Exhibit 4.20
XXXXXXXX & DANIELSSON
ADVOKATBYRA KB
EXECUTION COPY
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SHARE PURCHASE AGREEMENT
regarding the sale and purchase
of shares in Open Training Sweden AB
5 November 2004
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This Share Purchase Agreement (the "Agreement") is entered into this 5th day of
November 2004, by and between Xxxx-Xxxx Xxxxxxxx, 611216-7819, Xxxxxxxxx 00 0
xx, 000 00 Stockholm, Xxxxxx Xxxxxx, 680325-5212, Xxxxxxxxxxx 0, 000 00 Xxxx and
Investment AB Oresund (publ), registration number 556063-9147, a public limited
liability company organised and existing under the laws of the kingdom of Sweden
with its registered office at Box 7621, 103 94 Stockholm, on the one hand,
jointly referred to as the "Sellers", and Futuremedia Plc, a public limited
liability company organised and existing under the laws of England with its
registered office at Xxxx Xxxxx, Xxxx Xxxxxx, Xxxxxxxx, XX0 0XX Brighton, United
Kingdom (the "Purchaser" or "Futuremedia"), on the other hand.
BACKGROUND
A. Open Training Sweden AB, registration number 556560-6885 (the "Company"),
is a limited liability company organised and existing under the laws of
Sweden. The Company has an issued share capital of SEK 714,300 divided
into 7,143,000 shares, each with a nominal value of SEK 0.10.
B. The Sellers own 89% of the outstanding shares in the Company in accordance
with what is set out below (the "Shares"):
Investment AB Oresund 2,143,000 shares
Xxxx-Xxxx Xxxxxxxx 2,109,000 shares
Xxxxxx Xxxxxx 2,109,000 shares
The remaining shares in the Company are directly and indirectly owned by
current and former employees of the Company as set out in Exhibit B (the
"Minority Shareholders").
C. The Company was founded in 1999 by Xxxx-Xxxx Xxxxxxxx and Xxxxxx Xxxxxx
(the "Founders") and provides e-learning solutions consisting of products
and services such as (i) custom made e-learning courses, (ii) LMS platform
Learngate, (iii) consulting and (iv) other tools.
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D. The Sellers desire to sell and the Purchaser desires to purchase all the
Shares on the terms and conditions set out in this Agreement.
1. Definitions
When used in this Agreement, the following terms shall have the meanings
set out below (such meanings to be equally applicable to the singular and
plural forms of such terms):
"Accounts Date" means 31 December 2003;
"Additional Purchase Price" shall have the meaning set out in Clause 3.2.
"Agreement" means this share transfer agreement and the Schedules attached
to it;
"Annual Report" shall have the meaning set out in Clause 6.4.1;
"APP Calculations" shall have the meaning set out in Clause 3.4;
"Arrangements" shall have the meaning set out in Clause 6.8.2;
"Business Day" means a day when banks are open for general banking
business in Sweden, in the United Kingdom and in the United States of
America;
"Claim" means a claim made by the Purchaser against the Sellers in respect
of a breach of any of the Sellers' representations and warranties,
obligations or agreements in this Agreement;
"Closing" means the completion of the sale and purchase of the Shares
pursuant to this Agreement and as set out in Clause 5.1;
"Closing Date" means the date on which Closing takes place in accordance
with Clause 5.1;
"Company" has the meaning given in the Background Clause;
"Confidentiality Agreement" means the confidentiality agreement between
the Parties, dated 4 June 2004;
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"EBIT" means earnings before interest and taxes (Sw: rorelseresultatet)
which for the financial year 2003 was SEK -3,754,449, not taking into
consideration transactions and payments between the Purchaser and the
Company which are not in the ordinary course of business, e.g. management
and marketing fees.
"Encumbrance" means any claim, charge, mortgage, lien, option,
hypothecation, usufruct, retention of title, right of pre-emption, right
of first refusal or other third party rights or security interest of any
kind or an agreement to create any of the foregoing;
"Escrow Agreement" shall have the meaning set out in Clause 4.1.(d);
"Founders" shall have the meaning set out in the Background Clause;
"Intellectual Property" means patents, copyrights (including but not
limited to rights in software), trademarks, logos, inventions, trade
secrets, know-how or any other intellectual property rights, including but
not limited to, where such rights are obtained or enhanced by
registration, any registration of such rights and applications and rights
to apply for such registrations;
"Interim Date" means 30 June 2004;
"Interim Report" shall have the meaning set out in Clause 6.4.1;
"Key Employee" means any of Ulf Annerberg, Xxxxxx Xxxxxxxxx, Xxxxxxxxx
Xxxxxxx, Xxxxxx Sjo and Xxxxxx Xxxx;
"Losses" means losses, liabilities, damages, claims and expenses, whether
direct or indirect;
"Material Arrangements" shall have the meaning set out in Clause 6.9.1;
"Minority Shareholders" shall have the meaning given in the Background
Clause.
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"Party" means a Seller or the Purchaser, and "Parties" means the Sellers
and the Purchaser, collectively;
"Purchaser" shall have the meaning set out in the introductory paragraph
and for a specific purpose in Clause 9.1.(a);
"Purchase Price" shall have the meaning set out in Clause 3.1;
"Receivables" shall have the meaning set out in Clause 6.5.1;
"Retirement Benefit Arrangements" shall have the meaning set out in Clause
6.17.7;
"SEK" means Swedish Kronor;
"Sellers" shall have the meaning set out in the introductory paragraph;
"Shares" shall have the meaning given in the Background Clause;
"Signing Date" means the date of this Agreement, 5 November 2004;
"Transaction" means the sale and purchase of the Shares pursuant to this
Agreement.
2. Sale and Purchase
2.1 Subject to the terms and conditions of this Agreement, on the Closing
Date, as defined in Clause 5.1 below, the Sellers agree to sell and
transfer the Shares to the Purchaser and the Purchaser agrees to purchase
the Shares from the Sellers.
2.2 The Shares shall be sold free and clear from all Encumbrances and together
with all accrued benefits and rights pertaining thereto.
3. Purchase Price
3.1 The purchase price for the Shares (the "Purchase Price") shall be
allocated between the Sellers as follows:
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(i) Investment AB Oresund shall receive SEK 4,800,000 in cash, and
(ii) each of the Founders shall receive SEK 4,372,000 in the form of
shares in Futuremedia (ADRs).
3.2 The Founders shall furthermore have a conditional right to additional
purchase price based on the Company's EBIT (the "Additional Purchase
Price") for the period starting on the 1 November 2004 and ending on 31
October 2005, in accordance with the following:
(i) In the event EBIT for said period is less than SEK 1,400,000 the
Founders shall not be entitled to the Additional Purchase Price;
(ii) In the event EBIT for said period is between SEK 1,400,000 and
1,599,000 the total Additional Purchase Price to be received by the
Founders shall be SEK 2,000,000;
(iii) In the event EBIT for said period is between SEK 1,600,000 and
1,999,000 the total Additional Purchase Price to be received by the
Founders shall be SEK 3,500,000; and
(iv) In the event EBIT for said period is not less than SEK 2,000,000,
the total Additional Purchase Price to be received by the Founders
shall be SEK 5,000,000.
3.3 In order to determine the Additional Purchase Price, the Purchaser shall
procure that the Company, as soon as practicable after 31 October 2005,
however not later than 15 Business Days after such date, delivers to the
Founders a profit and loss account of the Company, for the period 1
November 2004 - 31 October 2005, and balance sheet of the Company as at 31
October 2005, reviewed by an auditor, together with a presentation of EBIT
and the corresponding Additional Purchase Price (together the "APP
Calculations"). The profit and loss account and the balance sheet shall be
prepared in accordance with Swedish GAAP (Sw: god redovisningssed) and the
accounting principles applied in the Annual Report (as defined below) and
the Interim Report. The Founders shall have the right at their own expense
to review and have auditors review the delivered APP Calculations,
including reviewing all books, records and information on which the APP
Calculations are based.
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3.4 Within ten Business Days after receipt of the APP Calculations, the
Founders shall in writing either inform the Purchaser that the APP
Calculations are acceptable or object to the APP Calculations setting out
a specific description of the Founders' objections. The failure of the
Founders to deliver objections to the Purchaser within ten Business Days
after receipt of the APP Calculations shall be deemed acceptance by the
Founders of the APP Calculations. Within ten Business Days after receipt
of the Founders' objections, if any, the Purchaser shall in writing either
inform the Founders that the Founders' objections are acceptable or object
to the Founders' objections setting out a specific description of the
Purchaser's objections. The failure of the Purchaser to deliver objections
to the Founders within ten Business Days after receipt of the Founders'
objections shall be deemed acceptance by the Purchaser of the APP
Calculations in accordance with the Founder's objections. If the Founders
and the Purchaser have not accepted or agreed on the APP Calculations the
Parties shall meet to attempt to resolve and agree on such issues in good
faith.
3.5 Not later than 15 Business Days after the APP Calculations have been
accepted or agreed between the Parties, the Additional Purchase Price, if
any, shall be paid in shares in Futuremedia and in accordance with the
written instructions from the Founders. Any Additional Purchase Price
payable shall be allocated between the Founders so that Xxxx-Xxxx Xxxxxxxx
shall be entitled to 77.5% thereof and Xxxxxx Xxxxxx to the remaining
part, provided however that another allocation shall be applied if the
Founders have jointly informed Futuremedia thereof in the written payment
instruction referred to above.
3.6 Notwithstanding what is set out in Clause 3.5 as regards payment date for
the Additional Purchase Price, the Purchaser shall not be obliged to pay
the Additional Purchase Price until Claims have been settled between the
Purchaser and the Founders, e.g. by set-off.
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3.7 The number of shares in Futuremedia that shall be issued as part of the
Purchase Price shall be decided based on the 15 days average of the daily
low/high average price of Futuremedia's ADRs traded on NASDAQ under the
ticker symbol FMDAY prior to the Signing Date and on the average SEK/USD
exchange rate, as set out daily on the website of the Central Bank of
Sweden (Sw: Riksbanken; xxx.xxxxxxxxxx.xx/xxxxxxxxx/XxxxXxxx.xxxx?
id=10876), for the same period. Consequently, the above calculations as
regards the determination of the number of shares in Futuremedia that
shall be issued as part of the Additional Purchase Price, shall be based
on the 15 days period prior to 31 October 2005.
4. Conditions Precedent
4.1 The obligation of the Parties to complete the purchase of the Shares under
this Agreement is conditional upon the following:
(a) the Minority Shareholders shall have executed share purchase
agreements in the form attached hereto as Exhibit 4.1.(a);
(b) the Founders and the Key Employees shall have executed agreements
with the Company or the Purchaser (including an agreement under
which Xxxx-Xxxx Xxxxxxxx and Objekt Teknik AB transfer certain
Intellectual Property set out in Exhibit 6.12.1, e.g. the domain
name xxx.xxxxxxxxxxxx.xxx, to the Company), in form and substance
reasonably satisfactory to the Purchaser;
(c) since the Signing Date, no event shall have caused, and no event
shall have occurred that may reasonably be expected to cause a
material adverse effect relating to the business or financial
position of the Company;
(d) the Founders and the Purchaser shall have entered into an escrow
agreement substantially in the form set out in Exhibit 4.1.(d) (the
"Escrow Agreement");
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(e) a plan, setting out the joint business plan of the Company and the
Purchaser for the next 12 - 18 months, shall have been approved by
the Founders and the board of directors of the Purchaser;
(f) all representations and warranties in Clause 6 shall in all respects
be true and correct at and as of the Signing Date and the Closing
Date;
(g) the Sellers shall in all material respects have complied with the
covenants of this Agreement; and
(h) Bank of New York shall have confirmed that it is ready to transfer
the ADRs that will be part of the Purchase Price in accordance with
Clause 3.1(ii).
4.2 The Sellers and the Purchaser will each use all reasonable endeavours to
fulfil or procure the fulfilment of the applicable conditions set out in
Clause 4.1 above and will notify the other Parties immediately of the
satisfaction of any of such conditions.
5. The Closing
5.1 The Closing shall take place at the offices of Gemandt & Danielsson
Advokatbyra KB five Business Days after the fulfilment or relevant Party's
waiver of the conditions precedent set out in Clause 4.1 above, or, such
other date the Parties may agree on, however in no event later than 15
December 2004 (the "Closing"; the "Closing Date"). The Parties expect
Closing to take place within four weeks of the Signing Date but are aware
that it may take place later.
If Closing has not taken place on 15 December 2004, this Agreement shall
be declared null and void and no Party shall have any claims on the other
Parties for such declaration.
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5.2 At the Closing the Sellers shall:
(a) in exchange for the payment of the Purchase Price, deliver to the
Purchaser the share certificates representing the Shares, duly
endorsed in blank;
(b) cause all directors of the Company nominated by the Sellers to
retire from their respective office without claim for remuneration,
save for what is set out in Exhibit 5.2(b), to the extent this is
requested by the Purchaser;
(c) procure that the board of directors of the Company issues a general
power of attorney for the Purchaser to represent the Company, until
new authorised signatories in the Company have been appointed and
registered with the Swedish Companies Register; and
(d) deliver share purchase agreements in the form attached hereto as
Exhibit 4.1.(a) executed by all Minority Shareholders, together with
share certificates representing the Minority Shareholders' shares in
the Company, duly endorsed in blank.
5.3 At the Closing the Purchaser shall, subject to the Sellers fulfilling all
its obligations under Clause 5.2 above and in accordance with the Sellers'
transfer instructions to be provided to the Purchaser not later than five
days prior to the Closing Date, pay to Investment AB Oresund the purchase
price set out in Clause 3.1(i) and deliver to the Founders such number of
shares in Futuremedia that is the result of the application of Clauses
3.1(ii) and 3.7 above. Furthermore, the Purchaser shall pay the Minority
Shareholders for their shares in the Company.
5.4 At the Closing, an extraordinary shareholders' meeting in the Company
shall be held, at which among other things a new board of directors and
auditors shall be elected and a board meeting in the Company shall be
held, at which among other things new authorised signatories shall be
appointed. The Purchaser shall prepare the minutes of said meeting as well
as the necessary ancillary documents and ensure that the changes are
registered with the Swedish Companies Register (Sw: Bolagsverket) as soon
as possible.
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6. Representation and Warranties of the Sellers
The Sellers hereby severally, and not jointly, each Seller for himself
only, make the following representations and warranties to and for the
benefit of the Purchaser, each of which is made as of the Signing Date and
shall be deemed to be repeated on and as of the Closing Date.
Each representation and warranty given by Investment AB Oresund, save for
the representations and warranties in Clauses 6.1, 6.2, 6.3, 6.4.1, 6.7,
6.17.8 and 6.18, is given to the best of Investment AB Oresund's knowledge
only, meaning the actual knowledge of either of Messrs. Xxxxxx Xxxxxxxxx,
Xxxx Xxxxxxxx and Xxxxxx Xxxxxx.
To the extent the representations and warranties given by the Founders are
qualified by the expression "so far as the Sellers are aware" or any
similar expression shall, unless otherwise stated, be deemed to refer to
the knowledge of any of the Founders who shall be deemed to have knowledge
of such matters as they would have discovered, had they made reasonable
and customary enquiries.
The Purchaser agrees that the Sellers have made no, and the Purchaser has
not relied on any, express or implied representation or warranty regarding
the Shares or the Company other than the Warranties contained in this
Agreement and no action or omission by the Sellers or the Company shall be
construed as implying any representation or warranty. The Parties agree
that the Sellers' liability in relation to the Shares is exclusively
governed by the warranties in this Clause 6. The Sellers shall thus have
no liability for defects under the Sale of Goods Act (Sw. Koplagen
(1990:931)).
6.1 Organisation; Authorisation
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6.1.1 The Company is a duly organised and validly existing limited liability
company under the laws of Sweden;
6.1.2 The Company is registered with the Swedish Companies Register and the
certificate of registration and articles of association which appear from
Exhibit 6.1.2 are correct-and complete and no resolution has been passed
to alter any provision thereof;
6.1.3 The Company is in compliance with its articles of association;
6.1.4 The Company has all requisite corporate power and authority under its
articles of association to carry out its business, and holds all licenses,
permits and other required authorisations from governmental or regulatory
authorities, necessary to conduct its business as it is now being
conducted and is proposed to be conducted, and to own its assets;
6.1.5 The Company does not own or control, whether directly or indirectly, any
share capital or other equity or ownership interest in any business,
company, joint venture, partnership or other entity except for those set
out in Exhibit 6.1.5;
6.1.6 This Agreement, when executed, constitutes legal, valid and binding
obligations of the Sellers, enforceable against them in accordance with
its terms. The Sellers are neither prohibited nor restrained by their
articles of association, where applicable, or by any agreements to which
the Sellers are a party, from entering into this Agreement and from
consummating the Transaction, and this Agreement has been duly authorised
by all necessary corporate actions;
6.2 Share Capital
6.2.1 The Company has an issued share capital of SEK 714,300 divided into
7,143,000 shares, each with a nominal value of SEK 0. 10, validly issued
and fully paid for. The Shares constitute 89 per cent of the issued share
capital of the Company;
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6.2.2 The Sellers lawfully own the Shares. The Shares in the Company are free
and clear of all Encumbrances and no right of first refusal or similar
third party right exists, other than the pre-emption right (Sw:
hembudsratt) set out in the Company's articles of association which is
hereby waived by the Sellers and will consequently not be exercised in
relation to the completion of the Transaction. Neither the Sellers nor the
Company has issued, granted or entered into any outstanding options,
warrants or other rights of any kind to acquire or obligations to issue
securities in the Company or other equity interests including convertible
debentures or options to issue new shares;
6.3 Documentation
6.3.1 All documentation concerning the Company (including, without limitation,
the share ledger, minutes from board meetings and shareholders' meetings
and books of account) has been properly kept and contain in all material
respects an accurate and complete record of the matters dealt with in
those documents. Such documentation is in all material respects complete,
save for the share ledger which in all respects is complete, and in the
possession of the Company;
6.4 Financial Statements
6.4.1 The audited balance sheet and profit and loss account for the Company for
the financial year 2003 (Exhibit 6.4.1.1; the "Annual Report") and the
balance sheet and profit and loss account for the Company for the first 6
months of the financial year 2004, as reviewed by the Company's auditor
(Exhibit 6.4.1.2; the "Interim Report") have been prepared in accordance
with Swedish GAAP (Sw: god redovisningssed), consistently applied for the
last two financial years, and are true and correct in all material
respects and correctly present the financial position of the Company as of
the Accounts Date and Interim Date respectively and the result of the
Company and its operations for the relevant period;
6.4.2 Since the Accounts Date, there has been no material adverse change in the
assets, liabilities, business or condition, financial or otherwise, of the
Company and the Sellers do not foresee any such change. There has not
occurred or arisen, since the Interim Date, with respect to the Company,
(i) any obligation, commitment or liability, liquidated or unliquidated,
contingent or otherwise, whether for taxes or otherwise, arising out of
events occurring after the Interim Date, except obligations, commitments
and liabilities arising in the ordinary course of business or (ii) any
amendment or termination of any Material Arrangement as defined in Clause
6.9.1 below;
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6.5 Accounts Receivable, Unbilled Receivables and Accounts Payable
6.5.1 All accounts receivable and other rights to payment, including, without
limitation, unbilled receivables and credits extended to third parties
("Receivables"), and accounts payable that are reflected in the Annual
Report and the Interim Report have arisen from bona fide transactions of
the Company and represent valid obligations due to or by the Company which
have been accounted for in a manner consistent with past practice. All
Receivables that are reflected in the books as of the Closing Date will be
collected according to their respective terms by the Company (assuming
collection efforts will be made after the Closing Date in a manner
consistent with past practice);
6.6 No Undisclosed Liabilities
Except for the debts, liabilities or obligations (i) that are reflected in
the Annual Report and the Interim Report or (ii) that were incurred since
the Interim Date in the ordinary course of business and consistent with
past practise, there are no debts, liabilities or obligations of any
nature (whether or not accrued, contingent or otherwise) of the Company;
6.7 Dividends
6.7.1 No dividends or other distribution of payment (whether in shares, cash or
other property) in respect of the shares in the Company have been paid or
authorised since the Accounts Date.
6.8 Business
6.8.1 The Company is and has in all material respects at all times been in
compliance with all applicable laws, regulations and administrative orders
of every jurisdiction in which it transacts business or to which it is
subject;
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6.8.2 The Company has entered into all agreements, contracts and commitments
("Arrangements") necessary for the conduct of its business as currently
conducted and the Arrangements have been entered into in the ordinary and
usual course of business and at prices, terms and conditions that were
commercially sound in the Company's opinion. The Company has not received
any notice of breach by it and it has not since the Accounts Date been and
it is not currently in breach of any Arrangements to which it is party or
by which it is bound;
6.8.3 Except as set out in Exhibit 6.8.3, the Company is not bound by or subject
to any Arrangement of the following kind: (i) any guarantee or
indemnification by it for the benefit of any person or entity, (ii) any
credit or financing Arrangement and related collateral arrangement for the
borrowing of funds or obtaining credit by it from any individual or
entity, (iii) any Arrangement containing any covenant or provision
limiting the freedom of it to engage in any line of business or compete
with any individual or entity in any geographic area, (iv) any Arrangement
for the provision of services or products on an exclusive basis
(including, without limitation, distributorship, licensing, supplier and
franchising agreements), (v) any Arrangement containing provisions for
price redetermination or price revisions relating to the period up to the
date hereof or, as concerns the future other than Arrangements entered
into in the ordinary course of business and customary in the relevant
trade, (vi) any Arrangement with the Sellers, Key Employees or their
affiliates other than in the ordinary course of business and on arm's
length terms, (vii) any other Arrangement not made in the ordinary course
of business or (viii) any Arrangement made on non-commercial terms;
6.8.4 The Company has not granted or offered any warranties for goods or
services sold which are still valid except as set out in Exhibit 6.8.4;
6.8.5 The price and payment terms of all outstanding material Arrangements,
bids, sales orders and purchase orders of the Company contain terms
consistent with the past practice of the Company;
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6.8.6 Save for what is set out in Exhibit 6.8.6, the Company is not party to
any Arrangement which will be affected by reason of change of ownership
of the shares in the Company;
6.9 Material Arrangements
6.9.1 All Arrangements material to the business of the Company and with a
contract value (being the total amount to be paid or received by the
Company)- in excess of SEK 100,000 are listed in Exhibit 6.9.1,
("Material Arrangements"). All copies of the Material Arrangements are
complete, accurately reflect the Material Arrangements and have been
provided to the Purchaser;
6.9.2 The Company has not received or given notice of termination of any
Material Arrangement, nor do the Sellers expect any such notice;
6.9.3 The Company is not in default under any Material Arrangement, nor has any
Material Arrangement been breached by any counterparty to such Material
Arrangement;
6.9.4 All Material Arrangements and binding offers by the Company have been
entered into/given in the ordinary and usual course of business and at
prices, terms and conditions that were commercially sound in the
Company's opinion, other than what is set out in Exhibit 6.9.4. So far as
the Sellers are aware, no Material Arrangement contains provisions that
due to their content or application can be deemed wholly or partly
illegal or invalid;
6.10 Ownership to Real and Personal Property
6.10.1 The Company does not own any real property;
6.10.2 The Company owns, leases or has a license to use all real and personal
property necessary to conduct its business as it is currently conducted.
The Company has full ownership of or right to use, free and clear of all
Encumbrances, all real and personal property used in the business and no
such asset or right is subject to retention of title of pledged or
otherwise the subject of any Encumbrance. The Company's continued use of
such assets and rights is not subject to any restrictions other than such
as may follow from laws and regulations generally applicable to the
Company or to the type of operations carried out by the Company;
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6.10.3 No deed regarding floating charges (Sw: foretagshypoteksbrev) nor any
mortgage deed on real property (Sw: pantbrev), with respect to the
Company, is pledged, save for floating charges of SEK 2,400,000 pledged
to Ostgota Enskilda Banken;
6.11 Condition of Real and Personal Property
6.11.1 The real and personal property owned or leased by the Company and used in
its business is in good operating condition with consideration of normal
wear and tear and suitable in all material respects for its intended
purpose and adequate for the conduct of the Company's business as it is
currently being conducted;
6.12 Intellectual Property
6.12.1 The Company owns, or has valid licenses or other right to use, all
Intellectual Property used or required by the Company in its business as
currently conducted. Such Intellectual Property, together with
information on whether owned or licensed, are listed in Exhibit 6.12.1;
6.12.2 Neither the Company's conduct of business nor any Intellectual Property
owned by the Company infringes or violates the proprietary rights of any
third party;
6.12.3 To the best of the Sellers' knowledge, there are no infringements or
violations by a third party to the Intellectual Property listed in
Exhibit 6.12.1;
6.13 Information Technology
6.13.1 In the 12 months prior to the Signing Date, there have been no failures
or breakdowns of any computer systems, communication systems, software
and hardware used in the business of the Company which have caused any
disruption or interruption in or to the business of the Company or which
has had adverse effect on the Company's business.
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6.14 Licenses and Permits
6.14.1 The Company has all the necessary licences, permits and authorisations,
including environmental licences, to carry on its business as conducted
at the date hereof and has at all times been and is in compliance with
all licences, permits and authorisations, and there is no pending action
or other proceeding, nor is there any reason to expect any such action or
proceeding, which seeks the revocation or suspension or alteration of any
such existing licences, permits or authorisations;
6.15 Compliance
6.15.1 The Company has at all times complied with all laws and regulations where
it, directly or through intermediaries, carry out business. Without
limiting the generality of the foregoing, the Company neither is nor has
been engaged in any activity which could violate prohibitions against
restrictive agreements or abuse of dominant position in the European
Economic Area or Swedish competition law.
6.16 Insurances
6.16.1 The Company has maintained and maintains insurances that are adequate
with respect to its assets and business and in relation to liability
towards third parties and such insurances are in force and in effect and
are not void or voidable and will be maintained up to thirty (30) days
after the Closing Date;
6.17 Employee Matters and Pension Arrangements
6.17.1 True, complete and current copies of the employment contracts of the Key
Employees and the Founders are attached as Exhibit 6.17.1 and no Key
Employee has announced his or her termination of his or her position or
employment with the Company, nor is there to the Sellers' knowledge
reason to expect such termination, and the Company is not in default
under any such employment contracts. No collective bargaining agreement
is applicable to the Company or any of the Key Employees;
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6.17.2 Neither the Key Employees nor the Founders are entitled to any severance
pay due to a change of ownership of the Shares;
6.17.3 No employment contract, nor any arrangement with any former employee of
the Company, contains any provisions that deviate from what is normal in
the field of business where the Company is active;
6.17.4 Exhibit 6.17.4 sets out a complete and correct list of all employee
benefit, pension, retirement, bonus, incentive, profit sharing, severance
and life and medical insurance plans or programs adopted by the Company
or by which the Company is bound, other than those required by applicable
law;
6.17.5 There is no pending nor threatened claim by any current or former
director or employee of the Company or strike by the employees of the
Company. Neither the Company nor the Sellers have received notice of any
claim that it has not complied with any employment agreement or labour
related laws in respect of the such employees;
6.17.6 No former employees are entitled to re-employment by the Company:
6.17.7 The arrangements listed in Exhibit 6.17.7 are the only arrangements under
which the Company make or could become liable to make payments for
providing retirement, death, disability or life assurance benefits (the
"Retirement Benefit Arrangements"), except for arrangements to which the
Company contributes in compliance with any law or regulation. Exhibit
6.17.7 also include copies of documents governing such Retirement Benefit
Arrangements as will transfer to the Purchaser at Closing and membership
data to establish the members' entitlements to benefits under such
Retirement Benefit Arrangements. To the Sellers' knowledge, the
Retirement Benefit Arrangements are in compliance with their terms and
with all applicable laws, regulations and government taxation or funding
requirements in all material respects.
20
6.17.8 Provisions have been made in the Annual Report and the Interim Report for
the full amount of all present and accrued liabilities in respect of
pension undertakings to be paid to current or former directors, officers
or other employees of the Company;
6.18 Insolvency; Etc
6.18.1 No order has been made and no resolution has been passed for the
liquidation of the Company or for a liquidator to be appointed in respect
of the Company;
6.18.2 No reconstruction under the Company Reorganisation Act or bankruptcy
proceedings has been commenced in respect of the Company;
6.18.3 The Company is not insolvent, or unable to pay its debts, or has stopped
paying its debts as they fall due;
6.19 Legal Proceedings
6.19.1 There is no claim, legal action, counterclaim, suit, arbitration,
governmental investigation or other legal, administrative or tax
proceedings nor any order, decree or judgment in progress, pending or
threatened against the Company, nor is there any reason to expect such
proceedings, and there are, as far as the Sellers are aware, no facts or
circumstances that may lead to the aforesaid;
6.19.2 There is no outstanding order, injunction, judgment or decree or any
court, governmental agency or arbitration tribunal affecting the Company
or its respective assets;
6.20 Taxes
6.20.1 All tax and other returns, reports and forms required to be filed on or
prior to the Closing Date by or with respect to any activities of the
Company have been timely filed in accordance with all applicable laws and
regulations. There are no tax audits or tax disputes pending with respect
to the Company;
21
6.20.2 The Company has duly and punctually paid all taxes and fees required to
be paid by it on or prior to the Closing Date;
6.20.3 The Company has in the Annual Report and the Interim Report made proper
reservations for accrued but unpaid taxes;
6.20.4 The Company will not be the subject of additional assessment of taxes,
fees or fines or other punitive charges attributable to the conduct of
business or transactions or other tax related events prior to Closing;
6.21 No Conflict; Consents, Filings; Etc.
The execution of this Agreement by the Sellers does not,
(a) violate any law, regulation, order or judgment applicable to the
Sellers or the Company,
(b) violate or conflict with or constitute a default (or event which,
with notice or lapse of time, or both would constitute a default)
under, or give rise to a right of termination or modification, or
acceleration of the performance by (i) any licence, permit, approval
or other authorisation of the Company issued by any governmental or
regulatory authority, (ii) any Arrangements to which the Company is
a party or may be bound or to which the Company's assets are
subject,
(c) result in the creation of any mortgage, pledge, lien, security
interest, option or other encumbrance of any kind upon any of the
assets of the Company, or,
22
(d) require any registration of filing with or consent, approval,
permit, authorisation or action by any governmental or regulatory
authority;
6.22 True Statements
No warranty, nor any written statement delivered by the Sellers pursuant
hereto or in connection with the Transaction, contains or shall contain
any untrue statement, nor shall such warranty or statement taken as a
whole omit any statement necessary in order to make any statement therein
not misleading; and
6.23 Full Disclosure
There will on the Closing Date be no facts or circumstances known by the
Sellers and not disclosed to Purchaser that would have affected materially
and adversely a reasonable general purchaser's decision to enter into this
Agreement on the terms set out herein.
7. Representation and Warranties of the Purchaser
The Purchaser hereby makes the following representations and warranties to
and for the benefit of the Sellers, each of which is made as of the
Signing Date and shall be deemed to be repeated on and as of the Closing
Date;
7.1 The Purchaser is a limited liability company duly organised and validly
existing under the laws of England; and
7.2 The Purchaser has full requisite corporate power and authority to enter
into this Agreement and to purchase the Shares pursuant to this Agreement.
This Agreement, when executed, constitutes a legal valid and binding
obligation of the Purchaser enforceable against the Purchaser in
accordance with its terms.
8. Covenants
8.1 Interim Covenants
The Sellers covenants and agrees that they shall cause the Company from
the Signing Date through the Closing Date, to:
23
(a) conduct its business only in the ordinary course and consistent with
past practice and in all material respects compliance with all
applicable laws, rules and regulations, and use all reasonable
efforts to maintain and preserve its business organisation, assets,
business relationships and the service of the Key Employees and
consultants presently performing services for the Company;
(b) maintain or obtain in the usual, regular and ordinary manner all
licences, permits and other required authorisations as are necessary
in order to enable it to own and conduct its business as presently
conducted; and
(c) maintain its books, accounts and records in the usual, regular and
ordinary manner and to cause its books, accounts and records to be
true and complete in all respects.
8.2 Notice of Events
From time to time prior to the Closing Date, each of the Parties shall
give prompt notice to the other of (a) any occurrence or non-occurrence of
an event which would be likely to cause any representation or warranty
contained herein to be untrue or inaccurate at or prior to the Closing
Date or (b) any failure on its part to perform, comply with or satisfy any
covenant to be performed, complied with or satisfied by it hereunder;
provided, however, that the delivery of any such notice shall not limit or
otherwise affect the remedies available hereunder to any party.
8.3 Pending or Threatened Litigation
Between the date hereof and the Closing Date, the Sellers and the
Purchaser shall inform each other, promptly upon any of the Sellers' or
the Purchaser's obtaining knowledge thereof, of any pending or threatened
litigation which could reasonable be anticipated to prohibit or restrain
or materially and adversely affect the consummation of the Transaction or
the performance by the Purchaser or the Sellers of their respective
obligations hereunder.
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8.4 Discharge from liability
The Purchaser shall vote for that the present board members and the
present managing director of the Company, respectively, shall be
discharged from liability for their administration until the Closing Date
(or the earlier date of their retirement), at the first annual
shareholders' meeting held after the Closing, provided that the auditor of
the Company recommends such discharge nor is there any reason to expect
such proceedings, and there are, as far as the Sellers are aware, no facts
or circumstances that may lead to the aforesaid; in the auditors' report
for the relevant period.
8.5 Lock-up
8.5.1 The shares in Futuremedia that are received in accordance with Clause
3.1(ii) above shall be subject to lock-up undertakings. The Founders shall
not be entitled to sell or otherwise dispose of the shares in Futuremedia
that they received at Closing for a period of twelve months from Closing.
However, on the 41st calendar day following Closing, 35% of the each
Founder's holdings of shares in Futuremedia that were received at Closing
shall be released from such undertaking, provided that the daily number of
shares sold does not exceed 5% of the previous five days average traded
volume and, if applicable, that each sale has been made in consideration
of Futuremedia's xxxxxxx xxxxxxx policies. Furthermore, on the last day of
each subsequent three months period following the Closing Date, 16,25% of
the each Founder's holdings of shares in Futuremedia that were received at
Closing shall be released from such undertaking, provided that the daily
number of shares sold does not exceed 5% of the previous five days average
traded volume and, if applicable, that each sale has been made in
consideration of Futuremedia's xxxxxxx xxxxxxx policies. Hence, on the
last day of the twelfth month subsequent to Closing, the Founders shall be
free to sell or dispose of all shares in Futuremedia that they received at
Closing. Shares in Futuremedia, received in accordance with the,
Additional Purchase Price provision in Clause 3.6 above, shall be subject
to a corresponding lock-up undertaking based on the time when such shares
were received.
25
8.5.2 The lock-up undertakings set out in Clause 8.5.1 will be enforced by an
escrow arrangement provided for in the Escrow Agreement.
8.6 Drag-along
The Sellers shall procure that the Minority Shareholders sell their shares
in the Company to the Purchaser on the terms and conditions set out in
Exhibit 4. L(a).
9. Indemnification by the Sellers
9.1 Indemnification
(a) The Sellers shall severally and not jointly, each Seller for himself
only, indemnify, and hold harmless the Purchaser and its successors
and assigns (the Purchaser, the Company and such successors and
assigns being referred to in this Clause as the "Purchaser") from
and against any Losses which may be suffered by the Purchaser as a
result or on account of any breach of representations and
warranties, obligations or covenants made or given by the Sellers in
this Agreement. The Sellers' liability to indemnify the Purchaser
shall be limited as set out in this Clause 9.1. Subject to the
limitations set out in this Clause 9, in the event of a breach of
any of the warranties, covenants or agreements made or to be
performed by the Sellers pursuant to this Agreement, the Purchaser
shall, as its sole and exclusive remedy, be entitled to a reduction
of the Purchase Price or the Additional Purchase Price, as the case
may be, with an amount corresponding to the Loss.
26
(b) The Sellers' obligation to indemnify the Purchaser pursuant to this
Clause 9.1 for a breach of a representation or warranty shall
terminate, (i) with respect to Claims that are not based on a breach
of a representation or warranty contained in Clauses 6.20 hereof, on
15 August 2005, and (ii) with respect to Claims which are based on a
breach of a representation or warranty contained in Clause 6.20
(Taxes), three months (a) after the expiry of the period provided by
the statute of limitations applicable to such tax liability or (b)
after a final decision by the competent tax authority or court,
whichever is later; provided, however, that the Sellers' obligations
pursuant to Clause 9.1 shall not terminate with respect to any Claim
for which the Purchaser has given notice on or prior to the date
specified above for the termination of the liability with respect
thereto, irrespective of whether or not the amount of liability is
determined or determinable on such date.
(c) The Sellers shall not be liable for breach of any covenants,
representations or warranties in respect of any Claim unless the
individual amount of each Claim exceeds SEK 25,000 and the aggregate
amount of all such Claims for which the Seller would otherwise be
liable for breach of any covenant, representation or warranty
exceeds SEK 500,000. Where the aggregate amount of all Claims
exceeds the threshold, the full amount of the Claims shall be
recoverable from the Sellers.
(d) Each Seller's liability to indemnify the Purchaser in respect of
breach of any covenant, representation or warranty shall be several
and not joint, each Seller for himself only, on a pro rata basis in
relation to the number of shares sold by such Seller under this
Agreement in relation to the total number of shares in the Company
on the Closing Date. The maximum liability of each Seller shall be
limited to the part of the Purchase Price and the Additional
Purchase Price received by such Seller and, where applicable, with
deduction of such tax that has actually been incurred by such Seller
due to reception of the Purchase Price and the Additional Purchase
Price or due to sale of shares in Futuremedia received as Purchase
Price or Additional Purchase Price.
27
(e) The Sellers shall not be liable for breach of any covenant,
representation or warranty in respect of any liability which is
contingent unless and until such contingent liability becomes an
actual liability and is due and payable but this section shall not
operate to avoid a claim notified in respect of a contingent
liability within the time limits specified in Clause 9.1 (b) above.
Such contingent liabilities shall be included when assessing whether
or not the thresholds in Clause 9.1 (c) above have been exceeded
even if the liability is contingent at the time of assessment.
(f) The Sellers shall not be liable for breach of any representations or
warranties in respect of losses suffered by the Purchaser or the
Company to the extent of any corresponding savings by or net benefit
to the Purchaser or the Company arising directly and immediately
from such losses (for example, without limitation, where the amount
(if any) by which any taxation for which the Purchaser or the
Company would otherwise have been accountable or liable to be
assessed is actually reduced or extinguished as a result of the
matter giving rise to such liability);
(g) The Purchaser shall procure that reasonable steps are taken,
including by the Company, and that the Sellers are given reasonable
opportunity to assist in order to avoid or mitigate any losses which
in the absence of mitigation might give rise to a liability in
respect of any claim under this Agreement; .
(h) If any Loss is a tax deductible item the recoverable Loss shall be
reduced by an amount equivalent to the Loss multiplied by the actual
corporate tax rate applicable in the relevant jurisdiction of the
Company (or, as the case may be, the Purchaser) during the relevant
fiscal year;
28
(i) Save for Claims for breaches of representations and warranties set
out in Clauses 6.1.1-2, 6.1.6, 6.2.2 and 6.12.1-3, the Purchaser
shall not be entitled to present any Claims where such claim is
based on a fact, circumstance or information known to the Purchaser
prior to the signing of this Agreement; and
(j) No liability shall arise if and to the extent that any Claim
(i) occurs as a result of the passing of any legislation not in
force at the Signing Date, or which takes effect
retrospectively, or occurs as a result of any increase in the
tax rate in force on the Signing Date or any change in the
generally established practise of the relevant tax
authorities;
(ii) which is recoverable under an insurance policy or which would
have been recoverable had the insurance protection level,
which existed at the Closing Date, been continued; and
(iii) would not have arisen but for an act, omission or transaction
carried out by the Purchaser, or persons deriving title from
the Purchaser or the Company after the Closing Date.
9.2 Procedure for Indemnification
The Purchaser shall within reasonable time, however no later than 60 days
from discovery thereof, give notice to the Sellers of any claim or event
known to it which does or may give rise to a Claim for indemnification
hereunder by the Purchaser against the Sellers describing in reasonable
detail the nature of the Claim and a good faith estimate of the amount
claimed in damages.
29
9.3 The remedy provided for in this Clause 9 in case of a breach of any
warranty, covenant or agreement made or to be performed by the Sellers
pursuant to this Agreement shall be exclusive and hence it is specifically
agreed that no remedy whatsoever under the Sale of Goods Act (Sw. Koplagen
(1990:931)) or under any other statute, law or legal principle, including
(but not limited to) the right to rescind this Agreement, shall be
available to the Purchaser.
10. Non-compete
10.1 Each Founder confirms and undertakes that he shall not, directly or
indirectly, for a period of two (2) years from the Closing Date or the
date when the Founder no longer is employed or otherwise engaged in the
Company or Futuremedia, whichever is later:
(i) be engaged in the e-learning business as presently conducted
by the Company, or planned to be conducted in accordance with
what is set out in the plan referred to in Clause 4.1(d);
(ii) have any ownership interests in or influence over, by
affiliation, agreement or otherwise, any companies or business
enterprises engaged in any such activities; or
(iii) endeavor to employ or entice away from any of the Purchaser,
the Company, or any other affiliate of the Purchaser or the
Company, any key personnel.
10.2 Notwithstanding what is set out in Clause 9, in the event of a breach of
the covenant in this Clause 10, then the Founders, jointly and severally,
shall for each such breach pay to the Purchaser a penalty of SEK
1,000,000, provided that the Purchaser may claim higher damages upon proof
that the actual damage incurred is higher than the agreed penalty.
10.3 Notwithstanding what is set forth in this Clause 10, Xxxx-Xxxx Xxxxxxxx
shall be allowed to be active in the operations set forth in Exhibit 10.3.
30
11. Miscellaneous
11.1 Publicity and confidentiality
The Parties agree to co-ordinate all announcement of the Transaction. The
Parties shall continue to be bound by the Confidentiality Agreement until
the Closing and shall further continue to be bound by the Confidentiality
Agreement if the Transaction is not completed. Notwithstanding this,
Investment AB Oresund shall continue to be bound by the Confidentiality
Agreement for the term thereof.
11.2 Entire Agreement
This Agreement supersedes any and all prior agreements, oral or written,
between the parties hereto with respect to the subject matter hereof, and
contains the entire agreement between the parties with respect to the
transactions contemplated hereby. However, this Agreement shall not
supersede the Confidentiality Agreement.
11.3 Costs and expenses
Each Party shall pay all of its costs and expenses, including but not
limited to fees to advisors, incurred in connection with negotiations,
execution and performance of the Agreement and it is specifically agreed
that the Company shall not bear any such costs and expenses.
11.4 Assignment
The Purchaser shall have the right to assign its rights and obligations
hereunder to a wholly-owned subsidiary provided that the Purchaser
notifies the other Parties thereof and issues a guarantee as regards such
subsidiary's fulfilment of the Purchaser's obligations.
11.5 Amendments
This Agreement may be amended only pursuant to a written instrument signed
by the parties hereto.
31
11.6 Headings
The headings of this Agreement are inserted for convenience only and shall
not affect the construction or interpretation of this Agreement.
12. Notices
12.1 All notices, requests, demands and other communication under this
agreement shall be in the English language and in writing (mail or fax)
and addressed as follows:
If to the Sellers: I
Investment AB Oresund
Att. Xxxx Xxxxxxx
Xxxxxxxxxxxxxx 00 X
Xxx 0000
000 00 Xxxxxxxxx
Telephone x00 0 000 00 00
Fax x00 0 000 00 00
Xxxx-Xxxx Xxxxxxxx
Xxxxxxxxx 00, 0 xx
000 00 Xxxxxxxxx
Telephone: x00 0 00 00 00
Fax: Currently no fax.
Xxxxxx Xxxxxx
Rattarvagen 2
187 69 Taby
Telephone: x00 0 000 00 00
Fax: Currently no fax.
32
If to the Purchaser:
Futuremedia Plc
Att. CFO
Xxxx Xxxxx, Xxxx Xxxxxx
Xxxxxxxx
XX0 MW Brighton UK
Telephone: x00 0000 000 000
Fax: x00 0000 000 000
12.2 Each communication shall be deemed to have been effectively given:
(a) If by fax, upon receipt by the sender of the confirmation receipt at
the end of transmission;
(b) If by mail, five days after such communication was deposited in the
mail (postage prepaid); and
(c) If by any other means, when delivered.
If any party to this Agreement should change its address, or fax number,
it shall promptly give written notice to the other parties.
13. Governing Law and Arbitration
13.1 This Agreement shall be governed by and construed in accordance with the
laws of the kingdom of Sweden.
13.2 Any dispute, controversy or claim arising out of or in connection with
this Agreement, or the breach, termination or invalidity thereof, shall be
settled by arbitration in accordance with the Rules for Expedited
Arbitrations of the Arbitration Institute of the Stockholm Chamber of
Commerce.
33
The arbitral proceedings shall take place in Stockholm and be conducted in the
English language.
----------------------------
This Agreement has been executed in four original counterparts of which the
Parties have taken one each.
Stockholm on 5 November 2004
FUTUREMEDIA PLC
/s/ Xxxx-Xxxx Xxxxxxxx /s/ Xxxx Xxxxxx
------------------------------------- ------------------------------------
Xxxx-Xxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxx
-------------------------------------
Xxxxxx Xxxxxx
INVESTMENT AB ORESUND (publ)
/s/ Xxxx Xxxxxxxxxx
-------------------------------------
