EXHIBIT 4.14
Shareholders
Agreement
relating to The Communications Group
Holdings Pty Limited
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The Communications Group Holdings Pty Limited
Cordiant Communications (Australia) Pty Limited
TCG Nominee Pty Limited as trustee of the TCG Trust
Those persons listed in Schedule 7
Bain Pacific Associates, LLC
BCIP Associates II
BCIP Associates II-B
Pacific Equity Partners Fund I Pty Limited
Pacific Equity Partners (NZ) Limited
PEP Co-Investment Pty Limited
PEP Investment Pty Limited
Those persons listed in Schedule 9
MinterEllison
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LAWYERS
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, DX ▇▇▇ ▇▇▇▇▇▇
TEL: ▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇ FAX: ▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Shareholders Agreement
relating to The Communications Group Holdings Pty Limited
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Details 6
Agreed terms 9
1. Defined terms & interpretation 9
1.1 Defined terms 9
1.2 Interpretation 12
2. Objectives and business 13
2.1 Objectives 13
2.2 Just and faithful 14
2.3 Business 14
3. Boards 14
3.1 The Company 14
3.2 The Group 14
4. Management of the Group 14
5. Approval requirements 15
5.1 Minority Approval 15
5.2 Board Approval 15
5.3 Company covenants 16
6. Business plan 16
6.1 Initial Business Plan 16
6.2 Subsequent Business Plans 16
6.3 Failure to adopt a Business Plan 17
6.4 Variation of Business Plan 17
7. Financial and other reporting 17
7.1 Provision of Reports 17
7.2 Confidentiality 17
8. Accounts and records 17
8.1 Records and Accounting Books 17
8.2 Access by Directors 17
8.3 Disclosure by Directors 17
8.4 Investment Agreement 18
9. Dividend policy 18
10. Issue of Equity Securities 18
10.1 No obligation 18
10.2 Board approval 18
10.3 Offer to existing Shareholders 18
10.4 Offer of Equity Securities 18
10.5 Subscription Notice 18
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10.6 Notification 19
10.7 Additional Equity Securities 19
10.8 Offer of Remaining Equity Securities 19
10.9 Remaining Equity Securities 19
10.10 Deed of Accession 19
10.11 Excluded Issue 19
11. Management equity 20
11.1 Equity issue 20
11.2 Cessation of employment 20
11.3 Determination of Market Value 20
11.4 Departing ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇. Restrictions on Transfer 21
12.1 No Transfer 21
12.2 Approval of Transfer 21
12.3 Permitted Transfers 21
12.4 Security 21
12.5 Change of Permitted Transferee 22
12.6 Deed of Accession 22
13. Drag Along rights 22
13.1 Drag Along Notice 22
13.2 Settlement Date 22
13.3 Revocation 23
13.4 Attorney 23
14. Tag Along 23
14.1 Sale Notice 23
14.3 Sale by the Selling Shareholder(s) 23
14.4 Settlement Date 24
14.5 Attorney 24
14.6 Revocation 24
15. Formal Sale Process 24
15.1 Service of Notice 24
15.2 Formal Sale Process 24
15.3 Sale of Share Capital 25
15.4 Sale of Non Cordiant Shares to Cordiant 26
15.5 Payment for Trade Sale or Sale of Share Capital 26
15.6 Attorney 26
15.7 Listing 26
15.8 Sell Down 27
15.9 Lock-Up 27
15.10 Participation 27
15.11 Do all things 27
15.12 Additional obligations of the Company 27
16. Cordiant exit rights 28
16.1 Sale of Cordiant Shares 28
16.2 Offer of Cordiant Shares 28
16.3 Transfer Notice 28
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16.4 Notification 28
16.5 Additional Cordiant Sale Shares 28
16.6 Offer of Remaining Cordiant Sale Shares 29
16.7 Remaining Cordiant Sale Shares 29
16.8 Deed of Accession 29
16.9 Change of Control 29
16.10 Meaning of Change in Control 30
17. Management warranties 30
17.1 Warranties 30
17.2 Limitation of Liability 30
17.3 Caps on liability 31
18. Warranties regarding capacity and status 31
19. Confidentiality 32
19.1 Obligation to keep Confidential 32
19.2 No announcement 32
19.3 Exceptions 32
19.4 Survival of Termination 33
19.5 Technical Information 33
20. Termination 33
20.1 Automatic Termination 33
20.2 No prejudice 33
21. Specific performance 33
21.1 Injunction 33
21.2 Confirmation 34
22. Fees 34
22.1 Advisory fees 34
22.2 Management Fees 34
22.3 TCG Trust Expenses 34
23. Other provisions 34
23.1 Unitholders 34
23.2 Management Subscription 34
23.3 Entire Agreement 35
23.4 No Agreements 35
23.5 Disclosure of future agreements 35
23.6 Subsidiaries 35
23.7 No Waiver 35
23.8 Waiver in writing 35
23.9 Duration of provisions 35
23.10 Assignment 35
23.11 Costs 35
23.12 Governing Law 35
23.13 Jurisdiction 36
23.14 Further action 36
23.15 Counterparts 36
23.16 Unlawful provisions 36
23.17 No relationship 36
23.18 No authority 36
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23.19 Consent 36
23.20 Amendment of Agreement 36
23.21 Distributions and realisations 36
23.22 Limitations on liabilities 36
24. Notices 37
24.1 Address for service 37
24.2 Time of service 37
24.3 Execution 37
24.4 Service permitted by law 37
24.5 Meaning of notice 37
25. Paramountcy 37
26. Campaign Palace 37
26.1 Cordiant obligations 37
26.2 Directors involvement 38
26.3 Disclosure of information 38
26.4 Company obligations 38
27. Network Agreement 38
Schedule 1 - Board of Directors 40
Schedule 2 - Minority rights 44
Schedule 3 - Company covenants 45
Schedule 4 - Financial and other reporting 46
Schedule 5 - Deed of Accession 47
Schedule 6 - Investors 48
Schedule 7 - Management Shareholders 49
Schedule 8 - Warranties 50
Schedule 9 - Management Warrantors 53
Schedule 10 - Management Disclosures 54
Schedule 11 - Matters requiring Board approval 55
Signing page 57
Annexure A - Incentive Plan 67
Annexure B - Power of attorney 68
Annexure C - Investment Services Agreement 69
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Details
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Date
Parties
Name The Communications Group Holdings Pty Limited
ACN 104 455 003
Short form name Company
Notice details ▇/-▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
Facsimile: 02 9778 7585
Attention: ▇▇▇ ▇▇▇▇▇
With a copy to: Pacific Equity Partners Pty Limited,
Level 36, Chifley Tower, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ Facsimile: + 61 2 9231 2804
Attention: ▇▇▇ ▇▇▇▇
Name Those persons whose names and addresses are listed
in Schedule 7
Short form name Management Shareholders
Notice details ▇/- ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
Facsimile: 02 9778 7585
Attention: ▇▇▇ ▇▇▇▇▇
Name TCG Nominee Pty Limited as trustee of the TCG Trust
Short form name Trustee
Notice details ▇/- ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
Facsimile: 02 9778 7585
Attention: ▇▇▇ ▇▇▇▇▇
Name Cordiant Communications (Australia) Pty Limited
ACN 082 292 019
Short form name Cordiant
Notice details Cordiant Communications Group plc, ▇-▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Facsimile: + 44 207 706 3820
Attention: ▇▇▇▇ ▇▇▇▇▇▇
And a copy to: ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
Facsimile: 02 9322 4000
Attention Al Donald
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Name ▇▇▇▇ Pacific Associates, LLC
Notice details C/- ▇▇▇▇ Capital LLC, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
Facsimile: + 1 617 516 2010
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Name BCIP Associates II
Notice details C/- ▇▇▇▇ Capital LLC, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
Facsimile: + 1 617 516 2010
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Name BCIP Associates II-B
Notice details C/- ▇▇▇▇ Capital LLC, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
Facsimile: + 1 617 516 2010
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Name Pacific Equity Partners Fund I Pty Limited
ACN 083 026 822
Notice details C/- Pacific Equity Partners Pty Limited, Level 36,
Chifley Tower, ▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
Facsimile: + 61 2 9231 2804
Attention: ▇▇▇ ▇▇▇▇
Name Pacific Equity Partners (NZ) Limited
Notice details ▇/- ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇, Coopers
& ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇-▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇
Facsimile: + 61 2 9231 2804
Attention: ▇▇▇ ▇▇▇▇
Name PEP Co-Investment Pty Limited
ACN 083 026 859
Notice details C/- Pacific Equity Partners Pty Limited, Level 36,
Chifley Tower, ▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
Facsimile: + 61 2 9231 2804
Attention: ▇▇▇ ▇▇▇▇
Name PEP Investment Pty Limited
ACN 083 926 084
Notice details C/- Pacific Equity Partners Pty Limited, Level 36,
Chifley Tower, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
Facsimile: + 61 2 9231 2804
Attention: ▇▇▇ ▇▇▇▇
page 7
Name Those persons whose names and addresses are listed
in Schedule 9
Short form name Management Warrantors
Notice details ▇/- ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
Facsimile: 02 9778 7585
Attention: ▇▇▇ ▇▇▇▇▇
Background
A The Company is a company limited by shares incorporated on 16 April 2003
with the name ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Holdings Pty Ltd. It changed its name to The
Communications Group Holdings Pty Limited on 24 April 2003.
B The Company has agreed to purchase the entire issued share capital of CCGA
on the terms set out in the Investment Agreement and to offer Management
the opportunity to participate in the transaction by offering them shares
(either directly or through the TCG Trust) in the Company.
C This Agreement records the terms and conditions agreed by the Parties for
the financing, management and control of the Company and the Group.
page 8
Agreed terms
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1. Defined terms & interpretation
1.1 Defined terms
In this document except where the context otherwise requires:
Accounts has the meaning given in the Investment Agreement.
Accounts Date has the meaning given in the Investment Agreement.
Accounting Standards means the Australian Accounting Standards from time to
time and if and to the extent that any matter is not covered by the
Australian Accounting Standards means generally accepted accounting
principles applied from time to time in Australia for a company similar to
the Company.
Acquisition Transaction means the acquisition of all the shares in CCGA.
Act means the Corporations ▇▇▇ ▇▇▇▇ (Cth).
Affiliate means in relation to a person:
(a) an entity or investment fund Controlled by the person; or
(b) an entity or person Controlled by, under common Control with, or which
Controls the person.
Agreement means this agreement including its schedules, annexures and
exhibits.
Auditors means the auditors of the Company from time to time.
Bain Funds has the meaning given in the Investment Agreement.
Board means the board of directors of the Company as constituted from time
to time.
Business means the businesses of the Group from time to time .
Business Day means any day other than a Saturday, Sunday, bank holiday or
public holiday in Sydney, New South Wales and London.
Business Plan means the program current from time to time for the conduct
of the Business during the current Financial Year and the next two
Financial Years, comprising:
(a) a business plan including the proposed or projected:
(i) agreed activities of the Business;
(ii) marketing plans;
(iii) sales targets;
(iv) profit and loss statement, profitability, cashflow statements and
balance sheet;
(v) capital expenditure;
(vi) financing plans including proposed debt and equity funding;
(vii) staffing requirements;
(viii) research and development plans,
page 9
during that period; and
(b) a budget specifying an estimate of the income to be received and the
expenses to be incurred in the Business during the current Financial
Year and the next two Financial Years.
Buyer has the meaning given in clause 13.1.
Campaign Palace means the business of Black Book Holdings Pty Ltd and its
subsidiaries or any other entities owned or controlled by Cordiant UK which
conduct business under the trading name 'The Campaign Palace'.
CCGA means Cordiant Communications Group Australia Pty Limited.
Chief Executive Officer means the chief executive officer of the Group from
time to time.
Completion means completion of the Acquisition Transaction.
Conditions has the meaning given in the Investment Agreement.
Confidential Information means any of the following which is not in the
public domain:
(a) all data bases, source codes, methodologies, manuals, artwork,
advertising manuals, trade secrets and all financial, accounting,
marketing and technical information, customer and supplier lists,
know-how, technology, operating procedures and other information of a
Group Company or of a Shareholder or its transactions and affairs;
(b) all notes and reports incorporating or derived from information
referred to in paragraph (a); and
(c) all copies of the information, notes and reports referred to in
paragraph (a).
Constitution means the Constitution of the Company, as amended from time to
time in accordance with this Agreement.
Control in respect of an entity or a trust estate means:
(a) control of the composition of the board of directors of the entity or
the trustee of the entity or the general partner or manager of the
entity (where the entity is a partnership or limited partnership or
limited liability corporation);
(b) control of more than one half of the voting rights attaching to issued
shares in the entity or trustee of the entity or the general partner
or manager of the entity (where the entity is a partnership or limited
partnership or limited liability corporation); or
(c) control of more than one half of the issued capital of the entity or
trustee of the entity or the general partner or manager of the entity
(where the entity is a partnership or limited partnership or limited
liability corporation),
and includes the acquisition by any means by a person of voting rights (as
that term is defined in the Act) so that they hold or control sufficient
voting rights to allow that person either alone or jointly to exercise the
control referred to in this definition.
Cordiant Directors means the persons appointed as directors of the Company
by Cordiant pursuant to clause 2 of Schedule 1 (and in their absence their
appointed alternate Director) and Cordiant Director means any of them.
Cordiant Shares means the Shares held from time to time by Cordiant.
Cordiant UK means Cordiant Communications Group plc.
page 10
Deeds of Access and Indemnity means the several deeds to be entered into in
accordance with Schedule 3, by the Company and each Director respectively,
all in the same form.
Deed of Accession means a deed of accession in the form of Schedule 5.
Directors means the directors of the Company from time to time and Director
means any one of them.
Equity Securities means ordinary shares, preference shares, options,
warrants or other securities convertible into or exchangeable for Shares.
Excluded Issue means an issue of Shares referred to in clause 10.11.
Financial Year means the period of 12 months commencing on 1 July and
ending on 30 June each year (or such other dates as the Board approves).
Group means the Company and all of its Subsidiaries from time to time.
Group Company means each of the Company and each Subsidiary.
Investment Agreement means the agreement dated the same date as this
agreement between Cordiant, the Company and others relating to the
Acquisition Transaction..
Investment Services Agreement means the agreement to be dated on the date
of Completion and to be in the form attached as Annexure C to this
agreement.
Investors means the parties listed in Schedule 6 severally, and Investor
means any one of them.
Investors Agreement means the agreement dated the same date as this
Agreement between each of the Investors with respect to, amongst other
things, certain matters concerning the affairs and management of the
Company.
Investor Directors means the persons appointed as directors of the Company
by the Investors pursuant to clause 2 of Schedule 1 (and in their absence
their appointed alternate Director) and Investor Director means any of
them.
Listing means the listing of the Shares, or the shares of any operating
Subsidiary or any Related Corporation (which has the meaning given in the
Investment Agreement) on a Stock Exchange.
Management means the Management Shareholders and the Unitholders.
Management Accounts has the meaning given in the Investment Agreement.
Management Directors means the persons appointed as directors of the
Company by the Management Shareholders and the Trustee (acting jointly)
pursuant to clause 2 of Schedule 1 (and in their absence their appointed
alternate Director) and Management Director means any of them.
Management Warrantors means those persons whose names are set in Schedule 9
and Management Warrantor means any one of them.
Network Agreement means the agreement between ▇▇▇▇▇ WorldWide Inc, Fitch
Design Consultants Limited, Healthworld Corporation and various
subsidiaries of the Company dated on or about the date of this Agreement.
Parties means each of the parties to this Agreement (and any other person
that executes a Deed of Accession and becomes a party to this Agreement, in
accordance with this Agreement, from time to time) and Party means any one
of them.
Permitted Transferee means a person to Shares are transferred pursuant to
clause 12.3.
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Proceeds means in relation to a Trade Sale and in relation to a sale of
Share Capital, the total purchase price.
Relative means, in relation to a person:
(a) the spouse, parent, son, daughter, or brother or sister of the person;
and
(b) any person married to any of the persons mentioned in paragraph (a).
Respective Proportion in relation to a Shareholder means the proportion
that the number of Shares from time to time held or beneficially owned by
that Shareholder bears to the total number of the Share Capital from time
to time.
Selling Shareholder(s) has the meaning given in clause 13.1.
Settlement Date has the meaning given in clause 13.1.
Share Capital means all of the Shares on issue.
Shares means shares in the capital of the Company.
Shareholder means a person that is from time to time a registered holder of
Shares.
Stock Exchange means the Australian Stock Exchange or any other stock
exchange approved by the Investors.
Subsidiaries means any company that is at the time a subsidiary of the
Company within the meaning of the Act.
Summary Dismissal means termination of employment by the relevant Group
Company of a member of Management where the member of Management is guilty
of wilful or deliberate misconduct which is inconsistent with the
continuation of the contract of employment and such conduct causes an
imminent and serious risk to the health and safety of a person or the
reputation, viability or profitability of the employer's business,
including:
(a) theft, fraud, assault or like criminal offence; or
(b) disobedience of a lawful and responsible order that is consistent with
the employee's contract of employment.
TCG Trust means the TCG Trust constituted by a trust deed dated the same
date as this agreement.
Trade Sale means the sale of one or more of the main operating Subsidiaries
or the sale of the whole or a substantial part of the Business or the sale
of all or substantially all of the assets of the Group under clause 15.
Transfer means in respect of a Share, to sell, assign, transfer, convey or
otherwise dispose of the Share (or any direct or indirect legal or
beneficial interest in or over any rights in respect of the Share).
Unitholders means those persons who from time to time hold units under the
TCG Trust and Unitholder means any one of them.
Warranty has the meaning given in clause 17.1.
Warranty Claim has the meaning given in the Investment Agreement.
1.2 Interpretation
In this Agreement unless the contrary intention appears:
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(a) the singular includes the plural and vice versa and words importing a
gender include other genders;
(b) reference to any legislation or any provision of any legislation
includes any amendment, modification, consolidation or re-enactment of
the legislation or any legislative provision substituted for, and all
legislation and statutory instruments of, and regulations issued
under, the legislation;
(c) other grammatical forms of defined words and expressions have
corresponding meanings;
(d) a reference to a clause, paragraph, schedule, annexure or exhibit is a
reference to a clause or paragraph of, or schedule, annexure or
exhibit to, this Agreement and a reference to this Agreement includes
its schedules, annexures and exhibits;
(e) words importing persons or companies include firms, bodies corporate,
unincorporated associations or authorities;
(f) a reference to a person includes a reference to the person's
executors, administrators, successors, substitutes and assigns;
(g) headings are for ease of reference only and do not affect the
construction of this Agreement;
(h) a reference to '$' or 'dollar' is a reference to the amount in the
lawful currency of Australia;
(i) a reference to writing includes typewriting, printing, lithography,
photography and any other mode of representing or reproducing words,
figures or symbols in a permanent and visible form;
(j) a document expressed to be an annexure or exhibit means a document a
copy of which has been initialled for the purposes of identification
by or on behalf of the Parties;
(k) if any day appointed or specified by this Agreement for the payment of
any money falls on a day which is not a Business Day the day appointed
or specified is deemed to be the next Business Day;
(l) a reference to the Company will be taken to include a reference to
each Subsidiary of the Company from time to time and all rights and
obligations of the Parties under this Agreement will apply to each
Subsidiary as if a reference to the Company is also a reference to
that Subsidiary; and
(m) if any calculations relating to the issue or transfer of Shares under
this Agreement result in a number that is, or includes, a fraction,
that fraction will be rounded upwards to the nearest whole number.
2. Objectives and business
2.1 Objectives
The primary objectives of the Company are to:
(a) acquire CCGA;
(b) carry on the Business;
(c) develop and expand the Business in accordance with the Business Plan;
and
(d) maximise the sustainable value of the Company.
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2.2 Just and faithful
To fulfil the objectives specified in clause 2.1 each Shareholder
undertakes to each other Shareholder to:
(a) be just and faithful to, and cooperate with, each other in relation to
all matters concerning the affairs and activities of the Company;
(b) do or cause to be done all acts necessary or desirable for the
implementation of this Agreement including, without limitation,
casting their votes as Shareholders, executing any necessary documents
and causing their nominees to the Board to implement this Agreement;
and
(c) not unreasonably delay any action, approval, direction, determination
or decision required under this Agreement.
2.3 Business
The Company will not carry on any business other than the Business
unless authorised in accordance with clauses 4 and 6.
3. Boards
3.1 The Company
Each Shareholder undertakes to each other Shareholder that it will
exercise its rights as a holder of Shares to ensure that the
composition of the Board, and the procedures for meetings of the
Board, will be in accordance with and as set out in Schedule 1.
3.2 The Group
(a) The parties shall procure that the boards of directors of all
companies in the Group downstream from the Company shall consist of:
(i) at least two members of Management or their nominees; and
(ii) other persons determined by the Board from time to time.
(b) Each member of Management appointed to the board of the Company or any
Subsidiaries will resign from the board of all Group Companies on
termination of his or her employment contract with a Group Company. If
the member of Management fails to comply with this provision, the
Shareholders will revoke the appointment of such member of Management.
(c) Both Cordiant and the Investors may each from time to time nominate a
person as an observer to a Group Company. An observer appointed under
this clause 3.2(c) is entitled to attend, as an observer, board
meetings of such Group Company and is entitled to receive all
documents and notices which a director of the Group Company receives.
The Company will procure that all such notices and documents are
received by the observer at the same time as received by directors of
the relevant Group Company.
4. Management of the Group
Each Shareholder undertakes to each other Shareholder that it will exercise
its rights as a holder of Shares to ensure that:
(a) subject to clauses 3 and 4, management of the Group will be vested in
the Board;
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(b) subject to clauses 3 and 4, the Group will be managed on a day to day
basis by the Chief Executive Officer who will report and be
responsible to the Board for the Group's activities and operations;
(c) the Chief Executive Officer will have the power and authority to
manage the Group:
(i) in accordance with paragraph (d) and his service agreement;
(ii) subject to and in accordance with the Business Plan; and
(d) the Chief Executive Officer will be responsible for:
(i) making recommendations to the Board regarding the allocation of
options under the Incentive Plan (as defined in clause 11.1);
(ii) management of all activities of the Group in the conduct of the
Business in compliance with the Business Plan;
(iii) the general administration of the Group;
(iv) implementation of and compliance with the Business Plan; and
(v) provision to the Board of full information relating to the
activities of the Group,
subject to lawful directions and delegations from, and supervision by,
the Board in accordance with this Agreement.
5. Approval requirements
5.1 Minority Approval
(a) Subject to clause 5.1(b), for so long as Cordiant holds either
directly or indirectly at least 15% of the Share Capital, the
Company must not do or commit to do, and may not permit any other
Group Company to do or commit to do, any of the things listed in
Schedule 2 unless first approved in writing by Cordiant. Cordiant
will be taken to indirectly hold any Share held by a permitted
transferee of Cordiant or by an Affiliate of Cordiant.
(b) The rights of Cordiant under clause 5.1(a) shall have no effect
in relation to an act of the Company in connection with the
implementation of a resolution of the Board in accordance with
clause 15.
5.2 Board Approval
(a) Subject to clause 5.1, the Company must not do or commit to do,
and may not permit any Group Company to do or commit to do, any
of the things listed in Schedule 11 unless first authorised by
resolution of the Board. The Company must, as soon as reasonably
possible, and in any event within 30 days after Completion,
procure that:
(i) the Constitution of each Group Company is amended to include
a prohibition on each such Group Company taking any of the
steps listed in Schedule 11 without prior authorisation from
the Board; and
(ii) the financial year of each Group Company is the Financial
Year.
(b) The obligations of the Company under clause 5.2(a) shall not
apply in respect of the constitutions of HMA Blaze Pty Ltd, Patts
Consulting Pty Ltd and Patts Beyond Pty Ltd.
(c) The Company must not, unless first approved in writing by each of
the Management Directors, implement any reconstruction of the
Share Capital (including without limitation a consolidation,
subdivision, reduction, return of capital or share bonus issue)
which could
page 15
reasonably be regarded as having the dominant purpose of diluting
the Management interest in the Share Capital.
5.3 Company covenants
The Company undertakes to the Investors and to Cordiant to do or cause to
be done the things listed in Schedule 3.
5.4 Zenith Agreements
(a) The Company must procure that each Subsidiary that is a Group Company
for the purpose of the Media Services Agreement:
(i) complies with the obligations expressed as being obligations on
Group Companies under the Media Services Agreement; and
(ii) does not by its act or omission, cause Cordiant UK to be in
breach of the Media Services Agreement.
(b) The Company must not and must procure that no Subsidiary voluntarily
terminates the Franchise Agreement.
(c) The parties must take all action within their power to ensure that
that the Company complies with its obligations under this clause 5.4.
(d) For the purposes of this clause 5.4, Media Services Agreement means
the media services agreement between Cordiant UK and Mediavista
Limited dated 27 September 2001 and Franchise Agreement means the
Zenith Media Worldwide Licence Agreement, between Zenith Media
Holdings Limited, Zenith Media Pty Ltd and the Company dated 29 June
1999.
6. Business plan
6.1 Initial Business Plan
Each Shareholder undertakes to each other Shareholder and to the Company
that it will exercise its rights as a holder of Shares to ensure that the
Company will conduct the Business in accordance with an initial business
plan agreed by the Investors, Cordiant and the Management Directors before
Completion, until another Business Plan is approved and adopted in
accordance with this clause 6.
6.2 Subsequent Business Plans
Each Shareholder undertakes to each other Shareholder and to the Company
that it will exercise its rights as a holder of Shares to ensure that
subsequent Business Plans will be considered and adopted in accordance with
the following procedure:
(a) at least three months before the beginning of each Financial Year, the
Chief Executive Officer must submit to the Board a draft Business Plan
for the following Financial Year; and
(b) the Board must consider the draft Business Plan and approve a Business
Plan not less than two months before the beginning of the following
Financial Year.
page 16
6.3 Failure to adopt a Business Plan
Each Shareholder undertakes to each other Shareholder and to the Company
that it will exercise its rights as a holder of Shares to ensure that, if
the Board fails to adopt a Business Plan in accordance with clause 6.2,
until a new Business Plan is adopted under clause 6.2 the Business must be
conducted on the basis of the then current Business Plan.
6.4 Variation of Business Plan
The Board may, at their discretion, agree to amend the then current
Business Plan at any time during a Financial Year.
7. Financial and other reporting
7.1 Provision of Reports
The Company must provide the financial reports and information listed in
Schedule 4 at the times specified in Schedule 4 to Cordiant, the Investors
and each Management Director and the Trustee.
7.2 Confidentiality
All information provided by the Company under clause 7.1 will be provided
subject to the terms of clause 19.
8. Accounts and records
8.1 Records and Accounting Books
The Company must ensure that its records and accounting books are:
(a) kept in accordance with the Act;
(b) audited yearly by the Auditors; and
(c) reflect the Accounting Standards as consistently applied by the
Company and approved by the Board.
8.2 Access by Directors
Subject to clause 19, each of the Directors will be entitled, on behalf of
their appointing Shareholder and with any of an accountant, lawyer, agent,
consultant or employee of that appointing Shareholder to:
(a) inspect, and take photocopies using the Company's facilities of, all
the books, accounts, financial records and other documents of the
Company; and
(b) have full access to the facilities and employees of the Company.
8.3 Disclosure by Directors
Subject to clause 19, the Parties acknowledge that each Director may
disclose all information (confidential or otherwise) about the affairs,
finances and accounts of the Company and of a Subsidiary of the Company,
which information comes into the Director's possession from time to time:
(a) to the Shareholder which appointed the Director in accordance with
clause 3; and
(b) in relation to each Investor Director, to any investors or unitholders
with an interest in those funds managed by the Investor which have
been invested in the Company and to any investment and advisory
committees of those funds and any third party advisers to those
page 17
funds, so long as they agree to maintain confidentiality in terms of
clause 19 of this Agreement
8.4 Investment Agreement
The Company will provide to Cordiant and will procure that the Group
provides to Cordiant all such assistance and access as the Investors commit
to provide to Cordiant under the Investment Agreement.
9. Dividend policy
The dividend policy of the Company will be as determined by the Board from
time to time.
10. Issue of Equity Securities
10.1 No obligation
No Shareholder will be obliged to provide any funds to the Company, whether
by way of loans or subscription for Equity Securities.
10.2 Board approval
If the Board resolves that an issue of Equity Securities is necessary then
that issue must be carried out in accordance with this clause 10.
10.3 Offer to existing Shareholders
Except in relation to an Excluded Issue, if the Board resolves to issue any
Equity Securities the Equity Securities must be offered to existing
Shareholders in accordance with this clause 10.
10.4 Offer of Equity Securities
The Company must offer to each Shareholder (regardless of the class of
share held by that Shareholder) the number of Equity Securities calculated
in accordance with the following formula (Round 1 Offer):
N = A x B
--------
C
where:
N = the number of Equity Securities to be offered for subscription to that
Shareholder;
A = the total number of Equity Securities proposed to be issued;
B = the number of Shares held by that Shareholder on the date of the Round
1 Offers; and
C = the total number of Shares in the capital of the Company held by
Shareholders on the date of the Round 1 Offers.
10.5 Subscription Notice
The Company must make each Round 1 Offer to each Shareholder by notice in
writing (Subscription Notice) specifying:
(a) the total number of Equity Securities available for subscription and
the number being offered to each Shareholder;
(b) the type of Equity Securities being offered; and
(c) the terms of issue of the Equity Securities.
page 18
10.6 Notification
Within 15 Business Days after receipt of the Round 1 Offers, each
Shareholder must notify the Company whether it accepts all or a specified
number of Equity Securities contained in its Round 1 Offer or rejects in
full its Round 1 Offer. If a Shareholder accepts all or a specified number
of Equity Securities contained in its Round 1 Offer (Accepting
Shareholder), that Accepting Shareholder must subscribe and pay for that
number of Equity Securities contained in its notice of acceptance of its
Round 1 Offer on the terms specified in the Subscription Notice. If any
Shareholder fails to notify the Company within the period specified in this
clause 10.6 of its acceptance or rejection of that offer, that Shareholder
will be deemed to have rejected its Round 1 Offer. The Trustee will accept
any offer made to it as contemplated by this clause 10 on behalf of those
Unitholders which direct it to accept such offer.
10.7 Additional Equity Securities
Any Accepting Shareholder may by written notice to the Company, given at
the same time as that Accepting Shareholder accepts (in whole or part) the
Round 1 Offer, offer to subscribe for such additional number of Equity
Securities as may be specified in the Subscription Notice in the event that
not all of the Equity Securities are subscribed for by the Accepting
Shareholders under the Round 1 Offers.
10.8 Offer of Remaining Equity Securities
If all or a portion of the Equity Securities are not accepted under the
Round 1 Offers, the Company must within 5 Business Days re-offer to those
Accepting Shareholders who have given notice in accordance with clause 10.7
the Equity Securities not accepted under the Round 1 Offers (such Equity
Securities, collectively, Remaining Equity Securities) on the terms set out
in the Subscription Notice. The amount of Remaining Equity Securities which
are re-offered to each Accepting Shareholder will be the additional amount
each Accepting Shareholder has agreed to subscribe for in its notice given
under clause 10.7 or, in the event of competition between them, on a
pro-rata basis to their acceptances under clause 10.6.
10.9 Remaining Equity Securities
If all Remaining Equity Securities are not taken up under clause 10.8 then,
those Remaining Equity Securities not taken up will be at the disposal of
the Board who may allot or otherwise dispose of the Equity Securities to
any persons whether or not existing Shareholders, at any time within 30
Business Days after the end of the period under clause 10.8 on terms no
more favourable to the subscribers than those offered to Shareholders under
this clause 10.
10.10 Deed of Accession
The Board must not allot or issue any Equity Securities to any person that
is not a Shareholder until the proposed allottee has executed, and
delivered to the Company, a Deed of Accession.
10.11 Excluded Issue
The provisions of this clause 10 (other than clause 10.10) do not apply to
any of the following:
(a) Subscription - the issue of Shares in accordance with the terms of the
Investment Agreement;
(b) Consent - an issue of Equity Securities to which Shareholders holding
at least 95% of the Share Capital consent in writing; and
(c) Management Issue - an issue of Additional Management Equity under
clause 11.
page 19
11. Management equity
11.1 Equity issue
The parties agree that key employees of the Group will be invited to
participate in up to a further 20% of the equity (on a fully diluted basis)
in the Company (Additional Management Equity) under the terms (or
substantially similar terms) of the incentive plan attached as Annexure A
(Incentive Plan).
11.2 Cessation of employment
Any Management Shareholder will be obliged to sell (Management Seller) his
or her Shares (Management Sale Shares) to a person (provided that such
Management Sale Shares are first offered by the Board to a member of
Management) nominated by the Board if he or she ceases to be employed by
the Group at a price per Share determined as follows:
(a) if the employment ceases as a result of:
(i) resignation (other than in circumstances of ill-health or
disability in accordance with the relevant Management
Shareholder's contract of employment); or
(ii) dismissal as a result of the Board forming the reasonable
opinion, after having made all reasonable enquiries, that the
Management Shareholder has knowingly breached any of the
Warranties in a material respect; or
(iii)Summary Dismissal,
the lower of:
(A) the market value of the Management Sale Shares upon the
cessation of employment, determined in accordance with
clause 11.3 below (Market Value); and
(B) the price paid by the Management Seller for the Management
Sale Shares (whether on issue or on subsequent acquisition);
and
(b) if the employment ceases as a result of circumstances other than those
set out in clause 11.2(a), the price paid to the Management Seller for
the Management Sale Shares shall be the Market Value.
11.3 Determination of Market Value
(a) The Market Value of the Management Sale Shares will be the value of
the Shares determined by the Board on the basis of a report prepared
annually by the Auditors using such assumptions and discounts as the
Board and the Auditors think fit, including discounts for a lack of
liquidity, and otherwise as may be required from time to time under
Division 13A of the Income Tax Assessment ▇▇▇ ▇▇▇▇.
(b) If the Board or the relevant Management Shareholder does not agree
that the above valuation is appropriate then the Market Value shall be
determined by a firm of independent accountants chosen jointly by the
Board and the relevant Management Shareholder using the same
methodology (including any assumptions and discounts) as described in
clause 11.3(a). Such a firm will be appointed to act as experts and
not as arbitrators and their determination will be final and binding.
Their costs shall be borne by the party requesting such valuation.
(c) Within seven days after the price has been determined:
page 20
(i) the Company shall notify the Management Seller of the names and
addresses of the purchaser of the Management Sale Shares and the
number of Management Sale Shares to be offered to each;
(ii) the Company shall notify each purchaser of the number of
Management Sale Shares on offer to him; and
(iii) the Company's notices shall specify the price per share and
state a date, between seven and 14 days later, on which the sale
and purchase of the Management Sale Shares is to be completed.
11.4 Departing Unitholder
In the event that any Unitholder ceases to be employed by the Group
(Departing Unitholder) then the provisions of clauses 11.2 and 11.3 shall
apply to the Trustee as if the Shares held by the Trustee on behalf of the
Departing Unitholder are the Management Sale Shares.
12. Restrictions on Transfer
12.1 No Transfer
Except in accordance with clauses 11 - 16 , each Shareholder must not
Transfer or otherwise dispose of any of its Shares (other than in respect
of a permitted transfer under clause 12.3) unless all other Shareholders
otherwise agree in writing.
12.2 Approval of Transfer
Subject to clause 12.3 and notwithstanding any other provision of this
Agreement, no Shareholder can Transfer or otherwise dispose of its Shares
prior to the second anniversary of this Agreement without the prior written
approval of Cordiant and the Investors.
12.3 Permitted Transfers
The provisions of clauses 12.1 and 12.2 do not apply to any of the
following:
(a) a Transfer by an Investor to another Investor;
(b) a Transfer by Cordiant to an Affiliate, provided such Affiliate is not
an entity comprising the Campaign Palace;
(c) a Transfer by a ▇▇▇▇ Fund to an Affiliate;
(d) a Transfer by a Shareholder (other than an Investor or a Management
Shareholder) to a Related Corporation (as defined in the Act),
provided such Related Corporation is not an entity comprising the
Campaign Palace;
(e) a Transfer by a Management Shareholder to another member of Management
as approved by the Board or pursuant to the terms of the Incentive
Plan; or
(f) a Transfer by any Management Shareholder of his or her Shares to a
transferee which is a Relative of that Management Shareholder or a
superannuation fund or trust of which the relevant Management
Shareholder or his or her Relative is the primary beneficiary.
If a Party transfers all of the shares held by it to a Permitted Transferee
under this clause 12.3, such entity will be considered as that Party for
the purpose of this agreement.
12.4 Security
Neither any Management Shareholder nor the Trustee may grant security over
or encumber any Shares or grant security over or encumber any company that
acquires any Shares held by such
page 21
person pursuant to clause 12.3, unless the Investors and Cordiant agree in
writing prior to such security or encumbrance being granted.
12.5 Change of Permitted Transferee
In the event that any person to whom shares are transferred pursuant to
clause 12.3 ceases to be within the required relationship to the original
transferor then, that person must, within 15 Business Days of so ceasing,
transfer all such shares to the person who originally transferred them or
to any person falling within the required relationship to the original
transferor on the same terms as they were originally transferred.
12.6 Deed of Accession
A Transfer of Shares to a person that is not a Shareholder is void and of
no effect unless and until the proposed transferee has executed, and
delivered to the Company and each Shareholder, a Deed of Accession.
13. Drag Along rights
13.1 Drag Along Notice
Subject to clauses 12.2, 12.3, 13.2 and 15, if one or more of the
Shareholders (Selling Shareholder(s)) owning more than 51% of the Shares
receives an offer made on arms length terms to sell 51% or more of the
Shares (Offer) to an independent bona fide third party buyer (Buyer) and
the terms of such offer provide that the Buyer offers to acquire all of the
issued Shares in the Company on the same terms, the Selling Shareholder(s)
may give a notice (Drag Along Notice) to each other Shareholder within 10
Business Days of receiving the Offer (Drag Along Notice Period) stating its
wish to sell all of its Shares to the Buyer and:
(a) specifying the proportion of its Shares it wishes to sell (Sale
Proportion) being at all times greater than 51% of the Share Capital;
(b) specifying the price for the Sale Proportion (Sale Price);
(c) specifying the proposed settlement date (Settlement Date);
(d) specifying the other material terms and conditions of the proposed
sale of Shares;
(e) specifying the name of the Buyer; and
(f) attaching a copy of the offer by the Buyer,
and requiring each other Shareholder to sell the Sale Proportion of its
Shares to the Buyer on the terms and conditions set out in the Drag Along
Notice at the same time as the Selling Shareholder(s) sells the Sale
Proportion of its Shares to the Buyer.
13.2 Settlement Date
If it has complied with the provisions of clause 13.1, then the Selling
Shareholder(s) may accept the Offer and on the Settlement Date:
(a) each Shareholder must deliver to the Buyer title to the Sale
Proportion of its Shares free from all encumbrances provided that
Cordiant (and its Permitted Transferees) will only be required to sell
its Shares to the Buyer under this clause 13.2 if (and will not
otherwise be required to sell its Shares under clause 13.1) the Buyer
is acquiring all of the Shares then held by Cordiant (and its
Permitted Transferees) for the same price per Share at which the
Selling Shareholders are selling their Shares;
(b) the Board will receive on behalf of all Shareholders the aggregate
purchase price from the Buyer and must account, on the Settlement
Date, to the Shareholders for the purchase
page 22
price by paying each Shareholder the amount calculated as the amount
paid per Share on the sale multiplied by the number of Shares sold by
each Shareholder.
13.3 Revocation
A Drag Along Notice is irrevocable by a Selling Shareholder.
13.4 Attorney
Each Shareholder and the Company hereby severally and irrevocably appoints
any two Directors (provided that at least one Director is an Investor
Director and the other a Cordiant Director) jointly as their agent and
attorney with power to complete the sale as contemplated in this clause 13,
(including the power for either Director to execute all necessary
documentation to complete the sale on behalf of that Shareholder or the
Company (as the case may be)).
14. Tag Along
14.1 Sale Notice
If the Selling Shareholder(s) (except in respect of a Transfer under
clause 12.3) has received an Offer and has not served a Drag Along Notice
in accordance with clause 13.1 then the Selling Shareholder(s) must give a
copy of the Offer together with a notice in writing (Sale Notice) to each
other Shareholder (Offeree) stating its wish to sell some or all of its
Shares to the Buyer specifying:
(a) the Sale Proportion;
(b) the Sale Price;
(c) the Settlement Date;
(d) the other material terms and conditions of the proposed sale of
Shares; and
(e) the name of the Buyer.
The Trustee shall ensure that each Unitholder is supplied with a copy of
the Sale Notice which it receives under this clause.
14.2 Tag Along Notice
Each Offeree may within 10 Business Days of receipt of the Sale Notice give
notice (Tag Along Notice) to the Selling Shareholder(s) of its wish to sell
the Sale Proportion of the Shares held by or on behalf of the Offeree at
the date of the Sale Notice at the Sale Price per Share and otherwise on
the terms contained in the Sale Notice. If no Tag Along Notice is received
from the Offeree within 10 Business Days of receipt of the Sale Notice, the
Selling Shareholder(s) may, subject to clauses 14.4, within 30 Business
Days of the date of the Sale Notice, proceed, on the terms set out in the
Sale Notice to sell the Sale Proportion of its Shares to the Buyer. The
Trustee must ensure that it serves a Tag Along Notice in respect of those
Shares which it holds that it is directed by Unitholders to sell pursuant
to this clause 14 and do all things necessary to procure the sale of such
Shares.
14.3 Sale by the Selling Shareholder(s)
If one or more Offerees gives a Tag Along Notice to the Selling
Shareholder(s), the Selling Shareholder(s) shall not be entitled to sell
any of its Shares in accordance with the Sale Notice, unless
contemporaneously with the sale in accordance with the Sale Notice, all
Shares specified in each Tag Along Notice (Tag Along Shares) are sold at
the price per share specified in the Sale Notice and on the same terms and
conditions as those specified on the Sale Notice.
page 23
14.4 Settlement Date
On the Settlement Date:
(a) each Shareholder who has given a Tag Along Notice must deliver to the
Buyer title to all of its Shares free from encumbrances; and
(b) the Board will receive on behalf of all Shareholders the aggregate
purchase price from the Buyer and must account to the Shareholders for
the purchase price by paying each Shareholder its Respective
Proportion of the purchase price.
14.5 Attorney
Each Offeree which gave a Tag Along Notice to the Selling Shareholder(s)
hereby severally and irrevocably appoints any two Directors (provided that
one is an Investor Director and the other a Cordiant Director) jointly as
their agent and attorney with power to complete the sale as contemplated in
this clause 14, including the power for either Director to execute all
necessary documentation to complete the sale on behalf of that Offeree.
14.6 Revocation
A Tag Along Notice once given cannot be revoked or withdrawn.
15. Formal Sale Process
15.1 Service of Notice
Notwithstanding any other clause of this Agreement, at any time after the
second anniversary of this Agreement the Board may resolve (which right
may, for the avoidance of doubt, be exercised on more than one occasion) to
undertake a Listing, a sale of the Share Capital or a Trade Sale. As soon
as practicable, following such a resolution, the Board must serve notice on
all Shareholders informing them of the Board's decision.
15.2 Formal Sale Process
In the case of a Trade Sale or a sale of the Share Capital:
(a) the Board must immediately give notice to Cordiant (Exit Notice) of
its intention to commence a Trade Sale or a sale of the Share Capital
(as the case may be);
(b) within 10 Business Days of receipt of the Exit Notice, Cordiant may
make an offer to the Board for:
(i) in the case of a sale of the Share Capital, the Shares it does
not already own (Non-Cordiant Shares); or
(ii) in the case of a Trade Sale which is a sale of one or more of the
operating Subsidiaries, the shares in the relevant Subsidiaries
which the Board has decided to sell (Trade Sale Shares); or
(iii)in the case of a Trade Sale which is a sale of the whole or a
substantial part of the Business or assets of the Group, the
assets which the Board has decided to sell (Trade Sale Assets),
and
such offer must set out:
(A) the proposed price (Cordiant Price) for the Non-Cordiant
Shares, the Trade Sale Shares or the Trade Sale Assets (as
the case may be); and
page 24
(B) the other material terms and conditions on which it is
prepared to acquire the Non-Cordiant Shares, the Trade Sale
Shares or the Trade Sale Assets (as the case may be)
(Cordiant Offer);
(c) after the 10 Business Day period set out in clause 15.2(b), the Board
may decide to either:
(i) accept the Cordiant Offer (if one is made); or
(ii) invite arms length offers from independent bona fide third
parties (Third Party Offer) for the Share Capital, the Trade Sale
Shares or the Trade Sale Assets (as the case may be) (Third Party
Sale Process);
(d) if the Board decides to undertake a Third Party Sale Process:
(i) Cordiant may participate in the Third Party Sale Process as if it
were an independent third party; and
(ii) any Board discussions or decisions regarding the Third Party Sale
Process contemplated by this clause 15.2 will, for so long as
Cordiant participates in the sale process, take place without any
Cordiant Director, alternate or nominee being present or able to
vote or participate or having any right to receive information
relating to the Third Party Sale Process that is not made
available to any other third party that participates in the
process;
(e) once it has received all the Third Party Offers, the Board may not
sell the Share Capital, the Trade Sale Shares or the Trade Sale Assets
(as the case may be) to a third party at a price less than the
Cordiant Price without first giving notice to Cordiant (Further Sale
Notice) of the price and terms offered by such third party and giving
Cordiant the opportunity, within 10 Business Days of receipt of the
Further Sale Notice, to purchase the Non-Cordiant Shares, the Trade
Sale Shares or the Trade Sale Assets (as the case may be) at the
Cordiant Price;
(f) if Cordiant decides to accept the offer made in the Further Sale
Notice, it must complete the purchase of the Non-Cordiant Shares, the
Trade Sale Shares or the Trade Sale Assets (as the case may be) at the
Cordiant Price within 10 Business Days of its acceptance; and
(g) if Cordiant:
(i) does not offer to buy the Non-Cordiant Shares, the Trade Sale
Shares or the Trade Sale Assets (as the case may be); or
(ii) participates in the Third Party Sale Process but does not offer
the highest price; or
(iii) is given the opportunity to buy the Non-Cordiant Shares, the
Trade Sale Shares or the Trade Sale Assets (as the case may be)
but does not complete the purchase within 10 Business Days,
then the Board may, in accordance with the terms of this Agreement,
arrange to sell the Share Capital, the Trade Sale Shares or Trade Sale
Assets (as the case may be) to a third party provided such sale is
made on arms length terms to an independent bona fide third party
buyer.
15.3 Sale of Share Capital
If the Board decides to undertake a sale of the Share Capital to a third
party in accordance with clause 15.2 it will be entitled to give a notice
to each of the Shareholders:
(a) stating the Board's wish to sell all of the Shares to the third party
on the terms contained in the relevant Third Party Offer; and
page 25
(b) requiring the Shareholders to sell all of their Shares to the third
party on the terms contained in the relevant Third Party Offer.
15.4 Sale of Non Cordiant Shares to Cordiant
If the Board decides to undertake a sale of the Non-Cordiant Shares to
Cordiant in accordance with clause 15.2 it will give a notice to each of
the non-Cordiant Shareholders:
(a) stating its wish to sell all of their Shares to Cordiant on the terms
contained in the Cordiant Offer; and
(b) requiring those Shareholders to sell all of the Non-Cordiant Shares to
Cordiant on the terms contained in the Cordiant Offer.
In such circumstances, the parties (other than Cordiant) will procure the
resignation of all directors appointed by them, to any Group Company, such
resignations to take effect on the date of sale of the Non-Cordiant Shares.
15.5 Payment for Trade Sale or Sale of Share Capital
In the case of a Trade Sale or a sale of the Share Capital:
(a) the Board will receive on behalf of all Shareholders or the Company
(as the case may be) the aggregate purchase price;
(b) the Board must account to the Shareholders for the Proceeds by paying
each Shareholder its Respective Proportions of the remainder of the
purchase price;
(c) the Shareholders must, if so requested by the Board:
(i) pass a special resolution at short notice to wind up the Company
so that the Proceeds may be distributed to the Shareholders on
the basis referred to in clause 15.5(b); and
(ii) pass any special or other resolution or resolutions to facilitate
the distribution of the Proceeds to the Shareholders on the basis
referred to in clause 15.5(b).
15.6 Attorney
Each Shareholder and the Company hereby severally and irrevocably appoints
any two Directors (provided that one is an Investor Director and the other
a Cordiant Director) jointly as their agent and attorney with power to
complete the sale as contemplated in this clause 15, (including the power
for the Directors to execute all necessary documentation to complete the
sale on behalf of that Shareholder or the Company (as the case may be)).
15.7 Listing
If under clause 15.1 the Board decides that there should be a Listing then,
at any time thereafter the Board shall be entitled to serve notice in
writing on each Shareholder requiring them to cooperate and use their best
endeavours as soon as reasonably practicable after service of the notice
in:
(a) applying to a Stock Exchange nominated by the Board for:
(i) admission of the Company to the official list of that Stock
Exchange; and
(ii) official quotation of the Share Capital of the Company on that
Stock Exchange; and
(b) facilitating an offer of shares to the public in conjunction with the
listing.
page 26
15.8 Sell Down
(a) If there is to be a sell-down as part of the Listing:
(i) Cordiant (and its Permitted Transferees) and each of the
Investors will have the right to participate pro-rata to their
respective Shareholdings;
(ii) the Board agrees to consider and discuss with Management in good
faith, the right for the Shares held by or on behalf of
Management to participate in such sell-down to the extent of up
to 30% of the aggregate Shares or options over Shares held by or
on behalf Management; and
(iii) if any of the options issued to Management under the Incentive
Plan will convert into Shares due to the Listing, then Management
may sell down such of their Shares to enable each person to
recover the amount of tax payable due to such conversion.
15.9 Lock-Up
Each Management Shareholder and the Trustee agrees that Shares issued to it
may not be disposed, or dealt with or encumbered in any way (Disposed) in
the period of 36 months after the date of the Listing (Listing Date),
except as follows:
(a) one third of the Shares held by each Management Shareholder (or, in
case of the Trustee, one third of the Shares held by it on behalf of
each Unitholder) may be Disposed between 12 and 24 months after the
Listing Date; and
(b) one third of the Shares held by each Management Shareholder (or, in
case of the Trustee, one third of the Shares held by it on behalf of
each Unitholder) may be Disposed between 24 and 36 months after the
Listing Date
15.10 Participation
In the event of a Listing, each Shareholder shall be entitled to
participate in such Listing, to the effect that the other Shareholders
shall not proceed with such Listing unless all Shareholders are given a
timely opportunity to participate on equal terms and conditions.
15.11 Do all things
After the decision of the Board under clause 15.1, each Shareholder must
sign all such documents as are reasonably required to transfer such
person's shares, where such transfer is required to be made under this
Agreement or, in the case of a Listing must pass all such resolutions as
are required to implement the Listing (and must comply with any restriction
or escrow imposed at law by the rules of the exchange on which the Listing
is to take place).
15.12 Additional obligations of the Company
Without limiting the generality of clause 15.7 above, the Company must:
(a) bear the costs of preparing the prospectus, advisory fees,
underwriting commissions (if any), expenses of due diligence
investigations, Stock Exchange fees, fees of the relevant regulatory
authorities, legal fees, expert's fees, printing expenses and postage
expenses; and
(b) use its best endeavours to satisfy all terms and conditions of
admission to listing imposed by the Stock Exchange.
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16. Cordiant exit rights
16.1 Sale of Cordiant Shares
Notwithstanding any other provisions of this Agreement, after the second
anniversary of the date of this Agreement, Cordiant (and its Permitted
Transferees, such parties, if any, and Cordiant will together be considered
as 'Cordiant' for the purposes of this clause 16) may resolve to sell all
the Shares held by Cordiant provided that it follows the procedure set out
in this clause 16.
16.2 Offer of Cordiant Shares
On resolving to sell all its Shares (Cordiant Sale Shares), Cordiant must
offer to each other Shareholder the number of Cordiant Sale Shares
calculated in accordance with the following formula (Round One Offer):
N = A x B
-------
C-A
where:
N = the number of Cordiant Sale Shares to be offered for Transfer to that
Shareholder;
A = the total number of Cordiant Sale Shares;
B = the number of Shares held by that Shareholder on the date of the Round
One Offers; and
C = the total number of Shares in the capital of the Company held by
Shareholders.
16.3 Transfer Notice
Cordiant must make each Round One Offer to each Shareholder by notice in
writing (Transfer Notice) specifying:
(a) the total number of Cordiant Sale Shares and the number being offered
to each Shareholder; and
(b) the terms (including the price per share) of the Transfer of the
Cordiant Sale Shares.
16.4 Notification
Within 15 Business Days after receipt of the Round One Offers, each
Shareholder must notify Cordiant whether it accepts all or a specified
number of Cordiant Sale Shares contained in its Round One Offer or rejects
in full its Round One Offer. If a Shareholder accepts all or a specified
number of the Cordiant Sale Shares contained in its Round One Offer
(Accepting Shareholder), that Accepting Shareholder must agree to buy and
pay for that number of Cordiant Sale Shares contained in its notice of
acceptance of its Round One Offer on the terms specified in the Transfer
Notice. If any Shareholder fails to notify Cordiant within the period
specified in this clause 16.4 of its acceptance or rejection of that offer,
that Shareholder will be deemed to have rejected its Round One Offer. The
Trustee will accept any offer made to it as contemplated by this clause 16
on behalf those Unitholders which direct it to accept such offer.
16.5 Additional Cordiant Sale Shares
Any Accepting Shareholder may by written notice to the Company, given at
the same time as that Shareholder accepts (in whole or part) the Round One
Offer, offer to purchase such additional number of Cordiant Sale Shares as
may be specified in the Transfer Notice in the event that not all of the
Cordiant Sale Shares are purchased by the Accepting Shareholders under the
Round One Offers.
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16.6 Offer of Remaining Cordiant Sale Shares
If all or a portion of the Cordiant Sale Shares are not accepted under the
Round One Offers Cordiant must within 5 Business Days re-offer to those
Accepting Shareholders (if any) who have given notice in accordance with
clause 16.5 the Cordiant Sale Shares not accepted under the Round One
Offers (such Cordiant Sale Shares, collectively, Remaining Cordiant Sale
Shares) on the terms set out in the Transfer Notice (the price per Share at
which Shares are offered to Accepting Shareholders, to be the same price as
the Round One Offer price). The amount of Remaining Cordiant Sale Shares
which are re-offered to each Accepting Shareholder will be the additional
amount each Accepting Shareholder has agreed to subscribe for in its notice
given under clause 16.5 or, in the event of competition between them, on a
pro-rata basis to their acceptances under clause 16.4.
16.7 Remaining Cordiant Sale Shares
(a) Notwithstanding clauses 16.1-16.6 of this Agreement, if all the
Cordiant Sale Shares are not taken up after the Round One Offers or
under clause 16.6 then each party must:
(i) use their reasonable endeavours (including attempting to arrange
third party debt finance, but not, for the avoidance of doubt the
provision of further share capital or debt finance by any of the
Shareholders) to ensure that the Company enters into and performs
an agreement to buy back all the Remaining Cordiant Sale Shares
not taken up; and
(ii) do all things and execute all further documents, necessary to
give full effect to any such agreement.
(b) The terms of the buy-back agreement shall provide that each Remaining
Cordiant Sale Share not taken up will be bought back for an amount
equal to the per share price set out in the Transfer Notice issued
under clause 16.3.
(c) If the Company is not able to perform a buy-back under clause 16.7(a)
then, subject to clause 16.7(d) below, Cordiant may sell all the
Cordiant Sale Shares to a third party on terms no more favourable to
the purchaser that those set out in the Transfer Notice issued under
clause 16.3.
(d) Cordiant may not sell the Cordiant Sale Shares to a third party until
such time as the rights attaching to the Cordiant Sale Shares have
been varied so that the number of votes that the Cordiant Sale Shares
carry on any resolution other than a resolution on which all
Shareholders are not treated equally at any shareholders' meeting is
calculated as the lesser of the Cordiant Sale Shares and 24.9% of the
Share Capital.
16.8 Deed of Accession
Cordiant must not allot or issue any Cordiant Shares to any person that is
not a Shareholder until the proposed transferee has executed, and delivered
to the Company, a Deed of Accession.
16.9 Change of Control
(a) If there is a Change in Control in Cordiant, then Cordiant will cease
to have any rights under clauses 3.2(c), 5.1(a) and under Schedule 1
to appoint a Director and Schedule 2 of this Agreement and Cordiant
must execute and deliver to the Company the power of attorney attached
to this Agreement as Annexure B. For the avoidance of doubt, if there
is a Change of Control, Cordiant will no longer have the right to
appoint a Director to the Board under Schedule 1 and shall procure
that the Cordiant Directors immediately resign as Directors.
(b) Cordiant hereby irrevocably appoints any two Investor Directors
jointly as its attorney to execute the power of attorney attached as
Annexure B, in the event that a signed copy of
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the power of attorney referred to in clause 16.9(a) is not delivered
by Cordiant to the Company within 30 days of a Change of Control
occurring.
The power of attorney will provide that:
(c) an Investor Director can vote as Cordiant's attorney, at any
shareholders' meeting, in respect of such number of Shares as is
calculated as:
A - B, where A equals such number of Shares as is then held by
Cordiant; and B equals such number of Shares that constitute 24.9% of
the Share Capital, provided that if A-B is a negative number then the
power of attorney will not apply; and
(d) the power of attorney will not apply to a proposed resolution under
which all Shareholders are not treated equally.
16.10 Meaning of Change in Control
For the purposes of clause 16.9, 'Change of Control' means an acquisition
by a person of shares in Cordiant or its ultimate holding company which
carry 50.1% or more of the voting rights of Cordiant or its ultimate
holding company (as the case may be) except in circumstances where
following such acquisition Cordiant's ultimate holding company remains a
publicly listed company with one or more directors independent of its new
parent and which trades independently of its parent.
17. Management warranties
17.1 Warranties
Each Management Warrantor, only in relation to the operations of the
Business which are set out across from his or her name in Schedule 9, gives
those of the statements contained in Schedule 8 (Warranty) to the Investors
which are set out against his or her name in Schedule 9, subject to this
clause 17, to the extent of his or her actual knowledge.
17.2 Limitation of Liability
(a) A Management Warrantor will have no liability in respect of a breach
of any Warranty to the extent that:
(i) any Group Company has not suffered or incurred any actual loss
arising from or in relation to that breach of Warranty; or
(ii) the Management Warrantor has fully and fairly disclosed in
Schedule 9 the facts inconsistent with that Warranty; or
(iii) an Investor has successfully claimed under any policy of
insurance taken out in relation to the loss; or
(iv) an Investor has recovered the same loss by any other means,
including without limitation, under any other provision of this
Agreement; or
(v) an Investor is aware of any facts constituting a breach of any
Warranty as a result of information disclosed to it in writing by
the Management Warrantors prior to the date of this Agreement; or
(vi) an Investor is aware of any facts constituting a breach of any
Warranty as a result anything contained in the Transaction
Documents (as defined in the Investment Agreement); or
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(vii) the loss has been, or is, made good or is otherwise compensated
for without amount to any Investors; or
(viii) the loss would not have arisen but for any action carried out
(other than pursuant to a legally binding commitment created on
or before the date of Completion or in reliance on the accuracy
of a Warranty in good faith and without knowledge of inaccuracy),
or wilful omission, by an Investor after the date of Completion;
or
(ix) the loss has arisen as a result of any legislation or regulation
not in force at the date of this Agreement, or a change in the
application or interpretation of any legislation, regulation or
governmental policies or practices after the date of this
Agreement.
(b) Written disclosure by one Management Warrantor to the Investors or
their agents or advisers of facts inconsistent with a Warranty shall
constitute written disclosure of those facts by all Management
Warrantors.
(c) Subject to clause 17.2(b), the liability of a Management Warrantor for
any breach of Warranty will cease on the earlier of:
(i) 3 years after the date of this Agreement; or
(ii) the date on which none of the Investors hold any Shares.
17.3 Caps on liability
(a) No Management Warrantor will be liable to the Investors for any claim
or series of like claims with respect to any breach of Warranty:
(i) unless the Investors have first made a claim against Cordiant
under the Investment Agreement and are using or have used all
reasonable endeavours to pursue that claim; and
(ii) to the extent that the amount of the loss the subject of the
claim or series of claims has been recovered from Cordiant.
(b) No Management Warrantor will be liable to the Investors for any claim
or series of like claims with respect to any breach of Warranty unless
the amount of the claim or series of aggregated like claims made
against the Management Warrantor exceeds A$50,000, in which case, that
Management Warrantor will be liable for the whole of the amount and
not just the excess.
(c) The maximum aggregate liability of a Management Warrantor for all
claims for breaches of the Warranties is the price paid by of that
Management Warrantor for his or her Shares at the time of issue.
18. Warranties regarding capacity and status
Each Party represents to each of the other Parties that each of the
following statements is true and accurate as at the date of this Agreement:
(a) if it is a corporate entity, it is validly existing under the laws of
its place of incorporation;
(b) it has the power to enter into and perform its obligations under this
Agreement and to carry out the transactions contemplated by this
Agreement;
(c) it has taken all necessary action to authorise its entry into and
performance of this Agreement and to carry out the transactions
contemplated by this Agreement; and
page 31
(d) its obligations under this Agreement are valid and binding and
enforceable against it in accordance with their terms.
19. Confidentiality
19.1 Obligation to keep Confidential
Each Party agrees in relation to Confidential Information:
(a) to use the Confidential Information only for the purposes of the
Business of the Company or to make decisions regarding its investment
in the Company; and
(b) to keep that Confidential Information confidential and not disclose it
or allow it to be disclosed to any third party except:
(i) with the prior written approval of the Investors and Cordiant;
(ii) where disclosure is required to allow the Business to be
conducted in the ordinary course (for the avoidance of doubt such
disclosure will not include the disclosure of Confidential
Information relating to the Investors or Cordiant);
(iii) to officers, employees, consultants, advisers, limited partners
or members of the Parties (or its related bodies corporate) who
have a need to know (and only to the extent that each has a need
to know) and are aware that the Confidential Information must be
kept confidential,
and the Parties must take or cause to be taken reasonable precautions
necessary to maintain the secrecy and confidentiality of the
Confidential Information.
19.2 No announcement
Subject to clause 19.3, no announcement, press release or other
communication of any kind relating to the negotiations of the Parties or
the subject matter or terms of this Agreement will be made or authorised by
or on behalf of any Party without the prior written approval of the
Investors and Cordiant unless that announcement, press release or
communication is required to be made by:
(a) law or any order of any court, tribunal, authority or regulatory body;
and
(b) an Investor under its obligations to report to investors in the funds
with which it is affiliated.
19.3 Exceptions
Subject to clause 19.5, the obligations of confidentiality under this
Agreement do not extend to information that (whether before or after this
Agreement is executed):
(a) is disclosed to a Party to this Agreement, but at the time of
disclosure is rightfully known to or in the possession or control of
the Party and not subject to an obligation of confidentiality on the
Party;
(b) is public knowledge (otherwise than as a result of a breach of this
Agreement or any other obligation of confidence);
(c) is required to be disclosed by law or any order of any court,
tribunal, authority or regulatory body or in connection with the
enforcement of this Agreement or by the rules of a stock exchange or
listing authority;
(d) the Investor wishes or is required to disclose to investors in funds
on whose behalf the Investor is investing, the members of advisory and
investment committees of funds on
page 32
whose behalf the Investor is investing, or to any person to whom the
Investor is permitted to transfer Equity Securities under clause 12.3,
provided that any such disclosure is made on a confidential basis;
(e) Cordiant is required to disclose to its shareholders; and
(f) any Shareholder wishes to disclose to an adviser of that Shareholder
provided that any such disclosure is made on a confidential basis.
19.4 Survival of Termination
The rights and obligations of the Parties set out in this Agreement with
respect to Confidential Information survive termination of this Agreement.
19.5 Technical Information
Despite any other provision of this Agreement (other than clause 19.3(a),
(b) and (c)), a permitted disclosure under clause 19.3 must not include
Confidential Information which is technical information in relation to the
Company's operations which has been notified to the Shareholders by the
Company as being commercially sensitive.
20. Termination
20.1 Automatic Termination
Subject to clause 20.2, this Agreement will terminate automatically:
(a) by agreement of all Parties;
(b) for any Shareholder, when it ceases to hold, directly or indirectly,
any Shares in the capital of the Company, at which time that
Shareholder will have no further rights or obligations (except under
clause 19) under this Agreement, except in respect of any prior breach
of this Agreement;
(c) when the Company is wound up by an order of a Court;
(d) on the day on which the Shares are listed in accordance with clause
15.7;
(e) if the Acquisition Transaction is not completed; or
(f) on the day on which an agreement to sell all of the Shares is
completed.
20.2 No prejudice
Termination of this Agreement will be without prejudice to any accrued
rights of the Parties.
21. Specific performance
21.1 Injunction
The Shares cannot be readily purchased or sold in the open market, and for
that reason, among others, the Company and the Shareholders will be
irreparably damaged in the event that this Agreement is not specifically
enforced. Accordingly each Shareholder and the Company agree that specific
performance and injunctive relief would be appropriate remedies in the
event of any breach or threatened breach of this Agreement. Without
limiting the generality of the foregoing, should any controversy arise
concerning a sale or disposition of any Shares, an injunction may be issued
restraining any sale or disposition pending the determination of such
controversy and the resolution thereof shall be enforceable in a court of
equity by a decree of specific performance.
page 33
The remedies specified in this clause 21.1 shall be cumulative and not
exclusive, and shall be in addition to any other remedies which the Parties
may have.
21.2 Confirmation
Each Party confirms to each other Party that, for the purposes of entering
into the transactions contemplated by this Agreement:
(a) it has entered into such transactions entirely on the basis of its own
assessment of the risks and effect thereof;
(b) save as expressly set out in this Agreement it is owed no duty of care
or other obligation by any other Party in respect thereof; and
(c) insofar as it is owed any duty or obligation (not expressly set out in
this Agreement) (whether in contract, tort or otherwise) by such other
Party it hereby waives, to the extent permitted by law, any rights
which it may have in respect of such duty or obligation.
22. Fees
22.1 Advisory fees
On or shortly after Completion, the Company will procure payment of the
following fees:
(a) $700,000 to PEP or its nominee;
(b) $343,000 to Cordiant; and
(c) $500,000 to The Caliburn Partnership or its nominee,
in consideration for the advisory services provided in relation to the
Acquisition Transaction and this Agreement.
22.2 Management Fees
Under the Investment Services Agreement, the Company will pay an annual
management fee for management services provided to the Group by both of
Cordiant UK and the Investors (Annual Management Fee). The Investors and
Cordiant UK agree that they will not attempt to increase the Annual
Management Fee in a reckless or uncommercial manner.
22.3 TCG Trust Expenses
The parties agree that all costs and expenses of the Trustee incurred in
connection with its role as trustee of the TCG Trust and all costs and
expenses associated with the operation, management, administration or other
function of the TCG Trust will be paid by the Company.
23. Other provisions
23.1 Unitholders
The Management Directors, the Chief Executive Officer and all other parties
will (to the extent they are reasonably able) require the Trustee to redeem
or transfer units held by Unitholders or make distributions under the TCG
Trust (as the case may be) to ensure that each Unitholder is treated in
substantially the same way as if they were a Management Shareholder.
23.2 Management Subscription
Each Management Shareholder who executes this Agreement or a Deed of
Accession at or prior to Completion (as defined in the Investment
Agreement) agrees to subscribe for not less than the
page 34
number of Shares set out in their application form accompanying the
management information summary distributed by the Company prior to
Completion.
23.3 Entire Agreement
Other than the Investors Agreement, this Agreement contains the entire
understanding of the Parties as to its subject matter and any and all
previous understandings or agreements on that subject matter cease to have
any effect from the date of this Agreement.
23.4 No Agreements
Except in respect of the Investors Agreement, each Shareholder represents
and warrants that as of the execution of this Agreement it is not party to
any written or other enforceable agreement with any other Shareholder with
respect to the subject matter of this Agreement.
23.5 Disclosure of future agreements
Except in respect of the matters set out in the Investors Agreement, each
of the Shareholders agrees that it will not enter into any written or other
enforceable agreement with any other Shareholder with respect to the
subject matter of this Agreement without first obtaining the prior written
approval of the Shareholders.
23.6 Subsidiaries
The Shareholders each undertake (in their capacity as Shareholders) to
exercise the voting rights attributable to the Shares which they hold and
cause the Directors and the directors of each of the Subsidiaries nominated
by them respectively to vote to ensure that the Company and each of the
Subsidiaries operate in accordance with the provisions of this Agreement
and so as to give full effect to the terms of this Agreement.
23.7 No Waiver
The failure of a Party to exercise or delay in exercising a right, power or
remedy under this Agreement does not prevent its exercise.
23.8 Waiver in writing
A provision of or right under this Agreement may not be waived except by a
waiver in writing signed by the Party granting the waiver, and will be
effective only to the extent specifically set out in that waiver.
23.9 Duration of provisions
The covenants, conditions and provisions contained in this Agreement do not
merge or terminate on signing this Agreement and to the extent that they
have not been fulfilled and satisfied remain in full force and effect.
23.10 Assignment
None of the rights of the Parties under this Agreement may be assigned or
transferred except in connection with a transfer permitted under this
Agreement.
23.11 Costs
Subject to clause 22, each Party will pay its own costs and expenses
incurred in connection with the preparation and execution of this Agreement
and any instrument or other document executed to give effect to any
provisions of this Agreement.
23.12 Governing Law
This Agreement is governed by the law of New South Wales.
page 35
23.13 Jurisdiction
Each Party irrevocably and unconditionally submits to the exclusive
jurisdiction of the courts of New South Wales.
23.14 Further action
Each Party must do everything reasonably necessary or desirable to give
full effect to this Agreement.
23.15 Counterparts
This Agreement may be executed in any number of counterparts and all those
counterparts taken together are regarded as one instrument.
23.16 Unlawful provisions
None of the Company and any Subsidiaries will be bound by any provision of
this Agreement to the extent that the provision operates as an unlawful
▇▇▇▇▇▇ on any statutory power of the Company or any Subsidiary (as the case
may be), but that provision shall remain valid and binding in relation to
each other Party to which it is expressed to apply and the provision will
take effect so as to include an obligation on the part of the Parties
(other than the Company) to exercise all their respective powers and rights
so as to procure, so far as they are able, that the Company and any
Subsidiary (as the case may be) complies with such provision
notwithstanding that it is not bound by it.
23.17 No relationship
Nothing contained or implied in this Agreement will create or constitute,
or be deemed to create or constitute, a partnership, agency, trustee or
other fiduciary relationship between the Parties.
23.18 No authority
A Party must not act, represent or hold itself out as having authority to
act as the agent of or in any way bind or commit the other Parties to any
obligation.
23.19 Consent
Where this Agreement provides that any particular transaction or matter
requires the consent, approval or agreement of any Party that consent,
approval or agreement may be given subject to such terms and conditions as
that Party may impose and any breach of such terms and conditions by any
person will be deemed to be a breach of the terms of this Agreement.
23.20 Amendment of Agreement
This Agreement may only be amended in writing signed by each Party, except
in the case of the Management Shareholders whereby any such amendment must
have the written agreement of Management Shareholders holding at least 75%
of the Shares held by such Management Shareholders.
23.21 Distributions and realisations
The Shareholders agree to take all further actions and execute all further
documents as may be reasonably necessary to give effect to the Investment
Services Agreement, including, but not limited to, the passing of
Shareholder resolutions and directing any Directors appointed by them to
procure the passing of any necessary resolutions of the Directors.
23.22 Limitations on liabilities
Except to the extent of the Trustee's breach of trust, fraud or negligence
the Trustee is not liable to any other Shareholder to a greater extent than
the extent to which it is entitled to be and is in fact
page 36
indemnified out of the property of the TCG Trust actually vested in the
Trustee in respect of the TCG Trust.
23.23 Amendments to trust deed
The Trustee will ensure, to the extent that it is able, that the trust deed
governing the TCG Trust will not be amended unless the Investors and
Cordiant UK consent.
24. Notices
24.1 Address for service
A notice required or authorised to be given or served on a Party under this
Agreement must be in writing and may be given or served by facsimile, post
or hand to that Party at its facsimile number or address appearing in the
Details or such other facsimile number or address as the Party may have
notified the other Party or Parties in writing.
24.2 Time of service
A notice is deemed to have been given or served on the Party to whom it was
sent:
(a) in the case of hand delivery, on delivery during business hours;
(b) in the case of prepaid post, 5 Business Days after the date of
despatch;
(c) in the case of facsimile transmission, at the time of despatch if,
following transmission, the sender receives a transmission
confirmation report or, if the sender's facsimile machine is not
equipped to issue a transmission confirmation report, the recipient
confirms in writing that the notice has been received.
24.3 Execution
A notice given or served under this Agreement is sufficient if:
(a) in the case of the Company, it is signed by a director, officer or
secretary of that company; or
(b) in the case of an individual, it is signed by that Party.
24.4 Service permitted by law
The provisions of this clause are in addition to any other mode of service
permitted by law.
24.5 Meaning of notice
In this clause notice includes a demand, request, consent, approval, offer
and any other instrument or communication made, required or authorised to
be given under this Agreement.
25. Paramountcy
The provisions of this Agreement will prevail over any inconsistent clause
in the Constitution and immediately on all Shareholders becoming aware of
any such inconsistency the Shareholders will amend the Constitution to
remove the inconsistency.
26. Campaign Palace
26.1 Cordiant obligations
Cordiant shall procure that Campaign Palace will not for a term of six
months:
page 37
(a) attempt in any manner to persuade any client of a Group Company to
cease to do business or to reduce the amount of business which any
such client has customarily done or contemplates doing with such Group
Company provided that this clause 26.1 shall not prevent Campaign
Palace from pitching for work from any party (including a current
client of a Group Company) where such party has invited pitches to be
made for its work and any such pitch by Campaign Palace will not be
considered to breach this clause 26.1; or
(b) induce or attempt to induce any employee of a Group Company to
terminate his employment with such company.
26.2 Directors involvement
Cordiant will ensure that no person nominated by it to act as a Director or
as an observer to any Group Company is a director, officer or employee of
Campaign Palace (or of a subsidiary of Campaign Palace) or has any
involvement in the management or business of Campaign Palace.
26.3 Disclosure of information
Notwithstanding any other provision of this Agreement Cordiant may not
disclose (or permit the disclosure of) any Confidential Information of the
Company or of any Group Company to Campaign Palace or to any director,
officer or employee of Campaign Palace.
26.4 Company obligations
The Company will procure that no Group Company will for a term of six
months:
(a) attempt in any manner to persuade any client of Campaign Palace to
cease to do business or to reduce the amount of business which any
such client has customarily done or contemplates doing with Campaign
Palace provided that this clause 26.4 shall not prevent a Group
Company from pitching for work from any party (including a current
client of Campaign Palace) where such party has invited pitches to be
made for its work and any such pitch by a Group Company will not be
considered to breach this clause 26.4; or
(b) induce or attempt to induce any employee of Campaign Palace to
terminate his employment with such company.
For the purpose of this clause 26, Client means a retained client of the
relevant entity as at the date of this Agreement.
27. Network Agreement
The parties agree that to the extent that a Group Company uses a name, that
is a Name for the purposes of the Network Agreement, as a corporate name,
business name or otherwise, the Group Company has no right, title or
interest to that Name except as expressly licensed under the Network
Agreement and the parties acknowledge and agree that any prior use by such
Group Company of any such name was on the basis of a licence on terms
consistent with the terms of the Network Agreement. For the purpose of this
clause, the term Name shall have the meaning given to that term in the
Network Agreement.
28. Warranty Claims
In the event that the Company brings a Warranty Claim against Cordiant
pursuant to the terms of the Investment Agreement, Cordiant agrees and
acknowledges that:
(a) Cordiant Director, alternate or nominee will:
page 38
(i) be able to be present or able to vote or participate in any
discussion of the Board regarding any Warranty Claim;
(ii) notwithstanding any other provision of this Agreement, have any
right to receive information regarding such a Warranty Claim in
his or her capacity as a Director;
(iii) solely in his or her capacity as a Director take any action to
prevent or obstruct the Company in any way from pursuing a
Warranty Claim.
(b) neither it, nor any of its Permitted Transferees (if any), will,
solely in its capacity as a Shareholder:
(i) take any action to prevent or obstruct the Company in any way
from pursuing a Warranty Claim; or
(ii) notwithstanding any other provision of this Agreement, have any
right to receive information regarding such a Warranty Claim.
Nothing in this clause 28 shall operate to prejudice any rights that
Cordiant has under the Investment Agreement or at law.
page 39
Schedule 1 - Board of Directors
--------------------------------------------------------------------------------
1. Maximum Number of Directors
The maximum number of Directors of the Company will be 8.
2. Appointment and Removal of Directors
2.1 Entitlement
(a) Subject to paragraphs 2.1(b) below, the initial Directors will be
appointed as follows:
(i) the Investors will have the right to appoint and remove, by
notice in writing to the Company from time to time, 4 Directors;
(ii) Cordiant will have the right to appoint and remove, by notice in
writing to the Company from time to time, 2 Directors.
(iii) the Management Shareholders and the Trustee (acting jointly)
will have the right to appoint and remove, by notice in writing
to the Company from time to time, 2 Directors.
(b) Subject to clause 16.9, a person holding 15% or more of the issued
Shares may appoint one director for every 12.5% of the Shares such
person holds. If, after the date of this Agreement, a person acquires
Shares, for every 12.5% of the Shares such person holds, that person
will be entitled to appoint a Director. If, after the date of this
Agreement, the percentage of Shares held by a person falls as a direct
consequence of a disposal of Shares by that person, then the number of
Directors such person may appoint will be adjusted on the basis of the
above appointment threshold and, if such a person has appointed more
Directors than such person is permitted to appoint, that person will
procure that such number of Directors appointed by it resigns from the
Board so as to ensure that it does not have more Board appointees than
it is permitted under this paragraph 2.1.
2.2 Chairman
One of the Directors will be appointed as Chairman by resolution of the
Board. The initial Chairman will be ▇▇▇▇ ▇▇▇▇▇▇.
3. Initial Directors
3.1 Initial Investor Directors
The Investors each undertake that the Directors they will appoint initially
will be:
(a) ▇▇▇ ▇▇▇▇;
(b) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇;
(c) Simon Pillar; and
(d) ▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
3.2 Cordiant initial Directors
Cordiant undertakes that the Directors it will appoint initially will be:
page 40
(a) ▇▇▇▇▇ ▇▇▇▇▇; and
(b) ▇▇▇▇▇▇ ▇▇▇▇▇▇.
3.3 Management initial Directors
The Management Shareholders and the Trustee (acting jointly) undertake that
the Directors it will appoint initially will be:
(a) ▇▇▇ ▇▇▇▇▇; and
(b) ▇▇▇▇ ▇▇▇▇▇▇.
4. Voting
At any meeting of the Directors:
(a) Each Investor Director is entitled to cast the number of votes which
is:
100 x the aggregate Respective Proportions of the Investors (and their
Permitted Transferees)
the aggregate number of Investor Directors
(b) Each Cordiant Director is entitled to cast the number of votes which
is:
100 x the Respective Proportion of Cordiant (and its Permitted
Transferees)
the aggregate number of Cordiant Directors
(c) Each Management Director is entitled to cast the number of votes which
is:
100 x the Respective Proportion of the Management Shareholders (and
their Permitted Transferees) and the Trustee
the aggregate number of Management Directors
(d) each Investor Director appoints the other Investor Directors as his or
her alternate unless otherwise notified to the Company. At any Board
meeting where an Investor Director is acting as an alternate for any
absent Investor Directors, he or she will have the right to cast the
votes that the absent Investor Directors would be entitled to cast if
they were present in addition to the votes that he or she is entitled
to cast;
(e) each Cordiant Director appoints the other Cordiant Director(s) as his
or her alternate unless otherwise notified to the Company. At any
Board meeting where an Cordiant Director is acting as an alternate for
any absent Cordiant Director, he or she will have the right to cast
the votes that the absent Cordiant Director(s) would be entitled to
cast if they were present in addition to the votes that he or she is
entitled to cast;
(f) each Management Director appoints the other Management Director(s) as
his or her alternate unless otherwise notified to the Company. At any
Board meeting where an Management Director is acting as an alternate
for any absent Management Director, he or she will have the right to
cast the votes that the absent Management Director(s) would be
entitled to cast if they were present in addition to the votes that he
or she is entitled to cast;
(g) the Chairman will not have a casting vote in addition to a
deliberative vote;
(h) subject to clause 5.1, all decisions of the Board will be made by
majority vote with each Director (or his or her alternate) being able
to cast the number of votes that he or she is entitled under
sub-paragraphs (a) - (c) of this paragraph 4.
page 41
5. Quorum
The quorum for a Board meeting is 3 Directors, of which a majority must be
Investor Directors, with at least one Management Director present. If a
quorum is not present within 30 minutes after the time appointed for the
meeting, the meeting will stand adjourned to the same time and place 24
hours after the meeting and, at the reconvened meeting, the quorum will
comprise the Directors present.
6. Frequency of Meetings
Unless otherwise agreed in writing by Cordiant and the Investors, the Board
will meet 6 times annually at regular intervals.
7. Time and Location of Meetings
As far as practicable all monthly meetings of the Board must be held on the
same day and week of the month and be held at the same location. Directors
will have the right to participate by conference call.
8. Notice
A Board meeting will require at least five Business Days' prior written
notice to be given to all Directors unless otherwise agreed by all
Directors.
9. Board Papers
The notice of a Board meeting must include an agenda accompanied by:
(a) a report from the Chief Executive Officer on the previous one month's
trading including, but not limited to, comments on revenues, margins,
overheads, profits, cash flow, prospects, a profit and loss statement
for the month and year to date relative to budget, consolidated
finance report, consolidated balance sheet, major variations to budget
and any major commercial issues affecting the current and future
trading position of the Company and proposed actions to correct any
adverse variances; and
(b) a copy of all papers to be considered at that meeting.
10. Resolutions
(a) At a meeting of the Board, unless all Directors (whether or not
present at the meeting) otherwise resolve, the Board may only resolve
matters specifically referred to in the agenda issued for the meeting.
(b) The Directors may pass a resolution without a Directors' meeting being
held if all the Directors sign a document containing a statement that
they are in favour of the resolution set out in the document. The
resolution is passed when the last Director signs.
(c) A Directors' meeting may be held by the Directors communicating with
each other by any technological means by which they are able
simultaneously to hear each other and to participate in discussion.
page 42
11. Directors Remuneration
Directors will not be paid fees. In respect of all reasonable expenses
associated with or incidental to the discharge of their obligations as
directors or otherwise in connection with any business of the Company
including all travelling, hotel and other expenses (Out of Pocket Expenses)
then, the following shall apply:
(a) Out of Pocket expenses incurred by the Investor Directors, shall be
paid by PEP;
(b) Out of Pocket expenses incurred by the Management Directors, shall be
paid by the Company;
(c) Out of Pocket expenses incurred by the Cordiant Directors, shall be
paid by Cordiant.
12. Interests
Subject to the terms of this Agreement, directors of the Company may, when
exercising a power or performing duties as a director, act in a manner
which he or she believes is in the best interests of the Shareholder which
appointed the director.
page 43
Schedule 2 - Minority rights
--------------------------------------------------------------------------------
1. (Debt Finance) - raise in one or a series of related transactions any debt
finance (including the creation of guarantees and encumbrances over assets)
with a total value of $10 million or more.
2. (Share Capital) - issue share capital or other securities:
(a) having a combined value of $10 million or more in any one issue or a
series of related issues: or
(b) above an aggregate annual value of $20 million.
3. (Acquisitions and Disposals) - enter into:
(a) any acquisition or disposal or series of related transactions with a
value of $10 million or more (inclusive of any deferred consideration
and earn out payments); or
(b) acquisitions or disposals above an aggregate annual value of $20
million (inclusive of any deferred consideration and earn out
payments).
4. (Related Party Transactions) - enter into a transaction with a related
party, provided that for the purpose of this Agreement the term related
party has the same meaning as it would have in section 228 of the Act if
that section applied to proprietary companies as well as public companies,
and also the term includes all Shareholders and their Affiliates.
5. (Ordinary Course of Business) - matters or transactions outside the
ordinary course of business.
6. (Delegation) - delegate any of the powers of the Board.
page 44
Schedule 3 - Company covenants
--------------------------------------------------------------------------------
1. (Insurances)
(a) Take out and maintain insurance policies in respect of all risks that
a prudent person would insure in relation to the conduct of a business
similar to the Business including indemnity insurance policies in
respect of the assets of the Company.
(b) Review those policies annually so as to ensure that the policies are
maintained so as to achieve the objective in paragraph (a) above.
2. (D & O Insurances) Subject to the provisions of the Act take out and, at
all times maintain directors' and officers' liability insurance in relation
to all Directors of the Company providing cover in the amount and of a
level reasonably required by the Investor and Cordiant.
3. (Auditors' Report on Transactions) Procure the Auditors to provide, with
every statutory audit report on the Company, a report of particulars of
every transaction affecting that corporation and in which any Shareholder
or any officer or senior executive of that corporation has participated
whether as a party or otherwise.
4. (Deeds of Access and Indemnity) Enter into Deeds of Access and Indemnity
with each Director, which deeds shall provide for indemnification of the
Director, access to Company books by the Director for the purpose of
defending an action against the Director for breach of duty and maintenance
of D & O insurance for the Director, after he or she ceases to be a
Director, each to the maximum extent permitted by law.
page 45
Schedule 4 - Financial and other reporting
--------------------------------------------------------------------------------
1. Monthly
Within 15 days after the last day of each month - unaudited management and
financial reports for the immediately preceding month comprising and
including at least:
(a) a profit and loss account and cash flow statement for the immediately
preceding month;
(b) a balance sheet as at the end of that immediately preceding month; and
(c) a variance analysis of actual performance vs. budget.
2. Quarterly
Within 15 days after the end of each calendar quarter - unaudited quarterly
management accounts for the immediately preceding quarter, comprising and
including at least:
(a) commentary on the financial performance for that quarter; and
(b) a re-forecast for the performance of the Company for the remainder of
the financial year and for the following 12 months.
3. Annual
Within 45 days after the end of each Financial Year - financial statements
audited by the Auditor (including consolidated profit and loss accounts,
balance sheets and cash flow statements) in respect of that Financial Year.
4. Minutes
At the same time as they are provided to the Directors and in any event
within 10 Business Days after each meeting:
(a) minutes of all Board meetings; and
(b) minutes of all Shareholder meetings.
5. Offer information
Immediately after receipt by the Company of any offer for the purchase of
any Shares, a Trade Sale or any interest in any Subsidiary, full details of
that offer.
6. General
Details of any key operational events as they occur eg. incoming or
outgoing key employees, winning or losing key accounts and other material
developments potentially affecting the financial position or prospects of
the Business.
page 46
Schedule 5 - Deed of Accession
--------------------------------------------------------------------------------
THIS DEED is made the day of
by
of
(Acceding Party)
RECITAL
This Deed is supplemental to a Shareholders Agreement dated [ ]
between Cordiant Communications Group Australia Pty Limited, Cordiant
Communications Group plc and others (Shareholders Agreement).
OPERATIVE PART
1. The Acceding Party:
(a) confirms that it has been supplied with a copy of the Shareholders
Agreement; and
(b) covenants with all present parties thereto (whether original or by
accession) (Parties) to observe, perform and be bound by all the terms
of the Shareholders Agreement to the intent and effect that the
Acceding Party will be deemed with effect from the date on which the
Acceding Party is registered as a Shareholder of the Company to be a
party to the Shareholders Agreement.
2. The Address of the Acceding Party for the purposes of the Shareholders
Agreement will, until substituted in accordance therewith, be as follows:
[ ]
3. This Deed will be governed by and construed in accordance with the laws of
Australia.
EXECUTED as a deed.
EXECUTED by [ ] )
)
)
)
------------------------------------ ----------------------------------------
Signature of secretary Signature of director
------------------------------------ ----------------------------------------
Name of secretary (print) Name of director (print)
page 47
Schedule 6 - Investors
--------------------------------------------------------------------------------
▇▇▇▇ PACIFIC ASSOCIATES, LLC, of C/- ▇▇▇▇ Capital LLC, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
BCIP ASSOCIATES II of C/- ▇▇▇▇ Capital LLC, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
BCIP ASSOCIATES II-B of C/- ▇▇▇▇ Capital LLC, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
PACIFIC EQUITY PARTNERS FUND I PTY LIMITED (ACN 083 026 822) of C/- Pacific
Equity Partners Pty Limited, ▇▇▇▇▇ ▇▇, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇
PACIFIC EQUITY PARTNERS (NZ) LIMITED of C/- ▇▇▇▇▇▇▇ ▇▇▇▇▇ Sheffield Young, Level
35, Coopers & ▇▇▇▇▇▇▇ Tower, ▇▇-▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇
PEP CO-INVESTMENT PTY LIMITED (ACN 083 026 859) of C/- Pacific Equity Partners
Pty Limited, Level 36, Chifley Tower, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇
PEP INVESTMENT PTY LIMITED (ACN 083 926 084) of C/- Pacific Equity Partners Pty
Limited, Level 36, Chifley Tower, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇
page 48
Schedule 7 - Management Shareholders
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ Bridge
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ Fitzhardinge
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇-▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Rafe Ring
The address for each Management Shareholder listed above will be c/- ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇.
page 49
Schedule 8 - Warranties
--------------------------------------------------------------------------------
1. Information
1.1 All information which has been given by Management in the course of the
negotiations leading to this Agreement and the Acquisition Transaction was
when given and is at the date hereof not misleading or deceptive in any
material respect.
1.2 There is no fact, matter or circumstance concerning the business or affairs
of the Business which is or might reasonably be considered to be material
for disclosure to a reasonable buyer for value which has not been disclosed
by Management or provided by Management in connection with the due
diligence investigations of the Investors. For the purpose of warranty 1.2
'material' means an amount that impacts the net assets or EBIT of the
Business by $500,000 or more.
1.3 The Business Plan has been honestly and diligently prepared with due care
and attention and is believed by the Management Warrantors to be reasonable
in all respects. With the exception of any statement or figure relating to
market growth rates (prepared in reliance on external sources), the
forecasts as to the future prospects of the business and affairs of the
Business contained in the Business Plan are based on assumptions which have
been fully and carefully considered by the Management Warrantors and which
the Management Warrantors believe are reasonable.
1.4 Notwithstanding any other provision of this agreement, no warranty is given
in connection with, and the Management Warrantors express no opinion on,
any forecast, projection, estimate or statement of opinion or belief
contained in any document or information referred to in paragraph 1.1 and 3
(including without limitation the Management Accounts).
2. Management
2.1 There are no existing contracts or arrangements with relate to the Business
in which any member of Management has a direct or indirect interest either
personally or through a related party or entity.
2.2 No member of Management is either alone or jointly with or as manager,
adviser, consultant, agent or employee of any person directly or indirectly
engaged in any business other than the Business.
2.3 No member of Management is concerned or interested in any way in any
business competing with that carried on by the Business or the business of
any supplier or customer of the Business.
2.4 He or she has never been charged with or convicted of any criminal offence
other than a road traffic offence (except one involving a custodial
sentence, whether suspended or not) nor have bankruptcy or any analogous
proceedings been brought or threatened in respect of him or her, and he or
she is not aware of any facts or matters which they believe might give rise
to any such criminal or bankruptcy proceedings.
3. Accounts
3.1 The Accounts show a true and fair view of the assets, liabilities and state
of affairs of the Business as at the Accounts Date and of the profits and
losses of the Business for the financial year ended
page 50
on the Accounts Date, and have been prepared in accordance with the law and
applicable standards, principles and practices generally accepted in
Australia.
3.2 The Management Accounts have been properly prepared with due care and
attention on a basis consistent with each other and with the Accounts. So
far as the Management Warrantors are aware, the Management Accounts show a
true and fair view of the assets and liabilities of the Business.
4. Effect Of Sale
Management have not received any notices or indications (whether written or
oral) that all relationships with key customers and suppliers will not be
maintained in materially the same form or that there will be any other
material adverse impact on the Business as a result of the Acquisition
Transaction.
5. Employees
The details of the terms of the employment arrangements (including all
benefits) of each member of Management together with details of all
non-contractual benefits have been to disclosed to the Investors.
6. Compliance with law
6.1 The Business has conducted its business and dealt with its assets in all
material respects in accordance with all applicable legal and
administrative requirements in any jurisdiction.
6.2 There are no issues in existence, relating to legal compliance, regulatory
or environmental matters, which could have a materially adverse effect on
the future performance of the Business.
7. Litigation
So far as the Management Warrantors are aware,
(a) no fact or circumstance exists which is likely to give rise to; and
(b) no notice has been received of any proposal to commence,
a civil, criminal, arbitration, administrative or other proceeding in
any jurisdiction and there is no other contingent liability involving
a Group Company (or a person for whose acts or defaults a Group
Company may be vicariously liable) which could result in a materially
adverse effect on the future performance of the Group.
8. Brokerage or commissions
There is no agreement or arrangement under which any member of Management
or any person who is a connected person with any member of Management is to
receive from any person and, so far as the Management Warrantors are aware,
no person is entitled to receive from any part of the Business, or any
third party any finder's or other fee, brokerage or commission in
connection with this Agreement or any of the matters contemplated or
referred to in this Agreement.
9. Current trading
Since the Accounts Date:
page 51
(a) the business and activities of the Business have been carried on in
the ordinary and usual course;
(b) there has been no adverse change in the financial or trading position
or prospects of the Business;
(c) the Business has not, other than in the ordinary cause of trading,
acquired or disposed of or agreed to acquire or dispose of any
material asset or assumed or incurred or agreed to assume or incur any
material liability expenditure or obligation; and
(d) there has been no change in the accounting policies, practices and
principles used in the Business.
page 52
Schedule 9 - Management Warrantors
--------------------------------------------------------------------------------
Name Business Unit Warranties
▇▇▇ ▇▇▇▇▇ All business units 1.1, 1.2, 1.3, 2.1, 2.2, 2.3, 2.4,
4, 5, 6.1, 6.2, 7, 8, 9(a), (b), and
(c).
▇▇▇▇▇ ▇▇▇▇▇▇ All business units 1.1, 1.2, 1.3, 2.1, 2.2, 2.3, 2.4,
3.1, 3.2, 4, 5, 6.1, 6.2, 7, 8,
9(a), (b), (c) and (d).
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Marketing Services 1.1, 1.2, 1.3, 2.4, 4, 5, 6.1, 6.2,
7, 8, 9(a), 9(b), and 9(c).
▇▇▇▇ ▇▇▇▇▇▇▇ Zenith 1.1, 1.2, 1.3, 2.4, 4, 5, 6.1, 6.2,
7, 8, 9(a), 9(b), and 9(c).
▇▇▇▇▇ Bridge All business units 1.1, 1.2, 1.3, 2.4, 4, 5, 6.1, 6.2,
7, 8, 9(a), 9(b), and 9(c).
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ 1.1, 1.2, 1.3, 2.4, 4, 5, 6.1, 6.2,
7, 8, 9(a), 9(b), and 9(c).
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ 1.1, 1.2, 1.3, 2.4, 4, 5, 6.1, 6.2,
7, 8, 9(a), 9(b), and 9(c).).
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Melbourne 1.1, 1.2, 1.3, 2.4, 4, 5, 6.1, 6.2,
7, 8, 9(a), 9(b), and 9(c).
page 53
Schedule 10 - Management Disclosures
--------------------------------------------------------------------------------
page 54
Schedule 11 - Matters requiring Board approval
--------------------------------------------------------------------------------
1. (Chairman and Senior Management) appoint or remove any person as the
chairman, chief executive officer, chief operating officer or chief
financial officer of a Group Company or materially change the role or
responsibilities of any such person.
2. (Power to Appoint Directors of other corporation) appoint or remove any
director of a corporation in relation to which the Company has the power to
appoint or remove a director.
3. (Remuneration and Bonuses) except as approved under the Business Plan,
agree to:
(a) an increase in the remuneration per annum payable to any director; or
(b) any executive, profit or other bonus being paid to any director.
4. (Securities) issue or allot or grant any right to issue or allot any
securities.
5. (Borrowings) except as budgeted for in the Business Plan, make any
borrowing or accept any financial accommodation of an amount greater than
$1 million.
6. (Encumbrances) create any mortgage, charge, pledge or other encumbrance
that is not included in the Business Plan over any asset or undertaking.
7. (Guarantee) give or enter into any guarantee, letter of comfort or
performance bond, that is not included in the Business Plan.
8. (Business Plan and Budgets) adopt or vary any Business Plan or any other
operating, capital or cash budget or business financial plan.
9. (Auditor) appoint or remove the auditor.
10. (Constitution) make any amendment to the constitution.
11. (Acquisitions and Disposals) except as approved under the Business Plan,
acquire or dispose of the business, any company or business or enter into
any joint venture or partnership.
12. (Assets) sell or purchase assets (either tangible or intangible) having a
value greater than $100,000 except as approved under the Business Plan.
13. (Winding Up) take any step to dissolve or wind up the company.
14. (Capital Expenditure) except as approved under the Business Plan, incur any
capital expenditure exceeding $100,000 in a Financial Year.
page 55
15. (Related Party Transactions) enter into any contract or other arrangement
with any director or any Associate (as defined in the Act) of a director.
16. (Change in Nature of Business) cease to carry on, or materially alter the
scale of operations of, the business or commence any business or
operational activities other than the business.
17. (Finance and Operating Leases) except as approved under the Business Plan,
enter into any finance or operating lease with a cost over $100,000 per
annum.
18. (Contracts) enter into, terminate, amend or vary any contract outside the
ordinary course of business.
19. (Accounting Standards and Principles) materially alter the Accounting
Standards or principles previously adopted by the company for the
preparation or presentation of any individual or consolidated financial
statements unless required to do so by law.
20. (Balance Date) change the balance date or alter the accounting period of
the company.
21. (Loans) make any loan, provide any credit or other financial accommodation
to any person other than in the ordinary course of business.
22. (Financial Assistance) provide any loans or other financial assistance to
any director or his associates or vary the terms of any loans or other
financial assistance previously provided to any director or his associates.
23. (Disputes) commence or conduct any proceedings (including with any tax
authority) other than debt collection in the ordinary course of business
except for any disputes between the Company and the Investors or its
related entities.
24. (Special Resolution) pass any special resolution of the shareholders of
that company.
25. (Committees of Directors) appoint, dissolve or alter the composition of any
committee of the board of directors.
26. (Dividends) declare, make or pay any dividend or other distribution.
27. (Partnerships and Joint Ventures) enter into, amend or vary any
partnerships of joint ventures.
28. (Insurance) amend or vary the insurance cover over the Company or the
Business or any key man insurance policies.
page 56
Signing page
--------------------------------------------------------------------------------
EXECUTED as an agreement
Executed by The Communications Group
Holdings Pty Limited
/s/ [Authorized Person] /s/ [Authorized Person]
--------------------------------------- <-- --------------------------------------- <--
Signature of director Signature of director/company secretary
(Please delete as applicable)
--------------------------------------- ---------------------------------------
Name of director (print) Name of director/company secretary (print)
Signed for Cordiant Communications
(Australia) Pty Ltd by its duly authorised
attorney in the presence of
/s/ [Authorized Person]
--------------------------------------- <-- --------------------------------------- <--
Signature of witness Signature of Attorney
--------------------------------------- ---------------------------------------
Name of witness (print) Name of Attorney (please print)
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for ▇▇▇
▇▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for ▇▇▇▇
▇▇▇▇▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
page 57
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for ▇▇▇▇
▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for ▇▇▇▇▇
▇▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
page 58
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for ▇▇▇▇▇
▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for ▇▇▇▇
▇▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for ▇▇▇▇▇
Fitzhardinge in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for ▇▇▇▇
▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
page 59
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for ▇▇▇▇▇
▇▇▇▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for Rafe
Ring in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
page 60
Executed by TCG Nominee Pty Ltd on
behalf of the TCG Trust by an authorised
officer in the presence of:
/s/ [Authorized Person]
--------------------------------------- <--
Signature of officer
--------------------------------------- <-- ---------------------------------------
Signature of witness Name of officer (print)
--------------------------------------- ---------------------------------------
Name of witness (print) office held
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for ▇▇▇▇
▇▇▇▇-▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
Signed by ▇▇▇ ▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
Signed by ▇▇▇▇▇ ▇▇▇▇▇▇ in the presence of
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name of witness (print)
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for ▇▇▇▇
▇▇▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
page 61
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for
▇▇▇▇▇▇▇ ▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
Signed by ▇▇▇▇▇ Bridge in the presence of
/s/ ▇▇▇▇▇ Bridge
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇▇▇ Bridge
---------------------------------------
Name of witness (print)
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for
▇▇▇▇▇▇▇ ▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for ▇▇▇▇
▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
page 62
Signed by ▇▇▇ ▇▇▇▇▇ as attorney for
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in the presence of
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------- <-- --------------------------------------- <--
Signature of witness ▇▇▇ ▇▇▇▇▇
---------------------------------------
Name of witness (print)
page 63
Signed for Pacific Equity Partners Fund I
Pty Limited by an authorised officer in the /s/ [Authorized Person]
presence of --------------------------------------- <--
Signature of officer
--------------------------------------- <-- ---------------------------------------
Signature of witness Name of officer (print)
--------------------------------------- ---------------------------------------
Name of witness (print) Office held
Signed for Pacific Equity Partners (NZ)
Limited by an authorised officer in the /s/ [Authorized Person]
presence of --------------------------------------- <--
Signature of officer
--------------------------------------- <-- ---------------------------------------
Signature of witness Name of officer (print)
--------------------------------------- ---------------------------------------
Name of witness (print) Office held
page 64
Signed for PEP Co-Investment Pty
Limited by an authorised officer in the /s/ [Authorized Person]
presence of --------------------------------------- <--
Signature of officer
--------------------------------------- <-- ---------------------------------------
Signature of witness Name of officer (print)
--------------------------------------- ---------------------------------------
Name of witness (print) Office held
Signed for PEP Investment Pty Limited by /s/ [Authorized Person]
an authorised officer in the presence of -------------------------------------- <--
Signature of officer
--------------------------------------- <-- ---------------------------------------
Signature of witness Name of officer (print)
--------------------------------------- ---------------------------------------
Name of witness (print) Office held
Signed for ▇▇▇▇ Pacific Associates, LLC /s/ [Authorized Person]
by an authorised officer in the presence of --------------------------------------- <--
Signature of officer
--------------------------------------- <-- ---------------------------------------
Signature of witness Name of officer (print)
--------------------------------------- ---------------------------------------
Name of witness (print) Office held
Signed for BCIP Associates II by an /s/ [Authorized Person]
authorised officer in the presence of --------------------------------------- <--
Signature of officer
--------------------------------------- <-- ---------------------------------------
Signature of witness Name of officer (print)
--------------------------------------- ---------------------------------------
Name of witness (print) Office held
page 65
Signed for BCIP Associates II-B by an /s/ [Authorized Person]
authorised officer in the presence of --------------------------------------- <--
Signature of officer
--------------------------------------- <-- ---------------------------------------
Signature of witness Name of officer (print)
--------------------------------------- ---------------------------------------
Name of witness (print) Office held
page 66