Exhibit 4.4
SUBSCRIPTION AGREEMENT dated 23 March 2000
PARTIES:
(1) THE DIALOG CORPORATION PLC a company registered in England under Number
1890236 whose registered office is at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (Dialog).
(2) JIYU HOLDINGS LIMITED a company registered in British Virgin Islands
under number 135971 whose registered office is at ▇▇▇▇ ▇▇▇▇▇ Building,
Wickhams Cay, Road Town, Tortola, British Virgin Islands (Jiyu)
WHEREAS
Dialog wishes to raise additional capital by the issue of shares upon and
subject to the terms of this Agreement.
IT IS AGREED as follows:
1. Subject to the satisfaction of the conditions set out in clause 3, Jiyu
shall subscribe for either of:
1.1 such number of new ordinary shares of 1p each in the capital of
Dialog (excluding fractions) whose value (ascertained by
reference to clause 2) shall be nearest to but not less than
(pound)12,000,000; or
1.2 up to 10 million ordinary shares of 1p each in the capital of
Dialog at a price per share calculated in accordance with clause
2, provided that the total subscription price of such ordinary
shares exceeds (pound)12,000,000
such shares being referred to below as the "New Shares". The decision to
elect for either of 1.1 or 1.2 shall be at the option of Jiyu.
2. For the purposes of clause 1, the value of each of the New Shares shall
be a sum equal to the closing price of an ordinary share of 1p in the
capital of Dialog on the day on which the Exchange is open for business
immediately preceding the date of the announcement made by Dialog to the
Exchange announcing that final terms have been agreed for the disposal
referred to in clause 3.1 ascertained by reference to the Daily Official
List of the Exchange, less a discount of 5%.
3. The obligations of Jiyu under clause 1 are conditional upon:
3.1 the completion of the disposal by Dialog of its Information
Services Division to The Thomson Corporation of Canada or one of
its subsidiaries ("Thomson") for a consideration (the "Sale
Proceeds") of not less than US$250,000,000;
3.2 Dialog providing such evidence as Jiyu may reasonably require
that Dialog has satisfied its obligation under clause 11 to
repay its senior indebtedness;
3.3 the creation by Dialog of an internet/e-commerce incubator fund;
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3.4 the passing of all the necessary resolutions by the shareholders
of Dialog to permit the issue of the New Shares;
3.5 admission of the New Shares to the Official List of the Exchange
("Admission");
3.6 the Warranties (as defined below) remaining true and accurate in
all material aspects, at all times up to and including
Completion (as defined below); and
3.7 Thomson having entered into an agreement with Dialog to
subscribe for ordinary shares in Dialog having an aggregate
subscription price of not less than US$15,000,000 completion of
which is required to take place on the same date as Completion
all by not later than 5 June 2000, or such later date as the parties may
agree in writing
4. If any condition referred to in clause 3 is not satisfied in accordance
with its terms or becomes incapable of satisfaction, then this Agreement
shall automatically terminate and become null and void and neither party
shall have any claim against the other for any costs, damages,
compensation or otherwise under this Agreement except as regards any
breach of any provision of this Agreement which has occurred before
termination; provided that Jiyu may waive any of the conditions referred
to in clauses 3.1, 3.2, 3.3, 3.6 and 3.7 above
5. Dialog shall use its reasonable endeavours to procure that each
condition referred to in clause 3 is satisfied as soon as reasonably
practicable and in any event by the date mentioned in the clause. Dialog
undertakes to Jiyu to procure that the resolution by the shareholders of
Dialog which will be required to approve the disposal referred to in
clause 3.1 shall be conditional upon the passing of the resolutions
referred to in clause 3.4
6. Completion of the subscription ("Completion") shall take place as soon
as reasonably practicable (and in any event not later than 2 business
days) after the satisfaction of the last to be satisfied of the
conditions set out in clause 3 when:
6.1 Dialog shall allot the New Shares (conditionally only on
Admission) to Jiyu fully paid pursuant to a resolution of its
directors or of a duly authorised committee of its directors;
6.2 Dialog shall deliver to Jiyu a certified copy of the resolution
referred to at clause 6.1;
6.3 subject to Admission, Jiyu shall transfer or procure the
transfer of the subscription price for the New Shares, such
payment to be made to Dialog's account previously notified in
writing to Jiyu in cleared funds for value that day.
7. Dialog shall procure the registration of Jiyu as the holder of the New
Shares promptly and in any event within 2 business days following the
receipt by Dialog of the payment to be made pursuant to clause 6.3
(without registration fee) and shall procure that a definitive
certificate
in respect of the New Shares is despatched to Jiyu as soon as reasonably
practicable following Completion and in any event within 3 business days
following Completion.
8. The New Shares, when issued, will rank pari passu in all respects with the
existing ordinary shares of Dialog then in issue including the right to
receive all dividends and other distributions declared, made or paid after
the date hereof.
9. Dialog will make an application to the Exchange for Admission and will use
all reasonable endeavours to obtain Admission as soon as reasonably
practicable following the holding of the Extraordinary General Meeting of
Dialog held to approve the resolutions referred to in clause 3.4. Dialog
will supply all such information, give all such undertakings, execute all
such documents, pay all such fees and do or procure to be done all such
things as may be necessary or reasonably required by the Exchange for the
purpose of obtaining Admission.
10. While it continues to hold not less than 70% of the new Shares, Jiyu shall
be entitled to nominate a representative to sit on the investment committee
of the fund referred to in clause 3.2. Such representative shall enjoy the
same rights and privileges as other representatives on the investment
committee.
11. Dialog undertakes to Jiyu to use the proceeds of the disposal of its
Information Services division, less the costs and expenses incurred by it
in connection with such disposal, to repay in full the indebtedness due to
the banks under its senior secured loan facilities and to repay at least
85% of the indebtedness due in respect of its high-yield bonds (such senior
indebtedness and 85% of high-yield indebtedness amounting in total to not
less than $247,439,000). Such repayments shall be made as soon as
reasonably practicable.
12. Dialog undertakes that it will not issue any shares or enter into any
agreements, options or other arrangements for the issue of shares or
securities convertible into shares in Dialog prior to Completion other
than (a) the exercise or grant of officers' or employees' share or ADR
options in accordance with the terms of Dialog's existing share or ADR
option schemes, (b) the issue of shares to Thomson Canada representing not
more than 15% of the issued share capital of Dialog at Completion (ignoring
the subscription provided for in this Agreement), (c) any issue of shares
for a non-cash consideration that does not require shareholder approval
under the terms of the Listing Rules of the Exchange and (d) any issue of
shares made pursuant to any agreement or binding commitment entered into by
Dialog prior to 6 March 2000 which has been subject to an announcement to
the Exchange or is referred to in the Report and Accounts as defined in
clause 14.2.
13. Dialog hereby warrants and represents to and for the benefit of Jiyu in the
terms of the warranties contained in the schedule to this Agreement (the
"Warranties") and acknowledges and accepts that Jiyu is entering into this
Agreement in reliance upon each of the Warranties each of which is given on
the basis that it will remain true and accurate from 6 March 2000 up to and
including Completion. Dialog shall promptly disclose in writing to Jiyu any
matter or thing which may arise or become known to Dialog after the date
hereof and before Completion which is in breach of any of the Warranties.
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14. The following provisions shall apply in relation to the Warranties:
14.1 No fact or circumstance shall give rise to a claim in damages against
Dialog or a right to terminate or rescind this Agreement for breach
of any of the Warranties unless such fact or circumstance materially
adversely affects the interests of Jiyu in the context of the
subscription provided for in this Agreement.
14.2 The Warranties are given subject to the matters fairly disclosed in
the published annual report and audited accounts of Dialog and its
subsidiaries ("Group") as at and for the financial period ended on 31
December 1998 ("Report and Accounts"), the interim statement of the
Group for the six months ended 30 June 1999, the documents supplied
to Jiyu or its advisers prior to 6 March 2000 in the course of the
negotiations leading up to this Agreement and each announcement made
by or on behalf of Dialog to the Exchange since the date of
publication of the Report and Accounts and prior to 6 March 2000.
14.3 The liability of Dialog in respect of claims under the Warranties:
(a) shall not arise unless the amount of the claim exceeds
(pound)100,000, in which case the Company shall be liable for the
whole amount of such claim and not merely the excess;
(b) shall not exceed an aggregate sum equal to the total subscription
price for the New Shares;
(c) shall terminate on 31 August 2001 except in respect of any claim
of which notice in writing is given to Dialog before that date.
15. Dialog undertakes to Jiyu that it will not claim payment under any
undertaking or arrangement for payment of the subscription price for the
New Shares unless and until it is entitled to receive such payment under
the terms of this Agreement and Dialog will indemnify Jiyu in respect of
any costs, claims, expenses, obligations, losses or liabilities suffered or
incurred by Jiyu in connection with any breach of this clause 15.
16. This Agreement shall be governed by and construed in accordance with
English Law and the parties submit to the non-exclusive jurisdiction of the
English Courts.
17. This Agreement and the rights and obligations under it may not be assigned
or transferred in whole or in part but is binding upon and shall enure for
the benefit of the parties' successors in title.
18. Each party shall pay its own costs and expenses incurred in relation to the
negotiation, preparation and implementation of this Agreement.
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19. This Agreement shall supersede any previous agreement between the parties
in relation to the subject matter of this Agreement and shall represent the
entire agreement between the parties in relation to such subject matter and
none of the provisions of this Agreement may be varied except by a written
instrument signed by or on behalf of both parties.
20. The failure by any party at any time to require performance by the other
party or to claim a breach of any term of this Agreement shall not be
deemed to be a waiver of any right under this Agreement and no waiver of
any provision of this Agreement shall be effective unless made in writing
by the party granting the waiver.
21. No announcement or publicity or disclosure to any third party relating to
any matter referred to in this Agreement shall be made or issued by either
party without the prior approval of the other party other than as required
by law or by the rules of any regulatory organisation to which either of
the parties may be subject (in which case the parties shall consult with
each other on the form of the announcement).
SIGNED by the parties on the date specified at the beginning of this Agreement.
SIGNED by a duly authorised officer )
for and on behalf of THE DIALOG )
CORPORATION PLC in the ) /s/ [ILLEGIBLE]
presence of:- )
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
SIGNED by a duly authorised officer )
for and on behalf of JIYU )
HOLDINGS LIMITED in the ) /s/ [ILLEGIBLE]
presence of:- )
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SCHEDULE: Warranties
Dialog hereby warrants and represents to and for the benefit of Jiyu as set out
in the following paragraphs of this Schedule:
1. Capacity and Issue
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1.1 Capacity
Dialog has full power and authority to enter into and perform this
Agreement, and may execute and deliver this Agreement and, subject to the
passing of the resolutions referred to in clause 3.4, perform its
obligations under this Agreement without requiring or obtaining the consent
of its shareholders or of any other person, authority or body and this
Agreement constitutes valid and binding obligations of Dialog in accordance
with its terms.
1.2 Issue
The New Shares will on issue be fully paid up and free from any interest or
equity of any person (including any right to acquire, option or right of
pre-emption), any mortgage, charge, pledge, lien, assignment,
hypothecation, security interest (including any created by law), title
retention or other security agreement or arrangement. The New Shares will
rank pari passu in all respects with the existing ordinary shares in Dialog
including the right to receive all dividends and other distributions
disclosed, made or paid after 6 March 2000.
2. Dialog's Constitution
---------------------
2.1 Options etc.
No person has the right (whether exercisable now or in the future and
whether contingent or not) to call for the allotment, issue, sale, transfer
or conversion of any share or loan capital of Dialog under any option or
other agreement (including conversion rights and rights of pre-emption)
other than (i) any new issue of shares in the capital of Dialog made (a)
pursuant to any agreement or binding commitment entered into by Dialog
prior to 6 March 2000 which has been subject to an announcement to the
Exchange or is referred to in the Report and Accounts as defined in clause
14.2 or (b) for a non-cash consideration that does not require shareholder
approval under the terms of the Listing Rules of the Exchange and (ii) the
exercise or grant of officers' or employees' share or ADR options in
accordance with the terms of Dialog's existing share or ADR option schemes.
2.2 Memorandum and Articles
The copy of the memorandum and articles of association of Dialog provided
to Jiyu is true and complete and has embodied therein or annexed thereto a
copy of every resolution or agreement as is required by law to be embodied
in or annexed to it, and sets out completely the rights and restrictions
attaching to each class of authorised share capital of Dialog. No
shareholders of Dialog have any rights, in their capacity as such, in
relation to Dialog other than as set out in the Articles of Association of
Dialog.
2.3 Share capital
Dialog is a public company limited by shares incorporated under the
Companies ▇▇▇ ▇▇▇▇. As at 6 March 2000 Dialog had an authorised share
capital of (Pound)1,998,270 divided into 199,827,000 ordinary shares of 1p
each of which 155,190,112 shares were in issue fully paid (the "Existing
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Shares"). The Existing Shares are admitted to the Official List of London
Stock Exchange Limited (the "Exchange").
3. Dialog and the law
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3.1 Compliance with laws
Dialog has conducted its business in all material respects in accordance
with all applicable laws and regulations of the United Kingdom and any
relevant foreign country or authority and there is no order, decree or
judgement of any court or any governmental or other competent authority or
agency of the United Kingdom or any foreign country outstanding against
Dialog or any person for whose for whose acts Dialog is vicariously liable
which may have a material adverse effect upon the assets or business of
Dialog.
3.2 Breach of statutory provisions
Neither Dialog, nor, so far as it is aware, any of its officers, agents or
employees (during the course of their duties in relation to Dialog) have
committed, or omitted to do, any act or thing the commission or omission
of which is in contravention of any Act, Order, Regulation, or the like in
the United Kingdom or elsewhere which is punishable by fine or other
penalty and no notice or communication has been received with respect to
any alleged, actual or potential violation of or failure to comply with,
any of the same.
3.3 Litigation
Dialog is not engaged in and has not been threatened in writing with any
litigation or arbitration or administrative or criminal proceedings which
materially adversely affect the financial position of Dialog and so far as
Dialog is aware there are no facts or circumstances likely to give rise to
any such litigation or arbitration or administrative or criminal
proceedings.
3.4 Licenses etc
(A) All licenses, consents, permits, approvals and authorisations (public
and private) which are material to the ability of Dialog to carry on
effectively any aspect of its business in the places and in the
manner in which such business is now carried on have been obtained by
Dialog and all such licences, consents, permits, approvals and
authorisations are in full force and effect.
(B) The utilisation of any of the assets of Dialog or the carrying on of
any aspect of Dialog's business is not in breach of any of the terms
and conditions of any of such licences, consents, permits, approvals
and authorisations.
4. Dialog's solvency
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4.1 Winding-up
No order has been made, petition presented or resolution passed for the
winding up of Dialog or any subsidiary of Dialog and no meeting has been
convened for the purpose of winding up Dialog or any subsidiaries of
Dialog.
4.2 Administration and receivership
No steps have been taken for the appointment of an administrator or
receiver (including an administrative receiver) of all or any part of
Dialog's assets.
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4.3 Compositions
Neither Dialog nor any subsidiary of Dialog has made or proposed any
arrangement or composition with its creditors or any class of its
creditors.
4.4 Insolvency
Neither Dialog nor any subsidiary of Dialog is or is deemed for the
purposes of s.123 Insolvency ▇▇▇ ▇▇▇▇ unable to pay its debts as they fall
due and neither Dialog nor any subsidiary of Dialog has stopped paying its
debts as they fall due.
4.5 Unsatisfied judgments
No distress, execution or other process been levied against Dialog or any
subsidiary of Dialog or action taken to repossess goods in Dialog's or any
subsidiary or Dialog's possession which has not been satisfied in full. No
unsatisfied judgment is outstanding against Dialog or any subsidiary of
Dialog.
4.6 Floating charges
No floating charge created by Dialog or any subsidiary of Dialog has
crystallised and there are no circumstances likely to cause such a
floating charge to crystallise.
5. Dialog's accounts
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5.1 Accounts
The audited consolidated balance sheet and profit and loss account of
Dialog and its subsidiary undertakings (the "Group") for the year ended 31
December 1998 (the "Accounts"):
(A) were prepared in accordance with the requirements of all relevant
statutes and generally accepted accounting principles; and
(B) show a true and fair view of the state of affairs of the undertakings
included in the consolidation as at 31 December 1998 (the "Balance
Sheet Date") and of their aggregate profit or loss for the accounting
period ending on the Balance Sheet Date.
5.2 Interim Accounts
The interim statement for the six months ended 30 June 1999 has been
properly compiled with all due care and attention and gives a true and
fair view of the results of the Group for the six month period ended 30
June 1999.
6. Dialog's business
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6.1 Business since the Balance Sheet Date
Since the Balance Sheet Date (and save as referred to in the Interim
Statement):
(A) Dialog has in all material respects carried on its business in the
ordinary and usual course save for the conclusion of any one or more
agreements for the purpose of implementing the disposal described in
clause 3.1 or concerning the subscription of new ordinary shares in
Dialog by Thomson;
(B) Dialog has not borrowed or raised any money or taken any form of
financial facility;
(C) no share or loan capital has been issued or agreed to be issued
by Dialog other than in the circumstances described in clause
12;
(D) no distribution of capital or income has been declared, made or
paid in respect of any share capital of Dialog and (excluding
fluctuations in overdrawn current accounts with bankers) no loan
or share capital of Dialog has been repaid in whole or part or
has become liable to be repaid in whole or part;
(E) no member of the Group has acquired or disposed of or agreed to
acquire or to dispose of any business or asset which is material
for disclosure other than as referred to in sub-paragraph
6.1(A); and
(F) no member of the Group has incurred any material liability for
taxation of whatsoever nature otherwise than in the ordinary
course of business save for a possible taxation liability of up
to $1.5 million in connection with the transfer of certain
intellectual property rights within the Group.
7. Contracts
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7.1 Material Contracts
(A) Dialog is not a party to any agreement, commitment,
understanding or arrangement which cannot be fulfilled or
performed by it on time and without exceptional expenditure of
money or other resource of Dialog (including without limitation)
human resource.
(B) No written notice avoiding, rescinding or terminating, or
purporting to avoid, rescind or terminate any material contract
has been received or given by Dialog nor, so far as Dialog is
aware, has any party to any material contract threatened in
writing an intention to give any such notice.
7.2 Business otherwise than at arm's length
Since the Balance Sheet Date, Dialog has not been and is not now a party
of any agreement or arrangement which is not entirely of an arm's length
nature.
8. Future business of Dialog
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Following the disposal of the Information Services Division, Dialog's
business will comprise its four main operating divisions (K-Working,
InfoSort, Muscat and Sparza) together with the proposed internet/e-
commerce incubator fund).
9. Intellectual Property Rights
----------------------------
Dialog is the sole legal beneficial owner (free from any encumbrances
other than those already granted in respect of its senior secured loan
facilities which are to be repaid at Completion) of all intellectual
property and other rights relating to the following:
K-Working, WebTop, InfoSort, Muscat, Office Shopper and Sparza (the
"Technology Assets").
No person has been authorised to make any use whatsoever of any of the
Technology Assets save for licences granted to customers in the ordinary course
of business and on arm's length terms. No person has any rights in relation to
the Technology Assets which affect the ability of Dialog to exploit the
Technology Assets as it sees fit. None of the Technology Assets is being
used, claimed, applied for, opposed or attached by any person. Dialog has not
infringed the intellectual
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property rights of any other person and is not aware of any infringement
of its intellectual property rights.
10. Compliance with Listing Rules
-----------------------------
10.1 Dialog has complied in all material respects with the listing rules of
the Exchange (the "Listing Rules").
10.2 Without limitation to paragraph 10.1, the documents issued to
shareholders by Dialog in connection with the disposal referred to in
clause 3.1 (the "ISD Sale") and the issue of New Shares (the "Public
Documents") will comply with the Listing Rules and all relevant legal
requirements.
10.3 The following warranties relate to the agreements to be entered into for
or in connection with the ISD Sale as referred to in the Public
Documents (the "ISD Documents"):-
(A) the ISD Documents will be valid and binding obligations of the
parties in accordance with their terms;
(B) the ISD Documents will provide for payment of the full amount of
the consideration payable for the ISD Division in cash at
completion of the sale ("ISD Completion");
(C) there are no conditions to ISD Completion other than consents
from its shareholders, its bankers and the holders of its high-
yield bonds;
(D) the ISD Documents are on arm's length terms and there are no
other material agreements, arrangements or understandings
between any of the parties to the ISD Documents not described in
the Public Documents;
(E) Dialog is not aware of any fact or circumstances which will or
are likely to give rise to any breach of the ISD Documents or to
any obligation by Dialog to make any payments to Thomson under
the ISD Documents; and
(F) no provision of the ISD Documents will prevent the Group from
carrying on and developing its business as it sees fit subject
only to any restriction on the Group competing with the business
of the Information Services Division as carried on at or before
ISD Completion.
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