DATED OCTOBER 2008
EXHIBIT
18: Acquisition Agreement For 3,000,000 Armadillo Preferred Shares
DATED OCTOBER 2008
(2) XXXXX
& XXXXXXXXXX TRUSTEES (JERSEY) LIMIT
(3) ARMADILLO
INVESTMENTS LIMITED (in liquidation)
STOCK SALE
AGREEMENT
1
THIS
AGREEMENT is made
on October
2008
BETWEEN
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(1)
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SEVEN
ARTS PICTURES plc a
company incorporated in England & Wales under company number 4276617
and whose registered office is at Xxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxx XX0X 0XX
("Company");
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(2)
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XXXXX
& XXXXXXXXXX TRUSTEES (JERSEY) LIMITED, whose registered office
is at IFG House, 00 Xxxxx Xxxxxx, Xx. Xxxxxx, Xxxxxx XX0 0XX ("Buyer")
as trustee of the Seven Arts Pictures Employee Benefit Trust
established by a deed of trust dated 21 October 2008 and made between the
Company and the Buyer; and
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(3)
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ARMADILLO
INVESTMENTS LTD. (in
members voluntary liquidation), a company incorporated in England and Wales
under Company Number 4977138 whose registered office is at 00
Xxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX acting by its liquidator, Xxxxxxx Xxxxx Xxxxxx Xxxx of
Xxxxxx Xxxx & Co., of 00 Xxxxxx Xxxxx, Xxxxxxxx XX00 0XX ("Seller")
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RECITALS
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(A)
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The
Company, then known as Cabouchon plc, and Seller entered into that certain
Subscription Agreement dated August, 2004 ("Subscription Agreement"), a
copy of which is attached hereto as Exhibit "A," under which Company
issued to Seller and Seller acquired from Company 3,000,000 convertible
redeemable preference shares with a par value of £1.00 each (the
"Preference Shares"). As consideration for the issue of the Preference
Shares pursuant to the Subscription Agreement, the Company received
3,000,000 ordinary shares of £0.10 in the capital of the Seller of which
it now holds 1,600,000 such Ordinary
Shares.
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(B)
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Buyer
has agreed to acquire from Seller and Seller has agreed to sell to Buyer
the Preference Shares for the
Consideration.
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(C)
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The
Company has agreed to deliver to Seller the Armadillo Shares and the Stock
Option Agreement.
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(D)
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Buyer
has agreed to convert certain of the Preference Shares into Ordinary
Shares of the Company in accordance with the terms of the Subscription
Agreement. The Company has agreed to transfer the Armadillo Shares to
Seller and to issue to Seller an option to acquire five hundred thousand
Ordinary Shares of Company at a price of £0.20 per Ordinary Share pursuant
to the terms of the Stock Option Agreement attached hereto as Exhibit
"B."
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(E)
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Company
and Seller have agreed that this Agreement is in full and final settlement
and release of any claims, demands or causes of action of any nature or
kind whatsoever based upon or arising out of the Subscription Agreement or
the Preference Shares that either of Company, Seller or their respective
directors, shareholders, associated companies, officers, directors, or
agents ("Parties") may have against any other
Party.
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IT IS AGREED as
follows: 1.INTERPRETATION
1.1In
this Agreement:
`Act'
means the Companies Xxx 0000 together with such provisions of the
Companies Xxx 0000 as are in force at the date of this Agreement;
'Armadillo
Shares' means 1,600,000 ordinary shares of £0.10 each in the capital of
Seller now owned by Company together with all rights accrued
thereon;
`Articles'
means the articles of association for the time being of the
Company;
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'Business
Day' means any day (other than a Saturday) when banks in London are open
for the transaction of normal banking business;
' Charge'
means the charge over shares to be issued by the Buyer to the Seller in
terms of Clause 3.4.2 and in the form attached hereto as Exhibit
'C';
'Completion
Date' means 23 October 2008;
' Consideration'
shall have by the meaning set forth in clause 2.2 below;
'Conversion'
shall mean the conversion of certain of the Preference Shares by Buyer
into Ordinary Shares pursuant to the terms hereof;
'Encumbrance'
means any mortgage, pledge, lien, charge, assignment, hypothecation or
other agreement or arrangement which has the same or a similar effect to the
granting of security;
'Liquidator'
means Xxxxxxx Xxxxx Xxxxxx Xxxx in his capacity as liquidator of the
Seller;
'Ordinary
Shares' means ordinary shares of £0.05 each in the share capital of the
Company;
'Preference
Shares' shall mean 3,000,000 convertible redeemable preference shares of
£1.00 each in the capital of the Company issued to Seller pursuant to the
Subscription Agreement;
'Stock
Option Agreement' means that certain stock option agreement between
Company and Seller dated as of the Completion Date under which Company grants to
Seller the right and option to acquire Ordinary Shares for £0.20 per Ordinary
Share;
' Subscription
Agreement' means that certain subscription agreement between Company and
Seller dated August, 2004 attached hereto as Exhibit "A".
1.2 In this
Agreement, a reference to:
1.2.1 a 'subsidiary'
or 'holding
company' shall be construed in accordance with section
1159 of the Companies Xxx 0000;
1.2.2 an 'associated
company' and 'control'
shall be construed in accordance with
section 416 of the Income and Corporation Taxes Xxx 0000;
1.2.3 a statutory provision
includes a reference to:
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(a)
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the
statutory provision as modified or re-enacted or both from time to time
(whether before or after the date of this Agreement);
and
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(b)
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any
subordinate legislation made under the statutory provision (whether
before or after the date of this
Agreement);
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1.2.4 persons includes a
reference to any body corporate, unincorporated association
or partnership;
1.2.5 a person includes a
reference to that person's legal personal representatives
or successors.
1.3 The headings in this
Agreement shall not affect the interpretation of this Agreement.
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2. ACQUISITION
AND CONSIDERATION
2.1 On the
Completion Date Seller shall sell to Buyer and Buyer shall acquire from
Seller
the Preference Shares for the Consideration. The Preference Shares shall be sold
with the full title and interest held by the Liquidator and with all
rights attaching to them and
available to the Liquidator at the Completion Date and
subsequently.
2.2 The
consideration payable for the Preference Shares shall be the payment to
Seller by
Buyer of £1,500,000 in cash ("Consideration") payable as
to:
2.2.1 £500,000 on
the Completion Date;
2.2.2 £500,000 six
(6) months after the Completion Date ("First Deferred Payment"); and
2.2.3 £500,000
twelve (12) months after the Completion Date ("Second Deferred
Payment").
Any
Deferred Payments not paid when due shall bear interest at the rate of 10% per
annum.
3. COMPLETION
3.1 Subject
always to the provisions of this clause, Completion shall take place at 0
Xxxxxxxx
Xxxx, Xxxxxxxx'x Xxx, Xxxxxx XX0X 1 BL on the Completion Date at such time as
the Buyer and Seller agree.
3.2 The Company
shall procure that a board meeting of the Company is held at Completion
at which:
3.2.1 the transfer
referred to in clause 3.3.1 is (subject only to it being duly stamped)
approved for registration;
3.2.2 the Stock
Option Agreement is approved and executed by the Company;
3.2.3 issue to the
Buyer 10,000,000 Ordinary Shares pursuant to the Conversion.
3.3 At
Completion, the Seller shall deliver or procure delivery to the Buyer
of:
3.3.1 a transfer of
the Preference Shares in favour of the Buyer or its nominee duly
executed by the Seller;
3.3.2 the share
certificate representing the Preference Shares in the name of the Seller
(or an indemnity for a lost certificate in usual terms);
3.3.3 the Stock
Option Agreement duly signed by the Seller; and
3.3.4 the Charge
over Shares duly executed by the Seller.
3.4 At
Completion, the Buyer shall deliver:
3.4.1 a duly signed
conversion notice on the Company in respect of the Preference
Shares in accordance with the terms of the Subscription Agreement;
and
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3.4.2 to the Seller
the Charge over Shares duly executed by the Buyer and shall pay the
cash sum of £500,000 to the Seller in respect of the first tranche of
Consideration.
3.5 At
Completion, the Company shall deliver or procure delivery to the Seller
of:
3.5.1 a transfer or
transfers of the Armadillo Shares in favour of such persons as the
Seller shall direct duly executed by the Company (or an indemnity for a lost
certificate in usual terms);
3.5.2 the share
certificate representing the Armadillo Shares in the name of the Company;
and
3.5.3 the Stock
Option Agreement duly signed by the Company.
3.6 For the
avoidance of doubt the Armadillo Shares will be transferred with the
benefit
of all accrued rights including any outstanding dividends or
distributions.
4. WAIVER
AND RELEASE
4.1 Each of
Company and Seller agree that on Completion the Subscription Agreement
shall terminate, the parties shall be fully released from all obligations under
the Subscription Agreement and that neither the Company nor the
Seller shall have any claims,
demands or causes of actions of any nature or kind whatsoever based upon or
arising out of the Subscription Agreement and that each of them shall release
all claims, rights or remedies they may
have against the other (including
their respective directors, officers and employees) arising from or in
connection with the Subscription Agreement.
5. WARRANTIES
5.1 Company
hereby warrants in this capacity ("Warrantor") for the benefit of Seller
and Buyer
("Beneficiary") with respect to itself and its actions:
5.1.1 Warrantor is
properly established and validly existing under the laws of England
with all necessary corporate power and authority to own and use its properties
and assets and carry on its business as currently conducted.
5.1.2 Warrantor has
all necessary corporate power and authority to enter into and
undertake the transaction contemplated hereby and to otherwise carry out its
obligations hereunder. The execution and delivery of the Agreement
by Warrantor and the undertaking
of the transactions contemplated hereby has been duly authorized by all
necessary actions by Warrantor. This Agreement is or will be a valid and binding
obligation of Warrantor
enforceable against it in
accordance with its terms.
5.1.3 The execution
and performance of the Agreement by Warrantor does not and will
not (i) conflict with or violate any provisions of the Warrantor's Articles of
Association; (ii) constitute a default under, or give to others
any rights of termination
of, any agreement to which Warrantor is a party, including any indenture, loan
or credit agreement; or (iii) result in a breach of any law, regulation, or
other restriction of any kind. The business
of the Warrantor is not
being conducted in violation of any law, ordinance or regulation of any
governmental authority.
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5.1.4 Warrantor is not
required to obtain any consent or approval from any person in
connection with the execution and performance by Warrantor of this
Agreement.
5.1.5 Warrantor is not
involved in any proceedings and no proceedings or investigations
are pending or, to the best knowledge of Warrantor, threatened which could
materially affect the ability of Warrantor to perform its
obligations hereunder on a
timely basis.
5.2 By its
signature hereto, the Company agrees and warrants that the Form 20-F filed by
the Company with the Securities and Exchange Commission ("SEC") and provided to
Seller and Buyer is true and correct in all material respects
and includes all the facts and
information required by the SEC's rules and regulations and all applicable
laws.
5.3 It is an
essential condition of this agreement:
5.3.1 that the Liquidator
contracts solely as agent of the Seller and shall incur nopersonal
liability of whatsoever nature (whether directly or indirectly, express or
implied) and howsoever arising including without prejudice to
the foregoing generality,
personal liability in respect of any action or actions of whatsoever nature and
howsoever arising in pursuance of the Seller's rights and/or obligations under
this agreement and whether such
claim is formulated in
contract and/or delict and/or tort and/or restitution or by reference to any
other remedy or right, and in whatever jurisdiction or forum;
5.3.2 that no claim which
may be or become competent to the Buyer or the Company
arising directly or indirectly from this agreement (or under any deed or other
document executed in consequence hereof or on or under
any associated or
collateral agreement or arrangement) will lie against the Liquidator personally
and the Liquidator shall be entitled at any time to have any such deeds,
documents or others amended to include an
exclusion of personal
liability in terms of this clause 5.3; and
5.3.3 that any personal
liability of the Liquidator which would in terms of the Insolvency
Xxx 0000 arise but for the provisions of this clause 5.3 is hereby expressly
excluded.
5.4 The
Liquidator has joined in as a party to this agreement solely for the purpose
of obtaining
the benefit of the provisions of this clause 5.3 and any other provisions of
this agreement in his favour.
5.5 Nothing in
this agreement shall constitute a waiver of any right of the Liquidator to
be
indemnified, or to exercise a lien, whether under the provisions of the
Insolvency Xxx 0000 or otherwise howsoever.
5.6 For the
purpose of this clause 5.3 references to "the Liquidator" where the context
so permits shall mean and include his present and future firm or firms, partners
and employees and any legal entity or partnership using in its
name the words "Xxxxxx
Xxxx", and the partners, members, officers, employees, advisers, representatives
and agents of any such entity or partnership.
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6. DEALING
IN SHARES
6.1 Seller and
Buyer each hereby undertake that it shall not (save in the event of an
intervening
court order, or an offer for the entire share capital of the Company becoming or
being declared unconditional):
6.1.1 dispose of
any interest in any Ordinary Shares before 30 June 2009; and
6.1.2 save as set
out in this Agreement, acquire any interest in any or charge Ordinary
Shares before 30 June 2009
save, in
either case, for any Ordinary Shares acquired pursuant to the exercise of the
Charge or the Share Option Agreement.
6.2 For these purposes,
the expression 'dispose'
shall extend to any sale, transfer, charge,
pledge, encumbrance or grant of any option over or in respect of or an agreement
to do any of these things (whether oral or in writing).
6.3 Seller and Buyer each
further undertake that:
6.3.1 it will
procure that no associated company of Seller or Buyer shall deal in Ordinary
Shares in breach of clause 3.1; and
6.3.2 it shall not
directly or indirectly either on its own account or through the agency of
another seek to manipulate the market in Ordinary Shares.
6.4 Upon the issue and
allotment of all of the Ordinary Shares pursuant to the Conversion, Buyer shall not own
30% or more of the issued share capital of the Company.
7. GUARANTEE
7.1 In consideration of the Seller
entering into this Agreement the Company, at the request of the Seller, hereby
unconditionally guarantees to the Seller and its successors, transferees and assigns the
payment by the Buyer of the
First Deferred Payment and the Second
Deferred Payment (together, the "Deferred
Payments").
7.2 If the Buyer shall make default
in the payment when due of the Deferred Payments,
the Company shall, forthwith on demand by the Seller, unconditionally pay to the
Seller in the manner prescribed in this Agreement an amount
equal to the amount payable
by the Buyer.
7.3 The guarantee contained in this
Clause 7 shall be a continuing guarantee and shall
continue in full force and effect until the Deferred Payments have been paid in
full.
7.4 The Company shall not be
exonerated or discharged nor shall its liability be affected
by any forbearance, whether as to payment, time, performance or otherwise, or by
any other indulgence being given to the Buyer or by
any variation of the terms
of this Agreement or by any act, thing, omission or means whatever which, but
for this provision, might operate to exonerate or discharge the Company from its
obligations under the guarantee contained
in this Clause
7.
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8.NOTICES
8.1 Any notice or
other communication to be given by one party to another under, or in
connection with the matters contemplated by this Agreement shall be addressed to
the recipient and sent to the address or facsimile number
of such other party given in
this clause 5.1; and marked for the attention of the person so given or sent to
such other address or facsimile number and/or marker for such other attention as
such other party may from time to
time specify by notice given in
accordance with this clause to the party giving the relevant notice or
communication to it. As at the date of this Agreement such details
are:
For the Company:
Address: 00 Xxxxxxxx Xxxxxx, Xxxxxx X0X 0XX,
XX
Facsimile
number:
323-372-3790
For the attention
of: Xxxxxx New
For
Buyer:
Address: 00 Xxxxxxxx
Xxxxxx
Facsimile
number: 323-372-3790
For the attention
of: Xxxxxx New
For
Seller:
Address: 00 Xxxxxx Xxxxx,
Xxxxxxxx XX00 0XX
Facsimile
number: 01224 626
089
For the
attention of: Xxxxxxx Xxxx
8.2 Any notice or
other communication to be given by any party to any other party under or
in connection with the matters contemplated by this Agreement shall be in
writing and shall be given by letter delivered by hand and by
facsimile, and shall be deemed to
have been received:
8.2.1 in the case
of delivery by hand, when delivered; or
8.2.2 in the case
of a facsimile, on acknowledgement of the addressee'sfacsimile
receiving equipment (where such acknowledgement occurs before 17:00 on the day
of acknowledgement) and in any other case on the day following
the day of
acknowledgement.
Any
notice or other communication not received on a Business Day or received after
17:00 local time on any Business Day in the place of receipt shall be deemed to
be received on the next following Business Day.
9.GENERAL
9.1 In entering
into this Agreement and in any subsequent dealing with the Preference
Shares, Buyer undertakes to the Company that it shall comply in all respects
with all applicable laws, rules and regulations to which it is subject in
its
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jurisdiction
of incorporation and in any jurisdiction in which the Ordinary Shares are
traded.
9.2 Nothing in this
Agreement or in any document referred to in it shall constitute any of the
parties a partner of any other, nor shall the execution, completion and
implementation of this Agreement confer on any party any power to
bind or impose any obligations
to any third parties on any other party or to pledge the credit of any other
party.
9.3 None of the parties
may assign any of their respective rights or obligations under this
Agreement in whole or in part.
9.4 This Agreement
represents the entire understanding, and constitutes the whole agreement,
in relation to its subject matter and supersedes any previous agreement between
the parties with respect thereto and, without prejudice
to the generality of the
foregoing, excludes any warranty, condition or other undertaking implied at law
or by custom.
9.5 No variation of this
Agreement shall be effective unless made in writing and signed by
or on behalf of the parties.
9.6 Nothing in
this Agreement is intended to confer on any person any right to enforce
any term of this Agreement which that person would not have had but for the
Contract (Rights of Third Parties) Xxx 0000.
10. COUNTERPARTS
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10.1
This Agreement may be executed in any number of counterparts and by the
different parties on separate counterparts, each of which when executed
and delivered shall constitute an original but all the counterparts shall
together constitute but one and the same
instrument.
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11. GOVERNING
LAW AND JURISDICTION
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1 This Agreement shall be governed by, and construed in accordance with,
English Law.
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11.2
Each party irrevocably agrees that the Courts of England shall have
exclusive jurisdiction in relation to any claim, dispute or difference
concerning this Agreement and any matter arising
therefrom.
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IN
WITNESS whereof the parties have executed this Agreement on the day and
year first above written.
SIGNED
on behalf of
SEVEN
ARTS PICTURES
plc /s/
Xxxxxx
New
Director
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SIGNED
on behalf of
XXXXX &
XXXXXXXXXX TRUSTEES
(JERSEY) LIMITED in its capacity as
trustee of
THE
SEVEN ARTS PICTURES EMPLOYEE BENEFIT TRUST
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EXECUTED
for and on behalf of
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ARMADILLO
INVESTMENTS
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LIMITED
(in liquidation)
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)
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/s/
Authorised Signatory
at
on the
day of Two thousand and eight by
the
Liquidator (without incurring personal liability
on the part of the Liquidator) in the presence
of this witness:
Witness
Full
Name
Address
