DATED 28 January 2000
(1) AUTHORISZOR INC.
(2) THE PERSONS NAMED IN THE FIRST SCHEDULE
(3) XXXXXX XXXXXXX LIMITED
PLACING AGREEMENT relating to shares of common stock par value US$0.01 per share
in AUTHORISZOR INC.
TITMUSS SAINER DECHERT
0 Xxxxxxxxx' Xxx
Xxxxxx XX0X 0XX
Date: 28.1.2000
Ref: C353/062581
INDEX
Clause Page number
Recitals 1
1. Definitions and interpretation 2
2. Conditions 8
3. Agency 9
4. Placing 10
5. The Option 11
6. Allotment 12
7. Commissions and expenses 13
8. Warranties 14
9. Indemnities 15
10. Appointment of financial adviser 20
11. Further agreements of the Company 20
12. Termination 24
13. Remedies and enforcement 24
14. Further agreements regarding the Placing 25
15. Whole agreement 27
16. Time of the essence 28
17. Notices 28
18. Governing Law 29
Schedules
1. The Directors 32
2. Warranties 33
3. Documents to be delivered 53
4. Terms and conditions of the Option 52
Appendices
A. Selling restrictions for offers and
sales outside the USA 54
B Business Plan
THIS AGREEMENT is made 28 January, 2000
BETWEEN:
(1) AUTHORISZOR INC. a company incorporated and registered in the State of
Delaware, USA and whose registered office is at 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000 XXX ("Company");
(2) THE SEVERAL PERSONS whose names and addresses are set out in the second
schedule (each a "Director" and together the "Directors"); and
(3) XXXXXX XXXXXXX LIMITED a company registered in England and Wales with
number 2316630 and whose registered office is at Xxx Xxxxxxxx, Xxxxx Xxxx
Xxxxx, Xxxxxx XX0X 0XX ("Xxxxxx Xxxxxxx").
RECITALS
(1) The Company was originally registered as a Colorado corporation on 30
January 1989 under the name Starlight Acquisitions Inc. On 10 May 1996, the
Company acquired Toucan Mining Limited, the holding company of a mining
group operating in South America. On 29 July 1996, the Company was merged
into a newly formed holding company, which was registered as a Delaware
corporation on 22 July 1996 under the name Toucan Gold Corporation.
Effective as of 15 July 1999, Toucan Mining Limited sold its only operating
subsidiary to Minmet plc in consideration for the issue of Minmet plc
shares, the grant of certain warrants over Minmet plc shares and other
consideration. On 27 January 2000, the Company sold the whole of the issued
share capital of Toucan Mining plc (formerly Toucan Mining Limited) to
Golden Ridge Group Limited for an aggregate consideration comprising
(pound)500,000.
(2) On 22 July 1999, the Company acquired the whole of the issued share capital
ITIS Technologies Limited, whose business comprised the basis of the
Group's current business. On 25 August 1999, the name of the Company was
changed to Authoriszor Inc. and the name of ITIS Technologies Limited was
changed to Authoriszor Limited.
(3) On 12 January 2000, the Company's newly formed wholly owned subsidiary,
Authoriszor Holdings Limited, acquired the whole of the issued share
capital of Authoriszor Limited on the same date.
(4) On 27 January 2000, Authoriszor Holdings Limited agreed to subscribe for
25.1 per cent. of the issued share capital of WRDC Limited with an option
to acquire the balance of its issued share capital on the terms and subject
to the conditions of the Acquisition Agreement. The Acquisition Agreement
is conditional upon the Placing and is not otherwise capable of being
terminated by the parties to it (other than by Authoriszor Holdings
Limited).
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(5) The Company has agreed to issue 1,850,000 Shares to Placees who are not US
Persons (as defined in Regulation S) procured by Xxxxxx Xxxxxxx at the
Placing Price and to issue the Investment Memorandum to such Placees (and
to other potential or proposed placees identified by Xxxxxx Xxxxxxx).
Xxxxxx Xxxxxxx has conditionally agreed to procure such Placees. The
Company shall apply the proceeds of the Placing as described in the
Investment Memorandum and (except with the prior approval in writing of
Xxxxxx Xxxxxxx) substantially in accordance with the Business Plan.
(6) At the date of this agreement the Company has an authorised share capital
of 30,000,000 shares of common stock, par value US$0.01 each, and 2,000,000
shares of preferred stock, par value US$0.01 each, of which o shares of
common stock are in issue and, save for the outstanding warrants over o
shares of common stock and the outstanding options over o shares of common
stock disclosed in the Information Memorandum, has not granted or created
or agreed to grant or create any options or warrants or other rights in
respect of any part of its unissued share capital (save for the Option
referred to in clause 5 of this agreement).
1. DEFINITIONS AND INTERPRETATION
In this agreement (including the schedules hereto):
1.1 the following expressions shall, except where the context otherwise
requires, have the meanings set out below:
"Accountants" means Xxxxx Xxxxxxxx of St. Xxxxx Centre, 000
Xxxxxx Xxxxxx, Xxxxx, Xxxx Xxxxxxxxx XX0 0XX
"Accounts Date" means 30 June 1999;
"Acquisition" means the subscription for shares in WRDC Limited by
Authoriszor Holdings Limited pursuant to the Acquisition
Agreement;
"Acquisition Agreement" means an agreement dated 21 January 2000
between (1) Authoriszor Holdings Limited (2) WRDC Limited (3) the
shareholders of WRDC Limited and (4) the Company relating to the
subscription by Authoriszor Holdings Limited for shares in WRDC
Limited;
"Affiliate" means in relation to a specified person a person who,
directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with, the
person specified;
"Agreed Form" means, in relation to any document, in a form
previously agreed and signed or initialled by or on behalf of the
Company and Xxxxxx Xxxxxxx for the purposes of identification;
"Allotment Date" means the date of allotment of the Placing Shares
which is currently expected to be 18 February 2000;
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"Audited Accounts" means the audited consolidated balance sheets
of the Group for the year ended on the Accounts Date and the
audited consolidated profit and loss accounts and audited cash
flow statements of the Group for the financial periods ended on
the Accounts Date (including all related notes and directors' and
auditors' reports);
"Xxxxxx Xxxxxxx'x UK Lawyers" means Titmuss Sainer Dechert of 2
Xxxxxxxxx' Xxx, Xxxxxx XX0X 0XX;
"Board" means the board of directors of the Company;
"Business Day" means a day, other than a Saturday or Sunday, on
which banks are open for ordinary business in London;
"Business Plan" means the Company's business plan as at the date
of this agreement, a copy of which initialled by the Company and
Xxxxxx Xxxxxxx is attached as appendix "B";
"Companies Act" means the UK Companies Xxx 0000 as amended;
"Company's UK Lawyers" means Xxxxxxx Suddards of 0 Xxxx Xxxx,
Xxxxx XX0 0XX;
"Company's US Lawyers" means Jenkens and Xxxxxxxxx, l.p.c., of
0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx Xxxxx 00000;
"Condition Date" means the first date on which any of the events
referred to in clause 2.4 occurs;
"Conditions" the conditions set out in clause 2.1; and "Condition"
shall mean any one of them or, where so specified, any particular
one of them;
"control" means the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of
a person, whether through the ownership of voting securities, by
contract, or otherwise;
"Engagement Letter" means the engagement letter dated 14 December
1999 between Xxxxxx Xxxxxxx and the Company;
"Engagement Term" has the meaning given to that expression in
clause 10.3;
"Exchange Act" means the US Securities Exchange Act of 1934, as
amended;
"FSA" means the UK Financial Services Xxx 0000;
"Group" means the Company and its Subsidiaries;
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"Group Company" means the Company or any of its Subsidiaries;
"Indemnified Persons" means Xxxxxx Xxxxxxx and its group
undertakings and the respective directors, officers, agents and
employees of Xxxxxx Xxxxxxx and its group undertakings and each
person who controls Xxxxxx Xxxxxxx or any of its group
undertakings; and in this definition the expression "group
undertaking" shall have the meaning set out in section 259(5) of
the Companies Act;
"Information Memorandum" means the information memorandum to be
dated the same date as this agreement prepared by Xxxxxx Xxxxxxx
in connection with the Placing;
"Intellectual Property" includes (i) patents, trade marks,
registered designs, database rights, domain names and any
applications for any of the foregoing, and (ii) copyright,
know-how, design rights and analogous rights, trade and business
names, rights in confidential information, in each case howsoever
arising and including any right or interest in any of the
foregoing;
"Legal Due Diligence Questionnaire" means the legal due diligence
questionnaire prepared by Xxxxxx Xxxxxxx'x UK Lawyers and all
supplemental written questions sent to the Company or its advisers
by Xxxxxx Xxxxxxx'x advisers;
"Listed Countries" means Belgium, France, Italy, Switzerland and
the United Kingdom;
"Lock-up Agreements" means the lock-up agreements in the Agreed
Form entered into by the Company and Xxxxxx Xxxxxxx with those
directors of the Company who are directly or indirectly
beneficially interested in Shares as at the date of this
agreement;
"Management Accounts" means the unaudited consolidated monthly
balance sheets of the Group for the period from 30 June 1999 to 31
December 1999;
"NASD" the North American Association of Securities Dealers;
"Nasdaq NMS" means the NASD Automated Quotation National Market
System based in the USA;
"Option" has the meaning given to that expression in clause 5.1;
"Option Shares" has the meaning given to that expression in clause
5.1;
"Placees" means the institutional and other investors in the
Listed Countries selected by Xxxxxx Xxxxxxx as subscribers for
Placing Shares under the Placing;
"Placing" means the placing by Xxxxxx Xxxxxxx on behalf of the
Company of the Placing Shares with Placees on the terms of this
agreement and the Placing Documents;
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"Placing Date" means the date on which the Placing takes place
which is expected to be on or about 16 February 2000; "Placing
Documents" means the Information Memorandum, the Placing Letter
and the Press Announcement;
"Placing letter" means the letter from Xxxxxx Xxxxxxx to each of
the Placees;
"Press Announcement" means the press announcement in the Agreed
Form relating to the Placing and the Acquisition;
"Placing Price" means the price per Placing Share notified to the
Company (after consultation therewith) by Xxxxxx Xxxxxxx on or
before the Placing Date which shall be such price as may be
reasonably determined by Xxxxxx Xxxxxxx based upon the indicative
price range and the other criteria set out in the Information
Memorandum;
"Placing Shares" means the 1,850,000 unissued Shares subject to
the Placing;
"Properties" means the properties identified as being owned or
occupied by the Group in the Information Memorandum;
"Registration Rights Agreement" means the registration rights
agreement in respect of the Placing Agreement in the Agreed Form
to be entered into by the Company pursuant to this agreement;
"Regulation S" means Regulation S (17 C.F.R. 230.901 through 905,
inclusive) promulgated by the SEC under the Securities Act;
"Regulations" means the UK Public Offers of Securities Regulations
1995, as amended;
"SEC" means the US Securities and Exchange Commission;
"Securities Act" means the US Securities Act of 1933, as amended;
"Shares" means shares of common stock, par value US$0.01 each, in
the Company, whether in issue as at the date of this agreement or
to be issued as Placing Shares under the Placing;
"Stock Plan" has the same meaning as in the Information Memorandum;
"Subsidiaries" means the Subsidiary Undertakings of the Company
referred to in the Information Memorandum; and "Subsidiary" shall
mean any of them;
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"Subsidiary Undertakings" means any "subsidiary undertaking" of
the Company from time to time (within the meaning given to that
expression by section 258 of the Companies Act); and the
expression "Subsidiary Undertaking" means any one or more of them;
"Tax" "Taxes" or "Taxation" has the meaning given to those
expressions in warranty 7.1;
"Termination Date" has the meaning given to that expression in
clause 12.4;
"UK" means the United Kingdom of Great Britain and Northern
Ireland;
"UK Legal Comfort Letter" means a letter dated as at the date of
this agreement from the Company's UK Lawyers addressed to Xxxxxx
Xxxxxxx and the Company in the Agreed Form;
"US" or "USA" means the United States of America;
"US Legal Comfort Letter" means a letter dated as at the date of
this agreement from the Company's UK Lawyers addressed to Xxxxxx
Xxxxxxx and the Company in the Agreed Form;
"US GAAP" means generally accepted accounting principles and
practices in the USA;
"Verification Notes" means the verification notes in the Agreed
Form dated 28 January 2000 in relation to the information
contained in the Information Memorandum;
"Warranties" means the warranties contained in clause 8 and in
the second schedule; and
"Warrantors" the Company and the Directors.
1.2 words and expressions defined in the Information Memorandum bear the same
meanings in this agreement unless otherwise defined in this agreement;
1.3 any reference to any recital, clause or schedule (other than to a schedule
to a statutory provision) is a reference to a recital, clause of or
schedule to this agreement and the recitals and schedules form part of and
are deemed to be incorporated in this agreement;
1.4 any reference to a statute or statutory provision includes a reference to
that provision as amended, re-enacted or replaced and any regulations or
orders made under such provisions from time to time, in each case before
the date of this agreement;
1.5 any reference to persons includes a reference to firms, corporations or
unincorporated associations;
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1.6 any reference to the singular includes a reference to the plural and vice
versa and any reference to any gender includes a reference to each other
gender;
1.7 any agreement, warranty, representation, indemnity, covenant or undertaking
on the part of two or more persons shall, save where expressly provided to
the contrary, be deemed to be given or made by such persons jointly and
severally;
1.8 if any statement is qualified by the expression "to the best of the
knowledge, information and belief" of any person, or "so far as the
Warrantors are aware" or by any similar expression or otherwise by
reference to a person's knowledge or awareness, that expression shall mean
the awareness of that person having made due and careful enquiry;
1.9 words and expressions defined in the Companies Act bear the same respective
meanings in this agreement;
1.10 headings and titles are used for ease of reference only and do not affect
the interpretation of this agreement;
1.11 reference to a certified copy of a document being a certified copy shall be
a reference to a copy of such document certified by any Director as being a
true and complete copy of the original; and
1.12 any reference to "material" means material in the context of the Group as a
whole or the Placing or material to any subscriber for or purchaser of
Placing Shares.
2. CONDITIONS
2.1 Subject as provided under clause 12, the obligations of the parties
hereunder (other than the obligations of the Warrantors under this clause 2
and of the Company under clauses 7, 10, 13, 15, 16, 17 and 18) are
conditional on the following matters being fulfilled:
2.1.1 the publication of the Press Announcement in accordance with the
requirements of NASD;
2.1.2 the Company having complied with all filing requirements of the SEC in
respect of the Placing and the Acquisition;
2.1.3 all board and shareholder approvals of the Placing having been obtained by
the Company on or before the date of the Information Memorandum;
2.1.4 the notice and filing requirements in the Listed Countries having been
complied with on or before the date of the Information Memorandum;
2.1.5 the obligations of Xxxxxx Xxxxxxx not having been terminated pursuant to
clause 12;
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2.1.6 the fulfilment by the Company of its obligations under clauses 6.2 and
6.3;
2.1.7 the Warranties being true, complete and accurate in all material respects
on the date hereof and on every day up to and including the Allotment
Date;
2.1.8 book building with proposed Placees in respect of the Placing Shares
having been completed to the satisfaction of Xxxxxx Xxxxxxx which Xxxxxx
Xxxxxxx shall confirm to the Company prior to the Placing Date;
2.1.9 Xxxxxx Xxxxxxx having received opinions of the Company's US Lawyers
confirming compliance of the Placing with Regulation S and US securities
law and all relevant US regulations all in a form satisfactory to Xxxxxx
Xxxxxxx on or before the Placing Date;
2.1.10 all the documents listed in the third schedule having been delivered to
Xxxxxx Xxxxxxx on or before the date of this agreement (or on or before
such later date as specified in the third schedule);
2.1.11 the Acquisition having become unconditional in all respects (save only
for any condition relating to receipt by the Company of proceeds of the
Placing); and
2.1.12 new stock certificates in respect of the Placing Shares being delivered
to Xxxxxx Xxxxxxx on or before 29 February 2000; and
provided that Xxxxxx Xxxxxxx may agree in writing to extend the date for
fulfilment of any Condition to a later date (not being later than 10
March 2000).
2.2 Any Condition may be waived in whole or in part by Xxxxxx Xxxxxxx in its
absolute discretion by notice in writing to the Company.
2.3 The Company undertakes to Xxxxxx Xxxxxxx to use all reasonable endeavours
at the Company's own expense to fulfil or procure the satisfaction of the
Conditions by the times and dates specified in clause 2.1.
2.4 Subject to the provisions of clause 11, if any Condition becomes incapable
of being satisfied (and such Condition is not waived by Xxxxxx Xxxxxxx) or
if any Condition is not satisfied in accordance with clause 2.1 (or waived
by Xxxxxx Xxxxxxx in accordance with clause 2.7), this agreement (other
than the obligations of the Warrantors under this clause 2.4 and under
clauses 7, 10, 13, 15, 16, 17 and 18 shall have no further effect and in
such event (and without prejudice to the terms of the Engagement Letter) no
party to this agreement shall have any claim whatsoever against any other
party to this agreement except in relation to any breaches prior to the
relevant date, except that the Company shall forthwith pay (or indemnify
Xxxxxx Xxxxxxx to the extent that the same have been, or that it has been
agreed that the same shall be, incurred by Xxxxxx Xxxxxxx against) the sums
set out in clause 7.2.
8
2.5 The Company shall deliver or procure the delivery to Xxxxxx Xxxxxxx of the
documents listed in the third schedule on or before the date of this
agreement (or on or before such later date as specified in the third
schedule).
3. AGENCY
3.1 Xxxxxx Xxxxxxx shall be entitled to offer the Placing Shares for
subscription or sale or to invite offers to subscribe for or purchase the
Placing Shares upon the terms and conditions set out in the Placing
Documents.
3.2 The Company irrevocably and unconditionally appoints Xxxxxx Xxxxxxx as its
agent for the purposes of the Placing and procuring subscribers for or
purchasers of the Placing Shares on the terms and subject to the conditions
of this agreement and the Placing Documents. The Company confirms that this
appointment confers on Xxxxxx Xxxxxxx all powers and authorities on behalf
of the Company which are necessary for or reasonably incidental to the
purpose for which it has been appointed as agent and agrees to ratify and
confirm everything which Xxxxxx Xxxxxxx shall lawfully do in the exercise
of such powers and authorities.
4. PLACING
4.1 Xxxxxx Xxxxxxx agrees with the Company that it shall use its reasonable
endeavours to procure subscribers for the Placing Shares at the Placing
Price on the terms of the Placing Documents. To the extent that Xxxxxx
Xxxxxxx fails to procure subscribers for the Placing Shares at the Placing
price under the Placing, it shall itself subscribe as principal at the
Placing Price for such Placing Shares as are not subscribed at the Placing
Price by Placees under the Placing.
4.2 In full discharge of its obligations under this clause 4, Xxxxxx Xxxxxxx
will not later than 3 pm on 25 February 1999 pay to the bank account
previously notified in writing by the Company to Xxxxxx Xxxxxxx in
immediately available funds the aggregate Placing Price of those Placing
Shares, in respect of which either the Placing Price has been received by
Xxxxxx Xxxxxxx from Placees (together with any interest received thereon),
or which Xxxxxx Xxxxxxx has agreed pursuant to this clause 5 to subscribe
as principal, after deducting the commission of Xxxxxx Xxxxxxx referred to
in clause 7.1, such of the amounts as are referred to in clause 7.2 as have
been or which it has been agreed are to be incurred by Xxxxxx Xxxxxxx in
each case together with any VAT thereon.
4.3 Xxxxxx Xxxxxxx agrees with the Company that it will not offer, sell or
deliver any Placing Shares as part of its distribution under the Placing or
otherwise, until one year after the later of (i) the time when the Placing
Shares are first offered to persons other than distributors in reliance
upon Regulation S or (ii) the date of closing of the Placing, within the
United States or to, or for the account or benefit of, a US Person (as
defined in the Securities Act) and that it will not engage in hedging
transactions in the Shares, in each case except in compliance with
9
the Securities Act. Xxxxxx Xxxxxxx also agrees that it will send to each
distributor, dealer or other person receiving a selling commission, fee or
other remuneration from Xxxxxx Xxxxxxx in connection with the Placing to
which it sells Placing Shares a confirmation to the following effect:
"Prior to investing in the Placing Shares or conducting any transactions in
the Placing Shares, investors are advised to consult professional advisers
regarding the above restrictions on transfer."
4.4 Xxxxxx Xxxxxxx agrees that it will only place Placing Shares in the Listed
Countries and will use all reasonable endeavours to ensure that such
placing will be in accordance with the laws of those jurisdictions.
5. OPTION
5.1 The Company grants to Xxxxxx Xxxxxxx an option ("Option") to subscribe or
procure the subscription for 92,500 Shares (apart from the Placing Shares)
("Option Shares").
5.2 The Option may be exercised by Xxxxxx Xxxxxxx by written notice to the
Company at any time beginning on the date of this agreement and ending 2
years following the date of this agreement.
5.3 The Option may be exercised in whole or on one or more occasion in parts.
Exercise notices shall state the number of Option Shares in respect of
which the Option is being exercised and shall designate the closing date
for the delivery to Xxxxxx Xxxxxxx or as it may direct of such Option
Shares which shall be as set out in clause 6.5. Such closing date shall be
not less than 3 Business Days following the date of the relevant exercise
notice.
5.4 Any option notice may only be given on a Business Day and if given later
than 5 pm on any Business Day shall be deemed to have been given on the
next Business Day.
5.5 The price of the Option Shares shall be the Placing Price.
5.6 In full discharge of its obligations under this clause 5, Xxxxxx Xxxxxxx
will not later than 3 pm on the Business Day following the date on which
any Option Shares are issued by the Company pursuant to clause 5.3 pay to
the bank account previously notified in writing by the Company to Xxxxxx
Xxxxxxx in immediately available funds the aggregate Placing Price of such
Option Shares.
6. ALLOTMENT AND SALE
6.1 Subject to the terms and conditions of the Placing Documents, Xxxxxx
Xxxxxxx shall determine all matters in respect of the Placing, including
(without limitation):
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6.1.1 the identity of the Placees provided that Xxxxxx Xxxxxxx shall consult
with the Company in relation thereto; and
6.1.2 the allocation of the Placing Shares amongst such Placees.
6.2 The Company irrevocably undertakes to Xxxxxx Xxxxxxx to allot Placing
Shares to Placees under the Placing (or to Xxxxxx Xxxxxxx as appropriate)
with full title guarantee free from all liens, charges and encumbrances,
equities and other third party rights of any nature whatsoever and on terms
that they shall be fully paid and rank pari passu in all respects with the
existing Shares including the right to receive all dividends and other
distributions, the record date in respect of the payment of which shall
occur on or after the date of the Information Memorandum.
6.3 If not so duly held and convened prior to execution of this agreement, upon
execution of this agreement the Directors shall convene a meeting of the
Board for the purpose of considering and passing resolutions to allot the
Placing Shares to Placees under the Placing (or to Xxxxxx Xxxxxxx as
appropriate) in accordance with clauses 6.1 and 6.2 and approve the issue
in compliance with Regulation S of new stock certificates to and the entry
in the Company's register of such persons as allottees.
6.4 The Company shall or shall procure that its transfer agents shall deliver
the relevant stock certificates in compliance with Regulation S in respect
of the Placing Shares to Placees in accordance with clauses 6.1 and 6.2 on
or before 29 February 2000.
6.5 On each occasion on which Xxxxxx Xxxxxxx exercises the Option the Company
shall or shall procure that its transfer agents shall deliver the relevant
stock certificates in favour of Xxxxxx Xxxxxxx or as it may direct in
respect of those Option Shares in respect of which the Option is exercised
to Xxxxxx Xxxxxxx by 12 noon within 3 Business Days of the date the
relevant date of exercise.
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6.6 In order to facilitate the performance of the obligations of the Company
contained in clauses 6.2 to 6.4 inclusive, Xxxxxx Xxxxxxx shall, if
reasonably required by the Company, provide the Company with a schedule of
the Placees subscribing for Placing Shares and the number of Placing Shares
for which each of them are subscribing.
6.7 Xxxxxx Xxxxxxx shall be entitled to retain any interest earned on the sums
to be paid to the Company referred to in this clause 6 in respect of the
period from and including the receipt of such sums by Xxxxxx Xxxxxxx until
and including the dates for payment of such sums to the Company.
7. COMMISSIONS AND EXPENSES
7.1 Xxxxxx Xxxxxxx'x fee in respect of its services to the Company in
connection with the Placing shall comprise a commission equal to 5 per cent
of an amount equal to the Placing Price multiplied by the aggregate number
of Placing Shares plus, to the extent that any value added tax is
chargeable on such commission, any value added tax thereon. Xxxxxx Xxxxxxx
shall be entitled to deduct such fee from the proceeds of the issue of the
Placing Shares received by it. Xxxxxx Xxxxxxx'x fee shall also comprise the
Option.
7.2 The Company shall pay (whether or not this agreement becomes unconditional
pursuant to clause 2 or is terminated by Xxxxxx Xxxxxxx pursuant to clause
12) all costs and expenses of whatever nature properly incurred by Xxxxxx
Xxxxxxx in connection with the Placing including, without limitation, all
reasonable out of pocket expenses, travel and hotel costs, all costs
associated with the road show and marketing, the reasonable legal fees and
expenses of Xxxxxx Xxxxxxx'x UK Lawyers, Xxxxxx Xxxxxxx'x US Lawyers and
the lawyers responsible for the Foreign Lawyers Letters, the accounting
fees and expenses of Xxxxx Xxxxxxxx, printing and postage costs, public
relations costs and all the other costs and expenses arising from the
Placing (together with all value added tax properly charged on such costs
and expenses). Xxxxxx Xxxxxxx shall be entitled to deduct such fees and
expenses from the proceeds of the issue of the Placing Shares received by
it.
7.3 Where any sum payable under this agreement is subject to value added tax,
such sum will be paid together with the relevant amount of properly
chargeable value added tax.
7.4 In the event of any inconsistency between this clause 7 and the Engagement
Letter, the terms of this clause shall prevail.
8. WARRANTIES
8.1 Each of the Warrantors jointly and severally warrants and represents to and
undertakes with Xxxxxx Xxxxxxx that each of the Warranties set out in the
second schedule is now true complete and accurate and will be true complete
and accurate in all material respects on each
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day between the date of this agreement up to and including the Allotment
Date as if repeated on each such day with reference to the facts which
shall then exist.
8.2 Each of the Warrantors shall procure that (save only as may be necessary to
give effect to this agreement) neither it nor any company in the Group
shall do, allow or procure any act or omission which would constitute a
material breach of any of the Warranties upon the repetition of such
Warranties from and including the date of this agreement up to and
including the Allotment Date.
8.3 Each Warrantor undertakes to notify Xxxxxx Xxxxxxx in writing upon becoming
aware of any facts or circumstances which constitute or would be likely to
constitute a material breach of any Warranty or which make or would be
likely to make inaccurate or misleading any Warranty in any material
respect.
8.4 If the Option is exercised after the Allotment Date each Warrantor
undertakes to notify Xxxxxx Xxxxxxx in writing ("Notification") if that
Warrantor is or becomes aware of any facts or circumstances which
constitute or might be likely to constitute a material breach of any
Warranty or which make or would be likely to make inaccurate or misleading
any Warranty in any material respect as if such Warranty were repeated on
the date of exercise.
8.5 In this clause 8 and the second schedule, references to the Company shall,
except where the context otherwise requires, be deemed to include
additional and separate references also to each of the Subsidiary
Undertakings whether or not it was a Subsidiary Undertaking at the relevant
time.
8.6 The maximum liability of each Director under the Warranties and the
indemnities under clause 9.1 shall be an amount equal to the number of
Shares held by such Director at the date of this agreement (assuming all
warrants and options held by such Director have been exercised and all
Shares the subject thereof have been issued) multiplied by the Placing
Price. The Warranties in respect of a breach of Warranty of which he could
not reasonably have been aware, having made due and careful inquiry.
8.7 A Director shall, at his option, be entitled to satisfy any claim made
against him under the Warranties by transferring such number of shares to
Xxxxxx Xxxxxxx (or as Xxxxxx Xxxxxxx may direct) as shall, at the NASDAQ
quoted price of the shares at the date of the claim, be equal to the value
of the claim.
9. INDEMNITIES
9.1 To the extent permitted by law the Company and each Director agrees to
indemnify and hold harmless Xxxxxx Xxxxxxx (for itself and as trustee for
each of the other Indemnified Persons) against all liabilities, demands,
claims, actions proceedings or judgments made, brought or established
against any losses, claims, costs, charges and expenses (including
reasonable legal fees and proper expenses) which the Indemnified Person as
a result of or arising out of or in connection with:
9.1.1 the issue or despatch of the Placing Documents (or any of them);
9.1.2 the allotment, issue and sale or re-sale of the Placing Shares;
13
9.1.3 any breach or alleged breach of any of the Warranties or of any of the
other provisions of this agreement;
9.1.4the Placing Documents not containing, or being alleged not to contain, all
information material in the context of the Placing, whether required by
statute or not, or any statement therein being, or being alleged to be,
untrue, incorrect or misleading in any material respect;
9.1.5 any breach or alleged breach of the laws or regulations of any
jurisdiction resulting from the issue or distribution of the Placing
Documents or the offer or the allotment, issue and sale or re-sale of the
Placing Shares or the entering into or completion of this agreement;
9.1.6 the performance by Xxxxxx Xxxxxxx of its services to the Company in
connection with the Placing or the preparation and distribution of any of
the Placing Documents;
9.1.7 any failure or alleged failure by the Company or any of its agents,
employees, officers or professional advisers (other than the Indemnified
Persons) to comply with any relevant statutory or regulatory requirements
in relation to the Placing;
9.1.8 any allegation that Xxxxxx Xxxxxxx failed to comply with its obligations
pursuant to the any statutory or regulatory requirements in relation to the
Placing;
9.1.9 any of the transactions contemplated by this agreement.
9.2 The indemnities contained in clause 9.1:
9.2.1 shall not extend to any actions, liabilities, demands, losses, claims,
costs, charges and expenses to the extent that arise as a result of (i)
negligence or wilful default on the part of Xxxxxx Xxxxxxx or (ii) a breach
by Xxxxxx Xxxxxxx of its duties under the FSA or any other relevant
regulatory requirement or (iii) a material breach by Xxxxxx Xxxxxxx of this
agreement; and
9.2.2shall not apply to the extent prohibited by law. 9.3 No claim shall be
made against any of the Indemnified Persons by any party to this agreement
(other than by Xxxxxx Xxxxxxx) to recover any damage, cost, charge or
expense which the Company, any Subsidiary Undertaking, the Directors or any
subscriber for or purchaser of Placing Shares pursuant to the Placing or
any subsequent purchaser or transferee thereof may suffer or incur by
reason of or arising out of any underwriting and the placing of the Placing
Shares, the allotment, issue and sale or re-sale of the Placing Shares or
the publication or despatch of the Placing Documents, unless and except to
the extent that such damage, cost, charge or expense arises as a result of
(i) negligence or wilful default on the part of Xxxxxx Xxxxxxx or (ii) a
breach by Xxxxxx Xxxxxxx of its duties under the FSA or any other relevant
regulatory requirement or (iii) a material breach by Xxxxxx Xxxxxxx of this
agreement.
14
9.4 Should any amount paid or payable under clause 9.1 to Xxxxxx Xxxxxxx or any
of the other Indemnified Persons ("Recipient") be itself subject to tax in
the hands of such Recipient or be required by law to be paid by the Company
or any of the Directors under any deduction or withholding, the Company or
the relevant Director (as the case may be) will pay to such Recipient such
sum as will after any such tax, deduction or withholding leave such
Recipient with the same amount as he would have received if no such tax had
been payable and no deduction or withholding had been made.
9.5 Xxxxxx Xxxxxxx enters into this clause 9 for itself and as trustee for each
Indemnified Person on the following basis:
9.5.1 only Xxxxxx Xxxxxxx may decide whether or not to enforce an Indemnified
Person's right under the trust (and only it may decide the terms and
conditions of that enforcement) and investigate a matter or give
information to an Indemnified Person, in connection with the trust;
9.5.2 notwithstanding the trust, Xxxxxx Xxxxxxx may enter into an agreement,
arrangement or transaction with a person (including, without limitation,
the Company) and may deal with his or its rights under this agreement
without regard to an Indemnified Person's interest and is not liable to
account to an Indemnified Person for any benefit realised by that
agreement, arrangement, transaction or dealing; and
9.5.3 Xxxxxx Xxxxxxx is not liable to another Indemnified Person for any of
its acts or omissions as trustee.
9.6 Xxxxxx Xxxxxxx agrees to inform the Company on behalf of itself and the
Directors as soon as practicable about any claim brought or threatened
against any Indemnified Person of which it becomes aware and in respect of
which Xxxxxx Xxxxxxx or any other Indemnified Person may seek indemnity
under this clause 9 and in connection therewith shall:
9.6.1consult with the Company in relation to all significant decisions
concerning any such claim and shall have due regard to any reasonable
request of the Company relating thereto; and
9.6.2 provide the Company with such information relating thereto and which it
may reasonably request;
except, in any such case, insofar as, in the reasonable opinion of Xxxxxx
Xxxxxxx (having consulted with its insurers), to do so would prejudice its
own insurance arrangements in respect of any matter to which this clause 9
applies.
9.7 If Xxxxxx Xxxxxxx makes a claim against any of the Directors for breach of
any of the Warranties or under the indemnity contained in clause 9.1, none
of the Directors shall have or pursue any claim or third party action to
join in, claim against, seek a contribution from or otherwise claim or seek
damages or compensation from the Company or any Subsidiary
15
Undertaking or any associated company of the Company or any of their
respective directors (other than the Directors), officers or employees and
the Directors confirm to Xxxxxx Xxxxxxx that no member of the Group has
entered into any agreement or arrangement concerning the liability of the
Directors or any of them for any breach of the Warranties or in relation to
any other covenant, term or condition set out in this agreement.
9.8 The parties to this agreement (other than Xxxxxx Xxxxxxx) agree with and
acknowledge to Xxxxxx Xxxxxxx that neither Xxxxxx Xxxxxxx nor any of its
officers, directors, employees, agents or advisers are or shall be
responsible to such other parties for verifying the accuracy and/or
fairness of any information in any of the Placing Documents or any other
documents otherwise published or caused to be published in connection with
the Placing.
9.9 The Company agrees:
9.9.1 to indemnify and hold harmless Xxxxxx Xxxxxxx, its directors, officers,
employees and agents and each person who controls Xxxxxx Xxxxxxx within the
meaning of either the Securities Act or the Exchange Act against any and
all losses, claims, damages or liabilities, joint or several, to which they
or any of them may become subject under the Securities Act, the Exchange
Act or other US Federal or state statutory law or regulation, at common law
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Information Memorandum (or in any supplement or amendment thereto) or any
information provided by the Company to any holder or prospective subscriber
for or purchaser of Shares, or in any amendment thereof or supplement
thereto, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and
9.9.2 to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action.
9.10 The Company will not be liable under clause 9.9 to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such
untrue statement or omission or alleged omission made in the Information
Memorandum, or in any amendment thereof or supplement thereto, in reliance
upon and in conformity with written information furnished to the Company by
or on behalf of Xxxxxx Xxxxxxx or to the extent that such damage, cost,
charge or expense arises as a result of (i) negligence or wilful default on
the part of Xxxxxx Xxxxxxx or (ii) a breach by Xxxxxx Xxxxxxx of its duties
under the FSA or any other relevant regulatory requirement or (iii) a
material breach by Xxxxxx Xxxxxxx of this agreement.
9.11 The indemnity in clause 9.9 will be in addition to any liability which the
Company may otherwise have and in the event that it is unavailable to or
insufficient to hold harmless an
16
Indemnified Person for any reason, the Company agree to contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending
them) (collectively "Losses") to which Xxxxxx Xxxxxxx may be subject in
such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and by the Xxxxxx Xxxxxxx on the other from
the offering of the Placing Shares. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company
shall contribute in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company in
connection with the statements or omissions which resulted in such Losses,
as well as any other relevant equitable considerations. Benefits received
by the Company shall be deemed to be equal to the total net proceeds from
the Placing received by it, and benefits received by Xxxxxx Xxxxxxx shall
be deemed to be equal to the total fees and commissions referred to in
clause 8. Relative fault shall be determined by reference to, among other
things, whether any untrue or any alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates
to information provided by the Company on the one hand or Xxxxxx Xxxxxxx on
the other, the intent of the parties and their relative knowledge, access
to information and opportunity to correct or prevent such untrue statement
or omission. The Company and Xxxxxx Xxxxxxx agree that it would not be just
and equitable if contribution were determined by pro rata allocation or any
other method of allocation which does not take account of the equitable
considerations referred to above.
9.12 Notwithstanding the provisions of clauses 9.9 and 9.2, no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
10. APPOINTMENT OF FINANCIAL ADVISER
10.1 The Company hereby appoints Xxxxxx Xxxxxxx as its exclusive financial
adviser, such appointment to be subject to 3 months written notice of
termination by either party.
10.2 The Company will pay to Xxxxxx Xxxxxxx an annual fee of (pound)25,000 plus
VAT (if any) and reasonable disbursements payable quarterly in advance in
respect of the services which Xxxxxx Xxxxxxx normally provides as a UK
financial adviser, the first payment being due on the Issue Date. Xxxxxx
Xxxxxxx shall not be obliged to undertake any specific assignments and
shall be entitled to agree a separate fee with the Company in respect of
them.
10.3 For so long as Xxxxxx Xxxxxxx continues to be engaged by the Company as
financial advisor ("Engagement Term"), the Company will consult with Xxxxxx
Xxxxxxx before undertaking any action which would require the issue of an
announcement or circular or which would require shareholder approval or
which is material in the context of the Placing and would require board
approval or which would involve the issue of new securities or which would
require notice to any regulatory body.
17
10.4 In relation to the appointment of Xxxxxx Xxxxxxx as financial adviser, the
standard terms and conditions of business of Xxxxxx Xxxxxxx for time to
time shall apply, except where the terms of this agreement and such
standard terms.
10.5 Except to the extent specifically excluded by this agreement, the
Engagement Letter shall remain in force and continue to bind the Company
and Xxxxxx Xxxxxxx.
11. FURTHER AGREEMENTS OF THE COMPANY
11.1 The Company agrees with Xxxxxx Xxxxxxx as follows:
11.1.1 that it will not issue any amendment or supplement to the Information
Memorandum of which Xxxxxx Xxxxxxx shall not previously have been advised
and approved and furnished with a copy or to which Xxxxxx Xxxxxxx shall
have reasonably objected in writing or which is not in compliance with any
applicable law or regulation;
11.1.2 that it will promptly notify Xxxxxx Xxxxxxx in the event of, at any time
within the period of 90 days following the date of this agreement or, if
longer, during the Engagement Period, the receipt by the Company of notice
of the initiation or threatening of any proceeding for such purpose or any
request, inquiry or order issued, given or sent by Nasdaq or the SEC
relating to the Company, any of its Subsidiary Undertakings or any of their
respective officers, directors, employees, shareholders or affiliates.
11.1.3 that the Company will make every commercially reasonable effort to
prevent the issue of such any such order as is referred to in clause 11.1.2
and, if such an order shall at any time be issued, to obtain the withdrawal
thereof at the earliest possible moment;
11.1.4 that Xxxxxx Xxxxxxx is authorised to use the Information Memorandum as
from time to time amended or supplemented in connection with the sale of
the Placing Shares;
11.1.5 that, during the Engagement Period, the Company will furnish to Xxxxxx
Xxxxxxx 3 copies of all periodic and special reports furnished to
shareholders of the Company and of all information, documents and reports
filed with the SEC and/or Nasdaq;
11.1.6 that, without the prior written consent of Xxxxxx Xxxxxxx, the Company
will not, directly or indirectly, issue, sell, offer, contract to sell,
pledge, grant any option to subscribe or purchase or otherwise dispose of,
or publicly announce any intention to issue, sell, offer, contract to sell,
pledge, grant any option to subscribe or purchase or otherwise dispose, of
any shares or any securities convertible into or exchangeable or
exercisable for or any rights to subscribe or purchase or acquire Shares or
other equity securities or enter into any material transaction for a period
of 10 Business Days following the Placing Date without the prior written
consent of Xxxxxx Xxxxxxx, such consent not to be unreasonably withheld or
delayed;
18
11.1.7 that the Company's US Lawyers have explained to each of the directors of
the Company the nature of their responsibilities and obligations as,
respectively, directors of a US public company and directors of a company
whose securities have been admitted to trading on Nasdaq;
11.1.8 that the net proceeds from the sale of the Placing Shares will be applied
as set out in the Information Memorandum and (except with the prior
approval in writing of Xxxxxx Xxxxxxx) substantially in accordance with the
Business Plan.
11.1.9 that it has not taken and will not take, directly or indirectly, any
action which is designed to stabilise or manipulate, or which constitutes
or which might reasonably be expected to cause or result in stabilisation
or manipulation of, the price of any security of the Company in connection
with the Placing;
11.1.10 to do all such acts as may be required to vest the Placing Shares in
Placees (or Xxxxxx Xxxxxxx as appropriate) and the Option Shares in Xxxxxx
Xxxxxxx or as it may direct in accordance with the provisions of clause 6;
11.1.11 that it will not create any pre-emption right, lien, charge, encumbrance
or other adverse interest over any Placing Shares or Option Shares;
11.1.12 that the Placing Shares and the Option Shares will, as from the date
when they are issued and are fully paid up, rank pari passu in all respects
with, and be identical to, the existing Shares then in issue;
11.1.13 that it will register any transfer of Placing Shares or Option Shares
within 10 Business Days of receipt and will despatch share certificates in
compliance with Regulation S without delay;
11.1.14 that it will notify Xxxxxx Xxxxxxx without delay of: (i) any major new
developments in its sphere of activity which are not public knowledge which
may by virtue of the effect of those developments on its assets and
liabilities or financial position or on the general course of its business
lead to a substantial movement in the price of the Shares in each case in
so far as it is aware of such matters and (ii) any change in the financial
condition of the Company or in the performance of its business or in the
Company's expectation of its performance, the knowledge of which change is
likely to lead to a substantial movement in the price of the Shares; and
11.1.15 that it will supply Xxxxxx Xxxxxxx on a timely basis with copies of all
its filings with Nasdaq and the SEC.
11.2 The Company undertakes to Xxxxxx Xxxxxxx that between the date of this
agreement and the date falling 90 days thereafter or, if this agreement is
terminated prior the Placing Date, 30 days after such termination, it shall
not without the prior written consent of Xxxxxx Xxxxxxx, such
19
consent not to be unreasonably withheld enter into or procure or permit
itself or any Subsidiary Undertaking to enter into any transaction or take
any action which would require shareholder approval.
11.3 Save as expressly required under this agreement or by applicable law or
regulation, the Company shall not, and the Company shall procure that no
Subsidiary Undertaking shall, make or despatch any public announcement,
statement or communication concerning the Company or any Subsidiary
Undertaking or any Affiliate in connection with the Placing (whether in
response to enquiries or otherwise) between the date of this agreement and
the date falling 90 days thereafter or, if longer, during the Engagement
Term or, if this agreement is terminated prior to the Placing Date, 30 days
after such termination, without the prior written consent of Xxxxxx Xxxxxxx
(not to be unreasonably withheld or delayed).
11.4 The Company undertakes to Xxxxxx Xxxxxxx that it will at all times during
the Engagement Term as soon as practicable:
11.4.1 notify Xxxxxx Xxxxxxx in advance of, and discuss with Xxxxxx Xxxxxxx the
content, timing and manner of, any announcement of profits, losses or
dividends in respect of any financial period of the Company or part of such
period or any other announcement concerning the financial position, affairs
or prospects of the Company or the Group and (to the extent practicable in
the circumstances) discuss with Xxxxxx Xxxxxxx any other information which
is likely materially to affect the general character or nature of the
business of the Group; and
11.4.2 forward to Xxxxxx Xxxxxxx for perusal and discussion as to the timing of
despatch and content of all proofs of all documents to be sent to holders
of the Company's shares including, without prejudice to the generality of
the foregoing, notices of meetings, forms of proxy and the directors'
report and annual accounts, and all documents relating to takeovers,
mergers, reorganisations or other schemes (including employee profit
sharing schemes or share option schemes) and all press announcements which
it is required to issue (other than trade announcements which are not of a
price-sensitive nature).
11.5 The Company shall take all reasonable steps to procure that employees of
the Company and the Subsidiary Undertakings and the advisers to and agents
of the Company and the Subsidiary Undertakings observe the restrictions set
out in clauses 11.2 to 11.4 (inclusive) as if they were parties to this
agreement.
11.6 The Company shall and the Directors shall procure that the Company shall
take all steps reasonably necessary to comply with all recommendations set
out in the letters from Xxxxx Xxxxxxxx listed in the third schedule.
12. TERMINATION
12.1 If, at any time on or prior to 8.30 am on the Placing Date:
20
12.1.1 there shall have occurred, happened or come into effect any material
adverse change in national or international finance, economic, market or
political conditions and/or in the business, financial position or
prospects of the Company or any of the Subsidiary Undertakings or WRDC and,
in the reasonable opinion of Xxxxxx Xxxxxxx, arrived at in good faith and
having consulted with the Company, the effect of such act or change is
likely to cause a substantial deterioration in the price or value of the
Placing Shares; or
12.1.2 there is a breach of any of the Warranties which Xxxxxx Xxxxxxx
reasonably considers to be material.
then Xxxxxx Xxxxxxx shall be entitled to terminate its obligations under
this agreement by giving notice in writing to the Company at any time prior
to 8.30 am on the Allotment Date.
12.2 If this agreement is terminated pursuant to clause 12, it shall cease and
determine and such termination shall be without prejudice to any accrued
rights or obligations of any party under this agreement and the provisions
of this clause 12.2 and clauses 7, 10, 13, 15, 16, 17 and 18 shall remain
in full force and effect.
12.3 The date of service of a notice under clause 12.1 is the "Termination
Date".
12.4 Notwithstanding any representations given by the Warrantors under this
agreement, Xxxxxx Xxxxxxx shall not be entitled to rescind this agreement
except pursuant to clause 2 or this clause 12.
13. REMEDIES AND ENFORCEMENT
13.1 Each of the Warranties, and the undertakings and indemnities referred to in
clauses 8, 9, 11 and 14, shall remain in full force and effect
notwithstanding the completion of the purchase and/or subscription of the
Placing Shares and any Option Shares and the completion of the Placing
until 4 months following the date of publication of the Group's audited
accounts for the year ending 30 June 2002.
13.2 No neglect, delay or indulgence on the part of any party in enforcing any
term or condition of this agreement or their rights or remedies under this
agreement shall be construed as a waiver of any term or condition of this
agreement or of its rights or remedies under this agreement, and the
release or compromise by any party from or of the liability of any other
party or the grant to any of them of any time or other indulgence shall not
affect the liability of any other party.
13.3 This agreement shall be binding upon each of the parties hereto and its or
his assigns, successors in title or legal personal representatives as the
case may be.
13.4 If any amounts payable to any party under this agreement are overdue then
interest shall be payable on the overdue amount at the annual rate of 2
percentage points above the base rate
21
of National Westminster Bank plc from time to time from the due date up to
and including the date of actual payment of such amounts compounded
quarterly.
14. FURTHER AGREEMENTS REGARDING THE PLACING
14.1 The Company will not, and will not permit any of its Affiliates to, resell
any Placing Shares or Option Shares to a US Person.
14.2 Neither the Company, nor any of its or their Affiliates, nor any person
acting on any of their behalves will, directly or indirectly, make offers
or sales of any security, or solicit offers to buy any security, under
circumstances that would require the registration of the Placing Shares
under the Securities Act.
14.3 Neither the Company, nor any of its Affiliates, nor any person acting on
any of their behalves will engage in any form of general solicitation or
general advertising (within the meaning of Regulation D of the Securities
Act) in connection with any offer or sale of the Placing Shares in the USA.
14.4 Neither the Company, nor any of its Affiliates, nor any person acting on
any of their behalves will engage in any directed selling efforts (as
defined in Regulation S) with respect to the securities.
14.5 The Company agrees to refuse to register any transfer of the Placing Shares
not made in accordance with the provisions of Regulation S, pursuant to
registration under the Securities Act, or pursuant to an available
exemption from registration supported by an opinion of counsel experienced
in securities laws acceptable to Xxxxxx Xxxxxxx establishing the
availability of such exemption. The Company will give instructions to its
transfer agent to the foregoing effect. The certificates representing the
Placing Shares offered or sold in relation on Regulation S will bear the
following legend:
"THE COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE US SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (1) IN AN OFFSHORE TRANSACTION
MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT, (2) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS.
22
HEDGING TRANSACTIONS INVOLVING THE COMMON STOCK OF THE
COMPANY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT."
14.6 The Company will not take, directly or indirectly, any action designed to
or which has constituted or which might reasonably be expected to cause or
result, under the Exchange Act or otherwise, in stabilisation or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Placing Shares.
14.7 The Company represents and warrants to and agrees with Xxxxxx Xxxxxxx that:
14.7.1 it has not offered or sold, and will not offer or sell, any Placing
Shares except in accordance with the restrictions set forth in Annex A
hereto; and
14.7.2 neither it nor any person acting on its behalf has made or will make
offers or sales of the Placing Shares in the USA by means of any form of
general solicitation or general advertising (within the meaning of
Regulation D) in the USA.
14.8 Xxxxxx Xxxxxxx represents to the Company that it has offered and sold the
Placing Shares, and will offer and sell the Placing Shares, (i) as part of
their distribution at any time and (ii) otherwise until one year after the
later of the commencement of the offering of the Placing Shares to persons
who are not distributors, as defined in Regulation S, and the closing date
of the offering of the Placing Shares hereunder, only in accordance with
Rule 903 or 904 of Regulation S under the Securities Act. Accordingly,
Xxxxxx Xxxxxxx further represents and agrees that, so far as it is aware,
all of the Placing Shares have been or will be sold in offshore
transactions, that none of the Placing Shares have been or will be sold to,
or for the account or benefit of, a US Person, that neither it, nor its
officers or employees nor any persons engaged to act on its behalf, have
engaged or will engage in any directed selling efforts with respect to the
Placing Shares, and that it and they have complied and will comply with the
offering restrictions requirement of Regulations S. Xxxxxx Xxxxxxx agrees
to engage in hedging transactions in the Shares only in accordance with the
Securities Act. All terms in the above paragraph have the meanings ascribed
to them in Regulation S.
14.9 The Company agrees to file as soon as reasonably practicable after the date
of this agreement and in any event prior to the Placing Date an application
for the Shares to be included in the Nasdaq NMS. The Company will use its
best efforts to cause the NASD to accept such application and include the
Shares in the Nasdaq NMS no later than 42 days from the date hereof. In
fulfilling its obligation hereunder, the Company shall promptly respond to
all requests for information and further documentation from the NASD and
shall adopt such corporate governance measures as requested by the NASD."
23
14.10 The Company agrees with Xxxxxx Xxxxxxx to use its best efforts (including
disposing of investments) by no later than 14 July 2000 to cause the
Company not to be or be controlled by an "investment company" under the US
Investment Company Act of 1940.
15. WHOLE AGREEMENT
The parties to this agreement confirm that (save for any matters implied or
arising as a matter of law):
15.1 save for the Engagement letter, this agreement and the agreements and
documents referred to herein contain or refer to the whole of the terms of
the agreement and arrangements between the parties or any of them with
regard to the Placing;
15.2 this agreement may be executed as two or more documents in the same form
and execution by all of the parties of at least one of such documents will
constitute due execution of this agreement.
16. TIME OF THE ESSENCE
Time shall be of the essence of this agreement but any time, date or period
mentioned in any clause of this agreement may be extended by mutual
agreement between the Company and Xxxxxx Xxxxxxx.
17. NOTICES
17.1 Any notice to be given under this agreement shall be in writing and shall
be served by sending it by hand, facsimile transmission or first class
post:
17.1.1 if to the Company or to any of the Directors, to the Company's registered
office for the time being, marked for the attention of the Chief Executive
Officer ; and
17.1.2 if to Xxxxxx Xxxxxxx, to its registered office for the time being, marked
for the attention of the Head of Corporate Finance and Xxxxxxxx Xxxxxxx.
17.2 Any notice referred to in clause 17.1 shall be deemed to have been
received:
17.2.1 if delivered by hand, on the day of delivery and in proving service it
shall be necessary only to produce a receipt for the communication signed
by or on behalf of the addressee;
17.2.2 if sent by facsimile transmission, at the time of transmission or, if the
time of transmission is not during the addressee's normal business hours,
at 9.30 a.m. on the next Business Day and in proving service it shall be
necessary only for the communication or a confirmatory letter to have been
delivered by hand or sent by first class post on the same day but failure
of the addressee
24
to receive such confirmation shall not invalidate the relevant
communication deemed given by facsimile transmission;
17.2.3 if sent by first class post, on the second Business Day after the day of
posting (or five Business Days after the day of posting in the case of
posting to an address outside the United Kingdom) and, in proving service,
it shall be necessary only to prove a communication was contained in an
envelope which was duly addressed and posted in accordance with this
clause.
18. GOVERNING LAW
18.1 This agreement shall be governed by and construed in all respects in
accordance with the laws of England.
18.2 In relation to any legal action or proceedings arising out of or in
connection with this agreement ("Legal Proceedings"), each of the parties
to this agreement (other than Xxxxxx Xxxxxxx) who is not or who ceases to
be resident in England ("Relevant Parties") hereby irrevocably submits to
the exclusive jurisdiction of the English Courts and waives any objection
to Legal Proceedings in such Courts on the grounds of venue or on the
grounds that the Legal Proceedings have been brought in an inconvenient
forum. These submissions shall not affect the right of any other party to
take Legal Proceedings in any other jurisdiction, nor shall the taking of
Legal Proceedings in any jurisdiction preclude any party from taking Legal
Proceedings in any other jurisdiction.
18.3 Each of the Relevant Parties hereby undertakes to Xxxxxx Xxxxxxx
irrevocably to appoint, and each hereby appoints, the Company's UK Lawyers
(Reference: SGG/KRP) to receive at its address set out at the beginning of
this agreement, for him and on his behalf, service of process in any Legal
Proceedings in England. Such service shall be deemed completed on delivery
to such address (whether or not it is forwarded to or received by the
relevant appointor).
EXECUTED as a DEED )
and DELIVERED by )
AUTHORISZOR INC. ) /s/ Xxxxx X. Xxxxxxx
acting by )
XXXXX XXXXXXX XXXXXXX )
Duly authorised signatory
Duly authorised signatory
SIGNED as a DEED and )
25
DELIVERED by )
XXXXXXX XXXXXXXX, )
ACTING BY HIS ATTORNEY ) /s/ Xxxxx X. Xxxxxxx
XXXXX, XXXXXXX XXXXXXX )
in the presence of: )
/s/
SIGNED as a DEED and )
DELIVERED by )
XXXXX XXXXXXX ) /s/ Xxxxx X. Xxxxxxx
in the presence of: )
/s/
SIGNED as a DEED and )
DELIVERED by )
XXXXX XXXX ACTING BY )
HIS DULY AUTHORIZED ) /s/ Xxxxx X. Xxxxxxx
ATTORNEY )
XXXXX XXXXXXX XXXXXXX )
in the presence of: )
SIGNED as a DEED and )
DELIVERED by )
XXXXXX XXXXXXXX ACTING BY )
HIS DULY AUTHORIZED ) /s/ Xxxxx X. Xxxxxxx
ATTORNEY )
XXXXX XXXXXXX XXXXXXX )
in the presence of: )
/s/
26
EXECUTED as a DEED )
and DELIVERED by ) /s/
XXXXXX XXXXXXX LIMITED )
acting by: )
Director
Director
27
THE FIRST SCHEDULE
THE DIRECTORS
Xxxxxxx Xxxxxxxx
0 Xxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxxxx, XXX
Xxxxx Xxxxxxx
0 Xxxxxxxxx, Xxxxxxx Xxxxx, Xxxxx, Xxxxx Xxxxxxxxx XX0 0XX
Xxxxx Xxxx
00 Xxx Xxxx Xxxx, Xxxxxxxxxx, XxxxXxxx, XX00 0XX
Xxxxxx Xxxxxxxx
42B Roc Fleuri, 0 Xxx xx Xxxxx, XX 0000 Xxxxxx
28
THE SECOND SCHEDULE
WARRANTIES
For the purpose of this second schedule, the term "Company" shall refer to the
Company and all of its predecessors, by merger or otherwise.
THE PLACING AND PLACING DOCUMENTS
1.1 The Information Memorandum contains all such information as investors
(including Xxxxxx Xxxxxxx) and their professional advisers would reasonably
require and reasonably expect to find in the Information Memorandum for the
purpose of making an informed assessment of the assets and liabilities,
business, financial position, profits and losses and prospects of the Group
and of the rights attaching to the Placing Shares and the Option Shares.
1.2 All statements of fact in the Information Memorandum are true complete and
accurate and not misleading in any material respect and all expressions of
opinion, intention and expectation in the Placing Documents are truly and
honestly held and either fairly based upon facts within the knowledge of
the Directors or made on reasonable grounds.
1.3 The Information Memorandum contains the items of information required by
the relevant law and regulations including the FSA and the Securities Act.
1.4 No Group Company has distributed any offering material in connection with
the Placing other than the Placing Documents and other materials required
to be so distributed by applicable law.
1.5 All material supplied by the Warrantors in connection with the Verification
Notes and in response to the Legal Due Diligence Questionnaire was when
supplied and is now true complete and accurate in all material respects and
where such information was expressed as an opinion of the Group Company or
its directors such opinion was and continues to be honestly and reasonably
held by reference to the facts and circumstances now subsisting.
1.6 The Company has complied and will comply with all applicable laws and
regulations with respect to anything done by it in relation to the Shares
in, from or otherwise involving the United Kingdom.
1.7 Neither the Company nor any of its Affiliates, nor any person acting on any
of their behalves has, directly or indirectly, made offers or sales of any
security, or solicited offers to buy any security, under circumstances that
would require the registration of the offer and sale of the Placing Shares
or the Option Shares under the Securities Act.
1.8 Neither the Company nor any of its Affiliates, nor any person acting on any
of their behalves has engaged in any form of general solicitation or
general advertising (within the meaning of
29
Regulation D) in connection with any offer or sale of the Placing Shares or
the Option Shares in the USA.
1.9 Neither the Company nor any of its or their Affiliates, or any person
acting on any of their behalves (i) has engaged nor will engage in any
directed selling efforts (as defined in Regulation S) and (ii) has complied
and will comply with the offering restrictions requirements of Rule 903 of
Regulation S, in each case, with respect to the Placing Shares or the
Option Shares.
1.10 The Company has not paid or agreed to pay to any person any compensation
for soliciting another to subscribe for or purchase any securities of the
Company, except as contemplated by this agreement.
1.11 The Company has not taken, directly or indirectly, any action designed to
cause or which has constituted or which might reasonably be expected to
cause or result, under the Exchange Act or otherwise, in the stabilisation
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Shares.
1.12 No consent, approval, authorisation, filing with or order of any court or
governmental agency or body is required in connection with the transactions
contemplated herein or the offer and sale of the Placing Shares and the
Option Shares under any law or regulation applicable in the USA or any of
the Listed Countries, except filings under the Securities Act, Exchange Act
and applicable state securities laws with respect to the Company's
obligations under the Registration Rights Agreement and filings, under the
Exchange Act to report the transactions contemplated herein or the offer
and sale of the Placing Shares and the Option Shares.
1.13 The issue and sale of the Placing Shares or the Option Shares, the
execution and delivery of this agreement, the consummation of any other of
the transactions contemplated in it and, the fulfilment of its terms will
not conflict with, result in a breach or violation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or
any of its Subsidiaries pursuant to, (i) the certificate or incorporation
or bylaws of the Company or any of its Subsidiaries; (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or instrument
to which the Company or any of its Subsidiaries is a party or bound or to
which its or their property is subject; or (iii) any statute, law, rule,
regulation, judgement, order or decree applicable to the Company or any of
its Subsidiaries of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over
the Company or any of its Subsidiaries or any of its or their properties.
1.14 Provided the offer and sale of the Placing Shares and the Option Shares is
conducted in accordance with the provisions hereof, the offer and sale of
the Placing Shares and the Option Shares is exempt from registration under
the Securities Act by virtue of the exemption contained in Regulation S or
in the case of any offer or sale to a US Person, section 4(2) of the
Securities Act.
30
1.15 The summaries of the Acquisition and the Acquisition Agreement and the sale
of Toucan Mining Limited set out in the Investment Memorandum are accurate
and not materially misleading, including by omission.
THE GROUP
2.1 Each of the Company and the Subsidiaries has been duly organised and is
validly existing (in the case of the Company as a corporation in good
standing) under the laws of the jurisdiction in which it is chartered or
organised with full corporate power and authority to own or lease, as the
case may be, and to operate its properties and conduct its business as
described in the Information Memorandum, and is duly qualified to do
business as a foreign corporation (and in the case of the Company is in
good standing) under the laws of each jurisdiction which requires such
qualification.
2.2 All the outstanding shares of capital stock of each Subsidiary have been
duly and validly authorised and issued and are fully paid and
non-assessable, and, except as otherwise set forth in the Information
Memorandum, all outstanding shares of capital stock of the Subsidiaries are
owned by the Company either directly or through wholly owned subsidiaries
free and clear of any perfected security interest or any other security
interests, claims, liens or encumbrances.
2.3 The Company is not required to register under the US Investment Company Act
of 1940, as amended as it is a transient investment company within the
meaning of Rule 3a-2 of the US Investment Company Xxx 0000, as amended.
2.4 The Company is subject to and in compliance in all material respects with
the reporting requirements of Section 13 or Section 15(d) of the Exchange
Act.
2.5 This agreement has been duly authorised, executed and delivered by the
Company and constitutes the legal, valid and binding obligations of the
Company, enforceable against each of them in accordance with its terms.
2.6 The Company and each of its Subsidiaries owns or leases all such properties
as are necessary to the conduct of their operations as presently conducted.
2.7 Neither the Company nor any Subsidiary is in violation or default of (i)
any provision of its certificate of incorporation or bylaws; (ii) the terms
of any indenture, contract, lease, mortgage, deed of trust, note agreement,
loan agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or bound or to which its property is
subject; or (iii) any statute, law, rule, regulation, judgement, order or
decree of any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over the Company or
such subsidiary or any of its properties, as applicable in each case to an
extent which is material.
31
2.8 The details of the Company and the Subsidiaries and WRDC set out in the
Information Memorandum are accurate and in particular the directors of each
Group Company are accurately identified as such in the Information
Memorandum and each such director has been validly appointed and consented
to act as a member of the board of each Group Company and the Subsidiaries
are the only Subsidiary Undertakings of the Company.
2.9 The recitals at the beginning of this agreement are accurate and not
misleading.
2.10 The Company currently satisfies the quantitative requirements for inclusion
of its Shares in the Nasdaq NMS.
THE SHARES
3.1 The Company's authorised equity capitalisation is as set forth in the
Information Memorandum; the outstanding Shares have been duly and validly
authorised and issued and are fully paid and non-assessable; the Placing
Shares and the Option Shares have been duly and validly authorised and,
when issued and delivered to and paid for pursuant to this agreement, will
be fully paid and non-assessable; the certificates for the Placing Shares
and the Option Shares are in valid and sufficient form; and the holders of
outstanding shares of capital stock of the Company are not entitled to
pre-emptive or other rights to subscribe for the Placing Shares or the
Option Shares. Except as set forth in the Information Memorandum, no
options, warrants or other rights to subscribe or purchase, agreements or
other obligations to issue, or rights to convert any obligations into or
exchange any securities for, shares of capital stock of or ownership
interests in the Company are outstanding; and the statements set forth in
the Information Memorandum relating to the description of capital stock of
the Company insofar as they purport to constitute a summary of the terms of
the Shares fairly summarise the matters therein described.
3.2 The creation, issue and allotment of the Placing Shares in the manner
proposed by the Placing Documents and the Option Shares will comply with US
law and all other relevant law and regulations.
3.3 The Company has power under its by laws and certificate of incorporation to
create, allot and issue the Placing Shares and to effect the Placing in the
manner proposed and to enter into and perform this agreement without any
further sanction or consent by members of the Company or any class of them
and there is no consent required by the Company for the issue of the
Placing Shares, to effect the Placing and to enter into this agreement and
to perform its obligations under this agreement which has not been
unconditionally and irrevocably obtained.
3.4 The Placing Shares and the Option Shares when issued and delivered against
payment therefor as provided herein, will be duly and validly issued, fully
paid and will not be subject to any restrictions upon voting or transfer
other than as set out in the Company's bye laws and articles or any other
agreement or instrument to which the Company is a party.
32
3.5 All sums due in respect of the issued capital of each Group Company have
been paid to and received by the relevant Group Company and save as
disclosed in the Information Memorandum there are in force no options or
other agreements which call for the issue of, or accord to any person the
right to call for the issue of, any shares in or other securities of the
Group Company.
3.6 When the Placing Shares and the Option Shares are allotted or transferred
to Xxxxxx Xxxxxxx or the Placees and paid for in accordance with the terms
of this agreement, Xxxxxx Xxxxxxx or the Placees will receive valid title
to the Placing Shares and any Option Shares subscribed for or purchased by
them, and the Placing Shares and such Option Shares will be issued, in each
case, free and clear of all liens, charges, encumbrances and adverse
claims.
WORKING CAPITAL
4.1 The working capital projections for the Group referred to or set out in the
Working Capital Report have been approved by each Director after due and
careful enquiry and have been accurately compiled on assumptions reasonably
and honestly made which are believed by each Director to be reasonable.
4.2 The statements, forecasts, estimates and expressions of opinion or
intention which the directors of the Company have made or given as set out
in the Working Capital Report have been made after due and proper
consideration, are honest and represent reasonable expectations on the
basis of facts known or which could on reasonable enquiry have been known
to the Directors
ACCOUNTS AND MANAGEMENT ACCOUNTS
5.1 The consolidated historical financial statements of the Company and its
Subsidiaries included in the Information Memorandum present truly and
fairly in all material respects the consolidated financial position,
results of operations and cash flows of the Company as of the dates and for
the periods indicated, comply as to form with the applicable accounting
requirements of the Securities Act and have been prepared in conformity
with generally accepted accounting principles in the USA applied on a
consistent basis throughout the periods involved (except as otherwise noted
therein). The selected financial data set forth in the Information
Memorandum fairly presents, on the basis stated in the Information
Memorandum, the information included therein; the pro forma financial
statements included in the Information Memorandum includes assumptions that
provide a reasonable basis for presenting the significant effects directly
attributable to the transactions and events described therein, the related
pro forma adjustments give appropriate effect to those assumptions, and the
pro forma adjustments reflect the proper application of those adjustments
to the historical financial statement amounts in the financial statements
included in the Information Memorandum.
5.2 Xxxxx Xxxxxxxx, who have audited financial statements of the Company and
its consolidated Subsidiaries and delivered their report with respect to
the audited consolidated financial
33
statements and schedules included in the Information Memorandum, are
independent public accountants with respect to the Company within the
meaning of the Securities Act and the applicable published rules and
regulations thereunder.
5.3 The Group maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions are executed in
accordance with management's general or specific authorisation, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to maintain accountability for assets, (iii) access to assets is permitted
only in accordance with management's general or specific authorisation; and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect
to any differences.
5.4 The Management Accounts have been prepared by the directors of the Company
with due care and attention in accordance with the same accounting policies
as the Audited Accounts and in the reasonable opinion of the directors of
the Company, having made due and careful enquiry, show a reasonably
accurate and fair view of the profit or loss of the Group as at the date
and for the period in respect of which they have been prepared and are not
affected by any exceptional or non-recurring items.
5.5 Since the Accounts Date there has been no material adverse change in the
trading or financial position or prospects of any Group Company.
DIVIDENDS AND LOANS
6.1 Save as disclosed in the Information Memorandum, the Company has not paid
or made any payment or transfer to shareholders of any dividend, bonus,
loan or other distribution.
6.2 No Subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the
Company any loans or advances to such Subsidiary from the Company or from
transferring any of such Subsidiary's property or assets to the Company or
any other Subsidiary of the Company, except as described in or contemplated
by or reflected in the Information Memorandum.
TAXATION
7.1 For the purpose of this clause 7:
"Code" means the Internal Revenue Code of 1986, as amended.
"Governmental Body" means any foreign, federal, state, local or
other governmental authority or regulatory body.
34
"Regulations" means the federal income tax regulations under the
Code, promulgated by the Treasury Department and contained in
Title 26 of the Code of Federal Regulations, including any
amendments or any substitute or successor provisions thereto.
"Tax" or "Taxes" or "Taxation" means any federal, state, local,
foreign or other net income, gross income, gross receipts,
windfall profits, severance, property, production, sales, use,
transfer, gains, license, excise, franchise, employment, payroll,
withholding (which includes, without limitation, income, payroll
tax, foreign withholding, backup withholding, and any other
withholding obligation imposed by the Code or a Governmental
Body), value added, estimated, alternative or add on minimum tax,
or any other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount
imposed by any Governmental Body; and
"Tax Return" means any return, report or similar statement
required to be filed with respect to any Taxes (including any
required schedules), including, without limitation, any
information return, claim for refund, amended return and
declaration of estimated Tax.
7.2 No Group Company has incurred, nor will incur, any liability in respect of
any Taxation in respect of the period since the Accounts Date to the date
hereof which is material in the context of the Placing, other than any such
liabilities arising in the ordinary course of its business since the
Accounts Date and any such liabilities arising since that date as a result
of any transactions entered into by and affecting it which are disclosed in
the Information Memorandum.
7.3 Each Group Company is registered for value added tax (of the equivalent) in
every country in which it is liable to pay value added tax.
7.4 The statements in the Information Memorandum under the heading "Taxation"
fairly summarise the matters therein described.
7.5 There are no stamp or other issuance or transfer taxes or duties or other
similar fees or charges required to be paid in connection with the
execution and delivery of this agreement or the issue by the Company of the
Placing Shares or the Option Shares or the issuance and sale of the Placing
Shares and the Option Shares.
7.6 Tax Returns that are required to have been filed by the Company and each
Subsidiary have been filed within the time and in the manner required by
law, and all such Tax Returns are true and correct and accurately reflect
the respective Tax liabilities of the Company and its Subsidiaries in all
respects. All Taxes of the Company and each Subsidiary that have become due
pursuant to such Tax Returns, or any assessments or demand for payment
received, have been paid. The provision for Taxes reflected on the
financial statements included in the Information Memorandum is adequate to
cover all Tax liabilities, whether or not disputed, of the Company and each
Subsidiary with respect to any taxable year or taxable period ending
35
on or before the date thereof, and nothing has occurred subsequent to the
such date to make any such provision inadequate. All Taxes related to
taxable periods of the Company and each Subsidiary subsequent to the date
of the financial statements contained in the Information Memorandum have
been paid or are adequately reserved for on the books and records of the
Company and each Subsidiary. There are no current, pending or threatened
claims, assessments, notices, proposals to assess, deficiencies, or audits
with respect to any Taxes. No Governmental Body has claimed that the
Company or any Subsidiary is or may be subject to taxation by that
Governmental Body. The Company and each Subsidiary has withheld and paid
all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, shareholder, creditor, independent
contractor or other party. Neither the Company nor any Subsidiary has
executed any presently effective waiver or extension of any statute of
limitations against assessments and collections of Taxes. No Tax Returns of
the Company or any Subsidiary are presently subject to an extension of time
to file.
7.7 Neither the Company nor any Subsidiary has filed, or has had filed on its
behalf, an election under Section 341(f) of the Code that is applicable to
the Company, any Subsidiary or any of their respective assets. Neither the
Company nor any Subsidiary is a party to any Tax allocation or sharing
agreement. Neither the Company nor any Subsidiary, has been a member of an
affiliated group that elected to file or was required to file consolidated
returns for federal income tax purposes or consolidated, combined or
unitary tax returns for state or local income tax purposes.
7.8 Neither the Company nor any Subsidiary has an interest in any entity that
is treated as a partnership for federal income tax purposes.
7.9 Except to the extent disclosed in the Information Memorandum, neither the
Company nor any Subsidiary is a successor to any other business entity by
way of merger, reorganisation, liquidation or similar transaction.
7.10 There is no ruling issued to the Company or any Subsidiary (or closing
agreement or gain recognition agreement to which the Company or any
Subsidiary is a party) concerning Taxes from (or with) any Governmental
Body.
PROPERTIES
8. The Information Memorandum contains details of the only properties owned,
leased, licenced, or occupied by a Group Company or in respect of which the
Group has any material liability (contingent or otherwise) and so far as
the Warrantors are aware, there is no fact or circumstance as a result of
which any person may validly require the relevant Group Company to vacate
prematurely the Properties or to cease to carry on the business which it
presently carries on at the Properties, which is, in either case, material
in the context of the Placing.
ENVIRONMENT
36
9. So far as the Warrantors are aware, the Company and its Subsidiaries are
(i) in compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws"); (ii) have received and
are in compliance with all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective
businesses; and (iii) have not received notice of any actual or potential
liability for the investigation or remediation of any disposal or release
of hazardous or toxic substances or wastes, pollutants or contaminants,
except where such non-compliance with Environmental Laws, failure to
receive required permits, licenses or other approvals, or liability would
not, individually or in the aggregate, have a material adverse change in
the condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its Subsidiaries, individually or taken as a
whole, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Information
Memorandum (exclusive of any amendment or supplement thereto); except as
set forth in the Information Memorandum, neither the Company nor any of the
Subsidiaries has been named as a "potentially responsible party" under the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended.
INSURANCE
10. The Company and each of its Subsidiaries are insured by insurers of
recognised financial responsibility against such losses and risks and in
such amounts as are reasonably prudent in the businesses in which they are
engaged; all policies of insurance and fidelity or surety bonds insuring
the Company or any of its Subsidiaries or their respective businesses,
assets, employees, officers and directors are in full force and effect; the
Company and its Subsidiaries are in compliance with the terms of such
policies and instruments in all material respects; and there are no claims
by the Company or any of its Subsidiaries under any such policy or
instrument as to which any insurance company is denying liability or
defending under a reservation of rights clause; neither the Company nor any
such Subsidiary has been refused any insurance coverage sought or applied
for; and neither the Company nor any such Subsidiary has any reason to
believe that it will not be able to renew its existing insurance coverage
as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost
that would not have a material adverse effect on the condition (financial
or otherwise), earnings, business or properties of the Company and its
Subsidiaries, taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated in
the Information Memorandum (exclusive of any amendment or supplement
thereto).
INTELLECTUAL PROPERTY
11.1 In this warranty 11, "Intellectual Property Rights" means all Intellectual
Property described or referred to in the Information Memorandum as owned or
used by the Company and/or which is necessary or desirable for the conduct
of its business as now or proposed to be
37
conducted as described in the Information Memorandum or which otherwise
relates to the business of the Company.
11.2 The Company is the sole beneficial owner of all Intellectual Property
Rights owned by it ("Owned Rights") free from liens, charges and
encumbrances and full particulars of each of such Owned Rights are set out
in the written responses of the Company and its advisers to the Legal Due
Diligence Questionnaire. Each of such Owned Rights which is registered is
valid and enforceable.
11.3 The Warrantors have no reason to believe that any of the unregistered Owned
Rights capable of registration would not be registered or granted on an
application for such registration or grant and the Warrantors believe any
such registration or grant will be valid.
11.4 The details of the Intellectual property Rights described or referred to in
the Information Memorandum are true, complete and accurate in all material
respects.
11.5 All Intellectual Property Rights material to the existing or proposed
business of the Company other than the Owned Rights ("Licenced Rights") are
licenced to the Company on the terms of subsisting licences ("Licences")
which have been disclosed to Xxxxxx Xxxxxxx'x legal advisers. Each Licence
grants the Company adequate rights to use and sub-licence the relevant
Licenced Rights for the conduct of the business of the Group as now or
proposed to be conducted as described in the Information Memorandum in all
material respects. There are no agreements with third parties other than
the Licences whereby any member of the Group is authorised to use any
Intellectual Property.
11.6 The Licences are enforceable by the Company in accordance with their terms
and there has not been any material default (or any event which with notice
or lapse of time or both would constitute a default) under any of them by
any member of the Group or (as far as the Company is aware) by any other
party to such Licences.
11.7 Except as disclosed in writing to Xxxxxx Xxxxxxx'x legal advisers in
response to the Legal Due Diligence Questionnaire, the Company does not use
any Intellectual Property Rights which are capable of registration in
countries in which the Group carries on or proposes to carry on its
business other than in the countries where such rights have been registered
and (in the case of any trade and service marks which form part of such
Rights) other than in relation to the goods and services specified in the
registration.
11.8 There is no reason to believe that any Owned Rights which are capable of
registration in countries in which the Group carries on or proposes to
carry on its business but in respect of which the Company has not been
registered as proprietor cannot be registered by the Company, in each case
to the full extent to which the registration of such Intellectual Property
is possible in such countries. The Company has taken the steps referred to
in the Information Memorandum and the written responses to the Legal Due
Diligence Questionnaire to protect
38
any Intellectual Property currently used by it which are or could through
registration or the taking of any other steps become its property and are
material to its business.
11.9 There has been no infringement by the Company of Intellectual Property held
by third parties which would have a material adverse effect on the
business, assets or prospects of the Group. So far as the Warrantors are
aware, there has not been any infringement by third parties of the Owned
Rights or the Licenced Rights which would have a material adverse effect on
the business, assets or prospects of the Group.
11.10The Company has not done or omitted to do any act, matter or thing in
respect of any Intellectual Property Rights which would impinge upon the
validity or enforceability of the same or upon the right of the Company to
use the same to an extent which is material in the context of the Group nor
are there any outstanding obligations of the Company whether as to payment
or otherwise which if left outstanding would so impinge.
11.11So far as the Warrantors are aware none of the Owned Rights is being used
by any person other than the Group. None of the Intellectual Property
Rights is the subject of any claim, opposition, assertion, infringement,
attack, right, action or other restriction or arrangement of whatsoever
nature which does or may impinge upon the validity, enforceability or
ownership of the same or the utilisation thereof by any Group Company to an
extent which is material in the context of the Group.
11.12So far as the Warrantors are aware, none of the activities of the Company
infringes any right of any other person relating to Intellectual Property
or gives rise to a liability for any royalty, compensation or similar
payment.
11.13All formulae, processes and other information forming part of Owned Rights
or the subject of any of the Licences (including in each case any know-how
and confidential information) are adequately documented and to the extent
that they are confidential or material in the context of the Group have not
been (and nor is there any agreement that they will or may be) disclosed to
any third party.
11.14 All documents material to the title to any Owned Rights and an original of
all Licences are in the Company's possession.
INDEBTEDNESS
12.1 No circumstances have arisen or so far as the Warrantors are aware are
likely to arise, such that any person is, or would with the giving of
notice and/or lapse of time become, entitled to require payment of any
material indebtedness (including, for the avoidance of doubt, pursuant to
finance leases) of any Group Company before its stated maturity and no
person to whom any material indebtedness of a Group Company which is
payable on demand is owed has indicated to the Group Company that it now
proposes to demand repayment.
39
12.2 No event has occurred or so far as the Warrantors are aware is about to
occur by reason of the happening of which any secured or unsecured
borrowings of any Group Company have become or would with the giving of
notice or the lapse of time become repayable prior to maturity, and there
are no circumstances known to any Group Company which are reasonably likely
to lead to the occurrence of any such event.
MATERIAL CONTRACTS
13.1 No notice has been given to any of the Warrantors or action taken or is
expected to be given or taken whereby any material agreement, instrument or
arrangement to which any Group Company is a party would be terminated or
amended in any material respect. No event has occurred or is subsisting or
so far as the Warrantors are aware is about to occur, which constitutes or
results in, or would with the giving of notice and/or lapse of time,
constitute or result in, a default or the acceleration or breach of any
obligation under any agreement, instrument or arrangement to which any
Group Company is a party or by which it or any of its properties, revenues
or assets are bound or in the infringement by any Group Company of any
intellectual property rights held by third parties and which would, in any
such case, have a material adverse effect on the business, assets or
prospects of the Group.
13.2 The documents disclosed by the Company in response to the Legal Due
Diligence Questionnaire include complete copies of all material contracts
to which any Group Company is a party.
13.3 No Group Company has manufactured, sold or supplied products which are, or
were, or will become, in any material respect faulty or defective or which
do not comply in any material respect with any warranties or
representations expressly or impliedly made by any Group Company or with
all applicable regulations, standards and requirements.
INSOLVENCY
14. No Group Company has taken any action nor have any other steps been taken
or legal proceedings started or threatened against any Group Company for
its the winding-up or dissolution or for it to enter into any arrangement
or composition for the benefit of creditors, or for the appointment of a
receiver, administrator, administrative receiver, trustee or similar
officer of its properties, revenues, undertakings or assets.
LITIGATION
15.1 Except as disclosed in the Information Memorandum neither the Warrantors
nor any Group Company is engaged in any legal or arbitration proceedings or
enquiries by any governmental or regulatory bodies which, individually or
collectively, are material or may have or have had during the last 12
months a significant effect on the financial position or prospects of the
Group Company or the Group taken as a whole and, so far as the Warrantors
are aware, no such
40
legal or arbitration proceedings are threatened or pending nor, so far as
the Warrantors are aware, are there any circumstances which are likely to
give rise to any such legal or arbitration proceedings.
15.2 The Group has adequate insurance in place in respect of any litigation
relating to the Group which is disclosed in the Information Memorandum.
EMPLOYMENT
16.1 The Warrantors are not aware that any executive, key employee or
significant group of employees of any Group Company plans to terminate
employment with such Group Company. For the purposes of this clause, "key
employee" means an employee whose annual salary is equal to or exceeds
$30,000.
16.2 Neither any Director, nor so far as the Warrantors are aware any key
employee, is subject to any non-compete, non-disclosure, confidentiality,
employment, consulting or similar agreement which would be violated by the
present or proposed business activities of any Group Company.
16.3 No labour problem or dispute with the employees of the Company or any of
its Subsidiaries exists or so far as the Warrantors are aware is threatened
or imminent.
LEGAL DUE DILIGENCE REPORT
17. The information supplied by the Group and its advisers in response to the
Questionnaire was, when provided, true and accurate in all material
respects and no further information has been withheld, the absence of which
would make misleading in any material respect the information so provided
or which is material to be known by Xxxxxx Xxxxxxx or its advisers in
connection with the Placing and the information so supplied is accurate in
all material respects and any opinions attributed to any of the Warrantors
in such replies are honestly held and either fairly based upon facts within
the knowledge of the Warrantors or made on reasonable grounds.
VERIFICATION NOTES
18. The replies to the Verification Notes, are true and accurate in all
material respects and have been prepared or approved by persons reasonably
believed by the Warrantors to have appropriate knowledge and responsibility
to enable them properly to provide such replies and any statements of
opinion contained in the replies to the Verification Notes are honestly
held and either fairly based upon facts within the knowledge of the
Warrantors or made on reasonable grounds.
RELATED PARTIES
41
19. The Information Memorandum contains details of all material agreements and
arrangements (whether written or unwritten) entered into outside the
ordinary course of business between a Group Company and any one or more of
the directors of the Group or any connected persons of any one or more of
such directors.
COMPLIANCE
20.1 No Group Company nor so far as the Warrantors are aware any of its officers
has committed or is liable for any criminal, illegal or unlawful act or
breach of any obligation or duty whether imposed by or pursuant to statute,
contract, the relevant Group Company's by-laws or otherwise, and to the
best of the knowledge, information and belief of the Warrantors no claim
that it has or is doing so remains outstanding against any such member.
20.2 No Group Company has received notification that any investigation or
enquiry is being or has been conducted by any governmental or other body in
respect of the affairs of any member of the Group and to the best of the
knowledge, information and belief of the Warrantors there are no
circumstances which would give rise to such investigation or enquiry.
20.3 The Company and its Subsidiaries possess all licenses, certificates,
permits and other authorisations issued by the appropriate federal, state
or foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such Subsidiary has received
any notice of proceedings relating to the revocation or modification of any
such certificate, authorisation or permit which, singly or in the
aggregate, if the subject of an unfavourable decision, ruling or finding,
would have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company and
its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business.
20.4 The Company has offered and sold all of its issued and outstanding capital
stock in accordance with the Securities Act, the Exchange Act and all rules
and regulations promulgated thereunder, and the blue sky or other
securities laws of any state the laws of which would have been applicable
to any such offer or sale.
20.5 Since becoming subject to the Exchange Act, the Company has complied in all
material respects with the provisions of the Exchange Act and all rules
promulgated thereunder and has filed all reports required to be filed
pursuant to the Exchange Act and all rules and regulations promulgated
thereunder.
20.6 The Company and its officers, directors and Affiliates have never been the
subject of an injunction, order or decree of the SEC or any federal or
state court relating to US securities laws.
DIRECTORS' DETAILS
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21. The answers given by each Director to Xxxxxx Xxxxxxx in his director's
questionnaire and the answers given by each Director in his declaration of
business activities are true and accurate in all material respects and no
further information has been withheld which would make such answers
misleading.
NO VIOLATION OF SECURITIES LAWS
22.1 No Group Company and no predecessor or affiliate or associate of any Group
Company has offered, sold or issued any of its securities in violation of
any US federal securities laws or the securities laws (blue sky laws) of
any state of the US.
22.2 Notwithstanding anything set forth herein, the Company's subsidiary, Toucan
Mining plc (formerly named Toucan Mining Ltd) filed a Form 20-F with the
SEC, which was withdrawn. The SEC issued a comment letter with respect to
such Form 20-F, a copy of which has been provided to Xxxxxx Xxxxxxx. The
comments set forth in paragraphs 9, 10, 11, 12, 18, 19, 20, 21, 32, 33, 34,
35, 46 and 50 to 88 of the comment letter may be applicable to reports
filed by the Company with the SEC pursuant to the Exchange Act or with
respect to other matters relating to the Company's compliance with
applicable securities laws. Accordingly, any warranties set forth in this
second schedule relating to compliance with applicable securities laws is
qualified by reference to such comments.
DATA PROTECTION ACT
23. Each Subsidiary has complied with all requirements of the Data Protection
Xxx 0000 and in particular:
23.1 has registered as a data user under that Act for all purposes for which
registration is required by the business as carried on by that Subsidiary;
23.2 has complied with the data protection principles; and
23.3 no Group Company has received any notice letter or complaint alleging a
breach by a Subsidiary of the provisions of the Data Protection Act 1984
and has no reason to believe that circumstances exist which may give rise
to such a notice letter or complaint.
43
THIRD SCHEDULE
DOCUMENTS TO BE DELIVERED
1. A copy of the Information Memorandum and (on the date of publication) any
supplemental memorandum required to be issued under the FSA signed by the
directors of the Company or their attorneys.
2. A copy of the board and board committee minutes of the Company in the
Agreed Form relating to the approval and issue of the Information
Memorandum and the Placing and copies of all documents referred to therein.
3. Such number of conformed copies of the Information Memorandum and (on the
date of publication) any supplementary information memorandum required to
be issued as Xxxxxx Xxxxxxx shall reasonably request.
4. Two copies of each of the Press Announcement in the Agreed Form on the date
of its publication.
5. Duly executed Lock-up Agreements in the Agreed Form.
6. Duly executed Directors' Powers of Attorney in the Agreed Form.
7. Duly signed Directors' Responsibility Letters.
8. The following financial documents:
*8.1 the Company's Working Capital Letter in the agreed Form;
8.2 duly signed Accountants' Consent Letter in the agreed Form;
*8.3 duly signed Financial Information Comfort Letter in the agreed Form;
*8.4 duly signed Accountants Working Capital Comfort Letter in the agreed Form;
8.5 a copy of the Accounts, duly signed by the Accountants;
8.6 a copy of the Working Capital Report in the agreed Form; and
44
8.7 a copy of the Management Accounts signed by a Director.
9. An original signed copy of the Verification Notes.
10. A copy of the certificate of incorporation and by-laws or memorandum and
articles of association of each Group Company current at the date of this
agreement and the Placing Date.
11. A copy of all board and shareholders' resolutions relating to creation,
conversion and issue of the Placing Shares and the Option Shares.
12. A copy of the leases and licences relating to the Properties.
13. The original questionnaires of the directors of the Company addressed to
Xxxxxx Xxxxxxx duly signed by such directors
14. A copy of the signed service agreements and letters of appointment of the
directors of the Company.
15. A copy of each of the material contracts referred to in the Information
Memorandum.
*16. A duly signed copy of the UK Legal Comfort Letter.
*17. A duly signed copy of the US Legal Comfort Letter.
18. A duly executed copy of the Registration Rights Agreement.
19. The Acquisition Agreement and all agreements and documents referred to
therein or entered into in connection therewith or pursuant thereto.
20. The share sale agreement relating to the sale by the Company of Toucan
Mining Limited and all agreements and documents referred to therein or
entered into in connection therewith or pursuant thereto.
* to be re-delivered in an up to date version on the day before the Placing Date
45
ANNEX A
Selling Restrictions for Offers and Sales outside the United States
Xxxxxx Xxxxxxx acknowledges that the Placing Shares have not been and will not
be registered under the Securities Act and may not be offered or sold within the
USA or to, or for the account or benefit of, US persons except in accordance
with Regulation S under the Securities Act or pursuant to an exemption from the
registration requirements of the Securities Act. Except as permitted by Clause
21.9.1(i), Xxxxxx Xxxxxxx represents that neither it nor, so far as it is aware,
any selling agent appointed by it in connection with the Placing have offered or
sold the Placing Shares or the Option Shares, and will not offer and sell the
Placing Shares or the Option Shares (i) as part of their distribution at any
time and (ii) otherwise until one year after the later of the commencement of
the offering and the Time of Delivery, except in accordance with Rule 903 of
Regulation S under the Securities Act. Accordingly, Xxxxxx Xxxxxxx agrees that
it, its Affiliates and all persons acting on its or their behalf will not make
offers of the Placing Shares and the Option Shares to persons in the United
States and that at the time a buy order is originated, the buyer will be outside
the United States, or it or they will reasonably believe that the buyer is
outside the United States. Further, Xxxxxx Xxxxxxx agrees that neither it, its
Affiliates nor any persons acting on its or their behalf have engaged or will
engage in any directed selling efforts in the United States with respect to the
Placing Shares or the Option Shares, and it and they have complied and will
comply with the offering restrictions requirement of Regulation S. Xxxxxx
Xxxxxxx agrees to engage in hedging transactions in the Company's Class A common
stock only in accordance with the Securities Act. Xxxxxx Xxxxxxx agrees that, at
or prior to confirmation of sale of Securities, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases Securities from it during the distribution
compliance period a confirmation or notice to substantially the following
effect:
"The securities covered hereby have not been registered under the US Securities
Act of 1933 (the "Securities Act") and may not be offered and sold within the
United States or to, or for the account or benefit of, US persons (i) as part of
their distribution at any time or (ii) otherwise until one year after the later
of the commencement of the offering and the closing date, except in either case
in accordance with Regulation S under the Securities Act. Hedging transactions
in the Company's common stock may only be engaged in if in compliance with the
Securities Act. Terms used above have the meaning given to them by Regulation
S".
Terms used in this paragraph have the meanings given to them by Regulation S.
46
