DATED 1ST OF JULY 1999
------------------------
SF INTERNATIONAL LIMITED AND OTHERS
- and -
BRILLIANT DIGITAL ENTERTAINMENT, INC.
------------------------------------------------------
AGREEMENT
FOR
THE SALE AND PURCHASE OF
SHARE CAPITAL OF
TROJAN TELEVISION LIMITED
-------------------------------------------------------
XXXXXXXXX & XXXXX
Xxxxxxx House
00 Xxxxxxx Xxxxxx
Xxxxxx X0X 0XX
Ref: h175/25576v20
CONTENTS
1. Interpretation 1
2. Agreement for Sale 7
3. Consideration for Trojan Shares 8
4. Closing 9
5. Joint Venture Arrangements 10
6. Representations Warranties and Undertakings 10
7. Restrictions on Sellers 18
8. Effect of Closing 20
9. Costs, Expenses and Insurance 20
10. Notices 21
11. Announcements 21
12. Confidentiality 21
13. General 22
14. Sellers' Representative 23
15. Governing Law and Jurisdiction 23
16. Admission of Minority Shareholders 24
SCHEDULES
SCHEDULE 1 - The Sellers 26
SCHEDULE 2 - The Company 29
SCHEDULE 3 - Warranties 30
SCHEDULE 4 - Closing Arrangements 41
SCHEDULE 5 - Deed of Adherence 44
SCHEDULE 6 - Disclosure Schedule 45
SCHEDULE 7 - The Executive Summary 46
SCHEDULE 8 - The Memorandum of Understanding
THIS AGREEMENT is made on 1st of July 1999
BETWEEN:
(1) The shareholders listed in Part A of Schedule 1 and such other parties
adhering to this Agreement as a Seller in accordance with Clause 16 hereof
(the "SELLERS"); and
(2) BRILLIANT DIGITAL ENTERTAINMENT, INC., a Delaware Corporation of 0000
Xxxxxxx Xxxxxx Xxxx., Xxxxx 000, Xxxxxxxx Xxxxx, XX 00000, XXX ("THE
BUYER" (which expression shall, where consistent with the context, include
its successors in title and assigns)).
WHEREAS:
(A) Each of the Investor Sellers is and immediately prior to Closing will be
the legal and beneficial owner of the number of issued shares in the
capital of the Company set opposite its name in Part A of Schedule 1.
(B) Each of the Minority Shareholders is and immediately prior to Closing will
be the legal and beneficial owner of the number of issued shares in the
capital of the Company set opposite its name in Part B of Schedule 1.
(C) The particulars of the Company are set out in Schedule 2.
(D) Each of the Investor Sellers and the Buyer have entered into the Option
Agreement pursuant to which the Investor Sellers agreed to grant an option
to the Buyer to acquire their entire holding of shares in the capital of
the Company pursuant to the terms and conditions contained therein (the
"OPTION").
(E) This Agreement is supplemental to the Option Agreement and sets out the
terms and conditions additional to those contained in the Option Agreement
pursuant to which the Buyer agrees to buy and the Sellers agree to sell
the Shares.
(F) The Sellers have induced the Buyer to enter into this Agreement by the
Sellers making the representations and agreeing to warrant and undertake
in the terms of Clause 6 and Schedule 3.
IT IS AGREED as follows:-
1. INTERPRETATION
1.1 "ACCOUNTS": in relation to any Financial Year or other specified period
of the Company:
(a) the audited balance sheet of the Company as at the Accounts Date in
respect of the Financial Year; and
(b) the audited profit and loss account of the Company (and, where
relevant, the audited consolidated profit and loss account of the
Company and its Subsidiary Undertakings) in respect of that Financial
Year,
together with any notes, statements or documents permitted or required by
the Companies Act (or equivalent legislation in the relevant jurisdiction)
to be made thereon or annexed or attached thereto;
"ACCOUNTS DATE": in relation to any Financial Year of the Company, the
last day of that Financial Year;
"ASSOCIATE": as defined in Section 435 of the Insolvency Xxx 0000;
"ASSOCIATED COMPANY": means any subsidiary or holding company of the
Company or any subsidiary of such holding company from time to time (which
expressions have same meanings in this Agreement as in Section 736 of the
Companies Act);
"AUDITORS": the auditors of the Company from time to time;
"BUSINESS DAY": any day other than a Saturday, a Sunday, or a day on
which banks in London are authorised by law to close;
"BUYER'S ACCOUNTANTS": Price Waterhouse Coopers;
"BUYER'S GROUP": any holding company (or any subsidiary of such
holding company) or subsidiary of the Buyer;
"BUYER'S US SOLICITORS": Troop Xxxxxxx Xxxxxx Xxxxxxx & Xxxxx, LLP of
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx, Xxx Xxxxxxx, XX 00000-0000, XXX;
"BUYER'S UK SOLICITORS": Xxxxxxxxx & Xxxxx of Hanover House, 00
Xxxxxxx Xxxxxx, Xxxxxx, X0X 0XX;
"CLAIM": a claim for breach or non-observance by the Seller of any
Warranty;
"CLOSING": completion of the sale and purchase of the Trojan Shares
held by the relevant Seller as provided by Clause 4 of this Agreement;
"CLOSING ACCOUNTS": the profit and loss account and the balance sheet
of the Company prepared by the Buyers' Accountants in accordance with
Clause 3.4 as at the Investor Sellers Closing Date;
"CLOSING DATE": the date of Closing;
"COMPANY": Trojan Television Limited;
"COMPANIES ACT": the Companies Xxx 0000 as amended;
"COMMON STOCK": as defined in the Option Agreement;
"CONFIDENTIAL INFORMATION": trade secrets and information not publicly
known (including but not limited to formulae, processes, methods,
financial data, customer lists, marketing information, knowledge and know
how) in connection with the Company or any Associated Company, and the
customers, suppliers, licensors and licensees and the operation of the
Company or any Associated Company and which are for the time being
confidential to the Company or any Associated Company;
"DEBENTURE": the debenture granted by the Company on 11 January 1999 in
favour of SF International Limited;
Page 2
"DEBT ESCROW AGREEMENT": the agreement in the agreed form relating to the
shares of Common Stocks to be issued to SF International Limited pursuant
to the Deed of Assignment to be entered into by the Buyer, SF
International Limited, and the Escrow Agent to be entered into on Closing;
"DEED OF ASSIGNMENT": the deed of assignment of even date in the agreed
form pursuant to which SF International Limited, inter alia, assigns to
the Buyer the benefit of certain indebtedness of the Company to SF
International Limited and of the Debenture;
"DEED OF TERMINATION": the deed of termination of even date in the
agreed form between SF International Limited and the Company relating
to the termination of all joint venture arrangements between SF and the
Company;
"DISCLOSURE SCHEDULE": that Schedule attached hereto together with any
copy documents annexed thereto;
"ENCUMBRANCES": any interest or equity of any person (including, without
limitation, any right to acquire, option or right of pre-emption) or any
mortgage, charge, pledge, lien or assignment or any other encumbrance,
priority or security interest or arrangement of whatsoever nature over,
affecting or in the relevant Properties;
"ESCROW AGENT": Citicorp Trust N.A./PBG, Sort# 0000, Xxx Xxxxx Xxxxxx -
00xx Xxxxx, Xxxx Xxxxxx, Xxxx, XX 00000 appointed pursuant to the Escrow
Agreements;
"ESCROW AGREEMENTS" the SPA Escrow Agreement and the Debt Escrow
Agreement;
"EVENT": any payment, transaction, act or omission in connection with the
business of the Company of whatever nature, whether or not the Company is
a party thereto and references to an Event occurring on or before a
particular date shall include an Event deemed to occur or treated or
regarded as occurring on or before that date provided that any reference
to an Event occurring on or before Closing shall include the combined
result of two or more Events the first of which shall have occurred on or
before Closing and the second or subsequent of which shall have taken
place after Closing but in such case only to the extent that the first
such Event occurring or commencing prior to Closing is outside the
ordinary course of business of the Company and the second or successive
Event after Completion is inside the ordinary course of business of the
Company as carried on at Closing.
"EXECUTIVE SUMMARY": the executive summary summarising the business of
the Company set out at Schedule 7;
"EXERCISE NOTICE": the written notice from the Buyer to the relevant
Sellers which must be issued in accordance with Section 3 of the Option
Agreement in order to exercise the Option;
"FINANCIAL YEAR": shall be construed in accordance with Section 223 of
the Companies Act;
"FOREIGN SELLERS WARRANTIES": the warranties and representations set
out in Part C of Schedule 3;
"GOTHAM GROUP INDEBTEDNESS": the debt of (British Pounds)65,000 which may
have previously been due from the Company to the Gotham Group (as defined
in section 8.3 of the Disclosure Schedule);
"GRANTORS": the Sellers;
Page 3
"INTELLECTUAL PROPERTY RIGHTS": all copyright, patents, trade marks,
registered and unregistered design rights, all rights to bring an action
for passing off, all rights to apply for protection in respect of any of
the above rights, and all other Intellectual Property rights in any
jurisdiction and all legal rights protecting the confidentiality of any
information or materials;
"INVESTOR SELLER DOCUMENTS": this Agreement the SPA Escrow Agreement, Debt
Escrow Agreement, the Option Agreement and the Subordination Agreement
dated 8 April 1999 between the Investor Sellers, the Buyer and the Company
(the "SUBORDINATION AGREEMENT"). The Subordination Agreement shall only be
an "Investor Seller Document" if it can be shown that the Company has made
no payments to SF International Limited prior to the Investor Sellers
Closing.
"INVESTOR SELLERS": the shareholders listed in Part A of Schedule 1;
"INVESTOR SELLERS CLOSING": completion of the sale and purchase of the
Trojan Shares held by the Investor Sellers as provided by Clause 4 of
this Agreement;
"INVESTOR SELLERS CLOSING DATE": the date of the Investor Sellers
closing;
"KEY THIRD PARTY": a person with whom the Company (or, for the purposes of
Clause 7 only, the Company or any Associated Company) or the Sellers or
Minority Shareholders has any agreement, arrangement or is in the habit of
dealing with (where such agreement, arrangement or dealing is material in
the context of carrying on the business of the Company as carried at any
time prior to the date of this Agreement (or, for the purposes of Clause 7
only, the business of the Company or any Associated Company) as carried on
at any time prior to the relevant Event Date (as defined in Clause 7))
including, without limitation, each of the third parties to the Material
Contracts;
"LATEST ACCOUNTS": The Accounts of the Company in relation to the 9
month period ending on the Latest Accounts Date;
"LATEST ACCOUNTS DATE": 31 March 1999;
"LIABILITIES": all liabilities, duties, commitments and obligations of
every description, whether deriving from contract, common law, statute or
otherwise actual or contingent or ascertained or unascertained and whether
owed or incurred severally or jointly or as a principal or surety;
"MANAGEMENT ACCOUNTS": the unaudited balance sheet and profit and loss
account of the Company for the one month ended on 30 April 1999 and as at
the Management Accounts Date, and the reports, notes and other documents
annexed thereto in each case, prepared to a "review" standard as such term
is generally understood under US accounting principles and practices;
"MANAGEMENT ACCOUNTS DATE": 30 April 1999;
"MATERIAL CONTRACTS": the agreements or arrangements referred to in
paragraph 8.2 of Schedule 3 and set out in the Disclosure Schedule;
"MINORITY SHAREHOLDERS": those persons listed in Part B of Schedule 1;
"NET ASSET VALUE": as defined by Clause 3.4;
Page 4
"OPINIONS": the opinions given by Xxxxxx Xxxxxxx and Paige & Co in the
agreed form;
"OPTION": has the meaning given to it in Recital (C) of this Agreement;
"OPTION AGREEMENT": the "Option Agreement" dated 11 March 1999 between the
Investor Sellers and the Buyer as amended by the "First Amendment to
Option Agreement" dated 12 April 1999 and the "Second Amendment to Option
Agreement" dated 29 April 1999 (and as further amended by agreement in
writing by the parties thereto);
"OWNERSHIP PERCENTAGE": the proportion that the number of shares in
the capital of the Company of which the Buyer becomes the legal and
beneficial owner pursuant to this Agreement bears to the entire issued
share capital of the Company;
"PERMIT": means a permit, licence, consent, approval, certificate,
qualification, specification, registration or other authorisation, or a
filing of a notification, report or assessment, necessary in any
jurisdiction for the effective operation of the Company's business, its
ownership, possession, occupation or use of an asset or the execution or
performance of this Agreement;
"PERSON": any individual, firm, company or other incorporated or
unincorporated body;
"PROPERTIES": XX Xxxxxxxxxxx, Xxxxxx Xxxx, Xxxxxx, Xxxxxx XX00 0XX and
Pirate's Rest, Xxxxxx Xxxx, Xxxxxx, Xxxxxx XX00 0XX;
"RELIEF": includes any loss, relief, allowance, exemption, set-off or
deduction in computing or against profits, income or gains for the
purposes of Taxation, or any credit against or relating to any form of
Taxation;
"SELLERS' ACCOUNTANTS": such accountants nominated by the Sellers'
Representative after Closing;
"SELLERS' REPRESENTATIVE": as defined in Clause 14.
"SELLERS' AGENT": for the purposes of clause 15.2 only, shall mean
Paige & Co. of 0 Xxxxxx Xxxxx, Xxxxxx Xxxxx, Xxxxxx Xxx, Xxxxx XX0 0XX;
"SHARES": as defined in Section 2 of the Option Agreement;
"SPA ESCROW AGREEMENT": the agreement in the agreed form relating to
the Shares to be issued to the Escrow Agent pursuant to this Agreement
between the Buyer, the Sellers and the Escrow Agent to be entered into
on Closing;
"TAXATION": (a) any form of taxation whenever and wherever created or
imposed and generally any amount in the nature of
taxation payable to any revenue, customs or fiscal
authorities in any jurisdiction whatsoever;
(b) such amount or amounts as are referred to in
paragraphs (i) to (iv) below; and
(c) all charges, interest, penalties, fines and reasonable
costs and expenses incidental or relating to claims by
or on behalf of any other
Page 5
governmental, statutory or federal authority or body
whatsoever for or in respect of a liability to Taxation
Provided That:
(i) there shall be treated as an amount of Taxation,
liability for which falls on the Company an amount
equal to any Taxation which would have been
suffered by the Company and in respect of which
the Sellers would have been liable under this
Agreement but for the use or set off of some form
of Relief which has been taken into account as an
asset in or in computing any provision for
Taxation in the Latest Accounts or has resulted in
no such provision being made or which arises in
respect of an Event or Events occurring after
Closing;
(ii) there shall be treated as an amount of Taxation,
liability for which falls on the Company any
liability of the Company to repay the whole or any
part of any payment received for the surrender or
transfer of any form of Relief pursuant to any
agreement or arrangement made or in place before
Completion;
(iii) if at any time it is determined and certified by
the Auditors for the time being of the Company
that the Company is not and will not be entitled
to repayment of any Taxation which has been taken
into account as an asset in the Latest Accounts,
there shall be treated as an amount of Taxation,
liability for which falls on the Company so much
of such anticipated repayment as is lost,
cancelled or otherwise set-off;
(iv) there shall be treated as an amount of Taxation,
liability for which falls on the Company, any
Taxation which is assessed on a person other than
the Company (whether or not the Taxation is
assessed in the name of the Company) and which is
recoverable by that other person from the Company,
pursuant to any enactment relating to Taxation,
but only to the extent that it is so recovered;
"TAX INDEMNITY": means that indemnity contained in Clause 6.7. of the
Agreement;
"TROJAN SHARES": the issued shares in the capital of the Company held
by each of the Sellers as set opposite each of their names in Schedule
1;
"US SELLER WARRANTIES": the warranties and representations set out in
Part B of Schedule 3;
"IN WRITING": includes any communication made by letter, cablegram,
telex, facsimile transmission or electronic mail; and
"WARRANTIES": the warranties, representations and undertakings by the
Sellers set out in clause 6.1.1(c) and "WARRANTY" means one of them.
1.2 Words and expressions which are defined in the Companies Act and used
in this Agreement will unless the context otherwise requires bear the
same meanings as in that Act. In this Agreement:-
Page 6
1.2.1 a reference to a statutory provision will be interpreted as a
reference to that provision as amended or re-enacted from time to
time including any statutory instrument order or governmental
regulation from time to time made or issued pursuant to that
provision and including a reference to any past statutory
provision instrument order or regulation which such provision has
amended or from which it derives as from time to time (whether
before or after the date of this Agreement) amended or re-enacted;
1.2.2 a reference to a Recital, Clause or Schedule is unless otherwise
specified a reference to the Recital, Clause or Schedule of that
number in or to this Agreement; any reference to a sub-Clause is
unless otherwise specified a reference to the sub-Clause of that
number in the Clause in which the reference is made;
1.2.3 a document referred to as being in "the agreed form" will be in
the form of a draft document approved by the parties to this
Agreement and for identification purposes signed or initialled by
or on behalf of the parties hereto on or before the date hereof;
1.2.4 the Clause headings are for ease of reference only and do not
affect interpretation;
1.2.5 except in Clauses 6.1.2, 6.1.3 and 7 where the obligations and
liability shall be several, the liability of each of the Sellers
under or in respect of this Agreement shall be joint and several
and every representation, warranty, covenant, undertaking,
guarantee, indemnity and other obligation of whatever nature of or
undertaken or granted by the Sellers or, as the case may be, the
Sellers shall be construed as a covenant, undertaking, guarantee,
indemnity and other obligation of each of the Sellers or, as the
case may be, the Sellers and in this Agreement the expression "the
Sellers" shall mean each of the Sellers;
1.2.6 "to the best of the Sellers' knowledge and belief" "so far as the
Sellers are aware" or any similar expression will mean to the best
of any of the Sellers' (which term for the purposes of this Clause
1.2.6 shall include without limitation Xxxxx Xxxxxx) knowledge and
belief having made (or caused to have been made) all reasonable
enquiries which a prudent buyer would make and having used their
reasonable endeavours to ascertain all relevant information and to
ensure that all information given, referred to or reflected in any
relevant warranty or representation is accurate in all respects;
1.2.7 any reference in this Agreement to "the Buyer" shall include its
successors and assigns; and
1.2.8 a reference to the masculine gender will be deemed to include a
reference to the feminine gender and vice versa; the singular
shall be construed as including the plural and vice versa; and
1.3 Words and expressions used in the Option Agreement which are defined in
this Agreement shall have the meanings set out in this Agreement.
2. AGREEMENT FOR SALE
2.1 Each of the Sellers with full title guarantee shall sell to the Buyer and
the Buyer shall purchase the Trojan Shares free from all options, claims
and Encumbrances with effect from Closing and together with all rights
attached or accruing to them at Closing.
Page 7
2.2 Each of the Sellers waives irrevocably any and all rights of pre-emption
in respect of the sale and purchase of Trojan Shares or any of them
pursuant to Clause 2.1.
3. CONSIDERATION FOR TROJAN SHARES
3.1 Subject to Clause 3.4, the total consideration for the sale of the Trojan
Shares shall be calculated in accordance with the provisions of Section
2(a) of the Option Agreement (save that the reference in that section to
"825,000" is modified to "660,000") which consideration shall be satisfied
by delivering a stock certificate in respect of the Shares to Drake & Co.,
ID # 00-0000000, c/o Citibank N.A./PBG, Sort # 0000, Xxx Xxxxx Xxxxxx,
00xx Xxxxx, Xxxx Xxxxxx, Xxxx XX 00000 as nominee for the Escrow Agent
within five Business Days following final determination or agreement of
the amount of the Net Asset Value pursuant to Clause 3.4 below.
3.2 The proportion of the total consideration to which each Seller is entitled
shall be that proportion set opposite such Seller's name in Schedule 1.
3.3 The Buyer shall be entitled to set off, or (pending the determination of
the relevant amount) withhold any amounts payable by it after Closing to
the Sellers against this Agreement the amount of any Claims subject to the
express provisions of this Agreement.
3.4 For the purposes of Section 2(a) of the Option Agreement in order to
determine whether, as at the Investor Sellers Closing Date, the amount of
the Company's cash and cash equivalents as determined in accordance with
US GAAP is greater or less than the Company's actual accrued and
contingent liabilities (such difference being the "NET ASSET VALUE"):
3.4.1 The Buyers shall procure that as soon as practicable following the
Investor Sellers Closing Date (and in any event within 30 days)
draft Closing Accounts are prepared by the Buyers' Accountants in
accordance with the Option Agreement (Provided That: (a) such
Closing Accounts shall take account, as cash and cash equivalents,
of the net amount of monies received by the Company pursuant to
clause 5 being $500,000 to the extent that such monies are
received within 90 days of the Investor Sellers Closing Date
pursuant to clause 5 and (b) insofar that the Gotham Group
Indebtedness has been fully and validly waived pursuant to the
Articulate Settlement Agreement (as defined in the Disclosure
Schedule) with no further liability by the Company in respect of
the same, such Closing Accounts shall not include the Gotham Group
Indebtedness as a liability);
3.4.2 Forthwith following preparation of the draft Closing Accounts the
Buyers shall deliver to the Sellers' Representative and the
Sellers' Accountants a copy of the draft Closing Accounts;
3.4.3 Following receipt of the draft Closing Accounts, the Sellers'
Representatives and the Sellers' Representatives' Accountants
shall be entitled to examine these with a view to agreeing the
Buyer's Accountants' calculation of the Net Asset Value. Such
calculation of the Buyer's Accountants shall be final and binding
upon the parties to this Agreement unless, prior to the expiry of
10 days following their delivery to the Sellers' Representatives,
the Sellers' Representatives serves notice on the Buyer stating
that it wishes to dispute the same giving (so far as practicable
and possible) their grounds for wishing to do so.
3.4.4 If a dispute is raised by the Buyer as to the Net Asset Value and
such dispute is not settled by agreement between the Buyer and the
Sellers' Representative within 15 days
Page 8
after the Buyer notifies the Sellers' Representative of the
dispute pursuant to sub-Clause 3.4.3 above, then either the
Sellers' Representative or the Buyer may instruct an independent
firm of chartered accountants (the "INDEPENDENT ACCOUNTANTS")
appointed by agreement between the Buyer and the Sellers'
Representative or in default of agreement by the President of the
Institute of Chartered Accountants of England and Wales (acting as
experts and not as arbitrators) to determine the dispute in
question within 30 days of such instruction and the determination
of such firm (whose costs shall be borne as such firm shall direct
or (in default of direction) by the parties in equal proportions)
shall be final and binding on the parties in all circumstances.
4. CLOSING
4.1 The Investor Sellers Closing shall take place on the date hereof. At the
Investor Sellers Closing the Buyer shall fulfil the obligations imposed on
it by Schedule 4.
Closing in respect of any Seller adhering to this Agreement pursuant to
clause 16 shall take on the date of the Deed of Adherence of that Seller.
At Closing each of the Sellers shall fulfil the obligations imposed upon
it by Schedule 4.
4.2 The Buyer shall not be obliged to complete this Agreement unless each
Seller executing this agreement on the date hereof complies fully with the
requirements of Schedule 4 so far as they relate to that Seller. As
regards any Seller who becomes a party to this Agreement pursuant to
Clause 16, the Buyer shall not be required to complete this Agreement in
relation to that Seller unless that Seller complies fully with
requirements of Schedule 4 so far as they relate to that Seller.
4.3 The Buyer shall not be obliged to complete this Agreement unless the
purchase of all the Trojan Shares held by the Investor Sellers is
completed simultaneously in accordance with this Agreement.
4.4 Save to the extent that the Sellers are already obliged to do so pursuant
to the Option Agreement, each of the Sellers shall (and shall procure that
all other necessary parties shall) on, and at all times after, Closing
execute and do all such deeds, documents, acts and things as the Buyer
shall reasonably require at or after Closing for assigning to or vesting
in the Buyer or its nominees the full beneficial ownership of, and legal
title to, the Trojan Shares held by that Seller, and for giving full
effect to this Agreement.
4.5 The Sellers shall use reasonable endeavours to procure that prior to the
Investor Sellers Closing all guarantees, indemnities, mortgages, sureties
or security arrangements of any kind, (other than the Debenture) given by
or binding on the Company (including any assets of the Company) in respect
of any liabilities or obligations (actual or contingent) of any of the
Sellers or any of the officers of the Sellers or any associate of the
Sellers shall have been fully and effectively released without any
provision or consideration for such release by the Company and shall
indemnify and keep the Buyer indemnified (as trustee for itself and on
behalf of the Company) from and against any failure so to procure and from
any Liability pending such release.
4.6 The Sellers shall procure that prior to the Investor Sellers Closing all
amounts owing (whether due for payment or not) by the Company to any of
the Sellers or the Minority Shareholders or any of the officers of the
Company or the Sellers or any Associate of the Sellers or such officers or
any of them respectively shall have been paid or repaid provided that,
without prejudice to the foregoing, to the extent that any such amounts
owing have not been repaid prior to the Investor
Page 9
Sellers Closing, each of the Sellers agrees that they shall (or procure
that such amounts be irrevocably and unconditionally released and forever
discharged as against the Company or any member of the Buyer's Group and
shall indemnify and keep the Company and the Buyer indemnified (as
trustee for itself and on behalf of the Buyer's Group Companies) from and
against any failure so to procure and from any such amount pending such
release save for any salary of Xxxxx Xxxxxx provided for in the Closing
Accounts and for the amounts due to any Seller or Minority Shareholder
set out in Schedule 9 which will also be set out and fully provided for
in the Closing Accounts.
5. JOINT VENTURE ARRANGEMENTS
The Investor Sellers shall:-
(a) use reasonable endeavours to ensure that within 90 days of the
Investor Sellers Closing Date the joint venture arrangements set
out in the memorandum of understanding between the Company and
Intertainment GMBH in the form attached at Schedule 8 (as may be
amended with the prior written consent of the Investor Sellers
and the Buyer) (the "Memorandum of Understanding") are concluded
on the terms set out in the Memorandum of Understanding and to
procure that, in accordance with the terms of the Memorandum of
Understanding, the sum of $2,000,000 is paid by or on behalf of
Intertainment GMBH to the Company for the rights set out in the
Memorandum of Understanding and, upon receipt of such monies, the
Company shall pay to the joint venture entity which is the
subject of the Memorandum of Understanding ("JVCo"), by way of
equity subscription, the sum of $1,500,000 to acquire such rights
or interests in JVCo as are set out in the Memorandum of
Understanding; or
(b) (i) within 60 days of the Investor Sellers Closing Date pay to
the Company $500,000 in consideration of which the Company
will enter into a memorandum of understanding with the
Investor Sellers or a party nominated by them (the
"Investor Party") on terms substantially similar to the
Memorandum of Understanding save that references to
"Intertainment GMBH" shall be to the Investor Party, in
clause 3(b)(i) the reference to $2,000,000 shall be to
$500,000 and in clause 3(d)(i) the reference to $1,500,000
shall be to $1 save that such Memorandum of Understanding
can be terminable at the Buyer's option (without any
obligation to return the $500,000) in the event that the
Investor Sellers fail to comply with their obligation in
(ii) below; and
(ii) procure that within 180 days of the Investor Sellers Closing
Date that a partner or the Investor Sellers will provide
equity financing, on terms reasonably acceptable to the
Company to JVCo of at least $1,500,000.
The Buyer will use reasonable endeavours to provide any reasonable
assistance to the Investor Sellers to facilitate completion of such joint
venture arrangements.
6. REPRESENTATIONS WARRANTIES AND UNDERTAKINGS
6.1
6.1.1 The Sellers jointly and severally represent, warrant and undertake
to the Buyer that:-
Page 10
(a) each Warranty is true, accurate, complete and not
misleading as at the date hereof;
(b) upon any material event occurring or material matter
arising which may result in any of the Warranties being
untrue, inaccurate, incomplete or misleading in any
material respect as at the date hereof or any material
breach or material non-fulfilment of any of the
undertakings, agreements or obligations of the Sellers or
any of them contained in this Agreement the Sellers will
promptly notify the Buyer of the same and give details of
and, where requested, investigate fully all relevant
circumstances; and
(c) that the contents of the Disclosure Schedule are true,
accurate and complete in all respects and fully clearly and
accurately divulge every matter to which they relate.
6.1.2 Each of the Sellers located in the United States of America
represent and warrant to the Buyer that each US Seller Warranty is
true, accurate, complete and not misleading as at the date hereof
in relation to that Seller;
6.1.3 Each of the Sellers located outside the United States of America
represent and warrant to the Buyer that each Foreign Seller
Warranty is true, accurate, complete and not misleading as at the
date hereof in relation to that Seller;
6.2 The Warranties contained in this Agreement will each remain in full force
and effect beyond and notwithstanding Closing and are each made without
prejudice to any of the others. Subject to Clauses 6.9 to 6.13 and Clauses
6.15 to 6.18 and any matters fully, fairly and specifically disclosed in
the Disclosure Schedule in accordance with Clause 6.8 no provision of this
Agreement will limit the extent or application of any Warranty no other
information relating to the Company of which the Buyer or any of its
advisers has knowledge (actual or constructive) will prejudice any claim
made by the Buyer under any such warranties or operate to reduce any
amounts recoverable. Notwithstanding the above or any other provision of
this Agreement:
6.2.1 the Warranties contained in paragraph 1 of Schedule 3 the Foreign
Seller Warranties and the US Seller Warranties shall not be or be
capable of being qualified or discharged by the Disclosure
Schedule, any provision of Clause 6 or in any other way PROVIDED
THAT the liability of the Sellers shall be subject to the
provisions of Clause 6.17 save that the liability of the Investor
Sellers in respect of paragraphs [1.1,] 1.2, 1.3, 1.4, 1.9 and
1.13 of Schedule 3 shall not be subject to the provisions of
Clause 6.17;
6.2.2 the Warranties shall not be or be capable of being qualified or
discharged in relation to any Seller by the Disclosure Schedule,
any provision of Clause 6 or in any other way insofar as any Claim
arises as a consequence of the fraud or wilful concealment or
grossly negligent or wilful misconduct of that Seller.
6.3 Subject to the provisions of Clause 6.4, without restricting the rights of
the Buyer or its ability to claim damages on any basis, the amount of any
Claim may be determined as and be deemed to be and the Sellers shall,
subject to Clause 6.17, at all times indemnify and keep fully and
effectively indemnified the Buyer (for itself and at its option on behalf
of the Company and its officers, employees, directors, shareholders,
advisors and agents (other than the Sellers)) from and in respect of:-
Page 11
6.3.1 the amount of all actual loss, damage or liability (and all
actual, reasonable and verifiable costs, charges, interest, fines,
penalties and expenses relating to the same (including without
limitation all expenses of investigations and legal fees and
expenses on a solicitor and own client basis) and/or the amount of
any depletion or diminution in the value of any assets of the
Company in each case suffered or incurred by the Buyer or the
Company as a result of, in connection with or in relation to the
subject matter of such Claim provided that the parties
specifically agree that neither shall be liable for any losses
which were not reasonably foreseeable as at the date hereof; or
6.3.2 the amount by which any assets or liabilities of the Company are
respectively less or more than they would have been had the
relevant statement in Part A of Schedule 3 been true and not
misleading; or
6.3.3 the amount of any decrease in the value of the Trojan Shares and
of other loss or damage incurred by the Buyer as a result of the
subject matter of such Claim.
6.4 Without prejudice to clause 6.17, the Buyer shall be entitled, pursuant to
this Agreement, to set-off, reduce or (pending the determination of the
amount thereof) withhold any of the Shares or any of the shares of Common
Stock issued pursuant to the Deed of Assignment (or any proceeds resulting
from any disposal of such shares), in each case, which are held by the
Escrow Agent pursuant to the terms of the SPA Escrow Agreement and the
Debt Escrow Agreement respectively by or against an amount equal to the
amount of any Claim (determined in accordance with Clause 6.3, or any
claim pursuant to the Tax Indemnity, any claim pursuant to Clauses 6.19
and 6.20 or any claim for damages hereunder and provided also that the
Buyer may not exercise any set-off or withholding right pursuant to this
Clause 6.4 unless the Buyer has complied or is complying in all material
respects with the procedure set out in the respective Escrow Agreements.
6.5 Save as otherwise provided herein and save as regards matters already
disclosed in the Disclosure Schedule in accordance with Clause 6.8 the
rights and remedies of the Buyer in respect of any breach of the
Warranties shall not be affected by Closing, by any investigation made by
it or on its behalf into the affairs of the Company, by its rescinding or
failing to rescind this Agreement.
6.6 The accuracy of information supplied by the Company or any of its
employees or agents to the Sellers or their professional advisers prior to
Closing in connection with matters disclosed to the Buyer in the
Disclosure Schedule will not be deemed to have been represented, warranted
or guaranteed by the Company and the Sellers hereby waive any and all
claims against the Company or against any of its employees (other than in
the event of a claim for fraud against Xxxxx Xxxxxx) in respect thereof
and assign to the Buyer any rights, remedies or claims which they may have
in respect of any misrepresentations in, or omission from, any information
or advice supplied or given by the Company or its respective officers or
employees (other than in the event of a claim for fraud against Xxxxx
Xxxxxx) and on which reliance has been placed in giving the Warranties or
any of the warranties pursuant to the Deed of Assignment and preparing the
Disclosure Schedule.
6.7 Subject to Clause 6.17 and the limitations contained in Clauses
6.11(d)(i)(ii) and (iii) and 6.11(i) and provided that notice of any claim
pursuant to this Clause 6.7 is given in writing by the Buyer to the
Sellers setting out in detail in reasonable particulars of the grounds
upon which such claim is made within seven years of the Investor Sellers
Closing Date, the Sellers at all times covenant to pay to the Buyer an
amount equal to:-
Page 12
6.7.1 any liability for Taxation assessed on the Company resulting from
or by reference to any gross receipts, income, profits or gains
earned, accrued or received or deemed to be earned, accrued or
received by the Company or the Sellers on or before the Investor
Sellers Closing Date or any Event occurs on or before the Investor
Sellers Closing Date (which shall include, for the avoidance of
doubt, the Investor Sellers Closing Date) whether or not such
Taxation is directly or primarily chargeable against or
attributable to the Company;
6.7.2 any liability for Taxation for which the Company is liable
occurring before, on or after the Investor Sellers Closing Date
resulting from or by reference to any Event;
6.7.3 any costs reasonably and properly incurred as a result of any
claims, actions, proceedings, demands, judgements, orders or
enforcements and all actual loss or damage and all actual costs,
charges, interest, fines, penalties and expenses relating to or
arising in connection with any such loss or damage of the Buyer or
any Associate of the Buyer (in either case save where due to the
delay or default of the Buyer or any associate of the Buyer after
the Investor Sellers Closing Date) as a result of any liability
for Taxation within 6.7.1 or 6.7.2 above or any action required to
be taken in respect of such liability for Taxation unless and to
the extent that such costs, loss, damage, charges, interest,
fines, penalties and expenses are compensated pursuant to 6.7.1 or
6.7.2 by virtue of their being Taxation as defined in this
Agreement which for the avoidance of doubt, shall not include any
losses which were not reasonable foreseeable as at the date
hereof.
6.8 Each disclosure in the Disclosure Schedule shall:
(a) be made with specific reference and provide full and precise
details of the nature and extent of the particular disclosure
against the Warranty;
(b) to the extent reasonable specify the maximum amount of any
ascertainable financial liability referred to in the disclosure
and shall further to the extent reasonable specify the best
possible pre-estimate of the maximum amount of any
non-ascertainable or contingent financial liability referred to in
the disclosure;
(c) (if it refers to any separate document) identify precisely the
nature of such document and the terms of all relevant provisions
in such document which are relied upon, with a copy of the
relevant document being attached to the Disclosure Schedule and
specified by reference in the Disclosure Schedule. Such document
shall only be deemed to be a disclosure to the extent that the
attached document is full, fair and specific disclosure. No other
document (whether or not referred to in the Disclosure Schedule or
any accompanying document) shall deemed to be disclosed.
(d) constitute a Warranty that the matters set out or referred to in
such disclosure are true and accurate in all material respects and
in the case of any pre-estimate of the maximum amount of any
non-ascertainable or contingent financial liability that the
amount in question represents the best possible pre-estimate of
the liability in question having regard to all information then
available and making all diligent enquiries.
Any disclosure which is not full, fair and specific shall not be effective
and the matters stated therein shall be deemed not to be disclosed so that
the Warranties shall continue to have full effect without qualification in
any respect by such disclosure.
Page 13
6.9 Subject to Clause 6.2, the Warranties are subject to:
(a) the limitations set out herein;
(b) any matter fully, fairly and specifically disclosed to the Buyer
in the Disclosure Schedule; and
(c) any of the matters deemed disclosed pursuant to Clause 6.13 below;
6.10 The Buyer may not assign the benefit of the Warranties and the liability
of the Sellers shall cease and subsisting Claim shall be withdrawn upon
any purported assignment save in each case where such assignment is to a
member of the Buyer's Group;
6.11 Notwithstanding any other provision of this Agreement, neither the Company
nor the Sellers shall be liable under this Agreement in respect of any
Claim:
(a) unless notice of such Claim is given in writing by the Buyer to
the Sellers setting out details in reasonable particularity of the
grounds on which such Claim is based within 24 months of the
Investor Sellers Closing Date. Such Claim shall refer to Section 4
of the relevant Escrow Agreement and attach a copy of the relevant
Escrow Agreement and shall be delivered to the Escrow Agent
provided that failure to comply with this obligation shall not in
any way operate to reduce or extinguish the liability of a Seller
under this Agreement in respect of any Claim;
(b) unless the aggregate amount of all Claims for which the Sellers
would otherwise be liable under the Warranties exceeds (British
Pounds)50,000 in which event the Sellers will be liable for the
entire amount of such Claims;
(c) (such Claim to be deemed to be withdrawn and wholly barred and
unenforceable if not previously satisfied, settled or withdrawn)
unless proceedings in respect thereof are instituted against and
served on the Sellers within twelve (12) months of the date upon
which written notice provided herein of such Claim is given to the
Sellers; and
(d) to the extent that such a Claim arises:
(i) from any act or omission occurring at the request of or
with the consent of the Buyer on or after the Investor
Sellers Closing Date provided that the Buyer was aware or
any reasonable buyer would have been aware that such act or
omission might give rise to such Claim;
(ii) as a result of any increase in rates of Taxation since the
Investor Sellers Closing Date; or
(iii) as a result of the passing of an enactment or other
government regulation with retrospective effect;
(e) for any liability for Taxation which arises as a result of
transactions in the ordinary course of business of the Company
after the Investor Sellers Closing Date;
(f) to the extent to which it would not have arisen but for any matter
or thing done or omitted to be done otherwise than in the ordinary
course of business by the Company or the
Page 14
Buyer or persons deriving title therefrom on or after the Investor
Sellers Closing Date where the Company, Buyer or other such person
knew or ought reasonably to have known that such act or omission
would give rise to such a claim.
(g) in respect of any matter or thing expressly provided or stipulated
to be performed under the terms of this Agreement which has been
so performed;
(h) notwithstanding any other provisions of this Agreement, to the
extent that the circumstances giving rise to such Claim are fully,
fairly and specifically disclosed in the Latest Accounts or the
Management Accounts in terms that a reasonable Buyer should have
appreciated the full significance of such disclosure; or
(i) to the extent that the matter, amount or liability in question is
expressly provided or reserved for in the Closing Accounts.
6.12
6.12.1 The amount of any Claim shall be reduced by an amount equal to the
amount of or by which any Taxation expressly provided for in the
Closing Accounts is extinguished or reduced as a result of such
Claim;
6.12.2 If the Buyer discovers that any provision for Taxation in the
Closing Accounts may prove to be an over-provision (an
"OVER-PROVISION"), it shall give or shall procure that the Company
gives full details to the Sellers. The Buyer shall (at the
Sellers' request and expense) procure that the Auditors certify
the amount of the Over-Provision and the Buyer shall as soon as
reasonably practicable after the amount of the Over-Provision is
so certified:-
(a) set-off the Over-Provision against any payment then due
from the Sellers under this Agreement;
(b) to the extent that there is an excess, that excess shall be
carried forward and set off against any future payment or
payments which become due from the Sellers under this
Agreement.
For the purposes of this Clause 6.12.2 an Over-Provision is a
provision for Taxation in the Closing Accounts which is or proves
to be an over-provision.
6.13 There shall be deemed to be disclosed any matter appearing on the Register
of Charges concerning the Company at the Registrar of Companies as at the
date hereof.
6.14 All sums payable or any obligation to return Shares by the Sellers to the
Buyer under or as a result of a breach of this Agreement shall be paid or
discharged free and clear of all deductions or withholdings whatsoever
save only as may be required by law. If any such deductions or
withholdings are required by law, the Sellers shall be obliged to pay such
sum or discharge such obligation as will, after such deduction or
withholdings has been made, leave the amount the Buyer would have been
entitled to receive in the absence of any such requirement to make a
deduction or withholding. In the event that any sum paid to the Buyer or
Shares returned as a result of the obligations contained in this Agreement
or in the Agreement will be subject to Taxation the Sellers shall be
obliged to pay such sum as will, after payment of the Taxation so
Page 15
charged, leave a sum equal to the amount that would otherwise be payable
under any such obligation.
6.15
6.15.1 If any payment is made by the Sellers in full discharge of a
liability which has arisen under this Agreement in respect of a
Claim ("CLAIM PAYMENT") then:
6.15.1.1 if the Buyer or the Company, as the case may be,
subsequently receives from any person other than the Buyer,
the Company or any Associate a Benefit in respect of the
Claim in question (such Benefit being received by virtue of
a legal right) the Buyer shall, within five business days
of receipt of the relevant payment (or in the case of a
credit, within five business days of the date on which any
payment to which the Claim relates would otherwise have
been payable had such credit not been available) pay to the
Sellers an amount equal to the lower of the Benefit and the
amount of such payment or credit, in each case, less all
liabilities incurred in respect of such Claim and, in any
case, no more than the amount of the Claim Payment.
6.15.1.2 if the Buyer or the Company is or becomes entitled to
recover a Benefit in respect of the Claim in question from
any person, other than the Buyer, the Company or any
Associate then the Buyer shall if so reasonably required by
the Sellers and at the Sellers' sole expense and upon the
Sellers providing such security as the Buyer shall
reasonably require against all costs and expenses to be
incurred take, or procure the Company shall take, all
appropriate steps to enforce that entitlement (keeping the
Sellers reasonably informed of the progress of any action
taken) provided that such action has no prejudicial effect
on the Buyer or the Company or any of their officers.
6.15.2 for the purposes of this clause 6.15 a Benefit means a payment or
credit received by the Buyer or the Company in respect of a Claim
(other than the proceeds of an insurance policy) which if received
or given prior to the Claim Payment would have reduced the amount
of the Claim Payment.
6.16 If there is any liability pursuant to a Claim, a claim pursuant to the Tax
Indemnity, any claim pursuant to Clause 6.19 and 6.20 or any other claim
for damages under this Agreement or the Deed of Assignment which either:
(i) the Seller accepts;
(ii) is the subject matter of an agreement between the Buyer and the
Sellers; or
(iii) is so adjudged by a court of competent jurisdiction
then each of the Sellers shall procure that such liability shall be
discharged either:
(a) by payment or the provision to the Buyer by the Escrow Agent or
otherwise the amount of such liability in the shares of Common
Stock to which that the Seller is entitled pursuant to this
Agreement and the Deed of Assignment to the extent such shares of
Common Stock remain in escrow;
Page 16
(b) by payment to the Buyer of the proceeds of sale or other value
received in respect of such shares; or
(c) by payment to the Buyer of the amount of the liability in cleared
funds or as otherwise agreed by the parties
or any combination of any of the above where any of the above is not
sufficient to discharge such liability
6.17
6.17.1 Except as set out in Clauses 6.2.1 and 6.2.2 the maximum aggregate
liability of each of the Sellers in respect of all Claims and all
claims pursuant to the Tax Indemnity and all other claims for
damages under any of the Investor Seller Documents in each case,
(excluding (i) any costs pursuant to Clause 9 and (ii) any costs
or expenses (including, without limitation, any legal fees and
expenses) awarded by any court ("AWARDED COSTS") shall not exceed
the aggregate number of shares of Common Stock to which they are
entitled under this Agreement and the Deed of Assignment and the
proceeds of sale or other value received in respect of such shares
(the "CAP").
6.17.2 To the extent that any costs or expenses (including, without
limitation all actual, reasonable and verifiable expenses of
investigations and legal fees and expenses on a solicitor and
own-client basis but excluding any Awarded Costs) in connection
with such claims or Claims together with the aggregate amount of
such claim or Claims would result in the Cap being exceeded, then
the Sellers shall pay 50% of such costs and expenses
notwithstanding the provisions of Clause 6.17.1.
6.18 For the purposes of this Clause 6 and Clause 7, the number of shares of
Common Stock which the Buyer may withhold, set-off or have paid to it or
provided to it shall be calculated by dividing the amount of the claim
(or, if such claim is not in US dollars, converted in US dollars at the
spot rate reported in the Wall Street Journal on the date that such claim
is accepted, agreed or adjudged (as set out in clauses 6.16(i) to (iii)))
by US$3.50.
6.19 Subject to Clause 6.17, the Sellers will at all times indemnify and hold
the Buyer (for itself and on behalf of the Company and any Associate of
the Buyer and its officers, shareholders, directors, employees,
shareholders and advisors and agents (other than the Sellers)) fully and
effectively indemnified against any and all loss, damage or liability (and
all actual, reasonable and verifiable costs, charges, interest, fines,
penalties and expenses incidental or relating to or arising in connection
with any such loss, damage or liability, including without limitation, all
expenses of investigations and legal fees and expenses on a solicitor and
own-client basis) in relation to or as a consequence of those matters
disclosed in the Disclosure Schedule which refer to this indemnity or
which the Disclosure Schedule provides will be covered, or subject to or
otherwise dealt with by this indemnity.
6.20 The Sellers will at all times indemnify and hold the Buyer (for itself and
on behalf of the Company and any Associate of the Buyer and its officers,
shareholders, directors, employees, shareholders and advisors and agents
(other than the Sellers)) fully and effectively indemnified against any
and all loss, damage or liability (and any and all costs, charges,
interest, fines penalties and expenses, (including without limitation, all
expenses of investigations and legal fees and expenses on a solicitor and
own-client basis) incidental or relating to or arising in connection with
any such loss, damage or liability) relating to or arising in connection
with any claim, complaint, action, allegation, proceedings, demand or
enforcement arising from or relating to use or ownership in the United
Kingdom whether by or of the Buyer, the Company or its Associates
Page 17
or any third party of the name or domain name "the Auction Channel" or
any name, xxxx or style confusingly similar thereto (the "Name")
threatened, made or initiated at any time prior to, on or after the date
hereof whether by or on behalf of the Buyer, the Company or any of their
Associates against any third party or vice-versa.
The Sellers acknowledge that the use of the Name is a material reason for
the Buyer entering into this Agreement and therefore covenant to the
Buyer that the Buyer, the Company and its Associates are exclusively
entitled to use the Name in the United Kingdom without restriction. If
(i) the Buyer or the Company or any of their Associates are restricted in
anyway in their use or ownership in the United Kingdom of the Name
referred to above; or (ii) if the Buyer or the Company or any of their
Associates are unable to prevent any third party from using the Name in
the United Kingdom, then the Buyer shall be entitled to exercise its
rights pursuant to clauses 6.4 and/or 6.16 to withhold or have paid or
provided to it, in the case of (i) above, 100% of the shares of Common
Stock to which the sellers are entitled pursuant to this Agreement and
the Deed of Assignment (the "Consideration Shares") and, in the case of
(ii) above, 30% of the Consideration Shares (or, in each case, the cash
value or any proceeds thereof) as liquidated damages for the loss of
goodwill arising therefrom which, in each case, each of the parties
hereto consider is a genuine pre-estimate of such loss as being
reasonably foreseeable as the natural and direct consequence of a breach
of the above covenant.
6.21 Where any claim by any third party which relates to a claim by the Buyer
pursuant to this Agreement is about to be settled by the Buyer, the Buyer
shall, in the event that the Buyer believes that it is reasonably
practicable so to do and where to do so would, in the Buyer's opinion,
not prejudice to the Company or the Buyer's negotiations with such third
parties, notify the Sellers' Representatives of such fact. For the
avoidance of doubt, any breach by the Buyer of any of its obligations
pursuant to this Clause 6.21 will not limit in any way any claim by the
Company, the Buyer or any of their Associates pursuant to this Agreement.
6.22
6.22.1 Certain matters are referred to in the Opinion form Xxxxxx Xxxxxxx
relating to the share capital of the Company, (including, without
limitation, those matters referred to in paragraphs 5 and 11 of
such Opinion) which indicate that there may be potential issues in
relation to the share capital of the Company. The Sellers
expressly acknowledge that the Buyer has entered into this
Agreement on the basis that there are no such issues and that the
Buyer will acquire from each Seller the percentage of the
Company's entire issued share capital set opposite that Seller's
name and the Sellers therefore covenant to the Buyer that:
(i) Each of the shares in the issued share capital of the
Company (as set out in Schedules 1 and 2) has been duly
authorised, validly issued, fully paid and is
non-assessable and has not been issued in violation of any
statutory preemption right, any preemption right contained
to the articles of association of the Company from time to
time or any contractual preemption right;
(ii) Each of the Sellers and the Minority Shareholders is the
sole legal and beneficial owner of the ordinary shares of
0.1p each in the capital of the Company ("Ordinary Shares")
set opposite its name in column 2 of Schedule 1 and the
Ordinary Shares set opposite its name in column 2 of
Schedule 1 represent the percentage (set out opposite in
column 3 of Schedule 1) of the Company's entire issued
share capital;
Page 18
(iii) There is no Encumbrance on, over or affecting any of the
issued Ordinary Shares and there is no agreement or
arrangement to give or create any such Encumbrance and no
claim has been made or threatened (or is anticipated to be
made or threatened) by any person to be entitled to any of
the foregoing;
(iv) Other than this Agreement and the Option 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 the Company (including, without limitation, an
option or right of pre-emption or conversion); and
(v) By execution of stock transfer forms, registration of such
transfers and delivery of a certificate or certificates
representing the Trojan Shares, each of the Sellers will
transfer to the Buyer valid and marketable title to the
Trojan Shares of that Seller, free and clear of any pledge,
lien, security interest, charge, claim, equity, encumbrance
or security interest and together with all rights attaching
to them.
6.22.2 The Sellers will at all times indemnify and hold the Buyer (for
itself and on behalf of the Company and any Associate of the Buyer
and its officers, shareholders, directors, employees, shareholders
and advisors and agents (other than the Sellers)) fully and
effectively indemnified against any and all loss, damage or
liability (and any and all actual, reasonable and verifiable
costs, charges, interest, fines penalties and expenses, (including
without limitation, all expenses of investigations and legal fees
and expenses on a solicitor and own-client basis) incidental or
relating to or arising in connection with any such loss, damage or
liability) relating to or arising in connection with any breach of
the covenants contained in clause 6.22.1. [If, as a result of a
breach by any of the Sellers of any of the covenants contained in
clause 6.22.1, the percentage of the entire issued share capital
of the Company held by the Buyer is less than: (I) 80%, the Buyer
shall, at the option of the Buyer, either (a) have paid to it from
the insurance policy referred to below, $5,000,000 or (b) withhold
or have paid or provided to it, 33% of the shares of Common Stock
to which the Sellers are entitled pursuant to this Agreement and
the Deed of Assignment ; or (ii) 50.1%, the Buyer shall, at the
option of the Buyer, either (a) have paid to it pursuant to such
insurance policy, $15,000,000 or (b) withhold or have paid or
provided to it, 100% of such shares of Common Stock (and in each
case the Sellers shall procure the same), in each case as
liquidated damages for the loss suffered by it as a result of its
holding such reduced percentage of the Company's issued share
capital and its ability to recover any of the monies provided by
the Buyer or its Associates to the Company (whether by loan or
otherwise) which liquidated damages each of the parties hereto
consider to be a genuine pre-estimate of such loss and as being
reasonably foreseeable as a natural and direct consequence of a
breach of the above covenants. The Investor Sellers will, at their
own cost, obtain within two months of the Investor Sellers Closing
Date and maintain for a period of 6 years adequate and appropriate
insurance satisfactory to the Investor Sellers and the Buyer in
the names of the Investor Sellers and the Buyer as co-insurees
from a reputable insurance broker for an amount of $15,000,000
against any and all of their liability pursuant to this clause
6.22.]
6.22.3 The provisions of this clause 6.22 shall not be or be capable of
being qualified or discharged by the Disclosure Schedule, any
provision of clause 6 or in any other way.
6.23 In the twelve month period following the Investor Sellers Closing Date,
unless and until the
Page 19
aggregate value of all Claims, claims under the Tax Indemnity and all
other claims pursuant to this Agreement which either:
(i) have been accepted by the Sellers;
(ii) are the subject matter of any agreement by the Sellers and the
Buyer; or
(iii) have been adjudged by a court of competent jurisdiction
exceeds (British Pounds)125,000, the Sellers shall not be obliged to
discharge such liability until two Business Days immediately preceding
the date being twelve months after the Investor Sellers Closing Date:
(i) by transferring the aggregate amount of such claims in cleared
funds on such date; or
(ii) by procuring that such claims are discharged by the payment or
provision of shares of Common Stock to the Buyer in accordance
with the recovery provisions contained in Clause 6 of this
Agreement and Section 4 of the Escrow Agreements.
For the avoidance of doubt, in the event that, at any time in the twelve
month period following the Investor Sellers Closing Date, the aggregate
amount of such claims exceed (British Pounds)125,000 then the Buyer shall
be immediately entitled to recover such amount in accordance with the
recovery provisions contained in Clause 6 of this Agreement and Section 4
of the Escrow Agreements forthwith.
7. RESTRICTIONS ON SELLERS
7.1 For the purposes of this Clause the following words and expressions shall
have the following meanings:
"THE EVENT DATES"
(i) the Investor Sellers Closing Date or (ii), in the case of Sellers who
are, at the date of this Agreement, employees of the Company or provide
services to the Company whether by a consultancy or other arrangement,
the Termination Date;
"KEY PERSON"
a person who is or was at any time whilst the relevant Seller was
employed by, providing consultancy or other services to or a shareholder
of the Company:
(a) employed or engaged as an employee, director or consultant of the
Company or any Associated Company; and
(b) employed or engaged:-
(i) in the capacity of manager, marketing or technician or is
otherwise material to the business of the Company or any
Associated Company; or
(ii) in a more senior capacity;
Page 20
"PERIOD"
the period commencing on the relevant Event Date and ending on the date
being, in the case of Clause 7.2.3, the fifth anniversary of the Event
Date and in the case of Clauses 7.2.1, 7.2.2 and 7.2.4 the first
anniversary of the Event Date;
"RESTRICTED BUSINESS"
any business which competes or compete or about to compete with any part
or parts of the business of the Company or any Associated Company which,
for the purposes of this Clause 7, shall be deemed to be the business of
the Company as carried on at any time prior to or on the Investor Sellers
Closing Date including, without limitation, the transmission and/or
broadcast via the medium of television (whether terrestrial, satellite,
digital or any other medium in existence or developed after the date
hereof) and/or the internet (or any other medium in existence or
developed after the date hereof) of auctions taking place at or organised
by any auction house anywhere in the world and/or the provision of remote
bidding at such auctions;
"THE TERMINATION DATE"
the date on which the relevant Seller ceases to be employed by, or to
provide services to (whether under a consultancy or other arrangement)
the Company or any Associated Company.
7.2 Each Seller agrees with the Buyer that, without prejudice to any other
duty imposed by law or equity, it will not without the prior written
consent of the Buyer (which consent will be withheld only in so far as
may be reasonably necessary to protect the legitimate interests of the
Buyer, the Company or any Associated Company or the business of the
Company or any Associated Company), either by itself, its employees or
agents or otherwise howsoever, on its own account or in conjunction with
or as principal, partner, director, employee, consultant or agent or
otherwise on behalf of any other person for the Period, directly or
indirectly:
7.2.1 carry on or assist with or be concerned or interested in the
carrying on of a Restricted Business (other than by the Sellers
and their Associates together having an aggregate holding of
shares carrying less than 25% of the voting rights (but no Seller
and its Associates having a holding of shares carrying not more
than 5% of the voting rights) in such Restricted Business provided
that each such holding is by way of passive investment only and
does not involve any other participation whatsoever in such
business other holding such shares);
7.2.2 in competition with the Company or any Associated Company deal
with, canvass or solicit (or procure or assist the dealing with,
canvassing or soliciting of) any Key Third Party;
7.2.3 in competition with the Company or any Associated Company.
(a) offer employment to or employ or offer or conclude any
contract for services with, canvass or solicit the
employment or engagement of any Key Person; or
(b) procure or assist any third party so to offer, employ,
engage or solicit any Key Person (whether or not such
person would commit any breach of his contract with the
Company or any Associated Company) unless such Key Person
had
Page 21
ceased to be employed or engaged by the Company or any
Associated Company more than 3 months previously;
7.2.4 interfere or seek to interfere with the continuance of the Company
or any Associated Company dealing with any Key Third Party or do
or say anything likely or calculated to lead any person, firm or
company to withdraw from or cease to continue dealing with the
Company or any Associated Company.
7.3 Each of the Sellers agrees with the Buyer that he will not at any time
after the Investor Sellers Closing (other than pursuant to any contract of
employment with the Company), whether by himself, his employees or agents
or otherwise howsoever:
7.3.1 engage in any trade or business or be associated with any person,
firm or company or permit any person engaged in any trade or
business using the name "Trojan", "The Auction Channel" or other
trading names owned by the Company or any Associated Company or
incorporating the words "Trojan", "The Auction Channel" or any
xxxx or style thereof or any name, xxxx, style similar thereto;
7.3.2 in the course of carrying on any trade or business, claim,
represent or otherwise indicate any present association with the
Company or any Associated Company or for the purpose of obtaining
or retaining any business or custom claim;
7.3.3 without the consent of the Company use, whether on his own behalf
or on behalf of any third party, or divulge to any third party any
Confidential Information;
7.3.4 do or say anything with the intention of harming the reputation of
the Company or any Associated Company or do anything which could
be anticipated to lead to any person ceasing to do business with
the Company or any Associated Company.
7.4 If the Company shall have obtained any Confidential Information from any
third party under an agreement including any restriction on disclosure
known to him, each of the Sellers agrees with the Buyer that he will not
at any time without the consent of the Buyer infringe such restrictions.
7.5 Each of the Sellers agrees with the Buyer that the restrictive covenants
herein contained are reasonable and necessary for the protection of the
value of the Trojan Shares and the Company and each of the Sellers agrees
that having regard to that fact those covenants do not work harshly on
him.
7.6 Without prejudice to any other rights or remedies that the Buyer may
have, the Sellers acknowledge and agree that damages alone would not be
an adequate remedy for any breach by any of the Sellers of the provisions
of this Clause 7 and that, accordingly, the Buyer shall be entitled
without proof of special damage to the remedies of injunction, specific
performance and other equitable relief for any threatened or actual
breach of the provisions of this Clause 7 by any of the Sellers.
7.7 Each of the obligations on the Sellers contained in the above provisions
of this Clause constitutes an entirely separate and independent
restriction on the Sellers notwithstanding that they may be contained in
the same sub-Clause, paragraph, sentence or phrase.
8. EFFECT OF CLOSING
Page 22
Any provision of this Agreement and any other documents referred to in it
which is capable of being performed after but which has not been
performed at or before Closing and all warranties and all covenants and
other undertakings (excluding all Warranties and the Tax Indemnity which
shall be subject to the provisions of Clause 6) contained in or entered
into pursuant to this agreement shall remain in full force and effect
notwithstanding Closing.
9. COSTS, EXPENSES AND INSURANCE
9.1 Except where this Agreement provides otherwise, each party shall pay its
own costs and expenses (including all professional fees) relating to the
negotiation, preparation, execution and implementation of this Agreement.
For the avoidance of doubt, any costs and expenses relating to work done
by either Paige & Co or Chiltern Group plc (or any of its Associates) and
the Sellers' Accountants relating to the acquisition of any of the shares
of the Company by either the Investor Sellers or the Buyer and of Xxxxxxx
& Co in preparing the Latest Accounts will be paid by the Investor
Sellers.
9.2 Any stamp duty payable in respect of the transfer of the Trojan Shares
held by the Investor Sellers shall be paid by:-
(i) the Investor Sellers; and
(ii) the Buyer
in equal proportions.
9.3 Pending Investor Sellers Closing and for 90 days thereafter the Sellers
shall take such steps as are reasonably available to them to maintain in
good standing all insurance policies relating to the Company details of
which are given in the Disclosure Schedule. The Buyer shall be
responsible for making new insurance arrangements for the Company as soon
as reasonably practicable after Investor Sellers Closing and undertakes
to pay on demand (against evidence thereof) to the Sellers all costs
incurred by them properly attributable to keeping the said insurance
arrangements in force after Investor Sellers Closing.
10. NOTICES
10.1 To be effective all notices or other communications under or in
connection this Agreement shall be in writing and shall be delivered
personally or sent by first class prepaid (airmail if overseas) recorded
delivery post or fax (with a confirmation copy sent by post) to the
relevant party (for the attention of the person specified below) to be
served at its address as stated in this Agreement or to that party's fax
transmission number at that address or as notified by that party by
written notice to the other. If to the Buyer, for the attention of the
Chief Financial Officer of the Buyer and, if to the Sellers, to the
Sellers' Representative (on behalf of the Sellers) or, if to one of the
Sellers only, to that Seller.
10.2 In the absence of evidence of earlier receipt a notice or communication
is deemed given, if delivered personally, at the time of delivery or, if
posted, two days (three days if by airmail) after posting it or, if sent
by fax on completion of its transmission.
10.3 In proving service it will be sufficient to prove that the personal
delivery was made or that the envelope containing the communication was
properly addressed as a pre-paid first class (airmail if overseas)
recorded delivery letter or that the facsimile was properly transmitted.
Page 23
11. ANNOUNCEMENTS
No announcement, communication or circular concerning the transactions
referred to in the Option Agreement, this Agreement or the Deed of
Assignment shall be made or issued by or on behalf of the Sellers,
without the prior written approval of the Buyer (such approval not to be
unreasonably withheld or delayed) during any period prior to or within
three (3) months after Investor Sellers Closing. This shall not apply to
any announcement, communication or circular required by law or the rules
of any stock exchange.
12. CONFIDENTIALITY
12.1 Each party agrees that at any time after the Investor Sellers Closing:-
(a) that it will not use or disclose to any third party or use any
confidential information relating to another party disclosed to it
by the other except as expressly permitted in this Agreement; and
(b) that it will take all reasonable measures to maintain the
confidentiality of all confidential information of the other party
in its possession or control, which in no event be less than the
measures it uses to maintain the confidentiality of its own
information of similar importance, but in no event with less than
due care.
12.2 Notwithstanding any of the foregoing, each party may use or disclose
confidential information:-
(a) to the extent required by law; or
(b) to the extent that such confidential information becomes publicly
known except by breach of another party of this Clause 12; or
(c) on a "need-to-know" basis under obligations of confidentiality no
less restrictive than those contained in this Agreement to its
legal counsel, accountants, banks and other financing sources and
their advisers.
12.3 For the purposes of Clause 12.1, the terms and conditions of this
Agreement will be deemed to be confidential information.
13. GENERAL
13.1 This Agreement, the SPA Escrow Agreement, the Debt Escrow Agreement, the
Deed of Assignment, the Option Agreement and each of the other documents
referred to in Schedule 4 constitute the entire agreement and
understanding between the parties and supersedes any previous agreement,
arrangement or understanding between the parties in relation to the
subject matter of this Agreement, the SPA Escrow Agreement, the Debt
Escrow Agreement, the Deed of Assignment or the Option Agreement.
13.2 Each of the parties acknowledges and agrees that in entering into this
Agreement, it does not rely on, and shall have no remedy in respect of,
any statement, representation, warranty or understanding (whether
negligently or innocently made) of any person (whether party to this
Agreement or not) other than as expressly set out in this Agreement.
Page 24
13.3 The only remedy available to any party for breach of the Warranties shall
be for breach of contract under the terms of this Agreement. Nothing in
Clauses 13.1 and 13.2 shall, however, operate to limit or exclude any
liability for fraud.
13.4 No variation of this Agreement or the Option Agreement shall be effective
unless made in writing and signed by or on behalf of each party.
13.5 If there shall be any conflict between the provisions of this Agreement
and the provisions of the Option Agreement, the Escrow Agreements then
the provisions of this Agreement shall prevail. Except as expressly
provided otherwise in this Agreement, the Option Agreement shall remain
in full force and effect. Each of the parties hereto undertakes with each
of the others to fully and promptly observe and comply with the
provisions of the Option Agreement to the intent and effect that each and
every provision shall be enforceable by the parties hereto inter se and
in whatever capacity.
13.6 This Agreement may be executed in any number of counterparts all of which
together shall constitute a single instrument.
13.7 The termination of this Agreement for whatever cause shall not prejudice
or affect the rights or remedies of either party against the other in
respect of any antecedent breach of this Agreement and shall not
prejudice the rights or remedies of either party in respect of any sums
or sum of money owed or owing from one party to the other.
13.8 The failure or delay in exercising any right, remedy, power or privilege
provided by this Agreement or by law does not constitute a waiver
thereof. No single or partial exercise either party of any right, remedy,
power or privilege provided by this Agreement or by law shall prevent any
further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights and remedies herein provided are
cumulative and not exclusive of and are without prejudice to any rights
or remedies provided by law or otherwise.
13.9 No breach of any provision of this Agreement or the Option Agreement
shall be waived or discharged except with the express written consent of
the parties.
13.10 If any provision in this Agreement shall be held to be illegal or
unenforceable, in whole or in part, under any enactment or rule of law,
such term or provision or part shall to that extent be deemed not to form
part of this Agreement but the enforceability of the remainder of this
Agreement shall not be affected. The parties further agree to replace
such void or unenforceable provision of this Agreement with valid and
enforceable provisions that will achieve, to the greatest extent
possible, the economic, business and other purposes of the illegal or
unenforceable provision.
14. SELLERS' REPRESENTATIVE
14.1 Save in relation to Clause 7, each of the Sellers hereby irrevocably
appoints Xxxxx Xxxxx ("the Sellers' Representative") to conduct on behalf
of the Sellers all dealings, negotiations and discussions with the Buyer
on its behalf and hereby irrevocably authorise the Sellers'
Representative on behalf of the Sellers to give any approval, consent,
agreement or licence or to be consulted with or enter into any settlement
or conduct of any proceedings, in each case, in connection or in relation
to this Agreement, the Escrow Agreements or any other document referred
to in this Agreement and the subject matter of each such document.
14.2 The Sellers' Representative agrees that he shall only act pursuant to
Clause 14.1 as instructed by the holders of a majority in number of the
Trojan Shares immediately prior to the Investor Sellers Closing Date.
Page 25
the holders of a majority in number of the Trojan Shares immediately
prior to the Investor Sellers Closing Date.
14.3 Buyer shall not be required to deal with any person other than the
Sellers' Representative in relation to the matters referred to in Clause
14.1 or be concerned as to whether the Sellers' Representative is
properly authorised to do any of those matters referred to in Clause
14.1.
14.4 To the extent that Clause 14.1 does not constitute sufficient authority
to the Sellers' Representative to do any of things referred to therein,
each of the Sellers appoints the Sellers' Representative to be its
attorney to do any of those things referred to in Clause 14.1
14.5 Each of the Sellers hereby ratifies and confirms and agrees to ratify and
confirm whatever the Sellers' Representative shall do or propose to do in
the exercise or purported exercise of its powers pursuant to this Clause
14.
15. GOVERNING LAW AND JURISDICTION
15.1 This Agreement shall be governed by and construed in accordance with
English law and the parties irrevocably submit to the non-exclusive
jurisdiction of the English courts as regards any claim, dispute or
matter ensuing in relation to this Agreement.
15.2 Each of the Sellers and the Buyer hereby irrevocably designate, appoint
and empower (in the case of the Sellers) the Sellers' Agent and (in the
case of the Buyer) the Buyer's UK Solicitors as its agent to receive for
and on its behalf service of process in any legal action, matter or
proceedings with respect to this Agreement service on whom shall be
deemed completed whether or not received by the Sellers or the Buyer as
the case may be. Each party shall inform the other in writing of any
change in the address of its process agents within 28 days. If such
process agents cease to have an address in England, the relevant party
irrevocably agrees to appoint new process agents acceptable to the other
party and deliver to it within 14 days a copy of a written acceptance of
appointment by its new process agents. Nothing contained in this
Agreement shall however affect the right to serve process in any other
manner permitted by law or the right to bring proceedings in any other
jurisdiction for the purposes of the enforcement or execution of any
judgment or other settlement in any other courts.
16. ADMISSION OF MINORITY SHAREHOLDERS
16.1 Each of the Sellers agrees that by the date being six months after the
Investor Sellers Closing Date that it shall [use reasonable endeavours
to] procure, at their own cost, that each of the Minority Shareholders
becomes a party to this Agreement and to provide to the Buyer all of the
benefits of this Agreement by executing the deed of adherence in the form
attached as Schedule 5 (the "Deed of Adherence") and delivering the
signed Deed of Adherence to the Buyer and by performing its obligations
hereunder. Upon delivery of the Deed of Adherence by such Minority
Shareholder, such person shall become a party to this Agreement and shall
be deemed a Seller within the meaning of this Agreement with all of the
rights and obligations of a Seller under this Agreement and complying in
all respects with Section 9 of the Escrow Agreements.
16.2 Any costs or expenses of the Buyer in procuring that any of the Minority
Shareholders shall execute a Deed of Adherence or execute an
acknowledgement in respect of their shareholding in the Company and a
waiver in respect of any claims in relation to such shareholding on or
after the date referred to in clause 16.1 shall be reimbursed by the
Sellers to the Buyer.
Page 26
IN WITNESS of which this Agreement has been duly executed and delivered as a
deed the day and year first above written.
EXECUTED as a Deed )
For and on behalf of ) /s/ XXXXX XXXXXXXXXX
BRILLIANT DIGITAL )
ENTERTAINMENT, INC )
EXECUTED as a Deed )
For and on behalf of ) /s/ XXXXX XXXXXXX
SF INTERNATIONAL )
LIMITED )
EXECUTED as a Deed )
For and on behalf of ) /s/ XXXXXXX XXXXXXX
COMMTEL SERVICES )
LTD )
EXECUTED as a Deed )
For and on behalf of ) /s/ XXX XXXXXX
TB INVESTMENTS LLC )
Page 27
SCHEDULE 1
THE SELLERS
NAME AND ADDRESS NO OF PROPORTION OF
TROJAN SHARES CONSIDERATION
Column 1 Column 2 Column 3
PART A. THE INVESTOR SELLERS
SF International Limited 680,000 34%
Tropic Isle Building
PO Box 438
Road Town
Tortola
British Virgin Islands
Commtel Services Ltd 340,000 17%
Teacher Stem Xxxxx Solicitors
00-00 Xxxxxxx Xxx
Xxxxxx XX0X 0XX
TB Investments LLC 680,000 34%
00000 Xxxxxxxx Xxxx
Xxx Xxx
Xxxxxxxxxx 00000
XXX
PART B. THE MINORITY SHAREHOLDERS NO. OF TROJAN PROPORTION OF
SHARES CONSIDERATION
Column 1 Column 2 Column 3
Xxxxxx Xxxxx, 0 Xxxxxx Xxxx, 3,000 0.15%
Xxxxxxxxxx, Xxxxxxx, XX0 0XX
Xxxxxxx Broad, 00 Xxxxxxxx Xxxx, 3,000 0.15%
Xxxxxxxx, Xxxxxxx, XX00 0XX
Morten Buskop, c/o TV Huset AS, 7,500 0.375%
XX Xxx 000, Xxxxxxxxx, 0000
Xxxx, Xxxxxx
Xxxx Xxxxxx, Xxxxxx Xxxxx Xxxx, 6,000 0.30%
Xxxxxxxxxx Xxxxxxx, Xxxxxx, XX0X
0XX
Xxxxxx X Xxxxxxxxx, 23 9,000 0.45%
Xxxxxxxxx, Xxxxxxxx-xx-Xxxx,
Xxxxxxx, XX0 0XX
X X Xxxxxxxxxxx, Wits End, 3,000 0.15%
Xxxxxxxxx Xxxx, Xxxxxxxx,
Xxxxxxxx, XX00 0XX
Xxxxxxx Xxxxx 3,000 0.15%
Page 28
Xxxxxxxx Xxxxxx, 22 Denmark 6,000 0.30%
Street, London, XX0 0XX
Xxxx Xxxxxxx Xxxxxxx Xxxxxxxx, 3,000 0.15%
00 Xxxxxxxxx Xxxx,
Xxxxxxxx-xx-Xxxx, Xxxxxxx, XX0
0XX
Xxxxx Xxxxx Xxxxxxxx, 19 6,000 0.30%
Xxxxxxxxx Xxxx,
Xxxxxxxx-xx-Xxxx, Xxxxxxx, XX0
0XX
Xxxxxxx X Xxxxxx, 49 Xxxxxxx 4,500 0.225%
Road, Xxxxxxxxxx, Xxxxxxx, XX0
0XX
Xxxxxxx Xxxxx Davey, 174 30,000 1.5%
Xxxxxxxxxxxx Xxxx, Xxxxxxx, XX0
0XX
Xxxxx Xxxxx Xxxxxx, MV 40,500 2.025%
Boanaventure, Xxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxx, XX00 0XX
Xxxxxx Xxxxx Xxxxxxx, Xxxx'x 6,000 0.3%
Arms Cottage, 00 Xxxxxxx Xxxx,
Xxxxxxx, Xxxxxxx, XX0 0XX
Xxxxx Xxxxxxx Xxxxxxx, King's 3,000 0.15%
Arms Cottage, 00 Xxxxxxx Xxxx,
Xxxxxxx, Xxxxxxx, XX0 0XX
TV Huset AS, XX Xxx 000, 9,000 0.45%
Lilleaker, 0216 Oslo, Norway
Leighwood Investments Ltd, c/o 39,000 1.95%
PO Box 161, Dixcart House, Xxx
Xxxxxxx Place, St Xxxxx Port,
Guernsey C.1.
Xxxxxxx Xxxxxxx Xxxxxx, 5 6,000 0.30%
Xxxxxxxx Xxxxxxx, Xxxxxx Xxx,
Xxxxxxxxxxx, Xxxxxxxxx, XX0 0XX
Xxxx Xxxxxxx, 0 Xxxxxx Xxxxx, 3,000 0.15%
Hotwells, Xxxxxxx, XX0 0XX
Xxxxxxx Xxxxxx Xxxxxxxx 15,000 0.75%
Xxx Xxxx 30,000 1.5%
Xxxxxx X Xxxxxx, 110a High 21,000 1.05%
Street, Bathford, Bath,
Somerset, BA1 7TH
6,000 0.3%
Xxxx T & Xxxxxx X Xxxxx,
0 Xxxxxxxxx Xxxxx,
Xxxxxxx, XX0 0XX
Xxxxxxx Xxxxx, 24 St Anne's 3,000 0.15%
Close, Xxxxxxx Xxxxx, Xxxxxx,
Xxxxxxx, XX00 0XX
Xxxxxx Xxxxx, 24 St Anne's 6,000 0.3%
Close, Cadbury
Page 00
Xxxxx, Xxxxxx,
Xxxxxxx, XX00 0XX
Ola Birgur Steinsrud, c/o TV 15,000 0.75%
Huset AS, XX Xxx 000, Xxxxxxxxx,
0000 Xxxx, Xxxxxx
Xxxx Xxxxxxx, 000 Xxxxxxxx Xxxx, 9,000 0.45%
Xx Xxxxxx, Xxxxxxx, XX0 0XX
Xxxxxxxxx Xxxxx 4,500 0.225%
Page 30
SCHEDULE 2
PARTICULARS OF THE COMPANY
Date and Place of Incorporation: 18 June 1996 in England
Registered Number: 3213333
Registered Office: Sceptre House, 000-000 Xxxxxx Xxxxxx,
Xxxxxx, X0X 0XX
Authorised Share Capital: (British Pounds)2,000 divided into
2,000,000 Ordinary Shares of 0.1p each
Issued Share Capital: 2,000,000 Ordinary Shares of 0.1p
Held by the Investor Sellers and the
Minority Shareholders as set out in
Schedule 1.
Particulars of any issued
share capital not fully paid up: None
Accounting Reference Date: 30 June
Names and addresses of
Directors: (1) Xxxxx Xxxxx Xxxxxx, XX
Xxxxxxxxxxx, Xxxxxx Xxxx, Xxxxxx,
Xxxxxx, XX00 0XX
(2) Xxx Xxxxxx Steinsrud, Lone Star Ent AB,
Xxxxxxxxxxxxxx 0X, Xxxx 0000, Xxxxxx
Name and address of Secretary: CHT Secretaries Limited of Sceptre House,
000-000 Xxxxxx Xxxxxx, Xxxxxx, X0X 0XX
Name and address (and reference)
of Auditors: Xxxxxxx & Co of Sceptre House,
000-000 Xxxxxx Xxxxxx, Xxxxxx, X0X 0XX
Names of subsidiaries: None
Page 31
SCHEDULE 3
PART A
REPRESENTATIONS WARRANTIES AND UNDERTAKINGS
"WARRANTIES"
1. SHARE CAPITAL, OWNERSHIP AND AUTHORITY
1.1 Each of the Sellers, has full power and authority and legal capacity to
enter into and perform this Agreement. This Agreement, constitute or when
executed will constitute binding obligations on each of them enforceable
against each in accordance with their terms
1.2 Each of the Sellers and the Minority Shareholders is the sole legal and
beneficial owners of the ordinary shares of 0.1p each in the capital of
the Company ("Ordinary Shares") set opposite its name in column 2 of
Schedule 1 and the Ordinary Shares set opposite its name in column 2 of
Schedule 1 represent the percentage (set out opposite in column 3 of
Schedule 1) of the Company's entire issued share capital and all of which
are fully paid up. The entire issued and allotted share capital of the
Company is as described in Schedule 2 and held as set out in Schedule 1
and is fully paid up. At Closing each of the Sellers will have the right
to sell and transfer the full legal and beneficial ownership of the Trojan
Shares to the Buyer on the terms of this Agreement, free from all claims,
liens, charges and encumbrances and without the consent, permission or
conditions of any third party.
1.3 Other than this Agreement and the Option 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 the Company
(including, without limitation, an option or right of pre-emption or
conversion).
1.4 There is no Encumbrance on over or affecting any of the issued Ordinary
Shares and there is no agreement or arrangement to give or create any such
Encumbrance and no claim has been made or threatened (or is anticipated to
be made or threatened) by any person to be entitled to any of the
foregoing.
1.5 The Company is not and has not within the past three years been the legal
or beneficial owner of nor is it committed to acquire any interest in
shares or securities of any description.
1.6 Pursuant to the Joint Venture Arrangements (as defined in the Deed of
Termination), SF International Limited acquired certain joint venture
rights as set out in the Joint Venture Arrangements. Neither SF
International Limited nor any other person has exercised any of its rights
pursuant to the Joint Venture Arrangements and neither the Company, SF
International Limited nor the joint venture entities the subject of the
Joint Venture Arrangements have any claim as against the other in respect
of the Joint Venture Arrangements. None of the joint venture entities the
subject of the Joint Venture Arrangements have at any time traded.
1.7 The Company is in all respects duly organised and registered, validly
existing for an indefinite duration under the laws of England and the
Company has all requisite corporate power to carry out its business as it
is now being conducted, and the said business has been conducted and is
now being conducted in conformity with all applicable laws.
Page 32
1.8 The Company has full corporate power and corporate authority to carry on
its business as it is now being conducted and to own, lease and operate
the property and assets that it now owns and leases.
1.9 The issued share capital of the Company is duly authorized, validly
issued, fully paid and nonassessable and has not been issued in violation
of any statutory preemption right or any preemption right contained in the
articles of association of the Company from time to time.
1.10 Each of the Sellers has the requisite power and authority to enter into
and perform this Agreement and to consummate the transactions contemplated
therein. The execution, delivery and performance of this Agreement have,
where relevant been duly authorized by each Seller, and this Agreement
constitutes the legal, valid and binding obligation of each Seller,
enforceable against each Seller in accordance with its terms.
1.11 The execution and delivery of this Agreement by the Sellers and the
consummation of the will not so far as the Sellers are aware, result in a
breach of any Material Contract.
1.12 No authorization, approval or consent of, or any action of, or any
registration or filing with, any court or administrative or regulatory
authority that has not been obtained, taken or made, is required for or in
connection with the execution, delivery or performance of this Agreement
by any of the Sellers or to ensure its validity or enforceability.
1.13 By execution of stock transfer forms, registration of such transfers and
delivery of a certificate or certificates representing theTrojan Shares,
each of the Sellers will transfer to the Buyer valid and marketable title
to the Trojan Shares of that Seller, free and clear of any pledge, lien,
security interest, charge, claim, equity, encumbrance or security interest
and together with all rights attaching to them.
1.14 As far as the Sellers are aware, having made all due and careful enquiry,
there is no litigation, proceeding, claim or investigation pending,
threatened or proposed in any manner involving any Seller or the Company
or any of the properties or assets of either of them or which questions
the validity of this Agreement or any action taken or to be taken by any
Seller under this Agreement.
2. INFORMATION
2.1 All information to the extent given in writing by, or on behalf of, each
of the Sellers or the Company to the Buyer, its advisers or agents before
or during the negotiations leading to this Agreement is true, complete,
accurate and not misleading.
2.2 The information set out in Schedule 1 and in the Disclosure Schedule is
true, complete, accurate and not misleading.
2.3 All information about the Trojan Shares and the Company's business which
might be material for disclosure to a buyer of the Trojan Shares has been
disclosed in the Disclosure Schedule.
3. ACCOUNTS AND FINANCE
3.1 The Latest Accounts (including all books and records relevant to them)
were prepared and
Page 33
audited on a proper and consistent basis in accordance with the law and
applicable standards, principles and practices generally accepted in the
United States of America and:-
3.1.1 are true complete and accurate in all material respects, set out in
all material respects accurately and correctly all assets and
liabilities (whether actual or contingent) of the Company as at the
Latest Accounts Date, show a true and fair view of the assets,
liabilities and state of affairs of the Company at the Latest
Accounts Date and of the profits and losses of the Company for the
period ended on the Latest Accounts Date and are not affected by any
extraordinary or exceptional items or non-recurring item or by
another fact or circumstance making the profit or loss for the
period covered by the Latest Accounts artificially or unusually high
or low; and
3.1.2 fully disclose and contain either full provision or full particulars
in notes (conforming with good accountancy practice) in respect of
all bad and doubtful debts and all Liabilities of the Company as at
the Latest Accounts Date;
and no change has been made in the accounting policies used in preparing
the accounts for the previous Financial Year.
3.2 In the Latest Accounts the value attributed to each asset used in
preparing the Latest Accounts does not exceed its net realisable value and
the Company's Liabilities were not undervalued in any material respect.
3.3 Except as disclosed in the Latest Accounts, the Company does not have
outstanding and has not agreed to create or incur loan capital, borrowing
or indebtedness in the nature of borrowing, including without limitation,
a bank overdraft, a liability under an acceptance (other than a normal
trade xxxx) and an acceptance credit.
3.4 The Company is not a party to and is not liable (including, without
limitation, contingently) under a guarantee, indemnity or other agreement
to secure or incur a financial or other obligation with respect to another
person's obligation.
3.5 Subject to 3.6 below the Management Accounts have been prepared on a basis
consistent with the Latest Accounts.
3.6 The Management Accounts have been prepared to a "review" standard as such
term is generally understood under US accounting principles and practices.
4. EVENTS SINCE THE LATEST ACCOUNTS DATE
Since the Latest Accounts Date and, in the case of 4.1 to 4.3, to the best
of the Sellers' knowledge and belief:
4.1 the Company's business has been operated in the usual way so as to
maintain it as a going concern;
4.2 there has been no adverse change in the financial or trading
position or prospects of the Company; and
Page 34
4.3 no material change has occurred in the assets and liabilities shown
in the Latest Accounts.
4.4 the Company has not terminated or amended any agreement, arrangement
or understanding or waived or released any right or claim of
material value;
4.5 the Company has not ceased to deal with any Key Third Party or
received any notice of termination;
4.6 the Company has not received any notice of the termination, or
proposed or intended termination, of or changes or desired changes
to the terms of any of the Material Contracts;
5. LITIGATION
5.1 The Company is not in default under any agreement to which it is a party
or in respect of any other obligation binding upon it and it is not
engaged (whether as plaintiff defendant or otherwise) in any litigation
(whether civil or criminal), arbitration, tribunal inquiry or other
proceedings or dispute and none of the foregoing is or are pending or
threatened either by or against the Company nor are there any facts or
circumstances which may lead to any of the foregoing or to any proceedings
against any director or employee of the Company in respect of any act or
default for which the Company might be vicariously liable.
5.2 To the best of the Sellers' knowledge and belief no governmental or other
investigation or inquiry is in progress or threatened in respect of the
Company or its business and (so far as the Sellers are aware) there are no
circumstances likely to lead to any of the same.
5.3 The Company has conducted its business and dealt with its assets in all
material respects in accordance with all applicable legal and
administrative requirements in any jurisdiction.
5.4 Neither the Company nor any of its officers has committed any criminal
illegal tortious or unlawful act (except traffic offences not being
indictable offences in the case of officers) or committed any breach of
contract or committed or omitted to do any act or thing which could give
rise to the Company being liable to any fine, penalty, sanction, loss or
similar event.
5.5 The Company has obtained and complied with the terms and conditions of
each Permit details of which have been disclosed to the Buyer.
5.6 Each Permit 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. There is no indication that any Permit might
be revoked, suspended, cancelled, varied or not renewed. No Permit and no
condition to which any Permit is subject is personal to any of the
Sellers.
Page 35
5.7 Each action required for the renewal or extension of each Permit has been
taken.
5.8 No Permit will be revoked, suspended, cancelled, varied or not renewed as
a result of the execution or performance of this Agreement or a document
to be executed at or before Closing.
5.9 No fees or expenses have been paid or are or will be payable by the
Company the payment of which would constitute "financial assistance"
pursuant to Section 151 of the Companies Act in connection with the
acquisition by either the Investor Sellers or the Buyer of any of the
share capital of the Company.
6. INTELLECTUAL PROPERTY RIGHTS
6.1 All Intellectual Property Rights relating to or used in connection with
the business of the Company (the "COMPANY INTELLECTUAL PROPERTY Rights")
are so far as the Sellers are aware specified in the Disclosure Schedule
and are :
6.1.1 legally and beneficially owned by, and validly granted to, the
Company alone free from any licence, Encumbrances, restriction on
use or disclosure obligation;
6.1.2 listed and briefly described in the Disclosure Schedule.
6.1.3 not, and, so far as the Sellers are aware, will not be, the subject
of a claim or opposition from a person (including, without
limitation, an employee of the Company) as to title, validity,
enforceability, entitlement or otherwise.
6.2 The Company Intellectual Property Rights comprise all the Intellectual
Property Rights necessary for the Company to operate its business as it
has been operated at any time before the date of this Agreement.
6.3 All Company Intellectual Property Rights is valid, subsisting and
enforceable, there is in full force and effect any registrations of
Intellectual Property Rights required to enable the Company to exercise
fully such rights, and, in the case of Company Intellectual Property which
is registered, all renewal fees in respect thereof have been duly paid.
6.4 Nothing has been done by the Company or by any other person whereby any of
the Company Intellectual Property Rights has ceased or might cease to be
valid and enforceable or whereby any person is or will be able to seek
cancellation, rectification or any similar remedy in relation to any such
rights.
6.5 There have been and there are no infringements of any of the Company
Intellectual Property Rights and none is threatened.
6.6 The Company has not granted and is not obliged to grant or enter into any
licence, sub-licence, assignment, consent or any other right in respect of
the Company Intellectual Property Rights. The Intellectual Property Rights
not owned by the Company but used by it in relation to its business are
used under licences which are currently in force and no claims have been
made in respect of any such use nor are any applications pending which if
pursued or granted might be material in relation to such use.
Page 36
6.7 All computer software used in the business of the Company is governed by
valid licence agreements which will continue in full force and effect for
an indefinite period following Closing.
6.8 The Company's business and the products and services used in or supplied
by the Company do not now nor did they at any time since its incorporation
infringe any Intellectual Property Rights of any third party; and will
not, to the best of the knowledge, information and belief of the Sellers,
give rise to any claim for infringement, misuse, payment or otherwise.
6.9 The Company is not, nor has at any time been, in breach of any agreement
relating to the use by the Company of any Company Intellectual Property
Rights owned by a third party and no other party to any such agreement is,
or has at any time, been in breach thereof.
6.10 The Company has taken all reasonable steps to preserve the confidentiality
of all know-how, trade secrets, price or customer or supplier lists,
formulae, confidential information or secret processes relating to or used
in or in connection with the business of the Company.
6.11 There are no confidentiality or other agreements in favour of the third
parties which restrict the free use or disclosure of Company know-how by
the Company.
6.12 The goods and services supplied in the course of, and the processes
employed in, the business of the Company are free of inherent defects of
design (whether known or not).
7. TRADING
7.1 The trade of the Company comprises exclusively the business summarised in
the Executive Summary. The Company has no obligations or liabilities
(actual, accrued or contingent) other than those directly related to, and
incurred in the ordinary course of such trade.
7.2 During the year ending on the date of this Agreement no Key Third Party
has (or is likely to do so):
(a) stopped, or indicated an intention to stop, dealing with, trading
with or supplying or otherwise terminate its arrangements with the
Company;
(b) reduced, or indicated an intention to reduce, substantially its
dealing with, trading with, or supplies to the Company; or
(c) changed, or indicated an intention to change, substantially the
terms on which it is prepared to deal with, trade with or supply the
Company.
7.3 So far as the Sellers are aware, the attitude of the Key Third Parties and
the employees with regard to the Company will not be prejudicially
affected by the execution or performance of this Agreement or a document
to be executed at or before Closing.
Page 37
8. CONTRACTS
8.1 In relation to the Material Contracts:
8.1.1 the same are reduced to writing, in the name of or validly legally
assigned to the Company, are not unauthorised, invalid or
unenforceable and (where necessary) have been appropriately
registered;
8.1.2 neither the Company nor (to the best of the Sellers' knowledge
information and belief) any third party is in breach of any of the
same;
8.1.3 are listed in the Disclosure Schedule and the material terms thereof
are set out in the Disclosure Schedule.
8.2 The Material Contracts comprise all the agreements, arrangements or
obligations entered into by the Company which are material, long-term,
onerous or unusual (including, without limitation):
8.2.1 material in the context of the carrying on of the business of the
Company;
8.2.2 an agreement, arrangement or obligation entered into other than in
the usual course of its business;
8.2.3 an agreement, arrangement or obligation entered into other than by
way of a bargain at arm's length;
8.2.4 an agreement or arrangement restricting the Company's freedom to
operate the whole or part of its business or to use or exploit any
of its assets as it decides;
8.2.5 an agreement, arrangement or obligation which the Company cannot
comply with on time or without undue or unusual expenditure of money
or effort.
8.2.6 to govern or exploit the Company Intellectual Property Rights; or
8.2.7 between the Company and any of the Sellers.
8.3 The Company has not entered into or incurred or assumed any contract or
Liability of a material or unusual nature or which is not in the ordinary
course of trading consistent with past practice or pursuant to which the
Company is required to make a payment in excess of (British Pounds)50,000
or periodic payments which involved or may involve total annual
expenditure in excess of (British Pounds)50,000 per contract or commitment
(or series or related associated contracts and or commitments).
9. INSOLVENCY
Page 38
9.1 There has not been and there is not, in respect of the Company or any part
of its business or assets, any order made, petition presented or
resolution passed for its winding up or any voluntary arrangement or
administration order (both as defined in the Insolvency Act 1986) or any
proposal or petition therefor or any distress, execution or other process
levied or any receiver, administrative receiver, administrator or other
encumbrancer appointed or any event analogous to any of the foregoing in
or outside England or any unfulfilled or unsatisfied judgment or court
order outstanding or any delay by the Company in the payment of any
obligation due for payment or any circumstance which might lead to any of
the foregoing.
9.2 The Company has not stopped payment nor ceased to carry on business nor is
it insolvent nor is it unable to pay its debts for the purposes of section
123 of the Insolvency Xxx 0000.
10. EMPLOYEES
10.1 The following details are set out in the Disclosure Schedule:
10.1.1 in the case of all employees of the Company their names jobs and
short details of their terms of employment including years of
continuous service for redundancy purposes;
10.1.2 in the case of officers of the Company, key personnel and
consultants engaged by the Company the above details and full
details of their terms of employment or engagement;
10.1.3 full details of any benefit received by any employee otherwise
than in cash.
10.2 None of the officers employees or consultants is contemplating leaving the
service of the Company.
10.3 Except in relation to any direct written dealings of the Buyer with
individual employees or officers of the Company there is not in operation
as at date of this Agreement, and there has not been in operation at any
time prior to the date of this Agreement, and no proposal has been
announced to enter into or establish, any agreement, arrangement, custom
or practice (whether legally enforceable or not and Approved or not) for
the payment of, or payment of a contribution towards, a pension,
allowance, lump sum or other similar benefit on retirement, death,
termination of employment (whether voluntary or not) or during periods of
sickness or disablement (whether during service or after retirement), for
the benefit of an employee or consultant of the Company or such a person's
dependants in relation to the leases or licences under which the same are
occupied.
11. THE PROPERTIES
The Properties comprise all the land and premises or otherwise owned
occupied or otherwise used by the Company and together with any fixtures
and fittings thereon free from any Encumbrances. The Properties which are
occupied or used by the Company in connection with any business carried on
by the Company and are so occupied or used lawfully by right of ownership
or under lease or licence and the terms of any such leases, licence,
statute or by law permit such occupation and use. The Disclosure Schedule
contains details of the terms thereof and the notice period to be given by
each party thereto. There are no liabilities, obligations, disputes or
breaches in relation to the Properties other than as set out in the
Disclosure Schedule and on termination
Page 39
upon three months' notice of such leases or licences there will be no
liabilities except as set out in the Disclosure Schedule. The Company's
use, occupation or otherwise of the Properties will not be determined,
determinable or varied as a result of the execution or performance of this
Agreement or a document to be executed at or before closing. The right to
occupy or otherwise use the Properties will continue until determined by
the Company as above. The Company has no continuing liability in respect
of any other Properties formerly owned or occupied by the Company.
12. YEAR 2000
12.1 Each item of equipment and software program used by the Company (a
"COMPANY SYSTEM") in the course of its business has been produced, tested
and/or amended in a manner which ensures that:
(a) a change of, reference to or use of a date before, on or after 31
December 1999 in the operation of that Company System, whether alone
or in conjunction with each other Company System, will not have
adverse effect on, nor give rise to inconvenience in, the operation
of that Company System; and
(b) the inclusion of a date or dates before, on or after 31 December
1999 in the date information exchanged with any item of equipment
and software program which is not a Company System but with which
that Company System exchanges date information in the course of
business will not have adverse effect on, nor give rise to
inconvenience in, that exchange of date information or the
subsequent use of that date information.
13. TAX
13. The Company has made all returns and supplied all information and given
all notices to the Inland Revenue or other Taxation Authority as
reasonably requested or required by law within any requisite period and
all such returns and information and notices are correct and accurate in
all material respects and are not the subject of any dispute and so far as
the Sellers are aware there are no facts or circumstances likely to give
rise to or be the subject of any such dispute.
13.2 The Company has duly and punctually paid all Taxation to the extent that
the same ought to have been paid and is not liable nor has it so far as
the Sellers are aware within the last three years been liable to pay any
penalty or interest in connection with any such Taxation.
13.3 The Company has properly operated the PAYE system deducting Taxation as
required by law from all payments to or treated as made to or benefits
provided for employees, ex-employees or independent contractors of the
Company (including any such payments within section 134, Taxes Act) and
duly accounted to the Inland Revenue for any Taxation so deducted and has
complied in all respects with its reporting obligations to the Inland
Revenue in connection with any such payments made or benefits provided.
13.4 So far as the Sellers are aware, the Company has maintained sufficient
records to enable it to calculate any present or, so far as possible,
future liability for Taxation of the Company or its entitlement to any
deduction relief or repayment of Tax and such records are true, accurate
and complete.
Page 40
13.5 The Company is not and has never been a close investment holding company
within the meaning of section 13A, Taxes Act (close investment holding
companies).
14. SELLERS' INTERESTS
14.1 Save for ownership of the Company, neither the Sellers, the Minority
Shareholders nor any of their Associates has any interest, direct or
indirect, in any business which competes or is likely to complete with the
business of the Company or in any assets which are necessary or expedient
for or relate to the continuation of the business of the Company as
carried on prior to the date hereof.
14.2 The Disclosure Schedule contains an accurate description of all
guarantees, indemnities, mortgages and other encumbrances given by the
Company in respect of any of the Sellers' or their Associates' obligations
and of all loans or other financing commitments made or extended by the
Sellers, the Minority Shareholders or their Associates to the Company.
Page 41
PART B
THE US SELLER WARRANTIES
1. He/She understands that an investment in the Buyer's Common Stock or
warrants to purchase Buyer's Common Stock ("Warrants") to be issued to the
Sellers under this Agreement and shares of Common Stock issuable upon
exercise of such Warrants (collectively, the "Securities") involves a high
degree of risk, and he/she is able to bear the risk of an entire loss of
the investment; of evaluating the merits and risks of an investment in the
Securities.
2. He/She understands that the issuance of the Securities have not been
registered under the Securities Act of 1933 (the "Securities Act") or
under any state securities laws. He/She is familiar with the provisions of
the Securities Act and Rule 144 thereunder and understands that the
restrictions on transfer placed on the Securities may result in his/her
being required to hold the Securities for an indefinite period of time.
3. He/She is acquiring the Securities for his/her own account, and not as a
nominee or agent for others, and not with a view to resale or distribution
of any part thereof, and he/she has no present intention of selling or
distribution the Securities.
4. He/She is an accredited investor for purposes of Regulation D promulgated
by the Securities and Exchange Commission under the Securities Act.
5. He/She believes that he/she has received all the information he/she
considers necessary or appropriate for deciding whether to acquire the
Securities, and he/she has had an opportunity to ask questions and receive
answers from the Buyer and he/she officers and directors regarding the
business, prospects and financial condition of the Buyer.
6. He/She agrees not to sell, assign, transfer or otherwise dispose of
(collectively, "Transfer") any of the Securities except pursuant to an
effective registration statement under the Securities Act or an exemption
from registration. As a further condition to any such Transfer, except in
the event that such Transfer is made pursuant to an effective registration
statement under the Securities Act, if in the reasonable opinion of
counsel to the Buyer any Transfer of the Securities by the contemplated
transferee thereof would not be exempt from the registration and
prospectus delivery requirements of the Securities Act, the Buyer may
require the contemplated transferee to furnish the Buyer with an
investment letter setting forth such information and agreements as may be
reasonably requested by the Buyer to ensure compliance by such transferee
with the Securities Act. 7. Each certificate evidencing the Securities
will bear the following
Legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR STATE SECURITIES LAWS AND
NO TRANSFER OF THESE SECURITIES MAY BE MADE EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR (B) PURSUANT TO AN
EXEMPTION THEREFROM WITH RESPECT TO WHICH THE COMPANY MAY, UPON REQUEST,
REQUIRE A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER THAT SUCH
TRANSFER IS EXEMPT FROM THE REQUIREMENTS OF THE ACT.
Page 42
PART C
THE FOREIGN SELLER WARRANTIES
1. He/She acknowledges that the issue of the Securities shall be made subject
to the restrictions contained in the US Securities and Exchange
Commission's Regulation S, as such regulation is in effect on the Closing
Date, and otherwise in compliance with applicable US law. He/She
acknowledges that he/she has access to all filings made by Buyer under the
US Securities Exchange Act of 1934, as amended, including its Annual
Report on Form 10-KSB for the year ended December 31, 1998 and each of its
Quarterly Reports on Form 10-QSB filed with the Securities and Exchange
Commission thereafter, and that he/she has had access to such financial
and other information concerning Buyer and the Securities as he/she deemed
necessary in connection with his/her agreement with Buyer concerning issue
of the Securities to him/her in connection with his/her agreement with
Buyer concerning issue of the Securities to such Foreign Seller, including
an opportunity to ask questions of and request information from Buyer and
its management. Without limiting the generality of the foregoing he/she
acknowledges that Securities which may be delivered to him/her pursuant to
this clause - shall be restricted securities which have not been
registered under the Securities Xxx 0000, as amended, and that until the
expiration of the restricted period provided under Regulation S, an offer
or sale of the Securities shall not be made by him/her within the United
States or to, or for the account or benefit of, a US person within the
meaning of Rule 902(k) of the US Securities Act of 1933, as amended
He/She was outside of the United States at both the time the offer of the
Securities was received and at the time this Agreement was entered into.
2. He/She is acquiring the Securities for investment purposes only and not
for the purpose of sale or distribution of the Securities in the United
States or in a manner that does not comply with the requirements of
Regulation S. He/She acknowledges that the Securities to be acquired by
him/her pursuant to this Agreement are not registered under the Securities
Act and cannot be sold or otherwise disposed of except in compliance with
the Securities Act or in reliance upon an exemption from the Securities
Act. He/She acknowledges that the certificates(s) representing the
Securities shall bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED,
SOLD, TRANSFERRED, PLEDGED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATOIN STATEMEENT UNDER THE ACT,
REGULATIONS OR AN EXEMPTION FROM REGISTRATION AND OTHERWISE IN ACCORDANCE
WITH The TERMS OF AN AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL
UNDERSIGNED OF THE SECURITIES, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
EXECUTIVE OFFICE OF THE ISSUER".
Page 43
SCHEDULE 4
CLOSING ARRANGEMENTS
At Closing:
BOARD MEETINGS
1. The Sellers shall procure that a Board Meeting of the Company is duly
convened and held at which valid resolutions are passed:
1.1 that the transfers referred to in paragraph 2 below be approved for
registration, and that the Buyer and/or its nominees be forthwith
placed on the register of members of the Company as the holders of
the Trojan Shares;
1.2 that there be appointed as:-
(i) directors of the Company, any two of Xxx Xxxxxx, Xxxxx Xxxxx,
Xxxxxx Xxxxxxxxxx and Xxxxxxx Xxxxxxx as the Investor Sellers
shall nominate by notice to the Buyer within seven days of
Closing unless the Buyer elects that such persons shall not be
Directors; and
(ii) secretary of the Company, HAL Management Limited.
1.3 that current instructions to banks be cancelled and be replaced with
any new instructions required by the Buyer;
1.4 that the resignations of the directors, secretary and auditors
referred to in paragraph 2 below be tendered and accepted;
1.5 that PriceWaterhouseCoopers be appointed as Auditors of the Company;
1.6 that the accounting reference date of the Company be changed to such
date as the Buyer shall specify;
1.7 that the situation of the registered office of the Company be
changed to such address as the Buyer shall nominate;
1.8 that service agreement in the agreed form be approved by and signed
on behalf of the Company;
1.9 that any other document to be executed by the Company be approved by
and signed on behalf of the Company.
DELIVERY BY SELLERS
2. The Sellers shall comply with its obligation pursuant to Clause 4.1(ii)
and shall deliver to the Buyer's Solicitors:
2.1 copies certified as correct by the Secretary of the Company of the
resolutions passed at
Page 44
the Board Meeting referred to in paragraph 1 above;
2.2 duly executed transfers of the Trojan Shares in favour of the Buyer
or its nominees together with the relevant share certificates;
2.3 any powers of attorney or other authorities under which any
transfers have been executed which shall be duly stamped and
executed;
2.4 subject to the due holding of the Board Meeting referred to in
paragraph 1 above the written resignation in the agreed form of Ola
Steinsrud as director of and of CHT Secretaries Limited as secretary
of and from all other offices, places or positions of profit with
the Company with effect from Closing and a written acknowledgement
under seal from each of them in such form as the Buyer requires
waiving any claim he may then or afterwards have against the Company
on any grounds whatsoever and stating that no agreement or
arrangement is outstanding under which the Company has or could have
any obligation to him;
2.5 the resignation in the form prescribed by the Companies Act of
Xxxxxxx & Co. as auditors of the Company with effect from the
closing of the said Board Meeting, such resignation to state that
they have no claim against the Company for outstanding professional
fees or otherwise howsoever;
2.6 the statutory books, certificate(s) of incorporation and of
incorporation on change of name, up to date as at Closing, and the
Common Seal of the Company;
2.7 all cheque books containing unused cheques relating to all bank
accounts of the Company and the appropriate forms to amend the
mandates given by the Company to its banks;
2.8 the SPA Escrow Agreement duly executed by each of the Sellers;
2.9 the Debt Escrow Agreement duly executed by each of the Sellers;
2.10 the Opinions;
2.11 the Deed of Assignment duly executed by SF International Limited;
2.12 transfers and/or assignments of all shares, rights and interests in
the entity having the name "The Auction Channel, Inc." and any
Intellectual Property Rights therein duly executed by Xxxxxx
Xxxxxxxxxx;
Page 45
2.13 a letter from Xxxxxxx & Co in the agreed form confirming that they
will provide the Buyer's auditors with access to their work papers
as reasonably requested after the Investor Sellers Closing Date and
that they will provide consents to the inclusion of their name and
reports in the Buyer securities filings (under the Securities and
Exchange Act);
2.14 the Deed of Termination; and
2.15 letters from each of Paige & Co and Chiltern Group plc to the Buyer
confirming that any fees and expenses paid or payable by the Company
to Paige & Co and Chiltern Group plc (or its Associates) (as
appropriate) do not constitute "financial assistance" within the
meaning of Section 151 of the Companies Xxx 0000 in connection with
the acquisition by either the Investor Sellers or the Buyer of any
share capital of the Company.
DELIVERY BY THE BUYER
8. The Buyer shall deliver to the Sellers' Representative:
8.1 the SPA Escrow Agreement duly executed by the Buyer;
8.2 The Debt Escrow Agreement duly executed by SF International Limited;
8.3 the Deed of Assignment duly executed by the Buyer; and
8.4 the Exercise Notice duly executed by the Buyer.
Page 46
SCHEDULE 5
DEED OF ADHERENCE
THIS DEED OF ADHERENCE is made the day of 19 by of (hereinafter called "the
Covenantor")
SUPPLEMENTAL to a Share Purchase Agreement dated the ] day of 1999 and made
between SF International Limited, Commtel Services Ltd, TB Investments LLC and
Brilliant Digital Entertainment, Inc and such other parties who have adhered to
such agreement in accordance with Clause 16 thereof ("the Share Purchase
Agreement"), and an Escrow Agreement dated the day of 1999 and made between SF
International Limited, Commtel Services Ltd, TB Investments LLC, Brilliant
Digital Entertainment, Inc and such other parties who have adhered to such
agreement in accordance with Section 9 thereof ("the SPA Escrow Agreement").
WITNESSETH as follows:
1. The Covenantor hereby confirms that he/it has been supplied with a copy of
each of the Share Purchase Agreement and the SPA Escrow Agreement and
hereby covenants with each of the parties thereto to observe perform and
be bound by all the terms of the Share Purchase Agreement and the SPA
Escrow Agreement which have not been performed at the date hereof to the
intent and effect that the Covenantor shall be deemed with effect from the
date hereof to be a party to the Share Purchase Agreement and the SPA
Escrow Agreement as a "Seller"(as defined in the Share Purchase
Agreement).
2. This Deed shall be governed by and construed in accordance with the laws
of England.
EXECUTED as a deed the day and year first before written
Page 47
SCHEDULE 6
DISCLOSURE SCHEDULE
Page 48
SCHEDULE 7
EXECUTIVE SUMMARY
Page 49
SCHEDULE 8
THE MEMORANDUM OF UNDERSTANDING
Page 50
SCHEDULE 9
SHAREHOLDER LOANS
-------------------------------------------------------------------------------
T Davey 10,000 10,000 10,000
-------------------------------------------------------------------------------
Christian 15,000 15,000 15,000
-------------------------------------------------------------------------------
Xxxxx Xxxxxx 5,000 5,000 5,000
-------------------------------------------------------------------------------
SF International 264,000 352,549 380,132
-------------------------------------------------------------------------------
Ola Steinstud 4,300 4,300 4,300
-------------------------------------------------------------------------------
Xxx Xxxx 2,500 2,500 2,500
-------------------------------------------------------------------------------
Broadstar 15,000 15,000 15,000
-------------------------------------------------------------------------------
Xxxx Xxxxx 10,000 10,000 10,000
-------------------------------------------------------------------------------
Xxxx Xxxxxx 5,000 5,000 5,000
-------------------------------------------------------------------------------
S Xxxxxx 10,000 10,000 10,000
-------------------------------------------------------------------------------
D Xxxxx 3,335 3,141 2,948
-------------------------------------------------------------------------------
BDE 30,820
-------------------------------------------------------------------------------
OTHER 334,135 432,480 500,701
-------------------------------------------------------------------------------
together with any debts incurred in the ordinary course of business which are
set out and fully provided for in the Closing Accounts
Page 51
