Dated 1998
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(1) XXXXXXX XXXXXXX XXXXXXXX AND XXXXXXX XXX XXXXXXXX
- AND -
(2) THE MARQUEE GROUP INC.
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SHARE PURCHASE AGREEMENT
FOR THE SALE AND PURCHASE OF
ALL THE ISSUED SHARE CAPITAL OF
XXXX XXXXXXXX ASSOCIATES LIMITED
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BIRD & BIRD
00 XXXXXX XXXX
XXXXXX XX0X 0XX
Tel: 0000 000 0000
Fax: 0000 000 0000
ref:CMC/RMD/MARQU/002
CONTENTS
1 DEFINITIONS AND INTERPRETATION...............................1
2 SALE OF THE SHARES...........................................6
3 CONSIDERATION................................................7
4 COMPLETION...................................................8
5 INTERIM PAYMENT.............................................10
6 REPRESENTATIONS AND WARRANTIES..............................13
7 CONFIDENTIALITY.............................................19
8 PROTECTIVE COVENANTS........................................19
9 ANNOUNCEMENTS...............................................21
10 NOTICES AND RECEIPTS........................................21
11 RESOLUTIONS AND WAIVERS.....................................21
12 ASSIGNMENT..................................................22
13 GENERAL.....................................................22
14 WHOLE AGREEMENT.............................................23
15 GOVERNING LAW...............................................23
16 PURCHASER'S WARRANTIES AND COVENANT.........................23
THIS AGREEMENT is made on the day of 1998
BETWEEN
(1) THE PERSONS WHOSE NAMES AND ADDRESSES ARE SHOWN IN SCHEDULE 1 (each a
"SELLER" and together the "SELLERS");
(2) THE MARQUEE GROUP, INC. a company incorporated under the laws of the
state of Delaware, the principal office of which is at 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, XX 00000, XXX (the "PURCHASER")
RECITALS
(A) Xxxx Xxxxxxxx Associates Limited (the "COMPANY") (certain
particulars of which are set out in Schedule 2) is a private company
limited by shares incorporated in England and Wales on 3 November
1987 under the Companies Acts 1985 having an authorised capital of
(pound)1,000 divided into 1000 ordinary shares of (pound)1 each of
which 500 shares have been issued fully paid or credited as fully
paid (the "SHARES").
(B) The Sellers are the registered holders and the beneficial owners of
the Shares set opposite their respective names in Schedule 1.
(C) The Sellers wish to sell and, in reliance upon the representations,
warranties, and undertakings set out in this Agreement, the
Purchaser is willing to purchase all the issued share capital of the
Company on the terms and subject to the conditions set out in this
Agreement.
OPERATIVE PROVISIONS
1 DEFINITIONS AND INTERPRETATION
1.1 In this Agreement and the Schedules
"ACCOUNTS" means all or any one of the audited balance sheet of the
Company as at the Accounts Date and the audited profit and loss
account of the Company for the financial period ended on the
Accounts Date and the notes to such accounts and the directors
reports and the other documents required by law to be annexed
thereto;
"ACCOUNTS DATE" means 30 April 1998;
"ANNIVERSARY DATES" means the first, the second, the third, the
fourth and the fifth anniversary of Completion;
"AGREED TERMS" means terms contained in a form which has been agreed
and initialled by or on behalf of the parties for the purpose of
identification immediately prior to the signing of this Agreement;
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"BUSINESS DAY " means Monday to Friday inclusive but excluding any
day which is a bank or public holiday in the country concerned;
"CASH CONSIDERATION" means that part of the consideration for the
sale of the Shares as is payable in cash under Clause 3;
"CHANGE OF CONTROL" means the change of control (as defined in
Section 840 Taxes Act 1988) of the Purchaser (other than as a result
of the acquisition of shares in the Purchaser by SFX Entertainment
Inc.) and as a result of such change of control, Xx Xxxxxx Xxxxxxxxx
ceasing to be President and Chief Executive Officer of the Purchaser
(whether immediately on change of control or subsequently);
"COMMON STOCK" means the shares of no par value in the Common Stock
of the Purchaser quoted on the American Stock Exchange;
"COMPLETION" means completion of the sale and purchase of the Shares
in accordance with Clause 4;
"COMPLETION DATE" means the date on which Completion takes place;
"CONSIDERATION" means the Cash Consideration, the Loan Notes and the
Consideration Shares;
"CONSIDERATION SHARES" means the Initial Consideration Shares and
the Deferred Consideration Shares;
"DEFERRED CONSIDERATION SHARES" means the Common Stock of the
Purchaser to be issued to the Sellers in accordance with the
provisions of Clause 3.3 and ranking pari passu with the existing
Common Stock of the Purchaser at the date of issue;
"DISCLOSURE LETTER" means the letter from the Warrantors to the
Purchaser of today's date and which has been delivered to the
Purchaser prior to the signing of this Agreement;
"HOLDING COMPANY" and "SUBSIDIARY" have the meaning given in Section
736 and 736A of the Companies Xxx 0000;
"INITIAL CONSIDERATION SHARES" means the Common Stock of the
Purchaser to be issued by the Purchaser at Completion pursuant to
Clause 3.1(b) and ranking pari passu with the existing Common Stock
of the Purchaser at the date of issue;
"INSOLVENCY ACT" means the Insolvency Xxx 0000;
"ISSUE PRICE" means the average closing price of shares of Common
Stock as printed in the eastern edition of the Wall Street Journal
over the 20 trading days ending three days prior to Completion or
the relevant Anniversary Date, as appropriate, (provided
2
that no account shall be taken of any trading day in respect of
which the said edition is not published) as converted to Pounds
Sterling by the application of the average spot rate of exchange for
the purchase of Pounds Sterling with US Dollars, as published by the
eastern edition of the Wall Street Journal at the close of business
on the twenty business days ending three days prior to Completion or
the relevant Anniversary Date, as appropriate (provided that no
account shall be taken of any business day in respect of which the
said eastern edition of the Wall Street Journal is not published);
"INTELLECTUAL PROPERTY RIGHTS" means all and any patents,
trademarks, service marks, trade names, registered designs,
unregistered design rights, copyrights and rights in confidential
information, and all and any other intellectual property rights,
whether registered or unregistered, and including all applications
and rights to apply for any of the same;
"LOAN NOTES" means the series of (pound)200,000 nominal unsecured
loan notes of the Purchaser in the agreed terms;
"PARTIES" means the parties to this Agreement;
PERMITTED ACTIVITIES" means those activities to be carried out by
Sponsasport Limited (of which Xxxxxxx Xxxxxxxx is a Director and
shareholder and Xxxxxxx Xxxxxxxx is Company Secretary and
shareholder) directly in connection with the following contracts and
any other activities of Sponsasport Limited approved in writing by
the Purchaser from time to time:
(a) Licence Agreement dated 16 October 1997 between (1)
Sponsasport Limited (2) Asda Stores Limited trading as
Xxxxxx Clothing (3) Xxxx Xxxxxxx (4) Xxxxxxx Promotions
Limited.
(b) Letter dated 9 October 1997 from Umbro International to
Sponsasport Limited consenting to the above Agreement.
(c) Letter of agreement dated 22 December 1997 between
Sponsasport Limited and Umbro Europe Limited relating to
the above Agreement.
(d) Agreement dated 1 July 1997 between (1) Newcastle United
Football Company Limited (2) Xxxx Xxxxxxx (3) Xxxxxxx
Promotions Limited (4) Sponsasport Limited.
"PERSONAL GUARANTEE" means a legal charge over 00 Xxx Xxxxxx,
Xxxxxxxxx-xxxx-Xxxx dated 9 July 1996 in the names of A.E. & G.A.
Xxxxxxxx in favour of Barclays Bank Plc, a guarantee in the sum of
(pound)150,000 from A.E. & G.A. Xxxxxxxx dated 9 July 1996 in favour
of Barclays Bank Plc, assignments of life policies in the name of
X.X. Xxxxxxxx with the Scottish Mutual Assurance Society (policy
numbers 652666 and 454928) in favour of Barclays Bank plc relating
to the guarantee provided by Swiss Bank Corporation for CHF 200,000
in favour of Federation Internationale de Football Association
("FIFA") in relation to the FIFA License granted to Xxxxxxx
Xxxxxxxx;
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"PROPERTY LICENCE" means a licence in the agreed terms and as set
out in Schedule 4 to be entered into between the Sellers and the
Company relating to occupation of office premises at Xxx Xxxxxxx,
Xxxxxxx, Xxxxxxx, Xxxx Xxxxxxxx, XX0 0XX;
"PURCHASER'S ACCOUNTANTS" means Ernst & Young;
"PURCHASER'S SOLICITORS" means Bird & Bird, 00 Xxxxxx Xxxx, Xxxxxx
XX0X 0XX;
"PURCHASER'S STOCKBROKERS" means Continental Stock Transfer & Trust
Company;
"SELLERS' ACCOUNTANTS" means Xxxxxxx X. Xxxxxxxx & Co., 00
Xxxxxxxxxx Xxxxx, Xxxxx Xxx, Xxxxxxxxxx X00 0XX;
"SELLERS' SOLICITORS" means Freeth Xxxxxxxxxx Xxxx Xxxxxxx, 00 Xxxxx
Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx XX0 0XX;
"SERVICE AGREEMENT" means the service agreement in the agreed terms
to be entered into between the Company and Xxxx Xxxxxxxx;
"TAX" shall have the meaning ascribed to it in the Tax Deed;
"TAXES ACT 1988" means the Income and Corporation Taxes Xxx 0000;
"TAX DEED" means the deed in relation to tax in the agreed terms;
"TAXATION WARRANTIES" means each and every warranty contained in
Section [D] of Schedule 3;
"UNTRADEABLE SHARES" means any Initial Consideration Shares or any
issued Deferred Consideration Shares which remain subject to the
restrictions of Clause 3.6;
"WARRANTIES" means all and any of the representations, warranties
and undertakings referred to in Clause 6 and Schedule 3; and
"WARRANTORS" means Xxxxxxx Xxxxxxx Xxxxxxxx and Xxxxxxx Xxx Xxxxxxxx.
1.2 References in this Agreement to any statutory provisions shall be
construed as references to those provisions as respectively amended,
consolidated or re-enacted (whether before or after Completion) from
time to time and shall include any provisions of which they are
consolidations or re-enactments (whether with or without amendment)
except to the extent that any amendment, consolidation or
re-enactment made after Completion creates or increases the
liability of the parties under this Agreement or the Tax Deed.
1.3 Where any Warranty is qualified by the expression "so far as the
Warrantors are aware" or "to the best of the Warrantors' knowledge
information and belief" or any similar
4
expression that statement shall be deemed to include an additional
statement that it has been made after due and careful enquiry unless
stated otherwise. For the purposes of establishing whether due and
careful enquiry has been made the Warrantors shall be deemed to have
given the relevant matter due and careful thought and to have taken
appropriate advice from, and made proper enquiries of the Company's
auditors, tax advisors, insurance brokers, legal advisors and
employees but otherwise they shall not be under any obligation to
have taken specialist advice or to have employed or consulted any
third parties.
1.4 The Schedules form part of this Agreement and shall have the same
force and effect as if set out in the body of this Agreement and any
reference to this Agreement shall include the Schedules.
1.5 In this Agreement:-
(a) the masculine gender shall include the feminine and neuter
and the singular number shall include the plural and vice
versa;
(b) references to persons shall include bodies corporate,
unincorporated associations and partnerships;
(c) any headings or side notes or, in the case of any
legislation specifically referred to, the inclusion in
parentheses of the title to the relevant Part, Section,
Schedule or paragraph contained in such legislation are for
the sake of convenience only and shall not affect the
construction of this Agreement; and
(d) references to any party include a reference to the estate,
personal representative, successor, or permitted assigns of
that party; and
(e) a person shall be deemed to be connected with another if
that person is connected with another within the meaning of
section 839 of the Taxes Xxx 0000.
1.6 Except where the contrary is stated, any reference in this Agreement
to a Clause or Schedule is to a Clause or Schedule of this
Agreement, and any reference within a Clause or Schedule to a
sub-clause, paragraph or other sub-division is a reference to such
sub-clause, paragraph or other sub-division so numbered or lettered
in that Clause or Schedule.
1.7 In construing this Agreement
(a) the rule known as the ejusdem generis rule shall not apply
and accordingly general words introduced by the word
"other" shall not be given a restrictive meaning by reason
of the fact that they are preceded by words indicating a
particular class of acts, matters or things; and
5
(b) general words shall not be given a restrictive meaning by
reason of the fact that they are followed by particular
examples intended to be embraced by the general terms.
2 SALE OF THE SHARES
2.1 Each of the Sellers shall sell with full title guarantee those of
the Shares set out opposite his name in Schedule 1 and the Purchaser
relying on the representations, warranties and undertakings of and
indemnities by the Sellers set out in this Agreement shall purchase
the Shares on the terms of this Agreement free from all claims,
liens charges encumbrances and equities and together with all rights
attaching or accruing to them.
2.2 Each of the Sellers severally covenants with the Purchaser that save
as accurately and fairly disclosed in the Disclosure Letter:
(a) he has the right to sell and transfer the full legal and
beneficial interest in the Shares set out opposite his name
in Schedule 1 to the Purchaser on the terms set out in this
Agreement; and
(b) on or after Completion he will, at his own cost and
expense, execute and do (or procure to be executed and done
by any necessary party) all such deeds, documents, acts and
things as the Purchaser may from time to time reasonably
require in order to vest any of the Shares set opposite his
name in Schedule 1 in the Purchaser or its assignee or as
otherwise may be necessary to give full effect to this
Agreement; and
(c) he has the requisite power and authority to enter into and
perform this Agreement and (as appropriate) the Tax Deed
and such entry and performance will not breach, violate,
infringe or otherwise affect the rights of any person;
(d) this Agreement and (if appropriate) the Tax Deed will, when
executed, constitute binding obligations on him in
accordance with their respective provisions;
(e) the execution and delivery of, and performance by him of
his obligations under, this Agreement and (if appropriate)
the Tax Deed will not constitute a default under any
instrument or arrangement binding on him or otherwise to
which he is a party or result in a breach of any order,
judgment or decree of any court or governmental agency to
which he is a party or by which he is bound;
(f) neither he nor any person connected with him has any
interest, directly or indirectly, in any business that has
a close trading relationship with or is or is likely to be
competitive with the business of the Company or in any
asset which within the two years preceding the date of this
Agreement has been acquired or disposed of by or leased to
the Company;
6
(g) there is no option, right of pre-emption, right to acquire,
mortgage, charge, pledge, lien or other form of security or
encumbrance over or affecting any of the Shares set out
opposite his name in Schedule 1 nor is there any commitment
to create or to give any of the foregoing and no person has
claimed to be entitled to any of the foregoing.
2.3 Each of the Sellers hereby waives any rights of pre-emption
conferred upon him by the Articles of Association of the Company or
in any other way in respect of the Shares.
2.4 The parties shall not be obliged to complete the sale and purchase
of any of the Shares unless the sale and purchase of all the Shares
is completed simultaneously in accordance with this Agreement.
3 CONSIDERATION
3.1 The consideration for the sale of the Shares shall be
(pound)2,096,768, subject to any adjustments pursuant to Clause 5
and shall consist of:
(a) the sum of (pound)1,414,268 payable in cash on Completion
(the "Cash Consideration") and shall be satisfied by
payment to the Sellers of the cash amounts as set out in
Schedule 1;
(b) the sum of (pound)432,500 which shall be satisfied by the
allotment and issue as fully paid and non-assessable by the
Purchaser to the Sellers of such number of Initial
Consideration Shares as shall, at the Issue Price, have a
value of (pound)432,500 in aggregate;
(c) the sum of (pound)200,000 which shall be satisfied by the
allotment by the Purchaser to the Sellers of the Loan
Notes;
(d) the sum of (pound)50,000 which shall be satisfied by the
allotment and issue as fully paid and non-assessable by the
Purchaser to the Sellers of the Deferred Consideration
Shares in accordance with the provisions of Clause 3.3.
3.2 The Sellers shall be entitled to the Consideration in equal
proportions.
3.3 Upon each of the Anniversary Dates the Purchaser shall issue to the
Sellers such number of Deferred Consideration Shares as shall, at
the Issue Price, have a value of (pound)10,000 in aggregate and
shall deliver to the Sellers definitive share certificates for such
Consideration Shares.
3.4 In the event of a Change of Control, any Consideration which remains
outstanding pursuant to Clause 3.3, shall be due for payment within
14 days of the date of the Change of Control and shall be satisfied
by the payment of cash to the Sellers in the percentages set out
against their respective names in Schedule 1.
7
3.5 If the Purchaser consolidates, sub-divides or reorganises its share
capital, declares any distribution or makes any issue by way of
capitalisation or rights to holders of its Common Stock during or by
reference to any period relevant for calculating the Issue Price the
amount of Deferred Consideration Shares or the Issue Price will be
adjusted as the Purchaser's Stockbrokers for the time being (acting
reasonably as experts and not as arbitrators) certify to be in their
opinion fair and reasonable.
3.6 Without the written consent of the Purchaser and save in respect of
any transfers of such number of Consideration Shares which at the
Issue Price have an aggregate maximum value of (pound)100,000 by the
Sellers to individuals who are clients of the Company none of the
Sellers shall dispose of, charge or otherwise encumber any interest
in any of the Consideration Shares or any other securities for the
time being representing or derived from those shares (whether by way
of consolidation, subdivision, capitalisation or rights issue or
otherwise) during the period of one year from the date of allotment
of the relevant Consideration Shares.
4 COMPLETION
4.1 Completion shall take place immediately following signature and
exchange of this Agreement when:
(a) the Sellers shall deliver or cause to be delivered to the
Purchaser
(i) transfers of the Shares duly completed in favour of
the Purchaser and/or its nominees notified by the
Purchaser;
(ii) the share certificates representing the Shares (or an
express indemnity in a form satisfactory to the
Purchaser in the case of any found to be missing);
(iii) all the Statutory and Minute Books of the Company and
its Common Seal and the Certificate of Incorporation;
(iv) the Tax Deed duly executed by each of the Warrantors;
(v) a letter of resignation (expressed to be with effect
from the end of the meeting of the Board of the
Company referred to in sub-clause (d) below), from
Xxxxxxx Xxxxxxxx resigning office as Director and
Secretary of the Company, executed as a deed in the
agreed terms;
(vi) the resignation of the auditors of the Company in
accordance with section 394 of the Companies Xxx
0000, confirming that there are no circumstances
connected with their resignation which should be
brought to the notice of the members or creditors of
the Company and that there are no fees due to them;
(vii) the Service Agreement, duly executed by Xxxxxxx
Xxxxxxxx;
8
(viii) the Property Licence duly executed by the Sellers; and
(ix) the Disclosure Letter.
(b) the Warrantors shall procure that all indebtedness due from
any of the Warrantors or any person connected with them to
the Company shall have been satisfied in full prior to
Completion;
(c) all indebtedness due from the Company to any of the
Warrantors (full particulars of which are contained in the
Disclosure Letter but excluding remuneration accrued but
not yet due for payment) shall have been satisfied in full
without payment of interest prior to Completion;
(d) the Sellers shall cause a meeting of the Board of the
Company to be held at which the Board shall:-
(i) appoint such persons as the Purchaser may nominate
as Directors and Secretary of the Company;
(ii) accept the letters of resignation referred to in
sub-clause (a)(v) and (a)(vi) above;
(iii) vote in favour of the registration of the
Purchaser and/or its nominees as members of the
Company subject only to the production of duly
stamped and completed transfers in favour of the
Purchaser and/or its nominees in respect of the
Shares;
(iv) approve the Property Licence;
(v) change the accounting reference date of the
Company to 31 December;
(vi) appoint Ernst & Young as auditors;
(e) the parties shall join in procuring that all existing bank
mandates in force for the Company shall be altered (in such
manner as the Purchaser shall at Completion require) so as
(inter alia) to reflect the resignations and appointments
referred to above.
(f) the Purchaser shall not be obliged to complete this
Agreement unless the Sellers comply fully with the
requirements of paragraphs (a), (b), (d), and (e) of this
Clause;
4.2 Upon completion of all the matters referred to in sub-clause 4.1 the
Purchaser shall:
(a) pay to the Sellers' Solicitors (whose receipt shall be a
sufficient discharge therefor) the Cash Consideration by
way of telegraphic transfer;
9
(b) allot the Initial Consideration Shares and issue the Loan
Notes to the Sellers and within five days of Completion
deliver to the Sellers' Solicitors definitive share
certificates in respect of the Initial Consideration Shares
and certificates in the agreed terms in respect of the Loan
Notes in the names of the Sellers; and
(c) deliver to the Sellers' Solicitors a duly executed
counterpart of:
(i) the Tax Deed;
(ii) the Service Agreement;
(iii) the Property Licence;
(iv) the Disclosure Letter;
(d) the Sellers shall not be obliged to complete this Agreement
unless the Purchaser complies fully with the requirements
of paragraphs (a), (b) and (c) of this Clause.
4.3 If in any respect either the Sellers or the Purchaser fail to comply
with all the provisions of Clauses 4.1 and 4.2 on the date for
Completion then the other of them may:
(a) defer Completion to a date not more than 28 days after the
date for Completion set by this Clause 4 (and so that the
provisions of this sub-clause 4.3 shall apply to Completion
as so deferred); or
(b) proceed to Completion as far as practicable; or
(c) rescind this Agreement (without prejudice to its accrued
rights and remedies).
4.4 The Purchaser (with the reasonable cooperation of the Sellers) shall
procure as soon as reasonably practicable following Completion and
in any event within 28 days of Completion the full and unconditional
release of the Personal Guarantee and the Purchaser shall fully
indemnify the Sellers against any liability, loss, cost or claim
arising out of or in connection with the Personal Guarantee at any
time after Completion.
5 INTERIM PAYMENT
5.1 On 31 August 1998 the Company paid pension contributions for the
benefit of the Sellers in the aggregate amount of (pound)125,000
(the "PENSION PAYMENT") of which (pound)85,000 represented an amount
equal to four twelfths of (pound)255,000.
5.2 The Purchaser shall procure that the Purchaser's Accountants shall
within 60 days after the end of the Company's current financial
period ending 31 December 1998 (the "FINANCIAL PERIOD"):
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(a) prepare and audit the Company's accounts for the Financial
(the "1998 ACCOUNTS") using the accounting policies and
methods used in the preparation of the Accounts and so as
to give a true and fair view of the profits or losses of
the Company for the Financial Period; and
(b) prepare a statement (the "PROFIT STATEMENT") of the
Company's net profit before taxation for the Financial
Period (the "ADJUSTED PROFIT") as ascertained from the 1998
Accounts but after adding back:
(i) any dividends or other distributions declared or
paid in respect of the Financial Period;
(ii) the bonuses in the aggregate gross sum (before
PAYE taxation) of (pound)42,950 (and any related
employer's national insurance contributions) paid
to Xxxxxxx Xxxxxxx and Xxxxxx Xxxxxxx on 31 August
1998;
(iii) the gross amount (before PAYE taxation) of any
bonus payments paid or payable pursuant to the
Service Agreement and any related employer's
national insurance contributions;
(iv) the amount of the Pension Payment;
(v) any liability incurred to the Purchaser or its
subsidiaries or associated companies for
management or similar charges;
(vi) any directors fees paid or payable to any
directors of the Company nominated by the
Purchaser;
(vii) any liabilities or losses incurred otherwise than
in the ordinary and proper course of the Company's
business as carried on at the Completion Date;
and also containing a calculation of the amount (the
"PRE-COMPLETION PROFIT") equal to one half of the Adjusted
Profit.
5.3 Upon the completion of the preparation of the 1998 Accounts and the
Profit Statement by the Purchaser's Accountants they shall be
presented to the Sellers' Accountants for their approval. The
Sellers shall procure that the Sellers' Accountants communicate
their decision as to whether or not they approve the Profit
Statement to the Sellers and the Purchaser within 14 days of such
presentation (the "APPROVAL PERIOD") and shall, in the event of non
approval, specify with reasonable particularity the reasons for non
approval. In the event that the Sellers' Accountants fail to
communicate their decision to the Sellers and Purchaser within the
Approval Period they shall be deemed to have approved the Profit
Statement.
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5.4 The Purchaser and the Sellers shall use their best endeavours to
procure that the Sellers' Accountants and the Purchaser's
Accountants shall have access to all the books and records of the
Company for the purposes of enabling them to prepare or check, as
the case may be, the Profit Statement.
5.5 In the event that the Sellers' Accountants do not approve the Profit
Statement within the Approval Period the Sellers and the Purchaser
shall use their best endeavours to procure that the Sellers'
Accountants and the Purchaser's Accountants meet together promptly
and in any case within a period of 14 days of the end of the
Approval Period to resolve any dispute that has arisen between them
with regard to the Profit Statement.
5.6 Any dispute with respect to the Profit Statement which is not
settled within 28 days of the end of the Approval Period shall
(unless the Sellers and the Purchaser otherwise agree in writing) be
referred for final determination to an Independent Accountant
nominated jointly by the Sellers and the Purchaser (or failing such
nomination within ten days of one party serving notice upon the
other party to make such nomination) nominated at the request of
either party by the President for the time being of the Institute of
Chartered Accountants in England and Wales. The Independent
Accountant shall be instructed to render his decision (which shall
be communicated in writing to the Sellers and the Purchaser and
shall be final and binding on the Sellers and the Purchaser) within
21 days of his appointment. The fees and costs of the Independent
Accountant shall be borne and paid by the Sellers and the Purchaser
in such proportions as the Independent Accountant shall consider
appropriate. The parties shall provide to the Independent Accountant
all such information assistance and documentation as he may
reasonably require.
5.7 Upon the approval of the Profit Statement under clauses 5.3 or 5.5
or the determination of any dispute under clause 5.6 the Sellers and
Purchaser shall use their best endeavours to procure that the
Sellers' Accountants and the Purchaser's Accountants immediately
issue the Profit Statement signed by the Sellers' Accountants and
the Purchaser's Accountants respectively in the form so approved,
resolved or decided which shall in the absence of manifest error be
final and binding on the Sellers and the Purchaser.
5.8 If the Pre-Completion Profit as stated in the Profit Statement is
less than (pound)85,000, the Sellers shall within 7 days after the
issue of the Profit Statement pursuant to clause 5.7 pay an amount
to the Purchaser equal to the amount of the shortfall and the
Consideration shall be deemed to be reduced by the same amount.
5.9 If the Pre-Completion Profit as stated in the Profit Statement is
more than (pound)85,000 then the Purchaser shall within 7 days after
the issue of the Profit Statement pursuant to clause 5.7 pay an
amount to the Sellers equal to the amount of the excess and the
Consideration shall be deemed to be increased by the same amount.
5.10 In the event that any payment due under clauses 5.8 or 5.9 is not
paid on its due date then it will bear interest from the due date
until the date of actual payment at the rate of 3% per annum over
the base rate from time to time of Barclays Bank plc such interest
to be payable upon demand.
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5.11 As further protection for the Sellers in respect of their rights and
obligations under this clause 5, the Purchaser undertakes and agrees
to procure that prior to the end of the Financial Period unless
otherwise agreed by the Sellers:
(a) there will be no change in the Company's accounting
reference date;
(b) the Company shall not engage in any transactions except on
an arms length basis and in the ordinary course of its
business as carried on at the Completion Date;
(c) there shall be no material departure by the Company from
the nature of the business and the manner in which it is
carried on as at the Completion Date;
(d) nothing shall be done or omitted to be done which is
intended adversely to affect the amount of the Adjusted
Profit;
(e) the Company shall not transfer or dispose of the whole or
any part of its business or merge all or any part of its
business with any other company, firm or business and the
Company shall continue to operate as a separate limited
company;
(f) (save where the Purchaser is advised by a licensed
insolvency practitioner that the Company is trading whilst
insolvent) the Purchaser shall not take any steps to wind
up the Company;
(g) no action shall be taken which has the effect of impeding
the Company's ability to carry on its business in the
ordinary and usual course on a basis consistent with the
business carried on at the Completion Date;
(h) the Company enjoys adequate working capital for the
purposes of its business and the development thereof;
(i) there shall be no material change in the basis on which,
and the manner in which, the Company acts for its clients
and charges for its services;
(j) the Company shall endeavour to retain its employees and
there shall be no material adverse change in the manner in
which the Company deals with its employees or the
employees' terms and conditions of employment.
6 REPRESENTATIONS AND WARRANTIES
6.1 The Warrantors hereby jointly and severally represent, warrant and
undertake to the Purchaser that:
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(a) except as accurately and fairly disclosed to the Purchaser
in the Disclosure Letter, each of the statements set out in
Schedule 3 is true and accurate as at Completion; and
(b) all information contained in the Disclosure Letter is true
and accurate as at Completion and fairly presented and
nothing of which the Warrantors were aware as at Completion
has been omitted from the Disclosure Letter which renders
any of that information misleading as at Completion.
6.2 Each of the Warranties set out in the several paragraphs of Schedule
3 is separate and independent and except as expressly provided to
the contrary in this Agreement is not limited:
(a) by reference to any other paragraphs of Schedule 3; or
(b) by anything in this Agreement or the Tax Deed;
and (save as provided in Clause 6.22 below) none of the
Warranties shall be treated as qualified by any actual or
constructive knowledge on the part of the Purchaser or any
of its agents.
6.3 Each of the Warrantors agree with the Purchaser (as trustee for the
Company and its employees) to waive any rights or claims which he
may have against the Company and its employees in respect of any
misrepresentation, inaccuracy or omission in or from any information
or advice supplied or given to the Warrantors by any of the Company
or its employees in connection with the giving of the Warranties and
the preparation of the Disclosure Letter.
6.4 Without restricting the rights of the Purchaser or the ability of
the Purchaser to claim damages on any basis available to it in the
event of any breach of any of the Warranties, the Warrantors
undertake with the Purchaser that the Warrantors will, pay to the
Purchaser within 7 days of the earlier of agreement between the
Warrantors and the Purchaser and, in default of such agreement,
final determination by order of a court of competent jurisdiction a
sum by way of damages as so agreed or finally determined as being
the amount necessary to put the Purchaser into the position which
would have existed if the Warranties had been true and accurate and
had not been misleading or breached (as the case may be) together
with all costs and expenses reasonably and properly incurred by the
Purchaser as a result of such breach.
6.5 In the event that the Purchaser obtains judgment (without leave to
appeal being granted) against the Warrantors or reaches agreement
with the Warrantors in respect of any claim for breach of the
Warranties pursuant to the Tax Deed or otherwise pursuant to this
Agreement (other than a claim arising under sub-clauses 2.1(c) and
2.2 of the Tax Deed)] then any amount which shall have been agreed
or finally adjudged or determined to be owing by the Warrantors to
the Purchaser shall, where and to the full extent possible, be
satisfied by the cancellation of any outstanding Loan Notes or any
Untradeable Shares held by the Warrantors or by way of deduction
from any instalment
14
(each an "OUTSTANDING INSTALMENT") of the Consideration due to the
Warrantors which remains to be satisfied pursuant to Clause 3.3 and
in the following order of priority:
(a) firstly by way of cancellation of any outstanding Loan
Notes held by the Warrantors (and pro rata as between the
Warrantors) and by deduction from the value of any
Outstanding Instalment due to the Warrantors, taking the
Loan Notes and Outstanding Instalments in reverse order of
maturity, and in the case of any Loan Notes and Outstanding
Instalments which fall due for redemption or satisfaction
on the same date the deduction from the value of the
relevant Outstanding Instalment shall take place in
priority to the cancellation of the relevant Loan Notes;
(b) thereafter by the Warrantors offering and the Purchaser
accepting the cancellation of any issued Deferred
Consideration Shares held by the Warrantors which remain
subject to the restrictions contained in Clause 3.6 (and
pro rata as between the Warrantors); and
(c) thereafter by the Warrantors offering and the Purchaser
accepting the cancellation of any Initial Consideration
Shares held by the Warrantors which remain subject to the
restrictions contained in Clause 3.6 (and pro rata as
between the Warrantors)
and for the purposes of paragraphs (b) and (c) of this Clause the
value attributable to the relevant Untradeable Shares for the
purposes of such cancellation shall be their Issue Price.
6.6 The Purchaser shall be entitled to take action in respect of any
breach or non-fulfilment of any of the representations, warranties,
undertakings, covenants or agreements on the part of the Warrantors
or any of them contained in or made pursuant to this Agreement both
before and after Completion and (save as provided in Clause 6.22
below) such action may be taken after Completion in respect of any
breach or non-fulfilment discoverable by the Purchaser on or before
Completion and Completion shall not constitute a waiver of any of
the Purchaser's rights.
6.7 The Warrantors shall have no liability for a claim for breach of the
Warranties where the amount of such claim is less than (pound)5,000
and the liability of the Warrantors in respect of the Warranties:
(a) shall not (when aggregated with any liability under the Tax
Deed) (i) arise unless the amount of all claims (ignoring
for this purposes any individual claims of less than
(pound)5,000 each) made in respect of the Warranties and/or
the Tax Deed (or which would have been made but for the
operation of this paragraph or the corresponding provision
in the Tax Deed) exceeds (pound)30,000 or (ii) exceed the
sum of 2,096,768 as adjusted pursuant to Clause 5; and
(b) shall terminate (but without prejudice to the rights and
obligations of the parties under the Tax Deed);
15
(i) on the seventh anniversary of Completion in
respect of those matters set out in Part D
(Taxation) of Schedule 3; and
(ii) on 30 April 2000 in respect of all other matters
contained in Schedule 3;
provided that the limitations contained in this Clause 6.7
shall not apply to any claim which (or the delay in
discovery of which) is a consequence of fraud, dishonesty
or wilful concealment on the part of the Warrantors, their
agents or advisors.
6.8 Any payment made (or suffered by cancellation or deduction pursuant
to Clause 6.5) by the Warrantors for any breach of the Warranties or
a liability under the Tax Deed shall be deemed to be a reduction in
the Consideration.
6.9 The Warranties are given subject to any matters accurately and
fairly disclosed in the Disclosure Letter and to the contents of the
documents contained in the indexed bundle annexed thereto and any
other specific information relating to the Company of which the
Purchaser has actual (but not imputed or implied) knowledge at the
date hereof.
6.10 No liability shall arise on the part of the Warrantors in respect of
any breach of the Warranties:
(a) which arises as a result of any liability to Tax arising or
being increased as a result of any change in the basis or
method of calculation of Tax after Completion with
retrospective effect;
(b) which arises as a result of any retrospective increase in
rates of Tax introduced after Completion;
(c) which arises as a result of any legislation or other
governmental regulation not in force at Completion; whether
or not having retroactive or retrospective effect;
(d) which arises as a result of any voluntary act, omission or
transaction of the Purchaser or the Company after
Completion which is outside the ordinary course of business
of the Company;
(e) which arises as a result of any act, transaction, or
omission carried out by the Warrantors at the Purchaser's
request and direction unless necessary to comply with any
applicable law or statutory regulation enacted prior to
Completion;
(f) which would not have arisen but for any winding up or
cessation after Completion of any business or trade carried
on by the Company except to the extent that such winding up
or cessation is caused by the subject matter of one or more
claims under the Warranties and/or under the Tax Deed;
16
(g) which arises as a result of any act, omission, transaction
or arrangement of the Company after Completion (whether or
not in the ordinary course of business of the Company)
pursuant to a legally binding obligation incurred on or
before Completion details of which have been accurately and
fairly disclosed in the Disclosure Letter;
(h) where and to the extent that specific provision or reserve
(including provision for deferred tax) is made for the
matter giving rise to the liability in the Accounts;
(i) arising solely from a change after Completion of the
Company's accounting policy or practice or a change of the
accounting reference date of the Company.
6.11 To the extent that any breach of the Warranties is capable of remedy
the Purchaser shall first afford the Warrantors 28 days to remedy
the breach complained of and for such purposes the Purchaser at the
Warrantors' cost shall make available to the Warrantors all
assistance and all papers documents and information in its
possession, custody and control which the Warrantors may reasonably
require.
6.12 In the event that the Company or the Purchaser shall become aware of
any matter which is likely to constitute a breach of Warranty the
Purchaser shall as soon as reasonably practicable notify in writing
the Warrantors giving reasonable details of such matter and if so
requested by the Warrantors and at the Warrantors' cost shall
provide copies of available relevant documentation and thereafter
shall keep the Warrantors informed of developments and
communications relating thereto. In any event notice of any claim
under the Warranties must be served by the Purchaser on the
Warrantors in writing specifying in reasonable detail the nature of
the claim and the breach that results (having regard to the
information then available to the Purchaser) and where reasonably
practicable the amount claimed before the date specified in Clause
6.7(b) and any claim shall (if not previously satisfied or
withdrawn) be deemed to have been waived or withdrawn at the
expiration of nine months after the date upon which written notice
thereof is given to the Warrantors (or such longer period as the
Warrantors may permit) unless legal proceedings shall already have
been issued against and served on the Warrantors.
6.13 Subject to the Warrantors indemnifying and securing the Purchaser
and the Company to their reasonable satisfaction against any
liabilities, costs or expenses which may be incurred in taking such
action the Purchaser shall take or procure that the Company takes
such action as the Warrantors may reasonably request to dispute,
compromise or defend any claim or demand giving rise to the claim
for breach of Warranty or to mitigate any resulting loss.
6.14 Where the Company or the Purchaser or any of them is entitled
(whether by reason of insurance or otherwise) to recover from a
third party any sum in respect of the damage or liability the
subject of a claim under the Warranties the Purchaser shall if so
required by the Warrantors (subject to the Warrantors indemnifying
and securing the Purchaser and the Company to their reasonable
satisfaction against any liabilities, costs or
17
expenses which may be incurred in taking such action) procure that
the Company takes action as the Warrantors may reasonably require to
enforce such recovery and any claim against the Warrantors shall be
limited (in addition to the other limitations on the liability of
the Warrantors referred to in this Clause 6) to the amount by which
the amount of the Purchaser's claim as a result of such breach shall
exceed the amount so recovered (less any reasonable costs, charges
and expenses properly incurred by the Purchaser or the Company in
connection therewith).
6.15 Where in relation to any matter which has been the subject of any
claim for breach of the Warranties the Purchaser or the Company
shall recover any sum (whether by payment, discount, credit or
otherwise) referable to that matter the Purchaser shall forthwith
repay to the Warrantors any sums paid by the Warrantors in respect
of such claim (or an appropriate part thereof) not exceeding the sum
recovered.
6.16 If and to the extent that the Warrantors make a payment to the
Purchaser in respect of any breach of the Warranties relating to any
liabilities in respect of which the Purchaser or the Company have a
right to reimbursement (in whole or in part) against any third party
the Purchaser shall upon the request of the Warrantors assign or
procure to be assigned to them for no consideration but at the cost
of the Warrantors the benefit of the right of reimbursement.
6.17 In the event of the Warrantors being liable to the Purchaser under
the Warranties in respect of an obligation of the Company to pay Tax
and in certain circumstances the payment of Tax will be repaid to
the Company or some other liability to Tax reduced directly in
consequence (in whole or in part) of the payment of Tax by the
Company the liability of the Warrantors shall be reduced and any
amount paid to the Purchaser by the Warrantors in respect of the
liability to Tax shall be refunded when and to the extent that the
Company actually receives such repayment or reduction in liability
and the Purchaser shall procure that the Company makes all
reasonable claims to obtain the repayment or reduction when it
becomes aware that it is entitled to do so.
6.18 Any breach of the Warranties shall give rise only to an action in
damages by the Purchaser.
6.19 The provisions of Clause 2.3 of the Tax Deed shall additionally
apply in relation to any claim which could be made under the
taxation warranties as it applies to a claim under the Tax Deed.
6.20 Nothing herein shall in any way diminish the Purchaser's common law
duty to mitigate its loss.
6.21 The Purchaser undertakes to retain or procure the retention by the
Company of all such books, records, accounts, correspondence and
other papers of the Company as are material in the context of the
liability of the Warrantors under the Warranties or the Tax Deed
during the subsistence of the liability of the Warrantors under the
Warranties or (as the case may be) the Tax Deed.
18
6.22 The Purchaser warrants and undertakes to and for the benefit of the
Warrantors that (having made due enquiry of its advisors) it is not
aware of any fact, circumstance or information as at Completion upon
the basis of which it has or may have a claim against the Warrantors
and/or Sellers under this Agreement or any of the other documents
referred to herein other than under sub-clauses 2.1(c) and 2.2 of
the Tax Deed (whether for breach of the Warranties or under the Tax
Deed or on any other account whatsoever). The Purchaser acknowledges
that the Warrantors are entering into this Agreement on the basis
that the foregoing warranty is true and accurate in all respects
and, without restricting the rights of the Warrantors, the Purchaser
hereby agrees that in the event of such warranty being found to have
been broken, misleading or untrue by reason of the Purchaser being
at Completion aware of any such fact, circumstance or information
then the Purchaser shall have no right to make any claim against the
Warrantors and/or the Sellers under this Agreement or any of the
other documents referred to herein in respect of such fact,
circumstance or information.
7 CONFIDENTIALITY
7.1 Each of the Sellers hereby undertakes to the Purchaser, for itself
and as trustee of the Company that he will:
(a) not at any time after the date of this Agreement (save as
required by law or regulatory authority) divulge or
communicate to any person other than to officers or
employees of the Company whose province it is to know the
same or on the instructions of the Board of Directors of
the Company any confidential information concerning the
business, accounts, finance or contractual arrangements or
other dealings transactions or affairs of the Company which
may have come to his knowledge prior to Completion; and
(b) use his reasonable endeavours to prevent publication or
disclosure of any confidential information concerning such
matters;
provided that such undertakings shall cease to have effect
in relation to any confidential information which comes
into the public domain otherwise than through the fault of
any of the Sellers.
8 PROTECTIVE COVENANTS
8.1 Xxxxxxx Xxxxxxxx and Xxxxxxx Xxxxxxxx jointly and severally covenant
with the Purchaser (for itself and as trustee for the Company) that
they will not for a period of 5 years from Completion:
(a) except in relation to the Permitted Activities be concerned
in any business carrying on business within the United
Kingdom or Great Britain and Northern Ireland (including
the Channel Islands and the Isle of Man) or within the
Republic of Ireland which is competitive or likely to be
competitive with any of the businesses carried on by the
Company at Completion; or
19
(b) except on behalf of the Company or in relation to the
Permitted Activities canvass or solicit orders for services
similar to those being provided by the Company at
Completion from any person who is at Completion or has been
at any time within the year prior to Completion a customer
of the Company; or
(c) induce or attempt to induce any supplier of the Company to
cease to supply, or to restrict or vary the terms of
supply, to the Company; or
(d) induce or attempt to induce any employee of the Company to
leave the employment of the Company; or
(e) use or (in so far as it lies within his control) allow to
be used (except by the Company) any trade name used by the
Company at Completion or any other name intended or likely
to be confused with such a trade name; or
(f) spend more than 6 hours per month on Permitted Activities.
8.2 For the purposes of this Clause:
(a) Xxxx Xxxxxxxx is concerned in a business if he carries it
on as principal or agent or if:
(i) he is a partner, director, employee, seconde,
consultant or agent in, of or to any person who
carries on the business; or
(ii) he has any direct or indirect financial interest
(as shareholder or otherwise) in any person who
carries on the business disregarding any
financial interest of a person in securities
which are listed on the American Stock Exchange
or the London Stock Exchange or traded on the
Alternative Investment Market, if that person,
the remaining Sellers and any person connected
with him or them are interested in securities
which amount to less than three per cent of the
issued securities of that class and which, in all
circumstances, carry less than three per cent of
the voting rights (if any) attaching to the
issued securities of that class.
8.3 Each of the restrictions in each paragraph or sub-clause above shall
be enforceable by the Purchaser independently of each of the others
and its validity shall not be affected if any of the others is
invalid; if any of those restrictions is void but would be valid if
some part of the restrictions were deleted the restriction in
question shall apply with such modification as may be necessary to
make it valid without in any way extending the scope of the
restrictions.
8.4 Xxxx Xxxxxxxx acknowledges that the above provisions of this Clause
are no more extensive than is reasonable to protect the Purchaser as
the purchaser of the Shares.
8.5 If any provision of this Agreement or of any other agreement or
arrangement of which it forms part is subject to registration under
the Restrictive Trade Practices Xxx 0000,
20
it shall not take effect until the day after particulars of the
agreement or arrangement have been given to the Director General of
Fair Trading under section 24 of that Act.
9 ANNOUNCEMENTS
Neither the Sellers nor the Purchaser shall make or permit any person connected
with any of them to make any announcement concerning the sale and purchase of
the Shares or any ancillary matter before, on or after Completion except as
required by law or other applicable regulation or with the written approval of
the other, such approval not to be unreasonably withheld or delayed.
10 NOTICES AND RECEIPTS
10.1 Any notice or other document to be served under this Agreement may
be delivered or sent by first class registered post (or airmail if
to a destination outside the country where it is despatched) or
facsimile process to the party to be served at his address appearing
in this Agreement or at such other address as he may have notified
to the other parties in accordance with this Clause.
10.2 Any notice or document shall be deemed to have been served:
(a) if delivered, at the time of delivery; or
(b) if posted, at 10.00 am on the second or (if sent to a
destination outside the country where it is despatched)
seventh business day in the country of the recipient after
it was put into the post; or
(c) if sent by facsimile process, at the expiration of 2 hours
after the time of despatch, if despatched before 3.00 pm on
any business day in the country of the recipient, and in
any other case at 10.00 am on the business day in the
country of the recipient following the date of despatch.
10.3 In proving service of a notice or document it shall be sufficient to
prove that delivery was made or that the envelope containing the
notice or document was properly addressed and posted as a prepaid
registered post or airmail letter or that the facsimile message was
properly addressed and despatched as the case may be.
10.4 The receipt of the Sellers' Solicitors for any sum or document to be
paid or delivered to a Seller will discharge the Purchaser's
obligation to pay or deliver it to that Seller.
10.5 The Purchaser agrees that service or delivery of any documents on it
(including service of any proceedings) may be effected by service
upon the Purchaser's Solicitors in accordance with this Clause 10.
11 RESOLUTIONS AND WAIVERS
11.1 In relation to the Company the Sellers shall procure the convening
of all meetings, the giving of all waivers and consents and the
passing of all resolutions as are necessary
21
under the Companies Xxx 0000, its Articles of Association or any
agreement or obligations affecting it to give effect to this
Agreement.
11.2 For so long after Completion as it remains the registered holder of
any of the Shares each of the Sellers will hold them and any
distributions, property and rights hereafter deriving from them in
trust for the Purchaser and will deal with the Shares and any
distributions, property and rights hereafter deriving from them as
the Purchaser directs and will on request by the Purchaser execute
an instrument of proxy or other document which enables the Purchaser
or its representative to attend and vote at any meeting of the
Company.
12 ASSIGNMENT
None of the rights or obligations under this Agreement may be
assigned or transferred without the prior written consent of all the
parties, save that the Purchaser may (without the Sellers' consent)
assign any or all of its rights (but not its obligations) under this
Agreement to any subsidiary, holding company, or subsidiary of any
holding company, of the Purchaser provided that any such assignment
shall be on terms that if an assignee of any of the Purchaser's
rights ceases to be a subsidiary, holding company, or subsidiary of
any holding company, of the Purchaser, the assignee shall, before so
ceasing, reassign to the Purchaser (or any subsidiary, holding
company or subsidiary of any holding company of the Purchaser) all
such rights and provided further that any such assignment shall not
in any way extend the scope or nature of any of the obligations or
restrictions of the Sellers and/or the Warrantors under this
Agreement or limit the scope or nature of their rights under this
Agreement.
13 GENERAL
13.1 Each of the obligations, warranties and undertakings set out in this
Agreement which is not fully performed at Completion will continue
in force after Completion.
13.2 Where any obligation, representation, warranty or undertaking in
this Agreement is expressed to be made, undertaken or given by the
Sellers, they shall be jointly and severally responsible in respect
of it unless otherwise stated.
13.3 The Purchaser may release or compromise in whole or in part the
liability of any of the Sellers under this Agreement or grant any
time or other indulgence without affecting the liability of any
other of the Sellers.
13.4 Time is of the essence in relation to this Agreement.
13.5 Each party shall pay the costs and expenses incurred by him or it in
connection with the entering into and completion of this Agreement.
13.6 This Agreement may be executed in any number of counterparts, all of
which, taken together shall constitute one and the same Agreement
and any party may enter into this Agreement by executing a
counterpart.
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14 WHOLE AGREEMENT
14.1 This Agreement and the documents referred to in it contain the whole
agreement between the parties relating to the transactions
contemplated by this Agreement and supersede all previous
agreements, arrangements and understandings between the parties
relating to these transactions.
14.2 The parties acknowledge that in agreeing to enter into this
Agreement he or it has not relied on any representation, warranty or
other assurance except those set out in this Agreement and waives
all rights and remedies, which, but for this Clause might be
available to it in respect of such representation, warranty or other
assurance provided that nothing in this Clause shall limit or
exclude any liability for fraudulent misrepresentation.
15 GOVERNING LAW
This Agreement is governed by and shall be construed in accordance
with English law. Each of the parties submits to the exclusive
jurisdiction of the English courts for all purposes relating to this
Agreement.
16 PURCHASER'S WARRANTIES AND COVENANT
16.1 The Purchaser covenants that it shall use its reasonable endeavours
to file the reports required to be filed by it under the US
Securities Xxxxxxxx Xxx 0000, as amended (the "EXCHANGE ACT") and
the rules and regulations of the US Securities and Exchange
Commission (the "COMMISSION") thereunder, and it shall, if feasible,
take such further action as any holder of Consideration Shares may
reasonably request, all to the extent required from time to time to
enable such holder to sell Consideration Shares without registration
under the US Securities Act of 1933 (the "SECURITIES ACT") within
the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time or (b)
any similar rules or regulations hereafter adopted by the
Commission. Upon the written request of any holder of Consideration
Shares, the Purchaser shall deliver to such holder a written
statement as to whether it has complied with such requirements.
16.2 Provided that a period of at least 2 years has elapsed since the
later of the date any Consideration Shares were acquired from the
Purchaser or an affiliate of the Purchaser (within the meaning of
Rule 144 under the Securities Act), the Purchaser shall, upon the
request of any holder thereof who is not an affiliate of the
Purchaser and has not been an affiliate of the Purchaser during the
preceding 3 months, use its reasonable efforts (subject to
applicable law) to arrange for the exchange of the certificates
representing such Consideration Shares for new certificates omitting
any legend relating to restrictions on the transfer of such
Consideration Shares.
16.3 The Purchaser hereby warrants and represents to the Sellers that:
23
(a) neither the execution of this Agreement or the Loan Notes
by the Purchaser nor the completion of the transaction as
contemplated by this Agreement will violate, conflict
with or result in the breach of any term, limitation in
or provisions of, or constitute a default (or an event
that, with the giving of notice or the lapse of time or
both, would constitute a default) under the terms,
provisions or conditions of the constitutional documents
of the Purchaser or any agreement to which the Purchaser
is a party or by which the Purchaser is bound, or violate
any order, writ, injunction, decree, statute, rule or
regulation applicable to the Purchaser;
(b) no consent or approval by, notice to or registration with
any governmental or other authority is required on the
part of the Purchaser in connection with the execution of
this Agreement or the Loan Notes or the completion of the
transaction as contemplated in it;
(c) the Consideration Shares, when issued pursuant to this
Agreement, shall be duly authorised, validly issued,
fully paid and nonassessable and the certificates
representing the Consideration Shares and the Loan Notes,
when delivered pursuant to this Agreement, shall be in
due and proper form and shall be duly and validly
executed by the officers of the Purchaser named thereon;
(d) the execution, delivery and performance by the Purchaser
of the Agreement and the Loan Notes, and all other
documents contemplated hereby and thereby, the fulfilment
of and the compliance with the respective terms and
provisions hereof and thereof, and the consummation by
the Purchaser of the transactions contemplated hereby and
thereby, have been duly authorised by the Board of
Directors of the Purchaser (which authorisation has not
been modified or rescinded and is in full force and
effect) and no other corporate action is necessary for
the Purchaser to enter into this Agreement and the Loan
Notes, and all other documents contemplated hereby and
thereby, and to consummate the transactions contemplated
hereby and thereby;
(e) this Agreement and the Loan Notes constitute valid and
binding obligations of the Purchaser, enforceable against
the Purchaser in accordance with their respective terms;
IN WITNESS of which this Agreement has been executed by the parties or their
duly authorised representatives on the date which appears first on page 1.
24
SIGNED by Xxxx Xxxxxxxx )
in the presence of: )
Witness Signature:
Witness Address:
Witness Occupation:
SIGNED by Xxxxxxx Xxxxxxxx )
in the presence of: )
Witness Signature:
Witness Address:
Witness Occupation:
SIGNED by Xxx Xxxxxx )
the duly authorised representative of )
The Marquee Group Inc. )
25
