DATED 6th February 1998
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(1) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
AND OTHERS
(2) GETTY COMMUNICATIONS PLC
AND
GETTY IMAGES, INC.
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AGREEMENT FOR THE SALE OF THE
WHOLE OF THE ISSUED SHARE CAPITAL OF
ALLSPORT PHOTOGRAPHIC PLC
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INDEX
1. Interpretation ....................................................... 1
2. Sale of Shares and purchase consideration ............................ 5
3. Completion ........................................................... 6
4. Warranties ........................................................... 9
5. Buyers' Warranties ................................................... 10
6. Remedies ............................................................. 11
7. Restrictive covenants ................................................ 11
8. Information .......................................................... 13
9. General .............................................................. 14
10. Notices .............................................................. 14
11. Restriction on Sale of Consideration Shares .......................... 15
12. Securities Act of 1933 ............................................... 15
SCHEDULE 1A DETAILS OF SELLERS AND CONSIDERATION PAYABLE ................ 18
SCHEDULE 1B PART 1 - THE COMPANY ........................................ 20
SCHEDULE 1B PART 2 - UK SUBSIDIARY ...................................... 22
SCHEDULE 1B PART 3 - OVERSEAS SUBSIDIARY ................................ 23
SCHEDULE 2 TAX DEED ..................................................... 24
1. Definitions and interpretation ....................................... 25
2. Covenant ............................................................. 27
3. Limitation of Covenantors' Liability ................................. 27
4. Disputes and Conduct of Tax Claims ................................... 30
5. Payment Date and Interest ............................................ 31
6. Mitigation ........................................................... 32
7. Over-provisions ...................................................... 32
8. Taxation of Payments ................................................. 33
9. Recovery from other persons .......................................... 34
10. Savings .............................................................. 34
11. Corporation Tax Returns .............................................. 35
12. Counter Covenant ..................................................... 35
13. Information .......................................................... 36
14. Preservation of records and insurance ................................ 36
15. Assignment ........................................................... 36
16. General .............................................................. 36
17. Notices .............................................................. 37
Schedule 1 The Covenantors ............................................... 38
Schedule 2 The Companies ................................................. 39
SCHEDULE 3 GENERAL WARRANTIES PART A ................................... 41
1. Information .......................................................... 41
2. Share capital ........................................................ 41
3. Accounts ............................................................. 41
4. Debts ................................................................ 42
5. Liability to the Sellers etc ......................................... 42
6. Insolvency ........................................................... 42
7. Library Photographs .................................................. 43
8. Confidentiality ...................................................... 43
9. Subsidiaries ......................................................... 43
SCHEDULE 3 GENERAL WARRANTIES PART B ................................... 45
1. Stock and fixed assets ............................................... 45
2. Events since Accounts Date ........................................... 45
3. Assets of the Company ................................................ 46
4. Employment matters ................................................... 46
5. Restrictions on business ............................................. 48
6. Pensions ............................................................. 48
7. Litigation ........................................................... 49
8. Applicable legislation ............................................... 49
9. Company books of account, records and documents ...................... 50
10. Insurances ........................................................... 50
11. Company agreements ................................................... 50
12. Conduct of business .................................................. 50
13. Environmental matters ................................................ 51
14. Loans, charges and guarantees ........................................ 51
15. Unusual obligations .................................................. 52
16. Brokerage ............................................................ 53
17. Intellectual Property ................................................ 53
18. Taxation ............................................................. 54
19. Property ............................................................. 56
20. Subsidiaries ......................................................... 57
21. Projections .......................................................... 57
SCHEDULE 4 DESCRIPTION OF THE PROPERTY PART 1: FREEHOLD PROPERTY ...... 58
PART 2: LEASEHOLD PROPERTY .............................................. 58
SCHEDULE 5 LIMITATIONS ON THE SELLERS' LIABILITY ........................ 59
1. General .............................................................. 59
2. Disclosure ........................................................... 59
3. Minimum and Maximum Claims ........................................... 59
4. Time Limits .......................................................... 60
5. Single Recovery ...................................................... 61
6. Reliance ............................................................. 61
7. Rescission ........................................................... 61
8. Specific Limitations ................................................. 61
9. Recovery ............................................................. 63
10. Contingent Liabilities ............................................... 64
11. Notice of Claims ..................................................... 64
12. Mitigation ........................................................... 65
13. Preservation of records and insurance ................................ 65
14. Knowledge of Sellers ................................................. 66
AGREED FORM DOCUMENTS
Completion Board Minutes
Schedule of Disclosure Documents
Management Accounts
Schedule of Staff Bonus Payments
Service Agreements
Information Memorandum
Strategy Paper
MP Option Surrender Deed
Trustee Undertaking
THIS AGREEMENT is made the 6th day of February 1998
BETWEEN:
(1) The persons whose names and addresses are set out in column (1) of
schedule 1A ("Sellers"); and
(2) GETTY COMMUNICATIONS PLC a company registered in England and Wales under
number 3005770 whose registered office is at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇ ("Getty Communications") and GETTY IMAGES, INC. a Delaware
corporation whose principal executive offices are located at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Getty Images")
(together the "Buyers" which expression shall include any successors and
assigns).
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 Unless the context otherwise requires the following definitions shall apply
throughout this agreement:
"ACCOUNTS" means the audited consolidated balance sheet of the Company
and its subsidiaries as at the Accounts Date and the audited consolidated
profit and loss account of the Company and its subsidiaries for the year
ended on that date together with the notes thereto and the report of the
directors in respect of that period
"ACCOUNTS DATE" means 30th November 1996
"AGREED FORM" means a form agreed by the Sellers and the Buyers and
initialled by, or on behalf of, the Sellers and the Buyers
"A SHARES" means the 19,140 A Shares of L1 each of the Company
"BUSINESS DAY" means a day other than a Saturday or Sunday or public
holiday in England and Wales;
"ASSOCIATE" means any associate or associated company, as such terms are
respectively defined in sections 416 and 417 Taxes Act
"B SHARES" means the 1,914,000 B Shares of 0.01p each of the Company
"BUYERS' GROUP" means the group of companies comprising the Buyers and
their subsidiaries from time to time
"BUYERS' SOLICITORS" means ▇▇▇▇▇▇▇▇ Chance, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
"CASH CONSIDERATION" means the sum of L16,529,750 payable to the Sellers
on Completion by Getty Communications in the individual sum per Seller
set out in Column (3) of Schedule 1A being part of the Consideration
"COMPANY" means Allsport Photographic Plc, details of which are set out
in Part 1 of schedule 1B
1
"COMPANY'S INTELLECTUAL PROPERTY" means all Intellectual Property and
Materials used by each group company or relating to the business of any
group company at Completion (other than the Library Photographs and all
Intellectual Property in them)
"COMPLETION" means the performance by the parties of their obligations
under clause 3 and, where the context so admits, the date on which such
obligations are performed
"COMPLETION STAFF PAYMENT" means the payment in an aggregate sum of
L250,400.65 to be made by the Company and each other group company to
their respective employees as set out in column I of the schedule of
staff bonus payments in agreed form
"CONFIDENTIAL INFORMATION" means all information not publicly known used
in or otherwise relating to each group company's business, customers or
financial or other affairs, including, without limitation, information
relating to:
(a) the marketing of goods or services including, without limitation,
customer names and lists and other details of customers, sales
targets, sales statistics, market share statistics, prices, market
research reports and surveys, and advertising or other promotional
materials which are not intended for public use or circulation; or
(b) future projects, business development or planning, commercial
relationships and negotiations;
"CONSIDERATION" means the Cash Consideration and the Consideration Shares
"CONSIDERATION SHARES" means the 1,137,916 new ordinary shares of common
stock, par value US$0.01 per share, in Getty Images required to be
allotted and issued to the Sellers in the number per Seller set out in
column (5) of schedule 1A credited as fully paid in accordance with the
provisions of clause 2 of this Agreement in satisfaction of part of the
Consideration or, if applicable, the 2,275,832 new Class A ordinary
shares of 1p each in the capital of Getty Communications required to be
allotted and issued to the Sellers pursuant to clause 3.4
"CONTINGENT LIABILITY" means any circumstance or liability which, under
UK GAAP, would be considered to constitute a contingent liability
"DISCLOSURE DOCUMENTS" means those documents copies of which have been
made available to the Buyers for inspection and short details of which
are set out in the index headed "Schedule of Disclosure Documents" in
the agreed form
"DISCLOSURE LETTER" means a letter from the Sellers to the Buyers in
relation to the Warranties and having the same date as this Agreement
identifying itself as the Disclosure Letter referred to herein, and the
expression "disclosed to the Buyers" shall mean as disclosed in the
Disclosure Letter
"ENCUMBRANCE" means any mortgage, charge, pledge, lien, option,
restriction or other security interest of any kind, any option or right
of first refusal, pre-emption, forfeiture or call, any other right
exercisable by a third party, any other encumbrance (including
encumbrances imposed and rights conferred by or under any enactment) and
any other type of preferential arrangement (including, without
limitation, title transfer and retention arrangements) having a similar
effect
"EVENT" includes any act, omission, occurrence, transaction or
circumstance (including the Completion of this agreement in accordance
with its terms)
2
"GROUP COMPANY" means a member of the group comprising the Company and
its subsidiaries
"GUARANTEE" includes indemnity, security given for the indebtedness or
liabilities of another person, and all other forms of surety
"IHTA" means Inheritance Tax ▇▇▇ ▇▇▇▇
"INDEPENDENT CONTRACTOR AND EXIT AGREEMENTS" means the agreements of such
name both dated 30 November 1995 and made between the Overseas Subsidiary
and ▇▇▇▇▇▇▇ ▇▇▇▇▇, copies of which appear at 5.8.4 and 5.8.5 in the
Schedule of Disclosure Documents
"INDUSTRIAL DISPUTE" includes both a trade dispute, as defined by
section 218 Trade Union and Labour Relations (Consolidation) ▇▇▇ ▇▇▇▇,
and a strike
"INTELLECTUAL PROPERTY" means all patents, trade marks, service marks,
community trade marks, registered designs, trade names, business names,
unregistered trade and service marks, copyrights, topography rights,
design rights, Know-How, trade secrets and all other industrial or
commercial monopoly rights, intellectual property rights and rights or
forms of protection of the same or of a similar or equivalent nature or
effect which may subsist anywhere in the world whether or not registered
or capable of registration and together with all applications for
registration of and rights to apply for any of the foregoing
"KNOW-HOW" means all information, data and methodology not at present in
the public domain and all financial, commercial, trade and business
secrets of whatever nature and in whatever form, including, without
limitation, that comprised in, derived from or relating to any Materials
"LIABILITY" includes contingent liability
"LIBRARY PHOTOGRAPHS" means all the photographs, whether held as
photographs, negatives, transparencies or digitally or in any other
medium and whether located at the Properties, at any group company's
agent's or customer's premises or otherwise, in which any group company
owns the copyright or which any group company, exploits, is entitled to
exploit or is reasonably likely to exploit in connection with its
business at Completion
"MANAGEMENT ACCOUNTS" means the unaudited consolidated profit and loss
account of the Group for the period starting on the day after the
Accounts Date and ending on 30th November 1997 and the Group's unaudited
consolidated balance sheet as at 30th November 1997 in the agreed form
"MATERIALS" means all drawings, diagrams, illustrations, data,
specifications, lists, programs and all other documents, recorded
information and data whatsoever and howsoever stored
"MP OPTION SURRENDER DEED" means the deed in agreed form terminating 900
options for the subscription by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ for 900 ordinary shares of
L1 each in the Company ("MP OPTIONS")
"ORDINARY SHARES" means the 60,176 Ordinary Shares of L1 each in the
Company
"OVERSEAS SUBSIDIARY" means Allsport Photography USA Inc. details of
which are set out in Part 3 of schedule 1B
3
"PLANNING ACTS" means the Public Health Acts 1875 to 1984, the Town and
Country Planning Act 1990 (as amended), the Planning (Listed Buildings
and Conservation Areas) ▇▇▇ ▇▇▇▇, the Planning (Hazardous Substances) ▇▇▇
▇▇▇▇ and all other enactments from time to time relating to town and
country planning
"PROPERTIES" means the properties of which short particulars are set out
in schedule 4, including the whole, or any part or parts of, and any
right or interest in, such property or properties
"SCHEME OF ARRANGEMENT" means the scheme of arrangement dated 6th January
1998 of Getty Communications in relation to the proposed merger of Getty
Communications and PhotoDisc, Inc in accordance with an agreed merger
agreement
"SELLERS' SOLICITORS" means ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (ref GB/NSM/0Z6975/1) ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
"SHARES" means the whole of the issued and to be issued Ordinary Shares,
A Shares and B Shares
"STOCK" includes work in progress
"TAXATION" means any taxation duty levy charge impost or contribution of
whatever nature imposed by any jurisdiction or any statutory governmental
federal state provincial municipal authority body or official whatsoever
thereof whenever imposed and any interest surcharge penalty or fine in
relation thereto
"TAXES ACT" means Income and Corporation Taxes Act 1988
"TAX DEED" means a deed in the form set out in schedule 2, duly executed
by each of the Sellers
"TCGA" means Taxation of Chargeable Gains ▇▇▇ ▇▇▇▇
"TRUSTEES" means Allsport Photographic Share Scheme Trustees Limited, one
of the Sellers
"TRUSTEE UNDERTAKING" means the deed in agreed form to be executed by the
Trustees and the Buyers relating to the exercise of certain discretions
pursuant to the Allsport Photographic plc Unapproved Share Option Scheme
"US PLAN" means the Allsport USA 401(k) Profit Sharing Plan
"WARRANTIES" means the warranties set forth in schedule 3 and "Warranty"
means any of them
"WARRANTORS" means each of the Sellers other than the Trustees
"VATA" means Value Added Tax ▇▇▇ ▇▇▇▇ and, in a jurisdiction outside the
United Kingdom, any equivalent legislation.
1.2 The expressions "subsidiary" and "holding company" bear the same meanings
in this agreement as they respectively bear in the Companies ▇▇▇ ▇▇▇▇.
1.3 Reference in this agreement to any statutory provision shall include a
reference to that provision as amended, extended or re-enacted and to any
statutory replacement thereof (either before or after the date hereof)
from time to time and to any former statutory
4
provision replaced (with or without modification) by the provision
referred to, and shall also include reference to all statutory
instruments and orders made pursuant to any such statutory provision
provided that the liability of the Sellers shall not be increased by any
such amendment, extension, re-enactment, replacement, statutory
instrument or order made after the date hereof.
1.4 Reference in this agreement to the singular includes a reference to the
plural and vice versa and reference to the masculine includes a reference
to the feminine and neuter and reference to a person shall include a
reference to any company as well as any legal or natural person.
1.5 The construction of this agreement and the schedules hereto is not to be
affected by any heading.
1.6 References in this agreement to clauses, sub-clauses and schedules are,
unless otherwise specified, references to clauses and sub-clauses of and
schedules to this agreement.
1.7 References to this agreement include a reference to each of the schedules.
2. SALE OF SHARES AND PURCHASE CONSIDERATION
2.1 Subject to the terms of this agreement each of the Sellers:
2.1.1 shall sell the number of Shares set out opposite his name in
column (2) of schedule 1A to Getty Communications for the Cash
Consideration set out in column (3) of schedule 1A; and
2.1.2 shall sell the number of shares set out opposite his name in
column (4) of schedule 1A to Getty Images (subject to clause 3.4),
for the number of Consideration Shares set out in column (5) of
schedule 1A; and
the Buyers shall purchase such Shares, free from all Encumbrances and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall terminate the MP Options in the terms of the MP
Option Surrender Deed.
2.2 Each of the Sellers hereby covenants with the Buyers that he has full
right, power and title to sell such Shares free from all Encumbrances and
each of the Sellers hereby covenants with the Buyers that he will at his
own cost and as soon as practicable after Completion do everything
reasonably required by the Buyers to transfer to, and vest in, the Buyers
(or their nominees) the full beneficial and legal ownership of such
Shares, free from all Encumbrances.
2.3 Save as specifically provided herein, the provisions of part 1 Law of
Property (Miscellaneous Provisions) Act 1994 shall not apply to this
agreement.
2.4 The Buyers shall not be obliged to complete the purchase of any of the
Shares hereunder unless the Sellers comply with all their obligations
under clause 3 and sale of all of the Shares is completed simultaneously,
and if on Completion such sale is not completed due to one or more of the
Shares not being available for purchase then the Buyers shall be entitled,
but not obliged, to rescind this agreement without liability of any kind
by written notice to the Sellers.
2.5 The Shares shall be sold with the benefit of all rights which attached
thereto at, or which have or will become attached thereto after, the
Accounts Date.
5
2.6 The aggregate consideration for the sale of the Shares shall be paid or
satisfied as follows:
2.6.1 as to L16,529,750 in cash which shall be paid by Getty
Communications to the Sellers at Completion in accordance with
clause 3.5.1; and
2.6.2 by the issue to the Sellers on Completion of the Consideration
Shares credited as fully paid by Getty Images or, if clause 3.4
shall apply, by Getty Communications.
2.7 The Consideration payable to each Seller shall be satisfied:
2.7.1 as regards the Cash Consideration, in the respective amounts (if
any) shown opposite the name of each Seller in column (3) of
schedule 1A; and
2.7.2 as regards the Consideration Shares, by the issue to each Seller
of such number of Consideration Shares (if any) as is shown
opposite the name of such Seller in column (5) of schedule 1A.
3. COMPLETION
3.1 The sale and purchase of the Shares shall be completed on 10th February
1998 at the offices of the Sellers' Solicitors.
3.2 The Sellers shall procure that on or before Completion all amounts
(other than sums arising in the ordinary course of their employment by a
group company) owing to each group company at Completion:
3.2.1 by the Sellers; and
3.2.2 by their respective associates,
shall be paid or repaid in full.
3.3 At or before Completion the Sellers shall deliver to (or make available
to the reasonable satisfaction of) the Buyers:
3.3.1 definitive certificates for the Shares together with transfers
thereof duly executed by the registered holders thereof in favour
of the Buyers (or as it may direct) together with the MP Option
Surrender Deed duly executed by Mr ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Company;
3.3.2 such other consents or documents (if any) as may be reasonably
necessary to give evidence of the title of the transferor to the
Shares and his or its capacity to sell or transfer such Shares;
3.3.3 definitive certificates for the whole of the issued share
capital of each group company (other than the Company) together
with transfers duly executed by the registered holders thereof in
favour of the Buyers (or as it may direct) of any shares in any
group company which are not registered in the name of another
group company;
3.3.4 a letter from National Westminster Bank plc to the Buyers
confirming that the floating charges briefly described in
schedule 1B Parts 1 and 2 have not crystallised and will not
crystallise as a result of Completion, together with
6
evidence as at Completion of the aggregate of monies owed by
group companies to National Westminster Bank plc;
3.3.5 service agreements in agreed form between the Company and
respectively, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ duly executed by the said parties;
3.3.6 the Tax Deed duly executed by the Sellers;
3.3.7 the seal, certificate of incorporation, certificates of
incorporation on change of name and statutory books, duly written
up to date, of each group company;
3.3.8 certified copies of all documents of title to the freehold
property listed in schedule 4 and all documents of title to any
Intellectual Property;
3.3.9 certificates from each of the banks at which each group company
maintains accounts of the amounts standing to the debit or credit
of such accounts at the close of business on the day preceding
Completion;
3.3.10 such cheque books, bank mandates and form of new bank mandates of
each group company and all charge, credit or cash cards issued in
the name of the Company as the Buyers shall have requested on or
before the date of this agreement;
3.3.11 resignation letters for such directors of each group company and
the secretary of each group company as the Buyers shall require;
3.3.12 a counterpart of the Trustee Undertaking duly executed by the
Trustee;
3.3.13 procure that the Company pays by electronic transfer the sum of
$966,666.67 to ▇▇▇▇▇▇▇ ▇▇▇▇▇ in full and final settlement of all
amounts outstanding under the Independent Contractor and Exit
Agreements; and
3.3.14 procure that the payment by the Company and each group company of
the Completion Staff Payment is fully provided for in the
accounting records of the Company and each group company.
3.4
3.4.1 Completion shall not occur until the proposed merger of Getty
Communications and PhotoDisc, Inc has been effected. This
condition may be waived after 10th February 1998 with the written
consent of either the Sellers or the Buyers. In the event of
such waiver either the Sellers or Getty Images has the right to
nominate Getty Communications as the purchaser of the shares set
out in column (4) of schedule 1A. Upon any such nomination,
Getty Communications shall issue two Class A ordinary shares of
1p each credited as fully paid in satisfaction of each share of
common stock in Getty Images which Getty Images would otherwise
have issued pursuant to clause 2.1.2 and notwithstanding any
other provision in this agreement references to the Consideration
Shares and the rights and obligations of Getty Images shall be
read accordingly as references to shares issued pursuant to this
clause 3.4.1 and to rights and obligations of Getty
Communications respectively.
7
3.4.2 Immediately thereafter the Sellers shall procure that a meeting of
the directors of each group company is properly convened and held
and that such meeting:
(a) duly appoints as additional directors such persons as the Buyers
shall nominate;
(b) in the case of the Company, approves the registration of the
transfers of the Shares referred to in sub-clauses 3.3.1 and
3.3.3 (subject to their being duly stamped); and
(c) conducts such other business as the Buyers may reasonably
require;
and that the chairman of each such meeting shall sign the minutes
thereof in agreed form.
3.5 Subject to the Sellers having complied in all respects with their
obligations under this agreement, at Completion:
3.5.1 Getty Communications shall deliver to the Sellers' Solicitors by
electronic transfer to the account of the Sellers' Solicitors the
sum of L16,529,750;
3.5.2 Getty Images shall issue to the Sellers (other than ▇▇▇▇ ▇▇▇▇▇▇
whose Consideration Shares will be issued in April 1999 or as
otherwise agreed by ▇▇▇▇ ▇▇▇▇▇▇ and Getty Images (or, if clause
3.4 shall apply, Getty Communications) in accordance with clause
3.8) the Consideration Shares and Getty Images (or, if clause 3.4
shall apply, Getty Communications) shall provide the Sellers with
a certified copy of the minutes of a meeting of the Board of
Directors of Getty Images (or, if clause 3.4 shall apply, Getty
Communications) (duly convened) at which the issue to the Sellers
of the Consideration Shares was approved and shall deliver the
share certificates in respect thereof to each of the Sellers as
soon as reasonably practicable thereafter;
3.5.3 the Buyers shall deliver to the Sellers' Solicitors a counterpart
of the Tax Deed duly executed by the Buyers; and
3.5.4 deliver to the Sellers' Solicitors a counterpart of the Trustee
Undertaking duly executed by the Buyers.
3.6 Payment to the Sellers' Solicitors in accordance with clause 3.5.1 hereof
shall be a complete discharge to the Buyers who shall not be concerned with
the distribution of any monies so paid amongst the Sellers.
3.7 The Buyers shall after Completion use their best endeavours (but so that
such best endeavours shall not oblige the Buyers to make, or procure the
making of, any payment to a third party) to procure that the Sellers are
released from all guarantees, surety covenants, bonds and indemnities
given by them in respect of any liability of any group company and
pending such release shall indemnify and keep indemnified the Sellers
against any liability which the Sellers may incur thereunder or in
relation thereto.
3.8 The Buyers agree with ▇▇▇▇ ▇▇▇▇▇▇ that Getty Images will issue the
Consideration Shares set opposite his name in column 4 of schedule 1
within 5 Business Days after the restrictions on the sale of
Consideration Shares in clause 11.1 shall have ceased to apply. Getty
Images further agrees that upon a written request from ▇▇ ▇▇▇▇▇▇, it
will defer the issue of any such shares to ▇▇ ▇▇▇▇▇▇ to such later date
or dates as he shall so request.
8
3.9 The Buyers undertake that the bonuses to be paid to each of the Sellers
(other than the Trustee) under the terms of their respective existing
service agreements with the relevant group company (the termination of
such agreements being without prejudice to such Seller's entitlement to
his or her bonus thereunder) in respect of the financial year of the
Company ended 30th November 1997 will be paid within 30 days after the
audited accounts for such financial year have been approved by the
directors of the Company or such other relevant group company or if
earlier on 31st March 1998.
3.10 The Buyers agree to procure that the Completion Staff Payments are paid
on or about 20th February 1998.
4. WARRANTIES
4.1 Each of the Warrantors hereby acknowledges that he has made
representations to the Buyers in the terms of the Warranties at the date
of this agreement with the intention of inducing the Buyers to enter
into this agreement. Accordingly each of the Warrantors hereby severally
represents and warrants to the Buyers, subject to the provisions of this
clause 4 and schedule 5 in the terms of the Warranties and acknowledges
that each Buyer is entering into this agreement in reliance upon such
Warranties.
4.2 The Warranties, and those other obligations of the Sellers, the Buyers
and the Warrantors under this agreement which then remain to be
performed, shall survive Completion.
4.3 Insofar as any information supplied directly or indirectly by any group
company or its agents, advisers, directors, officers or employees prior
to Completion to any of the Warrantors or their agents, advisers,
directors, officers or employees in connection with the Warranties and
any disclosures thereto shall or could be deemed to be a representation
made by the relevant group company to such Warrantor, such Warrantor
hereby waives any and all claims against the relevant group company in
respect thereof.
4.4 Each Warranty shall be construed independently of any other to the
intent that the meaning and effectiveness of any one Warranty shall not
be restricted by reference to any other Warranty.
4.5 No claim by the Buyers shall be prejudiced or reduced in consequence of
any information relating to any group company (other than, in relation
to a claim under the Warranties, information disclosed to the Buyers as
provided in this clause 4 and in schedule 5) which may come to the
knowledge of the Buyers or its advisers after Completion.
4.6 The Warranties are qualified to the extent of the facts and
circumstances disclosed in the Disclosure Letter and the Disclosure
Documents or deemed pursuant to paragraph 2 of schedule 5 to have been
disclosed. Subject to paragraph 6 of schedule 5 no other knowledge
relating to a group company (actual constructive or imputed) prevents or
limits a claim made by the Buyers for breach of the Warranties and the
Warrantors may not invoke the Buyers' knowledge (actual constructive or
imputed) of a fact or circumstance which might make a Warranty untrue,
inaccurate, incomplete or misleading as a defence to a claim for a
breach of Warranty.
4.7 The Warrantors shall not (in the event of any claim made against any of
them in connection with the sale of the Shares to the Buyers) make any
claim against the Company or any group company or against any director
or employee of the Company or any group company on whom they have relied
before agreeing to any term of this agreement or the Tax Deed or
authorising any statement in the Disclosure Letter save
9
that in circumstances where the Warrantors have been fraudulently misled
or information has been deliberately and knowingly withheld by any such
director or employee, or where any employee has otherwise acted in bad
faith, the Warrantors shall be entitled to make a claim against any such
director or employee who has acted fraudulently or deliberately and
knowingly withheld information.
4.8 The provisions of schedule 5 shall operate to limit or exclude, as the
case may be, the liability of the Warrantors for Relevant Claims (as
defined therein).
5. BUYERS' WARRANTIES
5.1 In consideration of the Sellers agreeing to sell the Shares on the terms
contained in this Agreement each of the Buyers hereby warrants to the
Sellers as follows:-
5.1.1 each of the Buyers has the requisite power and authority to enter
into and perform this Agreement and any other agreement referred
to herein to which it is or has agreed to become a party (the
"Buyer Documents");
5.1.2 this Agreement constitutes and the Buyers Documents will, when
executed, constitute binding obligations of each of the Buyers in
accordance with their respective terms;
5.1.3 no order has been made and no resolution has been passed for the
winding up of each of the Buyers or for a provisional liquidator
to be appointed in respect of it and so far as each of the Buyers
is aware no petition has been presented and no meeting has been
convened for the purposes of winding up either of the Buyers;
5.1.4 no administration order has been made and so far each of the
Buyers is aware no petition for such an order has been presented
in respect of either of the Buyers;
5.1.5 no receiver (which expression shall include an administrative
receiver) has been appointed in respect of either of the Buyers;
5.1.6 neither Buyers is insolvent or unable to pay its debts within the
meaning of section 123 of the Insolvency ▇▇▇ ▇▇▇▇ and has not
stopped paying its debts as they fall due;
5.1.7 each Buyer has obtained all necessary shareholder and board
approvals in respect of the entry into of this Agreement and each
other of the Buyers' Documents; and
5.1.8 the execution and delivery of, and the performance by each Buyer
of its obligations under, this Agreement and the Buyers Documents
will not:
(a) be or result in a breach of any provision of the memorandum
or articles of association of Getty Communications or the
by-laws of Getty Images;
(b) be or result in a breach of, or constitute a default under,
any instrument to which either Buyer is a party or by which
either Buyer is bound and which is material in the context
of the transactions contemplated by this Agreement; or
10
(c) be or result in a breach of any order, judgment or
decree of any court or governmental agency to which either
Buyer is a party or by which either Buyer is bound and which
is material in the context of the transactions contemplated
by this Agreement.
5.2 Getty Images undertakes to the Sellers that upon and subject to the
merger with PhotoDisc, Inc and Getty Communications becoming effective
in accordance with its terms, all the Consideration Shares issued to the
Sellers will be quoted on the NASDAQ National Market and shall rank in
all respects pari passu with all Getty Images Common Stock, subject only
to this Agreement and applicable U.S. Securities laws.
5.3 If Getty Communications is nominated in accordance with clause 3.4,
Getty Communications shall forthwith procure that American Depository
Receipts evidencing the right to receive the total number of
Consideration Shares be quoted on the NASDAQ National Market. Getty
Communications shall reimburse the Sellers for all quotation costs and
any stamp duty or other fees, charges and taxes associated with any such
quotation and depository fees.
6. REMEDIES
The rights of each Buyer under this agreement are independent,
cumulative and without prejudice to all other rights available to it,
and the exercise or non-exercise of any of its rights shall not
prejudice or constitute a waiver of any other of its rights whether
under this agreement or otherwise.
7. RESTRICTIVE COVENANTS
7.1 Subject to clause 7.2, as a separate and independent stipulation and in
consideration of the purchase by the Buyers of the Shares hereunder,
each of the Sellers hereby covenants with the Buyers that for a period
of 2 years after Completion he will not and will procure that any body
corporate of which he has for the time being control (within the meaning
of section 840 Taxes Act) and/or any partnership and/or business and/or
family trust in which he may be engaged directly or indirectly and any
associate will not either on his or its own account or in conjunction
with or on behalf of any person, firm or company:
7.1.1 carry on, engage in or be concerned or interested directly or
indirectly in or assist any business or activity which competes
directly or indirectly with the business and activities in which
any group company is engaged at the date hereof in a country in
which the business is operated at that date, whether alone or
jointly with, through or as manager, adviser, consultant or agent
for another person, provided always that nothing in this
sub-clause shall prevent any Seller from holding or being
beneficially interested in any securities of a company which have
been admitted to trading on any recognised stock exchange, if
such Seller neither holds nor is beneficially interested in more
than five per cent in value of all the securities of that
company; or
7.1.2 in connection with any business or activity which competes with
that of any group company employ or offer employment to, either
directly or indirectly, any director or any person employed as a
photographer, editor, researcher, digital technician or
salesperson by any group company as at the date of this
agreement, whether or not the same would involve any breach of
contract by such director or senior employee; or
11
7.1.3 solicit or entice, or endeavour to solicit or entice, away from any
group company or (in connection with any business or activity which
competes with that of any group company) deal with any person who,
to his knowledge, is now or has, during the period of one year
preceding the date hereof, been a client, customer, supplier or
otherwise in the habit of dealing with the relevant group company
and with whom the Seller has had material dealings; or
7.1.4 be engaged or employed or otherwise involved in a sports photography
agency or set up in business with or in partnership with in
competition with any group company or be employed by or with or
engaged by any other photographer employed by any group company or
who has been employed by any group company within the period of one
year preceding the date hereof (or company or partnership in which
any such photographer is materially interested); or
7.1.5 do or say anything which is deliberately intended to be harmful to
any group company's reputation or which is deliberately intended to
lead to a person to cease to deal with any group company on
substantially equivalent terms to those previously offered or at
all.
7.2
7.2.1 In respect of any Seller, upon the termination of his employment by
a group company, clause 7.2.2 below shall apply unless such
termination arises by reason of:
(a) the summary termination (with the prior written approval of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇) of his employment in accordance with his
Service Agreement following:
(i) his committing a serious breach or non-observance of any
of the material terms, conditions or stipulations
contained in his Service Agreement;
(ii) his committing (after one warning) any persistent breach
or non-observance of any material terms, conditions or
stipulations contained in his Service Agreement;
(iii) his being found to be guilty of gross misconduct in
connection with or affecting the business or affairs of
the Company or any group company or any other member of
the Buyers' Group for which he is required to perform
duties;
(iv) his being found to be guilty of conduct which brings or
is reasonably likely to bring himself or the Company or
any group company into serious disrepute; or
(v) his conviction of a serious arrestable criminal offence
(other than an offence under road traffic legislation in
the United Kingdom or elsewhere for which a non-
custodial penalty is imposed); or
(b) his voluntary resignation, being the resignation by such Seller
in circumstances where he is unable to establish constructive
dismissal.
12
7.2.2 Nothing in clause 7.1 shall limit or prevent any Seller from carrying
on business or being employed as a photographer or from providing,
selling, licensing or otherwise disposing of any rights which he
might have in photographs or other visual images taken or produced
by him (but, in respect of any Seller who, immediately after
Completion, is an employee of the Company, any group company or any
member of the Buyers' Group, only those photographs and other
visual images taken or produced by him after termination of such
employment) to any person for any purpose.
7.3 Each of the Sellers hereby covenants with the Buyers that he will not at
any time in relation to any business which competes with the business
carried on by any group company at the date hereof, directly or indirectly
use or allow to be used (other than by the relevant group company) any
trade or corporate name used by the relevant group company at the date
hereof or any name similar thereto or which is intended or likely to be
confused therewith.
7.4 Each of the restrictive covenants and provisions set out above shall be
construed as a separate and severable undertaking.
7.5 The Sellers acknowledge that they consider the said restrictive covenants
and provisions to be necessary to protect the goodwill of the business
carried on by each group company and a factor on which the consideration
payable by the Buyers is based, but if any of such covenants or
provisions are held to be void or invalid and would not have been so held
if part of the wording were deleted or its extent reduced or modified, or
if the period or area or nature of any such restriction were reduced,
then such restriction or provision shall apply with such modification as
may be necessary to make the same valid and enforceable.
7.6 If there is any provision of this agreement, or of any agreement or
arrangement of which this agreement forms part, which causes or would cause
this agreement or that agreement or arrangement to be subject to
registration under the Restrictive Trade Practices ▇▇▇ ▇▇▇▇, then that
provision shall not take effect until the day after particulars of this
agreement or of that agreement or arrangement (as the case may be) have
been furnished to the Director General of Fair Trading pursuant to section
24 of that Act.
8. INFORMATION
8.1 The Sellers shall, after Completion, give to the Buyers such information
known to them relating to each group company and its affairs as the Buyers
may reasonably require.
8.2 Neither the Sellers nor the Buyers shall, at any time, divulge to any
person (except in confidence to their professional advisers) any
information relating to this agreement or the sale of the Shares without
the prior written consent of the other. This provision shall not apply to
the disclosure of any information pursuant to legislation or the
requirements of any recognised stock exchange.
8.3 The Sellers shall cooperate with the Buyers in providing such information
as the Buyers reasonably requires to enable it to complete all filings with
the Securities Exchange Commission which are necessary in relation to the
sale and purchase of the Shares hereunder.
13
9. GENERAL
9.1 The Sellers shall procure the passing of such resolutions, execute such
documents and waivers and generally do everything further required by the
Buyers effectively to comply with all their obligations under this
agreement without prejudice to those contained in clause 2.2.
9.2 This agreement and the Disclosure Letter comprise the entire agreement
between the parties in relation to the matters referred to herein and
supersedes any previous agreement or arrangement between the parties hereto
or any of them in relation to the sale of the Shares (or any of them) or
any interest in the Company and the parties acknowledge that no claim shall
arise in respect of any agreement or arrangement so superseded.
9.3 No delay or omission on the part of the Buyers in exercising any right,
remedy, power or privilege hereunder shall operate to impair such right,
remedy, power or privilege or be construed as a waiver thereof and no
single or partial exercise or non-exercise of any right, remedy, power or
privilege shall in any circumstances preclude any further or other exercise
thereof or the exercise of any other right, remedy, power or privilege.
9.4 The Sellers by their execution of this agreement hereby waive any
pre-emption rights in respect of the Shares conferred on them under the
articles of association of the Company or otherwise.
9.5 The provisions of this agreement, insofar as the same shall not have been
performed at Completion, shall remain in full force and effect
notwithstanding Completion.
9.6 Save as otherwise specifically provided herein, any variation of this
agreement shall be binding only if it is recorded in a document signed by
or on behalf of all the parties hereto.
9.7 Any time, date or period mentioned in this agreement may be extended by
mutual agreement between the parties hereto, but as regards any time, date
or period originally fixed or any time, date or period so extended as
aforesaid, time shall be of the essence.
9.8 Each party to this agreement shall pay its own costs, charges and expenses
incurred in the preparation, completion and implementation of this
agreement and the documents referred to herein and for the avoidance of
doubt no expense shall be borne by any group company provided that the
costs of KPMG and the Sellers' Solicitors, totalling L41,000 plus VAT, in
establishing the employee benefit trust relating to the Group and of
which the Trustee is trustee, shall be paid by the Company.
9.9 This agreement may be executed in any number of documents or counterparts
each in the like form, all of which taken together shall constitute one and
the same document, and any party may execute this agreement by signing
any one or more of such documents or counterparts.
9.10 This agreement shall be construed according to and governed by the law of
England and each of the parties submits to the non-exclusive jurisdiction
of the English courts.
10. NOTICES
10.1 The respective addresses (and facsimile numbers) for service of notices
under this agreement shall be those set out below, provided always that
any party may, by written
14
notice to the others, substitute another address in England or facsimile
number for the service of notices hereunder:
Address Buyer Sellers
------- ----- -------
Postal: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ The respective addresses
▇▇▇▇▇▇ ▇▇▇ ▇▇▇ set out in Schedule 1
Facsimile number: 0171 267 6540 N/A
10.2 Notices may be given by being delivered to the notice address of the
addressee (in which case the notice shall be deemed to be served at the
time of delivery) or by being sent by facsimile (in which case the notice
shall be deemed to be served upon transmission) or by being sent by first
class post (in which case the notice shall be deemed to be served 24 hours
after time of posting).
10.3 In proving service of any notice, it shall be sufficient to prove that
delivery was made or that the envelope containing the notice was properly
addressed and posted or that the facsimile was transmitted to the correct
number, as the case may be.
11. RESTRICTION ON SALE OF CONSIDERATION SHARES
11.1 Each of the Sellers severally covenants with each of the Buyers not to
sell, agree to sell, encumber, grant any interest, title or right in or
otherwise dispose of or ▇▇▇▇▇▇ any of the Consideration Shares or any
interest therein which they are issued pursuant to this Agreement except
with the prior written consent of the Buyers for a period expiring on the
date of the audited reports and accounts of Getty Images Inc. for the
year ending 31 December 1998 (the "Getty Accounts") provided that the
covenant contained herein shall cease to apply in the case of all of the
Sellers, if the Getty Accounts are not published on or before 30 April,
1999;
11.2 Notwithstanding clause 11.1 above the Trustees may dispose of Consideration
Shares pursuant to the exercise of options granted by it, provided that
the option holder enters into an agreement with the Buyers to be bound by
the provisions of clause 11.1 above.
11.3 ▇ ▇ ▇▇▇▇▇▇, ▇ ▇ ▇▇▇▇▇▇, ▇ ▇ ▇▇▇▇▇▇▇, J ▇▇▇▇▇▇▇▇, M I ▇▇▇▇▇▇▇▇ and J ▇▇▇▇▇
hereby agree that they will not exercise the options granted to them on
23 December 1997 under the Allsport Photographic PLC Unapproved Share
Option Scheme (the "Option Scheme") in an aggregate number of 12,507
options until such time as Getty Images has filed a Form S8 in respect of
the Option Scheme save that each such optionholder may exercise his
option if he has made a payment to his employer or former employer equal
to the amount which the employer or former employer is liable to pay in
respect of any tax or other similar liabilities due on the exercise of
such option. The Buyers agree to use all reasonable endeavours to file
such Form S8 as soon as practicable after Completion.
12. SECURITIES ACT OF 1933
12.1 Each of the Sellers who will receive Consideration Shares at Completion
or who will receive Consideration Shares from the Trustees pursuant to the
exercise of options granted to them by the Trustees warrants to the
Buyers that:
12.1.1 such Seller understands and acknowledges that the issuance and
subscription of the Consideration Share to be issued to him or her
pursuant to this Agreement have not been, and will not be,
registered under the U.S. Securities Act of 1933,
15
as amended (the "Securities Act"), and that such Consideration
Shares will be issued to him or her in a transaction that is exempt
from the registration requirements of the Securities Act. Such
Seller understands and acknowledges that such Consideration Shares
cannot be offered or resold within the United States or to or for
the account or benefit of U.S. persons except pursuant to
registration under the Securities Act or an available exemption from
registration and such Seller agrees that he or she shall not resell
Consideration Shares except in compliance with applicable
securities laws;
12.1.2 such Seller is purchasing the Consideration Shares for his own
account for investment and not with a view to, or for resale in
connection with, a distribution thereof, and such Seller has no
present intention of distributing any thereof, except in accordance
with the terms of this Agreement;
12.1.3 such Seller understands and acknowledges that all certificates
representing Consideration Shares shall bear, in addition to any
other legends required under applicable securities laws, the
following legend:
"The shares represented by this certificate are subject to the
provisions of the agreement for the sale of the whole of the issued
share capital of Allsport Photographic plc dated as of February [ ],
1998 among ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and Others and Getty
Communications plc and Getty Images, Inc."
12.2 In addition, each of the Sellers who will receive Consideration Shares at
Completion (other than ▇▇▇▇ ▇▇▇▇▇▇) warrants to the Buyers that:
12.2.1 such Seller is not a U.S. person and is not acquiring Consideration
Shares for the account or benefit of any U.S. person;
12.2.2 neither such Seller nor any of its affiliates nor any persons acting
on its or their behalf have engaged or will engage in any directed
selling efforts with respect to the Consideration Shares and it and
they have complied and will comply with the offering restrictions
requirements of Regulation S under the Securities Act.
12.3 In addition, ▇▇▇▇ ▇▇▇▇▇▇ represents and warrants to the Buyers that:
12.3.1 he has such knowledge and experience in financial and business
matters that he is capable of evaluating the merits and risks of his
investment in the Consideration Shares pursuant to this Agreement;
12.3.2 he has the financial ability to bear the economic risk of his
investment in the Consideration Shares pursuant to this Agreement,
he is aware that he may be required to bear the economic risk of an
investment in the Consideration Shares for an indefinite period of
time, he has no need for liquidity with respect to his investment
therein at this time, and he has adequate means of providing for his
current needs and personal contingencies;
12.3.3 he has been furnished with a copy of the prospectus of Getty Images,
Inc. dated January 7, 1998 and has been given the opportunity to ask
questions of, and receive answers from, the Buyers concerning the
terms and conditions of his investment in the Consideration Shares
and other matters pertaining to his investment in the Consideration
Shares, and he has not been furnished any other oral or written
information or representation in connection with his or her
investment in the Consideration Shares except as mentioned herein.
16
AS WITNESS the hands of the parties hereto or their duly authorised
representatives the day first above written.
17
SCHEDULE 1A
DETAILS OF SELLERS AND CONSIDERATION PAYABLE
(1) (2) (3) (4) (5) (6)
NAME AND ADDRESS SHARES SOLD FOR CASH SHARES SOLD FOR GETTY IMAGES DUE
OF SELLER CASH CONSIDERATION GETTY IMAGES CONSIDERATION PROPORTION
CONSIDERATION CONSIDERATION SHARES OF RELEVANT
SHARES CLAIMS
▇ ▇ ▇▇▇▇▇▇ 22,944 Ordinary L8,160,357 17,056 Ordinary 575,227 50.314
c/o Allsport Shares Shares
Photography USA Inc
▇ ▇ ▇▇▇▇▇▇▇ 101 Ordinary Shares L 36,063 2,629 Ordinary 88,653 15.498
The Cottage 6,966 A Shares
1 Copse Hill Shares L 24,530
Wimbledon SW20 696,600 B
0NA Shares L2,453,000
▇ ▇ ▇▇▇▇▇▇ 227 Ordinary L 80,600 NIL NIL 12.902
4 Ashurst Cottages Shares
West Hoathly 5,657 A Shares L 19,920
Nr East ▇▇▇▇▇▇▇▇▇ 565,700 B
W Sussex RH19 4BJ Shares L1,992,000
▇ ▇ ▇▇▇▇▇▇ 527 Ordinary L 187,256 NIL NIL 12.902
142 Knightwood Shares
Crescent 5,357 A Shares L 18,864
New Malden 535,700 B
▇▇▇▇▇▇ ▇▇▇ ▇▇▇ Shares L1,886,400
M I ▇▇▇▇▇▇▇▇ 16 Ordinary L 5,837 175 Ordinary 5,887 2.58
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Shares Shares
Motspur Park 1,160 A Shares L 4,085
New Malden 116,000 B
▇▇▇▇▇▇ ▇▇▇ ▇▇▇ Shares L 408,500
▇ ▇ ▇▇▇▇▇▇ 1,151 Ordinary L 729,462 NIL NIL 2.58
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
G ▇▇▇▇▇▇ 883 Ordinary L 313,970 656 Ordinary 22,132 1.936
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇
18
(1) (2) (3) (4) (5) (6)
NAME AND ADDRESS SHARES SOLD FOR CASH SHARES SOLD FOR GETTY IMAGES DUE
OF SELLER CASH CONSIDERATION GETTY IMAGES CONSIDERATION PROPORTION
CONSIDERATION CONSIDERATION SHARES OF RELEVANT
SHARES CLAIMS
J Nicholls 294 Ordinary L104,453 NIL NIL 0.644
Flat 4 Shares
▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
J ▇▇▇▇▇ 294 Ordinary L104,453 NIL NIL 0.644
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Shares
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Allsport Photographic NIL NIL 13,223 Ordinary 446,017 NIL
Share Scheme Shares
Trustees ____________ ___________ ________________ __________ ___________
Limited 26,437 Ordinary L16,529,750 33,739 Ordinary 1,137,916 100
Shares Shares Consideration
19,140 A Shares Shares in
1,914,000 B Getty Images
Shares
19
SCHEDULE 1B
PART 1 - THE COMPANY
1. Name : Allsport Photographic plc
2. Registered number : 1215846
3. Registered office : ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
4. Date of incorporation : 12th June 1975
5. Authorised share capital : L100,000 divided into
80,660 Ordinary Shares, 19,140 A Shares
and 2,000,000 B Shares
6. Issued share capital : 60,176 Ordinary Shares, 19,140 A Shares and
1,914,000 B Shares
7. Loan capital : NIL
8. Directors : ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
9. Secretary : ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
10. Accounting reference date : 30th November
11. Auditors : ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Quick & Co
12. Tax district and reference: Corporation Tax Ref :150 76410 00335
PAYE Office: LP22 Ref: 846/A2568
13. VAT number : 603 0750 85
14. Mortgages and charges : 1. Mortgage debenture dated 13th February
1976 in favour of National Westminster
Bank Ltd comprising a fixed and floating
charge over undertaking, goodwill and
all property and assets and uncalled
capital securing all monies.
2. Legal mortgage dated 28th June 1985 in
favour of National Westminster Bank PLC
comprising a fixed charge over ▇▇▇▇ ▇
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ and/or the
proceeds of sale thereof, and floating
charge over moveable plant and machinery
securing all monies.
15. Subsidiaries : All-Sport (UK) Limited
Allsport Photography USA Inc.
21
SCHEDULE 1B
PART 2 - UK SUBSIDIARY
1. Name : All-Sport (UK) Limited
2. Registered number : 1825389
3. Registered office : ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇. Date of incorporation : 18th June 1984
5. Authorised share capital : L100 divided into 100 Ordinary Shares
of L1 each
6. Issued share capital : 100 Ordinary Shares
7. Loan capital : NIL
8. Directors : ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
9. Secretary : ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
10. Accounting reference date : 30th November
11. Auditors : ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Quick & Co
12. Tax district and reference : Corporation Tax Ref: 150 26410 00489
PAYE Office: LP22 Ref: 846/A2510
13. VAT number : 603 0750 85
14. Mortgages and charges : Mortgage debenture dated 21st June 1985
in favour of National Westminster Bank
PLC comprising a first fixed charge
over property and the proceeds of sale
thereof; and a fixed and floating charge
over undertaking, property, assets,
goodwill and book debts securing all
monies.
15. Subsidiaries : None
22
SCHEDULE 1B
PART 3 - OVERSEAS SUBSIDIARY
1. Name : Allsport Photography USA Inc.
2. Place of Incorporation : California, USA
3. Registered number : n/a
4. Registered office : ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇
▇▇▇
5. Date of incorporation : 30th October 1984
6. Authorised stock : 1,000 authorised
7. Issued stock : 637.5 "outstanding"
8. Loan stock : None
9. Directors : G ▇▇▇▇▇▇
▇ ▇▇▇▇▇▇
J ▇▇▇▇▇
10. Secretary : E ▇▇▇▇▇
11. Accounting reference date : 31st October
12. Auditors ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Certified
Accountant
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇
▇▇▇▇▇▇
▇▇ ▇▇▇▇▇
▇▇▇
13. Tax district and reference : California - ▇▇-▇▇▇ ▇▇▇▇
14. VAT number : None
15. Mortgages and charges : See section 5 of Data Room files or
lease at section 22
16. Subsidiaries : None
23
SCHEDULE 2
TAX DEED
DATED 1998
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (1)
AND OTHERS
- AND -
GETTY COMMUNICATIONS PLC (2)
AND
GETTY IMAGES INC
----------------------------------------
DEED OF TAX COVENANT
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
T ▇▇▇(▇)▇▇▇ ▇▇▇ ▇▇▇▇
F ▇▇▇(▇)▇▇▇ ▇▇▇ ▇▇▇▇
DRAFT: 50138989.06/13TH JANUARY 1998
TLP/SPC/0Z6975.00001
24
THIS DEED is made the day of 1998
BETWEEN:-
(1) THE PERSONS whose respective names and addresses are set out in
Schedule 1 hereto (together referred to as the "Covenantors"); and
(2) GETTY COMMUNICATIONS PLC a company registered in England and Wales
under number 3005770 whose registered office is at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇ ("Getty Communications") and GETTY IMAGES, INC. a
Delaware corporation whose principal executive offices are located at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Getty
Images") (together the "Buyers" which expression shall include any
successors and assigns).
WHEREAS:-
By an Agreement (hereinafter referred to as the "Sale Agreement") dated
1998 and made between the Covenantors (1) and the Buyers (2)
the Covenantors agreed to sell the whole of the issued share capital of
Allsport Photographic Plc to the Buyers and the Covenantors agreed on
completion of such sale to enter into this Deed.
THIS DEED WITNESSES as follows:
1. DEFINITIONS AND INTERPRETATION
In this Deed:-
1.1 Words and expressions defined in the Sale Agreement have the same
meaning except where otherwise provided or unless there is something in
the subject matter or context which is inconsistent with them;
1.2 "AUDITORS" means the auditors for the time being of the Company;
1.3 "COMPANY" means each, any or all of the companies whose respective
names, registered numbers and registered offices are set out in Schedule
2 as the context shall require;
1.4 "DUE DATE" means the due date for making payment of any sum payable
under this Deed as set out in clauses 5.1, 7.2, 9.3 and 10.2;
1.5 "EVENT" means the existence of any state of affairs and any payment,
transaction, act, omission or occurrence of whatever nature whether or
not the Company or either of the Buyers is a party thereto and for the
avoidance of doubt includes:
1.5.1 the execution of the Sale Agreement and completion of the sale
of the Shares to the Buyers; and
1.5.2 the death of any person;
and references to an Event occurring on or before Completion shall
include (a) an Event deemed, pursuant to any Taxation Statute, to occur
or which is otherwise treated or regarded as occurring on or before
Completion, and (b) a combination of Events where the first or some of
which took place on or before Completion and were outside the ordinary
course of business of the Company and any related Events which took
place after Completion were within the ordinary course of business of
the Company;
25
1.6 "LIABILITY FOR TAXATION" means any liability of the Company to make a
payment of or in respect of Taxation whether or not the same is
primarily payable by the Company and whether or not the Company has or
may have any right of reimbursement against any other person or persons
and shall also include:
1.6.1 the Loss of any Relief where such Relief has been taken into
account in computing and so reducing or eliminating any
provision for deferred Tax which appears in the Accounts (or
which but for such Relief would have appeared in the Accounts)
or where such Relief was treated as an asset of the Company in
the Accounts or was taken into account in computing any
deferred Tax asset which appears in the Accounts in which case
the amount of the Liability for Taxation shall be the amount
of Taxation which would (on the basis of tax rates current at
the date of such Loss) have been saved but for such Loss
assuming for this purpose that the Company had sufficient
profits or was otherwise in a position to use the Relief; and
1.6.2 the Loss of any right to repayment of Taxation (including any
repayment supplement) which was treated as an asset in the
Accounts of the Company in which case the amount of the
Liability for Taxation shall be the amount of the right to
repayment and any related repayment supplement;
1.6.3 the set-off or use against income, profits or gains earned,
accrued or received or against any Tax chargeable in respect
of an Event occurring on or before Completion of any Relief or
right to repayment of Taxation (including any repayment
supplement) which is not available before Completion but
arises after Completion in circumstances where, but for such
set-off or use, the Company would have had a liability to make
a payment of or in respect of Taxation for which the Buyer
would have been able to make a claim against the Covenantors
under this Deed in which case the amount of the Liability for
Taxation shall be the amount of Taxation saved by the Company
as a result of such set-off or use
1.7 "LOSS" means any reduction, modification, loss, counteraction,
nullification, disallowance or clawback for whatever reason.
1.8 "RELIEF" means any loss, relief, allowance, credit, exemption or set-off
in respect of Taxation or any deduction in computing income, profits or
gains for the purposes of Taxation.
1.9 "SAVING" means the reduction or elimination of any liability of the
Company to make an actual payment of corporation tax in respect of which
the Covenantors would not have been liable under clause 2, by the use of
any Relief arising as a result of a Liability to Taxation in respect of
which the Covenantors have made a payment under clause 2.
1.10 "TAX" or "TAXATION" means
1.10.1 all forms of taxation including and without any limitation any
charge, tax, duty, levy, impost, withholding or liability
wherever chargeable imposed for support of national, state,
federal, municipal or local government or any other person and
whether of the UK or any other jurisdiction; and
1.10.2 any penalty, fine, surcharge, interest, charges or costs
payable in connection with any Taxation within 1.10.1 above;
26
1.11 "TAX CLAIM" means any assessment, self-assessment, notice, demand,
letter or other document issued or action taken by or on behalf of any
Taxation Authority from which it appears that the Company or either of
the Buyers is or may be subject to a Liability for Taxation or other
liability in respect of which the Covenantors are or may be liable under
this Deed;
1.12 "TAXATION AUTHORITY" means the Inland Revenue, Customs & Excise,
Department of Social Security and any other governmental or other
authority whatsoever competent to impose any Taxation whether in the
United Kingdom or elsewhere.
1.13 "TAXATION STATUTE" means any directive, statute, enactment, law or
regulation wheresoever enacted or issued, coming into force or entered
into providing for or imposing any Taxation and shall include orders,
regulations, instruments, bye-laws or other subordinate legislation made
under the relevant statute or statutory provision and any directive,
statute, enactment, law, order, regulation or provision which amends,
extends, consolidates or replaces the same or which has been amended,
extended, consolidated or replaced by the same;
1.14 headings are for convenience only and shall not affect the construction
of this Deed;
1.15 references to gross receipts, income, profits or gains earned, accrued
or received shall include any gross receipts, income, profits or gains
deemed pursuant to the relevant Taxation Statute to have been or treated
or regarded as earned, accrued or received;
1.16 unless the context otherwise requires the singular shall include the
plural and vice versa, the masculine shall include the feminine and
references to persons shall include bodies corporate, unincorporated
associations and partnerships in each case whether or not having
separate legal personality.
2. COVENANT
Subject as hereinafter provided the Covenantors hereby covenant to pay
to the Buyers an amount equal to:-
2.1 any Liability for Taxation resulting from or by reference to any Event
occurring or to be deemed to have occurred on or before Completion or in
respect of any gross receipts, income, profits or gains earned, accrued
or received by the Company on or before Completion;
2.2 all costs and expenses reasonably and properly incurred and payable by
the Company or either of the Buyers in connection with any action taken
to avoid, resist or settle any Tax Claim, Liability for Taxation, or
otherwise in successfully taking or defending any action under this Deed.
3. LIMITATION OF COVENANTORS' LIABILITY
3.1 The covenant given by clause 2 above shall not cover any Liability for
Taxation:
3.1.1 to the extent that an allowance, provision or reserve in
respect thereof was made in the Accounts or the Management
Accounts or to the extent that such matter was taken into
account in computing the amount of any such allowance
provision or reserve or was specifically referred to in the
Accounts or the
27
Management Accounts or in the notes to the Accounts or the
Management Accounts;
3.1.2 to the extent that such Liability for Taxation arises from any
act or transaction of the Company in the ordinary course of
its business since the Accounts Date;
3.1.3 to the extent that such Liability for Taxation arises or is
increased as a result only of any increase in rates of Tax,
change in law, published change in practice, any published
withdrawal of any extra-statutory concession by a Tax
Authority or any published change in accountancy practices or
principles announced and coming into force after the date of
the Sale Agreement with retrospective effect;
3.1.4 to the extent recovery has been made by either of the Buyers
under the Sale Agreement in respect of the same subject matter;
3.1.5 to the extent that such Liability for Taxation would not have
arisen or occurred but for (or is increased as a result of):
(a) any voluntary act, event, default, omission, transaction
or arrangement after Completion by either of the Buyers,
the Company or any other member of the Buyers' Group or
any person connected with any of them, otherwise than, in
the case of the Company, in the ordinary course of its
business as now carried on or pursuant to a
pre-Completion obligation; or
(b) any claim, election, surrender or disclaimer made, or
notice or consent given, or any other thing done after
Completion by the Company or the Buyer or any other
member of the Buyers' Group, or any person connected with
any of them, under or in connection with the provisions
of any enactment or regulation relating to Taxation; or
(c) any failure or omission by any group company to make any
claim, election, surrender or disclaimer, or give any
notice, or consent or do any other thing, under, or in
connection with, the provisions of any enactment or
regulation relating to Taxation after Completion, the
anticipated making, giving or doing of which was taken
into account in computing the provision for Taxation in
the Accounts or the Management Accounts which claim,
election, surrender, disclaimer, notice, consent or
action, as the case may be, must be capable of being made
properly without detriment to the Company;
3.1.6 to the extent that such Liability for Taxation arises from an
act, event, default, omission, transaction or arrangement of
the Covenantors or the Company prior to Completion occurring
at the written request or direction of, or with the written
consent of, either of the Buyers;
3.1.7 to the extent that that Liability for Taxation arises as a
result of any changes after Completion in the bases, methods
or policies of accounting of either of the Buyers or the
Company except those changes required to bring the bases,
methods or policies in line with UK GAAP;
3.1.8 to the extent that that Liability for Taxation has been made
good by insurers or otherwise compensated for without cost to
either of the Buyers or the Company;
28
3.1.9 to the extent that that Liability for Taxation arises or is
increased as a consequence of any failure by either of the
Buyers or the Company to comply with any of their respective
obligations under clauses 4 (Conduct of Tax Claims) 6
(Mitigation), 11 (Tax Returns), or 12 (Counter Covenant);
3.1.10 to the extent that that Liability for Taxation is attributable
to the Company ceasing to be entitled to the small companies'
rate of corporation tax;
3.1.11 to the extent that that Liability for Taxation would not have
arisen but for:
(a) the payment of any unusual or abnormal dividend by any
Company after Completion;
(b) the change of the date to which any Company makes up its
accounts;
(c) a cessation of, or any change in the nature or conduct of,
any trade carried on by the Company, being a cessation or
change occurring on or after Completion;
3.1.12 except in the case of fraudulent conduct, unless written notice
of such Liability for Taxation or any Tax Claim which may give
rise to such Liability for Taxation specifying in reasonable
detail the circumstances giving or which may give rise to such
Liability for Taxation and the amount thereof has been served
on the Covenantors on or prior to the seventh anniversary of
the date of Completion;
3.2 Without limitation, none of the following is regarded for the purposes of
clause 3.1.2 or clause 3.1.5 as an act or transaction in the ordinary
course of business of either of the Buyers or Company as the case may be:
3.2.1 an Event giving rise to a liability under Part VIII of the Taxes
Management Act 1970 (charges arising on non-residents);
3.2.2 an Event giving rise to a liability under Part XVII of the Taxes
Act (tax avoidance);
3.2.3 a distribution within the meaning given by Part VI or section 418
of the Taxes Act;
3.2.4 an acquisition, disposal or supply or deemed acquisition,
disposal or supply of assets, goods, services or business
facilities of any kind (including a loan of money or a letting,
hiring or licensing of tangible or intangible property) for a
consideration which is treated for Tax purposes as different
from the actual consideration;
3.2.5 an Event which results in the Company being liable for Tax for
which it is not primarily liable;
3.2.6 an Event in respect of which Tax arises as a result of the
Company's failure to deduct or account for Tax or pay Tax when
due;
3.2.7 an Event giving rise to a liability within section 419 of the
Taxes Act.
3.3 The provisions of paragraph 3 of Schedule 5 of the Sale Agreement shall
apply;
29
3.4 Any payment by the Covenantors under this Deed to either of the Buyers
shall reduce by that amount any Relevant Claim by the Buyers under the
Sale Agreement (and vice versa), and the Buyers shall at all times
procure that there is no duplication of recovery of any claim relating
to the same subject matter whether under this Deed or under the Sale
Agreement or otherwise.
3.5 For the purposes of this clause 3 only, "Liability for Taxation" shall be
deemed to include a liability or loss falling within clause 2.2 above.
4. DISPUTES AND CONDUCT OF TAX CLAIMS
4.1 If the Buyers or the Company shall become aware of a Tax Claim, the Buyers
shall or shall procure that the Company shall within ten days thereafter
give written notice thereof to the Covenantors but so that any notice
which any one of the Covenantors has in his capacity as a director of the
Company for the time being or in any other capacity shall be deemed to be
awareness by them for the purpose of this sub-clause.
4.2 The Buyers shall and shall procure that the Company shall take such
action as the Covenantors may request by notice in writing given to the
Company and either of the Buyers to avoid, dispute, defend, resist,
appeal or compromise any Tax Claim (such a Tax Claim where action is so
requested being hereinafter referred to as a "Dispute") and such action
may include allowing the Covenantors to take on at their own expense the
conduct of all or any proceedings arising in connection with the Tax
Claim in question.
4.3 If the Covenantors do not request either of the Buyers or the Company to
take any action under clause 4.2 of this Deed within a period of 30 days
(commencing with the date of the notice given to the Covenantors) or if
the Dispute concerns fraudulent conduct of the Covenantors before the
date of the Agreement, the Buyers or Company shall have the conduct of
the Dispute absolutely (without prejudice to its rights under this Deed)
and shall be free to pay or settle the Tax Claim on such terms as the
Buyers or the Company may reasonably consider fit.
4.4 Subject to sub-clause 4.3 above, the conduct of a Dispute shall be
carried out upon such terms as may be agreed from time to time between
either of the Buyers and the Covenantors PROVIDED THAT, unless either of
the Buyers and the Covenantors specifically agree otherwise in writing,
the following terms shall be deemed to be incorporated into any such
agreement:-
4.4.1 the Company and either of the Buyers shall be kept fully
informed of all matters pertaining to a Dispute and shall be
entitled to see copies of all correspondence and notes or other
written records of telephone conversations or meetings with any
Taxation Authority to the extent that they relate to a Dispute;
4.4.2 the Covenantors shall be entitled to appoint solicitors or other
professional advisers to conduct the Dispute;
4.4.3 the Covenantors shall make no settlement or compromise of the
Dispute or agree any matter in the conduct of the Dispute which
is likely to adversely or materially affect the future
liability to Taxation of the Company without the prior approval
of either of the Buyers, such approval not to be unreasonably
withheld or delayed;
4.4.4 the Buyers shall not and shall ensure that the Company shall
not admit liability in respect of or compromise or settle any
Tax Claim without the prior written
30
consent of the Covenantors, such consent not to be unreasonably
withheld or delayed;
4.4.5 the Buyers shall procure that the Company shall make available
to the Covenantor such information as the Covenantor may
require for determining what action (if any) shall be taken or
whether the Covenantors' consent should be given pursuant to
clause 4.4.4 above.
4.5 A Covenantor's rights under clauses 4.2 and 4.4 shall cease if that
Covenantor:
4.5.1 takes action or other steps are taken or legal proceedings are
started for his bankruptcy; or
4.5.2 makes a general assignment for the benefit of, or a composition
with, his creditors.
4.6 The Buyers are not obliged to take action pursuant to clause 4.2 which
involves contesting a Tax Claim beyond the first appellate body
(excluding the Taxation Authority which has made the Tax Claim) in the
jurisdiction concerned, unless the Covenantors have been advised by
leading Counsel that such further appeal shall have a reasonable chance
of success.
5. PAYMENT DATE AND INTEREST
5.1 Where the Covenantors are liable to make any payment under clause 2, the
Due Date shall be the later of the date falling fourteen days after
either of the Buyers has served a notice on the Covenantors demanding
that payment and:-
5.1.1 in a case that involves an actual payment of Taxation by the
Company, the date on which the Taxation in question would have
had to have been paid to the relevant Taxation Authority in
order to prevent a liability to interest or a fine, surcharge
or penalty from arising in respect of the Liability for
Taxation in question.
5.1.2 in any case that involves a Liability for Taxation falling
within clause 1.6.1 the last date upon which the Taxation is or
would have been required to be paid to the relevant Taxation
Authority in respect of the period in which the Loss of the
Relief occurs (assuming for this purpose that the Company had
sufficient profits or was otherwise in a position to use the
Relief).
5.1.3 in any case that involves a Liability for Taxation falling
within clause 1.6.2 the date upon which the repayment was due
from the relevant Taxation Authority.
5.1.4 in any case that involves a Liability for Taxation falling
within clause 1.6.3 the date upon which the Company is required
to pay an actual liability to Taxation to the relevant Taxation
Authority which would have been saved by the use of any set off
or Relief but for the use of that set off or Relief against a
Tax Claim under this Deed.
5.2 Any dispute as to the amount specified in any notice served on the
Covenantors under clause 5.1.2, 5.1.3 or 5.1.4 shall be determined by
the auditors of the Company for the time being, acting as experts and
not as arbitrators (the costs of that determination being shared equally
by the Covenantors and the Buyer).
31
5.3 If any sums required to be paid under this Deed are not paid on the Due
Date, then, except to the extent that the Covenantors' liability under
clause 2 compensates the Buyers for the late payment by virtue of it
extending to interest and penalties, such sums shall bear interest at
the rate of two per cent per annum over the base rate from time to time
of National Westminster Bank Plc or (in the absence thereof) at such
similar rate as the Buyers shall select from the day following the Due
Date up to and including the day of actual payment of such sums such
interest to be compounded quarterly.
6. MITIGATION
6.1 The Buyers shall, at the direction in writing of the Covenantors, procure
that the Company takes all such steps as the Covenantors may require to:
6.1.1 without prejudice to either Buyer's right to receive payment
under this Deed in respect of a Liability for Taxation falling
within clause 1.6.1, use in the manner hereinafter mentioned
all such Reliefs arising as a consequence of or by reference to
any Event occurring (or deemed to occur) on or before
Completion or in respect of a period ended on or before
Completion and not as a consequence of or by reference to an
Event occurring (or deemed to occur) after Completion or in
respect of a period commencing after Completion as are
available to the Company to reduce or eliminate any Liability
for Taxation in respect of which the Buyers would have been
able to make a claim against the Covenantors or any of them
under this deed (such Reliefs including, without limitation,
Reliefs made available to a company by means of a surrender
from another company), the said use being to effect the
reduction or elimination of any such Liability for Taxation to
the extent specified by the Covenantors and permitted by law,
and to provide to the Covenantors, at the Covenantors' expense,
a certificate from the auditors (for the time being) of the
Company confirming that all such Reliefs have been so used;
6.1.2 make all such claims and elections specified by the Covenantors
in respect of any accounting period of the Company commencing
before Completion as have the effect of reducing or eliminating
any such Liability for Taxation as is mentioned in sub-clause
6.1, provided that no such claim or election shall require the
Company to use any Relief which arises solely as a consequence
of or by reference to an Event occurring (or deemed to occur)
after Completion or in respect of a period commencing after
Completion; and
6.2 Nothing in this schedule shall in any way restrict or limit the general
obligation of the Buyers to mitigate any loss or damage which it may
suffer in consequence of any matter giving rise to a claim against the
Covenantors under this Deed.
7. OVER-PROVISIONS
7.1 If the Auditors shall certify (at the request and expense of the
Covenantors) that any provision for Tax in the Accounts or the Management
Accounts (excluding any provision for deferred Tax) has proved to be an
over-provision, then
7.1.1 the amount of such over-provision (the "Relevant Amount") shall
first be set off against any payment then due from the
Covenantors under this Deed or in respect of any Relevant Claim
under the Warranties relating to Taxation in the Sale
Agreement; and
32
7.1.2 to the extent there is an excess, a refund shall be made to the
Covenantors of any previous payment or payments made by the
Covenantors under this Deed or in respect of any Relevant Claim
under the Warranties relating to Taxation in the Sale Agreement
and not previously refunded under this clause up to the amount
of such excess; and
7.1.3 to the extent that the excess referred to in paragraph 7.1.2 of
this sub-clause is not exhausted under that paragraph, the
remainder of that excess shall be carried forward and set off
against any future payment or payments which become due from
the Covenantors under this Deed or in respect of any Relevant
Claim under the Warranties relating to Taxation in the Sale
Agreement.
7.2 If any refund is payable pursuant to clause 7.1 the Due Date shall be five
working days after certification by the Auditors that such a sum is
payable.
7.3 Where any such certification as is mentioned in clause 7.1 has been
made, the Covenantors or the Buyers or the Company may request the
auditors for the time being of the Company to review such certification
in the light of all relevant circumstances, including any facts which
have become known only since such certification, and to certify whether
such certification remains correct or whether, in the light of those
circumstances, the amount that was the subject of such certification
should be amended.
7.4 If the Auditors certify under clause 7.3 that an amount previously
certified should be amended, that amended amount shall be substituted
for the purposes of clause 7.1 as the Relevant Amount in place of the
amount originally certified and such adjusting payment (if any) as may
be required by virtue of that substitution shall be made as soon as
practicable by the Covenantors to the Buyers or (as the case may be) by
the Buyers to the Covenantors.
8. TAXATION OF PAYMENTS
8.1 Any sum payable under this Deed shall be paid free and clear of any
right of counterclaim or set-off (save as stipulated in this Deed) and
without any deduction or withholding whatsoever, save only as may be
required by law.
8.2 If any payment by the Covenantors under this Deed is subject to
Taxation, the Covenantors shall increase the amount of the payment by
such additional amount as is necessary to ensure that the net amount
received and retained by the Buyers (after taking account of all
Taxation) is equal to the amount which they would have received and
retained had the payment in question not been subject to any Taxation.
8.3 If any payment by the Buyers under this Deed is subject to Taxation, the
Buyers shall increase the amount of the payment by such additional
amount as is necessary to ensure that the net amount received and
retained by the Covenantors (after taking account of all Taxation) is
equal to the amount which it would have received and retained had the
payment in question not been subject to any Taxation.
8.4 If the Covenantors make a deduction or withholding required by law from
a payment under this Deed, the sum due from the Covenantors shall be
increased to the extent necessary to ensure that, after the making of
any deduction or withholding, the Buyers receive a sum equal to the sum
they would have received had no deduction or withholding been made.
33
8.5 If the Covenantors pay any additional amount under clause 8.4 and either
of the Buyers receives a Tax credit, repayment or other benefit by reason
of any deduction or withholding in respect of which the Covenantors have
paid an additional amount, the Buyer shall pay to the Covenantors
forthwith the amount of such Tax credit, repayment or other benefit.
9. RECOVERY FROM OTHER PERSONS
9.1 Where a Buyer or the Company is or becomes entitled to recover from some
other person not being a Buyer, the Company or any other company within
the same group of companies as the Buyers or the Company any amount which
is referable to a Liability for Taxation which has resulted in a payment
being made by the Covenantors under this Deed, the Buyers shall or
procure that the Company shall:
9.1.1 notify the Covenantors of its entitlement; and
9.1.2 if required by the Covenantors and at the Covenantors' cost and
expense, take or procure that the Company takes all reasonable
steps to enforce that recovery.
9.2 If the Buyers or the Company recover any amount referred to in clause 9.1
the Buyers shall account to the Covenantors for any amount recovered
(including any related interest or related repayment supplement) less any
Taxation suffered in respect of that amount and any costs and expenses
reasonably incurred in recovering that amount (save to the extent that
that amount has already been made good by the Covenantors under clause
9.1.2), which does not exceed the amount paid by the Covenantors under
clause 2 in respect of the Liability for Taxation in question, and to the
extent that there is an excess, that excess shall be set off against
future payments due from the Covenantors under this Deed.
9.3 The Due Date for payment of any amount recovered under clause 9.2 above
shall be five days after the date of recovery of that amount.
10. SAVINGS
10.1 If (at the Covenantors' request and expense) the Auditors determine that
the Company has obtained a Saving, the Buyers will repay to the
Covenantors the lesser of:-
10.1.1 the amount of the Saving (as determined by the Auditors) less
any costs incurred by the Company or the Buyers; and
10.1.2 the amount paid by the Covenantors under clause 2 in respect of
the Liability for Taxation which gave rise to the Saving less
any part of that amount previously repaid to the Covenantors
under any provision of this Deed or otherwise.
10.2 The Due Date for the repayment of any Saving by the Buyers pursuant to
clause 10.1 above will be five days after the date upon which the Auditors
notify the Company or the Buyers that a Saving has arisen.
34
11. CORPORATION TAX RETURNS
11.1 The Covenantors or their duly authorised agents shall at the Covenantors'
cost and expense prepare the corporation tax returns and computations (or
any overseas equivalent) of the Company for all accounting periods ended
on or prior to the Accounts Date, to the extent that the same shall not
have been prepared before Completion, and submit them to the Buyers.
11.2 The Buyers shall procure that, provided they comply with all applicable
legal requirements, the returns and computations mentioned in clause 11.1
shall be authorised, signed and submitted to the relevant Tax Authority
without amendment or with such amendments as the Covenantors shall agree
and shall give the Covenantors or their agents all such assistance as may
be required (at the Covenantors' cost and expense) to agree those returns
and computations with the relevant Tax Authority;
11.3 The Covenantors or their duly authorised agents shall at the Covenantors'
cost and expense prepare all documentation and shall have conduct of all
matters (including correspondence) relating to the corporation tax
returns and computations (or any overseas equivalent) of the Company for
all accounting periods ended on or prior to the Accounts Date provided
that the Covenantors shall not without the prior written consent of
either of the Buyers (not to be unreasonably withheld or delayed) agree
any matter with the relevant Tax Authority;
11.4 The Buyers shall procure that the Company, at the Covenantors' cost and
expense, affords such access to its books, accounts and records as is
necessary and reasonable to enable the Covenantors or their duly
authorised agents to prepare the corporation tax returns and computations
(or overseas equivalent) of the Company for all accounting periods ended
on or before the Accounts Date and conduct matters relating to them in
accordance with this clause 11.
11.5 The Covenantors shall, at the Buyers' expense provide or ensure the
provision to the Buyer of all information and assistance which may
reasonably be required to prepare, submit and agree all corporation tax
returns (or overseas equivalent) and computations of the Company for all
accounting periods ending after the Accounts Date.
12. COUNTER COVENANT
The Buyers hereby covenants to indemnity and keep indemnified on first written
demand the Covenantors from and against:
12.1 any Liability for Taxation or Tax Claim recoverable from the Covenantors;
and
12.2 all reasonable losses, costs and expenses attributable thereto or arising
in connection therewith
by reason of the Company failing to meet its primary liability for Taxation
when due under section 767A of the Taxes Act (or any similar provision under US
law) in respect of corporation tax assessed on the Company.
35
13. INFORMATION
13.1 The Covenantors shall, both before and after Completion, give to the
Buyers such information known to them relating to each Company and its
affairs as the Buyers may reasonably require.
13.2 Neither the Covenantors nor the Buyers shall, at any time, divulge to any
person (except in confidence to their professional advisers) any
information relating to this Deed or the sale of the Shares without the
prior written consent of the other. This provision shall not apply to the
disclosure of any information pursuant to legislation or the requirements
of any recognised stock exchange.
14. PRESERVATION OF RECORDS AND INSURANCE
14.1 The Buyers shall and shall procure that each Company will preserve all
documents, records, correspondence, accounts and other information
whatsoever relevant to a matter which may give rise to a Liability to
Taxation.
14.2 If at any time after the date of this Deed the Covenantors wish to take
out insurance against their liabilities in respect of Relevant Claims, the
Purchasers shall provide such information as any prospective insurer may
reasonably require before effecting the insurance.
15. ASSIGNMENT
This Deed shall be actionable only by the Buyers and no other party shall
be entitled to make any claim or take any action whatsoever against the
Covenantors under or arising out of or in connection with this Deed
except that the Buyers may assign the whole of its rights under or
arising out of or in connection with this Deed to any of its group
companies or subsidiaries for so long as it remains a group company.
16. GENERAL
16.1 The Covenantors shall procure the passing of such resolutions, execute
such documents and waivers and generally do everything further required
by the Buyers effectively to comply with all their obligations under this
Deed.
16.2 No delay or omission on the part of the Buyers in exercising any right,
remedy, power or privilege hereunder shall operate to impair such right,
remedy, power or privilege or be construed as a waiver thereof and no
single or partial exercise or non-exercise of any right, remedy, power or
privilege shall in any circumstances preclude any further or other
exercise thereof or the exercise of any other right, remedy, power or
privilege.
16.3 The provisions of this Deed, insofar as the same shall not have been
performed at Completion, shall remain in full force and effect
notwithstanding Completion.
16.4 Save as otherwise specifically provided herein, any variation of this Deed
shall be binding only if it is recorded in a deed executed by or on
behalf of all the parties hereto.
16.5 Any time, date or period mentioned in this Deed may be extended by mutual
agreement between the parties hereto, but as regards any time, date or
period originally fixed or any time, date or period so extended as
aforesaid, time shall be of the essence.
36
16.6 Save or otherwise expressly stated herein, each party to this Deed shall
pay its own costs, charges and expenses incurred in the preparation,
completion and implementation of this Deed and the documents referred to
herein and for the avoidance of doubt no expense shall be borne by any
group company.
16.7 This Deed may be executed in any number of documents or counterparts each
in the like form, all of which taken together shall constitute one and the
same document, and any party may execute this Deed by signing any one or
more of such documents or counterparts.
16.8 This Deed shall be construed according to and governed by the law of
England and each of the parties submits to the non-exclusive jurisdiction
of the English courts.
17. NOTICES
17.1 The respective addresses (and facsimile numbers) for service of notices
under this Deed shall be those set out below, provided always that any
party may, by written notice to the others, substitute another address in
England or facsimile number for the service of notices hereunder:
Address Buyers Covenantors
------- ------ -----------
Postal: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ The respective addresses
▇▇▇▇▇▇ ▇▇▇ OAG set out in Schedule 1
Facsimile number: 0171 267 6540 N/A
17.2 Notices may be given by being delivered to the notice address of the
addressee (in which case the notice shall be deemed to be served at the
time of delivery) or by being sent by facsimile (in which case the notice
shall be deemed to be served upon transmission) or by being sent by first
class post (in which case the notice shall be deemed to be served 24 hours
after time of posting).
17.3 In proving service of any notice, it shall be sufficient to prove that
delivery was made or that the envelope containing the notice was properly
addressed and posted or that the facsimile was transmitted to the correct
number, as the case may be.
IN WITNESS of which the parties have executed this document as a deed and
delivered it the day and year first above written
The Schedules begin on the next page.
37
SCHEDULE 1
THE COVENANTORS
▇ ▇ ▇▇▇▇▇▇
c/o Allsport Photography USA Inc
▇ ▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇ ▇ ▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇ ▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
M I ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇ ▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
G ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇
J Nicholls
▇▇▇▇ ▇
▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
J ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
38
SCHEDULE 2
THE COMPANIES
Name Registered Number Registered Office
---- ----------------- -----------------
Allsport Photographic Plc 1215846 ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
All-Sport (UK) Limited 1825389 ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Allsport Photography USA Inc. N/A ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇
▇▇▇
Signatures to this Deed begin on the next page.
39
Signed as a deed )
by ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ )
for himself and as attorney for each of )
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ )
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ )
▇▇▇ ▇▇▇▇▇▇ )
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ )
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ )
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ )
▇▇▇▇ ▇▇▇▇▇ and )
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ )
in the presence of: )
Signed as a deed by GETTY ) _________________________
COMMUNICATIONS PLC acting by ) Director
)
) _________________________
) Director/Secretary
Signed as a deed by GETTY IMAGES, INC. ) _________________________
acting by ) Director
)
) _________________________
) Director
40
SCHEDULE 3
GENERAL WARRANTIES
PART A
I. INFORMATION
1.1 The information set out in schedule 1 is true and accurate in all respects.
1.2 The information comprised in the documents in the Schedule of Disclosure
Documents and in the Disclosure Letter is true, complete and accurate in
all material respects and the Sellers are not aware of any factors which
have not been disclosed to the Buyers which would make any such
information misleading in any material respect. and the Sellers have not
deliberately withheld any information about any group company's business
with the intention of inducing the Buyers to acquire the Shares.
2. SHARE CAPITAL
2.1 Without prejudice to the provisions of clauses 2.1 and 2.2 of this
agreement, each of the Sellers is the beneficial and legal owner and
registered holder of the Shares set out opposite the name of such Seller
in column (2) of schedule 1A and has full right, power and title to sell
such Shares free from all Encumbrances to the Buyers.
2.2 The Shares comprise the whole of the allotted and issued share capital
of the Company and all of them have been properly allotted and are fully
paid up or credited as fully paid up.
2.3 There is no outstanding right to call for the issue of any share or loan
capital of the Company and no further share or loan capital of the
Company will before Completion be created or issued or agreed to be
issued.
2.4 All dividends declared or otherwise due in respect of the Shares have been
paid.
2.5 Other than this agreement, there is no agreement, arrangement or obligation
requiring the creation, allotment, issue, transfer, redemption or
repayment of, or the grant to a person of the right (conditional or not)
to require the allotment, issue, transfer, redemption or repayment of, a
share in the capital of a group company (including, without limitation,
an option or right of pre-emption or conversion).
3. ACCOUNTS
3.1 The Accounts have been properly audited, have been prepared and
presented in accordance with accounting practice and policies generally
accepted in the United Kingdom and subject thereto are consistent with
the practice and policies adopted by the Company during the three
accounting periods ended on the Accounts Date, comply with the
requirements of the Companies ▇▇▇ ▇▇▇▇ and give a true and fair view of
the financial position, assets, liabilities, and of the profits and
losses of the Company at the Accounts Date.
3.2 The Management Accounts have been properly prepared in accordance with
accounting practice and policies consistent with the Accounts and,
together with the other
41
accounting records of the Company and its subsidiaries, comply with the
relevant provisions of section 221 Companies Act 1985 and do not
materially misrepresent the assets, liabilities, profits and losses of
the Company as at 30 November 1997 (the "Management Accounts Date").
4. DEBTS
4.1 So far as the Sellers are aware, having made no enquiry of any debtor, all
debts due to the Company at Completion will be good and collectable in
full in the ordinary course of business.
4.2 No part of any debt or other amount shown or reflected in the Accounts
or the Management Accounts as being due to the Company has been written
off, written down, waived or released for an amount less than the book
value thereof for the purposes of the Accounts or the Management
Accounts.
4.3 All debt collection procedures have been observed in the ordinary course
since the Accounts Date and no acceleration or changes have been made to
the Company's normal practice in that regard since the Accounts Date
5. LIABILITY TO THE SELLERS ETC
5.1 The Company has no trading or business relationship with or (apart from
remuneration at the rates disclosed to the Buyers) liability to:
5.1.1 any of the Sellers;
5.1.2 any of their associates;
5.1.3 any company of which 3 per cent or more of the equity share
capital is owned or controlled directly or indirectly by the
Sellers or their associates; or
5.1.4 any officers of the Company.
5.2 Neither the Sellers nor their associates nor any of them has any interest
in any other firm, business or company which has or within the last two
years has had a material or close trading relationship with or is in
competition with the Company.
6. INSOLVENCY
6.1 No order has been made nor has any resolution been passed for the
winding up of the Company and nor so far as the Sellers are aware is
there outstanding any petition for the administration or the winding up
of the Company or any receivership of the whole or any part of the
undertaking or assets of the Company.
6.2 So far as the Sellers are aware, there are no circumstances which would
entitle any person to present a petition for the administration or the
winding up of the Company or to appoint a receiver or administrator of
the whole or any part of its undertaking or assets.
6.3 The Company is not insolvent or unable to pay its debts as defined by
section 123 Insolvency Act 1986 and has not entered into any scheme of
arrangement or voluntary or other arrangement with any of its creditors.
42
7. LIBRARY PHOTOGRAPHS
7.1 The Library Photographs are legally and beneficially owned by the Company
free from any Encumbrance.
7.2 The Intellectual Property in the Library Photographs is either:
7.2.1 legally and beneficially owned by the Company; or
7.2.2. the subject of an irrevocable worldwide licence in favour of the
Company
and in either case is free of any Encumbrance.
7.3 The Company is entitled to exploit, use, reproduce and licence the use and
reproduction of the Library Photographs in any format or on any medium
without limitation or any obligation (legal or moral) to make any royalty
or other like payment to any person in respect of such use, reproduction
or licence and free of any moral rights (other than the identification of
the identity of the relevant photographer).
7.4 The Company has received no notification of any breach of copyright or
other claim relating to its use, reproduction or licensing of any Library
Photograph.
7.5 So far as the Warrantors are aware, the Company has, prior to any
exploitation, use, reproduction or licence of Library Photographs
contained in the Allsport Concepts catalogue obtained in writing either
(i) all such model releases and/or other third party consents or
authorisations whatsoever as were necessary or desirable or (ii) a
warranty from all those third parties to whom it made any such Library
Photograph available that those third parties would obtain in writing
all such model releases and/or other third party consents or
authorisations before exploiting, using, reproducing or licensing the
relevant Library Photograph.
8. CONFIDENTIALITY
8.1 Neither the Sellers nor a group company has at any time disclosed or
permitted to be disclosed or agreed to disclose Confidential Information
to any person, other than to a potential buyer of the Shares on terms no
less onerous than the terms of the confidentiality letter between Getty
Communications and the Sellers dated 23rd June 1997 (in agreed form).
8.2 The Disclosure Letter contains details of all disclosures of Confidential
Information made to a potential buyer of the Shares which were not also
made to the Buyers before execution of this agreement.
9. SUBSIDIARIES
9.1 The companies of which details are set out in part 2 and part 3 of
schedule 1B comprise all the subsidiaries of the Company, and the
Company does not own any shares, loan capital or other securities either
legally or beneficially in any other company or body corporate. The
Company owns all outstanding shares in each subsidiary free and clear of
encumbrances and each subsidiary has been duly incorporated and is
validly existing and, in the case of Allsport Photography (USA) Inc. is
of good standing.
9.2 The above warranties (other than warranties 2.1 and 3.2) shall apply to
each subsidiary of the Company as if each reference to the Company was a
reference to each such
43
subsidiary and references to the balance sheet, profit and loss account
and Accounts and Management Accounts shall respectively be deemed to be
references:
9.2.1. in the case of All-Sport (UK) Limited, to the balance sheet at
the Accounts Date and Management Accounts, to the profit and
loss account for the year ended on the Accounts Date and the
Management Accounts Date, and to the accounts as at the
Accounts Date and the Management Accounts Date of that company;
and
9.2.2 in the case of Allsport Photography (USA) Inc, to the balance
sheet at, the profit and loss account for the year ended on and
the accounts as at 31st October 1996 of that company.
9.3 As regards the Overseas Subsidiary references to UK legislative provisions
shall be construed as references to the equivalent or similar legislative
provisions (if any) existing in the jurisdiction of incorporation of the
Overseas Subsidiary.
44
SCHEDULE 3
GENERAL WARRANTIES
PART B
So far as the Sellers are aware:
1. STOCK AND FIXED ASSETS
1.1 Any obsolete, slow moving, excessive, defective or unsaleable Stock
included in the Accounts has been written down appropriately and the
value attributed to each item of that and the remaining Stock for the
purposes of the Accounts did not exceed the lowest of cost, net realisable
value or replacement cost at the Accounts Date.
1.2 The Stock of the Company at the Accounts Date and acquired subsequently
will at Completion (to the extent that it has not then been sold by the
Company in the ordinary course of normal trading) be in good condition and
capable of being sold profitably by the Company.
1.3 The value attributed in the Accounts to each of the fixed assets of the
Company did not exceed the market value of such asset at the Accounts Date.
2. EVENTS SINCE ACCOUNTS DATE
2.1 Since the Accounts Date the Company:
2.1.1 has carried on its business as a going concern in the ordinary course
and has not departed from the ordinary course of its normal trading;
2.1.2 has not incurred any liability other than in the ordinary course of
its business;
2.1.3 subject to any item of capital expenditure identified in the
Management Accounts has not made, or agreed to make any item of
capital expenditure exceeding L50,000 (or its equivalent at the time)
or entered into any long term, substantial or unusual obligations,
commitments or transactions including (without limitation) any
capital or forward commitment involving in any such case more than
L50,000 (or its equivalent at the time);
2.1.4 has not made (or agreed to make) any change in the basis or amount of
the emoluments of or benefits for its directors or any of its
employees;
2.1.5 has not agreed any general increase in wages or wage rates;
2.1.6 has not paid, declared or made (or agreed to do so) any dividend or
other distribution (within the meaning of sections 187, 209 to 211,
254 and 418 Taxes Act);
2.1.7 has not acquired or set up (or agreed to do so) any new business,
branch or subsidiary;
2.1.8 has not borrowed or lent any money and has not increased any secured
liability;
45
2.1.9 has paid creditors in the ordinary course of its business and has
not deferred any payment outside its normal practices; and
2.1.10 has not created, allotted, acquired issued, redeemed or repaid or
agreed to create, allot, acquire issue, redeem or repay, any share
or loan capital.
2.2 The Company has not since the Accounts Date acquired or agreed to acquire,
any asset (including without limitation trading stock) or received a
service or business facility of any kind for a consideration higher than
the market value at the time of acquisition or receipt and the Company has
not since the Accounts Date disposed of or agreed to dispose of any asset
or supplied a service or business facility of any kind for a
consideration lower than the market value at the time of disposal or
supply.
2.3 Since the Accounts Date no part of the Company's business has been
materially affected by the loss of any customer, or of any source of
supply, or by the cancellation or loss of any order or contract and the
Sellers are not aware of any material fact which will have a material and
adverse effect on the Company's business.
3. ASSETS OF THE COMPANY
3.1 Each asset (including all vehicles, plant, machinery, equipment and Stock)
needed for the proper conduct of the Company's business is and will at
Completion be in good repair and working order, fair wear and tear
expected and is capable of being used efficiently in the Company's
business.
3.2 Each asset (other than the Library Photographs) of the Company is legally
and beneficially owned by the Company free from any encumbrance and is in
the possession or under the control of the Company and none of the assets
has been subject to sequestration, confiscation, impounding, seizure, lien
(other than a lien arising by operation of law), distraint or similar
control or constraint.
3.3 None of the assets which is reflected in the Accounts has been depleted in
consequence directly or indirectly of fraud, theft or dishonesty on the
part of any person; and no event or circumstance has occurred as a result
of which the Company has suffered or incurred or will before Completion
suffer or incur any loss or liability in consequence directly or
indirectly of fraud, theft or dishonesty on the part of any person.
3.4 No asset in the actual, reputed or apparent possession or ownership of the
Company, or which is reflected in the Accounts, was or is being acquired
on terms that title or any security or other interest therein was
reserved to any other party, or was or is being acquired under any ▇▇▇▇
of sale, hire or hire purchase agreement, conditional sale, credit sale,
deferred payment or similar agreement, and each such asset is (save to
the extent that it may has been profitably sold in the ordinary course of
the Company's normal trading) in the beneficial ownership and sole
possession and control of the Company.
4. EMPLOYMENT MATTERS
4.1 No director or employee of the Company is serving the Company on terms
which either expressly or impliedly preclude the Company from lawfully
terminating his employment on not more than three months' notice without
compensation (other than statutory compensation).
46
4.2 The Company has at all times and in all material respects duly complied
with all statutory and other legal obligations and requirements in respect
of its employees and former employees.
4.3 The Company has not and is not proposing to introduce a share incentive,
share option, profit sharing, bonus, commission or other incentive scheme
for any of its directors, other officers or employees.
4.4 The Company has no obligation (whether legal or moral) to make any
contributions or payments in connection with any pension, superannuation,
assurance, death or disability scheme or arrangement, or to pay
redundancy, gratuities or compensation for loss of office to or in
respect of any ex-directors or ex-employees of the Company or others or
their dependants and no such obligation has arisen in respect of the
present directors or employees of the Company or their dependants.
4.5 The Company is not involved in any dispute with any employee or former
employee nor has it incurred a liability for breach or termination of an
employment contract which remains unsatisfied or which was satisfied
after the Accounts Date.
4.6 No trades unions are recognised by the Company for any purpose and the
Company is not a party to any collective or other group wage bargaining
arrangements.
4.7 The Disclosure Letter contains details of:
4.7.1 the total number of the Company's employees including those who are
on maternity leave or absent because of disability or other long term
leave of absence, and have or may have a right of return to work
with a group company;
4.7.2 the name, date of start of employment, period of continuous
employment, salary and other benefits, job title and age of each
employee of the Company and, where an employee has been continuously
absent for more than one month, the reason for the absence;
4.7.3 the terms of the contract of each director, other officer and
employee of the Company entitled to remuneration at an annual rate,
or an average rate over the last three financial years, of more than
L30,000; and
4.7.4 the material terms of each consultancy agreement with the Company.
4.8 The basis of the remuneration payable to the Company's directors, other
officers and employees is the same as that in force at the Accounts Date.
The Company is not obliged to increase, nor has it made provision to
increase, the total annual remuneration payable to its directors other
officers and employees by more than five per cent. or to increase the
rate of remuneration of a director, other officer or employee entitled to
annual remuneration of more than L30,000.
4.9 Within the period of two years ending on the date of this agreement the
Company has not:
4.9.1 given notice of redundancies to the relevant Secretary of State or
started consultations with a trade union under Part IV of the Trade
Union and Labour Relations (Consolidation) ▇▇▇ ▇▇▇▇ or failed to
comply with its obligations under Part IV of that Act; or
47
4.9.2 been a party to a relevant transfer (as defined in the Transfer of
Undertakings (Protection of Employment) Regulations 1981) or failed
to comply with a duty to inform and consult a trade union under
those Regulations.
5. RESTRICTIONS ON BUSINESS
5.1 Full details of all permits, authorities, licences and consents (whether
granted by public or private authority) necessary or used to carry on the
business of the Company in the manner and in the places in which its
business is now carried on have been disclosed to the Buyers and each
permit, authority, licence and consent is in force and unconditional or
subject only to a condition that has been satisfied (and nothing more
remains to be done under the condition). No expenditure or work is or
will be necessary to comply with, maintain or obtain a permit, authority,
licence or consent and there are no circumstances which might lead to the
suspension, alteration revocation, variation or cancellation of any such
permits, authorities, licences or consents, nor is there any agreement
which materially restricts the fields within which or the manner in which
the Company may carry on its business. No permit, authority, licence or
consent and no condition to which any permit, authority, licence or
consent is subject to is personal to any Seller.
5.2 No permit, authority, licence or consent will be revoked, suspended,
cancelled, varied or not renewed as a result of the execution or
performance of this agreement or a related document
5.3 Without prejudice to clause 10.1, the Company has not given or entered into
any restrictive or similar covenants which prevent or might reasonably be
expected to prevent the Company from carrying on any particular type of
business or from manufacturing or supplying any particular type of goods
or services, or which restrict or could restrict the manner in which the
Company could do so.
6. PENSIONS
6.1 The Disclosure Letter contains a statement of the basis on which the
Company has undertaken to contribute to any personal pension scheme
approved or provisionally approved for the purposes of Chapter IV of
Part XIV of the Taxes Act and the rate and amount of the contributions
in respect of each director or employee of the Company who is a member
of a personal pension scheme made in the three year period ending on the
date of this agreement.
6.2 No assurance, promise or guarantee (oral or written) has been made or given
to a director or employee of the Company who is a member of a personal
pension scheme of a particular level or amount of benefit to be provided
for in respect of him under the personal pension scheme on retirement,
death or leaving employment. The Company may terminate an obligation it
may have to contribute to a personal pension scheme without incurring a
liability to a director or employee who is a member of the personal
pension scheme under an agreement or arrangement with the member.
6.3 No contribution due to a personal pension scheme by the Company is unpaid.
6.4 The Company has no liability to make any payment to the Allsport (UK)
Limited Retirement Schemes XL Group and XL Plus and no payment for the
purposes of section 144 of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ or section 75 of
the Pensions Act 1995 has been triggered in respect of such scheme.
48
6.5 The Sellers have supplied the Buyers with copies of all agreements, deeds,
declarations, insurance contracts and other relevant documents creating,
governing or otherwise relating to the US Plan including a form 5500.
The Internal Revenue Service determination letter with respect to the US
Plan is currently pending however the Company is using all reasonable
efforts to procure such an Internal Revenue Service determination letter.
The Sellers have supplied the Buyers with a list of members of the US
Plan.
6.6 The US Plan and the documents referred to in paragraph 6.5 above are in
compliance and have since the date of commencement of the US Plan been in
compliance both as to form and in operation, with their terms and with
all applicable laws, regulations and other relevant requirements of a
competent governmental body or regulatory authority. In particular, but
without limitation, the Sellers are not aware of any failure to comply
with any applicable law, regulation or requirement, or any other
circumstance, which would or might result in the loss of tax approval or
qualification of the US Plan.
6.7 The Company does not have any outstanding liability (including, without
limitation, liability for unpaid benefits, contributions or insurance
premiums) with respect to the US Plan.
6.8 The Company would not have any further liability either to the US Plan or
to the employees of that group company if it terminated the US Plan and
ceased to make contributions to the U.S. Plan at Completion excluding any
obligations the Company had previously made to fund the US Plan.
6.9 Neither the Company, nor the US Plan, nor any officer of the Company or of
the US Plan is a party to any litigation relating to the US Plan. There are
no pending or threatened claims, investigations, audits, lawsuits or
arbitrations which have been or may be asserted or instituted against the
Company, the U.S. Plan or any officer of the Company or of the US Plan or
the assets of the US Plan.
6.10 The Company does not maintain, sponsor or make contributions to any
"employee pension benefit plan" as defined in Section 3(2) Employment
Retirement Income Security Act of 1974, as amended, other than the US Plan
and the Company has no obligations or liabilities, contingent or otherwise,
with respect to any other employee pension benefit plan.
7. LITIGATION
7.1 The Company is not engaged in any legal proceedings (including litigation,
arbitration, prosecution or any hearing before any tribunal or official
body), no such proceedings are pending or threatened, and there are no
facts considered likely to give rise to such proceedings.
7.2 There is no judgment or order of any court, tribunal or official body
against the Company which has not been fully satisfied or discharged.
8. APPLICABLE LEGISLATION
8.1 The Company, its officers and employees (in connection with its affairs)
have complied in all material respects with the Companies ▇▇▇ ▇▇▇▇, and all
applicable Taxation legislation (including sections 765, 766 and 767
Taxes Act) and equivalent applicable legislation in each other
jurisdiction in which the Company carries on business.
49
9. COMPANY BOOKS OF ACCOUNT, RECORDS AND DOCUMENTS
9.1 The Company has kept duly and properly made up all requisite books of
account (properly recording or reflecting, where appropriate in accordance
with accounting practice and policies generally accepted in the United
Kingdom, all assets, liabilities, financial transactions and contracts of
the Company), minute books, registers and records which are legally
required to be kept and these and all other documents (properly stamped
where necessary) belonging to or which ought to be in the possession of
the Company are in the possession of the Company.
9.2 All documents requiring to be filed with the Registrar of Companies by the
Company have been properly made up and filed.
9.3 The register of members of the Company is correct, there has been no notice
of any proceedings to rectify the register and there are no circumstances
which might lead to any application for rectification of the register.
10. INSURANCES
Accurate details of the policies of insurance taken out by the Company
are set out in the Disclosure Letter, such policies are in full force and
effect, the premises thereon are paid up to date and there are no
circumstances which are likely to lead to any such insurance being
vitiated or the premium being abnormally increased.
11. COMPANY AGREEMENTS
11.1 The Company is not a party to any agency, distributorship, marketing,
purchasing, service, licensing or other agreement which cannot be
terminated by the Company on less than six months' notice without payment
of compensation, or to any agreement or arrangement which is liable to be
terminated or varied by another party, or the terms of which would be
affected, on a change in the management or control of the Company.
11.2 No agreement or other transaction to which the Company is a party is or may
be unenforceable, invalid, avoidable, rescindable or repudiable for any
reason and the Company has received no notice of any intention to
terminate, repudiate or disclaim any such agreement or other transaction.
12. CONDUCT OF BUSINESS
12.1 The Company has not carried on business under nor has it used on its
letterhead, advertising or documents any name other than its own full
corporate name, and such use does not infringe any proprietary right or
interest of any other person or render the Company liable to pay any
royalty or similar sum.
12.2 No event has occurred which constitutes or which may with the passage of
time or the giving of notice constitute a breach of, or an act or event of
default under, any debenture, trust deed or other deed or agreement in
relation to borrowed moneys to which the Company is a party or by which
it is bound.
12.3 The Company is not and will not at Completion be:
50
12.3.1 the holder of any shares or securities of or interest in any
corporation incorporated without limited liability or in which
liability is not limited; or
12.3.2 the owner of any branch or permanent establishment (as defined in
the relevant double taxation agreement or treaty) outside the United
Kingdom.
12.4 In carrying on its business the Company does not use, nor are any of its
records, controls, data, information or systems stored, recorded,
maintained, operated or in any other manner dependent (directly or
indirectly) upon, any computer hardware or software or any other
electronic, mechanical or photographic equipment, process, system or
service (whether computerised or not) which is not in the exclusive
ownership and possession (free of any licence or royalty obligations) and
under the direct control of the Company.
13. ENVIRONMENTAL MATTERS
13.1 The business of the Company has been carried on in all material respects in
compliance with all relevant Environmental Laws (as defined in paragraph
13.2 below).
13.2 The Company has received no written notification from any applicable
authority of any breach by the Company of any existing UK, US or European
Community legislation, including directives and regulations, relating to
environmental and health and safety matters ("Environmental Laws") with
respect to:
13.3.1 the storage, control, disposal, consignment, transportation,
packaging and labelling of dangerous, hazardous or toxic substances
or materials;
13.2.2 civil and criminal liability for damage caused by pollution of any
description, including waste and any such substances or materials
as are referred to in sub-clause 13.2.1;
13.2.3 contaminated land;
13.2.4 discharges on or into land, ground water, surface water, streams,
rivers, sewers and drains;
13.2.5 atmospheric emissions;
13.2.6 noise and noise pollution; and
13.2.7 nuisance.
14. LOANS, CHARGES AND GUARANTEES
14.1 No loans have been made by the Company in breach of the Consumer Credit ▇▇▇
▇▇▇▇ and all charges created at any time before Completion by the Company
have if and to the extent so required been duly registered under
sections 395 to 400 (inclusive) Companies ▇▇▇ ▇▇▇▇.
14.2 No overdraft or other financial facilities available to or drawn by the
Company are secured by, or dependent on, any guarantee or security provided
by any Seller or any other third party, nor is there anything known or
which would on reasonable enquiry be known to the Company, its officers or
the Sellers which would suggest that any financial
51
facility available to the Company may be withdrawn, or its terms adversely
affected, whether as a result of Completion of this agreement or otherwise.
14.3 The Company has adequate working capital for its present business
operations, and the Sellers have fully disclosed to the Buyers all current
deposit and other bank accounts and facilities held or operated by the
Company.
14.4 The Company has no loan capital or debenture or have any encumbrance over
any of its assets.
15. UNUSUAL OBLIGATIONS
15.1 The Company is not a party to and is not liable under a long term, onerous
or unusual agreement, arrangement or obligation, including without
limitation:
15.1.1 an agreement, arrangement or obligation entered into other than in
the usual course of its business;
15.1.2 an agreement, arrangement or obligation entered into other than by
way of a bargain at arms-length;
15.1.3 an agreement or arrangement to restrict to a material extent the
Company's freedom to operate the whole or part of its business or
to use or exploit any of its assets in any part of the world as it
decides;
15.1.4 a sale or purchase, option or similar agreement, arrangement or
obligation affecting an asset owned, occupied, possessed or used by
the Company or by which the Company is bound; or
15.1.5 an agreement, arrangement or obligation which the Company cannot
comply with on time or without undue or unusual expenditure of money
or effort;
15.2 The Company is not a party to and is not liable under:
15.2.1 an agreement, arrangement or obligation by which the Company is a
member of a joint venture, consortium, partnership or association
(other than a bona fide trade association);
15.2.2 a distributorship, agency, franchise or management agreement or
arrangement; or
15.2.3 an agreement or arrangement:
(a) particulars of which have been furnished the Director General
of Fair Trading under the Restrictive Trade Practices Act 1976
and 1977;
(b) which has been notified to the Commission of the European
Communities or EFTA Surveillance Authority for an exemption
under article 85(3) of the Treaty of Rome or Article 53(3) of
the Agreement on the European Economic Area;
(c) for which an application has been made to the Commission of the
European Communities or EFTA Surveillance Authority for a
negative clearance under article 85 or 86 of the Treaty of
Rome or
52
Article 53 or 54 of the Agreement on the European Economic
Area; or
(d) which is prohibited by a competition law in any jurisdiction.
15.3 The Company has and will at Completion have no liability (present or future
or ascertained or contingent) under:
15.3.1 any guarantee, surety, indemnity, bond or similar obligation;
15.3.2 any agreement for the hire, rent, hire purchase or purchase on
deferred terms of any asset; or
15.3.3 any warranty or representation, except a warranty or representation
implied by law in respect of a transaction entered into by the
Company in the ordinary course of its trading.
16. BROKERAGE
The Company has no fees or to make any brokerage, commission or other
payment in connection with the sale of the Shares.
17. INTELLECTUAL PROPERTY
17.1 The Company's Intellectual Property:
17.1.1 is exclusively and absolutely vested in, beneficially owned by or
validly licenced or granted to, the Company free from any
Encumbrance; and
17.1.2 insofar as capable of registration or similar or equivalent
protection by the Company, is registered or so protected in the name
of the Company, free from any Encumbrance and all steps required for
its maintenance and protection have been taken; and
17.1.3 comprises all the Intellectual Property required by the Company to
carry on the Business as now constituted, or required for or in
connection with the use, application or supply of the products and
services currently produced or supplied by the Company and any
group company; and
17.1.4 is fully valid, in force and enforceable.
17.2 No right or licence has been granted to any person to use in any manner or
to do anything which would or might otherwise infringe any of the Company's
Intellectual Property and no act has been done or omitted to be done,
which will result in any of the Company's Intellectual Property ceasing
to be valid, in force and enforceable. All fees which have prior to
Completion become due in respect of the registration, protection and/or
maintenance of the Company's Intellectual Property have been paid.
17.3 The Company does not in carrying on its business infringe any Intellectual
Property rights; and no claim against the Company in respect of any
infringement of any Intellectual Property or which challenges the
validity or the Company's ownership of or exclusive right to use,
exploit, disclose or derive benefit from any Intellectual Property has
been made or threatened.
53
17.4 The Company is not a party to any secrecy, confidentiality or other
agreement which may restrict its use or disclosure of any Know-How.
17.5 No disclosure has been made to any third party of any Know-How of the
Company save as is necessary in the ordinary course of its normal trading
and subject to valid obligations upon the third party not to use or
disclose the same.
17.6 There is no continuing infringement of any of the Company's Intellectual
Property.
17.7 The Company does not use, or otherwise carry on its business under, any
name other than its corporate name.
17.8 Full details of all licences and consents granted by any third party to the
Company for or in relation to any Company Intellectual Property have been
disclosed to the Buyers in the Disclosure Letter and the Disclosure
Documents and there are no circumstances which might reasonably be
expected to lead to the termination, withdrawal or cancellation of any
such licence or consent.
17.9 The Intellectual Property in any computer or telecommunications software
used by the Company is either:
17.9.1 legally and beneficially owned by the Company; or
17.9.2 the subject of a licence granted to the Company the terms of which
have been disclosed to the Buyers.
18. TAXATION
18.1 The Company has paid all Taxation that has become due and is under no
liability to pay any penalty, interest, surcharge or fine in connection
with any Taxation.
18.2 The Company has punctually made all such returns, given all such notices,
provided all such information and maintained all such records in relation
to Taxation as are required to be made or provided or maintained by the
Company.
18.3 The Company has duly complied with its obligations in relation to Pay As
You Earn and earnings-related contributions and its reporting obligations
to the Inland Revenue in connection with any benefits provided to employees
and directors of the Company.
18.4 The Company is duly registered in accordance with VATA and has made, given,
obtained and kept full, complete, correct and up-to-date records,
invoices and other documents appropriate or required for the purposes
thereof and is not in arrears with any payment or returns due thereunder
and has not been required by HM Customs & Excise to give security under
paragraph 4 of schedule 11 VATA.
18.5 The Company has never been a member of a group for the purposes of section
43 VATA.
18.6 The Company has not been in default in respect of any accounting period for
the purposes of section 59 VATA.
18.7 All value added tax payable upon the importation of goods and all excise
duties payable in respect of any assets (including trading stock) imported
or owned by the Company have been paid in full.
54
18.8 No liability to Taxation will arise on the disposal by the Company of
any asset acquired since the Accounts Date but prior to Completion for
a consideration equal to the consideration actually given for the
acquisition.
18.9 Since the Accounts Date the Company has not entered into or been a
party to any transaction, otherwise than in the ordinary course of
business, which will or may give rise to a liability to Taxation.
18.10 Full particulars of each claim under sections 152 to 154 TCGA made
prior to the date hereof which affects any asset owned by the Company
on or after the Accounts Date are set out in the Disclosure Letter.
18.11 The Company has not made any repayment of share capital to which
section 210 Taxes Act applies or issued any share capital as paid up
otherwise than by the receipt of new consideration within the meaning
of part IV Taxes Act.
18.12 The Company is not liable to make any payment of interest or any annual
payment for which no relief will be received by reason of section 125
Taxes Act or section 787 Taxes Act or by reason of it being a
distribution.
18.13 The Company has made all deductions in respect, or on account, of any
Taxation from any payments which it is required or entitled to make and
has accounted in full to the appropriate authority for all amounts so
deducted.
18.14 The Company has not without prior consent caused, permitted or entered
into any of the transactions specified in section 765 Taxes Act.
18.15 The Company does not hold any shares as trading stock.
18.16 Except as provided in the Accounts, no event, transaction, act or
omission has occurred which would result in the Company becoming liable
to pay or to bear any Taxation which is primarily or directly
chargeable against or attributable to any person, firm or company other
than the Company.
18.17 The Company has not incurred any expense to which the provisions of
section 418 Taxes Act would apply and does not have outstanding any
loan to which the provisions of sections 419-420 Taxes Act would apply.
18.18 There is no unsatisfied liability to inheritance tax attached or
attributable to the assets of the Company or the shares of the Company
and neither the assets nor the shares are subject to an Inland Revenue
charge as mentioned in section 237 IHTA.
18.19 No person has the power under section 212 IHTA to raise any inheritance
tax by sale or mortgage of or by a terminable charge on any of the
Company's assets.
18.20 All documents which are required to be stamped and are in the
possession of the Company or by virtue of which the Company has any
right have been duly stamped.
18.21 The Company has not incurred a liability to stamp duty reserve tax
since the Accounts Date.
18.22 The Company is not and does not expect to be involved in a dispute in
relation to Taxation. No Taxation Authority has investigated or
indicated that it intends to investigate the Company's Taxation affairs.
55
18.23 The Company has sufficient records to determine the Tax consequences
which would arise on a disposal or on the realisation of each asset
owned by it at the Accounts Date, or acquired since the Accounts Date
but before Completion.
18.24 On disposal of an asset of the Company for a consideration equal to the
value attributed to the asset in the Accounts, no liability to
corporation tax in respect of a chargeable gain will arise
(disregarding a statutory right to claim an allowance or relief).
18.25 In preparing the Accounts the value used for each asset or class of
assets in respect of which a separate computation for capital
allowances is required (whether as a result of an election or
otherwise) is such that, on a disposal of that asset or all the assets
in that class for a consideration equal to the value used (and
disregarding a statutory right to claim an allowance or relief), no
balancing charge would be made.
18.26 The Company owns no asset which is a capital item, the input tax on
which may be subject to adjustment in accordance with Part XV of the
Value Added Taxation Regulations 1995 (capital goods scheme).
18.27 The Company has not elected to waive exemption under paragraph 2 of
Schedule 10 to the VATA in relation to any land except as disclosed in
the Disclosure Letter. Each election of that type disclosed in the
Disclosure Letter has effect.
18.28 The Company is not and has not agreed to become an agent, manager or
factor for the purposes of section 47 of the VATA (agents etc.) of a
person not resident in the United Kingdom.
18.29 The Disclosure Letter contains details of each asset owned at the date
of this Agreement by the Company in relation to which a charge to
Taxation might arise under section 179 of the TCGA (company ceasing to
be member of a group) as a result of an intra-group transfer of assets
having taken place at any time prior to the date of this Agreement.
18.30 A valid group income election is in force between Allsport Photographic
Plc and All-Sport (UK) Limited under section 248 of the Taxes Act
(dividends etc paid by one member of a group to another).
19. PROPERTY
19.1 The Properties are the only land and buildings owned or occupied by the
Company.
19.2 The Company has good title to each of the Properties.
19.3 There is no exception, reservation, right or covenant contained in any
document of title to any of the Properties which materially and
adversely affects the use of the relevant Property for the purposes for
which it is now used and is material in the context of the business and
activities of the Company.
19.4 There is no outstanding dispute, written notice or complaint which
materially and adversely affects the use of any of the Properties for
the purpose for which it is now used and is material in the context of
the business and activities of the Company.
19.5 There is no person in possession or occupation of, or who has or claims
a right or interest of any kind in the Properties adversely to the
Company's interest. The Company is entitled to and has exclusive
vacant possession of the Properties.
56
19.6 The Company has performed or complied with each permit, obligation,
condition, restriction, agreement (including, without limitation, the
term of any lease) and legal and administrative requirement affecting
the Properties, their ownership, occupation, possession or existing use.
19.7 The Sellers are not aware of a material deficiency which requires
correction in the state or condition of any building or other structure
on or forming part of the Properties.
19.8 Except in relation to the Properties, no Group Company has a liability
(actual or contingent) arising out of a conveyance, transfer, lease,
tenancy, licence, agreement or other document relating to land,
premises or an interest in land or premises.
20. SUBSIDIARIES
20.1 The above warranties shall apply to each subsidiary of the Company
provided that the warranties contained in paragraphs 6.5 to 6.10 shall
apply only to the Overseas Subsidiary and the warranties contained in
paragraphs 6.1 to 6.4 shall not apply to the Overseas Subsidiary as if
each reference to the Company was a reference to each such subsidiary
and references to the balance sheet, profit and loss account and
Accounts shall respectively be deemed to be references to the balance
sheet at the Accounts Date, to the profit and loss account for the year
ended on the Accounts Date, and to the accounts as at the Accounts Date
of the relevant subsidiary.
20.2 As regards the Overseas Subsidiary in interpreting such paragraphs,
references to UK legislative provisions shall be construed as
references to the equivalent or similar legislative provisions (if any)
existing in the jurisdiction of incorporation of the Overseas
Subsidiary.
21. PROJECTIONS
21.1 The expressions of opinion or future intention, forecasts,
speculations, assessments, estimates and budgets set out in the
Information Memorandum and the Strategy Paper (each in Agreed Form)
have been made in good faith on the basis of reasonable assumptions and
have been prepared reasonably diligently bearing in mind the nature of
the respective documents and the level of factual information currently
available.
57
SCHEDULE 4
DESCRIPTION OF THE PROPERTY
PART 1: FREEHOLD PROPERTY
▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇'▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
PART 2: LEASEHOLD PROPERTY
Allsport Building, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇-▇▇▇▇, ▇▇▇
58
SCHEDULE 5
LIMITATIONS ON THE SELLERS' LIABILITY
1. GENERAL
1.1 The provisions of this schedule shall operate to limit the liability of the
Sellers under and in respect of the provisions of clause 4 and the
Warranties. Clause 4 and the Warranties shall accordingly have effect
subject to and as qualified by the terms of this schedule.
1.2 The Warranties shall be actionable only by the Buyers and no other party
shall be entitled to make any claim or take any action whatsoever against
the Sellers under or arising out of or in connection with this agreement
except that each Buyer may assign the whole of its rights under or
arising out of or in connection with this Agreement to any of its group
companies or subsidiaries for so long as it remains a group company.
1.3 References in this schedule to a "Relevant Claim" include any claim against
the Warrantors for breach of the Warranties, and any other claim (whether
in contract, tort or otherwise) against the Warrantors arising out of
clause 4 of this agreement and in respect of paragraph 3 of this schedule 5
only, any claim against the Warrantors in respect of the Tax Deed.
2. DISCLOSURE
2.1 The following matters shall be treated as disclosed to the Buyers by the
Warrantors both in respect of the Company and each group company:
2.1.1 the contents of this agreement and all transactions herein envisaged,
whether expressly or by necessary implication;
2.1.2 the Accounts and all information which is contained in the Accounts;
2.1.3 all matters and information which would have been revealed by a
search of the microfiche of the files of the Company and each group
company registered in England and Wales at Companies House on
5th February 1998; and
2.1.4 the full contents of all documents which are listed in the Schedule
of Disclosure Documents.
3. MINIMUM AND MAXIMUM CLAIMS
3.1 The Warrantors shall not be liable in respect of any Relevant Claim or
Claims unless and until the aggregate amount that would otherwise be
recoverable from the Warrantors in respect of all such Claims shall exceed
L250,000 and in the event that the aggregate amounts exceeds L250,000 the
Buyers are entitled to claim the entire amount and not merely the excess.
For the avoidance of doubt, amounts for which the Warrantors have no
liability, or by which the Warrantors' liability is reduced, as a
consequence of the operation of this schedule or clause 3 of the Tax Deed
shall not be capable of being
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aggregated as a Relevant Claim or part thereof with other Relevant Claims
for the purposes of this paragraph 3.1.
3.2 For the purposes of paragraphs 3.1 above, the amount of any Relevant
Claim(s) in respect of any particular matter or circumstance shall be
counted only once, so that the Buyers shall not be entitled to aggregate
any Relevant Claims which it may make (or be entitled to make) under this
agreement and/or under the Tax Deed in respect of that particular matter or
circumstance.
3.3 The total aggregate liability of the Warrantors in respect of all and any
Relevant Claims or under or in respect of this agreement and the Tax Deed
shall not exceed the aggregate of the sum of L16,000,000 and the
aggregate proceeds of sale of the Consideration Shares (net of the costs
of sale). To the extent that the aggregate liability of the Warrantors to
the Buyers hereunder is less than or equal to L16,000,000 such liability
shall be met out of the Cash Consideration and to the extent that it
exceeds a sum equal to the Cash Consideration the Warrantors shall be
entitled to(a) await settling such excess until the period in clause 11.1
of this agreement has expired and (b) thereafter, to satisfy such
liability from the proceeds of sale of Consideration Shares provided that
the Warrantors shall have no obligation to pay any part of such excess to
the Buyers until such time as they are able to deal in the Consideration
Shares free from any restriction.
3.4 The liability of each Warrantor for and in respect of any Relevant Claim
shall be limited to and shall not exceed such Warrantors' due proportion
of the Relevant Claim, and the aggregate liability of each Warrantor in
respect of all Relevant Claims or under or in respect of this agreement
and the Tax Deed shall not exceed such Warrantor's due proportion of the
total aggregate liability of the Warrantors referred to in paragraph 3.3
above. Any payment by a Warrantor to the Buyers in respect of a Relevant
Claim or under or in respect of this agreement and the Tax Deed shall
take effect as an adjustment to the purchase consideration for the sale
of such Warrantor's Shares. In this paragraph 3.4, "due proportion"
means, as regards each Warrantor, the figure, expressed as a percentage,
which is shown opposite the name of the relevant Warrantor in column (5)
of schedule 1A.
4. TIME LIMITS
4.1 Specific written notice of any Relevant Claim, setting out the amount
and such details thereof as are practicable (including mention of the
specific Warranties which the Buyers allege have been breached), shall
be given by the Buyers to the Warrantors:
4.1.1 in the case of any Relevant Claim the subject matter of which relates
to Taxation under the Tax Warranties contained in schedule 3, on or
before the seventh anniversary of the date of this agreement; and
4.1.2 in the case of any other Relevant Claim, on or before the second
anniversary of the date of this agreement;
(such date being referred to in this schedule as the "Expiry Date")
and the Warrantors shall cease to be under any liability to the
Buyers or otherwise in respect of all and any Relevant Claims not so
notified to the Warrantors.
4.2 Any Relevant Claim which has been made or shall be made before the
Expiry Date shall, if it has not been previously satisfied, settled or
withdrawn, be deemed to have been withdrawn and shall become fully
barred and unenforceable (and the Warrantors' liability in respect of
such Relevant Claim shall absolutely terminate) on the later of the
Expiry
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Date or the expiry of the period of six months after notice of
such Relevant Claim was given to the Warrantors in accordance with
paragraph 4.1 of this schedule, unless proceedings in respect thereof
shall have been commenced against the Warrantors (and for this purpose
proceedings shall not be deemed to have been commenced unless they shall
have been issued and served upon the Warrantors).
5. SINGLE RECOVERY
Any payment by the Warrantors under this agreement to the Buyers shall
reduce by that amount any claim by the Buyers under the Tax Deed (and
vice versa), and the Buyers shall at all times procure that there is no
duplication of recovery of any claim relating to the same subject matter
whether under this agreement or under the Tax Deed or otherwise.
6. RELIANCE
Each Buyer acknowledges and declares that in entering into this agreement
it has not relied and is not relying on any warranties, representations,
covenants, undertakings, indemnities, promises, forecasts or other
statements whatsoever whether written or oral (and whether implied or
otherwise) (collectively "Representations"), other than those expressly
set out in this agreement and in the Tax Deed, and each Buyer hereby
irrevocably and unconditionally waives any right it may have to claim
damages for, or to rescind this agreement by reason of, any
Representation not expressly set out in this agreement or the Tax Deed
unless such Representation was made fraudulently. Each Buyer further
declares that, at the time of entering into this agreement, it is not
actually aware of any fact or matter which it knows constitutes or would,
upon the making of any Warranty, constitute a liability on the part of
the Warrantors under a Warranty.
7. RESCISSION
The sole remedy against the Warrantors for any breach of any of the
Warranties, any other breach of this agreement by the Warrantors or any
event giving rise to liability on the Warrantors under the Tax Deed shall
be an action for damages. Save in the event of fraudulent
misrepresentation no right of rescission shall be available after
Completion to the Buyers by reason of any breach of the Warranties or any
other provision of this agreement or the Tax Deed.
8. SPECIFIC LIMITATIONS
8.1 The Warrantors shall have no liability in respect of any Relevant Claim
if and to the extent that such Relevant Claim (or the subject matter
thereof):
8.1.1 occurs or arises or, such Relevant Claim otherwise having arisen, is
increased as a result of the passing of, or any change in, after
the date hereof, any law, rule, regulation, interpretation of the
law or administrative practice of any government, governmental
department, agency or regulatory body, or any increase in the rates
of Taxation or any imposition of Taxation or any amendments to or
the withdrawal of any extra-statutory concession or other practice
previously made by or published by the Inland Revenue or other
taxing authority and in force at the date hereof, and in any such
case not actually or prospectively in force at the date of this
agreement;
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8.1.2 occurs or arises or, such Relevant Claim otherwise having arisen, is
increased as a result of any change made after the date hereof in
any accounting or taxation policies or practice of the Company, the
Buyers or any other company in the Buyers' Group;
8.1.3 would not have arisen or occurred but for (or is increased as a
result of):
(a) any voluntary act, event, default, omission, transaction or
arrangement after Completion by the Buyers, the Company or
any other member of the Buyers' Group or any person connected
with any of them, otherwise than, in the case of the Company,
or any group company in the ordinary course of its business
as now carried on or pursuant to a pre-Completion obligation;
or
(b) any claim, election, surrender or disclaimer made, or notice or
consent given, or any other thing done after Completion by
the Company or any group company or the Buyers or any other
member of the Buyers' Group, or any person connected with any
of them, under or in connection with the provisions of any
enactment or regulation relating to Taxation; or
(c) any failure or omission by any group company to make any claim,
election, surrender or disclaimer, or give any notice, or
consent or do any other thing, under, or in connection with,
the provisions of any enactment or regulation relating to
Taxation after Completion, the anticipated making, giving or
doing of which was taken into account in computing the
provision for Taxation in the Accounts or the Management
Accounts which claim, election, surrender, disclaimer,
notice, consent or action, as the case may be, must be
capable of being made properly without detriment to the
Company;
8.1.4 arises from an act, event, default, omission, transaction or
arrangement of the Sellers or the Company or any group company
prior to Completion occurring at the written request or direction
of, or with the written consent of, the Buyers;
8.1.5 is recovered by the Buyers or any group company under the terms of
any insurance policy of either of the Buyers or the Company or any
group company;
8.1.6 is recovered by the Buyers or the Company or the relevant group
company from any person (other than the Warrantors) whether under
any applicable law or otherwise;
8.1.7 is a Taxation liability which arises in consequence of an event
occurring since the Accounts Date in the ordinary and usual course
of business of any group company;
8.1.8 is a liability which arises directly or indirectly as a result of:
(a) the payment of any unusual or abnormal dividend by any group
company after Completion;
(b) the change of the date to which any group company makes up its
accounts;
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(c) the cessation of any business carried on by the Company
or any group company occurring after Completion.
8.2 The Warrantors shall have no liability in respect of any Relevant Claim:
8.2.1 to the extent that specific allowance, provision or reserve has
been made in the Accounts or the Management Accounts in respect
of the matter to which such liability relates;
8.2.2 to the extent that such matter was taken into account in
computing the amount of any such allowance, provision or
reserve or was specifically referred to in the Accounts or
the Management Accounts or in the notes to the Accounts or the
Management Accounts;
8.2.3 in respect of any expression of opinion or future intention or
any forecasts, speculation, assessment, estimate or budget save
to the extent of Warranty 21 in Part B of schedule 3.
8.3 In relation to any Relevant Claim under the Warranties relating to
Taxation, if any specific provisions or reserve for Taxation shall
have proved to have been an over provision or over reserve the amount
of such over provision or over reserve shall be set off against any
actual liability of the Sellers in respect of any Relevant Claim(s)
under the Warranties which relate to Taxation in accordance with
clause 7 of the Tax Deed.
8.4 For the avoidance of doubt, in determining the amount of any Relevant
Claim for the purposes of the limits set out in paragraphs 3.1 and 3.2
above, the amount of such Claim shall be the net amount after giving
effect to the provisions of paragraphs 8.1, 8.2 and 8.3 above.
9. RECOVERY
9.1 Where the Buyers or any group company is or may be entitled to recover
from some other person any sum in respect of any matter or event which
has given rise to a Relevant Claim under the Warranties the Buyers
shall procure that, the person so entitled shall use his reasonable
endeavours to recover that sum (keeping the Warrantors at all times
fully and promptly informed of the conduct of such recovery) provided
that the person so entitled shall not be obliged hereby to use such
reasonable endeavours if so to do would have a significant detrimental
commercial effect on the Company's business, and any sum recovered
will reduce the amount of the Relevant Claim (and, in the event of the
recovery being delayed until after the Relevant Claim has been
satisfied by the Warrantors, shall be paid to the Warrantors, after
deduction of all reasonable costs and expenses of the recovery).
9.2 Without prejudice to the provisions of paragraph 9.1 above if the
Sellers pay to the Buyers an amount in respect of any Relevant Claim
under the Warranties, and either Buyer or any group company
subsequently recovers (whether by payment, credit, discount, relief or
otherwise) from a third party (including any taxation authority) an
amount which is referable to the matter giving rise to such Relevant
Claim, then:
9.2.1 if the amount paid by the Warrantors in respect of such Claim is
more than the Sum Recovered (as defined in paragraph 9.3 below),
the Buyers shall (or, where appropriate, shall procure that the
relevant group company shall) immediately pay to the Warrantors
the Sum Recovered; and
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9.2.2 if the amount paid by the Warrantors in respect of such Claim is
less than or equal to the Sum Recovered, the Buyers shall
immediately pay to the Warrantors an amount equal to the amount
paid by the Warrantors
so as to leave the Buyers, taking into account the amounts
received from the third party and from the Sellers and those
payable to the Sellers under this clause, in no better or worse
position than it would have been in (subject always to the other
provisions of this paragraph 9) had the Relevant Claim not arisen.
9.3 For the purposes of this paragraph, the expression "Sum Recovered"
means an amount equal to the amount recovered from the third party
(and for this purpose, in addition to any cash payment, any payment in
kind or discount, credit or like benefit obtained shall constitute an
amount recovered) plus any repayment supplements in respect of the
amount recovered from the third party (as defined in section 85 of the
Taxes Act) plus any interest in respect of the amount recovered from
the third party less all reasonable costs and expenses incurred by the
Buyers or (as the case may be) the relevant group company in
recovering the amount from the third party.
10. CONTINGENT LIABILITIES
If any Relevant Claim arises by reason of a liability of any group
company which is a contingent liability when the Claim in respect
thereof is notified to the Warrantors, then the Warrantors shall not
be obliged to make any payment to the Buyers until such time as the
contingent liability ceases to be contingent and becomes an actual
liability and is due and payable but the provisions of paragraph 4 of
this schedule shall not prevent such amount being paid to the Buyers
as and when it becomes an actual liability.
11. NOTICE OF CLAIMS
Insofar as the same would not have a significant detrimental
commercial effect on the relevant group company's business, the
Warrantors shall be afforded every reasonable opportunity of resisting
in the name of the relevant group company any claims against any group
company which might constitute a breach of any of the Warranties (or
otherwise give rise to a Relevant Claim), and the Warrantors shall
subject as aforesaid (if they so require) be allowed to have the
conduct of any negotiations, proceedings or appeals incidental thereto
(keeping the Buyers at all reasonable times fully and promptly
informed of the conduct) and to use professional advisers nominated by
the Buyers. Accordingly and subject thereto the Buyers shall, and
shall procure that the relevant group company shall:
11.1.1 as soon as practicable upon becoming aware of any breach or
circumstances which will or may give rise to a claim, give to
the Sellers by written notice details of such circumstances and
such Claim and consult with the Warrantors in respect of such
circumstances and such claim, and thereafter keep the Warrantors
as fully informed as is practicable of all material developments
relating to such circumstances and claim;
11.1.2 if so requested by the Warrantors, subject as aforesaid take
all reasonable steps or proceedings as the Warrantors may
consider necessary in order to mitigate, avoid, resist, appeal,
dispute, contest, remedy, compromise or defend any such claim
and any adjudication in respect thereof or enforce against any
person (other than the Warrantors the rights of the relevant
group company and the
64
Buyers and each member of the Buyers' Group in relation to the
matter the subject of the claim and shall procure that any
group company shall act in accordance with any such
requirements, and for this purpose take all appropriate
proceedings in the name of the relevant group company subject
to the Buyers and/or each group company (as appropriate) being
indemnified by the Warrantors against all reasonable costs and
expenses incurred in connection therewith;
11.1.3 at all reasonable times allow the Warrantors and their agents
access to and to inspect and take copies of all necessary
books, correspondence and records of the relevant group company
(subject always to keeping the same confidential other than
necessary disclosures in connection with any such action or
claim);
11.1.4 use reasonable endeavours to procure that the auditors (both
past and present) of the Company and/or the relevant group
company make available to the Warrantors and their agents their
audit working papers in respect of any audit of the Company's
and/or the relevant group company accounts for any relevant
accounting period in connection with the claims or action.
Such access shall only be required at reasonable times and on
reasonable notice;
11.1.5 if reasonable require the personnel of the Company and/or the
relevant group company to provide statements and proofs of
evidence, and to attend at any trial or hearing to give
evidence or otherwise, and to provide like assistance to enable
the Warrantors to mitigate, avoid, resist, appeal, dispute,
contest, remedy, compromise or defend any Relevant Claim such
assistance to be provided without charge to the Buyers;
11.1.6 save with the Warrantors' prior written consent, and subject as
aforesaid, not admit liability in respect of or compromise, or
settle any such claims as aforesaid.
11.2 Without prejudice to paragraphs 4 and 11.1 above and 12 below, if the
Buyers consider that they will or may make a Relevant Claim against
the Warrantors, they shall as promptly as is practicable so notify the
Warrantors in writing, giving such reasonable particulars thereof as
are available, and for a period of 60 days after such notification
shall afford the Warrantors the opportunity to take steps to remedy
the matter giving rise to such Relevant Claim to the extent that it
can be remedied.
11.3 References in this paragraph 11 to "Relevant Claim" shall not include
reference to any such claim made under or in respect of the Tax Deed.
12. MITIGATION
12.1 Nothing in this schedule shall in any way restrict or limit the general
obligation of the Buyers to mitigate any loss or damage which it may
suffer in consequence of any breach by the Warrantors of the terms of
this agreement.
13. PRESERVATION OF RECORDS AND INSURANCE
13.1 The Buyer shall and shall procure that each group company will preserve
all documents, records, correspondence, accounts and other information
whatsoever relevant to a matter which may give rise to a Relevant Claim.
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13.2 If at any time after the date this agreement the Warrantors wish to
take out insurance against their liabilities in respect of Relevant
Claims, the Buyers shall provide such information as any prospective
insurer may reasonably require before effecting the insurance.
14. KNOWLEDGE OF SELLERS
Where any Warranty is qualified by a reference (howsoever expressed)
to the awareness, knowledge, information or belief of the Sellers, the
Sellers shall not be deemed to have made enquiry of any other person,
and the Sellers shall be deemed to be aware and/or to have knowledge
only of such matters or things as are within the knowledge of the
Sellers.
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Signed by )
a duly authorised director on )
behalf of GETTY COMMUNICATIONS PLC )
Signed by )
a duly authorised director on )
behalf of GETTY IMAGES, INC. )
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for himself and as attorney for each of )
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Signed by ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ )
a duly authorised director on behalf of )
ALLSPORT PHOTOGRAPHIC SHARE )
SCHEME TRUSTEES LIMITED )
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