EXHIBIT 2.1
DATED FEBRUARY 2003
THE SELLERS (AS DEFINED)
- and -
EURONET WORLDWIDE, INC.
-and-
THE COMMITTEE (AS DEFINED)
_________________________________
AGREEMENT
for the sale and purchase
of the entire issued share capital
- of -
E-PAY LIMITED
_________________________________
Squire, Xxxxxxx & Xxxxxxx
Xxxxx Xxxxx
Xxxxxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Tel: 000 0000 0000
Fax: 000 0000 0000
Ref: SJN/CAM 34963.11
TABLE OF CONTENTS
PAGE
1. INTERPRETATION............................................. 2
2. CONDITIONS................................................. 3
3. SALE AND PURCHASE OF SHARES................................ 5
4. BUYER WARRANTIES........................................... 5
5. TITLE AND CAPACITY......................................... 9
6. PURCHASE PRICE............................................. 9
7. OPTIONS................................................... 10
8. WARRANTIES................................................ 10
9. (A) LIMITATION OF LIABILITY OF THE WARRANTORS............. 11
9. (B) LIMITATION OF LIABILITY OF THE BUYER.................. 15
10. COVENANTS UP TO COMPLETION................................ 18
11. UNITED STATES SECURITIES ACT REPRESENTATIONS BY SELLERS... 20
12. COMPLETION................................................ 20
13. RELEASE OF GUARANTEES AND INDEMNITIES..................... 23
14. DEFERRED CONSIDERATION PROTECTION......................... 23
15. NON-COMPETITION........................................... 25
16. COSTS..................................................... 27
17. FURTHER ASSURANCE......................................... 27
18. NOTICES................................................... 27
19. GOVERNING LAW AND JURISDICTION............................ 28
20. PUBLICITY................................................. 29
21. GENERAL................................................... 29
SCHEDULE 1..................................................... 31
DEFINITIONS.................................................... 31
SCHEDULE 2..................................................... 40
DETAILS OF SELLERS............................................. 40
SCHEDULE 3..................................................... 41
BRIEF DETAILS OF THE COMPANY................................... 41
SCHEDULE 4..................................................... 43
PART A - BRIEF DETAILS OF THE SUBSIDIARY....................... 43
PART B - BRIEF DETAILS OF THE ASSOCIATED CORPORATION........... 44
SCHEDULE 5..................................................... 45
BRIEF DETAILS OF THE PROPERTIES................................ 45
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SCHEDULE 6..................................................... 46
SCHEDULE 7..................................................... 47
WARRANTIES..................................................... 47
SCHEDULE 8..................................................... 76
ASSOCIATED CORPORATION WARRANTIES.............................. 76
SCHEDULE 9..................................................... 77
ITEMS FOR DELIVERY BY THE SELLERS AT COMPLETION................ 77
SCHEDULE 10.................................................... 79
MATERIAL CONTRACTS............................................. 79
PART A - NETWORK AGREEMENTS.................................... 79
PART B - RETAILER AGREEMENTS................................... 81
SCHEDULE 11.................................................... 83
METHOD OF PAYMENT OF EURONET SHARES............................ 83
SCHEDULE 12.................................................... 93
DEFERRED CONSIDERATION......................................... 93
SCHEDULE 13.................................................... 97
CONVERTIBLE NOTE............................................... 97
SCHEDULE 14................................................... 117
UNSECURED QCB NOTES........................................... 117
SCHEDULE 15................................................... 125
CONSIDERATION ADJUSTMENT COMPLETION ACCOUNTS.................. 125
SCHEDULE 16................................................... 127
THE COMMITTEE................................................. 127
SCHEDULE 17................................................... 129
THE UNITED STATES SECURITIES ACT REPRESENTATIONS BY SELLERS... 129
SCHEDULE 18................................................... 132
EXERCISE OF OPTIONS........................................... 132
DOCUMENTS IN THE AGREED FORM
1. Service Agreement(s)
2. Promissory Notes
3. Releases
4. Sellers' Confirmation Letters
5. Consideration Schedule
6. Charge
ii
THIS AGREEMENT is made on February 2003
PARTIES
1. THE PERSONS whose details appear in columns (1) and (2) of Part A and
B of Schedule 2 (together the "Sellers");
2. EURONET WORLDWIDE, INC., incorporated in Delaware, USA with registered
number 04-280688 and whose principal executive offices are at 0000
Xxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxx 00000, XXX (the "Buyer" which
expression shall, where the context so admits, include its successors
and assigns); and
3. THE COMMITTEE in its capacity as agent and trustee for each Seller
entitled to Deferred Consideration as set out in the Consideration
Schedule (the "Security Agent") which expression shall include all
successor security agents as appointed from time to time.
RECITALS
(A) The Company:-
(1) was incorporated under the laws of England and Wales on 14
January 1999 under the Companies Xxx 0000 under registered
number 3695345 as a private company limited by shares;
(2) has at the date of this Agreement:-
(a) an authorised share capital of 4,440,000 divided into:-
(i) 1,000,000 A Ordinary Shares of (pound)1 each;
(ii) 1,000,000 B Ordinary Shares of (pound)1 each;
(iii) 1,000,000 C Ordinary Shares of (pound)1 each;
(iv) 1,000,000 D Ordinary Shares of (pound)1 each;
(v) 400,000 Ordinary Shares of (pound)1 each; and
(vi) 40,000 E Ordinary Shares of (pound)1 each;
(b) an issued share capital of 738,227 divided into:-
(i) 121,719 A Ordinary Shares of (pound)1 each;
(ii) 152,219 B Ordinary Shares of (pound)1 each;
(iii) 121,719 C Ordinary Shares of (pound)1 each;
(iv) 152,219 D Ordinary Shares of (pound)1 each;
(v) 162,143 Ordinary Shares of (pound)1 each; and
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(vi) 28,208 E Ordinary Shares of (pound)1 each.
(B) The Sellers:-
(1) are legally and beneficially entitled to the Shares in the
numbers set out in the Consideration Schedule; and
(2) have the right to sell or procure the sale of the Shares
free from all Encumbrances.
(C) The Option Holders have exercised the Options and will sell the
resulting shares to the Buyer in accordance with the terms and
conditions of this Agreement.
(D) The Company has acquired 25% of the issued share capital of the
Subsidiary and will at Completion, be beneficially entitled to, and
will be entitled (subject to stamping of the relevant transfers) to be
the registered holder of, 100% of the issued share capital of the
Subsidiary. The Subsidiary is the only subsidiary of the Company other
than e-pay New Zealand Pty Limited.
(E) e-pay New Zealand Pty Limited is a wholly-owned subsidiary of the
Subsidiary.
(F) The Company is the beneficial owner (directly or indirectly) of 40% of
the issued share capital of the Associated Corporation. The Associated
Corporation is the only company which the Company is the beneficial
owner (directly or indirectly) of part only of its issued share
capital.
(G) The Sellers have agreed with the Buyer to sell or procure the sale to
it of the Shares subject to the terms and conditions of this
Agreement.
OPERATIVE PROVISIONS
1. INTERPRETATION
1.1 The defined terms and expressions set out in Schedule 1 will apply for
the purposes of this Agreement except where the context otherwise
requires.
1.2 Any reference to a person being "connected with" another person
means:-
1.2.1 any person connected with such other person (and "connected
with" bears the meaning set out in section 839 of ICTA
1988); and/or
1.2.2 any company under the control of such other person (and
"control" bears the meaning set out in section 840 of ICTA
1988).
1.3 References to "Parties" means the parties to this Agreement and
"Party" means any one of them and shall include that person's
permitted assigns, transferees or successors in title.
1.4 References to any payment being made on "an after-Tax basis" means
that the amount so payable shall be grossed up by such amount as will
ensure that after deduction of any Taxation there shall be left in the
hands of the relevant payee a sum equal to the amount which would
otherwise have been payable.
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1.5 References in the Warranties to a Warrantor's knowledge, information,
belief or awareness or similar expression are deemed to include such
knowledge, information, belief, or awareness as such person would have
had if the person had:-
1.5.1 made due and careful enquiries of the directors of the
Company and the Subsidiary and Xxxxx Xxxxx, Xxxxx Xxxxxxxxx,
Xxxxxxx Xxxxxx and Xxxxxx Xxxxxx; and
1.5.2 taken the views of these individuals who had properly
considered the relevant Warranties prior to giving such
views.
1.6 References to recitals, clauses and schedules are references to
recitals and clauses of and schedules to this Agreement.
1.7 The headings and/or bold typeface used in this Agreement are inserted
for convenience only and shall not affect its construction or
interpretation.
1.8 The schedules form part of this Agreement.
1.9 Expressions in the singular shall include the plural and in the
masculine shall include the feminine and vice versa and references to
persons shall include corporations and vice versa.
1.10 References to any Law shall be construed as references to such Law as
amended or re-enacted or modified by any other Law (whether before or
after the date of this Agreement) and shall include any provisions of
which they are re-enactments (whether with or without modification)
and shall include subordinate legislation made under the relevant
statute; and in addition.
1.11 Expressions defined in ICTA 1988, XXXX 0000, XXXX 0000, XXXX 1997, the
GST Law or in the Companies Acts shall, wherever used in this
Agreement, have the meanings given to them in the relevant statute
(unless the context otherwise requires) and in the case of any
inconsistency the defined terms used in the Companies Acts shall
prevail.
2. CONDITIONS
2.1 Completion is subject to and conditional upon the following being
fulfilled by the Buyer or the Sellers (as the case may be) and
Completion will take place on the next Business Day following the
satisfaction of the following conditions:-
2.1.1 the delivery to the Buyer of the necessary consents and
approvals (regarding change of control - networks) in
relation to the agreement dated 21 August 2002 between the
Company (1) and One2One Personal Communications Limited
(TMobile) (2); and
2.1.2 the receipt of clearance in terms reasonably satisfactory to
the Sellers pursuant to an application made under ICTA 1988
section 707 and TGCA 1992 section 138; and
2.1.3 the Buyer being satisfied that there is no event of Force
Majeure.
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Subject to clause 2.6 if the conditions set out in sub-clauses 2.1.1
and 2.1.2 be satisfied (or waived in respect of clause 2.1.2), then
the Buyer will within two Business Days serve on the Committee
either:-
(a) a notice that a Force Majeure Event has arisen (a
"Force Majeure Notice"); or
(b) a notice that a Force Majeure Event has not arisen or
has been waived and that the Parties can proceed to
Completion (a "Notice to Complete").
Completion shall take place on the Business Day following the service
of a Notice to Complete.
If condition 2.1.1 has been satisfied or waived on execution and
delivery of this Agreement, the conditions in sub-clauses 2.1.2 and
2.1.3 shall be deemed to have been automatically and simultaneously
satisfied and the Parties shall proceed immediately to Completion and
none of the other provisions of this clause 2 shall apply.
2.2 In the case of sub-clauses 2.1.1 to 2.1.2, the Sellers shall use all
reasonable endeavours to procure that the conditions set out in
sub-clauses 2.1.1 and 2.1.2 above are fulfilled as soon as practicable
in any event not later than 30 days following the date of this
Agreement.
2.3 The Committee shall be entitled, at its sole discretion and without
giving any reason, to waive the condition in clause 2.1.2 by notice to
the Buyer in writing.
2.4 The Buyer shall be entitled at its sole discretion and without giving
any reason, to waive any conditions (other than the condition in
clause 2.1.2) by notice in writing to the Committee.
2.5 If and to the extent there is a Force Majeure:-
2.5.1 the Buyer shall have the right to:-
(a) waive condition 2.1.3; or
(b) rescind the Agreement, in which case the provisions of
clause 2.6.2 shall apply.
2.6 If any of such conditions have not been fulfilled or waived by the
Buyer or the Committee (as the case may be) on or before 30 days after
the date of this Agreement or such later date as may be agreed in
writing between the Committee and the Buyer, this Agreement shall:-
2.6.1 on such date, lapse and be discharged; and
2.6.2 provided that the relevant Party shall not be in breach of
its obligations under this clause 2 none of the Parties
shall have any rights against any other Party after the date
on which this Agreement lapses, except for the
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provisions of clauses 18, 19, 20 and 21 which will remain
binding upon the Parties notwithstanding that this Agreement
has lapsed.
3. SALE AND PURCHASE OF SHARES
3.1 Subject to the terms of this Agreement, each of the Sellers shall,
with full title guarantee, sell or procure the sale of and the Buyer
shall purchase the Shares free from all Encumbrances and third party
rights or claims and with all attached or accrued rights as at the
Effective Date and after such date for the Purchase Price.
3.2 The Buyer shall be entitled to all dividends and distributions
declared, paid or made in respect of the Shares from and after the
Effective Date.
3.3 Each of the Sellers waives any rights of pre-emption conferred on him
by the Articles of Association of the Company, by agreement, by
statute or otherwise over those of the Shares agreed to be sold by the
other Sellers.
3.4 The Buyer shall not be obliged to complete the purchase of any of the
Shares unless the purchase of all of the Shares is completed
simultaneously.
3.5 The benefits and burdens under this Agreement shall transfer to the
Parties as at the Effective Date except as otherwise expressly
provided in this Agreement.
3.6 Except as contemplated by or referred to in this Agreement, the
Sellers acknowledge to the Buyer that since the Effective Date:-
3.6.1 the Company and the Subsidiary have been operated in the
ordinary course of business;
3.6.2 no distribution of capital or income have been made by the
Company, or the Subsidiary;
3.6.3 no share or loan capital (except in the case of the
Permitted Loans) or sum in the nature of borrowings or
leasing liability (including interest) have been repaid; and
3.6.4 no sum has been paid to any Group Company other than in
respect of trading in the ordinary course of business.
4. BUYER WARRANTIES
Subject to the limitation of the liability of the Buyer as set out in
clause 9(B), the Buyer warrants to each of the Sellers as follows:-
4.1.1 Organization. The Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws on the
State of Delaware, and has all requisite corporate power,
authority and capacity to execute and deliver this Agreement
and the Promissory Notes and all other agreements related to
this Agreement to which the Buyer is a party (collectively
"Related Agreements"), to perform its obligations hereunder
and thereunder, and to consummate the transactions
contemplated by this Agreement and such Related Agreements.
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4.1.2 Execution and Delivery. The execution, delivery and performance of
this Agreement and the Related Agreements by Buyer and the
consummation of the transactions contemplated by this Agreement and
such Related Agreements, have been duly authorized and approved by the
board of directors of Buyer, and no other action on the part of Buyer
is necessary to authorize the execution, delivery and performance of
this Agreement and the Related Agreements by Buyer and the
consummation of the transactions contemplated by this Agreement and
such Related Agreements. This Agreement has been duly and validly
executed and delivered by Buyer and constitutes, and upon the
execution and delivery by Buyer of the Related Agreements, the Related
Agreements will constitute, legal, valid and binding obligations of
Buyer, enforceable against Buyer in accordance with their terms,
assuming valid authorization, execution and delivery of this Agreement
and the Related Agreements by the other parties thereto, except as
enforceability may be limited by bankruptcy and similar laws and
general principles of equity.
4.1.3 No Conflicts. The execution and delivery by Buyer of this Agreement
and the Related Agreements, the performance of its obligations under
this Agreement and such Related Agreements and the consummation of the
transactions contemplated by this Agreement and such Related
Agreements do not and will not:-
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of Buyer's certificate
of incorporation or bylaws;
(b) conflict with or result in a violation or breach of any term
or provision of any law, regulation, order or governmental
regulation applicable to Buyer or any of its respective
assets or properties, except for such conflict or breach
which could not reasonably be expected to have a material
adverse effect on Buyer; or
(c) conflict with or result in a violation or breach of,
constitute (with or without notice or lapse of time or both)
a default under, require Buyer to obtain any consent,
approval or action of, make any filing with or give any
notice to any person as a result or under the terms of,
result in or give to any person any right of termination,
cancellation, acceleration or modification in or with
respect to, result in or give to any person any additional
rights or entitlement to increased, additional, accelerated
or guaranteed payments under, or result in the creation or
imposition of any lien upon Buyer or any of its assets or
properties under any contract, licence or other agreement to
which Buyer is a party or by which any of Buyer's assets or
properties is bound, except for such conflict, violation,
breach or default which could not reasonably be expected to
have a material adverse effect on Buyer.
4.1.4 Capital Structure. The issued and outstanding capital stock of Buyer
as of February, 2003 consists of shares of common stock par value
$0.02 ("Common Stock"). All the outstanding shares of Common Stock
have
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been duly and validly authorised and issued and are fully paid
and non-assessable.
4.1.5 Euronet Shares. The Euronet Shares when issued at Completion, and the
Common Stock issuable pursuant to conversion or redemption of the
Convertible Notes when issued upon conversion, shall be validly
issued, fully paid and non-assessable, and free of any pre-emptive or
similar rights.
4.1.6 Governmental Approvals and Filings. No consent, approval or action of,
filing with or notice to any governmental or regulatory authority on
the part of Buyer is required in connection with the execution,
delivery and performance of this Agreement or any of the Related
Agreements or the consummation of the transactions contemplated by
this Agreement and such Related Agreements, except for such consent,
approval, action, filing or notice which could not reasonably be
expected to have a material adverse effect on Buyer.
4.1.7 SEC Filings. Since January 1, 2001 (i) Buyer has made all filings
required to be made by the Securities Act and the Exchange Act, (ii)
all filings by Buyer with the SEC, at the time filed (in the case of
documents filed pursuant to the Exchange Act) or when declared
effective by the SEC (in the case of registration statements filed
under the Securities Act) complied in all material respects with the
applicable requirements of the Securities Act and the Exchange Act,
(iii) no such filing, at the time described above, contained any
untrue statement of a material fact or omitted to state any material
fact required to be stated in such filing in order to make the
statements contained in such filing, in the light of the circumstances
under which they were made, not misleading, and (iv) all financial
statements contained or incorporated by reference in such filing
complied as to form when filed in all material respects with the rules
and regulations of the SEC, were prepared in accordance with GAAP
(except (a) as may be indicated in the notes in such filing or (b) in
the case of unaudited financial statements, as permitted by the rules
and regulations of the SEC), and fairly presented the financial
condition and results of operations of Buyer at and as of the
respective dates and the consolidated results of its operations and
changes in cash flows for the periods indicated (subject in the case
of unaudited statements, to normal year-end audit adjustments and any
other adjustments described in such financial statements).
4.1.8 Financial Statements. True, correct and complete copies of the balance
sheet of Buyer as of December 31, 2002 and the statement of income of
Buyer for the annual period ended December 31, 2002 and unaudited
quarterly financials dated December 31, 2002 (collectively, the "Buyer
Financial Statements") have been delivered to Sellers. The Buyer
Financial Statements reflect and present fairly the assets,
liabilities, transactions and financial condition of Buyer as of their
indicated dates, and the results of its operations, for the indicated
periods. Except for liabilities (i) reflected in such Buyer Financial
Statements or in the notes of such financial statements, (ii) incurred
in the ordinary course of business
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consistent with past practice since the date of the most recent
audited financial statements, or (iii) incurred in connection with
this Agreement or the transactions contemplated in this Agreement,
neither Buyer nor any of its subsidiaries has any liabilities or
obligations (whether absolute, accrued, contingent or, otherwise) of
any nature which, individually or in the aggregate, could reasonably
be expected to have a material adverse effect on Buyer. There has not
been any material change by Buyer in its accounting methods,
principles or practices, except as required by changes in GAAP, or any
other change provided such other change could not reasonably be
expected to have a material adverse effect on Buyer.
4.1.9 Compliance with Applicable Laws. Buyer is in compliance in all
material respects with all applicable laws, except where failure to
comply would not have a material adverse effect on the financial
condition of Buyer, and no notice, citation, summons or order has been
received, and, to the knowledge of Buyer, no complaint has been filed,
no penalty has been assessed and no investigation or review is pending
or threatened with respect to any alleged violation by Buyer of any
law.
4.1.10 LITIGATION.
(a) The Buyer is not a party to any suit, action, arbitration or
legal, administrative, governmental or other proceeding or
investigation pending or, to its knowledge threatened, which
reasonably could adversely affect or restrict its ability to
consummate the transactions contemplated by this Agreement
or the Related Agreements, or to perform its obligations
under this Agreement or the Related Agreements, or which
could reasonably be expected to have a material adverse
effect on Buyer.
(b) There is no judgment, order, writ, injunction or decree of
any court, arbitration tribunal or other governmental or
regulatory authority, domestic or foreign, to which Buyer is
subject which might adversely affect or restrict its ability
to consummate the transactions contemplated by this
Agreement and the Related Agreements, or to perform its
obligations under this Agreement or the Related Agreements,
or which could reasonably be expected to have a material
adverse effect on Buyer.
4.1.11 Full Disclosure. No warranty, or any information with respect to Buyer
contained in this Agreement, and no schedule or, document or
certificate delivered pursuant to the terms of this Agreement, taken
as a whole, contains an untrue statement of a material fact, or omits
to state a material fact required to be stated or necessary to make
the statements made, in the context in which made, not misleading.
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5. TITLE AND CAPACITY
5.1 Each of the Sellers agrees (for himself only) that:-
5.1.1 the Shares are legally and beneficially owned by him free of
all Encumbrances or interest in favour of, or claims made
by, or which could be made by, any other person;
5.1.2 he is entitled to sell or procure the sale of his full legal
and beneficial interest in the Shares to the Buyer on the
terms set out in this Agreement;
5.1.3 he taken all corporate (if relevant) and other actions
necessary to enable him to enter into and perform this
Agreement;
5.1.4 has secured all approvals and consents (governmental or
otherwise) required for the performance of the transactions
contemplated by this Agreement;
5.1.5 neither the execution or delivery of this Agreement by any
of the Sellers nor the transactions contemplated by this
Agreement is prohibited by, or violates any provision of and
will not result in a breach of (to the extent relevant) the
Memorandum or Articles of Association (or equivalent
constitutional documents) of any of the Sellers;
5.1.6 this Agreement constitutes and imposes valid, legal and
binding obligations of each Seller fully enforceable in
accordance with their terms; and
5.1.7 completion of the transactions contemplated by this
Agreement by the Sellers will not:-
(a) conflict with, result in the breach of, constitute a
default under, or accelerate performance under the
terms of any contract, agreement or deed to which any
of the Sellers may be bound or affected; or
(b) constitute a default or an event which, with the lapse
of time or action by a third party, could result in the
creation of any Encumbrance, equity, claim or
restriction on any of the Shares.
5.2 The Warrantors agree that the Shares constitute the entire issued and
allotted share capital of the Company.
6. PURCHASE PRICE
6.1 The Purchase Price payable for the Shares shall be the sum
of (pound)47,632,478 less the amount of the Adjustment as follows:-
6.1.1 (pound)24,218,048 (which includes the Deferred
Consideration) in cash (subject to clause 6.2 and Schedule
12);
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6.1.2 (pound)11,889,743 by the allotment and issue among the
Sellers of the Euronet Shares which will be issued and
allotted in accordance with the provisions of Schedule 11;
and
6.1.3 (pound)11,524,687 payable by the issue to the Sellers of a
combination of:-
(a) the Convertible Notes; and
(b) the Unsecured QCB Notes.
6.2 The Deferred Consideration shall be payable to the Sellers in cash in
accordance with the terms set out in schedule 12.
6.3 The Purchase Price shall be apportioned among the Sellers in
accordance with the Consideration Schedule.
6.4 The Management Shareholders agree that the Working Capital Value as at
the Effective Date and at Completion will not be less than the Target
Working Capital Value. If there is a breach of this provision by the
Management Shareholders then the provisions of Schedule 15 will apply
for the purposes of agreeing or determining the amount of the
Adjustment (if any) but the Management Shareholders shall have no
further or greater liability in respect of such breach.
7. OPTIONS
Each of the Option Holders agrees to the provisions of Schedule 18.
8. WARRANTIES
8.1 The Warrantors warrant to the Buyer:-
8.1.1 in relation to the Company;
8.1.2 as separate warranties in relation to the Subsidiary as if
the name of the Subsidiary (where the context so admits)
were substituted for references to the "Company"; and
8.1.3 as separate warranties in relation to the Associated
Corporation,
except for and to the extent of those disclosures Fairly Disclosed in
the Disclosure Letter, each of the statements set out in Schedule 7 (in
the case of the Company and the Subsidiary) and Schedule 8 (in the case
of the Associated Corporation) is true and accurate, and not
misleading.
8.2 Each statement in the Warranties shall be separate and independent and
except as expressly provided shall not be limited by reference to any
other sub-clause or anything in this Agreement or its Schedules. The
interpretation of any such statement shall not be restricted by
reference to or inference from any other such statement or by any
other provision of this Agreement, the Disclosure Letter or the Tax
Deed.
8.3 None of the information supplied by the Company or the Subsidiary
and/or the Associated Corporation or their professional advisers prior
to the date of this
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Agreement to the Sellers or their officers, employees, agents,
representatives or advisers in connection with the Warranties and the
contents of the Disclosure Letter, or otherwise in relation to the
business or affairs of the Company or the Subsidiary and/or Associated
Corporation, shall be deemed, a representation, warranty or guarantee
of its accuracy by the Company or of the Subsidiary or Associated
Corporation to the Sellers and the Sellers waive any claims against
the Company, the Subsidiary or Associated Corporation and their
officers, employees, agents, representatives or advisers which it
might otherwise have except in the case of fraud.
8.4 The rights and remedies of the Buyer in respect of the Warranties
shall not be affected by:-
8.4.1 Completion;
8.4.2 its knowledge of any information the Buyer may have received
or been given or have actual, implied or constructive notice
of prior to the signing of this Agreement (other than those
disclosures Fairly Disclosed in the Disclosure Letter); or
8.4.3 any event or matter whatsoever except where the Sellers have
received a specific and duly authorised written waiver or
release in relation to such event or matter.
8.5 Any payment made to the Buyer under this clause 8 shall be deemed to
be a reduction in the Purchase Price.
8.6 Mr Xxxxxx Xxxxxx has been working as a consultant of the Company and
the Sellers hereby agree to indemnify the Company against any claims
by Xx Xxxxxx that he is an employee of the Company.
9. (A) LIMITATION OF LIABILITY OF THE WARRANTORS
9.1(A) A claim under any Warranty (other than those relating to a Tax Claim)
(a "Claim") or a claim under the Tax Deed or the Warranties in section
(P) (Taxation) of Schedule 7 (Warranties) (a "Tax Claim") will be
subject to the following provisions of this clause.
9.2(A) The liability of the Warrantors in respect of a Claim or a Tax Claim
shall be joint and several and shall be limited in accordance with the
following provisions:-
9.2.1(A) the aggregate liability of the Warrantors for Claims or Tax
Claims (including, without limitation, under clause 8 and/or
Schedule 7 shall not exceed the following amounts:-
Xxxx Xxxxxxxxx Xxxxxxxx (pound)5,461,469
Xxxx Xxxxxxxx (pound)5,441.808
Xxxxxxx JohnTreliving Westlake (pound)1,366,810
Xxxx Xxxxxxx Xxxxxxxxxx (pound)3,923,096
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Xxx Xxxxxx & Associates Pty Ltd (pound) 909,165
Xxxxxxx Xxxx Xxxxxx (pound)3,923,096
Xxxxxx Xxxxxxxxx (pound)1,474,556
TOTAL (pound)22,500,000
but the liability of Xxx Xxxxxx & Associates Pty Ltd shall
only apply in respect of Claims or Tax Claims in respect of
matters related to the Subsidiary;
9.2.2(A) the Warrantors will not be required to make payment in
respect of Claims (but the Buyer shall be entitled to make
any Claims) unless the aggregate liability of the Warrantors
exceeds (pound)155,000 in which event the Buyer shall be
entitled to compensation for the entire amount of the Claims
and not just the excess over (pound)155,000;
9.2.3(A) the Buyer shall not be entitled to make any Claim or Tax
Claim (as the case may be) unless written notice of the
Claim or Tax Claim (as the case may be) has been given to
the Committee (stating reasonable particulars of its nature
and, so far as reasonably practicable, the amount claimed):-
(a) in the case of any Tax Claim within a period of 7 years
from the Completion Date; and
(b) in the case of any other Claim within a period 2 years
from the Completion Date;
9.2.4(A) (except for any Tax Claim) any Claim which has been made
against the Warrantors and which has not been previously
satisfied, settled or withdrawn shall be deemed to have been
withdrawn and shall become fully barred and unenforceable on
the expiry of the period of 6 months commencing on the date
on which notice of the relevant Claim was given to the
Committee in accordance with clause 9.2.2(A), unless
proceedings in respect of the relevant Claim shall have been
issued and served on the Committee;
9.2.5(A) if:-
(a) the Warrantor pays to the Buyer any amount in respect
of a breach of any of the Warranties; and
(b) the Buyer subsequently receives or recovers from a
third party a sum which is referable to that breach,
the Buyer shall promptly inform the Committee in writing of such
occurrence and repay to the Warrantors the net amount so received
or recovered (less the costs of recovery and Taxation), provided
that the amount so paid shall not exceed the amount previously
paid to the Buyer by the relevant Warrantors in respect of that
breach.
12
9.3(A) None of the limitations on the liability of the Warrantors set out
in clause 9.1(A) shall apply to a Warrantor regarding any Claim or Tax
Claim if such claim involves any fraud or wilful concealment on the
part of the relevant Warrantor.
9.4(A) The Buyer confirms to the Warrantors that based on the information
contained within the Disclosure Letter and the Buyer's due diligence
reports none of Mr J Xxxxxx, Xx X Xxxxxx, Mr R Xxxxxx or Mr S Xxxxxxx
at the time of execution of this Agreement has actual knowledge of a
Claim which can successfully be made against the Warrantors following
execution of this Agreement.
9.5(A) The Warrantors shall not be liable in respect of any breach of the
Warranties and/or under the Tax Deed:-
9.5.1(A) if such Claim would not have arisen but for a change in law
or practice or any withdrawal of any extra-statutory
concession by a tax authority or any change in accounting
practices, bases or principles after the date of Completion,
where such change or withdrawal purports to be effective
retrospectively and which was not announced before
Completion;
9.5.2(A) to the extent of any specific provision, or specific
allowance is made for the specific subject matter of such
breach in the Completion Accounts;
9.5.3(A) in respect of any liability where the liability would not
have arisen or occurred but for a voluntary act, omission or
transaction done, made or carried out by the Buyer or any of
its directors, employees or agents after the Completion
Date, otherwise than:-
(a) as required by Law; or
(b) pursuant to a legally binding commitment created on or
before the Completion Date; or
(c) in the ordinary course of business; or
(d) as a result of a breach of Warranty or if the relevant
matter has not been Fairly Disclosed by the Warrantors;
or
(e) at the written request of Warrantors; or
(f) as a mandatory requirement of GAAP in the UK or
Australia, as the case may be; and
9.5.4(A) if, in respect of any matter which would give rise to a
breach of the Warranties the Buyer has recovered under any
policy of insurance an amount sufficient to discharge the
sums which are the subject of the relevant Claim.
9.6(A) There shall be no liability to make payment in respect of Claims
(but such liability will subsist) in respect of a liability which is
contingent until such contingency has crystallised following which the
liability will become an actual liability and will be due and payable.
13
9.7(A) The Buyer shall not be entitled to recover damages or otherwise obtain
reimbursement or restitution more than once in respect of the same
cause of action relating to any individual breach of the Warranties or
any claim under the Tax Deed or the provisions of Schedule 18.
9.8(A) The Committee shall be entitled to reasonably require the Buyer
(or as the case may be the Company) at the cost of the Warrantors to
take all such reasonable steps or proceedings as far as is reasonably
practicable in order to avoid, dispute, resist, mitigate, compromise,
defend or appeal against any claim by a third party against it which
will or may give rise to a Claim and the Buyer shall:-
9.8.1(A) act in accordance with such reasonable requirements subject
to the Buyer being properly indemnified in advance by cash
collateral by the Warrantors to the reasonable satisfaction
of the Buyer against all reasonable costs and expenses,
(both of itself and all third parties), reasonably incurred
or anticipated in connection with the taking of steps or
proceedings and such cash collateral being promptly and
properly augmented to the reasonable satisfaction of the
Buyer as such matters proceed;
9.8.2(A) for the purpose of enabling the Warrantors to avoid,
dispute, resist, mitigate, compromise, defend or appeal
against any relevant third party claim or to decide what
steps or proceedings should be taken in order to do so, the
Buyer shall, or shall procure that the Company shall not
make any admission of liability, agreement or compromise
with any person, body or authority without the prior
agreement of the Warrantors which shall not be unreasonably
withheld or delayed;
9.8.3(A) give the Warrantors (or their duly authorised
representatives) reasonable access to the personnel and any
premises, assets, accounts, documents and records which are
relevant to such claim and are within the power, possession
or control of the Buyer to enable the Warrantors (or their
duly authorised representatives) to investigate the claim
and to examine and take copies or photographs of the same at
the Warrantors' expense; and
it shall be a requirement for the obligations of the Buyer
set out above that the Warrantors shall:-
(a) by cash collateral provide to the Buyer, and the
Company, all costs and expenses reasonably and properly
incurred or anticipated by them in complying with their
obligations under this clause 9.8(A); and
(b) consent to use counsel and legal advisers nominated by
the Buyer such consent not to be unreasonably withheld.
9.9(A) The Buyer shall comply with its common law duty to mitigate losses in
respect of the subject matter of:-
9.9.1 (A) any Claim; or
14
9.9.2(A) a Tax Claim under the Warranties in Part (P) in Schedule 7
provided that such mitigation does not prejudice the Buyer's
rights under the Tax Deed.
9.10(A) Each of the Warranties is given subject to the matters Fairly
Disclosed in the Disclosure Letter.
9.11(A) All warranties on the part of the Sellers whether express or implied,
statutory or otherwise are hereby excluded except to the extent that
they are provided for in this Agreement.
The Buyer acknowledges to the Sellers that it has not relied on any
representations or Warranties other than those incorporated in this
Agreement and the Disclosure Letter.
Nothing contained in this clause shall have the effect of excluding
any warranties on the part of the Sellers nor the Purchaser's reliance
on them where such warranty was made fraudulently or there has been
wilful concealment of any matter or thing.
9. (B) LIMITATION OF LIABILITY OF THE BUYER
9.1(B) A claim under any Buyer Warranty (a "Sellers' Claim") will be subject
to the following provisions of this clause.
9.2(B) The liability of the Buyer in respect of a Sellers' Claim shall be
limited in accordance with the following provisions:-
9.2.1(B) the aggregate liability of the Buyer of all Sellers'
Claims shall be limited to(pound)22,500,000;
9.2.2(B) the Buyer will not be required to make payment in
respect of a Sellers' Claim (but the Committee shall be
entitled to make any Sellers' Claim) unless the aggregate
liability of the Buyer exceeds (pound)155,000 in which event
the Committee (on behalf of the Sellers) shall be entitled
to compensation for the entire amount of the Sellers' Claims
and not just the excess over (pound)155,000;
9.2.3(B) the Committee on behalf of the Sellers shall not be
entitled to make any Sellers' Claim unless written notice of
the Sellers' Claim has been given to the Buyer by the
Committee (stating reasonable particulars of its nature and,
so far as reasonably practicable, the amount claimed);
9.2.4(B) any Sellers' Claim which has been made against the Buyer
and which has not been previously satisfied, settled or
withdrawn shall be deemed to have been withdrawn and shall
become fully barred and unenforceable on the expiry of the
period of 6 months commencing on the date on which notice of
the relevant Sellers' Claim was given to the Buyer in
accordance with clause 9.2.2(B), unless proceedings in
respect of the relevant Sellers' Claim shall have been
issued and served on the Buyer; and
9.2.5(B) if:-
15
(a) the Buyer pays to the Sellers any amount in respect of
a breach of any of the Buyer Warranties; and
(b) the Sellers subsequently receive or recover from a
third party a sum which is referable to that breach,
the Committee shall promptly inform the Buyer in writing of
such occurrence and repay to the Buyer the net amount so
received or recovered (less the costs of recovery and
Taxation), provided that the amount so paid shall not exceed
the amount previously paid to the Sellers by the Buyer in
respect of that breach.
9.3(B) None of the limitations on the liability of the Buyer set out in
clause 9.2(B) shall apply to the Buyer regarding any Sellers' Claim if
such claim involves any fraud or wilful concealment on the part of the
Buyer.
9.4(B) The Buyer shall not be liable in respect of any breach of the Buyer
Warranties:-
9.4.1(B) if such Sellers' Claim would not have arisen but for a
change in Law or practice or any withdrawal of any
extra-statutory concession by a tax authority or any change
in accounting practices, bases or principles after the date
of Completion, where such change or withdrawal purports to
be effective retrospectively and which was not announced
before Completion;
9.4.2(B) in respect of any liability where the liability would not
have arisen or occurred but for a voluntary act, omission or
transaction done, made or carried out by the Sellers or any
of its directors, employees or agents after the Completion
Date, otherwise than:-
(a) as required by Law; or
(b) pursuant to a legally binding commitment created on or
before the Completion Date; or
(c) in the ordinary course of business; or
(d) as a result of a breach of Buyer Warranty; or
(e) at the written request of Buyer; or
(f) as a mandatory requirement of GAAP in the US; and
9.4.3(B) if, in respect of any matter which would give rise to a
breach of the Buyer Warranties the Sellers have recovered
under any policy of insurance an amount sufficient to
discharge the sums which are the subject of the relevant
Sellers' Claim.
9.5(B) There shall be no liability to make payment in respect of Sellers'
Claims (but such liability will subsist) in respect of a liability
which is contingent until such contingency has crystallised following
which the liability will become an actual liability and will be due
and payable.
16
9.6(B) The Sellers shall not be entitled to recover damages or otherwise
obtain reimbursement or restitution more than once in respect of the
same cause of action relating to any individual breach of the Buyer
Warranties.
9.7(B) The Buyer shall be entitled to reasonably require the Committee at the
cost of the Buyer to take all such reasonable steps or proceedings as
far as is reasonably practicable in order to avoid, dispute, resist,
mitigate, compromise, defend or appeal against any claim by a third
party against it which will or may give rise to a Sellers' Claim and
the Sellers shall:-
9.7.1(B) act in accordance with such reasonable requirements subject
to the Sellers being properly indemnified in advance by cash
collateral by the Buyer to the reasonable satisfaction of
the Sellers against all reasonable costs and expenses, (both
of itself and all third parties), reasonably incurred or
anticipated in connection with the taking of steps or
proceedings and such cash collateral being promptly and
properly augmented to the reasonable satisfaction of the
Sellers as such matters proceed;
9.7.2(B) for the purpose of enabling the Buyer to avoid, dispute,
resist, mitigate, compromise, defend or appeal against any
relevant third party claim or to decide what steps or
proceedings should be taken in order to do so, the Sellers
shall not make any admission of liability, agreement or
compromise with any person, body or authority without the
prior agreement of the Buyer which shall not be unreasonably
withheld or delayed;
9.7.3(B) give the Buyer (or their duly authorised representatives)
reasonable access to the personnel and any premises, assets,
accounts, documents and records which are relevant to such
claim and are within the power, possession or control of the
Sellers to enable the Buyer (or their duly authorised
representatives) to investigate the claim and to examine and
take copies or photographs of the same at the Buyers'
expense; and
it shall be a requirement for the obligations of the Sellers
set out above that the Buyer shall:-
(a) by cash collateral provide to the Sellers all costs and
expenses reasonably and properly incurred or
anticipated by it in complying with its obligations
under this clause 9.7(B); and
(b) consent to use counsel and legal advisers nominated by
the Sellers such consent not to be unreasonably
withheld as delayed.
9.8(B) The Sellers shall comply with their common law duty to
mitigate losses in respect of the subject matter of any
Sellers' Claim.
9.9(B) All warranties on the part of the Buyer whether express or
implied, statutory or otherwise are hereby excluded except
to the extent that they are provided for in this Agreement.
17
The Sellers acknowledge to the Buyer that they have not relied on any
representations or Buyer Warranties other than those incorporated in
this Agreement.
Nothing contained in this clause 9(B) shall have the effect of
excluding any warranties on the part of the Buyer nor the Seller's
reliance on them where such warranty was made fraudulently or there
has been wilful concealment of any matter or thing.
10. COVENANTS UP TO COMPLETION
10.1 The Sellers covenant with and undertake to the Buyer that neither the
Company nor the Subsidiary has, since the Effective Date, nor shall
either of them at any time prior to Completion without the prior
consent in writing of the Buyer, such consent not to be unreasonably
withheld:-
10.1.1 increase or reduce its authorised or issued share capital or
convert, sub-divide or consolidate any of its shares;
10.1.2 allot or issue (or agree to allot or issue) any shares save
as contemplated in or by this Agreement or grant (or agree
to grant) any option in respect of any shares or loan
capital;
10.1.3 amend or alter its Memorandum or Articles of Association
save as contemplated in or by this Agreement;
10.1.4 declare or pay any dividend or make any other distribution
of its assets or profits to any shareholder or other person
or repay loans to it made by any shareholder or any other
person except for the Permitted Loans;
10.1.5 make any change in its business as carried on as at the date
of this Agreement;
10.1.6 make any material adverse change to its trade connections
except in connection with waivers of change of control
provisions contemplated in sub-clause 2.1.1;
10.1.7 otherwise than in the usual course of trading, acquire or
dispose of (or agree to acquire or dispose of) any asset
exceeding (pound)10,000 in value or assets aggregating more
than (pound)10,000 in value;
10.1.8 dispose of or agree to dispose of or grant any option in
respect of any asset or assets except in the ordinary course
of trading;
10.1.9 dispose of or agree to dispose of or grant any option in
respect of its business or any part of its business;
10.1.10 assign or otherwise dispose of any of its book debts;
10.1.11 remove any asset from the Properties except in the usual
course of trading;
10.1.12 borrow any money (except from its bankers drawn against
facilities now existing and in any event not exceeding an
aggregate of (pound)100,000 in total)
18
or make payments out of or drawings on its bank accounts
other than in accordance with its normal practice during the
period of 12 months prior to the date of this Agreement;
10.1.13 grant or issue or agree to grant or issue any mortgage,
charge, debenture or security for money or redeem or agree
to redeem any such mortgage, charge, debenture or security
or give or agree to give any guarantee or indemnity;
10.1.14 enter into any contract or commitment other than in the
usual course of its business;
10.1.15 modify or agree to terminate any Material Contract except in
connection with waivers of change of control provisions
contemplated in sub-clause 2.1.1;
10.1.16 enter into any unusual or abnormal contract or commitment
or:-
(a) grant or agree to grant or enter into any lease or
third party right in respect of the Properties or any
of them or assign or agree to assign or otherwise
dispose of the same; or
(b) enter into any lease on any property; or
(c) make any loan; or
(d) enter into any material leasing, hire purchase or other
agreement or arrangements for payment on deferred terms
in any case in excess of (pound)5,000;
10.1.17 make any change in the terms and conditions of employment
(including, without limitation, any enhanced salaries or
benefits) or pensions benefits of any of its Directors or
employees or employ or terminate (other than for good cause)
the employment of any person;
10.1.18 appoint or employ any new managerial or senior skilled
employee or consultant or amend or terminate the terms or
contracts of employment of any of its present employees or
consultants;
10.1.19 institute, settle or agree to settle any legal proceedings
relating to its business where the amount of the claim in
question is in excess of (pound)10,000 (except for debt
collection up to an aggregate amount of (pound)10,000 in
respect of the Company and the Subsidiary taken together in
the ordinary course of its business);
10.1.20 permit or suffer any of its insurances to lapse or do
anything which would make any policy of insurance void or
voidable;
10.1.21 incur any liabilities between itself and any of the Sellers
or any person connected with any of the Sellers except the
payment of remuneration in the usual course of trading and
at the rates current prior to the date of this Agreement;
and/or
19
10.1.22 in any other way depart from the usual course of its
day-to-day business either as regards the nature, scope or
the manner of conducting the same or do or suffer anything
which would cause or contribute to its financial position
being rendered materially less favourable than as at the
date of this Agreement.
10.2 Pending Completion the Sellers will procure that the Buyer and its
agents and representatives are given reasonable access to the
Properties and to the books and to the records of the Company, the
Subsidiary and the Associated Corporation and the Sellers shall upon
request furnish such information regarding the businesses and affairs
of the Company and the Subsidiary as the Buyer or its agents or
representatives may reasonably require.
11. UNITED STATES SECURITIES ACT REPRESENTATIONS BY SELLERS
11.1 Each of the Sellers in relation to the Euronet Shares and the
Promissory Notes agrees, represents, warrants and acknowledges the
matters set out in Schedule 17.
12. COMPLETION
12.1 Completion of the sale and purchase of the Shares shall take place at
the offices of the Buyer's Solicitors immediately following execution
of this Agreement when:-
12.1.1 the Sellers will:-
(a) deliver to the Buyer those items set out in Schedule 9;
(b) procure that a board meeting of each of the Company and
the Subsidiary shall be held at which:-
(i) such persons as the Buyer may nominate shall be
appointed as Directors and the Secretary of the
Company and the Subsidiary;
(ii) the Service Agreements referred to in
sub-clause 12.1.2 below shall be authorised;
(iii) the transfers of the Shares, shall be approved
for registration, subject to stamping;
(iv) the Company shall authorise and approve the
repayment of an aggregate of (pound)776,463.84
plus interest accrued to date being the
Permitted Loans to the people listed below in
the amounts set against their names,
representing loans made by them to the
Company:-
PRINCIPAL LOAN
NAME AMOUNTS ((POUND))
------------------- -----------------
Xxxxxxx Xxxx Xxxxxx 136,617.96
20
PRINCIPAL LOAN
NAME AMOUNTS ((POUND))
----------------------- -----------------
Xxxx Xxxxxxxx 249,367.96
Xxxx X X Xxxxxxxxxx 136,617.96
Xxxx Xxxxxxxxx Xxxxxxxx 231,478.46
Xxxxx Xxxxxxxx 18,596.00
Xxxxxxx Xxxxxx Xxxxx 756.00
Xxxxx XxXxxxxx 3,029.50
TOTAL 776,463.84
12.1.2 except in the case of Xxx Xxxxxx who shall enter into a
Service Agreement with the Subsidiary only, the Company
shall enter into Service Agreements with:-
(a) Xxxx Xxxxxxxx;
(b) Xxxx Xxxxxxxx; and
(c) Xxxxxxx Xxxxxxxx,
in the Agreed Form and such other service agreements with
additional employees as may be decided by the Buyer;
12.1.3 the Company shall enter into employment contracts with:-
(a) Xxxxxxxx Xxxxxxx;
(b) Xxxxxx Xxxxxx; and
(c) Xxxxx Xxxxxxxxx,
in the Agreed Form and such other employment contracts with
additional employees as may be decided by the Buyer.
12.2 Following the compliance in full with the provisions of sub-clause
12.1.1 and Schedule 9 the Buyer shall:-
12.2.1 send by way of telegraphic transfer to the client account of
the Seller's Solicitors (whose receipt shall be full
discharge for the Buyer) the sum of (pound)18,854,523
(eighteen million eight hundred and fifty four thousand five
hundred and twenty three pounds sterling) less the amounts
detailed in Schedule 18 as regards the relevant Optionholder
in part payment of the Purchase Price;
21
12.2.2 pay the Deferred Consideration to the Sellers in accordance
with the terms set out in schedule 12 and subject to the
maximum amounts detailed in column (8) of the Consideration
Schedule;
12.2.3 allot and issue to the Sellers in due proportion the Euronet
Shares in accordance with the provisions of Schedule 11;
12.2.4 allot and issue to the Sellers in due proportion the:-
(a) Convertible Notes; and
(b) Unsecured Notes,
and deliver to the Sellers' Solicitors (whose receipt shall
be full discharge) the appropriate certificates;
12.2.5 deliver to the Sellers' Solicitors a counterpart of the Tax
Deed duly executed by the Buyer; and
12.2.6 deliver to the Sellers at Completion true and complete
copies of all resolutions of its board of directors by which
the execution, delivery and performance of this Agreement
and the Related Agreements and consummation of the
transactions contemplated by this Agreement and such Related
Agreements were authorized, certified by the Secretary of
Buyer as of the Completion Date.
12.3 The Committee shall be entitled to:-
12.3.1 designate one person in their sole discretion, as identified
in writing no later than 1 April, 2003 (the "Director
Designee"), for nomination as a Class III director to the
Buyer's Board of Directors by the holders of Euronet Shares,
at the Buyer's next annual stockholder meeting (the
"Stockholder Meeting"). The Buyer agrees to increase the
size of Buyer's Board of Directors by creating one
additional Class III director seat and to nominate and
recommend for approval at the Stockholder Meeting the
Director Designee to such Class III director seat; and
12.3.2 designate one person who is a Management Shareholder and who
is an employee of the Company or the Buyer (the "Observer
Designee") in their sole discretion, as identified in
writing, to attend, as a representative of the Management
Shareholders and for a period (the "Observation Period")
commencing immediately after the Completion and ending three
years after the Completion Date, all meetings of the Buyer's
Board of Directors (but not committees, sub-committees or
special committees of the Buyer's Board of Directors) in a
non-voting observer capacity. During the Observation Period,
the Buyer shall give the Observer Designee copies of all
notices, minutes, consents, and other materials that it
provides to its directors; provided that:-
(a) the Observer Designee shall agree to hold in confidence
and trust and to act in a fiduciary manner with respect
to all information so
22
provided, and shall take proper and reasonable steps to
maintain the confidentiality of any price sensitive
information affecting the Buyer's securities; and
(b) the Buyer reserves the right to withhold any
information and to exclude the Observer Designee from
any meeting or any part of any meeting:-
(i) access to such information or attendance at
such meeting could adversely affect the
attorney-client privilege between the Buyer and
its counsel; and
(ii) the Observer Designee becomes associated or
affiliated with a competitor of the Buyer.
13. RELEASE OF GUARANTEES AND INDEMNITIES
13.1 The Sellers will:-
13.1.1 procure the release at or by Completion of the Company and
the Subsidiary from all guarantees, indemnities,
undertakings and obligations given by any of them in respect
of any obligation or liability of the Sellers or any person
connected with any of the Sellers; and
13.1.2 on an after-Tax basis indemnify and hold harmless the
Company the Subsidiary and the Buyer from and against all
and any actual or contingent liabilities which the Company
or the Subsidiary or the Buyer may at any time incur in
relation to any such guarantee, indemnity, undertaking or
other obligation.
13.2 The Buyer will use all reasonable endeavours to procure the release as
soon as practicable after Completion of the Sellers from all
guarantees, indemnities, undertakings and obligations given by them in
respect of any obligation or liability of the Company, or the
Subsidiary and of which full particulars are contained in the
Disclosure Letter.
14. DEFERRED CONSIDERATION PROTECTION
14.1 The following provisions of this clause 14 will apply during the
period up to the payment of the Deferred Consideration in full or the
date 2 years from the date of Completion, whichever is the earlier
(the "Relevant Period").
14.2 Subject to any Adjustment in the Purchase Price in accordance with the
terms of this Agreement, the Buyer acknowledges and agrees that the
Sellers are entitled to payment of the Deferred Consideration on the
basis that the Sellers acknowledge and agree that the Buyer, in order
to fulfil its obligation to make the Deferred Consideration payments,
must be free to operate the business of the Company in such manner as
it deems commercially appropriate.
14.3 The Buyer agrees that during the Relevant Period, and in so far as it
is within its power, that it will:-
23
14.3.1 ensure that the business of the Company and the Subsidiary
is run in a proper and commercial manner;
14.3.2 act in a manner so as not to artificially prevent the
ability of the Buyer to make Deferred Consideration payments
to the Sellers in accordance with this Agreement;
14.3.3 ensure that no management charges, service charges or other
like costs or expenses shall be paid by the Company or the
Subsidiary to the Buyer or any of the Buyer's Group other
than for services the cost of which does not exceed that
currently payable by the Company or the Subsidiary for such
services as agreed by the Board of Directors of the Company
following an affirmative vote supported by any two of Xxxx
Xxxxxxxx, Xxxx Xxxxxxxx or Xxxxxxx Xxxxxxxx;
14.3.4 ensure that Xxxx Xxxxxxxx, Xxxx Xxxxxxxx and Xxxxxxx
Xxxxxxxx shall remain as executive directors of the Company
during the Relevant Period and the Buyer undertakes not to
remove them from office whether under Section 303 of the
Companies Xxx 0000 or otherwise, without prejudice to any
right of the Buyer acting through the board summarily to
dismiss an executive director for reasons provided for in
the relevant Service Agreement;
14.3.5 in order to protect the interests of the Sellers during the
Relevant Period, the Buyer shall take such steps as may be
necessary to ensure that, save with the written consent of
the Committee (which shall not unreasonably be withheld):-
(a) neither the Company nor the Subsidiary disposes of or
transfers all or any material part of its business to
any other person;
(b) the ownership of the majority of the shares:-
(i) in the Company; and
(ii) in the Subsidiary
continues to be held by the Buyer (or a company which
is and continues to be a wholly-owned subsidiary of the
Buyer) and that neither the Company nor the Subsidiary
is wound up or put into receivership or administration
or other similar process;
(c) the Company is run as a stand alone business unit and
that no business is diverted away from the Company or
the Subsidiary with the objective of artificially
depressing the gross income of the Company;
(d) no steps are taken intended only to diminish the gross
income of the Company or the Subsidiary in the absence
of a bona fide commercial reason not inconsistent with
sub-clause 14.3.5(c) above; and
24
(e) the same policies relating to recognition of revenue
will be maintained by the Company and the Subsidiary as
were previously applied in the preparation of the
Audited Accounts.
14.3.6 not undertake any actions which are calculated to cause the
Company to be unable to pay its debts as they fall due.
Provided always that nothing set out in this clause 14 shall restrict or prevent
the Buyer from:-
(1) effecting payments from the Company and/or the Subsidiary for the
purpose of paying off the Deferred Consideration or sums payable in
respect of the Promissory Notes; and/or
(2) carrying out a group reorganisation under which e-pay Australia
remains a wholly owned subsidiary within the Buyer's group provided
that following such reorganisation the income attributable to e-pay
Australia continues to be consolidated with that of the Company.
15. NON-COMPETITION
15.1 For the purposes of this Agreement, this clause 15 shall apply to
matters relating to each Group Company and the Associated Corporation
only.
15.2 To ensure that the Buyer receives the full benefit of the goodwill of
the business of the Company, the Subsidiary and the Associated
Corporation (as applicable), each of the Management Shareholders
covenants irrevocably and unconditionally with the Buyer for the
Period of Restraint that except as otherwise specifically agreed in
writing with the Buyer:-
15.2.1 he will not:-
(a) directly or indirectly in any capacity whatsoever
(whether solely or jointly) with, any other person
whether corporate or unincorporate or otherwise
howsoever (whether for payment or not) carry on or be
engaged in or concerned in or interested in (directly
or indirectly and whether for payment or not) in the
Restricted Business;
(b) in connection with the Restricted Business, accept
business from, deal with or perform services for or
canvass, entice away, or solicit any person who is or
was within a period of 12 months prior to the date of
this Agreement, a customer, client, or Prospective
Client of any Group Company or the Associated
Corporation;
15.2.2 he will keep confidential and not disclose or make use of in
connection with Restricted Business any financial or other
confidential information or other know-how relating to any
Group Company or the Associated Corporation including, but
not limited, to any such information about current or future
affairs or plans or about customers/clients or Prospective
Clients;
25
15.2.3 he will not directly or indirectly induce or seek to induce
away from any Group Company or the Associated Corporation
any directors or senior employees as are engaged by any
Group Company or the Associated Corporation on the date of
this Agreement;
15.2.4 he will not directly or indirectly own beneficially or
otherwise or be interested in the share capital of any
company engaged in the Restricted Business;
15.2.5 he will not use and he will not procure that any other
person directly or indirectly at any time after the
Completion Date uses the name e-pay or any name likely to be
confused with such name in the minds of members of the
public for the purposes of a business similar to or
competing with the business of any Group Company or the
Associated Corporation whether by using such name as part of
a corporate name or otherwise;
15.2.6 except as required by Law, he will not at any time do or say
anything harmful to the reputation of any Group Company or
the Associated Corporation or which leads or may lead any
person, firm or company to cease to do business with any
Group Company or the Associated Corporation on substantially
equivalent terms to those previously offered or not to
engage in business with the Company or any Group Company or
the Associated Corporation.
PROVIDED THAT (but except in relation to its Restricted Business)
nothing contained in this clause 15 shall prevent the Seller from at
any time holding for investment purposes only any class of securities
for the time being listed or dealt in on any recognised investment
exchange (as defined in the Financial Services and Markets Act 2000)
or the Australian Stock Exchange or other stock of investment exchange
where securities are publicly traded.
15.3 The covenants contained in clause 15.1 shall be deemed to be in
respect of each part entire, separate, severable and separately
enforceable so that each covenant shall be deemed to be a separate
covenant notwithstanding the fact that it appears in the same clause,
sub-clause or sentence or any other covenant or is imposed by the
introduction of a word or phrase conjunctively with or disjunctively
from or alternatively to other words or phrases.
15.4 The Sellers acknowledge that:-
15.4.1 the restrictions have been negotiated and agreed on an arm's
length basis and are reasonable when taken together as well
as individually;
15.4.2 the duration, extent and application of each restriction is
no greater than is necessary for the protection of the
goodwill of the business of the Company, the Subsidiary and
the Associated Corporation (as applicable); and
15.4.3 the consideration paid by the Buyer for the Shares takes
into account and provides adequate compensation for the
Sellers for the restraint and restrictions imposed.
26
15.5 If the business of the Company or of the Subsidiaries is transferred
to another company which is a subsidiary of the Buyer (the "Transferee
Company"), each of the restrictions contained in this clause 15 shall
continue to apply, mutatis mutandis, in relation to the business
transferred as carried on from time to time by the Transferee Company
as if the name of the Transferee Company were substituted for the word
"Company" or "Subsidiary" (as the case may be).
16. COSTS
All costs and expenses incurred by or on behalf of either the Buyer or
the Sellers respectively including all fees of accountants,
representatives and solicitors employed by any of the Parties in
connection with the negotiation, preparation and execution of this
Agreement shall be borne solely by the Party who shall have incurred
the same and the other Parties shall have no liability in respect of
such costs and expenses.
17. FURTHER ASSURANCE
17.1 Each of the Sellers by way of security irrevocably and unconditionally
appoints the Buyer as his attorney with full powers of substitution in
his name and on his behalf (and to the complete exclusion of any
rights he may have in such regard):-
17.1.1 lawfully to exercise all voting and other rights and receive
all benefits and entitlements which may now or at any time
after the date of this Agreement attach to the Shares;
17.1.2 to transfer and deal with the Shares and such rights,
benefits and entitlements and execute such documents under
hand or under seal; and
17.1.3 do such acts and things in connection with the matters
specified in sub-clauses 17.1.1 and 17.1.2 as the Buyer
shall from time to time think fit in all respects as if the
Buyer were the absolute legal and beneficial owner of such
Shares.
17.2 Each of the Sellers undertakes to the Buyer to ratify everything that
the Buyer shall lawfully do or purport to do pursuant to clause 17.1.
17.3 Without limitation to any obligations implied by Law all of the
Parties will after as well as before and upon the Completion Date do
all acts and things and sign and execute all documents and deeds
requisite for the purpose of implementing the terms of this Agreement.
18. NOTICES
18.1 Any notice to be given for the purposes of this Agreement shall either
be delivered personally or sent by first class recorded delivery post,
internationally recognised overnight courier service, e.g. Federal
Express (the "International Courier") or facsimile transmission.
18.2 The address for service of the Sellers and/or the Committee shall be
the address (or principal address if more than one) of the Sellers'
Solicitors or such other firm:-
18.2.1 with which it may merge or which a majority of its partners
may join; or
27
18.2.2 as the Sellers who own the majority in number of Shares may
notify in writing to the Buyer.
If at any time it shall not be evident which firm of Solicitors are
appointed for the purposes of this sub-clause the Buyer may by notice
to the Sellers and/or the Committee at their addresses in this
Agreement nominate one of their number for the purposes of receiving
and giving notices.
18.3 The address for service of the Buyer shall be its principal executive
offices in Kansas, USA as stated at the beginning of the Agreement for
the time being.
18.4 A notice shall be deemed to have been served as follows:-
18.4.1 if personally delivered, at the time of delivery;
18.4.2 if sent by first class recorded delivery post or
International Courier, at the expiration of 72 hours after
the same was delivered into the custody of the postal
authorities or International Courier as appropriate; and
18.4.3 if sent by facsimile transmission at the expiration of 12
hours after despatch.
18.5 In proving such service it shall be sufficient to prove that personal
delivery was made, or that the envelope containing such notice was
properly addressed and delivered:-
18.5.1 into the custody of the postal authorities as a pre-paid
recorded delivery letter; or
18.5.2 into the custody of the International Courier; or
18.5.3 that the facsimile transmission was properly addressed and
despatched to the appropriate number.
18.6 Notice given to the Sellers pursuant to clause 18.2 above shall be
deemed to be notice to all the Sellers and any notice by the Sellers
(other than a notice changing their Solicitors pursuant to clause
18.2) shall only be given by the Sellers' Solicitors or the Seller
nominated by the Buyer pursuant to clause 18.2.
18.7 The members of the Committee are hereby authorised on behalf of all
the Sellers to accept service of proceedings in the UK from the Buyer.
19. GOVERNING LAW AND JURISDICTION
19.1 This Agreement shall be governed by and construed in all respects in
accordance with English Law. The Parties irrevocably agree that the
Courts of England and Wales shall have exclusive jurisdiction in
respect of any dispute, suit, action, arbitration or proceedings (in
this clause together referred to as "Proceedings") which may arise out
of or in connection with this Agreement provided that nothing
contained in this Agreement shall be taken to have limited the right
of the Buyer to bring Proceedings in any other jurisdiction or
jurisdictions, whether concurrently or not.
28
19.2 The Sellers expressly and specifically agree and accept that the terms
of this clause 19 are fair and reasonable and irrevocably appoint the
Sellers' Solicitors for the time being or such other firm as is
mentioned in clause 18.2 to accept service on their behalf of any
Proceedings which may be commenced in England and Wales.
20. PUBLICITY
No announcement or other disclosure concerning the sale and purchase
of the Shares to the Buyer or any other matter referred to or set out
in this Agreement or any ancillary matter shall be made before or
after Completion by the Sellers (whether to the press employees
customers or suppliers) except in a form agreed between the Seller and
the Committee or otherwise as required by Law or any regulatory
authority.
21. GENERAL
21.1 This Agreement contains the whole agreement between the Parties
relating to the transactions provided for in this Agreement and
supersedes all previous agreements (if any) between such Parties in
respect of such matters and each of the Parties acknowledges that in
agreeing to enter into this Agreement it has not relied on any
representations or warranties except for those contained in this
Agreement.
21.2 A person who is not party to this Agreement shall have no right under
the Contracts (Rights of Third Parties) Xxx 0000 to enforce any term
of this Agreement. This clause 21.2 does not affect any right or
remedy of any person which exists or is available otherwise than
pursuant to that Act.
21.3 This Agreement shall (except for any obligation fully performed prior
to or at the Completion Date) continue in full force and effect after
the Completion Date notwithstanding Completion.
21.4 Notwithstanding any rule of law or equity to the contrary any release,
waiver or compromise or any other arrangement of any kind whatsoever
which the Buyer may agree to or effect in relation to one Seller in
connection with this Agreement and in particular the Warranties shall
not effect the rights and remedies of the Buyer as regards any other
Seller.
21.5 Any remedy or right conferred upon any Party for breach of this
Agreement (including the right to rescission) shall be in addition to
and without prejudice to all other rights and remedies available to
it.
21.6 No failure or delay by any Party in exercising any claim, remedy,
right, power or privilege under this Agreement shall operate as a
waiver nor shall any single or partial exercise of any claim, remedy,
right, power or privilege preclude any further exercise of any of them
or the exercise of any other claim, right, power or privilege.
21.7 This Agreement may be executed in any number of counterparts by the
different Parties on separate counterparts, each of which shall when
executed and delivered constitute an original, but all of which shall
together constitute one and the same instrument.
29
21.8 If the Shares shall at any time be sold or transferred the benefit of
each of the obligations, undertakings, indemnities or warranties
undertaken or given by the Sellers under or pursuant to this Agreement
shall be assignable to any company within the Buyer's group from time
to time (a "Permitted Assignment"), and any such assignee group member
shall be entitled to enforce the same against the Sellers as if it
were named in this Agreement as the Buyer. Except for a Permitted
Assignment the benefit of the obligations under this Agreement will
not be assignable.
IN WITNESS of which the Parties have signed or sealed this Agreement as a deed
and have delivered it upon dating it.
30
SCHEDULE 1
DEFINITIONS
In this Agreement and in its Schedules (unless the context otherwise requires)
the following words and expressions shall have the following meanings:-
"Accountant" has the meaning ascribed to it in paragraph 7
of Schedule 15;
"Accounting Date" 31 March 2002;
"Adjustment" the amount by which the Working Capital Value
is less than the Target Working Capital Value
calculated in accordance with Schedule 15;
"Agreed Form" in relation to any document, the draft of
that document which is either annexed to this
Agreement or which has been initialled by the
Sellers' Solicitors and the Buyers'
Solicitors by way of identification;
"Appointment Period" has the meaning ascribed to it in paragraph 8
of Schedule 15;
"Associated Corporation" e-pay (M) Sdn. Bhd. brief details of which
appear in Schedule 4 Part (B);
"Audited Accounts" the audited accounts of each of the Company
and the Subsidiary for the accounting
reference period ended on the Accounting Date
(a copy of which has been included in the
Disclosure Letter) comprising, inter alia, a
balance sheet, profit and loss account,
notes, auditors' and directors' reports and
cash flow statement;
"Australian Superannuation Funds" the Westpac MasterTrust (SFN 281412 and ABN
81 236 903 448) established by trust deed
dated 27 March 1992;
"Business Days" a day, not being a Saturday, Sunday or public
holiday in England and Wales on which banks
are generally open for business in the City
of London and the term "Business Day" shall
be construed accordingly;
"Buyer's Accountants" KPMG LLP;
"Buyer Financial Statements" has meaning ascribed to it in sub-clause
4.1.8;
"Buyer's Solicitors" Squire, Xxxxxxx & Xxxxxxx, Xxxxx Xxxxx,
Xxxxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX;
31
"Buyer Warranty" the warranties given by the Buyer to the
Sellers in contemplation of matters in
this Agreement pursuant to clause 4;
"CAA 0000" Xxx Xxxxxxx Xxxxxxxxxx Xxx 0000;
"Charge" shall have the meaning given to such term in
paragraph 6 of Schedule 12;
"Claim" has the meaning ascribed to it in clause 9.1;
"Closing Stock Price" the average of the closing stock price for
the Euronet Shares listed on the NASDAQ
National Market for the 20 trading dates
prior to the date of this Agreement;
"Committee" a committee consisting of Xxxx Xxxxxxxx,
Xxxx Xxxxxxxx and Xxxxxxx Xxxxxxxx;
"Common Stock" has the meaning ascribed to it in sub-clause
4.1.4;
"Companies Acts" in relation to the Company, the Companies
Acts 1985 and 1989, the Companies
Consolidation (Consequential Provisions) Xxx
0000, the Financial Services and Markets Xxx
0000 and Part V of the Criminal Justice Xxx
0000 (and in relation to the Subsidiary, the
Corporation Act 2001);
"Company" e-pay Limited brief details of which appear
in Schedule 3;
"Completion Accounts" the (consolidated) accounts of the Company
and the Subsidiary for the accounting
reference period ended on the Completion Date
comprising a consolidated balance sheet,
profit and loss account and cash flow
statement;
"Completion Date" the date of completion of the matters set out
in clause 12 and Schedule 9 of this Agreement
and "Completion" shall be construed
accordingly;
"Confidential Information" any confidential information concerning the
assets, property, trade secrets, customers
contracts, software, business, financial
position, results or anticipated results of
operations, personnel, marketing or business
plans or strategy of the Company;
"Consideration Schedule" the schedule in the Agreed Form (signed by or
on behalf of each of the Sellers) detailing
the Sellers, the Shares to be sold by them
and the Purchase Price payable to them
pursuant to this Agreement;
"Convertible Notes" the unsecured convertible notes of the Buyer
bearing interest at 7% per annum in Agreed
Form to be issued by the Buyer at Completion,
the terms and conditions of which are set out
in
32
the note, a copy of which appears at
Schedule 13;
"Copyrights" has the meaning ascribed to it in (iv)
"Intellectual Property Rights" of Schedule 1;
"Court" any court of competent jurisdiction;
"Deferred Consideration" the consideration of(pound)5,363,525 in cash
payable by the Buyer to the Sellers upon the
terms set out in Schedule 12;
"Director Designee" has the meaning ascribed to it in clause
12.3.1;
"Disclosure Letter" the letters and their respective annexures
(the "Disclosure Bundle") dated with today's
date delivered immediately before the
execution of this Agreement and addressed by
the Warrantors to the Buyer disclosing
various matters and documentation relating to
the Warranties;
"Dissatisfaction Notice" has the meaning ascribed to it in paragraph
4.2 of Schedule 15;
"Effective Date" February 3, 2003;
"Encumbrance" any mortgage, charge (whether fixed or
floating), pledge, lien, option, right of
pre-emption, right of retention of title or
negative pledge, or any other form of
security interest, third party right or
encumbrance (whether monetary or not) or any
obligation (including any conditional
obligation) to create any of the same;
"End Date" the earlier of:-
(i) the date on which the entire amount of
Deferred Consideration and accrued
interest under this Agreement has been
paid; or
(ii) the second anniversary of Completion;
"e-pay New Zealand" e-pay New Zealand, the wholly owned
subsidiary of the Subsidiary;
"Euronet Shares" the common stock of the Buyer with a par
value of $0.02 per share and to be issued and
registered in accordance with Schedule 11;
"Excess Cash Flow" for each fiscal quarter, consolidated net
income of the Company and the Subsidiary plus
depreciation minus capital expenditure and
minus an amount by which current liabilities
(excluding any corporation tax creditor)
exceed current assets;
33
"Exchange Rate" $1.6003 to (pound)1;
"Fairly Disclosed" in the case of:-
(i) the text of the Disclosure Letter
(excluding the Disclosure Bundles),
means such disclosure is true and
accurate and made with sufficient
particularity to permit the Buyer to
assess the impact of such fact on the
Warranties; and
(ii) the Disclosure Bundles, means such
disclosure as will give the Buyer
sufficient information to assess the
effect and consequences of the
relevant documentation on the
Warranties;
"Force Majeure" any matter, action or thing which arises and
which could give rise to:-
(i) third party claims in excess of
$3,000,000; or
(ii) injunctive relief to any party
relating to the consummation of this
Agreement; or
(iii) any action by regulatory authorities
which could affect the consummation of
this Agreement;
"Force Majeure Notice" has the meaning ascribed to it in sub-clause
2.1.3(a) of the Agreement;
"GAAP" generally accepted accounting principles and
practices in the relevant jurisdiction as in
effect from time to time;
"Government Body" any government body, department, agency or
board;
"Group" the Company and the Subsidiary;
"Group Company" the Company and (as the context requires)
the Subsidiary and each or both of them;
"GST" goods and services tax imposed by the GST
Law;
"GST Law" a New Tax System (Goods and Services Tax) Xxx
0000 (Australia);
"ICTA 1988" the Income and Corporation Taxes Xxx 0000;
"IHTA 1984" the Inheritance Tax Xxx 0000;
"Information Technology Systems" the computer and data processing systems used
by the Company at the date of this Agreement
(including all computer software) together
with all plant and equipment, which includes
embedded software or similar processing
systems;
34
"Intellectual Property Contracts" all written agreements concerning the
Intellectual Property Rights which the
Company owns or is licensed to use and to
which the Company is a party, including
without limitation agreements granting the
Company rights to use the Licensed
Intellectual Property Rights, non-assertion
of agreements, assignments of Intellectual
Property Rights, settlement agreements
relating to Intellectual Property Rights,
agreements granting rights to use the Owned
Intellectual Property Rights, confidentiality
agreements, Trademark co-existence agreements
and Trademark consent agreements;
"Intellectual Property Rights" all worldwide rights in and to:-
(i) trademarks, collective marks, Internet
domain names, logos, symbols, trade
dress, assumed names, fictitious names,
trade names, and all indicia of origin
(whether registered or not), all
applications and registrations for the
foregoing, and all goodwill associated
therewith and symbolized thereby,
including all renewals of same
(collectively, "Trademarks");
(ii) inventions and discoveries, whether
patentable or not, and all patents,
registrations, registered design
rights, industrial models, invention
disclosures and applications therefor,
including divisions, continuations,
continuations-in-part, and renewal
applications, and including renewals,
extensions, reissues and re-examined
patents (collectively, "Patents");
(iii) confidential and proprietary
information, trade secrets and
know-how, including processes,
schematics, business methods, formulae,
data, drawings, flow diagrams,
specifications, prototypes, models,
designs, source code, object code,
customer lists and supplier lists
(collectively, "Trade Secrets");
(iv) published and unpublished works of
authorship, whether copyrightable or
not (including without limitation
databases and other compilations of
information), copyrights, and related
registrations and applications and all
renewals, extensions, restorations and
reversions (collectively,
"Copyrights");
(v) all other intellectual property or
other proprietary rights or similar
rights;
"IP Suit" has the meaning ascribed to it in paragraph
(L)3 of Schedule 7;
35
"ITAA 1936" the Income Tax Assessment Act 1936
(Australia);
"ITAA 1997" the Income Tax Xxxxxxxxxx Xxx 0000
(Xxxxxxxxx);
"Law" all or any:-
(i) national or local legislation, laws,
statutes, rules, codes, directives,
regulations and ordinances including,
without limitation, all circulars and
guidance notes;
(ii) judgments, decrees, orders or notices
of any European Union or United Kingdom
judicial, governmental, quasi-
governmental or other official body
having jurisdiction or other binding
requirements of any judicial
governmental, quasi-governmental or
other official body having
jurisdiction;
(iii) of the matters set out in (i) and (ii)
above as regards any jurisdiction
outside the European Union or United
Kingdom (including Malaysia and
Australia);
(iv) rules established by NASDAQ and the US
Securities and Exchange Commission as
in effect from time to time;
"Leasehold Properties" the Leasehold Properties brief details of
which appear in Part I of Schedule 5;
"Licensed Intellectual Property Intellectual Property Rights that the Company
Rights" is licensed or otherwise permitted by
other persons to use;
"Management Accounts" the unaudited management accounts of the
Company and the Subsidiary for the 10 months
ended February 2, 2003;
"Management Shareholders" the persons whose names and details appear in
Columns (1) and (2) of Part A of Schedule 2;
"Material Contracts" those contracts described in Schedule 10;
"Notice to Complete" has the meaning ascribed to it in sub-clause
2.1.3(b) of this Agreement;
"Observer Designee" has the meaning ascribed to it in clause
12.3.2;
"Observer Period" has the meaning ascribed to it in clause
12.3.2;
"Options" the options for shares in the Company set out
in column (2) of Schedule 18 and held by each
Option Holder;
"Option Holder" those persons whose names appear in column
(1) of Schedule
36
18;
"Overseas Properties" the overseas Properties brief details of
which appear in Part II of Schedule 5;
"Owned Intellectual Property Intellectual Property Rights owned by the
Rights" Company;
"Patents" has the meaning ascribed to it in (ii)
"Intellectual Property Rights" of Schedule 1;
"Permitted Loans" The loans to be repaid pursuant to clause
12.1.1(b)(iv);
"Period of Restraint" means the period of 1 year from the
Completion Date;
"Proceedings" has the meaning ascribed to it in clause 19.1
of the Agreement;
"Promissory Notes" together the Convertible Note and the
Unsecured QCB Note;
"Properties" the Leasehold Properties and the Overseas
Properties and "Property" shall mean any of
them;
"Prospective Client" means any association, company, firm, or
person with whom or with which any Group
Company, Associated Corporation and/or the
Buyer has made a proposal with a view to that
association, company, firm or person becoming
a client or customer of any Group Company
and/or the Buyer;
"Purchase Price" the total consideration payable for the
Shares specified in clause 6;
"PwC" PricewaterhouseCoopers, the Sellers'
accountants;
"QCB Holders" Xxxxxxxx Xxxxxxxx, Xx Xxxxxxx, Xxxxx
XxXxxxxx, Xxxxxxx Xxxxx, Xxxxx Xxxxxx,
Xxxxxxx Xxxxxx, Xxxx Xxxxxxxxxx, Xxxxxx
Standing, Xxxxxx Xxxxxxxxx and Xxxxxx
Xxxxxxxxx;
"Registered" issued, registered, renewed or the subject of
a pending application for registration;
"Related Agreements" has the meaning ascribed to it in sub-clause
4.1.1;
"Releases" the releases in the Agreed Form from each of
the Sellers and Xxx Xxxxxx;
"Resolution Period" has the meaning ascribed to it in paragraph 7
of Schedule 15;
"Restricted Business" any type of business for the provision of
systems to provide solutions for the
provision of electronic top-ups for pre-paid
mobile services or activity of the same or of
a similar kind to that carried on by any
Group Company;
37
"Revenue" all fiscal authorities (national, municipal
or local) whether of the United Kingdom,
Malaysia, Australia or elsewhere;
"Satisfaction Notice" has the meaning ascribed to it in paragraph
4.1 of Schedule 15;
"Securities Act" has the meaning ascribed to in paragraph 2 of
Schedule 17;
"Sellers' Claim" has the meaning ascribed to it in clause
9.1(B) ;
"Sellers' Solicitors" Xxxxxxxx Xxxxxx, 000 Xxxxxx, Xxxxxx XX0X 0XX;
"Service Agreements" the service agreements in the Agreed Form
between the Company and each of the persons
set out in clause 12.1.2 (including such
other service agreements with additional
employees as may be decided by the Buyer) to
be entered into on or before Completion;
"Shares" the shares (including without, limitation,
the resulting shares following the exercise
of the Options by the Option Holders) of the
Company detailed in column (3) of Schedule 2;
"Stockholders Meeting" has the meaning ascribed to in clause 12.3.1;
"Subsidiary" e-pay Australia Pty Limited brief details of
which appear in Schedule 4 Part (A);
"Superannuation Commitment" means any legal liability (whether arising
under an industrial instrument or otherwise)
or voluntary commitment to make contributions
to any superannuation or retirement fund,
pension scheme or other arrangement which
provides employees or their dependants with
superannuation or retirement benefits;
"Target Working Capital Value" negative (pound)367,522;
"Taxation" or "Tax" any form of taxation, duty, stamp duty, levy,
impost, charge, national insurance or other
similar contribution, or rates, whether
created or imposed by any governmental,
country, state, federal, local, municipal or
other body, and whether in the United
Kingdom, Australia or elsewhere (including,
without limitation, any payment which the
Company may be or become bound to make or
obliged to account for to any person in
respect of Taxation) and also including any
related penalty, interest, fine or surcharge;
"Taxation Authority" the Inland Revenue, HM Customs & Excise, the
Australian Taxation Office or any other
revenue, customs, fiscal,
38
governmental, statutory, state provincial,
local governmental or municipal authority
whether of the United Kingdom, Australia or
elsewhere;
"Tax Deed" the tax deed in Agreed Form;
"TCGA 1992" The Taxation of Chargeable Gains Xxx 0000;
"Trademarks" has the meaning ascribed to it in (i)
"Intellectual Property Rights" of Schedule 1;
"Trade Secrets" has the meaning ascribed to it in (iii)
"Intellectual Property Rights" of Schedule 1;
"Transfer has the meaning ascribed to it in paragraph 2
Restriction Period" of Schedule 11 of this Agreement;
"Transferee Company" has the meaning ascribed to it in clause 15.5
of this Agreement;
"Unsecured QCB Notes" the unsecured QCB notes of the Buyer bearing
interest at 8% per annum in Agreed Form to be
issued by the Buyer at Completion to the QCB
Holders, the terms and conditions of which
are set out in the note, a copy of which
appears at Schedule 14;
"VAT" Value Added Tax;
"VATA 1994" The Value Added Tax Xxx 0000;
"Warranties" the, warranties given by the Warrantors in
clause 8 and Schedule 7 and Schedule 8;
"Warrantors" Xxxx Xxxxxxxx, Xxxx Xxxxxxxx, Xxxxxxx
Xxxxxxxx, Xxx Xxxxxx & Associates Pty
Limited, Xxxx Xxxxxxxxxx, Xxxxxxx Xxxxxx and
Xxxxxx Xxxxxxxxx
"Working Capital Value" the difference between current assets and
current liabilities of the Company and the
Subsidiary as at Completion calculated in
accordance with Schedule 15 all as shown in
the Completion Accounts and agreed, deemed or
agreed or determined (as the case may be)
pursuant to Schedule 15.
39
SCHEDULE 2
DETAILS OF SELLERS
Pursuant to Rule 601(b)(2) of Regulation S-K, Euronet agrees to furnish
Schedule 2 - Details of Sellers supplementally to the Securifies and Exchange
Commission upon request.
40
SCHEDULE 3
BRIEF DETAILS OF THE COMPANY
Date of Incorporation: 14 January 1999
Country of Incorporation: England
Registered Number: 3695345
Registered Office: 0xx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxxx,
Xxxxxxxx, Xxxxx XX00 0XX
Directors: Xxxx Xxxxx Althasen, Xxxx Xxxxxxxxx Xxxxxxxx,
Xxxxxxx Xxxx Xxxxxxxxx Westlake
Secretary: Xxxxxxx Xxxx Xxxxxxxxx Westlake
Accounting Reference Date: 31 March
Auditors: PricewaterhouseCoopers
Authorised Share Capital: (pound)4,440,000 divided into:-
(1) 1,000,000 A Ordinary Shares of(pound)1 each;
(2) 1,000,000 B Ordinary Shares of(pound)1 each;
(3) 1,000,000 C Ordinary Shares of(pound)1 each;
(4) 1,000,000 D Ordinary Shares of(pound)1 each;
(5) 400,000 Ordinary Shares of(pound)1 each; and
(6) 40,000 E Ordinary Shares of(pound)1 each,
all such Shares being fully paid up
Issued Share Capital: (pound)738,227 divided into:-
(1) 121,719 A Ordinary Shares of(pound)1 each;
(2) 152,219 B Ordinary Shares of(pound)1 each;
(3) 121,719 C Ordinary Shares of(pound)1 each;
(4) 152,219 D Ordinary Shares of(pound)1 each;
(5) 162,143 Ordinary Shares of(pound)1 each; and
(6) 28,208 E Ordinary Shares of(pound)1 each
Shareholder(s) and See Consideration Schedule.
Percentage holding:
41
Mortgages/Charges: (1) Charge over Deposit dated 30 November 2001
granted in favour of The Law Debenture Trust
Corporation Plc;
(2) Charge over Deposit dated 23 January 2001
granted in favour of Orange Personal
Services Limited; and
(3) Trust Deed dated 15 July 2002 granted in
favour of Virgin Mobile Telecoms Limited.
42
SCHEDULE 4
PART A - BRIEF DETAILS OF THE SUBSIDIARY
Date of Incorporation: 30 June 2000
Country of Incorporation: Australia
Australian Company Number: 093 566 057
Australian Business Number: 71 093 566 057
Registered Office: X/x Xxxxxxx X Xxxx, Xxxxx 0, 000 Xxxxxxxxxxx
Xxxxxx, Xxxxxx, XXX 0000 Xxxxxxxxx
Directors: Xxxx Xxxxxxxxx Xxxxxxxx, Xxxxxxx Xxxx Xxxxxxxxx
Westlake, Xxxx Xxxxx Xxxxxxxx, Xxxxxx Xxxxxxx
Xxxxxx
Secretaries: Xxxxxxx Xxxx Xxxxxxxxx Xxxxxxxx, Xxxxxx Xxxxxxx
Xxxxxx
Accounting Reference Date: 31 March
Auditors: PricewaterhouseCoopers
Issued Share Capital: AUS$200,000 divided into 200,000 ordinary shares,
all such shares being fully paid up
Shareholder(s) and The Company - 200,000 ordinary shares (100% of
Percentage holding: issued share capital at Completion)
Share Ownership: 100% of the issued share capital of e-pay
New Zealand Pty Limited
Mortgages/Charges: None
Status: Active
43
PART B - BRIEF DETAILS OF THE ASSOCIATED CORPORATION
Date of Incorporation: 18 September 1999
Country of Incorporation: Malaysia
Malaysian Company Number: 494207-U
Registered Office: 19, Xxxxx Xxxxxx Xxxxxxxx Xxxx, Xxxxxxxxxxx,
00000 Xxxxx Xxxxxx
Directors: Md. Hassan bin Hj Said, Soh Chuan Sing, Loh Wee
Hian, Xxxx Xxxxxxxxx Xxxxxxxx, Tan Sri Datuk Xxxxx
Xxxxxx bin Sahan
Secretaries: Xxxxxxxx Xxxxx Xxxx Xxxx, Xxx Yoke Sum
Accounting Reference Date: 31 March
Auditors: PricewaterhouseCoopers
Authorised Share Capital: RM500,000 divided into RM500,000 shares of RM1.00
each
Issued Share Capital: RM180,002 divided into 180,002 shares all shares
being fully paid up
Shareholder(s) and (1) The Company - 72,001 shares (40% of the
Percentage holding: issued shared capital)
(2) Orion Gateway Sdn Bhd (Malaysian company
number 488292-K) - 108,001 shares (60% of
the issued share capital)
Mortgages/Charges: (1) Charge number 001 created on 31 January 2002
in favour of Public Bank Berhad for a sum of
RM1,500,000
(2) Charge number 002 created on 4 October 2002
in favour of Citibank Berhad for a sum of
RM10,000,000
Status: Active
44
SCHEDULE 5
BRIEF DETAILS OF THE PROPERTIES
PART I
Leasehold Properties
---------------------------------------------------------------------------------------------------------------------
NEW/
PROPERTY DATE OF LEASE PARTIES OLD LEASE TERM CURRENT RENT
---------------------------------------------------------------------------------------------------------------------
Part 2/nd/ Floor 27.11.2001 Barclays Bank (1) New 12.3.2001 (pound)43,310 p.a.
(formerly known as lst -
floor) e-pay Limited (2) 9.8.2006
Xxxxxxx Xxxxx
Xxxxxxxxxxx
Xxxxxxxx, Xxxxx
---------------------------------------------------------------------------------------------------------------------
Xxxx 00 7.4.2001 Tanata Limited (1) New 26.4.1999 (pound)21,000 p.a.
Xxxxxxx Square (lease by -
Southfields Industrial surrender and e-pay Limited (2) 24.4.2003
Estate regrant
Laindon incorporating
Basildon lease dated
Xxxxx XX00 0XX 26.4.1999)
---------------------------------------------------------------------------------------------------------------------
PART II
Overseas Properties
---------------------------------------------------------------------------------------------------------------------
NEW/
PROPERTY DATE OF LEASE PARTIES OLD LEASE TERM CURRENT RENT
---------------------------------------------------------------------------------------------------------------------
Suite 602 Undated Boutique Offices New 1.1.2003 AUS$97,500 p.a.
000 Xxxxxxxx Xxxxxx Pty Limited (1) -
Xxxxxx XXX 0000 31.12.2004
Australia e-pay Australia
Pty Limited (2)
---------------------------------------------------------------------------------------------------------------------
45
SCHEDULE 6
[INTENTIONALLY OMITTED]
46
SCHEDULE 7
WARRANTIES
In this Schedule references to the "Company" shall be construed as a reference
to:-
1. the Company; and
2. the Subsidiary,
to the intent that each of the paragraphs of this Schedule shall have effect in
relation to each Group Company as if the respective name of that Group Company
was substituted for references to the "Company".
(A) INFORMATION
1. The information contained in the Recitals and Schedules 2, 3, 4, 5, 10
and 18 of this Agreement is true and accurate.
2. So far as the Warrantors are aware, the Company has not disclosed any
Confidential Information to any third party except in the ordinary
course of business.
(B) COMPLIANCE WITH COMPANY LAW
1. The Company has properly and punctually made and filed all returns,
particulars, resolutions and documents required by the Companies Acts
or any other legislation to be filed with, in the case of:-
1.1 the Company, the Registrar of Companies;
1.2 the Subsidiary, the Australian Securities and Investments Commission,
or any other governmental or local authority), and all such filings
were and are correct.
2. The Company has not at any time given financial assistance (as defined
in Section 152(1)(a) of the Companies Xxx 0000 or part 2J.3 of the
Corporation Xxx 0000, as applicable) in connection with the
subscription, purchase or acquisition of any shares in the Company or
its holding company.
3. The Company has complied in all material respects with all applicable
provisions of the Companies Acts.
4. No shares in the capital of the Company have at any time been issued
or allotted and no transfers of shares in the capital of the Company
have been registered otherwise than in accordance with the Articles of
Association of the Company from time to time in force and all material
requirements of Law and all necessary governmental consents have been
obtained for each issue, allotment and transfer of shares in the
capital of the Company.
5. The Company has not at any time:-
47
5.1 reduced its share capital;
5.2 redeemed any share capital;
5.3 purchased or bought back any of its shares; or
5.4 forfeited any share capital.
DISTRIBUTIONS
5.5 All dividends or other distributions of profits declared, made or paid
since the date of incorporation of the Company have been declared,
made and paid in accordance with Law and its Articles of Association
or in the case of the Subsidiary, in accordance with its constitution.
5.6 No dividends or other distributions of profits have been declared,
made or paid by the Company since the Accounting Date.
REGISTER OF MEMBERS
5.7 The Register of Members and all other statutory books and minute
books, of the Company:-
5.7.1 have been properly kept;
5.7.2 are up to date; and
5.7.3 contain true and accurate records of all matters required to
be dealt with by the Companies Acts.
5.8 The Buyer has been supplied with a copy of the Memorandum and Articles
of Association or current Constitution of the Company having attached
copies of:-
5.8.1 all resolutions as are by Law required to be attached; and
5.8.2 all resolutions setting out the rights attached to or the
conditions of issue of any of the share capital of the
Company.
5.9 These copies are true, complete and up to date and set out in full the
rights and restrictions attaching to the share capital of the Company.
5.10 The Company has at all times carried on its business and conducted its
affairs in all respects in accordance with its Memorandum and Articles
of Association or Constitution for the time being in force and any
other documents to which it is or has been a party.
(C) THE SHARES AND SHARE CAPITAL
1. There are no agreements or other arrangements in force which:-
1.1 provide for the present or future issue, allotment or transfer of; or
48
1.2 accord to any person the right (absolute or conditional) to call for
the issue, allotment or transfer of,
any share or loan capital of the Company (including any option or
right of pre-emption or conversion).
2. Since the Accounting Date:-
2.1 no share or loan capital of the Company has been issued or allotted or
agreed to be issued or allotted whether conditionally or absolutely;
and
2.2 the Company has not undergone any capital reorganisation or change in
its capital structure.
3. The Company does not have and never has had any subsidiaries.
4. The Company:-
4.1 does not have and never has had any subsidiary undertaking;
4.2 is not the holder or beneficial owner of any class of shares or other
securities of any other company; and
4.3 is not party to any agreement or arrangement in relation to the
acquisition of any such shares or securities.
5. No dividends or other distributions of profits have been declared,
made or paid by the Company since the date of incorporation.
(D) ACCOUNTS
AUDITED ACCOUNTS
1. The Audited Accounts:-
1.1 comply with the requirements of the Companies Acts and all relevant
statutory instruments and have been prepared for the period to 31
March 2002;
1.2 have been prepared in accordance with generally accepted accounting
principles and practices and comply with all current Statements of
Standard Accounting Practice and Financial Reporting Standards
applicable to a UK company;
1.3 are accurate and show a true, and fair view of the state of affairs,
financial position, assets and liabilities of the Company and the
Subsidiary and of its results for the financial period ending on the
Accounting Date;
1.4 as at the Accounting Date are not affected by any exceptional items;
1.5 make proper provision for depreciation of the fixed assets of the
Company having regard to their original cost and estimated life;
1.6 make adequate provision for any bad or doubtful debts;
49
1.7 disclose all or any changes in the accounting policies adopted by the
Company; and
1.8 provide for Taxation liable to be assessed on or for which the Company
is or may become accountable as at the Accounting Date.
2. All material liabilities (actual, contingent or otherwise) or
outstanding financial commitments of the Company as at the Accounting
Date have been included in the Audited Accounts by way of:-
2.1 provision or reserve; or
2.2 (in the case of such a liability as was contingent, unquantified or
disputed) by way of note stating the maximum amount which has been
deferred or could be claimed and the best estimate of the Directors
(after taking all relevant professional advice) of the likelihood of
such a claim materialising or being successful.
MANAGEMENT ACCOUNTS
3. The Management Accounts have been properly prepared in accordance with
good accounting practice and on a basis consistent in all material
respects with that previously adopted in the preparation of the
Audited Accounts and reasonably represent the financial position of
the Company as at 2 February 2003 and for the 10 month period ended on
that date.
ACCOUNTING RECORDS
4. The accounting and other books and records, ledgers, financial and
other records of the Company:-
4.1 are in its possession;
4.2 have at all times been properly written up;
4.3 comply with Law;
4.4 have been held for the periods required by Law; and
4.5 to the extent (if any) that they are kept on computer:-
4.5.1 are freely accessible to the Company; and
4.5.2 the Company is the owner of all hardware and all software
and has all software licences necessary to enable it to use
the records as they have been used in its business; and
4.5.3 the Company does not share any hardware or software relating
to such records with any person.
4.6 There has been no material change in the treatment of items recorded
in the books of the Company since the Accounting Date.
50
(E) TRADING POSITION
1. Since the Accounting Date:-
1.1 there has been no material adverse change nor so far as the Warrantors
are aware is any such material change pending or expected in:-
1.1.1 the business, financial or trading position or business
prospect, or other prospects of the Company; or
1.1.2 in the value or state of the assets or amount or nature of
the liabilities of the Company; or
as compared with the position disclosed in the Audited Accounts;
1.2 the Company has not disposed of any material assets or assumed or
incurred any outstanding material capital commitment or any material
liabilities (whether actual or contingent) otherwise than in the
ordinary course of carrying on its business. For these purposes,
disposals of Intellectual Property Rights, fixed assets, fixed and
loose plant and machinery, fixtures and fittings, vehicle and office
equipment shall not be deemed to be in the ordinary course of
business;
1.3 the Company has paid all material creditors in the ordinary course of
business and within the normal terms of business undertaken between
the Company and the creditors; and 1.4 the business of the Company has
been carried on in the ordinary and usual course of business without
interruption and so as to maintain the same as a going concern.
2. So far as the Warrantors are aware, the Company is not subject to
material liabilities, other than those disclosed (whether actual or
contingent) in the Audited Accounts, other than those entered into in
the ordinary course of business since the Accounts Date.
3. The Company is not a party to any agreement or arrangement which is
subject to termination or re-negotiation by another party as a result
of any of the transactions contemplated by this Agreement.
4. So far as the Warrantors are aware the Company is entitled to carry on
the business now carried on by it and carried on by it during the
three years prior to the date of this Agreement without any conflict
with any valid right of any other person, firm or company.
5. No substantial part of the business of the Company is carried on or is
required to be carried on with the agreement or consent of a third
party.
6. There is no agreement or arrangement to which the Company is a party
which significantly restricts the field in which the Company carries
on business.
51
(F) ASSETS
1. Except for assets disposed of by the Company in the ordinary course of
trading, the Company is the owner of and has good title to:-
1.1 all assets included in the Audited Accounts;
1.2 all assets acquired since the Accounting Date; and
1.3 and all such assets are in the Company's possession or under its
control.
2. The assets owned by the Company (together with assets held under the
hire purchase, lease or rental agreements listed in the Disclosure
Letter) comprise all assets necessary for the continuation of the
business of the Company as presently carried on.
3. There is no Encumbrance or agreement to create an Encumbrance over the
whole or any part of the undertaking, property, assets, goodwill or
uncalled capital of the Company.
4. All assets used in connection with the business of the Company are:-
4.1 owned by it absolutely; and
4.2 are held free from any lease, hire, hire purchase or conditional sale
agreement, xxxx of sale or other agreement for payment on deferred
terms.
5. The fixed and loose plant and machinery, fixtures and fittings,
vehicles and office equipment currently used in connection with the
business of the Company are:-
5.1 subject to normal wear and tear, in reasonable repair and condition
regularly maintained, properly tested and certified, safe and without
risk to health when used; and
5.2 capable of being efficiently and properly used in connection with the
business of the Company.
MOTOR VEHICLES
6. The Company owns or has on lease or hire purchase the motor vehicles
the make, model, registration number and driver of which appear
opposite its name in the Schedule annexed to the Disclosure Letter.
EQUIPMENT LEASES
7. No circumstance has arisen or so far as the Warrantors are aware is
likely to arise in relation to any asset (other than the Properties)
held by the Company under a lease or hire purchase or similar
agreement under which the rental payable has been or is likely to be
increased.
52
MAINTENANCE
8. Details of all material contracts entered into by the Company for the
maintenance of any of the Company's assets are included in the
Disclosure Letter and so far as the Warrantors are aware such
contracts are in full force and effect.
9. Upon Completion the Company will have all necessary services available
to it in order to permit it to carry on business as it does at the
date of this Agreement.
(G) BORROWINGS AND LENDING
1. Accurate details of all overdrafts, loans or other financial
facilities outstanding or available to the Company (together the
"Facilities") are contained in the Disclosure Letter together with
true and complete copies of all documents relating to the Facilities.
2. Except as disclosed in the Audited Accounts, the Company does not have
outstanding (whether made by or incurred by the Company):-
2.1 any borrowing or indebtedness in the nature of borrowing (for these
purposes payments to the non-material trade creditors incurred in the
normal course of business will not be considered to be borrowings);
2.2 any bank overdrafts, liability under acceptances (otherwise than in
respect of normal trade bills) or any acceptance credit; and
2.3 any amounts due to any present or former Directors or to members of
the Company other than remuneration accrued due or for reimbursement
of business expenses.
3. The Company has no bank or deposit accounts (whether in credit or
overdrawn) except for those specifically detailed in the Disclosure
Letter.
4. The total amounts borrowed by the Company under the Facilities do not
exceed:-
4.1 the limits as set out in the Facilities; or
4.2 any limitation on borrowing powers contained in its Articles of
Association or in any debenture or other agreement binding on it.
5. Full and accurate details of each Encumbrance, guarantee or similar
obligation on the part of the Company is contained in the Disclosure
Letter and the Company is not in default in any material respect of
any of the same and/or under the terms of any borrowing made by it.
6. The Company has not:-
6.1 factored any of its debts;
6.2 engaged in financing or borrowing of a type which is not required to
be shown or reflected in its statutory accounts;
6.3 since the Accounting Date repaid or become liable to repay or prepaid
any:-
53
6.3.1 loan or loan capital or the Facilities (or any part of
them); or
6.3.2 any other indebtedness in advance of its date of maturity;
or
6.4 received notice from any lenders requiring repayment or intimating
enforcement of any Encumbrance, and there are no circumstances likely
to give rise to any such notice.
7. The Company:-
7.1 has not lent any money to any director or employee which has not been
repaid to it; and
7.2 does not own the benefit of any debt (whether present or future) or
the right to receive any monies other than debts accrued to it in the
ordinary course of its business.
8. No:-
8.1 grants, awards, subsidies or assistance of a financial nature have
been given to the Company by any Governmental department or agency
during the last five years; and
8.2 no amounts are or may be liable to be repaid pursuant to the terms of
any grants, awards, subsidies or financial assistance by any
Governmental department or agency.
(H) INSURANCES
1. Details of all current insurance policies of the Company are disclosed
in the Disclosure Letter.
2. All of the Company's insurance policies are in force and so far as the
Warrantors are aware are not void or voidable.
3. All premiums due in respect of the Company's insurance policies have
been paid in full.
4. Details of all outstanding insurance claims are disclosed in the
Disclosure Letter and so far as the Warrantors are aware there are no
circumstances giving rise to or likely to give rise to any claim under
any of the Company's insurance policies.
5. The Company has notified its insurers in accordance with the terms of
such policies of any claim that may or might be made under any
policies of insurance of which it is the beneficiary.
(I) DISPUTES/LITIGATION
1. The Company is not engaged whether as plaintiff or defendant or
otherwise in any litigation, criminal or arbitration proceedings
before any Court, tribunal, statutory or Governmental body,
department, board or agency.
2. So far as the Warrantors are aware, no litigation, criminal or
arbitration proceedings are pending or threatened by or against the
Company and, so far as the Warrantors are aware, there are no facts
which are likely:-
54
2.1 to give rise to such proceedings; or
2.2 which are likely to give rise to proceedings against any person in
respect of which the Company would be liable to indemnify any person
concerned.
3. The Company has not been subject to any order or judgment given by any
court, tribunal or governmental agency.
4. There is no dispute or, so far as the Warrantors are aware, potential
dispute involving any Taxation Authority or other governmental or
quasi-governmental department in the United Kingdom, Australia or
elsewhere in relation to the affairs of the Company and, so far as the
Warrantors are aware, there are no facts which may give rise to such
dispute.
(J) COMPLIANCE WITH STATUTES AND LICENCES
1. The Company has obtained all material licences, consents, approvals,
permissions, permits, test and other certificates and authorities
(public or private) (together "Licences") necessary for the carrying
on of its business in the places and in the manner in which such
business is now carried on.
2. Copies of the Licences are included in the Disclosure Letter.
3. The Sellers know of no reason or of any facts or circumstances which
(with or without the giving of notice or lapse of time) would be
likely to give rise to any reason why any of the Licences should be
suspended, cancelled, revoked or not renewed.
4. The Company has conducted and is conducting its business in all
material respects in accordance with applicable Law, (whether of the
UK, Australia or elsewhere).
5. The Company has complied in all material respects with the provisions
of Law relating to data protection, privacy or similar requirements
relating to the collection, storage, processing, release, access to
and protection of data and personal information.
6. The Company has not received any written notice alleging
non-compliance with any data protection or privacy Law or prohibiting
the transfer of data or personal information, nor has any individual
given a written claim for compensation from the Company for loss or
unauthorised disclosure of data or information in relation to any act
or omission during the period prior to Completion.
UNLAWFUL PAYMENTS
7. The Company has not, nor, so far as the Warrantors are aware, has any
of its employees or any other person for whose acts or defaults the
Company may be vicariously liable:-
7.1 induced a person to enter into an agreement or arrangement with a
Group Company by means of an unlawful or immoral payment,
contribution, gift, or other inducement;
7.2 offered or made an unlawful or immoral payment, contribution, gift or
other inducement to a government official or employee; or
55
7.3 directly or indirectly made an unlawful contribution to a political
activity.
8. The Company has complied in all material respects in relation to any
applicable Law relating to money laundering.
OVERSEAS BUSINESS
9. The Company was in the past empowered and is now duly qualified to
carry on business at all relevant times in all jurisdictions in which
it carries on business.
10. The Company does not carry on or have a place of business or any
branch or agency or other permanent establishment outside the United
Kingdom or (whether in the UK or elsewhere) other than at and from the
Properties.
11. The Company has no commitments or liabilities and has not entered into
a guarantee or similar obligation in relation to e-pay New Zealand Pty
Limited.
(K) CONTRACTS AND ARRANGEMENTS
1. A copy of all standard terms and conditions on which the Company
carries on business is included in the Disclosure Letter.
2. There are not now outstanding with respect to the Company or to which
the Company is a party:-
2.1 any joint venture, consortium or other partnership arrangement or
agreement other than the Material Contracts;
2.2 any material arrangements contractual or otherwise between the Company
and any third party which will or may in accordance with its terms be
terminated or varied as a result of:-
2.2.1 any change in the central management or shareholders of the
Company; or
2.2.2 the sale and purchase provided for in this Agreement; or
2.2.3 compliance with any other provision of this Agreement,
2.3 any contract for services (other than retailer agreements and
contracts for the supply of electricity, gas, water,
telecommunications or normal office services);
2.4 any:-
2.4.1 power of attorney;
2.4.2 contract of agency or distributorship; or
2.4.3 subsisting licence;
2.5 any guarantee, warranty, undertaking or contract for indemnity or for
suretyship under which the Company is under a prospective or
contingent liability;
56
2.6 any agreement or arrangement entered into by the Company otherwise
than by way of bargain at arms length or on arms length terms and in
the ordinary course of the Company's business;
2.7 any agreement or arrangement which cannot readily be fulfilled or
performed by the Company other than in the ordinary course of business
in accordance with its terms and without undue or unusual expenditure
or effort or without making a loss;
2.8 any agreement containing covenants limiting or excluding its right to
do business and/or compete in any area or any field or with any
person, firm or company;
2.9 any agreement or arrangement which contravenes or is invalidated by
any competition Law prohibiting the restriction and/or distortion of
competition in the United Kingdom, European Union, or any agreement or
arrangement which contravenes or is invalidated in Australia pursuant
to Part IV if the Trade Practices Xxx 0000 (Cth) and/or any other
territory; and
2.10 have any material disputes with its customers or suppliers.
3. None of the activities or contracts or rights of the Company are ultra
xxxxx or unauthorised by the Company and invalid or unenforceable as a
result.
4. The Company is not in breach of any material contract or covenant.
5. No offer, tender or the like, given or made by the Company on or
before the date of this Agreement and still outstanding is capable of
giving rise to a contract merely by a unilateral act of a third party.
6. All material deeds or agreements or documents to which the Company is
a party are in the possession of the Company.
MATERIAL CONTRACTS
7. The Material Contracts are all the material contracts necessary for
the conduct of the business (excluding employee contracts) and are in
full force and effect and the Company has not received notice to
terminate any Material Contract.
8. No counterparty to a Material Contract has threatened the Company to
terminate a Material Contract nor, so far as the Warrantors are aware,
has grounds to do so.
(L) INTELLECTUAL PROPERTY RIGHTS
1. All Owned Intellectual Property Rights are owned exclusively by the
Company free from Encumbrances; all Registered Owned Intellectual
Property Rights are subsisting and the Company has not been notified
by any court or tribunal of competent jurisdiction that any of the
Owned Intellectual Property Rights have been cancelled or adjudicated
invalid by any court or tribunal of competent jurisdiction, or that
they are subject to any outstanding order, judgment or decree against
them restricting their use.
2. All Licensed Intellectual Property Rights are the subject of a
subsisting licence to Company, as detailed in the Disclosure Letter,
and the Company has not been notified in writing that any of these
have been cancelled or adjudicated invalid by any court or
57
tribunal of competent jurisdiction, or are subject to any outstanding
order, judgment or decree against them restricting their use.
3. So far as the Warrantors are aware, no suit, action, reissue,
re-examination, protest, interference, opposition, cancellation, or
other proceeding by any third party (collectively, "IP Suit") is
pending or has been threatened or asserted in writing concerning any
claim that the Company has violated any third party's Intellectual
Property Rights, any Intellectual Property Contract and/or Owned
Intellectual Property Rights or moral rights. So far as the Warrantors
are aware the Company has not violated any Intellectual Property
Rights material to its business as presently conducted.
4. No party to any Intellectual Property Contract has given the Company
written notice of its intention to cancel, terminate or change the
scope of rights under such a contract during the period of 6 months
prior to the date of this Agreement.
5. So far as the Warrantors are aware, no person is violating any of the
Company's Owned Intellectual Property Rights.
6. The Company owns or otherwise has the right to use pursuant to the
licences as detailed in the Disclosure Letter sufficient for the
Company's use, all Intellectual Property Rights used by the Company as
at the date of this Agreement, including, without limitation, all
software currently used by the Company. All such Owned Intellectual
Property Rights are free of all liens and encumbrances.
7. The Company has taken reasonable measures to protect the secrecy and
confidentiality of all Trade Secrets which are Owned Intellectual
Property Rights. So far as the Warrantors are aware, the Company's
Trade Secrets have only been disclosed or made accessible to persons
with a bona fide business purpose and need for receiving and accessing
such information and details of confidentiality agreements which the
Company has with third parties are set out in the Disclosure Letter.
8. All current and former employees, consultants and independent
contractors that are or were involved in the creation, invention,
research or development of the Company's Intellectual Property Rights
have executed and delivered to the Company written agreements
assigning the Company all of their rights, title and interest in and
to the Company's Intellectual Property Rights and procuring moral
rights, consents and waivers.
9. The Owned Intellectual Property Rights and the Licensed Intellectual
Property Rights of the Company constitute all Intellectual Property
Rights necessary to enable the Company to conduct its business in the
manner in which such business is being conducted as at the date of
this Agreement. The Company has not licensed any of its Owned
Intellectual Property Rights to any person on an exclusive basis.
SOFTWARE/HARDWARE
10. To the extent that the Company does not own the Intellectual Property
Rights in any of the software which it uses or, it is licensed to use
such software on terms annexed to the Disclosure Letter.
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11. In respect of all software which the Company uses, the Company holds
copies of all source codes and object codes or is party to a fully
enforceable escrow agreement entitling it to access to the source
codes and object codes in the event of insolvency of the licensor or
failure of the licensor to provide maintenance and support for such
software. The Company has not provided the source code and/or object
code of the software developed by it to any third party.
12. Copies of all maintenance agreements in respect of software and
hardware are contained in the Disclosure Letter.
13. The communications networks necessary for the continued use and
operation of the hardware and the software which is used by the
Company is owned by or licensed or leased to the Company and details
of this are provided in the Disclosure Letter.
14. Neither the hardware nor the software owned and/or used by the Company
has been affected by any major defects or recurrent faults which have
caused any interruption which has prevented the Company from carrying
on any substantial part of its business at any time during the 12
months prior to the date of this Agreement.
15. The software and hardware presently used by the Company in the
carrying out of its business:-
15.1 permits it to do so in the same or substantially the same way as it
has done during the 12 months prior to the date of this Agreement; and
15.2 is fully functional.
There is no reason why such software and hardware should require
substantial modification, replacement or enhancement to permit the
Company to carry out its business as currently carried on in a proper
and efficient manner over the next 12 months.
16. The Company's hardware and software, which it owns or uses to operate
its business, is not wholly or partly dependent on or held by any
means which are not under the exclusive ownership or direction of the
Company including all means of access.
17. So far as the Warrantors are aware none of the Intellectual Property
Rights used or purported to be used by the Company is currently being
infringed by any third party or has been so infringed during the 12
months prior to the date of this Agreement.
18. So far as the Warrantors are aware the Company has the absolute right,
title and interest to produce, copy, distribute and sell and license
all software owned by the Company and such other Owned Intellectual
Property Rights as have been sold or licensed by the Company.
19. Reasonable steps have been taken to back up electronically stored
information used by the Company, and the Company has made prudent
disaster recovery and security arrangements in relation to the
Information Technology Systems.
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(M) EMPLOYEES AND PENSIONS
1. Details of the Company's employees including date of birth, job title,
commencement of service and period of continuous employment, notice
period, normal hours of work, remuneration and other benefits are set
out in the Disclosure Letter and such details are accurate in all
material respects.
2. Other than Xxxxxxxx Xxxxxxx, Xxxxx Xxxxxxxxx, Xxxxxx Xxxxxx, Xxxx
Xxxxxx and Xxxxx Xxxxx, all employees are employed under the terms of
the Company's standard contract of employment or standard IT contract
of employment as annexed in the Disclosure Letter.
3. There are not now outstanding any service agreements or contracts
between the Company and any of its directors, officers, executives or
employees which cannot be terminated by the Company by 12 weeks notice
or less without giving rise to a claim for damages or compensation
(other than a statutory redundancy payment).
4. There are no outstanding claims against the Company by any person who
is now or has been an officer or employee of or consultant to the
Company.
5. During the preceding three years, no disputes have arisen between the
Company and any material number or category of employees or with any
consultant and so far as the Warrantors are aware there are no present
circumstances which are likely to give rise to any such dispute.
6. The Company is not under any present or contingent liability to pay
compensation for loss of office or employment to any ex-officer or
ex-employee and no payments are now due by the Company under the
Employment Rights Xxx 0000 or under any applicable law, industrial
instrument or employment agreement.
7. Since the Accounting Date no gratuitous payment has been made or
promised by the Company in connection with the actual or proposed
termination or suspension of employment or variation of any contract
of employment of any present or former director or employee nor will
any such payment be made or promised prior to Completion.
8. Since the Accounting Date no change has been made in the rate of
remuneration or the endowment or pension benefits of any Director or
employee or consultant or in the terms of employment of any officer or
senior executive. No negotiations for any increase in the remuneration
or benefits of any officer or employee of the Company are current or
likely to take place within six months after Completion other than in
accordance with the Company's normal pattern of review (without taking
account of the transactions contemplated by this Agreement).
9. The Company has complied with in all material respects all common law,
statutory and other legal obligations owed to or in respect of every
employee and all regulations, policies, rules, custom, practices and
codes of conduct affecting the employment of any persons and have
maintained current, accurate and suitable records relating to the
service of all such employees.
10. The Company does not recognise any trade unions.
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11. No profit sharing schemes, share option schemes, 'phantom' share
option schemes, profit related pay schemes, employee share ownership
trusts under the Finance Xxx 0000, or employee benefit trusts have
been adopted by the Company and no director or employee is remunerated
on a profit sharing or bonus or commission basis of any nature
whatsoever.
12. There are no superannuation, retirement, pension, death, ill health or
disability benefit schemes or like arrangements in operation or
proposed to be operated by or in relation to the business of the
Company nor do any of the current or past employees or any other
person have any entitlement or expectation or to any such benefits
under any such scheme or arrangement (whether legally binding or
established by custom or otherwise) by virtue of or in connection with
the employment of any of the current or past employees with the
Company or any previous employment counting as continuous employment
with the Company.
13. The Company has not undertaken to any employee and/or director to
contribute to any personal pension scheme or self-managed fund (within
the meaning of the Superannuation Industry (Supervision) Act 1993).
14. The Company does not and has never had a pension scheme for its
employees and/or directors.
15. There are no payments to employees and/or directors that will arise as
a consequence of change in control of the Company.
16. The Subsidiary has satisfied all of its Superannuation Commitments and
has made all payments necessary to avoid incurring any liability to
pay the superannuation guarantee charge under the Superannuation
Guarantee Charge Act 1992 in relation to its employees, and will
continue to do so until the Completion Date.
17. There is no present legal liability or voluntary commitment (other
than a Superannuation Commitment) by the Subsidiary or the Australian
Superannuation Funds to pay benefits to an employee or any of their
dependants or beneficiaries.
18. No promise or undertaking has been given to pay a benefit to, or in
respect of, any employee who is a member of the Australian
Superannuation Fund which varies from the benefit stated in the
governing rules of that fund.
19. The Subsidiary will not agree to amend the governing rules of the
Australian Superannuation Funds, or do anything to increase the
Superannuation Commitments of the Subsidiary, up to the Completion
Date without the written consent of the Buyer.
20. In respect of the Australian Superannuation Funds, as far the
Subsidiary is aware:-
20.1 all amendments made to the governing rules of the Australian
Superannuation Fund have been validly made;
20.2 the Australian Superannuation Fund has, from the date of its
establishment, been a complying superannuation fund within the meaning
of the Income Tax Assessment Xxx 0000; and
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20.3 no order has been made by any Court or Industrial Commission in
relation to the governing rules, or the assets, of any of the
Australian Superannuation Fund.
20.4 The assets of the Australian Superannuation Fund are sufficient
(having regard to appropriate actuarial valuation methods and
assumptions) to provide the benefits payable to employees who are
members of that fund in relation to their periods of service or
membership up to the Completion Date.
21. There are no payments or compensation owed or due to any employee
under any contract, arrangement, policies or industrial instrument
arising, directly or indirectly out of a change of the shareholding or
control of the Subsidiary.
22. No claim has been made against Xxx Xxxxxx by his former employer,
Westpac Banking Corporation Limited, alleging breach of contract
arising directly or indirectly out of his termination of employment
with Westpac or his commencement of employment with the Subsidiary.
(N) THE PROPERTIES
OWNERSHIP
1. The information contained in Schedule 5 is true and accurate in all
respects.
2. The Company has good title to the Properties and has sole use and
occupancy of the Properties.
3. The Company has under its control all title deeds and documents
necessary to prove title to the Properties and the same are original
documents or properly examined abstracts and have been properly
stamped.
4. The Properties comprise all the leasehold properties owned by the
Company or occupied by it under licence or in which the Company has
any right, interest or liability (contingent or actual).
5. Since the Accounting Date the Company has not acquired or disposed of
any land or buildings or any estate, interest, right or title in land
or buildings.
THIRD PARTY RIGHTS
6. So far as the Warrantors are aware there are no encumbrances,
agreements for sale, leases, agreements for lease, conditions,
restrictive covenants, easements, licences, notices, exceptions,
reservations, rights, privileges or stipulations affecting or in the
course of being acquired in respect of the Properties or any part of
them which are of an onerous or unusual nature.
7. The Properties are not subject to the payment of any outgoings (except
the usual rents, rates and taxes) nor are there any persons in
unlawful possession or occupation of or who have or claim any rights
or easements of any kind in respect of the Properties or any part of
them adverse to the estate, interest, right or title of the Company.
8. The Company:-
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8.1 has paid all rent, insurance, service charges, and other outgoings
that may be payable in respect of the Properties; and
8.2 has received no notice of breach of any covenants (whether in relation
to freehold or leasehold land), agreements, bye-laws, conditions,
orders, planning consents, regulations, exceptions, reservations,
stipulations and statutory and common law requirements affecting the
Properties.
COMPLIANCE
9. No notice of breach of the requirements of the Public Health Acts, the
Offices, Shops and Railway Premises Acts, the Highway Acts, the
Housing Acts, the Factory Acts and the London Building Acts has been
received by the Company.
10. No planning contravention notices, breach of condition notices,
enforcement notices, or stop notices have been received by the Company
in respect of the Properties, nor, so far as the Warrantors are aware,
has any other enforcement action been taken by any such authority and
the Warrantors are not aware that such enforcement action is about to
be taken.
11. No notice of breach of any planning permissions and building
regulation and byelaw consents in relation to the Properties under the
Town and County Planning Act 1990 has been received by the Company.
12. So far as the Warrantors are aware there are no outstanding or
unobserved requirements or recommendations of the Fire Authority.
CONDITION OF THE PROPERTIES
13. The current state of repair and condition of the Properties does not
prevent the Company from carrying on the current use.
14. The Company has not been served with any Notice of Dilapidations or
received any correspondence from the Landlord relating to
dilapidations in relation to the property at Xxxx 00, Xxxxxxx Xxxxxx.
LEASEHOLD
15. Each of the Properties which is leasehold is held under the lease,
brief details of which are set out in Schedule 5, and no licences or
arrangements or concessions have been entered into or granted.
16. Any lease of the Properties which is a new tenancy for the purposes of
the Landlord and Xxxxxx Xxxxxxxxx Xxx 0000 is stated so to be in
Schedule 5.
DEVELOPMENT
17. All necessary consents and permissions relating to works carried out
at 2nd Floor, Xxxxxxx House and referred to in a licence for
alterations dated 28 January 2002 have been obtained and observed in
all material respects.
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INSURANCE
18. The Company has not done or omitted to do anything whereby any policy
of insurance relating to the Properties has or may become void or
voidable and all requisite insurances are in force and all current
premiums are fully paid.
GENERAL
19. The Company has not at any time assigned or otherwise disposed of any
real property in respect of which it has any actual or contingent
liability under any covenant or obligation relating to such real
property.
20. Full details of all leases have been accurately disclosed in writing
to the buyer or its solicitors prior to the date of this Agreement and
will be correct at Completion in all material respects.
(P) TAXATION
INFORMATION
1. The Company is in possession of sufficient information or has
reasonable access to such information to enable it to compute its
liability to Taxation in relation to any Event (as defined in the Tax
Deed) occurring on or before Completion.
2. No Taxation Authority has investigated (other than routine enquiries
following submission of a return) or indicated that it intends to
investigate the Tax affairs of the Company or carried out any audit in
relation to the Tax affairs of the Company.
3. All Taxation liabilities of the Company including contingent and
deferred liabilities as at the Accounting Date are fully and properly
provided for or reserved in the Audited Accounts.
4. The books and records of the Company are up-to-date and contain
sufficient detail in appropriate form to enable the Tax liability of
the Company to be established and to determine the Tax consequences
which would arise on any disposal or realisation of any asset owned at
the Accounting Date or acquired since that date but before Completion.
5. The Disclosure Letter contains full and accurate particulars of any
transaction in respect of which the Company is required to make a
return or provide information to a Taxation Authority, where such
return or information will not have been provided at Completion.
6. The Disclosure Letter sets out full particulars of any special
agreement or arrangement currently in place between the Company and
the Revenue as a result of which the Company is permitted not to
comply with its statutory obligations.
TAXATION CLAIMS, LIABILITIES AND RELIEFS
7. There are set out in the Disclosure Letter, with express reference to
this paragraph, particulars of all matters relating to Taxation in
respect of which the Company (either alone or jointly with any other
person) has, or at Completion will have, an outstanding
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entitlement in relation to any accounting period on or before
Completion to make any claim for relief; any appeal or further appeal
against an assessment to Taxation; any application for the
postponement of, or payment by instalments of, Taxation; or to
disclaim or require the postponement of any allowance or relief. Such
particulars are sufficient to enable the Buyer to procure that any
time limit to such entitlement expiring within six months of
Completion can be met.
8. The Company has not carried out or been engaged in any transaction or
arrangement, nor is it under a contractual obligation to carry out or
engage in any transaction or arrangement, such that it is required by
Law to substitute for the amount or value of the actual consideration
given or received (or to be given or received) by the Company any
different amount or value for taxation purposes.
9. The Company has not engaged in, or been a party to any transaction:-
9.1 on a non-arm's length basis or in relation to which section 28AA ICTA
or Division 13 of the ITAA 1936 has applied or may apply; or
9.2 for the purposes of the avoidance of Tax.
COMPLIANCE
10. The Company has made all returns, claims for relief, applications,
notifications, computations, elections and assessments (whether
physically in existence or electronically stored) ("Returns") it is
required by law to make. All Returns have been properly submitted
(whether physically or electronically) by the Company within any
relevant time limits to all relevant taxation authorities (whether of
the United Kingdom or elsewhere) and the Returns are complete, true
and accurate, give proper disclosure of all material facts and
circumstances and are not the subject of any question or dispute nor
so far as the Sellers are aware is likely to become the subject of any
question or dispute with any Taxation Authority.
11. The Company has filed an appropriate tax return for the period ended
on the Accounting Date and since the Accounting Date has not filed any
amended tax return for any period.
12. The Company has prepared, kept and preserved records as required by
Law for the purposes of Taxation of the Company.
13. The Company has properly and punctually submitted to the relevant
Taxation Authorities all claims and disclaimers which have been
assumed to have been made for the purposes of computing any provision
or reserve for Taxation (including deferred taxation) included in the
Accounts.
14. The Company has properly and punctually paid all Taxation which it has
become liable to pay and it has never paid or become liable to pay any
penalty, fine, surcharge or interest in connection with Taxation.
There is no Taxation for which the Company is liable the due date for
which will fall within 30 days of the date of this Agreement.
15. The Subsidiary has deducted or withheld and paid to the relevant
Taxation Authority every amount any Tax law requires it to deduct or
withhold and pay.
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16. Every request for a special arrangement, ruling or agreement made by
the Subsidiary with a Taxation Authority has been made with true and
full disclosure of all relevant matters.
17. The Subsidiary has carried out each transaction for which it relies
upon any special arrangement, ruling or agreement with a Taxation
Authority in the way disclosed to that Taxation Authority and in
accordance with any condition imposed by that Taxation Authority.
DISTRIBUTIONS
18. The Company has not made any distribution for Taxation purposes since
the Accounting Date.
19. The balance of the Subsidiary's franking or exempting account is nil,
and the account is not in deficit. The loss or damage for breach of
this Warranty is to be an amount equal to the franking or exempting
account deficit tax which would have been payable if the balance in
the franking or exempting account had been reduced from the warranted
balance to the actual balance by payment of a fully franked dividend.
20. The Subsidiary has kept proper records of franking debits and franking
credits which are sufficient for the purposes of the ITAA 1936 and the
ITAA 1997 and give rise to a franking or exempting account balance in
conformity with Part IIIAA of the ITAA 1936.
21. Since 6 April 1965 the Company has not made a repayment of share
capital to which Section 210 ICTA 1988 (bonus issue following
repayment of share capital) applies or issued share capital as paid up
other than by the receipt of new consideration within the meaning of
Part VI ICTA 1988 (company distributions, tax credits etc.).
RESIDENCE
22. e-pay Limited has been resident for Tax purposes in the United Kingdom
and nowhere else at all times since its incorporation and will be so
resident at Completion.
23. e-pay Limited is not liable to, and has at no time incurred any,
Taxation in any jurisdiction other than the United Kingdom.
24. e-pay Limited is not the branch, agency or UK representative (as that
term is defined in section 126 Finance Act 1995) of a person who is
not resident in the United Kingdom.
25. No provision has been made or imposed by means of a transaction or
series of transactions which requires the Company to compute its
profits or losses for tax purposes as if an arm's length provision has
been made or imposed instead of the actual provision in accordance
with the requirements of Schedule 28AA ICTA 1988. The Company has
sufficient information and records to enable it to establish that it
is not subject to the operation of Schedule 28AA ICTA 1988.
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THE SUBSIDIARY'S RESIDENCE
26. The Subsidiary has been resident for Tax purposes in Australia and
nowhere else at all times since its incorporation and will be so
resident at Completion.
27. The Subsidiary is not liable to, and has at no time incurred any,
Taxation in any jurisdiction other than Australia.
GROUP RELATIONSHIPS
28. The Company has never been a member of any group for any Taxation
purpose.
REPLACEMENT OF BUSINESS ASSETS
29. No claim has been made under any provision of Taxation legislation
which would affect the amount of gain accruing or being treated as
accruing on a disposal of an asset of the Company.
CORPORATION TAX
30. If each of the assets (other than trading stock) or the plant and
machinery taken as a whole of the Company was disposed of for a
consideration equal to the book value of that asset, or, as
appropriate, plant and machinery in, or adopted for the purpose of,
the Audited Accounts, no liability to Taxation, not fully provided for
in the Audited Accounts, would arise; and, for the purpose of
determining whether any such Taxation would arise there shall be
disregarded any relief and allowance available to the Company
concerned, other than amounts falling to be deducted in calculating
the amount liable to Taxation.
31. The Company has not disposed of or acquired any asset in circumstances
such that s 17 TCGA92 1992 (disposals and acquisitions treated as made
at market value) did or could apply to determine the consideration
deemed to be given on such disposal or acquisition.
32. No balancing charge in respect of any capital allowances claimed by or
given to the Company would arise if any assets of the Company or the
plant and machinery taken as a whole were to be realised for a
consideration equal to the amount of their book value as shown or
included in the Audited Accounts.
33. All accumulated losses disclosed in the Audited Accounts are, subject
only to the Buyer satisfying the requirements of section 80E of the
ITAA 1936 or Division 165 of the ITAA 1997, allowable as deductions to
the Subsidiary under the ITAA 1936 and the ITAA 1997.
34. The Subsidiary will not have an unrealised net loss on the Completion
Date as calculated under section 165-115E of the ITAA 1997.
35. No debt owed by the Subsidiary has been forgiven for the purposes of
Division 245 in Schedule 2C to the ITAA 1936.
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36. The Subsidiary has not provided to a shareholder a benefit to which
section 45C of the ITAA 1936 may apply because any Taxation Authority
could make a determination under section 45A(2) or 45B(3) of the ITAA
1936.
CAPITAL ALLOWANCES
For the purposes of paragraphs 38 and 39 below, references to "the Company" do
not include "the Subsidiary":-
37. All capital expenditure on the provision of machinery and plant
qualifies for writing down allowances pursuant to Part 2 CAA 2001 and
the Company has made all claims that it is eligible to make with in
the time limits required in respect of such allowances.
38. The Company is not, and has not been, entitled to claim nor has
claimed any capital allowances under Part 3 CAA 200.
CLOSE COMPANY PROVISIONS
For the purposes of paragraphs 41 to 45 below, references to "the Company" do
not include "the Subsidiary" except to the extent that it is resident in the
UK:-
39. The Company is not, nor has it been a close company within Section 414
ICTA 1988.
40. The Company has at all times in its current accounting period complied
with section 13A(2) ICTA 1988.
41. No distribution falling within Section 418 ICTA 1988 has been made by
the Company.
42. No loan or advance within Section 419 ICTA 1988 has ever been made by
the Company.
43. No gain has accrued in respect of which the Company may be liable to
corporation tax on chargeable gains by virtue of Section 13 TCGA 1992
(Attribution of gains to members of non resident companies).
44. The Company does not have any interest whether direct or indirect in
any company on the disposal of the assets of which a liability could
arise under Section 13 TCGA92 1992.
VALUE ADDED TAX (VAT)
For the purpose of these paragraphs references to "the Company" do not include
"the Subsidiary" except to the extent that it trades in the UK:-
the "VAT legislation" means the law relating to VAT in any
jurisdiction (excluding Australia) including VATA 1994 and all
regulations made or imposed under such laws (or any earlier enactment
of which VATA 1994 is a consolidation) and any other statutes or other
provisions relating to value added tax including all EC legislation
whether in the form of directives, regulations or otherwise; and
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"VAT" means UK value added tax and its equivalent under the law of any
other country (excluding Australia).
45. The Company is registered for the purposes of VAT and has been so
registered at all times that it has been required to be so registered
in accordance with VAT legislation.
46. The Company has complied in all respects with the VAT legislation and
has made and maintained full complete, correct and up-to-date records
invoices and other documents appropriate or requisite for the purpose
of such legislation and has at all times punctually paid and made all
payments and returns required under the VAT legislation.
47. The Company has never been liable to any abnormal or non-routine
payment of VAT or to any penalty or interest for late payment of VAT
or non-compliance with VAT legislation.
48. The Company has not been partially exempt for any VAT accounting
period in the last six years prior to Completion and has not in that
period been denied credit for any input tax.
49. Neither the Company nor any company of which the Company is a relevant
associate within the meaning of paragraph 3 (7) Schedule 10 VATA 1994
has elected to waive exemption under paragraph 2 Schedule 10 VATA 1994
in relation to any land except as disclosed in the Disclosure Letter.
Each such election disclosed in the Disclosure Letter has effect.
50. The Company is not and has never been treated for the purposes of
sections 43 to 43C VATA 1994 (groups of companies) as a member of a
group.
51. The Company is a registered and taxable person for the purposes of
VATA 1994 and has complied with and observed in all respects the terms
of all the statutory provisions, directions, conditions, notices and
agreements with H.M. Customs and Excise relating to value added tax.
The Company has maintained and obtained accounts, records, invoices
and other documents (as the case may be) appropriate or requisite for
the purposes of value added tax which are complete, correct and
up-to-date.
52. The Company:-
52.1 is not, nor in the two years prior to Completion has been, in arrears
with any payments or returns or notifications under any statutory
provisions, directions, conditions or notices relating to value added
tax, or liable to any forfeiture or penalty or interest or surcharge
or to the operation of any penalty, interest or surcharge provision;
52.2 has not been required by H.M. Customs and Excise to give security; and
52.3 has not received, and has not engaged in any arrangements or
transactions such that it could receive, a notice under paragraph 1
Schedule 6 VATA 1994 (valuation - special cases) directing that the
value of any supply shall be taken to be its open market value.
69
53. The Company has never received a surcharge liability notice under
section 59 VATA 1994 (default surcharge) or a penalty liability notice
under section 64 VATA 1994 (repeated misdirections).
54. The Company is not required to pay amounts on account of value added
tax under any order made under section 28 VATA 1994 (payments on
account).
55. No claims have or could be made by the Company under section 36 VATA
(bad debts).
56. Except as set out in the Disclosure letter the Company has not
received approval to operate a self-billing procedure under s 6(9)
VATA 1994 (time of supply) or has applied for such approval and in
respect of any such approval the Company has complied fully with the
conditions required to operate such procedure.
GOODS AND SERVICES TAX (GST)
57. The Subsidiary:-
57.1 is registered for GST;
57.2 has complied with GST Law;
57.3 has adequate systems to ensure it complies with the GST Law; and
57.4 is entitled to full input tax credits for any GST it has paid in
connection with taxable supplies made to it where the supplies are
used solely for creditable purposes.
58. The Subsidiary is not a member of a GST group or a GST joint venture.
59. All Australian real property acquired by the Subsidiary since 1 July
2000 was acquired under the margin scheme.
60. The Subsidiary has never supplied or acquired anything in reliance of
section 38-325 of the GST Law (concerning supplies or acquisitions of
assets as a going concern).
61. The Subsidiary has complied with section 75AU of the Trade Practices
Act 1974 (Australia) and with the Australian Competition and Consumer
Commissioner's guidelines on price exploitation in respect of every
supply made by it which was regulated by Part VB of the Trade
Practices Act.
62. No determination has been made by a Taxation Authority changing the
attribution rules for acquisitions by or supplies to the Subsidiary.
63. The Subsidiary has never issued a recipient created tax invoice. It
has never made or makes acquisitions for which it should issue a
recipient created tax invoice.
64. e-pay Limited has never made a taxable supply or a taxable importation
through the Subsidiary as resident agent.
65. The Subsidiary has never made a "reverse charged" acquisition to which
Division 83 or Division 84 of the GST Law applies.
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66. The Subsidiary has never made an agreement under Division 83 of the
GST Law to make a "reverse charged" supply or acquisition.
67. The Subsidiary is not, or has never been, a party to an agreement
under Division 153B of the GST Law in respect of any supply or
acquisition by it.
68. There is no contract requiring the Subsidiary to supply anything which
does not contain a provision enabling it as supplier to require the
other party to the contract to pay to it the amount of any GST payable
on a taxable supply under that contract in addition to consideration
for that supply.
69. There is no contract requiring the Subsidiary to pay any GST on a
taxable supply which does not contain a provision enabling it as
recipient to require the other party to the contract to provide to it
a tax invoice for any GST on the taxable supply prior to the due date
for payment for that taxable supply.
STAMP DUTY
70. All documents in the possession or under the control of the Company to
which it has been a party and which attract stamp duty, capital duty
or stamp duty reserve tax have been properly stamped, no documents are
presently subject to adjudication of claims for exemption or relief,
and there are no circumstances which may result in the Company
becoming liable for any interest or penalties.
71. There is no instrument which is necessary to establish the Company's
rights or the Company's title to any asset which is liable to stamp
duty (or any like duty or tax in a jurisdiction outside the United
Kingdom) which has not been duly stamped or which would attract stamp
duty, interest or penalties if brought within the relevant
jurisdiction.
72. There is no instrument which is necessary to establish the Company's
rights or the Company's title to any asset which has been adjudicated
as to the amount of duty with which it is chargeable, or has been
stamped with a stamp denoting that it has been adjudicated and is not
chargeable to any duty, other than where the relevant taxation
authority has been supplied with details of all facts and
circumstances which could reasonably have affected that authority's
decision when making that adjudication.
73. No event has occurred as a result of which any stamp duty (or any like
duty or tax in a jurisdiction outside the United Kingdom) from which
the Company may have obtained relief has become payable.
74. The Company does not hold any interest in land which was transferred,
granted or surrendered to it, or which is derived from an interest in
land which was transferred, granted or surrendered to it, within two
years prior to the date of this Agreement by means of an instrument
which was stamped on the basis that it was entitled to relief.
75. The Company has not been a party to any transactions which could cause
the Company to become liable to stamp duty reserve tax.
76. The Company has not obtained corporate reconstruction relief from the
payment of stamp duty in any jurisdiction. The Company has no
contingent liability to pay stamp
71
duty in connection with a prior transfer of property to it in the
course of a corporate reconstruction.
INHERITANCE TAX
77. The Company has made no transfer of value within section 94 or 99 IHTA
1984.
78. No person has or may as a result of any event occurring on or before
Completion have the power under section 212 IHTA 1984 to raise any
capital transfer tax or inheritance tax by the sale of or charge over
any of the Company's assets.
79. There is no unsatisfied liability to capital transfer tax or
inheritance tax attached or attributable to the assets of the Company
or the shares in the Company, and neither the assets nor the Shares
are subject to any Inland Revenue charge as is mentioned in section
237 IHTA 1984.
EMPLOYEES
80. e-pay Limited has properly operated and complied with all provisions
dealing with PAYE and National Insurance Contributions and has
deducted tax as required by law from all payments to or treated as
made to or benefits provided for employees, officers, ex-employees,
ex-officers and persons rendering services to e-pay Limited and has
duly accounted to the Inland Revenue or other relevant tax authority
for tax so deducted and contributions payable. The Company has
maintained and retained such books and records relating to PAYE and to
National Insurance contributions as it is required to maintain and
retain.
81. The expenses incurred under the existing arrangements for remunerating
employees, officers, ex-employees and ex-officers and rewarding
persons rendering services to e-pay Limited, including any
compensation for loss of office and any gratuitous payments, are
deductible for the purposes of section 74 or 75 ICTA 1988
(deductions).
82. e-pay Limited has not remunerated any employee, officer or person
rendering services and there are no arrangements to pay any employee,
officer or person rendering services other than in cash payable to
that employee, officer or person and in respect of which e-pay Limited
has a liability to account for tax under PAYE or to make National
Insurance contributions.
83. e-pay Limited has never, under section 136(b) (information unapproved
share options), 140G ICTA 1988 (information for the purpose of
sections 140A to 140F conditional and convertible shares), section 85
Finance Xxx 0000 (information: unapproved share schemes), and Schedule
14 paragraph 2, FA2000 (information: Enterprise Management Incentives)
been required to give or deliver particulars (as specified in those
sections) to any taxation authority.
TAX FILE NUMBERS
84. The Subsidiary has complied with all obligations about the quotation
of Tax file numbers by its employees.
72
85. The Subsidiary has not committed any offence in relation to the
collection, recording, use or disclosure of Tax file numbers.
RESIDENCE
86. The Company has not without the prior consent of H M Treasury caused,
permitted or entered into any of the transactions specified in Section
765 ICTA 1988 (migration etc of companies, issue and transfer of
securities).
87. The Company does not have and never has had any interest in a
controlled foreign company as defined in Section 747 ICTA 1988 or Part
X of the ITAA 1936.
88. No circumstances exist which would require the profits of a controlled
foreign company to be apportioned to the Company.
89. The Company has not made any claim under Section 584 ICTA 1988
("relief for unremittable overseas income") or Section 279 TCGA92
(foreign assets: delayed remittance) Section 139 FA 1993 (claim to
defer unrealised for ex gains).
90. No election has been made by the Company as the principal company (as
defined in section 187 TCGA 1992) (postponement of charge on deemed
disposal of assets by company ceasing to be resident in the United
Kingdom) nor has any company over which the Company had control or
which was a member of the same group of companies as the Company
ceased to be resident in the United Kingdom otherwise than in
compliance with section 185 TCGA 1992.
91. The Company is not nor at any time has been:-
91.1 a dual resident company within section 188 TCGA92 1992 or a prescribed
dual resident within Section 6(1) of the ITAA 1936;
91.2 a company to which section 11 ICTA 1988 applies or is likely to apply;
and
91.3 a dual resident investing company within section 404 ICTA 1988.
92. The Company has not made any such transfer as is mentioned in sections
140, 140A or 140C TCGA92 1992.
93. Except as set out in the Disclosure Letter the Company has not made
and is not entitled to make any claims under Part XVIII ICTA 1988
(relief for foreign tax) and in respect of any such disclosed claims
all necessary conditions for all foreign Taxation credit claimed or to
be claimed by the Company were at all material times, and remain,
satisfied and in particular (but without prejudice to the generality
of the foregoing) the Company holds all tax deduction certificates or
other documentation necessary for production to HM Inland Revenue in
respect of such foreign Taxation.
94. The Company is not liable to be assessed to Tax as the branch or agent
of a non-resident person, under Sections 126 to 130 Finance Xxx 0000
or otherwise.
73
(Q) SELLERS
1. So far as the Warrantors are aware no Seller and no person connected
with any Seller has any interest (direct or indirect) in any other
company or business which competes or has competed with or is in the
future likely to compete with any business now carried on by the
Company or intends to acquire any such interest.
2. There is not now outstanding:-
2.1 and there has not at any time during the past 5 years been outstanding
any contract or arrangement; or
2.2 any indebtedness actual or contingent,
to which the Company is a party and in which any Seller or any
Director of the Company or any person connected with any Seller or
Director of the Company is or has been interested, whether directly or
indirectly.
3. The Company has not at any time entered into any arrangements of a
type covered by Sections 320 or 330 of the Companies Xxx 0000.
4. The Company has not in contravention of the provisions of the
Companies Acts or any equivalent legislation in relation to any of its
Directors or any person connected with such Director:-
4.1 granted any loan or quasi-loan or entered into any guarantee or credit
transaction; or
4.2 provided any security in connection with any such loan, quasi-loan,
guarantee or credit transaction.
5. No person is entitled to receive from the Company any finder's fee,
brokerage or other commission in respect of or in connection with this
Agreement or anything contained in it or the transactions contemplated
by this Agreement.
6. The Company is not a party to, nor has its profits or financial
position during the past three years been affected by, any contract or
arrangement which was not of an entirely arm's length nature.
(R) GOOD STANDING
1. No receiver, administrative receiver, judicially appointed manager or
administrator has been appointed, petition presented, or order made
for the appointment of any such person, nor, so far as the Warrantors
are aware, any notice given over the whole or any part of the assets
or undertaking of the Company.
2. No petition has been presented, order has been made and no resolution
has been passed for the winding up of the Company or for the
appointment of a liquidator or provisional liquidator of the Company.
3. No voluntary arrangement has been proposed or is in force under
Section 1 of the Insolvency Xxx 0000 in respect of the Company.
74
4. No compromise or arrangement has been proposed, agreed to or
sanctioned in respect of creditors generally of the Company.
5. The Company has not stopped payment of its creditors generally nor is
it insolvent or unable to pay its debts as and when they fall due.
6. No unsatisfied judgment is outstanding against the Company and no
demand has been served on the Company under Section 123(1)(a) of the
Insolvency Xxx 0000.
7. No distress, execution or other process has been levied in respect of
the Company which remains undischarged; nor is there any unfulfilled
or unsatisfied judgment or court order outstanding against the
Company.
8. So far as the Warrantors are aware, no action is being taken by the
Registrar of Companies to strike the Company off the register.
(S) DISCLOSURE LETTER
1. The information set out in the Disclosure Letter is Fairly Disclosed.
75
SCHEDULE 8
ASSOCIATED CORPORATION WARRANTIES
1. The information appearing in the Recitals and Part (B) of Schedule 4
is true and accurate.
2. The shares shown in Part (B) of Schedule 4 as being registered in the
name of the Company are legally, beneficially and absolutely owned by
the Company alone.
3. There is no Encumbrance, and there is no agreement, arrangement or
obligation to create an Encumbrance, in relation to any share in the
Associated Company registered in the name of the Company and no person
has claimed to be entitled to any Encumbrance in relation to any such
shares.
4. Neither the Company, or the Subsidiary has any commitment to provide
any financial or other support to the Associated Corporation.
5. There are no agreements in force which would require the Company or
Subsidiary to subscribe for any share or loan capital or equivalent in
respect of the Associated Corporation.
6. There are no guarantees, suretyships, indemnities or similar
commitments given by the Company or the Subsidiary in respect of the
Associated Corporation.
76
SCHEDULE 9
ITEMS FOR DELIVERY BY THE SELLERS AT COMPLETION
The Sellers will deliver to the Buyer the following:-
1. transfers of the Shares duly executed by the registered holders or by
their lawfully appointed attorney in favour of the Buyer accompanied
by the respective share certificates or an indemnity in favour of the
Company in respect of a lost share certificate (in the Agreed Form);
2. certificates in respect of all issued shares in the Subsidiary;
3. certificates in respect of all issued shares in the Associated
Corporation owned by the Company;
4. the certificates of incorporation, statutory books (including minute
books), common seal and all books of account and other records of the
Company and the Subsidiary complete and (where appropriate) written up
to date;
5. the title deeds to the Properties and all ancillary documents;
6. a written acknowledgement in the Agreed Form from each of the existing
Directors of the Company and the Subsidiary who is to continue as a
Director after the date of Completion that he has no claim whatsoever
against the Company, the Subsidiary or the Associated Corporation;
7. the Tax Deed duly executed by the Warrantors;
8. copy real-time bank statements of the Company's, and the Subsidiary's
current and deposit account balances at the close of business on the
last Business Day preceding Completion;
9. appropriate certified minutes of each Group Company:-
9.1 authorising execution of the documentation in the Agreed
Form to which it is a party; and
9.2 dealing with the matters referred to in sub-clause 12.1.1(b)
of this Agreement;
10. certified copies of certificates of all registered trademarks, patents
and designs and the originals of all licences, obtained by or issued
to the Company or the Subsidiary or any other person in connection
with the business carried on by it;
11. the Disclosure Letter;
12. all records of the Company and the Subsidiary relating to the
businesses and operations of the Company and the Subsidiary copies of
all other records reasonably required to conduct the businesses and
operations of the Company and the Subsidiary in the manner in which
they have been conducted prior to the date of this Agreement,
77
to the extent that they are not in the possession or under the control
of the Company, the Subsidiary and the Associated Corporation;
13. opinion letters in the Agreed Form from lawyers acting for Xxx Xxxxxx
& Associates Pty Limited and Sefta Trustees Limited, such confirming,
inter alia, that such Sellers are properly authorised to enter into
and implement the terms of this Agreement;
14. a certified copies of (i) the executed Australian Share Exchange
Agreement; (ii) the signed board minute of the Subsidiary; (iii) the
executed share transfers; (iv) the waiver of pre-emption rights; and
(v) releases from all guarantees and confirmation from each of the
transferors and Xxx Xxxxxx that there are no subsisting guarantees
given by the Company, the Subsidiary or the Associated Corporation in
their favour and that they are not indebted to any Group Company or
the Associated Corporation or vice versa; and
15. evidence that the entire issued share capital of the Subsidiary is
legally and beneficially owned by the Company and that, subject to
stamp duty being paid, the Company will be registered as the legal
owner of the entire share capital of the Subsidiary.
78
SCHEDULE 10
MATERIAL CONTRACTS
PART A - NETWORK AGREEMENTS
DATE PARTIES DESCRIPTION OF MATERIAL CONTRACT
--------------------------------------------------------------------------------------------------------------
8 February 2002 e-pay Limited (1) Electronic Top-Ups Solution Provider Direct
Vodafone Limited (2) Agreement
--------------------------------------------------------------------------------------------------------------
1 August 2000 e-pay Limited (1) Authorisation to Operate
Vodafone Limited (2)
--------------------------------------------------------------------------------------------------------------
21 March 2001 e-pay Limited (1) Agreement for the Supply of the Orange
Orange Personal Communications Limited (2) Electronic Top-Up Mechanism for Retailers
other than Orange Retail
--------------------------------------------------------------------------------------------------------------
11 December 2000 e-pay Limited (1) Agreement for the Supply of the Orange
Orange Personal Communications Limited (2) Electronic Top-Up Mechanism
--------------------------------------------------------------------------------------------------------------
21 August 2001 e-pay Limited (1) Agreement for the Provision of Electronic
One2One Personal Communications Limited (2) Top-Up Service
--------------------------------------------------------------------------------------------------------------
11 April 2001 e-pay Limited (1) Agreement for the Provision of an Electronic
BT Cellnet Limited (2) Top-Up Service
--------------------------------------------------------------------------------------------------------------
15 July 2002 e-pay Limited (1) Agreement Relating to the Provision of
Virgin Mobile Telecoms Limited (2) Electronic Top-Up Service
--------------------------------------------------------------------------------------------------------------
22 March 2003 e-pay Limited (1) Distribution Agreement
Vodafone Ireland Limited (2)
--------------------------------------------------------------------------------------------------------------
22 January 2003 e-pay Limited (1) Phone Codes Distribution Agreement and
Meteor Mobile Communications Limited (2) Authorised Broker Agreement
--------------------------------------------------------------------------------------------------------------
22 January 2003 e-pay Limited (1) Easykey Codes Distribution Agreement
O/2/ Communications (Ireland) Limited (2)
--------------------------------------------------------------------------------------------------------------
5 December 2000 e-pay Australia Pty Limited (1) Supply Agreement
Optus Mobile Pty Limited (2)
--------------------------------------------------------------------------------------------------------------
5 November 2001 e-pay Australia Pty Limited (1) Supply Agreement
Optus Internet Pty Limited (2)
--------------------------------------------------------------------------------------------------------------
79
DATE PARTIES DESCRIPTION OF MATERIAL CONTRACT
--------------------------------------------------------------------------------------------------------------
5 October 2002 e-pay Australia Pty Limited(1) Software Licence
e-pay Limited (2)
Optus Mobile Pty Limited (3)
--------------------------------------------------------------------------------------------------------------
18 December 2002 e-pay Australia Pty Limited (1) Sub Agency Agreement
Optus Mobile Pty Limited (2)
Optus Internet Pty Limited (3)
Prepaid Services Pty Limited (4)
--------------------------------------------------------------------------------------------------------------
18 July 2001 e-pay Australia Pty Limited (1) Supply and Distribution Agreement
Telstra Corporation Limited (2)
--------------------------------------------------------------------------------------------------------------
13 November 2001 e-pay Australia Pty Limited (1) New Product Schedule 1 (Product: "Say
Telstra Corporation Limited (2) G'day")
--------------------------------------------------------------------------------------------------------------
30 November 2001 e-pay Australia Pty Limited (1) New Product Schedule 2 (Product:
Telstra Corporation Limited (2) "PhoneAway")
--------------------------------------------------------------------------------------------------------------
14 December 2001 e-pay Australia Pty Limited (1) New Product Schedule 3 (Product: "Telstra
Telstra Corporation Limited (2) Prepaid Mobile")
--------------------------------------------------------------------------------------------------------------
25 June 2001 e-pay Australia Pty Limited (1) Supply Agreement
Global Card Services Pty Limited (2)
--------------------------------------------------------------------------------------------------------------
e-pay Australia Pty Limited (1) Supply and Distribution Agreement
Virgin Mobile Pty Limited (2)
--------------------------------------------------------------------------------------------------------------
5 December 2002 e-pay Australia Pty Limited (1) Supply and Distribution Agreement
TAB Limited (2)
--------------------------------------------------------------------------------------------------------------
11 December 2002 e-pay Australia Pty Limited (1) Vodafone New Zealand Electronic System
Vodafone New Zealand Pty Limited (2) Distribution Agreement
--------------------------------------------------------------------------------------------------------------
15 January 2002 e-pay Australia Pty Limited (1) Transaction Bible
Vodafone Pty Limited (2)
--------------------------------------------------------------------------------------------------------------
1 March 2002 e-pay Australia Pty Limited (1) Supply and Distribution Agreement
Pracom Retail Pty Limited (2)
--------------------------------------------------------------------------------------------------------------
3 April 2001 e-pay Australia Pty Limited (1) Supply and Distribution Agreement
Apple Communications Limited (2)
--------------------------------------------------------------------------------------------------------------
80
PART B - RETAILER AGREEMENTS
DATE PARTIES DESCRIPTION OF MATERIAL CONTRACT
--------------------------------------------------------------------------------------------------------------
8 February 2001 e-pay Limited (1) Retailer Agreement
Tesco Stores Limited (2)
--------------------------------------------------------------------------------------------------------------
15 November 2001 e-pay Limited (1) Retailer Agreement
Somerfield Stores Limited (2)
--------------------------------------------------------------------------------------------------------------
2 April 2002 e-pay Limited (1) Retailer Agreement
The Boots Company PLC
--------------------------------------------------------------------------------------------------------------
5 April 2002 e-pay Limited (1) Retailer Agreement
Shell UK Oil Products Limited (2)
--------------------------------------------------------------------------------------------------------------
21 May 2002 e-pay Limited (1) Retailer Agreement
Asda Stores Limited (2)
--------------------------------------------------------------------------------------------------------------
22 May 2001 e-pay Limited (1) Retailer Agreement
BT Cellnet Limited (2)
--------------------------------------------------------------------------------------------------------------
11 December 2000 e-pay Limited (1) Retailer Agreement
Orange Personal Communications Services
Limited (2)
--------------------------------------------------------------------------------------------------------------
30 January 2001 e-pay Limited (1) Retailer Agreement
BP Oil UK Limited (2)
--------------------------------------------------------------------------------------------------------------
16 February 2001 e-pay Limited (1) Retailer Agreement
Northcliffe Retail
--------------------------------------------------------------------------------------------------------------
24 August 2002 e-pay Limited (1) Retailer Agreement
Rippleglen Limited (2)
--------------------------------------------------------------------------------------------------------------
7 June 2001 e-pay Limited (1) Retailer Agreement
TM Retail Limited (2)
--------------------------------------------------------------------------------------------------------------
21 June 2001 e-pay Australia Pty Limited (1) Retailer Agreement
7-Eleven Stores Pty Ltd (2)
--------------------------------------------------------------------------------------------------------------
8 October 2002 e-pay Australia Pty Limited (1) Electronic Recharge Services Agreement
Woolworths Limited (2)
--------------------------------------------------------------------------------------------------------------
11 October 2001 e-pay Australia Pty Limited (1) Retailer Agreement
Xxxx Xxxxx Electronics Pty Ltd (2)
--------------------------------------------------------------------------------------------------------------
81
DATE PARTIES DESCRIPTION OF MATERIAL CONTRACT
--------------------------------------------------------------------------------------------------------------
12 December 2001 e-pay Australia Pty Limited (1) Retailer Agreement
BP Australia Limited (2)
--------------------------------------------------------------------------------------------------------------
12 December 2001 e-pay Limited (1) Sale of E-Top-Ups at Esso Company owned
Esso Petroleum Company Limited (2) service stations
--------------------------------------------------------------------------------------------------------------
On or about 19 e-pay Australia Pty Limited (1) Retailer Agreement
July 2001 Allphones Retail Pty Limited (2)
--------------------------------------------------------------------------------------------------------------
Undated e-pay Australia Pty Limited (1) Retailer Agreement
Sibalo Pty Ltd (trading as C2One
Communications)
--------------------------------------------------------------------------------------------------------------
Undated e-pay Australia Pty Limited (1) Retailer Agreement
Retravision Australia Pty Ltd (2)
--------------------------------------------------------------------------------------------------------------
On or about 6 e-pay Australia Pty Limited (1) Retailer Agreement
September 2002 Rafinc Pty Ltd (Mobil stores) (2)
--------------------------------------------------------------------------------------------------------------
3 November 2002 e-pay Australia Pty Limited (1) Retailer Agreement
Video Ezy (2)
--------------------------------------------------------------------------------------------------------------
12 February 2002 e-pay Australia Pty Limited (1) Retailer Agreement
TLS (Forest Hill Shop) (Franchise of
Telstra (2)
--------------------------------------------------------------------------------------------------------------
3 July 2002 e-pay Australia Pty Limited (1) Retailer Agreement
Vodafone Pty Ld (Vodafone Retail store) (2)
--------------------------------------------------------------------------------------------------------------
82
SCHEDULE 11
METHOD OF PAYMENT OF EURONET SHARES
1. The number of Euronet Shares issued to the Sellers (in accordance with
the Consideration Schedule) shall be equal to (pound)11,889,743
(eleven million eight hundred and eighty-nine thousand seven hundred
and forty-three pounds sterling) converted into dollars at:-
1.1 the Exchange Rate, divided by the Closing Stock Price; and
1.2 rounded up so that each of the Sellers receives a whole number of
shares.
2. Except for Permitted Transfers (as defined below) and subject to
compliance with Paragraph 4.4 hereof, each of the Holders (as defined
below) shall be prohibited from transferring, disposing, assigning or
encumbering any of the Euronet Shares for a period of 12 months
following the Completion Date ("Transfer Restriction Period")
provided, however, that this restriction shall not apply with respect
to shares issued following an election by the Buyer to require
redemption pursuant to section 7(c) of the Convertible Notes.
"Permitted Transfer" means any transfer (a)(i) to a personal trust of
such Holder; (ii) to members of such Holder's immediate family; (iii)
to any trust for the benefit of any such person; (iv) to the estate of
any of the foregoing by gift, will or intestate succession; (v) by
will or the laws of descent and distribution; (vi) to non-profit
institutions, by gift of will; or (vii) to an "affiliate" (as such
term is defined under Rule 12b-2 of the Exchange Act) of such Holder;
provided, that any such transferee agrees in writing to be bound by
the transfer restrictions on such securities contemplated hereunder
and any such transfer complies with the provisions of Paragraph 4.4
hereof; or (b) pursuant to the Registration Statement of any shares
issued upon redemption pursuant to Section 7 of the Convertible Note.
For the purposes of this Schedule 11, the term "Holder" shall mean
each of the Sellers and their Permitted Transferees.
3. Total dilution arising from the issue by the Buyer of the Euronet
Shares (including such Euronet Shares that are issuable upon
conversion or redemption of the Convertible Note) shall not equal or
exceed 20% of the outstanding Common Stock of the Buyer immediately
prior to the Completion Date.
4. Registration of the Shares; Compliance with the Securities Act
4.1 REGISTRATION PROCEDURES AND EXPENSES
4.1.1 The Buyer shall:
(i) subject to receipt of necessary information from
the Holders prepare and file with the United
States Securities and Exchange Commission (the
"SEC") by the later of (1) 30 days after the Buyer
files its Annual Report on Form 10-K for the year
ended December 31, 2002 with the SEC and (2) April
15,2003, a registration
83
statement on Form S-3 (or, in the event the Buyer
is not eligible to use Form S-3, such other
registration form as may be utilized at such time
by Buyer) (the "Registration Statement") to enable
the resale of the Euronet Shares received by the
Sellers at the Completion (together with Euronet
Shares received by the Holders upon conversion or
redemption pursuant to the Convertible Note, the
"Registrable Shares" (which term shall include any
securities into which or for which the Euronet
Shares may hereafter be changed, converted or
exchanged, and any other shares or securities
issued with respect to the Euronet Shares to any
Holder)) by the Holders from time to time through
the automated quotation system of the NASDAQ
National Market or in privately-negotiated
transactions;
(ii) use its commercially reasonable efforts, subject
to receipt of necessary information from the
Holders, to cause the Registration Statement to
become effective (1) as promptly as practicable
with respect to any shares issued upon redemption
pursuant to Section 7 of the Convertible Note and
(2) not later than the expiration of the Transfer
Restriction Period with respect to all other
Registrable Shares;
(iii) use its commercially reasonable efforts to prepare
and file with the SEC such amendments and
supplements to the Registration Statement and the
Prospectus used in connection therewith as may be
necessary to keep the Registration Statement
current (other than during any Blackout Period (as
defined below)) and effective for a period not
exceeding, with respect to each Holder's
Registrable Shares, the earlier of (A) the second
anniversary of the Completion Date, (B) the date
on which each Holder may sell all Registrable
Shares then held by it without restriction by the
volume limitations of Rule 144(e) of the United
States Securities Act of 1933, as amended (the
"Securities Act"), or (C) such time as all
Registrable Shares issued to each Holder have been
sold pursuant to the Registration Statement;
(iv) furnish to each Holder with respect to the
Registrable Shares registered under the
Registration Statement such number of copies of
the Registration Statement, Prospectus and such
other documents as such Holder may reasonably
request, in order to facilitate the public sale or
other disposition of all or any of the Registrable
Shares by such Holder; provided, however, that the
obligation of the Buyer to deliver copies of the
Prospectus to each Holder shall be subject to the
receipt by the Buyer of reasonable assurances from
such Holder that it will comply with the
applicable provisions of the Securities Act and of
such other securities or blue sky laws as may be
applicable in connection with any use of such
Prospectus;
(v) use its commercially reasonable efforts to (A)
register or qualify the Registrable Shares to be
included in the Registration Statement
84
under such other securities laws or blue sky laws
of such jurisdictions in the United States as the
Holders shall reasonably request, (B) keep such
registrations or qualifications in effect for so
long as the Registration Statement remains in
effect and (C) take any and all such actions as
may be reasonably necessary or advisable to enable
the Holders to consummate the disposition in such
jurisdictions of such Registrable Shares;
provided, however, that Buyer shall not be
required for any such purpose to (x) qualify
generally to do business as a foreign corporation
in any jurisdiction wherein it would not otherwise
be required to qualify but for the requirements of
this Paragraph 4.1.1(v), (y) subject itself to
taxation in any such jurisdiction or (z) consent
to general service of process in any such
jurisdiction;
(vi) promptly notify the Holders and (if requested by
any such Holder) confirm such advice in writing
when the Registration Statement, the Prospectus or
any Prospectus Supplement or post-effective
amendment has been filed, and, with respect to the
Registration Statement or any post-effective
amendment, when the same has become effective;
(vii) use its commercially reasonable efforts to list
all such Registrable Shares on each securities
exchange and automated inter-dealer quotation
system on which such Registrable Shares are then
listed or admitted for trading;
(viii) use its commercially reasonable efforts to comply
with all applicable rules and regulations of the
SEC, and make available to its security holders,
as soon as reasonably practicable, an earnings
statement covering a period of at least twelve
months which shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158
thereunder; and
(ix) pay all expenses incident to Buyer's performance
or compliance herewith, including, without
limitation, all SEC and any National Association
of Securities Dealers, Inc. registration and
filing fees and expenses, fees and expenses of
compliance with securities and blue sky laws,
document preparation and printing expenses,
messenger and delivery expenses, fees and expenses
of any escrow agent or custodian, internal
expenses (including, without limitation, all
salaries and expenses of Buyer's officers and
employees performing legal or accounting duties),
fees and disbursements of counsel and independent
certified public accountants of Buyer (including
the expenses of any special audit or "cold
comfort" letters required by or incident to such
performance and compliance), and fees and expenses
of any other persons, including special experts,
retained by Buyer; provided, however, that,
notwithstanding the foregoing, the Holders of the
Registrable Securities being registered shall pay
all discounts or commissions to any underwriter or
broker attributable to the sale of such
85
Registrable Securities and the fees and
disbursements of any counsel, advisors or experts
retained by such Holders.
4.1.2 With a view to making available to the Holders the benefits
of Rule 144 of the Securities Act (or its successor rule)
("Rule 144") and any other rule or regulation of the SEC
that may at any time permit the Holders to sell Registrable
Shares to the public without registration, the Buyer
covenants and agrees to: (i) make and keep public
information available, as those terms are understood and
defined in Rule 144, until the earlier of (A) such date as
all of the Holders' Registrable Shares may be resold
pursuant to Rule 144(k) or any other rule of similar effect
or (B) such date as all of the Holders' Registrable Shares
shall have been resold; (ii) file with the SEC in a timely
manner all reports and other documents required of the Buyer
under the Securities Act and under the United States
Securities Exchange Act of 1934, as amended (the "Exchange
Act"); and (iii) furnish to the Holders upon request, as
long as any Holder owns any Registrable Shares, (A) a
written statement by the Buyer that it has complied with the
reporting requirements of the Securities Act and the
Exchange Act, (B) a copy of the Buyer's most recent Annual
Report on Form 10-K or Quarterly Report on Form 10-Q, and
(C) such other information as may be reasonably requested in
order to avail the Holders of any rule or regulation of the
SEC that permits the selling of any such Registrable Shares
without registration.
4.1.3 It shall be a condition precedent to the obligations of the
Buyer to take any action pursuant to this Paragraph 4.1 that
the Holders shall furnish to the Buyer such information
regarding itself, the Registrable Shares to be sold by the
Holders, and the intended method of disposition of such
securities as shall be required to effect the registration
of the Registrable Shares.
4.2 TRANSFER OF SHARES AFTER REGISTRATION; SUSPENSIONS; BLACKOUTS
4.2.1 Each Holder agrees that it will not effect any sale or other
transfer of the Registrable Shares except as contemplated in
the Registration Statement referred to in Paragraph 4.1 and
as described below, and that it will promptly notify the
Buyer of any changes in the information set forth in the
Registration Statement regarding each Holder or its
respective plan of distribution.
4.2.2 Except in the event that subparagraphs 4.2.3 or 4.2.4 below
applies, the Buyer shall: (i) if deemed necessary by the
Buyer, prepare and file from time to time with the SEC a
post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or a supplement or
amendment to any document incorporated therein by reference
or file any other required document so that such
Registration Statement will not contain an untrue statement
of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
86
therein not misleading, and so that, as thereafter delivered
to purchasers of the Registrable Shares being sold
thereunder, such Prospectus will not contain an untrue
statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under
which they were made, not misleading; (ii) provide each
Holder with copies of any documents filed pursuant to
subparagraphs 4.2.2(i); and 4.2.2(iii) inform each Holder
that the Buyer has complied with its obligations in
subparagraph 4.2.2(i) (or that, if the Buyer has filed a
post-effective amendment to the Registration Statement which
has not yet been declared effective, the Buyer will notify
each Holder to that effect, will use its commercially
reasonable efforts to secure the effectiveness of such
post-effective amendment as promptly as practicable and will
promptly notify each Holder pursuant to subparagraph
4.2.2(i) hereof when the amendment has become effective).
4.2.3 Subject to subparagraph 4.2.5 below, in the event: (i) of
any request by the SEC or any other federal or state
governmental authority during the period of effectiveness of
the Registration Statement for amendments or supplements to
the Registration Statement or related Prospectus or for
additional information; (ii) of the issuance by the SEC or
any other federal or state governmental authority of any
stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that
purpose; (iii) of the receipt by the Buyer of any
notification with respect to the suspension of the
qualification or exemption from qualification of any of the
Registrable Shares for sale in any jurisdiction or the
initiation of any proceeding for such purpose; or (iv) of
any event or circumstance which necessitates the making of
any changes in the Registration Statement or Prospectus, or
any document incorporated or deemed to be incorporated
therein by reference, so that, in the case of the
Registration Statement, it will not contain any untrue
statement of a material fact or any omission to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading, and that in the
case of the Prospectus, it will not contain any untrue
statement of a material fact or any omission to state a
material fact required to be stated therein or necessary to
make the statements therein, in the light of the
circumstances under which they were made, not misleading;
then the Buyer shall deliver a certificate in writing to
each Holder (the "Suspension Notice") to the effect of the
foregoing and, upon receipt of such Suspension Notice, each
Holder will suspend offers and sales of Registrable Shares
pursuant to the Registration Statement (a "Suspension")
until such Holder's receipt of copies of a supplemented or
amended Prospectus prepared and filed by the Buyer, or until
it is advised in writing by the Buyer that the current
Prospectus may be used, and has received copies of any
additional or supplemental filings that are incorporated or
deemed incorporated by reference in any such Prospectus. In
the event of any Suspension, the Buyer will use its
commercially reasonable efforts to cause the use of the
Prospectus so suspended to be resumed as soon as reasonably
practicable after delivery of a Suspension Notice to the
Holders.
4.2.4 Subject to subparagraph 4.2.5 below, if at any time the
Buyer notifies the Holders (as contemplated by subparagraph
4.2.3 above) the Buyer also notifies the Holders that the
event giving rise to such notice relates to a
87
development involving the Buyer which occurred subsequent to
the later of (i) the effective date of the Registration
Statement and (ii) the latest date prior to such notice on
which the Buyer has amended or supplemented the Registration
Statement, then the Buyer shall not be required to use its
commercially reasonable efforts to make any changes to the
Registration Statement or Prospectus, or any document
incorporated or deemed to be incorporated therein by
reference, during a period of up to 45 consecutive days as
specified in the notice contemplated herein (a "Blackout
Period") and each Holder shall suspend offers and sales of
Registrable Securities pursuant to the Registration
Statement during each Blackout Period; provided, however,
that in any period of 365 consecutive days the Buyer shall
not be entitled to avail itself of its rights under this
subparagraph 4.2.4 with respect to more than two Blackout
Periods, unless in the good faith judgment of the Buyer's
Board of Directors, upon advice of counsel, the offer and
sale of Registrable Shares would be reasonably likely to
cause a violation of the Securities Act or the Exchange Act
and result in potential liability of the Buyer.
4.2.5 Provided that a Suspension or a Blackout Period is not then
in effect, the Holders may sell Registrable Shares under the
Registration Statement, provided that each such Holder
arranges for delivery of a current Prospectus to the
transferee of such Registrable Shares. Upon receipt of a
request therefor, the Buyer agrees to provide an adequate
number of current Prospectuses to each Holder and to supply
copies to any other parties requiring such Prospectuses.
4.2.6 In the event of a sale of Registrable Shares by a Holder,
such Holder shall also deliver to the Buyer's transfer
agent, with a copy to the Buyer, a notice of such sale so
that the Registrable Shares may be properly transferred.
4.3 INDEMNIFICATION
4.3.1 Indemnification by the Buyer. Upon the registration of the
Registrable Shares pursuant to Paragraph 4.1 hereof, Buyer
shall, and it hereby agrees to, indemnify and hold harmless
Holders, the directors and officers and partners of such
Holders and each other person, if any, who controls any
Holder within the meaning of the Securities Act, from and
against any and all losses, claims, damages or liabilities,
joint or several, and expenses (including reasonable fees of
counsel and any amounts paid in any settlement effected with
the consent of Buyer) to which such Holder, such director,
officer or partner of such Holder or such controlling person
may become subject under the Securities Act, common law or
otherwise, insofar as such losses, claims, damages or
liabilities or expenses (including all such losses, claims,
damages, liabilities and expenses arising out of any actions
or proceedings, whether commenced or threatened) arise out
of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in the
Registration Statement or any preliminary, final or summary
prospectus contained therein, or any amendment or supplement
thereto, or (ii) any omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make
88
the statement therein not misleading; provided, however,
that Buyer shall not be liable to any such person in any
such case to the extent that any such loss, claim, damage,
liability (or action or proceeding, whether commenced or
threatened, in respect thereof) or expense arises out of or
is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such
Registration Statement, or preliminary, final or summary
prospectus, or amendment or supplement in reliance upon and
in conformity with written information furnished to Buyer by
such person expressly for use in the Registration Statement
or preliminary, final or summary prospectus, amendment or
supplement; and provided further, however, that Buyer will
not be liable in any case with respect to any untrue
statement or omission or alleged untrue statement or
omission made in any preliminary prospectus or prospectus,
or in any amendment thereof or supplement thereto, to the
extent that any such loss, claim, damage or liability (or
action in respect thereof) resulted from the fact that any
Holder sold Registrable Shares to a person to whom there was
not sent or given, at or prior to the written confirmation
of such sale, a copy of the prospectus as then amended or
supplemented in any case where such delivery is required by
the Securities Act, if Buyer had previously complied with
the provisions of Paragraph 4.1.1(iv) hereof and if the
untrue statement contained in or omission from such
preliminary prospectus or prospectus was corrected in the
prospectus as then amended or supplemented. Such
indemnification and reimbursement of expenses shall remain
in full force and effect regardless of any investigation
made by or on behalf of such Holder, such director, officer
or partner of such Holder or such controlling person and
shall survive the transfer of such Registrable Shares by
such Holder.
4.3.2 Indemnification by the Holders. Holders hereby agree,
severally and not jointly, to indemnify and hold harmless
Buyer, each director and officer of Buyer and each other
person, if any who controls Buyer within the meaning of the
Securities Act, from and against any and all losses, claims,
damages or liabilities, joint or several, and expenses
(including fees of counsel and any amounts paid in
settlement effected with the consent of such holders) to
which Buyer, such director or officer or controlling person
may become subject under the Securities Act, common law or
otherwise, insofar as such losses, claims, damages or
liabilities or expenses (including all such losses, claims,
damages, liabilities and expenses arising out of any actions
or proceedings, whether commenced or threatened), arise out
of or are based upon any untrue statement or alleged untrue
statement of any material fact in or omission or alleged
omission to state a material fact required to be stated in
the Registration Statement, or any preliminary, final or
summary prospectus contained therein, or any amendment or
supplement thereto, or necessary to make the statements
therein not misleading, to the extent, but only to the
extent, such statement or alleged statement or omission or
alleged omission was made in reliance upon and in conformity
with written information furnished to Buyer by or on behalf
of such Holder expressly for use in the Registration
Statement or preliminary, final or summary prospectus,
amendment or supplement; provided, however, that no such
Holder shall be liable to any such person
89
under this Paragraph 4.3.2 for any amounts in excess of the
dollar amount of the proceeds to be received by such Holder
from the sale of such Holder's Registrable Shares pursuant
to such registration. Such indemnification and reimbursement
of expenses shall remain in full force and effect regardless
of any investigation made by or on behalf of Buyer or any of
its directors, officers or controlling persons or any of the
Holders of Registrable Shares or their respective directors,
officers, partners and controlling persons and shall survive
the transfer of such Registrable Shares by such Holder.
4.3.3 Notices of Claims, Etc. Promptly after receipt by an
indemnified party hereunder of written notice of the
commencement of any action or proceeding with respect to
which a claim for indemnification may be made pursuant to
this Paragraph 4.3, such indemnified party shall, if a claim
in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement
of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall
not relieve the indemnifying party of any obligations
hereunder. In case any such action is brought against an
indemnified party, the indemnifying party shall be entitled
to participate in and to assume the defence thereof, jointly
with any other indemnifying party similarly notified, to the
extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after such
notice from the indemnifying party to such indemnified party
of its election so to assume the defence thereof, the
indemnifying party shall not be liable to such indemnified
party for any legal or other expenses subsequently incurred
by the latter in connection with the defence thereof unless
the indemnifying party has failed to assume the defence of
such claim and to employ counsel reasonably satisfactory to
such indemnified person. An indemnifying party who elects
not to assume the defence of a claim shall not be liable for
the fees and expenses of more than one counsel in any single
jurisdiction for all parties indemnified by such
indemnifying party with respect to such claim, or with
respect to claims separate but similar or related in the
same jurisdiction arising out of the same general
allegations. No indemnifying party shall consent to entry of
any judgment or enter into any settlement with respect to a
claim without the consent of the indemnified party, which
consent shall not be unreasonably withheld, or unless such
judgment or settlement includes as an unconditional term
thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect
of such claim. No indemnified party shall consent to entry
of any judgment or enter into any settlement of any action
the defence of which has been assumed by an indemnifying
party without the consent of such indemnifying party, which
consent shall not be unreasonably withheld.
4.3.4 Contribution.
(i) If for any reason the indemnification provided for
in Paragraphs 4.3.1 or 4.3.2 is unavailable to or
insufficient to hold harmless an indemnified party
in respect of any losses, claims, damages or
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liabilities specifically covered by the
indemnification provisions set forth in Paragraphs
4.3.1 or 4.3.2, then the indemnifying party shall
contribute to the amount paid or payable by the
indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the
relative fault of the indemnifying party and the
indemnified party as well as any other relevant
equitable considerations. The relative fault of
such indemnifying party and indemnified party
shall be determined by reference to, among other
things, whether any action in question, including
any untrue or alleged untrue statement of a
material fact or omission or alleged omission to
state a material fact, has been made by, or
relates to information supplied by, such
indemnifying party or indemnified party, and the
parties relative intent, knowledge, access to
information and opportunity to correct or prevent
such action. The amount paid or payable by a party
as a result of the losses, claims, damages,
liabilities and expenses referred to above shall
be deemed to include, subject to the limitations
set forth in Paragraph 4.3.3, any legal or other
fees or expenses reasonably incurred by such
party. In no event shall a Holder be required to
contribute an amount greater then the dollar
amount of the proceeds received by such holder
with respect to the sale of any Registrable
Shares.
(ii) The parties hereto agree that it would not be just
and equitable if contribution pursuant to this
Paragraph 4.3.4 were determined by pro rata
allocation or by any other method of allocation
which does not take account of the equitable
considerations referred to in the immediately
preceding paragraph. No person guilty of
fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(iii) The contribution provided for in this Paragraph
4.3.4 shall survive, with respect to a Holder, the
transfer of Registrable Shares by such Holder and
with respect to a Holder or Buyer shall remain in
full force and effect regardless of any
investigation made by or on behalf of any
indemnified party.
4.3.5 Other Indemnification. Indemnification and contribution
similar to that specified in Paragraphs 4.3.1 to 4.3.4
hereof (with appropriate modifications) shall be given by
Buyer and each Holder with respect to any required
registration or other qualification of such Registrable
Shares under any federal or state law or regulation of a
governmental authority other than the Securities Act.
4.3.6 Payments. The indemnification required by this Paragraph 4.3
shall be made by periodic payments of the amount thereof
during the course of the investigation or defence, as and
when bills are received or expense, loss, damage or
liability is incurred, subject to refund in the event any
such payments are determined not to have been due and owing
hereunder.
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4.4 PERMITTED TRANSFERS
Each Holder may from time to time transfer any or all of the
Registrable Securities and assign its rights and obligations
hereunder to one or more Permitted Transferees, provided
that prior to any such transfer and assignment, (a) such
Holder furnishes to Buyer an opinion of counsel acceptable
to Buyer stating that an exemption from registration under
the Securities Act and applicable state and foreign
securities laws is available at the time of such transfer,
(b) such Holder furnishes to Buyer information from which it
can reasonably conclude that the proposed transferee is a
Permitted Transferee, (c) such Permitted Transferee agrees
in writing to all the terms and conditions hereof and to the
status as a Holder hereunder, and (d) such Holder and such
Permitted Transferee promptly comply with Paragraph 4.1.3
hereof for purposes of amending the Registration Statement
and related prospectus covering the Registrable Securities.
4.5 UNDERWRITTEN OFFERING
Any Holder may request the Buyer to facilitate an
underwritten offering of Registrable Securities. Any such
request shall set forth in writing all such information with
respect to such proposed underwritten offering as would be
required to be included in the Registration Statement. The
Buyer shall consider whether or not any such underwritten
offering is in its best interests and shall be entitled to
accept or deny any such request in its sole discretion. Any
such underwritten offering permitted by the Buyer shall be
conducted in accordance with customary terms and conditions.
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SCHEDULE 12
DEFERRED CONSIDERATION
1. Within 10 days after the end of each fiscal quarter of the Company,
the first such payment to be made 10 days after 31 March 2003, the
Buyer shall make a payment to each of the Sellers in the proportions
set out in Consideration Schedule against the relevant Seller's name
(and for the purpose of this Schedule 12 "Seller" shall be construed
accordingly) in an aggregate amount equal to 90% of Excess Cash Flow
for such fiscal quarter by way of part payment of the Deferred
Consideration and interest.
2. If on the End Date, there remains any balance of Deferred
Consideration payable to the Sellers, notwithstanding the payments
made pursuant to paragraph 1 above of this Schedule 12, the Buyer
shall pay all amounts of Deferred Consideration and unpaid interest in
full.
3. If all Deferred Consideration and accrued interest thereon shall have
been paid by the Buyer to the Sellers prior to the End Date, the Buyer
shall have no further obligations or liability pursuant to this
Schedule 12.
4. The Deferred Consideration shall bear interest at the rate of 6% per
annum accruing on a daily basis and on the basis of a year of 365
days.
5. The Buyer shall have the right to prepay any amount of the Deferred
Consideration at any time without premium or penalty. Partial
prepayments of Deferred Consideration shall not postpone the due dates
or amounts of subsequent payments due under the terms of paragraph 1
of Schedule 12.
6. If so requested in writing by the Committee the Buyer will use all
reasonable endeavours to procure that a floating charge (the "Charge")
over account number 00000000, sort code 30-97-84 of the Company be
executed in favour of the Security Agent (as agent and trustee for
each Beneficiary) (as such term is defined in the Charge) in the
Agreed Form to secure the Deferred Consideration subject to:-
6.1 the requirements of Law;
6.2 all or any technical requirements relating to financial assistance (as
defined in Section 151 of the Companies Act 1985) being satisfied; and
6.3 consents being received from all parties having security against the
Company's assets for the creation of the debenture.
7. Each of the following shall constitute an "Event of Default" under
this Schedule 12:-
7.1 FAILURE TO PAY
If the Buyer fails to pay when due any payment owing to any Seller
under the terms of this Schedule 12, and continuance of such failure
for a period of five days after written notice thereof is received by
the Company from any Seller;
7.2 FAILURE TO OBSERVE OTHER COVENANTS
If the Buyer fails to perform or observe any material term, covenant,
warranty or agreement contained in this Schedule 12 or the charge
referred to in paragraph 6
93
above, and continuance of such failure for a period of five days after
written notice thereof is received by the Buyer from any Seller;
7.3 BREACH OF REPRESENTATION
If any representation or warranty made or deemed made by the Buyer
herein was materially untrue when made or deemed made, or is breached
in any material respect;
7.4 INVOLUNTARY BANKRUPTCY OR RECEIVERSHIP PROCEEDINGS
A receiver, conservator, liquidator or trustee of the Buyer or of its
properties is appointed by order or decree of any court or agency or
supervisory authority having jurisdiction; or an order for relief is
entered against the Buyer or under the United States Bankruptcy Code,
as amended, and any and all regulations promulgated thereunder
(collectively, the "Bankruptcy Code"); or the Buyer is adjudicated
bankrupt or insolvent; or any material portion of the properties of
the Buyer is sequestered by court order and such order remains in
effect for more than 60 days after the Company obtains knowledge
thereof; or a petition is filed against the Company under any state
bankruptcy, reorganisation, arrangement, insolvency, readjustment of
debt, dissolution, liquidation or receivership law of any
jurisdiction, whether now or hereafter in effect, and such petition is
not dismissed within 60 days;
7.5 VOLUNTARY PETITIONS
The Buyer files a petition under the Bankruptcy Code or seeks relief
under any provision of any state bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution,
liquidation or receivership law of any jurisdiction, whether now or
hereafter in effect, or consents to the filing of any such case or
petition against it under any such law;
7.6 ASSIGNMENTS FOR BENEFIT OF CREDITORS
The Buyer makes a general assignment for the benefit of its creditors,
or admits in writing its inability to pay its debts generally as they
become due, or consents to the appointment of a receiver, trustee or
liquidator of all or any part of its property;
7.7 DEFAULT UNDER OTHER AGREEMENTS
(a) The Buyer shall (A) default in any payment with respect to
any indebtedness for borrowed money (other than in relation
to Deferred Consideration) which indebtedness has an
outstanding principal amount in excess of $5,000,000
individually or $10,000,000 in the aggregate for the Buyer,
beyond the period of grace, if any,provided in the
instrument or agreement under which such indebtedness was
created or (B) default in the observance or performance of
any agreement, covenant or condition relating to any such
indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event
or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or
holders of such indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause, any such
indebtedness to become due prior to its stated maturity and
such default or event shall continue beyond the period of
grace, if any,
94
provided in the instrument or agreement under which such
indebtedness was created (after giving effect to any consent
or waiver obtained and then in effect thereunder); or
(b) any indebtedness of the Buyer which has an outstanding
principal amount in excess of $5,000,000 individually or
$10,000,000 in the aggregate for the Buyer shall, in
accordance with its terms, be declared to be due and
payable, or required to be prepaid other than by a regularly
scheduled or required payment prior to the stated maturity
thereof;
7.8 CHANGE OF CONTROL
A sale of all or substantially all of the assets of the Buyer or a
transaction or series of related transactions whereby the holders of
the Buyer's Common Stock, on a fully diluted basis, immediately prior
to such transaction or related transactions hold less than 50% of the
Buyer's Common Stock, on a fully diluted basis, after such transaction
or series of related transactions;
7.9 DELISTING OF COMMON STOCK
The Buyer's Common Stock shall cease to be listed on any of Nasdaq,
the New York Stock Exchange or the American Stock Exchange and shall
remain unlisted for a period of three Trading Days;
7.10 SALE OF BUSINESS
A sale of all or substantially all of the assets of the Company or
more than 50% of the equity shares in the Company.
7.11 CHARGE
If an Enforcement Event (as that term is defined in the Charge) occurs
under the Charge.
8. If:-
8.1 an Event of Default (other than an Event of Default specified in
paragraphs 7.4, 7.5, 7.6 and 7.11 shall occur and be continuing, then
the Security Agent may declare the outstanding amount of Deferred
Consideration and all accrued and unpaid interest on all of such
outstanding Deferred Consideration immediately due and payable by a
notice in writing to the Buyer, and upon any such declaration all such
amounts payable in respect of the Deferred Consideration shall become
immediately due and payable;
8.2 an Event of Default specified in paragraphs 7.4, 7.5, 7.6 and 7.11
occurs and is continuing, then the outstanding principal amount of
Deferred Consideration and all accrued and unpaid interest on all of
such outstanding Deferred Consideration shall become immediately due
and payable without any declaration or other act on the part of any
Seller;
8.3 the Deferred Consideration shall become due and payable pursuant to
either paragraphs 8.1 or 8.2, then the Seller, in addition to such
remedies as are therein
95
provided, shall be entitled to exercise all other rights and remedies
available at law or in equity.
9. The Buyer shall pay all reasonable costs, fees and expenses (including
court costs and reasonable attorney's fees) incurred by the Sellers in
collecting or attempting to collect any amount that becomes due
pursuant to this Schedule 12 or in seeking legal advice with respect
to any amendment or modification to this Schedule 12, any such
collection or an Event of Default hereunder.
10. Each Seller (as defined above) (other than the Security Agent) hereby
appoints the Security Agent to act as its agent and trustee under and
in connection with the Charge and to hold the assets charged under the
Charge as trustee for the Sellers and the Security Agent (together the
"Finance Parties" and each a Finance Party) on the trust and other
terms contained in the Charge and each Finance Party irrevocably
authorises the Security Agent to exercise any rights, powers,
authorities and discretions as the Security Agent shall in its
absolute discretion determine appropriate in relation to the Charged
Assets (being those assets charged under the Charge) and the Charge.
11. Each Finance Party and the Security Agent hereby undertake and
covenant in favour of each other to perform the obligations and duties
expressed to be performed by it or them in clause 23 of the Charge and
in the manner contemplated therein as if such obligations or duties
were set out herein in full mutatis mutandis, and each Finance Party
and the Security Agent hereby acknowledge and agree in favour of each
other that the various rights and entitlements set out in the Charge
are owed to each other in the terms set out in the Charge and, as
such, are enforceable against each other party.
12. Each Finance Party (other than the Committee) irrevocably and
unconditionally authorises the Committee to exercise or refrain from
exercising any rights, powers, authorities and discretions as are
contained in this Schedule 12 and to act in its absolute discretion in
exercising or refraining from exercising any such rights, powers, and
authorities without reference to any Finance Party.
13. Each Seller agrees that it will not assert or seek to assert against
the Committee any claim it might have against the Committee in respect
of any of the matters referred to in this Schedule 12.
14. The Committee may refrain from exercising any right, power or
discretion vested in it under this Schedule 12 and shall in all cases
be fully protected when acting or refraining from acting.
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SCHEDULE 13
CONVERTIBLE NOTE
THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OR REDEMPTION OF THIS
NOTE ARE SUBJECT TO RESTRICTIONS ON TRANSFER PURSUANT TO THAT CERTAIN AGREEMENT
FOR THE SALE AND PURCHASE OF THE ENTIRE ISSUED SHARE CAPITAL OF E-PAY LIMITED,
DATED FEBRUARY __, 2003. THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED BY THE HOLDER HEREOF. THE COMMON STOCK ISSUABLE UPON
CONVERSION OR REDEMPTION OF THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED FOR A PERIOD OF ONE YEAR EXPIRING ON ___________, 2004
(THE "RESTRICTED PERIOD").
THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OR REDEMPTION OF THIS
NOTE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"), OR APPLICABLE STATE OR FOREIGN SECURITIES LAWS. UPON
THE EXPIRATION OF THE RESTRICTED PERIOD, THE COMMON STOCK ISSUABLE UPON
CONVERSION OR REDEMPTION OF THIS NOTE MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IF REGISTERED UNDER THE 1933 ACT AND APPLICABLE STATE AND
FOREIGN SECURITIES LAWS OR IF THE HOLDER PROVIDES THE COMPANY WITH AN OPINION
FROM COUNSEL ACCEPTABLE TO THE COMPANY STATING THAT AN EXEMPTION FROM
REGISTRATION IS AVAILABLE AT THE TIME OF SUCH TRANSFER. HEDGING TRANSACTIONS
INVOLVING THIS NOTE OR THE COMMON STOCK ISSUABLE UPON CONVERSION OR REDEMPTION
OF THIS NOTE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT AND ALL
APPLICABLE STATE AND FOREIGN SECURITIES LAWS.
EURONET WORLDWIDE, INC.
7% CONVERTIBLE PROMISSORY NOTE DUE 2005
No. C-__ GBP ______________
Euronet Woldwide, Inc., 0000 Xxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxx 00000, XXX
_________, 2003
FOR VALUE RECEIVED, EURONET WORLDWIDE, INC., a Delaware corporation
(the "Company"), promises to pay to ______________, or registered assigns (the
"Holder"), at ________________________, or at such other place as the Holder may
from time to time designate in writing, in lawful money of the United Kingdom,
the principal sum of _____________ AND 00/100 pounds sterling (GBP _________),
in accordance with the following terms and provisions of this 7% Convertible
Promissory Note (as the same may be amended, modified or supplemented from time
to time, this "Note").
97
The obligations of the Company under this Note shall rank in right of
payment on a parity with all other unsubordinated obligations of the Company for
the payment of borrowed money. This Note was issued pursuant to the Agreement
for the sale and purchase of the entire issued share capital of e-pay Limited, a
company incorporated in England ("e-pay"), dated as of February __, 2003, as
amended (the "Purchase Agreement"), among the Company, the Holder, and the other
parties thereto. Unless the context otherwise requires, as used herein, "Note"
means this Note, "Other Notes" means the other 7% Convertible Promissory Notes
issued pursuant to the Purchase Agreement and, in either case, any other similar
convertible promissory notes issued by the Company in exchange for or to effect
a transfer thereof, and "Notes" means this Note and the Other Notes in the
aggregate.
1. Definitions. As used herein, the following terms shall have the
following meanings:
(a) "Common Stock" means the common stock, par value $.02 per share,
of the Company.
(b) "Exchange Rate" on any day means the median rate of the U.S.
Dollar to the Pound Sterling as appearing in the Wall Street Journal on such
date.
(c) "Holders" means the Holder and the Other Holders.
(d) "Majority Holders" means, at any time, the Holders holding of at
least 51% in principal amount of the Notes at the time outstanding.
(e) "Market Price" of any security on any date means the closing sale
price of such security on such date on the Nasdaq National Market or such other
securities exchange or other market on which such security is listed for trading
on such date which constitutes the principal securities market for such
security, as reported by Bloomberg, L.P.
(f) "Maturity Date" means __________, 2005 [insert date 24 months
from execution].
(g) "Other Holders" means the holders of the Other Notes.
(h) "Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
(i) "Registration Statement" means the Registration Statement
required to be filed with the SEC pursuant to Schedule 13 of the Purchase
Agreement.
(j) "Trading Day" means a day on which either the national securities
exchange or Nasdaq which then constitutes the principal securities market for
the Common Stock is open for general trading of securities.
All other capitalized terms used herein and not defined shall have the meanings
ascribed to such terms in the Purchase Agreement.
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2. Interest. This Note shall bear interest at a the rate of 7% per
annum. Accrued interest shall be computed for actual days elapsed on the basis
of a year of 365 days.
3. Payments.
(a) Accrued interest shall be payable as of each March 31 and
September 30 of each fiscal year of the Company, in arrears, beginning on
September 30, 2003, and continuing on the last day of each succeeding six-month
period until and including the Maturity Date.
(b) The unpaid principal balance of this Note, together with all
accrued and unpaid interest thereon, shall be repaid in one installment on the
Maturity Date.
(c) If on or before the Maturity Date, all or substantially all of
the assets or more than 50% of the equity interests of e-pay are sold the unpaid
principal balance of this Note and all accrued and unpaid interest thereon shall
be payable in full.
(d) As of the Maturity Date, if all payments described in paragraphs
(a), (b) and (c) of this Section 3 have been made, and if applicable, payments
due under Section 15 have been made, the Company shall have no further
obligations or liability under this Note.
(e) All payments due hereunder shall be made in immediately available
funds and, except as otherwise permitted hereunder or required by law, without
set-off, counterclaim, deduction or withholding. The Company agrees not to
withhold any amounts pursuant to U.S. federal tax laws provided it has received
from the Holder a valid Form W-8BEN.
4. Prepayment. The Company shall have the right to prepay this Note in
whole or in part, at any time, but in no event prior to a Pre-Payment Date,
without premium or penalty; provided that the Company provides the Holder with
written notice of such intention to pre-pay this Note, and the amount of such
intended pre-payment, not less than 10 Trading Days prior to the date such
pre-payment will be made (a "Pre-Payment Date"). Holder shall have the right to
convert this Note, in whole or in part, at any time prior to such Pre-Payment
Date in accordance with Section 8 hereof. Any pre-payment notice delivered by
the Company shall be irrevocable, and in the event Holder does not elect to
exercise its Conversion Rights with respect to the entire amount of such
pre-payment amount, the Company's failure to made such pre-payment to Holder on
the applicable Pre-Payment Date shall be deemed an Event of Default hereunder.
Partial prepayments shall not postpone the due dates or amounts of subsequent
payments due under the terms of Section 3 of this Note.
5. Offset; Satisfaction and Waiver.
(a) The Company shall have the right to withhold and set off against
any amounts due hereunder any amounts to which the Company believes in good
faith it is entitled from the initial Holder or any subsequent Holder under the
Purchase Agreement.
(b) The Holder shall have the right to satisfy any liability which he
or it may at any time have to the Company under the Purchase Agreement by
written election given to the Company to waive all or part of the amount
outstanding under this Note, including any accrued
99
but unpaid interest, in an amount equal to the liability (or such part of that
liability) as the Holder shall elect to satisfy in that manner.
6. Application of Payments. Payments made hereunder shall be applied
first to accrued interest hereon, if any, and any remainder to the principal
balance hereof. All payments made hereunder, and all offsets against amounts due
hereunder, shall be applied ratably to this Note and the Other Notes based on
the respective balances outstanding under this Note and the Other Notes.
7. Redemption.
(a) Redemption Conditions. The Company shall have the right to redeem
the Note in whole but not in part through the issuance of Common Stock if the
following conditions (the "Redemption Conditions") have been met:
(i) the average Market Price for the thirty consecutive Trading
Days immediately prior to the Redemption Notice Date exceeds 137.5% of the
Conversion Price (disregarding any adjustment to the Conversion Price after such
Trading Days and disregarding any adjustment to the Conversion Price pursuant to
Section 8(i) hereof);
(ii) there are sufficient authorized, unissued and unreserved
shares of Common Stock to effect the redemption;
(iii) the Common Stock is either listed or admitted to trading on
a national securities exchange or quoted on Nasdaq;
(iv) an Event of Default has not occurred and is not continuing;
(v) the Company also exercises its redemption right and satisfies
the Redemption Conditions with respect to the Other Notes; and
(vi) if the Redemption Date is on or after ________, 2004 [insert
date one year after execution], the Registration Statement is in effect and
available for use by the Holder for the resale of the Redemption Shares.
(b) Redemption Share Calculation. The number of Redemption Shares
issuable upon redemption shall equal the aggregate number of whole shares of
Common Stock determined by dividing (i) the sum of the outstanding principal
amount of the Note plus all accrued but unpaid interest thereon, as converted
into U.S. dollars in accordance with the Exchange Rate as of the Trading Day
immediately prior to the Redemption Notice Date, by (ii) the Conversion Price as
of the Trading Day immediately prior to the Redemption Notice Date.
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(c) Redemption Notice. If the Company elects to redeem the Note in
accordance with this Section 7, the Company shall deliver to the Holder a notice
of redemption (the "Redemption Notice"), on a date (the "Redemption Notice
Date") not less than 15 or more than 45 days prior to the date redemption is to
be effected (the "Redemption Date"), stating:
(i) the Redemption Date;
(ii) the total amount of principal and accrued but unpaid
interest to be redeemed;
(iii) the number of shares of Common Stock to be issued on
redemption (the "Redemption Shares"), including the basis for the calculation of
such number and any rounding adjustment made pursuant to Section 7(e);
(iv) that the Note called for redemption must be surrendered to
the Company to collect the Redemption Shares;
(v) that, unless the Company defaults in making such redemption
payment, all Conversion Rights (as defined below) terminate after the close of
business one Trading Day prior to the Redemption Date and interest on the Note
called for redemption ceases to accrue on and after the Redemption Date; and
(vi) that the requirements of the Redemption Conditions have been
met.
The Redemption Notice shall be conclusive evidence of the correctness of the
calculation of the number of Redemption Shares and of any adjustments to such
number made pursuant to this Section 7 in the absence of manifest error. On or
before the Redemption Date, the Company shall issue, or cause the transfer agent
for the Common Stock to prepare and issue, the Redemption Shares in the name of
the Holder before being so delivered by the Company on the Redemption Date.
(d) Discharge and Satisfaction; Common Stock Legend. The Redemption
Shares shall be duly issued in the name of the Holder. The Redemption Shares,
when issued pursuant to and in compliance with this Section 7, shall be, and for
all purposes shall be deemed to be, validly issued, fully paid and nonassessable
shares of Common Stock; the issuance and delivery thereof is in all respects
hereby authorized; and the issuance thereof will be, and for all purposes shall
be deemed to be, in full discharge and satisfaction of the Company's obligations
and liability under the Note and the Note shall be retired and cancelled. The
certificates
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representing the Redemption Shares shall bear any legend required by any then
existing rights agreement and any restrictive legend required by law.
(e) No Fractional Shares. Notwithstanding any provision hereof to the
contrary, the Company shall not be required to issue certificates representing
fractions of shares of Common Stock upon the redemption of the Note, nor shall
it be required to issue scrip or pay cash in lieu of fractional interests, it
being the intent of the parties that all fractional interests shall be
eliminated by rounding any fraction of .5 or more up to the nearest whole number
of shares of Common Stock and any fraction of less than .5 down to the nearest
whole number of shares of Common Stock.
(f) Irrevocable. A Note called for redemption becomes irrevocably due
and payable on the Redemption Date for the number of Redemption Shares
determined pursuant to this Section 7 and, provided that the Redemption Shares
are issued in accordance with this Section 7, shall no longer be convertible
pursuant to Section 8 hereof after the close of business one Trading Day prior
to the Redemption Date. A notice of redemption may not be conditional.
8. Conversion Rights; Adjustments. The Holder shall have conversion
rights as follows (the "Conversion Rights"):
(a) Holder's Right to Convert. At any time after the date hereof, the
outstanding principal amount of this Note plus all accrued but unpaid interest
thereon shall be convertible, in whole or in part (subject to Section 8(m)), at
the option of the Holder, at any time and from time to time into fully paid and
nonassessable shares of Common Stock at the then effective Conversion Rate (as
defined below) (each such conversion, a "Holder's Optional Conversion").
The "Conversion Rate" as of any Conversion Date (as defined below),
shall equal an amount determined by dividing (i) the amount proposed to be
converted into Common Stock outstanding on such date, as converted into U.S.
dollars in accordance with the Exchange Rate as of the Trading Day immediately
prior to the Conversion Date, by (ii) the Conversion Price (as defined below) in
effect as of such Conversion Date. The Conversion Price at which shares of
Common Stock shall be deliverable upon conversion hereof without the payment of
additional consideration by the Holder (the "Conversion Price") shall initially
be $___________[PLUG 150% of the Signing Stock Price, as defined in the Purchase
Agreement]. Such initial Conversion Price shall be subject to adjustment as
provided below.
(b) Fractional Shares. Notwithstanding any provision hereof to the
contrary, the Company shall not be required to issue certificates representing
fractions of shares of Common Stock upon the conversion of the Note, nor shall
it be required to issue scrip or pay cash in lieu of fractional interests, it
being the intent of the parties that all fractional interests shall be
eliminated by rounding any fraction of .5 or more up to the nearest whole number
of shares of Common Stock and any fraction of less than .5 down to the nearest
whole number of shares of Common Stock.
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(c) Mechanics of Conversion.
(i) In order to exercise its rights pursuant to a Holder's
Optional Conversion, the Holder shall deliver written notice in the form of
Exhibit A to the Company stating that it elects to convert all or part of the
outstanding principal amount of this Note and accrued but unpaid interest. Such
notice shall state the amount that the Holder seeks to convert and shall be
accompanied by this Note. The date contained in the notice shall be the
conversion date ("Conversion Date") and the Holder shall be deemed to own the
underlying Common Stock as of such date. As soon as practicable (but no later
than three (3) Trading Days) after the Conversion Date, the Company shall
promptly issue and deliver to the Holder a certificate or certificates for the
number of shares of Common Stock to which the Holder is entitled and, in the
case where only part of this Note is converted, the Company shall execute and
deliver a new Note in an aggregate principal amount equal to and in exchange for
the unconverted portion of the principal amount of the Note so surrendered.
Notwithstanding anything to the contrary in this Section 8, in the case where
only a part of this Note is converted, the amount of the unconverted portion
shall be at least [GBP_______]. Conversions pursuant to this Section 8 shall be
deemed to have been made immediately prior to the close of business on the
Conversion Date. The person entitled to receive the Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder of such
Common Stock at the close of business on the Conversion Date.
(ii) The Company shall at all times during which this Note shall
be outstanding, reserve and keep available out of its authorized but unissued
stock, for the purpose of effecting the conversion hereof and the Other Notes,
such number of its duly authorized shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all of such outstanding Notes.
Before taking any action which would cause an adjustment reducing the Conversion
Price below the then par value of the shares of Common Stock issuable upon
conversion of this Note and the Other Notes, the Company will take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock at such adjusted Conversion Price.
(iii) If this Note (or a portion thereof) shall have been
surrendered for conversion as herein provided, it (or such portion) shall no
longer be deemed to be outstanding and all rights with respect hereto, including
the rights, if any, to receive interest, notices and consent rights shall
immediately cease and terminate on the Conversion Date, except only the right of
the Holder to receive shares of Common Stock in exchange therefor. To the extent
so converted, this Note shall be retired and canceled.
(iv) If a Holder's Optional Conversion is in connection with an
underwritten offering of securities registered pursuant to the 1933 Act, the
conversion may, at the option of the Holder tendering shares for conversion, be
conditioned upon the closing with the underwriter of the sale of securities
pursuant to such offering, in which event the Holder entitled to receive the
Common Stock issuable upon such conversion of the Notes shall not be deemed to
have converted such Notes until immediately prior to the closing of the sale of
securities.
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(v) The certificates representing the shares issued upon
conversion shall bear any legend required by any then existing rights agreement
and any restrictive legend deemed appropriate by the Company.
(d) Adjustment for Stock Splits and Combinations. If the Company
shall at any time or from time to time after the Issue Date effect a subdivision
of the outstanding Common Stock, the Conversion Price then in effect immediately
before that subdivision shall be proportionately decreased. If the Company shall
at any time or from time to time after the Issue Date combine the outstanding
shares of Common Stock, the Conversion Price then in effect immediately before
the combination shall be proportionately increased. Any adjustment under this
paragraph shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(e) Adjustment for Certain Dividends and Distributions. In the event
the Company at any time or from time to time after the Issue Date shall make or
issue a dividend or other distribution payable in additional shares of Common
Stock, then and in each such event the Conversion Price shall be decreased as of
the time of such issuance, by multiplying such Conversion Price by a fraction,
the numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such issuance and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
prior to such issuance plus the number of such additional shares of Common Stock
issuable in payment of such dividend or distribution.
(f) Adjustments for Other Dividends and Distributions. In the event
the Company at any time, or from time to time after the Issue Date shall make or
issue, a dividend or other distribution payable in securities of the Company
(other than shares of Common Stock) or other assets or properties (including,
without limitation, cash dividends), then and in each such event provision shall
be made so that the Holder and the holders of the Other Notes shall receive in
addition to the number of shares of Common Stock receivable upon conversion of
this Note and the Other Notes, the amount of securities of the Company or other
assets or properties that they would have received had such Notes been converted
into Common Stock on the date of such event and had thereafter, during the
period from the date of such event to and including the Conversion Date,
retained such securities or other assets or properties receivable by them as
aforesaid during such period giving application to all adjustments called for
during such period, under this paragraph with respect to the rights of the
Holder and the holders of the Other Notes; provided that, in the event rights or
benefits under such securities, assets or properties shall terminate prior to
the time that the Holder may elect to convert this Note into shares of Common
Stock, such amount of securities, assets or properties that the Holder would
have received had the Holder converted this Note immediately prior to the
distribution shall be distributed to the Holder on the date the securities,
assets or properties are distributed to the holders of Common Stock.
(g) Adjustment for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon the conversion hereof (and the Other Notes) shall be
changed into the same or a different number of shares of any class or classes of
stock, whether by capital reorganization, reclassification, or otherwise (other
than a subdivision or combination of shares, stock dividend or reorganization,
reclassification, merger, consolidation or asset sale provided
104
for elsewhere in this Section 8), then and in each such event the Holder shall
have the right thereafter to convert this Note into the kind and amount of
shares of stock and other securities and property receivable upon such
reorganization, reclassification, or other change, by holders of the number of
shares of Common Stock into which this Note and all the Other Notes might have
been converted immediately prior to such reorganization, reclassification, or
change, all subject to further adjustment as provided herein or with respect to
such other securities or property by the terms thereof.
(h) Reorganizations, Mergers, Consolidations or Asset Sales. If at
any time after the Issue Date there is a tender offer, exchange offer, merger,
consolidation, recapitalization, sale of all or substantially all of the
Company's assets or reorganization involving the Common Stock (collectively, a
"Capital Reorganization") (other than a merger, consolidation, sale of assets,
recapitalization, subdivision, combination, reclassification, exchange or
substitution of shares provided for elsewhere in this Section 8), as part of
such Capital Reorganization, provision shall be made so that the Holder and the
holders of the Other Notes (whether then outstanding or thereafter issued) will
thereafter be entitled to receive upon conversion of this Note and the Other
Notes the number of shares of stock or other securities or property of the
Company to which a holder of the number of shares of Common Stock deliverable
upon conversion would have been entitled on such Capital Reorganization, subject
to adjustment in respect to such stock or securities by the terms thereof. In
any such case, appropriate adjustment will be made in the application of the
provisions of this Section 8(h) with respect to the rights of the Holder and the
holders of the Other Notes after the Capital Reorganization to the end that the
provisions of this Section 8(h) (including adjustment of the Conversion Price
then in effect and the number of shares issuable upon conversion of this Note
and the Other Notes) will be applicable after that event and be as nearly
equivalent as practicable. In the event that the Company is not the surviving
entity of any such Capital Reorganization, this Note (and each Other Note) shall
become notes of such surviving entity, with the same powers, rights and
preferences as provided herein.
(i) Adjustment for Sale of Shares. If at any time after the Issue
Date, the Company issues or sells any shares of its Common Stock or any
securities or other instruments convertible into or exercisable for shares of
Common Stock (other than (1) Common Stock issuable or issued upon conversion or
exercise of securities outstanding prior to the Issue Date, (2) options to
purchase Common Stock granted to directors, employees or consultants of the
Company and its affiliates, and Common Stock issuable or issued to such persons
thereunder or under any stock purchase or similar arrangement, (3) Common Stock
issued after the Issue Date as consideration in an acquisition of a business,
assets or a legal entity that is approved by the Company's board of directors
and (4) rights issued pursuant to a rights agreement or stockholder rights plan
approved by the Company's board of directors and Common Stock issuable or issued
upon exercise thereof or in exchange therefor (collectively, the "Excluded
Stock")), for a consideration per share less than the Signing Stock Price (as
defined in the Purchase Agreement, as adjusted to take into account subsequent
increases or decreases in the outstanding shares of Common Stock pursuant to
subdivisions, combinations or distributions of Common Stock), then and in each
such case, the Conversion Price then in effect will be reduced to a price
(calculated to the nearest cent) determined by multiplying such Conversion Price
by a fraction (1) the numerator of which will be the number of shares of Common
Stock outstanding immediately prior to such issue, plus the number of shares of
Common Stock which the aggregate
105
consideration received by the Company for such issue (plus the aggregate
consideration to be received by the Company upon the exercise thereof) would
purchase at the Closing Stock Price (as adjusted), and (2) the denominator of
which will be the number of shares of Common Stock outstanding immediately after
the Common Stock proposed to be issued or sold is issued or sold (or into which
the securities so issued or sold are convertible or exercisable); provided that
such fraction will in no event be greater than one (1). For purposes of making
any adjustment in the Conversion Price as provided in this Section 8(i), the
consideration received by the Company for any issue or sale of Common Stock
shall be computed:
(i) to the extent it consists of cash, as the amount of cash
received by the Company before deduction of any offering expenses payable by the
Company and any underwriting or similar commissions, compensation or concessions
paid or allowed by the Company in connection with such issue or sale;
(ii) to the extent it consists of property other than cash, at
the fair market value of that property as determined in good faith by the
Company's board of directors;
(iii) if Common Stock is issued or sold together with other
assets of the Company for a consideration which covers both, as the portion of
the consideration so received that may be determined in good faith by the
Company's board of directors to be allocable to such Common Stock;
(iv) if any security convertible into or exercisable for shares
of Common Stock is involved in such transaction, then, in each case, the price
per share of Common Stock issuable on the exercise of the rights or options or
the conversion of the securities will be determined by dividing the total
amount, if any, received or receivable by the Company as consideration for the
granting of the rights or options or the issue or sale of the convertible
securities, plus the minimum aggregate amount of additional consideration
payable to the Company on exercise or conversion of the securities, by the
maximum number of shares of Common Stock issuable on the exercise or conversion.
Such grant or issue or sale will be considered to be an issue or sale for cash
of the maximum number of shares of Common Stock issuable on exercise or
conversion at the per share price determined under this subsection, and the
Conversion Price will be adjusted as above provided to reflect (on the basis of
that determination) such issue or sale. No further adjustment of the Conversion
Price will be made as a result of the actual issuance of shares of Common Stock
on the exercise of any such rights or options or the conversion of any such
convertible securities. Upon the expiration or termination of any unexercised
right or option or unconverted convertible security, the Conversion Price shall
be adjusted immediately to reflect the applicable Conversion Price which would
have been in effect had such option, right or convertible security never been
issued. In the event of any change in the number of shares of Common Stock
issuable upon the exercise or conversion of any option, right or convertible
security, including but not limited to a change resulting from the anti-dilution
provisions thereof, the Conversion Price then in effect shall forthwith be
readjusted to such Conversion Price as would have been obtained had the
Conversion Price adjustment that was originally made upon the issuance of such
option, right or convertible security which were not exercised or converted
prior to such change been made upon the basis of such change, but no further
adjustment shall be made for the actual issuance of the Common Stock upon the
exercise or conversion of any such option, right or convertible security.
106
(j) No Impairment. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but will at all
times in good faith assist in the carrying out of all the provisions of this
Section 8 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the Holder against
impairment to the extent required hereunder. Nothing in this Section 8 shall
affect the continued accrual of interest on the Notes in accordance with the
terms of this Note.
(k) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 8,
the Company, at its expense. shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to the Holder a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment are based and shall file a
copy of such certificate with its corporate records. The Company shall, upon the
reasonable written request of the Holder, furnish or cause to be furnished to
such holder a similar certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price then in effect, and (iii) the number of
shares of Common Stock and the amount, if any, of other property which then
would be received upon the conversion hereof. Despite such adjustment or
readjustment, the form of this Note, if the same shall reflect the initial or
any subsequent Conversion Price, need not be changed in order for the
adjustments or readjustments to be valid in accordance with the provisions of
this Note, which shall control.
(l) Notice of Record Date. In the event:
(i) that the Company declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or other securities of
the Company;
(ii) that the Company subdivides or combines its outstanding
shares of Common Stock;
(iii) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding shares of Common
Stock or a stock dividend or stock distribution thereon);
(iv) of any Capital Reorganization; or
(v) of the involuntary or voluntary dissolution, liquidation or
winding up of the Company;
the Company shall cause to be filed at its principal office, and shall cause to
be mailed to the Holder at its last addresses as shown on the records of the
Company, at least ten (10) days prior to the record date specified in (A) below
or twenty (20) days prior to the date specified in (B) below, a notice stating
(A) the record date of such dividend, distribution,
subdivision or combination, or, if a record date is not to be taken, the date as
of which the holders of
107
Common Stock of record to be entitled to such dividend, distribution,
subdivision or combination is to be determined, or
(B) the date on which such reclassification, Capital
Reorganization, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reclassification, Capital
Reorganization, dissolution or winding up.
(m) Limitation on Shares Issuable on Conversion. Notwithstanding any
other provision herein, the Company shall not be required to issue upon
conversion of this Note a number of shares of Common Stock that, when added to
the number of shares of Common Stock issued to the Holder on the Issue Date
pursuant to the Purchase Agreement, would be in excess of the product of (i)
19.9% of the number of shares of Common Stock outstanding on the date prior to
the Issue Date and (ii) a fraction, the numerator of which is (x) the aggregate
original principal amount of this Note and the denominator of which is (y) the
aggregate original principal amount of this Note and the Other Notes.
9. Information. The Company will furnish to the Holder, promptly upon
filing thereof, copies of any filings (including on Form 10-K, 10-Q or 8-K) or
registration statements with, and reports to, the SEC (other than amendments to
any registration statements (to the extent such registration statement, in the
form it becomes effective, is delivered to the Holder), exhibits to any
registration statement and, if applicable, any registration statements on Form
S-8) and copies of all financial statements, proxy statements, notices and
reports that the Company shall send to the holders of any publicly issued debt
of the Company in their capacity as such holders (in each case to the extent not
theretofore delivered to the Holder pursuant to this Note) and, with reasonable
promptness, such other information (financial or otherwise) as the Holder may
reasonably request in writing from time to time.
10. Events of Default. Each of the following shall constitute an "Event
of Default" under this Note:
(a) Failure to Pay. If the Company fails to pay when due any payment
owing to the Holder under the terms of this Note, including without limitation
failure to make a noticed pre-payment on the Pre-Payment Date applicable
thereto, and continuance of such failure for a period of three Trading Days
after written notice thereof is received by the Company from the Holder;
(b) Failure to Observe Other Covenants. If the Company fails to
perform or observe any material term, covenant, warranty or agreement contained
in this Note, and continuance of such failure for a period of five Trading Days
after written notice thereof is received by the Company from the Holders of at
least 25% in aggregate principal amount at maturity of this Note and the Other
Notes then outstanding;
(c) Breach of Representation. If any representation or warranty made
or deemed made by the Company herein was materially untrue when made or deemed
made, or is breached in any material respect;
108
(d) Involuntary Bankruptcy or Receivership Proceedings. A receiver,
conservator, liquidator or trustee of the Company or of its properties is
appointed by order or decree of any court or agency or supervisory authority
having jurisdiction; or an order for relief is entered against the Company or
under the United States Bankruptcy Code, as amended, and any and all regulations
promulgated thereunder (collectively, the "Bankruptcy Code"); or the Company is
adjudicated bankrupt or insolvent; or any material portion of the properties of
the Company is sequestered by court order and such order remains in effect for
more than 60 days after the Company obtains knowledge thereof; or a petition is
filed against the Company under any state bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution, liquidation or
receivership law of any jurisdiction, whether now or hereafter in effect, and
such petition is not dismissed within sixty (60) days;
(e) Voluntary Petitions. The Company files a petition under the
federal Bankruptcy Code or seeks relief under any provision of any state
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution, liquidation or receivership law of any jurisdiction, whether now or
hereafter in effect, or consents to the filing of any such case or petition
against it under any such law;
(f) Assignments for Benefit of Creditors. The Company makes a general
assignment for the benefit of its creditors, or admits in writing its inability
to pay its debts generally as they become due, or consents to the appointment of
a receiver, trustee or liquidator of all or any part of its property;
(g) Default under Other Agreements. (i) The Company shall (A) default
in any payment with respect to any indebtedness for borrowed money (other than
this Note) which indebtedness has an outstanding principal amount in excess of
$5,000,000 individually or $10,000,000 in the aggregate for the Company, beyond
the period of grace, if any, provided in the instrument or agreement under which
such indebtedness was created or (B) default in the observance or performance of
any agreement, covenant or condition relating to any such indebtedness or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event or condition exist, the effect of which default or
other event or condition is to cause, or to permit the holder or holders of such
indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause, any such indebtedness to become due prior to its stated maturity and such
default or event shall continue beyond the period of grace, if any, provided in
the instrument or agreement under which such indebtedness was created (after
giving effect to any consent or waiver obtained and then in effect thereunder);
or (ii) any indebtedness of the Company which has an outstanding principal
amount in excess of $5,000,000 individually or $10,000,000 in the aggregate for
the Company shall, in accordance with its terms, be declared to be due and
payable, or required to be prepaid other than by a regularly scheduled or
required payment prior to the stated maturity thereof; (iii) the Company shall
(1) fail to pay any material amount when due under the Purchase Agreement, (2)
commit any other material default under the Purchase Agreement or (3) breach in
any material respect any material representation, warranty or undertaking given
in respect of or on the part of the Company under the Purchase Agreement; or
(iv) any Event of Default shall occur under the series of 8% unsecured
promissory notes issued by the Company pursuant to the Purchase Agreement;
109
(h) Delisting of Common Stock. The Common Stock shall cease to be
listed on any of Nasdaq, the New York Stock Exchange or the American Stock
Exchange and shall remain unlisted for a period of three Trading Days; or
(i) Sale of the Company. A sale of all or substantially all of
the assets of the Company, or any transaction or series of related transactions
whereby the holders of the Common Stock, on a fully diluted basis, immediately
prior to such transaction or series of related transactions, hold less that 50%
of the Common Stock, on a fully diluted basis, immediately after such
transaction or series of related transactions.
11. Remedies Upon Default.
(a) If an Event of Default (other than an Event of Default specified
in Sections 10(d), 10(e) and 10(f)) shall occur and be continuing, then the
Holder may declare the outstanding principal amount and all accrued and unpaid
interest on this Note immediately due and payable by a notice in writing to the
Company, and upon any such declaration all such amounts payable in respect of
this Note shall become immediately due and payable.
(b) If an Event of Default specified in Section 10(d), 10(e) or 10(f)
occurs and is continuing, then the outstanding principal amount and all accrued
and unpaid interest on this Note shall become immediately due and payable
without any declaration or other act on the part of the Holder.
(c) If this Note shall become due and payable pursuant any of the
foregoing subsections (a) or (b), then the Holder, in addition to such remedies
as are therein provided, shall be entitled to exercise all other rights and
remedies available at law or in equity.
12. Waiver of Presentment; Extensions. Presentment, demand, notice of
dishonor, protest and the benefits of the homestead and all other exemptions
provided debtors are hereby waived. The Company agrees that it shall remain
liable for the payment hereof notwithstanding any agreement for the extension of
the due date of any amount payable hereunder made by the Holder after the
maturity thereof.
13. Amendment, Waiver, Etc. Neither this Note or any Other Note nor any
terms hereof or thereof may be changed, waived, discharged or terminated unless
such change, waiver, discharge or termination is in writing signed by the
Company and the Majority Holders, provided that no such change, waiver,
discharge or termination shall, without the consent of the Holder and the
Holders of the Other Notes affected thereby, (a) extend the scheduled final
maturity of this Note or any Other Note, or reduce the rate or extend the time
of payment of interest hereon or thereon or reduce the principal amount hereof
or thereof, (b) amend, modify or waive any provision of this Section 13, (c)
reduce the percentage specified in, or otherwise modify, the definition of
Majority Holder, (d) change the method of calculating the number of Redemption
Shares pursuant to Section 7(b) in a manner adverse to the Holder or (e) change
the method of calculating the Conversion Price in a manner adverse to the
Holder.
14. Waiver of Jury Trial. THE HOLDER AND THE COMPANY IRREVOCABLY WAIVE
ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS NOTE AND THE
110
TRANSACTIONS CONTEMPLATED HEREIN, AND THE COMPANY FURTHER WAIVES ANY RIGHT TO
FILE ANY COUNTERCLAIM AS PART OF ANY ACTION OR PROCEEDING FILED OR MAINTAINED BY
THE HOLDER TO COLLECT ANY INDEBTEDNESS OF THE HOLDER OR TO EXERCISE ANY RIGHTS
OR REMEDIES AVAILABLE TO THE HOLDER UNDER THIS NOTE, AT LAW, IN EQUITY OR
OTHERWISE IN CONNECTION WITH OR RELATED TO SUCH INDEBTEDNESS.
15. Collection Costs and Expenses. The Company shall pay all reasonable
costs, fees and expenses (including court costs and reasonable attorneys' fees)
incurred by the Holder in collecting or attempting to collect any amount that
becomes due hereunder or in seeking legal advice with respect to any amendment
or modification hereof, any such collection or an Event of Default hereunder.
16. Notices. All notices, requests, demands and other communications
with respect hereto shall be in writing and shall be delivered by hand, sent
prepaid by an internationally recognized overnight courier service (e.g.,
Federal Express), sent by first class recorded delivery post, or sent by
facsimile transmission, to the following addresses:
If to the Holder, If to the Company,
Any notice, request, demand or other communication delivered or sent in
the manner aforesaid shall be deemed given or made (as the case may be) upon the
earliest of (a) the date it is actually received, (b) the business day after the
day on which it is delivered by hand, (c) the second business day after the day
on which it is properly delivered to an internationally recognized overnight
courier or if sent by first class recorded delivery post or (d) at the
expiration of 12 hours after dispatch by facsimile transmission. Either the
Company or the
111
Holder may change its address by notifying the other party of the new address in
any manner permitted by this Section 16.
17. Severability. If any provision of this Note, or the application
thereof to any Person, entity or circumstance, shall to any extent be invalid or
unenforceable, the remainder of the provisions of this Note, or the application
of such provision to other Persons or circumstances, shall not be affected
thereby, and each provision of this Note shall be valid and enforceable to the
fullest extent permitted by law.
18. Transfer of Note and Common Stock. This Note may not be offered,
sold, pledged, or otherwise transferred. The Common Stock issuable upon
conversion or redemption of this Note may not be offered, sold, pledged or
otherwise transferred for a period of one year expiring on February __, 2004
(the "Restricted Period") except (a) as provided in the Purchase Agreement and
(b) that any shares of Common Stock issued upon redemption pursuant to Section 7
hereof may be sold prior to the expiration of the Restricted Period pursuant to
the Registration Statement as soon as it is effective. Upon the expiration of
the Restricted Period, the Common Stock issuable upon conversion or redemption
of this Note may be offered, sold, pledged or otherwise transferred only if
registered under the 1933 Act and applicable state and foreign securities laws
or if the Holder provides the Company with an opinion from counsel acceptable to
the Company stating that an exemption from registration is available at the time
of such transfer. Prior to any such transfer (other than pursuant to the
Registration Statement), such transferee shall have represented in writing to
the Company that such transferee has requested and received from the Company all
information relating to the business, properties, operations, condition
(financial or other), results of operations or prospects of the Company deemed
relevant by such transferee; that such transferee has been afforded the
opportunity to obtain and review the Registration Statement and the prospectus
included therein, each as amended or supplemented to the date of transfer to
such transferee, and the reports and other information concerning the Company
which at the time of such transfer have been filed by the Company with the SEC
pursuant to the Securities Exchange Act of 1934, as amended and which are
incorporated by reference in such prospectus as of the date of such transfer.
Hedging transactions involving the Common Stock issuable upon conversion or
redemption of this Note may not be conducted unless in compliance with the 1933
Act and all applicable state and foreign securities laws.
19. Successors and Assigns. This Note shall be binding upon and inure
to the benefit of the Company and the Holder, and their respective successors
and permitted assigns; provided, however, that the Company may not assign or
delegate its obligations hereunder, by operation of law or otherwise, to any
Person without the prior written consent of the Holder.
20. Note Register. The Company shall maintain a register showing the
names, addresses and facsimile numbers of the Holder and the registered Holders
of the Other Notes. The Company shall also maintain a facility for the
registration of transfers of this Note and the Other Notes and at which this
Note and the Other Notes may be surrendered for split up into instruments of
smaller denominations or for combination into instruments of larger
denominations.
112
21. Replacement of Notes. Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Note and (a) in the case of loss, theft,
destruction, of indemnity from the Holder reasonably satisfactory in form to the
Company (and without the requirement to post any bond or other security) or (b)
in the case of mutilation, upon surrender and cancellation of this Note, the
Company will execute an deliver to the Holder a new Note of like tenor.
22. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to conflict
of laws principles.
23. Tax Classification. Prior to the conversion hereof, this Note is
intended to represent, and unless otherwise required by law, the Company and the
Holder each shall treat this Note as representing, indebtedness of the Company
for all tax purposes.
24. Survival. All agreements, representations and warranties made herein
shall survive the delivery of this Note and the disbursement of any amounts
hereunder.
25. Captions. The captions of the various Sections and paragraphs of
this Note have been inserted only for the purposes of convenience, such captions
are not a part hereof and shall not be deemed in any manner to modify, explain,
enlarge or restrict any of the provisions of this Note.
[SIGNATURES ON THE FOLLOWING PAGE]
113
IN WITNESS WHEREOF, the Company has caused this Note to be executed by
its duly authorized representative as of the day and year first above written.
EURONET WORLDWIDE, INC.
a Delaware corporation
By: ___________________
Name: ___________________
Title: ___________________
114
EXHIBIT A
(TO BE EXECUTED BY REGISTERED HOLDER
IN ORDER TO CONVERT NOTE)
CONVERSION NOTICE
FOR
7% CONVERTIBLE PROMISSORY NOTE
The undersigned, as a holder of a 7% Convertible Promissory Note of
EURONET WORLDWIDE, INC. (the "Company"), in the outstanding principal amount of
GBP _____________ (the "Note"), hereby elects to convert that portion of the
outstanding principal amount of the Note shown on the next page into shares of
Common Stock, $0.02 par value per share (the "Common Stock"), of the Company
according to the conditions of the Note, as of the date written below. The
undersigned hereby requests that share certificates for the Common Stock to be
issued to the undersigned pursuant to this Conversion Notice be issued in the
name of, and delivered to, the undersigned or its designee as indicated below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto. No fee
will be charged to the holder for any conversion, except for transfer taxes, if
any.
CONVERSION INFORMATION:
Name of Holder:
Signature:
Print Name:
Print Title:
Address of Holder:
Issue Common Stock to:
at
--------------------------------------------
Date of Conversion:
Applicable Conversion Price: $
THE COMPUTATION OF THE NUMBER OF SHARES OF COMMON STOCK TO BE RECEIVED IS SET
FORTH ON THE ATTACHED PAGE.
115
Page 2 to Conversion Notice for:
(NAME OF HOLDER)
Total Dollar Amount Converted: $
Conversion Price: $
Number of Shares of Common Stock to be Received:
Please issue and deliver _____ certificate(s) for shares of Common Stock in the
following amount(s):
Please issue and deliver _____ new Note(s) in the following amounts:
116
SCHEDULE 14
UNSECURED QCB NOTES
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT"), OR APPLICABLE STATE OR FOREIGN SECURITIES
LAWS.
THIS NOTE IS SUBJECT TO RESTRICTIONS ON TRANSFER PURSUANT TO THAT CERTAIN
AGREEMENT FOR THE SALE AND PURCHASE OR THE ENTIRE ISSUED SHARE CAPITAL OF E-PAY
LIMITED, DATED FEBRUARY 19, 2003, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED BY THE HOLDER HEREOF.
EURONET WORLDWIDE, INC.
8% UNSECURED PROMISSORY NOTE DUE ____
No. B-__ GBP _________
Leawood, Kansas
February 19, 2003
FOR VALUE RECEIVED, EURONET WORLDWIDE, INC., a Delaware corporation
(the "Company"), promises to pay to ______________, or registered assigns (the
"Holder"), at ________________________, or at such other place as the Holder may
from time to time designate in writing, in lawful money of the United Kingdom,
the principal sum of _____________ AND 00/100 pounds sterling (GBP _________),
in accordance with the following terms and provisions of this 8% Unsecured
Promissory Note (as the same may be amended, modified or supplemented from time
to time, this "Note").
The obligations of the Company under this Note shall rank in right of
payment on a parity with all other unsubordinated obligations of the Company for
the payment of borrowed money. This Note was issued pursuant to the Agreement
for the sale and purchase of the entire issued share capital of e-pay, Limited,
a company incorporated in England ("e-pay"), dated as of February __, 2003, as
amended (the "Purchase Agreement"), among the Company, the Holder, and the other
parties thereto. Unless the context otherwise requires, as used herein, "Note"
means this Note, "Other Notes" means the other 8% Unsecured Promissory Notes
issued pursuant to the Purchase Agreement and, in either case, any other similar
unsecured promissory notes issued by the Company in exchange for or to effect a
transfer thereof, and "Notes" means this Note and the Other Notes in the
aggregate.
1. Definitions. As used herein, the following terms shall have the
following meanings:
(a) "Holders" means the Holder and the Other Holders.
117
(b) "Majority Holders" means, at any time, the Holders holding of at
least 51% in principal amount of the Notes at the time outstanding.
(c) "Maturity Date" means February 19, 2005.
(d) "Other Holders" means the holders of the Other Notes.
(e) "Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
All other capitalized terms used herein and not defined shall have the meanings
ascribed to such terms in the Purchase Agreement.
2. Interest. This Note shall bear interest at a the rate of 8% per
annum. Accrued interest shall be computed for actual days elapsed on the basis
of a year of 365 days.
3. Payments.
(a) Accrued interest shall be payable as of each March 31 and
September 30 of each fiscal year of the Buyer, in arrears, beginning on
September 30, 2003, and continuing on the last day of each succeeding six-month
period until and including the Maturity Date.
(b) The unpaid principal balance of this Note, together with all
accrued and unpaid interest thereon, shall be repaid in one installment on the
Maturity Date.
(c) If on or before the Maturity Date, all or substantially all of
the assets or more than 50% of the equity interests of e-pay are sold the unpaid
principal balance of this Note and all accrued and unpaid interest thereon shall
be payable in full.
(d) As of the Maturity Date, if all payments described in paragraphs
(a), (b) and (c) of this Section 3 have been made, and if applicable, payments
due under Section 13 have been made, the Company shall have no further
obligations or liability under this Note.
(e) All payments due hereunder shall be made in immediately available
funds and, except as otherwise permitted hereunder or required by law, without
set-off, counterclaim, deduction or withholding. The Company agrees not to
withhold any amounts pursuant to U.S. federal tax laws provided it has received
from the Holder a valid Form W-8BEN.
4. Prepayment. The Company shall have the right to prepay this Note in
whole or in part, at any time, without premium or penalty. Partial prepayments
shall not postpone the due dates or amounts of subsequent payments due under the
terms of Section 3 of this Note.
5. Offset; Satisfaction and Waiver.
(a) The Company shall have the right to withhold and set off against
any amounts due hereunder any amounts to which the Company believes in good
faith it is entitled from the initial Holder or any subsequent Holder under the
Purchase Agreement.
118
(b) The Holder shall have the right to satisfy any liability which he
or it may at any time have to the Company under the Purchase Agreement by
written election given to the Company to waive all or part of the amount
outstanding under this Note, including any accrued but unpaid interest, in an
amount equal to the liability (or such part of that liability) as the Holder
shall elect to satisfy in that manner.
6. Application of Payments. Payments made hereunder shall be applied
first to accrued interest hereon, if any, and any remainder to the principal
balance hereof. All payments made hereunder, and all offsets against amounts due
hereunder, shall be applied ratably to this Note and the Other Notes based on
the respective balances outstanding under this Note and the Other Notes.
7. Information. The Company will furnish to the Holder, promptly upon
filing thereof, copies of any filings (including on Form 10-K, 10-Q or 8-K) or
registration statements with, and reports to, the Securities and Exchange
Commission ("SEC") (other than amendments to any registration statements (to the
extent such registration statement, in the form it becomes effective, is
delivered to the Holder), exhibits to any registration statement and, if
applicable, any registration statements on Form S-8) and copies of all financial
statements, proxy statements, notices and reports that the Company shall send to
the holders of any publicly issued debt of the Company in their capacity as such
holders (in each case to the extent not theretofore delivered to the Holder
pursuant to this Note) and, with reasonable promptness, such other information
(financial or otherwise) as the Holder may reasonably request in writing from
time to time.
8. Events of Default. Each of the following shall constitute an "Event
of Default" under this Note:
(a) Failure to Pay. If the Company fails to pay when due any payment
owing to the Holder under the terms of this Note, and continuance of such
failure for a period of three business days after written notice thereof is
received by the Company from the Holder;
(b) Failure to Observe Other Covenants. If the Company fails to
perform or observe any material term, covenant, warranty or agreement contained
in this Note, and continuance of such failure for a period of five days after
written notice thereof is received by the Company from the Holders of at least
25% in aggregate principal amount at maturity of this Note and the Other Notes
then outstanding;
(c) Breach of Representation. If any representation or warranty made
or deemed made by the Company herein was materially untrue when made or deemed
made, or is breached in any material respect;
(d) Involuntary Bankruptcy or Receivership Proceedings. A receiver,
conservator, liquidator or trustee of the Company or of its properties is
appointed by order or decree of any court or agency or supervisory authority
having jurisdiction; or an order for relief is entered against the Company or
under the United States Bankruptcy Code, as amended, and any and all regulations
promulgated thereunder (collectively, the "Bankruptcy Code"); or the Company is
adjudicated bankrupt or insolvent; or any material portion of the properties of
the Company is sequestered by court order and such order remains in effect for
more than 60 days
119
after the Company obtains knowledge thereof; or a petition is filed against the
Company under any state bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution, liquidation or receivership law of any
jurisdiction, whether now or hereafter in effect, and such petition is not
dismissed within sixty (60) days;
(e) Voluntary Petitions. The Company files a petition under the
Bankruptcy Code or seeks relief under any provision of any state bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution,
liquidation or receivership law of any jurisdiction, whether now or hereafter in
effect, or consents to the filing of any such case or petition against it under
any such law;
(f) Assignments for Benefit of Creditors. The Company makes a general
assignment for the benefit of its creditors, or admits in writing its inability
to pay its debts generally as they become due, or consents to the appointment of
a receiver, trustee or liquidator of all or any part of its property; or
(g) Default under Other Agreements. (i) The Company shall (A) default
in any payment with respect to any indebtedness for borrowed money (other than
this Note) which indebtedness has an outstanding principal amount in excess of
$5,000,000 individually or $10,000,000 in the aggregate for the Company, beyond
the period of grace, if any, provided in the instrument or agreement under which
such indebtedness was created or (B) default in the observance or performance of
any agreement, covenant or condition relating to any such indebtedness or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event or condition exist, the effect of which default or
other event or condition is to cause, or to permit the holder or holders of such
indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause, any such indebtedness to become due prior to its stated maturity and such
default or event shall continue beyond the period of grace, if any, provided in
the instrument or agreement under which such indebtedness was created (after
giving effect to any consent or waiver obtained and then in effect thereunder);
or (ii) any indebtedness of the Company which has an outstanding principal
amount in excess of $5,000,000 individually or $10,000,000 in the aggregate for
the Company shall, in accordance with its terms, be declared to be due and
payable, or required to be prepaid other than by a regularly scheduled or
required payment prior to the stated maturity thereof; or (iii) the Company
shall (1) fail to pay any material amount when due under the Purchase Agreement,
(2) commit any other material default under the Purchase Agreement or (3) breach
in any material respect any material representation, warranty or undertaking
given in respect of or on the part of the Company under the Purchase Agreement;
or (iv) any Event of Default shall occur under the series of 7% convertible
promissory notes issued by the Company pursuant to the Purchase Agreement; or
(h) Sale of the Company. A sale of all or substantially all of the
assets of the Company, or any transaction or series of related transactions
whereby the holders of the Common Stock, on a fully diluted basis, immediately
prior to such transaction or series of related transactions, holder less than
50% of the Common Stock, on a fully diluted basis, immediately after such
transaction or series of related transactions.
9. Remedies Upon Default.
120
(a) If an Event of Default (other than an Event of Default specified
in Sections 8(d), 8(e) and 8(f)) shall occur and be continuing, then the Holder
may declare the outstanding principal amount and all accrued and unpaid interest
on this Note immediately due and payable by a notice in writing to the Company,
and upon any such declaration all such amounts payable in respect of this Note
shall become immediately due and payable.
(b) If an Event of Default specified in Sections 8(d), 8(e) or 8(f)
occurs and is continuing, then the outstanding principal amount and all accrued
and unpaid interest on this Note shall become immediately due and payable
without any declaration or other act on the part of the Holder.
(c) If this Note shall become due and payable pursuant any of the
foregoing subsections (a) or (b), then the Holder, in addition to such remedies
as are therein provided, shall be entitled to exercise all other rights and
remedies available at law or in equity.
10. Waiver of Presentment; Extensions. Presentment, demand, notice of
dishonor, protest and the benefits of the homestead and all other exemptions
provided debtors are hereby waived. The Company agrees that it shall remain
liable for the payment hereof notwithstanding any agreement for the extension of
the due date of any amount payable hereunder made by the Holder after the
maturity thereof.
11. Amendment, Waiver, Etc. Neither this Note or any Other Note nor any
terms hereof or thereof may be changed, waived, discharged or terminated unless
such change, waiver, discharge or termination is in writing signed by the
Company and the Majority Holders, provided that no such change, waiver,
discharge or termination shall, without the consent of the Holder and the
Holders of the Other Notes affected thereby, (a) extend the scheduled final
maturity of this Note or any Other Note, or reduce the rate or extend the time
of payment of interest hereon or thereon or reduce the principal amount hereof
or thereof, (b) amend, modify or waive any provision of this Section 11, or (c)
reduce the percentage specified in, or otherwise modify, the definition of
Majority Holder.
12. Waiver of Jury Trial. THE HOLDER AND THE COMPANY IRREVOCABLY WAIVE
ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS NOTE AND THE TRANSACTIONS CONTEMPLATED HEREIN, AND
THE COMPANY FURTHER WAIVES ANY RIGHT TO FILE ANY COUNTERCLAIM AS PART OF ANY
ACTION OR PROCEEDING FILED OR MAINTAINED BY THE HOLDER TO COLLECT ANY
INDEBTEDNESS OF THE HOLDER, OR TO EXERCISE ANY RIGHTS OR REMEDIES AVAILABLE TO
THE HOLDER UNDER THIS NOTE, AT LAW, IN EQUITY OR OTHERWISE IN CONNECTION WITH OR
RELATED TO SUCH INDEBTEDNESS.
13. Collection Costs and Expenses. The Company shall pay all reasonable
costs, fees and expenses (including court costs and reasonable attorneys' fees)
incurred by the Holder in collecting or attempting to collect any amount that
becomes due hereunder or in seeking legal advice with respect to any amendment
or modification hereof, any such collection or an Event of Default hereunder.
121
14. Notices. All notices, requests, demands and other communications
with respect hereto shall be in writing and shall be delivered by hand, sent
prepaid by an internationally recognized overnight courier service (e.g.,
Federal Express), sent by first class recorded delivery post, or sent by
facsimile transmission, to the following addresses:
If to the Holder, If to the Company,
Any notice, request, demand or other communication delivered or sent in
the manner aforesaid shall be deemed given or made (as the case may be) upon the
earliest of (a) the date it is actually received, (b) the business day after the
day on which it is delivered by hand, (c) the second business day after the day
on which it is properly delivered to an internationally recognized overnight
courier or if sent by first class recorded delivery post or (d) at the
expiration of 12 hours after dispatch by facsimile transmission. Either the
Company or the Holder may change its address by notifying the other party of the
new address in any manner permitted by this Section 14.
15. Severability. If any provision of this Note, or the application
thereof to any Person, entity or circumstance, shall to any extent be invalid or
unenforceable, the remainder of the provisions of this Note, or the application
of such provision to other Persons or circumstances, shall not be affected
thereby, and each provision of this Note shall be valid and enforceable to the
fullest extent permitted by law.
16. No Transfer of Note. This Note has not been and is not being
registered under the provisions of the 1933 Act or applicable state or foreign
securities laws. This Note may not be offered, sold, pledged, assigned or
otherwise transferred.
122
17. Successors and Assigns. This Note shall be binding upon and inure
to the benefit of the Company and the Holder, and their respective successors
and permitted assigns; provided, however, that the Company may not assign or
delegate its obligations hereunder, by operation of law or otherwise, to any
Person without the prior written consent of the Holder.
18. Note Register. The Company shall maintain a register showing the
names, addresses and facsimile numbers of the Holder and the registered Holders
of the Other Notes. The Company shall also maintain a facility for the
registration of transfers of this Note and the Other Notes and at which this
Note and the Other Notes may be surrendered for split up into instruments of
smaller denominations or for combination into instruments of larger
denominations.
19. Replacement of Notes. Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Note and (a) in the case of loss, theft,
destruction, of indemnity from the Holder reasonably satisfactory in form to the
Company (and without the requirement to post any bond or other security) or (b)
in the case of mutilation, upon surrender and cancellation of this Note, the
Company will execute and deliver to the Holder a new Note of like tenor.
20. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to conflict
of laws principles.
21. Tax Classification. This Note is intended to represent, and unless
otherwise required by law, the Company and the Holder each shall treat this Note
as representing, indebtedness of the Company for all tax purposes.
22. Survival. All agreements, representations and warranties made herein
shall survive the delivery of this Note and the disbursement of any amounts
hereunder.
23. Captions. The captions of the various Sections and paragraphs of
this Note have been inserted only for the purposes of convenience, such captions
are not a part hereof and shall not be deemed in any manner to modify, explain,
enlarge or restrict any of the provisions of this Note.
[SIGNATURES ON THE FOLLOWING PAGE]
123
IN WITNESS WHEREOF, the Company has caused this Note to be executed by
its duly authorized representative as of the day and year first above written.
EURONET WORLDWIDE, INC.
a Delaware corporation
By: ___________________
Name: ___________________
Title: ___________________
124
SCHEDULE 15
CONSIDERATION ADJUSTMENT COMPLETION ACCOUNTS
1. If there is a dispute as to whether or not an adjustment is required
which is not resolved between the Committee and the Buyer within 5
Business Days, the Sellers shall procure that the Completion Accounts
incorporating a Statement of Working Capital Value are prepared as
soon as practicable and, in any event within 20 Business Days. The
reasonable costs of the preparation of such Completion Accounts will
be borne by the Buyer.
2. The Completion Accounts shall be prepared on a basis which is
consistent with the manner in, and the principles, bases and policies
on which the Audited Accounts were prepared and, in accordance with
generally accepted accounting standards in England and Wales. The
Buyer shall provide the Seller's Accountants with access to all
documentation, information and data in or relating to the Company
reasonably considered appropriate by the Seller's Accountants in order
to prepare the Completion Accounts.
3. When draft Completion Accounts have been prepared, the Committee shall
promptly deliver a copy of the draft Completion Accounts and Statement
of Working Capital Value to the Buyer for review.
4. Within 15 Business Days after the Committee delivers the draft
Completion Accounts to the Buyer, the parties shall procure that the
Buyer's Accountant and the Seller's Accountants meet to review the
draft Completion Accounts and to satisfy themselves that they have
been duly prepared in accordance with this Agreement and that the
Statement of Working Capital Value has been correctly stated. The
Committee shall promptly provide, and render or cause the provision
and rendering to the Buyer of such information and assistance as the
Buyer may reasonably require for the purposes of agreeing the
Completion Accounts and the Statement of Working Capital Value. The
Buyer shall then, within 10 Business Days following such meeting
either:-
4.1 confirm in writing (a "Satisfaction Notice") to the
Committee that the Buyer agrees that the draft Completion
Audited Accounts have been duly prepared and that the
Working Capital Value has been correctly stated; or
4.2 give notice in writing (a "Dissatisfaction Notice") to the
Committee explaining in reasonable detail why they are
unable so to confirm.
5. If the Buyer fails to give a Satisfaction Notice or a Dissatisfaction
Notice when required, the draft Completion Audited Accounts and the
Statement of Working Capital Value shall be deemed to have been
finally accepted and agreed by the Sellers and the Buyer.
6. If the Buyer gives a Dissatisfaction Notice the Buyer and Committee
shall endeavour to resolve all matters in dispute as soon as is
practicable.
7. If the Buyer and Committee fail to resolve such matters within 10
Business Days of the date of the giving of the Dissatisfaction Notice
(the "Resolution Period") either the Buyer or the Committee may refer
all matters in dispute for resolution to an
125
independent chartered accountant (the "Accountant").
8. The identity of the Accountant shall be agreed between the parties and
he shall be appointed within five Business Days of the expiry of the
Resolution Period (the "Appointment Period"). If there is a failure to
appoint the Accountant within the Appointment Period, the Accountant
shall be appointed by the President for the time being of the
Institute of Chartered Accountants in England and Wales within five
Business Days of the expiry of the Appointment Period, on the
application of either the Buyer or the Seller.
9. The Accountant shall be instructed to determine the dispute in
accordance with the provisions of this Schedule 15 and to make such
determination as soon as is practicable and, in any event, within 20
Business Days of his being instructed. In making such determination
the Accountant shall act as an expert and not as an arbitrator and his
decision shall (in the absence of manifest error) be final and binding
on the parties.
10. The costs of the Accountant shall be borne by the parties in the
proportions the Accountant may direct or, in the absence of direction,
as to one half by the Buyer and as to the other half by the Sellers.
11. If, there is an Adjustment of (pound)75,000 or greater the Buyer will
have the right to reduce the amount of such of the Deferred
Consideration and/or the Promissory Notes by (pound)1 for every
(pound)1 in excess of the said (pound)75,000 as it may in its absolute
discretion determine by an amount equal to the Adjustment and to
recover the balance against the Sellers.
12. The Working Capital Value will be the amount of Current Assets less
Current Liabilities based on the figures for such items in the
Completion Accounts.
For these purposes "Current Assets" and "Current Liabilities" will be
determined in the Completion Accounts on the basis as previously set
out in the Audited Accounts.
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SCHEDULE 16
THE COMMITTEE
Each of the Sellers agree that:-
1. the Committee shall have irrevocable authority to exercise and carry
out all discretions, authorities, powers and duties conferred on the
Committee under or pursuant to this Agreement, together with all
incidental and related discretions, authorities, rights and powers.
Without limitation they will have the power and authority to:-
1.1 agree and finalise the Completion Accounts;
1.2 finalise and agree any Adjustment;
1.3 deduct from the Purchase Price then due to any of the Sellers an
amount equal to any costs, charges and expenses reasonably and
properly incurred (including, without limitation, professional advice
by or on behalf of the Committee) in relation to this Agreement;
1.4 carry out any of the steps or functions allocated to them in
accordance with this Agreement; and
1.5 accept service of proceedings in the UK relating to any of the
Sellers;
2. any decision made by the Committee pursuant to the general or specific
powers set out in paragraph 1 above will bind the Sellers;
3. the Committee shall not be obliged to take any proceedings against any
person for the payment or recovery of any sum due under the Agreement;
4. the Committee shall be entitled to rely on the advice of any
professional advisers selected by it in connection with any matters
connected with or under this Agreement and shall not be liable to the
Sellers or any of them for any of the consequences of such reliance;
5. in performing its functions the Committee shall act solely as the
agent of (but not as trustee for) the Sellers and in so doing shall
not assume, and shall not be deemed to have assumed, any obligation as
trustee for, or relationship of trust with or for, the Sellers;
6. the Committee shall consist of not more than three persons, but may
consist of a lesser number;
7. membership of the Committee is automatically terminated if:-
7.1 a member dies; or
7.2 becomes of unsound mind; or
7.3 becomes a patient for any purposes of any statute relating
to mental health,
127
except for the above, a member of the Committee shall not be entitled
to resign his membership unless, prior to such resignation, the member
has appointed a person as his replacement and such appointee has
undertaken to act as a member of the Committee as required by the
terms of this Agreement;
8. if there is a vacancy in the members of the Committee the vacancy need
not be filled if the remaining members of the Committee so agree,
provided that the total number of members does not fall below one. The
power of appointment of members to the Committee shall be vested in
the remaining member(s) who may appoint any Seller or representative
of a Seller to fill the vacancy, if such Seller or representative
consents to act;
9. all acts done by the Committee or by any person acting as a member of
the Committee shall, notwithstanding that it is afterwards discovered
that there was some defect in the appointment of any member of the
Committee or person so acting or that they or any of them were
disqualified or had vacated office, be as valid and effectual as if
each such member or person had been properly appointed and was
qualified and had continued to be a member of the Committee;
10. the Committee may meet for despatch of business, adjourn and otherwise
regulate its meetings, including provision as to notice, quorum and
voting, as it thinks fit provided that whenever required by the
provisions of this Agreement to take any action or make any decision
the Committee shall be obliged to take such action or make such
decision. Unless otherwise agreed by the Committee all decisions will
be made by a majority vote;
11. any change to the members of the Committee shall be notified to the
Buyer within 3 Business Days of such change; and
12. notices to be served on Sellers will be valid if served on the
Committee in accordance with clause 18 (Notices).
128
SCHEDULE 17
THE UNITED STATES SECURITIES ACT REPRESENTATIONS BY SELLERS
1. Each Seller understands that an investment in the Euronet Shares and
Promissory Notes involves substantial risk. Each Seller severally
represents and warrants to the Buyer that it:-
1.1 has, or its advising affiliate has, such knowledge and experience in
financial and business matters as is necessary in order to evaluate
the merits and risks of an investment in the Euronet Shares and
Promissory Notes and protecting its own interests in connection with
such Euronet Shares and Promissory Notes;
1.2 acknowledges that it can bear the economic risk of an investment in
the Euronet Shares and Promissory Notes; and
1.3 has read and understood a private placement memorandum of the Buyer
circulated by e-mail on 14 February 2003.
2. Each Seller severally represents and warrants to the Buyer that the
Euronet Shares and Promissory Notes to be acquired by the Seller
hereunder will be acquired for investment purposes for the Seller's
own account, not as a nominee or agent, and not with a view to the
public resale or other distribution thereof within the meaning of the
United States Securities Act of 1933, as amended (the "Securities
Act"), and the Seller has no present intention of selling, granting
any participation in, or otherwise distributing the Euronet Shares or
Promissory Notes.
3. Each Seller severally acknowledges that the Buyer has answered all
inquiries that the Seller has made concerning the Buyer and its
activities and all other matters relating to the operations of the
Buyer and the Euronet Shares and Promissory Notes.
4. Other than any information provided pursuant to paragraph 3 above and
the Warranties of the Buyer under this Agreement, the Sellers are not
relying on any other information, oral or written, that they may have
received relating to the Buyer or the Euronet Shares or Promissory
Notes.
5. Each Seller severally acknowledges that the Euronet Shares have not
been registered under the Securities Act and may not be offered or
sold within the United States or to, or for the account or benefit of,
US persons except in accordance with Regulation S under the Securities
Act ("Regulation S") or pursuant to an exemption from the registration
requirements of the Securities Act. Each Seller represents and agrees
that, with respect to offers and sales outside the United States, it
will offer and sell the Euronet Shares only in accordance with Rule
903 under the Securities Act.
6. Each Seller severally agrees that each Promissory Note will contain a
legend substantially to the following effect:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR
APPLICABLE STATE OR FOREIGN SECURITIES LAWS.
129
THIS NOTE IS SUBJECT TO RESTRICTIONS ON TRANSFER PURSUANT TO
THAT CERTAIN AGREEMENT FOR THE SALE AND PURCHASE OF THE
ENTIRE ISSUED SHARE CAPITAL OF E-PAY LIMITED, DATED FEBRUARY
__, 2003, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED BY THE HOLDER HEREOF.
7. Each Seller severally agrees that each Euronet Share will contain a
legend substantially to the following effect:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER PURSUANT TO THAT CERTAIN AGREEMENT
FOR THE SALE AND PURCHASE OF THE ENTIRE ISSUED SHARE CAPITAL
OF E-PAY LIMITED, DATED FEBRUARY __, 2003, AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED FOR A PERIOD
OF ONE YEAR EXPIRING ON ___________, 2004 (THE "RESTRICTED
PERIOD").
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "1933 ACT"), OR APPLICABLE STATE OR FOREIGN
SECURITIES LAWS. UPON THE EXPIRATION OF THE RESTRICTED
PERIOD, THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IF
REGISTERED UNDER THE 1933 ACT AND APPLICABLE STATE AND
FOREIGN SECURITIES LAWS OR IF THE HOLDER PROVIDES THE
COMPANY WITH AN OPINION FROM COUNSEL ACCEPTABLE TO THE
COMPANY STATING THAT AN EXEMPTION FROM REGISTRATION IS
AVAILABLE AT THE TIME OF SUCH TRANSFER. HEDGING TRANSACTIONS
INVOLVING THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT AND ALL
APPLICABLE STATE AND FOREIGN SECURITIES LAWS.
8. Notwithstanding the foregoing Paragraphs 6 and 7, Buyer agrees that
the legends contemplated thereby shall be removed, and Buyer shall
instruct its transfer agent to reissue certificates for such
securities without such legends, as applicable, upon expiration of the
transfer restrictions contemplated by this Agreement or in connection
with a transfer of such securities in accordance with the Registration
Statement or other transaction exempt from the registration
requirements of the Securities Act after which transaction such legend
is no longer required, in the reasonable opinion of counsel to Buyer,
to establish Buyer's compliance with any provision of the Securities
Act. In addition, from and after the effective date of the
Registration Statement, Buyer shall cause its transfer agent to
promptly reissue certificates for such securities without such legends
from time to time at the request of Sellers and any Sellers' permitted
transferees.
130
9. Each Seller severally agrees that it and each of its affiliates,
except as permitted under the Registration Statement or otherwise
under the Securities Act, will not offer or sell the Euronet Shares in
the United States by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) under the
Securities Act, including, but not limited to:-
9.1 any advertisement, article, notice or other communication published in
any newspaper, magazine or similar media or broadcast over television
or radio; or
9.2 any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.
10. Each of the Sellers severally represents and agrees that it
understands that no action has been taken or will be taken (except as
contemplated by Schedule 11 of this Agreement with respect to the
Registrable Shares) in any jurisdiction by the Buyer that would permit
a public offering of the Euronet Shares and Promissory Notes, or
possession or distribution of any offering or publicity material
related to the Euronet Shares and Promissory Notes in any country or
jurisdiction where action for that purpose is required and such Seller
has complied and will comply with all applicable laws and regulations
in each jurisdiction in which it acquires, offers, sells or delivers
Euronet Shares and Promissory Notes or has in its possession or
distributes any such offering or publicity material.
131
SCHEDULE 18
EXERCISE OF OPTIONS
Pursuant to Rule 601(b)(2) of Regulation S-K, Euronet agrees to furnish
Schedule 18 - Exercise of Options supplementally to the Securities and Exchange
Commission upon request.
132
EXECUTION
EXECUTED AND DELIVERED )
AS A DEED by )
XXXX XXXXXXXX ) ......................................
In the presence of:- ) I hereby confirm that I have taken
) independent legal advice before
signing this Agreement
Signature
...................................
Name
...................................
Address
...................................
Occupation
...................................
EXECUTED AND DELIVERED )
AS A DEED by )
XXXXXX XXXXXX acting by his duly ) ......................................
authorised attorney in the presence of:-) I hereby confirm that Xxxxxx Xxxxxx
) has taken independent legal advice
before signing this Agreement
Signature
...................................
Name
...................................
Address
...................................
Occupation
...................................
133
EXECUTED AND DELIVERED )
AS A DEED by )
XX X.X. XXXXXXX acting by his duly ) ......................................
authorised attorney in the presence of:-) I hereby confirm that
) Xx. X. X. Xxxxxxx has taken
independent legal advice before
signing this Agreement
Signature
...................................
Name
...................................
Address
...................................
Occupation
...................................
EXECUTED AND DELIVERED )
AS A DEED by )
XXXX XXXXXXXXX XXXXXXXX ) ......................................
in the presence of:- ) I hereby confirm that I have taken
) independent legal advice before
signing this Agreement
Signature
....................................
Name
...................................
Address
...................................
Occupation
...................................
134
EXECUTED AND DELIVERED )
AS A DEED by )
XXXXX XXXXXXXXX acting by his duly ) ......................................
authorised attorney in the presence of:-) I hereby confirm that Xxxxx Xxxxxxxxx
) has taken independent legal advice
before signing this Agreement
Signature
...................................
Name
...................................
Address
...................................
Occupation
...................................
EXECUTED AND DELIVERED )
AS A DEED by )
SEFTA TRUSTEES LIMITED ) ......................................
acting by its duly authorised Attorney:-) Authorised Attorney
135
EXECUTED AND DELIVERED )
AS A DEED by )
XXXXXXX X X XXXXXXXX ) ......................................
in the presence of:- ) I hereby confirm that I have taken
) independent legal advice before
signing this Agreement
Signature
...................................
Name
...................................
Address
...................................
Occupation
...................................
EXECUTED AND DELIVERED )
AS A DEED by )
XXXX XXXXXXXX acting by her duly ) ......................................
authorised attorney in the presence of:-) I hereby confirm that Xxxx Xxxxxxxx
) has taken independent legal advice
before signing this Agreement
Signature
-----------------------------------
Name
-----------------------------------
Address
-----------------------------------
Occupation
-----------------------------------
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EXECUTED AND DELIVERED )
AS A DEED by )
XXXXXXXX XXXXXXXX acting by her duly ) ......................................
authorised attorney in the presence:- ) I hereby confirm that Xxxxxxxx
) Althasen has taken independent legal
advice before signing this Agreement
Signature
...................................
Name
...................................
Address
...................................
Occupation
...................................
EXECUTED AND DELIVERED )
AS A DEED by )
XXXXXXXX XXXXXXX acting by his duly ) ......................................
authorised attorney in the presence of:-) I hereby confirm that Xxxxxxxx Xxxxxxx
) has taken independent legal advice
before signing this Agreement
Signature
...................................
Name
...................................
Address
...................................
Occupation
...................................
137
EXECUTED AND DELIVERED )
AS A DEED by )
XXXXX XXXXX acting by his duly ) ......................................
authorised attorney in the presence of:-) I hereby confirm that Xxxxx Xxxxx has
) taken independent legal advice
before signing this Agreement
Signature
...................................
Name
...................................
Address
...................................
Occupation
...................................
EXECUTED AND DELIVERED )
AS A DEED by )
XXXX XXXXXX acting by his duly ) ......................................
authorised attorney in the presence of:-) I hereby confirm that Xxxx Xxxxxx has
) taken independent legal advice
before signing this Agreement
Signature
...................................
Name
...................................
Address
...................................
Occupation
...................................
138
EXECUTED AND DELIVERED )
AS A DEED by )
XXX XXXXXX & ASSOCIATES PTY LIMITED ) ......................................
acting by its duly authorised Attorney ) Authorised Attorney
)
EXECUTED AND DELIVERED )
AS A DEED by )
XXXXX XXXXXXXX acting by his duly ) ......................................
authorised attorney in the presence of:-) I hereby confirm that Xxxxx XxXxxxxx
) has taken independent legal advice
before signing this Agreement
Signature
...................................
Name
...................................
Address
...................................
Occupation
...................................
EXECUTED AND DELIVERED )
AS A DEED by )
XXXXXXX XXXXXX XXXXX ) ......................................
in the presence of:- ) I hereby confirm that I have taken
) independent legal advice before
signing this Agreement
Signature
...................................
Name
...................................
Address
...................................
Occupation
...................................
139
EXECUTED AND DELIVERED )
AS A DEED by )
XXXX XXXXXX ) ......................................
in the presence of:- ) I hereby confirm that I have taken
) independent legal advice before
signing this Agreement
Signature
...................................
Name
...................................
Address
...................................
Occupation
...................................
EXECUTED AND DELIVERED )
AS A DEED by )
XXXXX XXXXXX acting by her duly ) ......................................
authorised attorney in the presence of:-) I hereby confirm that Xxxxx Xxxxxx has
) taken independent legal advice
before signing this Agreement
Signature
...................................
Name
...................................
Address
...................................
Occupation
...................................
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EXECUTED AND DELIVERED )
AS A DEED by )
XXXXXXX XXXX XXXXXX acting by his duly ) ......................................
authorised attorney in the presence of:-) I hereby confirm that Xxxxxxx Xxxx
) Xxxxxx has taken independent legal
advice before signing this Agreement
Signature
...................................
Name
...................................
Address
...................................
Occupation
...................................
EXECUTED AND DELIVERED )
AS A DEED by )
XXXX XXXXXXX XXXXXXXXXX acting by his ) ......................................
duly authorised attorney in the presence) I hereby confirm that Xxxx Xxxxxxx
of:- ) Witzenfeld has taken independent
legal advice before signing this
Agreement
Signature
...................................
Name
...................................
Address
...................................
Occupation
...................................
141
EXECUTED AND DELIVERED )
AS A DEED by )
XXXXXX C STANDING acting by his duly ) ......................................
authorised attorney in the presence ) I hereby confirm that Xxxxxx C
of:- ) Standing has taken independent legal
advice before signing this
Agreement
Signature
...................................
Name
...................................
Address
...................................
Occupation
...................................
EXECUTED AND DELIVERED )
AS A DEED by )
XXXXXX XXXXXXXXX acting by her duly ) ......................................
authorised attorney in the presence of:-) I hereby confirm that Xxxxxx Xxxxxxxxx
) has taken independent legal advice
before signing this Agreement
Signature
...................................
Name
...................................
Address
...................................
Occupation
...................................
142
EXECUTED AND DELIVERED )
AS A DEED by )
XXXXXX XXXXXXXXX acting by his duly ) ......................................
authorised attorney in the presence of:-) I hereby confirm that Xxxxxx Xxxxxxxxx
) has taken independent legal advice
before signing this Agreement
Signature
...................................
Name
...................................
Address
...................................
Occupation
...................................
EXECUTED AND DELIVERED )
AS A DEED by EURONET )
WORLDWIDE, INC. )
acting by:- )
)
Duly authorised signatory
......................................
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