainties and factors, including those listed under "Risk Factors", that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot and do not guarantee future results, levels of activity, performance or achievements. Our short-term objectives are to complete the upgrading of our line of 3D graphics products on Linux. with product sales to commence during the second quarter of fiscal year 2002. We expect to be in a position to roll out our products at the Linux World Expo trade show in August 2001. The success of this plan depends, in part, on our ability to forge cooperative relationships with the major hardware and software vendors in the Linux market. We shall also seek to sell our products worldwide directly over the Internet and via the reseller channel for Linux-based computer solutions commencing in the above-mentioned period. Our long-term objectives are to generate steadily increasing revenues and obtain the capital necessary to acquire or license other promising technologies to expand our portfolio of Linux-based products. During the year ended March 31, 2000 our operations generated cash losses of $297,170. We funded our operating losses during this period through a combination of low interest long-term debt and the private sale of shares of our common stock. During the nine months ended December 31, 2000 we generated operating losses from operations of $521,897. We funded these operating losses during this period through a combination of low interest long-term debt and the private sale of shares of our common stock. Subsequent to December 31, 2000, we borrowed $800,000 to help fund our operations. Based on anticipated revenue growth during fiscal year 2002 and the above borrowings, we believe we will have sufficient funds to meet our projected cash needs through the end of fiscal 2002. We believe that we will attain profitability during the second half of fiscal year 2002. However, should we realize lower than expected revenue growth or incur an unforeseen level of expenses, we will incur additional losses and we will need to obtain additional capital in order to continue operations. No assurances can be given as to the availability of such funding, or the terms thereof. We do not have any available credit, bank financing or other external sources of funding. Due to historical operating losses, our operations have not generated cash flow. In order to obtain capital, we would need to sell additional shares of common stock and/or borrow funds from private lenders. There can be no assurance that we will be successful in attracting equity or debt funding. During fiscal year 2002, we plan to perform limited research and development work on our existing product line. The work on existing products will include product maintenance, de-bugging and certain enhancements. The majority of expenses anticipated in fiscal year 2002 are expected to relate to building our Internet website, marketing, sales and personnel expenses. We expect to employ a combination of development hardware lending programs provided by affiliated computer manufacturers; leasing and purchasing of certain computer hardware; purchasing software licenses and leasing of office equipment and services in order to meet our technical and operational needs. -27- The total number of full time employees is anticipated to increase from one to seven over the remainder of fiscal year 2002. We intend to continue to utilize a network of consultants and third-party vendors in both operational and technical roles for the foreseeable future. Most of these employees and consultants are expected to telecommute from their established home offices. We anticipate the relocation of our corporate headquarters from New York, New York to the Charlotte, North Carolina metropolitan area within the first quarter of fiscal year 2002 in order to reduce costs and facilitate the expansion of our infrastructure and number of personnel. We anticipate no significant increase in operating expenses related to this move. We also contemplate changing our fiscal year to coincide with the June 30 fiscal year of ADVA. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS The directors and officers of the Company on and after the Closing Date will be as follows: Name Age Position and Term of Service - ---- --- ---------------------------- George L. Down 60 Director President: October 1997 - Closing Vice President: April 1996 - October 1997 Director: September 1986 - Closing. C. Roger Jones 62 Director since January 1996 Ronald G. Moyer 65 Director, Vice President and Chairman, January 1996 - Closing. Anthony E. Mohr 42 President, Chief Executive Officer and Chairman of the Board since the Closing Date Philip Ayoub 39 Acting Chief Financial Officer Philip L. van Wijngaarden 30 Director since October 2, 2000 Prof. Dr. Ruud A. M. Pruijm 54 Director since October 2, 2000 Anthony E. Mohr is President, Chief Executive Officer and Chairman of the Board. After four years of sutudy at Fordham University, Mr. Mohr became Production Manager for Irving Miller Inc. in 1981 and became Vice President in 1985. In 1989, Mr. Mohr left Irving Miller, Inc. to become the Director of U.S. marketing and sales for the Royal Dutch Graphics Industry, a consortium of over 350 graphics production firms. In January 1994, Mr. Mohr joined ElectroGIG Nederland B.V. as Director of Operations. Two years later Mr. Mohr left ElectroGIG to co-found the Virtual Studio Corporation, the first dedicated virtual television facility in the United States. Virtual Studio Corporation was sold within one year. In 1997 Mr. Mohr accepted a position in the Netherlands to act as a consultant to Europe's largest television producer, Endemol Entertainment, in the execution of its virtual television department until founding the Company in April 1998. -28- George L. Down has been a Director since 1986, including for the duration of ADVA's Chapter 11 bankruptcy proceeding. See "ADVA's Historical Background". Prior to re-assuming a seat on the board, Mr. Down had served since October 1997 as ADVA's President. Mr. Down was Vice President of Sales and Marketing for ADVA from April 1996 to October 1997, and, since 1986, had also served as a director. Until December 1992 and for more than five years prior, he served as the president of Design Realizations, Ltd., a closely held corporation founded by Mr. Down, where he performed design and packaging services for a variety of companies, including ADVA. Mr. Down received a Bachelor of Science in Industrial Design degree from Syracuse University in 1964. C. Roger Jones has been a Director since 1996, including for the duration of ADVA's Chapter 11 bankruptcy proceeding. See "ADVA's Historical Background". Mr. Jones was Chief Executive Officer of Carolina Medical from July 1999 to January 2000 and served as President of Carolina Medical from 1985 until 1999. From 1970 to 1985 he was Vice President of Sales and Marketing for Carolina Medical.. He has been with that company since 1961. He has also served as Chairman for Eagle Golf Ball Company, Inc. since 1988. Ronald G. Moyer is a director. Mr. Moyer is President, Chief Executive Officer and Chairman of Biotel, Inc., a holding company that owns Advanced Biosensor Inc., Braemar Inc. and Carolina Medical Inc. Mr. Moyer served as Vice President, Treasurer and Chairman of the Board of ADVA from January 1996 to the consummation of the Exchange, including for the duration of ADVA's Chapter 11 bankruptcy proceeding. See "ADVA's Historical Background". From January 1996 until October 1997 he also served as Advanced Medical's President and Chief Executive Officer. Since 1992 he has been the Chief Executive Officer and Chairman of Carolina Medical, Inc., a manufacturer of medical instruments. From 1991 to 1992 he served as Director of Mergers and Acquisitions for Dominion Holdings Group, a merchant bank. From 1989 to 1991 he served as Executive Vice President and Chief Operating Officer of CXR Corporation, an AMEX listed company. Prior to that time since 1969 he was the President, Chief Executive Officer and Chairman of the Board of Digilog, Inc., a NASDAQ listed public company. He received an MS in Aerospace Engineering from Drexel University in 1963 and completed the Harvard Business School Small Corporation Management Program in 1981. Prof. Dr. Ruud A. M. Pruijm will serve as a Director from and after the Closing. Prof. Pruijm is president of Pruijm Informatica B.V., an independent information strategy consultancy firm and a part-time professor of Information Management at the Erasmus University of Rotterdam (the Netherlands). Prof. Pruijm is a Dutch certified public accountant. From 1972 through 1977 he worked for KPMG as an EDP-Auditor. In 1977 he joined Coopers Lybrand as its principal information systems consultant. In 1981 he joined the ING Group as a Senior Manager for Planning and Research and in 1997 became Vice President for Planning and Research and Advisor to the Board of Directors. Prof. Pruijm is also member of the Board of Directors of Chatelin Capital Partners Limited, a firm providing investment banking, advisory and administrative services and assistance to the Company. See "Executive Compensation and Other Information --- Certain Relationships and Related Transactions". Philip L. van Wijngaarden will serve as a Director from and after the Closing. Mr. van Wijngaarden is Managing Director of Paramount Corporate Finance B.V., a firm providing venture capital and related corporate finance services to start-up and development stage enterprises. Prior to joining Paramount Corporate Finance B.V. in September 2000, Mr. van Wijngaarden was Managing Director of Chatelin Capital Partners Limited, the investment advisor to the Company and other start-up technology companies in Europe and the United States. Mr. van Wijngaarden is a licensed attorney in the Netherlands with experience in cross-border mergers and acquisitions from both a legal and a financial perspective. He also sits on the non-executive Board of Directors for the European Association of Securities Dealers (EASDAQ). Philip Ayoub will serve as the Company's acting Chief Financial Officer. Mr. Ayoub has served the Company in the capacity of acting Chief Financial Officer since May 2000. Mr. Ayoub is a self-employed certified public accountant who, since 1992, has performed accounting-related consulting services on an independent basis. Mr. Ayoub will continue in his role as acting Chief Financial Officer until such time as the Company engages a permanent, full-time CFO. It is contemplated that Mr. Ayoub will work approximately ten hours per week on the Company's financial matters. -29- The Company does not currently compensate its Directors for serving as such, but the Directors are and will be reimbursed for their reasonable out-of-pocket expenses incurred in their capacities as members of the Board of Directors. EXECUTIVE COMPENSATION AND OTHER INFORMATION Employment Agreement with Anthony E. Mohr GIG and Anthony E. Mohr entered into an employment agreement dated January 21, 2000 extending Mr. Mohr's position as Chief Executive Officer of GIG. In connection with the Stock Exchange, Mr. Mohr's employment agreement will be re-negotiated. It is anticipated that the re-negotiated agreement will provide to Mr. Mohr health benefits and insurance plans, performance based bonuses, eligibility to participate in a stock option plan, certain vacation and personal time and reimbursement of approved expenses incurred in the conduct of business. Mr. Mohr will receive a salary of $110,000 per annum. In addition, the Company shall pay to Mr. Mohr $62,500 in deferred salary, plus 10% interest on the outstanding deferred portion of his salary. Any improvements, inventions, discoveries, formulae, processes or methods within the scope of GIG's business activities which Mr. Mohr makes or conceives during his employment will be the sole and exclusive property of GIG. Mr. Mohr will be bound by provisions precluding him from divulging confidential and/or proprietary information both during and after termination of his employment. Key Man Insurance The Company maintains a "key man" insurance policy with a face amount of $5,000,000 on the life of Anthony Mohr. The Company, as Trustee, is entitled to receive the sum of $5,000,000 in the event of Mr. Mohr's death. The annual premium for this policy paid by the Company is $10,000. ADVA Executive Compensation The following table discloses certain summary information concerning the compensation paid for services rendered to ADVA in all capacities for the two fiscal years ended June 30, 2000 and the six month period ended December 31, 2000, to each of ADVA's Chief Executive Officer and its four most highly compensated executive officers other than the Chief Executive Officer, whose total annual salary and bonus were in excess of $100,000 (each a "Named Executive Officer"): ADVA SUMMARY COMPENSATION TABLE
Long-Term Compensation/Awards ----------------------------- Annual Compensation Awards Payouts ------------------- ------ ------- Name/Position FY Ended Salary Bonus Options Other 6/30 ($) ($) George W. Down, Pres. 1999 $77,661 -0- $6,500 (1) -0- George W. Down, Pres. 2000 -0- -0- -0- -0-
- ---------- (1) The value of 10,000 shares of ADVA common stock issued in lieu of cash compensation for services. -30- There were no grants of ADVA stock options during the fiscal year ended June 30, 2000 nor for the six month period ended December 31, 2000. GIG Stock Option Grants In the fourth quarter of fiscal year 2000, GIG granted to Jolec Trading Limited ("Jolec") and Chatelin CApital Partners Limited ("CCP") options to purchase GIG shares upon the occurrence of certain events. See "Executive Compensation and Other Information -- Certain Relationships and Related Transactions" for a complete description of these option grants. Employee Benefit Plans 401(k) Plan. ADVA's defined contribution profit sharing plan pursuant to Section 401(k) of the Code (the "ADVA Plan") was established in 1993. In connection with Biotel's purchase of ADVA's assets and its hiring of ADVA's employees in May, 1999, Biotel took into its 401(k) plan the ADVA Plan accounts of the terminated ADVA employees, leaving in the ADVA Plan approximately $15,000 in funds belonging to former ADVA employees. ADVA's Board subsequently voted to terminate the ADVA Plan and instructed the Plan Administrator to close it. The funds belonging to the former ADVA employees have now been distributed and the ADVA Plan is formally terminated. ADVA Stock Option Plan. On January 26, 1987, the Board of Directors of ADVA adopted a Stock Option Plan. An amended and restated version of the Stock Option Plan was adopted by the stockholders of ADVA on December 16, 1992. Pursuant to the terms of the ADVA Stock Option Plan, both qualified and non-qualified stock options could be granted. The maximum term of any option under the ADVA Stock Option Plan is ten years and the per share option price of incentive options may not be less than 100% of the fair market value of ADVA's common stock on the date of grant. However, incentive stock options granted to persons owning more than 10% of the voting common stock of ADVA may not have a term in excess of five years or an option price per share less than 110% of the fair market value of the common stock on the date of grant. As of June 30, 1999, options to purchase 602,500 shares of Common Stock under the ADVA Stock Option Plan were outstanding. The options were exercisable at prices ranging from $0.14 to $1.63 per share and expired at various dates through April 2003. During fiscal 1999 and fiscal 2000, no options to purchase shares were granted and no options were exercised. On May 12, 1999, in connection with the Chapter 11 bankruptcy estate of ADVA, all ADVA employees were terminated and became employees of Biotel. Under the terms of the ADVA Stock Option Plan, employee stock options expire ninety days after termination. Options granted to non-employee directors expire upon a director's resignation or termination. The May 12, 1999 termination of ADVA employees resulted in the expiration on August 10, 1999 of all outstanding options except options to purchase 1,500 shares held by C. Roger Jones, a non-employee director. In anticipation of the consummation of the Agreement of Stock Exchange, Mr. Jones executed a Release of Stock Options on June 20, 2000 and thereby released and quit-claimed in favor of ADVA all his interest in these options. Accordingly, there are currently no outstanding options under the ADVA Stock Option Plan. 2001 Stock Option Plan Set forth below is a summary of the provisions of the 2001 Stock Option Plan, adopted by the Board of Directors on March 2, 2001. This summary is qualified in its entirety by the detailed provisions of the text of the actual 2001 Stock Option Plan set forth as an exhibit to this Form 8-K. -31- Eligibility All officers and key employees of the Company and of any present or future Company parent or subsidiary corporation are eligible to receive an option or options under the 2001 Stock Option Plan. All directors of, and important consultants to, the Company and of any present or future Company parent or subsidiary corporation are also eligible to receive an option or options under the 2001Stock Option Plan. Awards Under the 2001 Stock Option Plan Options granted under the 2001 Stock Option Plan may be Incentive Stock Options, or Non-Qualified Stock Options. Unless the context otherwise requires, the term "option" includes both Incentive Stock Options and Non-Qualified Stock Options. Administration The 2001 Stock Option Plan shall be administered by the Board of Directors of the Company, or a compensation committee appointed by the Company's Board of Directors. Pursuant to the terms of the 2001 Stock Option Plan, the compensation committee must consist of a minimum of two and a maximum of five members of the Board of Directors, each of whom shall be a "Non-Employee Director" within the meaning of Rule 16b-3(b)(3) under the Securities Exchange Act of 1934, as amended, or any future corresponding rule, except that the failure of the compensation committee for any reason to be composed solely of Non-Employee Directors shall not prevent an option from being considered granted under the 2001 Stock Option Plan. References to the term "Committee" herein refer to either the Company's Board of Directors or such committee. Under the 2001 Stock Option Plan, the Committee has the right to adopt such rules for the conduct of its business and the administration of the 2001 Stock Option Plan as it considers desirable. The Committee has the right to construe the 2001 Stock Option Plan and the options issued pursuant to it, to correct defects and omissions and to reconcile inconsistencies to the extent necessary to effectuate the purpose of the 2001 Stock Option Plan and the options issued pursuant to it. Common Stock Subject to the 2001 Stock Option Plan The aggregate number of shares which may be issued upon the exercise of options under the 2001 Stock Option Plan is 1,400,000 shares of the Company's Common Stock. Limitation on Maximum Number of Options Awarded The 2001 Stock Option Plan provides that the maximum number of options which may be awarded to any single optionee under the 2001 Stock Option Plan shall be no more than is equal to 80% of the shares reserved for issuance under the 2001 Stock Option Plan. The purpose of this limitation is to enable awards made pursuant to the 2001 Stock Option Plan to comply with the conditions of Section 162(m) of the Internal Revenue Code which provide for the deductibility of compensation paid to the Company's Named Officers if it is performance based. Exercise Price of Options/Payment of Exercise Price The option price for options issued under the 2001 Stock Option Plan shall be equal to the fair market value of the Company's Common Stock on the date of grant of the option. The exercise price of an option may be paid in cash, the delivery of already owned shares of Common Stock of the Company having a fair market value equal to the exercise price, or a combination thereof. The 2001 Stock Option Plan permits, only upon the approval of the committee administering the Plan, payment of the option price in Common Stock of the Company to permit the "pyramiding" of shares in successive exercises. Thus, only if permission is obtained, an optionee could initially exercise an option in part, acquiring a small number of shares of Common Stock, and immediately thereafter effect further exercises of the option, using the Common Stock acquired upon earlier exercises to pay for an increasingly greater number of shares received on each successive exercise. This procedure, where allowed, could permit an optionee to pay the option price by using a single share of Common Stock or a small number of shares of Common Stock and to acquire a number of shares of Common Stock having an aggregate fair market value equal to the excess of (a) the fair market value of all shares to which the option relates over (b) the aggregate exercise price under the option. -32- Special Provisions for Incentive Stock Options The maximum aggregate fair market value of the shares of Common Stock (determined when the Incentive Stock Option is granted) with respect to which Incentive Stock Options are first exercisable by an employee in any calendar year cannot exceed $100,000. In addition, no Incentive Stock Option may be granted to an employee owning directly or indirectly stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, unless the exercise price is set at not less than 110% of the fair market value of the shares subject to such Incentive Stock Option on the date of the grant and such Incentive Stock Option expires not later than five years from the date of grant. No Incentive Stock Option granted under the 2001 Stock Option Plan is assignable or transferable, otherwise than by will or by the laws of descent and distribution. Except in the event of death or disability, any Incentive Stock Option granted under the 2001 Stock Option Plan is exercisable only during the lifetime of an optionee, and are exercisable only by such optionee. Awards of Non-Qualified Stock Options are not subject to these special limitations. Exercisability and Expiration of Options All options granted pursuant to the 2001 Stock Option Plan are exercisable in accordance with a vesting schedule (if any) which is set by the Committee at the time of grant. The expiration date of an option is also determined by the Committee at the time of the grant, but in no event will an option be exercisable after the expiration of ten years from the date of grant of the option. All unexercised options terminate three months following the date on which an optionee's employment with the Company terminates, other than by reason of disability or death. An exercisable option held by an optionee who dies or who ceases to be employed by the Company because of disability may be exercised by the employee or his representative within one year after the employee dies or becomes disabled (but not later than the scheduled option termination date). The Committee may in its sole discretion, provide in an option agreement the circumstances under which the option shall become immediately exercisable and may accelerate the date on which all or any portion of an option may be exercised. Expiration of the Stock Option Plan Unless terminated earlier by the Board of Directors, the 2001 Stock Option Plan will remain in effect until all awards granted under 2001 Stock Option Plan have been satisfied by the issuance of shares provided that no new awards may be granted under such 2001 Stock Option Plan more than ten years from of the date the 2001 Stock Option Plan was adopted by the Company. Adjustments The 2001 Stock Option Plan provides for adjustments to the number of shares subject to outstanding options and to the exercise price of such outstanding options in the discretion of the Committee in the event of a declaration of a stock dividend, distribution or other offering of shares, merger, consolidation, transfer of assets, reorganization, split up, combination or recapitalization. Transferability of Non-Qualified Stock Options Except as otherwise provided by the Rules and Regulations of the SEC, the 2001 Stock Option Plan provides that the Committee at the time of grant of a Non-Qualified Stock Option may provide that such stock option is transferable to any "family member" of the optionee by gift or qualified domestic relations order. For purposes of this section, a family member includes any child, stepchild, grandchild, parent, step-parent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the grantee's household (other than a tenant or employee), a trust in which these persons have more than 50% of the beneficial interest, a foundation in which these persons (or the grantee) controls the management of assets, and any other entity in which these persons or the grantee own more than 50% of the voting interests. -33- Amendments Except as required pursuant to Rule 422 of the Code or any successor or provision, the Board of Directors may amend or supplement the 2001 Stock Option Plan, including the form of option agreement, in any way, or suspend or terminate such plan at any time, as determined by the Board of Directors without the approval of stockholders; provided, however, that such action shall not affect options granted under the 2001 Stock Option Plan prior to the actual date on which such action occurred. If the Board of Directors voluntarily submits a proposed amendment, supplement, suspension or termination for shareholder approval, such submission shall not require any future amendments, supplements, suspensions or terminations (whether or not relating to the same provision or subject matter) to be similarly submitted for shareholder approval. It is contemplated that the Company will grant options to purchase approximately 360,000 shares of common stock to executive level employees to be hired by the Company in the near term. Limitation on Liability of Directors; Indemnification ADVA's Certificate of Incorporation provides that a director will not be personally liable to ADVA or its stockholders for monetary damages for breach of the fiduciary duty of care as a director, including breaches which constitute gross negligence. However, this provision does not eliminate or limit the liability of a director of ADVA (i) for breach of the director's duty of loyalty to ADVA or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law (relating to unlawful payment of dividends or unlawful stock repurchases or redemptions), (iv) for gaining a financial profit or other personal advantage to which he or she was not entitled, or (v) for breaches of a director's responsibilities under the Federal securities laws. ADVA's by-laws provide that ADVA shall indemnify its officers, directors, employees and agents, to the extent permitted by the General Corporation Law of Delaware. The Company has in place a director's and officer's liability insurance policy providing for their full indemnification to the extent permitted by the General Corporation Law of Delaware. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS On January 14, 2000, GIG entered into a Share Purchase and Shareholders' Agreement (the "Share Purchase Agreement") pursuant to which GIG borrowed in three tranches an aggregate of $1,500,000 from Koenig Invest AG, a Swiss company with a principal place of business in Zug, Switzerland ("Koenig") and Newick Developments Limited, a company incorporated in the British Virgin Islands with its principal place of business in Tortola, B.V.I. ("Newick").; Jolec Trading Limited, a British Virgin Islands company, purchased from Anthony Mohr 100 shares of the issued and outstanding shares of GIG for the sum of $1; and CCP, a firm providing investment banking, advisory and related services to GIG received: (i) a fee of 2.5% of the loan principal amount in return for services rendered in connection with arranging the loans from Koenig and Newick; and (ii) an option to purchase 300 GIG shares (equating to 3,145,920 shares of ADVA Common Stock in the Stock Exchange) for the sum of $1 at the time the second tranche was advanced; and either (a) options in an IPO event for $2,500,000 worth of shares at issue price and a further 10% of the issued shares at a 30% discount to the issue price; or (b) options in a takeover or merger event to purchase 10% of GIG's issued and outstanding share capital (determined as at the date of exercise) (equating to 1,246,875 shares of ADVA Common Stock in the Stock Exchange) at a 65% discount to the value assigned to the shares for the purposes of the transaction, and a further 5% of GIG's issued and outstanding share capital (equating to 623,437 shares of ADVA Common Stock in the Stock Exchange) at a discount of 90% to the value assigned to the GIG shares (the "Take-over Options"). -34- Pursuant to basic terms agreed in the Share Purchase Agreement, GIG, Koenig and Newick subsequently entered into loan agreements entitling GIG to borrow an aggregate of $1,500,000 and pursuant to which CCP received a fee for advisory services rendered amounting to 2.5% of the loan principal (the "Loan Agreements"). In February 2000, GIG drew down $300,000 against the aggregate $1,500,000 loan. Pursuant to the Share Purchase Agreement and the relevant loan agreements, CCP received an arrangement fee of $7,500 resulting in net proceeds to GIG of $292,500. In May 2000, Jolec Trading Limited exercised an option to subscribe for one percent (1%) of GIG resulting in proceeds to GIG of $300,000. In March 2000, in anticipation of the Stock Exchange, CCP exercised the Take-over Options and caused the transfer of the underlying shares to certain Stockholders. As proceeds from the exercise of the Take-over Options, GIG received $450,000, net of $750,000 in fees due CCP in connection with investment and other adivsory services rendered in connection with the Stock Exchange. Fiona van Hulst, a Stockholder of GIG and a director of CCP, personally acquired 2.38 shares of GIG common stock, which converted to 25,000 shares of ADVA Common Stock after giving effect to the Stock Exchange. In May 2000, GIG drew down a further $400,000, net of an arrangement fee of $30,000 to CCP, against the aggregate $1,500,000 loan. In February 2001, GIG drew down the balance of the available loan proceeds ($800,000). No arrangement or other fees were due or have been paid in connection with this disbursement. Certain of the Stockholders and Newick Developments Limited (one of the lenders to GIG) share a common Managing Director. Each of Jolec Trading Limited, Sorenesen's Securities Limited, Gorilla Ventures N.V., Moana Lake Finance Corporation and Viewmont Holdings Limited are managed by Intertrust (Curacao) N.V., a Netherlands Antilles firm providing company management and formation services, trustee and other professional and financial services. In addition, the capital stock of Hacken Investments Limited (which, after the Closing, will own ADVA common stock representing approximately 5.8% of ADVA's issued and outstanding share capital), is 45% beneficially owned by Benno P. Hafner, a director of Koenig. See "Executive Compensation and Other Information --- Certain Relationships and Related Transactions". In order to comply with all the terms and conditions of the Agreement of Stock Exchange, the parties to the Share Purchase Agreement and the Loan Agreements executed a Waiver and an Agreement effectively amending the Share Purchase Agreement and the Loan Agreements. The Waiver and Agreement serve to delete certain provisions and revise others in the Share Purchase Agreement and the Loan Agreements which were inconsistent with the requirements of the Agreement of Stock Exchange. The Waiver and the Agreement are filed as exhibits hereto. Since the execution of the Agreement of Stock Exchange, certain changes in the composition of Stockholders occurred. Pursuant to the Agreement of Stock Exchange, all the parties to the Agreement of Stock Exchange, together with the new stockholders, subsequently executed a Stock Exchange Joinder Agreement in which ADVA and Biotel consented to the transfer of GIG shares and the new stockholders agreed to be bound by the Agreement of Stock Exchange and all ancillary documents which contemplate the consummation of the Stock Exchange. -35- On May 14, 1998, GIG and Inrisco B.V. ("Inrisco") entered into a letter agreement whereby Inrisco purchased 100 shares of GIG, which constituted 10% of GIG's issued and outstanding share capital (equating to 1,246,875 shares of ADVA Common Stock in the Stock Exchange) (the "Letter Agreement"). The Letter Agreement contained certain clauses affording minority shareholder protections to Inrisco and to co-investors, and to their respective successors and assigns. In November 1998, Inrisco transferred its entire holding to three individuals who, according to the terms of the Letter Agreement, might have been able to invoke the minority shareholder protections originally afforded to Inrisco. In contemplation of the Agreement of Stock Exchange, all the Stockholders (including the three individuals who acquired the Inrisco shares) executed a Termination Agreement and Mutual Release whereby they agreed that the Letter Agreement (and the minority shareholder protections provided therein) was of no further force or effect and did not and will not, individually or collectively, inure to the benefit of any of the Stockholders. The Termination Agreement and Mutual Release are filed as exhibits hereto. On February 3, 2000, the ADVA Board appointed a committee consisting of Ronald Moyer, George Down, Roger Griffis and L. John Ankney for the purpose of seeking potential reverse merger candidates, negotiating terms of a stock sale or merger and presenting recommendations for the Board's approval. The Board also approved a resolution to issue ADVA Common Stock to members of the committee and to one or more outside consultants in lieu of cash compensation for providing these services to ADVA. On February 5, 2000, ADVA entered into an agreement with a consultant to advise the Board and the committee regarding opportunities for merging a private company into ADVA. On March 24, 2000, pursuant to the resolution, Mr. Moyer received 30,000 shares of ADVA Common Stock, Mr. Down, Mr. Griffis and Mr. Ankney each received 10,000 shares of ADVA Common Stock and the consulting firm received 60,000 shares of ADVA Common Stock. ADVA's HISTORICAL BACKGROUND ADVA (then known as Advanced Medical Products, Inc. ("Advanced Medical") was incorporated in the state of Delaware in September 1986, and in June 1987 successfully concluded an IPO of its Common Stock, raising $2,034,000 net proceeds. In 1994 Nishimoto Sangyo Company Ltd., a Japanese distributor of Advanced Medical's products, purchased 2,000 shares of Preferred Stock in Advanced Medical for $2,000,000. Through 1997 Nishimoto accepted additional shares of Preferred Stock and common stock in satisfaction of unpaid dividends on the Preferred Stock. 160 Preferred shares were issued to SCANA in 1996. On January 12, 1996 Carolina Medical, Inc., a privately held medical device manufacturing company located in King, North Carolina, purchased 750,000 shares of Advanced Medical's authorized but unissued Common Stock for $150,000. BioTel International, Inc., a holding company (which was subsequently acquired by Carolina Medical) purchased an additional 1,400,000 shares of Advanced Medical's Common Stock on March 29, 1996 for $280,000. On October 20, 1997 Advanced Medical entered into a Stock Purchase Agreement with Carolina Medical, Inc., selling an additional 850,000 shares of Common Stock of Advanced Medical to Carolina Medical, Inc. for $263,500. This stock purchase increased Carolina Medical's ownership in Advanced Medical to 3,000,000 shares, or 50.3 percent, of the 5,962,495 issued and outstanding Common Stock shares. In May 1998 Nishimoto Sangyo sold 300,000 common stock shares and 2,217 preferred stock shares in Advanced Medical in exchange for shares of Carolina Medical, Inc. This transaction brought Carolina Medical's ownership in Advanced Medical to 55.3% of the common stock and 93.3% of the preferred stock of Advanced Medical issued and outstanding. In June 1998 Carolina Medical purchased from SCANA the remaining 160 Preferred shares of Advanced Medical. As of June 30, 1998, dividends on the Preferred Stock of $162,981 were owed to Carolina Medical by Advanced Medical. On July 23, 1998, Biosensor acquired all of the outstanding shares of CMI of Minnesota ("CMI"), a Minnesota corporation, pursuant to a Plan of Reorganization and Agreement by and between CMI and Biosensor. Carolina Medical Inc., a North Carolina corporation which owned 55.3% of the common stock and all of the preferred stock of Advanced Medical, was merged with and into CMI, which also owned Braemar, Inc., a North Carolina corporation operating in Minneapolis, MN. This transaction became effective July 1, 1998 and was recorded as a "reverse acquisition", whereby CMI was deemed to have acquired Biosensor. The net assets of Biosensor acquired were recorded at fair market value. The historical financial statements of Biosensor prior to the acquisition became those of CMI. Subsequent to July 1, 1998, the financial statements of Biosensor include the operations of the combined companies, including Carolina Medical, Braemar, and Advanced Medical. -36- In July 1998, the board approved a plan to sell Advanced Medical's MICROS QV product line to Carolina Medical in exchange for all of the 2,377 shares of Preferred Stock in Advanced Medical (having a face value of $2,377,000), and the unpaid dividends of $162,981. In October 1998 the Plan that had been approved by both companies was completed, and all of the shares of Advanced Medical's Preferred Stock issued and outstanding were retired. On March 23, 1999, Advanced Medical filed a motion with the Federal Bankruptcy Court, District of South Carolina, for an order authorizing the sale of all assets, including equipment, inventory, and accounts receivable, outside the ordinary course of business, free and clear of all liens and encumbrances and other interests, pursuant to 11 U.S.C. Section 363 of the bankruptcy code. Advanced Medical continued to operate as debtor in possession, pending sale of the assets. Emergent Asset Based Lending, L.L.C., Advanced Medical's principle secured lender whose loan agreement has been in default since December, agreed to continue to lend against receivables and inventory based on Biosensor's guarantee of the debt. As of March 22, 1999, $ 253,446 was borrowed by Advanced Medical under this agreement. On May 11, 1999 pursuant to the order of the Bankruptcy Court, Advanced Medical sold all assets, including equipment, inventory, and accounts receivable, outside the ordinary course of business, free and clear of all liens and encumbrances and other interests. Biosensor Corporation purchased the assets and assumed all of the secured debt, employee and commission liabilities, and all customer warranty and service liabilities of Advanced Medical. In addition, Biosensor made a payment of $68,000 for certain priority claims and administrative expenses, and for distribution to outside unsecured creditors. Biosensor and its subsidiaries agreed not to participate in distribution of payments toward unsecured claims, although their claims exceeded unsecured claims by all non-affiliated creditors combined. The assets and liabilities of Advanced Medical were consolidated with the operating assets and liabilities of Biosensor, and the assets and liabilities of Diagnostic Monitoring purchased by Biosensor from Cardiac Science Inc. on December 31, 1998, into Advanced Biosensor, Inc., a new wholly owned subsidiary of Biosensor, which also assumed Advanced Medical's lease obligations and continued to operate the business at the present Columbia, SC location. On May 23, 1999 stockholders of Biosensor Corporation voted to change the name of Biosensor Corporation to BIOTEL Inc. On June 29, 1999 the Bankruptcy Court entered an order confirming the Plan of Reorganization. Advanced Medical filed the Final Report with the Court on October 5, 1999, and the Final Decree closing the bankruptcy case was issued by the Court on November 9, 1999. Advanced Medical changed its name to "ADVA International, Inc." on March 14, 2000. In connection with the Agreement of Stock Exchange, ADVA on April 14, 2000 filed with the Court a Motion to Reopen the Case in order to seek modification of the plan of reorganization confirmed by the Order of Confirmation entered June 29, 1999. The Motion to Reopen the Case was granted by the Court on April 20, 2000 and the Court entered an Order granting the Company an expedited hearing. Also on April 20, 2000, ADVA filed a Motion to Revise Certain Language of Confirmed Plan and to Modify Confirmed Plan to Delete Dissolution and Cancellation of Stock Language (the "Motion to Revise"). In the Motion to Revise, ADVA sought authorization to modify the confirmed plan to delete language stating that it would be dissolved and the stock of its shareholders extinguished, and to insert provisions stating that ADVA shall continue its existence, and that the shares of its stock shall remain valid. The court re-opened the case and, on May 5, 2000, the Court issued an order approving and amending the Plan of Reorganization in order that a transaction fee could be realized for the benefit of creditors of Advanced Medical Product, Inc. and the payment of certain expenses, thus allowing the transactions contemplated by the Agreement of Stock Exchange to proceed. On January 5, 2001, the Court entered an order closing the re-opened case. -37- DESCRIPTION OF SECURITIES GENERAL Upon consummation of the Agreement of Stock Exchange, the authorized capital stock of ADVA will consist of 20,000,000 shares of Common Stock, $0.001 par value, 4,000 shares of Class A Preferred Stock, no par value, and 6,000 shares of Class B Preferred Stock, no par value. An aggregate of 13,185,000 shares of Common Stock are issued and outstanding upon consummation and no Preferred Stock is outstanding. COMMON STOCK Holders of ADVA Common Stock are entitled to one vote per share on all matters to be voted upon by the stockholders. Subject to preferences that may be applicable to any outstanding preferred stock that may be applicable, the holders of Common Stock are entitled to receive ratably those dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available for dividends. REGISTRATION RIGHTS After consummation of the Exchange, the Stockholders and certain others (the "Rights Holders") will be entitled to registration rights under the Securities Act with respect to the shares of ADVA Common Stock held by them pursuant to a Registration Rights Agreement dated March 2, 2001. Under the terms of the Registration Rights Agreement, the Rights Holders are entitled to demand registration rights pursuant to which they may require ADVA to file a registration statement under the Securities Act at ADVA's expense with respect to certain shares of ADVA Common Stock. Additionally, if ADVA proposes to register any securities under the Securities Act, either for its own account or for the account of other security holders exercising registration rights, the Rights Holders are entitled to notice of the registration and to include their shares of ADVA Common Stock in the registration at ADVA's expense. Further, in the event market factors require that the number of shares of ADVA Common Stock requested to be registered be reduced in the offering pro rata among the Rights Holders, ADVA may be required to file additional registration statements at its own expense. All of these registration rights are subject to the right of the underwriters of an offering to limit the number of shares included in such registration. These registration rights terminate when the holder can transfer his or her registrable shares pursuant to Rule 144 or on March 2, 2006, whichever occurs first. SHARES ELIGIBLE FOR FUTURE SALE Potential Adverse Effect on Market Price Due to Shares Eligible for Future Sale. At March 2, 2001 the Company had a total of 13,185,000 shares of Common Stock outstanding, of which 716,250 shares were freely tradeable without restriction or registration under the Securities Act by persons other than "affiliates" of the Company as defined under the Securities Act. The remaining 12,468,750 shares outstanding are "restricted shares" as that term is defined by Rule 144 promulgated under the Securities Act. These restricted shares will become eligible for sale under Rule 144 in March, 2002, subject, in certain cases to the volume and other limitations set forth in Rule 144. The Company has granted certain registration rights with respect to the 12,468,750 restricted shares of Common Stock held by the Stockholders and certain other individuals which would otherwise become eligible for sale under Rule 144 beginning in March, 2002. Sales of substantial amounts of Common Stock could adversely affect the prevailing market price of the Common Stock. -38- TRANSFER AGENT ADVA's transfer agent is Valley Forge Software Corporation, 1375 Anthony Wayne Drive, Wayne, Pennsylvania 19087. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS ADVA'S Common Stock, $0.001 par value, is traded in the over-the-counter ("OTC") market under the symbol "ADII". Through February 1, 1995, the Common Stock was quoted on the NASDAQ Bulletin Board under the symbol "ADVA". The Common Stock was delisted from NASDAQ Small Cap trading commencing February 2, 1995 due to ADVA's inability to meet NASDAQ capital and surplus requirements. Since that date, ADVA's Common Stock has been traded on the electronic bulletin board. Set forth below is the range of high and low bid information for ADVA's Common Stock for the two preceding fiscal years as reported from the OTC Bulletin Board and reflect daily bid prices. These quotations represent prices between dealers, do not reflect retail mark-up, mark-down or commissions, and may not represent actual market transactions. The information has been adjusted to give effect to a one-for-ten reverse stock split, effective March 13, 2000. High Ask Low Bid -------- ------- First Calendar Quarter, 1999 0.90 0.20 Second Calendar Quarter, 1999 0.70 0.10 Third Calendar Quarter, 1999 0.80 0.10 Fourth Calendar Quarter, 1999 3.10 0.50 First Calendar quarter, 2000 3.00 2.06 Second Calendar Quarter, 2000 3.25 1.19 Third Calendar Quarter, 2000 1.63 0.88 Fourth Calendar Quarter, 2000 1.75 0.50 The bid and ask prices as of March 1, 2001 were 0.50 and 1.00, respectively. As of February 28, 2001 there were approximately 1,334 record holders of ADVA's outstanding Common Stock. ADVA has never paid any cash dividends on its Common Stock and does not anticipate paying cash dividends on its Common Stock in the foreseeable future. ADVA currently has authorized 4,000 shares of Class A Preferred Stock, no par value, and 6,000 shares of Class B Preferred Stock, no par value. Between 1992 and 1996, ADVA issued a total of 2,377 shares of Class A Preferred Stock. Pursuant to the sale in July 1998 by ADVA to Carolina Medical, Inc. of ADVA's MICROS QV product line in exchange for all of the 2,377 shares of ADVA Class A Preferred Stock and unpaid dividends thereon of $162,981, all 2,377 outstanding shares of ADVA Class A Preferred Stock were retired. No shares of Class A or Class B Preferred Stock are currently issued and outstanding. -39- ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. See Item 1 above for a complete description of the Stock Exchange. Pursuant to the Agreement, ADVA exchanged 12,468,750 shares of its Common Stock representing a 94.57% equity interest in ADVA in return for all of the issued and outstanding shares of GIG and GIG became a wholly-owned subsidiary of ADVA. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements filed as part of this report: The financial statements and the notes thereto of GIG, the financial statements and notes thereto of ADVA and the pro forma consolidated financial statements of ADVA after giving effect to the Agreement of Stock Exchange, are attached hereto beginning on page F-1.
Financial Statements of Global Information Group U.S.A., Inc. Report of Independent Certified Public Accountants................................... F-1 Financial Statements Balance sheets as of March 31, 2000 and December 31, 2000......................... F-2 Statements of operations for the year ended March 31, 2000, for the period April 2, 1998 (inception) through March 31, 1999, for the nine months ended December 31, 2000 and 1999 and for the period April 2, 1998 (inception) through December 31, 2000........................... F-4 Statements of changes in stockholders' equity for the year ended March 31, 2000, for the period April 2, 1998 (inception) through March 31, 1999 and for the nine months ended December 31, 2000................ F-5 Statements of cash flows for the year ended March 31, 2000, for the period April 2, 1998 (inception) through March 31, 1999, for the nine months ended December 31, 2000 and 1999 and for the period April 2, 1998 (inception) through December 31, 2000........................... F-6 Notes to financial statements..................................................... F-7 to F-11
Financial Statements of ADVA International, Inc.(1) - --------------- (1) Reference is made to Registrant's Annual Report on Form 10K-SB/A for the fiscal year ended June 30, 2000, filed October 17, 2000 and Registrant's Quarterly Reports on Form 10Q-SB for the quarters ended September 30, 2000 and December 31, 2000, filed October 10, 2000 and February 8, 2001, respectively, each of which is hereby incorporated by reference. -40- Notes to Financial Statements (b) Pro Forma Financial Information Unaudited Pro Forma Consolidated Financial Statements .................... F-12 ADVA International, Inc. Unaudited Pro Forma Consolidated Balance Sheet December 31, 2000 .......................... F-13 (c) List of Exhibits filed pursuant to Item 601 of Regulation S-K. The following exhibits are incorporated by reference in, or filed with, this Report on Form 8-K. Management contracts and compensatory plans, contract and arrangement are indicated by "*". Exhibit No. Description - ---------------- ------------------------------------------------------------ 2.1 Agreement of Stock Exchange, as amended, dated June 19, 2000 2.2 Amendment (2.01) to Agreement of Stock Exchange dated February 21, 2001. 2.3 Stock Exchange Joinder Agreement dated February 21, 2001 2.4 Escrow Agreement dated February 7, 2001 2.5 Waiver dated February 21, 2001 2.6 Funding Agreement dated February 21, 2001 4.1 Registration Rights Agreement dated as of the Closing Date 4.2 Letter Agreement between Inrisco B.V. and the Company dated May 14, 1998 4.3 Share Purchase and Shareholders' Agreement among the Company, Chatelin Capital Partners Limited, Jolec Trading Limited, Anthony Mohr, Koenig Invest AG and Newick Developments Limited 4.4 Consultancy Agreement between the Company and Chatelin Capital Partners Limited dated January 21, 2000 4.5 Termination and Mutual Release dated May 31, 2000 5.1 Intentionally omitted 5.2 Legal Opinion of Menaker & Herrmann LLP 5.3 Legal Opinion of Blanco Tackabery Combs & Matamoros, P.A. 8.1 Tax Opinion of Blank Rome Comisky & McCauley LLP -41- 10.1 Intellectual Property Rights Transfer Agreement dated February 12, 2000 *10.2 Employment Agreement with Anthony Mohr 10.3 Intentionally omitted 10.4 Intentionally omitted *10.5 Letter Agreement with Philip Ayoub *10.6 C. Roger Jones - Release of Stock Options dated June 20, 2000. *10.7 2001 Stock Option Plan 10.8 First Loan Agreement by and between the Company and Newick Developments Limited dated February 2, 2000. 10.9 First Loan Agreement by and between the Company and Koenig Invest AG dated February 2, 2000. 10.10 Second Loan Agreement by and between the Company and Newick Developments Limited dated February 2, 2000. 10.11 Second Loan Agreement by and between the Company and Koenig Invest AG dated February 2, 2000. 24.1 Power of Attorney in favor of Philip van Wijngaarden dated April 1, 2000 24.2 Power of Attorney in favor of Hendrik Smit dated May 12, 2000 24.3 Power of Attorney in favor of Anthony E. Mohr dated May 12, 2000 24.4 Power of Attorney in favor of Benno P. Hafner dated 30 March 2000 24.5 Power of Attorney in favor of Benno P. Hafner dated 16 February 2001 24.6 Power of Attorney in favor of Christiaan Ouwinga dated 26 February 2001 -42- Report of Independent Certified Public Accountants Global Information Group USA, Inc. New York, New York We have audited the accompanying balance sheet of Global Information Group USA, Inc. (a development stage enterprise) as of March 31, 2000, and the related statements of operations, changes in stockholders' equity, and cash flows for the year ended March 31, 2000 and the period April 2, 1998 (inception) through March 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Global Information Group USA, Inc. (a development stage enterprise) as of March 31, 2000, and the results of its operations and its cash flows for the year ended March 31, 2000 and the period April 2, 1998 (inception) through March 31, 1999 in conformity with generally accepted accounting principles. BDO Seidman, LLP Philadelphia, Pennsylvania February 24, 2001 F-1 Global Information Group USA, Inc. (A Development Stage Enterprise) Balance Sheets March 31, December 31, 2000 2000 ----------- ---------- (Unaudited) Assets Current assets................................ Cash $ 183,492 $ 478,516 Other receivables, officer............... 19,005 26,384 Prepaid expenses......................... -- 29,000 ----------- ---------- Total current assets.......................... 202,497 533,900 Software 200,000 200,000 Deferred financing costs, net................. 869,687 742,246 ----------- ---------- Total assets.................................. $ 1,272,184 $1,476,146 =========== ========== See accompanying notes to financial statements. F-2 Global Information Group USA, Inc. (A Development Stage Enterprise) Balance Sheets
March 31, December 31, 2000 2000 ---------- ---------- (Unaudited) Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued expenses.............................. $399,069 $ 126,219 Long-term debt......................................................... 300,000 700,000 ---------- ---------- Total liabilities...................................................... 699,069 826,219 Commitments Stockholders' equity Common stock, $.01 par value Authorized 10,000 shares Issued and outstanding 1,000 shares and 1,189.04 shares, respectively......................................... 10 12 Additional paid-in capital......................................... 1,200,990 1,950,988 (Deficit) accumulated during the development stage................. (626,885) (1,300,073) Stock subscription receivable...................................... (1,000) (1,000) ---------- ---------- Total stockholders' equity............................................. 573,115 649,927 ---------- ---------- Total liabilities and stockholders' equity............................. $1,272,184 $1,476,146 ========== ==========
See accompanying notes to financial statements. F-3 Global Information Group USA, Inc. (A Development Stage Enterprise) Statements of Operations
Cumulative Period Period April 2, April 2, 1998 1998 (inception) (inception) Year ended through Nine months ended through March 31, March 31, December 31, December 31, 2000 1999 2000 1999 2000 ---------- ---------- ---------- ---------- ------------- (Unaudited) (Unaudited) Sales, license fees...................... $ 6,944 $ 1,540 $ -- $ 6,944 $ 8,484 ---------- ---------- ---------- ---------- ------------- Operating expenses Salary and employee related.......... 125,799 106,885 85,060 84,500 317,744 General and administrative........... 96,661 184,385 170,664 79,514 451,710 Expenses related to mergers.......... 81,654 -- 266,173 -- 347,827 ---------- ---------- ---------- ---------- ------------- Total operating expenses................. 304,114 291,270 521,897 164,014 1,117,281 ---------- ---------- ---------- ---------- ------------- (Loss) from operations................... (297,170) (289,730) (521,897) (157,070) (1,108,797) ---------- ---------- ---------- ---------- ------------- Other income (expense) Miscellaneous income (expense)....... 1,636 (331) -- 1,674 1,305 Interest (expense), officer.......... (1,988) -- -- (1,988) (1,988) Interest (expense) debt.............. (41,876) -- (166,181) -- (208,057) Interest income...................... 364 2,210 14,890 -- 17,464 ---------- ---------- ---------- ---------- ------------- Total other income (expense), net........ (41,864) 1,879 (151,291) (314) (191,276) ---------- ---------- ---------- ---------- ------------- Net (loss)............................... $(339,034) $(287,851) $(673,188) $(157,384) $ (1,300,073) ========== ========== ========== ========== =============
See accompanying notes to financial statements. F-4 Global Information Group USA, Inc. (A Development Stage Enterprise) Statements of Changes in Stockholders' Equity
(Deficit) Accumulated Common Stock Additional During the Stock Total ------------ Paid-In Development Subscription Stockholders' Shares Amount Capital Stage Receivable Equity -------- ----- ---------- ------------ --------- ----------- Balance, April 2, 1998 (inception) ..................... $ -- $ -- $ -- $ -- $ -- Common stock issued, May 14, 1998 ...................... 1,000.00 10 300,990 -- (1,000) 300,000 Net (loss) ............................................. -- -- (287,851) -- (287,851) -------- ----- ---------- ------------ --------- ----------- Balance, March 31, 1999 ................................ 1,000.00 10 300,990 (287,851) (1,000) 12,149 Original issue discount arising from options granted in connection with debt, January 14, 2000 ... -- 900,000 -- -- 900,000 Net (loss) ............................................. -- -- (339,034) -- (339,034) -------- ----- ---------- ------------ --------- ----------- Balance, March 31, 2000 ................................ 1,000.00 10 1,200,990 (626,885) (1,000) 573,115 Common stock issued, May 17, 2000 (unaudited) .......... 12.57 -- 300,000 -- -- 300,000 Stock options exercised, May 17, 2000 (unaudited) ...... 176.47 2 449,998 -- -- 450,000 Net (loss) (unaudited) ................................. -- -- (673,188) -- (673,188) -------- ----- ---------- ------------ --------- ----------- Balance, December 31, 2000 (unaudited) ................. 1,189.04 $ 12 $1,950,988 $(1,300,073) $ (1,000) $ 649,927 ======== ===== ========== ============ ========= ===========
See accompanying notes to financial statements. F-5 Global Information Group USA, Inc. (A Development Stage Enterprise) Statements of Cash Flows
Cumulative Period Period April 2, April 2, 1998 1998 (inception) Nine months ended (inception) Year ended through through March 31, March 31, December 31, December 31 2000 1999 2000 1999 2000 ---------- ---------- ---------- ---------- ------------ (Unaudited) (Unaudited) Cash flows from operating activities Net (loss) ............................................ $(339,034) $(287,851) $(673,188) $(157,384) $(1,300,073) Adjustments to reconcile net (loss) to net cash (used in) provided by operating activities Amortization of deferred finance costs ................ 37,813 -- 137,441 -- 175,254 Changes in assets and liabilities (Increase) in assets Prepaid expenses .................................... -- -- (29,000) -- (29,000) Increase (decrease) in liabilities Accounts payable and accrued expenses ............... 395,961 3,108 (272,850) 142,951 126,219 ---------- ---------- ---------- ---------- ------------ Net cash (used in) provided by operating activities ....... 94,740 (284,743) (837,597) (14,433) (1,027,600) ---------- ---------- ---------- ---------- ------------ Cash flows from investing activities Purchase of software .................................. (200,000) -- -- -- (200,000) Loan to officer ....................................... (19,005) -- (7,379) (679) (26,384) ---------- ---------- ---------- ---------- ------------ Net cash (used in) investing activities ................... (219,005) -- (7,379) (679) (226,384) ---------- ---------- ---------- ---------- ------------ Cash flows from financing activities Proceeds from long-term debt, net of finance fees ..... 292,500 -- 390,000 -- 682,500 Proceeds from stock issuance, net of stock subscription receivables ............................ -- 300,000 750,000 -- 1,050,000 ---------- ---------- ---------- ---------- ------------ Net cash provided by financing activities ................. 292,500 300,000 1,140,000 -- 1,732,500 ---------- ---------- ---------- ---------- ------------ Net increase (decrease) in cash ........................... 168,235 15,257 295,024 (15,112) 478,516 Cash at beginning of period ............................... 15,257 -- 183,492 15,257 -- ---------- ---------- ---------- ---------- ------------ Cash at end of period ..................................... $ 183,492 $ 15,257 $ 478,516 $ 145 $ 478,516 ========== ========== ========== ========== ============ Noncash activity During the year ended March 31, 2000, the Company incurred $900,000 in noncash original issue discount from options for common stock issued with debt. The amount was credited to additional paid-in capital.
See accompanying notes to financial statements. F-6 Global Information Group USA, Inc. (A Development Stage Enterprise) (Information as of December 31, 2000 and for the Periods Ended December 31, 2000 and 1999 is Unaudited) Notes to Financial Statements 1. Business Global Information Group USA, Inc. (the "Company") was Operations incorporated on April 2, 1998, in Delaware. From April 2, 1998 (inception) to March 31, 2000, the Company maintained operations in the Netherlands and in April 2000 moved all operations to the United States. The Company develops and markets applications software running on the Linux operating system (the "Linux OS"). The Company's present software product, first developed for the UNIX operating system, is believed to be the only complete 3D solid modeling, animation and rendering system currently available on the Linux OS. The Company's software has been designed for use by digital media professionals in the production of film and video special effects, animation, computer-aided design and scientific visualization, Internet web site and print graphics, game development and virtual television. The Company's success will depend in part on its ability to obtain patents and product license rights, maintain trade secrets, and operate without infringing on the proprietary rights of others, both in the United States and other countries. There can be no assurance that patents issued to or licensed by the Company will not be challenged, invalidated, or circumvented, or that the rights granted thereunder will provide proprietary protection or competitive advantages to the Company. The Company has no significant operating history and, from April 2, 1998 (inception) to December 31, 2000, has generated a net loss of $1,300,073. This loss has been financed by proceeds from equity and debt issuances. Additional loan proceeds of $800,000 were received subsequent to December 31, 2000. During fiscal 2002, management intends to raise additional equity to fund future operations and to provide additional working capital. There can be no assurance that management will be successful in its efforts. 2. Summary of Revenue Recognition Significant Accounting Revenue will be recognized upon conveyance of software Policies applications to customers. Provision for discounts and returns and other adjustments will be provided for in the same period that the related sales are recorded. Planned principal operations have not commenced and revenues since inception have not been significant. F-7 Global Information Group USA, Inc. (A Development Stage Enterprise) (Information as of December 31, 2000 and for the Periods Ended December 31, 2000 and 1999 is Unaudited) Notes to Financial Statements Interim Unaudited Information The accompanying interim financial statements as of December 31, 2000 and for the nine months ended December 31, 2000 and the period from April 2, 1998 (inception) through December 31, 1999, respectively, and related disclosures in the accompanying notes have not been audited. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) have been included to present fairly, in all material respects, the financial position of the Company as of December 31, 2000, and the results of its operations and its cash flows for the periods ended December 31, 1999 and 2000. Operating results for the nine-month period ended December 31, 2000 are not necessarily indicative of the results that may be expected for a full year. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Research and Development Internal research and development costs are expensed as incurred. Research and development costs of $56,000 and $34,000 for the period from April 2, 1998 (inception) through March 31, 1999 and for the year ended March 31, 2000, respectively, are included in general and administrative expenses in the accompanying statements of operations. Deferred Finance Costs Deferred finance costs arising from the incurrence of long-term debt are being amortized using the straight-line method over the five-year terms of the related debt. Income Taxes The Company follows the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"). SFAS No. 109 requires a company to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in its financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. F-8 Global Information Group USA, Inc. (A Development Stage Enterprise) (Information as of December 31, 2000 and for the Periods Ended December 31, 2000 and 1999 is Unaudited) Notes to Financial Statements Software Costs Software costs represents amounts paid to third parties to acquire software and its related source code. The Company expects it will incur additional costs to enhance the software. The Company will begin amortizing, over a three year period, the software when it is fully developed and sales commence on a commercial basis. The Company will evaluate any impairments to the software on a periodic basis. Concentration of Credit Risk The Company's policy is to limit the amount of credit exposure to any one financial institution and places its investments with financial institutions evaluated as being credit worthy. At times, such amounts may be in excess of the Federal Deposit insurance Corporation limits. The Company had deposits that exceeded federally insured limits by approximately $379,000 at December 31, 2000. Foreign Currency Translation All balance sheet accounts of the Company's foreign operations, if any, are translated at the current exchange rate as of the end of the accounting periods. Statement of operation items are translated at average currency exchange rates. The resulting translation adjustments are insignificant for all periods presented. Expenses Related to Mergers These costs relate primarily to professional fees incurred in connection with the Company's proposed reverse merger with ADVA International, Inc. ("ADVA") (see Note 7) and with other mergers activities which were not consummated. The ADVA-related costs have been expensed in as much as no cash proceeds will be realized upon consummation of the proposed merger. 3. Share Purchase In January 2000, the Company entered into a Share and Shareholders' Purchase and Shareholders' Agreement with five other Agreement parties. The agreement was established in order to promote the growth of the Company either through an initial public offering or merger with a publicly held company. The agreement provided that one of the five parties purchase 100 shares of the Company's stock from its chief executive officer and two other parties ("lenders") advance $300,000 to the Company in the form of loans (see Note 4). In addition, the agreement granted an option to purchase 30% of the Company's outstanding stock from its chief executive officer to a party providing consulting and other services. Such F-9 Global Information Group USA, Inc. (A Development Stage Enterprise) (Information as of December 31, 2000 and for the Periods Ended December 31, 2000 and 1999 is Unaudited) Notes to Financial Statements option was exercised on May 17, 2000 upon the advance to the Company of $400,000, representing the first tranche of additional loans aggregating $1,200,000 from the lenders. In connection with the granting of the options, the Company recorded deferred financing costs of $900,000 (representing the estimated fair value of the options based on application of the Black-Scholes formula), of which $37,813 and $137,441 were amortized to interest expense for the year ended March 31, 2000 and the nine months ended December 31, 2000, respectively. The consulting company was also granted additional options in connection with the above agreement to purchase an indefinite number of shares to be determined based on an agreed upon formula, exercisable upon the Company's sale, merger or initial public offering. When the Company entered into the agreement to merge with ADVA International, Inc. (see Note 7), the consultant was granted options to purchase 176 shares representing approximately 13.8% of the total outstanding stock of the Company. Notification of intent to exercise the options received on March 29, 2000. The stock was issued on May 17, 2000 for $450,000. This amount, credited to additional paid-in capital, was net of $750,000 that the consultant earned for investment advisory and other services. Since the options granted were contingent upon the consummation of future equity transactions, no value was ascribed to the options as of the grant date. 4. Long-Term In February 2000, the Company received the first Debt advance from the two lenders. The loans are for an aggregate amount of $1,500,000, of which $300,000 and $700,000 were outstanding as of March 31 and December 31, 2000, respectively. The loans carry an interest rate of 6.5% per annum. Interest on each advance is accrued on a daily basis and is payable 18 months from the date of each advance and, thereafter, at the end of each of the succeeding three month periods. The loans are due generally five years from January 14, 2000. The loans are secured by an escrow agreement under which the source code for the Company's software is held as collateral. One of the lenders and certain common stockholders share a common managing director. Additionally, a director of the other lender owns shares in a stockholder of the Company. During February 2001, the Company received its remaining available advances under its loan agreements aggregating $800,000. These advances are subject to the same terms described above. 5. Leases The Company currently leases office space, telecommunication services, business services and administrative staff services in New York City. This lease was for a one-year period and began on May 1, 1998 and contained an option to renew. As of May 1, 2000, the Company has opted to maintain the lease on a month to month basis. F-10 Global Information Group USA, Inc. (A Development Stage Enterprise) (Information as of December 31, 2000 and for the Periods Ended December 31, 2000 and 1999 is Unaudited) Notes to Financial Statements 6. Income Taxes The Company has net operating loss carryforwards aggregating approximately $627,000 and $1,300,000 at March 31, 2000 and December 31, 2000, respectively, expiring through 2014. SFAS No. 109 requires the establishment of a deferred tax asset for all deductible temporary differences and operating loss carryforwards. Because of the uncertainty that the Company will generate income in the future sufficient to fully or partially utilize these carryforwards and that some losses may be limited to the extent they were generated from operations outside of the United States and due to recent and prospective changes in the Company's stock ownership, which could limit the available carryforward for federal income tax purposes, any deferred tax asset is offset by a valuation allowance of the same amount. Accordingly, no deferred tax asset is reflected in these financial statements. 7. Subsequent In June 2000, the Company and its stockholders entered Events into an Agreement of Stock Exchange with ADVA International, Inc. ("ADVA") and Biotel, Inc., ADVA's principal stockholder. The agreement is expected to be consummated in March 2001. Under the terms of the agreement, the stockholders will exchange all of the issued and outstanding shares of the Company and receive in return 12,468,750 shares of ADVA common stock representing a 94.57% equity interest in ADVA. The transaction will be accounted for as a reverse merger whereby, for accounting purposes, the Company will be considered the accounting acquirer, and although the legal capital structure of ADVA will carry forward, the Company will be treated as the successor to the historical operations of ADVA. Accordingly, the historical financial statements of ADVA, which previously have been reported to the Securities and Exchange Commission ("SEC") on Forms 10-KSB and 10-QSB, among others as of and for all periods through December 31, 2000, will be replaced with those of the Company upon successful completion of the transaction. The Company expects to continue to file as an SEC registrant and will report under the name, ADVA International, Inc. The Company will pay $300,000 to debtors of ADVA upon the consummation of the merger. This amount will be charged to operations in the consolidated financial statements. F-11 Item 7 - Annex 1 Unaudited Pro Forma Combined Balance Sheet as of December 31, 2000 On March 2, 2001 the stockholders of Global Information Group USA Inc. ("GIG") exchanged all of the issued and outstanding shares of GIG for 12,468,750 shares of the ADVA International, Inc.'s (the "Company or "ADVA") common stock, or approximately 95% of the total shares then issued and outstanding. The remaining 716,277 shares, or approximately 5% will continue to be held by the Company's prior stockholders. As a result of the transaction, GIG became a wholly-owned subsidiary of the Company. The transaction will be accounted for as a reverse merger whereby, for accounting purposes, GIG will be considered the accounting acquirer and the historical financial statements of GIG will become the historical financial statements of the Company. The following Pro Forma Consolidated Balance Sheet presents the Company's Consolidated Balance Sheet at December 31, 2000 as if the Stock Exchange by and among the stockholders of GIG and ADVA had taken place on that date. A cash infusion of $800,000 into GIG on February 27, 2001, needed to effect the merger, in the form of long term debt has been included in the Pro Forma Consolidated Balance Sheet as if the cash had been received on December 31, 2000. Also, a fee of $300,000 paid to Advanced Medical Products, Inc. -- Debtor in Possession by GIG at Closing on March 2, 2001, as a condition of the reverse merger, has been included in the Pro Forma Consolidated Balance Sheet as if that amount had been paid on December 31, 2000. Pro forma statements of operations for the period ended December 31, 2000 and the year ended March 31, 2000 have not been presented because the Company had no operations during those periods and the statements of operations of GIG for these periods, presented elsewhere herein, constitute the pro forma results of operations for the combined entities as if they had been consolidated at the beginning of the above periods. F-12 ADVA International Inc. Unaudited Pro Forma Consolidated Balance Sheet December 31, 2000
Pro Forma Pro Forma GIG ADVA Total Adjustments Consolidated ------------ ------------ ------------ ------------ ------------ Assets Current assets: Cash ........................................ $ 478,516 $ 62 $ 478,578 $ (62) (a) $ 979,516 800,000 (b) (300,000) (c) 1,000 (d) Other receivables, officer................... 26,384 26,384 26,384 Prepaid ..................................... 29,000 29,000 29,000 ------------ ------------ ------------ ------------ ------------ Total current assets ..................... 533,900 62 533,962 500,938 1,034,900 ------------ ------------ ------------ ------------ ------------ Other assets: Deferred financing costs, net................ 742,246 742,246 742,246 Software .................................... 200,000 200,000 200,000 ------------ ------------ ------------ ------------ ------------ Total other assets ........................ 942,246 942,246 942,246 ------------ ------------ ------------ ------------ ------------ Total assets ................................... $ 1,476,146 $ 62 $ 1,476,208 $ 500,938 $ 1,977,146 ============ ============ ============ ============ ============ Liabilities And Stockholders' Equity Current liabilities: Accounts payable and accrued expenses .......... $ 126,219 $ 39,724 $ 165,943 $ (39,724) (e) $ 126,219 Long-term debt ................................. 700,000 700,000 800,000 (b) 1,500,000 ------------ ------------ ------------ ------------ ------------ Total liabilities........................ 826,219 39,724 865,943 760,276 1,626,219 ------------ ------------ ------------ ------------ ------------ Stockholders' equity: Common stock.................................... 12 716 728 12,457 (f) 13,185 Additional paid-in capital ..................... 1,950,988 4,950,377 6,901,365 (5,003,212) (g) 1,898,153 Accumulated deficit ............................ (1,300,073) (4,990,755) (6,290,828) 4,990,755 (h)(a) (1,560,411) (c) (260,338) (e) Stock subscription receivable................... (1,000) (1,000) 1,000 (d) ------------ ------------ ------------ ------------ ------------ Total stockholders' equity ..................... 649,927 (39,662) 610,265 (259,338) 350,927 ------------ ------------ ------------ ------------ ------------ Total liabilities and stockholders' equity ..... $ 1,476,146 $ 62 $ 1,476,208 $ 500,938 $ 1,977,146 ============ ============ ============ ============ ============
- ---------- (a) ADVA cash of $62 on December 31, 2000 will be distributed to creditors of Advanced Medical Products - Debtor in Possession. (b) An $800,000 long-term loan was advanced to GIG on February 27, 2001 in order to effect the merger. (c) A fee of $300,000 was paid by GIG on March 2, 2001 to Advanced Medical Products - Debtor in Possession for distribution to creditors. (d) A stock subscription receivable of $1,000 has been paid in cash as a condition of Closing. (e) The total liabilities of ADVA at December 31, 2000 will be paid out of the $300,000 fee (see note c) and, therefore, are eliminated. (f) Par value of the new common stock shares issued, minus par value of the acquired stock of GIG. (g) All of the paid in capital of ADVA has been eliminated in the consolidation as result of the reverse merger. (h) All of the accumulated deficit ADVA has been eliminated in the consolidation as a result of the reverse merger. F-13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned thereunto duly authorized. ADVA INTERNATIONAL, INC. DATE: March 2, 2001 BY: /s/George L. Down, President --------------------------------- INDEX TO EXHIBITS
Sequentially Exhibit No. Description Numbered Page - ---------------- ------------------------------------------------------------- ----------------- 2.1 Agreement of Stock Exchange, as amended, dated June 19, 2000 2.2 Amendment (2.01) to Agreement of Stock Exchange dated February 21, 2001. 2.3 Stock Exchange Joinder Agreement dated February 21, 2001 2.4 Escrow Agreement dated February 7, 2001 2.5 Waiver dated February 21, 2001 2.6 Funding Agreement dated February 21, 2001 4.1 Registration Rights Agreement dated as of the Closing Date 4.2 Letter Agreement between Inrisco B.V. and the Company dated May 14, 1998 4.3 Share Purchase and Shareholders' Agreement among the Company, Chatelin Capital Partners Limited, Jolec Trading Limited, Anthony Mohr, Koenig Invest AG and Newick Developments Limited 4.4 Consultancy Agreement between the Company and Chatelin Capital Partners Limited dated January 21, 2000 4.5 Termination and Mutual Release dated May 31, 2000 5.1 Intentionally Omitted 5.2 Legal Opinion of Menaker & Herrmann LLP dated March 2, 2001 5.3 Legal Opinion of Blanco Tackabery Combs & Matamoros, P.A. dated March 2, 2001 8.1 Tax Opinion of Blank Rome Comisky & McCauley LLP dated March 2, 2001 10.1 Intellectual Property Rights Transfer Agreement dated February 12, 2000
Sequentially Exhibit No. Description Numbered Page - ---------------- ------------------------------------------------------------- --------------- *10.2 Employment Agreement with Anthony Mohr dated January 21, 2000 10.3 Intentionally omitted 10.4 Intentionally omitted *10.5 Letter Agreement with Philip Ayoub dated January 1, 2001 *10.6 C. Roger Jones - Release of Stock Options dated June 20, 2000. *10.7 2001 Stock Option Plan 10.8 First Loan Agreement by and between the Company and Newick Developments Limited dated February 2, 2000. 10.9 First Loan Agreement by and between the Company and Koenig Invest AG dated February 2, 2000. 10.10 Second Loan Agreement by and between the Company and Newick Developments Limited dated February 2, 2000. 10.11 Second Loan Agreement by and between the Company and Koenig Invest AG dated February 2, 2000. 24.1 Power of Attorney in favor of Philip van Wijngaarden dated April 1, 2000 24.2 Power of Attorney in favor of Hendrik Smit dated May 12, 2000 24.3 Power of Attorney in favor of Anthony E. Mohr dated May 12, 2000 24.4 Power of Attorney in favor of Benno P. Hafner dated 30 March 2000 24.5 Power of Attorney in favor of Benno P. Hafner dated 16 February 2001 24.6 Power of Attorney in favor of Christiaan Ouwinga dated 26 February 2001
EX-2.1 2 0002.txt EXHIBIT 2.1 EXHIBIT 2.1 AGREEMENT OF STOCK EXCHANGE THIS AGREEMENT OF STOCK EXCHANGE ("Agreement") is made as of this 19th day of June, 2000, by and among Anthony E. Mohr, Jolec Trading Limited, Hugo Heerema, FOG Investments, Ltd., Equation Ventures N.V., Linares Capital Limited, Heydael B.V., Henri B. G. Sijthoff, Charles Langereis, Jouke V.J.P. Brada, Femia E. van Wulfften Palthe, Leonard van Hulst, Nicole E.A.M. Aarts, Fiona N. van Hulst, Viewmont Holdings Limited, Moana Lake Finance Corp., Sorensen's Securities Ltd. and Hacken Investments Limited, (individually, a "Seller" and collectively, the "Sellers"); ADVA International Inc., a Delaware corporation ("Buyer"); Global Information Group USA Inc., a Delaware corporation (the "Company") and Biotel, Inc. ("Biotel"). WHEREAS, the Company is authorized to issue 10,000 shares of common stock ("Company Shares"), par value $.01 per share, of which 1,000 shares are presently issued and outstanding and, immediately prior to the Closing Date, 1,189.04 shares will be issued and outstanding, and WHEREAS, the Company has outstanding Take Over Options and Subscription Options to purchase 189.04 Company Shares and there exists an Executive Option to acquire 300 Company Shares owned by Anthony E. Mohr (collectively, the "Company Options"), all of which will be exercised prior to Closing (as set forth on Schedule "A"), and WHEREAS, ADVA International Inc. is authorized to issue 20,000,000 shares of common stock (the "Buyer Shares"), par value $.001 per share, of which 716,250 shares are presently issued and outstanding and, immediately prior to the Closing Date 716,250 shares will be issued and outstanding, and WHEREAS, on the Closing Date, the Buyer shall issue 12,468,750 Buyer Shares of the 13,185,000 outstanding Buyer Shares (the "Outstanding Buyer Shares") to the Sellers (set forth on Schedule "A"), in return for all the issued and outstanding Company Shares owned by the Sellers (this share exchange shall be referred to herein as the "Stock Exchange"), with the result that: (a) Sellers will own 94.57% of the Outstanding Buyer Shares (after giving effect to the exercise of the Company Options), with the remaining Buyer Shares (716,250) being owned by the present Shareholders of Buyer, and WHEREAS, the Company shall pay in cash, immediately after Closing, to Advanced Medical Products, Inc. Debtor-in-Possession Three Hundred Thousand Dollars ($300,000) which shall be paid to creditors of Advanced Medical Products, Inc. pursuant to Section 6.2.10 hereof, and WHEREAS, the Stock Exchange shall be effected as a tax-free exchange pursuant to Section 351 and/or Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"), and WHEREAS, on the Closing Date there shall be no warrants, options, or any other rights, either authorized or outstanding, which are convertible or exercisable into the Company Shares. NOW, THEREFORE, in consideration of the premises, the parties hereto do mutually agree as follows: ARTICLE I EXCHANGE OF SHARES 1.1 Exchange of Company Shares and Cash for Buyer Shares. 1.1.1 On the Closing Date, Buyer shall (i) issue 12,468,750 Buyer Shares to the Sellers (as set forth on Exhibit "A" hereto) and such shares when issued shall be fully-paid and nonassessable, and no preemptive rights of stockholders shall exist with respect to the shares or the issue or sale thereof. 1.1.2 On the Closing Date, the Sellers shall deliver to Buyer all of the Outstanding Company Shares, duly endorsed for transfer or with stock powers attached. 1.1.3 Company shall have paid in cash Three Hundred Thousand Dollars ($300,000) to Advanced Medical Products Inc., Debtor in Possession for distribution to creditors and payment of expenses pursuant to Section 6.2.10 hereof. 1.2 Outstanding Buyer Shares. Each share of Buyer Common Stock which is issued and outstanding immediately prior to the Closing Date shall by virtue of this Agreement remain issued and outstanding thereafter. 1.3 Restrictions on Shares. The Buyer Shares and the Company Shares being acquired by the respective parties are being acquired for investment only and not with a view to the further sale or distribution thereof. Such Buyer Shares issued hereunder constitute "restricted securities" as that term is defined under Rule 144 of the Rules and Regulations promulgated under the Securities Act of 1933 (the "Securities Act"). The Buyer Shares and the Company Shares may not be sold, assigned or otherwise disposed of unless registered or otherwise exempt from registration under the Securities Act and such other state securities laws as may be applicable. The certificates representing such shares shall contain an appropriate investment legend. ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS Each Seller, for such Seller but not on behalf of any other Seller, hereby represents and warrants to Buyer as follows: 2.1 Title of Company Shares. At the time of delivery of the Company Shares to Buyer hereunder, Sellers will be the lawful owners of the Company Shares in the amounts set forth in Exhibit A attached hereto and will have good and marketable title thereto, and upon delivery as provided hereunder, Buyer will receive good and marketable title thereto, free and clear of all liens, pledges and encumbrances with no personal liability attaching to the ownership thereof. 2.2 Authority to Execute and Perform Agreements. Each Seller which is a corporation or other type of legal entity is, and on the Closing Date will be, a duly organized and validly existing corporation (or other entity) in good standing under the laws of its incorporation or organization. Each Seller has, and on the Closing Date will have, the full legal right and power and all authority and approval required to enter into, execute and deliver this Agreement and to perform fully such Seller's respective obligations hereunder, and this Agreement is the valid and binding obligation of each Seller enforceable in accordance with its terms, except to the extent that: (a) the enforceability hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights and remedies generally, (b) the remedies of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and general principles of equity and to the discretion of the court before which any proceeding therefor may be brought, and (c) rights to indemnity and contribution hereunder, if any, may be limited by state and federal laws or the public policy underlying such laws. 2.3 No Conflict. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated by this Agreement will: (a) conflict with, or result in a breach of, or constitute a default under (i) in the case of Jolec Trading Limited, Fog Investments, Ltd., Equation Ventures N.V., Linares Capital Limited, Heydael B.V., Viewmont Holdings Limited, Moana Lake Finance Corp., Sorensen's Securities Ltd. and Hacken Investments Limited, its charter or bylaws; (ii) any instrument or agreement to which any Seller is a party, or by which any Seller is bound; or (iii) any governmental decree, order, ruling, writ, permit or license to which any Seller is a party or by which any Seller may be bound; (b) violate any law, statute, rule or regulation applicable to any Seller or the transactions contemplated hereby; or (c) except as set forth in Schedule 2.3, require the consent of any governmental or administrative agency or any party to any contract to which any Seller is a party or by which any Seller may be bound. 2.4 Broker's Fees. None of the Sellers has employed any broker or finder or incurred any liability for any broker's fees, commissions or finder's fees in connection with any of the transactions contemplated by this Agreement, except as set forth in Schedule 2.4 hereto. 2.5 Investment Intent. Each of the Sellers are acquiring Buyer Shares for investment only and not with a view to further distribution and do not have, and will not have on the Closing Date, any commitment for the disposition of such shares. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby represents and warrants to Buyer as follows: 3.1 Organization. The Company is, and on the Closing Date will be, a duly organized and validly existing corporation in good standing under the laws of the State of Delaware. 3.2 Capitalization. The authorized capital stock of the Company consists only of the Company Shares. As of the Closing Date, the Outstanding Company Shares will be issued and outstanding. There are no Company Shares reserved for issuance upon the exercise of outstanding stock options, warrants or similar rights, other than for the Company Options. All of the Outstanding Company Shares have been duly authorized and validly issued, are fully paid, nonassessable and free of preemptive rights, and are registered in the names of the Sellers, free and clear of all actual liens and encumbrances. There are no, and on the Closing Date there will be no, issued or outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of Company Common Stock, other than the Company Options, or any other equity security of the Company or any securities representing the right to purchase or otherwise receive any shares of Company Common Stock or any other equity security of the Company. 3.3 Agreement; Authority. The Company has, and on the Closing Date will have, the power and authority to enter into this Agreement and to consummate the transactions contemplated thereby. This Agreement and the transactions contemplated hereby have been, or on or prior to the Closing Date will be, duly approved by appropriate corporate action of the Company. 3.4 Agreement: Enforceability. This Agreement has been duly authorized, executed and delivered by the Company and is a legally valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except to the extent that: (a) the enforceability hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights and remedies generally, (b) the remedies of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and general principles of equity and to the discretion of the court before which any proceeding therefor may be brought, and (c) rights to indemnity and contribution hereunder, if any, may be limited by state and federal laws of the public policy underlying such laws. 3.5 No Conflict. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated by this Agreement will: (a) conflict with, or result in a breach of, or constitute a default under (i) the Company's charter or bylaws, (ii) any instrument or agreement to which the Company is a party, or by which it is bound; or (iii) any governmental decree, order, ruling, writ, permit or license to which the Company is a party or by which the Company may be bound; (b) violate any law, statute, rule or regulation applicable to the Company or the transactions contemplated hereby; (c) except as set forth in Schedule 3.5, require the consent of any governmental or administrative agency or any other person not a party hereto; or (d) require the consent of any party to any contract, agreement or commitment to which the Company is a party or by which the Company may be bound, or result in a default under or an acceleration of any obligation under any such contract, agreement or commitment. 3.6 Subsidiaries. The Company has, and on the Closing Date will have, no subsidiaries. 3.7 Doing Business. The Company is, and on the Closing Dates will be, duly authorized, qualified and licensed under any and all applicable laws, regulations, ordinances or orders of public authorities to carry on their respective businesses in the places and in the manner as presently conducted or as contemplated in this Agreement, except where the failure to be so authorized, qualified or licensed would not have a materially adverse effect upon the business of the Company. 3.8 Financial Statements. The financial statements of the Company, consisting of a Balance Sheet as of March 31, 2000 and related Statement of Income, and Statement of Shareholders' Equity for the year ended March 31, 2000 together with the accompanying notes, have been prepared by independent public accountants. All such financial statements (collectively, the "Company Financial Statements") were prepared in conformity with generally accepted accounting principles, have been delivered to Buyer, and fairly present the financial position and results of operations of the Company as of the dates and for the periods shown. 3.9 No Adverse Change. Except as set forth in Schedule 3.9, since March 31, 2000, the business of the Company has only been operated in the normal course. There has not been, and on the Closing Date there will not have been, any material adverse change in the financial condition of the Company from that set forth in the Company Financial Statements dated March 31, 2000. 3.10 Liabilities. Except as set forth on Schedule 3.10 hereof, there are, and on the Closing Date will be, no liabilities (including, but not limited to tax liabilities) or claims against the Company (whether such liabilities or claims are contingent or absolute, direct or indirect, matured or unmatured) not appearing on the Company Financial Statements, other than liabilities incurred in the ordinary course of business or taxes accrued or incurred with regard to earnings since March 31, 2000 or liabilities for expenses incurred in connection with this Agreement. 3.11 Taxes. Except as set forth on Schedule 3.11 hereof, all federal, state, county and local income, excise, property and other tax returns required to be filed by the Company have been filed and all required taxes, fees or assessments have been paid or an adequate reserve therefor has been set up in the Company Financial Statements. No income tax returns of the Company have ever been audited by any authority empowered to do so. There are no agreements or waivers in effect that provide for an extension of time for the filing of any tax returns by the Company or the assessment of any tax against the Company. 3.12 Title; Property. Except as set forth on Schedule 3.12 hereof, the Company has, and on the Closing Date will have, all legal and beneficial ownership of all of its real property, furniture, fixtures and equipment excluding any leased real property, furniture, fixtures and equipment. Such assets (excluding leased assets) are owned free and clear of all security interests, pledges, liens, restrictions and encumbrances of every kind and nature, except as stated in the Company Financial Statements. 3.13 Title; Inventory. The Company has, and on the Closing Date will have, all legal and beneficial ownership of its inventory as set forth in the Company Financial Statements, except for (a) inventory sold or leased in the ordinary course of business since the date of the Company Financial Statements and (b) inventory provided to the Company by certain suppliers under arrangements pursuant to which title does not pass until the amounts owed to such suppliers are paid in full. All of the Company's inventory is saleable in the ordinary course of business. 3.14 Accounts Receivable. Except as set forth in Schedule 3.14, the accounts receivable as set forth in the Company Financial Statements, except to the extent already collected, represent amounts due for goods sold or services rendered by the Company in the ordinary course of business. Except to the extent of any reserve allowed therefor in the Company Financial Statements, such accounts receivable, to the knowledge of the Company, are fully collectible in the ordinary course of business. 3.15 Contracts and Commitments. All material agreements, contracts and commitments to which the Company is, or on the Closing Date will be, a party, or from which the Company does receive, or expects to receive on or after the Closing Date, a substantial benefit, are set forth and briefly described in Schedule 3.15 hereto. A true and complete copy of each such agreement, contract or commitment has been delivered to Buyer. The Company is not, and on the Closing Date will not be, and to the knowledge of the Company, each such other party to each of such material agreements, contracts or commitments is not, in default under any such material agreement, contract or commitment, the result of which breach would have a materially adverse effect on the Company. True and complete copies of all employment agreements or arrangements with employees of the Company have been delivered to Buyer. 3.16 Litigation. Except as disclosed in Schedule 3.16 hereof, there are, and on the Closing Date there will be, no claims, actions, suits or proceedings pending, or to the best knowledge of the Company, threatened against the Company. 3.17 Compensation and Loans. Except as disclosed in Schedule 3.17, since March 31, 2000 there have been, and on the Closing Date there will be (i) no bonuses or unusual compensation to any of the officers or directors of the Company which are inconsistent with past practices, (ii) no loans made to any of the officers or directors of the Company, (iii) except as may be consistent with past practices, no dividends or other distributions declared or paid by the Company, and (iv) no repurchase by the Company of any of its shares of capital stock. 3.18 Additional Issuances of Equity. Except as set forth in Schedule 3.18, since March 31, 2000 or as otherwise disclosed herein, the Company has not issued or committed itself to issue, and to the Closing Date will not issue or commit itself to issue, any additional common shares or any options, rights, warrants or other securities or instruments convertible into or exchangeable for common shares, except as disclosed in or contemplated by this Agreement. 3.19 Broker's Fees. Except as set forth on Schedule 3.19, neither the Company, nor any of its officers or directors, has employed any broker or finder or incurred any liability for any broker's fees, commissions or finder's fees in connection with any of the transactions contemplated by this Agreement. 3.20 Insurance. The Company has, and on the Closing Date will have, coverage (which to its knowledge is adequate) against accident, damage, injury, third party loss (including product liability), loss of profits and other risks normally insured by persons carrying on the same business as that carried on by it. A list of such insurance policies is set forth in Schedule 3.20 hereto. 3.21 Patents, etc. The Company has, and on the Closing Date will have, no patents, patent applications, trademarks, trademark registrations or applications therefor, tradenames, copyrights, copyright registrations or applications therefor, except as set forth on Schedule 3.21 hereto (collectively "Company Intellectual Property"). Except as set forth in Schedule 3.21: (a) the Company, has the right to use the Company Intellectual Property in the manner in which it is currently being used; (b) to the Company's knowledge, neither the Company Intellectual Property nor the current uses thereof by the Company is violating or infringing upon any intellectual property right of any person and no claim to such effect has been made to the Company; and (c) to the Company's knowledge, no other person is violating or infringing upon any of the Company Intellectual Property listed on Schedule 3.21. 3.22 Business Conduct. The Company has, and on the Closing Date will have, operated its business and conducted its affairs in compliance with all applicable laws, rules and regulations of the United States, the State of Delaware and all jurisdictions in which it now carries on business, except where the failure to so comply would not have a materially adverse effect on the Company. 3.23 Affiliated Transactions. There are, and on the Closing Date there will be, no loans, leases or other contracts or arrangements outstanding between (i) the Company, on the one hand, and (ii) any stockholder, officer, director or key employee of the Company, or any person related to any of them, on the other hand, except as set forth in Schedule 3.15 or Schedule 3.23 hereto. 3.24 Sanctions. During the past five year period, no officer or director of the Company, and no person whom Sellers shall appoint as a director of Buyer pursuant to Section 5.1 hereof, has been the subject of: 3.24.1 a petition for bankruptcy or other relief under United States insolvency or creditor's rights laws, nor has a receiver, fiscal agent or similar officer been appointed by a court for the business or property of such person, or any partnership in which he was a partner at or within two years before the time of such filing or appointment, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing or appointment; 3.24.2 a conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); 3.24.3 any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities: (i) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with activity; (ii) Engaging in any type of business practice; or (iii) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal, state or other securities laws or commodities laws. 3.24.4 any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal, state or local authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in the preceding sub-paragraph, or to be associated with persons engaged in any such activity; 3.24.5 a finding by a court of competent jurisdiction in a civil action or by the United States Securities and Exchange Commission to have violated any securities law, and the judgment in such civil action or finding by such Commission has not been subsequently reversed, suspended or vacated; or 3.24.6 a finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated. 3.25 Employee Benefit Plans. Except as set forth in Schedule 3.25, the Company has no pension plan, profit sharing or similar employee benefit plan. 3.26 Questionable Payments. Neither the Company, nor any current or former shareholder, partner, director or officer of it has (a) used any corporate funds for any illegal contributions, gifts, entertainment or other unlawful expenses relating to political activity; (b) used any corporate funds for any direct or indirect unlawful payments to any foreign or domestic government officials or employees; (c) established or maintained any unlawful or unrecorded fund of corporate monies or other assets; (d) made any false or fictitious entries on such corporation's books and records; (e) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment of any nature using corporate funds or otherwise on behalf of the Company; (f) violated any provision of the Foreign Corrupt Practices Act of 1977, if applicable; or (g) made any material favor or gift that is not deductible for United States income tax purposes using corporate funds or otherwise on behalf of the Company. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer hereby represents and warrants to the Sellers and the Company as follows: 4.1 Organization. Buyer is, and on the Closing Date will be, a duly organized and validly existing corporation in good standing under the laws of the State of Delaware. 4.2 Capitalization. The authorized capital stock of Buyer consists of 20,000,000 Buyer Shares. As of the date of this Agreement, there are 716,250 Buyer Shares issued and outstanding, and no Buyer Shares are held in Buyer's treasury. On the Closing Date (after giving effect to the stock exchange) there will be 13,185,000 Buyer Shares issued and outstanding and no Buyer Shares will be held in Buyer's treasury. It being understood that up to an additional 282 Buyer Shares may be issued as a result of Buyer's 1-for-10 reverse stock split effected on March 13, 2000. There are no Buyer Shares reserved for issuance upon the exercise of outstanding stock options, warrants or similar rights. All issued and outstanding Buyer Shares have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights. There are no, and on the Closing Date there will be no, issued or outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of Buyer common stock or any other equity security of Buyer or any securities representing the right to purchase or otherwise receive any shares of Buyer common stock or any other equity security of Buyer. All Outstanding Buyer Shares have been issued in compliance with applicable Federal and state Securities Laws. No shareholders of the Company have a right to receive dividends and no unpaid dividends are due and owing with regard to the Buyer's capital stock. 4.3 Agreement; Authority. Buyer has, and on the Closing Date will have, power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. This Agreement and the transactions contemplated hereby have been, or on or prior to the Closing Date, will be duly approved by appropriate corporate action of Buyer. 4.4 Agreement: Enforceability. This Agreement has been duly authorized, executed and delivered by Buyer and is a legally valid and binding agreement of Buyer, enforceable against Buyer in accordance with its terms, except to the extent that: (a) the enforceability hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights and remedies generally, (b) the remedies of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and general principles of equity and to the discretion of the court before which any proceeding therefor may be brought, and (c) rights to indemnity and contribution hereunder, if any, may be limited by state and federal laws of the public policy underlying such laws. 4.5 Doing Business. Buyer is, and on the Closing Date will be duly authorized, qualified and licensed under any and all applicable laws, regulations, ordinances or orders of public authorities to carry on its business in the places and in the manner as presently conducted or as contemplated in this Agreement, except where the failure to be so authorized, qualified or licensed would not have a materially adverse effect upon the business of Buyer. The business of Buyer does not require it to be registered as an Investment Company or Investment Advisor as such terms are defined under the Investment Company Act and the Investment Advisor Act of 1940, respectively. 4.6 No Conflict. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated by this Agreement will: (a) conflict with, or result in a breach of, or constitute a default under (i) Buyer's charter or bylaws, (ii) any instrument or agreement to which Buyer is a party, or by which it is bound; or (iii) any governmental decree, order, ruling, writ, permit or license to which Buyer is a party or by which Buyer may be bound; (b) violate any law, statute, rule or regulation applicable to Buyer or the transactions contemplated hereby; (c) except as set forth in Schedule 4.6, require the consent of any governmental or administrative agency or any other person not a party hereto; or (d) require the consent of any party to any contract, agreement or commitment to which Buyer is a party or by which Buyer may be bound, or result in a default under or an acceleration of any obligation under any such contract, agreement or commitment. 4.7 Subsidiaries. Buyer has, and on the Closing Date will have, no subsidiaries. 4.8 Financial Statements. The audited financial statements of Buyer, consisting of its Balance Sheet as of June 30, 1999 and its Statement of Income, Statement of Stockholders' Equity and Statement of Cash Flows as of June 30, 1999, together with accompanying notes, have been audited by independent public accountants whose report thereon is without qualification. The unaudited financial statements of Buyer, consisting of its Balance Sheet as of March 31, 2000, its Statement of Income, Statement of Stockholders' Equity and Statement of Cash Flows for the three months ended March 31, 2000, together with accompanying notes, have been prepared by the officers of Buyer, and have been adjusted for all normal and recurring accruals necessary for a fair presentation thereof. All such financial statements (collectively, the "Buyer Financial Statements") have been prepared in accordance with generally accepted accounting principles, have been delivered to the Company, and fairly present the financial condition and results of operations of Buyer as of the dates and for the periods shown. 4.9 No Adverse Change. Since June 30, 1999, the business of Buyer has only been operated in the normal course. There has not been, and on the Closing Date there will not have been, any material adverse change in the financial condition of Buyer from that set forth in the Buyer Financial Statements dated June 30, 1999. 4.10 Liabilities. There are, and on the Closing Date will be, no liabilities (including, but not limited to tax liabilities) or claims against Buyer (whether such liabilities or claims are contingent or absolute, direct or indirect, matured or unmatured) not appearing on the Buyer Financial Statements, other than liabilities incurred or made in the ordinary course of business, taxes incurred with regard to earnings since June 30, 1999 or liabilities for expenses incurred in connection with this Agreement. 4.11 Taxes. All federal, state, county and local income, excise, property and other tax returns required to be filed by Buyer have been filed and all required taxes, fees or assessments have been paid or an adequate reserve therefor has been set up in the Buyer Financial Statements. No income tax returns of Buyer have ever been audited by any authority empowered to do so. There are no agreements or waivers in effect that provide for an extension of time for the filing of any tax returns by Buyer or the assessment of any tax against Buyer. 4.12 Properties. Buyer has, and on the Closing Date will have, no fixtures, furniture, equipment, inventory or accounts receivable. 4.13 Contracts and Commitments. Buyer has, and on the Closing Date will have, no agreements, contracts and commitments to which it is, or on the Closing Date will be a party, except as described in Schedule 4.13. A true and correct copy of each such agreement, contract or commitment has been delivered to the Company. Buyer is not, and on the Closing Date will not be, and to the knowledge of Buyer, each such other party to each of such agreements, contracts or commitments is not, in default under any such agreement, contract or commitment, the result of which breach would have a materially adverse effect on Buyer. 4.14 Litigation. There are, and on the Closing Date will be, no claims, actions, suits or proceedings, pending, or to the best knowledge of Buyer, threatened against Buyer. 4.15 Compensation and Loans. Except as disclosed in Schedule 4.15, since June 30, 1999, there have been, and on the Closing Date will be, (i) no salaried or otherwise compensated employees, officers or directors of Buyer, (ii) no loans made to any officer or director of Buyer, (iii) no dividends or other distributions declared or paid by Buyer, and (iv) no repurchase by Buyer of any shares of capital stock. 4.16 Additional Issuances of Equity. Except as set forth on Schedule 4.16 hereof, since June 30, 1999, Buyer has not issued or committed itself to issue, and to the Closing Date will not issue or commit itself to issue any additional common shares or any options, rights, warrants or other securities or instruments convertible into or exercisable for common shares, except as contemplated by this Agreement. 4.17 Investment Intent. Buyer is acquiring Company Shares for investment only and not with a view to further distribution and does not have, and will not have on the Closing Date, any commitment for the disposition of such shares. 4.18 Patents, etc. Buyer has no patents, patent applications, trademark, trademark registrations, tradenames, copyrights, copyright registrations or applications therefor. Buyer is not infringing upon any intellectual property right of any person. 4.19 Business Conduct. The Company has, and on the Closing Date will have, operated its business and conducted its affairs in compliance with all applicable laws, rules and regulations of the United States, the State of Delaware and all jurisdictions in which it now carries on its business, except where the failure to so comply would not have a materially adverse effect on Buyer. 4.20 Affiliated Transactions. There are, and on the Closing Date there will be no loans, leases or other contracts outstanding between Buyer and any officer or director of Buyer or any person related to any officer or director of Buyer. 4.21 Sanctions. During the past five year period, except as set forth on Schedule 4.21, no officer or director of Buyer has been the subject of: 4.21.1 a petition under the federal bankruptcy laws or any other insolvency or creditor's rights laws, nor has a receiver, fiscal agent or similar officer been appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing or appointment, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing or appointment; 4.21.2 a conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); 4.21.3 any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities; (i) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with activity; (ii) Engaging in any type of business practice; and (iii) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal, state or other securities laws or commodities laws. 4.21.4 any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal, state or local authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in the preceding sub-paragraph, or to be associated with persons engaged in any such activity; 4.21.5 a finding by a court of competent jurisdiction in a civil action or by the United States Securities and Exchange Commission to have violated any securities law, and the judgment in such civil action or finding by such Commission has not been subsequently reversed, suspended or vacated; or 4.21.6 a finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated. 4.22 Buyer Representation. Buyer has not taken and will not take, and to its knowledge, no officer, director or shareholder has taken, directly or indirectly, any action designed to, or which has constituted, or which might reasonably be expected to, cause or result in any violations of the federal securities laws with regard to Buyer or its securities. 4.23 Employee Benefit Plans. Buyer has no pension plan, profit sharing or similar employee benefit plan. 4.24 Broker's Fees. Buyer nor any of its officers or directors has employed any broker or finder or incurred any liability for any broker's fees, commissions or finder's fees in connection with any of the transactions contemplated by this Agreement. 4.25 Questionable Payments. Neither Buyer, nor any current or former shareholder, partner, director or officer of Buyer, has (a) used any corporate funds for any illegal contributions, gifts, entertainment or other unlawful expenses relating to political activity; (b) used any corporate funds for any direct or indirect unlawful payments to any foreign or domestic government officials or employees; (c) violated any provision of the Foreign Corrupt Practices Act of 1977; (d) established or maintained any unlawful or unrecorded fund of corporate monies or other assets; (e) made any false or fictitious entries on such corporation's books and records; (f) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment of any nature using corporate funds or otherwise on behalf of Buyer; or (g) made any material favor or gift that is not deductible for federal income tax purposes using corporate funds or otherwise on behalf of Buyer. 4.26 Blank Check Company Status. Buyer is not a "blank check company" as defined in Section 7(b) of the Securities Act of 1933, as amended ("Securities Act"), and, accordingly, is not required to comply with Section 7(b) of the Securities Act or Rule 419 promulgated under the Securities Act. 4.27 Exchange Act Registration. At Closing, the Buyer Shares will be registered under the Securities Exchange Act of 1934 and listed for trading on the OTC Bulletin Board. ARTICLE V COVENANTS OF THE PARTIES 5.1 Buyer Special Board Meeting. On the Closing Date Buyer shall cause a special meeting of the Board of Directors of Buyer to be held, at which meeting the size of the Board of Directors of Buyer shall be set at six (6) members. Three (3) designees of the Company (Anthony E. Mohr, Prof. Dr. Ruud A.M. Pruijm R.A. and Philip L. van Wijngaarden) shall be appointed as new directors of Buyer, and at which resignations from all of the present officers, directors not continuing to serve and employees of Buyer which shall have been tendered prior to the Closing Date shall be accepted. In addition, Mr. Mohr shall be appointed as President and Chief Executive Officer. At the special meeting of the Board of Directors of Buyer referred to above, an advisory board of Buyer shall be appointed to include up to three (3) members designated by the Company, with such appointments effective as of the Closing Date. 5.2 Delivery of Registration Statement and Related Securities and Corporate Documents by Buyer. Buyer has previously delivered to the Company true and complete copies, including exhibits and, as applicable, amendments thereto, of (i) all registration statements filed under the Securities Act of 1933; (ii) the prospectuses contained therein; (iii) its Form 10-K Annual Reports for the three years ended June 30, 1999; (iv) its Form 10-Q Quarterly Reports, for the quarters during the three years ended June 30, 1999 and subsequent thereto to the Closing Date; (v) its Form 8-K Current Reports for the three years ended June 30, 1999 and subsequent thereto to the Closing Date; (vi) copies of all material correspondence with the Securities and Exchange Commission, the OTC and state blue sky commissions; (vii) all reports filed under Section 13 and 16 of the Securities Exchange Act of 1934 (the "Exchange Act"); (viii) all proxy statements filed under the Exchange Act; (ix) a certified copy of the Buyer's Certificate of Incorporation, as amended as of the Closing Date; and (x) a certified copy of the Buyer's Bylaws, as amended, as of the Closing Date. All such documents referred to herein, at the time filed with the Securities and Exchange Commission ("SEC") complied with the Exchange Act and all applicable rules and regulations of the SEC and were timely filed. No such registration statement, prospectus, or other document specified herein, as of the date of filing or the effective date, as the case may be, or as of any subsequent date when Buyer was required to amend, supplement or update any such document (regardless of whether it did so), contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. 5.3 Affirmative Covenants of Buyer. Buyer covenants and agrees that prior to the Closing Date, it has or will file all reports and filings required to be filed by Buyer under Sections 13, 14 and 15(d) of the Exchange Act, together with all other reports and filings necessary to have available "current public information" as defined in Rule 144 under the rules and regulations promulgated under the Securities Act. Buyer knows of no reports or filings required to be filed by officers, directors, shareholders or their affiliates under the Exchange Act which have not been filed. 5.4 Negative Covenants of Buyer. Buyer agrees that from the date hereof to the Closing Date, except as otherwise consented to or approved by the Sellers and the Company in writing or as permitted or required by this Agreement, it will not change any provision of its certificate of incorporation or bylaws. 5.5 Subsequent Interim Financial Statements of Buyer. As soon as reasonably available, but in no event more than 45 days after the end of each fiscal quarter ending after the Closing Date, Buyer will deliver to the Company its Quarterly Report on Form 10-Q, as filed with the Securities and Exchange Commission under the Exchange Act. 5.6 OTC Bulletin Board Eligibility. As of the Closing Date, after giving effect to the Stock Exchange, Buyer shall satisfy all criteria for having its Buyer Shares qualified for inclusion in the OTC Bulletin Board listing and shall be so listed. 5.7 Affirmative Covenants of the Company. The Company covenants and agrees that subsequent to the Closing Date, it will use its best efforts to see that all reports and filings required to be filed by Buyer under Sections 13 and 15(d) of the Exchange Act, together with all other reports and filings necessary to have available "current public information" as defined in Rule 144 under the rules and regulations promulgated under the Securities Act are filed. 5.8 Access to Records; Confidentiality. 5.8.1 During the period from the date of this Agreement to the Closing Date, Buyer and the Company shall each permit the other party and its respective representatives, agents and designees reasonable access to its properties and those of its subsidiaries, and shall disclose and make available to them all books, papers and records relating to the assets, stock, ownership, properties, operations, obligations and liabilities of it and its subsidiaries, including, but not limited to, all books of accounts (including the general ledger), tax records, minute books of directors' and stockholders' meetings, organizational documents, bylaws, material contracts and agreements, filings with any regulatory authority, accountants' work papers, litigation files, plans affecting employees, and any other business activities or prospects in which Buyer or the Company, as the case may be, may have an interest. 5.8.2. All information furnished by Buyer to the Company and by the Company to Buyer pursuant hereto shall be treated as the sole property of the party furnishing the information and, if the Stock Exchange shall not occur, the party receiving the information shall return to the party furnishing the information, all documents (in whatever form, including electronic) or other materials containing, reflecting or referring to such information, shall use its best efforts to keep confidential all such information, and shall not directly or indirectly use such information for any competitive or other commercial purpose. The obligation to keep such information confidential shall not apply to (i) any information which: (w) the party receiving the information can establish was already in its possession prior to the disclosure thereof by the party furnishing the information; (x) was then generally known to the public; (y) became known to the public through no fault of the party receiving the information; or (z) was disclosed to the party receiving the information by a third party not bound by an obligation of confidentiality or (ii) disclosures in accordance with an order of a court of competent jurisdictions. 5.9 Buyer acknowledges the existence of that certain Share Purchase and Shareholders' Agreement relating to Global Information Group USA Inc. dated January 14, 2000 among Buyer, Chatelin Capital Partners Limited, Jolec Trading Limited, Anthony E. Mohr, Koenig Invest AG and Newick Developments Limited and the agreement between Invest B.V. and Global Information Group USA Inc. dated May 14, 1998 and agrees to abide by the terms thereof. 5.10 Buyer shall deliver a registration rights agreement ("Registration Rights Agreement") providing Sellers with registration rights in such form as shall be reasonably satisfactory to Sellers. 5.11 Buyer agrees not to grant any registration rights which are superior to those set forth in the Registration Rights Agreement or which could otherwise adversely affect the rights granted thereunder. 5.12 Biotel, Inc. agrees to take any and all actions including voting Buyer Shares owned in favor of the Stock Exchange and the transactions contemplated thereby at any shareholders meeting, or if no shareholders meeting is held, executing written consents in favor of such actions. 5.13 So long as this Agreement remains in effect, Buyer shall not and Buyer shall not authorize or permit any of its directors, officers, employees or agents, to directly or indirectly (i) respond to, solicit, initiate or encourage any inquiries relating to, or the making of any proposal which relates to, an Acquisition Transaction (as defined below), (ii) recommend or endorse an Acquisition Transaction, (iii) participate in any discussions or negotiations regarding an Acquisition Transaction, (iv) provide any third party (other than the Company or an affiliate of the Company) with any non-public information in connection with any inquiry or proposal relating to an Acquisition Transaction or (v) enter into an agreement with any other party with respect to an Acquisition Transaction. Buyer will immediately cease and cause to be terminated any existing activities, discussions or negotiations previously conducted with any parties other than the Company with respect to any of the foregoing, and will take all actions necessary or advisable to inform the appropriate individuals or entities referred to in the first sentence hereof of the obligations undertaken in this Section 5.13. Buyer will notify the Company orally (within one day) and in writing (as promptly as practicable) if any inquiries or proposals relating to an Acquisition Transaction are received by, any such information is requested from, or any such negotiations or discussions are sought to be initiated or continued with Buyer. As used in this Agreement, "Acquisition Transaction" shall mean one of the following transactions with a party other than the Company of an affiliate of the Company (i) a merger, consolidation, share exchange, or any similar transaction, involving Buyer, (ii) a purchase, lease or other acquisition of all or a substantial portion of the assets or liabilities of Buyer or, (iii) a purchase or other acquisition (including by way of share exchange, tender offer, exchange offer or otherwise) of a substantial interest in any class or series of equity securities of Buyer. 5.14 Further Assurances. In case at any time after the Closing Date any further action is necessary or desirable to carry out the purposes of this Agreement, each party to this Agreement shall take all such necessary action, including but not limited to responding to SEC comments on any filings made with the SEC and working to have such filings cleared by the SEC. ARTICLE VI CLOSING CONDITIONS 6.1 Conditions to the Obligations of Buyer under the Agreement. The obligations of Buyer to perform this Agreement shall be further subject to the satisfaction, at or prior to the Closing Date, of the following conditions, any one or more of which may be waived by Buyer: 6.1.1 Each of the obligations of the Sellers and the Company required to be performed at or prior to the Closing Date pursuant to the terms of this Agreement shall have been performed and complied with in all material respects and the representations and warranties of Sellers and the Company contained in this Agreement shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made at and as of the Closing Date, except with respect to changes permitted hereby and for any such representations and warranties made as of a specific date and the representations and warranties contained in Section 3.08 which shall be true and correct with respect to all financial statements of the Company delivered to Buyer prior to the Closing Date. Buyer shall have received a certificate to the foregoing effect signed by an executive officer of the Company. 6.1.2 There shall have been no material adverse change in the financial condition of the Company, since the date of this Agreement, whether or not in the ordinary course of business. 6.1.3 All action required to be taken by, or on the part of, the Company to authorize the execution, delivery and performance of this Agreement and the consummation by the Company of the transactions contemplated hereby shall have been duly and validly taken by the Company and Buyer shall have received certified copies of the resolutions evidencing such authorization. 6.1.4 Any and all permits, consents, waivers, clearances, approvals and authorizations of all third parties which are necessary in connection with the consummation of the transactions contemplated hereby shall have been obtained. 6.1.5 The Company shall not have suffered a loss on account of fire, flood, accident or other calamity of such a character as to interfere materially with the continuous operation of its business or materially adversely affect their aggregate financial condition, regardless of whether or not such loss shall have been insured. 6.1.6 Except as disclosed in Schedule 6.1.6 hereto that no material transactions shall have been entered into by the Company other than transactions in the ordinary course of business since March 31, 2000 or other than as referred to in this Agreement, except with the written consent of Buyer. 6.1.7 That none of the properties or assets of the Company shall have been sold or otherwise disposed of other than in the ordinary course of business since March 31, 2000, where such has had a materially adverse affect on the Company, except with the written consent of Buyer. 6.1.8 That Buyer shall have received an opinion from counsel to the Company in form reasonably satisfactory to Buyer's counsel, that: (a) The Company has been duly incorporated and is a validly existing corporation under the laws of the State of Delaware with a capitalization as represented in this Agreement. (b) All of the Outstanding Company Shares have been duly authorized by appropriate corporate action of the Company, as applicable, and are validly issued and represent fully paid and nonassessable shares of the Company, free of preemptive rights. (c) This Agreement and the transactions contemplated hereby have been duly authorized by necessary corporate action of the Company. (d) Upon delivery of the certificates and duly executed stock transfer forms representing the Company Shares pursuant to the terms of this Agreement, Buyer will acquire legal and beneficial ownership of such securities free and clear of all liens, pledges and encumbrances; and, upon the completion of the transactions contemplated by this Agreement, Buyer shall be the owner of all of the Outstanding Company Shares and, to the knowledge of counsel, there shall be no outstanding options or warrants to purchase any shares of the Company nor any outstanding securities of any nature convertible into such shares. 6.2 Conditions to the Obligations of Sellers and the Company under the Agreement. The obligations of Sellers and the Company to perform this Agreement shall be further subject to the satisfaction, at or prior to the Closing Date, of following conditions any one or more of which may be waived by Sellers and the Company: 6.2.1. Each of the obligations of Buyer required to be performed by it at or prior to the Closing pursuant to the terms of this Agreement shall have been performed and complied with in all material respects and the representations and warranties of Buyer contained in this Agreement shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made at and as of the Closing Date, except with respect to changes permitted hereby and for any such representations and warranties made as of a specific date and the representations and warranties contained in Section 4.8 which shall be true and correct with respect to all financial statements of Buyer delivered to the Company prior to the Closing Date. The Sellers and the Company shall have received a certificate to the foregoing effect signed by an executive officer of Buyer. 6.2.2 There shall have been no material adverse change in the financial condition of Buyer since the date of this Agreement, whether or not in the ordinary course of business. 6.2.3 All action required to be taken by, or on the part of, Buyer to authorize the execution, delivery and performance of this Agreement by Buyer and the consummation by Buyer of the transactions contemplated hereby shall have been duly and validly taken by the Board of Directors and stockholders of Buyer and Sellers and the Company shall have received certified copies of the resolutions evidencing such authorization. 6.2.4 Any and all permits, consents, waivers, clearances, approvals and authorizations of all third parties which are necessary in connection with the consummation of the transactions contemplated hereby shall have been obtained. 6.2.5 The Sellers and the Company shall have received an opinion of counsel or independent auditors to the effect that the Stock Exchange qualifies as a tax-free exchange pursuant to Section 351 and or Section 368(a)(1)(B) of the Code. 6.2.6 That Buyer shall not have suffered any loss on account of fire, flood, accident or other calamity of such a character as to interfere materially with the continuous operation of its business or materially adversely affect its financial condition, regardless of whether or not such loss shall have been insured. 6.2.7 That no material transactions shall have been entered into by Buyer other than transactions in the ordinary course of business between June 30, 1999 and the Closing Date, other than as contemplated by this Agreement, except with the written consent of the Company. 6.2.8 That none of the properties or assets of Buyer shall have been sold or otherwise disposed of other than in the ordinary course of business since June 30, 1999, except with the written consent of the Company. 6.2.9 Buyer shall have received, by May 5, 2000, to the reasonable satisfaction of the Company, an order (the "Order") of the Bankruptcy Court (under Section 1127, 1142 or any other applicable section of the Bankruptcy Code or applicable non-bankruptcy law), which shall become a final non-appealable (and otherwise not the subject of a motion to modify, alter or amend the judgment or be subject to reconsideration) and which deletes and/or renders null and void the following sentences contained on page 8 of the Plan of Reorganization dated March 23, 1999, a copy of which is attached hereto as Exhibit "C." "The Corporation and the Corporation name, will be dissolved after consummation of the sale and the appropriate bankruptcy court Order. The shareholders of Advanced Medical will have their stock extinguished" and replaces such language with the following: "ADVA will continue its corporate existence and that the existing shares of stock remain valid." 6.2.10 Should the Bankruptcy Court, pursuant to the Order, require that an amount up to $300,000 be paid to the creditors of Advanced Medical Products, Inc. (administrative, priority and unsecured) and for related costs, Buyer shall have complied with such order. 6.2.11 Buyer shall have delivered and executed a Registration Rights Agreement in such form as shall be reasonably satisfactory to the Company and the Shareholders. 6.2.12 Outstanding Buyer Shares, after giving effect to the transactions contemplated hereunder, shall be listed for trading on the OTC Bulletin Board. 6.2.13 That Sellers and the Company shall have received an opinion from counsel to Buyer in form satisfactory to the Company's counsel, that: (a) Buyer has been duly incorporated and is a validly existing corporation in good standing under the laws of the State of Delaware with a capitalization as represented in this Agreement. (b) All of the Outstanding Buyer Shares have been duly authorized by appropriate corporate action of Buyer, are validly issued and represent fully paid and nonassessable capital shares of Buyer and the Outstanding Buyer Shares have been registered under the Securities Exchange Act of 1934 and have been issued in compliance with applicable Federal and state securities laws. (c) This Agreement and the transactions contemplated hereby have been duly authorized by appropriate action of Buyer and, under applicable law and Buyer stockholder approval is not required under applicable law. (d) The issuance of the Buyer Shares to Sellers on the Closing Date pursuant to this Agreement have been duly authorized by appropriate corporate action of Buyer, and when issued, shall be fully paid and nonassessable common shares of Buyer free of preemptive rights. (e) To such counsel's knowledge, after due inquiry, Buyer has not been or is not required to be registered as an investment company or an investment adviser under the Investment Company Act of 1940 or the Investment Advisers Act of 1940, respectively. (f) Buyer is not a "blank check company" as defined in Section 7(a) of the Securities Act and, accordingly, is not required to comply with Section 7(b) of the Securities Act or Rule 419 promulgated under the Securities Act. (g) The Buyer Shares are qualified for inclusion in the OTC Bulletin Board listing. ARTICLE VII CLOSING 7.1 Time and Place. Subject to the provisions of Articles 6 and 8 hereof, the Closing of the transactions contemplated hereby shall take place at the offices of Blank Rome Comisky & McCauley LLP, One Logan Square, Philadelphia, Pennsylvania, at 9:00 A.M., local time, on the second (2nd) business day after the date on which all of the conditions contained in Article 6, to the extent not waived, are satisfied; or at such other place, at such other time, or on such other date as the Company and Buyer may mutually agree upon for the Closing to take place. 7.2 Deliveries at the Closing. Subject to the provisions of Articles 6 and 8 hereof, at the Closing there shall be delivered to Sellers, the Company and Buyer the opinions, certificates, and other documents and instruments required to be delivered under Article 6 hereof. ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER 8.1 Termination. This Agreement may be terminated at any time prior to the Closing Date: 8.1.1 by mutual written consent of Sellers, the Company, Biotel and Buyer, properly authorized; 8.1.2 by Sellers, the Company or Buyer, (i) if the Closing Date shall not have occurred on or prior to July 15, 2000, unless the failure of such occurrence shall be due to the failure of the party seeking to terminate this Agreement to perform or observe its agreements and conditions set forth herein to be performed or observed by such party at or before the Closing Date; or (ii) if it has become reasonably certain that any condition specified in Article 6 of this Agreement will not be satisfied and such condition has not been waived by the party having the power to waive such condition. Notwithstanding the foregoing, in the event the parties hereto do not receive assurances from the NASDAQ, after giving effect to the transactions contemplated hereby, that Buyer Shares shall continue to be deemed an "eligible security" under the OTC Bulletin Board Eligibility Rules, the Closing Date shall be extended to such date as such assurances are received, but in no event later than August 31, 2000. In addition, the Closing Date may also be extended by mutual agreement by the parties thereto; 8.1.3 by Sellers or the Company, if there shall have been any material breach of any obligation of Buyer hereunder and such breach shall have not been remedied within 10 days after receipt by Buyer of notice in writing from Sellers or the Company specifying the nature of such breach and requesting that it be remedied; and 8.1.4 by Buyer, if there shall have been any material breach of any obligation of Sellers or the Company hereunder and such default shall not have been remedied within 10 days after receipt by the defaulting Seller(s) or the Company, as the case may be, of notice in writing from Buyer specifying the nature of such breach and requesting that it be remedied. 8.2 Effect of Termination. In the event of termination of this Agreement by either Buyer, Sellers or the Company as provided above, this Agreement shall forthwith become void (other than Section 5.8 and 9.1 hereof which shall remain in full force and effect), there shall be no further liability on the part of Sellers, the Company or Buyer, except for liability under Section 5.8.2 and 9.1. Nothing contained in this Section 8.2 shall relieve any party hereto from liability for any breach of this Agreement. 8.3 Amendment, Extension and Waiver. Subject to applicable law, at any time prior to the consummation of the transactions contemplated herein, Sellers, the Company and Buyer may, (a) amend this Agreement, (b) extend the time for the performance of any of the obligations or other acts of the other, (c) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto, or (d) waive compliance with any of the covenants, agreements or conditions contained in Articles 5 and 6 hereof. This Agreement may not be amended, except by an instrument in writing signed on behalf of each of the parties hereto. Any agreement on the part of a party hereto to any extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party, but such waiver or failure to insist on strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. ARTICLE IX MISCELLANEOUS 9.1 Expenses. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby (including legal, accounting, printing and investment banking fees and expenses) shall be borne by the party incurring such costs and expenses. Buyer's costs and expenses shall be paid prior to the Closing Date. 9.2 Survival. The respective representations and warranties of the parties to this Agreement shall not survive the Closing Date, but shall terminate as of the Closing Date. 9.3 Notices. All notices or other communications hereunder shall be in writing and shall be deemed given if delivered personally or mailed by prepaid registered or certified mail (return receipt requested) or by cable, telegram or telex addressed as follows: (a) If to Sellers, to their respective addresses set forth on Exhibit "A" hereto. Copy to: Barry H. Genkin, Esquire BLANK ROME COMISKY & McCAULEY LLP One Logan Square Philadelphia, PA 19103 Fax No.: (215) 988-6910 (b) If to the Company, to: Global Information Group USA, Inc. One Rockefeller Plaza New York, NY l0020 Fax No.: (240) 266-6261 Copy to: Barry H. Genkin, Esquire BLANK ROME COMISKY & McCAULEY LLP One Logan Square Philadelphia, PA 19103 Fax No.: (215) 988-6910 (c) If to Buyer, to: ADVA INTERNATIONAL INC. 6 Woodcross Drive Columbus, SC 29212 Fax No.: (803) 407-1967 Copy to: Brian L. Herndon, Esquire Blanco Tackabery Combs & Matamoros, P.A. Stratford Point Building, 5th Floor South Stratford Road Winston-Salem, N.C. 27104-4255 Fax No.: (336) 7761-1250 or such other address as shall be furnished in writing by a party, and any such notice or communication shall be deemed to have been given as of the date so mailed. 9.4 Parties in Interest; Assignment. This Agreement shall be binding upon and shall inure to the benefit of parties hereto and their respective successors and assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any party hereto without the prior written consent of the other parties. 9.5 Complete Agreement. This Agreement, including the documents and other writings referred to herein or delivered pursuant hereto, contains the entire agreement and understanding of the parties with respect to its subject matter. There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties other than as expressly set forth herein. This Agreement supersedes prior agreements and understandings between the parties, both written and oral, with respect to its subject matter. 9.6 Neutral Construction. The parties have negotiated this Agreement and all of the terms and conditions contained in this Agreement in good faith and at arms' length, and each party has been represented by counsel during such negotiations. No term, condition, or provision contained in this Agreement shall be construed against any party or in favor of any party (i) because such party or such party's counsel drafted, revised, commented upon, or did not comment upon, such term, condition, or provision; or (ii) because of any presumption as to any inequality of bargaining power between nor among the parties. Furthermore, all terms, conditions, and provisions contained in this Agreement shall be construed and interpreted in a manner which is consistent with all other terms, conditions, and provisions contained in this Agreement. 9.7 Counterparts. This Agreement may be executed in one or more counterparts all of which shall be considered one and the same agreement and each of which shall be deemed an original. 9.8 Governing Law. This Agreement shall be governed by the laws of the State of Delaware, without giving effect to the principles of conflicts of laws thereof. 9.9 Arbitration. All claims, demands, disputes, controversies, differences, or misunderstandings between the parties arising out of, or by virtue of, this Agreement shall be submitted to and determined by arbitration in accordance with this Section. In the event of such a claim, demand, dispute, controversy, difference, or misunderstanding, Buyer on the one hand, and the Company and the Shareholders, on the other hand, shall each select one artibtrator and shall together select a third arbitrator who is neutral unbiased, and who shall serve as the chairman of the panel. If the parties are unable to agree upon the third arbitrator, or if one of the parties is unable to or fails to select an arbitrator in accordance with this Section, the American Arbitration Association ("AAA") shall be designated by either party to appoint such arbitrator(s) to arbitrate the matter in accordance with this Section. The matter shall be arbitrated under the rules of the AAA applicable to commercial arbitrations then obtaining, such arbitration to be held in New York, NY. At any time before a decision of the arbitration panel has been rendered, the parties may resolve the dispute by settlement. The decision of a majority of arbitrator(s) shall be the aware of the panel of arbitrators and shall be made in writing setting forth the award, the reasons for the decision and award shall be binding and conclusive on all parties; shall not be appealable and shall include a finding for payment of the costs of such arbitration. Judgment of a court of competent jurisdiction may be entered upon the award and may be enforced as such in accordance with the provisions of the award. This agreement to arbitrate is specifically enforceable by the parties to this Agreement. 9.9 Headings. The Article and Schedule headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. IN WITNESS WHEREOF, individual Sellers have executed, and Biotel, the Company and Buyer have caused this Agreement to be executed by their duly authorized officers, all as of the day and year first above written.
SELLERS: /s/ Hendrik Smit, power-of-attorney for /s/Anthony E. Mohr Henri B. G. Sijthoff - ----------------------------------------------- ------------------------------------------ ANTHONY E. MOHR HENRI B.G. SIJTHOFF JOLEC TRADING LIMITED /s/ Hendrik Smit, power-of-attorney for /s/ Intertrust (Curacao) N.V. Charles Langereis - ----------------------------------------------- ------------------------------------------ . By: Gregory Elias CHARLES LANGEREIS Managing Director /s/ Philip L. van Wijngaarden, power-of- /s/ Hendrik Smit, power-of-attorney for attorney for Hugo Heerema Jouke V.J.P. Brada - ----------------------------------------------- ------------------------------------------ HUGO HEEREMA JOUKE V.J.P. BRADA FOG INVESTMENTS, LTD. VIEWMONT HOLDINGS, LTD. /s/ Anthony E. Mohr /s/ Intertrust (Curacao) N.V. - ----------------------------------------------- ------------------------------------------ By: Anthony E. Mohr, power-of-attorney for By: Gregory Elias, FOG Investments, ltd. Managing Director GORILLA VENTURES N.V. MOANA LAKE FINANCING CORP. /s/ Intertrust (Curacao) N.V. /s/ Intertrust (Curacao) N.V. - ----------------------------------------------- ------------------------------------------ By: Gregory Elias, By: Gregory Elias, Managing Director Managing Director LINARES CAPITAL LIMITED SORENSEN'S SECURITIES LTD. /s/ Intertrust (Curacao) N.V. /s/ Intertrust (Curacao) N.V. - ----------------------------------------------- ------------------------------------------ By: Gregory Elias, By: Gregory Elias, Managing Director Managing Director
HEYDAEL B.V. HACKEN INVESTMENTS LIMITED /s/ Hendrik Smit /s/ Benno P. Hafner - ----------------------------------------------- ------------------------------------------ By: Hendrik Smit, By: Benno P. Hafner, power-of-attorney Managing Director for Hacken Investments Limited /s/ Philip L. van Wijngaarden, power-of- /s/ Philip L. van Wijngaarden, power-of- attorney for Femia E. van Wulfften Palthe attorney for Leonard van Hulst - ----------------------------------------------- ------------------------------------------ FEMIA E. VAN WULFFTEN PALTHE LEONARD VAN HULST /s/ Philip L. van Wijngaarden, power-of- /s/ Philip L. van Wijngaarden, power-of- attorney for Nicole E.A.M. Aarts attorney for Fiona N. Van Hulst - ---------------------------------------------- ------------------------------------------ NICOLE E.A.M. AARTS FIONA N. VAN HULST BIOTEL, INC. By: /s/ Ronald G. Moyer ------------------------------------- Title: President GLOBAL INFORMATION GROUP USA, INC. ADVA INTERNATIONAL INC. (the "Company"): (the "Buyer") By: /s/ Anthony E. Mohr By: /s/ George L. Down ------------------ --------------------------------- Title: President Title: President
EXHIBIT "A"
Global Information Number of Group USA Inc. Global Information Number of ADVA Shareholders and Group USA Inc. International Inc. Addresses Shares Owned to be Received - --------- ------------ -------------- Anthony E. Mohr 395.05 4,142,562 Jolec Trading Limited 36.75 385,439 Hugo Heerema 55.03 577,095 FOG Investments, Ltd. 4.95 51,908 Gorilla (f/k/a Equation) Ventures N.V. 44.12 462,631 Linares Capital Limited 50.00 524,354 Heydael B.V. 100.00 1,048,641 Henri B. G. Sijthoff 45.00 471,888 Charles Langereis 45.00 471,888 Jouke V.J.P. Brada 10.00 104,864 Viewmont Holdings Limited 100.00 1,048,630 Moana Lake Finance Corp. 100.00 1,048,630 Sorensen's Securities Ltd. 108.82 1,141,156 Femia E. van Wulfften Palthe 11.00 115,384 Leonard van Hulst 7.34 76,950 Nicole E.A.M. Aarts 1.43 15,000 Fiona N. van Hulst 1.19 12,500 Hacken Investments Limited 73.36 769,230 ----------- ----------- Total 1189.04 12,468,750
EX-2.2 3 0003.txt EXHIBIT 2.2 EXHIBIT 2.2 AMENDMENT (2.2.01) TO AGREEMENT OF STOCK EXCHANGE AMENDMENT ("Amendment"), dated as of February 2, 2001, to that certain Agreement of Stock Exchange dated 19 June 2000 (the "Agreement") by and among Anthony E. Mohr, Jolec Trading Limited, Hugo Heerema, FOG Investments, Ltd., Gorilla Ventures N.V. (f/k/a Equation Ventures, N.V.), Linares Capital Limited, Heydael B.V., Henri B. G. Sijthoff, Charles Langereis, Jouke V.J.P. Brada, Femia E. van Wulfften Palthe, Leonard van Hulst, Nicole E.A.M. Aarts, Fiona N. van Hulst, Viewmont Holdings Limited, Moana Lake Finance Corp., Sorensen's Securities Ltd. and Hacken Investments Limited, (individually, a "Seller" and collectively, the "Sellers"); ADVA International Inc., a Delaware corporation ("Buyer"); Global Information Group USA Inc., a Delaware corporation (the "Company") and Biotel, Inc. ("Biotel"). RECITALS WHEREAS, the parties to this Amendment are all of the parties to the Agreement; WHEREAS, Section 8.3 of the Agreement provides that the parties have the right to amend the Agreement provided such amendment is evidenced by an instrument in writing signed on behalf of each of the parties. WHEREAS, each of the parties desires to amend the Agreement as set forth in this Amendment. NOW THEREFORE, in consideration of the premises and the mutual representations hereinafter set forth and intending to be legally bound hereby, the parties hereto agree as follows: 1. All capitalized terms used but not defined herein shall have the meanings given to them in the Agreement. 2. Clause 8.1.2 of the Agreement is amended to read as follows: "by Sellers, the Company or Buyer, (i) if the Closing Date shall not have occurred on or prior to 5:00 p.m. Eastern Standard Time March 2, 2001, unless the failure of such occurrence shall be due to the failure of the party seeking to terminate this Agreement to perform or observe its agreements and conditions set forth herein to be performed or observed by such party at or before the Closing date; or (ii) if it has become reasonably certain that any condition specified in Article 6 of this Agreement will not be satisfied and such condition has not been waived by the party having the power to waive such condition. The Closing Date may be extended by mutual agreement of the parties hereto." 3. The Agreement, as amended by this Amendment, shall remain in full force and effect in accordance with its terms. 4. This Amendment may be executed in several counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one agreement. IN WITNESS WHEREOF, the parties to this Amendment have caused this Amendment to be executed and delivered as of the date first set forth above.
SELLERS: /s/ Anthony E. Mohr /s/ Hendrik Smit, power-of-attorney for Charles Langereis - -------------------------------------------------- --------------------------------------------------------------------- ANTHONY E. MOHR CHARLES LANGEREIS, by Hendrik Smit as power-of-attorney. FOG INVESTMENTS LIMITED By: Anthony E. Mohr as power-of-attorney. /s/ Anthony E. Mohr, power-of-attorney for FOG Investments Limited /s/ Hendrik Smith, pwer-of-atorney for Henri B.G. Sijthoff - -------------------------------------------------- --------------------------------------------------------------------- HENRI B. SIJTHOFF, by Hendrik Smit as power-of-attorney. /s/ Philip L. van Wijngaarden, power-of- attorney for Hugo Heerema /s/ Hendrik Smit, power-of-attorney for Jouke V.J.P. Brada - -------------------------------------------------- --------------------------------------------------------------------- HUGO HEEREMA, by Philip L. van Wijngaarden as JOUKE V.J.P. BRADA, by Hendrik Smit as power-of-attorney. power-of-attorney. /s/ Philip L. van Wijngaarden, power-of- attorney for Femia E. van Wulfften Palthe /s/ Philip L. van Wijngaarden, power-of-attorney for Leonard van Hulst - ------------------------------------------------- ---------------------------------------------------------------------- FEMIA E. VAN WULFFTEN PALTHE, by LEONARD VAN HULST, by Philip L. van Wijngaarden as power-of-attorney. Philip L. van Wijngaarden as power-of-attorney. /s/ Philip L. van Wijngaarden, power-of- attorney for Nicole E.A.M. Aarts /s/ Philip L. van Wijngaarden, power-of-attorney for Fiona van Hulst - -------------------------------------------------- ---------------------------------------------------------------------- NICOLE E.A.M. AARTS, by FIONA N. VAN HULST, by Philip L. van Wijngaarden as power-of-attorney. Philip L. van Wijngaarden as power-of-attorney. JOLEC TRADING LIMITED VIEWMONT HOLDINGS LIMITED By: Intertrust (Curacao) N.V. By: Intertrust (Curacao) N.V. /s/ Gregory Elias /s/ Gregory Elias - -------------------------------------------------- ----------------------------------------------------------------------- Gregory Elias, Managing Director Gregory Elias, Managing Director SORENSEN'S SECURITIES LIMITED GORILLA VENTURES N.V. By: Intertrust (Curacao) N.V. By: Intertrust (Curacao) N.V. /s/ Gregory Elias /s/ Gregory Elias - -------------------------------------------------- ----------------------------------------------------------------------- Gregory Elias, Managing Director Gregory Elias, Managing Director MOANA LAKE FINANCE CORP. LINARES CAPITAL LIMITED By: Intertrust (Curacao) N.V. By: Intertrust (Curacao) N.V. /s/ Gregory Elias /s/ Gregory Elias - -------------------------------------------------- ----------------------------------------------------------------------- Gregory Elias, Managing Director Gregory Elias, Managing Director HACKEN INVESTMENTS LIMITED HEYDAEL B.V. By: Benno P. Hafner, power-of-attorney By: Hendrik Smit, Managing Director /s/ Benno P. Hafner /s/ Hendrik Smit - -------------------------------------------------- -----------------------------------------------------------------------
BUYER: COMPANY: ADVA INTERNATIONAL, INC. GLOBAL INFORMATION GROUP USA, INC. By: /s/ George L. Down By: /s/ Anthony E. Mohr ------------------------------------------- ------------------------------------------- Name: George L. Down Name: Anthony E. Mohr ------------------------------------------- ------------------------------------------- Title: President Title: Chief Executive Officer ------------------------------------------- ------------------------------------------- BIOTEL, INC. By: /s/ Ronald G. Moyer ------------------------------------------- Name: Ronald G. Moyer ------------------------------------------- Title: President -------------------------------------------
EX-2.3 4 0004.txt EXHIBIT 2.3 EXHIBIT 2.3 STOCK EXCHANGE JOINDER AGREEMENT STOCK EXCHANGE JOINDER AGREEMENT ("Joinder") dated as of February 21, 2001, by and among Global Information Group USA, Inc., ("GIG"); the new shareholders of GIG identified on the signature pages hereto (each individually, a "New Shareholder" and collectively, the "New Shareholders"); the pre-existing shareholders of GIG (the "Sellers"); ADVA International Inc., a Delaware corporation ("ADVA"); and Biotel, Inc. ("Biotel"). RECITALS WHEREAS, on June 19, 2000, GIG, the Sellers, ADVA and Biotel entered into an Agreement of Stock Exchange whereby the Sellers agreed to convey all their stock in GIG in exchange for 94.57% of the outstanding capital stock of ADVA; WHEREAS, certain of the Sellers, since execution of the Agreement of Stock Exchange, have sold shares of GIG to certain persons who were not shareholders of GIG as of June 19, 2000 (the "New Shareholders"); WHEREAS, the New Shareholders desire to join and be bound by all the terms and conditions of the Agreement of Stock Exchange and all documents ancillary to the transactions contemplated in the Agreement of Stock Exchange (the "Ancillary Documents"); WHEREAS, pursuant to Section 9.4 of the Agreement of Stock Exchange, all the parties thereto must provide their consent prior to amending the Agreement of Stock Exchange; NOW THEREFORE, in consideration of the premises and the mutual representations hereinafter set forth and intending to be legally bound hereby, the parties hereto agree as follows: 1. The New Shareholders shall, for all purposes of the Agreement of Stock Exchange, the Ancillary Documents and all the transactions contemplated therein, be deemed "Sellers", as such term is defined in the Agreement of Stock Exchange. 2. ADVA and Biotel consent to the transfers of the shares to the New Shareholders and agree to such New Shareholders being deemed "Sellers" for purposes of the Agreement of Stock Exchange, the Ancillary Documents and all the transactions contemplated therein. 3. This Joinder may be executed in several counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one agreement. IN WITNESS WHEREOF, all the parties to this Joinder have caused this Joinder to be executed and delivered as of the date first set forth above.
SELLERS: /s/Anthony E. Mohr /s/ H. Smit, power-of-attorney for Charles Langereis - -------------------------------------------- -------------------------------------------------------------------------- ANTHONY E. MOHR CHARLES LANGEREIS, by Hendrik Smit as power-of-attorney. /s/Anthony E. Mohr, power-of-attorney for FOG Investments Limited /s/ H. Smit, power-of-attorney for H.B.G. Sijthoff - ------------------------------------------------ --------------------------------------------------- FOG INVESTMENTS LIMITED HENRI B.G. SIJTHOFF, by Hendrik Smit as By: Anthony E. Mohr as power-of-attorney. power-of-attorney. /s/ P. L. van Wijngaarden, power-of-attorney for Hugo Heerema /s/ H. Smit, power-of-attorney for Jouke V.J.P. Brada - --------------------------------------------------- ---------------------------------------------------- HUGO HEEREMA, by Philip L. van JOUKE V.J.P. BRADA, by Hendrik Smit as power-of-attorney. Wijngaarden as power-of- attorney. /s/Philip L. van Wijngaarden, power-of-attorney - --------------------------------------------------- for Femia E. van Wulfften Palthe /s/ Philip L. van Wijngaarden, power-of-attorney for Leonard Van Hulst - ------------------------------------ -------------------------------------------------------------------------- FEMIA E. VAN WULFFTEN PALTHE, by Philip LEONARD VAN HULST, by Philip L. van Wijngaarden as power-of-attorney. L. van Wijngaarden as power-of- attorney. /s/Philip L. van Wijngaarden, power-of-attorney for /s/Philip L. van Wijngaarden, power-of-attorney - --------------------------------------------------- --------------------------------------------------------------- Nicole E.A.M. Aarts for Fiona N. Van Hulst - -------------------------------------------- NICOLE E.A.M. AARTS, by Philip L. van Wijngaarden FIONA N. VAN HULST, by Philip L. van Wijngaarden as power-of- attorney. - ------------------------------------------------- ----------------------------------------------------------------------- as power-of-attorney. JOLEC TRADING LIMITED VIEWMONT HOLDINGS LIMITED By: Intertrust (Curacao) N.V. By: Intertrust (Curacao) N.V. /s/Gregory Elias /s/Gregory Elias - -------------------------------------------- -------------------------------------------------------------------------- Gregory Elias, Managing Director Gregory Elias, Managing Director SORENSEN' S SECURITIES LIMITED GORILLA VENTURES N.V. By: Intertrust (Curacao) N.V. By: Intertrust (Curacao) N.V. /s/Gregory Elias /s/Gregory Elias - -------------------------------------------- -------------------------------------------------------------------------- Gregory Elias, Managing Director Gregory Elias, Managing Director MOANA LAKE FINANCE CORP. LINARES CAPITAL LIMITED By: Intertrust (Curacao) N.V. By: Intertrust (Curacao) N.V. /s/Gregory Elias /s/Gregory Elias - -------------------------------------------- -------------------------------------------------------------------------- Gregory Elias, Managing Director Gregory Elias, Managing Director
HACKEN INVESTMENTS LIMITED H EYDAEL B.V. By: Benno P. Hafner as power-of-attorney. By: Hendrik Smit, Managing Director /s/Benno P. Hafner /s/ Hendrik Smit - -------------------------------------------- -------------------------------------------------- ADVA INTERNATIONAL, INC. GLOBAL INFORMATION GROUP USA, INC. By: /s/ George L. Down By: /s/Anthony E. Mohr ---------------------------------------- ---------------------------------------------- Name: George L. Down Name: Anthony E. Mohr Title: President Title: President BIOTEL, INC. By: /s/ Ronald G. Moyer ---------------------------------------- Name: Ronald G. Moyer Title: President NEW SHAREHOLDERS: /s/ Ruud A.M. Pruijm /s/ Jan P.D. Geertman - -------------------------------------------- -------------------------------------------------- Ruud A.M. Pruijm Jan P.D. Geertman /s/ Ernst R. Verdonck /s/ Jergen Maijers - -------------------------------------------- -------------------------------------------------- Ernst R. Verdonck Jergen Maijers /s/ J. Leffelaar /s/ M. Lavino - -------------------------------------------- -------------------------------------------------- J. Leffelaar M. Lavino /s/ Christiaan Ouwingar /s/ Christopher Schuijt - -------------------------------------------- -------------------------------------------------- Christiaan Ouwinga Christopher Schuijt Thames Asset Management Ltd. ---------------------------- /s/S.I.J. Zeilstra By: /s/Michael Hoving - -------------------------------------------- -------------------------------------------------- S.I.J. Zeilstra Name: Michael Hoving Title: Director
EX-2.4 5 0005.txt EXHIBIT 2.4 EXHIBIT 2.4 ESCROW AGREEMENT THIS ESCROW AGREEMENT ("Agreement") is made and entered into this 7TH day of February, 2001 by and among GLOBAL INFORMATION GROUP USA, INC., a Delaware corporation (the "Company"), ADVA INTERNATIONAL INC., a Delaware corporation ("Buyer"), BIOTEL, INC. ("Biotel"), and BLANCO TACKABERY COMBS & MATAMOROS, P.A., a North Carolina professional corporation ("Escrow Agent"). WHEREAS, the Company, Biotel and Buyer are parties to an Agreement of Stock Exchange dated June 15, 2000 (the "Exchange Agreement") pursuant to which the shareholders of the Company listed in the Exchange Agreement as Sellers (the "Sellers") would acquire 94.57% of the Outstanding Buyer Shares (as defined in the Exchange Agreement); and WHEREAS, pursuant to Section 5.13 of the Exchange Agreement, Buyer has agreed during the term of the Exchange Agreement to negotiate exclusively with the Company and the Sellers; and WHEREAS, the Exchange Agreement provides in Section 8.1.2 that it may be terminated by any of the parties if closing of the transaction ("Closing") does not occur on or prior to August 31, 2000; and WHEREAS, Section 8.1.2 of the Exchange Agreement was amended by an Amendment dated February 2, 2001 to extend the Closing Date to March 2, 2001; and WHEREAS, Buyer has agreed to extend the required closing date for the Exchange Agreement to 5:00 o'clock PM EST on March 2, 2001, and to cease all third party contacts until such time pursuant to Section 5.13 of the Exchange Agreement, provided that the Company deposits $50,000.00 in escrow with the Escrow Agent pursuant to the terms of this Agreement. NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants and conditions set forth below and other valuable consideration, the receipt and sufficiency of which is acknowledged, the parties agree as follows: 1. The Company shall deliver to the Escrow Agent for deposit in its trust account, within two business days from the execution and delivery of this Agreement by Buyer, the amount of Fifty Thousand and 00/100 Dollars ($50,000.00) (the "Escrowed Funds"), to be delivered by wire transfer or by overnight delivery of certified or otherwise readily available funds. The Escrowed Funds shall be held by Escrow Agent in its non-interest bearing trust account pursuant to the terms of this Agreement. Upon Escrow Agent's receipt of the Escrowed Funds, Buyer and Biotel agree to cease all third party contacts until 5:00 o'clock PM EST on March 2, 2001, and to give the Company and Sellers the exclusive right and opportunity until such time to complete the exchange transaction contemplated by the Exchange Agreement. 2. The Company agrees that the Company and the Sellers will close the transaction contemplated by the Exchange Agreement on or before March 2, 2001 at 5:00 p.m. (the "Closing Deadline"), provided that Buyer has complied with its material obligations pursuant thereto. If the Closing does not occur on or before the Closing Deadline because of the Company's or the Sellers' failure to comply with any of the material terms and conditions of the Exchange Agreement, Advanced Medical Products, Inc. Debtor-in-Possession ("AMP") shall be entitled to the Escrowed Funds. If the Closing Date occurs on or before the Closing Deadline, the Escrowed Funds shall be applied against and in reduction of the $300,000.00 payable to AMP at Closing. 3. If the Closing has not occurred on or before the Closing Deadline because of the Company's or the Sellers' failure to comply with any of the material terms and conditions of the Exchange Agreement on or before the Closing Deadline, Buyer shall give written Notice to Escrow Agent and the Company demanding payment of the Escrowed Funds to AMP, and certifying that the Closing has not occurred on or before the Closing Deadline as required by this Agreement. The Company shall have until March 9, 2001 at 5:00 p.m. (the "Notice Deadline") to give written Notice to the Escrow Agent demanding return of the Escrowed Funds, and certifying that: (i) the Company and the Sellers have complied with all of the material terms and conditions of the Exchange Agreement on or before the Closing Deadline; and (ii) the transaction contemplated by the Exchange Agreement failed to close on or before the Closing Deadline 4. Unless the Escrow Agent has received the written Notice described in paragraph 3 from the Company prior to the Notice Deadline, Escrow Agent shall deliver the Escrowed Funds to AMP, pursuant to wiring or other delivery instructions to be provided by Buyer, on or before March 12, 2001. In the event the Escrowed Funds are paid to the Buyer, Buyer and AMP authorize Escrow Agent to withhold from the Escrowed Funds and to apply against the balance due the amount necessary to reimburse Escrow Agent for its fees and expenses related to its undertakings pursuant to this Agreement. 5. If Escrow Agent has received Notice from the Company prior to the Notice Deadline and has not yet received a demand for disbursement from Buyer, Escrow Agent shall within two (2) business days deliver written Notice to Buyer stating that the Company has demanded the return of the Escrowed Funds. Buyer shall have five (5) business days after receipt of Notice from Escrow Agent to contest the disbursement of the Escrowed Funds to the Company by delivering written Notice to Escrow Agent pursuant to paragraph 3. If Escrow Agent has not received Notice from Buyer within such five-day period, Escrow Agent shall within two (2) business days thereafter disburse the Escrowed Funds to the Company per its written instructions. 6. In the event of a dispute between Buyer and the Company as to disbursement of the Escrowed Funds, evidenced by conflicting Notices given by both parties to Escrow Agent pursuant to paragraph 3, Escrow Agent shall retain the Escrowed Funds in its trust account until both Buyer and the Company join in a written agreement as to disbursement, or until ordered to disburse the Escrowed Funds pursuant to the final order of a court of competent jurisdiction. 7. In the event differences between the parties regarding disbursement of the Escrowed Funds are resolved by a court of competent jurisdiction or by an alternative method of dispute resolution, all costs and fees associated therewith shall be borne by the non-prevailing party. 8. Escrow Agent shall have no liability to either party for actions taken by it in good faith, including without limitation, any payments made to the Company or to AMP. 9. Escrow Agent shall have no responsibility except for the performance of its expressed duties hereunder and no additional duties shall be inferred or implied. 10. Escrow Agent shall not be required to institute or defend any action involving matters referred to herein or which affect it or its duties or liabilities hereunder unless or until requested to do so by both parties and then only upon receiving full indemnity, in character satisfactory to Escrow Agent, against any and all claims, liabilities and expenses in relation thereto. In the event of any dispute among the parties with relation to Escrow Agent or its duties, (a) Escrow Agent may act or refrain from acting in respect to any matter referred to herein in full reliance upon and by and with the advice of counsel selected by it and shall be fully protected in so acting or in refraining from acting upon the advice of such counsel, or (b) Escrow Agent may refrain from acting until required to do so by an order of a court of competent jurisdiction. 11. Should Escrow Agent desire to terminate this Agreement for any reason whatsoever, it may do so by giving thirty (30) days written notice to the other parties and Escrow Agent shall continue to hold any escrowed funds until either (a) a successor Escrow Agent shall have been appointed by mutual agreement of the parties, at which time Escrow Agent shall deliver all such escrowed funds to such successor escrow agent, or (b) Escrow Agent deposits the escrowed funds with the local clerk of court. 12. The Company and Buyer, jointly but not severally, agree to indemnify and hold Escrow Agent harmless from and against all claims, suits, costs and expenses incurred by Escrow Agent in connection with this Agreement except as result from its willful neglect, gross negligence, bad faith or intentional misconduct. 13. All notices or other communications hereunder shall be in writing and shall be deemed given: (i) upon delivery if delivered personally; (ii) upon receipt of a confirmation of delivery by the sender if delivered by facsimile; (iii) one (1) day after deposited with a reputable overnight delivery service; or (iv) three (3) days after deposited for delivery by certified or registered mail, return receipt requested, and addressed as follows: If to the Company, to: Global Information Group USA, Inc. One Rockefeller Plaza, Suite 1420 New York, NY 10020 Fax No.: (240) 266-6261 With a copy to: Barry H. Genkin, Esquire Blank Rome Comisky & McCauley LLP One Logan Square Philadelphia, PA 19103 Fax No.: (215) 988-6910 If to Buyer, to: ADVA International Inc. 6 Woodcross Drive Columbus, SC 29212 Fax No.: (803) 407-1967 With a copy to: Escrow Agent, at the address below If to Escrow Agent, to: Blanco Tackabery Combs & Matamoros, P.A. Attn: Brian L. Herndon P.O. Drawer 25008 Winston-Salem, NC 27114-5008 Fax No.: (336) 761-1530 14. Buyer shall be responsible for any fees charged by Escrow Agent. 15. Capitalized terms used in this Agreement and not otherwise defined shall have the meaning given to them in the Exchange Agreement. 16. This Agreement shall be governed by the laws of the State of North Carolina. 17. The Company acknowledges that Escrow Agent has provided and will in the future provide legal representation to Buyer and to Biotel. Escrow Agent shall not, as a result of its service as Escrow Agent pursuant to this Agreement, be disqualified from representing any of its clients in any matter, including any matter relating to this Agreement, provided such representation is consistent with applicable rules of professional responsibility. IN WITNESS WHEREOF, the parties have entered into this Agreement effective as of the date set forth in the preamble. GLOBAL INFORMATION GROUP USA, INC. By: /s/Anthony E. Mohr --------------------------------------- Anthony E. Mohr, CEO / President ADVA INTERNATIONAL INC. By: /s/George Down --------------------------------------- George Down, President BIOTEL, INC. By: /s/Ronald Moyer --------------------------------------- Ronald Moyer, President BLANCO TACKABERY COMBS & MATAMOROS, P.A. By: /s/BLANCO TACKABERY COMBS & MATAMOROS --------------------------------------- EX-2.5 6 0006.txt EXHIBIT 2.5 EXHIBIT 2.5 WAIVER THIS WAIVER is made as of the 21st day of February 2001, to the Share Purchase and Shareholders' Agreement relating to Global Information Group, USA, Inc., ("GIG"), by and among GIG, Chatelin Capital Partners Limited ("CCP"), Jolec Trading Limited ("Jolec"), Anthony Mohr, Koenig Invest AG ("Koenig") and Newick Developments Limited ("Newick"), dated 14 January 2000, the First Loan Agreement between GIG and Newick, dated 2 February 2000; the First Loan Agreement between GIG and Koenig, dated 2 February 2000, the Second Loan Agreement between GIG and Koenig, dated 2 February 2000; and the Second Loan Agreement between GIG and Newick, dated 2 February 2000. All capitalized terms used herein shall have the meaning ascribed to them in the Shareholders' Agreement, the respective First Loan Agreements and the respective Second Loan Agreements, unless otherwise defined herein. WITNESSETH: WHEREAS, on 14 January 2000 Global Information Group U.S.A., Inc. ("GIG") and, CCP, Jolec, Anthony Mohr, Koenig and Newick entered into a Share Purchase and Shareholders' Agreement relating to Global Information Group USA, Inc. (the "Shareholders' Agreement"). WHEREAS, on 2 February 2000 GIG, as Borrower, entered into two loan agreements with, respectively, Koenig and Newick, as Lenders (the "First Loan Agreements"). WHEREAS, on 2 February 2000 GIG, as Borrower, entered into two further loan agreements with, respectively, Koenig and Newick, as Lenders (the "Second Loan Agreements") (the First Loan Agreements and the Second Loan Agreements collectively referred to herein as the "Loan Agreements"). WHEREAS, pursuant to Section 10.4.2 of the Shareholders' Agreement, the Parties agreed that during the Investment Period: (i) the Company shall pursue the Business Plan; (ii) no material action shall be taken by the Company except as expressly contemplated in the Business Plan; and (iii) no expenditures shall be incurred by the Company except as expressly contemplated in the Financial Plan; in each case except as approved by the CCP director who shall act in good faith in the interest of the Company. WHEREAS, Section 10.4.3 of the Shareholders' Agreement provides that the Business Plan may be altered at any time with the prior agreement of all the directors but may not be otherwise be altered. WHEREAS, pursuant to the respective Sections 13.3 of the Loan Agreements it is deemed an event of default in the event any representation made in the Loan Agreements or the Shareholders' Agreement is incorrect in any respect or, if repeated at any time with reference to the facts and circumstances then existing, would be so incorrect. NOW, THEREFORE, in consideration of $1.00 and the mutual covenants and agreements hereinafter set forth the parties hereto agree as follows: 1. For purposes of Section 10.4.2 of the Shareholders' Agreement, the parties hereto acknowledge and agree that all material actions taken to date by the Company and all expenditures incurred to date by the Company have been and are in compliance with Section 10.4.2 of the Shareholders' Agreement. 2. For purposes of the Business Plan and the Financial Plan, the parties hereto acknowledge and agree that any payments made or to be made to CCP pursuant to the terms of the Shareholders' Agreement or any agreement referenced therein or incorporated through schedules thereto, including but not limited to the Consultancy Agreement, shall not be deemed to form the basis or a breach or be deemed to constitute a breach or other violation of Section 10.4.2 of the Shareholders' Agreement. 3. The parties further acknowledge and agree that any payments made or to be made to CCP pursuant to the terms of the Shareholders' Agreement, or any agreement referenced therein or incorporated through schedules thereto, including but not limited to the Consultancy Agreement, shall not form the basis of or be deemed to be an event of default under the respective Sections 13 of the Loan Agreements. 4. The Shareholders' Agreement, the Loan Agreements and the Consultancy Agreement, as may be amended by this Waiver and the Agreement of even date attached hereto, shall otherwise remain in full force and effect in accordance with their terms. 5. This Waiver may be executed in several counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one agreement. IN WITNESS WHEREOF, the Parties hereto have caused this Waiver to be executed and delivered as of the date first set forth above. AS PARTIES TO THE SHAREHOLDERS' AGREEMENT:
GLOBAL INFORMATION GROUP U.S.A., INC. CHATELIN CAPITAL PARTNERS LIMITED By: /s/Anthony E. Mohr By: /s/G.J. Slooter -------------------------------- ----------------------------- Name: Anthony E. Mohr Name. G. J. Slooter Title: President Title: Director NEWICK DEVELOPMENTS LIMITED JOLEC TRADING LIMITED By: Intertrust (Curacao) N.V. By: Intertrust (Curacao) N.V. /s/ Gregory Elias /s/Gregory Elias - ------------------------------------ ------------------------------ Name: Gregory Elias Name: Gregory Elias Title: Managing Director Title: Managing Director KOENIG INVEST AG /s/Benno P. Hafner /s/Anthony E. Mohr - ------------------------------------ ------------------------------ Benno P. Hafner as power-of-attorney ANTHONY E. MOHR for Koenig Invest AG AS PARTIES TO THE FIRST LOAN AGREEMENTS: THE BORROWER: THE LENDER: GLOBAL INFORMATION GROUP U.S.A., INC. NEWICK DEVELOPMENTS LIMITED By: Intertrust (Curacao) N.V. By: /s/Anthony E. Mohr /s/Gregory Elias -------------------------------- ------------------------ Name: Anthony E. Mohr Name: Gregory Elias Title: President Title: Managing Director
THE BORROWER: THE LENDER: GLOBAL INFORMATION GROUP U.S.A., INC. KOENIG INVEST AG By: /s/Anthony E. Mohr /s/Benno P. Hafner - ------------------------------------ ------------------------------------------------ Name: Anthony E. Mohr Benno P. Hafner as power-of-attorney for Koenig Title: President Invest AG AS PARTIES TO THE SECOND LOAN AGREEMENTS: THE BORROWER: THE LENDER: GLOBAL INFORMATION GROUP U.S.A., INC. NEWICK DEVELOPMENTS LIMITED By: Intertrust (Curacao) N.V. By: /s/Anthony E. Mohr /s/Gregory Elias - ------------------------------------ ------------------------------------------------- Name: Anthony E. Mohr Name: Gregory Elias Title: President Title: Managing Director THE BORROWER: THE LENDER: GLOBAL INFORMATION GROUP U.S.A., INC. KOENIG INVEST AG By: /s/Anthony E. Mohr /s/Benno P. Hafner - ------------------------------------ ------------------------------------------------ Name: Anthony E. Mohr Benno P. Hafner as power-of-attorney for Koenig Title: President Invest AG
EX-2.6 7 0007.txt EXHIBIT 2.6 EXHIBIT 2.6 FUNDING AGREEMENT This Agreement is made as of 21st day of February, 2001 among Global Information Group, USA., Inc. ("GIG" or the "Company"), Chatelin Capital Partners Limited ("CCP"), Jolec Trading Limited ("Jolec"), Newick Developments Limited ("Newick") and Koenig Invest AG ("Koenig"). WITNESS: WHEREAS, pursuant to that certain Share Purchase and Shareholders' Agreement dated 14 January 2000 among GIG, CCP, Jolec, Koenig and Newick (the "Shareholders' Agreement"), CCP has exercised a Take-over Option (as therein defined) for an agreed amount of $1,200,000 and has made partial payment in respect thereof in the amount of $450,000 (net of certain fees) leaving a balance of $750,000; WHEREAS, pursuant to the Shareholders' Agreement and Section 6.(b) of that certain Consultancy Agreement between CCP and GIG dated 21 January 2000, and in respect of the transactions contemplated by that certain Agreement of Stock Exchange among GIG, the shareholders of GIG, ADVA International Inc. and Biotel Inc., dated June 19, 2000, as amended (the "Stock Exchange Agreement"), CCP and GIG agree that the fee to which CCP is entitled in respect of its services is $750,000 (the "CCP Fee"); WHEREAS, CCP offset the consideration due GIG in respect of the Take-over Option against the CCP Fee and that, accordingly, the CCP Fee has been paid in full; WHEREAS, on 2 February 2000 Newick and Koenig, respectively, and GIG entered into the First Loan Agreements pursuant to which GIG received loans in an aggregate amount of $300,000, less certain arrangement fees (the "First Loan Agreements"); WHEREAS, on 2 February, 2000 Newick and Koenig, respectively, and GIG entered into the Second Loan Agreements pursuant to which GIG received a maximum aggregate loan facility of $1,200,000 and CCP became entitled upon draw down to an aggregate loan arrangement fee of $30,000 (the "Second Loan Agreements") (the First Loan Agreements and the Second Loan Agreements are herein collectively referred to as the "Loan Agreements"); WHEREAS, on May 15, 2000 the Company drew down $400,000 against the Second Loan Agreements facility, net of the total $30,000 arrangement fee due CCP in respect of the Second Loan Agreements, leaving a balance of $800,000 thereon (the "Second Loan Balance"), which shall be paid to the Company as provided herein; WHEREAS, pursuant to their respective Clauses 6, each Loan Agreement requires repayment in full on the sooner to occur of (i) an IPO or Third Party Sale, (ii) that date falling 5 years after the date of Completion and (iii) any or all of the equity share capital of the Borrower or its parent undertaking being admitted or readmitted to an internationally Recognised Stock Exchange, all as defined in the Shareholders' Agreement; NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the sufficiency of which is hereby acknowledged, and intending to be legally bound thereby, the parties hereto agree as follows: 1. Newick and Koenig hereby pay to GIG the sums of $266,700 and $533,300, respectively, representing the Second Loan Balance. 2. The parties hereto acknowledge that the arrangement fees due CCP in respect of the Second Loan Agreements facility have been paid in full. 3. The Second Loan Balance shall be paid into a bank account in GIG's name (the "GIG Capital Account") and shall be immediately available to GIG subject only to the following two conditions: (i) Disbursements from the GIG Capital Account shall require the signatures of the President of GIG and the CCP designated representative who shall be serving as a member of the Company's Board of Directors. For purposes of this Agreement the Company's President shall be Anthony E. Mohr and the initial CCP designated representative shall be Prof. Dr. R. A. M. Pruijm. (ii) Disbursements shall be made based solely on the cash flow needs of GIG in accordance with the current budget forecasts as such forecasts are set forth on Exhibits 1 and 2 hereto, with such modifications as may be approved by the Company's Board of Directors. 4. The parties agree that payment of the Second Loan Balance into the GIG Capital Account and the subsequent disbursement(s) thereof is in no way contingent upon the closing under the Stock Exchange Agreement. 5. The parties agree that, notwithstanding anything to the contrary in the Loan Agreements or any other documents executed prior to the date hereof, no repayment events shall be deemed to have occurred pursuant to the respective Clauses 6 of the Loan Agreements with respect to the transactions contemplated by the Stock Exchange Agreement. 6. The Shareholders' Agreement, the Loan Agreements and the Consultancy Agreement, as may be amended by this Agreement and the Waiver of even date attached hereto, shall otherwise remain in full force and effect in accordance with their terms. 7. This Agreement may be executed in several counterparts each of which shall constitute an original and all of which, when taken together, shall constitute one agreement. IN WITNESS WHEREOF, the parties to this Agreement have caused this Agreement to be executed and delivered as of the date first set forth above.
GLOBAL INFORMATION GROUP U.S.A., INC. NEWICK DEVELOPMENTS LIMITED By: Intertrust (Curacao) N.V. By: /s/Anthony E. Mohr /s/Gregory Elias ---------------------------------------- ------------------------------ Name: Anthony E. Mohr Name: Gregory Elias Title: President Title: Managing Director CHATELIN CAPITAL PARTNERS KOENIG INVEST AG By: /s/G.J. Slooter By: /s/Benno P. Hafner ---------------------------------------- -------------------------- Name: Slooter, G.J. Name: Benno P. Hafner Title: Director Title: Director JOLEC TRADING LIMITED By: Intertrust (Curacao) N.V. /s/Anthony E. Mohr /s/Gregory Elias - -------------------------------------------- ------------------------------ ANTHONY E. MOHR Name: Gregory Elias Title: Managing Director
EX-4.1 8 0008.txt EXHIBIT 4.1 EXHIBIT 4.1 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made by and among ADVA International Inc. (the "Company"), and the investors listed on Schedule I hereto (collectively, the "Investors" and each an "Investor"), each of whom has executed a signature page hereto. RECITALS A. The Company shall issue 12,468,750 shares of its common stock to the stockholders (the "Stockholders") of Global Information Group USA, Inc. ("GIG"), all of whom comprise certain of the Investors hereunder, in return for 100% of the issued and outstanding stock of GIG in a Stock Exchange with the result that the Stockholders will own 94.57% of the outstanding shares of Company stock, with the remaining shares (716,250), representing 5.43% will continue to be owned by certain investors (which consist of the current shareholders of the Company). B. To induce Investors to accept the Share Exchange, the Company is willing under certain circumstances to register under the Securities Act of 1933, as amended, and the rules and regulations thereunder (collectively, the "Securities Act"), the common stock, $.001 par value (the "Common Stock"), owned or to be owned by the Investors. NOW THEREFORE, intending to be legally bound, the parties hereto agree as follows: 1. Required Demand Registration for the Investors listed on Schedule II hereto. (a) At any time after the date hereof until the fifth anniversary hereof, holders of at least 25% of the then outstanding shares of the Registrable Securities may request, in writing, that the Company effect the registration of Registrable Securities (as defined in Section 7 hereof) owned by such holders on a form that may be used for the registration of Registrable Securities. If the holders initiating the registration intend to distribute the Registrable Securities by means of an underwriting, they shall so advise the Company in their request. In the event such registration is underwritten, the right of other holders to participate shall be conditioned on such holders' participation in such underwriting. Upon receipt of any such request, the Company shall promptly give written notice of such proposed registration to all holders of the Registrable Securities who have been granted registration rights hereunder. Such holders shall have the right, by giving written notice to the Company within 30 days after the Company provides its notice, to elect to have included in such registration a number of their Registrable Securities, as such holders may request in such notice of election; provided that if the underwriter (if any) managing the offering determines that, because of marketing factors, all of the securities, including the Registrable Securities, requested to be registered by all holders may not be included in the offering, then the securities requested to be included therein by the holders of the Registrable Securities requested to be included in such registration, shall be reduced pro rata among the holders of such Registrable Securities on the basis of the number of shares owned by each such holder. Thereupon, the Company shall, as expeditiously as possible, use its best efforts to effect the registration (on a form that may be used for the registration of the Registrable Securities) of all the Registrable Securities which the Company has been requested to so register. (b) The Company shall not be required to effect more than one registration pursuant to the first sentence of paragraph (a) above; provided, however, in the event of a proration pursuant to the foregoing paragraph (a) which results in Investors holding Registrable Securities having less than all of the requested securities being included in a current registration, then, to the extent of such unincluded Registrable Securities, the Investors shall receive an additional demand registration right such upon the expiration of any blackout period, upon the request of the holders of 25% of the remaining Registrable Securities, and the Company shall be obligated to file an additional registration statement (which registration statement shall contain a current prospectus) relating to the Registrable Securities; and (ii) the Company shall use its best efforts to effect the registration of such Registrable Securities as promptly as practicable thereafter. (c) The Registration Expenses (as defined in Section 4) shall be paid by the Company with respect to all registrations effected pursuant to this Section and Section 2. (d) The Company may delay the filing or effectiveness of any registration statement for the period or periods set forth below after the date of a request pursuant to this Section 1 if at the time of such request to register Registrable Securities: (i) the Company is engaged or has fixed plans to engage within 30 days of the time of the request (and subsequent thereto does so engage) in a firm commitment underwritten public offering for a period 90 days in connection with public offerings or (ii) the Company furnishes to the Investor or Investors requesting registration a certificate signed by senior executive officer of the Company stating that the Company is engaged in any other activity which, in the good faith determination of the Company's Board of Directors, is a material non-public event which would be adversely affected by the requested registration to the material detriment of the Company, then the Company may at its option direct that such request be delayed for a period not in excess of 90 days from the effective date of such offering or the date of commencement of such other material activity, as the case may be, provided, however, the Company may not utilize the right set forth in this clause (ii) more than once in any 12-month period. 2. Piggyback Registration for the Investors listed on Schedule I. (a) Each time that the Company proposes to register a public offering solely of its authorized but unissued Common Stock or shares held in Treasury ("Primary Shares") for its account or the offering of its Common Stock for the account of other stockholders or other securities, other than pursuant to a Registration Statement on Form S-4 or Form S-8 or similar or successor forms (collectively, "Excluded Forms"), the Company shall promptly give written notice of such proposed registration to all holders of the Registrable Securities, which shall offer such holders the right to request inclusion of any Registrable Securities in the proposed registration statement. (b) Each holder of the Registrable Securities shall have twenty (20) days or such longer period as shall be set forth in the notice from the receipt of such notice to deliver to the Company a written request specifying the number of shares of Common Stock such holder intends to sell and the holder's intended plan of disposition. (c) In the event that the proposed registration by the Company is, in whole or in part, an underwritten public offering of securities of the Company, any request under Section 2(b) may specify that the Registrable Securities be included in the underwriting on the same terms and conditions as the shares of Common Stock, if any, otherwise being sold through underwriters under such registration. (d) Upon receipt of a written request pursuant to Section 2(b), the Company shall promptly use its best efforts to cause all such Registrable Securities to be registered, to the extent required to permit sale or disposition as set forth in the written request. (e) Notwithstanding the foregoing, if the managing underwriter of an underwritten public offering determines and advises in writing that the inclusion of all Registrable Securities proposed to be included in the underwritten public offering, would interfere with the successful marketing of the securities proposed to be included in the underwritten public offering, then the number of such shares to be included in such underwritten public offering shall be reduced, and shares shall be excluded from such underwritten public offering in a number deemed necessary by such managing underwriter. In the event an exclusion of shares is necessary, shares shall be included in the following order: (i) first, the Primary Shares; (ii) second, the Investors holding Registrable Securities requesting registration. To the extent all of the Registrable Securities requested to be included in the underwritten public offering can not be included, holders of Registrable Securities shall participate in such offering pro rata based on the number of shares of Registrable Securities each holder proposes to include. (f) All shares of Common Stock that are not included in the underwritten public offering shall be withheld from the market by the holders thereof for a period, not to exceed 90 days for any offering, that the managing underwriter reasonably determines as necessary in order to effect the underwritten public offering. The holders of such shares shall execute such documentation as the managing underwriter reasonably requests to evidence this lock-up. 3. Registration Procedures. Whenever the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement, the Company shall use its best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof; and pursuant thereto the Company shall as expeditiously as possible: (a) prepare and file with the Securities and Exchange Commission (the "Commission") a registration statement on the appropriate form under the Securities Act, which form shall be available for the sale of such Registrable Securities in accordance with the intended method or methods of distribution thereof, and use its commercially reasonable efforts to cause such registration statement to become effective (provided that before filing a registration statement or prospectus or any amendments or supplements thereto, the Company shall furnish to the counsel selected by the holders of a majority of the Registrable Securities covered by such registration statement copies of all such documents proposed to be filed, which documents shall be subject to the review and comment of such counsel); (b) notify each holder of Registrable Securities of the effectiveness of each registration statement filed hereunder and prepare and file with the Commission, such amendments, post-effective amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary or appropriate to keep such registration statement effective for the period required for sale of the Registrable Securities, provided that in no event shall the Company be obligated to keep such registration statement effective: (i) if the Company is eligible to use the Form S-3, for so long as there are Registrable Securities, and (ii) if the Company is not eligible to register on Form S-3, until such time as the Investors are eligible to sell the Registrable Securities pursuant to Rule 144(k), cause such prospectus as so supplemented to be filed as required under the Securities Act, and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such registration statement or supplement to the prospectus; (c) if requested by the managing underwriter or underwriters or a holder of Registrable Securities being sold in connection with an underwritten offering, immediately incorporate in a Prospectus supplement or post-effective amendment such information as the managing underwriters and the holders of a majority in interest of the Registrable Securities being sold reasonably agree should be included therein relating to the plan of distribution with respect to such Registrable Securities, including, without limitation, information with respect to the principal amount of Registrable Securities being sold to such underwriters, the purchase price being paid therefor by such underwriters and with respect to any other terms of the underwritten (or best efforts underwritten) offering of the Registrable Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment; (d) furnish to each seller of Registrable Securities such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller; (e) use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions where such registration or qualification is required as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller (provided that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction); (f) notify each seller of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the happening of any event as a result of which the prospectus included in such registration statement as then in effect, contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made, and, at the request of any such seller, the Company shall promptly prepare a supplement or amendment to such prospectus so that, thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact required to be stated therein or omit to state any fact necessary to make the statements therein not misleading; (g) cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed or traded, and, if not so listed or traded, to be listed on the NASD automated quotation system and, if listed on the NASD automated quotation system, use commercially reasonable efforts to secure NASDAQ authorization for such Registrable Securities and, without limiting the generality of the foregoing, to arrange for at least two market makers to register as such with respect to such Registrable Securities with the NASD, and if not so listed on the NASD automated quotation systems, use commercially reasonable efforts to secure OTC Bulletin Board inclusion; (h) cooperate with the selling holders of Registrable Securities and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations and registered in such names as the selling holders or the managing underwriters, if any, may request at least ten Business Days prior to any sale of Registrable Securities; provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement; (i) enter into such customary agreements (including, if there is an underwriter, underwriting agreements in customary form including, without limitation, the requirement to obtain an opinion of counsel to the Company and a "comfort letter" from the independent public accountants to the Company in the usual and customary form for such an underwritten offering); (j) make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company that is customary, and cause the Company's officers, director, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement; (k) cooperate, and cause the Company's officers, directors, employees and independent accountants to cooperate, with the selling holders of Registrable Securities and the managing underwriters, if any, in the sale of the Registrable Securities and take any actions necessary to promote, facilitate or effectuate such sale; (l) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission and make available to its security holders, as soon as reasonably practicable, an earning statement covering the period of at least twelve months, beginning with the first fiscal quarter beginning after the effective date of the registration statement, which earning statement shall satisfy the provisions of Section 11(a) of the Securities Act; (m) in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any common stock included in such registration statement for sale in any jurisdiction, the Company shall use its best efforts promptly to obtain the withdrawal of such order; and (n) otherwise use its best effects to take all other steps necessary to effect the registration of the Registrable Securities. 4. Registration Expenses. (a) All expenses incident to the Company's performance of or compliance with this Agreement, including without limitation all registration and filing fees (including, if applicable, the fees and expenses of any "qualified independent underwriter" and its counsel as may be required under the rules and regulations of the NASD), fees and expenses of compliance with securities or blue sky laws (including fees and disbursements of counsel for the underwriters or selling holders in connection with blue sky qualifications and determination of their eligibility for investment under applicable laws), printing expenses, messenger, telephone and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for the Company and not more than one counsel for the Holders of the Registrable Securities, and all independent certified public accountants (including the expenses of any special audit and "cold comfort" letters required by or incident to such performance), underwriters (excluding underwriters' discounts and commissions) and other Persons retained by the Company (all such expenses being herein called "Registration Expenses"), shall be borne by the Company and the Company shall, in any event, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance if such insurance coverage is obtained by the Company and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed or on the NASD automated quotation system or on the OTC Bulletin Board; and, (b) Each holder of securities included in any registration hereunder shall pay those expenses which are not Registration Expenses, such as the underwriting discount and any selling commissions, which shall be borne by all sellers of securities included in such registration in proportion to the aggregate selling price of the securities to be so registered. 5. Indemnification and Contribution (a) The Company agrees to indemnify and hold harmless each holder of Registrable Securities which is included in a registration statement pursuant to Section 1 and Section 2 herein, its officers and directors and each Person who controls such holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses which arise out of or are based upon: (i) any untrue or alleged untrue statement of material fact contained in any registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, or with respect to a prospectus, necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such holder expressly for use therein or by such holder's failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has furnished such holder with a sufficient number of copies of the same; and (ii) any violation by the Company of the Securities Act, the Exchange Act (as defined below), any applicable state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law. In connection with an underwritten offering, the Company shall indemnify such underwriters, their officers and directors and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities. (b) In connection with any registration statement in which a holder of Registrable Securities is participating, each such holder shall furnish to the Company in writing such information and affidavits as the Company and any underwriter reasonably requests for use in connection with any such registration statement or prospectus and shall indemnify the Company, its directors and officers and each Person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses resulting from any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished in writing by such holder for inclusion in the Prospectus. (c) Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any Person's right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. (d) If the indemnification provided for in this Section 5 is unavailable to an indemnified party under paragraphs (a) or (b) hereof in respect to any losses, claims, damages, liabilities or expenses referred to therein, then an indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the Company and the holder of Registrable Securities in connection with the statements or omissions that resulted in such losses, claim, damages, liabilities or expenses. The relative fault of the Company and the holder of Registrable Securities in connection with the statements that resulted in such losses, claims, liabilities or expenses shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of material facts or the omission or alleged omission to state a material fact relates to information supplied by the Company or the holder of the Registrable Securities and the parties relative intent, knowledge, access to information and opportunity to correct such statement or omission. (e) Notwithstanding any other provision of this Section, the liability of any holder of Registrable Securities for indemnification or contribution under this Section shall be individual to each holder and shall not exceed an amount equal to the number of shares sold by such holder of Registrable Securities multiplied by the net amount per share which he receives in such underwritten offering. (f) The indemnification and contribution provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and shall survive the transfer of securities. 6. Participation in Underwritten Registrations. No Person may participate in any registration hereunder which is underwritten unless such Person (i) agrees to sell such Person's securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements; provided that no holder of Registrable Securities included in any underwritten registration shall be required to make any representations or warranties to the Company or the underwriters other than representations and warranties directly regarding such holder and such holder's intended method of distribution. 7. Definitions. "NASD" means the National Association of Securities Dealers. "Person" means any individual, corporation, partnership, limited liability company, trust, estate, association, cooperative, government or governmental entity (or any branch, subdivision or agency thereof) or any other entity. "Registrable Securities" means any of the shares of Common Stock issued to the Investors and any other securities that subsequently may be issued or issuable with respect to the shares of Common Stock as a result of a stock split or dividend or any sale, transfer, assignment or other transaction involving such shares of the Company and any securities into which the shares of Common Stock may thereafter be changed as a result of merger, consolidation, recapitalization or other similar transaction. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when they have been distributed to the public pursuant to a offering registered under the Securities Act or eligible to be sold to the public pursuant to Rule 144(k) under the Securities Act (or any such rule then in force) or, if held by an affiliate of the Company, when all such securities of such person are eligible for resale pursuant to Rule 144 and could be sold in one transaction in accordance with the volume limitations contained in Rule 144(e)(1)(i). For purposes of this Agreement, a Person shall be deemed to be a holder of Registrable Securities whenever such Person has the right to acquire directly or indirectly such Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected. "Securities Act" means the Securities Act of 1933, as amended. 8. Rule 144. From and after the time the Company's Common Stock is registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in order to permit each Investor to sell the securities of the Company it holds from time to time pursuant to Rule 144 promulgated by the Commission or any successor to such rule or any other rule or regulation of the Commission that may at any time permit the Investor to sell its securities to the public without registration ("Resale Rules"), the Company will: (a) comply with all rules and regulations of the Commission applicable in connection with use of the Resale Rules; (b) make and keep adequate and current public information available, as those terms are understood and defined in the Resale Rules, at all times; (c) file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; (d) furnish annually to the Investor material containing the information required by Rule 14a-3(b) under the Exchange Act; (e) furnish to the Investor promptly upon request (i) a written statement by the Company that it has complied with the reporting requirements of the Resale Rules, the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Company and any other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested in availing the Investor of any rule or regulation of the Commission which permits the selling of any shares of Common Stock holding the Investor without registration; and (f) take any action (including cooperating with the Investor to cause the transfer agent to remove any restrictive legend on certificates evidencing the shares of Common Stock held by the Investor) as shall be reasonably requested by the Investor or which shall otherwise facilitate the sale of shares of Common Stock held by the Investor from time to time by the Investor pursuant to the Resale Rules. 9. Additional Grants of Registration Rights. The Company shall not grant registration rights to any other Person which would be superior to, or would limit in any way the registration rights granted hereunder. 10. Miscellaneous. (a) No Inconsistent Agreements. The Company shall not hereafter enter into any agreement with respect to its securities which is inconsistent with or violates the rights granted to the holders of Registrable Securities in this Agreement. (b) Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may be amended or waived only upon the prior written consent of the Company and holders of a majority of the Registrable Securities. (c) Successors and Assigns. All covenants and agreements in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not. In addition, whether or not any express assignment has been made, the provisions of this Agreement which are for the benefit of purchasers or holders of Registrable Securities are also for the benefit of, and enforceable by, any subsequent holder of Registrable Securities. A person is deemed to be a holder of Registrable Securities whenever such person is the registered holder of Registrable Securities. Upon the transfer of any Registrable Securities, the transferring holder of Registrable Securities shall cause the transferee to execute and deliver to the Company a counterpart of this Agreement. (d) Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. (e) Counterparts. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same Agreement. (f) Descriptive Heading. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. (g) Governing Law. The corporate law of Delaware shall govern all issues and questions concerning the relative rights of the Company and its shareholders. All issues and questions concerning the construction, validity, interpretation and enforcement of this Agreement shall be governed by, and construed in accordance with, the laws of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than Delaware. (h) Notices required or permitted to be given hereunder shall be in writing and shall be deemed to be received when personally delivered or sent by overnight courier or registered mail, return receipt requested, addressed (i) if to the Company, at [6 Woodcross Drive, Columbus, SC 29212], Attention: President; and (ii) if to a Holder, at the address set forth under its name on the signature page hereto, or at such other address as each party furnishes by notice given in accordance with this Section 8. (i) Consent to Jurisdiction: Service of Process. The Company and Investors hereby irrevocably consent to the jurisdiction of the state courts of the State of Delaware, as appropriate and of the United States District Court for Delaware in any and all actions and proceedings in connection with this Agreement, and irrevocably consent, in addition to any methods of service of process permissible under applicable law, to service of process by certified mail, return receipt requested to the address of Company and Investors as set forth herein. Nothing in this Section shall affect or limit the right of any Investor to serve legal process in any other manner permitted by law. Company and Investors agree that in any action or proceeding brought by them in connection with this Agreement or the transactions contemplated hereby, exclusive jurisdiction shall be in state courts of the State of Delaware, as appropriate and the United States District Court for Delaware. INVESTORS:
/s/Anthony E. Mohr /s/H. Smit, power-of-attorney for Charles Langereis - -------------------- -------------------------------------------------------- ANTHONY E. MOHR CHARLES LANGEREIS, by Hendrik Smit as power-of-attorney. /s/Anthony E. Mohr, power-of-attorney for FOG Investments Limited /s/H. Smit, power-of-attorney for Henri B.G. Sijthoff. - ---------------------------------------------- -------------------------------------------------------- FOG INVESTMENTS LIMITED HENRI B.G. SIJTHOFF, by Hendrik Smit as By: Anthony E. Mohr as power-of-attorney. power-of-attorney. /s/Philip L. van Wijngaarden, power-of-attorney for
/s/Hugo Heerema /s/H. Smit, power-of-attorney for Jouke V.J.P. Brada. - ---------------------------------------------- -------------------------------------------------------- HUGO HEEREMA, by Philip L. van JOUKE V.J.P. BRADA, by Hendrik Smit as power-of-attorney. Wijngaarden as power-of-attorney. /s/Philip L. van Wijngaarden, power-of-attorney for /s/Philip L. van Wijngaarden, power-of-attorney for Femia E. van Wulfften Palthe Leonard van Hulst - ---------------------------------------------- -------------------------------------------------------- FEMIA E. VAN WULFFTEN PALTHE, by Philip LEONARD VAN HULST, by Philip L. van Wijngaarden as L. van Wijngaarden as power-of-attorney. power-of-attorney. /s/Philip L. van Wijngaarden, power-of-attorney for /s/Philip L. van Wijngaarden, power-of-attorney for Nicole E.A.M. Aarts Fiona van Hulst - ---------------------------------------------- -------------------------------------------------------- NICOLE E.A.M. AARTS, by Philip L. van FIONA N. VAN HULST, by Philip L. van Wijngaarden as Wijngaarden as power-of-attorney. power-of-attorney. JOLEC TRADING LIMITED VIEWMONT HOLDINGS LIMITED By: Intertrust (Curacao) N.V. By: Intertrust (Curacao) N.V. /s/ Gregory Elias /s/ Gregory Elias - ---------------------------------------------- ---------------------------------------------- Gregory Elias, Managing Director Gregory Elias, Managing Director SORENSEN'S SECURITIES LIMITED GORILLA VENTURES N.V. By: Intertrust (Curacao) N.V. By: Intertrust (Curacao) N.V. /s/ Gregory Elias /s/ Gregory Elias - ---------------------------------------------- ---------------------------------------------- Gregory Elias, Managing Director Gregory Elias, Managing Director MOANA LAKE FINANCE CORP. LINARES CAPITAL LIMITED By: Intertrust (Curacao) N.V. By: Intertrust (Curacao) N.V. /s/ Gregory Elias /s/ Gregory Elias - ---------------------------------------------- ---------------------------------------------- Gregory Elias, Managing Director Gregory Elias, Managing Director HACKEN INVESTMENTS LIMITED HEYDAEL B.V. /s/ Benno P. Hafner, power-of-attorney /s/ Hendrik Smit - ---------------------------------------------- ---------------------------------------------- By: Benno P. Hafner as power-of-attorney By: Hendrik Smit, Director FOCUSTECH INVESTMENTS, INC. BIOTEL, INC. By /s/ FocusTech Investments, Inc. By: /s/ Ronald G. Moyer - ---------------------------------------------- ---------------------------------------------- Name: Ronald G. Moyer Title: President
/s/Ruud A.M. Pruijm /s/Jan P.D. Geertman - ---------------------------------------------- ---------------------------------------------- RUUD A.M. PRUIJM JAN P.D. GEERTMAN /s/Ernst R. Verdonck /s/Jergen Maijers - ---------------------------------------------- ---------------------------------------------- ERNST R. VERDONCK JERGEN MAIJERS /s/J. Leffelaar /s/M. Lavino - ---------------------------------------------- ---------------------------------------------- J. LEFFELAAR M. LAVINO /s/Christiaan Ouwinga /s/Christopher Schuijt - ---------------------------------------------- ---------------------------------------------- CHRISTIAAN OUWINGA CHRISTOPHER SCHUIJT THAMES ASSET MANAGEMENT LTD. /s/Sybren I. Zeilstra By: /s/Michael J. Hoving - ---------------------------------------------- ---------------------------------------------- S.I.J. ZEILSTRA Name: Michael J. Hoving Title: Managing Director ADVA INTERNATIONAL, INC. By: /s/George L. Down ----------------------------------------- Title: President
EX-4.2 9 0009.txt EXHIBIT 4.2 EXHIBIT 4.2 INRISCO B.V. c/o Brada Kuttner & Gasit Advocaten Konigslaan 14 1075 AC Amsterdam THE NETHERLANDS Telephone: (+31 20) 676-6323 Telecopier: (+31 20) 674-9777 May 14, 1998 Mr. Anthony E. Mohr and Global Information Group USA, Inc. One Rockefeller Plaza, Suite 1420 New York, NY 10020 Dear Mr. Mohr: This will confirm that Inrisco, B.V. (the "Purchaser") is agreeable to making an investment in Global Information Group USA, Inc., a Delaware corporation (the "Company"), upon the terms and subject to the conditions set forth herein. 1. The purchaser hereby agrees to purchase 100 shares (the "Purchased Shares") of the outstanding common stock of the Company for an aggregate purchase of $300,000, payable by means of a wire transfer of funds to an account designated by the Company. In connection with this investment, the Purchaser warrants and represents to the Company that: (a) the Purchaser is an "Accredited Investor" as that term is defined in Rule 501 promulgated under the United States Securities Act of 1933, as amended (the "Securities Act"); (b) the Purchaser is acquiring the Purchased Shares for investment and without a present intention to sell or otherwise transfer such shares in a manner that would be in violation of the Securities Act or any applicable state securities laws; (c) the Purchaser has had an opportunity to ask questions of the management of the Company with respect to its investment and has made such inquiry as it has deemed necessary in connection therewith; (d) the Purchaser realizes that the Company is a start-up enterprise and that the Purchaser's investment is a speculative one and that it may suffer a complete loss of its investment; (e) in making this investment, the Purchaser has not relied upon any guarantee of success r profitability on the part of the Company and (f) this agreement ("Agreement") has been duly executed and delivered by the Purchaser and constitutes the valid and binding obligations of the Purchaser, enforceable against the Purchaser in accordance with its terms. 2. Anthony E. Mohr ("Mohr") and the Company, jointly and severally, warrant and represent to the Purchaser that (a) the Company is duly organized and validly existing under the laws of the state of Delaware; (b) the Company has the corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby; (c) the entering into of this Agreement by the Company and the performance of its obligations hereunder will not constitute a default under its certificate of incorporation, bylaws or any other instrument to which the Company is a party or by which it is bound nor will such entry or performance require the consent of any other party; (d) the copy of the certificate of incorporation and bylaws of the Company provided to the Purchaser are true and correct copies; (e) the authorized capital stock of the Company consists of 1,000 shares of Common Stock, par value $.01 per share; (f) upon issuance of the Purchased Shares to the Purchaser, they will have been validly issued, fully paid and non-assessable and will constitute 10% of the issued and outstanding capital stock of the Purchaser; and (g) this Agreement has been duly executed and delivered by the Company and constitutes the valid and binding obligations of the Company, enforceable against the Company in accordance with its terms. 3. For as long as the Purchaser and a co-investor or their respective successors and assigns (collectively, the "Investor Group") collectively continue to own at least 20% of the issued and outstanding common stock of the Company and for one year thereafter (the "Restricted Period") the following provisions will apply; (a) The Board of Directors (the "Board") of the Company shall consist at a minimum of three and a maximum of five members; (b) The Investor Group shall have the right to elect one member to the Board and have the right to remove and replace such member. Mohr agrees to vote his shares to give effect to the foregoing; (c) Without the consent of the Investor Group, the Company shall not take any of the following actions: (i) engage in a new line of business; (ii) amend its certificate of incorporation or bylaws; (iii) sell its business, merge or consolidate with another entity; (iv) incur any indebtedness in an amount exceeding $100,000; (v) file a bankruptcy petition or consent to the filing of a bankruptcy petition against it or (vi) engage in any financing or capital raising transaction that would yield gross proceeds to the Company in excess of $250,000; and (d) Without the consent of the Investor Group, Mohr will not engage, directly or indirectly, in any enterprise competitive with that of the Company. 4. To facilitate the voting arrangements set forth in paragraph 3(b) or the obtaining of any consent that may be required under paragraph 3(c) or (d), the Investor Group may appoint a representative to act as agent of the Investor Group in connection with such matters. 5. If the Company completes an initial offering of its securities in the United States, then during a period of three years thereafter, the following provisions will apply: (a) the Purchaser will have the right to demand that the Company file a registration statement with the Securities and Exchange Commission covering the resale of the shares then held by the Purchaser. The Company will comply with such demand and use its best efforts to declare such registration statement effective; and (b) If the Company files a registration statement in connection with a new offering of its own shares, it shall give the Purchaser an opportunity to include its shares in any such registration statement. In connection with the foregoing registration statements, the Company will bear all expenses of such registration excluding any underwriting discounts or concessions payable by the Purchaser in connection with the resale of its shares. 6. Should the Company wish to issue any additional shares of its capital stock to any party, it shall give the Purchaser the right to maintain its percentage interest in the Company by subscribing to purchase additional shares from the Company upon the same terms and conditions as were offered by the Company to the other party. 7. If, at any time during the Restricted Period, Mohr wishes to sell or dispose of his shares in the Company to another party (the "Proposed Transferee"), he shall not be able to consummate such sale unless the following conditions have been complied with: (a) he shall have first given the Purchaser and other members of the Investor Group, pro rata to their holdings in the Company, the right to purchase the shares being offered by Mohr upon the same terms and conditions that Mohr is willing to offer them to the Proposed Transferee and (b) in the event that the Investor Group does not wish to exercise such right of first refusal, Mohr shall have given the Investor Group an opportunity to sell the same proportion of their shares as Mohr is willing to sell to the Proposed Transferee and upon the same terms and conditions. If the Investor Group has not exercised either its right of first refusal or its right to sell its shares along with the sale of Mohr's shares, Mohr will be permitted to consummate the proposed sale but on terms no more favorable to the Proposed Transferee that those first proposed. 8. Nothing herein shall prohibit the sale, transfer, assignment or other disposition by any member of the Investor Group of any of its shares, and any member shall be free to do so as long as such member complies with applicable federal and state securities laws. 9. This Agreement shall not become effective until such time as a copy of this or a counterpart thereof has been duly executed by the Company and Mohr and delivered to Purchaser. This Agreement: (i) may not be terminated or amended except by a written instrument between the parties; (ii) constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes any prior understandings, and (iii) shall be governed by the internal laws of the state of Delaware. In connection with any dispute relating to or arising out of this Agreement, the parties hereby consent to the jurisdiction of the courts located in the County and State of New York and waive a trial by jury. Very truly yours, INRISCO B.V. By: /s/ Bob Sijthoff ----------------------------- Bob Sijthoff, Director ACCEPTED AND AGREED TO: GLOBAL INFORMATION GROUP USA, INC. By: /s/Anthony E. Mohr -------------------------------- Anthony E. Mohr, President /s/Anthony E. Mohr --------------------------------- Anthony E. Mohr, Individually EX-4.3 10 0010.txt EXHIBIT 4.3 EXHIBIT 4.3 DATED 14 January 2000 (1) GLOBAL INFORMATION GROUP U.S.A., INC. (2) CHATELIN CAPITAL PARTNERS LIMITED (3) JOLEC TRADING LIMITED (4) ANTHONY MOHR (5) KOENIG INVEST AG (6) NEWICK DEVELOPMENTS LIMITED - ------------------------------------------------- SHARE PURCHASE AND SHAREHOLDERS' AGREEMENT relating to GLOBAL INFORMATION GROUP U.S.A., INC. - ------------------------------------------------- TITMUSS SAINER DECHERT 2 Serjeants' Inn London EC4Y 1LT Ref: C353/062453 Date: 13.01.2000 INDEX Clauses Headings - ------- -------- 1. Definitions and interpretation 2. Recitals 3. Conditions 4. Sale and purchase of the Sale Shares 5. Grant of the options 6. Completion 7. Warranties 8. Breach of Warranty 9. CCP Director 10. Business of the Company 11. Reporting 12. External funding 13. Exit provisions 14. Executive undertakings 15. Restrictions on the Executive 16. Further shareholders 17. Issues of Shares 18. Transfers of Shares 19. Announcements 20. General 21. Communications 22. Costs 23. Proper Law Schedule Description - -------- ----------- First The Company Second Warranties Third Restricted Transactions Fourth Deed of Adherence Fifth Agreed Principles for First Loan Agreement Sixth Agreed Principles for Second Loan Agreement Seventh Agreed Principles for Consultancy Agreement Eighth Agreed Principles for Service Agreement Appendix Description - -------- ----------- A Business Plan B Disclosed Documents Exhibits Description - -------- ----------- A Written consent of Directors of GIG B Resolutions to be passed THIS AGREEMENT is made on 14th January 2000 BETWEEN:- (1) GLOBAL INFORMATION GROUP U.S.A., INC. a company incorporated under the General Corporation Law of the State of Delaware in the USA the principal place of business of which is at One Rockefeller Plaza, New York, NY 10020, USA ("Company"); (2) CHATELIN CAPITAL PARTNERS LIMITED a company incorporated in England and Wales under number 3755000 the registered office of which is at 2 Serjeants' Inn, London EC4Y 1LT ("CCP"); (3) JOLEC TRADING LIMITED a company incorporated under the laws of the British Virgin Islands under number 334217 the principal office of which is at Waterfront Drive, Atlantic Tower, Road Town, Tortola, British Virgin Islands ("Purchaser"); (4) MR ANTHONY MOHR of 29 East Church Street, Bergenfield, New Jersey 07621 USA ("Executive"); (5) KOENIG INVEST AG a company incorporated under the laws of Switzerland under number CH-170.3.022.536-1 the principal place of business of which is at c/o EMB Beratung und Service AG, Zeughausgasse 7a, CH-6301, Zug, Switzerland ("Koenig"); and (6) NEWICK DEVELOPMENTS LIMITED a company incorporated under the laws of the British Virgin Islands the principal place of business of which is at Waterfront Drive, Atlantic Tower, Road Town, Tortola, British Virgin Islands ("Newick"). 1. DEFINITIONS AND INTERPRETATION 1.1 In this agreement unless the context otherwise requires:- "Agreed Form" means in a form agreed by and signed by or on behalf of the Parties with such alterations (if any) as may be agreed in writing between them; "Associates" has the meaning given to that expression in section 52 of Part II of the Companies Act 1989; "Auditors" means the auditors for the time being of the Company; "Board" means the board of Directors as constituted from time to time; "business day" means a day on which banks generally are open in the city of New York, U.S.A. for the transaction of normal banking business; "Business Plan" means the business plan in the Agreed Form (incorporating an action plan and the Financial Plan) as varied pursuant to clause 10.4.3 and profit and cash flow projections which have been supplied by the Executive and the Company to CCP, Koenig, Newick and the Purchaser a copy of which (initialled by the Parties solely for the purposes of identification) is annexed as appendix "A"; "CCP Director" means a Director appointed by CCP pursuant to the provisions of clause 9 of this agreement and holding office from time to time; "Code" means the Internal Revenue Code of 1986, as amended; "Completion" means the date upon which completion of the sale and purchase of the Sale Shares takes (or should take) place pursuant to clause 6 of this agreement or (as the case may be) the date of actual completion of the sale and purchase of the Sale Shares; "Consultancy Agreement" means a consultancy agreement between the Company and CCP incorporating the agreed principles set out in the seventh schedule and otherwise on usual commercial terms to be executed and delivered pursuant to clause 6.1.6; "Deed of Adherence" means a deed in the form set out in the fourth schedule; "Designated Persons" means the former and present directors, officers and employees of, and consultants to, the Company; "Director" means any director for the time being of the Company; "Disclosure Letter" means the letter in the Agreed Form from the Warrantors to CCP, Koenig, Newick and to the Purchaser as at the date of this agreement together with the documents referred to in and attached thereto; "EASDAQ" means the European Association of Securities Dealers Automated Quotation based in Brussels, Belgium; "family" in relation to any principal shall mean any one or more of such principal, his spouse, his parents, his descendants, including persons claiming descendancy by adoption, his brothers and sisters, the estates of any such persons and the trustees of a trust ("family trust") exclusively for the benefit of the family of such principal; "family member" means any shareholder who is a member of a principal's family; "Financial Plan" means the detailed operating plan and financial budget for the Company, in the Agreed Form as varied pursuant to clause 10.4.3, referred to in clauses 6.1.4, 10.4.1 and 10.4.2; "First Loan" means the unsecured shareholder loan in the principal sum of $300,000 the subject of the First Loan Agreement; "First Loan Agreement" means the loan agreement between CCP (as lender) and the Company (as borrower) incorporating the agreed principles set out in the fifth schedule and otherwise on usual commercial terms to be executed and delivered pursuant to clause 6.1.8; "First IPO Option" has the meaning given to that expression in clause 5.2; "First Take-over Option" has the meaning given to that expression in clause 5.3; "Flotation" means the admission or readmission of all or any of the equity share capital of the Company or its parent undertaking to a Recognised Stock Exchange; "Forfeit Shares" has the meaning given to that expression in clause 7.5; "Initial Investors" means Heydael B.V., Charles Langereis, Jouke V.P.J. Bracha and Henri Sijthoff, being the other holders of Shares apart from the Executive as at the date of this agreement; "Intellectual Property" includes (i) patents, trade marks, registered designs, database rights, and any applications for any of the foregoing, and (ii) copyright, design rights and analogous rights, trade and business names, rights in confidential information, in each case howsoever arising and including any right or interest in any of the foregoing; "Investment Period" means the period commencing on Completion and ending on the date of the first to occur of a Flotation and a Third Party Sale; "IPO" means a public offering of equity securities by the Company (or its parent) or any other offering of shares of the Company or such parent, which takes place simultaneously with, or which is conditional upon or which follows, a Flotation or a Take-over by a listed parent; "IPO Options" means the First IPO Option and the Second IPO Option; "IPO Shares" means the securities sold in an IPO; "Issue Price" means the price (after subtracting underwriting discounts and commissions) of each security offered in an IPO; "Parties" means all the parties to this agreement and the word "Party" shall be construed accordingly; "Permitted Transfers" means any transfer of any Share which is permitted in accordance with the provisions of clause 18.1; "principal" means any person being an individual who was a shareholder of the Company but who has transferred shares to his family; "Recognised Stock Exchange" means any internationally recognised stock exchange; "Relevant Proportion" in relation to a claim under the Warranties means a percentage equal to the aggregate percentage ownership of CCP and the Purchaser and their Associates of the issued share capital of the Company (or its parent) as at the date of that claim; "Restricted Transaction" means any of the acts, transactions and dealings set out in the third schedule; "Revenue" means all fiscal or taxing authorities (national or local) whether of the USA or elsewhere; "Revised Bylaws" means the proposed revised certificate of incorporation and bylaws of the Company in the Agreed Form (or the bylaws of its parent) and as amended from time to time; "Sale Shares" means the 100 Shares, representing 10 per cent. of the issued share capital of the Company at Completion, to be sold by the Executive to the Purchaser pursuant to clause 4; "SEC" means the US Securities and Exchange Commission; "Second IPO Option" has the meaning given to that expression in clause 5.2; "Second Loan Agreement" means the loan agreement between Koenig and Newick (as lenders) and the Company (as borrower) incorporating the agreed principles set out in the sixth schedule and otherwise on usual commercial terms to be executed and delivered pursuant to clause 6.1.8; "Second Loan" means the unsecured shareholder loan in the principal sum of $1,200,000 the subject of the Second Loan Agreement; "Second Take-over Option" has the meaning given to that expression in clause 5.3; "Service Agreement" means the service agreement between the Company and the Executive incorporating the agreed principles set out in the eighth schedule and otherwise on usual commercial terms to be executed and delivered pursuant to clause 6.1.7; "Shareholder Loans" the First Shareholder Loan and the Second Shareholder Loan; "Shares" means the shares of common stock, par value $0.01 each, of the Company or capital stock or share capital of its parent which has been exchanged for such shares; "Take-over" any share for share acquisition of 50 per cent. or more of the Company's shares; "Taxation" includes all forms of taxation, duties, value added tax, levies, imposts, charges, withholdings, national insurance, social security, payroll and other contributions, rates and liabilities in respect of deductions at source from employees' emoluments (including any related or incidental penalty, fine, interest or surcharge) whenever created or imposed and whether of the USA or elsewhere; "Third Party Sale" means the sale on arms length terms of the whole of the outstanding capital stock of the Company to any person other than any of the Parties or their Associates; "transfer" means any sale, transfer, hypothication, charge, mortgage, encumbrance, security interest, declaration of trust, proxy, voting trust or other disposal of Shares or any interest in Shares; "Transfer Notice" means the notice to be served on the Company by any shareholder who desires or is obligated to transfer Shares in accordance with clause 18.2.3; "US" or "USA" means the United States of America; "US GAAP" means generally accepted accounting principles and practices in the USA, consistently applied; and "Warranties" means the representations, warranties and undertakings on the part of the Executive and the Company contained in the third schedule and which are made by the Executive and the Company pursuant to clause 7. 1.2 In this agreement unless the context otherwise requires:- 1.2.1 any reference to a clause, schedule or appendix (other than to a schedule to a statutory provision) is a reference to a clause of or schedule or appendix to this agreement; and the schedules and appendices form part of and are deemed to be incorporated in this agreement; 1.2.2 any reference to a statute or statutory provision includes a reference to that provision as amended, re-enacted or replaced and any regulations or orders made under such provisions from time to time whether before or after the date of this agreement and any former statutory provision replaced (with or without modification) by the provision referred to; 1.2.3 any reference to persons includes a reference to firms, corporations or unincorporated associations; 1.2.4 any reference to the singular includes a reference to the plural and vice versa; and any reference to the masculine includes a reference to the feminine and vice versa; and 1.2.5 any agreement, warranty, representation, indemnity, covenant or undertaking on the part of two or more persons shall be deemed to be given or made by such persons jointly and severally. 1.3 Headings and titles are used for ease of reference only and do not affect the interpretation of this agreement. 1.4 The expression "parent" when used in this agreement in relation to a company shall mean the ultimate parent of that company in accordance with the definition contained in section 258 of the Companies Act 1985. 2. RECITALS 2.1 The Company is a corporation incorporated under the General Corporation Law of the State of Delaware in the USA. 2.2 At the date of this agreement, the Company had authorised 10,000 shares of common stock, par value $0.01 per share ("Shares") of which 1,000 Shares have been duly issued and are fully paid and non-assessable and are held by the Executive and the Initial Investors in the proportions set out in the first schedule. Further details of the Company are set out in the first schedule. 2.3 The Executive has agreed to sell to the Purchaser and the Purchaser has agreed to purchase on the terms and subject to the conditions of this agreement 100 Shares ("Sale Shares") representing 10 per cent. of the outstanding Shares at Completion for an aggregate consideration of $1. 2.4 Koenig and Newick have together agreed on the terms and subject to the conditions of the First Loan Agreement to advance to the Company in the form of a subordinated loan the sum of $300,000 within 5 business days after Completion. 2.5 The Executive has granted to CCP an option to purchase Shares representing 30 per cent. of the issued share capital of the Company at the date of the purchase referred to in clause 2.4 for a consideration comprising US$1. This option will become exercisable upon the advance to the Company of a further subordinated loan in the sum of $1,200,000 in accordance with the terms and conditions of the Second Loan Agreement. 2.6 The Parties have agreed to pursue a flotation of the Company on EASDAQ or (subject to the approval of CCP and the Purchaser) another Recognised Stock Exchange within 18 months of the date of this agreement or else as soon as practicable thereafter and to follow the Business Plan and the Financial Plan prior to such Flotation. The Company has granted to CCP an option to purchase from the Company that number of newly issued shares in the Company or its parent equal to $2.5 million divided by the Issue Price in connection with any IPO and a further option ("Second IPO Option") to purchase from the Company an additional 10 per cent. of the outstanding Shares or shares in its parent (as enlarged pursuant to the IPO) at a price per share equal to 70 per cent. of the Issue Price. The Second IPO Option shall lapse upon the exercise of either or both of the options referred to in clause 2.7 below. 2.7 Alternatively, the Company will be sold (by way of a Take-over) to or merged with or into a company which is already listed on a Recognised Stock Exchange. The Company has granted to CCP:- (i) an option, exercisable immediately prior to any such transaction, to purchase from the Company such number of shares as shall on the date of exercise represent 10 per cent. of the issued share capital of the Company at a price per share equal to 35 per cent. of the value given to such shares for the purpose of the transaction ("relevant value"); and (ii) an option to purchase from the Company such number of shares as shall on the date of exercise represent 5 per cent. of the issued share capital of the Company at a price per share equal to 10 per cent. of the relevant value. These options shall lapse upon the exercise of the Second IPO Option. 3. CONDITIONS 3.1 The obligations of the Purchaser under this agreement are conditional upon:- 3.1.1 CCP, Koenig, Newick and the Purchaser being satisfied with the results of their technical, financial, legal and accounting investigations into the business and assets of the Company; 3.1.2 the Service Agreement, the Consultancy Agreement and the Loan Agreements having been executed by the Parties thereto; 3.1.3 the Company having effected and there being in force a key man life insurance policy covering death, accident and liability in respect of the Executive on terms acceptable to CCP and the Purchaser; 3.1.4 the Executive and the Company not being in breach of any of the Warranties or any other obligations or undertakings given or made by him under the terms of this agreement; and 3.1.5 the Company not having, since the date of this agreement, effected any Restricted Transaction without the prior written consent of CCP, Koenig, Newick and the Purchaser; 3.2 If any of such conditions are not fulfilled, or waived by CCP, Koenig, Newick and the Purchaser, on or before 31 January 2000 (or such later date as CCP, Koenig, Newick and the Purchaser may agree) then all obligations and liabilities of the Parties under this agreement shall cease and determine and no Party shall have any claim against the other:- 3.2.1 except insofar as any such conditions shall not have been satisfied due to any act or omission by the Executive or the Company, in which event any claim by CCP, Koenig, Newick and/or the Purchaser under clause 3.3 arising by virtue of such failure shall be preserved; and 3.2.2 save in respect of the provisions of clause 17 and, where the condition contained in clause 3.1.5 has not been satisfied (or waived by CCP, Koenig, Newick and the Purchaser), clauses 7 and 8. 3.3 The Executive and the Company and (solely in respect of the condition contained in clause 3.1.2) CCP, Koenig and Newick shall use their best endeavours to procure fulfilment of the above conditions within 7 business days of the date of this agreement. 3.4 CCP, Koenig, Newick and the Purchaser may at their sole discretion by notice in writing to the Executive and the Company waive in whole or part any or all of the above conditions. 4. SALE AND PURCHASE OF THE SALE SHARES 4.1 The Executive shall sell the Sale Shares to the Purchaser or as the Purchaser shall otherwise direct and the Purchaser, relying on the Warranties and the other obligations of the Executive and the Company under this agreement, shall purchase or procure the purchase of the Sale Shares. The consideration for the Sale Shares shall comprise the sum of $1 payable in cash at Completion. 4.2 The Executive shall sell the Sale Shares with full title guarantee free from all liens, charges, security interests, encumbrances and adverse claims (and whether or not the Executive knows or could reasonably be expected to know about such matters) together with all rights now or hereafter attaching to them including all dividends declared or payable or distributions made or proposed at any time since the date of incorporation of the Company. 4.3 The Executive shall and shall procure that the Initial Investors shall irrevocably and unconditionally waive all rights of pre-emption or other restrictions on transfer which they may have, whether under the certificate of incorporation or bylaws of the Company by contract or otherwise, in respect of the transfer to the Purchaser or its nominee(s) of the Sale Shares or any of them and all other transfers of Shares contemplated to be made by the Executive under or pursuant to this agreement including the option referred to in clause 5.1, 5.2, 5.3 and shall execute and deliver (and procure the execution and delivery of) all such deeds of waiver in respect thereof as the Purchaser may require. For the avoidance of doubt, this clause does not affect the non-dilutable character of the Shares held by the Initial Investors until the moment of IPO or Flotation. At such event all Shares held by any of the Parties and the Initial Investors shall be equally subject to dilution in case of any further issuance of Shares. 4.4 The Purchaser shall not be obliged to complete the purchase of some only of the Sale Shares unless the purchase of all the Sale Shares is completed simultaneously in accordance with the provisions of this agreement. 4.5 The Executive undertakes with the Purchaser that, if and for so long as he remains the registered holder of any of the Sale Shares after Completion, he will hold such Shares and the dividends and other distributions of profits or surplus or other assets in respect of such Shares and all rights arising out of or in connection with them in trust for the Purchaser and will at all times after Completion deal with and dispose of such Shares, dividends, distributions and rights as the Purchaser shall direct and (if so requested by the Purchaser) execute all instruments of proxy or other documents which may be necessary or proper to enable the Purchaser to attend and vote at any meeting of the Company. 5. GRANT OF OPTIONS 5.1 In consideration of CCP entering into this agreement and agreeing to arrange the Shareholder Loans and of the payment by CCP to the Executive of an option fee of US$1 on the date of this agreement (the receipt of which is hereby acknowledged), the Executive grants to CCP an option ("Executive Option") to purchase or to procure the purchase of such number of Shares from the Executive ("Executive Option Shares") as shall represent 30 per cent. of the outstanding shares as at the date of completion of the sale and purchase of such Shares pursuant to the exercise of the Executive Option on the following terms and conditions:- 5.1.1 subject to clause 5.1.3, the Executive Option shall be exercisable once only in whole but not in part at any time during the period of 6 months commencing on the day the Second Loan is advanced to the Company by notice in writing to the Executive and the Company and such exercise shall be irrevocable. If not exercised in such period, the Executive Option shall lapse and become incapable of subsequent exercise; 5.1.2 within 5 business days of the date of the notice exercising the Executive Option, the Executive shall deliver to CCP or to such person as CCP may direct stock powers or other instruments of transfer in respect of the Executive Option Shares and duly signed stock powers or other instruments of transfer transferring the Executive Option Shares to CCP (or to such other persons as they may direct) in the proportions notified by CCP. Upon receipt of such stock certificates and stock powers, CCP shall pay to the Executive the aggregate sum of $1 in full satisfaction of the consideration due in respect of the transfer of the Executive Option Shares; 5.1.3 where an agreement is reached pursuant to which the Company will be acquired by or merged with or into another company (including by way of a Take-over), the Executive shall at completion of that agreement grant to CCP an option over his shares in that other company on the same terms and with the at least same value as the Executive Option (based upon the valuations of the Company and the acquiring company for the purposes of the merger or acquisition) and upon the effective grant of such new option to the extent that it has not been exercised the Executive Option shall lapse. 5.2 In consideration of CCP entering into this agreement and the payment by CCP to the Company of the option fee of US$1 on the date of the agreement (the receipt of which is hereby acknowledged) referred to in clause 5.1, the Company grants to CCP an option ("First IPO Option") to purchase that number of Shares equal to $2.5 million divided by the Issue Price ("First IPO Option Shares") as part of an IPO or Flotation and a further option ("Second IPO Option") to purchase that number of Shares equal to 10 per cent. of the outstanding Shares (as enlarged by the IPO Shares) ("Second IPO Option Shares") as part of the IPO or Flotation at a price per share equal to 70 per cent. of the Issue Price on the following terms and conditions:- 5.2.1 subject to clause 5.2.3, each of the IPO Options shall be exercisable once only in whole or in part at any time during the Investment Period (including as part of any IPO) by notice in writing to the Company. To the extent not exercised in such period, the IPO Options shall lapse and become incapable of subsequent exercise; 5.2.2 if the IPO Options are exercised, on the date of the closing of the IPO or admission to listing on a Recognised Stock Exchange the Company shall deliver to CCP or to such persons as they may direct stock powers or other instruments of transfer in respect of the First IPO Option Shares or the Second IPO Option Shares (as the case may be) and a certified copy of the Board minutes allotting the relevant IPO Option Shares to CCP or to such other persons as it may direct in the proportions notified by CCP and register CCP or any persons nominated by it as holders of the shares as holders of the relevant IPO Shares. Upon receipt of such stock certificates and certified copy Board minutes and powers, CCP shall pay to the Company the aggregate applicable purchase price determined pursuant to clause 5.2 in full satisfaction of the consideration in respect of the issue and allotment of the relevant IPO Shares; and 5.2.3 where an agreement is reached pursuant to which the Company will be acquired by or merged with another company, the Company shall grant CCP prior to completion of that agreement grant to CCP options over its shares with the at least same value as the IPO Options or deal value and upon the effective grant of such new options any unexercised IPO Options shall lapse; and 5.2.4 the Second IPO Option shall lapse upon exercise of either or both of the Take-over Options; 5.3 In consideration of CCP entering into this agreement and the payment by CCP to the Company of the option fee of US$1 on the date of the agreement (the receipt of which is hereby acknowledged) referred to in clause 5.1, the Company grants to CCP:- (i) an option, exercisable immediately prior to a Take-over or a merger of the Company with or into a company which is already listed on a Recognised Stock Exchange ("relevant event"), to purchase from the Company such number of Shares as shall on the date of exercise represent 10 per cent. of the issued share capital of the Company at a price per share equal to 35 per cent. of the value given to such shares for the purpose of the transaction ("relevant value"); and (ii) an option, exercisable immediately prior to a relevant event, to purchase from the Company such number of Shares as shall on the date of exercise represent a further 5 per cent. of the issued share capital of the Company on the date of exercise at a price per share equal to 10 per cent. of the relevant value. These options ("Take-over Options") shall be granted on the following terms and conditions:- 5.3.1 each of them shall be exercisable once only in whole or in part at any time between one month and five business days prior to the occurrence of a relevant event by notice in writing to the Company and such exercise shall be irrevocable. To the extent not exercised in such period, the Take-over Options shall lapse and become incapable of subsequent exercise; 5.3.2 within 5 business days of the date of the notice exercising a Take-over Option (and prior to completion of the transaction giving rise to the relevant event), the Company shall deliver to CCP or to such persons as they may direct stock powers in respect of the shares the subject of the relevant Take-over Option and a certified copy of the Board minutes allotting the relevant shares to CCP or to such other persons as it may direct in the proportions notified by CCP and register CCP or any persons nominated by it as holders of the shares. Upon receipt of such stock certificates and certified copy Board minutes and powers, CCP shall pay to the Company the aggregate applicable purchase price determined pursuant to clause 5.3 in full satisfaction of the consideration in respect of the issue and allotment of the relevant Shares; and 5.3.3 the Take-over Options shall lapse upon exercise of the Second IPO Option. 6. COMPLETION 6.1 Completion shall take place at the offices of Titmuss Sainer Dechert in the UK at 2 Serjeants' Inn, London EC4Y 1LT (or at such other place as the Parties may agree) on such date as the Executive and the Purchaser may agree but in any event not later than 72 hours after the conditions set out in clause 3.1 have been fulfilled, or waived as provided in clause 3.4, when each of the Parties shall (so far as it is within his or its powers so to do) take or cause the following steps to be taken and, to the extent necessary, to be sanctioned by the Board and/or the shareholder of the Company (as appropriate):- 6.1.1 the Executive shall deliver to the Purchaser the stock certificates and duly signed stock powers or other instruments of transfer relating to the transfer of the Sale Shares to the Purchaser; 6.1.2 the Purchaser shall pay to the Executive the aggregate sum of $1 in consideration of the transfer of the Sale Shares; 6.1.3 the Company shall register the Purchaser or such persons as the Purchaser may direct as holders of the Sale Shares and issue new stock certificates to the Purchaser or as it may direct in respect of the Sale Shares; 6.1.4 the Company shall adopt the Business Plan and the Financial Plan; 6.1.5 the Company shall appoint the CCP Director as provided by clause 9; 6.1.6 the Company shall deliver to the Purchaser and the Purchaser shall deliver to the Company duly executed copies of the Consultancy Agreement; 6.1.7 the Company shall deliver to the Purchaser copies of the Service Agreement duly executed by the Company and the Executive; 6.1.8 the Company shall deliver to CCP, Koenig and Newick and CCP, Koenig and Newick shall deliver to the Company duly executed copies of the Loan Agreements and CCP shall advance to the Company the First Loan in accordance with the terms of the First Loan Agreement; 6.1.9 the Company shall adopt the Revised Bylaws and revise its certificate of incorporation by incorporating the restricted transactions set out in the third schedule to this agreement as transactions which cannot be conducted by the Company without the unanimous consent of the Board, or, insofar as the transactions set out in the third schedule are resolutions to be passed by the shareholders, without the consent of at least 75% of the shareholders; 6.1.10 the Company shall pay to CCP the arrangement fee of $7,500 referred to in clause 12.3.1 and the fifth schedule in respect of the First Loan and the arrangement fee 2,5 per cent. of the principal amount of the Second Loan Agreement, referred to in clause 12.3.2 and the sixth schedule; 6.1.11 deeds of waiver of pre-emption rights in relation to the issues and transfers of shares contemplated in this agreement in a form satisfactory to the Purchaser duly executed by each of the Initial Investors, such deeds to include confirmation by the Initial Investors that they will cooperate with the other Parties in relation to any Take-over or Flotation and that they have read and consent to the terms of this agreement. 6.2 If any of the Parties (other than the Purchaser, CCP, Koenig and/or Newick) shall fail to perform on or before the date due for Completion any of the obligations which this agreement requires it or him to perform on or by that date, the Purchaser, CCP, Koenig and/or Newick (as the case may be) shall in addition to and without prejudice to any other remedies that they may have be entitled to:- 6.2.1 defer Completion to a date not more than 14 days following the date on which Completion should have taken place (and so that the provisions of this clause shall apply to Completion as so deferred); or 6.2.2 proceed to Completion so far as is practicable; or 6.2.3 rescind this agreement. 7. WARRANTIES 7.1 In consideration of CCP, Koenig, Newick and the Purchaser, CCP, Koenig and Newick entering into this agreement and the Loan Agreements and the payment by CCP of the option fee referred to in clause 5.1, the Executive and the Company represent and warrant to CCP, Koenig, Newick and the Purchaser that, save only as and to the extent fully and fairly disclosed to CCP, Koenig, Newick and the Purchaser in this agreement or in the Disclosure Letter, each of the Warranties is now true and accurate and will continue to be true and accurate on each day from now up to and including Completion as if repeated on each such day with reference to the facts which shall then exist and the rights and remedies of CCP, Koenig, Newick and the Purchaser in respect of the Warranties are not to be affected or limited by any previous or other disclosures, express or implied, to, or any investigations carried out by, CCP, Koenig, Newick, the Purchaser their officers, representatives and professional advisers, by the sale of the Sale Shares or by CCP, Koenig, Newick or the Purchaser failing to terminate or rescind this agreement, or by any other matter whatsoever, except a specific and duly authorised written waiver or release by CCP, Koenig, Newick and the Purchaser. 7.2 The Executive and the Company will forthwith notify (in writing) CCP, Koenig, Newick and the Purchaser of any matter or thing which may arise or become known to him after the date of this agreement (whether or not prior to Completion) which renders any of the Warranties untrue, inaccurate or misleading in any respect by reference to the facts existing at that time or if he becomes aware of any circumstances which would, or would be likely to, cause any of the Warranties to become untrue, inaccurate or misleading. Any matter or thing so notified shall not be and shall not be deemed to be a disclosure for the purpose of qualifying or limiting the liability of the Executive or the Company pursuant to this agreement. 7.3.1 The following provisions of this clause 7.3 shall operate to limit the liability of the Executive and the Company pursuant to the Warranties and references to "breach", "claim" and "liability" (and any similar expression) shall, unless the context otherwise requires, be references to a breach of or a claim or liability arising pursuant to the Warranties notwithstanding any other provisions contained in this agreement. 7.3.2 No claim shall be made unless the Executive and the Company shall have been given written notice by or on behalf of CCP, Koenig, Newick or the Purchaser of that claim (in the case of a liability relating to a matter other than Taxation or a Warranty in Sections 3 and 15) during the Investment Period or (in the case of a liability relating to Taxation) prior to the seventh anniversary of Completion together with reasonable written details of the specific matter and amount in respect of which a claim is made. 7.3.3 If the Executive or the Company shall be unable to satisfy his or its liability under the Warranties by payment in cash, CCP, Koenig, Newick or the Purchaser shall be entitled to require him or it to do so by written notice requiring him or it to transfer and/or to procure the transfer of such number of Shares (in addition to the Sale Shares and the Option Shares) as shall have an aggregate value equal to the amount of such liability. For the purposes of the prior sentence, the value of the Shares to be transferred shall be the value (taking into account the effect of the breach in determining the value) as agreed between the Parties or, failing agreement, as the Auditors shall state in writing to be their opinion of a fair value thereof. In arriving at such opinion the Auditors shall assume a sale between a willing vendor and a willing purchaser on the relevant date taking into account (if such be the case) any bona fide offer received from any person not being a shareholder to purchase the Shares or any of them. In producing such statement the Auditors shall be deemed to be acting as experts and their decision shall be final and binding upon the Parties. 7.3.4 If CCP, Koenig, Newick or the Purchaser makes a claim against the Executive under Clause 7.1, the Executive shall not have or pursue any claim or third party action to join in, claim against, seek a contribution from or otherwise claim or seek damages or compensation from the Company in respect of any such claim and the Executive and the Company hereby confirm to CCP, Koenig, Newick and the Purchaser that the Company has not entered into any indemnity or other agreement or arrangement concerning the liability of the Executive or the Company for any breach of the Warranties or any other provision of this agreement. 7.3.5 Where notice of a claim is given to the Executive and/or the Company (in accordance with clause 7.3.2), no legal proceedings may be commenced in respect of that claim until one month after the date of notification. During such one month period the relevant Parties shall attempt in good faith to settle the claim between themselves or else to agree upon an independent arbitration procedure for the claim. 7.4 Each of the Warranties, covenants, indemnities and undertakings set out in this agreement is separate and independent. 7.5 If the Company shall not have achieved a market value of $6 million at any time within the one year period commencing the day after Completion, the Executive shall be deemed to have served a Transfer Notice transferring or procuring the transfer to CCP (or to such other persons as they may direct) in such proportions as they shall direct of such number of Shares as shall equate to 21 per cent of the issued share capital of the Company at the date of such Transfer Notice ("Forfeit Shares") for an aggregate consideration of $1. For the avoidance of doubt, if the Company shall have achieved a market value of $6 million or more at any time within the one year period commencing the day after Completion, the Executive shall not be deemed to have served a Transfer Notice pursuant to this clause. For the purposes of this clause, the "market value" of the Company shall be: (i) based upon the highest price paid in an arms length sale or the subject of a bona fide arms length offer during the Relevant Period for a minimum of 10 per cent. of the issued share capital of the Company; or (ii) where no such sale or offer takes place within the Relevant Period, the Transfer Value of the Company (referred to in clause 7.3.3) as determined by the Auditors based upon an arms length sale of 10 per cent. of the issued share capital of the Company. The Auditors shall be deemed to be acting as experts and their decision shall be final and binding upon the Parties. 8. BREACH OF WARRANTY 8.1 Without restricting the rights or the ability of CCP, Koenig, Newick or the Purchaser to claim damages on any basis if it shall be found that any matter which is the subject of any of the Warranties is not as represented, warranted or undertaken then, if CCP, Koenig, Newick and/or the Purchaser (as appropriate) shall so elect by notice in writing to the Executive or the Company, the Executive or the Company (as the case may be) shall on demand pay to CCP, Koenig, Newick and/or the Purchaser (as appropriate):- 8.1.1 a sum equal to the Relevant Proportion of the amount by which the value (or amount) at Completion of any asset or liability of the Company (computed for this purpose on the basis that full provision was made for the facts and circumstances in relation to which such breach arose) was less or, in the case of a liability, greater than the value (or amount) at Completion of such asset or liability (computed for this purpose on the assumption that the facts and circumstances had been such as to involve no such breach); and 8.1.2 all costs and expenses incurred by CCP, Koenig, Newick and/or the Purchaser as a result of such breach, together with such other amounts as shall be required to compensate them for any other loss or damage which they shall have suffered. 8.2 The Executive and the Company will forthwith notify (in writing) CCP, Koenig, Newick and the Purchaser of any matter or thing which may arise or become known to either of them after the date of this agreement (whether or not prior to Completion) which is inconsistent with any of the Warranties or which is or may reasonably be anticipated to be material to be known by a purchaser for value of the Sale Shares. Any matter or thing so notified shall not be and shall not be deemed to be a disclosure for the purpose of qualifying or limiting the liability of the Executive or the Company pursuant to this agreement. 8.3 If CCP, Koenig, Newick or the Purchaser becomes aware (whether as a consequence of any notification made by the Executive or the Company or otherwise) of any breach of the Warranties, then CCP, Koenig, Newick or the Purchaser (as appropriate) may rescind this agreement by giving notice in writing to the other Parties to that effect. 9. CCP DIRECTOR 9.1 CCP shall be entitled during the Investment Period and for a period of twelve months thereafter to appoint one person to be Director and to remove such Director and to appoint another person in his place as necessary, by notice in writing to the Company which shall take effect at the time it is served on the Company. 9.2 A CCP Director shall:- 9.2.1 (notwithstanding any provision from time to time of the Company) not be required to hold any share qualification, shall not be subject to retirement by rotation, may appoint any other person to be his alternate director and may only be removed by CCP; 9.2.2 be entitled to disclose to CCP such information regarding the Company as he shall in his absolute discretion determine; and 9.2.3 be entitled to be reimbursed by the Company for all expenses reasonably incurred by him in connection with the performance of his duties as a CCP Director. 9.3 At any meeting of the Company at which a resolution is proposed by CCP to appoint or remove a CCP Director, the Executive hereby agrees to vote in favour of any such appointment or removal. 9.4 Except as expressly provided under this agreement or as contemplated in the Business Plan, the number of Directors shall not exceed 5 at any time during the Investment Period except with the prior written consent of CCP. 10. BUSINESS OF THE COMPANY 10.1 The Executive and the Company covenant and undertake to CCP, Koenig, Newick and the Purchaser that during the Investment Period, save with the prior written consent of CCP, Koenig, Newick and the Purchaser, any expansion, development or evolution of the Company's business or any part thereof (whether to be conducted as part of or in connection with such main business or ancillary to it) will only be effected through the Company or a wholly owned subsidiary of the Company. 10.2 The Executive undertakes to and covenants with CCP, Koenig, Newick and the Purchaser that (subject to all applicable legal requirements) he will exercise his votes as director and/or shareholder in the Company so as to procure so far as he is able, and the Company agrees to ensure, that during the Investment Period, save with the prior written consent of CCP, Koenig, Newick and the Purchaser, the Company does not carry out or agree (whether conditionally or unconditionally) to carry out any Restricted Transaction. The Company shall endeavor its best efforts to alter its certificate of incorporation to reflect this on or prior to Completion, or in any case no later than 30 days thereafter. 10.3 Each of the Parties agrees that at all times during the Investment Period it shall fully and punctually perform and comply with all obligations on its part under the Revised Bylaws and it is agreed that each provision of the Revised Bylaws shall be enforceable by the Parties between themselves in whatever capacity. 10.4.1 At Completion, the Company shall and the other Parties shall ensure in so far as they are able that the Company shall adopt the Business Plan (incorporating the Financial Plan). 10.4.2 The Parties agree that during the Investment Period: (i) the Company shall pursue the Business Plan; (ii) no material action shall be taken by the Company except as expressly contemplated in the Business Plan; and (iii) no expenditure shall be incurred by the Company except as expressly contemplated in the Financial Plan; in each case except as approved by the CCP Director (who shall act in good faith in the interests of the Company). 10.4.3 The Business Plan may be altered at any time with the prior agreement of all the Directors but may not otherwise be altered. 10.5 The Company undertakes to CCP, Koenig, Newick and to the Purchaser that it shall keep in force key man insurance policy in respect of the Executive for so long as he is a director or employee of the Company. 11. REPORTING 11.1 The Company and the Executive agree that during the Investment Period the Company shall provide to CCP, Koenig, Newick and to the Purchaser in relation to the Company:- 11.1.1 audited accounts and an annual report of the Company within four months (or such longer period as CCP, Koenig, Newick and the Purchaser may agree) of the end of the accounting period to which they relate as soon as reasonably practicable at the end of each accounting period in accordance with US GAAP and such accounts shall be laid before the Company in general meeting no later than five months after the relevant accounting reference date; 11.1.2 such financial and other information about the Company as CCP, Koenig, Newick and the Purchaser may from time to time reasonably require; 11.1.3 within three weeks of the end of each calendar month management accounts in a format agreed with CCP, Koenig, Newick and the Purchaser and containing profit and loss account, balance sheet, cash flow forecast for the next calendar month and provide a comparison between budgeted and actual results together with a report on any significant variations between such results and a report on the Company's performance by the Executive; 11.1.4 proofs for approval of all notices of meeting (other than notices of annual general meetings containing notice of routine business only) reports, announcements or other documents (other than statutory accounts) proposed to be sent to holders of any securities of the Company. 11.1.5 all notices, reports, announcements or other documents at the same time as they are sent to the holders of any securities of the Company and copies of all resolutions passed by the holders of securities of the Company within 14 days of such resolution being passed; 11.1.6 any proposed public announcement in relation to CCP, Koenig, Newick and/or the Purchaser and no such announcement shall be made without the prior approval of CCP, Koenig, Newick and/or the Purchaser (as appropriate) unless required by law or other regulatory requirements; 11.1.7 copies of documents relating to transactions which are or may be material to the business of the Company; 11.1.8 as soon as they are available, full details of any material adverse change in the financial position or prospects of the Company; and 11.1.9 as soon as it or he become aware of the same, inform CCP, Koenig, Newick and the Purchaser of any general offer proposed to be made to shareholders of the Company or any discussions likely to lead to the same and any material litigation which may be made or threatened by or against the Company or any circumstance likely to give rise to the same. 11.2 The Company and the Executive agree with CCP, Koenig, Newick and the Purchaser that:- 11.2.1 all the business of the Company (other than day to day business) shall be carried on by the Board and a meeting of the Board shall be convened and held at least once in every calendar month; 11.2.2 unless the CCP Director agrees otherwise in relation to any particular meeting, Board meetings shall be convened by not less than 7 clear business days notice given to all directors at the addresses which they shall have supplied to the Company for the purpose of such notice; 11.2.3 notice of all Board meetings shall be accompanied by a written agenda specifying the business of such meeting and copies of all papers that shall be relevant for such meeting and only the business so specified may be transacted at such meeting save where (in an emergency) the interests of the Company dictate otherwise or where the CCP Director shall otherwise agree and as soon as practicable after each such meeting a copy of the minutes of the meeting shall be sent to the CCP Director. 11.3 CCP, Koenig, Newick and the Purchaser shall be entitled to examine all books and accounts of the Company. 12. EXTERNAL FUNDING 12.1 Following Completion, the initial external funding of the Company shall be provided by way of the First Loan. 12.2 If during the Investment Period additional external funding ("Additional Funding") is required by the Company, then if so approved by CCP:- 12.2.1 to the extent that CCP so elects, the Additional Funding shall first be provided:- 12.2.1.1 by advances under the Second Loan Agreement and in the form of consideration payable to the Company pursuant to the exercise of any of the options referred to in this agreement; and/or 12.2.1.2 to the extent that the amount of the required Additional Funding exceeds the principal sum of the Second Loan Agreement, by way of funding on commercial terms agreeable to the Board provided or procured by CCP; or 12.2.2 to the extent that CCP do not elect to provide or procure the provision of the Additional Funding pursuant to clause 12.2.1 within 20 business days ("Funding Period") of receipt by CCP from the Board of a written request for the Additional Funding (setting out in reasonable detail the purpose for which the Additional Funding is required), the Company shall be entitled to raise the Additional Funding:- 12.2.2.1 from the other shareholders of the Company (and their Associates) on terms no more favourable than those offered under clause 12.2.1.2; or 12.2.2.2 from third parties (excluding shareholders of the Company and their Associates) on reasonable commercial terms acceptable to all those Directors present at a meeting of the Board duly convened and held; provided that the percentage shareholding in the Company represented by Sale Shares (and any other Shares then owned by CCP or the Purchaser or their Associates) shall not in any way be reduced (ignoring for this purpose any increase in such percentage as a result of funding provided to the Company by such shareholders under this clause 12.2) as a result of any such funding. 12.3 The Company shall pay arrangement fees as follows:- 12.3.1 to CCP in respect of the First Loan, a fee of 2.5 per cent. of the principal amount of the loan, being $7,500, payable at Completion; 12.3.2 to CCP a total fee of US$30,000, in each case in respect of the Second Loan and payable at the grant of the Second Loan, subject to the terms of the Second; and 12.3.3 to CCP, in respect of an IPO, 2.5 per cent. of the aggregate total gross proceeds to the Company from such IPO payable within 3 business days of an IPO (or, in the case of a Take-over, 2.5 per cent. of the valuation of the Company for the purposes of such Take-over (which valuation shall, in the case of disagreement, be confirmed by the Auditors). 12.4.1 Subject to clause 12.4.2, at Completion, the Company shall deliver to a Dutch civil law notary nominated by CCP, Koenig and Newick the source codes for all the bespoke computer software used in the Company's business as security for the obligations of the Company under the Loan Agreements. The source codes may at any time be transferred to such other agent as CCP, Koenig, Newick and the Company may agree. The Dutch notary and such or other agreed agent ("Escrow Agent") shall hold the source codes in escrow on behalf of CCP, Koenig and Newick on the following terms:- 12.4.1.1 the source codes shall be released to CCP upon receipt by the Escrow Agent from CCP of a written direction to do so; CCP shall only be entitled to issue such direction where the Company is in material breach of either of the Loan Agreements where any failure of the Company to pay any interest or principal when due will constitute a material breach; 12.4.1.2 subject to clause 12.4.1.1, the source codes shall be released to the Company upon receipt by the Escrow Agent from CCP of a written direction to do so; CCP shall issue such direction once the Company's obligations under the Loan Agreements have been satisfied in full; 12.4.1.3 the fees and expenses of the Escrow Agent shall be borne by the Company. 12.4.2 At the date of this agreement, the Company is in the process of negotiating the acquisition of the source codes referred to in clause 12.4.1. If (because the Company does not then own the source codes or for any other reason) the Company is not able to deposit the source codes with the Escrow Agent at Completion then it shall use its best endeavours to ensure that it does so as reasonably practicable thereafter. 13. EXIT PROVISIONS 13.1 If , at any time during the Investment Period, the Executive whishes to sell or dispose of his Shares to another party ("the Proposed Transferee"), he shall not be able to consummate such sale unless the following conditions have been complied with: (a) he shall have first given CCP and the Purchaser or their assigns, pro rata to their shareholdings in the Company, the right to purchase the Shares being offered by the Executive upon the same terms and conditions that he is willing to offer them to the Proposed Transferee and (b) in the event that CCP and/or the Purchaser whish to exercise such right of first refusal, the Executive shall have given CCP and Purchaser or their assigns the opportunity to sell the same proportion of their Shares as the Executive is willing to sell to the Proposed Transferee and upon the same terms and conditions. If CCP and/or Purchaser have not exercised either their right of first refusal or their right to sell their Shares along with the sale of the Shares of Executive, the Executive will be permitted to consummate the proposed sale but on terms no more favorable to the Proposed Transferee than those first proposed. 14. EXECUTIVE UNDERTAKINGS 14.1 The Executive undertakes to the Company, CCP, Koenig, Newick and the Purchaser that during the Investment Period save with the prior written consent of CCP, Koenig, Newick, the Purchaser and the Company (such consent not to be unreasonably withheld):- 14.1.1 he will during normal business hours and such other hours as may be required under his Service agreement devote his full time and attention to the business of the Company and shall not hold any other office or appointment nor be concerned with any other business whether or not in competition with any business carried on by the Company; and 14.1.2 he will not transfer Shares: (i) to the extent that following such transfer he holds less Shares than the number of Forfeit Shares (except where the Forfeit Shares have been transferred to CCP pursuant to clause 7.5) and the Executive Option Shares (except where the Executive Option Shares have been transferred to CCP pursuant to the exercise of the Executive Option); or (ii) otherwise than in accordance clause 18 of this agreement and any relevant provisions of the Revised Bylaws. 14.2 If during the Investment Period the Executive ceases to be a director or employee of the Company (except as a result of his death, serious illness or unlawful dismissal) then unless CCP and the Purchaser otherwise agree a Transfer Notice shall be deemed to be served with effect from the expiry of a period of 30 days of such cessation in respect of 50 per cent. of the Shares of which the Executive and/or his Permitted Transferees are the registered holders as at the date of such Transfer Notice. The Transfer Price for the purpose of any transfer of such Shares pursuant to such Transfer Notice shall be equal to 50 per cent. of the market value of the Shares as agreed between the relevant Parties or (in the absence of agreement) determined by the Auditors. 14.3 The Company shall procure that provisions equivalent to those contained in clause 14.1.1 shall apply to any director (other than any CCP Director) who may be appointed in place of the Executive. 14.4 The Executive represents and warrants to CCP, Koenig, Newick and to the Purchaser that:- 14.4.1 he is not subject to any legally enforceable obligation (express, implied, statutory, contractual or otherwise) or subject to any duty which would or is likely to:- 14.4.1.1 prevent and/or restrict him from being engaged, concerned or interested in any capacity in any part of the business of the Company, unless this would be in the best interest of the Company; 14.4.1.2 prevent and/or restrict the Company from doing business with any person, firm or company with which it might otherwise do business; 14.4.1.3 require him or any other person to give any account of profits or render him or any other person liable in damages; or 14.4.1.4 adversely affect the implementation of this agreement and/or the Business Plan; and 14.4.2 the Disclosure Letter contains full details of all legally enforceable obligations undertaken by the Executive to his previous employer and its subsidiary, associated or holding companies which might operate to restrict his business activities, whether before or after the cessation of his employment, by any such company and of any legal advice obtained by him in relation to such arrangements and their application to the business activities of the Company as previously carried on or as envisaged by this agreement and/or the Business Plan. 15. RESTRICTIONS ON THE EXECUTIVE 15.1 In this clause:- "Business" means the existing business of the Company as carried out at the date of this agreement and the proposed business of the Company as described in the Business Plan; "directly or indirectly" means (without prejudice to the generality of the expression) either alone or jointly or in partnership with any other person, firm or company or (except as the holder for investment purposes only of securities in any company not exceeding 3 per cent in nominal value of the securities of that class in issue or shares) as the holder of any interest in or as an employee director agent or representative of or consultant to any other person firm or company; and "Restriction Period" means the Investment Period; 15.2 The Executive undertakes to CCP, the Purchaser, Koenig, Newick and the Company that he will not (other than for and on behalf of the Company) without the prior written consent of CCP, Koenig, Newick and the Purchaser directly or indirectly:- 15.2.1 at any time during the Restriction Period offer employment to or employ or offer or conclude any contract for services with any person who at any time during the Restriction Period shall have been a director, employee, consultant or agent of the Company entitled to emoluments (including commission if any) exceeding the annual rate of $25,000 ("Senior Employee"); or 15.2.2 at any time during the Restriction Period knowingly assist any competitor of the Company to a material extent in carrying on or developing any business which may in any way be the same as or similar to or in competition with the Business; or 15.2.3 at any time during the Restriction Period seek to contract with or engage any person who has been contracted with or engaged to manufacture, assemble, supply or deliver products or services to the Company at any time during the Restriction Period or the period of 12 months prior to the date of this agreement; or 15.2.4 at any time solicit or entice or endeavour to entice any Senior Employee of the Company away from the Company; or 15.2.5 at any time entice or endeavour to entice any person to breach his contract for services with the Company; or 15.2.6 except as required by law at any time disclose to any person or use for his own benefit (or that of any other person) any information or know-how of a confidential nature concerning and relating to the goodwill of the Company including (without limitation) information and know-how as to products, processes, techniques, suppliers, customers, finances, business policy and expansion or forward planning programmes; or 15.2.7 at any time falsely represent himself as being connected with or interested in the Company; or 15.2.8 except as required by law at any time do or say anything likely or calculated to lead any person, firm or company to withdraw from or cease to continue offering to the Company any rights (whether of purchase, sale, distribution, agency or otherwise) then enjoyed by it or in any other way to cease to do business or reduce the amount of business it transacts with any shareholder of the Company; or 15.2.9 at any time carry on a business under the name "Global Information Group" or any part combination or abbreviation thereof or any similar or other name likely to confuse or mislead any part of the public. 15.3 The Executive acknowledges and agrees with CCP, Koenig, Newick and the Purchaser that:- 15.3.1 each of the sub-clauses contained in clause 15.2 constitutes an entirely separate severable and independent covenant by and restriction on him; 15.3.2 the duration, extent and application of each of the restrictions contained in clause 15.2 are no greater than is necessary for the protection of the goodwill and trade connections of the Business and the value of the Company; and 15.3.3 if any restriction contained in clause 15.2 shall be found void but would be valid if some part thereof were deleted such restriction shall apply with any such deletion as may be necessary to make it valid and effective. 16. FURTHER SHAREHOLDERS 16.1 Subject to clauses 12, 16.2 and 18.5, no allotment or transfer of any Shares shall be made or registered other than in accordance with clause 18 of this agreement and the Revised Bylaws nor until the proposed allottee or transferee (if not already bound by the terms of this agreement) has entered into a Deed of Adherence. 16.2 Within 6 months following Completion (or such longer period as CCP shall determine) the Company shall establish an executive share option scheme ("Scheme") for its executive directors and senior employees. The terms of the Scheme shall be determined by the Board. The Company shall issue such number of Shares to the Purchaser (or as it may direct) so as to ensure that the percentage shareholdings represented by the Sale Shares shall not in any way be reduced as a result of the issue of new shares in the Company under the Scheme. 17. ISSUES OF SHARES 17.1 Notwithstanding anything to the contrary in this agreement or the Revised Bylaws, no unissued Share may be issued without the consent in writing of at least 75% of the shareholders of the Company. 17.2.1 Notwithstanding anything to the contrary in this agreement or the Revised Bylaws but subject to clause 17.1 all unissued shares shall, before sale or issue to any person on any terms, be offered on no less favourable terms first to the holders of shares in the Company in the following manner:- 17.2.1.1 the offer shall be by notice in writing and shall specify the number and class of shares which the Company desires to issue ("Offer Shares") and the proposed terms of the issue of the shares and shall invite each shareholder of the Company to apply in writing within such period ("Offer Period") as shall be specified in the notice (being a period expiring not less than 21 days from the date of the notice) for such maximum number of the Offer Shares as he wishes to take and to submit his remittance for the full amount payable in respect of the shares applied for; 17.2.1.2 the Offer Shares (or so many of them as shall have been applied for) shall be allotted on the same terms to and amongst the shareholders of the Company who have applied for them and who have submitted the full remittance in respect of the shares applied for on the earlier of:- 17.2.1.2.1 the date of expiration of the Offer Period; or 17.2.1.2.2 the date the Company receives notice in writing of the application for or refusal of the Offer Shares from every shareholder of the Company; 17.2.1.3 the Directors shall allocate the Offer Shares to and amongst the applying shareholders of the Company according to the number of Offer Shares applied for by each of such applying shareholders or, if the number of shares applied for exceeds the number of Offer Shares, on the basis that each such applying shareholder shall be allocated the number of Offer Shares applied for by him up to the proportion (as nearly as practicable) of the Offer Shares which the nominal value of shares of whatever class held by each of them respectively bears to the nominal value of the shares held by all such applying shareholders. If any Offer Shares remain unallocated they shall be allocated to and amongst those applying shareholders whose applications have not been satisfied in full in the proportion (as nearly as practicable) which the number of Offer Shares originally applied for by each such applying shareholder less the number of Offer Shares already allocated to him bears to the total number of Offer Shares originally applied for by all such applying shareholders less the number of Offer Shares already allocated to them; 17.2.1.4 if any shareholder of the Company is allotted fewer shares than he has applied for, then the balance of the amount remitted by him shall be returned to him (without interest) on the date the shares are allotted to him; 17.2.1.5 no shareholder shall be obliged to take more than the maximum number of shares applied for by him; 17.2.2 The Directors may dispose of any unissued shares not applied for by the shareholders of the Company or which, by reason of any other difficulty in apportioning the same, cannot in the opinion of the directors be conveniently allotted under this clause 16.4 at a price and on terms no more favourable than those at which the shares were initially offered to the shareholders. 18. ANNOUNCEMENTS Neither the Company nor the Executive shall (otherwise than as required by law make any announcement or divulge any information concerning each of CCP's, the Purchaser's, Koenig's and/or Newick's involvement in the Company or the terms of the agreement without the prior consent in writing of CCP, the Purchaser, Koenig and Newick. 19. GENERAL 19.1 Nothing in this agreement or in any document referred to in it shall constitute or be deemed to constitute a partnership or agency relationship between any of the Parties, nor (save as expressly provided herein) shall the execution, completion and implementation of this agreement confer on any Party any power to bind or impose any obligations on any other Party or to pledge the credit of any other Party or to create any fiduciary relationship with any other Party. 19.2 This agreement together with the Revised Bylaws and any other documents which this agreement expressly requires shall be signed as executed shall constitute the entire understanding and agreement between the Parties in relation to the subject matter of this agreement, expressly exclude any warranty, condition or other undertaking implied at law or by custom and supersede all previous agreements and understandings between the Parties with respect thereto and each of the Parties acknowledges and confirms that it does not enter into this agreement in reliance on any representation, warranty or other undertaking not fully reflected in the terms of this agreement, the Revised Bylaws or any other document which this agreement expressly requires shall be signed as executed. 19.3 Any variation of this agreement shall be binding only if it is recorded in a document signed by or on behalf of the Parties. 19.4 The Executive may not assign or delegate any of his rights or obligations under this agreement or any of the documents which this agreement expressly requires to be signed or executed in whole or in part (otherwise than pursuant to a transfer of Shares in accordance in all respects with the provisions and requirements of this agreement and of the Revised Bylaws). Notwithstanding anything to the contrary contained in the Revised Bylaws, each of CCP, Koenig, Newick and the Purchaser shall be free to assign any of its rights or obligations under this agreement or any of the documents which this agreement expressly requires to be signed or executed in whole or in part. 19.5 Any right or remedy of the Parties in respect of a breach of any provision of this agreement shall be in addition and without prejudice to all other rights and remedies of the Parties and no failure to exercise or delay in exercising or enforcing any right or remedy shall constitute a waiver by that Party of that or any of its other rights or remedies and no single or partial exercise or enforcement of any right or remedy shall preclude or restrict the further exercise or enforcement of any such right or remedy. 19.6 In the event of any conflict between the Revised Bylaws and this agreement, CCP, Koenig, Newick, the Purchaser and the Executive agree to consent to the holding of a general meeting of the Company on short notice at which a resolution in a form prepared by the Company and approved by CCP, Koenig, Newick and the Purchaser (such approval not to be unreasonably withheld or delayed) is proposed to amend the Bylaws so that they do not conflict with this agreement and pending the passing of such resolution the Executive and CCP, Koenig, Newick and the Purchaser agree that the terms of this agreement shall prevail so as to govern the exercise by the Executive and CCP and the Purchaser of their respective rights as shareholders in the Company. 19.7 If any of the provisions of this agreement are held to be invalid, illegal or unenforceable in any respect under any law, the validity legality or enforceability of the remainder of this agreement shall not be affected. 19.8 The Parties shall and shall use all reasonable endeavours to procure that any necessary third party shall do, execute and perform all such further deeds, documents, assurances, acts and things as may be reasonably required to give effect to this agreement including, without limitation, calling meetings of shareholders of the Company, the Board and voting at all such meetings in favour of all resolutions remaining if desirable for such purpose and the signing of all waivers of pre-emption rights which any Shareholder may have in relation to the issue of transfer of Shares. 19.9 Each of the obligations, representations, warranties, indemnities and undertakings entered into or made by or on behalf of any of the Parties (excluding any obligation fully performed at Completion) shall continue in full force and effect notwithstanding Completion taking place. 19.10 This agreement may be executed in any number of counterparts and by the different Parties on separate counterparts, each of which when executed and delivered shall constitute an original, but all the counterparts together shall constitute one and the same agreement. 20. COMMUNICATIONS 20.1 All communications between the Parties with respect to this agreement shall be in writing and delivered by hand or sent by pre-paid post (first class if inland, airmail if overseas) or facsimile telecopier ("fax") to the address of the addressee as set out in this agreement, or to such other address or fax number as the addressee may from time to time have notified for the purposes of this clause. 20.2 All communications to be sent to CCP and/or the Purchaser and/or Koenig and/or Newick shall be sent to the person whose name is given in clause 19.4 ("Representative") and each of CCP and the Purchaser and Koenig and Newick agrees that any communication received by the Representative shall be deemed to be communication to each of them. 20.3 Communications shall be deemed to have been received:- 20.3.1 if delivered by hand, on the day of delivery; 20.3.2 if sent by first class post, two business days after posting exclusive of the day of posting (or five business days in the case of a posting to an address outside the United Kingdom); 20.3.3 if sent by fax at the time of transmission or, if the time of transmission is not during the addressee's normal business hours, at 9.30 am on the next business day. 20.4 Communications addressed to the Company shall be marked for the attention of the Directors and communications addressed to CCP and/or the Purchaser and/or Koenig and/or Newick shall be marked for the attention of Jan Geertman and communications addressed to the Executive shall be sent to the Executive . 20.5 In proving service:- 20.5.1 by delivery by hand, it shall be necessary only to produce a receipt for the communication signed by or on behalf of the addressee; 20.5.2 by post it shall be necessary only to prove that the communication was contained in an envelope which was duly addressed and posted in accordance with this clause; and 20.5.3 by fax it shall be necessary only for the communication or a confirmatory letter to have been delivered by hand or sent by first class post on the same day but failure of the addressee to receive such confirmation shall not invalidate the relevant communication deemed given by fax. 21. COSTS The Company shall pay each Party's costs in relation to the preparation, execution and carrying into effect of this agreement and of all the other documents referred to in it. 22. PROPER LAW 22.1 This agreement shall be governed by and construed in all respects in accordance with the laws of England. 22.2 In relation to any legal action or proceedings arising out of or in connection with this agreement ("Legal Proceedings"), each of the parties to this agreement (other than CCP, Koenig, Newick and the Purchaser) who is not or who ceases to be resident in England ("Relevant Parties") hereby irrevocably submits to the exclusive jurisdiction of the English Courts and waives any objection to Legal Proceedings in such Courts on the grounds of venue or on the grounds that the Legal Proceedings have been brought in an inconvenient forum. These submissions shall not affect the right of any other party to take Legal Proceedings in any other jurisdiction, nor shall the taking of Legal Proceedings in any jurisdiction preclude any party from taking Legal Proceedings in any other jurisdiction. 22.3 Each of the Relevant Parties hereby undertakes to CCP, Koenig, Newick and the Purchaser and agrees irrevocably to appoint, and each hereby appoints, Titmuss Sainer Dechert to receive at its address set out at the beginning of this agreement, for it and on its behalf, service of process in any Legal Proceedings in England. Such service shall be deemed completed on delivery to such address (whether or not it is forwarded to or received by the relevant appointor). Thus Agreed between the Parties, on 14 January 2000, and signed in threefold.
/s/Anthony E. Mohr /s/Intertrust (Curacao) N.V. - -------------------------------------------- ------------------------------------------------- Mr. A.E. Mohr, for and on behalf of Gregory Elias, Managing Director of Intertrust Global Information Group U.S.A. Inc. (Curacao) N.V. , for Jolec Trading Limited /s/Anthony E. Mohr /s/Benno P. Hafner - -------------------------------------------- ---------------------------------------- Mr. A.E. Mohr Benno P. Hafner, for and on behalf of Koenig Invest AG /s/Philip van Wijngaarden /s/Intertrust (Curacao) N.V. - -------------------------------------------- ---------------------------------------------------- Mr Philip van Wijngaarden Gregory Elias, Managing Director of Intertrust Chatelin Capital Partners Ltd. (Curacao) N.V., for and on behalf of Newick Developments Limited
FIRST SCHEDULE THE COMPANY Date of Incorporation:- 6 April 1998 Incorporated in the State of Delaware Registered Office:- 15 East North street Dover Delaware 19901 USA Authorised Capital:- 10,000 shares of common stock par value US$0.01 each Issued Capital:- 1,000 shares of common stock Shareholders:- Anthony Mohr - 800 Shares; Henk Smit - 100 Shares; Jouke VPJ Brada - 10 Shares; Henri BG Sijthoff - 45 Shares; Charles Langereis - 45 Shares. Director:- Anthony Mohr Secretary:- Henk Smit Accounting Reference Date:- 31 December 1999 Subsisting Mortgages and Charges:- None SECOND SCHEDULE WARRANTIES Representations and Warranties. The Executive and the Company hereby represent and warrant to and undertake with CCP, Koenig, Newick and to the Purchaser as follows:- Organization. The Company (a) is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, (b) has all requisite corporate power and authority to own, lease and operate its properties, to carry on its business as presently conducted and to execute, deliver and perform this agreement, and (c) is duly qualified as a foreign corporation and in good standing to do business in all such jurisdictions, if any, in which the conduct of its business or its ownership, leasing or operation of property requires such qualification, except for those jurisdictions in which failure to so qualify would not have a material adverse effect on the business or assets of the Company. Executive has provided CCP with correct and complete copies of the Company's Certificate of Incorporation and Bylaws as in effect on the date hereof, which are contained in the Disclosure Letter. Equity Investments. The Company has never had, nor does it presently have, any subsidiaries, nor has it owned, nor does it presently own, any capital stock or other proprietary interest or other voting control, directly or indirectly, in any corporation, association, trust, partnership, limited liability company, joint venture or other entity. Capitalization. The authorized capital stock of the Company immediately upon the consummation at the Closing of the transactions contemplated hereby, and giving effect thereto, shall consist of 10,000 Shares, of which 1,000 Shares are validly issued and outstanding, and fully paid and nonassessable, with only limited liability attaching solely to the ownership thereof under applicable state law. The first schedule contains accurate details of (i) all holders of capital stock of the Company, including the number of shares of capital stock of the Company held by each such holder, and (ii) all outstanding warrants, options, agreements, convertible securities or other commitments pursuant to which the Company is or may become obligated to issue any shares of its capital stock or other securities of the Company, which names all persons entitled to receive such shares or other securities and the shares of capital stock or other securities required to be issued thereunder. There are no preemptive or similar rights to purchase or otherwise acquire shares of capital stock of the Company pursuant to any provision of law, the Certificate of Incorporation or Bylaws or any agreement to which the Company is a party, or otherwise, except as contemplated by this agreement and contained in Appendix B. There is no agreement, restriction or encumbrance (such as a right of first refusal, right of first offer, proxy, voting agreement, etc.) with respect to the sale or voting of any shares of capital stock of the Company (whether outstanding or issuable upon conversion or exercise of outstanding securities) except as contemplated by this agreement. The information contained in the first schedule is accurate and complete. Financial Information. The Business Plan contains all basic information which would be included in annual accounts of the Company for the period beginning on the date of incorporation of the Company and ending on 31 December 1999. Within 30 days upon Completion the Company shall provide the annual accounts in an agreed form to CCP. Absence of Undisclosed Liabilities. Except as disclosed in the Disclosure Letter, as of the date of this agreement, (a) the Company had no liability of any nature (matured or unmatured, fixed or contingent) which was not provided for or disclosed in the Disclosure Letter and on the statement of accounts payable, and (b) all liability reserves established by the Company were adequate in all respects. There are no loss contingencies (as such term is used in Statement of Financial Accounting Standards No. 5 issued by the Financial Accounting Standards Board in March 1975) .save as disclosed in the Disclosure Letter. Absence of Changes. Since December 1st, 1999, to the best of the Executive's knowledge there has not been (a) any adverse change in the financial condition, results of operations, assets, liabilities or business of the Company, taken as a whole, (b) any borrowing or agreement to borrow any funds or any liability or obligation of any nature whatsoever (contingent or otherwise) incurred by the Company, other than current liabilities or obligations incurred in the ordinary course of business, (c) any asset or property of the Company made subject to a lien of any kind, except as documented in Appendix B (d) any waiver of any valuable right of the Company, or the cancellation of any debt or claim held by the Company, (e) any payment of dividends on, or other distributions with respect to, or any direct or indirect redemption or acquisition of, any shares of the capital stock of the Company, or any agreement or commitment therefor, (f) any issuance of any stocks, bonds or other securities of the Company or options, warrants or rights or agreements or commitments to purchase or issue such securities or grant such options, warrants or rights, (g) any mortgage, pledge, sale, assignment or transfer of any tangible or intangible assets of the Company, except with respect to tangible assets in the ordinary course of business, (h) any loan by the Company to any officer, director, employee or stockholder of the Company, or any agreement or commitment therefor, (i) any damage, destruction or loss (whether or not covered by insurance) adversely affecting the assets, property or business of the Company, (j) any extraordinary increase, direct or indirect, in the compensation paid or payable to any officer, director, employee or agent of the Company, (k) any change in the accounting methods or practices followed by the Company or (l) any commitment (contingent or otherwise) to do any of the foregoing. Encumbrances; Burdensome Restrictions. The Company owns outright all of its property and assets, real, personal or fixed, tangible or intangible, reflected which are used or useful in the business of the Company, subject to no mortgages, liens, security interests, pledges, charges or other encumbrances of any kind, except as represented in Appendix B, in document nr. 15. The Company is not obligated under any contract or agreement or subject to any charter or other corporate restriction which materially adversely affects the Company's business, properties, assets, prospects or condition (financial or otherwise). Intellectual Property Rights Intellectual Property. There are no industrial and intellectual property rights, including without limitation, proprietary information, patents, patent applications, patent rights, mask works, mask work applications, trademarks, trademark applications, trade names, service marks, service mark applications, copyrights, copyright applications, know-how, certificates of public convenience and necessity, franchises, licenses, trade secrets, proprietary processes and formulae ("Intellectual Property Rights") necessary or required to enable the Company to carry on its businesses as now conducted and as presently proposed to be conducted as described in the Business Plan. A complete list of the Company's Intellectual Property Rights is contained in the Disclosure Letter. To the best of the Executive's knowledge, no third party has any ownership right, title, interest, claim in or lien on any of the Company's Intellectual Property Rights. The Company has not granted or assigned to any other person or entity any right to make, have made, assemble or sell the products or proposed products or to provide the services or proposed services of the Company. Proprietary Information of Third Parties. The Company has not materially violated or infringed, and is not currently materially violating or infringing, and the Company has not received any communications alleging that the Company (or any of its employees or consultants) has materially violated or infringed or, by conducting its businesses as presently proposed to be conducted, would materially violate or infringe, the Intellectual Property Rights of any other person or entity. No third party has claimed or has reason to claim that any Designated Person has (a) materially violated or may be violating any of the terms or conditions of his employment, non-competition or non-disclosure agreement with such third party, (b) disclosed or may be disclosing or utilized or may be utilizing any trade secret or proprietary information or documentation of such third party or (c) interfered or may be interfering in the employment relationship between such third party and any of its present or former employees. No third party has requested information from the Company which suggests that such a claim might be contemplated. No Designated Person has employed or proposes to employ any trade secret or any information or documentation proprietary to any former employer, and no Designated Person has violated any confidential relationship which such Designated Person may have had with any third party, in connection with the development, manufacture or sale of any product or proposed product or the development or sale of any service or proposed service of the Company, and the Company has no reason to believe there will be any such employment or violation. None of the execution or delivery of this agreement, or the carrying on of the business of the Company as officers, employees or agents by any Designated Person, or the conduct or proposed conduct of the business of the Company, will conflict with or result in a breach of the terms, conditions or provisions of or constitute a default under any contract, covenant or instrument under which any such Designated Person is obligated or under any judgment, decree or order of any court or administrative agency to which such Designated Person is subject. Prior Art; Technical Information. All prior art known to the Company which may be or may have been pertinent to the examination of any US patent or patent application contained in the Disclosure Letter has been cited to the US Patent and Trademark Office. To the best of the Company's knowledge, all technical information developed by and belonging to the Company which has not been patented has been kept confidential. The Executive, however, has disclosed certain individuals possess illegal copies of the source code. Litigation. There is no action, suit, proceeding, claim, arbitration or investigation ("Action") pending (or, to the best of the Company's knowledge, currently threatened) against the Company, its activities, properties or assets or, to the best of the Company's knowledge, against any Designated Person in connection with such Designated Person's relationship with, or actions taken on behalf of, the Company, other than those referred to in appendix B, under Litigation. There is no factual or legal basis for any such Action that might result, individually or in the aggregate, in any material adverse change in the business, properties or financial condition of the Company. The Company is not a party to or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality and there is no Action by the Company currently pending or which the Company intends to initiate. No Defaults. The Company is not in default (a) under its Certificate of Incorporation or Bylaws, or under any note, indenture, mortgage, lease, purchase or sales order, or any other material contract, agreement or instrument to which it is a party or by which it or any of its property is bound or affected, except for the defaults mentioned under Litigation or expressly mentioned therein, or (b) with respect to any order, writ, injunction, judgment or decree of any court or any federal, state, municipal or other domestic or foreign governmental department, commission, board, bureau, agency or instrumentality. To the best of its knowledge, there exists no condition, event or act which constitutes, or which after notice, lapse of time or both, would constitute, a default under any of the foregoing. Labour agreements and Actions. The Company is not bound by or subject to any contract, commitment or arrangement with any labour union, and to the Company's best knowledge, no labour union has requested, sought or attempted to represent any employees, representatives or agents of the Company. There is no strike or other labour dispute involving the Company pending nor, to the Company's best knowledge, threatened, nor is the Company aware of any labour organization activity involving its employees. The Company is not aware that any officer or employee intends to terminate their employment with the Company nor does the Company have any present intention to terminate the employment of any of its officers or employees. Compliance. To the best of its and the Executive's knowledge the Company (a) has complied in all material respects with all federal, state, local and foreign laws, ordinances, regulations and orders applicable to its business or the ownership of its assets, and the Company has not received notice of any claimed default with respect to such laws, ordinances, rules and regulations; and (b) has or has applied for all federal, state, local and foreign governmental licenses and permits necessary or required to enable it to carry on its business as now conducted and as presently proposed to be conducted. Such licenses and permits, if issued, are in full force and effect, no violations have been recorded in respect of any such licenses or permits, and no proceeding is pending or, to the best of the Company's knowledge, threatened to revoke or limit any thereof. None of the aforesaid licenses and permits shall be affected in any material adverse respect by this agreement. Authorization of this agreement. The execution, delivery and performance by the Company of this agreement have been duly authorized by all requisite corporate action by the Company, and each constitutes the valid and binding obligation of the Company and Executive, enforceable in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and similar laws affecting creditors' rights generally and to general principles of equity. The execution and delivery of this agreement by the Company, the consummation of the transactions contemplated hereby and thereby and compliance with the provisions hereof and thereof by the Company, will not (a) violate any provision of law, statute, rule or regulation, or any ruling, writ, injunction, order, judgment or decree of any court, administrative agency or other governmental body applicable to the Company or (b) materially conflict with or result in any material breach of any of the terms, conditions or provisions of, or constitute (with due notice or lapse of time, or both) a default (or give rise to any right of termination, cancellation or acceleration) under, the Certificate of Incorporation or Bylaws, or under any note, indenture, mortgage, lease, purchase or sales order or other material contract, agreement or instrument to which the Company is a party or by which it or any of its property is bound or affected, or (c) result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company. Executive represents as to himself that he has full legal right, power and authority to enter into this agreement and to perform his obligations hereunder without the need for consent of any other person, and that this agreement has been, and each other document, certificate or instrument to be executed by Executive in connection herewith will be, duly and validly executed and delivered by Executive and constitutes, or will constitute, the legal, valid and binding obligation of Executive, enforceable against him in accordance with its terms. Transactions with Affiliates. None of Executive nor any affiliate, as defined in Rule 405 under the Securities Act of 1933, as amended (the "Securities Act") ("affiliate"), of Executive (other than the Company) nor any of the Company's officers, directors or employees (or any associate of the foregoing persons) has any interest, directly or indirectly, in any lease, lien, contract, license, encumbrance, loan or other agreement or commitment to which the Company is a party, or any property or asset used or owned by, or any interest in any supplier of, the Company. The Company is not materially indebted, directly or indirectly, to (a) Executive or to any such affiliate or associate of Executive (other than in respect of items (and amounts) fully disclosed in the Disclosure Letter) or (b) any officer, director or employee of the Company (or to any of their affiliates or associates) for any liability or obligation, whether arising by reason of stock ownership, oral or written agreement or understanding or otherwise. The Disclosure Letter contains a complete and accurate list of all employees of the Company owing more than $1,000 (except in respect of advances for business expenses, none of which exceeds $2,000 individually or $5,000 in the aggregate) in principal to the Company, setting forth the amounts owned, the applicable interest rates, a description of the security and the maturity dates of all such debts. No Governmental Consent or Approval Required. Except for the filing of any notice subsequent to the Completion that may be required under applicable federal and/or state securities laws (which, if required, shall be filed on a timely basis as may be so required), no consent, approval or authorization of, or declaration to, or filing with, any person (governmental or private) is required for the valid authorization, execution, delivery and performance by the Company of this agreement. Agreements. The Company is not a party to any written or oral contract not made in the ordinary course of business and, whether or not made in the ordinary course of business, the Company is not a party to any written or oral (a) contract with any labour union, (b) contract for the future purchase of fixed assets or for the future purchase of materials, supplies or equipment in excess of normal operating requirements, (c) contract for the employment of any officer, individual employee or other person on a full-time basis or any contract with any person on a consulting basis, (d) bonus, pension, profit-sharing, retirement, stock purchase, stock option, hospitalization, medical insurance or similar plan, contract or understanding in effect with respect to employees or any of them or the employees of others, (e) agreement or indenture relating to the borrowing of money or to the mortgaging, pledging or otherwise placing of a lien on any assets of the Company, (f) guaranty of any obligation for borrowed money or otherwise, (g) lease or agreement under which the Company is lessee of or holds or operates any property, real or personal, owned by any other party, (h) lease or agreement under which the Company is lessor of or permits any third party to hold or operate any property, real or personal, owned or controlled by the Company, (i) agreement or other commitment for capital expenditures in excess of $10,000.00, (j) distributor, dealer, manufacturer's representative or sales agency agreement which is not terminable on less than ninety (90) days' notice without cost or other liability to the Company (except for agreements which, in the aggregate, are not material to the business of the Company); (k) contract, agreement or commitment under which the Company is obligated to pay any broker's fees, finder's fees or any such similar fees, to any third party, (l) contract, agreement or commitment under which the Company has issued, or may become obligated to issue, any shares of capital stock of the Company, or any warrants, options, convertible securities or other commitments pursuant to which the Company is or may become obligated to issue any shares of its capital stock, (m) contract, agreement or commitment under which the Company is obligated to repurchase or otherwise acquire or retire any shares of its capital stock, or (n) any other contract, agreement, arrangement or understanding which is material to the operation of the business of the Company. The Company has furnished to counsel to CCP true and correct copies of all such written agreements and other documents. Brokers. The Executive has not employed any broker or finder in connection with the transactions contemplated by this agreement. Registration Rights. Except as contemplated by this agreement, no person has any right to cause the Company to effect the registration under the Securities Act of any shares of Common Stock or any other securities (including without limitation, debt securities) of the Company. Compliance with ERISA; Benefit Plans. The Company does not (a) maintain, and it has never maintained, any employee benefit plan subject to ERISA or (b) contribute to, and has never contributed to, any such employee benefit plan maintained by any other person or entity. Environmental Matters. No Hazardous Substances have been used, handled, generated, processed, treated, stored, transported to or from, released, discharged or disposed of by the Company or any third party on, about or beneath any real property owned or leased by the Company, the result of which would have a material adverse effect on the Company. For purposes of this agreement, the term "Hazardous Substances" shall mean any substance regulated under any federal, state or local environmental law or regulation. Disclosure. Neither this agreement nor any other written document, certificate, instrument or statement furnished or made to CCP by or on behalf of the Company or the Executive in connection with the transactions contemplated hereby contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading. There is no fact known to the Company which materially adversely affects the business, properties or financial condition of the Company which has not been set forth in this agreement or in the other documents, certificates, instruments or statements furnished to CCP by or on behalf of the Company. Inventory. All of the inventories of the Company are valued at the lower of cost or market, the cost thereof being determined principally on an average cost basis, except as disclosed in the Disclosure letter. Accounts Receivable. All of the accounts and notes receivable of the Company represent amounts receivable for merchandise actually delivered or services actually provided (or, in the case of non-trade accounts or notes represent amounts receivable in respect of other bona-fide business transactions), have arisen in the ordinary course of business, have been billed and are generally due and collectible within an average of 60 days after such billing and are not, to the knowledge of the Company and the Executive, subject to any defenses, counterclaims or offsets. The Disclosure Letter contains accurate details of (a) the total amount of accounts receivable of the Company outstanding as of the last day of the month immediately preceding the present month and (b) the agings of such receivables based on the following Annex: 0-30 days, 31-60 days, 61-90 days, and over 90 days, from the due date thereof. SECTION 23. Ownership of Shares. The Executive owns 800 Shares free and clear of all liens, charges, claims, security interests and adverse claims. THIRD SCHEDULE RESTRICTED TRANSACTIONS 1. Increase, reduce or otherwise alter the authorised or issued share or loan capital (including the share premium account or other capital reserves) of the Company or its capital structure or make any variation to the rights attached to any of its shares. 2. Grant or create any option or other like rights to acquire any shares or securities convertible into shares in the Company, purchase or redeem or make any payment to any person for giving up his rights to any share capital on its cancellation or extinguishment. 3. Make any repayment of any loan stock or any loan notes issued by the Company or any term loan made available to the Company. 4. Create or permit the creation of or suffer to subsist any mortgage or charge whether fixed or floating or any other encumbrance or security interest of a similar nature on the undertaking, property or assets or any part thereof of the Company or issue any debentures or debenture stock. 5. Enter into or give or permit or suffer to subsist any guarantee of or indemnity in respect of the due payment of money or performance of any contract, engagement or obligation by any other person or otherwise. 6. Borrow or raise monies or obtain any advance or credit (other than normal trade credit and hire purchase and leasing commitments) if as a result the aggregate amount of all borrowings would exceed $25,000 the projections in the Financial Plan or factor or in any other way dispose of or encumber any of the Company's book debts. 7. Borrow or raise any monies which are not available for use by the Company. 8. Make any loans or advances or provide any credit (other than normal trade credit) in excess of $10,000 or acquire any loan capital of any corporate body. 9. Incur any capital expenditure exceeding the amount provided therefor in the capital expenditure budget in the then current Financial Plan by $15,000 for any individual item or $35,000 in aggregate and the expression "capital expenditure" shall without limitation include the following:- 9.1 entering into hire purchase or hiring or leasing agreements or arrangements for purchase by instalments; 9.2 purchasing or selling any fixed assets; 9.3 paying compensation for loss of office; 9.4 providing or purchasing of any pension or annuity; 9.5 establishing any bonus, profit sharing or other incentive scheme for directors and/or employees; 9.6 purchasing or acquiring any shares, debentures, debenture stock, mortgages or securities or interest in any other company, trust, partnership or other body. 10. Make any material deviation from the then current Financial Plan. 11.1 Engage or dismiss any director or employee earning remuneration (including all fees payable to him by the Company) exceeding $50,000 per annum. 11.2 Increase the remuneration (including all fees payable to him by the Company) of any director or employee currently earning at least $50,000 by more than 10% per annum. 11.3 In relation to any such director or employee agree to or accept any variation in his terms of employment (other than agreeing to increase his remuneration within the limitation referred to in paragraph 11.2), waive or agree not to take any action in respect of any material breach by any such person of his contract of employment. 12. Lease, assign or grant any licence in respect of any property or assets other than the sale of current assets in the ordinary course of trading or grant or dispose of any interest in land owned or leased by the Company or take or omit to take any action which could prejudice the continuation of any lease to which it is entitled. 13. Dispose, whether outright or by way of licence or otherwise howsoever, any Investment Property rights owned by the Company. 14.1 Enter into or vary any unusual or onerous contract or agreement or arrangement or transaction or, otherwise than in the ordinary course of trading and on an arm's length basis, any material or major or long term contract. 14.2 Enter into any transaction or carry out any dealing which is not on arm's length terms or give any service otherwise than at market value. 15. Enter into or compromise or settle any substantial litigation other than in the ordinary course of business. 16. Apply for any of the shares in the Company to be listed or dealt in on the London Stock Exchange or any recognised investment exchange. 17. Make a substantial alteration or reduction in the nature or extent of the business carried on by the Company. 18. enter into any partnership or joint venture or consortium arrangement. 19. Dispose of the whole or a material part of the undertaking assets or shares of the Company or any interest therein or form or acquire any subsidiary or subsidiary undertaking or acquire the whole or part of the undertaking assets or shares of any other person, firm or company. 20. Cease or propose to cease to carry on the business of the Company or take any steps to wind up the Company save where such company is insolvent or apply to petition to the Court for any creditors' order to be made in respect of the Company. 21. Appoint or remove any executive director of the Company. 22. Delegate any matter to any committee of directors of the Company unless a CCP Director is a member of such committee or take any decisions which are material to the Company otherwise than at a meeting of the directors. 23. Make any change to the Company's:- 23.1 auditors; 23.2 bankers or the terms of the mandate given to such bankers in relation to its accounts; 23.3 accounting reference date. 24. Make any alteration to the certificate or bylaws of the Company (other than by adopting the Revised Bylaws). 25. Make any distribution by way of dividend out of the profits of the Company or otherwise or agree to capitalise any reserves or apply any amount standing to the credit of the share premium account or capital redemption reserve for any purpose. 26. Establish any bonus, profit sharing, share option or other incentive scheme (whether legally binding or not) for directors and/or employees of the Company or vary any such scheme which has been established or grant any option over or in respect of any shares in the capital of the Company pursuant to such a scheme (except as set out in the Business Plan). 27. Appoint or remove the Auditor as referred to, i.a. in Clause 7 of this agreement. FOURTH SCHEDULE DEED OF ADHERENCE
THIS DEED is made on 200[ ] BETWEEN: (1) [include names and addresses of existing parties other than Transferor]; (2) [[ ] of [ ]] [[ ], a company registered in [ ] under number [ ] the registered office of which is at [ ]] ("Transferor"); (3) [[ ] of [ ]] [[ ], a company registered in [ ] under number [ ] the registered office of which is at [ ]] ("New Shareholder"). 1. DEFINITIONS AND INTERPRETATIONS 1.1 In this deed, unless the context otherwise requires, words defined in the Shareholders agreement shall have the same meanings in this deed and: "Completion" means the completion of the sale and transfer of the Transferred Interest to take place at the offices of [ ] on [ ] in accordance with the Transfer agreement; "Excepted Rights" has the meaning set out in clause 4; "Share Purchase and Shareholders' agreement" means the agreement dated [ ] 2000 and made between (1) Global Information Group USA, Inc., (2) Chatelin Capital Partners Limited, (3) Jolec Trading Limited (4) Anthony Mohr (5) Koenig and (6) Newick and relating to the Company; ["Transfer agreement" means an agreement to be dated [ ] and made between the Transferor and the New Shareholder;] "Transfer Date" has the meaning set out in clause [3.1]; "Transferred Interest" means the transfer of [ ] Shares from the Transferor to the New Shareholder. 1.2 The provisions of clause 1.2 of the Share Purchase and Shareholders' agreement shall apply to this deed. 1.3 Headings and titles are used for ease of reference only and do not affect the interpretation of this agreement. 2. RECITALS 2.1 The Transferor [is a party to] [has acceded by means of a deed dated [ ] to] the Share Purchase and Shareholders' agreement. 2.2 The Transferor wishes to transfer to the New Shareholder the Transferred Interest and the New Shareholder has agreed to purchase the Transferred Interest [subject to and in accordance with the terms and conditions of the Transfer agreement] and has agreed to execute this deed of adherence pursuant to clause 16.1] of the Share Purchase and Shareholders' agreement. 3. UNDERTAKINGS OF THE NEW SHAREHOLDER 3.1 In consideration of the agreement of the Transferor to transfer the Transferred Interest to the New Shareholder, the New Shareholder undertakes [subject to clause [3.2],] to each other party to this deed that it will, with effect from the date of transfer by the Transferor to the New Shareholder of the Transferred Interest ("Transfer Date") and without prejudice to any liability of the Transferor in respect of any breach by it of its obligations under the Shareholders agreement prior to the Transfer Date, assume, perform and comply with each of the obligations of the Transferor under the Share Purchase and Shareholders' agreement as if it had been a party to the Share Purchase and Shareholders' agreement at the date of its execution. [3.2 In consideration of the undertakings given by the New Shareholder under clause [3.1], the parties to this deed acknowledge and agree that the obligations of the Transferor under the Share Purchase and Shareholders' agreement shall, with effect from the Transfer Date cease.] NOTE: This applies only of a transfer of all the Transferor's Shares. 4. RIGHTS OF THE NEW SHAREHOLDER The parties to this deed (other than the New Shareholder) agree that there should be accorded to the New Shareholder with effect from the Transfer Date all the rights of the Transferor with respect to the Transferred Interest (in each case without prejudice to the rights of the Transferor under the Share Purchase and Shareholders' agreement in respect of any breach by any other party to it of its obligations thereunder at any time prior to the Transfer Date ("Excepted Rights") as if the New Shareholder had been a party to the Share Purchase and Shareholders' agreement at the date of its execution and, with effect from the Transfer Date, the Transferor shall cease to be entitled to those rights.
5. NOTICES For the purposes of clause 21 of the Share Purchase and Shareholders agreement (relating to communications), communications addressed to the New Shareholder shall be marked for the attention of [" "] to the address of the New Shareholder as set out in this deed, or to such other address or fax number in England as the New Shareholder may from time to time have notified to each of the other parties to this deed and the Company for this purpose. 6. ASSIGNMENT AND TRANSFER The parties to this deed hereby acknowledge and agree that no party shall have any right to assign, transfer or dispose of the benefit (or any part thereof) or the burden (or any part thereof) of this deed without the prior written consent of the other parties. 7. GENERAL PROVISIONS The provisions of clauses 19 and 20 of the Shareholders' Agreement shall apply mutatis mutandis to this deed as if they were expressly set out in this deed. 8. PROPER LAW Clause 23 of the Share Purchase and Shareholders' agreement shall apply to this deed.
FIFTH SCHEDULE AGREED PRINCIPLES FOR FIRST LOAN AGREEMENT 1. The Parties agree that the Company shall enter into a subordinated loan agreement ("First Loan Agreement") with Koenig and Newick ("Lenders") as soon as reasonably practicable after the date of this agreement and in any event no later than the date of Completion, pursuant to which the Company shall agree to borrow from the Lenders and the Lenders shall together agree to lend to the Company an aggregate principal amount of US$300,000 ("First Loan"). The First Loan will be advanced at Completion. 2. The First Loan shall carry interest at the rate of 6.5 per cent. per annum. Interest shall accrue on a daily basis and shall be payable on the date which falls 18 months from the date of Completion and every 3 months thereafter. The First Loan shall be repayable in full on the sooner to occur of (i) an IPO or Third Party Sale and (ii) the date 5 years after the date of Completion. 3. The principal of the First Loan shall be advanced in one tranche on the date of Completion. 4. The Company shall pay to CCP a fee of 2.5 per cent. of the principal amount of the First Loan, payable on the date on which the First Loan is advanced. 5. The First Loan Agreement will contain usual events of default and conditions precedent and the usual commercial covenants, warranties, indemnities and representations from the Company. SIXTH SCHEDULE AGREED PRINCIPLES FOR SECOND LOAN AGREEMENT 1. The Parties agree that the Company shall enter into a subordinated loan agreement ("Second Loan Agreement") with Koenig and Newick ("Lenders") as soon as reasonably practicable after the date of this agreement and in any event no later than 180 days after Completion, pursuant to which the Company shall agree to borrow from the Lenders and the Lenders shall together agree to lend to the Company an aggregate principal amount of US$1,200,000 ("Second Loan"). 2. The Second Loan shall carry interest at the rate of 6.5 per cent. per annum. Interest shall accrue on a daily basis and shall be payable on the date which falls 18 months from the date of Completion and every 3 months thereafter. The Second Loan shall be repayable in full on the sooner to occur of (i) an IPO or Third Party Sale and (ii) the date 5 years after the date of Completion. 3. The principal of the Second Loan shall be advanced in four equal tranches if in the reasonable opinion of the Board the Company's cash flow statements show a need for such advances. 4. The Company shall provide the lender with cash flow statements in a form acceptable to the lender on a monthly basis. 5. The Company shall pay to CCP a fee of 2.5 per cent. of the principal amount of the Second Loan Agreement, payable on the date of advance of the Second Loan. 6. The Second Loan Agreement will contain usual events of default and conditions precedent and the usual commercial covenants, warranties, indemnities and representations from the Company. 7. The Second Loan shall be applied in accordance with the Business Plan subject to the terms of this agreement 8. The Second Loan shall be secured in accordance with the provisions of clause 12.4 of this agreement and shall be conditional upon the Company's compliance with that clause. SEVENTH SCHEDULE AGREED PRINCIPLES FOR CONSULTANCY AGREEMENT 1. The Parties agree that the Company shall enter into a consultancy agreement ("Consultancy Agreement") with CCP as soon as reasonably practicable after the date of this agreement and in any event no later than the date of Completion, pursuant to which CCP shall agree to provide the Company with the consultancy services set out in paragraph 5 below ("Services") for the duration of the Investment Period. 2. The fees payable under the Consultancy Agreement shall be the arrangement fees referred to in this agreement. 3. All travel and other reasonable expenses of CCP incurred for the benefit of and approved by the Company are to be borne by the Company. 4. CCP shall be expected to work for such period as CCP may reasonably consider necessary to devote to the Company for the proper performance of the Services. 5. CCP shall advise the Company on any Take-over, Flotation or IPO. EIGHTH SCHEDULE SERVICE AGREEMENT EX-4.4 11 0011.txt EXHIBIT 4.4 EXHIBIT 4.4 CONSULTANCY AGREEMENT THIS MANAGEMENT SERVICES AGREEMENT is made as of the 21st day of January, 2000, by and among Chatelin Capital Partners Limited, a company incorporated in England and Wales under number 3755000 the registered office of which is at 2 Serjeants' Inn, London EC4Y 1LT ("CCP") and Global Information Group U.S.A., Inc., a company incorporated under the General Corporation Law of the State of Delaware in the USA, the principal place of business of which is at One Rockefeller Plaza, Suite 1420, New York, NY 10020, USA ("Company"). W I T N E S S E T H: WHEREAS, CCP has arranged for investors to purchase shares of the Company, and, as partial compensation therefor, the Company desires to retain CCP to advise the Company regarding, and to share in the profits resulting from, any potential Take-over, Flotation or IPO (each as defined below) upon the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the Company and CCP hereby agree as follows: 1. Definitions. Whenever used herein, the following words and phrases shall have the meanings ascribed thereto in this Section 1. "Agreement" means this Consultancy Agreement, including any amendments hereof and supplements hereto. "Business Day" means any day other than (a) a Saturday or a Sunday or (b) a legal holiday in the United States or the United Kingdom. "Flotation" means the admission or readmission of all or any of the equity share capital of the Company or the Parent to any internationally recognized stock exchange. "Investment Period" means the period commencing on the date hereof and ending on the date of the first to occur of a Flotation and a Third Party Sale. "IPO" means a public offering of equity securities by the Company (or its parent) or any other offering of shares of the Company or such parent, which takes place simultaneously with, or which is conditional upon or which follows, a Relevant Transaction. "Issue Price" means the price per share at which the securities of the Company or the Parent are offered to the public pursuant to an IPO. "Relevant Transaction" means a Flotation or a Take-over or a merger of the Company with or into a company which is already listed on a Recognized Stock Exchange. "Services" shall have the meaning assigned to such term in Section 3 hereof. "Shareholders Agreement" means the Share Purchase and Shareholders Agreement, dated January 14, 2000, among the Company, CCP, Jolec Trading Limited, Anthony Mohr, Koenig Invest AG and Newick Developments Limited as amended by a supplemental agreement dated January 20, 2000. "Third Party Sale" means the sale on arm's length terms of all of the outstanding capital stock of the Company to any person other than any of the parties to the Shareholders Agreement or any of their affiliates. 2. Appointment. The Company hereby engages CCP, and CCP hereby agrees under the terms and conditions set forth herein, to provide certain services to the Company as described in Section 3 hereof. 3. Duties of CCP. During the term of this Agreement, CCP shall provide the Company with management services and advice with respect to any Take-over, Flotation or IPO (collectively, the "Services"). The Services shall be provided at such times and places as may reasonably be agreed between CCP and the Company. 4. Term. The Agreement shall be effective for the duration of the Investment Period. 5. Power of CCP. So that it may properly perform its duties hereunder, CCP shall, subject to Section 10 hereof, have the authority and power to perform tasks necessary and proper to carry out the duties set forth in Section 3. CCP shall not have the power to enter into agreements or establish contractual obligations with third parties without the prior written consent of the Company's Chief Executive Officer. 6. Compensation. As consideration payable to CCP for providing the Services to the Company, the Company shall pay the following fees to CCP: 7. In the event of an IPO, a fee of two and a half percent (2.5%) of the aggregate total gross proceeds to the Company from such IPO, payable in cash by wire transfer of funds within three Business Days of such IPO. 8. In the event of a Relevant Transaction, a fee of two and a half percent (2.5%) of the valuation of the Company for the purposes of such Relevant Transaction (which valuation shall, in the case of disagreement, be confirmed by the Company's auditors), payable in cash by wire transfer of funds within three Business Days of the closing of such Relevant Transaction. (c) The arrangement fees of US$ 7,500 pursuant to clause 12.3.1 of the Shareholders Agreement payable under the terms of that clause. (d) The arrangement fees of US$ 30,000 pursuant to clause 12.3.2 of the Shareholders Agreement payable under the terms of that clause. In addition to such fees payable by the Company to CCP, all reasonable expenses incurred by CCP in the performance of the Services hereunder, and approved by the Company, shall be borne by the Company. 9. Options. For the avoidance of doubt, the Company has agreed to grant to CCP the IPO Options and the Take-over Options pursuant to the Shareholders Agreement. 10. Indemnification. In the event that CCP or any of its directors, officers and employees (collectively, the "Indemnified Parties") becomes involved in any capacity in any action, proceeding or investigation in connection with any matter referred to in or contemplated by this Agreement, or in connection with its Services, the Company shall indemnify and hold harmless the Indemnified Parties from and against any actual or threatened claims, lawsuits, actions or liabilities (including out-of-pocket expenses and the fees and expenses of counsel and other litigation costs and the cost of any preparation or investigation) of any kind or nature ("Losses"), arising as a result of or in connection with this Agreement and its Services, activities and decisions hereunder, except that the Company shall not be obligated to so indemnify any Indemnified Party if, and to the extent that, such claims, lawsuits, actions or liabilities against such Indemnified Party directly result from the gross negligence or willful misconduct of such Indemnified Party as admitted in any settlement by such Indemnified Party or held in any final, non-appealable judicial or administrative decision. The indemnity obligations of the Company under this Section 9 shall be in addition to any liability which the Company may otherwise have, shall extend upon the same terms and conditions to any Indemnified Party, as the case may be, of CCP and any such affiliate and shall be binding upon and inure to the benefit of any successors and assigns of the Company, CCP and any such Indemnified Party. The provisions of this Section 9 shall survive the termination of this Agreement. 11. Independent Contractors. Nothing herein shall be construed to create a joint venture or partnership between the parties hereto or an employee/employer relationship. CCP shall be an independent contractor pursuant to this Agreement. No party hereto shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name of the other party or to bind the other party to any contract, agreement or undertaking with any third party. 12. Notices. Any notice or other communications required or permitted to be given hereunder shall be in writing and delivered by hand or mailed by registered or certified mail, return receipt requested, or by telecopier to the party to whom it is to be given at its address set forth herein, or to such other address as the party shall have specified by notice similarly given. 13. If to the Company, to it at: One Rockefeller Plaza, Suite 1420, New York, NY 10020, USA Attention: Mr. A.E. Mohr 14. If to CCP, to it at Koningin Emmakade 199 2518 JP The Hague The Netherlands Attention: Mr Ph.L. van Wijngaarden 15. Liability. CCP is not and never shall be liable to any creditor of the Company and the Company agrees to indemnify and hold each Indemnified Party harmless from and against any and all Losses arising as a result of any claims of alleged creditors of the Company incurred or sustained by any Indemnified Party in connection with any action, suit or proceeding to which it may be made a party by any alleged creditor of the Company. Notwithstanding anything contained in this Agreement to the contrary, the Company agrees and acknowledges that CCP and its directors, officers and employees intend to engage and participate in acquisitions and business transactions outside of the scope of the relationship created by this Agreement and they shall not be under any obligation whatsoever to make such acquisitions, business transactions or other opportunities through the Company or offer such acquisitions, business transactions or other opportunities to the Company. The foregoing provisions shall not supersede any obligation of a party hereto to provide indemnification to another party hereto pursuant to any other agreement among such parties, or to release such indemnifying party from any indemnification obligation pursuant to such other agreement. 16. Amendment. Any amendment to this Agreement requires the approval of CCP and the Company. 17. Assignment. This Agreement shall inure to the benefit of and be binding upon the parties and their successors and assigns. However, neither this Agreement nor any of the rights of the parties hereunder may be transferred or assigned by either party hereto, except that CCP may assign its rights and obligations hereunder to any of its affiliates. Any attempted transfer or assignment in violation of this Section 14 shall be void. 18. Entire Agreement. This Agreement contains the entire agreement between the parties hereto and supersedes all prior agreements and undertakings, oral and written, among the parties hereto with respect to the subject matter hereof. All of the rights and obligations of the Company hereunder shall be the joint and several rights and obligations and liabilities of the Company and its subsidiaries. 19. Section Headings. The section headings contained herein are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. 20. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument. 21. Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts made and to be performed entirely within such State, regardless of the law that might be applied under principles of conflicts of law. 22. Severability. In the event that any provision of this Agreement or the application of any provision hereof is declared to be illegal, invalid or otherwise unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall not be affected except to the extent necessary to delete such illegal, invalid or unenforceable provision unless that provision held invalid shall substantially impair the benefits of the remaining portions of this Agreement. IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the day and year first above written. CHATELIN CAPITAL PARTNERS LIMITED By: /s/Philip van Wijngaarden -------------------------------------- Name: Philip van Wijngaarden Title: Managing Director GLOBAL INFORMATION GROUP U.S.A., INC. By: /s/Anthony E. Mohr ------------------------------------- Name: Anthony E. Mohr Title: CEO/President EX-4.5 12 0012.txt EXHIBIT 4.5 EXHIBIT 4.5 TERMINATION AGREEMENT AND MUTUAL RELEASE TERMINATION AGREEMENT AND MUTUAL RELEASE dated as of 31 May 2000 by and among INRISCO B.V. ("Inrisco"), CHARLES LANGEREIS ("Langereis"), JOUKE V.P.J. BRADA ("Brada"), HENRI B.G. SIJTHOFF ("Sijthoff"), JOLEC TRADING LIMITED ("Jolec"), HUGO HEEREMA ("Heerema"), FOG Investments, Ltd. ("FOG"), EQUATION VENTURES N.V. ("Equation"), LINARES CAPITAL LIMITED ("Linares"), HEYDAEL B.V. ("Heydael"), FEMIA E. VAN WULFFTEN PALTHE ("Palthe"), LEONARD VAN HULST ("Leonard"), NICOLE E.A.M. AARTS ("Aarts"), FIONA N. VAN HULST ("Fiona"), VIEWMONT HOLDINGS LIMITED ("Viewmont"), MOANA LAKE FINANCE CORP. ("Moana"), SORENSEN'S SECURITIES LTD. ("SSL"), HACKEN INVESTMENTS LIMITED ("Hacken") and GLOBAL INFORMATION GROUP USA, INC., a Delaware corporation ("GIG"). BACKGROUND A. Inrisco and GIG entered into an agreement dated May 14, 1998 (the "Letter Agreement") whereby Inrisco purchased one hundred (100) shares of GIG, constituting 10% of the issued and outstanding capital stock of GIG. B. The Letter Agreement contains clauses affording certain minority shareholder protections to Inrisco and to co-investors and to their respective successors and assigns. C. On or about 24 November 1998, Inrisco entered into a transaction whereby it sold, transferred and assigned its entire holding of one hundred (100) GIG shares, distributed as follows: forty-five (45) GIG shares to Sijthoff, forty-five (45) GIG shares to Langereis and ten (10) GIG shares to Brada (the "Inrisco Sale"). D. Inrisco and GIG now desire to terminate the Letter Agreement. E. Sijthoff, Langereis and Brada concur that the Letter Agreement and the protections therein afforded Inrisco and its successors and assigns have terminated, are of no further force and effect and do not and will not inure to the benefit of Sijthoff, Langereis and/or Brada. F. Jolec, Heerema, FOG, Equation, Linares, Palthe, Leonard, Aarts, Fiona, Viewmont, Moana, SSL, Heydael and Hacken also concur that the Letter Agreement and the protections therein, if any, afforded Inrisco, co-investors and their respective successors and assigns have terminated, are of no further force and effect and do not and will not inure to their benefit, individually or collectively. NOW, THEREFORE, intending to be legally bound, and in consideration of the Background set forth above, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. Termination (a) Inrisco and GIG for themselves, their successors and assigns hereby acknowledge and agree that the Letter Agreement and its terms and conditions thereof, including, without limitation, Clauses 3, 4, 6 and 7, are terminated and have no further force and effect. (b) Sijthoff, Langereis and Brada, for themselves, their heirs, executors, administrators, personal representatives, agents, successors and assigns hereby acknowledge and agree that the protections afforded them under the Letter Agreement, if any, are of no further force and effect, are deemed null and void and may not and will not be invoked by Sijthoff, Langereis or Brada in furtherance of any rights or benefits which may have inured to them thereunder. (c) Jolec, Heerema, FOG, Equation, Linares, Palthe, Leonard, Aarts, Fiona, Viewmont, Moana, SSL, Heydael and Hacken, for themselves and, in the case of individuals their heirs, executors, administrators, personal representatives, successors and assigns and, in the case of entities, their successors and assigns, hereby acknowledge and agree that the protections afforded them under the Letter Agreement, if any, are of no further force and effect, are deemed null and void and may not and will not be invoked by Jolec, Heerema, FOG, Equation, Linares, Palthe, Leonard, Aarts, Fiona, Viewmont, Moana, SSL and/or Hacken in furtherance of any rights or benefits which may have inured to them thereunder. 2. Mutual Release. Each of the parties hereto for him, her or itself and its, his or her heirs, executors, administrators, personal representatives, successors and assigns hereby releases, remises and forever discharges each other party hereto (and the heirs, executors, administrators, personal representatives, successors, assigns, subsidiaries, shareholders, officers, directors, employees and agents of each other party hereto) from any and all actions, causes of action, claims, demands, rights, suits, accountings, debts, dues, accounts, bonds, covenants, contracts, agreements, duties and obligations of whatsoever kind or nature, known or unknown, whether at law or equity, by reason of any matter or thing whatsoever from the beginning of the world to the date of this agreement relating to or arising from the Letter Agreement and/or any other document or agreement (written or oral) entered into in connection therewith (collectively, "Claims") which any party has, had or may have against any other party hereto. Notwithstanding any provisions of this agreement or to the contrary in the prior sentence, no party hereto is releasing any other party from such party's obligations under this agreement and/or any and all agreements executed in connection herewith, including, without limitation, the Agreement of Stock Exchange, if applicable. 3. Mutual Indemnification. Each party will hold each other party harmless from and will indemnify each other party for all expenses, costs and reasonable attorney's fees which each may suffer or incur by reason of the breach of any party hereto of the provisions hereof, which shall be construed in accordance with the substantive laws of the State of Delaware without regard to the principles of conflict of laws. Each party hereto consents to the jurisdiction of the Courts of Delaware and to service of process by certified mail, return receipt requested, postage prepaid. 4. Advice of Counsel. Each party represents that it, he or she, as applicable, has read this Termination Agreement and Mutual Release and has received the advice of counsel with respect thereto. 5. Miscellaneous. This agreement constitutes the entire agreement of the parties to this agreement with respect to the subject matter hereof and thereof and supersedes all prior agreements and undertakings, both written and oral, with respect to the subject matter hereof and thereof. Any changes to this agreement must be in writing and signed by the parties. The provisions of this agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns, legal representatives and heirs. This agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and to this agreement were upon the same instrument. IN WITNESS WHEREOF, the undersigned have executed this Termination Agreement and Mutual Release as of the date first above written.
INRISCO B.V. GLOBAL INFORMATION GROUP USA, INC. /s/H.B.G. Sijthoff, Director /s/Anthony E. Mohr, President - ---------------------------- ----------------------------- /s/Jouke V.P.J. Brada /s/Charles Langereis - --------------------- -------------------- JOUKE V.P.J. BRADA CHARLES LANGEREIS /s/Henri B.G. Sijthoff /s/Hugo Heerema - ---------------------- --------------- HENRI B.G. SIJTHOFF HUGO HEEREMA
JOLEC TRADING LIMITED FOG INVESTMENTS, LTD. By: Intertrust (Curacao) N.V. /s/Anthony E. Mohr as power-of-attorney for FOG /s/Gregory Elias, Managing Director Investments Ltd. - ------------------------------------ ----------------------------------------------- VIEWMONT HOLDINGS LIMITED EQUATION VENTURES N.V. By: Intertrust (Curacao) N.V. By: Intertrust (Curacao) N.V. /s/Gregory Elias, Managing Director /s/Gregory Elias, Managing Director - ----------------------------------- ----------------------------------- LINARES CAPITAL LIMITED HEYDAEL B.V. By: Intertrust (Curacao) N.V. /s/Gregory Elias, Managing Director By:/s/Hendrik Smit, Director - ----------------------------------- ------------------------- MOANA LAKE FINANCING CORP. SORENSEN'S SECURITIES LTD. By: Intertrust (Curacao) N.V. By: Intertrust (Curacao) N.V. /s/Gregory Elias, Managing Director /s/Gregory Elias, Managing Director - ----------------------------------- ----------------------------------- HACKEN INVESTMENTS LIMITED By:/s/Benno P. Hafner, power-of-attorney /s/Philip L. van Wijngaarden, power-of-attorney ------------------------------------- ----------------------------------------------- NICOLE E.A.M. AARTS /s/Philip L. van Wijngaarden, power-of-attorney /s/Philip L. van Wijngaarden, power-of-attorney - ----------------------------------------------- ----------------------------------------------- FIONA N. VAN HULST FEMIA E. VAN WULFFTEN PALTHE
EX-5.2 13 0013.txt EXHIBIT 5.2 EXHIBIT 5.2 March 2, 2001 ADVA International Inc. 6 Woodcross Drive Columbus, SC 29212 Ladies and Gentlemen: We are special counsel to Global Information Group U.S.A., Inc., a Delaware corporation (the "Company") in connection with the rendering of an opinion pursuant to an Agreement of Stock Exchange, dated as June 19, 2000 (the Agreement"), among the Sellers, Buyer, the Company and Biotel (as defined in the Agreement). The opinions expressed below are furnished to you pursuant to section 6.1.8 of the Agreement. Unless otherwise defined herein, terms defined in the Agreement and used herein shall have the meanings given to them in the Agreement. In connection with this opinion, we have examined execution copies of the Agreement and originals or copies, certified or otherwise identified to our satisfaction, of such other documents, corporate records and certificates of public officials and of corporate officers, and have made such investigations of law, as we deemed appropriate for purposes of this opinion. In stating our opinion, we have assumed the valid existence and good standing of each party to the Agreement (other than the Company), the due authorization, execution and delivery of the Agreement by each party thereto (other than the Company), the power and authority, corporate and otherwise, of each party (other than the Company) to enter into and perform its respective obligations under the Agreement, the genuineness of all signatures and the authority of all persons signing the Agreement on behalf of the parties thereto, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, conformed or photostatic copies and the authenticity of the originals of such copies. For purposes of this opinion, we have assumed the correctness of, and relied as to matters of fact upon, certain certificates of public officials, officers of the Company and of each of the shareholders of the Company, including the Company Certificate attached hereto as Exhibit A and the Shareholder's Certificates attached hereto as Exhibit B. Based upon and subject to the foregoing, we are of the opinion that: 1. The Company has been duly incorporated and is a validly existing corporation under the laws of the State of Delaware with an authorized and issued share capital as represented in the Agreement. 2. All of the Outstanding Company Shares have been duly authorized by appropriate corporate action of the Company as applicable, and are validly issued and represent fully paid and nonassessable shares of the Company, free of preemptive rights. 3. The Agreement and the transactions contemplated hereby have been duly authorized by necessary corporate action of the Company. 4. Upon delivery of the certificates and duly executed stock transfer forms representing the Outstanding Company Shares pursuant to the terms of the Agreement, and assuming Buyer is acquiring the Outstanding Company Shares in good faith without notice of any adverse claim, Buyer will acquire legal and beneficial ownership of the Outstanding Company Shares free and clear of all liens, pledges and encumbrances; and, upon the completion of the transactions contemplated by the Agreement, Buyer shall be the owner of all of the Outstanding Company Shares and, to the knowledge of counsel, there shall be no outstanding options or warrants to purchase any shares of the Company nor any outstanding securities of any nature convertible into such shares. We are members of the Bar of the State of New York and we express no opinion as to the laws of any jurisdiction other than the laws of the State of New York and the General Corporation Law of the State of Delaware. The opinions contained herein are being rendered to you in connection with the Closing pursuant to the Agreement and the transactions contemplated thereby and may not be relied upon by any other party or for any other purpose. Our opinion is expressed as of the date hereof, and we do not assume any obligation to update or supplement it to reflect any fact or circumstance which may hereafter come to our attention or any change in law which may hereafter occur. Very truly yours, MENAKER & HERRMANN LLP SHAREHOLDER'S CERTIFICATE The undersigned, as a shareholder in Global Information Group U.S.A., Inc., a Delaware corporation (the "Company"), does hereby certify: 1. I am a party to the Agreement of Stock Exchange, dated as of June 19, 2000 (the "Agreement"), between myself as a Seller, the other Sellers, Buyer, the Company and Biotel (as defined in the Agreement). I make this certificate with the intent that it shall be relied upon by Menaker & Herrmann LLP as a basis for its opinion to be rendered pursuant to Section 6.1.8 of the Agreement. 2. I am the lawful owner of the Company shares in the amount set forth behind my name in Exhibit A attached hereto (the "Shares"). 3. The Shares are free and clear of all liens, pledges and encumbrances. 4. The Shares are not subject to any agreement other than the Agreement. IN WITNESS WHEREOF, the undersigned has executed this Certificate as of February__, 2001. --------------------------- COMPANY CERTIFICATE The undersigned, as the President of Global Information Group U.S.A., Inc., a Delaware corporation (the "Company"), does hereby certify: 1. I am the President of the Company, which is a party to the Agreement of Stock Exchange, dated as of June 19, 2000 (the "Agreement"), between the Sellers, Buyer, the Company and Biotel (as defined in the Agreement). I make this certificate with the intent that it shall be relied upon by Menaker & Herrmann LLP as a basis for its opinion to be rendered pursuant to Section 6.1.8 of the Agreement. 2. The shares in the Company which have been issued and are outstanding are set forth in Exhibit A attached hereto (the "Outstanding Company Shares"). 3. All of the Outstanding Company Shares have been duly authorized and validly issued, are fully paid, nonassessable and free of preemptive rights, and are registered in the names of the Sellers (as defined in the Agreement), free and clear of all liens, pledges and encumbrances. 4. There are no, and on the Closing Date (as defined in the Agreement) there will be no, issued or outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of the Company Common Stock or any other equity security of the Company or any securities representing the right to purchase or otherwise receive any shares of Company Common Stock (including securities or instruments convertible into or exchangeable for common shares). 5. The Shares are not subject to any agreement other than the Agreement. 6. Attached hereto as Exhibit B are true, correct and complete copies of the Certificate of Incorporation and the By-laws of the Corporation, as in full force and effect as of the date hereof. No amendments have been made to the Certificate of Incorporation and the By-laws since the date of incorporation of the Company. IN WITNESS WHEREOF, the undersigned has executed this Certificate as of March 2, 2001. /s/Anthony E. Mohr . ---------------------------- Anthony E. Mohr President EXHIBIT "A" NUMBER OF GLOBAL INFORMATION GLOBAL INFORMATION GROUP U.S.A. INC. GROUP U.S.A. INC. SHARES SHAREHOLDERS OWNED - ---------------------------- ------------------------------ Anthony E. Mohr 337.83 Jolec Trading Limited 36.76 Hugo Heerema 55.03 FOG Investments, Ltd. 4.95 GorillaVentures N.V. 44.12 Linares Capital Limited 50.00 Heydael B.V. 100.00 Henri B. G. Sijthoff 45.00 Charles Langereis 45.00 Jouke V.J.P. Brada 10.00 Viewmont Holdings Limited 34.49 Moana Lake Finance Corp. 4.64 Sorensen's Securities Ltd. 32.53 Femia E. van Wulfften Palthe 11.00 Leonard van Hulst 7.34 Nicole E.A.M. Aarts 2.38 Fiona N. van Hulst 2.38 Hacken Investments Limited 73.36 Sybren I. Zeilstra 76.29 M. Lavino 76.29 Jan P.D. Geertman 47.63 Christopher Schuijt 28.61 Christiaan Ouwinga 28.61 J. Maijers 6.79 Ernst Verdonck 6.79 J. Leffelaar 1.43 R.A.M. Pruijm 0.72 Thames Asset Management Limited 19.07 ----- Total 1,189.04 EX-5.3 14 0014.txt EXHIBIT 5.3 EXHIBIT 5.3 ________________ _____, 2000 Anthony E. Mohr, Jolec Trading Limited, Hugo Heerema, FOG Investments, Ltd., Equation Ventures N.V., Linares Capital Limited, Heydael B.V., Henry B. G. Sijthoff, Charles Langereis, Jouke V.J.P. Brada, Femia E. van Wulfften Palthe, Leonard van Hulst, Nicole E.A.M. Aarts, Fiona N. van Hulst, Viewmont Holdings Limited, Moana Lake Finance Corp., Sorensen's Securities Ltd. and Hacken Investments Limited c/o Global Information Group USA, Inc. ______________________________ ______________________________ RE: Agreement of Stock Exchange among Global Information Group USA, Inc. (the "Company"), the other parties shown above (the "Sellers") and ADVA International, Inc. Gentlemen: We have acted as special counsel solely for the purposes of rendering this opinion to ADVA International, Inc., a Delaware corporation (the "Buyer"), in connection with the transaction which is the subject of that certain Agreement of Stock Exchange dated of even date herewith (the "Agreement"), with respect to the acquisition by Buyer of all of the outstanding shares of the Company in exchange for Common Stock of Buyer equal to approximately 94.57% of Buyer's outstanding Common Stock after the exchange (the "Exchange"), being consummated on the same date as this letter. Unless otherwise defined herein, capitalized terms used in this opinion shall have the same meanings given to such terms in the Agreement. For purposes of the opinions contained in this letter, we have examined and reviewed the following documents: (a) The Agreement; (b) Share certificates of Buyer to be issued to the Sellers, upon the consummation of the Exchange and in accordance with the terms of the Agreement; and (c) Officer's Certificate of ADVA International, Inc. For purposes of this letter, the documents described in paragraphs (a) through (c) above are collectively referred to as the "Exchange Documents." (d) Certified copy of the Certificate of Incorporation of Buyer, as amended, issued by the Delaware Secretary of State dated May 15, 2000. (e) A copy of the Bylaws of the Corporation, a certified true and correct copy of which is attached to the Officer's Certificate. We have examined originals or copies, certified or otherwise identified to our satisfaction, of the documents pursuant to which Buyer has been organized or formed and other related documents, if applicable, as well as of the documents and agreements covered by our opinions below, and have made such other examinations as we have deemed appropriate with respect to the subject matter of this opinion. As to any facts relevant to our opinions which we did not independently establish, we have relied, without investigation, upon information furnished to us by or on behalf of Buyer and in such examination we have assumed the genuineness of all signatures not witnessed by us and the conformity to originals of all documentation submitted to us as certified or photostatic copies. With respect to matters stated to be true to our knowledge, our opinion is based on such information as has come to the attention of Michael D. Hurst, Brian L. Herndon or Stephen C. Minnich, the attorneys who have devoted substantive attention on behalf of Buyer, and we have made no special investigations with respect thereto. Based upon and subject to the foregoing and to the qualifications, limitations, exceptions and assumptions set forth below, we are of the opinion that: 1. Buyer is a corporation, validly existing and in good standing under the laws of the State of Delaware. Our opinion with regard to existence and good standing is based solely upon a Certificate of Good Standing with regard to Buyer issued by the Delaware Secretary of State on May 15, 2000, a copy of which is attached. 2. The Buyer's authorized capital consists of 20,000,000 shares of Common Stock, $.001 par value per share, 4,000 shares of no par value Class A Preferred and 6,000 shares of no par value Class B Preferred "blank check" stock. Based solely on the Statement of Change in Shareholder's Equity of buyer delivered to us by Buyer, the Buyer's issued and outstanding stock consists solely of 716,250 shares of Common Stock. 3. To our knowledge, all of the outstanding shares of Buyer prior to consummation of the transactions contemplated by the Agreement (the "Outstanding Buyer Shares") have been duly authorized by appropriate corporate action of Buyer, are validly issued and represent fully paid and nonassessable capital shares of Buyer, and the Outstanding Buyer Shares have been registered under the Securities Exchange Act of 1934, and based solely on the Officer's Certificate, have been issued in compliance with applicable Federal and state securities laws. No opinion is given, or should be implied, regarding the free tradeability of any of the Outstanding Buyer Shares. 4. This Agreement and the transactions contemplated hereby have been duly authorized by appropriate action of Buyer under applicable law, and Buyer stockholder approval is not required under applicable law. 5. The issuance of the Buyer Shares to Sellers on the Closing Date pursuant to this Agreement has been duly authorized by appropriate corporate action of Buyer, and when issued, such Buyer Shares shall be fully paid and nonassessable common shares of Buyer free of preemptive rights. 6. To our knowledge, Buyer has not been or is not required to be registered as an investment company or an investment adviser under the Investment Company Act of 1940 or the Investment Advisers Act of 1940, respectively. 7. Buyer is not a "blank check company" as defined in Section 7(a) of the Securities Act and, accordingly, is not required to comply with Section 7(b) of the Securities Act or Rule 419 promulgated under the Securities Act. The opinions expressed in this letter are subject to the following qualifications: (a) Our opinions with regard to enforceability and nonassessability are subject to the qualification that enforcement of the Agreement is limited by principles of equity which limit the availability of certain equitable remedies, and bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and other laws applicable to creditor's rights or the collection of debtor's obligations generally. (b) We have assumed the legal capacity of each individual signing one or more of the Exchange Documents or other documentation upon which our opinions have been based. (c) We have assumed that the Agreement, and the transactions evidenced thereby, are valid, binding and enforceable with regard to the Company and the Sellers. (d) We have no obligation to update our opinions for events occurring after the date of this letter. (e) We are attorneys licensed to practice only in the State of North Carolina and our opinions are limited to matters involving the laws of the State of North Carolina and the United States of America, as well as certain corporate laws of the State of Delaware impacting upon our opinion; any references herein to applicable laws shall be deemed to refer only to those of such jurisdictions. We note that the Agreement is governed by the laws of the State of Delaware, and, with your permission, for purposes of this opinion we have assumed that such other laws are identical to those of North Carolina. (f) Our opinions are rendered solely to you in connection with the Exchange and should not be quoted or otherwise referred to in any financial statement or other documents, in whole or in part, or furnished to any other person or agency without our prior written consent. Very truly yours, BLANCO TACKABERY COMBS & MATAMOROS, P.A. EX-8.1 15 0015.txt EXHIBIT 8.1 EXHIBIT 8.1 (215) 569-5500 (215) 569-5555 March 2, 2001 Global Information Group USA Inc. One Rockefeller Plaza New York, NY 10020 Re: ADVA International, Inc - - Acquisition of Global Information Group USA Inc. Ladies and Gentlemen: You have requested our opinion (the "Opinion") concerning certain Federal income tax consequences of the acquisition of all of the issued and outstanding capital stock of Global Information Group USA Inc., a Delaware corporation (the "Company") by ADVA International Inc., a Delaware corporation ("ADVA"), pursuant to an Agreement of Stock Exchange dated June 19, 2000 and amended as of February 2, 2001 (the "Agreement") by and among: (i) ADVA; (ii) the Company; and (iii) Anthony E. Mohr, Jolec Trading Limited, Hugo Heerema, FOG Investments, Ltd., Gorilla Ventures N.V., Linares Capital Limited, Heydael B.V., Henry B. G. Sijthoff, Charles Langereis, Jouke V.J.P. Brada, Femia E. van Wulfften Palthe, Leonard van Hulst, Nicole E.A.M. Aarts, Fiona N. van Hulst, Viewmont Holdings Limited, Moana Lake Finance Corp., Sorensen's Securities Ltd. and Hacken Investments Limited (collectively, the "Sellers"). Pursuant to the Agreement, ADVA will acquire all of the issued and outstanding Company common stock owned by the Sellers (the "Company Shares") solely in exchange for shares of ADVA's common stock (the "ADVA Shares") (the "Share Exchange"). Our Opinion is based upon our understanding of the facts of and incident to the transaction, as set forth in the Agreement, and upon the condition that those facts are true, correct and complete. Further, our Opinion is issued in reliance upon the Officer's Certificates of ADVA and the Company dated as of today and provided to us for the purpose of issuing this Opinion. This Opinion is being furnished pursuant to Section 6.2.5 of the Agreement, and all defined terms used herein, unless otherwise specified, have the meanings assigned to them in the Agreement. In connection with our Opinion, we have examined the Agreement and such other documents as we have deemed necessary or appropriate. In our examination we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such latter documents. As to any facts material to this Opinion that we did not independently establish or verify, we have relied upon statements and representations of officers and other representatives of ADVA, the Company and others. In particular, we have relied upon certain representations of the management of ADVA and the Company in the Officer's Certificates provided to us for purposes of issuing this Opinion. Global Information Group USA Inc. March 2, 2001 Page 2 In addition, we have assumed that (i) the Share Exchange will be reported by ADVA, the Company and the Sellers on their respective federal income tax returns in a manner consistent with the Opinion set forth below and (ii) any representation or statement made "to the best of knowledge" or similarly qualified is correct without such qualification. Our Opinion is based on the current provisions of the Internal Revenue Code of 1986, as amended (the "Code")(1), applicable Treasury Regulations promulgated thereunder, and rulings, procedures, and other pronouncements published by the Internal Revenue Service (the "Service") and on judicial interpretations of the Code. Such laws, regulations, rulings, case law and pronouncements are subject to change at any time, and such change may adversely affect the continuing validity of the Opinion set forth below. Based solely upon the foregoing and provided that the transaction contemplated by the Agreement is consummated in the manner described in the Agreement, we are of the opinion that under present law, for Federal income tax purposes: The Share Exchange will qualify as a tax-free exchange pursuant to Section 351 and/or Section 368(a)(1)(B) of the Code. This letter expresses our views only as to the specific issues addressed above. No opinion is expressed concerning the Federal income tax treatment of the transaction under any provision of the Code not specifically referenced herein. No opinion is expressed with respect to foreign, state and local taxes, Federal or state securities law, or any other foreign, Federal, state or local law not expressly referenced herein. Our Opinion sets forth our legal judgment, and is not binding on the Service or any other person. Therefore, there can be no assurance that the conclusions set forth herein would be sustained by a court if challenged. We undertake no obligation to update the Opinion expressed herein after the date of this letter. This opinion letter is solely for the information and use of the addressee and may not be reproduced, quoted in whole or in part, referred to in any other context, filed with any governmental agency, or relied upon for any purpose by any other person without our express written consent. Very truly yours, BLANK ROME COMISKY & McCAULEY LLP - -------- (1) Unless otherwise indicated, all section references are to sections of the Code. EX-10.1 16 0016.txt EXHIBIT 10.1 EXHIBIT 10.1 INTELLECTUAL PROPERTY RIGHTS TRANSFER AGREEMENT Agreement This Letter of Agreement (this "Agreement") is made and entered into this 12th day of February, 2000, by and among Global Information Group U.S.A., Inc., a Delaware corporation having offices at One Rockefeller Plaza, New York, N.Y., 10021 (United States of America) (hereinafter, "GIG"), and Belport Informatica e Electronicas, Importacao e Exportacao, Unipessoal LDA, a corporation having offices at Avenido do Rio, Lote 3, 8365 Armacao de Pera, Portugal (hereinafter, "Belport"). GIG and Belport are hereinafter referred to collectively as "the parties." Background A. GIG has developed and possesses certain technical and market knowledge in the 3-D computer graphics field, and is currently applying that expertise in the production and marketing of related hardware and software. B. Belport owns the unencumbered intellectual property rights to the software, software source code, software work product, trademarks, copyrights, service marks, trade secrets, know-how, proprietary processes, formulae, technology, logos, logotypes, domain name registrations, and all other proprietary rights, including related text material and advertising copy, created by ElectroGIG Nederland, B.V., and its affiliate corporation ElectroGIG Technology, B.V. (collectively, "ElectroGIG"), as set forth in Schedule A attached hereto (the "ElectroGIG Intellectual Property"). C. The parties entered into certain Software License and Intellectual Property Transfer agreements (the "Intellectual Property Agreements") dated March 27, 1998 and April 23, 1998, respectively, by which Belport exclusively licensed to GIG worldwide rights in and to the ElectroGIG source code, and transferred to GIG certain ElectroGIG Intellectual Property. D. The parties have agreed to amend the Intellectual Property Agreements to cancel any underlying license to GIG of the ElectroGIG source code and, as set forth herein, to irrevocably transfer and assign to GIG all rights in and to the ElectroGIG Intellectual Property. NOW THEREFORE, in consideration of the agreements and obligations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Transfer Subject to the terms and conditions of this Agreement, Belport hereby irrevocably sells, assigns and transfers all right, title and interest to the ElectroGIG Intellectual Property to GIG, or its designate, together with all the business good will associated with any trademarks, service marks, trade dress, or applications for trademarks or service marks so transferred. 2. Compensation. a. GIG will pay Belport US$30,000.00, to be disbursed, in cash or cash equivalent, upon signing of this Agreement. Said payment represents the sum total of payments from GIG due to Belport for the transaction described herein and includes any and all outstanding obligations, if any, related to the prior Intellectual Property Agreements. 3. Delivery. Upon the execution of this Agreement by the parties, Belport shall transfer the source code and all copies of such source code held by Belport or any of its affiliates, in machine-readable and human-readable form, along with all related documentation for the source code, to GIG, or its designate, by means to be mutually agreed to by the parties. 4. Representations and Warranties by Belport a. Belport represents and warrants that the ElectroGIG Intellectual Property, and each such individual item of ElectroGIG Intellectual Property, is valid and in full force, is held of record in the name of Belport or any applicable Belport subsidiary free and clear of all liens, encumbrances and other claims, and is not the subject of any cancellation or reexamination proceeding or any other proceeding challenging its extent or validity. b. Belport further represents that the ElectroGIG Intellectual Property does not infringe, dilute or otherwise violate the patents, industrial design rights, trademarks, service marks, trade names, trade dress, copyrights, mask works, trade secrets or other intellectual property rights of any third party, and no claim has been made, notice given, or dispute arisen to that effect. c. Belport and any applicable Belport subsidiary does not have any pending claims that a third party has violated or infringed any of the ElectroGIG Intellectual Property, and neither Belport nor any applicable Subsidiary has given any indemnification to any third party against infringement of such intellectual property rights. d. Belport represents and warrants that it possesses, other than delivered under Section D(3)(a) herein, no copies or original versions of the source code, in part or whole, or installations on hardware or software. Belport further agrees to notify GIG immediately of any third party in possession of the source code, or any part thereof, or any third party which gains possession of the source code that becomes known to Belport in the future. E. Prior agreements. 1. The parties agree that this Agreement shall replace and supplant all prior agreements between the parties relating to the ElectroGIG Intellectual Property, whether written or oral, including, but not limited to, such provisions of the Intellectual Property Agreements relating to the term of such agreements; compensation to Belport under the Software License Agreement; restrictions on the use by GIG of the ElectroGIG name on products developed by GIG; restrictions on the sale of the ElectroGIG Intellectual Property by GIG, or rights of reimbursement by GIG to Belport upon the sale or transfer of ElectroGIG Intellectual Property by GIG; or mutual reporting requirements under such agreements. F. Other obligations of the parties. 1. Belport agrees that it shall: a. Execute at, prior to, or following the execution of this agreement such documents as shall be requested by GIG to establish a clean chain of title in and to the ElectroGIG Intellectual Property, including, but not limited to providing a true and certified translations of all document(s) transferring ownership in the ElectroGIG Intellectual Property to Belport, or such affidavits or other documentation as may be requested by GIG at, prior to or after the execution of this Agreement for purposes of recording the transfer and assignment of the ElectroGIG Intellectual Property. b. Cooperate fully with GIG in the production or creation of documentation as may be required to register the ElectroGIG Intellectual Property in the name of GIG in such jurisdictions as GIG in its sole discretion may choose. 2. GIG agrees that it shall: a. Be and remain responsible for all costs associated with the application, registration, issuance, recordation and/or maintenance of the ElectroGIG Intellectual Property, including all costs associated with the defense or prosecution of the rights in and to the ElectroGIG Intellectual Property. Such responsibility shall not include any costs associated with the production, creation or legalization of documentation to be produced by Belport under Section F(1)(a) herein, which costs shall be the sole responsibility of Belport. G. Confidentiality. 1. The parties individually acknowledge that from time to time during the course of performing services pursuant to the Intellectual Property Agreements and this Agreement, they have been and may continue to be exposed to information of a confidential or proprietary nature about each other and their respective business operations, including but not limited to information about pricing, costs, profits, sales, marketing or business plans, budgets, forecasts, customer lists, customer requirements, internally developed methods of customer solicitation, facts relating to existing or prospective customers, arrangements with customers or suppliers, possible acquisitions or divestitures, markets or market extensions, personnel, know-how, processes, systems and procedures, development plans, and other information not available to the public, none of which is part of the general knowledge of the industry. The parties agree that such information is to be kept in the strictest confidence by the parties during the term of this Agreement and at all times thereafter, and that each party shall treat all such information with the same degree of care as it does its own confidential information. 2. Miscellaneous. This Agreement (i) shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, successors and assigns, (ii) shall be governed by the laws of the State of New York, U.S.A., without recourse to international jurisdiction, (iii) may not be amended except by an agreement in writing signed by the parties hereto; and (iv) sets forth the entire agreement and understanding among the parties and supersedes all prior agreements and understandings, written or oral, relating to the subject matter of this Agreement. The parties waive the right to translate this Agreement into the Portuguese language and accept it as the complete agreement, "as is." IN WITNESS WHEREOF AND INTENDING TO BE LEGALLY BOUND HEREBY, Belport By:/s/Geoskens John ------------------------------------ Name: Geoskens John ---------------------------------- Title: Managing Director --------------------------------- Place: Antwerp, Belgium --------------------------------- Witnessed:[illegible] Name: [illegible] Global Information Group By:/s/Anthony E. Mohr ------------------------------------ Name:Anthony E. Mohr ---------------------------------- Title:President --------------------------------- Place Antwerp, Belgium ---------------------------------- Witnessed: [illegible] Name: [illegible] EX-10.2 17 0017.txt EXHIBIT 10.2 EXHIBIT 10.2 EMPLOYMENT AGREEMENT WITH ANTHONY MOHR Mr. Anthony Mohr 29 East Church Street Bergenfield, NJ 07621 RE: Employment Agreement (Service Agreement, Schedule 8 to the Share Purchase and Shareholders Agreement relating to Global Information Group U.S.A., Inc.) ------------------------------------------------------------------------- January 21, 2000 Dear Anthony, We are pleased to extend your position as Chief Executive Officer with GLOBAL INFORMATION GROUP USA, INC., ("the Company" or "GIG") at a base salary of $110,000.00 per annum. Your position and salary with the company will commence as of Monday, February 1st, 2000. Your compensation package will be reviewed (based on the attainment of goals and milestones to be determined within the first 30 days of this contract by the Company) within six months and raised commensurate with performance. As an employee of the Company, you are eligible to participate in a number of Company-sponsored benefits, including a health plan, which may be adopted from time to time by the Board of Directors. In addition, you will be eligible to participate in Company incentive programs, such as the GLOBAL INFORMATION GROUP USA, INC. Employee Stock Option Program, performance bonuses, etc., as these are finalized and adopted by the Board of Directors. Employment with GIG is not for a specific term and can be terminated by yourself or by the Company at any time, for any reason, with or without cause. Any contrary representations which may have been made or which may be made to you are superseded by this offer. Any and all improvements, inventions, discoveries, formulas, processes, or methods within the scope of the business activities of the Company, or any of its affiliates, as described in Rule 405 under the Federal Securities Act of 1933, including but not limited to GLOBAL INFORMATION GROUP USA, INC. intellectual property, which you may conceive or make during your employment with the Company shall be the sole and exclusive property of the Company or such affiliates. You agree, whenever requested to do so by the Company and at its expense, to execute and sign any and all applications, assignments, or other instruments, and do all other things which the Company may deem necessary or appropriate in order to apply for, the United States or any foreign country for such improvements, discoveries, formulas, processes, or methods. The terms of your continued employment with the Company will be inclusive of the following terms and conditions: 1. Health Benefits - You will be eligible for, and entitled to all health benefits and insurance plans as they are adopted by the Company. The Company will provide a working plan for the provision of employee health insurance no later than 30 days after the execution of this contract. 2. Company Employee Stock Option Plan - At the time a stock option plan is provided to the employees of the Company, you will be eligible to participate under terms to be determined at such a time as the plan is put into force. 3. Vacation / Personal Days - You will be entitled to 24 days of paid vacation per calendar year. Vacation days not used will be accrued for one year following, hence all vacation days accrued in one year must be taken within the following year or they will be forfeited. Furthermore, you are entitled to 7 personal days and all national holidays to conform with standard American business practises and employment law. These days will not be accruable. Health-related days off will be considered to be personal days until said personal days are exhausted. 4. Expenses - The Company will be responsible for the timely reimbursement of approved expenses incurred in the commission of business affairs on its behalf including, but not limited to, home telephone use, car rental or mileage, purchase of supplies, travel and lodging expenses, entertainment, postage and courier services. Expense reports shall be turned in at the end of every month, when practical, and payment will be disbursed within 5 business days of receipt. You will be responsible for providing acceptable proof of expense in order for reimbursement or for the settlement of cash advances to you. 5. Reimbursement of deferred salary/loans - The Company shall reimburse you for all salary deferred during the period of time between April 1999 and the date of this contract at a rate of your 1999 salary (US$99,999.00 per annum). It is agreed that the total deferred will be divided into two methods of payment: A) A lump-sum, or combination of scheduled periodic payments, which will total no more than US$21,000.00 will be disbursed within five (5) business days of this contract's execution. B) The remaining deferred amount of [US$62,333.33] will be considered as a loan to the Company and will accrue a 10% interest per annum to be compounded daily until repaid. Repayment will be made immediately upon any liquidity event wherein the Company transfers, either in sale, merger, acquisition or other transaction involving the majority of the Company's equity or assets. The loan will be guaranteed by the assets of the Company and your loan will enjoy priority rights to said assets in the event of the Company's failure or liquidation over any subordinated loans or accounts payable. C) The US$9,000.00 loan made by you to the Company in 1999 will be re-paid within five (5) business days of the execution of this contract. 6. Termination of Employment - A) Severance Package - Should your employment be terminated by the Company for any reason (including but not limited to, the dissolution of the Company) within the next 12 months, you will be paid a lump sum severance package equal to four (4) month's salary, based on the per annum rate herein, with continuing Company-paid health benefits to be paid in advance for six months from your termination date. After the next 12 months of employment, additional severance obligations will accrue on the basis of one week of salary per additional year employed with the Company. All business expenses outstanding at the time of any termination will be reimbursed immediately. In the event of termination, all earned vacation days not taken will be compensated in cash on a pro rata basis of your annual salary. B) Shares/Options - In the event of your voluntary termination of employment with the Company, all equity holdings held by you at the date of said termination shall be subject to reduction and transfer according to the following formula. i) Fifty percent (50%) of all Company shares held by you at the time of termination shall be retained by you in full. ii) The remaining fifty percent (50%) of your shares shall be transferred to Chatelin Capital Partners Ltd., or its assigns ("CCP"), minus a penalty of 50% from the Transfer Price per share as determined in the CCP-GIG Share Agreement . iii) So long as said termination is either for cause (as defined by the labor laws of the State of New York) or voluntary, any share options which may have been granted to you under a Company adopted Share Option plan will become immediately null and void upon your termination. 7. Restrictions on the Executive - You agree to abide by the statutory restrictions as found in the Company Certificate of Incorporation, by-Laws and any applicable shareholder agreements to which you are a party. Should the Company waive, or seek no remedy for the breach of, any individual term contained herein, said waiver shall have no negative effect on the remaining terms or obligations required of both parties in the contract, either individually or as a whole. If you accept this offer, the terms described in this letter shall be the terms of your employment. Any additions or modifications of these terms would have to be in writing and signed by yourself and an appropriate officer. This letter represents all of the terms and conditions of the subject matter hereof and supersedes and replaces any previous understanding, written or oral, by or between you and the Company. Your employment pursuant to this offer is contingent upon your providing the Company with the legally required proof of US citizenship and/or authorization to work in the United States. We look forward to your continued employment with GLOBAL INFORMATION GROUP USA, INC. If you accept the above-described offer, please return to me a signed copy of this letter. This offer, if not accepted by you or extended by us, will expire seven days from the date of this letter. Very truly yours, /s/ Henk Smit - ---------------------------- Secretary/Treasurer On behalf of the shareholders and Board of Directors of GLOBAL INFORMATION GROUP USA, INC. Agreed and Accepted: /s/ Anthony E. Mohr - --------------------------- Anthony E. Mohr Date: 21 January 2000 -------------------- EX-10.5 18 0018.txt EXHIBIT 10.5 EXHIBIT 10.5 CONSULTING AGREEMENT WITH PHILIP AYOUB January 1, 2001 Mr. Philip N. Ayoub 276 Palmer Hill Road Riverside, CT 06878 Dear Mr. Ayoub: This will serve as the agreement between Philip Ayoub ("the Consultant") and Global Information Group/ADVA International. ("GIG") pursuant to which the Consultant will serve GIG as the Chief Financial Officer. 1. Services. The Consultant will perform the services as needed in this capacity. 2. Fees. Charges for the services of Philip Ayoub will be solely based upon the schedule below. The hourly fee payable to Philip Ayoub shall be paid as provided in Paragraph 3 (b) below. January 1, 2001 to December 31, 2001 - $200.00 per hour 3. Billing. (a) Unless the nature or timing of the projects is changed by GIG and agreed to by Philip Ayoub. Should GIG decide to change the nature or timing of the project, there may be subsequent discussions with Philip Ayoub to revise the project cost estimate and/or the timing of the project. Any changes to the maximum cost estimate, the term of this Agreement or the scope of services must be in writing and agreed to by GIG and Philip Ayoub. (b) On or before the 1st day of each calendar month, Philip Ayoub will submit his invoice for the previous month, which will be payable ten days after receipt but in no event later then the 10th day of the month. 4. Any and all improvements, inventions, discoveries, formulas, processes, or methods within the scope of the business activities of the Company, or any of its affiliates (as such term is defined in Rule 405 under the Securities Act of 1933) which Consultant may conceive or make during his consultation period with the Company shall be the sole and exclusive property of the Company or such affiliates. Consultant agrees, whenever requested to do so by the Company and at its expense, to execute and sign any and all applications, assignments, or other instruments, and to do all other things which the Company may deem necessary or appropriate in order to apply for patent or other protection in the United States or any foreign country for such improvements, discoveries, formulas, processes, or methods. 5. Confidentiality. Philip Ayoub acknowledges his responsibility, both during and after the term of its appointment, to use all reasonable efforts to preserve the confidentiality of any information or data developed by Philip Ayoub on behalf of GIG or disclosed by GIG to Philip Ayoub. Notwithstanding the above, Philip Ayoub's obligation to maintain the confidentiality of any such information that it maintains in its possession or control, shall cease on the third anniversary of the termination of this agreement. All information provided by GIG remains the property of GIG. All information, reports and materials produced by Philip Ayoub for GIG becomes and remains the property of GIG. Any of the foregoing information must be turned over to GIG promptly upon request. Philip Ayoub will not use any such information for any purpose other than for the benefit of WPC. This paragraph 5 shall survive the expiration or earlier termination of this Agreement for three years. 6. Indemnity. (a) It is acknowledged that Philip Ayoub cannot undertake to verify facts supplied to it by GIG. Accordingly, GIG agrees to indemnify and hold harmless Philip Ayoub from and against any and all losses, claims, damages, expenses (including reasonable attorney's fees and disbursements) or liabilities ("collectively, damages") which Philip Ayoub may incur as a result of any materials, releases, reports or information supplied to Philip Ayoub by GIG and for which Philip Ayoub has no responsibility. Notwithstanding anything contained herein to the contrary, GIG shall not be obligated to indemnify and hold harmless Philip Ayoub for Philip Ayoub's misconduct or negligence. (b) Philip Ayoub shall indemnify and hold harmless GIG in respect to any and all losses, claims, damages, expenses(including reasonable attorney fees and disbursements) which GIG may incur as a result of Philip Ayoub's misconduct, negligence or breach of this Agreement. (c) The provisions of this Paragraphs 5 shall survive the expiration or earlier termination of this agreement for three years. 7. Term of Appointment. Philip Ayoub's appointment under this agreement shall be effective as of January 1, 2001 and continue thereafter until December 31st, 2001. GIG shall have the option to extend this agreement for another one year on the terms and conditions herein contained by giving written notice to Philip Ayoub on or before September 30th, 2001. Either party may terminate this agreement by giving the other party three-month's prior written notice. Upon termination of this agreement, (I) Philip Ayoub shall transfer, assign and make available to GIG all property and materials in its possession or control belonging to GIG and (ii) the fees and reimbursements due and payable by GIG to Philip Ayoub pursuant to this agreement shall be the remainder of the contract through the date of termination. 8. Notices. Any notice, statement, demand, consent, approval or other communication (collectively referred to herein as "Notices") required or permitted to be given, rendered or made by neither party hereto to the other, pursuant to this Agreement or pursuant to any applicable Law, shall be in writing (whether or not so stated elsewhere in this Agreement) and shall be deemed to have been properly given, rendered or made (a) on the day when delivered by hand or sent by telefacsimile with reasonable proof of delivery, (b) on the third Business Day after being posed in a United States post office station or letter box in the continental United States if sent by registered or certified mail, return receipt requested, of (c) on the next succeeding Business Day if sent by an nationally recognized overnight courier service, delivery charges prepaid, addressed to the other party at the respective address set forth below: To GIG: Global Information Group USA, Inc Anthony Mohr President One Rockefeller Plaza, Ste 1420 New York, NY 10020 Fax: (212) 265-6402 To Philip Ayoub: Mr. Philip N. Ayoub 276 Palmer Hill Road Riverside, CT 06878 Fax: (203) 637-5848 9. Governing Law. This agreement will be governed by and construed in accordance with the laws of the State of New York. 10. Entire Agreement. This Letter Agreement constitutes the entire agreement between GIG and Philip Ayoub with respect to the subject matter hereof, supersedes all prior agreements or understandings, whether written or oral, between GIG and Philip Ayoub with respect to such subject matter. 11. Changes, Etc. This Letter Agreement may not be changed, rescinded, or modified, except by as described herein and by the agreement in writing between the parties hereto. If you are in agreement with the above, would you kindly sign both copies of this letter in the space provided for that purpose below and return one copy to Philip Ayoub for his records. Global Information Group USA, Inc. By: /s/ Anthony E. Mohr --------------------------------- Date:January 1, 2001 Agreed between and by Philip Ayoub By: /s/ Philip Ayoub --------------------------------- Date:January 5, 2001 EX-10.6 19 0019.txt EXHIBIT 10.6 EXHIBIT 10.6 RELEASE OF STOCK OPTIONS This Release of Stock Options is executed this the 5th day of June, 2000 by C. Roger Jones ("Jones") for the benefit of and in favor of ADVA International, Inc., formerly known as Advanced Medical Products, Inc., a Delaware corporation (the "Corporation"). WHEREAS, Jones is the grantee of certain options (the "Options") to purchase common stock of the Corporation pursuant to the Amended and Restated Stock Option Plan of the Corporation; and WHEREAS, the Options presently have no value to Jones, as the exercise price substantially exceeds the market price of the underlying common stock; and WHEREAS, Jones has agreed to release the Options in furtherance of a transaction pursuant to which the Corporation will engage in a share exchange with the shareholders of Global Information Group USA Inc., a Delaware corporation, from which transaction Jones expects to benefit as a shareholders of the Corporation. NOW, THEREFORE, in consideration of the foregoing premises and other valuable consideration as set forth herein, Jones does hereby release and quit-claim in favor of the Corporation any interest Jones may have in the Options. Jones acknowledges that, effective upon the execution of this Release, he has no further option or right to acquire any class of the capital stock of the Corporation. IN WITNESS WHEREOF, Jones has executed this Release under seal effective as of the date first set forth above. /s/ C. Roger Jones ------------------- C. Roger Jones EX-10.7 20 0020.txt EXHIBIT 10.7 EXHIBIT 10.7 EMPLOYEE STOCK OPTION PLAN ADVA International Inc. 2001 STOCK OPTION PLAN 1. Purpose of Plan The purpose of this 2001 Stock Option Plan (the "Plan") is to provide additional incentive to officers, other key employees, and directors of, and important consultants to, ADVA International Inc., a Delaware corporation (the "Company"), and each present or future parent or subsidiary corporation of the Company, by encouraging them to invest in shares of the Company's common stock, $0.001 par value per share ("Common Stock"), and thereby acquire a proprietary interest in the Company and an increased personal interest in the Company's continued success and progress. 2. Aggregate Number of Shares One million four hundred thousand (1,400,000) shares of the Company's Common Stock shall be the aggregate number of shares which may be issued under this Plan. Notwithstanding the foregoing, in the event of any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the Committee (defined in Section 4(a)), deems in its sole discretion to be similar circumstances, the aggregate number and kind of shares which may be issued under this Plan shall be appropriately adjusted in a manner determined in the sole discretion of the Committee. Reacquired shares of the Company's Common Stock, as well as unissued shares, may be used for the purpose of this Plan. Common Stock of the Company subject to options which have terminated unexercised, either in whole or in part, shall be available for future options granted under this Plan. 3. Class of Persons Eligible to Receive Options All officers and key employees of the Company and of any present or future Company parent or subsidiary corporation are eligible to receive an option or options under this Plan. All directors of, and important consultants to, the Company and of any present or future Company parent or subsidiary corporation are also eligible to receive an option or options under this Plan. The individuals who shall, in fact, receive an option or options shall be selected by the Committee, in its sole discretion, except as otherwise specified in Section 4 hereof. No individual may receive options under this Plan for more than 80% of the total number of shares of the Company's Common Stock authorized for issuance under this Plan. 4. Administration of Plan (a) This Plan shall be administered either by the Company's Board of Directors or a Compensation Committee appointed by the Company's Board of Directors. The Compensation Committee shall consist of a minimum of two and a maximum of five members of the Board of Directors, each of whom shall be a "Non-Employee Director" within the meaning of Rule 16b-3(b)(3) under the Securities Exchange Act of 1934, as amended, or any future corresponding rule, except that the failure of the Compensation Committee for any reason to be composed solely of Non-Employee Directors shall not prevent an option from being considered granted under this Plan. The term "Committee," as used herein, shall refer to either the Company's Board of Directors or such Compensation Committee, depending upon who is administering the Plan. The Committee shall, in addition to its other authority and subject to the provisions of this Plan, determine which individuals shall in fact be granted an option or options, whether the option shall be an Incentive Stock Option or a Non-Qualified Stock Option (as such terms are defined in Section 5(a)), the number of shares to be subject to each of the options, the time or times at which the options shall be granted, the rate of option exercisability, and, subject to Section 5 hereof, the price at which each of the options is exercisable and the duration of the option. (b) The Committee shall adopt such rules for the conduct of its business and administration of this Plan as it considers desirable. A majority of the members of the Committee shall constitute a quorum for all purposes. The vote or written consent of a majority of the members of the Committee on a particular matter shall constitute the act of the Committee on such matter. The Committee shall have the right to construe the Plan and the options issued pursuant to it, to correct defects and omissions and to reconcile inconsistencies to the extent necessary to effectuate the Plan and the options issued pursuant to it, and such action shall be final, binding and conclusive upon all parties concerned. No member of the Committee or the Board of Directors shall be liable for any act or omission (whether or not negligent) taken or omitted in good faith, or for the exercise of an authority or discretion granted in connection with the Plan to a Committee or the Board of Directors, or for the acts or omissions of any other members of a Committee or the Board of Directors. Subject to the numerical limitations on Committee membership set forth in Section 4(a) hereof, the Board of Directors may at any time appoint additional members of the Committee and may at any time remove any member of the Committee with or without cause. Vacancies in the Committee, however caused, may be filled by the Board of Directors, if it so desires. 5. Incentive Stock Options and Non-Qualified Stock Options (a) Options issued pursuant to this Plan may be either Incentive Stock Options granted pursuant to Section 5(b) hereof or Non-Qualified Stock Options granted pursuant to Section 5(c) hereof, as determined by the Committee. An "Incentive Stock Option" is an option which satisfies all of the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and the regulations thereunder, and a "Non-Qualified Stock Option" is an option which either does not satisfy all of those requirements or the terms of the option provide that it will not be treated as an Incentive Stock Option. The Committee may grant both an Incentive Stock Option and a Non-Qualified Stock Option to the same person, or more than one of each type of option to the same person. The option price for options issued under this Plan shall be equal at least to the fair market value (as defined below) of the Company's Common Stock on the date of the grant of the option. The fair market value of the Company's Common Stock on any particular date shall mean the last reported sale price of a share of the Company's Common Stock on any stock exchange on which such stock is then listed or admitted to trading, or on the NASDAQ Stock Market, on such date, or if no sale took place on such day, the last such date on which a sale took place, or if the Common Stock is not then quoted on the NASDAQ Stock Market, or listed or admitted to trading on any stock exchange, the average of the bid and asked prices in the over-the-counter market on such date, or if none of the foregoing, a price determined in good faith by the Committee to equal the fair market value per share of the Common Stock. (b) Subject to the authority of the Committee set forth in Section 4(a) hereof, Incentive Stock Options issued pursuant to this Plan shall be issued substantially in the form set forth in Appendix I hereof, which form is hereby incorporated by reference and made a part hereof, and shall contain substantially the terms and conditions set forth therein. Incentive Stock Options shall not be exercisable after the expiration of ten years from the date such options are granted, unless terminated earlier under the terms of the option, except that options granted to individuals described in Section 422(b)(6) of the Code shall conform to the provisions of Section 422(c)(5) of the Code. At the time of the grant of an Incentive Stock Option hereunder, the Committee may, in its discretion, amend or supplement any of the option terms contained in Appendix I for any particular optionee, provided that the option as amended or supplemented satisfies the requirements of Section 422 of the Code and the regulations thereunder. Each of the options granted pursuant to this Section 5(b) is intended, if possible, to be an "Incentive Stock Option" as that term is defined in Section 422 of the Code and the regulations thereunder. In the event this Plan or any option granted pursuant to this Section 5(b) is in any way inconsistent with the applicable legal requirements of the Code or the regulations thereunder for an Incentive Stock Option, this Plan and such option shall be deemed automatically amended as of the date hereof to conform to such legal requirements, if such conformity may be achieved by amendment. If such conformity may not be achieved by amendment, such option shall be deemed to be a Non-Qualified Stock Option. (c) Subject to the authority of the Committee set forth in Section 4(a) hereof, Non-Qualified Stock Options issued to officers and other key employees pursuant to this Plan shall be issued substantially in the form set forth in Appendix II hereof, which form is hereby incorporated by reference and made a part hereof, and shall contain substantially the terms and conditions set forth therein. Subject to the authority of the Committee set forth in Section 4(a) hereof, Non-Qualified Stock Options issued to directors and important consultants pursuant to this Plan shall be issued substantially in the form set forth in Appendix III hereof, which form is hereby incorporated by reference and made a part hereof, and shall contain substantially the terms and conditions set forth therein. Non-Qualified Stock Options shall expire ten years after the date they are granted, unless terminated earlier under the option terms. At the time of granting a Non-Qualified Stock Option hereunder, the Committee may, in its discretion, amend or supplement any of the option terms contained in Appendix II or Appendix III for any particular optionee. (d) Neither the Company nor any of its current or future parent, subsidiaries or affiliates, nor their officers, directors, shareholders, stock option plan committees, employees or agents shall have any liability to any optionee in the event (i) an option granted pursuant to Section 5(b) hereof does not qualify as an "Incentive Stock Option" as that term is used in Section 422 of the Code and the regulations thereunder; (ii) any optionee does not obtain the tax treatment pertaining to an Incentive Stock Option; or (iii) any option granted pursuant to Section 5(c) hereof is an "Incentive Stock Option." (e) Except as otherwise provided in Section 422 of the Code and regulations thereunder or any successor provision, no Incentive Stock Option granted pursuant to this Plan shall be transferable other than by will or the laws of descent and distribution. Except as otherwise provided by the Rules and Regulations of the Securities and Exchange Commission, the Committee at the time of grant of a Non-Qualified Stock Option may provide that such stock option is transferable to any "family member" of the optionee by gift or qualified domestic relations order. For purposes of this section, a family member includes any child, stepchild, grandchild, parent, step-parent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the grantee's household (other than a tenant or employee), a trust in which these persons have more than 50% of the beneficial interest, a foundation in which these persons (or the grantee) controls the management of assets, and any other entity in which these persons or the grantee own more than 50% of the voting interests. 6. Amendment, Supplement, Suspension and Termination Options shall not be granted pursuant to this Plan after the expiration of ten years from the date the Plan is adopted by the Board of Directors of the Company. The Board of Directors reserves the right at any time, and from time to time, to amend or supplement this Plan, including the forms of option agreement attached hereto, in any way, or to suspend or terminate it, effective as of such date, which date may be either before or after the taking of such action, as may be specified by the Board of Directors; provided, however, that such action shall not affect options granted under the Plan prior to the actual date on which such action occurred. If an amendment or supplement of this Plan is required by the Code or the regulations thereunder to be approved by the shareholders of the Company in order to permit the granting of "Incentive Stock Options" (as that term is defined in Section 422 of the Code and regulations thereunder) pursuant to the amended or supplemented Plan, such amendment or supplement shall also be approved by the shareholders of the Company in such manner as is prescribed by the Code and the regulations thereunder. If the Board of Directors voluntarily submits a proposed amendment, supplement, suspension or termination for shareholder approval, such submission shall not require any future amendments, supplements, suspensions or terminations (whether or not relating to the same provision or subject matter) to be similarly submitted for shareholder approval. 7. Effectiveness of Plan This Plan shall become effective on the date of its adoption by the Company's Board of Directors, subject however to approval by the holders of the Company's Common Stock in the manner as prescribed in the Code and the regulations thereunder. Options may be granted under this Plan prior to obtaining shareholder approval, provided such options shall not be exercisable until shareholder approval is obtained. 8. General Conditions (a) Nothing contained in this Plan or any option granted pursuant to this Plan shall confer upon any employee the right to continue in the employ of the Company or any affiliated or subsidiary corporation or interfere in any way with the rights of the Company or any affiliated or subsidiary corporation to terminate his employment in any way. (b) Nothing contained in this Plan or any option granted pursuant to this Plan shall confer upon any director or consultant the right to continue as a director of, or consultant to, the Company or any affiliated or subsidiary corporation or interfere in any way with the rights of the Company or any affiliated or subsidiary corporation, or their respective shareholders, to terminate the directorship of any such director or the consultancy relationship of any such consultant. (c) Corporate action constituting an offer of stock for sale to any person under the terms of the options to be granted hereunder shall be deemed complete as of the date when the Committee authorizes the grant of the option to the such person, regardless of when the option is actually delivered to such person or acknowledged or agreed to by him. (d) The terms "parent corporation" and "subsidiary corporation" as used throughout this Plan, and the options granted pursuant to this Plan, shall (except as otherwise provided in the option form) have the meaning that is ascribed to that term when contained in Section 422(b) of the Code and the regulations thereunder, and the Company shall be deemed to be the grantor corporation for purposes of applying such meaning. (e) References in this Plan to the Code shall be deemed to also refer to the corresponding provisions of any future United States revenue law. (f) The use of the masculine pronoun shall include the feminine gender whenever appropriate. APPENDIX I INCENTIVE STOCK OPTION To: ----------------------------------------- Name ----------------------------------------- Address Date of Grant: ----------- You are hereby granted an option, effective as of the date hereof, to purchase __________ shares of common stock, $0.001 par value per share] ("Common Stock"), of ADVA International Inc., a Delaware corporation (the "Company"), at a price of $____________ per share pursuant to the Company's 2001 Stock Option Plan (the "Plan"). Your option may first be exercised for up to 20% of the total number of shares subject to option on the date of grant. On and after one year and prior to two years from the date of grant, your option may be exercised for up to 40% of the total number of shares subject to the option (as adjusted as the Committee in its sole discretion determines for any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the Committee deems in its sole discretion to be similar circumstances). Each succeeding year thereafter, your option may be exercised for up to an additional 20% of the total number of shares subject to the option (as adjusted for any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the Committee deems in its sole discretion to be similar circumstances). Thus, this option is fully exercisable on and after four years after the date of grant, except if terminated earlier as provided herein. This option shall terminate and is not exercisable after ten years from the date of its grant (the "Scheduled Termination Date"), except if terminated earlier as hereafter provided. In the event of a "Change of Control" (as defined below) of the Company, your option may, from and after the date of the Change of Control, and notwithstanding the immediately preceding paragraph, be exercised for up to 100% of the total number of shares then subject to the option minus the number of shares previously purchased upon exercise of the option (as adjusted for stock dividends, stock splits, combinations of shares and what the Committee deems in its sole discretion) and your vesting date may accelerate accordingly. A "Change of Control" shall be deemed to have occurred upon the happening of any of the following events: 1. A change within a twelve-month period in the holders of more than 50% of the outstanding voting stock of the Company; or 2. Any other event deemed to constitute a "Change of Control" by the Committee. You may exercise your option by giving written notice to the Secretary of the Company on forms supplied by the Company at its then principal executive office, accompanied by payment of the option price for the total number of shares you specify that you wish to purchase. The payment may be in any of the following forms: (a) cash, which may be evidenced by a check and includes cash received from a stock brokerage firm in a so-called "cashless exercise"; (b) (if permitted by the Committee) certificates representing shares of Common Stock of the Company, which will be valued by the Secretary of the Company at the fair market value per share of the Company's Common Stock (as determined in accordance with the Plan) on the date of delivery of such certificates to the Company, accompanied by an assignment of the stock to the Company; or (c) (if permitted by the Committee) any combination of cash and Common Stock of the Company valued as provided in clause (b). The use of the so-called "attestation procedure" to exercise a stock option may be permitted by the Committee. Any assignment of stock shall be in a form and substance satisfactory to the Secretary of the Company, including guarantees of signature(s) and payment of all transfer taxes if the Secretary deems such guarantees necessary or desirable. I-1 If you terminate your employment with the Company or if you are terminated by the Company for "Cause," your option will, to the extent not previously exercised by you, terminate immediately. Additionally, any shares of the Company's Common Stock held by you as a result of the exercise of this option shall be subject to repurchase by the Company, at the Company's option, at a price equal to the exercise price you paid when purchasing the shares of Common Stock pursuant to this option. "Cause" shall mean: (i) your willful misfeasance, willful misconduct, willful waste of material corporate assets, willful violation of Company policy, gross negligence for willful failure to perform reasonably assigned duties, (ii) material breach by you of any term or condition in your employment agreement with the Company, or (ii) your conviction of a felony or any crime involving fraud, larceny, embezzlement or moral turpitude. Your option will, to the extent not previously exercised by you, terminate three months after the date on which your employment by the Company or a Company subsidiary corporation is terminated without Cause, other than by reason of disability as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder, or death (but in no event later than the Scheduled Termination Date). After the date your employment is terminated, as aforesaid, you may exercise this option only for the number of shares which you had a right to purchase and did not purchase on the date your employment terminated. If you are employed by a Company subsidiary corporation, your employment shall be deemed to have terminated on the date your employer ceases to be a Company subsidiary corporation, unless you are on that date transferred to the Company or another Company subsidiary corporation. Your employment shall not be deemed to have terminated if you are transferred from the Company to a Company subsidiary corporation, or vice versa, or from one Company subsidiary corporation to another Company subsidiary corporation. If you die while employed by the Company or a Company subsidiary corporation, your executor or administrator, as the case may be, may, at any time within one year after the date of your death (but in no event later than the Scheduled Termination Date), exercise the option as to any shares which you had a right to purchase and did not purchase during your lifetime. If your employment with the Company or a Company parent or subsidiary corporation is terminated by reason of your becoming disabled (within the meaning of Section 22(e)(3) of the Code and the regulations thereunder), you or your legal guardian or custodian may at any time within one year after the date of such termination (but in no event later than the Scheduled Termination Date), exercise the option as to any shares which you had a right to purchase and did not purchase prior to such termination. Your executor, administrator, guardian or custodian must present proof of his authority satisfactory to the Company prior to being allowed to exercise this option. In the event of any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the Committee deems in its sole discretion to be similar circumstances, the number and kind of shares subject to this option and the option price of such shares shall be appropriately adjusted in a manner to be determined in the sole discretion of the Committee. Notwithstanding anything to the contrary contained in this option, in the event of a sale or a proposed sale of the majority of the stock or assets of the Company or a proposed Change of Control, the Committee shall have the right to terminate this option upon thirty (30) days prior written notice to you, subject to your right to exercise such option to the extent vested prior to such termination. This option is not transferable otherwise than by will or the laws of descent and distribution, and is exercisable during your lifetime only by you, including, for this purpose, your legal guardian or custodian in the event of disability. Until the option price has been paid in full pursuant to due exercise of this option and the purchased shares are delivered to you, you do not have any rights as a shareholder of the Company. The Company reserves the right not to deliver to you the shares purchased by virtue of the exercise of this option during any period of time in which the Company deems, in its sole discretion, that such delivery would violate a federal, state, local or securities exchange rule, regulation or law. I-2 Notwithstanding anything to the contrary contained herein, this option is not exercisable until all the following events occur and during the following periods of time: (a) Until the Plan pursuant to which this option is granted is approved by the shareholders of the Company in the manner prescribed by the Code and the regulations thereunder; (b) Until this option and the optioned shares are approved and/or registered with such federal, state and local regulatory bodies or agencies and securities exchanges as the Company may deem necessary or desirable; or (c) During any period of time in which the Company deems that the exercisability of this option, the offer to sell the shares optioned hereunder, or the sale thereof, may violate a federal, state, local or securities exchange rule, regulation or law, or may cause the Company to be legally obligated to issue or sell more shares than the Company is legally entitled to issue or sell. (d) Until you have paid or made suitable arrangements to pay (which may include payment through the surrender of Common Stock, unless prohibited by the Committee) (i) all federal, state and local income tax withholding required to be withheld by the Company in connection with the option exercise, and (ii) your portion of other federal, state and local payroll and other taxes due in connection with the option exercise. The following two paragraphs shall be applicable if, on the date of exercise of this option, the Common Stock to be purchased pursuant to such exercise has not been registered under the Securities Act of 1933, as amended, and under applicable state securities laws, and shall continue to be applicable for so long as such registration has not occurred: (a) The optionee hereby agrees, warrants and represents that he will acquire the Common Stock to be issued hereunder for his own account for investment purposes only, and not with a view to, or in connection with, any resale or other distribution of any of such shares, except as hereafter permitted. The optionee further agrees that he will not at any time make any offer, sale, transfer, pledge or other disposition of such Common Stock to be issued hereunder without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company to the effect that the proposed transaction will be exempt from such registration. The optionee shall execute such instruments, representations, acknowledgments and agreements as the Company may, in its sole discretion, deem advisable to avoid any violation of federal, state, local or securities exchange rule, regulation or law. (b) The certificates for Common Stock to be issued to the optionee hereunder shall bear the following legend: "The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, or under applicable state securities laws. The shares have been acquired for investment and may not be offered, sold, transferred, pledged or otherwise disposed of without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company that the proposed transaction will be exempt from such registration." The foregoing legend shall be removed upon registration of the legended shares under the Securities Act of 1933, as amended, and under any applicable state laws or upon receipt of any opinion of counsel acceptable to the Company that said registration is no longer required. The sole purpose of the agreements, warranties, representations and legend set forth in the two immediately preceding paragraphs is to prevent violations of the Securities Act of 1933, as amended, and any applicable state securities laws. I-3 It is the intention of the Company and you that this option shall, if possible, be an "Incentive Stock Option" as that term is used in Section 422 of the Code and the regulations thereunder. In the event this option is in any way inconsistent with the legal requirements of the Code or the regulations thereunder for an "Incentive Stock Option," this option shall be deemed automatically amended as of the date hereof to conform to such legal requirements, if such conformity may be achieved by amendment. If such conformity may not be achieved by amendment, such option shall be deemed to be a Non-Qualified Stock Option. Nothing herein shall modify your status as an at-will employee of the Company. Further, nothing herein guarantees you employment for any specified period of time. This means that either you or the Company may terminate your employment at any time for any reason, or no reason. You recognize that, for instance, you may terminate your employment or the Company may terminate your employment prior to the date on which your option becomes vested. Any dispute or disagreement between you and the Company with respect to any portion of this option or its validity, construction, meaning, performance or your rights hereunder shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association or its successor, as amended from time to time. However, prior to submission to arbitration you will attempt to resolve any disputes or disagreements with the Company over this option amicably and informally, in good faith, for a period not to exceed two weeks. Thereafter, the dispute or disagreement will be submitted to arbitration. At any time prior to a decision from the arbitrator(s) being rendered, you and the Company may resolve the dispute by settlement. You and the Company shall equally share the costs charged by the American Arbitration Association or its successor, but you and the Company shall otherwise be solely responsible for your own respective counsel fees and expenses. The decision of the arbitrator(s) shall be made in writing, setting forth the award, the reasons for the decision and award and shall be binding and conclusive on you and the Company. Further, neither you nor the Company shall appeal any such award. Judgment of a court of competent jurisdiction may be entered upon the award and may be enforced as such in accordance with the provisions of the award. This option shall be subject to the terms of the Plan in effect on the date this option is granted, which terms are hereby incorporated herein by reference and made a part hereof. In the event of any conflict between the terms of this option and the terms of the Plan in effect on the date of this option, the terms of the Plan shall govern. This option constitutes the entire understanding between the Company and you with respect to the subject matter hereof and no amendment, supplement or waiver of this option, in whole or in part, shall be binding upon the Company unless in writing and signed by the President of the Company. This option and the performances of the parties hereunder shall be construed in accordance with and governed by the laws of the State of Delaware. In consideration of the grant to you of this option, you hereby agree to the confidentiality and non-interference provisions set forth in Attachment A hereto. Please sign the copy of this option and return it to the Company's Secretary, thereby indicating your understanding of and agreement with its terms and conditions, including Attachment A hereto. ADVA International Inc. By: ------------------------------------- Name: Title: I-4 I hereby acknowledge receipt of a copy of the foregoing stock option and the 2001 Stock Option Plan and, having read them hereby signify my understanding of, and my agreement with, its terms and conditions including Attachment A hereto. I accept this option in full satisfaction of any previous written or verbal promises made to me by the Company with respect to option grants. - ---------------------------------- ----------------------------------------- (Date) (Signature) I-5 Attachment A to Stock Option Confidentiality and Non-Interference. (a) You covenant and agree that, in consideration of the grant to you of this stock option, you will not, during your employment with the Company or at any time thereafter, except with the express prior written consent of the Company or pursuant to the lawful order of any judicial or administrative agency of government, directly or indirectly, disclose, communicate or divulge to any individual or entity, or use for the benefit of any individual or entity, any knowledge or information with respect to the conduct or details of the Company's business which you, acting reasonably, believe or should believe to be of a confidential nature and the disclosure of which not to be in the Company's interest. (b) You covenant and agree that, in consideration of the grant to you of this stock option, you will not, during your employment with the Company and for a period of two years thereafter, except with the express prior written consent of the Company, directly or indirectly, whether as employee, owner, partner, consultant, agent, director, officer, shareholder or in any other capacity, engage in or assist any individual or entity to engage in any act or action which you, acting reasonably, believe or should believe would be harmful or inimical to the interests of the Company. (c) You covenant and agree that, in consideration of the grant to you of this stock option, you will not, for a period of two years after your employment with the Company ceases for any reason whatsoever (whether voluntary or not), except with the express prior written consent of the Company, directly or indirectly, whether as employee, owner, partner, consultant, agent, director, officer, shareholder or in any other capacity, for your own account or for the benefit of any individual or entity, (i) solicit any customer of the Company for business which would result in such customer terminating their relationship with the Company; or (ii) solicit or induce any individual or entity which is an employee of the Company to leave the Company or to otherwise terminate their relationship with the Company. (d) The parties agree that any breach by you of any of the covenants or agreements contained in this Attachment A will result in irreparable injury to the Company for which money damages could not adequately compensate the Company and therefore, in the event of any such breach, the Company shall be entitled (in addition to any other rights and remedies which it may have at law or in equity) to have an injunction issued by any competent court enjoining and restraining you and/or any other individual or entity involved therein from continuing such breach. The existence of any claim or cause of action which you may have against the Company or any other individual or entity shall not constitute a defense or bar to the enforcement of such covenants. If the Company is obliged to resort to the courts for the enforcement of any of the covenants or agreements contained in this Attachment A, or if such covenants or agreements are otherwise the subject of litigation between the parties, and the Company prevails in such enforcement or litigation, then the term of such covenants and agreements shall be extended for a period of time equal to the period of such breach, which extension shall commence on the later of (a) the date on which the original (unextended) term of such covenants and agreements is scheduled to terminate or (b) the date of the final court order (without further right of appeal) enforcing such covenant or agreement. (e) If any portion of the covenants or agreements contained in this Attachment A, or the application hereof, is construed to be invalid or unenforceable, the other portions of such covenant(s) or agreement(s) or the application thereof shall not be affected and shall be given full force and effect without regard to the invalid or enforceable portions to the fullest extent possible. If any covenant or agreement in this Attachment A is held unenforceable because of the area covered, the duration thereof, or the scope thereof, then the court making such determination shall have the power to reduce the area and/or duration and/or limit the scope thereof, and the covenant or agreement shall then be enforceable in its reduced form. (f) For purposes of this Attachment A, the term "the Company" shall include the Company, any successor to the Company and all present and future direct and indirect subsidiaries and affiliates of the Company. I-6 APPENDIX II NON-QUALIFIED STOCK OPTION FOR OFFICERS AND OTHER KEY EMPLOYEES To: ----------------------------------------- Name ----------------------------------------- Address Date of Grant: ----------- You are hereby granted an option, effective as of the date hereof, to purchase __________ shares of common stock, $0.001 par value per share ("Common Stock"), of ADVA International Inc., a Delaware corporation (the "Company"), at a price of $_______ per share pursuant to the Company's 2001 Stock Option Plan (the "Plan"). Your option may first be exercised for up to 20% of the total number of shares subject to option on the date of grant. On and after one year and prior to two years from the date of grant, your option may be exercised for up to 40% of the total number of shares subject to the option (as adjusted as the Committee in its sole discretion determines for any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the Committee deems in its sole discretion to be similar circumstances). Each succeeding year thereafter, your option may be exercised for up to an additional 20% of the total number of shares subject to the option (as adjusted for any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the Committee deems in its sole discretion to be similar circumstances). Thus, this option is fully exercisable on and after four years after the date of grant, except if terminated earlier as provided herein. This option shall terminate and is not exercisable after ten years from the date of its grant (the "Scheduled Termination Date"), except if terminated earlier as hereafter provided. The number of shares subject to this option may be adjusted as the Committee in its sole discretion determines for any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the Committee deems in its sole discretion to be similar circumstances. In the event of a "Change of Control" (as defined below) of the Company, your option may, from and after the date of the Change of Control, and notwithstanding the immediately preceding paragraph, be exercised for up to 100% of the total number of shares then subject to the option minus the number of shares previously purchased upon exercise of the option (as adjusted for stock dividends, stock splits, combinations of shares and what the Committee deems in its sole discretion) and your vesting date may accelerate accordingly. A "Change of Control" shall be deemed to have occurred upon the happening of any of the following events: 1. A change within a twelve-month period in the holders of more than 50% of the outstanding voting stock of the Company; or 2. Any other event deemed to constitute a "Change of Control" by the Committee. You may exercise your option by giving written notice to the Secretary of the Company on forms supplied by the Company at its then principal executive office, accompanied by payment of the option price for the total number of shares you specify that you wish to purchase. The payment may be in any of the following forms: (a) cash, which may be evidenced by a check and includes cash received from a stock brokerage firm in a so-called "cashless exercise"; (b) (if permitted by the Committee) certificates representing shares of Common Stock of the Company, which will be valued by the Secretary of the Company at the fair market value per share of the Company's Common Stock (as determined in accordance with the Plan) on the date of delivery of such certificates to the Company, accompanied by an assignment of the stock to the Company; or (c) (if permitted by the Committee) any combination of cash and Common Stock of the Company valued as provided in clause (b). The use of the so-called "attestation procedure" to exercise a stock option may be permitted by the Committee. Any assignment of stock shall be in a form and substance satisfactory to the Secretary of the Company, including guarantees of signature(s) and payment of all transfer taxes if the Secretary deems such guarantees necessary or desirable. II-1 Your option will, to the extent not previously exercised by you, terminate three months after the date on which your employment by the Company or a Company subsidiary corporation is terminated (whether such termination be voluntary or involuntary) other than by reason of disability as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder, or death (but in no event later than the Scheduled Termination Date). After the date your employment is terminated, as aforesaid, you may exercise this option only for the number of shares which you had a right to purchase and did not purchase on the date your employment terminated. If you are employed by a Company subsidiary corporation, your employment shall be deemed to have terminated on the date your employer ceases to be a Company subsidiary corporation, unless you are on that date transferred to the Company or another Company subsidiary corporation. Your employment shall not be deemed to have terminated if you are transferred from the Company to a Company subsidiary corporation, or vice versa, or from one Company subsidiary corporation to another Company subsidiary corporation. If you die while employed by the Company or a Company subsidiary corporation, your executor or administrator, as the case may be, may, at any time within one year after the date of your death (but in no event later than the Scheduled Termination Date), exercise the option as to any shares which you had a right to purchase and did not purchase during your lifetime. If your employment with the Company or a Company parent or subsidiary corporation is terminated by reason of your becoming disabled (within the meaning of Section 22(e)(3) of the Code and the regulations thereunder), you or your legal guardian or custodian may at any time within one year after the date of such termination (but in no event later than the Scheduled Termination Date), exercise the option as to any shares which you had a right to purchase and did not purchase prior to such termination. Your executor, administrator, guardian or custodian must present proof of his authority satisfactory to the Company prior to being allowed to exercise this option. In the event of any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the Committee deems in its sole discretion to be similar circumstances, the number and kind of shares subject to this option and the option price of such shares shall be appropriately adjusted in a manner to be determined in the sole discretion of the Committee. Notwithstanding anything to the contrary contained in this option, in the event of a sale or a proposed sale of the majority of the stock or assets of the Company or a proposed Change of Control, the Committee shall have the right to terminate this option upon thirty (30) days prior written notice to you, subject to your right to exercise such option to the extent vested prior to such termination. Except for transfers to ___________ under the terms set forth in the Plan, this option is not transferable otherwise than by will or the laws of descent and distribution, and is exercisable during your lifetime only by you, including, for this purpose, your legal guardian or custodian in the event of disability. Until the option price has been paid in full pursuant to due exercise of this option and the purchased shares are delivered to you, you do not have any rights as a shareholder of the Company. The Company reserves the right not to deliver to you the shares purchased by virtue of the exercise of this option during any period of time in which the Company deems, in its sole discretion, that such delivery would violate a federal, state, local or securities exchange rule, regulation or law. Notwithstanding anything to the contrary contained herein, this option is not exercisable until all the following events occur and during the following periods of time: (a) Until the Plan pursuant to which this option is granted is approved by the shareholders of the Company in the manner prescribed by the Code and the regulations thereunder; II-2 (b) Until this option and the optioned shares are approved and/or registered with such federal, state and local regulatory bodies or agencies and securities exchanges as the Company may deem necessary or desirable; or (c) During any period of time in which the Company deems that the exercisability of this option, the offer to sell the shares optioned hereunder, or the sale thereof, may violate a federal, state, local or securities exchange rule, regulation or law, or may cause the Company to be legally obligated to issue or sell more shares than the Company is legally entitled to issue or sell. (d) Until you have paid or made suitable arrangements to pay (which may include payment through the surrender of Common Stock, unless prohibited by the Committee) (i) all federal, state and local income tax withholding required to be withheld by the Company in connection with the option exercise and (ii) your portion of other federal, state and local payroll and other taxes due in connection with the option exercise. The following two paragraphs shall be applicable if, on the date of exercise of this option, the Common Stock to be purchased pursuant to such exercise has not been registered under the Securities Act of 1933, as amended, and under applicable state securities laws, and shall continue to be applicable for so long as such registration has not occurred: (a) The optionee hereby agrees, warrants and represents that he will acquire the Common Stock to be issued hereunder for his own account for investment purposes only, and not with a view to, or in connection with, any resale or other distribution of any of such shares, except as hereafter permitted. The optionee further agrees that he will not at any time make any offer, sale, transfer, pledge or other disposition of such Common Stock to be issued hereunder without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company to the effect that the proposed transaction will be exempt from such registration. The optionee shall execute such instruments, representations, acknowledgments and agreements as the Company may, in its sole discretion, deem advisable to avoid any violation of federal, state, local or securities exchange rule, regulation or law. (b) The certificates for Common Stock to be issued to the optionee hereunder shall bear the following legend: "The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, or under applicable state securities laws. The shares have been acquired for investment and may not be offered, sold, transferred, pledged or otherwise disposed of without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company that the proposed transaction will be exempt from such registration." The foregoing legend shall be removed upon registration of the legended shares under the Securities Act of 1933, as amended, and under any applicable state laws or upon receipt of any opinion of counsel acceptable to the Company that said registration is no longer required. The sole purpose of the agreements, warranties, representations and legend set forth in the two immediately preceding paragraphs is to prevent violations of the Securities Act of 1933, as amended, and any applicable state securities laws. It is the intention of the Company and you that this option shall not be an "Incentive Stock Option" as that term is used in Section 422 of the Code and the regulations thereunder. Nothing herein shall modify your status as an at-will employee of the Company. Further, nothing herein guarantees you employment for any specified period of time. This means that either you or the Company may terminate your employment at any time for any reason, or no reason. You recognize that, for instance, you may terminate your employment or the Company may terminate your employment prior to the date on which your option becomes vested. II-3 Any dispute or disagreement between you and the Company with respect to any portion of this option or its validity, construction, meaning, performance or your rights hereunder shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association or its successor, as amended from time to time. However, prior to submission to arbitration you will attempt to resolve any disputes or disagreements with the Company over this option amicably and informally, in good faith, for a period not to exceed two weeks. Thereafter, the dispute or disagreement will be submitted to arbitration. At any time prior to a decision from the arbitrator(s) being rendered, you and the Company may resolve the dispute by settlement. You and the Company shall equally share the costs charged by the American Arbitration Association or its successor, but you and the Company shall otherwise be solely responsible for your own respective counsel fees and expenses. The decision of the arbitrator(s) shall be made in writing, setting forth the award, the reasons for the decision and award and shall be binding and conclusive on you and the Company. Further, neither you nor the Company shall appeal any such award. Judgment of a court of competent jurisdiction may be entered upon the award and may be enforced as such in accordance with the provisions of the award. This option shall be subject to the terms of the Plan in effect on the date this option is granted, which terms are hereby incorporated herein by reference and made a part hereof. In the event of any conflict between the terms of this option and the terms of the Plan in effect on the date of this option, the terms of the Plan shall govern. This option constitutes the entire understanding between the Company and you with respect to the subject matter hereof and no amendment, supplement or waiver of this option, in whole or in part, shall be binding upon the Company unless in writing and signed by the President of the Company. This option and the performances of the parties hereunder shall be construed in accordance with and governed by the laws of the State of Delaware. In consideration of the grant to you of this option, you hereby agree to the confidentiality and non-interference provisions set forth in Attachment A hereto. Please sign the copy of this option and return it to the Company's Secretary, thereby indicating your understanding of and agreement with its terms and conditions, including Attachment A hereto. ADVA International Inc. By: ---------------------------------- Name: Title: I hereby acknowledge receipt of a copy of the foregoing stock option and the 2001 Stock Option Plan and, having read them hereby signify my understanding of, and my agreement with, its terms and conditions including Attachment A hereto. I accept this option in full satisfaction of any previously written or verbal promises made to me by the Company with respect to option grants. - ------------------------------------ ---------------------------------------- (Date) (Signature) II-4 Attachment A to Stock Option Confidentiality and Non-Interference. (a) You covenant and agree that, in consideration of the grant to you of this stock option, you will not, during your employment with the Company or at any time thereafter, except with the express prior written consent of the Company or pursuant to the lawful order of any judicial or administrative agency of government, directly or indirectly, disclose, communicate or divulge to any individual or entity, or use for the benefit of any individual or entity, any knowledge or information with respect to the conduct or details of the Company's business which you, acting reasonably, believe or should believe to be of a confidential nature and the disclosure of which not to be in the Company's interest. (b) You covenant and agree that, in consideration of the grant to you of this stock option, you will not, during your employment with the Company and for a period of two years thereafter, except with the express prior written consent of the Company, directly or indirectly, whether as employee, owner, partner, consultant, agent, director, officer, shareholder or in any other capacity, engage in or assist any individual or entity to engage in any act or action which you, acting reasonably, believe or should believe would be harmful or inimical to the interests of the Company. (c) You covenant and agree that, in consideration of the grant to you of this stock option, you will not, for a period of two years after your employment with the Company ceases for any reason whatsoever (whether voluntary or not), except with the express prior written consent of the Company, directly or indirectly, whether as employee, owner, partner, consultant, agent, director, officer, shareholder or in any other capacity, for your own account or for the benefit of any individual or entity, (i) solicit any customer of the Company for business which would result in such customer terminating their relationship with the Company; or (ii) solicit or induce any individual or entity which is an employee of the Company to leave the Company or to otherwise terminate their relationship with the Company. (d) The parties agree that any breach by you of any of the covenants or agreements contained in this Attachment A will result in irreparable injury to the Company for which money damages could not adequately compensate the Company and therefore, in the event of any such breach, the Company shall be entitled (in addition to any other rights and remedies which it may have at law or in equity) to have an injunction issued by any competent court enjoining and restraining you and/or any other individual or entity involved therein from continuing such breach. The existence of any claim or cause of action which you may have against the Company or any other individual or entity shall not constitute a defense or bar to the enforcement of such covenants. If the Company is obliged to resort to the courts for the enforcement of any of the covenants or agreements contained in this Attachment A, or if such covenants or agreements are otherwise the subject of litigation between the parties, and the Company prevails in such enforcement or litigation, then the term of such covenants and agreements shall be extended for a period of time equal to the period of such breach, which extension shall commence on the later of (a) the date on which the original (unextended) term of such covenants and agreements is scheduled to terminate or (b) the date of the final court order (without further right of appeal) enforcing such covenant or agreement. (e) If any portion of the covenants or agreements contained in this Attachment A, or the application hereof, is construed to be invalid or unenforceable, the other portions of such covenant(s) or agreement(s) or the application thereof shall not be affected and shall be given full force and effect without regard to the invalid or enforceable portions to the fullest extent possible. If any covenant or agreement in this Attachment A is held unenforceable because of the area covered, the duration thereof, or the scope thereof, then the court making such determination shall have the power to reduce the area and/or duration and/or limit the scope thereof, and the covenant or agreement shall then be enforceable in its reduced form. (f) For purposes of this Attachment A, the term "the Company" shall include the Company, any successor to the Company and all present and future direct and indirect subsidiaries and affiliates of the Company. II-5 APPENDIX III NON-QUALIFIED STOCK OPTION FOR DIRECTORS AND IMPORTANT CONSULTANTS To: ---------------------------------------- Name ---------------------------------------- Address Date of Grant: ------------ You are hereby granted an option, effective as of the date hereof, to purchase __________ shares of common stock, $0.001 par value per share ("Common Stock"), of ADVA International Inc., a Delaware corporation (the "Company"), at a price of $_______ per share pursuant to the Company's 2001 Stock Option Plan (the "Plan"). Your option may first be exercised for up to 20% of the total number of shares subject to option on the date of grant. On and after one year and prior to two years from the date of grant, your option may be exercised for up to 40% of the total number of shares subject to the option (as adjusted as the Committee in its sole discretion determines for any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the Committee deems in its sole discretion to be similar circumstances). Each succeeding year thereafter, your option may be exercised for up to an additional 20% of the total number of shares subject to the option (as adjusted for any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the Committee deems in its sole discretion to be similar circumstances). Thus, this option is fully exercisable on and after four years after the date of grant, except if terminated earlier as provided herein. This option shall terminate and is not exercisable after ten years from the date of its grant (the "Scheduled Termination Date"), except if terminated earlier as hereafter provided. In the event of a "Change of Control" (as defined below) of the Company, your option may, from and after the date of the Change of Control, and notwithstanding the immediately preceding paragraph, be exercised for up to 100% of the total number of shares then subject to the option minus the number of shares previously purchased upon exercise of the option (as adjusted for stock dividends, stock splits, combinations of shares and what the Committee deems in its sole discretion) and your vesting date may accelerate accordingly. A "Change of Control" shall be deemed to have occurred upon the happening of any of the following events: 1. A change within a twelve-month period in the holders of more than 50% of the outstanding voting stock of the Company; or 2. Any other event deemed to constitute a "Change of Control" by the Committee. You may exercise your option by giving written notice to the Secretary of the Company on forms supplied by the Company at its then principal executive office, accompanied by payment of the option price for the total number of shares you specify that you wish to purchase. The payment may be in any of the following forms: (a) cash, which may be evidenced by a check and includes cash received from a stock brokerage firm in a so-called "cashless exercise"; (b) (if permitted by the Committee) certificates representing shares of Common Stock of the Company, which will be valued by the Secretary of the Company at the fair market value per share of the Company's Common Stock (as determined in accordance with the Plan) on the date of delivery of such certificates to the Company, accompanied by an assignment of the stock to the Company; or (c) (if permitted by the Committee) any combination of cash and Common Stock of the Company valued as provided in clause (b). The use of the so-called "attestation procedure" to exercise a stock option may be permitted by the Committee. Any assignment of stock shall be in a form and substance satisfactory to the Secretary of the Company, including guarantees of signature(s) and payment of all transfer taxes if the Secretary deems such guarantees necessary or desirable. Your option will, to the extent not previously exercised by you, terminate three months after the date on which you cease for any reason to be a director of, or consultant to, the Company or a subsidiary corporation (whether by death, disability, resignation, removal, failure to be reappointed, reelected or otherwise, or the expiration of any consulting arrangement, and regardless of whether the failure to continue as a director or consultant was for cause or without cause or otherwise), but in no event later than ten years from the date this option is granted. After the date you cease to be a director or consultant, you may exercise this option only for the number of shares which you had a right to purchase and did not purchase on the date you ceased to be a director or consultant. If you are a director of a subsidiary corporation, your directorship shall be deemed to have terminated on the date such company ceases to be a subsidiary corporation, unless you are also a director of the Company or another subsidiary corporation, or on that date became a director of the Company or another subsidiary corporation. Your directorship or consultancy shall not be deemed to have terminated if you cease being a director of, or consultant to, the Company or a subsidiary corporation but are or concurrently therewith become (a) a director of, or consultant to, the Company or another subsidiary corporation or (b) an employee of the Company or a subsidiary corporation. In the event of any change in the outstanding shares of the Common Stock of the Company by reason of a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the Committee deems in its sole discretion to be similar circumstances, the number and kind of shares subject to this option and the option price of such shares shall be appropriately adjusted in a manner to be determined in the sole discretion of the Committee. Notwithstanding anything to the contrary contained in this option, in the event of a sale or a proposed sale of the majority of the stock or assets of the Company or a proposed Change of Control, the Committee shall have the right to terminate this option upon thirty (30) days prior written notice to you, subject to your right to exercise such option to the extent vested prior to such termination. Except for transfers to __________ under the terms set forth in the Plan, this option is not transferable otherwise than by will or the laws of descent and distribution, and is exercisable during your lifetime only by you, including, for this purpose, your legal guardian or custodian in the event of disability. Until the option price has been paid in full pursuant to due exercise of this option and the purchased shares are delivered to you, you do not have any rights as a shareholder of the Company. The Company reserves the right not to deliver to you the shares purchased by virtue of the exercise of this option during any period of time in which the Company deems, in its sole discretion, that such delivery would violate a federal, state, local or securities exchange rule, regulation or law. Notwithstanding anything to the contrary contained herein, this option is not exercisable until all the following events occur and during the following periods of time: (a) Until the Plan pursuant to which this option is granted is approved by the shareholders of the Company in the manner prescribed by the Code and the regulations thereunder; (b) Until this option and the optioned shares are approved and/or registered with such federal, state and local regulatory bodies or agencies and securities exchanges as the Company may deem necessary or desirable; or (c) During any period of time in which the Company deems that the exercisability of this option, the offer to sell the shares optioned hereunder, or the sale thereof, may violate a federal, state, local or securities exchange rule, regulation or law, or may cause the Company to be legally obligated to issue or sell more shares than the Company is legally entitled to issue or sell. III-1 (d) Until you have paid or made suitable arrangements to pay (which may include payment through the surrender of Common Stock, unless prohibited by the Committee) (i) all federal, state and local income tax withholding required to be withheld by the Company in connection with the option exercise and (ii) your portion of other federal, state and local payroll and other taxes due in connection with the option exercise. The following two paragraphs shall be applicable if, on the date of exercise of this option, the Common Stock to be purchased pursuant to such exercise has not been registered under the Securities Act of 1933, as amended, and under applicable state securities laws, and shall continue to be applicable for so long as such registration has not occurred: (a) The optionee hereby agrees, warrants and represents that he will acquire the Common Stock to be issued hereunder for his own account for investment purposes only, and not with a view to, or in connection with, any resale or other distribution of any of such shares, except as hereafter permitted. The optionee further agrees that he will not at any time make any offer, sale, transfer, pledge or other disposition of such Common Stock to be issued hereunder without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company to the effect that the proposed transaction will be exempt from such registration. The optionee shall execute such instruments, representations, acknowledgments and agreements as the Company may, in its sole discretion, deem advisable to avoid any violation of federal, state, local or securities exchange rule, regulation or law. (b) The certificates for Common Stock to be issued to the optionee hereunder shall bear the following legend: "The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, or under applicable state securities laws. The shares have been acquired for investment and may not be offered, sold, transferred, pledged or otherwise disposed of without an effective registration statement under the Securities Act of 1933, as amended, and under any applicable state securities laws or an opinion of counsel acceptable to the Company that the proposed transaction will be exempt from such registration." The foregoing legend shall be removed upon registration of the legended shares under the Securities Act of 1933, as amended, and under any applicable state laws or upon receipt of any opinion of counsel acceptable to the Company that said registration is no longer required. The sole purpose of the agreements, warranties, representations and legend set forth in the two immediately preceding paragraphs is to prevent violations of the Securities Act of 1933, as amended, and any applicable state securities laws. It is the intention of the Company and you that this option shall not be an "Incentive Stock Option" as that term is used in Section 422 of the Code and the regulations thereunder. Any dispute or disagreement between you and the Company with respect to any portion of this option or its validity, construction, meaning, performance or your rights hereunder shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association or its successor, as amended from time to time. However, prior to submission to arbitration you will attempt to resolve any disputes or disagreements with the Company over this option amicably and informally, in good faith, for a period not to exceed two weeks. Thereafter, the dispute or disagreement will be submitted to arbitration. At any time prior to a decision from the arbitrator(s) being rendered, you and the Company may resolve the dispute by settlement. You and the Company shall equally share the costs charged by the American Arbitration Association or its successor, but you and the Company shall otherwise be solely responsible for your own respective counsel fees and expenses. The decision of the arbitrator(s) shall be made in writing, setting forth the award, the reasons for the decision and award and shall be binding and conclusive on you and the Company. Further, neither you nor the Company shall appeal any such award. Judgment of a court of competent jurisdiction may be entered upon the award and may be enforced as such in accordance with the provisions of the award. III-2 This option shall be subject to the terms of the Plan in effect on the date this option is granted, which terms are hereby incorporated herein by reference and made a part hereof. In the event of any conflict between the terms of this option and the terms of the Plan in effect on the date of this option, the terms of the Plan shall govern. This option constitutes the entire understanding between the Company and you with respect to the subject matter hereof and no amendment, supplement or waiver of this option, in whole or in part, shall be binding upon the Company unless in writing and signed by the President of the Company. This option and the performances of the parties hereunder shall be construed in accordance with and governed by the laws of the State of Delaware. In consideration of the grant to you of this option, you hereby agree to the confidentiality and non-interference provisions set forth in Attachment A hereto. Please sign the copy of this option and return it to the Company's Secretary, thereby indicating your understanding of and agreement with its terms and conditions, including Attachment A hereto. ADVA International Inc. By: -------------------------------- Name: Title: III-3 I hereby acknowledge receipt of a copy of the foregoing stock option and the 2001 Stock Option Plan and, having read them hereby signify my understanding of, and my agreement with, its terms and conditions, including Attachment A hereto. I accept this option in full satisfaction of any previous written or verbal promises made to me by the Company with respect to option grants. - -------------------------------------- --------------------------------------- (Date) (Signature) III-4 Attachment A to Stock Option Confidentiality and Non-Interference. (a) You covenant and agree that, in consideration of the grant to you of this stock option, you will not, during your term as a director of, or a consultant to, the Company or at any time thereafter, except with the express prior written consent of the Company or pursuant to the lawful order of any judicial or administrative agency of government, directly or indirectly, disclose, communicate or divulge to any individual or entity, or use for the benefit of any individual or entity, any knowledge or information with respect to the conduct or details of the Company's business which you, acting reasonably, believe or should believe to be of a confidential nature and the disclosure of which not to be in the Company's interest. (b) You covenant and agree that, in consideration of the grant to you of this stock option, you will not, during your term as a director of, or a consultant to, the Company and for a period of two years thereafter, except with the express prior written consent of the Company, directly or indirectly, whether as employee, owner, partner, consultant, agent, director, officer, shareholder or in any other capacity, engage in or assist any individual or entity to engage in any act or action which you, acting reasonably, believe or should believe would be harmful or inimical to the interests of the Company. (c) You covenant and agree that, in consideration of the grant to you of this stock option, you will not, for a period of two years after your term as a director of, or a consultant to, the Company ceases for any reason whatsoever (whether voluntary or not), except with the express prior written consent of the Company, directly or indirectly, whether as employee, owner, partner, consultant, agent, director, officer, shareholder or in any other capacity, for your own account or for the benefit of any individual or entity, (i) solicit any customer of the Company for business which would result in such customer terminating their relationship with the Company; or (ii) solicit or induce any individual or entity which is an employee of the Company to leave the Company or to otherwise terminate their relationship with the Company. (d) The parties agree that any breach by you of any of the covenants or agreements contained in this Attachment A will result in irreparable injury to the Company for which money damages could not adequately compensate the Company and therefore, in the event of any such breach, the Company shall be entitled (in addition to any other rights and remedies which it may have at law or in equity) to have an injunction issued by any competent court enjoining and restraining you and/or any other individual or entity involved therein from continuing such breach. The existence of any claim or cause of action which you may have against the Company or any other individual or entity shall not constitute a defense or bar to the enforcement of such covenants. If the Company is obliged to resort to the courts for the enforcement of any of the covenants or agreements contained in this Attachment A, or if such covenants or agreements are otherwise the subject of litigation between the parties, and the Company prevails in such enforcement or litigation, then the term of such covenants and agreements shall be extended for a period of time equal to the period of such breach, which extension shall commence on the later of (a) the date on which the original (unextended) term of such covenants and agreements is scheduled to terminate or (b) the date of the final court order (without further right of appeal) enforcing such covenant or agreement. (e) If any portion of the covenants or agreements contained in this Attachment A, or the application hereof, is construed to be invalid or unenforceable, the other portions of such covenant(s) or agreement(s) or the application thereof shall not be affected and shall be given full force and effect without regard to the invalid or enforceable portions to the fullest extent possible. If any covenant or agreement in this Attachment A is held unenforceable because of the area covered, the duration thereof, or the scope thereof, then the court making such determination shall have the power to reduce the area and/or duration and/or limit the scope thereof, and the covenant or agreement shall then be enforceable in its reduced form. (f) For purposes of this Attachment A, the term "the Company" shall include the Company, any successor to the Company and all present and future direct and indirect subsidiaries and affiliates of the Company. III-5 EX-10.8 21 0021.txt EXHIBIT 10.8 EXHIBIT 10.8 DATED 2 FEBRUARY 2000 GLOBAL INFORMATION GROUP U.S.A., INC. as Borrower and NEWICK DEVELOPMENTS LIMITED as Lender ------------------------------------------------ FIRST LOAN AGREEMENT ------------------------------------------------ abcdef 2 Serjeants' Inn, London EC4Y 1LT Tel: 0171 583 5353 Fax: 0171 353 3683 THIS FIRST LOAN AGREEMENT is made on 2 February 2000 BETWEEN: (1) GLOBAL INFORMATION GROUP U.S.A., INC. (registered number [ ]) having its registered office at One Rockefeller Plaza, Suite 1420, New York, NY 10020, USA (the "Borrower"); and (2) NEWICK DEVELOPMENTS LIMITED (the "Lender") BACKGROUND A. The Borrower (1) Chatelin Capital Partners Limited ("CCP") (2) Jolec Trading Limited (3) Anthony Mohr (4) Koenig Invest AG ("Koenig") (5) and the Lender (6) have entered into a share purchase and shareholders agreement ("Agreement") (appended as Schedule 1) dated 14 January 2000 relating to the Borrower. B. This agreement is the First Loan Agreement referred to in clause 12.2 of, and the sixth schedule to, the Agreement. C. Capitalised expressions not defined in this First Loan Agreement shall have the meanings given to them in clause 1.1 of the Agreement. D. The Lender has agreed to offer the Borrower a loan facility in the maximum aggregate amount of US$100,000 ("First Loan Facility") on the following terms and conditions. IT IS AGREED as follows: 1. Amount A maximum aggregate amount of US$100,000. 2. Purpose The entire proceeds of the Loan Facility shall be applied by the Borrower in accordance with clause 10.4.2 of the Agreement. 3. Conditions Precedent Before a Loan may be drawn down under this First Loan Agreement, the Borrower shall deliver to the Lender in form and substance satisfactory to the Lender (i) a certified copy of a resolution of its Board of Directors approving the transactions contemplated by this letter and authorising a specified person or persons to execute this letter and (ii) a copy of this First Loan Agreement duly executed by the Borrower. 4. Drawdown The Loan shall be drawn down in not more than one tranche comprising the full amount of the Loan Facility on the date of Completion (as defined in the Agreement) ("Drawdown Date"), after which date any unutilised amount of the Loan Facility shall automatically be cancelled. The Lender will not be obliged to make available a Loan hereunder if, on the Drawdown Date, any of the representations in paragraph 12 of this First Loan Agreement or clause 7 of the Agreement shall not then be true and correct in all respects or any of the events specified in paragraph 13 of this First Loan Agreement shall have occurred and shall then be continuing. 5. COVENANTS 5.1 The Borrower shall provide the Lender with cash flow statements in a form acceptable to the Lender on a monthly basis and further provide us with information in accordance with clause 11.1 of the Agreement. 5.2 If at any time the Borrower, any of its subsidiaries or any company controlled by it purchases all or any of the source codes relating to the bespoke computer software used in the Borrower's business in accordance with clause 12.4 of the Agreement then the Borrower shall use it best endeavours to deliver within a reasonable time and in any event within 30 days of the completion of such purchase an executed escrow agreement (negotiated in good faith and in accordance with the principals appended as Schedule 2) over all source codes relating to the bespoke computer software used in the Borrower's business in favour of the Lender and Koenig. 5.3 If required by the Lender and Koenig, and if the purchase as referred to in 5.2 by Borrower of the bespoke computer software has not been realised, the Lender, Koenig and, the Borrower shall - if Lender or Koenig so requests - negotiate in good faith to provide the Lender and Koenig with an alternative form of security other than that required under Clause 5.2 of this First Loan Agreement over any and all source codes or other intellectual property relating to the bespoke computer software used in the Borrower's business (other than any which is held in escrow under Clause 5.2 of this First Loan Agreement). If such alternative security is agreed, the Borrower undertakes to execute all documentation required by the Lender and Koenig to perfect and protect such security. 6. Repayment The Loans shall be repaid in full on the sooner to occur of (i) an IPO or Third Party Sale (each as defined in the Agreement), (ii) that date falling 5 years after the date of Completion, and (iii) any or all of the equity share capital of the Borrower or its parent undertaking being admitted or readmitted to an internationally Recognised Stock Exchange. The relevant date shall be referred to in this First Loan Agreement as the Repayment Date. 7. Prepayment On giving the Lender not less than 15 days' notice, the Borrower may prepay all or any part of the Loan (but if in part in an amount of US$50,000 or an integral multiple thereof, if more). The Borrower may not re-borrow any prepayment. Prepayments shall be made together with all unpaid interest on the amount prepaid. 8. Interest Periods The first Interest Period shall commence on the date of disbursement of the First Loan Facility and end on that date following 18 months thereafter. Each subsequent Interest Period shall be a period of 3 months commencing on the date following the expiry of the preceding Interest Period. If an Interest Period would end on a day which is not a business day, such Interest Period shall be extended to the next business day. The first Interest Period of each Loan, other than the first Loan, shall end on the last day of the then current Interest Period relating to the first Loan. Thereafter, all Interest Periods relating to such Loans shall be co-terminous and such Loans shall be treated as one Loan. If an Interest Period would otherwise overrun the Repayment Date, such Interest Period shall be shortened so that such Interest Period ends on the Repayment Date. 9. Interest Interest on the Loan will be payable at the rate of 6.5 per cent. per annum. Interest shall be calculated on a basis of the actual number of days elapsed and a year of 360 days. Interest shall be payable in arrears on the last day of an Interest Period ("Interest Payment Date"). 10. Additional Interest If the Borrower fails to pay any sum due hereunder on its due date, the Borrower shall pay interest on such sum from the date of such failure to the date of actual payment (as well after as before judgment) at the rate of 2.5 per cent. per annum. 11. Payments All payments (whether capital, interest or otherwise) to be made by the Borrower under this First Loan Agreement shall be made without set-off or counterclaim and free and clear of any deduction in respect of any present or future taxes of any nature now or hereafter imposed ("Taxes") unless such deduction is required to be made by law, in which event any affected payment shall be increased to ensure that the Lender receives a net amount equal to the full amount due had such payment not been subject to such deduction. The Borrower shall deliver, on being so requested by the Lender, evidence satisfactory to it that such Taxes have been paid. Whenever any payment shall become due on a day which is not a business day, the due date thereof shall be extended to the next business day and interest shall be calculated accordingly. All payments to be made by the Borrower under this First Loan Agreement shall be made on the due date for value in immediately available funds to the Lender as it may, from time to time, instruct the Borrower. 12. Representations In addition to the representations, warranties, indemnities and undertakings given by the Borrower under the Agreement, the Borrower represents and warrants to the Lender that:- 12.1 it has the power to own its property and assets and carry on its business as it is now being conducted; 12.2 it has the power to enter into and perform this First Loan Agreement and the transactions contemplated by this First Loan Agreement and it has taken all necessary action to authorise the entry into and performance of this First Loan Agreement and the transactions contemplated by this First Loan Agreement; 12.3 this First Loan Agreement constitutes the Borrower's legal, valid and binding obligations enforceable in accordance with its terms; 12.4 the entry into and performance of this First Loan Agreement and the transactions contemplated by this First Loan Agreement do not and will not conflict with (i) any law or regulation or any official or judicial order, or (ii) the Borrower's certificate of incorporation and bylaws; 12.5 to the best of Borrower's knowledge, full disclosure has been made to us before the date of this First Loan Agreement of all material facts or circumstances which need to be disclosed to enable us to obtain a true and correct view of the Borrower's business, undertaking, assets, liabilities, revenues and affairs (in each case, both current and prospective) or which ought to be disclosed to any person proposing to provide finance to the Borrower. 13. Events of Default All sums due hereunder shall become immediately due and payable on demand and all the Lender's obligations hereunder shall cease if any of the following events occurs: 13.1 any sum payable by the Borrower under this First Loan Agreement is not paid within 30 days after due date; or 13.2 the Borrower fails to comply with any other provisions of this First Loan Agreement; or 13.3 any representation made in this First Loan Agreement or the Agreement is incorrect in any respect or, if repeated at any time with reference to the facts and circumstances then existing, would be so incorrect; or 13.4 the Borrower becomes insolvent, or it suspends making payments (whether of principal or interest) with respect to all or any class of its debts or announces an intention to do so; or 13.5 any administrative or other receiver or any manager relating to the Borrower or any of its property is appointed or any other steps are taken to enforce any charge or other security over any of its property, or any steps are taken with a view to putting in force any kind of attachment, sequestration, distress or execution against the Borrower or any of its property. 13.6 the Borrower is wound up, dissolved or liquidated; or 13.7 any event occurs or proceedings taken in relation to the Borrower in any jurisdiction which has a similar, equivalent or analogous effect to any of the events detailed in paragraphs 13.4 to 13.6 of this First Loan Agreement inclusive; or 13.8 the Borrower ceases, or threatens to cease, to carry on all or a substantial part of its business; or 13.9 any of the property subject to any security in favour of the Lender is subject to a compulsory purchase order or any order analogous to such an order. 14. Fees and Costs The Borrower shall, on the date on which the first Loan Facility is advanced, pay to CCP an arrangement fee of US$ 2,500 , pro rata as with the disbursements of the Loan Facility. The Borrower shall, on being so requested by the Lender, pay all reasonable costs and fees incurred by the Lender in connection with the preservation of its rights under, or the enforcement of, this First Loan Agreement or any security document in favour of the Lender. 15. General Indemnity The Borrower shall, on being so requested by the Lender, indemnify the Lender against any loss or expense which the Lender may sustain or incur as a consequence of the occurrence of any of the events referred to in paragraph 13 of this First Loan Agreement. 16. Law and Jurisdiction The terms of clause 22 of the Agreement shall be incorporated into this First Loan Agreement. 17. Notices The terms of clause 20 of the Agreement shall be incorporated into this First Loan Agreement. IN WITNESS whereof the parties have executed this First Loan Agreement the day and year first above written. THE LENDER: GLOBAL INFORMATION GROUP U.S.A., INC. By: /s/ Anthony E. Mohr, President ----------------------------------------- THE BORROWER: NEWICK DEVELOPMENTS LIMITED /s/ Intertrust (Curacao) N.V. - --------------------------------------------- By: Gregory Elias, Managing Director SCHEDULE 1. THE AGREEMENT 2. THE ESCROW AGREEMENT EX-10.9 22 0022.txt EXHIBIT 10.9 EXHIBIT 10.9 2 FEBRUARY 2000 --------------- GLOBAL INFORMATION GROUP U.S.A., INC. as Borrower and KOENIG INVEST AG as Lender ------------------------------------------------ FIRST LOAN AGREEMENT ------------------------------------------------ abcdef 2 Serjeants' Inn, London EC4Y 1LT Tel: 0171 583 5353 Fax: 0171 353 3683 CONTENTS
Clause Page 1. Amount.................................................................................................1 2. Purpose................................................................................................1 3. Conditions Precedent...................................................................................1 4. Drawdown...............................................................................................1 5. Covenants..............................................................................................2 6. Repayment..............................................................................................2 7. Prepayment.............................................................................................2 8. Interest Periods.......................................................................................2 9. Interest...............................................................................................2 10. Additional Interest....................................................................................3 11. Payments...............................................................................................3 12. Representations........................................................................................3 13. Events of Default......................................................................................3 14. Fees and Costs.........................................................................................4 15. General Indemnity......................................................................................4 16. law and jurisdiction...................................................................................4 17. notices................................................................................................4 SCHEDULE.....................................................................................................5 1. The Agreement..........................................................................................5 2. The Escrow Agreement Principals........................................................................5
THIS FIRST LOAN AGREEMENT is made on 2 February 2000 BETWEEN: (1) GLOBAL INFORMATION GROUP U.S.A., INC. (registered number [ ]) having its registered office at One Rockefeller Plaza, Suite 1420, New York, NY 10020, USA (the "Borrower"); and (2) KOENIG INVEST AG (the "Lender") BACKGROUND E. The Borrower (1) Chatelin Capital Partners Limited ("CCP") (2) Jolec Trading Limited (3) Anthony Mohr (4) Newick Developments Limited ("Newick") (5) and the Lender (6) have entered into a share purchase and shareholders agreement ("Agreement") (appended as Schedule 1) dated 14 January 2000 relating to the Borrower. F. This agreement is the First Loan Agreement referred to in clause 12.2 of, and the sixth schedule to, the Agreement. G. Capitalised expressions not defined in this First Loan Agreement shall have the meanings given to them in clause 1.1 of the Agreement. H. The Lender has agreed to offer the Borrower a loan facility in the maximum aggregate amount of US$200,000 ("First Loan Facility") on the following terms and conditions. IT IS AGREED as follows: 1. Amount A maximum aggregate amount of US$200,000. 2. Purpose The entire proceeds of the Loan Facility shall be applied by the Borrower firstly to repay the travel and other expenses advanced to GIG by CCP being in the amount of US$ 3,000 (three thousand US dollars) and Dfl. 3,000 (three thousand Dutch Guilders) and secondly in accordance with clause 10.4.2 of the Agreement. 3. Conditions Precedent Before a Loan may be drawn down under this First Loan Agreement, the Borrower shall deliver to the Lender in form and substance satisfactory to the Lender (i) a certified copy of a resolution of its Board of Directors approving the transactions contemplated by this letter and authorising a specified person or persons to execute this letter and (ii) a copy of this First Loan Agreement duly executed by the Borrower. 4. Drawdown The Loan shall be drawn down in not more than one tranche comprising the full amount of the Loan Facility on the date of Completion (as defined in the Agreement) ("Drawdown Date"), after which date any unutilised amount of the Loan Facility shall automatically be cancelled. The Lender will not be obliged to make available a Loan hereunder if, on the Drawdown Date, any of the representations in paragraph 12 of this First Loan Agreement or clause 7 of the Agreement shall not then be true and correct in all respects or any of the events specified in paragraph 13 of this First Loan Agreement shall have occurred and shall then be continuing. 5. COVENANTS 5.1 The Borrower shall provide the Lender with cash flow statements in a form acceptable to the Lender on a monthly basis and further provide us with information in accordance with clause 11.1 of the Agreement. 5.2 If at any time the Borrower, any of its subsidiaries or any company controlled by it purchases all or any of the source codes relating to the bespoke computer software used in the Borrower's business in accordance with clause 12.4 of the Agreement then the Borrower shall use it best endeavours to deliver within a reasonable time and in any event within 30 days of the completion of such purchase an executed escrow agreement (negotiated in good faith and in accordance with the principals appended as Schedule 2) over all source codes relating to the bespoke computer software used in the Borrower's business in favour of the Lender and Newick. 5.3 If required by the Lender and Koenig, and if the purchase as referred to in 5.2 by Borrower of the bespoke computer software has not been realised, the Lender, Koenig and, the Borrower shall - if Lender or Koenig so requests - negotiate in good faith to provide the Lender and Koenig with an alternative form of security other than that required under Clause 5.2 of this First Loan Agreement over any and all source codes or other intellectual property relating to the bespoke computer software used in the Borrower's business (other than any which is held in escrow under Clause 5.2 of this First Loan Agreement). If such alternative security is agreed, the Borrower undertakes to execute all documentation required by the Lender and Koenig to perfect and protect such security. 6. Repayment The Loans shall be repaid in full on the sooner to occur of (i) an IPO or Third Party Sale (each as defined in the Agreement), (ii) that date falling 5 years after the date of Completion, and (iii) any or all of the equity share capital of the Borrower or its parent undertaking being admitted or readmitted to an internationally Recognised Stock Exchange. The relevant date shall be referred to in this First Loan Agreement as the Repayment Date. 7. Prepayment On giving the Lender not less than 15 days' notice, the Borrower may prepay all or any part of the Loan (but if in part in an amount of [US$50,000] or an integral multiple thereof, if more). The Borrower may not re-borrow any prepayment. Prepayments shall be made together with all unpaid interest on the amount prepaid. 8. Interest Periods The first Interest Period shall commence on the date of the disbursement of the First Loan Facility and end on that date following 18 months thereafter. Each subsequent Interest Period shall be a period of 3 months commencing on the date following the expiry of the preceding Interest Period. If an Interest Period would end on a day which is not a business day, such Interest Period shall be extended to the next business day. The first Interest Period of each Loan, other than the first Loan, shall end on the last day of the then current Interest Period relating to the first Loan. Thereafter, all Interest Periods relating to such Loans shall be co-terminous and such Loans shall be treated as one Loan. If an Interest Period would otherwise overrun the Repayment Date, such Interest Period shall be shortened so that such Interest Period ends on the Repayment Date. 9. Interest Interest on the Loan will be payable at the rate of 6.5 per cent. per annum. Interest shall be calculated on a basis of the actual number of days elapsed and a year of 360 days. Interest shall be payable in arrears on the last day of an Interest Period ("Interest Payment Date"). 10. Additional Interest If the Borrower fails to pay any sum due hereunder on its due date, the Borrower shall pay interest on such sum from the date of such failure to the date of actual payment (as well after as before judgment) at the rate of 2.5 per cent. per annum. 11. Payments All payments (whether capital, interest or otherwise) to be made by the Borrower under this First Loan Agreement shall be made without set-off or counterclaim and free and clear of any deduction in respect of any present or future taxes of any nature now or hereafter imposed ("Taxes") unless such deduction is required to be made by law, in which event any affected payment shall be increased to ensure that the Lender receives a net amount equal to the full amount due had such payment not been subject to such deduction. The Borrower shall deliver, on being so requested by the Lender, evidence satisfactory to it that such Taxes have been paid. Whenever any payment shall become due on a day which is not a business day, the due date thereof shall be extended to the next business day and interest shall be calculated accordingly. All payments to be made by the Borrower under this First Loan Agreement shall be made on the due date for value in immediately available funds to the Lender as it may, from time to time, instruct the Borrower. 12. Representations In addition to the representations, warranties, indemnities and undertakings given by the Borrower under the Agreement, the Borrower represents and warrants to the Lender that:- 12.1 it has the power to own its property and assets and carry on its business as it is now being conducted; 12.2 it has the power to enter into and perform this First Loan Agreement and the transactions contemplated by this First Loan Agreement and it has taken all necessary action to authorise the entry into and performance of this First Loan Agreement and the transactions contemplated by this First Loan Agreement; 12.3 this First Loan Agreement constitutes the Borrower's legal, valid and binding obligations enforceable in accordance with its terms; 12.4 the entry into and performance of this First Loan Agreement and the transactions contemplated by this First Loan Agreement do not and will not conflict with (i) any law or regulation or any official or judicial order, or (ii) the Borrower's certificate of incorporation and bylaws; 12.5 to the best of Borrower's knowledge, full disclosure has been made to us before the date of this First Loan Agreement of all material facts or circumstances which need to be disclosed to enable us to obtain a true and correct view of the Borrower's business, undertaking, assets, liabilities, revenues and affairs (in each case, both current and prospective) or which ought to be disclosed to any person proposing to provide finance to the Borrower. 13. Events of Default All sums due hereunder shall become immediately due and payable on demand and all the Lender's obligations hereunder shall cease if any of the following events occurs: 13.1 any sum payable by the Borrower under this First Loan Agreement is not paid within 30 days after due date; or 13.2 the Borrower fails to comply with any other provisions of this First Loan Agreement; or 13.3 any representation made in this First Loan Agreement or the Agreement is incorrect in any respect or, if repeated at any time with reference to the facts and circumstances then existing, would be so incorrect; or 13.4 the Borrower becomes insolvent, or it suspends making payments (whether of principal or interest) with respect to all or any class of its debts or announces an intention to do so; or 13.5 any administrative or other receiver or any manager relating to the Borrower or any of its property is appointed or any other steps are taken to enforce any charge or other security over any of its property, or any steps are taken with a view to putting in force any kind of attachment, sequestration, distress or execution against the Borrower or any of its property. 13.6 the Borrower is wound up, dissolved or liquidated; or 13.7 any event occurs or proceedings taken in relation to the Borrower in any jurisdiction which has a similar, equivalent or analogous effect to any of the events detailed in paragraphs 13.4 to 13.6 of this First Loan Agreement inclusive; or 13.8 the Borrower ceases, or threatens to cease, to carry on all or a substantial part of its business; or 13.9 any of the property subject to any security in favour of the Lender is subject to a compulsory purchase order or any order analogous to such an order. 14. Fees and Costs The Borrower shall, on the date on which the first Loan Facility is advanced, pay to CCP an arrangement fee of US$ 5,000 , pro rata as with the disbursements of the Loan Facility. The Borrower shall, on being so requested by the Lender, pay all reasonable costs and fees incurred by the Lender in connection with the preservation of its rights under, or the enforcement of, this First Loan Agreement or any security document in favour of the Lender. 15. General Indemnity The Borrower shall, on being so requested by the Lender, indemnify the Lender against any loss or expense which the Lender may sustain or incur as a consequence of the occurrence of any of the events referred to in paragraph 13 of this First Loan Agreement. 16. Law and Jurisdiction The terms of clause 22 of the Agreement shall be incorporated into this First Loan Agreement. 17. Notices The terms of clause 20 of the Agreement shall be incorporated into this First Loan Agreement. IN WITNESS whereof the parties have executed this First Loan Agreement the day and year first above written. THE LENDER: GLOBAL INFORMATION GROUP U.S.A., INC. By: /s/Anthony E. Mohr, President ---------------------------------- THE BORROWER: KOENIG INVEST AG By: /s/Benno P. Hafner, Director ---------------------------- SCHEDULE 1. THE AGREEMENT 2. THE ESCROW AGREEMENT PRINCIPALS EX-10.10 23 0023.txt EXHIBIT 10.10 EXHIBIT 10.10 DATED 2 FEBRUARY 2000 --------------------- GLOBAL INFORMATION GROUP U.S.A., INC. as Borrower and NEWICK DEVELOPMENTS LIMITED as Lender ------------------------------------------------ SECOND LOAN AGREEMENT ------------------------------------------------ abcdef (Greek characters) 2 Serjeants' Inn, London EC4Y 1LT Tel: 0171 583 5353 Fax: 0171 353 3683 THIS SECOND LOAN AGREEMENT is made on 2 February 2000 BETWEEN: (1) GLOBAL INFORMATION GROUP U.S.A., INC. (registered number [ ]) having its registered office at One Rockefeller Plaza, Suite 1420, New York, NY 10020, USA (the "Borrower"); and (2) NEWICK DEVELOPMENTS LIMITED (the "Lender"), having its place of business at Waterfront Drive, Atlantic Tower, Road Town, Tortola, British Virgin Islands. BACKGROUND I. The Borrower (1) Chatelin Capital Partners Limited ("CCP") (2) Jolec Trading Limited (3) Anthony Mohr (4) Koenig Invest AG ("Koenig") (5) and the Lender (6) have entered into a share purchase and shareholders agreement ("Agreement") (appended as Schedule 1) dated 14 January 2000 relating to the Borrower. J. This agreement is the Second Loan Agreement referred to in clause 12.2 of, and the sixth schedule to, the Agreement. K. Capitalised expressions not defined in this Second Loan Agreement shall have the meanings given to them in clause 1.1 of the Agreement. L. The Lender has agreed to offer the Borrower a loan facility in the maximum aggregate amount of US$400,000 ("Second Loan Facility") on the following terms and conditions. IT IS AGREED as follows: 1. Amount A maximum aggregate amount of US$400,000. 2. Purpose The entire proceeds of the Loan Facility shall be applied by the Borrower in accordance with clause 10.4.2 of the Agreement. 3. Conditions Precedent Before a Loan may be drawn down under this Second Loan Agreement, the Borrower shall deliver to the Lender in form and substance satisfactory to the Lender (i) a certified copy of a resolution of its Board of Directors approving the transactions contemplated by this letter and authorising a specified person or persons to execute this letter and (ii) a copy of this Second Loan Agreement duly executed by the Borrower. 4. Drawdown The Second Loan Facility shall be drawn down in no more than four equal tranches (each a "Loan") if in the reasonable opinion of the board of directors of the Borrower, the cash flow statements of the Borrower show a need for this at any time before the Repayment Date (as defined in this Second Loan Agreement), after which date any unutilised amount of the Second Loan Facility shall automatically be cancelled. The Lender will not be obliged to make available a Loan hereunder if, on the Drawdown Date, any of the representations in paragraph 12 of this Second Loan Agreement or clause 7 of the Agreement shall not then be true and correct in all respects or any of the events specified in paragraph 13 of this Second Loan Agreement shall have occurred and shall then be continuing. 5. COVENANTS 5.1 The Borrower shall provide the Lender with cash flow statements in a form acceptable to the Lender on a monthly basis and further provide us with information in accordance with clause 11.1 of the Agreement. 5.2 If at any time the Borrower, any of its subsidiaries or any company controlled by it purchases all or any of the source codes relating to the bespoke computer software used in the Borrower's business in accordance with clause 12.4 of the Agreement then the Borrower shall use it best endeavours to deliver within a reasonable time and in any event within 30 days of the completion of such purchase an executed escrow agreement (negotiated in good faith and in accordance with the principals appended as Schedule 2) over all source codes relating to the bespoke computer software used in the Borrower's business in favour of the Lender and Koenig. 5.3 If required by the Lender and Koenig, and if the purchase as referred to in 5.2 by Borrower of the bespoke computer software has not been realised, the Lender, Koenig and, the Borrower shall - if Lender or Koenig so requests - negotiate in good faith to provide the Lender and Koenig with an alternative form of security other than that required under Clause 5.2 of this First Loan Agreement over any and all source codes or other intellectual property relating to the bespoke computer software used in the Borrower's business (other than any which is held in escrow under Clause 5.2 of this First Loan Agreement). If such alternative security is agreed, the Borrower undertakes to execute all documentation required by the Lender and Koenig to perfect and protect such security. 6. Repayment The Loans shall be repaid in full on the sooner to occur of (i) an IPO or Third Party Sale (each as defined in the Agreement), (ii) that date falling 5 years after the date of Completion, and (iii) any or all of the equity share capital of the Borrower or its parent undertaking being admitted or readmitted to an internationally Recognised Stock Exchange. The relevant date shall be referred to in this First Loan Agreement as the Repayment Date. 7. Prepayment On giving the Lender not less than 15 days' notice, the Borrower may prepay all or any part of the Loan (but if in part in an amount of US$50,000 or an integral multiple thereof, if more). The Borrower may not re-borrow any prepayment. Prepayments shall be made together with all unpaid interest on the amount prepaid. 8. Interest Periods The first Interest Period shall commence on the date of disbursement of the Second Loan Facility and end on that date following 18 months thereafter. Each subsequent Interest Period shall be a period of 3 months commencing on the date following the expiry of the preceding Interest Period. If an Interest Period would end on a day which is not a business day, such Interest Period shall be extended to the next business day. The first Interest Period of each Loan, other than the first Loan, shall end on the last day of the then current Interest Period relating to the first Loan. Thereafter, all Interest Periods relating to such Loans shall be co-terminous and such Loans shall be treated as one Loan. If an Interest Period would otherwise overrun the Repayment Date, such Interest Period shall be shortened so that such Interest Period ends on the Repayment Date. 9. Interest Interest on the Loan will be payable at the rate of 6.5 per cent. per annum. Interest shall be calculated on a basis of the actual number of days elapsed and a year of 360 days. Interest shall be payable in arrears on the last day of an Interest Period ("Interest Payment Date"). 10. Additional Interest If the Borrower fails to pay any sum due hereunder on its due date, the Borrower shall pay interest on such sum from the date of such failure to the date of actual payment (as well after as before judgment) at the rate of 2.5 per cent. per annum. 11. Payments All payments (whether capital, interest or otherwise) to be made by the Borrower under this First Loan Agreement shall be made without set-off or counterclaim and free and clear of any deduction in respect of any present or future taxes of any nature now or hereafter imposed ("Taxes") unless such deduction is required to be made by law, in which event any affected payment shall be increased to ensure that the Lender receives a net amount equal to the full amount due had such payment not been subject to such deduction. The Borrower shall deliver, on being so requested by the Lender, evidence satisfactory to it that such Taxes have been paid. Whenever any payment shall become due on a day which is not a business day, the due date thereof shall be extended to the next business day and interest shall be calculated accordingly. All payments to be made by the Borrower under this First Loan Agreement shall be made on the due date for value in immediately available funds to the Lender as it may, from time to time, instruct the Borrower. 12. Representations In addition to the representations, warranties, indemnities and undertakings given by the Borrower under the Agreement, the Borrower represents and warrants to the Lender that:- 12.1 it has the power to own its property and assets and carry on its business as it is now being conducted; 12.2 it has the power to enter into and perform this First Loan Agreement and the transactions contemplated by this First Loan Agreement and it has taken all necessary action to authorise the entry into and performance of this First Loan Agreement and the transactions contemplated by this First Loan Agreement; 12.3 this First Loan Agreement constitutes the Borrower's legal, valid and binding obligations enforceable in accordance with its terms; 12.4 the entry into and performance of this First Loan Agreement and the transactions contemplated by this First Loan Agreement do not and will not conflict with (i) any law or regulation or any official or judicial order, or (ii) the Borrower's certificate of incorporation and bylaws; 12.5 to the best of Borrower's knowledge, full disclosure has been made to us before the date of this First Loan Agreement of all material facts or circumstances which need to be disclosed to enable us to obtain a true and correct view of the Borrower's business, undertaking, assets, liabilities, revenues and affairs (in each case, both current and prospective) or which ought to be disclosed to any person proposing to provide finance to the Borrower. 13. Events of Default All sums due hereunder shall become immediately due and payable on demand and all the Lender's obligations hereunder shall cease if any of the following events occurs: 13.1 any sum payable by the Borrower under this First Loan Agreement is not paid within 30 days after due date; or 13.2 the Borrower fails to comply with any other provisions of this First Loan Agreement; or 13.3 any representation made in this First Loan Agreement or the Agreement is incorrect in any respect or, if repeated at any time with reference to the facts and circumstances then existing, would be so incorrect; or 13.4 the Borrower becomes insolvent, or it suspends making payments (whether of principal or interest) with respect to all or any class of its debts or announces an intention to do so; or 13.5 any administrative or other receiver or any manager relating to the Borrower or any of its property is appointed or any other steps are taken to enforce any charge or other security over any of its property, or any steps are taken with a view to putting in force any kind of attachment, sequestration, distress or execution against the Borrower or any of its property; or 13.6 the Borrower is wound up, dissolved or liquidated ; or 13.7 any event occurs or proceedings taken in relation to the Borrower in any jurisdiction which has a similar, equivalent or analogous effect to any of the events detailed in paragraphs 13.4 to 13.6 of this First Loan Agreement inclusive; or 13.8 the Borrower ceases, or threatens to cease, to carry on all or a substantial part of its business; or 13.9 any of the property subject to any security in favour of the Lender is subject to a compulsory purchase order or any order analogous to such an order; or 14. Fees and Costs The Borrower shall, on the date on which the first Loan Facility is advanced, pay to CCP an arrangement fee of US$ 10,000 pro rata as with the disbursements of the Loan Facility. The Borrower shall, on being so requested by the Lender, pay all reasonable costs and fees incurred by the Lender in connection with the preservation of its rights under, or the enforcement of, this First Loan Agreement or any security document in favour of the Lender. 15. General Indemnity The Borrower shall, on being so requested by the Lender, indemnify the Lender against any loss or expense which the Lender may sustain or incur as a consequence of the occurrence of any of the events referred to in paragraph 13 of this First Loan Agreement. 16. Law and Jurisdiction The terms of clause 22 of the Agreement shall be incorporated into this First Loan Agreement. 17. Notices The terms of clause 20 of the Agreement shall be incorporated into this First Loan Agreement. IN WITNESS whereof the parties have executed this First Loan Agreement the day and year first above written. THE LENDER: GLOBAL INFORMATION GROUP U.S.A., INC. By /s/Anthony E. Mohr, President THE BORROWER: NEWICK DEVELOPMENTS LIMITED /s/Intertrust (Curacao) N.V. By: Gregory Elias, Managing Director SCHEDULE 1. THE AGREEMENT 2. THE ESCROW AGREEMENT PRINCIPLES EX-10.11 24 0024.txt EXHIBIT 10.11 EXHIBIT 10.11 DATED 2 FEBRUARY 2000 --------------------- GLOBAL INFORMATION GROUP U.S.A., INC. as Borrower and KOENIG INVEST AG as Lender ------------------------------------------------ SECOND LOAN AGREEMENT ------------------------------------------------ abcdef (Greek characters) 2 Serjeants' Inn, London EC4Y 1LT Tel: 0171 583 5353 Fax: 0171 353 3683 THIS SECOND LOAN AGREEMENT is made on 2 February 2000 BETWEEN: (1) GLOBAL INFORMATION GROUP U.S.A., INC. (registered number [ ]) having its registered office at One Rockefeller Plaza, Suite 1420, New York, NY 10020, USA (the "Borrower"); and (2) KOENIG INVEST AG (the "Lender"), having its principal place of business at c/o EMB Boratung und Service AG, Zeughausgasse 7a, CH-6301, Zug, Switserland. BACKGROUND M. The Borrower (1) Chatelin Capital Partners Limited ("CCP") (2) Jolec Trading Limited (3) Anthony Mohr (4) Newick Developments Limited ("Newick") (5) and the Lender (6) have entered into a share purchase and shareholders agreement ("Agreement") (appended as Schedule 1) dated 14 January 2000 relating to the Borrower. N. This agreement is the Second Loan Agreement referred to in clause 12.2 of, and the sixth schedule to, the Agreement. O. Capitalised expressions not defined in this Second Loan Agreement shall have the meanings given to them in clause 1.1 of the Agreement. P. The Lender has agreed to offer the Borrower a loan facility in the maximum aggregate amount of US$800,000 ("Second Loan Facility") on the following terms and conditions. IT IS AGREED as follows: 1. Amount A maximum aggregate amount of US$800,000. 2. Purpose The entire proceeds of the Loan Facility shall be applied by the Borrower in accordance with clause 10.4.2 of the Agreement. 3. Conditions Precedent Before a Loan may be drawn down under this Second Loan Agreement, the Borrower shall deliver to the Lender in form and substance satisfactory to the Lender (i) a certified copy of a resolution of its Board of Directors approving the transactions contemplated by this letter and authorising a specified person or persons to execute this letter and (ii) a copy of this Second Loan Agreement duly executed by the Borrower. 4. Drawdown The Second Loan Facility shall be drawn down in no more than four equal tranches (each a "Loan") if in the reasonable opinion of the board of directors of the Borrower, the cash flow statements of the Borrower show a need for this at any time before the Repayment Date (as defined in this Second Loan Agreement), after which date any unutilised amount of the Second Loan Facility shall automatically be cancelled. The Lender will not be obliged to make available a Loan hereunder if, on the Drawdown Date, any of the representations in paragraph 12 of this Second Loan Agreement or clause 7 of the Agreement shall not then be true and correct in all respects or any of the events specified in paragraph 13 of this Second Loan Agreement shall have occurred and shall then be continuing. 5. COVENANTS 5.1 The Borrower shall provide the Lender with cash flow statements in a form acceptable to the Lender on a monthly basis and further provide us with information in accordance with clause 11.1 of the Agreement. 5.3 If at any time the Borrower, any of its subsidiaries or any company controlled by it purchases all or any of the source codes relating to the bespoke computer software used in the Borrower's business in accordance with clause 12.4 of the Agreement then the Borrower shall use it best endeavours to deliver within a reasonable time and in any event within 30 days of the completion of such purchase an executed escrow agreement (negotiated in good faith and in accordance with the principals appended as Schedule 2) over all source codes relating to the bespoke computer software used in the Borrower's business in favour of the Lender and Newick. 5.4 If required by the Lender and Koenig, and if the purchase as referred to in 5.2 by Borrower of the bespoke computer software has not been realised, the Lender, Koenig and, the Borrower shall - if Lender or Koenig so requests - negotiate in good faith to provide the Lender and Koenig with an alternative form of security other than that required under Clause 5.2 of this First Loan Agreement over any and all source codes or other intellectual property relating to the bespoke computer software used in the Borrower's business (other than any which is held in escrow under Clause 5.2 of this First Loan Agreement). If such alternative security is agreed, the Borrower undertakes to execute all documentation required by the Lender and Koenig to perfect and protect such security. 6. Repayment The Loans shall be repaid in full on the sooner to occur of (i) an IPO or Third Party Sale (each as defined in the Agreement), (ii) that date falling 5 years after the date of Completion, and (iii) any or all of the equity share capital of the Borrower or its parent undertaking being admitted or readmitted to an internationally Recognised Stock Exchange. The relevant date shall be referred to in this Second Loan Agreement as the Repayment Date. 7. Prepayment On giving the Lender not less than 15 days' notice, the Borrower may prepay all or any part of the Loan (but if in part in an amount of US$50,000 or an integral multiple thereof, if more). The Borrower may not re-borrow any prepayment. Prepayments shall be made together with all unpaid interest on the amount prepaid. 8. Interest Periods The first Interest Period shall commence on the date of disbursement of the Second loan Facility and end on that date following 18 months thereafter. Each subsequent Interest Period shall be a period of 3 months commencing on the date following the expiry of the preceding Interest Period. If an Interest Period would end on a day which is not a business day, such Interest Period shall be extended to the next business day. The first Interest Period of each Loan, other than the first Loan, shall end on the last day of the then current Interest Period relating to the first Loan. Thereafter, all Interest Periods relating to such Loans shall be co-terminous and such Loans shall be treated as one Loan. If an Interest Period would otherwise overrun the Repayment Date, such Interest Period shall be shortened so that such Interest Period ends on the Repayment Date. 9. Interest Interest on the Loan will be payable at the rate of 6.5 per cent. per annum. Interest shall be calculated on a basis of the actual number of days elapsed and a year of 360 days. Interest shall be payable in arrears on the last day of an Interest Period ("Interest Payment Date"). 10. Additional Interest If the Borrower fails to pay any sum due hereunder on its due date, the Borrower shall pay interest on such sum from the date of such failure to the date of actual payment (as well after as before judgment) at the rate of 2.5 per cent. per annum. 11. Payments All payments (whether capital, interest or otherwise) to be made by the Borrower under this Second Loan Agreement shall be made without set-off or counterclaim and free and clear of any deduction in respect of any present or future taxes of any nature now or hereafter imposed ("Taxes") unless such deduction is required to be made by law, in which event any affected payment shall be increased to ensure that the Lender receives a net amount equal to the full amount due had such payment not been subject to such deduction. The Borrower shall deliver, on being so requested by the Lender, evidence satisfactory to it that such Taxes have been paid. Whenever any payment shall become due on a day which is not a business day, the due date thereof shall be extended to the next business day and interest shall be calculated accordingly. All payments to be made by the Borrower under this Second Loan Agreement shall be made on the due date for value in immediately available funds to the Lender as it may, from time to time, instruct the Borrower. 12. Representations In addition to the representations, warranties, indemnities and undertakings given by the Borrower under the Agreement, the Borrower represents and warrants to the Lender that:- 12.1 it has the power to own its property and assets and carry on its business as it is now being conducted; 12.2 it has the power to enter into and perform this First Loan Agreement and the transactions contemplated by this First Loan Agreement and it has taken all necessary action to authorise the entry into and performance of this First Loan Agreement and the transactions contemplated by this First Loan Agreement; 12.3 this First Loan Agreement constitutes the Borrower's legal, valid and binding obligations enforceable in accordance with its terms; 12.4 the entry into and performance of this First Loan Agreement and the transactions contemplated by this First Loan Agreement do not and will not conflict with (i) any law or regulation or any official or judicial order, or (ii) the Borrower's certificate of incorporation and bylaws; 12.5 to the best of Borrower's knowledge, full disclosure has been made to us before the date of this First Loan Agreement of all material facts or circumstances which need to be disclosed to enable us to obtain a true and correct view of the Borrower's business, undertaking, assets, liabilities, revenues and affairs (in each case, both current and prospective) or which ought to be disclosed to any person proposing to provide finance to the Borrower. 13. Events of Default All sums due hereunder shall become immediately due and payable on demand and all the Lender's obligations hereunder shall cease if any of the following events occurs: 13.1 any sum payable by the Borrower under this First Loan Agreement is not paid within 30 days after due date; or 13.2 the Borrower fails to comply with any other provisions of this First Loan Agreement; or 13.3 any representation made in this First Loan Agreement or the Agreement is incorrect in any respect or, if repeated at any time with reference to the facts and circumstances then existing, would be so incorrect; or 13.4 the Borrower becomes insolvent, or it suspends making payments (whether of principal or interest) with respect to all or any class of its debts or announces an intention to do so; or 13.4 any administrative or other receiver or any manager relating to the Borrower or any of its property is appointed or any other steps are taken to enforce any charge or other security over any of its property, or any steps are taken with a view to putting in force any kind of attachment, sequestration, distress or execution against the Borrower or any of its property. 13.6 the Borrower is wound up, dissolved or liquidated ; or 13.7 any event occurs or proceedings taken in relation to the Borrower in any jurisdiction which has a similar, equivalent or analogous effect to any of the events detailed in paragraphs 13.4 to 13.6 of this First Loan Agreement inclusive; or 13.8 the Borrower ceases, or threatens to cease, to carry on all or a substantial part of its business; or 13.9 any of the property subject to any security in favour of the Lender is subject to a compulsory purchase order or any order analogous to such an order. 14. Fees and Costs The Borrower shall, on the date on which the first Loan Facility is advanced, pay to CCP an arrangement fee of US$ 20,000 , pro rata as with the disbursements of the Loan Facility. The Borrower shall, on being so requested by the Lender, pay all reasonable costs and fees incurred by the Lender in connection with the preservation of its rights under, or the enforcement of, this First Loan Agreement or any security document in favour of the Lender. 15. General Indemnity The Borrower shall, on being so requested by the Lender, indemnify the Lender against any loss or expense which the Lender may sustain or incur as a consequence of the occurrence of any of the events referred to in paragraph 13 of this First Loan Agreement. 16. law and jurisdiction The terms of clause 22 of the Agreement shall be incorporated into this First Loan Agreement. 17. Notices The terms of clause 20 of the Agreement shall be incorporated into this First Loan Agreement. IN WITNESS whereof the parties have executed this First Loan Agreement the day and year first above written. THE LENDER: GLOBAL INFORMATION GROUP U.S.A., INC. By /s/Anthony E. Mohr, President ---------------------------------- THE BORROWER: KOENIG INVEST AG By /s/Benno P. Hafner, Director ---------------------------------- SCHEDULE 1. THE AGREEMENT 2. THE ESCROW AGREEMENT PRINCIPLES EX-23.1 25 0025.txt EXHIBIT 23.1 EXHIBIT 23.1 RESERVED FOR AUDITORS CONSENT EX-23.3 26 0026.txt EXHIBIT 23.3 EXHIBIT 23.3 RESERVED FOR AUDITORS' CONSENT EX-24.1 27 0027.txt EXHIBIT 24.1 EXHIBIT 24.1 POWER-OF-ATTORNEY Each of the Sellers set forth on Schedule "A" hereto expressly constitutes and appoints Philip L. van Wijngaarden his, her or its true and lawful attorney-in-fact and agent for him, her or it and in his, her or its name, place and stead, in any and all capacities, and grants to Philip L. van Wijngaarden the full power and authority to represent such Seller, to take any and all actions with respect to entering into a Share Exchange Agreement (the "Agreement") among the shareholders of Global Information Group USA Inc. ("GIG") and ADVA International Inc. ("ADVA") pursuant to which, among other things, the GIG shareholders shall exchange all their shares in GIG in return for approximately 94.57% of the outstanding shares of ADVA, on behalf of such Seller including, but not limited to, (a) executing the Agreement and any and all documents related thereto; (b) receiving all notices, consents and similar communications from Buyer or the Company to Sellers; (c) agreeing to, executing and delivering any waiver, consent or amendment under or to the Agreement or other documents related thereto, provided that no such waiver, consent or amendment under this Agreement shall affect the number of shares to be issued to each Seller; (d) executing and delivering any certificate, document other instrument required by or in connection with the consummation of the transactions contemplated hereby, including, without limitation, assignments separate from certificate or affidavits of lost certificate, as the case may be, with respect to the GIG shares being transferred by Sellers; and (e) taking such actions and executing and delivering such documents as may be necessary or desirable to effect the transactions contemplated by the Agreement. IN WITNESS WHEREOF, individual Sellers have executed this power-of-attorney this 1st day of May, 2000. SELLERS: /s/Hugo Heerema - ------------------------------------ HUGO HEEREMA /s/Femia E. van Wulfften Palthe - ------------------------------------ FEMIA E. VAN WULFFTEN PALTHE /s/Leonard van Hulst - ------------------------------------ LEONARD VAN HULST /s/Nicole E.A.M. Aarts - ------------------------------------ NICOLE E.A.M. AARTS /s/Fiona N. van Hulst - ------------------------------------ FIONA N. VAN HULST EXHIBIT "A" Hugo Heerema Femia E. van Wulfften Palthe Leonard van Hulst Nicole E.A.M. Aarts Fiona N. van Hulst EX-24.2 28 0028.txt EXHIBIT 24.2 EXHIBIT 24.2 POWER-OF-ATTORNEY The Sellers set forth on Schedule "A" hereto expressly constitute and appoint Henk Smit his, her or its true and lawful attorney-in-fact and agent for him, her or it and in his, her or its name, place and stead, in any and all capacities, and grants to Henk Smit the full power and authority to represent Sellers, to take any and all actions with respect to entering into 1. a Share Exchange Agreement (the "Agreement") among the shareholders of Global Information Group USA Inc. ("GIG") and ADVA International Inc. ("ADVA") pursuant to which, among other things, the GIG shareholders shall exchange all their shares in GIG in return for approximately 94.57% of the outstanding shares of ADVA, and 2. a Termination Agreement and Mutual Release (the "Termination Agreement") among Inrisco B.V., the shareholders of GIG and GIG, pursuant to which, among other things, the clauses 3,4,6 and 7 of the agreement between Inrisco B.V. and GIG dated May 14, 1998 are terminated, the Agreement and the Termination Agreement collectively also referred to as the "Agreements", on behalf of Sellers including, but not limited to, (a) executing the Agreements and any and all documents related thereto; (b) receiving all notices, consents and similar communications from Buyer or the Company to Sellers; (c) agreeing to, executing and delivering any waiver, consent or amendment under or to the Agreement or other documents related thereto, provided that no such waiver, consent or amendment under the Agreements shall affect the number of shares to be issued to each Seller; (d) executing and delivering any certificate, document other instrument required by or in connection with the consummation of the transactions contemplated hereby, including, without limitation, assignments separate from certificate or affidavits of lost certificate, as the case may be, with respect to the GIG shares being transferred by Sellers; and (e) taking such actions and executing and delivering such documents as may be necessary or desirable to effect the transactions contemplated by the Agreement. IN WITNESS WHEREOF, individual Sellers have executed this power-of-attorney this 1st day of May, 2000. SELLERS: /s/Charles Langereis - ------------------------------------ Charles Langereis /s/Jouke V.J.P. Brada - ------------------------------------ Jouke V.J.P. Brada /s/Henri B.G. Sijthoff - ------------------------------------ Henri B.G. Sijthoff /s/ Henri B.G. Sijthoff - ------------------------------------ Inrisco B.V. By Henri B.G. Sijthoff EXHIBIT "A" Charles Langereis Jouke V.J.P. Brada Henri B. G. Sijthoff Inrisco B.V. EX-24.3 29 0029.txt EXHIBIT 24.3 EXHIBIT 24.3 POWER-OF-ATTORNEY The Seller set forth on Schedule "A" hereto expressly constitutes and appoints Anthony E. Mohr his, her or its true and lawful attorney-in-fact and agent for him, her or it and in his, her or its name, place and stead, in any and all capacities, and grants to Anthony E. Mohr the full power and authority to represent such Seller, to take any and all actions with respect to entering into a Share Exchange Agreement (the "Agreement") among the shareholders of Global Information Group USA Inc. ("GIG") and ADVA International Inc. ("ADVA") pursuant to which, among other things, the GIG shareholders shall exchange all their shares in GIG in return for approximately 94.57% of the outstanding shares of ADVA, on behalf of Seller including, but not limited to, (a) executing the Agreement and any and all documents related thereto; (b) receiving all notices, consents and similar communications from Buyer or the Company to Sellers; (c) agreeing to, executing and delivering any waiver, consent or amendment under or to the Agreement or other documents related thereto, provided that no such waiver, consent or amendment under this Agreement shall affect the number of shares to be issued to each Seller; (d) executing and delivering any certificate, document other instrument required by or in connection with the consummation of the transactions contemplated hereby, including, without limitation, assignments separate from certificate or affidavits of lost certificate, as the case may be, with respect to the GIG shares being transferred by Sellers; and (e) taking such actions and executing and delivering such documents as may be necessary or desirable to effect the transactions contemplated by the Agreement. IN WITNESS WHEREOF, Seller has executed this power-of-attorney this 12th day of May, 2000. SELLER: FOG INVESTMENTS, LTD. /s/Sally A. Cook - ------------------------------------ Sally A. Cook Director FOG Investments Ltd. EXHIBIT "A FOG Investments, Ltd. Fifth Floor, Fitzroy House 18-20 Grafton Street London, England Holder of 4.95 shares of common stock in Global Information Group USA, Inc. EX-24.4 30 0030.txt EXHIBIT 24.4 EXHIBIT 24.4 SPECIFIC POWER OF ATTORNEY Hacken Investments Limited, BVI Minutes of the Meeting of the Board of Directors held on February 16, 2001 Present: Mr. Taras Braitchenko, Director, by phone Mr. Iouri Kassatkine, Director Chairman: Mr. Iouri Kassatkine was, due to the physical absence of Mr. Taras Braitchenko, being elected as the Chairman of the Meeting. Quorum: There being a quorum present the Chairman declared the meeting properly constituted. Power of Attorney: IT WAS RESOLVED that Mr Benno P. Hafner, Esq., residing at Sonnenhof 8, CH-6004 Lucerne, Switzerland, holder of the Swiss Passport No. 7603358, issued on January 14, 1991 in Lucerne, Switzerland, valid up to January 30, 2001, shall be empowered to represent and sign all documents necessary in connection with the activities concerning the matter ADVA/Global Information Group U.S.A., Inc. The Attorney does not have the power to delegate his authority or to grant the power hereby conferred to third parties. This Power shall expire on December 31, 2000, and shall thereupon be returned to the company without demand being made thereof, together with any duplicates of copies thereof which may have been issued. This Consent shall be effective as of the date of signature. Further business: There being no further business to come before the meeting, it was adjourned. Dated and signed this 30th day of March, 2000. The Chairman /s/Iouri Kassatkine, Director SEAL - ----------------------------- EX-24.5 31 0031.txt EXHIBIT 24.5 EXHIBIT 24.5 SPECIFIC POWER OF ATTORNEY Hacken Investments Limited, BVI Minutes of the Meeting of the Board of Directors held on March 30, 2000 Present: Mr. Taras Braitchenko, Director, by phone Mr. Iouri Kassatkine, Director Chairman: Mr. Iouri Kassatkine was, due to the physical absence of Mr. Taras Braitchenko, being elected as the Chairman of the Meeting. Quorum: There being a quorum present the Chairman declared the meeting properly constituted. Power of Attorney: IT WAS RESOLVED that Mr Benno P. Hafner, Esq., residing at Sonnenhof 8, CH-6004 Lucerne, Switzerland, holder of the Swiss Passport No. 7603358, issued on January 14, 1991 in Lucerne, Switzerland, valid up to January 30, 2006, shall be empowered to represent and sign all documents necessary in connection with the activities concerning the matter ADVA/Global Information Group U.S.A., Inc. The Attorney does not have the power to delegate his authority or to grant the power hereby conferred to third parties. This Power shall expire on December 31, 2001, and shall thereupon be returned to the company without demand being made thereof, together with any duplicates of copies thereof which may have been issued. This Consent shall be effective as of the date of signature. Further business: There being no further business to come before the meeting, it was adjourned. Dated and signed this 16th day of February, 2001. The Chairman /s/Iouri Kassatkine, Director SEAL - ----------------------------- EX-24.6 32 0032.txt EXHIBIT 24.6 EXHIBIT 24.6 POWER-OF-ATTORNEY The Seller set forth on Schedule "A" hereto expressly constitutes and appoints Christiaan Ouwinga his, her or its true and lawful attorney-in-fact and agent for him, her or it and in his, her or its name, place and stead, in any and all capacities, and grants to Christiaan Ouwinga the full power and authority to represent such Seller, to take any and all actions with respect to entering into a Share Exchange Agreement (the "Agreement") among the shareholders of Global Information Group USA Inc. ("GIG") and ADVA International Inc. ("ADVA") pursuant to which, among other things, the GIG shareholders shall exchange all their shares in GIG in return for approximately 94.57% of the outstanding shares of ADVA, on behalf of Seller including, but not limited to, (a) executing the Agreement and any and all documents related thereto; (b) receiving all notices, consents and similar communications from Buyer or the Company to Sellers; (c) agreeing to, executing and delivering any waiver, consent or amendment under or to the Agreement or other documents related thereto, provided that no such waiver, consent or amendment under this Agreement shall affect the number of shares to be issued to each Seller; (d) executing and delivering any certificate, document other instrument required by or in connection with the consummation of the transactions contemplated hereby, including, without limitation, assignments separate from certificate or affidavits of lost certificate, as the case may be, with respect to the GIG shares being transferred by Sellers; and (e) taking such actions and executing and delivering such documents as may be necessary or desirable to effect the transactions contemplated by the Agreement. IN WITNESS WHEREOF, Seller has executed this power-of-attorney this 26th day of February, 2001. SELLER: Christopher Schuijt /s/Christopher Schuijt - ---------------------------- Christopher Schuijt Stenen Bogerd 47 3343 BR Hendrik Ido Ambacht The Netherlands EXHIBIT "A Christopher Schuijt Stenen Bogerd 47 3343 BR Hendrik Ido Ambacht The Netherlands Holder of 28.61 shares of common stock in Global Information Group USA, Inc. -----END PRIVACY-ENHANCED MESSAGE-----