DATED
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XXXXXX XXXXXXXXX & OTHERS
and
IFT HOLDINGS LIMITED
and
INTER LOTTO (UK) LIMITED
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SHAREHOLDERS AGREEMENT
in respect of
INTER LOTTO (UK) LIMITED
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Nabarro Xxxxxxxxx
00 Xxxxxxxx Xxxxxx
Xxxxxx X0X 0XX
Tel: 0000 000 0000
CONTENTS
Clause Subject matter Page
------ -------------- ----
1. DEFINITIONS.....................................................................................2
2. PURCHASE OF SHARES BY IFT.......................................................................6
3. APPOINTMENT OF DIRECTORS........................................................................7
4. SHARE TRANSFERS.................................................................................9
5. APPLICATION OF PROFITS/DIVIDEND DISTRIBUTION....................................................9
6. WARRANTIES.....................................................................................10
7. BOARD MEETINGS AND INFORMATION.................................................................13
8. OPERATION OF THE COMPANY.......................................................................13
9. OPTION.........................................................................................14
10. COUNTERPARTS...................................................................................16
11. GENERAL........................................................................................16
12. TERMS OF THIS AGREEMENT TO PREVAIL.............................................................17
13. SEVERANCE......................................................................................17
14. EXERCISE OF POWERS.............................................................................17
15. UNLAWFUL XXXXXX ON THE POWERS OF THE COMPANY...................................................18
16. NO PARTNERSHIP.................................................................................18
17. NOTICES........................................................................................19
18. COMPLIANCE WITH THE TERMS OF THE SETTLEMENT AGREEMENT..........................................19
19. FURTHER ASSURANCE..............................................................................20
20. DURATION.......................................................................................20
21. APPLICABLE LAW.................................................................................20
SCHEDULE 1 Current Shareholdings.....................................................21
Current Directors.........................................................21
SCHEDULE 3 Part 1 - Matters Requiring Shareholders Consent...........................31
Part 2 - Matters Requiring Board Approval.................................33
SCHEDULE 4 The Property..............................................................35
SCHEDULE 5 Intellectual Property.....................................................36
SHAREHOLDERS AGREEMENT
DATE: 1999
PARTIES:
(1) XXXXXX X. XXXXXXXXX of 00 Xxxxx Xxxxx, X. Xxxxxxxx Xxxx, Xxx Xxxxxx 00000,
XXX ("NF");
(2) THE RIGHT HON. THE XXXX XXXXXXXX of 00 Xxxxxxxx Xxxx, Xxxxxx, XX0 0XX
("BM");
(3) XXXX X. XXXXXX of 000 Xxxxxxx Xxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000, XXX
("GR");
(4) XXX XXXXX XXXXXXXX of Dowry Head, Helmshore, Xxxxxxxxxx, Xxxxxxxxxx, XX0
0XX ("DT");
(5) VISCOUNT STRATHALLAN of Xxx Xxxxx Xxxxx, 00 Xxxx Xxxxxx, Xxxxxx XX0 ("XX");
(6) XXX XXXXXX of 000 Xxxxx Xxxxx, Xxxxxxx Xxxxxx, Xxxxxx XX0X 0XX ("RF");
(7) XXXXXXX XXXXX of The Xxxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxx XX00 0XX ("DS");
(8) HGI HOUSE & GENERAL INVESTMENT FOUNDATION, a Liechtenstein Foundation of
Post Office Xxx 000, 0000 Xxxxx, Xxxxxxxxxxxx ("XXX");
(9) XXXXX XXXXX of 000 Xxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx, XXX, 00000;
(10) XXXXX XXX of 00 Xxxxxxxx Xxxx, Xxx Xxxxxx, Xxxxxxxxxxx, XXX 00000;
(11) XXXXXXX XXXXX of 00 Xxxxxxx Xxxxx, Xxxx Xxxxxx, Xxxxxxxxxx, XXX 00000;
(12) IFT HOLDINGS LIMITED (Company Number 3721699) whose registered office is at
Xxxxx Xxxxx, 00 Xxxxxxxx Xxxxxx, Xxxxxxxxxx X0 0XX ("IFT"); and
(13) INTER LOTTO (UK) LIMITED (Company Number 3036866) whose registered office
is at 00 Xxxxxxxx Xxxxxx, Xxxxxx X0X 0XX ("the Company").
RECITALS:
(A) The Company was incorporated on 23rd March 1995 and has at the date hereof
an authorised capital of (pound)1,000 divided into 100,000 Shares of 1p
each.
(B) HGI, BM, GR, DT, ES, RF and DS are, together with Crown Leisure Sales
Limited, the registered holders and beneficial owners of all of the issued
shares in the Company as set out in the First Schedule.
(C) IFT wishes to become a holder of Shares on the terms and subject to the
provisions of this Agreement by purchasing from Crown Leisure Sales Limited
its entire holding of ordinary and deferred shares in the Company.
(D) The parties have agreed to enter into this Agreement to regulate their
rights in relation to the Company.
IT IS AGREED as follows:
1. DEFINITIONS
1.1 In this Agreement (including the Recitals and Schedules):
"A Directors"
means the directors of the Company from time to time appointed by the
A Shareholders and includes their alternates duly appointed in
accordance with the Articles;
"A Shares"
means the A Ordinary Shares of 1p each in the capital of the Company
from time to time;
"A Shareholders"
means HGI, BM, GR, DT, ES, RF and DS and any other holder for the time
being of the A Shares;
"the Accounts"
means the audited balance sheet of the Company made up as at the
Balance Sheet Date and the audited profit and loss account of the
Company for the period of twelve months ended on the Balance Sheet
Date true copies of which are annexed hereto marked `A' and initialled
by or on behalf of the parties for the purposes of identification;
"agreed form"
means in relation to any document such document in the form agreed
between the parties and initialled by or on behalf of the parties for
the purpose of identification;
"Articles"
means the new Articles of Association of the Company in the agreed
form to be adopted pursuant to the resolutions set out in the Notice
of Meeting and as amended from time to time and any reference to an
"Article" shall be a reference to that article of the said Articles;
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"Associate"
means in relation to any person, a person (wherever situated)
connected with that person (and for this purpose the question whether
a person is so connected shall be determined in accordance with
Section 286 of the Taxation of Chargeable Gains Tax Act 1992);
"B Directors"
means the directors of the Company from time to time appointed by the
B Shareholder(s) and includes their alternates duly appointed in
accordance with the Articles;
"B Shares"
means the B Ordinary Shares of 1p each in the capital of the Company
from time to time;
"B Shareholders"
means IFT and any other holder for the time being of the B Shares;
"Balance Sheet Date"
means 31st August 1998;
"Board"
means the Directors for the time being of the Company present at a
duly convened quorate meeting or otherwise taking decisions and
passing resolutions in conformity with the provisions of this
Agreement and the Articles;
"Board Minutes"
means the minutes of a meeting of the Board in the agreed form;
"Business"
means the business of managing lotteries and such other business as
the Board (with the prior consent of IFT) may agree from time to time
should be carried on by the Company;
"Business Day"
means any day which is not a Saturday, Sunday or a bank or public
holiday in England and Wales;
"Business Plan Documents"
means the documentation annexed hereto marked 'B' and initialled by or
on behalf of the parties for the purpose of identification;
"C Shares"
means the C Ordinary Shares of 1p each in the capital of the Company
from time to time;
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"C Shareholders"
means MMK Europe Limited or MMK UK Limited and any other holder for
the time being of the C Shares;
"Deferred Shares"
means Deferred Shares of 1p each in the capital of the Company from
time to time;
"Deferred Shareholders"
means IFT and any other holder for the time being of the Deferred
Shares;
"Director"
means any director for the time being of the Company including where
applicable any alternate director;
"Disclosure Letter"
means the letter of disclosure of even date herewith from the
Warrantors to IFT;
"holding company"
shall have the meaning ascribed to such expression by Section 736 of
the Companies Xxx 0000;
"IFT Agreement"
means the agreement to be made between the Company and IFT Management
Limited in the agreed form;
"the Loan Agreement"
means the Loan Agreement between Crown Leisure Sales Limited and the
Company of even date herewith;
"the Management Accounts"
means the draft unaudited balance sheet of the Company made up as at
31st January 1999 and the draft unaudited profit and loss account of
the Company for the period from 1st September 1997 to 31st January
1999 true copies of which are annexed hereto marked "C" and initialled
by or on behalf of the parties for the purposes of identification;
"Notice of Meeting"
means the notice of extraordinary general meeting of the Company in
the agreed form;
"the Property"
means the property described in the Fourth Schedule;
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"Shareholder"
means the A Shareholders or the B Shareholders or the C Shareholders
or the Deferred Shareholders from time to time and the expression
"Shareholders" shall be construed accordingly;
"Shares"
means the A Shares, the B Shares, the C Shares and the Deferred
Shares;
"subsidiary"
shall have the meaning ascribed to such expression in Section 736 of
the Companies Xxx 0000;
"Subsidiary"
means a subsidiary of the Company;
"Taxation"
includes (without limitation) corporation tax, income tax, capital
gains tax, development land tax, value added tax, customs and other
import duties, inheritance tax, foreign taxation and any payment
whatsoever which the Company may be or become bound to make to any
person as a result of the operation of any enactment relating to
taxation and all penalties charges and interest relating to any claim
for taxation or resulting from a failure to comply with the provisions
of any enactment relating to taxation;
"Taxes Act"
means the Income and Corporation Taxes Xxx 0000;
"Warranties"
means the warranties contained in Clause 6 or the Second Schedule; and
"Warrantors"
means NF, BM, RF and DS.
1.2 The Schedules following the operative part of this Agreement shall be
deemed to be incorporated in this Agreement.
1.3 In this Agreement:
1.3.1 the Index and Clause headings are inserted for convenience only and
shall not affect the construction of this Agreement;
1.3.2 words denoting the singular shall include the plural and vice versa;
1.3.3 words denoting one gender shall include each gender and all genders;
1.3.4 references to persons shall be deemed to include references to natural
persons, to firms, to partnerships, to bodies corporate, to associations
and to trusts (in each case whether or not having separate legal
personality).
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1.4 References in this Agreement to "Clauses" and "Schedules" are references
to Clauses of this Agreement and Schedules to this Agreement; references
to Paragraphs are, unless otherwise expressly provided, references to
Paragraphs of the Schedule in which the references appear and references
to the "parties" or "party" are references to the parties or a party to
this Agreement.
1.5 Words and phrases defined for the purposes of or in connection with any
statutory provision shall, where the context so requires, be construed
as having the same respective meanings in this Agreement.
1.6 References in this Agreement to statutory provisions shall, where the
context so admits, and unless expressly provided otherwise, be construed
as references to those provisions as respectively amended, consolidated,
extended or re-enacted at the date hereof and shall, where the context
so admits or requires, be construed as references to the corresponding
provisions of any earlier legislation (whether repealed or not) directly
or indirectly amended consolidated extended or replaced thereby or
re-enacted and shall include where appropriate any orders, regulations,
instruments or other subordinate legislation made under the relevant
statute.
2. PURCHASE OF SHARES BY IFT
Upon the execution of this Agreement:
2.1 IFT shall purchase from Crown Leisure Sales Limited 3,793 Ordinary
Shares of 1p each in the Company which shall be re-designated as B
Shares pursuant to the special resolutions referred to in Clause 2.2 and
6,207 Deferred Shares.
2.2 The Shareholders shall procure that an extraordinary general meeting of
the Company shall be held on short notice at which the special
resolutions set out in the Notice of Meeting shall be passed.
2.3 The Shareholders shall procure that:
2.3.1 a board meeting of the Directors shall be held at which the business
referred to in the Board Minutes shall be transacted and the documents
and forms referred to therein shall be executed and signed; and
2.3.2 the register of members of the Company shall be written up to reflect
the transfers referred to in Clause 2.1 and share certificates in
respect of the B Shares and Deferred Shares referred to in Clause 2.1
shall be issued in favour of and delivered to the B Shareholder.
2.4 The Company and IFT Management Limited shall enter into the IFT
Agreement.
3. APPOINTMENT OF DIRECTORS
3.1 The appointment, dismissal and conduct of Directors shall be regulated
in accordance with this Agreement and the Articles.
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3.2 The number of Directors holding office at any time shall be seven unless
otherwise expressly agreed in writing by each of the Shareholders.
3.3 The A Shareholders shall be entitled to appoint three Directors and the
B Shareholders shall be entitled to appoint three Directors. NF, RF and
BM shall be the first A Directors and Xxxxx Xxxxx, Xxxxx Xxx and Xxxxxxx
Xxxxx shall be the first B Directors. The A and B Shareholders
respectively shall at any time be entitled to require the removal or
substitution of any such Director so appointed by them pursuant to the
powers conferred on the relevant Shareholders by the Articles. Any
Director so appointed by the A Shareholders shall be designated as an A
Director and any Director so appointed by the B Shareholders shall be
designated as a B Director.
3.4 In addition, an independent Director shall be appointed by the A
Directors and the B Directors acting by a simple majority (which
majority must include all the B Directors). Xxxxx Xxxxx shall be the
first such independent director.
3.5.1 In the case of an equality of votes at any meeting of the Board or the
Company, the Chairman of the meeting shall not be entitled to a second
vote.
3.5.2.1 Notwithstanding any provision to the contrary contained in this
Agreement or the Articles of Association of the Company from time to
time or the Articles or the IFT Agreement, if the Warrantors commit an
event of default, IFT (at any time thereafter) may serve a notice in
writing upon the Company specifying that with effect from the date of
such notice the B Directors shall have such number of votes in relation
to resolutions of the Board which exceed by one the number of votes in
aggregate of the other directors (including (if applicable) the vote of
any independent director or Chairman) whereupon this Agreement shall be
read and construed accordingly and the parties hereto shall forthwith
cause the Articles of Association of the Company to be amended
accordingly.
3.5.2.2 For the purposes of Clause 3.5.2.1 an event of default is committed by
the Warrantors if there shall be any material breach of any material
warranty included in the Warranties contained in the Second Schedule
arising in consequence of fraud or knowing non-disclosure by the
Warrantors or any of them and, in the case of a breach capable of
remedy, such breach is not remedied within 90 days of the Warrantors
being given written notice from IFT requiring them to do so and
referring to the consequences arising under Clause 3.5.2.1 of any
failure to do so.
3.6.1. On the execution of this Agreement BM, RF and DS shall each enter into
service agreements with the Company in the agreed form. Each of BM, RF
and DS hereby agrees and acknowledges that if he commits an event of
default then such event of default shall be deemed to be a breach by him
of his said service agreement entitling the Company to terminate that
service agreement summarily without liability to pay compensation or
damages to him and upon any such termination he shall forthwith resign
as a director of the Company and its subsidiaries.
3.6.2 For the purposes of Clause 3.6.1 an event of default is committed by BM,
RF or DS if there shall be any material breach by him in his capacity
as a Warrantor of any of any material warranty included in the
Warranties arising in consequence of his fraud
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or knowing non-disclosure and, in the case of a breach capable of
remedy, such breach is not remedied within 90 days of him being given
written notice from IFT requiring him to do so and referring to the
consequences arising under Clause 3.6.1 of any failure to do so.
3.6.3 Save pursuant to the agreements referred to in Clause 3.6.1 and as
hereinafter provided, no Director nor any of NF, BM, GR, DT, ES, RF or
DS shall receive any remuneration, emoluments or benefits or directors
fees from the Company PROVIDED that non-executive directors shall be
paid directors fees of an amount agreed by the Board.
3.6.4 The Directors (insofar as the same is not provided for in any contract
with the Company) shall be reimbursed for all reasonable expenses
properly incurred by them in connection with the business of the Company
subject to production of vouchers or other evidence of payment in
support and subject to agreement by the Board.
3.7 Each Director shall be entitled in accordance with the Articles to
appoint an alternate Director of his choice to represent his principal
in all respects.
3.8 Without prejudice to their rights hereunder it is agreed that the A
Shareholders proposing to appoint or remove an A Director under this
Clause and the Articles will consult with the B Shareholders before
giving notice under the Articles to do so and vice versa.
3.9 The A Shareholders and the B Shareholders undertake to each other that
at any one time there will be at least one Director appointed by them or
it pursuant to Clause 3.3 able and willing to act as such Director and
further undertake that they will procure that such Director (or his
alternate) shall not wilfully absent himself from any Board Meeting so
as to prevent the transaction of business thereat.
3.10 If all of the A Shareholders cease to be the registered holders of any A
Shares for whatever reason or all the B Shareholders cease to be the
registered holders of any B Shares for whatever reason, then upon them
or it so ceasing to be the holder(s) of such Shares, they or it shall
procure that the Director(s) nominated by them or it will resign
immediately without payment for compensation for loss of office or
otherwise.
3.11 IFT shall be entitled to bring any advisor and/or observer to any
meeting of the Directors of the Company (or any committee thereof) but
for the avoidance of doubt no such advisor or observer shall be entitled
to vote at any such meeting.
4. SHARE TRANSFERS
4.1 The transfer of Shares shall be regulated in accordance with the
Articles and each Shareholder shall exercise all voting rights and
powers available to it in relation to the Company so as to procure
registration of any transfer of shares permitted by the Articles.
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4.2 Save as expressly provided in the Articles, no Shareholder shall:
4.2.1 pledge, mortgage (whether by way of fixed or floating charge) or
otherwise encumber its legal or beneficial interest in its Shares; or
4.2.2 sell, transfer or otherwise dispose of any of such Shares (or any legal
or beneficial interest therein); or
4.2.3 enter into any agreement in respect of the votes or other rights
attached to Shares; or
4.2.4 agree, whether or not subject to any condition precedent or subsequent,
to do any of the foregoing.
4.3 In Clause 4.2 the expression "Shares" includes all Shares owned or to be
acquired by any Shareholder after the date of this Agreement under or
pursuant to this Agreement or by virtue of its shareholding in the
Company.
4.4 If any of the Shareholders shall purport to deal with any of its Shares
in contravention of the provisions of Clause 4.2 the Company shall not
register any transfer made in breach of Clause 4.2 and the Shares
comprised in any transfer so made shall carry no rights whatsoever
unless and until, in each case, the breach is rectified.
4.5 It shall be a condition precedent to any transfer or transmission of any
Shares by any party during the continuance in force of this Agreement
that the proposed transferee of such Shares shall have first agreed in
writing with the then parties to this Agreement (who shall be bound to
enter into such agreement) that upon the transfer or transmission of the
Shares concerned such transferee will observe and be bound by and have
the benefit of all provisions hereof so far as they affect the
transferor of such Shares as though the transferee were a party to this
Agreement and that such transferee shall procure an agreement on the
part of the transferee of any of the said Shares from him in similar
terms.
5. APPLICATION OF PROFITS/DIVIDEND DISTRIBUTION
Subject as hereinafter provided after making appropriate provisions for
Taxation, the Company's earnings available for distribution as
determined by the audited accounts of the Company for any financial year
or other accounting period shall be applied in making distributions to
the Shareholders by way of dividend, subject to such reasonable and
proper reserves being retained for working capital requirements or other
liabilities of the Company as the Board may consider appropriate
PROVIDED that no such distributions shall be made unless and until:
(a) any payments due in respect of the Continuing Loan (as defined
in the Loan Agreement) have been paid in full; and
(b) any loans, loan stock or preference shares (or any payments due
thereon) payable to the Shareholders or their Associates or
other indebtedness of the Company to the Shareholders or their
Associates (including without limitation any amount then
outstanding in respect of the loan of (pound)200,000 made to the
Company by IFT to
9
enable the Company to repay part of its indebtedness to Crown
Leisure Sales Limited) have been paid in full.
6. WARRANTIES
6.1.1 The Warrantors hereby jointly and severally warrant to IFT in the terms
of the Second Schedule.
6.1.2 Each of the Warrantors hereby agrees and acknowledges that IFT will in
purchasing shares in the capital of the Company as referred to in Clause
2.1 and further investing in the Company be doing so in reliance on the
Warranties.
6.1.3 The Warranties shall continue in full force and effect notwithstanding
completion of this Agreement.
6.1.4 It is hereby expressly agreed and declared that where any statement
contained in any of the Warranties is qualified by the expression "so
far as the Warrantors are aware" or "to the best of the Warrantors
knowledge and belief" or any similar expression that statement shall in
any case be deemed to include an additional statement that it has been
made after due and careful enquiry.
6.2.1. If any fact or matter comes to the notice of any of the Warrantors which
may give grounds for a claim under the Warranties the Warrantors shall:
(1) as soon as reasonably practicable give written notice thereof to
IFT;
(2) not on behalf of the Company make any agreement or compromise
with any person body or authority in relation thereto without
prior consultation with or the prior agreement of IFT;
(3) (so far as they are able) give to IFT and its professional
advisers reasonable access to the premises and personnel of the
Company and the Subsidiaries as the case may be and to any
relevant chattels documents and records within the power
permission or control of the Company and the Subsidiaries to
enable IFT and its professional advisers to examine such
chattels accounts documents and records and to take copies or
photographs thereof at their own expense.
6.2.2 The Company shall at its own expense take all such action as IFT may
reasonably request to pursue any such claim as aforesaid (including
without prejudice to the generality of the foregoing the institution of
legal proceedings) but so that (for the avoidance of doubt) IFT shall
not be required to indemnify the Company as to any costs and expenses
which it may incur by reason of such action.
6.3 Each of NF, BM, RF and DS hereby severally warrants to IFT and each of
Xxxxx Xxxxx, Xxxxx Xxx and Xxxxxxx Xxxxx severally warrants to the A
Shareholders that:
(a) he has never been a director shareholder partner or proprietor
or otherwise connected with any company firm or partnership
which has been the subject of an inspection by the Department of
Trade and Industry or an investigation by the
10
police, the Inland Revenue, the Department of Health and Social
Security or the Customs and Excise or any professional body or
any other similar authority or professional body in any country
of the World;
(b) he has never been convicted of a criminal offence (other than
road traffic offences not involving personal injury or
dishonesty);
(c) he has not been a director or senior executive employee of any
company in respect of which a receiver has been appointed or
which has gone into liquidation whilst he was a director or
employee of such Company or within the period of 12 months
following his ceasing to be a director or employee of such
company.
6.4.1 The following sub-clauses of this Clause 6.4 shall operate to limit the
liability of the Warrantors for damages for breach of the Warranties
contained in the Second Schedule (which for the avoidance of doubt
exclude the warranties contained in Clause 6.3) but shall not apply
further or otherwise and in particular, but without prejudice to the
generality of the foregoing this Clause 6.4 shall not apply in relation
to, or prejudice or in any way affect the provisions of Clauses 3.5.2,
3.6.1, 3.6.2 or 9 of this Agreement. Accordingly, in this clause,
"Relevant Claim" means any claim for damages under the Warranties.
6.4.2 (a) The liability of the Warrantors in respect of all and any
Relevant Claims shall be limited so that NF shall not in any
circumstances be liable for more than 70% of any Relevant Claim,
BM shall not in any circumstances be liable for more than 11.5%
of any Relevant Claim, RF shall not be liable for more than
11.5% of any Relevant Claim and DS shall not be liable for more
than 7% of any Relevant Claim.
(b) Except for Relevant Claims arising from fraud or knowing
non-disclosure, IFT's sole recourse and the Warrantors' sole
liability for Relevant Claims shall be against and from the
Warrantors' interest in the Company, whether as shares in the
Company or rights to distributions from the Company. HGI and NF
hereby undertake to take all action necessary to procure that
this Clause (b) can be enforced at all times and in all respects
as if NF were the holder of all the Shares held by HGI and
entitled to all the rights attached to those shares.
6.4.3. The Warrantors shall not be liable in respect of a Relevant Claim unless
the aggregate liability of the Warrantors in respect of all Relevant
Claims exceeds (pound)20,000 in which case the Warrantors shall be
liable for the whole amount and not merely the excess over
(pound)20,000.
6.4.4 The Warrantors shall have no liability in respect of any Relevant Claim
unless IFT shall have given notice in writing to the Warrantors of such
claim specifying (in reasonable detail) the matter which give rises rise
to the claim, the nature of the claim and the amount claimed in respect
thereof not later than:
(A) in the case of a Relevant Claim relating to Taxation, seven
years after the date of this Agreement; or
(B) in any other case, the date 18 months after the date of this
Agreement.
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6.4.5 The Warrantors shall have no liability in respect of any Relevant Claim:
(a) if and to the extent that such liability arises, occurs or
increases as a result of any retrospective legislation not in
force at the date hereof or as a result of any retrospective
change in law or published practice of a tax authority
hereafter;
(b) if and to the extent that such liability arises, occurs or
increases as a result of any change in the basis or method of
calculation of or any increase in the rate or rates of Taxation
in force at the date hereof or any change or new form of
Taxation made after the date hereof, in each case having
retrospective effect;
(c) if and to the extent that liability arises, occurs or increases
as a result of any voluntary act of the Company acting at the
express direction of IFT Management Limited pursuant to the IFT
Agreement or with the express prior written consent of IFT after
the date hereof otherwise than in the ordinary course or proper
course or business; or
(d) if and to the extent that allowance, provision (excluding the
deferred tax provision), reserve or note has been made in the
Accounts in respect of such liability or to the extent that the
existence or payment or discharge of such liability has been
taken into account in the Accounts.
6.4.6 IFT shall not be entitled to claim that any facts or circumstances
constitute or give rise to any liability in respect of any Relevant
Claim if such fact or circumstance has been fairly disclosed in the
Disclosure Letter.
6.4.7 IFT shall reimburse to the Warrantors an amount equal to any sum paid by
the Warrantors in respect of any Relevant Claim which is recovered by
IFT or the Company from any insurance company less the costs and
expenses of recovery to the extent that payment has been made by the
Warrantors or any of them to settle a claim pursuant to the Warranties
in respect of the same matter which has resulted in such recovery and if
the recovery is more than the amount paid by the Warrantors then IFT
shall only be liable to account for the said amount less the costs and
expenses of recovery.
6.4.8 The Warrantors shall have no liability in respect of any Relevant Claim
relating to a breach capable of remedy unless such breach is not
remedied within 90 days of the Warrantors being given written notice
from IFT requiring them to do so and referring to the consequences
arising under this Clause 6.4.8 of any failure to do so.
6.4.9 The Warrantors will (so far as they are able) procure that the Company
will use all reasonable efforts to obtain the approval of the Gaming
Board for Great Britain of the purchases and issues of Shares referred
to in Clauses 2.1 and 9 and the changes in directors and all other
constitutional changes relating to the Company provided for in this
Agreement or the Articles and confirmation from the Gaming Board for
Great Britain that it will regard the Company as a fit and proper person
to manage a lottery following such transfer, issues and changes.
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7. BOARD MEETINGS AND INFORMATION
7.1 The Company hereby authorises IFT to consult fully with the bankers to
the Company as to its affairs and to exchange information whether oral
or written in such manner as IFT and the said bankers shall deem
necessary.
7.2 The parties agree to procure that:
(a) Board Meetings of the Company shall be held at not less than
three monthly intervals and at such other times as IFT may
reasonably require ("meeting" shall include video conferencing
or teleconferencing);
(b) the Company will enforce from time to time the terms of the
Service Agreements and the IFT Agreement;
(c) IFT shall have the right to attend at any time during normal
business hours at the premises of the Company for the purposes
of inspecting books and records and (at times mutually
convenient to the parties) consultation with the directors and
employees of the Company and otherwise as it may require;
(d) (Without prejudice to any rights of IFT or the B Directors):
(i) IFT shall be entitled to receive at least five working
days' prior written notice of any meeting of the
directors of the Company giving full particulars of the
subject matter to be considered (other than in an
emergency when as much notice and as many particulars as
are reasonably practicable shall be given); and
(ii) the Company shall thereafter provide to IFT copies of
all documents, papers and reports that are given to the
directors of the Company or otherwise considered at any
Board meeting of the Company and at the same time as
such documents, papers and reports are given to the
Directors.
8. OPERATION OF THE COMPANY
8.1 Notwithstanding any other provision hereof or contained in the Articles
of Association of the Company from time to time or the Articles or the
IFT Agreement during the continuance of this Agreement the Company shall
not without first obtaining the prior consent in writing of at least
three A Shareholders together holding not less than 75% of the issued A
Shares and the holder(s) of more than half of the issued B Shares allow
or permit to occur any of the events referred to in Part 1 of the Third
Schedule in relation to the Company or any Subsidiary.
8.2 Notwithstanding any other provision hereof or contained in the Articles
of Association of the Company from time to time or the Articles or the
IFT Agreement during the continuance of this Agreement the Company shall
not without the prior approval of the Board allow or permit to occur any
of the events referred to in Part 2 of the Third Schedule in relation to
the Company or any Subsidiary.
13
8.3 Notwithstanding any provision to the contrary contained in the Articles
of Association of the Company from time to time or the Articles or the
IFT Agreement the parties hereby mutually agree and undertake and shall
use their respective powers to procure that:
(a) the business of the Company consists exclusively of the
Business;
(b) all cheques or other bankers payment instructions (or series of
related cheques or other bankers payment instructions) drawn by
the Company or any of the Subsidiaries in excess of
(pound)15,000 are signed by at least one A Director and one B
Director PROVIDED that this sub-clause (b) shall not apply in
respect of any payments to any of the following: the Inland
Revenue, H.M. Customs & Excise, any Society Trust Account or
Prize Fund Trust Account maintained by the Company, IFT, IFT
Management Limited or the principal service provider or to the
payment of regular monthly salaries via the Company's pay-roll
system;
(c) the board of directors of the Company determines the general
policy of the Company (including all strategies, budgets and
guidelines) (subject to the express provisions of this
Agreement), including the scope of its respective activities and
operations.
8.4.1. Where this Agreement provides that any particular transaction or matter
requires the consent, approval or agreement of IFT or the A Shareholders
or the B Shareholders (or any of them) such consent approval or
agreement may be given subject to such terms and conditions as IFT or
such A Shareholders or B Shareholders may impose and any breach of such
terms and conditions by any person subject thereto shall ipso facto be
deemed to be a breach of the terms of this Agreement.
8.4.2 If the consent approval or agreement of IFT or any A Shareholders or B
Shareholders is required under more than one provision of this Agreement
for any one transaction or matter then any consent approval or agreement
given in relation to that transaction or matter by IFT or any A
Shareholders or B Shareholders shall be deemed to cover all consents
approvals or agreements required for that transaction or matter unless
otherwise specified by IFT or such A Shareholders or B Shareholders.
8.4.3 Where this Agreement provides that any transaction or matter is required
to be done at the discretion of IFT or the A Shareholders or B
Shareholders (or any of them) then such discretion may be exercised by
IFT or such A Shareholders or B Shareholders or on its or their behalf
in an absolute and unfettered manner (subject as herein expressly
stated).
9. OPTION
9.1 Notwithstanding any provision to the contrary contained in this
Agreement or the Articles if any A or B Shareholder commits or suffers
an event of default, the other A and B Shareholders shall be entitled,
within 60 days of becoming aware of the occurrence of the event of
default, to require the defaulting Shareholder to sell all (but not some
only) of the Shares held or beneficially owned by the defaulting
Shareholder or its Associates to the other A and B Shareholders for the
prescribed price. The option shall be exercised by the other A and B
Shareholders or any of them delivering written
14
notice to the defaulting Shareholder stating that the option is
exercised. As between the said other Shareholders the option shall be
exercisable and the shares held or beneficially owned by the defaulting
shareholders shall be allocated (so near as may be) in accordance with
the provisions of paragraph 6 of the Articles to the extent that such
provisions are consistent with this clause and excluding the C
Shareholders from any entitlement.
9.2 If the option is exercised, the defaulting Shareholder shall deliver to
the other A and B Shareholders, within 14 days of the date of the
prescribed price being agreed or determined under Clause 9.3(c) (a) duly
executed transfer(s) of all the Shares held or beneficially owned by it
or its Associates in favour of the other A and B Shareholders upon full
payment to it in sterling in London of the prescribed price. The Shares
which are transferred shall be deemed to be sold by the transferor as
beneficial owner with effect from the date of the transfer, free from
any lien, charge or encumbrance and with all rights attaching to them as
at the date of exercise of the option.
9.3 For the purpose of this Clause:
(a) an event of default is committed or suffered by an A or B
Shareholder if:
(i) he commits a material breach of his obligations under
this Agreement (including without limitation any
material breach of any material warranty included in the
Warranties) and, in the case of a breach capable of
remedy, such breach is not remedied within 90 days of
him being given written notice from all or any of the
other shareholders requiring him to do so and referring
to the consequences arising under this clause of any
failure to do so; or
(ii) a distress, execution, sequestration or other process is
levied or enforced upon or sued out against his property
which is not discharged within 10 days or he shall be
adjudged bankrupt or enter into a formal voluntary
arrangement with his creditors;
(b) any event of default committed or suffered by Xxxxxx Xxxxxxxxx
shall be deemed to be an event of default committed or suffered
by HGI;
(c) "the prescribed price" means such sum in respect of the Shares
forming the subject matter of the option as may be agreed
between the Shareholders within 21 days of the date of the
notice exercising the option or (in default of agreement between
them) such sum as the specified experts certify to be, in their
opinion, the fair value of those Shares as between a willing
buyer and a willing seller contracting on arm's length terms,
having regard to the fair value of the Business as a going
concern as at the date of the notice exercising the option, but
without taking into account (if it is the case) that the
relevant Shares represent a minority interest in the Company;
(d) "the specified experts" means such firm of accountants as, on a
request by any Shareholder the making of which is promptly
notified to the other, is nominated by the President of the
Institute of Chartered Accountants in England and Wales.
9.4 The specified experts shall be instructed to determine which of the
Shareholders should bear, or in what proportions they should share, the
specified experts' costs of certifying the prescribed price. In making
their determination, the specified experts shall have
15
regard to the efforts made by each of the Shareholders to agree the
prescribed price under this Clause 9.
10. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which when either delivered personally or transmitted by facsimile shall
be deemed to be an original, and which together shall constitute one and
the same Agreement. Unless otherwise provided in this Agreement, this
Agreement shall become effective and be dated (and each counterpart
shall be dated) on the date on which this Agreement (or a counterpart of
this Agreement) is signed by the last of the parties to execute this
Agreement or, as the case may be, a counterpart thereof.
11. GENERAL
11.1 None of the Shareholders shall assign or transfer or purport to assign
or transfer any of its rights or obligations under this Agreement
without the prior written consent of the other Shareholders.
11.2 This Agreement shall be binding on and shall enure for the benefit of
the respective successors in title of each party to this Agreement.
11.3 The rights of any party hereto shall not be prejudiced or restricted by
any indulgence or forbearance extended to any other party and no waiver
by any party in respect of any breach shall operate as a waiver in
respect of any subsequent breach.
11.4.1. This Agreement together with the agreements referred to herein
supersedes any previous agreement between the parties in relation to the
matters dealt with herein and represents the entire understanding
between the parties in relation thereto.
11.4.2 Save as otherwise expressly provided, no modifications, amendments or
waiver of any of the provisions of the Agreement shall be effective
unless made in writing specifically referring to this Agreement and duly
signed by the parties hereto.
11.5 Notwithstanding the terms of the IFT Agreement all fees of Chaffe Street
and Mesirov Xxxxxx and any finders fee payable to Xxxxx Xxxxxxxxx in
connection with the transactions contemplated by this Agreement shall be
payable by the IFT Group (as defined in the IFT Agreement) in the first
instance and all fees of Nabarro Xxxxxxxxx in connection with the
transactions contemplated by this Agreement shall be payable by the
Warrantors (in proportion to their shareholdings) in the first instance
and such fees shall be reimbursed as provided in the IFT Agreement save
that such reimbursement shall only be made by payment by the Company of
lawful dividends or in such other manner as shall not constitute
unlawful financial assistance within the meaning of Section 151 of the
Companies Xxx 0000.
To the extent that any payments are made by way of dividend, the parties
shall take all steps as shall be necessary in relation to the dividend
payments to put all parties in the
16
same position (as near as may be) as if such reimbursement by way of
dividend had been a payment of Inter Lotto Revenue Share pursuant to
Clause 7.1 of the IFT Agreement.
12. TERMS OF THIS AGREEMENT TO PREVAIL
12.1 As between the parties (other than the Company) in the event of any
ambiguity or conflict arising between the terms of this Agreement and
those of the Company's Memorandum and Articles of Association from time
to time, to the extent of any such ambiguity or conflict the terms of
this Agreement shall prevail and the Shareholders shall cause the
Memorandum of Association and Articles of Association of the Company to
be amended accordingly.
12.2 As between the parties in the event of any ambiguity or conflict arising
between the terms of this Agreement and those of the IFT Agreement, to
the extent of any such ambiguity or conflict the terms of this Agreement
shall prevail, save in relation to Clause 5 in relation to which the
terms of the IFT Agreement shall prevail.
13. SEVERANCE
13.1 Each provision of this Agreement shall be enforceable independently of
all other provisions and its validity, legality or enforceability shall
not be affected if any other provision becomes invalid, illegal or
unenforceable in any respect under any law.
13.2 If at any time any provision of this Agreement becomes invalid, illegal
or unenforceable in any respect by reason that the Company is a party to
that provision and that provision purports lawfully to xxxxxx the
Company's statutory powers, the provisions of Clause 15 (Unlawful Xxxxxx
on the Powers of the Company) shall determine what action shall be taken
by the parties to this Agreement (other than the Company).
13.3 In respect of all provisions of this Agreement (but in those cases where
the provisions of Clause 14.2 must be complied with, following
compliance therewith) if at any time any provision of this Agreement is
or becomes invalid, illegal or unenforceable in any respect under any
law but would be or become valid, legal or enforceable if some part of
the provision were deleted or amended, the provision in question shall
remain in force with such deletion or with such amendment as may be
necessary to make the provision valid, legal and enforceable.
14. EXERCISE OF POWERS
14.1 Where the parties to this Agreement (other than the Company) are
required under this Agreement to exercise their powers in relation to
the Company to procure a particular matter or thing, such obligation
shall be deemed to include the obligation to exercise their powers both
as shareholders and as Directors (where applicable) of the Company to
procure such matter or thing.
17
14.2 In order to discharge their obligations under Clause 14.1 each of the
said parties to this Agreement shall join with the other said parties to
convene meetings, propose resolutions and vote for resolutions and
procure that any Director appointed by it (whether alone or jointly with
any other person) shall exercise its votes as a Director to procure such
matter or thing referred to in Clause 14.1.
14.3 The parties hereto shall procure as far as each is lawfully able to do
so that there shall be a quorum for any general meeting or board meeting
of the Company by whomsoever called.
15. UNLAWFUL XXXXXX ON THE POWERS OF THE COMPANY
15.1 If and to the extent that any provision of this Agreement to which the
Company is a party shall purport unlawfully to xxxxxx the Company's
statutory powers the parties to this Agreement (other than the Company)
agree that such provision shall be read and construed as though the
Company is not a party thereto and that no obligation is imposed upon
the Company.
15.2 If any other party or parties to this Agreement other than the Company
is a party to such a clause containing such provision, such clause shall
continue in full force and effect to the fullest extent possible (but so
that such provision shall not bind the Company) and shall in all other
respects remain binding upon the said party or parties and the said
party or parties in accordance with the provisions of Clause 14 shall
procure the Company to do and perform all the obligations imposed on it
and which it had undertaken to do or perform.
15.3 If the only party to such a clause containing such a provision is the
Company the other party or parties to this Agreement (other than the
Company) in accordance with the provisions of Clause 14 shall procure
the Company to do and perform all the obligations imposed on it and
which it had undertaken to do or perform.
16. NO PARTNERSHIP
16.1 Nothing in this Agreement shall be deemed to constitute a partnership
between the parties nor constitute any party the agent of any other
party for any purpose.
16.2 No party shall (save as expressly provided herein) have any authority to
bind any other party in any way.
16.3 The Shareholders will account separately to the relevant taxation
authorities for the taxation of their respective proportions of the
dividends of and/or payments by the Company and will bear no liability
whatsoever for taxation in respect of the portion of the dividends of
and/or payments by the Company attributable to the other Shareholders.
18
17. NOTICES
17.1 Any notice given under this Agreement shall either be delivered
personally or sent by first class recorded delivery post (air mail if
overseas) or telex, facsimile transmission or comparable means of
communication. The address for service of each party shall be (in the
case of an individual) the address set out at the head of this Agreement
or at such other address within the United Kingdom for service
previously notified to the other parties or (in the case of IFT)
Interactive Flight Technologies, Inc., Office of the Chairman, 0000
Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxxxx, XX 00000, XXX or such other
address for service previously notified to the other parties or (in the
case of any other company) its registered office for the time being. A
notice shall be deemed to have been served as follows:
17.1.1 if personally delivered, at the time of delivery;
17.1.2 if posted, at the expiration of 48 hours or (in the case of air mail)
seven days after the envelope containing the same was delivered into the
custody of the postal authorities; and
17.1.3 if sent by facsimile transmission or comparable means of communication,
at the time of transmission (if the notice is sent before 5.00 p.m. on a
Business Day) otherwise at 9.00 a.m. on the next following Business Day.
17.2 In proving such service (without prejudice to any other means of proof)
it shall be sufficient to prove that personal delivery was made, or that
the envelope containing such notice was properly addressed and delivered
into the custody of the postal authority of the country of despatch as a
prepaid first class recorded delivery or air mail letter (as
appropriate) or that in relation to a facsimile transmission or other
comparable means of communication, that a confirming copy thereof was
personally delivered or sent by first class recorded delivery or air
mail letter (as appropriate) within 24 hours after transmission.
17.3 The address for service of any notice to be served on the Directors from
time to time pursuant to this Agreement shall be the address stated in
the Companies form notifying their appointment as Directors, or such
other address notified in writing by the Directors to the Company.
18. compliance with the terms of the settlement agreement
Notwithstanding any other provision of this Agreement the Shareholders
shall cause such amendments (if any) to be made to the terms of this
Agreement and/or the Memorandum and/or Articles of Association of the
Company from time to time as IFT shall determine to be necessary to
ensure that the Company is not in breach of the terms of the Settlement
Agreement and IFT is irrevocably authorised to appoint any person in the
name of any Shareholders and on his/its behalf to sign any document and
to do all other things requisite to give effect to such amendments.
19
19. FURTHER ASSURANCE
Each of the parties shall co-operate with the others and execute and
deliver to the other such other instruments or documents and take such
other actions as may be reasonably requested from time to time in order
to carry out, evidence and confirm their rights and intended purpose of
this Agreement.
20. DURATION
This Agreement shall continue in full force and effect until the first
to occur of the following dates:
(a) the date on which the Shareholders cease to be beneficially
entitled in aggregate to 51 per cent or more of the equity share
capital of the Company or otherwise cease between them to
control (as defined by Section 839/840 of the Taxes Act) the
affairs of the Company; or
(b) the date of commencement of the Company's winding-up;
Provided that the terms of this Agreement shall nevertheless continue to
bind the parties hereto thereafter to such extent and for so long as may
be necessary to give effect to the rights and obligations embodied
herein.
21. APPLICABLE LAW
This Agreement shall be governed by and construed in accordance with
English law and each of the parties submits to the non-exclusive
jurisdiction of the Supreme Court of Judicature of England in relation
to any claim, dispute or difference which may arise in relation to the
Agreement.
IN WITNESS whereof this Deed has been duly executed and delivered the day and
year first above written.
20
SCHEDULE 1
Current Shareholdings
Name of Shareholder Number of Ordinary Shares Number of Deferred Shares
------------------- ------------------------- -------------------------
HGI 6,695
The Right Hon. Xxxx Xxxxxxxx 1,103
Xxxx X. Xxxxxx 276
Xxx Xxxxx Xxxxxxxx 66
Viscount Strathallan 66
Xxx Xxxxxx 1,103
Xxxxxxx Xxxxx 691
Crown Leisure Sales Limited 3,793 6,207
======== ======
13,793 6,207
======== ======
Current Directors
Xxxx Xxxxxxxx
Xxxxxx X. Xxxxxxxxx (alternate X. Xxxxxx)
Xxx Xxxxxx
Xxxxxxx Xxxxxx
Xxxx Xxxxx
21
SCHEDULE 2
Warranties
(1) The Company
(a) The Company:
(i) has no subsidiaries;
(ii) has not passed any elective resolution (within the
meaning of Section 379A of the Companies Act 1985);
(iii) is validly incorporated under the laws of England and
entitled to do business wherever necessary.
(b) The persons listed as such in the First Schedule are the only
directors and the only shareholders of the Company and their
shareholdings are as set out in the First Schedule all of which
shares are fully paid up.
(c) There are no options or agreements outstanding which call for
the issue of or accord to any person or company the right to
call for the issue of any shares in the capital of the Company
and the authorised share capital of the Company immediately
following completion of this Agreement will be (pound)1,000.
(d) The entering into this Agreement by the Company has been decided
on by the directors of the Company.
(e) There is annexed to this Agreement a true copy of the Memorandum
and Articles of Association of the Company together with a copy
of every such resolution or agreement as is referred to in
Section 380 of the Companies Xxx 0000.
(f) No administrator, administrative receiver, receiver, manager or
receiver and manager has been appointed of the whole or any part
of the assets or undertaking of the Company and no such
appointment has been threatened.
(g) No order has been made or petition presented or threatened or
resolution passed for the winding up of the Company or for an
administrator to be appointed in respect of the Company.
(h) All returns, particulars and other documents required to be
filed with the Registrar of Companies in respect of the Company
have been properly filed.
(2) Information
All written information furnished by the Warrantors (or any of them) to
IFT or its Associates or their respective advisers (or any of them) in
connection with the negotiation of the investment by and involvement of
IFT or its Associates (or any of them) in the Company and in particular
but without limitation each of the Business Plan Documents:
22
(i) insofar as it constitutes statements of facts was when given
and remains true and accurate in all material respects; and
(ii) insofar as it constitutes forecasts opinions and estimates was
when given and remains bona fide and based on reasonable and
proper bases and assumptions;
and there is no information known to the Warrantors which has not been
disclosed to IFT in writing which would make any such information or any
of the Business Plan Documents untrue inaccurate or misleading.
(3) Share Capital and Company Information
The facts and information contained in the First Schedule and the
Recitals to this Agreement in relation to the Company are true and
accurate in all respects; and none of the share capital of the Company
is under mortgage or charge and no dividends or other rights or benefits
have been declared made or paid or agreed to be declared made or paid.
(4) Accounts and Management Accounts
(a) The Accounts give a true and fair view of the state of affairs
of the Company as at the Balance Sheet Date and of the profits
of the Company for the period of twelve months ended on the
Balance Sheet Date.
(b) The Management Accounts give a true and fair view of the state
of affairs of the Company as at 31st January 1999 and of the
profits of the Company for the period from 1st September 1997 to
31st January 1999.
(5) The Accounts comply with all relevant statutory requirements and with
all statements of standard accounting practice and generally accepted
accounting principles current at the Balance Sheet Date.
(6) To the best of the Warrantors' knowledge the assets of the Company at
the Balance Sheet Date are not overstated nor are any liabilities
understated in the Accounts.
(7) To the best of the Warrantors' knowledge full disclosure has been made
in the Accounts of all known or foreseeable liabilities of the Company
whether actual or contingent including provisions and reserves for
taxation on profits earned up to the Balance Sheet Date and of all
encumbrances and onerous commitments in existence or contemplation.
(8) The Accounts were prepared on a basis consistent with that on which
accounts were prepared for the Company in respect of the two previous
financial periods save as stated in the notes to the Accounts.
(9) The assets of the Company referred to in the Accounts and any additions
made since the Balance Sheet Date and all other assets used or employed
by the Company are the absolute property of the Company free from any
mortgage charge lien equity or other encumbrance whatsoever and all such
assets are in the possession or under the control of the Company.
23
(10) Position since the Balance Sheet Date
Since the Balance Sheet Date
(a) the business of the Company has been continued in a proper
manner in the ordinary course and there has been no adverse
change in the financial or trading position or in the prospects
of the Company;
(b) there has been no material reduction in the value of the net
assets of the Company on the basis of the valuations adopted in
the Accounts;
(c) no dividend or other distribution (within the meaning of Section
233 or 234 of ICTA 1970) has been declared paid or made by the
Company;
(d) the Company has not entered into any arrangement which is
outside the ordinary and normal course of its business;
(e) there has been no extraordinary profit or loss.
(11) Intellectual Property
Except for the trade marks and other matter listed in the Fifth Schedule
the Company does not own use or require to use any trade marks,
copyright, letters patent, registered designs, confidential know how or
business names in connection with the carrying on of the Business.
(12) Immediately prior to the execution of this Agreement the Company had all
licences authorisations and consents required for the carrying on of the
Business (including without limitation a full and valid certificate to
manage a society's lottery or a local lottery issued in pursuance of the
Lotteries and Amusements Xxx 0000 (as amended) ("the Lottery Manager's
Certificate")) and to the best of the Warrantors' knowledge there are no
factors which might in any way prejudice the continuance or renewal
thereof.
(13) Insurance
(a) Immediately following the date hereof there will be valid
insurances in respect of the assets of the Company of an
insurable nature and the business of the Company to the full
replacement value thereof against all risks normally insured
against by other companies with similar assets or carrying on
similar business and nothing has been done or omitted to be done
which would or might make such insurances void or voidable.
(b) The Schedule of Insurance enclosed with the Disclosure Letter is
true and accurate and gives details of all current insurances.
(14) Confidential Information
The Warrantors have not at any time disclosed or undertaken to disclose
to any party other than IFT and its advisers any secret or confidential
information relating to the Business which could adversely affect the
Company or its prospects.
24
(15) There are no agreements or arrangements in existence which restrict the
activities of the Company in any part of the world or which have or
should have been registered or notified under or which infringe the
Restrictive Trade Practices Xxx 0000, the Monopolies and Mergers Acts
1965, the Fair Trading Xxx 0000, the Competition Xxx 0000, Articles 85
or 86 of the Treaty of Rome or any other anti-trust or anti-cartel
legislation.
(16) Litigation
No litigation arbitration prosecution or other proceedings are
outstanding or are pending or threatened in respect of the Company or of
its assets and no governmental or official investigation or inquiry
concerning the Company is in progress or pending and there are no
circumstances likely to give rise to any such proceedings investigations
or inquiry.
(17) Employees
(a) The Disclosure Letter contains accurate and complete details of
the identities, dates of appointment to office or commencement
of continuous employment, emoluments, notice periods and other
terms of employment of each officer and employee of the Company
including, without limitation, share option, share incentive,
profit sharing, commission and discretionary bonus arrangements
and other benefits provided by custom or practice of all
employees of the Company whose employment cannot be terminated
by three months notice or less without giving rise to any claim
for damages or compensation (other than a statutory redundancy
payment or compensation for unfair or constructive dismissal).
(b) The Company has in relation to each of its employees paid all
income tax due and payable under the PAYE System and payments
due and payable in respect of national insurance contributions
(including employer's contributions).
(18) Material Commitments Liabilities and Trading Practices
(a) The Company does not have outstanding:
(i) any contract transaction commitment (whether in respect
of capital expenditure or otherwise) liability or
obligation of whatsoever nature which is either long
term (that is to say not capable of complete performance
within six months from the date hereof) or involves or
is likely to involve an obligation of an onerous or
material nature or magnitude including a capital
commitment (that is to say involving a capital
commitment in excess of (pound)50,000 in aggregate);
(ii) any agreement or arrangement of a material nature or
magnitude with any other party which will or may be
terminated or materially affected as a result of making
this Agreement;
(iii) any sale or purchase option or similar agreement or
arrangements affecting any assets owned or used by the
Company.
25
(b) There is no default under any legally binding agreement to which
Company is a party which will have a material adverse effect on
the financial or trading position or prospects of the Company.
(c) There are no authorities by which any person may enter into any
commitment to do any act on behalf of the Company other than
authorities to officers and employees to enter into routine
contracts in the normal course of their duties.
(d) All agreements or arrangements between the Company on the one
hand and any of its directors or shareholders or any person or
company connected with any of them on the other hand have been
disclosed in writing to IFT.
(19) Properties
(A) Title to the Property
The particulars of the Property shown in the Fourth Schedule
hereto are true and correct and the Company has good and
marketable title to and exclusive occupation of the Property
free from any lien, charge or encumbrance, sub-lease, tenancy or
right of occupation, reservation, easement, quasi-easement,
covenant, condition, agreement, declaration or privilege in
favour of any third party which is or is likely to be
detrimental to the carrying on of the Business of the Company in
its usual and normal course and there are appurtenant to the
Property all rights and easement necessary for its use and
enjoyment and the Company has no other interest in land and does
not own or occupy any other property.
(B) Matters affecting the Property
(a) The Property is not affected by any of the following
matters nor is the Property likely to become so
affected:
(i) any outstanding dispute, notice or complaint or
any exception, reservation, right, covenant,
restriction or condition which is of an unusual
nature or which affects or might in the future
affect the use of the Property for the purpose
for which it is now used or which affects or
might in the future affect the value of the
Property; or
(ii) any notice, order, demand, requirement or
proposal made or issued by or on behalf of any
government or statutory authority, department or
body for acquisition, clearance, demolition or
closing, the carrying out of any work upon any
building, the modification of any planning
permission, or the continuance of any use or the
imposition of any building or improvement line;
or
(iii) any compensation received as a result of any
refusal of any application for planning consent
or the imposition of any restrictions in
relation to any planning consent; or
(iv) any commutation or agreement for the commutation
of rent or payment of rent in advance of the due
dates of payment thereof;
26
(b) There are no development works, redevelopment works or
fitting out works outstanding in respect of the
Property.
(c) All restrictions conditions and covenants (including any
imposed by or pursuant to any lease) affecting the
Property have been observed and performed and no notice
of any breach of any of the same has been received or is
likely to be received.
(d) The use and occupation of the Property and all machinery
and equipment therein and the conduct of any business
therein complies in all respects with all relevant
statutes and regulations including without prejudice to
the generality of the foregoing the Xxxxxxxxx Xxx 0000,
the Office Shops and Railway Premises Xxx 0000, the Fire
Precautions Xxx 0000, the Health and Safety at Work etc,
Xxx 0000 and with all rules regulations and delegated
legislation thereunder and all; necessary licences and
consents required thereunder have been obtained.
(e) There are no restrictive covenants or provisions,
legislation or orders, charges, restrictions,
agreements, conditions or other matters which preclude
the use of the Property for the purposes for which the
Property is now used and such user is the permitted user
under the provisions of the Town & Country Planning Acts
1971 to 1974 and regulations made thereunder and is in
accordance with the requirements of the Local Authority
and all restrictions, conditions and covenants imposed
by or pursuant to the Town & Country Planning Acts have
been observed and performed and no agreements have been
entered into under s.52 of the Town and Country Xxxxxxxx
Xxx 0000 in respect of the Property.
(C) Properties previously owned
The Company has no existing or contingent liabilities in respect
of any properties previously occupied by it or in which it owned
or held any interest, including, without limitation, leasehold
premises assigned or otherwise disposed of.
(20) Conduct of Business
To the best of the Warrantors' knowledge, the Company has conducted its
business in accordance with all applicable laws and regulations
(including without limitation the Lotteries and Amusements Xxx 0000 (as
amended) and all other laws and regulations relating to betting, gaming,
lotteries or amusements) and all necessary licences consents and permits
have been obtained to enable the Company to carry on its business. No
written notices have been received by the Company to the contrary.
(21) VAT
All amounts due to be paid to H.M. Customs & Excise by the Company prior
to the date hereof will have been paid and at the date hereof no dispute
exists between the Company and H.M. Customs & Excise.
27
(22) Taxation
(a) All Taxation for which the Company is liable as a result of any
act or omission by the Company prior to the date hereof will if
and so far as such Taxation ought to be paid prior to the date
hereof have been paid at or before the date hereof and the
Company is under no liability to pay any fine penalty surcharge
or interest in connection with any claim for Taxation.
(b) No provision or reserve has or ought to have been made in the
Accounts for Taxation liable to be assessed on the Company or
for which it is accountable in respect of income, profits or
gains earned, accrued or received on or before the Balance Sheet
Date or any act, omission, transaction or event on or before the
Balance Sheet Date including distributions made down to the
Balance Sheet Date or provided for in the Accounts and no
provision has or ought to have been made in the Accounts for
deferred Taxation in accordance with generally accepted
accounting principles.
(c) The Company has properly and punctually made all returns and
provided all information required for Taxation purposes and none
of such returns is disputed by the Inland Revenue or any other
authority concerned (in the United Kingdom or elsewhere).
(d) All payments by the Company to any person which ought to have
been made under deduction of tax have been so made and the
Company has (if required by law to do so) accounted to the
Inland Revenue for the tax so deducted.
(e) To the best of the Warrantors' knowledge, the Company is not
(otherwise than in the ordinary and proper course of the
Company's business) liable to Taxation in respect of any
transaction effected by the Company since the Balance Sheet
Date.
(23) Pensions
No agreement or arrangement exists for the provision by the Company of
any relevant benefits (as defined in s.612(1) of the Taxes Act with the
omission of the exception in that definition) for any officer or
employee or former officer or employee of the Company or for any
dependent of any such person.
(24) Debts
(a) Any debts owed to the Company at the Balance Sheet Date will
realise their full face value and be good and collectable in the
ordinary course of business and no amount included in the
Accounts as owing to the Company at the Balance Sheet Date has
been released for an amount less than the value at which it was
included in the Accounts or is now regarded by the Warrantors as
irrecoverable in whole or in part.
(b) The Company has not factored or discounted its debts or agreed
to do so.
(c) All debts owed to the Company at completion are good and
collectable in the ordinary course of business.
28
(25) Liabilities
(a) Other than as contained in the Accounts or the Management
Accounts or as disclosed in the Disclosure Letter the Company
does not have any known or foreseeable liability whatsoever
whether actual or contingent to all or any of MMK, MMKUK, MMK
Guernsey Limited, Xxxxxx Xxxx Brewing & Retailing Limited,
Mansfield Breweries, The Wolverhampton & Xxxxxx Breweries plc,
Pubmaster Limited, Corporate Catering Company Limited, On Line
Broadcasting Limited, Freud Communications Limited, Luther
Pendragon and Nabarro Xxxxxxxxx.
(b) Without prejudice to sub-paragraph 25(a), the aggregate amount
of all known or foreseeable liabilities of the Company
whatsoever whether actual or contingent does not exceed a total
of (pound)850,000.
(26) Ownership and Condition of Assets
(a) All assets included in the Accounts (save for real property) and
all assets acquired since the Balance Sheet Date (except for
current assets subsequently disposed of or applied in the
ordinary and normal course of business):
(i) are legally and beneficially owned by the Company; and
(ii) have been in the possession of or under the control of
it at all material times.
(b) None of the undertaking or assets of any of the Company are the
subject of any mortgage, charge, pledge, lien, option,
pre-emption right, encumbrance, equity or other third party
claim or right or of any outstanding agreement or commitment to
give or create any of the foregoing.
(c) None of the assets of any of the Company have been acquired on
terms that property in it is not to pass until full payment is
made or other indebtedness discharged except for retention of
title clauses arising in the ordinary course of business.
(d) No circumstance has arisen in relation to any asset held under
any hire purchase agreement or a similar agreement whereby the
amounts payable by the Company under the hire purchase agreement
have been or are likely to be increased.
(e) Each material item of plant, machinery vehicles and other
equipment used by the Company is:
(i) in good repair and condition and has been properly
serviced and maintained in all material respects;
(ii) capable of doing the work for which it was designed or
acquired during the period in which it is written down
to nil in the accounts of the Company;
in each case having regard to its age, the use to which it is
put, and fair wear and tear excepted.
(f) all of the plant, machinery, vehicles and other equipment used
by the Company materially complies with appropriate safety
regulations.
29
(27) Judgments and Court Orders
There is no unfulfilled or unsatisfied judgment or court order
outstanding against the Company.
(28) The Warrantors have disclosed in writing to IFT all material information
relating to the terms and conditions of any former or existing
employment of the directors of the Company (other than the B Directors)
and any resignation or proposed resignation of any such directors of the
Company from any such employment has been or shall be conducted in
strict compliance with the provisions of any contract of employment or
agreement regulating such employment and there are no claims which may
arise from such earlier employment.
(29) None of the Warrantors has wrongfully made use of or exploited or
proposes to make use of or exploit in the business of the Company any
trade secret or other intellectual property which an existing or former
employer of any of the Directors is legally entitled to protect and none
of the Warrantors has engaged in any business or activity or proposes to
engage in any business or activity in competition with the business of
any such employer which such employer was legally entitled to protect.
(30) The Disclosure Letter is true and accurate in all material respects and
fairly presented and nothing is omitted therefrom which renders the same
misleading.
(31) There are no companies or other businesses in which the Warrantors or
any of them have any interest of any nature whether directly or
indirectly.
30
SCHEDULE 3
Part 1
Matters Requiring Shareholders Consent
(1) The entering into of any guarantee or indemnity or standing surety for
any obligations of any third party.
(2) The acquisition of or making any investment in another company or
business or incorporating or acquiring or forming any subsidiary or
entering into any partnership, joint venture or other risk sharing
arrangement.
(3) The sale transfer or other disposal of or cessation in any way to
exercise control over (whether by one transaction or a series of
transactions and whether at one time or over a period of time) the whole
or any material part of its undertaking or assets.
(4) The making of any alterations to the nature of its business as would
constitute an alteration to the business of the Company and its
subsidiaries taken as a whole being carried on at the time of such
alteration.
(5) The payment of any remuneration or expenses to any person other than as
proper remuneration for work or services provided or as proper
reimbursement for expenses incurred in connection with its business.
(6) The sale transfer assignment or other disposal of or cessation in any
way to exercise direct control over any part of its interest in any
share capital mortgage charge debt or other obligation of any subsidiary
except to or in favour of another subsidiary.
(7) The alteration of the Memorandum or Articles of Association of the
Company or any of its subsidiaries and in particular but without
limitation any variation to the authorised or issued share capital of
the Company or any Subsidiary.
(8) The offer or grant of any option over or the sale of the whole or any
part of the share capital of the Company or any Subsidiary whether
issued or unissued.
(9) The forming, entering into, termination or withdrawal from any
partnership consortium or any other unincorporated association carrying
on a trade or business or any other similar arrangement whether or not
with a view to profit.
(10) The creation allotment or issue of any shares or securities of the
Company or any Subsidiary or the grant of any right to require the
allotment or issue of any such shares or securities (other than the
creation allotment or issue or the grant of any right to require the
allotment or issue of any shares or securities pursuant to this
Agreement or the Settlement Agreement made on 15th January 1999 between
the Company, MMK Europe Limited and MMK UK Limited).
(11) Any increase, reduction, repayment, redemption, sub-division,
consolidation or other variation of the authorised or issued share
capital of the Company or any Subsidiary (including early redemption of
any of the preference share capital of the Company or any
31
Subsidiary) or the rights attaching thereto or any reduction in the
amount, if any, standing to the credit of the share premium account or
capital redemption reserve.
(12) The evolution, expansion or development of the business of the Company
or any Subsidiary (whether conducted as part of or in connection with
the business of the Company or any Subsidiary or ancillary to it)
otherwise than through the Company or a wholly-owned subsidiary of the
Company.
(13) The creation of any fixed or floating charge, lien (other than a lien
arising by operation of law) or other encumbrance over the whole or any
part of the undertaking, property or assets of the Company or any
Subsidiary, except for the purpose of securing indebtedness to its
bankers for sums borrowed in the ordinary and proper course of the
Business.
32
Part 2
Matters Requiring Board Approval
(1) The incurring of any liability of a capital nature over any capital
expenditure plan approved from time to time by IFT (and so that for the
purposes of this paragraph (1) the expression "liability of a capital
nature" shall include the capital value of all items purchased or leased
on hire purchase, lease purchase, lease agreements and any other form of
credit sale or asset financing agreement).
(2) The entering into of any transaction or contract otherwise than on arm's
length terms and in the ordinary course of business of the Company and
its subsidiaries.
(3) The entering into or varying of any transaction or agreement with or for
the benefit of any director from time to time of the Company or any of
its subsidiaries or any Associate of such a director save as
contemplated by this Agreement.
(4) The commencement by the Company or any Subsidiary of any legal or
arbitration proceedings save for legal proceedings for the recovery of
debts.
(5) The loan of any money to any person (otherwise than by way of deposit
with a bank or other institution the normal business of which includes
the acceptance of deposits) or the granting of any credit to any person
other than in the ordinary course of business.
(6) The making of any change in the appointment of its auditors from BDO
Xxxx Xxxxxxx or changing the accounting reference date of the Company or
any subsidiary from 31st August.
(7) The entering into or varying of any contract or arrangement (whether
legally binding or not) with any director from time to time of the
Company or any of its subsidiaries or with any Associate of any such
director.
(8) The entering into of any lease licence tenancy or similar obligation
relating to land or buildings.
(9) The employment of any person (whether under a contract of service or for
services) or the grant of any increase in the remuneration of any
employee whereby such person's aggregate emoluments (including without
limitation all salaries, bonuses and benefits in kind (the cost of which
shall be calculated by reference to the actual annual cost thereof to
the Company and/or its subsidiaries as the case may be but disregarding
any corresponding reduction to liability to Taxation which arises to the
Company or any Subsidiary in relation thereto)) and pension benefits
will or may exceed the sum of (pound)30,000 in any year or whereby any
budgeted expenditure approved from time to time by IFT may be exceeded.
(10) The employment by the Company or any Subsidiary of any person who is a
relative or an Associate of any Director of the Company or any
Subsidiary or the increase in the remuneration of any such person.
33
(11) The granting by the Company or any Subsidiary of an increase in the
remuneration of any director or the payment of any fee or bonus or
commission to any director or any Associate of any director.
(12) The making of any change in the appointment of the bankers of the
Company or any Subsidiary.
(13) Any variation to or amendment of or any time or indulgence granted by
the Company under the IFT Agreement.
34
SCHEDULE 4
The Property
First floor premises at Xxxxxxxxxx Xxxxx, Xxxxxxxxxx Xxxx, Xxxxxx XX0 comprised
in a Lease dated 19 April 1995 made between Brixton Estate Plc (1) and Inter
Lotto (UK) Limited (3036871).
35
SCHEDULE 5
Intellectual Property
TRADE XXXX REGISTRATIONS IN THE NAME OF INTER LOTTO (UK) LIMITED
19TH APRIL 1999
Application
Country Xxxx Classes Filing Date Number
------- ---- ------- ----------- ------------
UK Pronto! 16, 18, 20, 21, 11.7.1997 2138823 X
00, 00, 00
Xxxxxx
XX Pronto! 16, 18, 20, 21, 23.10.1997 2148852
25, 26, 28, 36,
The Lively Lottery (& 38, 41 and 42
Shooting Stars Device)
Registration Registration
Country Date Number Status
------- ------------- ------------ ------
UK 11.7.1997 2138823 A Registered - renewal due
11.7.2007
UK 11.9.1998 2148852 Registered - renewal due
23.10.2007
36
IN THE AGREED FORM
1. Notice of Meeting.
2. Board Minutes.
3. Articles of Association.
4. IFT Agreement.
5. Service Agreements.
37
EXECUTED AND DELIVERED as a Deed )
by XXXXXX X. XXXXXXXXX in the )
presence of: )
EXECUTED AND DELIVERED as a Deed )
by THE RIGHT HON. THE LORD )
MANCROFT in the presence of: )
EXECUTED AND DELIVERED as a Deed )
by XXXX X. XXXXXX )
in the presence of: )
EXECUTED AND DELIVERED as a Deed )
by XXX XXXXX XXXXXXXX )
in the presence of: )
EXECUTED AND DELIVERED as a Deed )
by VISCOUNT STRATHALLAN )
in the presence of: )
EXECUTED AND DELIVERED as a Deed )
by XXX XXXXXX )
in the presence of: )
EXECUTED AND DELIVERED as a Deed )
by XXXXXXX XXXXX )
in the presence of: )
EXECUTED AND DELIVERED as a Deed )
by XXXXX XXXXX )
in the presence of: )
38
EXECUTED AND DELIVERED as a Deed )
by XXXXX XXX )
in the presence of: )
EXECUTED AND DELIVERED as a Deed )
by XXXXXXX XXXXX )
in the presence of: )
EXECUTED AND DELIVERED as a Deed )
by HGI HOUSE & GENERAL INVESTMENT )
FOUNDATION acting by: )
EXECUTED AND DELIVERED as a Deed )
by IFT HOLDINGS LIMITED )
acting by: )
EXECUTED AND DELIVERED as a Deed )
by INTER LOTTO (UK) LIMITED )
acting by: )
39
