EXHIBIT 10.8
18th March 2004
DEED OF WARRANTY
BETWEEN
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ AND ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
AS DIRECTORS OF SOE DEVELOPMENT LIMITED
AND
BAM! ENTERTAINMENT, INC.
RELATING TO SOE DEVELOPMENT LIMITED
THIS DEED is made among:-
(1) ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ of ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ of
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇ ▇▇▇ (the "WARRANTORS"); and
(2) BAM! ENTERTAINMENT, INC, a Delaware corporation (the "BUYER").
WHEREAS:-
(A) This Agreement is supplemental to a sale and purchase agreement relating
to the acquisition by the Buyer of the entire issued share capital of SOE
Development Limited of even date herewith (the "SALE AND PURCHASE
AGREEMENT"); and
(B) The Buyer is entering into the Sale and Purchase Agreement relying, inter
alia, on the Warranties contained in this document.
IT IS AGREED:-
1 DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
1.1.1 In this Agreement unless the context requires otherwise:-
"BoS" means Bank of Scotland;
"BoS OVERDRAFT FACILITY" means the overdraft facility of the Company in
the sum of L500,000 from BoS as documented in the overdraft facility
letter from BoS to the Company dated 9 October 2003;
"COMPANY" means SOE Development Limited, a company incorporated in England
and Wales with registered number 4856653;
"COMPANY LOAN STOCK" the L2,475,000 floating rate Unsecured Loan
Notes 2005 constituted by the Loan Note Instrument issued by the Company
and dated 10 October 2003;
"COMPLETION" means completion of the Sale and Purchase in accordance with
clause 6 of the Sale and Purchase Agreement;
"DEVELOPMENT AGREEMENT" the development agreement made between the Company
and VIS dated 10 October 2003;
"DISCLOSURE LETTER" means the letter dated the date of this Agreement from
the Warrantors to the Buyer relating to the Warranties;
"ENCUMBRANCE" means any interest or equity of any person (including,
without prejudice to the generality of the foregoing, any right to
acquire, option, right of first refusal or right of pre-emption), or any
mortgage, charge, pledge, lien, restriction, assignment, hypothecation,
security interest, title retention or any other security agreement or
arrangement (including, without limitation, a title transfer and retention
arrangement) having similar effect;
"ESCROW AGREEMENT" means the escrow agreement to be entered into between,
inter alia, the Buyer and the shareholders of the Company and regulating
the terms upon which the Escrow Consideration Shares are to be held in
escrow;
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"ESCROW CONSIDERATION SHARES" means 600,000 Consideration Shares to be
withheld by the Buyer on Completion in accordance with the terms of the
Sale and Purchase Agreement;
"INVESTMENT BIBLES" means the Bible of Documentation Relating to Project
Green dated October 2003 and the Supplemental Bible of Documents dated
October 2003 copies of which have been supplied to the Buyer and are set
out in the exhibit to this agreement marked "A";
"INVESTMENT DOCUMENTS" means the documents executed by the Company in
connection with its fundraising and investment in VIS which are contained
in the Investment Bibles;
"PARTIES" means the parties to this Agreement;
"TAX" or "TAXATION" means any form of tax, levy, impost, contribution,
duty and charge in the nature of taxation whenever imposed, whether of the
United Kingdom or elsewhere and whether directly or primarily chargeable
against, recoverable from or attributable to the Company or any other
person (including all fines, penalties, charges and interest relating to
the same);
"TAX AUTHORITY" means any national or local government, authority or body
whatsoever whether of the United Kingdom or elsewhere empowered to impose,
collect or administer Tax;
"TAX WARRANTIES" means the Warranties set out in paragraphs 7-14
(inclusive) of schedule 1 of this Agreement;
"UPDATED DISCLOSURE LETTER" means the Disclosure Letter as updated on
Completion;
"VIS" means VIS Entertainment plc; and
"WARRANTIES" means the warranties contained in schedule 1 of this
Agreement.
2 WARRANTIES
2.1 WARRANTIES
2.1.1 The Warrantors jointly and severally warrant to the Buyer that the
Warranties are true and accurate at the date of this Agreement and will be
true and accurate at Completion.
2.1.2 The Warranties are separate and independent.
3 WARRANTY LIMITATIONS
3.1 TIME LIMITS
The Warrantors shall not be liable in respect of any claim for breach of
any of the Warranties (other than the Tax Warranties) unless they shall
have received from the Buyer written notice of the claim (containing
reasonable details of the claim) on or before the first anniversary of
Completion (or in the case of the Tax Warranties on or before the seventh
anniversary of Completion).
3.2 CLAIM THRESHOLD
The Warrantors shall have no liability in respect of any claims under the
Warranties unless the aggregate amount of such claims exceeds L50,000, in
which case the
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Warrantors (subject to the other limitations herein) shall be liable for
the aggregate amount of such claims and not just the excess over
L50,000.
Clauses 3.1 and 3.2 to reflect final limits agreed in Offer Document.
3.3 LIMITED RECOURSE
If there are any claims under the Warranties the Buyer shall only be
entitled to satisfy any such claim from time to time out of the Escrow
Consideration Shares in accordance with the terms of the Escrow Agreement
and, subject thereto, the Warrantors shall have no liability in respect of
any breach of the Warranties.
3.4 FRAUD ETC
The provisions of Clauses 3.1 to 3.4 shall not apply in the case of fraud,
wilful concealment or wilful misrepresentation by any of the Warrantors.
3.5 DISCLOSURE LETTER
The Warrantors shall have no liability under the Warranties in respect of
any matters which are fairly disclosed in the Disclosure Letter or the
Updated Disclosure Letter.
4 AMENDMENTS, WAIVERS AND REMEDIES
4.1 AMENDMENTS
No amendment or variation of this Agreement shall be effective unless it
is in writing and signed by or on behalf of each of the Parties.
4.2 WAIVERS AND REMEDIES
4.2.1 The rights of each Party under this Agreement:-
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the general
law; and
(c) may be waived only in writing and specifically.
4.2.2 Delay in exercising or non-exercise of any right under this Agreement is
not a waiver of that right.
4.2.3 Partial exercise of any right under this Agreement shall not preclude any
further or other exercise of that right or any other right under this
Agreement.
5 SEVERANCE
If any provision of this Agreement is or becomes illegal, invalid or
unenforceable in any jurisdiction, that shall not affect:-
(a) the legality, validity or enforceability in that jurisdiction of any
other provision of this Agreement; or
(b) the legality, validity or enforceability in any other jurisdiction
of that or any other provision of this Agreement.
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6 ASSIGNATION
No Party shall without the prior written consent of the other Parties
assign, transfer or otherwise delegate (in whole or in part) this
Agreement or any of its rights or obligations under it.
7 AGREEMENT TO PREVAIL
If any provision of this Deed is inconsistent with the Sale and Purchase
Agreement, this Deed shall prevail.
8 NOTICES
8.1 WRITING
Any notice or communication to be given under, or in connection with the
matters contemplated by, this Agreement shall be in writing and signed by
or on behalf of the Party giving it.
8.2 SERVICE
Any notice or communication referred to in Clause 8.1 shall be served by
delivering it personally or sending it by pre-paid recorded delivery or
registered post or by fax to the address and for the attention of the
relevant Party set out in Clause 8.4 (or as otherwise notified by that
Party under Clause 8.4).
8.3 DEEMED RECEIPT
Any notice or communication referred to in Clause 8.1 shall be deemed to
have been received:-
(a) if delivered personally, at the time of delivery;
(b) in the case of pre-paid recorded delivery or registered post, 48
hours from the date of posting;
(c) in the case of registered airmail, five days from the date of
posting; and
(d) in the case of fax, at the time of transmission,
provided that if deemed receipt occurs after 5pm on a business day, or on
a day which is not a business day, the notice shall be deemed to have been
received at 9am on the next business day. For the purpose of this Clause
8.3, "BUSINESS DAY" means any day which is not a Saturday, a Sunday or a
public holiday in the place at or to which the notice is left or sent.
8.4 ADDRESSES FOR NOTICES
The addresses and facsimile numbers of the Parties for the purposes of
Clause 8.2 are:
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Address: ▇/▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ House, ▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
For the attention of: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax number: ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Address: c/o The ▇▇▇▇▇▇▇▇ Portfolio Limited, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇ ▇▇▇
For the attention of: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax number: ▇▇▇▇ ▇▇▇ ▇▇▇▇
BAM ENTERTAINMENT
Address: BAM! Entertainment, ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇ ▇▇▇ ▇▇▇
For the attention of: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax number: ▇▇▇▇▇ ▇▇▇▇▇▇
or such other address or facsimile number in the United Kingdom as may be
notified in writing from time to time by the relevant Party to the other
Parties.
8.5 NO ELECTRONIC SERVICE
Any notice or communication given under this Agreement shall not be
validly served if sent by electronic mail.
9 GOVERNING LAW AND JURISDICTION
9.1 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of England.
9.2 JURISDICTION
Each Party hereby submits to the non-exclusive jurisdiction of the Court
of Session as regards any claim, dispute or matter arising out of or in
connection with this Agreement or its implementation or effect.
IN WITNESS WHEREOF these presents consisting of this and the preceding pages are
executed by the Parties as a DEED follows:-
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EXECUTED as a DEED by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
at
on the 18th day of February 2004
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
.................................
before this witness
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
......................................... Witness
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
......................................... Full Name
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
......................................... Address
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
.........................................
EXECUTED as a DEED by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
at Glasgow
on the 18th day of February 2004
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
.................................
before this witness
/s/ C. FOLGUSON
......................................... Witness
C. Folguson
......................................... Full Name
▇▇ ▇▇▇▇▇ ▇▇
......................................... ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
.........................................
EXECUTED for and on behalf of
BAM ENTERTAINMENTS, INC.
at Bath, England
on the 18th day
of 2004
by
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
......................................... Director
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
......................................... Full Name
......................................... Director/Secretary
......................................... Full Name
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SCHEDULE 1
WARRANTIES AND REPRESENTATIONS:
PART 1
GENERAL
1 CONSTITUTION OF THE COMPANY
1.1 SHARE CAPITAL
The Company has an authorised and issued share capital as set out in
schedule 2. All its issued shares are beneficially owned by the Sellers in
the numbers set opposite their respective names in columns (1) and (2) of
schedule 1 of the Sale and Purchase Agreement free from all liens charges
and encumbrances or interests in favour of any other person.
1.2 MEMORANDUM AND ARTICLES
The copy of the current Memorandum and Articles of Association of the
Company included in the Investment Bibles is true and complete.
1.3 COMPANY RESOLUTIONS
Save as set out in the Investment Bibles and in the Sale and Purchase
Agreement, neither the Company nor any class of its members has passed any
resolution since its incorporation.
1.4 OPTIONS ETC.
Save as set out in the Investment Bibles and in the Sale and Purchase
Agreement, no person has the right (whether exercisable now or in the
future and whether contingent or not) to call for the issue of any share
or loan capital of the Company under any option or other agreement
(including conversion rights and rights of pre-emption) and no claim has
been made by any person to be entitled to any such right.
1.5 STATUTORY BOOKS
The register of members and other statutory books of the Company have been
properly kept and contain a true, accurate and complete record of the
matters which should be dealt with therein; no notice or allegation that
any of the same is incorrect or should be rectified has been received.
1.6 INSOLVENCY
No order has been made nor, so far as the Warrantors are aware, petition
presented or resolution passed for the winding up of the Company, nor has
any distress execution or other process been levied in respect of the
Company, nor is there any unfulfilled or unsatisfied judgment or court
order outstanding against the Company.
1.7 SUBSIDIARIES
The Company has no subsidiaries and has not had any subsidiaries since its
incorporation.
1.8 THE SHARES
1.8.1 Save as set out in the Investment Bibles, no one is entitled to receive
from the Company any finders fee, brokerage, or other commission in
connection with the purchase of shares in the Company.
1.8.2 Save as set out in the Investment Bibles and as provided in the Sale and
Purchase Agreement, no share or loan capital has been issued or agreed to
be issued by the Company since its incorporation.
1.8.3 Save as set out in the Investment Bibles and the Sale and Purchase
Agreement, there are no agreements or arrangements in force which provide
for the present or future issue, allotment or transfer of or grant to any
person the right (whether conditional or otherwise) to call for the issue,
allotment or transfer of any share or loan capital of the Company
(including any option or right of pre-emption or conversion).
1.8.4 The Company has not redeemed or purchased any of its shares since its
incorporation.
2 FINANCE
2.1 CAPITAL COMMITMENTS
The Company has not entered into, or agreed to enter into, any capital
commitments other than under the Development Agreement.
2.2 BORROWINGS
2.2.1 The Company has not borrowed any sums other than under and in accordance
with the terms of the BoS Overdraft Facility and the Company Loan Stock.
2.2.2 The total amount borrowed by the Company does not exceed its overdraft
facilities and the total amount borrowed by the Company from whatsoever
source does not exceed any limitation on its borrowing.
2.2.3 The details of the holders of the outstanding Company Loan Stock and the
principal amounts outstanding are as set out in schedule 3 of the Sale and
Purchase Agreement.
2.3 BANK ACCOUNTS
2.4 DISTRIBUTIONS AND LOAN REPAYMENTS
2.4.1 Since the Company was incorporated no distributions of capital or income
have been declared made or paid in respect of any share capital of the
Company and (excluding fluctuations in overdrawn current accounts with
bankers) no loan or loan capital or preference capital of the Company has
been repaid in whole or part or has become liable to be repaid.
2.4.2 No dividends or distributions of profits declared, made, or paid by the
Company since the date of incorporation of the Company.
3 OWNERSHIP OF ASSETS
3.1 ASSETS
3.1.1 The Company has no assets and has had no assets since its incorporation.
4 BUSINESS OF THE COMPANY
4.1 LITIGATION
4.1.1 The Company is not engaged in any litigation or arbitration proceedings.
4.1.2 So far as the Warrantors are aware no litigation or arbitration
proceedings are pending or threatened by or against the Company and there
are no circumstances likely to give rise to any litigation or arbitration.
4.1.3 The Company is not subject to any order or judgment given by any Court or
governmental agency and has not been a party to any undertaking or
assurance given to any Court or governmental agency which is still in
force.
4.2 POWERS OF ATTORNEY, ETC.
There are no powers of attorney given by the Company in force (other than
to the holder of an Encumbrance solely to facilitate its enforcement) and
no person, as agent or otherwise of the Company, is entitled or authorised
to bind or commit the Company to any obligations not in the ordinary
course of the Company's business.
4.3 INVESTMENT GRANTS
No investment grant paid to the Company is liable to be refunded in whole
or in part in consequence of any action or omission of the Company.
4.4 SURETIES
No person other than the Company has given any guarantee of or security
for any overdraft loan or loan facility granted to the Company.
4.5 COMPLIANCE WITH LAWS
So far as the Warrantors are aware, the Company has conducted its business
in all material respects in accordance with all applicable laws and
regulations of the United Kingdom and there is no violation of or default
with respect to any statute regulation order decree or judgement of any
Court or any governmental agency of the United Kingdom or any foreign
country which may have a material adverse effect upon the assets or
business of the Company.
4.6 TRADING
The Company has not carried on business or traded in any capacity
whatsoever since its incorporation.
4.7 CONTRACTS AND ARRANGEMENTS
4.7.1 The Company has not entered into any contracts other than those in the
Investment Documents and the documents referred to in the Sale and
Purchase Agreement, nor has the Company varied, amended or, so far as the
Warrantors are aware, breached the terms of such Investment Documents.
4.7.2 So far as the Warrantors are aware the Investment Documents entered into
by the Company are in full force and effect and the Company has not
received notice to terminate them.
4.7.3 So far as the Warrantors are aware, no counterparty to an Investment
Document entered into by the Company has threatened the Company to
terminate such contract nor, so far as the Warrantors are aware, has
grounds to do so.
5 EMPLOYMENT
5.1 DIRECTORS
The particulars shown in schedule 2 are true and complete and no person
not named therein as such is a director or shadow director (as defined in
section 741 of the Companies Act 1985) of the Company.
5.2 PARTICULARS OF EMPLOYEES
5.2.1 The Company does not have any employees and has not had any employees
since its incorporation.
6 PROPERTIES
The Company does not own any real property and has not owned any real
property since its incorporation.
7 RETURNS AND RECORDS
7.1 The Company has made or caused to be made within the requisite periods all
notices, returns, and computations required to be made, and has supplied
or caused to be supplied all information required to be supplied to any
Taxation Authority, and all such returns, computations and information
were when submitted correct, up-to-date and are not, nor so far as the
Warrantors are aware likely to be, the subject of any material dispute.
7.2 The Company has kept and maintained complete and accurate records for
Taxation purposes.
8 NON-ENTITLEMENT
So far as the Warrantors are aware the Company has not received from any
Taxation Authority any payment to which it was not entitled.
9 GROUP OF COMPANIES
The Company is not at the date of this agreement, nor has it ever been, a
member of a group of companies howsoever defined.
10 PAYMENT OF TAX, PENALTIES AND INTEREST
The Company has duly and punctually paid all Taxation which it has been
liable to pay and has not paid or become liable to pay, nor, so far as the
Warrantors are aware, are there any circumstances by reason of which the
Company is likely to become liable to pay any penalty, fine surcharge or
interest relating to Taxation.
11 REVENUE INVESTIGATIONS, AUDITS
The Company has not at any time been the subject of any audit, discovery
or investigation by any Taxation Authority and, so far as the Warrantors
are aware, there
are no facts which are likely to cause any non routine audit, discovery or
investigation to be made.
12 WITHHOLDINGS
The Company has made all deductions and retentions of or on account of
Taxation as it was or is obliged or entitled to make and all such payments
of or on account of Taxation as should have been made to any Taxation
Authority in respect of such deductions or retentions.
13 RESIDENCY AND STATUS OF COMPANY
13.1 The Company has never been resident for Taxation purposes in any
jurisdiction other than the United Kingdom and the Company has no branch,
agency, place of business or permanent establishment outside the United
Kingdom.
13.2 The Company has never been a close company for the purposes of section 414
of ICTA.
14 SECONDARY LIABILITY
The Company is not liable to be assessed to Taxation as an agent of any
other person and is not liable to pay, to reimburse or to indemnify any
person (including a Taxation Authority) in respect of the Taxation
liability of any other person as a consequence of that other person
failing to discharge the liability whether that other person is or may
become primarily liable for the Taxation in question.
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SCHEDULE 2
DETAILS OF THE COMPANY
Name: SOE Development Limited
Former Names: Law 2404 Limited
Number: 04856653
Date of Incorporation: 5 August 2003
Registered Office: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇
Authorised share capital: 11,999 A shares of L0.001 each
988,001 ordinary shares of L0.001 each
Issued share capital: 8,800 A shares of L0.001 each 46,201
ordinary shares of L0.001 each
Directors: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Secretary: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Accounting reference date: 31 December
Last accounts: N/A
Last annual return: N/A