1
▇. ▇▇▇▇▇▇▇ AND OTHERS
- and -
MEDIALINK WORLDWIDE INCORPORATED
================================
SHARE PURCHASE AGREEMENT
========================
================================
▇▇▇▇▇▇ SON & PEPPER
▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
Ref: SMA/VF
LDE: 35 LONDON
Tel: ▇▇▇▇-▇▇▇ ▇▇▇▇
Fax: ▇▇▇▇-▇▇▇ ▇▇▇▇
2
E Mail: ▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇▇▇.▇▇.▇▇
THIS AGREEMENT is made on the 7th day of July 1998
BETWEEN
(1) EACH PARTY LISTED IN SCHEDULE 1 TO THIS AGREEMENT (collectively
"the Vendors" and individually "a Vendor")
(2) MEDIALINK WORLDWIDE INCORPORATED (a company incorporated under the
laws of the State of Delaware, USA) of ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ and whose address in England is ▇▇/▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ("the Purchaser")
WHEREAS:-
The Vendors have agreed to sell, or procure the sale of, and the Purchaser has
agreed to purchase all, but not less than all, the Shares (as defined in this
Agreement) in each case on the terms and subject to the conditions of this
Agreement.
NOW IT IS AGREED as follows:-
1. DEFINITIONS AND INTERPRETATION
------------------------------
1.1 In this Agreement and the Schedules:-
"Accounts" means the audited financial
statements of the Company,
prepared in accordance with UK
generally accepted accounting
principles and the Companies Acts,
for the accounting reference
period ended on the Accounts Date,
comprising a balance sheet, profit
and loss account, notes, auditors'
and directors' reports;
"Accounts Date" means 31 March 1998;
"Additional Consideration" means any one of the First
Consideration, the Second
Consideration and the Third
Consideration
3
"Adjustments" means the agreed adjustments
detailed in Schedule 6 and
determined in accordance with
Clause 4 to be made in calculating
the Net Profits
"Agreed Form" means in a form signed by or on
behalf of the parties hereto
"AMG" means ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
"Bonus Letters" means a letter in Agreed
Form to be given by the Purchaser
following Completion to each of 2
employees of the Company, namely
▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇,
offering a profit related bonus
payment;
"Books and Records" has its common law meaning and
includes, without limitation, all
notices, correspondence, orders,
inquiries, drawings, films, plans,
books of account and other
documents and all computer disks
or tapes or other machine legible
programs or other records;
"the Business" means the business of television
public relations consultancy and
the production and distribution of
associated video footage and news
releases carried on by the Company
at Completion under the name of
The London Bureau
"Business Day" means a day (other than a Saturday
or a Sunday) on which banks are
open for business in London;
"Business Information" means all information, know-how
and records (whether or not
confidential and in whatever form
held) including (without
limitation) all formulas, designs,
specifications, drawings, films
data, manuals and instructions and
all customer lists, sales
information, business plans and
forecasts, and all records of
technical or other expertise and
all computer software and all
accounting and tax records,
correspondence, orders and
inquiries;
4
"the Business Property" means the leasehold property
referred to in Schedule 5;
5
"Change of Control" occurs where any person or group
of persons acting in concert who,
at the date of this Agreement, do
not possess Control over the
Purchaser, gain Control over the
Purchaser
"CGTA 1979" means the Capital Gains Tax ▇▇▇
▇▇▇▇;
"Companies Act" means the Companies ▇▇▇ ▇▇▇▇, the
Companies Consolidation
(Consequential Provisions) ▇▇▇
▇▇▇▇, the Companies ▇▇▇ ▇▇▇▇ and
Part V of the Criminal justice ▇▇▇
▇▇▇▇;
"Company" means Tempest T.V. Limited basic
information concerning which is
set out in Schedule 2;
"Completion" means completion of the sale and
purchase of the Shares under this
Agreement;
"Completion Date" means the date of this Agreement;
"Consideration Shares" means the shares of common stock
of the Purchaser having a par
value of $.01 per share;
"Consultancy Agreement" means the consultancy agreement to
be entered into between the
Purchaser and AGM on Completion in
the Agreed Form;
"Control" shall have the meaning set out in
Section 840 of ICTA
"Deeds of Covenant" means the deeds of covenant to be
entered into between each of AMG
and SM and the Purchaser on
Completion in the Agreed Form;
"Disclosure Letter" means the letter of today's date
written by or on behalf of the
Warrantors to the Purchaser for
the purposes of Clause 11 and
delivered to the Purchaser's
Solicitors before the execution of
this Agreement;
6
"the Division" means the broadcast public
relations business of the
Purchaser carried on from time to
time in Europe, Africa, the Middle
East, Asia and Australasia and
which with effect from Completion
will include the Business and will
be carried on under the name of
Medialink International but
excluding:-
(a) the Eye Catchers division
of the Purchaser;
(b) any investments made by
the Division or by the
Purchaser on behalf of
the Division otherwise
than in the ordinary
course of business of the
Division;
(c) for the avoidance of
doubt, any business
falling within the
exceptions set out in
Clause 7.1.7.
"Earn Out Accounts" each of the First Earn Out Accounts,
Second Earn Out Accounts and Third
Earn Out Accounts;
"Environment" means all, or any, of the
following media namely the air
(including, without limitation,
the air within buildings and the
air within other natural or
man-made structures above or below
ground), water and land and any
living organisms or systems
supported by those media;
"Environmental Laws" means all applicable statutes and
subordinate legislation and other
national, federal, state and local
laws, and common laws, guidance
notes or codes of conduct, insofar
as they relate to or apply to
Environmental Matters;
"Environmental Matters" means:-
(i) pollution or contamination;
(ii) the disposal, release,
spillage, deposit, escape,
discharge, leak or emission of,
Hazardous Materials or Waste;
7
(iii) exposure of any person to
Hazardous Materials or Waste;
(iv) all matters relating to the
health and safety of employees;
(v) the creation or existence of
any noise, vibration, common law
or statutory nuisance, or other
adverse impact on the Environment;
(vi) any other matters relating to
the condition, protection,
maintenance, restoration or
replacement of the Environment or
any part of it arising directly or
indirectly out of the
manufacturing, processing,
treatment, keeping, handling, use
(including as a building
material), possession, supply,
receipt, sale, purchase, import,
export, transportation or presence
of Hazardous Materials or Waste;
"Environmental Permits" means any permit, licence, consent
or authorisation required by
Environmental Laws in relation to
either the carrying on of the
business of the Company or in
relation to the Business
Properties;
"Escrow Account" means the interest bearing account
which may be established pursuant
to Clause 8.1.2 in the joint names
of the Purchaser's Solicitors and
the Vendors' Solicitors to be
operated in accordance with the
terms of an escrow letter between
the parties and their respective
solicitors in the Agreed Form;
"First Additional Consideration" means the Additional Consideration
for the sale of Shares relating to
the First Year calculated (subject
to Clause 3.7) in accordance with
Clause 3.3
"First Earn Out Accounts" means the accounts of the
Division to be prepared in
accordance with Clause 4 in
respect of the First Year
8
9
"First Year" means the period of 12 months
commencing on 1st August 1998;
"Hazardous Materials" means anything which alone or in
combination with other things is
capable of causing harm or damage
to property or to man or any other
organism supported by the
Environment including, without
limitation, hazardous substances,
pollutants, contaminants,
petroleum, petroleum products and
radioactive materials;
"ICTA 1988" means the Income and Corporation
Taxes ▇▇▇ ▇▇▇▇;
"Information Technology" means all hardware (including
processors, disks and
peripherals), software and other
telecommunications equipment used
in the business of the Company;
"the Initial Consideration" means the initial consideration
for the sale of the Shares stated
in Clause 3.2;
"Intellectual Property" means patents, trade marks and
service marks, rights in designs,
trade or business names,
copyrights and topography rights
(whether or not any of these is
registered and including
applications for registration of
any such thing) and all rights or
forms of protection of a similar
nature or having equivalent or
similar effect to any of these
which may subsist anywhere in the
world;
"Issue Price" the average of the last bid prices
of a Consideration Share as
reported on the NASDAQ National
Market for the 10 trading days
immediately prior to:-
(a) the announcement by the
Purchaser of Completion
in the case of the
Consideration Shares to
be issued on
Completion;
(b) 1 August 1999 in the
case of the
Consideration Shares to
be issued in partial
satisfaction of the
First
10
Additional Consideration;
11
(c) 1 August 2000 in the case
of the Consideration
Shares to be issued in
partial satisfaction of
the Second Additional
Consideration;
(d) 1 August 2001 in the case
of the Consideration
Shares to be issued in
partial satisfaction of
the Third Additional
Consideration;
"Liability" means any liability, fine, cost,
expense, damages or loss;
"Loan Notes" means the Loan Notes of the
Purchaser in Agreed Form to be
issued to the Vendors in partial
satisfaction of the Additional
Consideration;
"NASDAQ" means the National Association of
Securities Dealers Automated
Quotation System;
"Net Profits" means the profits of the Division
calculated by reference to the
Earn Out Accounts:-
(a) after taking account of
the Revenue;
(b) after deducting
reasonable and properly
incurred overhead costs
of the Division
including all expenses
of working and
management (including
consultancy fees
payable to AMG);
(c) after deducting a
charge for depreciation
of the assets of the
Division consistent
with the accounting
principles as applied
in the Purchaser's
Annual Report on Form
10-K filed with the
SEC;
(d) after adding back the
Adjustments;
12
(e) before any provision is
made for any dividend
on any share of any
class in the capital of
any member of the
Purchaser's Group or
for any other
distribution or for the
transfer of any sum to
any reserve of
whatsoever nature;
(f) before debiting or
crediting extraordinary
and exceptional items
in accordance with U.S.
Generally Accepted
Accounting Principles
(g) before deducting any
corporation tax,
advance corporation tax
or any other tax levied
upon or measured by
reference to profits or
gains on the profits
earned and gains
realised by any member
of the Purchaser's
Group;
(h) after adding back:-
(i) any management
or other similar
charges in
excess of $1,000
(or such other
amount as may be
agreed in
writing between
the Purchaser
and SM) per
month paid by
the Division to
any member of
the Purchaser's
Group;
(ii) any fees (as
distinct from
salaries) paid
to any of the
directors of the
Purchaser's
Group following
Completion
appointed by the
Purchaser; and
(iii) any interest
payments or
charges
(including any
interest on
monies made
available for
working capital
by any member of
the Purchaser's
Group to the
Division);
(i) without taking into
account interest
receivable;
13
(j) before deducting or
adding back, as the
case may be, capital
losses of a
non-recurring nature;
(k) without taking into
account profits of a
capital nature arising
on a disposal of fixed
assets, investments, or
any other assets of the
Division;
(l) after adding back the
cost of purchasing or
taking on a lease or
tenancy of or otherwise
acquiring any fixed
assets and any real or
leasehold property at
any time after
Completion other than
in the ordinary course
of business of the
Division;
(m) after adding back the
additional salary costs
of any employees of the
Purchaser's Group or
secondees or
consultants to the
Purchaser's Group
employed or engaged by
the Division at any
time after Completion
otherwise than in the
ordinary course of
business of the
Division;
(n) after adding back the
cost of guarantees or
other securities given
by the Division in
respect of borrowings
made by other members
of the Purchaser's
Group;
(o) after adding back the
effect (if any) of:-
(i) the actions
undertaken by any
member of the
Purchaser's Group in
contravention of
Clause 7;
(ii) the payment of the
dividend first
referred to in
Clause 9.12;
(iii) any material
adverse change in
the type of
businesses carried
on by the Division
14
immediately
following Completion
, effected by the
Purchaser without
the consent of SM;
(iv) any sale, transfer
or other disposition
of (other than in
the ordinary course
of business) any
part only (as
distinct from the
whole) of the
undertaking,
property or assets
of the Division
which has a market
value in excess of
25,000 pounds;
(v) any transaction
entered into by the
Division otherwise
than in the ordinary
course of business
or otherwise than on
arm's length terms
without the consent
of SM;
(p) without taking into account:-
(i) the payments due
to the Vendors under
this Agreement and
due under the Deeds
of Covenant;
(ii) any payments which
may become due under
the Bonus Letters;
(q) after adding back any amount
by which goodwill of the
Division is amortised;
(r) after adding to the amounts
due to the Division from the
Purchaser in respect of
services provided by the
Division to customers of the
Purchaser such amount as may
be found to be added pursuant
to the provisions of Clause
7.2;
(s) without taking account of the
cost of or any profits of or
earned from or the proceeds of
sale of any investments made
or businesses or companies
15
acquired by the Purchaser and
added to the Division or any
joint ventures or partnerships
entered into by the Purchaser
and added to the Division
unless otherwise agreed in
writing between the Purchaser
and the Vendors'
Representative;
"Planning Acts" as defined in Section 336 of the
Town and Country ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
"Proceeding" means any proceeding, suit or
action arising out of or in
connection with this Agreement;
"Property" or "Properties" means leasehold or other immovable
property in any part of the world;
"Purchaser's Disclosure Letter" means the letter of today's date
written by or on behalf of the
Purchaser for the purposes of Clause
13.2 and delivered to the Vendors'
Solicitors before the execution of
this Agreement;
"Purchaser's Group" means the Purchaser, its
subsidiaries and subsidiary
undertakings, any holding company
of the Purchaser and all other
subsidiaries of any such holding
company from time to time;
"Purchaser's Solicitors" means ▇▇▇▇▇▇ Son & Pepper of ▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇;
"Purchaser's Warranties" means the Warranties given by the
Purchaser to the Vendors pursuant to
Clause 12
"Required for the Business" has the meaning given in Clause 14;
"Revenue" all amounts chargeable to clients
in respect of services provided by
the Division (including those
relating to services provided by
the Division to other divisions,
branches or affiliates of the
Purchaser or any member
16
of the Purchaser's Group but
excluding, for the avoidance of
any doubt, any amounts charged by
the Division for sales of
MediaTrax to any person, firm,
company or organisation who or
which is not a client of the
Division);
"RTPA 1976" means the Restrictive Trade
Practices ▇▇▇ ▇▇▇▇;
"SEC" means the United States Securities
and Exchange Commission;
"Second Additional" means the Additional Consideration
for the sale of Consideration"
Shares relating to the Second Year
calculated (subject to Clause 3.7)
in accordance with Clause 3.4;
"Second Earn Out Accounts" means the accounts of the
Division to be prepared in
accordance with Clause 4 in respect
of the Second Year
"Second Year" means the period of 12 months
commencing on 1st August 1999;
"Service Agreement" means the service agreement to
be entered into between the
Purchaser and SM on Completion in
the Agreed Form;
"Shares" means all the issued shares in the
capital of the Company;
"Share Purchase Documents" has the meaning given to it in
Clause 22;
"SM" ▇▇▇▇▇▇ ▇▇▇▇▇▇▇;
"Tax" or "Taxation" shall have the meaning ascribed
thereto in the Tax Covenant;
"Tax Covenant" means the deed of tax covenant to be
entered into between the Warrantors
and the Purchaser on Completion in
the Agreed Form;
17
"Tax Warranties" means the Warranties set out in
paragraphs 32 to 46 (inclusive) of
Schedule 3;
"TCGA 1992" means the Taxation of Chargeable
Gains ▇▇▇ ▇▇▇▇;
"Third Additional Consideration" means the Additional Consideration
for the sale of Shares relating to
the Third Year calculated in
accordance with Clause 3.5
"Third Earn Out Accounts" means the accounts of the Division
to be prepared in accordance with
Clause 4 in respect of the Third
Year;
"Third Year" means the period of 12 months
commencing on 1st August 2000;
"VATA 1994" means the Value Added Tax ▇▇▇ ▇▇▇▇;
"the Vendors" shall include the Warrantors;
"Vendors' Representative" means SM;
"Vendors' Solicitors" means Olswang of ▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇;
"Warranties" means the warranties set out in
Schedule 3 given by the Warrantors
and "Warranty" shall be construed
accordingly;
"Warrantors" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇;
"Warranty Escrow Agent" means the Purchaser's Solicitors
"Waste" means any waste including anything
which is abandoned, unwanted or
surplus irrespective of whether it
is capable of being recovered or
recycled or has any value;
"Working Hours" means 9.30 a.m. to 5.30 p.m. on a
Business Day; and
18
"Works" means the carrying out of:
(i) inspection, investigation,
sampling and monitoring works; and
(ii) any works (including the
installation, operation, repair or
replacement of plant or equipment)
in order to remove, remediate or
contain any Environmental Matter
or in order to prevent an
Environmental Matter from arising.
"Year" means any one of the First Year,
the Second Year and the Third Year;
1.2 In this Agreement, unless otherwise specified:-
1.2.1 references to Clauses, paragraphs and Schedules are to
clauses, paragraphs of, and Schedules to, this Agreement;
1.2.2 a reference to any statute or statutory provision shall be
construed as a reference to the same as it may have been,
or may from time to time be, amended, modified or
re-enacted;
1.2.3 references to "company" shall be construed so as to
include any company, corporation or other body corporate,
wherever and however incorporated or established;
1.2.4 references to a "person" shall be construed so as to
include any individual, firm, company, government, state
or agency of a state or any joint venture, association or
partnership (whether or not having separate legal
personality);
1.2.5 the word "subsidiary" shall have the same meaning in this
Agreement as its definition in the Companies ▇▇▇ ▇▇▇▇;
1.2.6 references to "indemnify" and "indemnifying" any person
against any circumstance include indemnifying and keeping
him harmless from all actions, claims and proceedings from
time to time made against that
19
person and all loss or damage and all payments, costs or
expenses made or incurred by that person as a consequence
of or which would not have arisen but for that
circumstance;
20
1.2.7 the expressions "accounting reference date", "accounting
reference period", allotment", "body corporate", "current
assets", "debentures", "holding company", "paid up",
"profit and loss account" "subsidiary", "subsidiary
undertaking" and "wholly-owned subsidiary" shall have the
meanings given in the Companies Acts;
1.2.8 a person shall be deemed to be connected with another if
that person is connected with another within the meaning
of section 839 ICTA 1988;
1.2.9 references to writing shall include any modes of
reproducing words in a legible and non-transitory form;
1.2.10 headings to Clauses and Schedules are for convenience only
and do not affect the interpretation of this Agreement;
1.2.11 the Schedules form part of this Agreement and shall have
the same force and effect as if expressly set out in the
body of this Agreement, and any reference to this
Agreement shall include the Schedules;
1.2.12 references to any English legal term for any action,
remedy, method of judicial proceedings, legal document,
legal status, court, official, or any legal concept or
thing shall in respect of any jurisdiction other than
England be deemed to include what most nearly approximates
in that jurisdiction to the English legal term;
1.2.13 (a) the rule known as the ejusdem generis rule shall not
apply and accordingly general words introduced by the
word "other" shall not be given a restrictive meaning
by reason of the fact that they are preceded by words
indicating a particular class of acts, matters or
things; and
1.2.14 (b) general words shall not be given a restrictive meaning
by reason of the fact that they are followed by
particular examples intended to be embraced by the
general words;
1.2.15 references to "so far as the Vendors are aware" shall be
construed so as to mean after having made due and careful
enquiry of each director of the
21
Company.
22
2. SALE AND PURCHASE
-----------------
2.1 Each of the Vendors shall, with full title guarantee, sell or
procure the sale of and the Purchaser shall purchase the Shares set
opposite that Vendor's name in Schedule 1 with all rights attached
or accruing to them at the date of this Agreement (save for any
rights in respect of any dividend declared by reference to any
period ending prior to or on Completion). The Shares shall be free
from all charges and encumbrances and from all other rights
exercisable by or claims by third parties.
2.2 The Purchaser shall be entitled to exercise all rights attached or
accruing to the Shares including, without limitation, the right to
receive all dividends, distributions or any return of capital
declared, paid or made by the Company on or after the date of this
Agreement.
2.3 Each of the Vendors hereby waives all rights of pre-emption over
any of the Shares conferred upon him by the articles of association
of the Company or in any other way.
3. CONSIDERATION
-------------
3.1 Subject to Clause 3.7 the consideration for the Shares shall be the
aggregate (for the avoidance of doubt not exceeding three million
seven hundred and ninety nine thousand five hundred and seventy
five (pounds 3,799,575)) of the Initial Consideration, the First
Additional Consideration, the Second Additional Consideration and
the Third Additional Consideration.
3.2 The Initial Consideration shall be the sum of one million (pounds
1,000,000) and comprising:-
3.2.1 the sum of six hundred and twenty thousand (pounds
620,000) payable in cash on Completion and
3.2.2 the allotment on Completion of such number (which shall
be rounded up to the nearest whole share thus excluding
fractions) of Consideration Shares credited as fully
paid as shall at the sterling equivalent of the relevant
Issue Price has the value nearest to but not less than
three hundred and eighty thousand (pounds 380,000)
("Initial Consideration Shares").
3.3 Subject to Clause 3.7 the First Additional Consideration shall be a
sum of up to six hundred and ninety three thousand seven hundred
(pounds 693,700) and calculated as
23
shown in Column B below:-
24
A B
= =
ROW 1 ROW 2
First Year a x 550,000 + b x 150,000
----------- ------------
675,000 4,620,000
and so that if such calculation produces an amount in excess of six
hundred and ninety three thousand seven hundred (pounds 693,700)
the First Additional Consideration shall nevertheless not exceed
six hundred and ninety three thousand seven hundred (pounds
693,700).
3.4 Subject to Clause 3.7 the Second Additional Consideration shall be
a sum of up to nine hundred and forty one thousand four hundred and
fifty (pounds 941,450) and calculated as shown in Column B below:-
A B
= =
ROW 1 ROW 2
Second Year a x 700,000 + b x 250,000
----------- ------------
1,077,000 6,300,000
and so that if such calculation produces an amount in excess of
nine hundred and forty one thousand four hundred and fifty (pounds
941,450) the Second Additional Consideration shall nevertheless
not exceed nine hundred and forty one thousand four hundred and
fifty (pounds 941,450).
3.5 Subject to Clause 3.7 the Third Additional Consideration shall be a
sum of up to one million one hundred and sixty four thousand four
hundred and twenty five (pounds 1,164,425) and calculated as shown
in Column B below:-
A B
= =
ROW 1 ROW 2
Third Year a x 800,000 + b x 375,000
----------- -----------
25
1,815,000 8,375,000
and so that if such calculation produces an amount in excess
of one million one hundred and sixty four thousand four
hundred and twenty five (pounds 1,164,425) the Third
Additional Consideration shall nevertheless not exceed one
million one hundred and sixty four thousand four hundred and
twenty five (pounds 1,164,425).
3.6 For the purposes of each of Clause 3.3, Clause 3.4 and Clause 3.5:-
"a" means the Net Profits for the Year in question or zero
whichever shall be the greater;
"b" means the Revenue (net of VAT) during the Year in question.
Provided that the denominator of the fraction in Row 1 in Clauses
3.3, 3.4 and 3.5 ("Profit Target") shall be adjusted, as follows:-
The Profit Target for each Year shall be reduced by 1 3/4 % for
each complete 3 month period after 31st December 1998 that the
service known as "MediaTrax" is not available to be provided by the
Division to its clients (and so that for example if MediaTrax is
not available throughout the period from 1st January 1999 to 30th
June 1999 the Profit Target for the First Year shall be reduced
from 75,000 pounds to 651,375 pounds and if it is not available
throughout the whole of the Second Year the Profit Target for the
Second Year shall be reduced from 1,077,000 pounds to 1,001,610
pounds and if it is not available throughout the whole of
the Third Year the Profit Target for the Third Year shall be reduced
from 1,815,000 pounds to 1,687,950 pounds).
3.7 The amount of each of the First Additional Consideration, the
Second Additional Consideration and the Third Additional
Consideration shall be reduced by the amount or amounts which is or
are paid pursuant to the Bonus Letters.
3.8 The Additional Consideration payable in respect of each Year shall
be satisfied as to 60% thereof by the issue of Loan Notes (the
aggregate nominal amount of which shall be equal to 60% of the
amount of Additional Consideration payable) and as to 40% thereof
by the issue of Consideration Shares (rounded up to the nearest
whole share, thus excluding fractions) and shall be payable to the
Vendors in the proportions set out in Column 6 of Schedule 1.
26
3.9.1 For the purposes of determining the sterling equivalent of the
Issue Price of the Consideration Shares to be issued on Completion
pursuant to Clause 3.2.2 there shall be taken the sterling spot
exchange rate as derived from the WM Reuters closing spot rate
tables for the Business Day immediately prior to Completion.
3.9.2 For the purposes of determining the sterling equivalent of the
Issue Price of the Consideration Shares and the aggregate nominal
amount of the Loan Notes to be issued pursuant to Clause 3.3,
Clause 3.4 and Clause 3.5 there shall be taken the sterling spot
exchange rate as derived from the WM Reuters closing spot rate
tables for the Business Day immediately prior to the date when the
Additional Consideration in question is agreed or determined in
accordance with Clause 4.
3.10 The Consideration Shares and the Loan Notes to be issued in respect
of the First Additional Consideration, the Second Additional
Consideration and the Third Additional Consideration shall be
issued as soon as practicable after the presentation by the
Purchaser to the Vendor's Representative of the Earn Out Accounts
and the draft calculations in accordance with Clause 4 in the
proportions set out in Clause 3.8 of the amount so determined by
the Purchaser of the First Additional Consideration, the Second
Additional Consideration and the Third Additional Consideration (as
the case may be).
3.11.1 If upon the agreement by the parties or determination by the Expert
of the First Additional Consideration, the Second Additional
Consideration and the Third Additional Consideration (as the case
may be) in accordance with Clause 4 the amount so agreed and
determined is greater than the Purchaser's initial calculation
presented to the Vendors' Representative in accordance with Clause
4.1 (the amount of difference being the "Excess") the Purchaser
shall issue Consideration Shares and Loan Notes to the Vendors in
the proportions set out in Clause 3.8 in respect of the Excess as
soon as practicable after such agreement or determination which
when added to the Consideration Shares and Loan Notes issued to the
Vendors shall comprise the First Additional Consideration, the
Second Additional Consideration or Third Additional Consideration
(as the case may be).
3.11.2 If upon the agreement by the parties or determination by the Expert
of the First Additional Consideration the Second Additional
Consideration and the Third Additional Consideration (as the case
may be) in accordance with Clause 4 the amount so agreed or
27
determined is less than the Purchaser's initial calculation
presented to the Vendors' representative in accordance with Clause
4.1 (the amount of the difference being the "Shortfall") the
Vendors shall return to the Purchaser for cancellation in the
proportions set out in Clause 3.8 such number of Consideration
Shares and Loan Notes as shall equal the Shortfall and the balance
of the Consideration Shares and Loan Notes after deduction of the
amount which shall equal the Shortfall shall comprise the First
Additional Consideration, the Second Additional Consideration or
the Third Additional Consideration (as the case may be).
4. EARN OUT ACCOUNTS AND PROCEDURE WITH RESPECT TO THE ASCERTAINMENT
AND DETERMINATION OF THE ADDITIONAL CONSIDERATION
4.1 The Purchaser shall (within 60 days following the expiry of the
First Year) prepare a profit and loss account of the Division for
the First Year and a balance sheet of the Division as at 31st July
1999 and shall calculate the first draft of the Adjustments, Net
Profits for the First Year, Revenue for the First Year and the
First Additional Consideration
4.2 Except as provided in this Agreement, the profit and loss account
and balance sheet shall be prepared on a basis consistent with the
accounts of the Purchaser consistent with the accounting policies
and practices as applied in the Purchaser's Annual Report on Form
10-K filed with the SEC.
4.3 Unless the Vendors' Representative notifies the Purchaser in
writing within 30 Business Days that he does not accept such drafts
the Vendors shall be deemed to have accepted such drafts and the
draft statement of the Net Profits shall be the Net Profits the
draft calculation of the Revenue shall be the Revenue and the draft
calculation of the First Additional Consideration shall be the
First Additional Consideration and the draft accounts shall be the
First Earn Out Accounts.
4.4 If within the period of 30 Business Days referred to in Clause 4.3
the Vendors' Representative shall notify the Purchaser in writing
that he does not accept the said drafts the Purchaser and the
Vendors' Representative will use their best endeavours, negotiating
in good faith, to reach agreement upon the said drafts to meet the
objections of the Vendors.
4.5 When the Vendors' Representative accepts or is deemed to have
accepted the said drafts
28
then they shall be final and binding on the parties.
4.6 In the event that the Vendors' Representative and the Purchaser are
unable to reach agreement within a period of 15 Business Days after
the giving of any notice by the Vendor's Representative under
Clause 4.4 the Purchaser or the Vendors' Representative may refer
the dispute to an independent chartered accountant ("the Expert")
appointed by agreement between them or (in default of such
agreement) to be selected (at the instance of either of them) by
the President for the time being of the Institute of Chartered
Accountants in England and Wales.
4.7 In any reference to the Expert in accordance with Clause 4.6:-
4.7.1 the Expert shall act as an expert and not as an arbitrator;
4.7.2 the decision of the Expert shall in the absence of fraud or
manifest error be final and binding on the Purchaser and the
Vendors and not be capable of being appealed against by
either of the parties;
4.7.3 the costs of the Expert shall be paid by the Vendors if the
amount determined by the Expert in respect of the First
Additional Consideration is within 5% of the Purchaser's
draft calculation thereof, otherwise the cost of the Expert
shall be paid by the Purchaser;
4.7.4 the Vendors' Representative and the Purchaser shall
respectively provide or procure the provision to the Expert
of all such information as the Expert shall reasonable
require;
4.7.5 in giving his decision the Expert shall state what
adjustments (if any) are to be made to the said drafts.
4.8 The provisions of Clause 4.1 to Clause 4.7 (inclusive) shall apply
mutatis mutandis in the case of the ascertainment and determination
of the Net Profits and Revenue for the Second Year and for the
Third Year and the Second Additional Consideration and the Third
Additional Consideration and the Second Earn Out Accounts and the
Third Earn Out Accounts and as if in Clause 4.1 in the case of the
Second Year "31st July 2000" shall be substituted for "31st July
1999" and "Second Year" shall be substituted for "First Year" and
in the case of the Third Year "31st July 2001" shall be substituted
for
29
"31st July 1999" and "Third Year" shall be substituted for "First
Year".
4.9 Each of the Vendors hereby irrevocably authorises the Vendors'
Representative (or in the event of his death such other of the
Vendors as they shall nominate and notify in writing to the
Purchaser) to act on his behalf in connection with the
ascertainment and determination of the Additional Consideration in
accordance with the provisions of this Clause 4.
4.10 The Purchaser shall procure that the Vendor's Representative is
given all assistance and access to all additional information he
may reasonably require to enable him to make his decision.
4.11 The provisions of Schedule 7 shall apply to this Clause.
5. CONSIDERATION SHARES
--------------------
5.1 The Purchaser shall be under no obligation to any of the Vendors to
register any of the Consideration Shares with the SEC save as
expressly provided in this Agreement.
5.2 The Purchaser warrants that it shall maintain sufficient authorised
but unissued share capital and obtain all necessary authorities and
powers and take all requisite action to enable the Consideration
Shares to be issued.
5.3 The holders of Consideration Shares issued on Completion shall be
entitled to receive any dividend declared or paid to shareholders
of the Purchaser as of any "record date" therefor after Completion
and in respect of the holders of Consideration Shares to be issued
pursuant to Clause 3.3, Clause 3.4 and Clause 3.5 respectively
shall be entitled to receive any dividend declared or paid to
Shareholders of the Purchaser as of any "record date" therefor
after the first anniversary, the second anniversary and the third
anniversary of Completion respectively. The Consideration Shares
shall be issued fully paid and non-assessable, and free from any
option, charge, lien, equity, encumbrance, rights of pre-emption or
any other third party right save as expressly provided in this
Agreement.
5.4 The Purchaser shall comply with the requirements of NASDAQ with
regard to the Consideration Shares.
6. RESTRICTIONS ON THE DISPOSAL OF CONSIDERATION SHARES
----------------------------------------------------
6.1 Each Vendor undertakes to the Purchaser that he shall not for a
period of one year after
30
the date when they are issued to him sell, charge, pledge, transfer
or otherwise dispose of any interest in the Consideration Shares
("Sell") except to the extent permitted by Rule 144 under the US
Securities Act of 1933 (as amended).
6.2 Without prejudice to the provisions of Clause 6.1 SM undertakes to
the Purchaser that he shall not for a period of two years after the
respective dates when they are issued to him Sell his Consideration
Shares PROVIDED THAT:-
6.2.1 after 12 months from the respective dates of issue he shall
be entitled to Sell up to 20% of the original number of
them;
6.2.2 after 18 months from the respective dates of issue he shall
be entitled to Sell up to a further 20% of the original
number of them.
31
6.3 Nothing in Clause 6.1 or Clause 6.2 shall prevent a Vendor from
being entitled to Sell his Consideration Shares in acceptance of a
general offer for the issued share capital of the Purchaser.
6.4 The restrictions contained in Clause 6.2 shall not apply:-
6.4.1 to any transfer to or by the personal representatives of
SM if he shall die before the relevant date;
6.4.2 to the disposal by SM of such number of Consideration Shares
as is necessary to raise the money to satisfy any
liabilities under the Warranties or Tax Deed;
6.4.3 to the disposal by SM in circumstances where he has ceased
to be an employee of the Purchaser by reason of ill-health,
permanent incapacity, redundancy, unfair dismissal or
wrongful dismissal.
6.5.1 The Purchaser shall procure that upon the termination of any of the
restrictions on the disposal of the Consideration Shares contained
in Rule 144 under the US Securities Act of 1933 (as amended) the
Purchaser's transfer agent shall remove at the cost of the
Purchaser any statement of such restrictions endorsed on the
relevant certificate for such Consideration Shares upon
presentation of such certificate by the Vendors to the transfer
agent and re-issue the certificate accordingly.
[6.5.2 The following provisions of this Clause 6.5 will take effect
in the event that either:
6.5.2.1 the US attorneys of the Purchaser do not give an
unqualified legal opinion to any of the Vendors
acceptable to the transfer agent of the Purchaser
or a transferee of the Consideration Shares within
3 Business Days of the request and at the cost of
the Purchaser that such Vendor is not regarded as
an affiliate of the Purchaser for the purposes of
Rule 144 under the US Securities ▇▇▇ ▇▇▇▇ (as
amended) but not otherwise; or
6.5.2.2 any of the Vendors are the subject of restrictions in their
ability to dispose of Consideration Shares which they
would not have been subject had the consideration shares
been registered with the SEC.
32
6.5.3 The Vendors shall be entitled to require the Purchaser at its cost
to procure the registration with the SEC of such number of their
respective Consideration Shares as shall be capable of registration
("the demand right") subject to the Vendor or Vendors exercising
the demand right entering into a standard registration rights
agreement.
6.5.4 The demand right shall not be exercised on more than six occasions
and may not be exercised more than once per year. A demand right
may be exercised only during each of the following years:
1 August 1999 - 1 August 2000 (year one)
1 August 2000 - 1 August 2001 (year two)
1 August 2001 - 1 August 2001 (year three)
1 August 2002 - 1 August 2003 (year four)
1 August 2003 - 1 August 2004 (year five)
1 August 2004 - 1 August 2005 (year six)
6.5.5 In each of year one, year two, year three and year four the demand
right shall be exercised by Vendors holding not less than 25% of
the Consideration Shares issued upon the previous occasion when
Additional Consideration shall have been paid.
6.5.6 In year five and year six the demand right may be exercised by SM
in respect of those Consideration Shares issued to him which are
free from the restrictions contained in Clause 6.2.
7. PROTECTION OF THE ADDITIONAL CONSIDERATION
------------------------------------------
7.1 The Purchaser undertakes with the Vendors that until 31st July 2001
it shall and shall procure that the Company and each member of the
Purchaser's Group shall not (except with the prior written consent
of SM not to be unreasonably withheld):-
7.1.1 sell or transfer or otherwise dispose of the Division
provided that the consent of SM shall not be required in the
event that there is a Change of Control in the Purchaser and
in the event of a Change in Control of the Purchaser if the
Purchaser shall subsequently during such period as aforesaid
receive any offer for the sale, transfer or other
disposition of the Division it shall not accept such offer
without first procuring that the offer or enters into a deed
33
of adherence agreeing to be bound by the obligations on the
part of the Purchaser contained in this Agreement in place
of the Purchaser to the extent that such obligations remain
to be performed or observed and also without procuring that
the offer or offers to the Vendors in respect of outstanding
Additional Consideration shares or stock or other form of
equity security reasonably acceptable to the Vendors, or, in
the absence of agreement with the Vendors, loan notes in
substantially similar form as the Loan Notes (including in
relation to security);
7.1.2 procure any resolution to be proposed for the purpose of
voluntary winding-up or otherwise causing the Company or any
member of the Purchaser's Group to cease to trade;
7.1.3 procure the Company and any member of the Purchaser's Group
to be struck off the register under the Companies ▇▇▇ ▇▇▇▇;
7.1.4 conduct the business of the Division except in accordance
with all applicable laws and regulations;
7.1.5 enter into any transaction otherwise than in the ordinary
course of business or otherwise than on arm's length terms;
and the Purchaser shall and shall procure that the Company and each
member of the Purchaser's Group shall:-
7.1.6 manage and operate the Division with a view to maximising its
profits;
7.1.7 cause that all broadcast public relation business and the
television consultancy business of the Purchaser and each
member of the Purchaser's Group outside North America, South
America and the Caribbean shall be carried out by the
Division except where the client of the Purchaser or of any
other member of the Purchaser's Group (acting reasonably)
specifically requests otherwise or where the Purchaser with
the prior written consent of SM (not to be unreasonably
withheld) determines that the interests of the client will
be best served if the services the client requires are
provided by the Purchaser or another member of the
Purchaser's Group;
34
7.1.8 cause that all services provided by the Division as
sub-contractor to the Purchaser shall be provided at such
rate as may be reasonable in the context of the main
contract and the value to the Purchaser of the custom of the
client.
7.2.1 The Purchaser undertakes with the Vendors that during the period of
12 months immediately following Completion the Purchaser shall
review the basis upon which the Division provides its services to
the Purchaser or other members of the Purchaser's Group and the
amount of the discount from the Division's normal rates allowed to
the Purchaser or other members of the Purchaser's Group with a view
to considering whether to adjust the rate of discount.
7.2.2 If consequent upon such review the Purchaser shall determine that
the amount of such discount shall be less than the discount in
effect from time to time ("the Current Rate") then for the purpose
of determining the Net Profit and the Revenue there shall be added
to the amount paid and/or due to the Division from the Purchaser
and/or any member of the Purchaser's Group in respect of services
provided by the Division prior to the determination of the reduced
rate of discount ("the Reduced Rate") the effect of the difference
between the Current Rate and the Reduced Rate.
7.2.3 If the Purchaser shall not carry out such review within the period
referred to in Clause 7.2.1 or if the review is not carried out in
accordance with that Clause then for the purpose of determining the
Net Profits and the Revenue there shall be added 12.5% to the
amount due and/or paid to the Division from or by the Purchaser
and/or any member of the Purchaser's Group in respect of services
provided by the Division to the Purchaser until such time as the
Purchaser shall carry out such review whereupon the discount to be
applied to services provided by the Division to the Purchaser
and/or any member of the Purchaser's Group shall be at the Reduced
Rate until the end of the Third Year.
7.3 Nothing in Clause 7.1 shall impose any liability on the Purchaser
for anything done or omitted to be done on behalf of the Company by
SM or AMG except when done or omitted to be done at the request of
or at the direction of the Company or any member of the Purchaser's
Group.
8. SECURITY FOR THE LOAN NOTES
----------------------------
8.1 As security for the payment of the nominal amounts of each issue of
the Loan Notes and interest payable thereunder the Purchaser shall
as soon as the relevant Additional Consideration shall have been
ascertained and determined in accordance with Clause 4 (but prior
to the issue of the relevant Loan Notes), at its discretion by
written notice to
35
the Vendors elect either to:-
8.1.1 procure that a recognised clearing bank shall provide in a
form to be reasonably agreed between the Purchaser and the
Vendors' Representative a guarantee in favour of the Vendors
of the amounts payable by the Purchaser under the Loan Notes
issued; or
8.1.2 pay into the Escrow Account a sum equal to the amounts
payable by the Purchaser under the Loan Notes issued.
9. COMPLETION
-----------
9.1 Completion shall take place immediately after signature of this
Agreement at the offices of the Vendors' Solicitors.
9.2 On Completion the Vendors shall deliver, or procure the delivery,
to the Purchaser or the Purchaser's Solicitors:-
9.2.1 duly executed transfers in respect of the Shares in favour
of the Purchaser or such person as the Purchaser may
nominate together with share certificates for the Shares in
the names of the relevant transferors and any power of
attorney under which any transfer is executed on behalf of
any Vendor or nominee;
9.2.2 powers of attorney in the Agreed Form;
9.2.3 the Tax Covenant duly executed by the Warrantors;
9.2.4 the counterpart Service Agreement duly executed by SM;
9.2.5 the counterpart Consultancy Agreement duly executed by AMG;
9.2.6 the Deeds of Covenant duly executed by SM and AMG
respectively;
9.2.7 letters of resignation in the Agreed Form from the secretary
of the Company;
9.2.8 letters of resignation in the Agreed Form from all of the
directors of the Company;
36
9.2.9 all cheque books in current use of the Company;
9.2.10 bank statements in respect of each account of the
Company as at the close of business on the last
Business Day prior to completion together in each case
with a reconciliation statement prepared by the
Vendors to show the position at Completion (listing
un-presented cheques drawn or received by the Company
and standing orders payable since the date of such
bank statements).
9.2.11 the statutory books (which shall be written up to but
not including the Completion Date), the certificate of
incorporation (and any certificate of incorporation on
change of name) and common seal (if any) of the
Company;
9.2.12 the title deeds relating to the Business Property;
9.2.13 the original of the letter from the auditors of the Company
referred to in Clause 9.3;
9.2.14 a deed in the Agreed Form terminating the Severance
Agreement made between the Company (1) and ▇▇▇▇▇▇ ▇▇▇▇▇ (2)
attached at document 59 in the Disclosure Bundle;
9.2.15 a deed of restrictive covenant in the Agreed Form to
be between the Company (1) SM and AMG (2) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (3) and the Purchaser (4) duly executed
by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇;
9.3 The Vendors shall procure the present auditors of the Company to
resign their office as such, and to deposit at the registered
office of the Company a letter notifying their resignation,
acknowledging that they have no claim against the Company and
containing a statement pursuant to Section 394(1) of the Companies
▇▇▇ ▇▇▇▇ that there are no circumstances connected with their
ceasing to hold office which they consider should be brought to the
attention of any members or creditors.
9.4 Each Vendor will:-
9.4.1 repay and will procure that any person connected with such
Vendor will repay all amounts owed by him, her or it to the
Company whether due for payment or not;
37
9.4.2 deliver to the Purchaser a deed in the Agreed Form
acknowledging that neither such Vendor nor or any such
connected person has any claim against the Company and there
is no agreement or arrangement under which the Company has
any actual, contingent or prospective obligation to or in
respect of any of them.
9.5 The Vendors shall procure a board meeting of the Company shall be
held at which:-
9.5.1 it shall be resolved that each of the transfers relating to
the Shares shall be approved for registration and (subject
only to the transfer being duly stamped) each transferee
registered as the holder of the Shares concerned in the
register of members;
9.5.2 each of the persons nominated by the Purchaser shall be
appointed directors and/or secretary, as the Purchaser shall
direct, such appointments to take effect on the Completion
Date;
9.5.3 the resignations referred to in Clause 9.2.7, Clause 9.2.8
and Clause 9.3 shall be submitted and accepted;
9.5.4 all existing instructions to the Company's bank shall be
revoked and new instructions shall be given to such bank in
such form as the Purchaser may direct;
9.5.6 the registered office of the Company is changed to ▇▇/▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇;
9.6 Immediately thereafter the Purchaser shall:-
9.6.1 pay the Vendors' Solicitors by way of telegraphic transfer
the sum of six hundred and twenty thousand (pounds 620,000)
referred to in Clause 3.3.1;
9.6.2 deliver to the Vendors' Solicitors, duly executed by the
Purchaser:-
(a) the counterpart of the Tax Covenant
(b) the Service Agreement
38
(c) the Consultancy Agreement
(d) the Counterpart Deeds of Covenant;
9.6.3 undertake to deliver to the Vendors (other than the
Warrantors) certificates for the Consideration Shares
respectively due to be issued to them on Completion as soon
as practicable after Completion and to deposit with the
Warranty Escrow Agent the share certificates for the
Consideration Shares respectively due to be issued to the
Warrantors on Completion ("the Escrow Shares").
9.7 The Purchaser shall not be obliged to complete this Agreement
unless each Vendor complies fully with the requirements of Clause
9.2 to Clause 9.5 (inclusive).
9.8 The Purchaser shall not be obliged to complete the sale and
purchase of any of the Shares unless the sale and purchase of all
the Shares is completed simultaneously. This Clause shall not limit
any other Clause of this Agreement and in particular Clause 18.
9.9 Payment by telegraphic transfer of the sum of six hundred and
twenty thousand (620,000 pounds) in accordance with Clause 9.6.1
shall discharge the obligation of the Purchaser under Clause 3.2.1
and the Purchaser shall not be concerned to see that the sum
transferred is applied in paying the Vendors in accordance with
their respective entitlements.
9.10 The Vendors hereby acknowledge that immediately following
Completion until such time as the transfers of the Shares have been
registered in the register of members of the Company the Vendors
will hold the Shares on trust for and as nominee for the Purchaser
or its nominee(s) (as the case may be) and hereby undertake to hold
all dividends and distributions and exercise all voting rights
available in respect of the Shares in accordance with the
directions of the Purchaser or its nominee(s) (as the case may be)
and shall (if so requested by the Purchaser or its nominee(s) (as
the case may be)) execute all instruments or proxies (including
consents to short notice) or other documents which the Purchaser or
its nominee(s) (as the case may be) may reasonably require and
which may be necessary to enable the Purchaser or any such
nominee(s) to attend and vote at general meetings of the Company
and if the Vendors fail so to execute any such documents the
Purchaser is hereby irrevocably authorised to appoint some person
or persons to execute any such document in the name of or on behalf
of the Vendors and to do any thing or things necessary to give
effect to the same.
39
9.11 The Purchaser shall procure that the Company shall prepare
completion management accounts for the Company in accordance with
and on a basis consistent with the policy of the Company in the
period from 1st April 1998 to Completion for the period from 1st
June 1998 up to and including 6th July 1998 (such accounts to
include a provision for bad or doubtful debts not exceeding in the
aggregate 5,000 pounds).
9.12 The Purchaser shall procure that the Board of Directors of the
Company shall declare a dividend payable to the Vendors of the
amount by which the profits available for distribution (as defined
in the Companies Act 1985) at Completion as shown in the management
accounts of the Company referred to in Clause 9.11 exceeds 100,000
pounds (after allowing, for the avoidance of doubt, the dividend
declared on 6th July 1998) and shall procure that the Company
shall:-
9.12.1 deliver a copy of the management accounts referred to in
Clause 9.11 to the Vendor's Representative within 10 Business
Days after their preparation;
9.12.2 send to the Vendors' Representative each month a
statement showing the amounts received and payments made by
the Company during the previous month and payments due to be
made by the Company within the following 10 Business Days
(except for payment of any advance corporation tax made by
the Company), the amount by which the total of such receipts
shall exceed the total of such payments being called "the
Surplus";
9.12.3 with the delivery of such statement pay to the Vendors
out of the Surplus the amount of such dividend and the
amount of the dividend declared on 6th July 1998 but
remaining unpaid at Completion until both such dividends
shall have been paid in full.
9.13 The consideration for the Shares shall be reduced by the amount by
which the distributable reserves of the Company (as defined in the
Companies Act 1985) are less than 100,000 pounds as shown in the
management accounts referred to in Clause 9.11 ("Deficit"). Any
reduction in the consideration shall in accordance with this Clause
9.13 be made by the payment by the Vendors of an amount equal to
the Deficit within 30 days of receipt of the management accounts in
accordance with Clause 9.1.
9.14 The Vendors shall not be required to make a payment in accordance
with Clause 9.13 unless the amount of the Deficit exceeds 5,000
pounds and then only shall be required to make payment of the excess.
40
10. WARRANTIES
----------
10.1 Subject as set out in Clause 10.7 to 10.11, the Warrantors warrant
to the Purchaser that subject to Clause 11 each of the Warranties
is accurate in all respects and not misleading at the date of this
Agreement.
10.2 The Warrantors accept that the Purchaser is entering into this
Agreement in reliance upon each of the Warranties.
10.3 Each of the Warrantors undertakes (if any claim is made against any
of them for breach of the Warranties or claim under the Tax
Covenant) not to make any claim against the Company or any director
or employee on whom any of them may have relied before agreeing to
any terms of this Agreement or of the Tax Covenant or authorising
any statement in the Disclosure Letter (but nothing in this Clause
10.3 shall prevent any of the Warrantors exercising any right of
contribution or otherwise which they may have against any other of
the Warrantors).
10.4 Each of the Warranties shall be construed as a separate and
independent Warranty and (except where expressly provided to the
contrary) shall not be limited or restricted by reference to or
inference from the terms of any other Warranty or any other term of
this Agreement.
10.5 If any liability of one or some but not all of the Warrantors is,
or becomes, illegal, invalid or unenforceable in any respect, that
shall not affect or impair the liabilities of the other Warrantors
under this Agreement.
10.6 The Purchaser may release, or compromise the liability of, any
Warrantor or grant time or other indulgence to any Warrantor
without releasing or reducing the liability of any other Warrantor.
Where a liability of one or some but not all of the Warrantors
under any obligation which is both joint and several is released or
compromised, the remaining Warrantor shall continue to be severally
and shall together be jointly liable on that obligation.
10.7 The liability of AMG and Mrs J ▇▇▇▇▇▇▇▇▇ on the one hand in respect
of any claim for breach of or inaccuracy in the Warranties or under
the Tax Deed ("Claim") and SM and Mrs J Maister on the other hand
shall be several.
41
10.8 The liability of AMG and Mrs J ▇▇▇▇▇▇▇▇▇ in respect of any Claim as
between themselves shall be joint and several.
10.9 The liability of SM and Mrs J Maister in respect of any Claim as
between themselves shall be joint and several.
10.10 The maximum liability of either AMG or Mrs J ▇▇▇▇▇▇▇▇▇ in respect
of any Claim shall be 20.62% thereof and the maximum aggregate
liability of AMG and Mrs J ▇▇▇▇▇▇▇▇▇ in respect of any Claim shall
be 20.62% thereof.
10.11 The maximum liability of either SM or Mrs J Maister in respect of
any Claim shall be 100% thereof and the maximum aggregate liability
of SM and Mrs J Maister in respect of any Claim shall be 100%
thereof.
11. WARRANTORS' LIMITATIONS ON LIABILITY
------------------------------------
11.1 Subject to Clause 11.2 and to the limitations set out in Schedule 4
the Purchaser shall be entitled to claim that any of the Warranties
has or had been breached or is or was misleading and, without
limitation, to claim under any Warranty even if the Purchaser could
have discovered on or before Completion that the Warranty in
question had been breached or was misleading and Completion shall
not in any way constitute a waiver of any of the Purchaser's
rights.
11.2 The Purchaser shall not be entitled to claim that any fact causes
any of the Warranties to be breached or renders any Warranty
misleading if it has been fairly disclosed to the Purchaser in the
Disclosure Letter or in any document annexed to the Disclosure
Letter in the absence of any fraud or dishonesty on the part of any
of the Warrantors or their respective agents or advisers.
11.3 No liability shall attach to the Warrantors in respect of claims
under the Warranties if and to the extent that the limitations
which are set out in Schedule 4 apply, in the absence of any fraud
or dishonesty on the part of any of the Warrantors or their
respective agents or advisers.
11.4 Except as stated expressly in this Clause, this Clause and Schedule
4 shall not limit any other Clause of this Agreement and in
particular Clause 16.
42
12. PURCHASER'S WARRANTIES
----------------------
12. The Purchaser warrants to the Vendors that each of the following
statements is true and accurate in all respects and not misleading
as at the date of this Agreement:-
12.1 the line items included in the summary financial performance
of the Division for the years ended 31st December 1996 and
31st December 1997 (a copy of which summary is attached to
the Purchaser's Disclosure Letter) have been prepared in
accordance with the accounting policies attached to the
Purchaser's Disclosure Letter and that they show fairly in
all material respects the net profit before tax of the
Division for each of those years;
12.2 the balance sheet of the Division (excluding the Business)
to be prepared as at 1st August 1998 will be prepared on a
basis consistent with the accounting policies attached to
the Purchaser's Disclosure Letter;
12.3 full and adequate provision in the management accounts of
the Division for the period from 1st January 1998 to 31st
March 1998 has been made for all liabilities of the Division
then known;
12.4 to the best of the Purchaser's knowledge, information and
belief (having made all due and careful enquiry) all written
information supplied by the Purchaser to the Vendors or
their professional advisers in relation to the Purchaser or
the Division is true and accurate and not misleading in all
material respects;
12.5 there is nothing known to the Purchaser which renders the
factual information about the Division provided by the
Purchaser and contained in the report prepared by the
Vendor's Accountants (a copy of which is signed by or on
behalf of the Vendors and the Purchaser for the purposes of
identification) materially misleading and there is no other
factual information about the Division known to the
Purchaser which would, if it had been known to those
preparing such report, have reasonably caused them to
materially adversely change the contents thereof.
For the avoidance of doubt, for the purposes of this Clause 12 the
Division excludes the Business.
13. LIMITATIONS ON EARN OUT ADJUSTMENTS UNDER THE PURCHASER'S
----------------------------------------------------------
43
WARRANTIES
----------
13.1 Subject to Clause 13.2 and to the limitations set out in Schedule 7
the Vendors shall be entitled to claim that any of the Purchaser's
Warranties has or had been breached or is or was misleading and
without limitation to claim under any of the Purchaser's Warranties
even if the Vendors could have discovered on or before Completion
that the Purchaser's Warranty in question had been breached or was
misleading and Completion shall not in any way constitute a waiver
of any of the Vendors' rights.
13.2 The Vendors shall not be entitled to claim that any fact which
causes any of the Purchaser's Warranties to be breached or renders
any Purchaser's Warranty misleading if it has been fairly disclosed
to the Vendors in the Purchaser's Disclosure Letter or in any
document annexed to the Purchaser's Disclosure Letter in the
absence of any fraud or dishonesty on the part of the Purchaser or
its agents or advisors.
13.3 No adjustment to the Net Profits and/or Revenue shall be made in
respect of claims under the Purchaser's Warranties if and to the
extent that the limitations which are set out in Schedule 7 apply
in the absence of any fraud or dishonesty on the part of the
Purchaser or its agents or advisors.
14. PROVISION OF BUSINESS INFORMATION
14.1 During the period of three years after Completion and without
prejudice to any of the Warranties:-
14.1.1 if any Business Information Required for the Business\
of the Company is not in the possession of the Company or
the Purchaser or readily discoverable by the Company or the
Purchaser but is in the possession or under the control of
the Vendors, the Vendors shall procure that such Business
Information is provided to the Purchaser promptly on
request; and
14.1.2 if any Books or Records of any Vendor contain Business
Information which should be provided to the Purchaser, such
Vendor shall procure that copies of such Books or Records
are given to the Purchaser promptly on request.
14.2 For the purposes of this Clause and this Agreement generally,
"Required for the Business" means any Intellectual Property or
Business Information of the Company which is or has in the last
three years been used in the business of the Company and is or will
be needed by the Company to carry on the business of the Company in
the same
44
manner as it is presently carried on by the Company or is or will
be needed to fulfil any of the present contracts, plans or projects
of the Company or to comply with any law applicable in relation to
the business of the Company or is vested in any of the Vendors and
its retention by any Vendor after Completion of this Agreement
would be damaging or detrimental to the business of the Company.
15. EFFECT OF COMPLETION
--------------------
15.1 Any provision of this Agreement and any other documents referred to
in it which is capable of being performed after but which has not
been performed at or before Completion and all Warranties and
covenants and other undertakings contained in or entered into
pursuant to this Agreement shall remain in full force and effect
notwithstanding Completion.
16. JOINT AND SEVERAL LIABILITY
----------------------------
16.1 Save as expressly set out in this Agreement (and in particular in
Clauses 10.7 to 10.11) the obligations of the Vendors under this
Agreement are joint and several.
16.2 If any liability of one or some but not all of the Vendors is, or
becomes, illegal, invalid or unenforceable in any respect, that
shall not affect or impair the liabilities of the other Vendors
under this Agreement.
17. RELEASE OF VENDORS
------------------
17.1 The Purchaser may release, or compromise the liability of, any
Vendor or grant time or other indulgence to any Vendor without
releasing or reducing the liability of any other Vendor. Where a
liability of one or some but not all of the Vendors under any
obligation which is both joint and several is released or
compromised, the remaining Vendors shall continue to be severally
and shall together be jointly liable on that obligation.
18. REMEDIES AND WAIVERS
--------------------
18.1 No delay or omission on the part of any party to this Agreement in
exercising any right, power or remedy provided by law or under this
Agreement or any other documents referred to in it shall impair
such right, power or remedy or operate as a waiver thereof.
18.2 The single or partial exercise of any right, power or remedy
provided by law or under this Agreement shall not preclude any
other or further exercise thereof or the exercise of any other
right, power or remedy.
45
18.3 The rights, powers and remedies provided in this Agreement are
cumulative and not exclusive of any rights, powers and remedies
provided by law.
19. PURCHASER'S RIGHTS OF SET OFF AND ESCROW
----------------------------------------
19.1 Without prejudice to any other right or remedy available to the
Purchaser and notwithstanding any other provision of this Agreement
the Purchaser shall be entitled in accordance with this Clause 19
to ▇▇▇▇▇ any amount due to the Warrantors in respect of the First
Additional Consideration and/or the Second Additional Consideration
and/or the Third Additional Consideration by an amount equal to the
amount of a Relevant Purchaser's Claim. For the purpose of this
Clause 19 a "Relevant Purchaser's Claim" shall be any claim for a
breach of any of the Warranties or a claim under the Tax Deed which
may be made by the Purchaser pursuant to and in accordance with
this Agreement ("a Claim") which complies with the provisions of
Clause 19.3.
19.2 If the Purchaser shall make a Claim the Purchaser shall refer such
claim to a legal Counsel of at least 10 years call with experience
of the law relating to the acquisition of shares (or in the case of
a claim in excess of 500,000 pounds to a Queens Counsel with such
experience) and shall at the same time as making the reference to
the Counsel give written notice thereof to the Vendors'
Representative. The Purchaser shall request Counsel to consider the
quantum of the Claim and any associated costs together with the
likelihood of success (and shall request that Counsel shall also
consider the representations of the Purchaser and the Warrantors).
19.3 A Relevant Purchaser's Claim shall be a Claim which Counsel
instructed pursuant to Clause 19.2 determines has more than a 60%
chance of success.
19.4 The Purchaser shall pay to the Vendors the amount abated pursuant
to Clause 19.1 in the event that the Claim ceases to be a Relevant
Purchaser's Claim or (as the case may be) the amount by which the
amount abated exceeds the amount of the Relevant Purchaser's Claim
following settlement.
19.5 The Warrantors and the Purchaser irrevocably agree to instruct the
Warranty Escrow Agent:-
(a) to hold such number of Escrow Shares as shall equal the
quantum of a Relevant Purchaser's Claim as determined by
Counsel pursuant to Clause 19.2 and shall
46
retain such Shares until the Relevant Purchaser's Claim
shall be settled;
(b) if no Relevant Purchaser's Claim has been made within the
period of 12 months immediately following Completion to
release to the Warrantors all the Escrow Shares held by the
Warranty Escrow Agent according to the Warrantors'
respective entitlement thereto;
(c) upon settlement of any Relevant Purchaser's Claim at the
Purchaser's option either to return to the Purchaser for
cancellation or to sell and to pay the proceeds thereof to
the Purchaser such number of Escrow Shares the value of
which shall equal the amount of the Relevant Purchaser's
Claim which is the subject of the settlement;
(d) to release to the Warrantor according to their respective
entitlement thereto such number of Escrow Shares (if any) as
shall be remaining after all Relevant Purchaser's Claims
have been settled or if a Claim shall cease to be a Relevant
Purchaser's Claim.
19.6 For the purposes of this Clause 19 "settled" shall mean either that
the Claim has been agreed by the parties in writing or judgment has
been given by a Court of competent jurisdiction as to the liability
of the Warrantors and the amount of such liability and either the
time limit for appeal has expired or it is a final appellate
judgment with no further right of appeal.
19.7 A Purchaser's Claim shall cease to be a Relevant Purchaser's Claim
unless proceedings are issued within 3 months of the Counsel's
opinion pursuant to Clause 19.3 or if the Purchaser fails to
expedite the proceedings and in any event the Claim has not been
set down for trial within 2 years of the issue of proceedings.
19.8 In the event that a Claim becomes a Relevant Purchaser's Claim then
as regards its abatement and escrow rights pursuant to this Clause
19 the Purchaser shall:
19.8.1 firstly exercise its rights pursuant to Clause 19.5;
19.8.2 secondly to the extent that the Relevant Purchaser's
Claim has not been
47
satisfied by the exercise of the Purchaser's rights
pursuant to Clause 19.5 ("Shortfall") ▇▇▇▇▇ the Additional
Consideration by the amount of the Shortfall in the
proportions of the composition of the Additional
Consideration.
19.9 In the event of any inconsistency between the provisions of this
Clause 19 and any other Share Purchase document the provisions of
this Clause 19 shall prevail.
20. ASSIGNMENT
----------
20.1 The rights or benefits of or under this Agreement and any
agreements referred to in Clause 22, including without limitation
the Warranties, may be assigned (together with any cause of action
arising in connection with any of them) by the Purchaser to a
member of the Purchaser's Group but to no other person PROVIDED
THAT if such assignee ceases to be a member of the Purchaser's
Group, the Purchaser shall procure that such assignee shall
reassign the same to another member of the Purchaser's Group.
20.2 Obligations of the parties under this Agreement shall not be
assignable.
21. FURTHER ASSURANCE
-----------------
21.1 The Vendors shall from time to time on being required to do so by
the Purchaser now or at any time in the future, do or procure the
doing of all such acts and/or execute or procure the execution of
all such documents in a form satisfactory to the Purchaser as the
Purchaser may reasonably consider necessary for the rights, powers
and remedies conferred upon the Purchaser in this Agreement.
22. ENTIRE AGREEMENT
----------------
22.1 For the purpose of this Clause, "Pre-contractual Statement" means a
draft agreement, undertaking, representation, statement, warranty,
promise, assurance or arrangement of any nature whatsoever, whether
or not in writing, relating to the Share Purchase Documents or any
of them (as defined in Clause 22.2) made or given by a party to any
of the Share Purchase Documents or any other person at any time
prior to execution of the Share Purchase Documents.
22.2 This Agreement, the Tax Covenant, the Disclosure Letter and the
Deeds of Covenant and any other documents referred to in this
Agreement (the 'Share Purchase Documents') constitute the whole and
only agreement between the parties relating to the sale and
purchase of the Shares.
48
22.3 Except to the extent repeated in any of the Share Purchase
Documents, the Share Purchase Documents supersede and extinguish
any prior Pre-contractual Statement relating thereto.
22.4 All of the parties acknowledge that in entering into the Share
Purchase Documents or any of them on the terms set out therein,
they are not relying upon any Pre-contractual Statement which is
not expressly set out therein.
22.5 None of the parties shall have the right of action against any
other party to this Agreement or any of the Share Purchase
Documents arising out of or in connection with any Pre-contractual
Statement (except in the case of fraud).
22.6 This Agreement may only be varied in writing signed by all of the
parties.
23. NOTICES
-------
23.1 Any notice or other communication given or made under or in
connection with the matters contemplated by this Agreement shall be
made in writing.
23.2 Any such notice or other communication shall be addressed as
provided in Clause 23.3 and, if so addressed, shall be deemed to
have been duly given or made as follows:-
23.2.1 if sent by recorded delivery or other guaranteed
delivery post, two Business Days after the date of
posting;
23.2.2 if sent by facsimile, when despatched to the correct
facsimile number confirmed by an activity report showing
"transaction O.K." or words to similar effect and if
followed immediately by written confirmation by recorded
delivery or other guaranteed delivery post;
PROVIDED THAT if, in accordance with the above provisions, any such
notice or other communication would otherwise be deemed to be given
or made outside Working Hours, such notice or other communication
shall be deemed to be given or made at the start of Working Hours
on the next Business Day.
49
23.3 The relevant addressee, address and facsimile number of each party
for the purposes of this Agreement, subject to Clause 23.4, are:-
Name of Party Address Facsimile No.
------------- ------- -------------
The Purchaser:
Medialink Worldwide 37/38 Golden Square ▇▇▇▇-▇▇▇ ▇▇▇▇
Incorporated ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
For the attention of
▇▇▇▇▇ ▇▇▇▇▇
Copy to:
Medialink Worldwide ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇
For the attention of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
The Vendors:
▇/▇ ▇▇▇ ▇▇▇▇▇▇▇' ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Representative ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
23.4 A party may notify the other parties to this Agreement of a change
to its name, relevant addressee, address or facsimile number for
the purposes of Clause 23.3 PROVIDED THAT such notification shall
only be effective on:-
23.4.1 the date specified in the notification as the date on which
the change is to take place; or
23.4.2 if no date is specified or the date specified is less
than five clear Business Days after the date on which notice
is given, the date falling five clear Business Days after
notice of any such change has been given.
24. ANNOUNCEMENTS
-------------
24.1 Subject to Clause 24.2, no announcement concerning the sale of the
Shares or any ancillary matter shall be made by either party
without the prior written approval of the
50
other, such approval not to be unreasonably withheld or delayed.
51
24.2 Any of the parties may make an announcement concerning the sale of
the Shares or any ancillary matter if required by:-
24.2.1 the law of any relevant jurisdiction;
24.2.2 any securities exchange or regulatory or governmental
body to which either party is subject or submits, wherever
situated, including (without limitation) the London Stock
Exchange, NASDAQ or the SEC, whether or not the requirement
has the force of law
PROVIDED THAT any such announcement shall be made only after notice
to all of the other parties.
24.3 The restrictions contained in this Clause shall continue to apply
after Completion without limit in time.
25. CONFIDENTIALITY
---------------
25.1 Subject to Clause 25.2, all of the parties shall treat as strictly
confidential all information received or obtained as a result of
entering into or performing this Agreement which relates to:-
25.1.1 the provisions of this Agreement;
25.1.2 the negotiations relating to this Agreement; or
25.1.3 any of the other parties and is Business information.
25.2 Any of the parties may disclose information which would otherwise
be confidential if and to the extent such disclosure is:-
25.2.1 required by the law of any relevant jurisdiction;
25.2.2 required by any securities exchange or regulatory or
governmental body to which any of the parties is subject or
submits, wherever situated, including (without limitation)
the London Stock Exchange, NASDAQ or the SEC whether or not
the requirement for information has the force of law;
52
25.2.3 required to vest the full benefit of this Agreement in any of
the parties;
25.2.4 disclosed to the professional advisers, auditors and bankers
of that party;
25.2.5 of information that has already come into the public
domain through no fault of that party; or
25.2.6 approved by all of the other parties having given
prior written approval of the disclosure, such
approval not to be unreasonably withheld or delayed
PROVIDED THAT any such information disclosed pursuant to Clauses
25.2.1 or 23.2.2 shall be disclosed only after notice to the other
parties.
25.3 The restrictions contained in this Clause shall continue to apply
after Completion of the sale and purchase of the Shares under this
Agreement without limit in time.
26. RESTRICTIVE TRADE PRACTICES ▇▇▇ ▇▇▇▇
------------------------------------
26.1 If this Agreement (which for the purposes of this Clause includes
any other agreement or arrangement of which it forms part) contains
any provision which causes or would cause it to be subject to
registration under RTPA 1976, and if it is not a non-notifiable
agreement under RTPA 1976, that provision will not take effect
until the day after particulars of this Agreement have been
furnished to the Director General of Fair Trading in accordance
with section 24 RTPA 1976.
27. COUNTERPARTS
------------
27.1 This Agreement may be executed in any number of counterparts, and
by the parties on separate counterparts, but shall not be effective
until each of the parties has executed at least one counterpart.
27.2 Each counterpart shall constitute an original of this Agreement,
but all the counterparts shall together constitute but one and the
same instrument.
28. TIME OF ESSENCE
---------------
28.1 Except as otherwise expressly provided, time is of the essence of
this Agreement.
53
29. CHOICE OF GOVERNING LAW
-----------------------
29.1 This Agreement shall be governed by and construed in accordance
with English law save in respect of the provisions concerning the
deposit of the Escrow Shares which will be governed by, and
construed in accordance with, the laws of the State of New York,
USA.
54
30. JURISDICTION
------------
30.1 The parties to this Agreement irrevocably agree that the Courts of
England are to have jurisdiction to settle any disputes which may
arise out of or in connection with this Agreement and that
accordingly any proceedings may be brought in such Courts. Nothing
contained in this Clause shall limit the right of the Purchaser to
take proceedings against the Vendors (or any of them) in any other
Court of competent jurisdiction, nor shall the taking of
proceedings in one or more jurisdiction preclude the taking of
proceedings in any other jurisdiction, whether concurrently or not,
to the extent permitted by the law of such other jurisdiction.
AS WITNESS the hands of and for or on behalf of the parties hereto
55
SCHEDULE 1
----------
DETAILS OF THE VENDORS
----------------------
----------------------------------------------------------------------------------------------------
1 2 3 4 5 6
----------------------------------------------------------------------------------------------------
Name & address of No & type No of Proportion of Proportion Proportion of
Shareholder of Shares Consideration cash sum to of Claim Additional
held Shares to be be received Consideration
allotted on on Completion
Completion ,
----------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 1,250 A 18,424 368,156 100% 59.38%
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
----------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 100 A Ord 1,474 29,45 0 20.62% 4.75%
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇
----------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ 106 A Ord 1,560 31,186 100% 5.03%
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
----------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 334 A Ord 4,924 98,394 20.62% 15.87%
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇
----------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 52 A Ord 766 15,314 NIL 2.47%
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇
----------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ Parish 53 A Ord 782 15,624 NIL 2.52%
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
----------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ A Ord 1,548 30,938 NIL 4.99%
▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇
----------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 82 B Ord 1,207 24,118 NI L 3.89%
15 Hill Top
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
----------------------------------------------------------------------------------------------------
56
----------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 23 B Ord 341 24,118 NIL 3.89%
▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
----------------------------------------------------------------------------------------------------
Totals 2,000 A Ord 31,026 620,000 100%
------ ------------ ------ ------- ----
105 B Ord
------------
----------------------------------------------------------------------------------------------------
57
SCHEDULE 2
----------
BASIC INFORMATION ABOUT THE COMPANY
-----------------------------------
1. Registered Number 2693069
2. Date of Incorporation 3rd March 1992
3. Place of Incorporation England and Wales
4. Address of Registered Office ▇▇/▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
5. Class of Company Private Limited Company
6. Authorised Share Capital 200,000 pounds divided into 100,000
A shares of 1 pound each and
100,000 B shares of 1 pound each
7. Issued Share Capital 2,105 pounds comprising 2,000 A
shares of 1 pound each and 105 B
shares of 1 pounds each
8. Loan capital None
9. Directors:
Full Name Usual residential address Nationality
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 13 Ringwood Avenue British
(non executive) ▇▇▇▇▇▇ ▇▇ ▇▇▇
58
10. Secretary:
Full Name Usual residential address
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
11. Accounting Reference Date 31st March
12. Auditors Messrs Blinkhorns
▇▇/▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
13. Tax Residence United Kingdom
59
SCHEDULE 3
==========
WARRANTIES
Each Warrantor warrants to the Purchaser as follows except as disclosed in the
Disclosure Letter:-
1. Ownership of the Shares
-----------------------
Each of the Vendors is the sole beneficial owner of the Shares set
opposite his name in Schedule 1.
2. Capacity of the Vendors
-----------------------
2.1 Each of the Vendors has the requisite power and authority to enter
into and perform this Agreement and the Tax Covenant and the other
documents executed by the Vendors which are to be delivered at
Completion.
2.2 This Agreement constitutes and the Tax Covenant and the other
documents executed by any Vendor which are to be delivered at
Completion will, when executed, constitute binding obligations of
each Vendor in accordance with their respective terms.
2.3 The execution and delivery of, and the performance by the Vendors
of their respective obligations under, this Agreement, the Tax
Covenant and the other documents executed by the Vendors which are
to be delivered at Completion will not so far as the Warrantors are
aware:-
2.3.1 result in a breach of, or constitute a default under, any
instrument to which any Vendor or the Company is a party or
by which any Vendor or the Company is bound; or
2.3.2 result in a breach of any order, judgment or decree of any
court or governmental agency to which any Vendor or the
Company is a party or by which any Vendor or the Company is
bound.
2.4 None of the Vendors is subject to any legal disability including
any mental disability under the Mental Health ▇▇▇ ▇▇▇▇.
60
3. Arrangements between the Company and the Vendors
------------------------------------------------
No indebtedness (actual or contingent) and no contract or
arrangement is outstanding between the Company and any Vendor or
any person connected with any Vendor.
4. Details Relating to the Company
-------------------------------
4.1 The Shares comprise the whole of the issued and allotted share
capital of the Company and all of them are fully paid up.
4.2 There is no agreement or commitment outstanding which calls for the
allotment, issue or transfer of, or accords to any person the right
to call for the allotment or issue of, any shares (including the
Shares) or debentures in or securities of the Company.
4.3 The Company does not have any interest and has never had any
interest in the share capital of any other body corporate or
undertaking.
4.4 The Company does not carry on business in partnership with any
other person or is not a member of any corporate or unincorporated
body, undertaking or association and the Company does not hold or
is not liable on any share or security which is not fully paid up
or which carries any liability.
4.5 The Company does not have any branch, agency, place of business or
permanent establishment outside the United Kingdom.
5. Options, Mortgages and Other Encumbrances
-----------------------------------------
5.1 There is no option, right to acquire, mortgage, charge, pledge,
lien or other form of security or encumbrance or equity on, over or
affecting the Shares or any of them and there is no agreement or
commitment to give or create any and the Vendors have not received
notice that a claim has been made by any person to be entitled to
any.
5.2 No option, right to acquire, mortgage, charge, pledge, lien (other
than a lien arising by operation of law in the ordinary course of
trading) or other form of security or encumbrance or equity on,
over or affecting the whole or any part of the undertaking or
assets of the Company is outstanding and there is no agreement or
commitment to give or create any and the Vendors have not received
notice that a claim has been made by any person to be entitled to
any.
61
6. Accuracy and Adequacy of Information
------------------------------------
6.1 To the best of the Warrantor's knowledge information and belief
(having made all due and careful enquiry) all written information
supplied by the Vendors to the Purchaser or its professional
advisers is true, accurate and not misleading in all material
respects.
6.2 The information given in Schedule 2 is true and accurate in all
material respects and is not misleading because of any omission or
ambiguity.
6.3 The copies of the memorandum and articles of association of the
Company which have been supplied to the Purchaser or the
Purchaser's Solicitors are complete and accurate in all respects
and other documents required by law to be so attached and fully set
out the rights and restrictions attaching to each class of share
capital of the Company.
6.4 The statutory books (including all registers and minute books) of
the Company have been properly kept and contain an accurate and
complete record of the matters which should be dealt with in those
books and no notice or allegation that any of them is incorrect or
should be rectified has been received.
6.5 So far as the Vendors are aware all documents which should have
been delivered by the Company to the Registrar of Companies have
been properly so delivered.
7. Accounts
--------
7.1 The Accounts:-
7.1.1 were prepared in accordance with accountancy practices
generally accepted in the United Kingdom on a basis
consistent with the last four prior years;
7.1.2 contain proper provision for bad and doubtful debts and for
Taxation on profits (whether of an income or capital nature)
relating to any period ending on or before the date to which
they are made up;
7.1.3 show a true and fair view of the state of affairs of the
Company at the Accounts Date; and
7.1.4 save as the Accounts expressly disclose, are not affected by
any unusual or non-recurring items.
62
7.2 At the Accounts Date, the Company did not have any liability then
known (whether actual, contingent, unquantified or disputed) or
outstanding capital commitment that was not adequately disclosed in
each case to the extent required by applicable accounting policies
provided for in the Accounts.
7.3 The accounting records of the Company have been kept on a proper
and consistent basis in all material respects (no change in the
methods or bases of valuation or accounting treatment having been
made for at least four years prior to the Accounts Date or since),
are up-to-date and contain in all material respects complete and
accurate details of the business activities of the Company and of
all matters required by the Companies Act, to be entered in them.
8. Events Since the Accounts Date
------------------------------
Since the Accounts Date:
8.1 there has been no material adverse change in the turnover or
financial or trading position or prospects of the Company;
8.2 the business of the Company has been carried on in the ordinary and
usual course and in a materially similar manner (including nature
and scope) as in the previous 2 years prior to Completion and no
unusual or onerous contract has been entered into by the Company;
8.3 no assets have been acquired or disposed of on capital account or
have been agreed to be acquired or disposed of and no contracts on
capital account have been entered into by the Company, the value of
which exceed in aggregate 10,000 pounds;
8.4 there has been no unusual increase or decrease in the level of
stock of the Company;
8.5 no debts or other receivables and no trading stock, goods. plant,
machinery or equipment of the Company have been factored or sold or
agreed to be sold, apart from the sale of trading stock to trade
customers or the public on the Company's normal terms of business
in the routine course of trading;
8.6 the Company has not offered any price reductions or discounts or
allowances on sales of trading stocks or sales of its services or
provided them at less than cost to an extent which may materially
affect its profitability;
63
8.7 no resolutions of the Company in general meeting have been passed
other than resolutions relating to the routine business of annual
general meetings;
8.8 no change in the accounting reference period of the Company has
been made; and
8.9 no change in the basic remuneration of key employees has been made.
9. [No paragraph 9].
10. Book Debts
----------
10.1 No part of the amounts included in the Accounts, or subsequently
recorded in the books of the Company, as owing by any debtor is
overdue by more than twelve weeks other than as set out in the
debtor ledger attached to the Disclosure Letter, or has been
released on terms that any debtor pays less than the full book
value of his debt or has been written off or is now regarded by the
Company as irrecoverable in whole or in part.
10.2 The amounts due from debtors as at Completion (less the amount of
any relevant provision or reserve, determined on the same basis as
that applied in the Accounts and disclosed in the Disclosure
Letter) will so far as the Warrantors are aware be recoverable in
full in the ordinary course of business and so far as the
Warrantors are aware in any event not later than twelve weeks after
Completion; and none of those debts is subject to any counter-claim
or set off, except to the extent of any such provision or reserve.
11. Work in Progress and Stock-in-Trade
-----------------------------------
11.1 All work in progress represented in the Accounts has been valued on
a basis excluding profit and including adequate provision for
losses which are or could reasonably be anticipated.
11.2 All stock-in-trade represented in the Accounts was valued at the
lower of cost or net realisable value.
11.3 The amount of work in progress held by the Company is appropriate
and normal for the Company's present level of business.
12. Contracts and Commitments
-------------------------
64
12.1 The Company is not under any obligation, nor is it a party to any
contract, which so far as the Warrantors are aware cannot readily
be fulfilled or performed by it on time and without undue or
unusual expenditure of money or effort.
12.2 The Company is not a party to nor does it have any liability
(present or future) under any guarantee or indemnity or letter of
credit or any leasing, hiring, hire purchase, credit sale or
conditional sale agreement nor has it entered into any contract or
commitment involving on its terms obligations or expenditure of an
unusual or exceptional nature or magnitude.
12.3 The Company is not a party to any contract or arrangement which
restricts its freedom to carry on its business in any part of the
world in such manner as it may think fit, or to any agency,
distributorship or management agreement.
12.4 Neither the Company nor any of the Warrantors are aware of any
breach of, or any invalidity, or grounds for determination,
rescission, avoidance or repudiation of, any contract to which the
Company is a party or of any allegation of such a thing which would
have a material effect on the Company.
12.5 The Company does not have outstanding any bid or tender or sale or
service proposal which is substantial in relation to its business
or which, if accepted, would be likely to result in a loss which
would be material to the Company.
12.6 Except for any guarantee or warranty or indemnity implied by law or
contained in its standard terms of business (a copy of which is
attached to the Disclosure Letter) the Company has not given any
guarantee, indemnity or warranty nor, so far as the Warrantors are
aware, made any representation, in respect of goods or services
supplied or contracted to be supplied by it or accepted any
liability or obligation that would apply after such goods or
services had been supplied by it.
12.7 The Company is not a party to any joint venture agreement or
arrangement or any agreement or arrangement under which it is to
participate with any other in any business.
12.8 The Company is not a party to any contract which falls within any
of the cases specified below:-
65
12.8.1 the contract is of a value greater than 10,000 pounds and
which has material consequences in terms of
expenditure or revenue expectations or it relates to
matters not within the ordinary business of the
Company; or
12.8.2 the contract is of three years or greater duration; or
12.8.3 the contract can be terminated in the event of any
change in the underlying ownership or control of the
Company or would be materially affected by such a
change
and for this purpose "contract" includes any understanding,
arrangement or commitment however described.
13. Insider Contracts
-----------------
There is not, and there has not at any time during the last six
years been, any contract or arrangement to which the Company is, or
was, a party and in which any Vendor or any director of the Company
or any person connected with any such director is, or has been,
interested, either directly or indirectly, and the Company is not a
party to, nor has its profits or financial position during that
period been affected by, any contract or arrangement which was not
of an entirely arm's length nature; in particular, without
limitation, the Company has not transferred assets to any other
person except at market value.
14. Powers of Attorney
------------------
The Company has not given any power of attorney or other authority
(express, implied or ostensible) which is still outstanding or
effective to any person to enter into any contract or commitment on
its behalf other than to employees or Directors of the Company in
the ordinary course of business.
15. Grants and Allowances
---------------------
Full particulars of all grants, allowances, aids and subsidies paid
or made to the Company during the last six years by and of all
outstanding claims by the Company for any such grant, allowance,
aid or subsidy from, any supranational, national or local authority
or government agency are set out in the Disclosure Letter and the
Company has not done or failed to do any act or thing which could
result, nor will the sale of the Shares result, in all or any part
of such grant, allowance, aid or subsidy becoming repayable or
forfeited.
66
16. Terms of Trade
--------------
16.1 No substantial customer or supplier of the Company has during the
twelve months preceding the date of this Agreement ceased or
indicated to the Company an intention to cease trading with or
supplying to the Company or indicated to the Company an intention
to reduce substantially its trading with or supplies to the Company
and the Vendors have no reason to believe that any of the foregoing
may occur and there is no contract to which the Company is a party
which by reason of the sale of the Shares gives any other
contracting party the right to terminate (upon its terms) any
contract of, or to impose any additional obligation by virtue of
such sale (whether to make payment or otherwise) on, the Company
and, so far as the Vendors are aware, the attitude or actions of
customers, suppliers, employees and other persons with regard to
the Company will not be prejudicially affected by the execution of
this Agreement or Completion.
16.2 The Company does not use or otherwise carry on its business under
any name other than its corporate name or the name of The London
Bureau.
17. Substantial Dependence
----------------------
Neither in the financial period ending on the Accounts Date nor in
the period since the Accounts Date has any person (together with
other persons connected with him) purchased from or sold to the
Company more than 5% of the aggregate amount of all sales or
purchases made by the Company during such period, and there is no
person (together with other persons connected with him) on whom the
Company is substantially dependent or the cessation of transactions
with whom would substantially affect the business of the Company.
18. Licences
--------
So far as the Warrantors are aware all licences, consents and other
permissions and approvals required for or in connection with the
carrying on of the business now being carried on by the Company
have been obtained, are not limited in duration or subject to
onerous conditions and are in full force and effect and there is no
circumstance of which the Warrantors are aware which indicates that
any licence, consent, permission or approval which is material is
likely to be revoked or may confer a right of revocation.
19. Bank Accounts and Borrowings
----------------------------
19.1 Full details of all bank accounts maintained or used by the Company
(including, in each case, the name and address of the bank with
whom the account is kept and the number and nature of the
account)and of all direct debit or standing order or similar
authorities to any
67
of the accounts and statements showing all payments and receipts on
each account as at the close of business on a date not being more
than 3 days prior to the date of this Agreement are set out in or
attached to the Disclosure Letter. Since the date of each statement
no payment out of any of the accounts has been made, except for
routine payments in the ordinary course of trading, and the present
balances are not substantially different from those shown in the
statement. Amounts represented by cheques, warrants, mandates or
other payment instructions issued or given by the Company which at
the date of this Agreement remain outstanding or unpaid or
unperformed do not exceed in the aggregate 140,000 pounds.
19.2 Full details of all overdraft, loan and other financial facilities
available to the Company are set out in the Disclosure Letter and
none of the Vendors nor the Company has done anything whereby the
continuance of any of those facilities might be affected or
prejudiced.
19.3 The total amount borrowed by the Company from its bankers does not
exceed its financial facilities and the total amount borrowed from
whatsoever source does not exceed any limitation on its borrowing
contained in the Company's articles of association.
19.4 Except for the borrowings referred to in paragraphs 19.2 and 19.3,
the Company does not have outstanding any loan capital nor has it
incurred or agreed to incur any borrowing other than creditors in
the ordinary course of business which it has not repaid or
satisfied, or lent or agreed to lend any money which has not been
repaid to it nor does it own the benefit of any debt present or
future (other than debts due to it in the normal course of trading)
nor is it a party to nor does it have except as set out in or
referred to in the Disclosure Letter any obligation under:-
19.4.1 any loan agreement, debenture, acceptance credit
facility, ▇▇▇▇ of exchange, promissory note, finance
lease, debt or inventory financing, discounting or
factoring arrangement or sale and lease back
arrangement; or
19.4.2 any other arrangement the purpose of which is to raise money
or provide finance or credit.
19.5 No event which is or, with the giving of notice, certificate,
declaration or demand, would become, an event of default under, or
any breach of any of the terms of, any loan capital, borrowing,
debenture or financial facility of the Company or would entitle any
third party
68
to call for repayment prior to normal maturity has occurred or been
alleged.
20. Insolvency
----------
20.1 No notice has been received by the Company that any order has been
made and no resolution has been passed for the winding up of the
Company or for a provisional liquidator to be appointed in respect
of the Company and no petition has been presented and no meeting
has been convened for the purpose of winding up of the Company.
20.2 No administration order has been made and no petition for such an
order has been presented in respect of the Company.
20.3 No notice has been received by the Company of the appointment of a
receiver (which expression shall include an administrative
receiver) has been appointed in respect of the Company or all or
any of its assets.
20.4 The Company is not insolvent, or unable to pay its debts within the
meaning of section 123 Insolvency ▇▇▇ ▇▇▇▇, nor has it stopped
paying its debts as they fall due.
20.5 No voluntary arrangement has been proposed under section 1
Insolvency ▇▇▇ ▇▇▇▇ in respect of the Company.
20.6 No unsatisfied judgment, order or award is outstanding against the
Company.
20.7 No bankruptcy order has been made in respect of any of the Vendors
nor have they received notice that any petition for such an order
been presented.
20.8 No application has been made in respect of any of the Vendors for
an interim order under section 253 Insolvency ▇▇▇ ▇▇▇▇.
20.9 None of the Vendors are unable to pay or have no reasonable
prospect of being able to pay any debt as those expressions are
defined in section 268 Insolvency ▇▇▇ ▇▇▇▇.
20.10 No notice has been received that any interim receiver has been
appointed of the property of any of the Vendors under section 286
Insolvency ▇▇▇ ▇▇▇▇.
20.11 So far as the Warrantors are aware no event analogous to any of the
foregoing has occurred in or outside England.
69
20.12 No guarantee, loan capital, borrowed money or interest is overdue
for payment, and no other material obligation or indebtedness is
outstanding which is substantially overdue for performance or
payment.
21. Liability for Services/Products
-------------------------------
21.1 The Company has not sold or provided any service or product which
does not in any material respect comply with all applicable laws,
regulations or standards or in respect of which the Company has
received no notice that it is defective (in any material respect)
or dangerous or does not conform in all material respects with any
representation or warranty, express or implied, given in respect of
it.
21.2 In the 3 years ending on the Completion Date, the Company has not
received a prohibition notice, a notice to warn or a suspension
notice under the Consumer Protection ▇▇▇ ▇▇▇▇, or equivalent
legislation in any other jurisdiction.
22. Litigation
----------
The Company is not engaged in any litigation or arbitration,
administrative or criminal proceedings, whether as plaintiff,
defendant or otherwise, and no litigation or arbitration,
administrative or criminal proceedings by or against the Company is
threatened and, so far as the Warrantors are aware, there is no
fact or circumstance likely to give rise to any such litigation or
arbitration, administrative or criminal proceedings or to any
proceedings against any director or employee (past or present) of
the Company in respect of any act or default for which the Company
might be vicariously liable.
23. Delinquent and Wrongful Acts
----------------------------
23.1 The Company is not liable for any criminal, illegal, unlawful or
unauthorised act or breach of any obligation or duty whether
imposed by or pursuant to statute and no claim that it has or is
remains outstanding against the Company.
23.2 The Company has not received notification that any investigation or
inquiry is being or has been conducted by any governmental or other
body in respect of the affairs of the Company and no Vendor is
aware of any circumstances which would give rise to such
investigation or inquiry.
24. Ownership and Condition of Assets
---------------------------------
24.1 Each of the assets included in the Accounts or acquired by the
Company since the Accounts Date (other than current assets sold,
realised or applied in the normal course of trading) is owned both
legally and beneficially by the Company free from any third party
70
rights, and each of those assets capable of possession is in the
possession of the Company.
24.2 All plant and machinery (including fixed plant and machinery),
fixtures and fittings, vehicles and office equipment used by the
Company in connection with its business are in reasonable repair
and condition (fair wear and tear excepted) and capable of being
properly used in connection with the business of the Company and
none is dangerous or in need of immediate renewal or replacement.
24.3 The Company has not agreed to acquire any asset on terms that the
property in it does not pass until full payment is made.
25. Property
25.1 So far as the Company is aware the Business Property is the only
Property used or occupied by the Company or in respect of which the
Company has any estate, interest, right or liability. The Business
Property is used and occupied for the purpose of the business of
the Company.
25.2 In relation to the Business Property:-
25.2.1 the Business Property is held under the terms of the
lease (the 'Lease') briefly referred to in Schedule 5
and no collateral assurances, undertakings or
concessions have been made by any party to the Lease;
25.2.2 there are no rent reviews outstanding or exercisable
by the lessor from a date prior to the Completion
Date;
25.2.3 the rent and all other sums payable under the Lease
have been paid to date, and so far as the Warrantors
are aware all covenants and conditions contained in
the Lease or in any licence, consent or other document
entered into supplemental to the Lease, whether on the
part of the landlord or the tenant have been observed
and performed to date;
25.2.4 the Company has not made any alterations or
improvements to the Business Property which are
required by the Lease to be reinstated or removed on
or before the end of the term;
25.2.5 the Business Property is free from any mortgage,
debenture, charge,
71
rent-charge, lien or any other encumbrance securing the
repayment of monies or other obligation or liability of the
Company or any other person;
25.2.6 the Business Property is not subject to any outgoings
other than business rates, water rates and insurance
premiums, rent and service charges and utilities;
25.2.7 the Business Property is not subject to any
restrictive covenants, stipulations, easements,
profits prendre, wayleaves, licences, grants,
restrictions, overriding interests or other similar
rights vested in third parties;
25.2.8 where any of the matters referred to in paragraphs
25.2.5, 25.2.6 and 25.2.7 have been disclosed in the
Disclosure Letter, the obligations and liabilities
imposed and arising under them have been fully
observed and performed and any payments in respect of
them due and payable have been duly paid;
25.2.9 the Business Property is not subject to any option,
right of pre-emption or right of first refusal;
25.2.10 the Company has not received notice of any breach of:-
(a) permissions, orders and regulations
applicable to the Business Properties;
(b) planning obligations under Section 106 of the
Town and Country Planning Act 1990 undertaken
with respect to the Business Properties; and
(c) agreements made under Section 28 of the
▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ with respect to the
Business Properties.
25.2.11 the Company has not received any notice of breach of
applicable statutory and bye-law requirements with
respect to the Business Property;
25.2.12 so far as the Warrantors are aware there are no disputes
with any neighbouring owner with respect to boundary
walls and fences or with respect to any easement or
right over or means of access to the Business
Property;
25.2.13 the Business Property enjoys the main services of water,
drainage, electricity
72
and gas;
26. Intellectual Property
---------------------
26.1 Details of all registered rights (and applications for any such
right) in any Intellectual Property owned or used by the Company
and Required for the Business are disclosed in the Disclosure
Letter. The Company is the legal and beneficial owner of each such
right owned by the Company free from encumbrances.
26.2 So far as the Warrantors are aware no right owned by the Company
required to be disclosed pursuant to paragraph 26.1 is subject to
opposition, challenge or attack by any third party or competent
authority and all fees or other steps required for the maintenance
or prosecution of such rights have been paid or taken.
26.3 A brief description of all unregistered trade or service marks,
business or trade names and other material unregistered rights in
any Intellectual Property (including rights in computer software)
owned by the Company are disclosed in the Disclosure Letter.
26.4 A brief description of all material licences, sub-licences or
assignments granted to or by the Company in respect of Intellectual
Property used by the Company and Required for the Business are
disclosed in the Disclosure Letter. Where any licence or
sub-licence is subject to any limit as to time or other limitation,
right of termination or restriction the nature and extent of this
is clearly set out.
26.5 Except as required to be disclosed pursuant to paragraph 26.4 the
Company is not obliged to grant any licence, sub-licence or
assignment in respect of any Intellectual Property owned or
otherwise Required for the Business of the Company.
26.6 So far as the Warrantors are aware neither the Company nor any
other party thereto is in breach of any licence in respect of any
Intellectual Property and no licence is subject to any right of
termination as a result of the transactions contemplated by this
Agreement.
73
26.7 So far as the Warrantors are aware there is no, nor has there been
any, unauthorised use or infringement by any person of any
Intellectual Property or confidential Business Information owned or
used in the Business.
26.8 The Company has not, so far as the Warrantors are aware, infringed
or made unauthorised use, of any rights of any other person's
Intellectual Property or confidential Business Information.
26.9 Details of all confidentiality agreements which restrict the free
use or disclosure of any Business Information Required for the
Business of the Company are disclosed in the Disclosure Letter.
26.10 Save subject to express obligations of confidentiality, the Company
has not disclosed nor is it obliged to disclose any confidential
Business Information relating to the business of the Company to any
third party.
26.11 All rights in all material Intellectual Property and confidential
Business Information owned or otherwise Required for the Business
of the Company are vested in or validly licensed to the Company and
are not subject to any limit as to time or any other underlying
ownership or control of the Company save as set out in accordance
with paragraph 26.4.
26.12 A list of all Information Technology Required for the Business of
the Company and used by the Company under licenses are disclosed or
attached to the Disclosure Letter.
26.13 The Information Technology is owned by or licensed to the Company
and is adequate for the present needs of the Company and does so
far as the Warrantors are aware not infringe any Intellectual
Property of any other rights of any third party.
26.14 [No paragraph 26.14.]
26.15 None of the Company's records, systems, controls, data or
information are recorded, stored, maintained, operated or otherwise
wholly or partly dependent on or held by any means (including any
electronic, mechanical or photographic process where computerised
or not) which (including all means of access thereto and therefrom)
are not under the exclusive ownership and direct control of the
Company.
74
26.16 All software required for the Business and which is not the subject
of a licence from a third party was either;
26.16.1 written or created by the employees of the Company in the
ordinary course of their duties; or
26.16.2 written for the Company by a third party invoiced and paid
for by the Company and all Intellectual Property
Rights in such software are vested in the Company.
26.17 So far as the Warrantors are aware no computer software Required
for the Business is or has been affected by any virus or other
extraneously induced malfunction or contamination in the two year
period prior to Completion and the Company operates reasonable
controls to avoid all such infections or contamination.
26.18 All computer systems, excluding Computer software, used in the
Business of the Company are owned and operated by and are under the
control of the Company and, so far as the Warrantors are aware, are
not wholly or partly dependent on any facilities which are not
under the ownership, operation or control of the Company.
Immediately following Completion, no action will be necessary to
enable such systems to continue to be used in the business of the
Company to the same extent and in the same manner as they have been
used prior to the date hereof.
26.19 So far as the Warrantors are aware it is not necessary to incur any
further material expenditure on the modification, development,
expansion or (save for replacement in the normal course of
business) replacement of the computer software required for the
business of the Company in the context of its current activities
and their scope thereof. The Company has not received any report
from any consultant or third party recommending the incurring of
such expenditure.
26.20 The Company has, if required to do so under the Data Protection ▇▇▇
▇▇▇▇, duly registered as a data user and has complied with the Data
Protection Principles as set out in that Act.
27. Competition and Trade Regulation Law
------------------------------------
27.1 The Company is not and has not been a party to which:-
27.1.1 has been or is required to be registered under the RTPA 1976;
or
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27.1.2 contravenes the provisions of the Resale Prices ▇▇▇
▇▇▇▇ or any secondary legislation adopted under the
Fair Trading ▇▇▇ ▇▇▇▇.
27.2 So far as the Warrantors are aware the Company is not in breach of
any antitrust or similar legislation in any jurisdiction in which
it carries on business or where its activities may have effect.
28. Insurances
----------
28.1 The Company has maintained adequate insurance cover against risks
normally insured against by companies carrying on a similar
business, and in particular has maintained all insurance required
by statute and adequate product liability and has insured its
assets against those risks to their full replacement or
reinstatement value.
28.2 Full details of the insurance policies in respect of which the
Company has an interest have been disclosed in writing to the
Purchaser, and so far as the Warrantors are aware all such policies
are in full force and effect and so far as the Warrantors are aware
are not void or voidable, no claims are outstanding and so far as
the Warrantors are aware no event has occurred which might give
rise to any claim.
29. Employment
----------
29.1 A list of the names, jobs and short details of the terms of
employment of every employee of the Company and the years of
continuous service of that employee are set out in the Disclosure
Letter.
29.2 Full particulars of the terms of all consultancy agreements with
the Company are contained in the Disclosure Letter.
29.3 Any contract of employment with any director or employee to which
the Company is a party can be terminated by the employing company
without damages or compensation (other than that payable by
statute) by giving at any time not more than three months' notice.
29.4 No employee of the Company has given notice terminating his
contract of employment or is under notice of dismissal and no
amount due to or in respect of any such employee or former employee
of the Company is in arrears and unpaid other than his salary for
the month current at the date of this Agreement.
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29.5 Since the Accounts Date, no change has been made in the emoluments
or other terms of engagement of any employee of the Company, and no
such change, and no negotiation or request for such a change, is
due or expected within six months from the date of this Agreement.
29.6 There is no dispute between the Company and any trade union or
other organisation formed for a similar purpose existing, pending
or threatened and there is no collective bargaining agreement or
other arrangement (whether binding or not) to which the Company is
a party.
29.7 With the exception of PAYE and national insurance contributions in
respect of the month current at Completion, the Company does not
have outstanding any undischarged liability to pay to any
governmental or regulatory authority in any jurisdiction any
contribution, Taxation or other impost arising in connection with
the employment or engagement of personnel by the Company.
29.8 So far as the Warrantors are aware the Company has at all relevant
times complied with all relevant United Kingdom statutory
obligations concerning the health and safety at work of its
employees, and there are no claims (or so far as the Vendors are
aware) threatened or pending by any employee or third party in
respect of any accident or injury which are not fully covered by
insurance.
30. Pensions
--------
30.1 The Company has not prior to Completion been a party to or
participated in or contributed to, any scheme, arrangement or
agreement (whether or not legally enforceable and whether or not
established in the United Kingdom) for the provision or
retirement/death/disability benefit or otherwise to provide
"relevant benefits" within the meaning of ICTA 1988 Section 612(1)
and the Company is not under any obligation (whether or not legally
enforceable) to pay or provide retirement/death/disability benefit
or other relevant benefits as aforesaid in respect of any person
whether or not through an established trust scheme or arrangement
or otherwise.
31. The Environment
---------------
31.1.1 So far as the Warrantors are aware the Company has complied at all
times and in all material respects with Environmental Law so far as
the Warrantors are aware and there are and have been no acts or
omission of the Company in relation to Environmental Matters
77
which could give rise to fines, penalties, losses, damages, costs,
expenses or liabilities.
31.1.2 No Environmental Matters exist at or about the Business Property
which could give rise to any fines, penalties, losses, damages,
costs, expenses or liabilities. So far as the Warrantors are aware,
no such matters are likely to arise.
31.1.3 So far as the Warrantors are aware there are no landfill sites,
underground storage tanks, leaking, unsafe, un-contained or unlined
storage treatment or disposal areas for Hazardous Materials or
Waste within 250 metres of the Business Property.
31.1.4 So far as the Warrantors are aware the Business Property has not
been polluted or contaminated or has been used for any purpose
which has during the period of the Company's occupation resulted in
pollution or contamination.
31.1.5 So far as the Warrantors are aware the Company is not nor has it
been involved in any litigation, proceedings, claim or complaint by
any person under Environmental Laws and, so far as the Warrantors
are aware none is threatened and, so far as the Vendors are aware,
none is likely to arise.
31.1.6 So far as the Warrantors are aware there has been no transfer to
any person or disposal of Hazardous Materials or Waste by or on
behalf of the Company which could give rise to fines, penalties,
losses, damages, costs, expenses or liabilities in respect of the
Company.
31.1.7 So far as the Warrantors are aware the Company does not have any
liability to any person in respect of Environmental Matters under
any contract or other agreement relating to the sale or other
disposal or grant of any interest in any shares, land or other
asset.
32. The Accounts and Tax
--------------------
32.1 The Company does not have any liability in respect of Taxation for
which there is no proper provision, reserve or note in the Accounts
and, in particular, has no outstanding liability for:-
32.1.1 Taxation in any part of the world assessable or payable by
reference to profits, gains, income or distribution earned,
received or paid or arising or deemed to arise on or at any time
prior to the Accounts Date or in respect of any period starting
before the Accounts Date; or
78
32.1.2 purchase, value added, sales or other similar tax in any part of
the world referrable to transactions effected on or before the
Accounts Date.
79
32.2 The amount of the provision for deferred Taxation in the Accounts
was, at the Accounts Date, adequate and in accordance with
accountancy practices generally accepted in the United Kingdom and
commonly adopted by companies carrying on businesses similar to
those carried on by the Company and, in particular, was in
accordance with SSAP 15 (or any replacement of it instituted by the
Accounting Standards Board).
33. Tax Events Since the Accounts Date
----------------------------------
Since the Accounts Date:-
33.1 the Company has not declared, made or paid any distribution within
the meaning of Chapter II of Part IV ICTA 1988;
33.2 no accounting period of the Company has ended;
33.3 there has been no disposal of any asset (including trading stock)
or supply of any service or business facility of any kind
(including a loan of money or the letting, hiring or licensing of
any property whether tangible or intangible) by the Company in
circumstances where the consideration actually received or
receivable for such disposal or supply was less than the
consideration which could be deemed to have been received for Tax
purposes;
33.4 no event has occurred which will give rise to a Tax Liability of
the Company calculated by reference to deemed (as oppose to actual)
income, profits or gains or which will result in the Company
becoming liable to pay or bear a Tax Liability or primarily
chargeable against or attributable to a person, firm or company
other than the Company;
33.5 no disposal has taken place or other event occurred which will or
may have the effect of crystallising a liability to Taxation which
should have been included in the provision for deferred Taxation
contained in the Accounts if such disposal or other event had been
planned or predicted at the Accounts Date;
33.6 the Company has not made any payment or incurred any obligation to
make a payment which will not be deductible in computing trading
profits for the purposes of corporation tax, or be deductible as a
management expense for an investment company in an aggregate amount
exceeding 10,000 pounds.
33.7 the Company has not been a party to any transaction for which any
Tax clearance provided for by statute has been or could have been
obtained;
80
81
33.8 the Company has not paid or become liable to pay any interest or
penalty in connection with any Tax, has otherwise paid any Tax
after its due date for payment or owes any Tax the due date for
payment of which has passed.
34. Tax Returns, Disputes, Records and Claims, etc.
-----------------------------------------------
34.1 The Company has in all material respects within the applicable time
limits made or caused to be made all proper returns required to be
made, and has supplied or caused to be supplied all information
required to be supplied, to any revenue authority including the
Inland Revenue and H M Customs and Excise.
34.2 There is no dispute or disagreement outstanding nor is any
contemplated at the date of this Agreement with any revenue
authority regarding liability or potential liability to any Tax or
duty (including in each case penalties or interest) recoverable
from the Company and, so far as the Warrantors are aware, there are
no circumstances which make it likely that any such dispute or
disagreement will commence.
34.3 The Company has sufficient records relating to past events,
including any elections made, to calculate the Tax liability or
relief which would arise on any disposal or on the realisation of
any asset at the Accounts Date by the Company or acquired by the
Company since that date but before Completion.
34.4 The Company has duly submitted all claims, disclaimers, elections,
surrenders and application which have been assumed to have been
made for the purposes of the Accounts.
34.5 The amount of Tax chargeable on the Company during any accounting
period ending on or within six years before the Accounts Date has
not, to any material extent, depended on any concession, agreement
or other formal or informal arrangement with any revenue authority,
including (but without limitation) the Inland Revenue or H M
Customs and Excise.
34.6 The Company has not received any notice from any revenue authority,
including the Inland Revenue, which required or will or may require
the Company to withhold Tax from any payment made since the
Accounts Date or which will or may be made after the date of this
Agreement.
35. Stamp Duty and Stamp Duty Reserve Tax
-------------------------------------
82
35.1 All documents which are required to be stamped and which are in the
possession of the Company by virtue of which the Company has title
to any property have been duly stamped.
83
35.2 Since the Accounts Date the Company has not incurred any liability
to stamp duty reserve tax.
36. Value Added Tax
---------------
36.1 The Company is registered for the purpose of VATA 1994 and has in
all material respects made, given, obtained and kept full,
complete, correct and up-to-date records, invoices and other
documents appropriate or required for those purposes and is not in
arrears with any payment or returns due and has not been required
by the Commissioners of H M Customs and Excise to give security
under paragraph 4 of Schedule 11 VATA 1994.
36.2 The Company has not since the date 12 months before the Accounts
Date been in default in respect of any prescribed accounting period
as mentioned in ▇▇▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇.
36.3 Full details of any claim for bad debt relief under Section 36 VATA
1994 made by the Company have been disclosed in writing to the
Purchaser.
36.4 The Company has not made an election to waive exemption in relation
to any land in accordance with paragraph 2 of Schedule 10 VATA
1994.
36.5 The Disclosure Letter contains full details of any assets of the
Company to which the provisions of Part XV Value Added Tax
Regulations 1995 (the Capital Goods Scheme) apply and in
particular:
36.5.1 the identity (including, in the case of leasehold
property, the term of years) the date of acquisition
and cost of the asset; and
36.5.2 the proportion of input tax for which credit has been
claimed (either provisionally or finally in a tax year
and stating which).
37. Duties, etc.
------------
All value added tax, import duty and other taxes or charges payable
upon the importation of goods and all excise duties payable to H M
Customs and Excise or any other customs or excise authority payable
in respect of any assets (including trading stock) imported, owned
or used by the Company have been paid in full.
38. Tax on Disposal of Assets
-------------------------
84
On a disposal of all its assets by the Company for:-
85
38.1 in the case of assets owned by the Company at the Accounts Date, a
consideration equal to the value attributed to those assets in
preparing the Accounts; or
38.2 in the case of assets acquired since the Accounts Date, a
consideration equal to the consideration given for their
acquisition,
then either:-
38.2.1 in respect of assets falling within paragraph 39.1,
the liability to Tax (if any) which would be incurred
by the Company in respect of those assets would be
equal to or less than the amount stated as deferred
Taxation in the Accounts; or
38.2.2 in respect of assets within paragraph 39.2, no tax
liability would be incurred by the Company in respect
of those assets.
39. Replacement of Business Assets
------------------------------
Full particulars of each claim under Section 115 or 116 CGTA 1979
or under Sections 152 or 153 TCGA 1992 made prior to the date of
this Agreement to which Section 117 CGTA 1979 or Section 154 TCGA
1992 applies and which affects any asset which was owned by the
Company on or after the Accounts Date (except where the held-over
gain is treated as having accrued prior to the Accounts Date) have
been disclosed in writing to the Purchaser.
40. Distributions
-------------
40.1 Since 6 April 1965, the Company has not made any repayment of share
capital to which Section 210(1) ICTA 1998 applies or issued any
share capital or other security as paid up otherwise than by the
receipt of new consideration within the meaning of Part VI ICTA
1988.
40.2 No part of the amount payable on redemption of any share capital or
security will be a distribution, as defined in ICTA 1988.
41. Close Company
-------------
41.1 The Company has not requested its Inspector of Taxes to proceed
under paragraph 16 of Schedule 19 ICTA 1988 in relation to every
accounting period ended within six years before the date of this
Agreement, and to which that paragraph applies, no apportionment in
respect of any such period can now be made and no such
apportionment will become
86
possible otherwise than in consequence of the cessation of any
trade or business after the date of this Agreement.
87
41.2 The Company does not have outstanding any loan to which the
provisions of section 419 ICTA 1988 would apply (loans to
participators etc.).
41.3 The Company is not a close investment-holding company as defined in
section 13A ICTA 1988.
42. Non-Deductible Revenue Outgoings
--------------------------------
The Company is not under any obligation to make any future payment
which will be prevented (whether on the grounds of being a
distribution, or for any other reason) from being deductible for
corporation tax purposes, whether as a deduction in computing the
profits of a trade or as an expense of management or as a charge on
income, by reason of any statutory provision, other than section
74(1)(f) ICTA 1988 (capital).
43. Deductions and Withholdings
---------------------------
The Company has made all deductions in respect, or on account, of
any Tax from any payments made by it which it is obliged or
entitled to make and has accounted in full to the appropriate
authority for all amounts so deducted.
44. Inter-Group Transactions
------------------------
The Company has not within the last six years acquired any asset
from any other company which was, at the time of the acquisition, a
member of the same group of companies as the Company for the
purposes of corporation tax on chargeable gains.
45. Residence
----------
The country which is given in Schedule 2 as the Tax residence of
the Company is the only country whose tax authorities seek to
charge Tax on the worldwide profits or gains of the Company and the
Company has never paid Tax on income profits or gains to any Tax
authority in any other country except that mentioned in Schedule 2.
46. Non-Arm's Length Transactions
-----------------------------
The Company is not a party to any transaction or arrangement under
which it may be required to pay for any asset or any services or
facilities of any kind an amount which is in excess of the market
value of that asset or services or facilities or will receive any
payment for an asset or any services or facilities of any kind that
it has supplied or provided or is liable to supply or provide which
is less than the market value of that asset or services or
facilities.
88
47. FORMER SHAREHOLDERS OF THE COMPANY
----------------------------------
The Warrantors have disclosed to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇▇▇ the maximum amount of the consideration payable by the
Purchaser under this Agreement for the Shares.
89
SCHEDULE 4
==========
WARRANTOR'S LIMITATIONS AND LIABILITY
-------------------------------------
1. Warranties
----------
Notwithstanding anything in this Agreement to the contrary, the
provisions of this Schedule shall operate to limit the liability of
the Warrantors only in respect of any claim by the Purchaser or the
Company for (i) any breach of or inaccuracy in the Warranties and
(ii) where specified, under the Tax Covenant.
2. Limitations on Liability under Warranties
-----------------------------------------
2.1 Limitation on Quantum
2.1.1 The Warrantors shall not have any liability to the Purchaser
(whether for damages or other amounts) in respect of any claim or
claims under any of the Warranties or the Tax Deed unless and until
the aggregate amount of all such claims under the Warranties and
the Tax Deed exceeds 50,000 pounds and once the amount of all such
claims has exceeded such sum, the Warrantors shall only be liable for
the excess.
2.1.2 The liability of each Warrantor under or pursuant to the Warranties
or under the Tax Deed shall not in any event exceed the aggregate
of:-
(i) the aggregate nominal value of Loan Notes issued to such
Warrantor; and
(ii) the lower of the aggregate value of the Consideration Shares
issued to him at the Issue Price and the cash received from
the sale of the Consideration Shares issued to him and;
(iii) if the Purchaser makes an announcement of the settlement of
a claim within 1 week of the date of the settlement the
lower of the value at the Issue Price of the Consideration
Shares issued to him which he has not sold and their value
at the close of business on the date upon which the claim is
settled (but after any announcement in respect of the
settlement of the claim is made) but if the Purchaser does
not make such announcement the lower of the value at the
Issue Price of the Consideration Shares issued to him which
he has not sold and their value as at the close of business
on the date upon which the claim is settled; and
90
(iv) interest payable to the Warrantor under the Loan Notes issued
to him.
91
2.2 Time Limits for Bringing Claim
------------------------------
No claim shall be brought against any of the Warrantors in respect
of any breach of the Warranties or the Tax Covenant unless the
Purchaser shall have given to the Warrantors written notice of such
claim specifying the matter which gives rise to the breach or
claim, the nature of the breach or claim and a reasonable estimate
of the amount claimed in respect thereof:-
2.2.1 on or before the seventh anniversary of Completion in
respect of claims relating to UK Taxation or on or before
the end of the period of limitation applicable to all
Taxation (which applies generally and other than in cases of
fraud or negligent conduct), which is deemed for this
purpose to begin at the date of Completion, in respect of
claims so far as they relate to Taxation in any jurisdiction
other than the UK;
2.2.2 on or before the seventh anniversary of Completion in
respect of claims relating to Environmental Matters; or
2.2.3 on or before the second anniversary of Completion in respect
of any other matters;
and in respect of which proceedings have not been commenced (both
issued and served) within nine months of the notification (unless
satisfied, settled or withdrawn;
2.3 Conduct of Litigation
---------------------
2.3.1 Upon the Purchaser or the Company becoming aware of any claim,
action or demand against it or the Company or matter likely to give
rise to any of these in respect of the Warranties (other than the
Tax Warranties to which Clause 8 of the Tax Covenant shall apply):-
2.3.1.1the Purchaser shall:-
(a) notify the Warrantors by written notice as soon as
reasonably practicable after it appears to the
Purchaser that any claim of a third party received by
or coming to the notice of the Purchaser may result in
a claim against the Warrantors under the Warranties;
(b) subject to the Warrantors indemnifying the
Purchaser and/or the Company to their
reasonable satisfaction against any
liability, costs, damages or expenses
92
which may be incurred thereby and giving an
undertaking as to confidentiality reasonably
acceptable to the Purchaser, take such action
and give such information and access to
personnel, premises, chattels, documents and
records of the Purchaser and/or the Company
and their professional advisers as the
Vendors' Representative may reasonably
request and the Vendors' Representative shall
be entitled to require the Purchaser or the
Company to take such action and give such
information or assistance in order to avoid,
dispute, resist, mitigate, settle,
compromise, defend or appeal any claim in
respect thereof or adjudication with respect
thereto;
(c) make no admission of liability, agreement, settlement
or compromise with any third party in relation to any
such claim or adjudication without the prior written
consent of the Vendors' Representative such consent
not to be unreasonably withheld or delayed.
2.3.1.2 The Warrantors shall:-
(a) make no admission of liability, agreement,
settlement or compromise with any third
party in relation to any such claim or
adjudication without the prior written
consent of the Purchaser such consent not
to be unreasonably withheld or delayed;
(b) if they shall require to have conduct of
the third party litigation engage the
services of legal counsel who is
reasonably acceptable to the Purchaser.
2.3.2 In relation to claims to which paragraph 2.3.1 applies,
notwithstanding any other provision of paragraph 2.3.1, the
Purchaser shall not be required to take, permit or omit, or procure
the taking, permitting or omission of, any step or action in
relation to any third party claim where the Purchaser reasonably
believes that the taking, permitting or omission of the relevant
step or action would have a material adverse effect on any trading
relationship or goodwill of the Company or the Purchaser and the
failure to take, permit or omit such step or action is reasonable
in the circumstances.
2.4 If the Warrantors are liable to the Purchaser under the Warranties
or the Tax Deed by reason of any obligation of the Company to pay
advance corporation tax or any sum recoverable from the Company as
if it were advance corporation tax then the liability of
93
the Warrantors shall be reduced and the amount payable or paid to
the Purchaser in respect of that liability shall be reduced or
refunded (as the case may be) when and to the extent that the
relevant company obtains the benefit of a reduction in its
liability to or a refund of its mainstream corporation tax by
reason of the payment.
94
2.5 If the Warrantors are liable to the Purchaser under the Warranties
or the Tax Deed in respect of an obligation of the Company to pay
Taxation under the provisions of section 419 of the Taxes Act 1988
then the liability of the Warrantors shall be reduced and any
amounts paid to the Purchaser in respect of that liability shall be
reduced or refunded (as appropriate) when and to the extent that
the relevant company is entitled to relief under section 419(4) of
the Taxes ▇▇▇ ▇▇▇▇.
2.6 If the Warrantors pay to the Purchaser (or are liable to the
Purchaser) for an amount in respect of a claim under the Warranties
or other provisions of the Agreement or the Tax Deed and the
Purchaser or the Company subsequently recovers from a third party
an amount in respect of or referable to the subject matter of that
claim then the Purchaser or the Company shall promptly repay to the
Warrantors (or the Warrantors' liability shall be reduced by) so
much of the amount paid (or payable) by the Warrantors as does not
exceed the amount recovered from the third party less all costs,
charges and expenses reasonably and properly incurred by the
Purchaser or the Company in obtaining that payment and in
recovering that amount from the third party and less Taxation or
any amount in respect of Taxation paid by the Purchaser or the
Company save to the extent such Taxation is recoverable or for
which credit is available to the Purchaser or the Company.
2.7 The Warrantors shall not be liable under the Tax Deed to the extent
that a claim arises under the Warranties or other provisions of the
Agreement in respect of the same subject matter and such claim has
been satisfied.
2.8 The Warrantors shall not be liable under the Warranties or other
provisions of the Agreement to the extent that a claim arises under
the Tax Deed in respect of the same subject matter and such claim
has been satisfied.
2.9 The Warrantors shall not be liable for breach of the Warranties or
under the Tax Deed if and to the extent that:-
2.9.1 the subject matter is fully provided for or otherwise is
fully taken into account or noted in the Accounts; or
2.9.2 it arises or is increased as a result of any increase in the
rates of Taxation introduced with retrospective effect after
the date of this Agreement; or
95
2.9.3 it arises or is increased as a result of any imposition of
new Taxation or the introduction or change in any
legislation or applicable law or the change in the practice
of any Tax Authority introduced after the date of this
Agreement; or
96
2.9.4 it would not have arisen but for a transaction or other
voluntary act entered into or carried out by or omissions of
the Company or the Purchaser after the date of this
Agreement which is otherwise than in the ordinary course of
the business of the Company; or
2.9.5 in the case of a Tax Liability, it would not have arisen but
for a disclaimer by the Company after Completion of any
Relief available to the Company before the date of this
Deed; or
2.9.6 it arises as a result of any change after the date of this
Agreement in the accounting policy used in preparing the
accounts of the Company; or
2.9.7 it arises as a result of any change after the date of this
Agreement in the date to which the Company makes up its
accounts; or
2.9.8 it occurs or arises wholly or partly out of or as a result of
or in connection with:
2.9.8.1 any material change in the type of business of the
Company carried on after the date of this Agreement;
2.9.8.2 the claim has been or is made good or
otherwise compensated for at no expense to
the Purchaser and/or any member of the
Purchaser's Group and/or the Company; or
2.9.9 in respect of the Tax Warranties only, it arises as a result of an
Event occurring in the ordinary course of the Company's business
after Completion; or
2.9.10 it is contingent only in which case the Warrantors shall not be
under any obligation to make any payment in respect thereof until
such time as the contingent liability becomes an actual liability;
or
2.9.11 the claim would not have arisen but for any claim or election or
surrender or disclaimer made or omitted to be made or notice or
consent given or omitted to be done by the Company or any member of
the Purchaser's Group or the Purchaser under the provisions of any
Taxation statutes after Completion in each case to the extent that
the Purchaser was aware or ought reasonably to be aware of the
consequences of such action or omission; or
97
2.9.12 in the case of a Tax Liability, any Relief arising in respect of or
referable to a period ended, or by reference to an Event occurring,
prior to Completion is available to the Company to reduce or
eliminate such Tax Liability.
2.10 The Purchaser shall procure that the Company shall take all
reasonable steps necessary to mitigate any loss in relation to any
action or claim.
2.11 If, in respect of any matter which would give rise to a claim under
the Warranties, the Company is entitled to claim under any policy
of insurance, then a claim may nevertheless be made under the
Warranties and any insurance claim made by the Company shall then
reduce or extinguish (by the amount recovered) any such claim and
any liability of the Warrantors and the Purchaser shall procure
that the Company shall use all reasonable endeavours to procure a
settlement of the insurance claim.
2.12 Claims for breach of Warranty or under the Tax Deed shall be
reduced by the amount of any Relief obtained by the Company or the
Purchaser by reason, directly, of the subject matter of the claim.
2.13 In this Schedule references to a liability being established shall
be construed as meaning a liability which is admitted or is proven
or adjudicated in legal proceedings.
2.14 For the purposes of paragraph 2.17.2, "Relevant Proportion" shall
mean the proportion that the aggregate amount of the items
described in paragraph 2.1.2 (i), (ii) and (iv) ("Cash") bears to
the value of the Consideration Shares issued to the Warrantor which
have not been sold at the close of business on the date upon which
the claim is settled.
2.15 The liability of a Warrantor to the Purchaser for any claim for a
breach or inaccuracy of the Warranties or for a claim under the Tax
Deed ("Liability") which has been settled shall be discharged in
the following way:
2.15.1 firstly in exercise of the Buyer's rights pursuant to Clause
19.5;
2.15.2 secondly, to the extent that the liability shall not
be discharged in exercise of the Buyer's rights
pursuant to Clause 19.5, by a payment in the Relevant
Proportion of Cash and at the Purchaser's option:
(a) the transfer by the Warrantor for cancellation
of such number of the
98
Consideration Shares ("Claim Shares") whose
value determined in accordance with paragraph
2.1.2 (iii) when aggregated with the Cash sum
equals the amount of the Liability; or
(b) payment of the proceeds of sale of Claim Shares
if requested in writing by the Purchaser to
sell the same; or
(c) if requested in writing by the Purchaser to
sell the same payment of the proceeds of sale
of such number of Claim Shares as the Warrantor
shall not be restricted from selling and the
transfer of the balance for cancellation
and the aggregate amount of the payments made pursuant to
either 2.15.2 (a), 2.15.2 (b) or 2.15.2 (c) shall
discharge the Liability in full.
2.16 In the event that the Warrantor has insufficient Cash to make the
Cash payment in the Relevant Proportion in accordance with paragraph
2.16.2 (the amount of such shortfall being the "Deficit"), the
Warrantor shall at the Purchaser's option:
(a) transfer to the Purchaser for cancellation such number of
Consideration Shares which at the closing price on the day
on which the transfer takes place shall equal the Deficit
("Deficit Shares"); or
(b) payment of the proceeds of sale of Deficit Shares if
requested in writing by the Purchaser to sell the same; or
(c) if requested in writing by the Purchaser to sell the same
payment of the proceeds of sale of such number of Deficit
Shares as the Warrantors shall not be restricted from
selling and the transfer of the balance for cancellation
and the aggregate amount of the payments made pursuant to either 2.16
(a), 2.16 (b) or 2.16 (c) shall discharge the Liability in full.
2.17 The expression "settled" shall have the meaning ascribed to it in
Clause 19.
2.18 Any amount paid by the Warrantors pursuant to the Warranties or the
Tax Deed shall be by
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way of a reduction in and refund of the Consideration and the
Additional Consideration.
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SCHEDULE 5
==========
BUSINESS PROPERTY
-----------------
Address of Property Date of Lease Parties Term Rent
Second Floor 12/12/97 The Girdlers Livery Co (1) From 25/12/97 28,200 pounds
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ The Company (2) to 25/12/2002 (rising) p.a.x.
▇▇▇▇▇▇ ▇▇▇
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SCHEDULE 6
==========
ADJUSTMENTS
-----------
The cost of the following items shall be added back into the Earn-Out Accounts
for the purposes of calculating Net Profits:-
1. the cost to the Division of the development of "MediaTrax" (ongoing
costs of the Division attributable to "MediaTrax" shall be agreed
between the Purchaser and SM);
2. to the extent deducted in the computation of the Net Profits all
costs associated with the transactions contemplated by this Agreement
and of merging or integrating the Company in the Division;
3. to the extent deducted in the computation of the Net Profits the
costs of and the costs (including legal) associated with the
termination of the employment of any employees of the Division as a
result of or as a consequence of the transactions contemplated by
this Agreement;
4. any costs, losses or expenses associated with or in connection with
the Purchaser's lease of the first floor offices, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇;
5. any material research and/or development expenditure incurred by the
Division without the approval of SM;
6. any capital expenditure in relation to the Division in excess of 10,000
pounds incurred without the approval of SM;
7. any remuneration or expenses paid to any person other than as proper
remuneration for work done or services provided or for a proper
reimbursement for expenses incurred in connection with the business
of the Division;
8. the cost of options to subscribe for Shares granted by the Purchaser
prior to Completion where such costs are required to be taken into
account in computing the Net Profits.
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SCHEDULE 7
==========
LIMITATIONS ON ADJUSTMENT TO THE EARN OUT IF BREACH OF THE
----------------------------------------------------------
PURCHASER'S WARRANTIES
----------------------
1. Notwithstanding anything in this Agreement to the contrary the
provisions of this Schedule shall operate to limit any adjustment to
the Net Profits and/or the Revenue in respect of any claim by the
Vendors for any breach of or inaccuracy in the Purchaser's
Warranties.
2. In the event of a breach of any of the Purchaser's Warranties,
subject to paragraph 7 the only recourse or remedy of the Vendors is
to add back to the Revenue and/or the Net Profits the effect (if any)
of the breach on the Revenue and/or Net Profits in accordance with
this Schedule.
3. The Vendors shall not be entitled to make any claims under any of the
Purchaser's Warranties unless and until the aggregate amount of all
such claims exceeds 50,000 pounds and once the amount of all such
claims has exceeded such sum the Vendors shall only be entitled to
claim the excess.
4. The total aggregate amount which may be claimed by the Vendors under
or pursuant to the Purchaser's Warranties (including costs and
interest) shall not in any event exceed 2,400,000 pounds.
5. No claim shall be brought against the Purchaser in respect of any
breach of the Purchaser's Warranties unless the Vendors shall have
given to the Purchaser written notice of such claim (specifying the
matter which gives rise to the breach, the nature of the breach and a
reasonable estimate of the effect thereof (if any) upon the Revenue
and/or Net Profits for the relevant year or years) on or before the
second anniversary of Completion and in respect of which proceedings
have not been commenced (both issued and served) within 9 months of
the notification (unless satisfied, settled or withdrawn).
6. If any claim under or pursuant to the Purchaser's Warranties
("Vendors' Claim") shall not have been "settled" (which shall have
the meaning ascribed thereto in Clause 19.4) prior to the date when
the First Additional Consideration or the Second Additional
Consideration or the Third Additional Consideration shall have been
agreed or determined in accordance with the provisions of Clause 4
the Purchaser shall pay to the Vendors within 15 Business Days after
it shall have been settled an amount equal to the Additional
Consideration to which the Vendors are entitled after adding back the
effect, if any, of the Vendors' Claim less the Additional
Consideration actually paid to the Vendors.
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7. In addition to a Vendor's Claim which has been settled, save to the
extent they are taken into account in the settlement, the Purchaser
shall pay:-
7.1 the Vendor's reasonable legal costs and disbursements
incurred in connection with the Vendor's Claim; and
7.2 interest at the judgement rate from the date when the
Additional Consideration was paid until the date when
payment is made pursuant to paragraph 6.
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Signed by /s/ ▇▇▇▇▇ ▇▇▇▇▇.....................................
duly authorised for and on behalf of
MEDIALINK WORLDWIDE INCORPORATED
in the presence of:-
Signed by ......./s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇...........................
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
in the presence of:-
Witness: Name /s/ ▇.▇. ▇▇▇▇▇
Address
Occupation
Signed by ..../s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇..............................
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
in the presence of:-
Witness: Name /s/ ▇.▇. ▇▇▇▇▇
Address
Occupation
Signed by ...../s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇..............................
▇▇▇▇▇ ▇▇▇▇▇▇▇
in the presence of:-
Witness: Name /s/ ▇.▇. ▇▇▇▇▇
Address
Occupation
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Signed by ../s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇................................
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
in the presence of:-
Witness: Name /s/ ▇.▇. ▇▇▇▇▇
Address
Occupation
Signed by .../s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇................................
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
in the presence of:-
Witness: Name /s/ ▇.▇. ▇▇▇▇▇
Address
Occupation
Signed by /s/ ▇▇▇▇▇▇▇ Parish....................................
▇▇▇▇▇▇▇ PARISH
in the presence of:-
Witness: Name s/s ▇.▇. ▇▇▇▇▇
Address
Occupation
Signed by .../s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇................................
[VILLEM] ▇▇▇▇▇▇▇▇▇
in the presence of:-
Witness: Name /s/ ▇.▇. ▇▇▇▇▇
Address
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Occupation
107
Signed by .../s/ ▇▇▇▇▇▇ ▇▇▇▇▇...............................
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
in the presence of:-
Witness: Name /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Address
Occupation
Signed by .../s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇............................
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
in the presence of:-
Witness: Name /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Address
Occupation