DATED 1998
▇ ▇ ▇▇▇▇▇▇▇ & OTHERS
- and -
PRODUCTION RESOURCE GROUP LLC
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SHARE PURCHASE AGREEMENT
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CONTENTS
Clause Heading Page
1. Interpretation 1
2. Agreement to Sell 11
3. Consideration 11
4. Completion 12
5. The Warranties 16
6. Management Sellers' Continuing Obligations 17
7. Indemnity 19
8. Subscription Agreement 19
9. Restrictive Trade Practices Act 21
10. Successors and Assigns 21
11. Release, Indulgence, etc by Buyer 22
12. Notices 22
13. Confidentiality 23
14. Miscellaneous 23
15. Sale and Use Tax 24
16. Election for U.S. Income Tax Purposes 25
17. Further Assurance 25
18. Jurisdiction 25
Schedule 1
The Sellers 27
Schedule 2
The Company 28
Schedule 3
The Subsidiaries 30
Schedule 4
The Warranties 32
1
Schedule 5
Limitations on Liability 45
Schedule 6
Properties 50
2
DATE OF AGREEMENT 1998
PARTIES
(1) The Persons listed in Schedule 1 ("the Sellers")
(2) PRODUCTION RESOURCE GROUP LLC, a Delaware limited liability company
whose head office is at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ("the Buyer")
IT IS AGREED THAT:
1. Interpretation
1.1 In this Agreement words and phrases shall, unless the context
requires otherwise, have the following meanings.
1.1.1 "the Accounts" means the audited financial statements
of the Company and the audited consolidated financial
statements of the Company and the Subsidiaries in each
case for the year ended on the Accounts Date.
1.1.2 "the Accounts Date" means 31 March 1998.
1.1.3 "the Act" means the Companies ▇▇▇ ▇▇▇▇.
1.1.4 "agreed form" means in the form of the draft, a copy of
which is annexed to this Agreement and initialled for
identification purposes by or on behalf of the parties
or the form of the document as executed by the relevant
parties.
1.1.5 "the Auditors" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of ▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇.
1.1.6 "the Business" means the business of designing
manufacturing and supplying stage lighting systems for
concerts and other functions and events.
1.1.7 "the Buyer's Solicitors" means ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇
LLP and Nabarro ▇▇▇▇▇▇▇▇▇.
1.1.8 "Claim" means any claim by the Buyer pursuant to the
terms of this Agreement.
1.1.9 "the Company" means Light & Sound Design Holdings
Limited details of which are set out in Schedule
1
2.
1.1.10 "Completion" means completion as per clause 0.
1.1.11 "the Completion Date" means the date of this Agreement.
1.1.12 "Consent" means approval, consent, ratification,
waiver or other authorisation (including any
Governmental Authorisation).
1.1.13 "the Consideration" means $14,567,571.
1.1.14 "the Deeds of Release" the deeds of release to be
executed on completion by ▇▇▇▇▇▇ Ventures PLC and Sumit
Venture Fund One Limited Partnership relating to the
release of the debentures in their favour set out in
Schedules 2 and 3 and other security over any Group
Company.
1.1.15 "the Disclosure Letter" means the letter in the agreed
form delivered by the Management Sellers to the Buyer
immediately prior to execution of this Agreement which
contains certain disclosures to the Warranties.
1.1.16 "the Directors" means the directors of the Company and
any one of them as appropriate.
1.1.17 "the Employees" means the employees engaged by the
Company and the Subsidiaries at Completion a list of
whom is attached to the Disclosure Letter.
1.1.18 "Encumbrance" means any charge, lien, option, security
interest, any restriction on use, voting, transfer,
receipt or income or exercise of any other attribute
of ownership.
1.1.19 "Environment" means soil, land surface or subsurface
strata, surface waters (including navigable waters,
ocean waters, streams, ponds, drainage basins and
wetlands), groundwaters, drinking water supply, stream
sediments and plant and animal life.
1.1.20 "Environmental Law" means any Legal Requirement that
requires or relates to:
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(a) advising appropriate authorities, employees and
the public of intended or actual releases of
pollutants or hazardous substances or materials,
violations of discharge limits or other
prohibitions and of the commencement of
activities, such as resource extraction or
construction, that could have significant impact
on the Environment;
(b) preventing or reducing to acceptable levels the
release of pollutants or hazardous substances or
materials into the Environment;
(c) reducing the quantities, preventing the release
or minimising the hazardous characteristics of
wastes that are generated;
(d) reducing to acceptable levels the risks inherent
in the transportation and storage of hazardous
substances, pollutants, oil or other potentially
harmful substances;
(e) cleaning up pollutants that have been released,
preventing the threat of release or paying the
costs of such clean up or prevention; or
(f) making responsible parties pay private parties
or groups of them, for damages done to their
health or the Environment, or permitting
self-appointed representatives of the public
interest to recover for injuries done to public
assets.
1.1.21 "the Equipment" means all items of machinery,
equipment, furniture, fixtures and fittings used by the
Company and the Subsidiaries as at Completion.
1.1.22 "fully indemnified" means fully indemnified against
all costs, demands, expenses and proceedings in respect
of the matter concerned.
1.1.23 "GAAP" means generally accepted UK accounting
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principles, applied on a basis consistent with the
basis on which the Accounts were prepared.
1.1.24 "Governmental Authorization" means any approval,
consent, license, permit, waiver or other authorisation
issued, granted, given or otherwise made available by
or under the authority of any Governmental Body or
pursuant to any Legal Requirement.
1.1.25 "Governmental Body" means any:
1.1.25.1 nation, state, city, district or other
political subdivision or jurisdiction of
any nature;
1.1.25.2 national, local, foreign or other
government;
1.1.25.3 governmental or quasi-governmental
authority of any nature (including any
governmental ministry, agency, branch,
department, official or entity and any
court or other tribunal);
1.1.25.4 body exercising or entitled to exercise any
administrative, executive, judicial,
police, regulatory or taxing authority or
power of any nature.
1.1.26 "Group Companies" means, collectively, the Company,
LSD and LSD, Inc.
1.1.27 "the Intellectual Property" means in relation to the
Company all patents, copyrights, design rights, trade
marks, service marks, business names and trade names.
1.1.28 "Legal Requirement" means any national, local, foreign,
international order, constitution, law, ordinance,
principle of common law, regulation, statute or treaty.
1.1.29 "LSD" means Light and Sound Design Limited, one of the
Subsidiaries.
1.1.30 "LSD, Inc." means Light & Sound Design, Inc., one of
the Subsidiaries.
4
1.1.31 "the Management Sellers" means all of the Sellers
other than ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Ventures PLC and Sumit
Venture Fund One Limited Partnership.
1.1.32 "Material Interest" means 10% or more of the share
capital of or other ownership interest in any person.
1.1.33 "Option Agreement" means the option agreement in the
agreed form to be entered into on completion between
the Management Sellers (1) and the Buyer (2).
1.1.34 "the Option Shares" means certain of the 'B' ordinary
shares of 20p each in the capital of the Company owned
by the Management Sellers further details of which are
set out in Schedule 1.
1.1.35 "Order" means any award, decision, injunction,
judgment, order, ruling, subpoena or verdict entered,
issued, made or rendered by any court, administrative
agency or arbitrator.
1.1.36 "the Pension Schemes" means the Light & Sound Design
Stafflink Group Personal Pension Scheme, the Light &
Sound Design Executive Pension Scheme and the Light &
Sound Design Inc 401 (K) Plan.
1.1.37 "person" means any individual, corporation,
partnership, joint venture, association, joint stock
company, limited liability corporation, or trust.
1.1.38 "Properties" means the leasehold properties of the
Company and subsidiaries further details of which are
set out in Schedule 6
1.1.39 "Registrable Restriction" means a provision by virtue
of which the Restrictive Trade Practices Act 1976
applies to an agreement.
1.1.40 "Related person" means with respect to a person:
1.1.40.1 any person that directly or indirectly
controls, is directly or indirectly
controlled by or is directly or indirectly
under common control with such specified
person;
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1.1.40.2 any person that holds a Material Interest in
such specified person;
1.1.40.3 each person that serves as a director,
officer, partner, executor or trustee of
such specified person;
1.1.40.4 any person in which such specified person
holds a Material Interest;
1.1.40.5 any person with respect to which such
specified person serves as general partner
or trustee;
1.1.40.6 any Related Person of any individual
described in clause (0) or (0).
1.1.41 "the Sale Shares" means the shares in the capital of
the Company further details of which are set out in
column 2 of Schedule 1.
1.1.42 "the Sellers' Solicitors" means Dibb ▇▇▇▇▇▇ ▇▇▇▇▇ of
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇.
1.1.43 "the Specified Rate" means 3% above the base
lending-rate from time to time of Midland Bank plc.
1.1.44 "the Service Agreements" the service agreements in the
agreed form to be entered into upon Completion between
each of the Management Sellers (1) and the Company (2).
1.1.45 "the Subscription Agreement" the subscription agreement
dated 13 April 1995 between ▇▇▇▇▇▇ Ventures plc (1)
Sumit Venture Fund One Limited Partnership (2) ▇ ▇
▇▇▇▇▇▇▇ & Others (3) and the Company (4).
1.1.46 "the Subsidiaries" means LSD & LSD, Inc further details
of which are set out in Schedule 3.
1.1.47 "Tax Claim" means any claim by the Buyer pursuant to
the Tax Deed.
1.1.48 "Taxes" shall bear the meaning given to "Tax" in the
Tax Deed.
1.1.49 "the Tax Deed" means a deed in the agreed form
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which contains certain covenants on the part of the
Management Sellers relating to the taxation affairs of
the Company and LSD.
1.1.50 "the Taxes Act" means the Income and Corporation
Taxes ▇▇▇ ▇▇▇▇.
1.1.51 "Transaction Documents" means collectively this
Agreement, the Tax Deed, the Service Agreements, the
Option Agreement and the Disclosure Letter (or any one
of them as the case maybe).
1.1.52 "UK Companies" means, collectively, the Company and
LSD.
1.1.53 "UK Facilities" means any real property, leaseholds
or other interests in real property owned or operated
by any UK Company and any buildings.
1.1.54 "US Facilities" means any real property, leaseholds
currently owned or operated by LSD, Inc.
1.1.55 "the Warranties" means the warranties set out in
Schedule 4.
1.1.56 "the Warrantors" means the Management Sellers.
1.1.57 "Working Day" means a day (excluding Saturday and
Sunday) on which clearing banks are generally open for
business in the City of London.
1.2 Words and phrases which are defined in the Act have the same
meaning in this Agreement.
1.3 Any reference to a statutory provision includes all
modifications, enactments and amendments of that provision and
any regulations which may have been made under it in both cases
prior to the date of this Agreement.
1.4 References to clauses and schedules are unless specified
otherwise to the clauses and schedules of this Agreement.
1.5 References to the masculine gender include the feminine and vice
versa. Similarly, references to the singular include the plural
and vice versa.
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1.6 The headings and index to this Agreement have been inserted for
convenience only. They are not to affect its construction or
interpretation.
1.7 The Schedules all form part of this Agreement.
1.8 In clause 0 all references to "the Company" are to include a
corresponding reference to the Subsidiaries.
1.9 In Schedule 4 references to the Company are to include a
corresponding reference to Light & Sound Design Limited and
Light & Sound Design Inc save where expressly stated to the
contrary.
1.10 In Schedule 4 references to corporate constitution documents
which have an English meaning are to include references in
relation to Light & Sound Design Inc to the corresponding
documents under the laws applicable to the incorporation of
that entity.
2. Agreement to Sell
2.1 The Sellers will sell and the Buyer will buy the Sale Shares.
2.2 The Sale Shares are sold:
2.2.1 with full title guarantee;
2.2.2 with the benefit of all rights attaching to them at
Completion;
2.2.3 free from all rights of pre-emption (which the Sellers
waive or will procure the waiver of);
2.2.4 free from any Encumbrances.
2.3 Each Seller hereby warrants that he or it has incurred no
obligation or liability, contingent or otherwise for brokerage
or finders fees or agents commission or other similar payments
or payments of professional fees in connection with the
transaction contemplated by this Agreement which are or could
become the obligation or liability of any Group Company.
8
3. Consideration
3.1 The consideration for the sale of the Sale Shares and the
obligations of the Sellers pursuant to this Agreement is the
payment by the Buyer of the Consideration and the entering into
of the Option Agreement.
4. Completion
4.1 The Buyer will not be bound to complete the purchase of any of
the Sale Shares unless the Sellers satisfy all of their
obligations pursuant to clauses 0 and 0 at the same time.
4.2 The sale and purchase of the Sale Shares will be completed at a
venue to be agreed by the parties on the Completion Date. The
following will then occur.
4.3 The Sellers are to deliver to the Buyer:
4.3.1 duly executed transfers in respect of the Sale Shares
in favour of the Buyer or its nominee;
4.3.2 a duly executed transfer in respect of any shares in
the Subsidiaries which are not registered in the name
of the Company in favour of the Company;
4.3.3 the share certificates relating to the Sale Shares and
any shares transferred as contemplated by clause 0 (or
an indemnity for lost share certificates in a form
reasonably satisfactory to the Buyer);
4.3.4 the statutory books of the Company and LSD written up
to date;
4.3.5 the books of unissued share certificates and the
common seal of the Company and LSD;
4.3.6 the certificate of incorporation and any certificates
of incorporation on change of name of the Company and
LSD;
4.3.7 all available prints of the memorandum and articles of
association of the Company and LSD;
4.3.8 the share register, transfer records and minute books
of Light and Sound Design Inc complete and up to date
(but not to include the events
9
occurring at or immediately prior to Completion) and
its Certificate of Incorporation and Common Seal.
4.3.9 the Tax Deed duly executed by the Management Sellers;
4.3.10 the written resignation of the Auditors as auditors of
the Company and LSD containing an acknowledgement that
they have no claim for compensation for loss of office,
professional fees or otherwise and a statement pursuant
to section 394 of the Act that there are no
circumstances connected with such resignations which
the Auditors consider should be brought to the
attention of the members or creditors of the Company or
LSD;
4.3.11 a banker's draft in favour of the Company or the
Subsidiaries in respect of all amounts owed to it by
the Sellers or a certificate from the Sellers that
there are no such sums owing;
4.3.12 the Deeds of Release duly executed by ▇▇▇▇▇▇ Ventures
PLC and Sumit Venture Fund One Limited Partnership;
4.3.13 the Option Agreement duly executed by the Management
Sellers.
4.3.14 the Service Agreements executed by each of the
Management Sellers;
4.3.15 the consents described in clause 16.
4.4 The Sellers are to ensure that board meetings of the Company
and LSD are held at which:
4.4.1 the transfers of the Sale Shares are approved for
registration subject only to being stamped;
4.4.2 in the case of the Subsidiaries the transfers referred
to in clause 0 are approved for registration subject
only to being stamped;
4.4.3 ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ deliver their
written resignations as directors of the Company and
the Subsidiaries in the agreed form;
10
4.4.4 the nominees of the Buyer are appointed as directors;
4.4.5 all existing authorities to bankers are amended as the
Buyer may direct;
4.4.6 Ernst & Young are appointed auditors; and
4.4.7 the accounting reference dates are changed to 31
December.
4.5 The Buyer and the Management Sellers are to enter into and
exchange engrossments of the Option Agreement.
4.6 The Management Sellers will and the Buyer will procure that the
Company enters into and exchanges engrossments of the Service
Agreements.
4.7 The Buyer will then:
4.7.1 deliver to the Sellers' Solicitors a counterpart of the
Disclosure Letter, duly executed by the Buyer's
Solicitors;
4.7.2 deliver to the Management Sellers a duly executed
counterpart of the Option Agreement;
4.7.3 pay the sum of $14,567,571 in respect of the
Consideration by wire transfer to the account of the
Seller's Solicitors with the Midland Bank Plc, New
Street Branch, Birmingham, England, Sort Code:
40-11-18, Account Number: ▇▇▇▇▇▇▇▇ Ref ▇▇▇-▇▇▇▇▇▇-▇▇▇▇
(Name: Dibb ▇▇▇▇▇▇ ▇▇▇▇▇ Call Deposit US $ Account);
4.7.4 deliver to the Management Sellers an executed
counterpart of the Tax Deed; and
4.7.5 pay to ▇▇▇▇▇▇ Ventures Plc and Sumit Venture Fund One
Limited Partnership the sum of ,42,500 in full and
final settlement of all sums due to them in respect of
the Cumulative Preferred Participating Ordinary Shares
of 10p each and Cumulative Redeemable Preference Shares
of 50p each held by them prior to the transfer referred
to in clause 0.
4.7.6 deliver to the Warrantors executed Counterparts of the
Service Agreements.
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4.8 After Completion the parties will do all acts and things which
may prove necessary to implement in full their respective
obligations under the terms of this Agreement.
5. The Warranties
5.1 The Management Sellers severally warrant to the Buyer as at the
Completion Date in the terms set out in Schedule 4 subject
only to:
5.1.1 any matter which is fairly disclosed in the Disclosure
Letter;
5.1.2 the provisions of this clause 0 and Schedule 5; and
5.1.3 any matter or thing done or omitted to be done
pursuant to this Agreement.
5.2 The Management Sellers acknowledge that the Buyer has entered
into this Agreement in reliance upon, amongst other things, the
Warranties.
5.3 The Warranties shall be separate and independent.
5.4 All Warranties which relate to the Management Sellers'
knowledge, information, belief or awareness are given by them
after having made all reasonable enquiries and investigations.
5.5 For the avoidance of doubt ▇▇▇▇▇▇ Venture PLC, Summit Venture
Funds One Limited and ▇▇▇▇ ▇▇▇▇▇▇▇▇ shall have no liability to
the Buyer under this Agreement or the Tax Deed save in respect
of:-
5.5.1 clause 0;
5.5.2 clause 0;
5.5.3 clause 2.3;
5.5.4 Clause 0;
5.5.5 Clause 4.3.11;
5.5.6 Clause 4.3.12;
5.5.7 clause 0;
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5.5.8 clause 6.2;
5.5.9 clause 0;
5.5.10 clause 8;
5.5.11 clause 13;
5.5.12 clause 14.3;
5.5.13 clause 14.6; and
5.5.14 clause 16;
5.5.15 Clause 17.
6. Management Sellers' Continuing Obligations
6.1 Notwithstanding Completion the Management Sellers shall:
6.1.1 continue to give to the Buyer such information as the
Buyer may reasonably require relating to the Company
the Business and its employees, customers and
suppliers;
6.1.2 recommend and introduce the Buyer to customers,
suppliers and professional contacts of the Company; and
6.1.3 at the Buyer's request and cost execute all such
documents and do all such things and afford to the
Buyer such assistance as the Buyer may require for the
purpose of implementing all the provisions of this
Agreement.
6.2 The Sellers severally (but not jointly) undertake that they will
not at any time after Completion without the Buyer's prior
written consent:
6.2.1 use any name identical to or likely to be confused with
a name used by the Company prior to Completion in
connection with the Business or make reference in any
way to such a name (and for this purpose, "name"
includes a company or trading name);
6.2.2 make any public announcement regarding the Company, the
Business or this transaction save as may be required by
law or the rules of any recognised investment exchange;
or
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6.2.3 disclose or use any trade secrets or confidential
information (other than any which is public knowledge)
relating to the Company and/or the Business which they
have acquired prior to Completion.
6.3 Save as specified in clause 0 the restrictions set out in clause
0 are to prevent each of the Sellers from carrying out any of
the prohibited activities on their own behalf or jointly with
or as servant, agent, manager, employee, consultant, director or
shareholder of any other person, firm, company or body.
6.4 Nothing in this clause is to prevent any of the Management
Sellers from:
6.4.1 holding for investment purposes up to 3% of the issued
share capital of a company whose shares are dealt in
or quoted on a recognised stock exchange; or
6.4.2 performing their duties under any contract of
employment with the Company.
6.5 In this clause 0 all references to the Company shall be deemed
to include a reference to each of the Subsidiaries.
6.6 The parties consider the commitments contained in this clause 0
to be reasonable as between themselves and the public interest.
If, however, any of them are found by a court to be unreasonable
and unenforceable but would be reasonable and enforceable if
certain words were deleted, then the commitments will apply with
those words deleted.
7. Indemnity
Following Completion, the Company and the Buyer will keep ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇ (two of the Management Sellers) fully
indemnified against all liabilities, costs, claims and expenses
(including without limitation all reasonable professional fees)
incurred by either of them in relation to the claim against them by
Friend & Co further details of which are set out in the Disclosure
Letter. Save to the extent that any such liabilities costs claims and
expenses are incurred as a result of the wilful misconduct or gross
negligence of either ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇.
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8. Subscription Agreement
8.1 Each of the Sellers and the Company and the Subsidiaries hereby
forever release and discharge each other (and their respective
affiliates, employees and agents) from all claims, demands,
damages, debts, liabilities, obligations and causes of action,
whether fixed or contingent and whether known or unknown, based
on facts existing on or prior to the date of this Agreement and
arising under the terms of the Subscription Agreement.
8.2 ▇▇▇▇▇▇ Ventures plc and Sumit Venture Fund One Limited
Partnership (the "Investors") hereby forever release and
discharge the Group Companies their affiliates, employees and
agents from all claims, demands, damages, debts, liabilities,
obligations and causes of action, whether fixed or contingent
and whether known or unknown, based upon facts existing on or
prior to the date hereof (other than any claims arising out of
the Investors' investment in any companies other than any Group
Company), including, but not limited to, any obligations
pursuant to the following agreements:
8.2.1 Share Subscription Agreement, dated April 13, 1995,
between the Investors, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and others, and
Manordegree Limited;
8.2.2 Secured Loan Notes and Debentures, dated April 13,
1995, executed by Manordegree Limited in favour of the
Investors; and
8.2.3 Guarantees, Debentures and Security Agreement, dated
April 13, 1995, executed by Shinetest Limited and
Shinetest, Inc. in favour of the Investors.
8.2.4 Subject to clause 4.7.5 any unpaid accumulated
dividends due in respect of any of the Sale Shares
held by the Investors.
8.3 The Investors hereby waive and release the Company from any
obligations pursuant to the Articles of Association of the
Company to redeem the CPPO Shares or Preference Shares (as
defined in the Articles of Association).
8.4 The releases and waivers contained in clauses 0 and 0 shall not
apply to any claims which arise as the result of the fraud or
wilful default of the party against whom a claim is made.
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9. Restrictive Trade Practices Act
9.1 If any provision of this Agreement is a Registrable Restriction
the following shall apply:
9.1.1 each of the parties shall either independently or
together with the other party furnish this Agreement
to the Director General of Fair Trading within 3 months
of the date of this Agreement; and
9.1.2 none of the parties will give effect to, or enforce or
purport to enforce any Registrable Restriction until
the day following the day upon which the particulars of
that Registrable Restriction are furnished to the
Director General of Fair Trading in accordance with the
provisions of the Restrictive Trade Practices ▇▇▇ ▇▇▇▇.
9.2 The parties agree that if this Agreement is not furnished in
accordance with the provisions of clause 0, then any Registrable
Restriction (whether contained in this Agreement or not) forming
part of the arrangement of which this Agreement is itself part
will be void and no party will seek to enforce such Registrable
Restriction.
10. Successors and Assigns
Neither party may assign its rights or obligations under this Agreement
without the consent in writing of the other.
11. Release, Indulgence, etc by Buyer
Any liability to the Buyer under this Agreement may in whole or in part
be released, compounded or compromised or time or indulgence given by
the Buyer in its absolute discretion as regards any of the Management
Sellers under such liability without in any way prejudicing or
affecting its rights against any other of the Management Sellers under
the same or a like liability whether joint or several or otherwise.
12. Notices
12.1 Any notice given under this Agreement is to be in writing and
signed by or on behalf of the party giving it. The notice may
be served by leaving it at or sending it by facsimile
transmission, pre-paid recorded delivery, reputable
international courier or registered post to:
12.1.1 in the case of the Buyer, its head office; and
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12.1.2 in the case of the Management Sellers, their addresses
set out in Schedule 1 or such other address within the
United Kingdom or the United States as they may notify
to the Buyer from time to time.
12.2 Any notice so served is deemed to have been received:
12.2.1 in the case of personal service, upon delivery;
12.2.2 in the case of facsimile transmission, 1 hour after the
time of despatch provided that the sender obtains
confirmation of transmission; and
12.2.3 in the case of international courier, pre-paid recorded
delivery or registered post, 96 hours from the time of
posting, save that where a notice would be deemed to be
received on a day which is not a Working Day, the
notice shall instead be deemed to be received at 9.00
am on the next Working Day.
12.3 For notices served by post it will be sufficient in proving
service to establish that the envelope containing the notice
was properly stamped, addressed and posted.
13. Confidentiality
Save to the extent required by law or the rules of any recognised
investment exchange, no announcement concerning the terms of or any
matters contemplated by this Agreement or any matter ancillary to it
may be made by or on behalf of any party to the Agreement except with
the prior written consent of all of the other parties.
14. Miscellaneous
14.1 This Agreement may be executed in any number of counterparts and
by the several parties to it on separate counterparts, each of
which when so executed and delivered shall be an original, but
all the counterparts shall together constitute one document.
14.2 This Agreement will remain in full force and effect after
Completion in respect of any matters which have not been
performed in full at such time.
14.3 Each of the parties is to be responsible for its or his own
costs relating to the preparation and execution and performance
of this Agreement and any document entered
17
into pursuant to its terms.
14.4 This Agreement and the documents referred to in it constitute
the entire agreement between the parties. No variation of this
Agreement will be effective unless it is in writing signed by
or on behalf of all of the parties.
14.5 If any monies falling due for payment pursuant to this Agreement
are not paid in full on the due date for payment they will bear
interest at the Specified Rate from the due date for payment
until the date of payment in full. Interest will be calculated
on a daily basis and compounded quarterly on the last day of
March, June, September and December in each year. Interest will
not accrue on the Completion monies provided they are paid
within 10 working days of the date of this Agreement.
14.6 The Management Sellers and the Buyer shall consult together as
to the terms of, the timetable for and manner of publication of,
any announcement to the Employees, the customers and suppliers
or otherwise which either party may desire or be obliged to make
regarding this Agreement. Except as agreed between the
Management Sellers and the Buyer, such agreement not to be
unreasonably withheld or delayed, or to the extent required by
law or any regulatory authority where there is no opportunity to
consult with the other, neither the Sellers nor the Buyer shall
make or authorise any public announcement or statement
concerning the subject matter of this Agreement.
15. Sale and Use Tax
The parties recognise that LSD, Inc. may be deemed to have transacted
business in several of the United States of America. In so doing,
issues may arise as to the liability of LSD, Inc. for sales, use,
franchise and income taxes in said states other than California and
Tennessee. While the Management Sellers believe that all requisite tax
returns have been filed and taxes paid, if any Governmental Body, other
than the States of California, Tennessee, and any State in which LSD
Inc maintains or has maintained a place of business or from which more
than 10% of LSD Inc's net revenues in any fiscal year have been derived
shall assert or assess or threaten to assert or assess any liability
for sales, use, franchise and income taxes against LSD, Inc., the
Management Sellers shall have no responsibility or liability for the
defense or payment of same and the Buyer shall procure that LSD Inc
pays such taxes but for the avoidance of doubt this clause 15 shall not
exclude the liability of the
18
Management Sellers under this Agreement or the Tax Deed in respect of
such taxes in the states of California, Tennessee and any State in
which LSD Inc maintains or has maintained a place of business or from
which more than 10% of LSD Inc's net revenues in any fiscal year have
been derived.
16. Election for U.S. Income Tax Purposes
On or before Completion each Seller agrees to provide the Buyer with a
written consent with respect to the Company and LSD to treat each such
company as either a partnership or a disregarded entity for U.S.
Federal income tax purposes pursuant to Section 301.7701-3(c) of U.S.
Treasury Regulations. The election shall be effective as of the day
immediately before the Completion Date and each consent shall be
provided on separate statements substantially in the form agreed.
Notwithstanding the foregoing, whether or not the Company and/or LSD
shall file an election pursuant to U.S. Treasury Regulation Section
301.7701-3(c) shall be made in the sole and absolute discretion of the
Buyer.
17. Further Assurance
The Sellers will execute all deeds and documents and provide such
reasonable assistance as may be necessary to validly transfer title to
the Sale Shares to the Buyer and to give full effect to the
transactions contemplated by this Agreement .
18. Jurisdiction
This Agreement will be governed by English Law. The parties agree to
submit to the exclusive jurisdiction of the Courts of England.
IN WITNESS of which this document has been executed and on the date set out
above delivered as a deed.
19
Schedule 1
The Sellers
Part 1
The Management Sellers
1 2 3 4 5
SHAREHOLDER NUMBER OF SALE SHARES NUMBER % OF AMOUNT
OF CLAIM OF
OPTION CONSIDERATION
SHARES
-----------------------------------------------------------------------------------------------------------------------------------
'A' 'B' Cumulative Cumulative
Ordinary Ordinary Preferred Redeemable
Shares of Shares Participating Preference
10p each of 20p Ordinary Shares Shares of
each of 10p each 50p each
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ 0 25,000 0 0 6,250 25 $1,415,615
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇▇ 0 20,000 0 0 5,000 20 $1,161,293
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇ 0 12,500 0 0 3,125 12.5 $725,807
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ 0 12,500 0 0 3,125 12.5 $725,807
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ 15,000 0 0 0 1,875 7.5 $669
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇ 15,000 0 0 0 1,875 7.5 $669
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇ 15,000 0 0 0 1,875 7.5 $669
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 15,000 0 0 0 1,875 7.5 $669
Part 2
A B
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇
Ventures PLC 0 0 203,703 1,416,667 0 0 $7,000,000
-----------------------------------------------------------------------------------------------------------------------------------
Sumit
Venture Fund
One Limited
Partnership 0 0 101,852 708,333 0 0 $3,500,000
-----------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ 8,333 0 0 0 0 0 $373
20
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL 68,333 70,000 305,555 2,125,000 25,000 100 $14,567,571
-----------------------------------------------------------------------------------------------------------------------------------
21
Schedule 2
The Company
Company number : 3024622
Date of incorporation : 21 February 1995
Authorised
share capital : 1,125,000
Issued share capital : ,1,118,888,80 registered as follows:
No of Class of
Member Shares Shares
------ ------ ------
▇▇▇▇ ▇▇▇▇▇▇▇ 'B' Ordinary Shares of 20p
31,250
▇▇▇ ▇▇▇▇▇ 25,000 'B' Ordinary Shares of 20p
▇▇▇▇ ▇▇▇▇▇ 15,625 'B' Ordinary Shares of 20p
▇▇▇▇ ▇▇▇▇▇▇▇ 15,625 'B' Ordinary Shares of 20p
▇▇▇▇ ▇▇▇▇▇▇▇▇ 1,875 'B' Ordinary Shares of 20p
▇▇▇▇▇ ▇▇▇ 1,875 'B' Ordinary Shares of 20p
▇▇▇▇▇ ▇▇▇▇▇ 1,875 'B' Ordinary Shares of 20p
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 1,875 'B' Ordinary Shares of 20p
▇▇▇▇▇ ▇▇▇ 15,000 'A' Ordinary Shares of 10p each
▇▇▇▇▇ ▇▇▇▇▇ 15,000 'A' Ordinary Shares of 10p each
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 15,000 'A' Ordinary Shares of 10p each
▇▇▇▇ ▇▇▇▇▇▇▇▇ 15,000 'A' Ordinary Shares of 10p each
▇▇▇▇ ▇▇▇▇▇▇▇▇ 8,333 'A' Ordinary Shares of 10p each
▇▇▇▇▇▇ Ventures plc 203,703 Cumulative Participating Preferred
Ordinary Shares of 10p
Sumit Venture Fund 101,852 Cumulative Participating Preferred
One Limited Ordinary Shares of 10p
Partnership
▇▇▇▇▇▇ Ventures plc 1,416,667 Cumulative Redeemable Preference
Shares of 50p
22
No. of Class of
Member Shares Shares
------ ------ ------
Sumit Venture Fund 708,333 Cumulative Redeemable Preference
One Limited Shares of 50p each
Partnership
Registered office : ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
Accounting reference
date : 31 March
Directors : ▇ ▇ ▇▇▇▇▇▇▇, J ▇▇▇▇▇▇▇▇, J ▇▇▇▇▇,
▇ ▇ ▇▇▇▇▇, ▇ ▇ ▇▇▇▇▇▇▇, ▇ ▇ ▇▇▇▇▇▇▇▇
Secretary : J ▇▇▇▇▇
Auditors : ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Charges and
debentures : Document
Date of
Chargee Creation
------- ----------
Sumit Venture Debenture 13 April 1995
Fund One Limited
Partnership
▇▇▇▇▇▇ Debenture 13 April 1995
Ventures plc
Midland Bank Fixed & 23 May 1995
plc Floating
Charge
Midland Bank Fixed & 3 July 1995
plc Floating
Charge
23
Schedule 3
The Subsidiaries
Part 1
------
Light & Sound Design Limited
----------------------------
Company number : 3014564
Date of Incorporation : 26 January 1995
Authorised share
capital : ,100
Issued share capital : ,2 registered as follows:
No of Class of
Member Shares Shares
------ ------ ------
Light & Sound Design 2 Ordinary
(Holdings) Limited
Registered office : ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇
Accounting Reference
date : 31 March
Directors : M Curbishley, T ▇▇▇, ▇ ▇ ▇▇▇▇▇▇▇, J ▇▇▇▇▇,
▇ ▇ Keighley
Secretary : J ▇▇▇▇▇
Auditors : ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Charges and Date of
debentures Chargee Document Creation
------- -------- --------
Sumit Venture Debenture 13.04.95
Fund One
Limited
Partnership
▇▇▇▇▇▇ Ventures Debenture 13.04.95
24
plc
Midland Bank Fixed & 23.05.95
plc Floating Charge
Part 2
------
Light & Sound Design Inc.
-------------------------
Date of Incorporation : 7 April 1995
Registered Office : ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Authorised share
capital : 1,000,000 of no par value
Issued share capital :
No of Class of
Member Shares Shares
------ ------ ------
Light & Sound Design
(Holdings) Limited 416,000 Common Stock
Accounting Reference
Date : 31 March
Directors : ▇ ▇ ▇▇▇▇▇▇▇
T ▇▇▇▇▇
J ▇▇▇▇▇
W E Hewlett
Secretary : J ▇▇▇▇▇
Auditors : ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
25
Charges : Security Interest dated 13 April 1995 in
favour of ▇▇▇▇▇▇ Ventures PLC
Security Interest dated 13 April 1995
in favour of Sumit Venture Fund One
Limited Partnership
Charge dated 23 May 1995 in favour of
Midland Bank Plc
26
Schedule 4
The Warranties
1 Capacity
1.1 The information contained in the Schedules is true,
complete and accurate in all respects.
1.2 The copy of the memorandum and articles of association of
the Company annexed to the Disclosure Letter is true,
accurate and up-to-date. It has annexed to it copies of
all resolutions and agreements as are required by law to
be annexed to them.
1.3 All the assets of the Company or which it purports to own
(including without limitation those set out on the HITS
listing and the HIREMATE listing annexed to the Disclosure
Letter) are its absolute property and are free of any
Encumbrance. They are not subject to any charge,
mortgage, leasing or hiring agreement, hire-purchase
agreement or agreement for payment on deferred terms.
1.4 The Company is duly organised and validly existing under
the Act. It has full power and authority under the Act
to conduct the business as it is now being conducted to
own or use the properties and assets that it purports to
own or use and to perform the material obligations under
the contracts to which it is a party.
1.5 The Sellers have full power and authority to enter into
the Agreement which will constitute a legally binding
commitment on their part.
1.6 Except as set out in the Disclosure Letter, the execution
delivery and performance of this Agreement will not:-
1.6.1 contravene, (a) any provision of the Memorandum or
Articles of Association of the Company or (b) any
resolution adopted by the Board of Directors or
the shareholders of the Company;
1.6.2 contravene, conflict with or result in a violation
of, or give any Governmental Body or other person
the right to challenge any
27
of the transactions contemplated hereby or to
exercise any remedy or obtain any relief under any
Legal Requirement or any Order to which the
Company or any Seller, or any of the assets owned
or used by the Company may be subject;
1.6.3 contravene, conflict with, or result in a
violation of any of the terms or requirements of,
or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or
modify, any Governmental Authorisation that is
held by the Company or that otherwise relates to
the business of, or any of the assets owned or
used by, the Company;
1.6.4 result in the imposition or creation of any
Encumbrance upon or with respect to any of the
assets owned or used by the Company.
1.7 Except as set out in the Disclosure Letter, the Company
is not required to give any notice to or obtain any
consent from any person in connection with the execution
and delivery of this Agreement.
2 The Accounts
2.1 A true copy of the Accounts is annexed to the Disclosure
Letter.
2.2 The Accounts:
2.2.1 comply with the provisions of the Act;
2.2.2 have been prepared in accordance with generally
accepted accountancy practice in the United
Kingdom;
2.2.3 show a true and fair view of the state of affairs
of the Company as at the Balance Sheet Date and of
the profit or loss of the Company for the
accounting period ended on that date.
2.2.4 value stock and work in progress at the lower of
cost and net realisable value.
2.3 All accounts receivable reflected in the Accounts
represent valid obligations arising from sales
28
actually made or services actually provided in the
ordinary course of business.
2.4 There is attached to the Disclosure Letter a list of all
accounts receivable as at 31 May. The Warrantors are not
aware, having made no enquiry other than of each other,
of any reason why such receivables will not be collected
in the ordinary course of business.
3 Events since the Accounts Date
3.1 Since the Accounts Date the Company has carried on its
business in the ordinary and normal course so as to
maintain the same as a going concern and except as set
out in the Disclosure Letter there has not been any:
3.1.1 increase by the Company in any bonuses, salaries
or other compensation to any shareholder,
director, officer or employee or entry into any
employment, severance or similar contract with
any director, officer or employee earning in
excess of ,30,000 per annum after such increase;
3.1.2 adoption of, or increase in the payments to or
benefits under, any profit sharing, bonus,
deferred compensation, pension, retirement or
other employee benefit plan for or with any
employees of the Company;
3.1.3 entry into, termination of, or receipt of written
notice of termination of any contract, involving
a total remaining commitment by the Company of
,50,000;
3.1.4 material change in the accounting policies used by
the Company;
3.1.5 incurrence of any actual liabilities in excess of
50,000 as a result of any event or transaction or
series of related events or transactions, or
discharge or satisfaction of any Encumbrances,
other than in the ordinary course of business,
payment of any liabilities, other than in the
ordinary course of business, or failure to pay or
discharge when due any liabilities of which the
failure to pay or discharge has caused or will
cause any material damage or risk of material
loss to it or any of its
29
assets or properties (liabilities in this context
includes without limitation any indebtedness,
guarantee, cost, expense, fine or responsibility
in respect of any third party claim or violation
of any legal requirement but shall exclude any
matter relating to the Environment or any matter
for which the Company has compulsory insurance
cover at Completion);
3.1.6 creation by the Company of any guarantee of any
indebtedness for money borrowed, or mortgaging or
pledging of any of its assets or subjecting any
of its assets to any Encumbrance;
3.1.7 Any capital commitments or expenditure in excess
of ,10,000;
3.1.8 dividend or other distribution paid or declared by
the Company;
3.1.9 any material adverse change in the business or
operations of the Company.
4 Legislation
4.1 So far as the Warrantors are aware all necessary licences,
consents, permits and authorities (public and private)
have been obtained by the Company to enable it to carry
on its business in the manner in which it is now carried
on. So far as the Warrantors are aware all such licences,
consents, permits and authorities are valid and
subsisting. The Warrantors know of no reason why any of
them should be suspended, cancelled or revoked the
Disclosure Letter contains details of all such licences,
consents, permits and authorities.
4.2 So far as the Warrantors are aware the Company has
conducted the Business in all material respects in
accordance with all applicable laws and regulations of
the United Kingdom.
4.3 The minute books, stock record books and other records of
the Company, all of which have been made available to the
Buyer, are complete and correct in all material respects
and have been maintained in accordance with all Legal
Requirements. The minute books of the
30
Company contain accurate and complete records of all
meetings held of and corporate action taken by, the
Shareholders, the Boards of Directors and committees of
the Boards of Directors of the Company, and no meeting
of any such Shareholders, Board of Directors or
committee has been held for which minutes have not been
prepared and are not contained in such minute books
except to the extent set forth in clause 4.3.8.
5 Litigation
5.1 No claim of any nature has been made against the Company
which has not been settled in full and there has not
been any and so far as the Warrantors are aware there is
no investigation, decree or judgment of any court
outstanding or anticipated against the Company which has
had or may have a material adverse effect upon the
Company.
5.2 The Company is not at present engaged, whether as
plaintiff or defendant or otherwise, in any legal
action, proceedings or arbitration and is not being
prosecuted for any criminal offence. There are no
circumstances of which the Warrantors are aware likely
to lead to any such claim, legal action, proceedings,
arbitration or prosecution.
5.3 There is no Order to which the Company, or any of the
assets owned or used by the Company, is subject.
5.4 No Seller is subject to any Order that relates to the
business of, or any of the assets owned or used by, the
Company.
5.5 So far as the Warrantors are aware, no officer, director
or employee of the Company is subject to any Order that
prohibits such officer, director, or employee from
engaging in or continuing any conduct, activity or
practice relating to the business of the Company.
6 Trading and associated matters
6.1 The Company does not use on its letterhead, brochures,
sales literature or vehicles or otherwise carry on its
business under a name other than its corporate name.
6.2 There are no monies owed by the Company to the Sellers
nor any monies owed by the Sellers to the Company.
31
6.3 Not more than 10% of the aggregate amount of all the
sales of the Company are made to any single source.
6.4 The Disclosure Letter contains details of:
6.4.1 each contract not entered into in the ordinary
course of business that involves performance of
services or delivery of goods or materials by
the Company of an amount or value in excess of
,50,000;
6.4.2 each contract that was not entered into in the
ordinary course of business and that involves
expenditure or receipt by the Company in excess
of ,50,000;
6.4.3 each collective bargaining agreement and other
contract to or with any labour union or other
employee representative of the Company's
employees;
6.4.4 each contract containing covenants that in any
way purport to restrict the business activity
of the Company or any Affiliate of the Company
or limit the freedom of the Company or any
Affiliate of the Company to engage in any line
of business or to compete with any person;
6.4.5 each contract providing for payments by the
Company to or to the Company by any person
based on sales, purchases or profits, other
than direct payments for goods or services;
6.4.6 each power of attorney granted by the Company
that is currently effective and outstanding;
6.4.7 each contract entered into other than in the
ordinary course of business that contains or
provides for an express undertaking by the
Company to be responsible for consequential
damages;
6.4.8 each written warranty, guaranty and other
similar undertaking with respect to contractual
performance extended by the Company other than
in the ordinary course of business; and
32
6.4.9 each contract to which the Company is a party
involving a sharing of profits losses costs or
liabilities by the Company with any other
person.
6.5 Except as set out in the Disclosure Letter:
6.5.1 so far as the Warrantors are aware having made
no enquiry, no officer, director or employee,
of the Company is bound by any contract that
purports to limit the ability of such officer,
director, or employee, to (a) engage in or
continue any conduct, activity or practice
relating to the business of the Company, or (b)
assign to the Company or to any other person
any rights to any invention, improvement or
discovery.
6.6 Except as set out in the Disclosure Letter, each such
contract required to be set out in paragraph 6.4 above
is in full force and effect and the Company has not
given to or received from any other person, any written
notice regarding any material default under any such
Contract and the Warrantors are not aware of any
circumstances likely to cause any such notice to be
served.
6.7 There are no current renegotiations of any material
amounts paid or payable to the Company (being amounts in
excess of ,50,000) under current or completed contracts
with any person and, so far as the Warrantors are aware,
no such person has made written demand for such
renegotiation.
6.8 The Contracts relating to the sale, design, manufacture
or provision of products or services by the Company have
been entered into in the ordinary course of business and
have been entered into without the commission of any act
alone or in concert with any other person, or any
consideration having been paid or promised, that is or
would be in violation of any Legal Requirement.
6.9 So far as the Warrantors are aware having made no enquiry
the Company as at Completion has no actual or contingent
liabilities or obligations other than liabilities or
obligations provided for in the
33
Accounts or liabilities in respect of goods and services
supplied to the Company in the ordinary course of
business. Liabilities in this context includes without
limitation any indebtedness, guarantee, cost, expense
fine or responsibility other than any relating to the
Environment or any for which the Company has compulsory
insurance cover as at Completion.
7 Employees
7.1 So far as the Warrantors are aware the Company has
complied with all obligations imposed by statute,
regulation, contract and common law relating to the
Employees and the Company has maintained adequate and
suitable records regarding their service.
7.2 The Warrantors have not received any notice of termination
from any of the Employees in respect of their contracts
of employment.
7.3 There are not in existence any service agreements with
directors, officers or employees of the Company which
cannot be terminated by 3 months' notice or less without
giving rise to any claim for damages or compensation
(other than a statutory redundancy payment).
7.4 The Employees have been paid all sums to which they are
entitled from the Company.
7.5 There are no disputes between the Company and the
Employees and so far as the Warrantors are aware there
are no facts, matters or circumstances likely to give
rise to any such disputes or any claim by any of the
Employees or any former employee of the Company.
7.6 The Disclosure Letter contains a complete and accurate
list of the following information for each employee or
director of the Company, employer; name; job title;
current salary and participation under any employee
benefit plan, including any pension plan.
7.7 Since the date of the Company's incorporation, it has not
been and is not currently a party to any collective
bargaining or other labour contract, and there has not
been and there is not presently pending or existing, any
strike, slowdown, picketing or work stoppage.
34
7.8 The Warrantors are not aware of any pending grievance or
dispute that could give rise to any strike, slow down,
picketing or work stoppage or disruption.
8 Insurances
8.1 The Disclosure Letter contains full particulars of all
insurance policies validly effected by the Company.
8.2 The Disclosure Letter sets out a summary of the claims
history under each policy.
8.3 Except as set out in the Disclosure Letter:
8.3.1 All policies to which the Company is a party or
that provide coverage to the Company, or any
director or officer of the Company:-
8.3.1.1 are valid and existing;
8.3.1.2 and the premiums in respect of them
are fully paid up to date
and the Company has duly performed all its obligations
under such policies.
9 Intellectual Property
9.1 The details of all Intellectual Property owned by the
Company are contained in the Disclosure Letter and are
accurate in all material respects and the Company has
complied with all formal Legal Requirements relating to
the maintenance of or application for the registration
of such Intellectual Property.
9.2 So far as the Warrantors are aware none of the
Intellectual Property used by the Company infringes the
rights of any third party and no third party is
currently infringing any of the Intellectual Property
used by the Company and the Warrantors are not aware of
any circumstances likely to give rise to any such
infringement.
9.3 The Company is not under any obligation to make payment
to third parties in respect of the Intellectual Property
used by it.
35
10 The Properties
10.1 The Properties comprise all the land and premises that
the Company owns, occupies or otherwise uses.
10.2 The Company has in its possession all title deeds and
agreements to which it is a party and other documents
which it owns or which ought to be in its possession,
and these are properly executed and stamped.
10.3 With respect to the real property that is leased by the
Company:
10.3.1 True, complete and up-to-date copies of every
lease and sublease to which the Company is a
tenant or subtenant ("the Leases") are annexed
to the Disclosure Letter.
10.3.2 The Company has paid the rents due under the
Leases and has not received written notification
from any Landlord of the Leases that it is in
breach of any obligation contained in the Leases.
11 Shares
11.1 No person has the right (whether exercisable now or in
the future and whether contingent or not) to call for the
issue or transfer of any share or loan capital of the
Company under any option or other agreement (including,
without limitation, conversion rights).
11.2 The Company has never had any subsidiaries other than the
Subsidiaries and the Company owns all of the issued and
outstanding securities of the Subsidiaries free from any
Encumbrance.
11.3 There are no rights of pre-emption over or restrictions
relating to the transfer of the Sale Shares (whether
contained in the Company's articles of association or
otherwise) which could prevent their sale by the Sellers
to the Buyer pursuant to this Agreement.
11.4 All of the outstanding equity securities of the Company
have been validly issued in accordance with all
applicable Legal Requirements and are fully paid.
36
12 Taxation
12.1 Definitions
For the purposes of the warranties in this paragraph 0
the following definitions have the following meanings:
12.1.1 "CAA" means the Capital ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇;
12.1.2 "CGTA" means the Capital Gains Tax ▇▇▇ ▇▇▇▇;
12.1.3 "Company" shall mean Light & Sound Design
Holdings Limited and Light & Sound Design
Limited that shall not be deemed to include a
reference to LSD Inc.
12.1.4 "TA" means the Income and Corporation Taxes ▇▇▇
▇▇▇▇;
12.1.5 "TCGA" means the Taxation of Chargeable Gains
▇▇▇ ▇▇▇▇;
12.1.6 "VAT" means value added tax; and
12.1.7 "VATA" means the Value Added Tax ▇▇▇ ▇▇▇▇.
12.2 Capital gains - appropriation to trading stock
The Company has not made any claim or election under
section 161(3) of the TCGA.
12.3 Capital gains
12.3.1 No chargeable gain would arise on the disposal
by the Company of any asset where such disposal
is acquired since the Accounts Date for a
consideration equal to the consideration
actually given for the acquisition of such asset
(disregarding any indexation relief);
12.3.2 No chargeable gain could arise on the disposal
by the Company of any asset (the ownership of
which was reflected in the Accounts) for a
consideration equal to the value attributed to
that asset in the Accounts (disregarding any
indexation relief).
37
12.4 Close companies
12.4.1 The Company is a close company.
12.4.2 The Company is not and has never been a close
investment-holding company within the meaning
of section 13A of the TA;
12.4.3 No distribution within section 418 of the TA
has been made by the Company.
12.5 Capital allowances
12.5.1 All capital expenditure incurred by the Company
since the Accounts Date has qualified for
capital allowances. Such allowances have been
made in taxing the Company's trade;
12.6 Distributions
No distribution within the meaning of sections 209 or 210
of the TA (other than dividends shown in its audited
accounts) has been made by the Company since 6 April 1965.
The Company is not bound to make any such distribution.
12.7 The Company is a member of a group for VAT purposes.
12.8 Purchase of own shares
The Company has not purchased, redeemed or repaid nor
agreed to purchase, redeem or repay any of its own shares
in circumstances to which section 219 of the TA applies.
12.9 All returns, computations, deductions and payments which
should be, or should have been, made by the Company for
any taxation purpose have been made.
13 Pensions
13.1 The Company neither operates nor is a participant in any
pension or retirement benefit arrangements other than the
Pension Schemes.
13.2 The Pension Scheme is an exempt approved scheme within
section 592(1) of the Taxes Act or is capable of
receiving such exempt approval. The Warrantors are
38
not aware of any matter which could result in the
withdrawal or refusal of that approval.
13.3 The Pension Scheme is contracted-out scheme for the
purposes of Part III of the Pension Scheme ▇▇▇ ▇▇▇▇. The
Warrantors are not aware of any matter which could result
in the Occupational Pensions Board withdrawing its
contracted-out status.
13.4 All contributions payable by the Company and all
contributions due from members to the Pension Scheme have
been made at the rate stipulated by the actuary to the
Pension Scheme in the most recent actuarial investigation
of the Pension Scheme.
13.5 True copies of the Trust Deeds and Rules and ancillary
deeds of the Pension Scheme are attached to the Disclosure
Letter.
13.6 The Disclosure Letter sets forth a complete list of all
pension and other employee benefit, fringe benefit and
compensation plans and arrangements covering directors,
employees, former directors or employees, or their
respective dependents, of LSD, Inc. (the "Plans"). The
Plans have been administered in accordance with their
terms; may be amended or terminated by the Company at
any time without notice or approval and without any
liability other than for benefits previously accrued as
of the amendment or termination date; and, if intended
to be tax qualified, are and have always been so tax
qualified and have received favourable rulings to this
effect covering such Plans since their inception.
13.7 There are no multi-employer or multiple employer plans
(as defined in the U.S. Internal Revenue Code and/or the
U.S. Employee Retirement Income Security Act ("ERISA")
and related laws and regulations). No Plan has been
terminated and no reportable event (as defined in ERISA
and related laws and regulations) has occurred with
respect to any Plan.
39
14 Related Persons
Except as set out in the Disclosure Letter, no Seller or any
Related Person of any Seller or of the Company has, or since the
date of incorporation of the company has had, any interest in any
property (whether real, personal or mixed and whether tangible or
intangible), used in or pertaining to the Company's business.
Except as set forth in the Disclosure Letter, no Seller or any
Related Person of any Seller or of the Company is, or since the
date of incorporation of the Company has owned (of record or as a
beneficial owner) an equity interest or any other financial or
profit interest in, a person that has (a) had business dealings or
a material financial interest in any transaction with the Company
or (b) engaged in competition with the Company with respect to any
line of the products or services of the Company (a "Company
Competing Business") in any market presently served by the Company
except for passive investments in less than three percent of the
outstanding share capital of any Company Competing Business that is
publicly traded on any recognised exchange or in an
over-the-counter market or any investments of those Sellers listed
in part 2 of Schedule 1. Except as set out in the Disclosure
Letter, no Seller or any Related Person of any Seller or of the
Company is a party to any contract with, or has any claim or right
against, the Company other than any Contract of Employment.
15 Environment
The Company has complied with and is in compliance with all
applicable Environmental Laws and there is no pending, or so far as
the Warrantors are aware, threatened claim pursuant to any breach
prior to Completion by the Company of any Environmental Law with
respect to or relating to any of the properties or assets (whether
real, personal or mixed) in which the Company has or has had an
interest or for which the Company is otherwise responsible and
which could reasonably be expected to have a material adverse
effect on the Company's financial condition, results of operations
or business.
16 Disclosure Letter
So far as the Warrantors are aware, the contents of the Disclosure
Letter fairly represent exceptions to those Warranties to which
they relate and are not knowingly or deliberately misleading.
40
Schedule 5
Limitations on Liability
17 The provisions of this schedule apply despite (and prevail over)
any other provision of this agreement or the Tax Deed and are in
addition and without prejudice to the Buyer's general legal
obligation to mitigate any loss or damage it may suffer.
18 The Buyer:
18.1 confirms that, in entering into this agreement, it relies
on no warranties, representations, covenants,
undertakings, indemnities or other information except to
the extent set forth in the Transaction Documents;
18.2 agrees that (except as expressly set out or referred to
in the Transaction Documents) no information, advice or
assurances it or anyone on its behalf may have received
from the Warrantors, their advisors or anyone else on
their behalf in relation to the Company or otherwise in
relation to this agreement or its negotiation may be
legally relied upon in any manner; and
18.3 waives any rights it may have in respect of any
information, advice or assurance it may have received
other than that expressly set out or referred to in the
Transaction Documents; and
18.4 agrees that rescission shall not be available as a remedy
for any breach of this agreement and agrees not to claim
that remedy;
19 The Buyer shall not be entitled to make a Claim if and to the extent
that the facts or information upon which it is based are fairly
disclosed in the Disclosure Letter.
20 The Buyer shall not be entitled to make a Claim to the extent that:
20.1 provision or reserve together with a note disclosing the
matter to which it relates (or the existence or
possibility of any resulting liability) has been made in
the Accounts; or
20.2 provision or reserve together with a note disclosing the
matter to which it relates has been made in the Accounts
which is insufficient by reason only of any increase in
41
rates of Tax or change in the law after the date of this
agreement having retrospective effect.
21 The Buyer shall not be entitled to make a Claim to the extent that
the matter to which it relates:
21.1 is recoverable by the Company from insurers;
21.2 would not have arisen but for any matter or thing done or
omitted to be done by the Buyer or the Company on or after
Completion save that the Buyer shall be entitled to claim
to the extent that any existing liability of the
Warrantors is merely increased as a result of any such
act or omission by the Buyer provided that the Buyer
shall bear any increase in such liability;
21.3 arises as a result of the passing or amendment of any
legislation (including any subsidiary legislation) after
Completion with retrospective effect.
22 The Buyer shall have no right to recover in respect of any Claim or
Tax Claim unless and until the aggregate liability of the
Warrantors (but for this paragraph) in respect of all Claims and
Tax Claims would exceed $100,000, but, if such aggregate liability
should exceed that sum, the Warrantors shall be liable for the
full aggregate amount of the Claims and Tax Claims and not only
for the amount by which the Claims and Tax Claims exceeds that
sum.
23 The Buyer shall have no right to recover in respect of any
individual Claim or Tax Claim in respect of which the aggregate
liability of the Warrantors (but for this paragraph) would not
exceed $10,000 and such Claim or Tax Claim shall not be counted in
calculating the aggregate liability of the Warrantors for the
purposes of paragraph 6 provided that any series of related or
similar Claims or Tax Claims arising out of the same subject
matter shall for the purpose of this paragraph 7 be deemed to be a
single Claim or Tax Claim.
24 The maximum liability of each Warrantor pursuant to this Agreement
and the Tax Covenant shall not exceed the following amounts:-
▇▇▇▇ ▇▇▇▇▇▇▇ $1,451,615
▇▇▇ ▇▇▇▇▇ $1,161,292
▇▇▇▇ ▇▇▇▇▇ $ 725,807
▇▇▇▇ ▇▇▇▇▇▇▇ $ 725,807
▇▇▇▇▇ ▇▇▇ $ 435,484
▇▇▇▇ ▇▇▇▇▇▇▇▇ $ 435,484
42
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ $ 435,484
▇▇▇▇▇ ▇▇▇▇▇ $ 435,484
25 The Warrantors shall not be liable in respect of any Claim or Tax
Claim unless particulars of that Claim or Tax Claim (with
sufficient detail to enable the Warrantors to identify the basis
of the Claim or Tax Claim and the Buyer's best estimate of the
quantum of the Claim or Tax Claim and how this has been
quantified) are given in writing to the Warrantors in respect of
any Claim or Tax Claim, except to the extent set forth in the next
succeeding proviso under the Warranties not later than 31st
December 1999 and, in respect of any Tax Claim under the Tax Deed,
not later than the sixth anniversary of the Completion Date.
26 The Buyer will give notice of a claim to the Warrantors as soon as
reasonably practicable after becoming aware of any matter
entitling it to bring a Claim provided that if failure or delay to
so notify the Warrantors results in the Warrantors being
prejudiced, the Warrantors' liability shall be reduced to the
extent of that prejudice.
27 Any Claim or Tax Claim shall be unenforceable and be deemed waived
unless proceedings in respect of it are issued and served within
12 months of the date of service of notice of that Claim or Tax
Claim on the Warrantors under paragraph 9 (or if later in the case
of a Tax Claim 3 months after any matter pursued pursuant to the
provisions of clause 6 of the Tax Deed is concluded).
28 If any group Company or the Buyer is or becomes entitled to be
indemnified by or to recover from any other person (including any
Tax or other authority) in respect of a matter which would (apart
from this paragraph) give rise to a Claim, the Buyer shall procure
that:
28.1 the Warrantors are notified as soon as practicable after
the Company or the Buyer becomes aware of the possible
entitlement;
28.2 subject to the Warrantors indemnifying the Buyer to its
reasonable satisfaction against the costs incurred, all
reasonable steps are taken to enforce the indemnity or
right of recovery (and during such enforcement activity
the time period specified in paragraph 9 shall be
suspended)
29 If the Company or the Buyer becomes entitled to recover any sum
from any person in respect of the subject matter of any Claim in
respect of which the Warrantors have made any payment to the
43
Buyer, the provisions of paragraph 11 of this schedule shall apply
mutatis mutandis to that entitlement and the Buyer shall pay to
the Warrantors immediately after receipt by the Buyer or any group
company the amount of the liability of the person (if any) which
is established or agreed a sum equal to the lesser of:
29.1 any amount any group Company or the Buyer receives (net
of all costs and expenses reasonably and properly
incurred by it in pursuing the claim against the other
person); and
29.2 the amount paid by the Warrantors in respect of the Claim
30 The Warranties are given on a several basis (save that for the
avoidance of doubt each Warrantor shall be deemed to have the
knowledge of each other Warrantor) and in respect of any Claim or
Tax Claim the Buyer shall only be entitled to recover from each
Warrantor that percentage of the Claim as is set against their
respective names in Part 1 Schedule 1.
31 Payments made by the Warrantors to the Buyer in respect of Claims
and Tax Claims shall constitute a repayment of and a reduction in
the Consideration.
32 The Buyer shall not be entitled to make any Claim to the extent
that the facts or matters giving rise to the Claim are outside the
actual or constructive knowledge of all the Warrantors after
having made all reasonable enquiries and investigation.
33 For the avoidance of doubt the Warrantors shall not be deemed to be
aware of (save where the Warrantors otherwise have knowledge of
such matters), and the Buyer acknowledges that no enquiries have
been made of, any matter which would be revealed by searches at HM
Land Registry, HM Land Charges Registry, all relevant Local Land
Charges Registries and matters which would have been revealed by
the replies to enquiries of all relevant Local Authorities in form
CON29A.
44
Schedule 6
Properties
Address Parties to Lease Term Current Rent
24328 Vermont S Espirit ▇▇▇▇▇ Inc. Monthly
Avenue, Harbor dba Mini Suites (1)
City, LSD, Inc (2)
California
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 1 January 1996
Drive, Newbury Partners Limited (1) to 31 December
Park, LSD, Inc (2) 2002
California
1600 ▇▇▇▇ ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ 3 years from 1
Quaker ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ June 1996
Boulevard, ▇▇▇▇▇ ▇▇▇▇▇▇ &
Nashville, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (1)
Tennessee LSD, Inc (2)
Part of Ground Faram Limited (1) 6 January 1997
Floor at 163 LSD (2) LSD, Inc (3) to 22 March 2003
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇
201 Coventry The Trustees of the 20 years from
Road, Small Light & Sound Design 11 December 1987
Heath, Limited Self
Birmingham Administered Pension
Scheme (1) Light &
Sound Design Limited
(Company number
1472288) (2)
(assigned to LSD on
13 April 1995)
SIGNED and delivered as a deed ) /s/ ▇▇▇▇▇ ▇▇▇▇▇
by ▇▇▇▇ ▇▇▇▇▇▇▇ acting by his ) for ▇▇▇▇ ▇▇▇▇▇▇▇
duly authorised attorney in )
the presence of: )
)
Witness
45
Signature : /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Name : ▇▇▇▇▇▇▇ ▇▇▇▇
Occupation : Solicitor
Address : Birmingham
SIGNED and delivered as a deed )
by ▇▇▇ ▇▇▇▇▇ acting by his ) /s/ ▇▇▇▇▇ ▇▇▇▇▇
duly authorised attorney in ) for ▇▇▇ ▇▇▇▇▇
the presence of: )
)
Witness
Signature : /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Name : ▇▇▇▇▇▇▇ ▇▇▇▇
Occupation : As above
Address : As above
SIGNED and delivered as a deed )
by ▇▇▇▇ ▇▇▇▇▇ acting by his ) /s/ ▇▇▇▇▇ ▇▇▇▇▇
duly authorised attorney in ) for ▇▇▇▇ ▇▇▇▇▇
the presence of: )
)
Witness
Signature : /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Name : ▇▇▇▇▇▇▇ ▇▇▇▇
Occupation : As above
Address : As above
SIGNED and delivered as a deed ) /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
by ▇▇▇▇ ▇▇▇▇▇▇▇ in the )
presence of: )
Witness
Signature : /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Name : ▇▇▇▇▇▇▇ ▇▇▇▇
Occupation : As above
Address : As above
SIGNED and delivered as a deed ) /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
by ▇▇▇▇ ▇▇▇▇▇▇▇▇ in the )
presence of: )
Witness
Signature : /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Name : ▇▇▇▇▇▇▇ ▇▇▇▇
Occupation : As above
Address : As above
SIGNED and delivered as a deed ) /s/ ▇▇▇▇▇ ▇▇▇▇▇
by ▇▇▇▇▇ ▇▇▇ acting by his ) for ▇▇▇▇▇ ▇▇▇
duly authorised attorney in )
the presence of:
Witness
Signature : /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Name : ▇▇▇▇▇▇▇ ▇▇▇▇
Occupation : As above
Address : As above
SIGNED and delivered as a deed )
by ▇▇▇▇▇ ▇▇▇▇▇ in the ) /s/ ▇▇▇▇▇ ▇▇▇▇▇
presence of: )
Witness
Signature : /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Name : ▇▇▇▇▇▇▇ ▇▇▇▇
Occupation : As above
Address : A above
SIGNED and delivered as a deed )
by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ in the ) /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
presence of: ) for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Witness
Signature : /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Name : ▇▇▇▇▇▇▇ ▇▇▇▇
Occupation : As above
Address : As above
SIGNED and delivered as a deed ) /s/ ▇▇▇▇▇ ▇▇▇▇▇
by ▇▇▇▇ ▇▇▇▇▇▇▇▇ acting by his ) for ▇▇▇▇ ▇▇▇▇▇▇▇▇
duly authorised attorney in )
the presence of:-
Witness
Signature : /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Name : ▇▇▇▇▇▇▇ ▇▇▇▇
Occupation : As above
Address : As above
EXECUTED by ▇▇▇▇▇▇ VENTURES )
PLC acting by its duly ) /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
authorised signatory in the )
presence of: )
Witness
Signature : /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Name : ▇▇▇▇▇▇▇ ▇▇▇▇
Occupation : As above
Address : As above
EXECUTED by SUMIT VENTURE FUND )
ONE LIMITED PARTNERSHIP acting ) /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
by its duly authorised )
attorney in the presence of: )
Witness
Signature : /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Name : ▇▇▇▇▇▇▇ ▇▇▇▇
Occupation : As above
Address : As above
EXECUTED by PRODUCTION )
RESOURCE GROUP LLC acting by )
its duly authorised attorney ) /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
in the presence of: )
Witness
Signature :
Name :
Occupation :
Address :