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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 13, 1996
Caribiner International, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-14234 13-3466655
(Commission File Number) (I.R.S. Employer Identification No.)
16 West 61st Street, New York, NY 10023
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 541-5300
----------------------------------------------------------------------
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
(a) Pursuant to a (i) Share Sale Agreement, dated June 13, 1996 (the "Share
Sale Agreement"), by and among Peter Devonald Berners-Price, Esq.
("Berners-Price") and others, Caribiner International, Inc. (the
"Company") and Caribiner Holdings (UK) Limited ("Caribiner UK"), a wholly
owned subsidiary of the Company, and (ii) a Share Purchase Agreement,
dated June 13, 1996 (the "Share Purchase Agreement" and together with the
Share Sale Agreement, the "Spectrum Agreements"), among Caribiner UK,
Berners-Price, Mark Wallace, the Company and others, Caribiner UK
acquired all of the outstanding Ordinary Shares of 10 pence each (the
"Shares") of SCH International Limited (registered number: 2467201)
(also known as Spectrum Communications Holdings International Limited)
("Spectrum") for an initial consideration (including the assumption of
debt) of approximately $5,000,000 (Pound3.2 million) in cash. In addition,
there will be contingent cash payments in the event that the acquired
business meets certain performance goals during the Company's fiscal
years ending September 30, 1997, 1998 and 1999.
The Company financed the acquisition of the Shares from the Company's
working capital (which funds were raised in the Company's initial public
offering of Common Stock completed on March 15, 1996).
The Share Sale Agreement is attached as Exhibit 2.1 and the Share
Purchase Agreement is attached as Exhibit 2.2, and each such agreement is
incorporated by reference in its entirety herein. The description of each
of the Spectrum Agreements contained herein is qualified in its entirety
by reference to each of the Spectrum Agreements.
Attached as Exhibit 99.1 is the Company's press release announcing the
completion of the transactions contemplated by the Spectrum Agreements.
(b) Equipment or Other Physical Property
Certain of the assets of Spectrum acquired by the Company pursuant to
the Spectrum Agreements constitute equipment or other physical property.
Such assets have been used by Spectrum in connection with its business
communications services business. The Company intends to continue
substantially the same use for such acquired assets.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
It is currently impracticable for the Company to file with this Form
8-K the historical financial information of Spectrum required to be filed
pursuant to the instructions to Form 8-K. Such financial information will
be filed by amendment not later than 60 days after the date on which this
Form 8-K must be filed, and the Company expects such financial information
to be available in August, 1996.
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(b) Pro Forma Financial Information
It is currently impracticable for the Company to file with this Form
8-K the pro forma financial information relative to the transactions
contemplated by the Spectrum Agreements that is required to be filed
pursuant to the instructions to Form 8-K. Such pro forma financial
information will be filed by amendment not later than 60 days after the
date on which this Form 8-K must be filed, and the Company expects such
financial information to be available in August, 1996.
(c) Exhibits
2.1 Share Sale Agreement, dated June 13, 1996, by and among
Berners-Price and others, Caribiner UK and the Company (disclosure
letter omitted-the Company agrees to furnish a copy of such letter
to the Commission upon request).
2.2 Share Sale Agreement, dated June 13, 1996, by and among Caribiner
UK, Berners-Price, Mark Wallace, the Company and others.
99.1 Press release, dated June 13, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, Caribiner International, Inc. has caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Dated: June 28, 1996 CARIBINER INTERNATIONAL, INC.
By: /s/ Arthur F. Dignam
---------------------
Name: Arthur F. Dignam
Title: Executive Vice President,
Chief Financial and Administrative
Officer
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INDEX TO EXHIBITS
Exhibit Description Page
- ------- ----------- ----
2.1 Share Sale Agreement, dated June 13, 1996, by and
among Peter Devonald Berners-Price, Esq.
("Berners-Price") and others, Caribiner Holdings
(UK) Limited ("Caribiner UK") and Caribiner
International, Inc. (the "Company") (disclosure
letter omitted the Company agrees to furnish a copy
of such letter to the Commission upon request).
2.2 Share Purchase Agreement, dated June 13, 1996, by and
among Caribiner UK, Berners-Price, Mark Wallace, the
Company and others.
99.1 Press Release, dated June 13, 1996.
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================================================================================
Dated 13th June 1996
(1) PETER DEVONALD BERNERS-PRICE ESQ
AND OTHERS
(2) CARIBINER HOLDINGS (UK) LIMITED
(3) CARIBINER INTERNATIONAL, INC.
SHARE SALE AGREEMENT
Relating to the sale and purchase of part of the
issued share capital of SCH International Limited
Wacks Caller
Steam Packet House
76 Cross Street
Manchester
M2 4JU
Tel: 0161-957 8888
================================================================================
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THIS AGREEMENT is dated 13th June 1996
Parties:
1. "The Vendors": the persons whose names and addresses are set out in
column 1 of Part 1 Schedule 1
2. "The Purchaser": CARIBINER HOLDINGS (UK) LIMITED (registered no. 3189671)
whose registered office is at Steam Packet House, 76 Cross
Street, Manchester, M2 4JU
3. "The Guarantor": CARIBINER INTERNATIONAL, INC whose principal executive
office is at 16 West Sixty First Street, New York, New
York 10023, United States of America
NOW IT IS HEREBY AGREED as follows:-
1. Interpretation
1.1 In this agreement, including the Schedules other than Schedule 4:-
1.1.1 the following words and expressions have the following meanings,
unless they are inconsistent with the context:
"Additional Stock Vendors" the persons listed as such in Part IV of
Schedule 1
"Additional Stock" the Loan Stock owned on the Completion Date by
the Additional Stock Vendors as detailed in Part
IV of Schedule 1
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"Agreed Form" the form agreed between the parties on or prior
to the date of this agreement and initialled
for the purpose of identification by their
respective solicitors
"Associate" shall bear the meaning ascribed thereto by
Section 417 ICTA
"Auditors" the auditors of the Group Companies for the time
being
"CA" Companies Act 1985 as amended by the Companies
Act 1989
"CAA" Capital Allowances Act 1990
"Claim" any claim made by the Purchaser or its permitted
assigns for breach of any of the Warranties or
under the Tax Deed
"Companies Acts" CA and the former Companies Acts (within the
meaning of CA s 735 (1)), the Company Securities
(Insider Dealing) Act 1985, the Companies
Consolidation (Consequential Provisions) Act
1985 and the Companies Act 1989
"Company" SCH International Limited (Company No: 2467201)
"Completion" completion of the purchase of the Shares in
accordance with clause 4
"Confidential Information" trade secrets and information equivalent to the
same in connection with the services supplied by
the Group Companies
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to the customers of the Group Companies listed
in the Customer List and which are confidential
to any Group Company and all information
relating to the customers of any Group Company
which has been provided to the Group Companies
on a confidential basis
"Customer List" the list of customers annexed to the Disclosure
Letter containing a full list of the customers
and clients of the Group Companies who generate
or are expected or projected to generate under
the budgets to 30 June 1996 more than (pound)
50,000 income per annum for the Group Companies
and the directors and/or employees of the Group
Companies who have day to day contact with such
customers and clients and the standard terms of
trading between the Group Companies and each of
such customers or clients
"Disclosure Letter" the disclosure letter of the same date as this
agreement from the Vendors and the Minority
Shareholders to the Purchaser
"Dubai Agreements" a Consultancy Agreement between Ibrahim Sharif
and Spectrum Communications LLC and a revised
Management Agreement between Spectrum
Communications LLC and the Company both in the
Agreed Form
"EBITDA" the operating profits (calculated by
consolidating the financial statements of each
of the Group Companies on a basis consistent
with the Warranted Accounts and in other
respects, but subject to sub paragraph (xii)
below, generally in accordance with UK GAAP) of
the Group Companies for the period in question:-
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(i) before deducting depreciation or
amortisation on any tangible or
intangible assets;
(ii) before deducting any taxation
calculated or determined wholly or
mainly upon or by reference to profits;
(iii) before deducting any Interest;
(iv) before crediting any interest earned;
(v) after deducting all expenses including
without limitation directors and
employees remuneration (whether by way
of fees, salary bonus or commission);
(vi) before deducting or crediting (as the
case may be) any extraordinary items
(as defined by FRS 3 paragraph 6) or
non operating exceptional items (as
defined by FRS 3 paragraph 20);
(vii) excluding any profits or losses of a
capital nature arising on a disposal of
goodwill; Sure as provided in any
EBITDA Memorandum pursuant to (xiv)
below made in accordance with clause
6.2 of Schedule 7
(viii) excluding any profits or losses
attributable to any business or company
the assets or shares of which have been
purchased by any of the Group Companies
after the date hereof;
(ix) after deducting minority interests
(before tax); (for the avoidance of
doubt it is agreed that the current
policy of consolidating 100% of the
profits of Spectrum Communications LLC
(Dubai) shall continue, notwithstanding
the third party shareholding)
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(x) after making such adjustments as are
appropriate to reverse any artificial
effect on EBITDA arising from a breach
of clause 8 of Schedule 7 of the
Agreement
(xi) before deducting any management or
group charge levied by the Purchaser or
any of its subsidiaries to or (other
than management charges permitted to be
charged under the provisions of clause
7 of Schedule 7) as between the Group
Companies
(xii) for the avoidance of doubt the
reference to UK GAAP, insofar as the
determination of EBITDA is concerned,
relate to UK GAAP as applying at the
time of Completion and will not take
account of any changes in UK GAAP
occurring after Completion
(xiii) before deducting any redundancy or
wrongful or unfair dismissal costs
(including the costs of compensation
and any related professional advice) of
any reorganisation of the Group carried
out in each case at the Purchaser's or
its Associate's request without the
consent of the Vendor Committee.
(xiv) after making such adjustments as may
be required to reflect any EBITDA
Memorandum
(xv) before deducting any expenditure or
liability incurred by the Company or
one of its subsidiaries at the request
of the Purchaser or any director of the
Company (or any subsidiary) who was
nominated by the Purchaser unless it
was:-
(i) agreed with a member of the Vendor
Committee; or
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(ii) contained or provided for in the
agreed budget; or
(iii) in the ordinary course of business
of the relevant company; or
(iv) reasonably and properly incurred
for the protection of the business
of the relevant company.
"Earn Out Payments" all or any of (as the context requires) the
First Earn Out Payment, the Second Earn Out
Payment and the Third Earn Out Payment
"Earn Out Years" the three financial years ending 30th September
1997, 30th September 1998 and 30th September
1999
"EBITDA Memorandum" a memorandum signed by each member of the Vendor
Committee and by two directors of the Purchaser
(of whom no more than one shall also be a
Vendor) and which relates to the calculation of
EBITDA as envisaged by paragraphs 2.2, 3 and/or
6 of Schedule 7
"Environmental Laws" all statutes subordinate legislation regulations
and the like concerning the protection of human
health or the environment or the conditions of
the work place including the Public Health Act
1936 the Alkali etc Works Regulation Act 1906,
the Clean Air Act 1993 the Radioactive
Substances Act 1993, the Health and Safety at
Work etc Act 1974, the Control of Pollution Act
1974, the Food Act 1984, Food and Environmental
Protection Act 1985, the Control of Pollution
(Amendment) Act 1989, the Water Resources Act
1991, the Water Industry Act 1991, the Food
Safety Act 1990 and the
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Environmental Protection Act 1990 ("the EPA"),
the Planning (Hazardous Substances) Act 1990 the
Environmental Act 1995 including all subordinate
legislation under such legislation together with
all Directives, Byelaws, Codes of Practice,
Orders or Notices as the same are from time to
time varied or amended.
"Environmental Licences" means any permit, licence, authorisation,
consent or other approval required under the
Environmental Laws to be obtained in relation to
any activities processes and substances from
time to time on the Properties
"Environmental Matters" includes any of the following: (1) any
generation, deposit, disposal, keeping,
treatment, transportation, transmission,
handling or manufacture of any Relevant
Substance; (2) nuisance, noise, defective
premises, health and safety at work or
elsewhere; (3) the pollution, conservation or
protection of the environment (which includes
natural resources whether pertaining to life or
not, such as air, water, soil, fauna and flora
and the interactions between the same factors
and also the built environment) or of man or any
living organisms supported by the environment or
any other matter whatsoever affecting the
environment or any part of it
"First Earn Out Payment" the sum (including the Repayment Premium
thereon) to be paid on the repayment of the 1998
Loan Notes
"FA" Finance Act
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"FRS" Financial Reporting Standard issued by the
Accounting Standards Board
"GiroCredit Agreement" an Agreement between GiroCredit Bank
Aktiengesellschaft Der Sparkassen and the
Company relating to the termination of all
agreements between the Company and GiroCredit
and the release of the Company from all
liabilities and obligations to GiroCredit Bank
(including without limitation any options or
warrants over the share capital of the Company)
in the Agreed Form
"Group Companies" the Company, the Subsidiaries and any other
subsidiaries of the Company or the Subsidiaries
for the time being
"ICTA 1970" Income and Corporation Taxes Act 1970
"ICTA" Income and Corporation Taxes Act 1988
"Indebtedness" means any indebtedness and/or obligations and/or
liabilities incurred (whether for the purposes
of working capital, capital expenditure,
acquisitions, corporate reorganisation or
otherwise howsoever) with respect to any of:-
(a) moneys borrowed or raised;
(b) any bond, note, loan stock, debenture or
similar instrument;
(c) acceptance or documentary credit
facilities;
(d) rental payments under leases and
hire-purchase agreements and instalments
under conditional sale agreements (in all
cases whether in respect of land,
machinery, equipment or otherwise) entered
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into primarily as a method of raising
finance or of financing the acquisition or
use of any asset;
(e) guarantees, bonds, indemnities, letters of
credit or other instruments issued in
connection with the performance of
contracts;
(f) guarantees or other assurances against
financial loss in respect of indebtedness
of any person falling within any of
paragraphs (a) to (e) above;
(g) the receipt of credit or deferred payment
arrangements in respect of the purchase
price of goods, property or services
(including any interest and other charges
due and payable or accrued on or in
respect of any of the foregoing); or
(h) anything analogous to the above
"Industrial Property any patent, know-how, trade mark, service mark,
Rights" trade name, logo, registered design, copyright,
design right or other similar industrial or
commercial right and any applications for the
foregoing and whether registered or not
"Interest" means at any time and in relation to the Group
Companies the aggregate of such part of all
continuing, regular and periodic costs, charges
and expenses incurred or suffered or to be
incurred or suffered by the Group Companies in
relation to Indebtedness (including without
limitation Indebtedness to the Purchaser or any
member of its Group) as the Auditors of the
relevant Group Company determine to be the
interest element of such payments
"ITA" Inheritance Tax Act 1984
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"Last Accounts Date" 30 June 1995 (being the date to which the
Principal Accounts have been prepared)
"1998 Loan Notes" unsecured loan notes in the Agreed Form
substantially in the form of the loan notes set
out in Part 1 Schedule 8
"1999 Loan Notes" unsecured loan notes in the Agreed Form
substantially in the form of the Loan Note set
out in Part 1 of Schedule 8 save as varied by
the terms referred to in Part II of schedule 8.
"2000 Loan Notes" unsecured loan notes in the Agreed Form
substantially in the form of the Loan Note set
out in Part 1 of Schedule 8 save as varied by
the terms referred to in Part II of schedule 8.
.
"The Loan Notes" the 1998 Loan Notes, the 1999 Loan Notes and the
2000 Loan Notes
"Loan Stock Vendors" means the persons whose names appear in column 1
of Part III of Schedule 1
"Major Warrantors" means those individuals named in clause 5
"Management Committee" the Management Committee of the Board of
Directors of the Companies referred to in clause
4.12
"Mark Wallace Agreement" an Agreement in the Agreed Form between the
Company and Mr Wallace and Mrs Rachel Joy
Wallace for the purchase by the Company of that
part of the issued share
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capital of Mark Wallace Associates Limited not
already owned by the Company
"Minority Shareholders" the persons whose names and addresses are set
out in column 1 of Part II of Schedule 1
"Mr Wallace" Mark Wallace, one of the Vendors, whose address
appears in Schedule 1
"Wallace Prepayment" the sum of (pound) 180,000 less such of the
(pound) 60,000 reductions to be made in each of
the First Earn Out Payment and the Second Earn
Out Payment which is actually offset against the
amount of the First Earn Out Payment and the
Second Earn Out Payment under the provisions of
the relevant Loan Notes
"Mr Berners-Price" Peter Devonald Berners-Price, one of the
Vendors, whose address appears in Schedule 1
"NYSE" The New York Stock Exchange
"Planning Acts" The Town and Country Planning Act 1990, The
Planning (Listed Buildings and Conservation
Areas) Act 1990, The Planning (Hazardous
Substances Act 1990, The Planning (Consequential
Provisions) Act 1990 and The Planning and
Compensation Act 1991 and any statutory
extension or modification amendment or
re-enactment of such statute and any resolution
or orders made under such statute
"Principal Accounts" the audited balance sheet as at the Last
Accounts Date and audited profit and loss
account for the year ended on
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the Last Accounts Date of each Group Company
including in the case of the Company the audited
consolidated balance sheet as at that date and
the audited consolidated profit and loss account
for that year and the directors' report and
notes
"Properties" the properties of the Group Companies shortly
described in Schedule 5
"Purchaser's Solicitors" Wacks Caller, Steam Packet House, 76 Cross
Street, Manchester, M2 4JU
"Relevant Substance" means fumes, smoke, soot, ash, dust, grit,
chemicals, leachate, petroleum products, any
noxious radioactive inflammable explosive
dangerous or offensive substance (whether in a
solid or liquid form or in the form of a gas or
vapour and whether alone or in combination with
any other substance)
"Relief" includes any relief from Taxation or allowance,
exemption, set off or deduction in computing or
against profits, income or gains for the
purposes of Taxation, or any credit against
Taxation
"Second Earn Out Payment" the sum (including the Repayment Premium
thereon) to be paid on the repayment of the 1999
Loan Notes
"the Subsidiaries" the Companies listed in Schedule 2, Part II
"Shares" the ordinary shares of 10p each in the capital
of the Company to be sold by the Vendors under
the terms of this agreement in the numbers set
against their names in
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part 1 of Schedule 1 being the whole of its
issued and allotted share capital less those
shares sold under the terms of the Short Form
Share Purchase Agreement and under the
GiroCredit Agreement)
"Shareholders Agreements" (i) a shareholders agreement dated 15th July
1993 and made between GiroCredit Bank
Aktiengesellschaft Der Sparkassen and
certain of the Vendors and the Minority
Shareholders; and
(ii) a shareholders agreement dated 19 April
1995 between Mr Berners-Price (1), Paul
Anthony Swan (2), Anthony Bruce Crawford
(3) Bernard Philip Bussy (4) and Timothy
Martin Elliott (5) relating to the affairs
of the Company
"Short Form Share an Agreement between the Minority Shareholders
Purchase Agreement" and the Purchaser for the sale by the Minority
Shareholders of the shares owned by them in the
capital of the Company being the balance of the
issued share capital of the Company not being
sold under the terms of this agreement
"Subsidiary" a subsidiary as defined in CA s 736 and shall
include a subsidiary undertaking as defined in
CA s 258 and a quasi subsidiary as defined in
FRS 5 paragraph 7
"Taxation" all forms of taxation including:
(a) any charge, tax, duty or levy upon income,
profits, chargeable gains or development
value, land, any interest in land or in any
other property, or
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documents or supplies or other
transactions;
(b) income tax, corporation tax, capital gains
tax, inheritance tax, value added tax,
stamp duty, stamp duty reserve tax, customs
and other import duties, national insurance
contributions;
(c) any liability for sums equivalent to any
such charge, tax, duty, levy or rates or
for any related penalty, fine or interest
(d) the loss of all or part of any Relief
"Tax Deed" a deed in the form set out in Schedule 4
"Taxation Warranties" the warranties set out in paragraph 3 of
Schedule 3
"TCGA" Taxation of Chargeable Gains Act 1992
"Third Earn Out Payment" the (sum including the Repayment Premium sum
thereon) to be paid on the repayment of the 2000
Loan Notes
"TMA" Taxes Management Act 1970
"VATA" Value Added Tax Act 1994
"Vendor Committee" means Mr Berners-Price, Mr Wallace and Arif
Hamid or any person reasonably approved in
writing by the resolution of the board of the
Purchaser chosen by the remaining member(s) of
the Vendor Committee from time to time to
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replace any of its members who have ceased to be
a member of the Committee
"Vendor Loan Stock" the "A" unsecured loan stock 1990 of the Company
and the "B" unsecured loan stock 1990 of the
Company being (other than the Loan Stock
referred to in the GiroCredit Agreement and that
owned by the Additional Stock Vendors) all Loan
Stock issued by the Company or any Group Company
which at the date hereof remains unpaid or
unredeemed
"Vendors' Solicitors" Arnheim & Co, No 1 London Bridge, London SE1 9QL
"Vendor Executives" those of the Vendors who are on the Board of
Directors of the Company at Completion.
"Warranted Accounts" the consolidated balance sheet as at the
Warranted Accounts Date and the consolidated
profit and loss account for the period from the
Last Accounts Date and ending on the Warranted
Accounts Date of the Company and its
subsidiaries together with a statement of the
applicable accounting policies
"Warranted Accounts Date" 31st March 1996 (being the date to which the
Warranted Accounts have been prepared)
"Warranties" the warranties and undertakings of the Vendors
contained in Schedule 3
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"Warrantors" the Vendors and the Minority Shareholders
"Warranty Claim" any claim made by the Purchaser under the
Warranties
1.1.2 All references to a statutory provision shall be construed as
including references to:
(a) any statutory modification, consolidation or re-enactment
(whether before or after the date of this agreement) for the
time being in force;
(b) all statutory instruments or orders made pursuant to a
statutory provision;
(c) any statutory provisions of which a statutory provision is a
consolidation, re-enactment or modification.
1.1.3 Any reference to the Vendors includes, where appropriate, their
personal representatives.
1.1.4 Except where the context otherwise requires words denoting the
singular include the plural and vice versa; words denoting any one
gender include all genders; words denoting persons include firms and
corporations and vice versa.
1.1.5 Unless otherwise stated, a reference to a clause or sub-clause or a
Schedule is a reference to a clause or a sub-clause of or a Schedule
to this agreement.
1.1.6 Any reference to any matter or thing being within the "ordinary
course of business" or "ordinary and proper course of business" or
similar expression in relation to any Group Company shall refer to
any matter which relates to the main business of any Group Company,
being the provision of corporate event management and live
communications.
1.1.7 Save insofar as defined herein and in the Tax Deed words and phrases
defined in the Loan Notes have the same meaning when used in this
agreement.
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1.2 Clause headings in this agreement and in the Schedules are for ease of
reference only and do not affect the construction of any provision.
2. Agreement for Sale
2.1 Subject to the terms and conditions of this agreement, each of the Vendors
shall sell with full title guarantee the Shares set opposite his name in
column (2) of Part 1 of Schedule 1 to the Purchaser free from all liens,
charges and encumbrances and with all rights attaching to them and the
Purchaser, relying on the representations and warranties contained in
clause 5 and undertakings contained in clause 7 and on the Warranties,
shall purchase the Shares with effect from the date of this agreement.
2.2 Each of the Vendors hereby waives any pre-emption rights he may have in
relation to any of the Shares or in relation to the shares being sold under
the GiroCredit Agreement and the Short Form Share Purchase Agreement under
the articles of association of the Company or otherwise.
2.3 Subject to the terms and conditions of this agreement, each of the Loan
Stock Vendors shall sell with full title guarantee the Vendor Loan Stock
set opposite his name in column (2) of Part III of Schedule 1 to the
Purchaser free from all liens, charges and encumbrances and with all rights
attaching to them (including accrued interest) and the Purchaser, relying
on the representations and warranties relating to the Vendor Loan Stock
contained in clause 5 shall purchase the Vendor Loan Stock with effect from
the date of this agreement.
2.4 The Purchaser shall not be obliged to complete the purchase of any of the
Shares or the Vendor Loan Stock unless the purchase of all the Shares, the
Vendor Loan Stock, the Additional Stock and completion of the GiroCredit
Agreement are completed simultaneously.
3. Purchase Consideration
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3.1 The purchase consideration for the Shares shall be the payment to the
Vendors of a cash price set out in column (3) of Part 1 of Schedule 1 to
which the Vendors shall be respectively entitled in the amount set opposite
their respective names in column (1) of Part 1 of Schedule 1.
3.2 The purchase consideration for the Vendor Loan Stock shall be the payment
to the Loan Stock Vendors of a cash price set out in column (3) of Part III
of Schedule 1 to which the Loan Stock Vendors shall be respectively
entitled in the amount set opposite their respective names in column (1) of
Part III of Schedule 1.
3.3 By way of further consideration for the sale by the Vendors of the Shares
(subject to clauses 3.4, 3.5 and 3.6) the Purchaser shall:-
3.3.1 issue to the Vendors on the 1st October 1997 the 1998 Loan Notes in
the nominal amounts set out in column (4) of Part 1 of Schedule 1
opposite each Vendor's name in column (1) of Part 1 of Schedule 1;
3.3.2 issue to the Vendors on the 1st October 1998 the 1999 Loan Notes in
the nominal amounts set out in column (4) of Part 1 of Schedule 1
opposite each Vendor's name in column (1) of Part 1 of Schedule 1;
3.3.3 issue to the Vendors on the 1st October 1999 the 2000 Loan Notes in
the nominal amounts set out in column (4) of Part 1 of Schedule 1
opposite each Vendor's name in column (1) of Part 1 of Schedule 1.
3.4 The issue of the 1998 Loan Notes shall only be made if the Vendor Committee
certifies in good faith in writing to the Purchaser prior to 1st October
1997 that on the basis of the information then available, including the
management accounts of the Company and its subsidiaries for the eleven
months to 31st August 1997, it reasonably expects that EBITDA for the
financial year ending 30th September 1997 will exceed (pound) 1,000,000.
3.5 The issue of the 1999 Loan Notes shall only be made if the Vendor Committee
certifies in good faith in writing to the Purchaser prior to 1st October
1998 that on the basis of the
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information then available, including the management accounts of the
Company and its subsidiaries for the eleven months to 31st August 1998, it
reasonably expects that EBITDA for the financial year ending 30th September
1998 will exceed (pound) 1,100,000.
3.6 The issue of the 2000 Loan Notes shall only be made if the Vendor Committee
certifies in good faith in writing to the Purchaser prior to 1st October
1999 that on the basis of the information then available, including the
management accounts of the Company and its subsidiaries for the eleven
months to 31st August 1999, it reasonably expects that EBITDA for the
financial year ending 30th September 1999 will exceed (pound) 1,210,000.
3.7.1 By way of further consideration for the sale by the Vendors of the Shares
the Purchaser shall on Completion pay to the Company's solicitors by way
of contribution towards the professional costs incurred by the Vendors and
the Minority Shareholders and the Group Companies in relation to this
agreement, the Short Form Share Purchase Agreement and other documentation
related thereto in the aggregate sum of (pound) 117,500 which figure shall
include VAT and disbursements and shall (subject to clause 3.7.2) pay a
further sum of (pound) 20,000 towards such fees on behalf of the Company,
Vendors, Minority Shareholders and the Group Companies, such further
(pound) 20,000 to be deducted from the Repayment Premiums under the Loan
Notes.
3.7.2 To the extent that the aggregate amount determined or agreed to be payable
under the Loan Notes issued by the Purchaser is less than (pound) 20,000
the difference shall be payable to the Purchaser by the Vendors on a joint
and several basis.
3.7.3 In addition to the amounts specified in clause 3.7.1 above the Company
shall pay (pound) 10,000 (or such other amount being the balance held by
GiroCredit of the monies remaining from the sale of the Company's
shareholding in DMS) to such persons as the Vendor Committee shall direct.
3.8 If prior to any payment of an Earn Out Payment, the Purchaser shall notify
the Warrantors of a Claim being brought in good faith by the Purchaser,
then if the Purchaser so requires the amount of the Earn Out Payment which
would otherwise fall due for payment shall be reduced by an amount equal to
the amount of the Claim or a reasonable estimate thereof together with a
reasonable estimate of the professional costs of pursuing the Claim which
may be withheld by
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the Purchaser from all or any of the Warrantors and such withholding shall
not then be payable until the settlement or resolution of such Claim. For
the purposes of this clause 3.8:
3.8.1 a Claim shall be deemed;
3.8.1.1 to be settled when the Vendor Committee and the Purchaser
shall have agreed a final settlement thereof as between
the Warrantors and the Purchaser; or
3.8.1.2 to have been resolved when an order or decree of the Court
of competent jurisdiction shall have been given in
proceedings therein in respect of the Claim and such order
or decree is final and not or no longer appealable.
3.8.2 The amount determined to be payable on the settlement or resolution
of the Claim shall be the amount agreed by the Vendor Committee and
the Purchaser under any such settlement or determined by any such
order or decree (as the case may be) to be payable by the Warrantors
in respect thereof.
3.8.3 Subject to Schedule 6, the satisfaction pro tanto of any claim by
reduction of the amount of the Earn Out Payment pursuant to this
clause 3.8 shall in no way prejudice or affect any other rights or
remedies of the Purchaser for the purposes of recovering any amount
due to the Purchaser which is not satisfied by such means.
3.8.4 Subject to Schedule 6, any forbearance or delay in exercising or any
decision not to exercise or to exercise only in part the rights
conferred by this clause 3.8 shall in no way prejudice or affect the
right or remedy of the Purchaser against the Warrantors under this
agreement, the Tax Deed or otherwise howsoever and whensoever
arising.
3.9 Any notice served by the Purchaser in accordance with clause 3.8 shall
contain:
3.9.1 specific details of the Claim to which it relates, together with a
statement that such Claim has been brought against the Warrantors
(or any of them) by the Purchaser in good faith; and
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3.9.2 the Purchaser's best estimate of the amount of such Claim taking
into account both quantum and liability issues (taking account of
the limitations set out in Schedule 6).
3.10 If the Vendor Committee disputes the amount being withheld by the Purchaser
then the Vendor Committee may serve written notice ("a Default Notice") on
the Purchaser within 14 days of receipt of the notice served in accordance
with 3.8, disputing such notice. If within 14 days of service of the
Default Notice the Purchaser and the Vendor Committee are unable to agree
the amount of the withholding then either the Purchaser or the Vendor
Committee shall be entitled to refer the matter or matters not agreed to an
Independent Chartered Accountant agreed between the Vendor Committee and
the Purchaser (or, if not agreed within 7 days, to be nominated by the
President of the Institute of Chartered Accountants in England and Wales)
who shall act as expert and not arbitrator and whose decision in the
absence of clerical or manifest error shall be binding on the Warrantors
and the Purchaser. The reasonable costs of the independent Chartered
Accountant shall be borne as he shall direct.
3.11 At the end of each financial year during the Earn Out Years, the parties
shall use their respective powers to procure that the Company shall procure
that, as soon as reasonably practicable and in any event within 75 days
thereafter, the Auditors audit the accounts of the Group Companies and
having audited such accounts shall certify that EBITDA for that relevant
financial year has been calculated in accordance with this agreement.
3.12 The Purchaser shall deliver to the Vendor Committee copies of the accounts
and the certification by the Auditors of the amount of the EBITDA within 7
days of the certification.
3.13 The Purchaser and the Vendor Committee shall within 14 days of the service
by the Purchaser of the accounts and the EBITDA certification agree the
amount of EBITDA for that financial year. In default of such agreement, the
matters or matters not agreed shall be referred to an independent Chartered
Accountant agreed between the Vendor Committee and the Purchaser (or, if
not agreed within 7 days, to be nominated by the President of the Institute
of Chartered Accountants in England and Wales) who shall act as expert and
not arbitrator and whose decision in the absence of clerical or manifest
error shall be binding on the Vendors and the
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Purchaser. The reasonable costs of the independent Chartered Accountant
shall be borne as he shall direct.
3.14 The Vendors and the Purchaser agree that the provisions of Schedules 7 and
9 shall apply. Schedule 9 shall be without prejudice to any rights of the
Purchaser.
3.15 The Guarantor as a surety only (and not as a principal obligor)
unconditionally and irrevocably guarantees as a continuing obligation the
proper and punctual performance by the Purchaser and/or the Company of
their respective obligations (but with the benefit all rights of the
Purchaser and/or the Company) under:-
3.15.1 this agreement; and/or
3.15.2 all other agreements entered into at or after Completion by the
Purchaser and/or the Company in favour of the Vendors or any of them
whether or not referred to in this Agreement (each a "Transaction
Document") including, without limitation the Loan Notes to be issued
or in issue at any time after Completion.
3.16 The Guarantor's liability hereunder shall not be discharged or impaired by:
3.16.1 any failure to exercise or delaying the exercise of any right or
remedy (except a specific and duly authorised written waiver or
release signed pursuant to Schedule 9) and no partial exercise of
any right or remedy shall preclude any further or other exercise;
3.16.2 any legal limitation, disability, incapacity or other circumstance
in relation to the Purchaser, or any Group Company;
3.16.3 or any irregularity or invalidity of any obligation of the Purchaser
or any Group Company under or pursuant to this agreement or any
other Transaction Document so that the obligations of the Guarantor
hereunder will remain in full force and effect and this Guarantee
will be construed accordingly as if there were no such irregularity,
unenforceability or invalidity.
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3.17 The Guarantor hereby waives any right it may have of first requiring the
Vendors to proceed against, or enforce any right against, the Purchaser.
3.18 Any amounts payable hereunder shall be paid in full without any deduction
or withholding whatsoever (whether in respect of set-off, counterclaim,
duties, charges, taxes or otherwise) except that the amounts due to any
individual Vendor are subject to set-off of claims against that Vendor in
accordance with the terms of the Transaction Documents.
4. Completion
4.1 Completion shall take place at the offices of the Companys' Solicitors
immediately after the execution of this agreement when, subject to clause
4.9, all the transactions mentioned in the following sub-clauses shall take
place.
4.2 The Vendors shall deliver to the Purchaser:
4.2.1 duly completed and signed transfers in favour of the Purchaser or as
it may direct in respect of the Shares together with any relative
share certificates issued to them;
4.2.2 (save in respect of the shares the subject of the Mark Wallace
Agreement and those held by Mr Ibrahim Sharif in Spectrum
Communications LLC), duly completed and signed transfers in favour
of the Purchaser or as it may direct of all shares of the
Subsidiaries which are not registered in the name of a Group Company
together with any relative share certificates issued to them;
4.2.3 the Tax Deed duly executed by the Covenantors;
4.2.4 the resignation of the existing auditors of each UK Group Company
(except in) confirming that they have no outstanding claims of any
kind and containing a statement under CA s 394(1) that there are no
such circumstances as are mentioned in that section;
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4.2.5 the statutory books of each Group Company complete and up to date
(but not to include the events occurring at or immediately prior to
Completion) and their certificates of incorporation and (if any)
common seals;
4.2.6 the title deeds relating to each of the Properties;
4.2.7 the Dubai Agreements duly executed by the parties thereto;
4.2.8 the Mark Wallace Agreement duly executed by the parties thereto;
4.2.9 the GiroCredit Agreement duly executed by the parties thereto;
4.2.10 the Short Form Share Purchase Agreement duly executed by the parties
thereto;
4.2.11 duly executed transfers in favour of the Purchaser (and any relative
certificates issued to them) for the Additional Stock;
4.2.12 waivers in the Agreed Form in relation to the Additional Stock.
4.3 The Loan Stock Vendors shall deliver to the Purchaser duly executed
transfer instruments in favour of the Purchaser (in such form as the
Purchaser shall reasonably require) or as it may direct in respect of the
Vendor Loan Stock together with the relative certificates.
4.4 Save for expenses paid to the Vendors on account in the ordinary course of
business and those amounts referred to in the Disclosure Letter the Vendors
shall repay all monies then owing by them to any Group Company whether due
for payment or not.
4.5 The Vendors shall enter into service agreements with the Company and/or one
of its Subsidiaries in the Agreed Form.
4.6 Board Meetings of each Group Company whose registered office is in the
United Kingdom shall be held at which:
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4.6.1 additional directors shall be appointed as agreed;
4.6.2 the transfers referred to in clause 4.2.1 or 4.2.2 (as the case may
be) shall be approved (subject to stamping);
4.6.3 the resignations referred to in clause 4.2.4 shall be submitted and
accepted;
4.6.4 the accounting reference date shall be changed to 30th September and
the accounting reference period ending 30th June 1996 shall be
extended to 30th September 1996;
4.6.5 the transfers referred to in clause 6.2 of the Short Form Share
Purchase Agreement shall be approved (subject to stamping).
4.7 The Vendors shall procure a Board Meeting of Mark Wallace Associates
Limited at which the transfer of shares agreed in the Mark Wallace
Agreement shall be approved (subject to stamping) procure that Spectrum
Communications BVI Limited becomes a wholly owned subsidiary of the
Purchaser and;
4.8 Upon completion of the matters referred to in clauses 4.2 to 4.7 the
Purchaser shall:
4.8.1 deliver to Mr Berners-Price a cheque for each of the Vendors for
each Vendor's entitlement of the consideration referred to in clause
3.1;
4.8.2 deliver to each of the professional firms whose fees are being paid
in accordance with clause 3.5 cheques in respect of the
consideration referred to in clause 3.5;
4.8.3 deliver to Mr Berners-Price a cheque for each of the Loan Stock
Vendors for each Loan Stock Vendor's entitlement of the
consideration referred to in clause 3.2; and
4.8.4 advance to the Company the sum of (pound) 2,500,000 to be applied in
satisfying the obligations of the Group Companies under the
GiroCredit Agreement in the reduction
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of creditors and for general working capital purposes. Furthermore
the Guarantor and the Purchaser acknowledge the intention of the
Group Companies to incur approximately (pound) 200,000 of capital
expenditure within the two months following Completion.
4.9 The Purchaser may in its absolute discretion waive any requirement
contained in clauses 4.2 to 4.7 and shall not be obliged to complete the
purchase of any of the Shares unless the GiroCredit Agreement and the
purchase of
4.9.1 all the Shares;
4.9.2 Vendor Loan Stock; and
4.9.3 the Additional Stock; and
4.9.4 all the shares being sold under the Short Form Share Purchase
Agreement
are completed in accordance with this agreement
4.10 As soon as practicable following Completion:
4.10.1 the Purchaser shall use its reasonable endeavours to procure the
release of the Vendors from all liability arising after Completion
under the guarantees given by them on behalf of the Group Companies
and listed in the Disclosure Letter.
4.10.2 Ernst & Young are appointed an auditor of Spectrum Communications
GmbH following the registration of KPMG; and
4.10.3 the Guarantor will as further consideration for the entry into
service agreements hereunder issue or grant share options to such
persons and in such numbers exercisable on normal terms it has
agreed to do so with the Vendor Committee
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4.10.4 Brian Shepherd shall be appointed to the board of directors of
Spectrum Communications LLC
4.10.5 each of the Company, Spectrum Communications Limited, Mark Wallace
Associates Limited and Spectrum Communications Dubai LLC shall
appoint management committees by passing board resolutions in the
agreed terms.
5. Warranties, Undertakings and Covenants by the Warrantors
5.1 Each of Mr Berners-Price, Mr Bernard Bussy, Mr Timothy Elliott, Mr Anthony
Crawford, Mr Jeremy Garbett and Laurence Croneen jointly and severally
warrant and represent to and undertake with the Purchaser that:
5.1.1 the Shares, together with the shares being transferred under the
terms of the Short Form Share Purchase Agreement at Completion
constitute the whole of the issued and allotted share capital of the
Company;
5.1.2 the Shares beneficially owned by the Company in Spectrum
Communications Limited ("SCL") constitute the whole of the issued
and allotted share capital of SCL;
5.1.3 the Vendor Loan Stock (together with the Additional Stock)
constitutes all loan stock issued by the Company or SCL and which
remains outstanding, unpaid or unredeemed;
5.1.4 except as required or contemplated by this agreement, there are no
agreements or arrangements in force which provide for the present or
future issue, allotment or transfer of or grant to any person the
right (whether conditional or otherwise) to call for or require the
issue, allotment or transfer of any share or loan capital of the
Company or SCL or so far as they are aware Mark Wallace Associates
Limited ("MWA") (including any option or right of pre-emption or
conversion);
5.1.5 SCL and MWA Ltd are wholly owned subsidiaries of the Company;
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5.1.6 the information in Schedule 2 relating to the Company and SCL is
true and accurate in all respects;
5.1.7 the Company or, where specified, SCL is the sole beneficial owner of
the shares stated to be owned by it in Schedule 2 in such of the
Subsidiaries who are trading and are not dormant as at the date of
this agreement, free from any encumbrance; and
5.1.8 there is no impediment to Spectrum Communications International BVI
Limited becoming a wholly owned subsidiary within a reasonable
period of Completion and it will without any cost or liability
become a wholly owned subsidiary within fourteen days of Completion
unless the Purchaser requires otherwise.
5.2 Mr Wallace warrants and represents to and undertakes with the Purchaser
that:-
5.2.1 the shares beneficially owned by the Company together with the
shares being transferred under the terms of the Mark Wallace
Agreement at Completion constitute the whole of the issued and
allotted share capital of MWA;
5.2.2 in relation to MWA, there is no loan stock in issue and which
remains outstanding, unpaid or unredeemed;
5.2.3 except as required or by this agreement, there are no agreements or
arrangements in force which provide for the present or future issue,
or allotment or transfer of or grant to any person the right
(whether conditional or otherwise) to call for or require the issue,
allotment or transfer of any share or loan capital of MWA (including
any option or right of pre-emption or conversion); and
5.2.4 the information in Schedule 2 relating to MWA Limited is true and
accurate in all respects.
5.3 Mr Rupert Evans warrants and represents to and undertakes with the
Purchaser that:
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5.3.1 the shares beneficially owned by SCL in Spectrum Communications LLC
("SC LLC") together with the shares beneficially owned by Ibrahim
Sharif in SC LLC at Completion constitute the whole of the issued
and allotted share capital of SC LLC;
5.3.2 in relation to SC LLC, there is no loan stock in issue and which
remains outstanding, unpaid or unredeemed;
5.3.3 except as required or by this agreement, there are no agreements or
arrangements in force which provide for the present or future issue,
allotment or transfer of any share or loan capital of SC LLC
(including any option or right of pre-emption or conversion);
5.3.4 the information in Schedule 2 relating to SC LLC is true and
accurate in all respects.
5.4 The Vendors and (by virtue of the Short Form Share Purchase Agreement) the
Minority Shareholders jointly and severally warrant and represent to and
undertake with the Purchaser in the terms of the Warranties.
5.5 Each of the Vendors and (by virtue of the Short Form Share Purchase
Agreement) the Minority Shareholders severally warrants and represents to
and undertakes with the Purchaser that:-
5.5.1 he has and will have full power and authority to enter into and
perform this agreement and (where relevant) the Tax Deed which
constitute or when executed will constitute binding obligations on
him in accordance with their respective terms;
5.5.2 he is entitled to transfer the full legal and beneficial ownership
those of the shares in the Company registered in his name to the
Purchaser on the terms of this agreement without the consent of any
third party; and
5.5.3 there is no pledge, lien, option or other encumbrance on, over or
affecting those of the shares in the company registered in his name
and there is no agreement or arrangement to give or create any such
encumbrance and no claim has been or will be made by any person to
be entitled to any of the foregoing.
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5.6 Each of the Loan Stock Vendors severally warrants and represents to and
undertakes with the Purchaser that he is entitled to transfer the full
legal and beneficial ownership of the Vendor Loan Stock set against his
name in Part III of Schedule 1 to the Purchaser on the terms of this
agreement without the consent of any third party.
5.7 Each of the Vendors and (by virtue of the Short Form Share Purchase
Agreement) the Minority Shareholders undertakes in relation to any Warranty
which refers to the knowledge, information or belief of the Warrantors,
that he has made due and careful enquiry into the subject matter of that
Warranty and has used all reasonable endeavours to ensure that all
information given, referred to or reflected in the relevant warranty or
representation is accurate in all material respects.
5.8 Each of the Warranties is without prejudice to any other Warranty and,
except where expressly stated otherwise, no clause contained in this
agreement shall govern or limit the extent or application of any other
clause.
5.9 Subject to Schedule 6, the rights and remedies of the Purchaser in respect
of any breach of the Warranties shall not be affected by Completion, by any
investigation made by it or on its behalf into the affairs of any Group
Company or failing to exercise or delaying the exercise of any right or
remedy, except a specific and duly authorised written waiver or release,
and no single or partial exercise of any right or remedy shall preclude any
further or other exercise.
5.10 None of the information supplied by any Group Company or its professional
advisers prior to the date of this agreement to any of the Warrantors or
their agents, representatives or advisers in connection with the Warranties
and the contents of the Disclosure Letter, or otherwise in relation to the
business or affairs of any Group Company, shall be deemed a representation,
warranty or guarantee of its accuracy by that Group Company to the
Warrantors, and the Warrantors waive any claims against that Group Company
which they might otherwise have in respect of it.
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5.11 Notwithstanding any rule of law or equity to the contrary, any release,
waiver or compromise or any other arrangement of any kind whatsoever which
the Purchaser may agree to or effect in relation to one of the Warrantors
in connection with this agreement, and in particular the Warranties, shall
not affect the rights and remedies of the Purchaser as regards any other of
the Warrantors.
5.12 None of the provisions of Schedule 6 shall apply in respect of any matter
where the Warrantors concealed such matter from the Purchaser or in the
event of fraud on the part of one or more of the Warrantors.
5.13 Each of the Vendors hereby covenants with the Purchaser that:
5.13.1 he will at all times after Completion comply to the best of his
ability with the terms of his service agreement with the Company or
the Subsidiaries; and
5.13.2 without the consent of the Purchaser in writing he will not waive
any remuneration, commission, bonus or any other payment to which he
may be entitled to whether under the terms of his service agreements
with any Group Company or otherwise; and
5.13.3 he will indemnify the Company in respect of any claims that may be
made against the Company in respect of his income tax or national
insurance contributions relating to the payment to him of the Earn
Out Payments.
5.14 The Purchaser and the Guarantor each severally warrant to the Vendors that
it has and will have full power and authority to enter into the agreement
and the Tax Deed which constitute or when executed will constitute binding
obligations on it in accordance with their respective terms.
6. Shareholders Agreements
6.1 In accordance with the terms of the Shareholders Agreements the Vendors (or
such of them as are parties to such Shareholders Agreements) hereby confirm
the termination with effect from
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Completion of the Shareholders Agreements and further confirm that none of
them have any claim against any other party to the Shareholders Agreements
arising under the terms of the Shareholders Agreements or arising from a
breach of the terms of the Shareholders Agreements or otherwise.
7. Restrictive Agreement
7.1 Subject to clause 7.2 and as further consideration for the agreement of the
purchase herein and as a fundamental term of this agreement each of the
Vendors agrees as a separate and distinct covenant with the Purchaser on
its own behalf and on behalf of the Company (and on behalf of its
subsidiaries) that, during the period commencing on the Completion Date and
expiring at 30th September 2000 he shall not (unless with the prior consent
of the Board of the Company which may be withheld only as is reasonably
necessary to protect the legitimate interests of the Company and its
subsidiaries) carry on or be interested in a Competitive Business in
competition with the Company and/or its subsidiaries in the Prohibited Area
as a director, proprietor, employee, consultant or otherwise.
For the purpose of this clause 7.1:
"Competitive Business" means any business or activity carried on by the
Company or any of its subsidiaries at the relevant date in which the Vendor
shall have been directly concerned to a material extent at any time during
the 12 month period ending on the relevant date; and
"Prohibited Area" means England, Wales, Scotland, Northern Ireland,
Republic of Ireland and the Channel Islands and (in the case of Mr Evans
the Gulf Co-operation States).
7.2 In considering any request for permission by any Vendor under clause 7.1
the Purchaser will and will use all reasonable endeavours to procure that
its directors will as appropriate:-
(a) discuss in full the request at the next available board meeting and convene
a board meeting to discuss the request as soon as is reasonably
practicable;
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(b) have due regard to the amount of further consideration which is then and
from time to time envisaged to become payable to such Vendor upon the
repayment of his Loan Notes;
(c) have due regard to the financial position of the relevant Vendor;
(d) seek where reasonably practicable to give a limited or conditional consent
(upon such limits or conditions as it thinks reasonable) rather than a
refusal;
(e) if its consent is refused or made subject to certain limits or conditions
review its position after a reasonable request by the relevant Vendor where
his or the Group Companies' position has materially changed;
PROVIDED THAT the provisions of this sub-clause shall not apply:;
(a) in the event that the Vendor has ceased to be employed by the Group
Companies in circumstances where he could have been dismissed for breach of
his service contract; or
(b) for so long as the Purchaser pays or procures the payment to the relevant
Vendor of the then most recently prevailing remuneration payable to him
under his service agreement with a Group Company
7.3 Each of the Vendors agrees as a separate and distinct covenant with the
Company (on its own behalf and as trustee for each other Group Company) and
the Purchaser that, during the period of 12 months commencing on the
Completion Date and expiring at 30th September 2000 he shall not:
7.3.1 either on his own account or otherwise directly or indirectly
canvass or solicit or accept business from any Customer Connection;
7.3.2 directly or indirectly induce or seek to induce any Skilled Employee
to leave any Group Company's employment or engagement, whether or
not this would be a breach of
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contract on the part of such person, or offer employment or
engagement to such person or employ or engage such person.
For the purposes of this clause 7.3:
"Customer Connection" means any person, firm, company or other organisation
who:
(a) at any time during the 12 month period ending on the relevant date,
was a client or customer of any Group Company; or
(b) was at the date of such termination, negotiating with any Group
Company with a view to dealing with the Company as a client or
customer or supplier;
Provided that this will only include suppliers where alternative sources of
supply on equivalent terms would not be generally available to the Group
Company or where the interference with any such supplier may reasonably be
anticipated to damage the Group Company and
"Skilled Employee" shall mean any person who was:
(a) employed by a Group Company; or
(b) contracted to render services to a Group Company;
on design, financial, technical, production or managerial work
during the 12 month period expiring on the date of the termination
of such person's employment.
7.4 Each of the Vendors agrees with the Company and the Purchaser that he will
not at any time after Completion or after the termination of his employment
with the Company, whether by himself, his employees or agents or otherwise
howsoever;
7.4.1 engage in any trade or business or be associated with any person,
firm or company engaged in any trade or business using the name
Spectrum or incorporating the word Spectrum or the name Mark Wallace
or MWA (save that Mark Wallace may use the name Mark Wallace or a
colourable imitation thereof in connection with a business not of a
type in which the Group Companies then engage);
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7.4.2 in the course of carrying on any trade or business, claim, represent
or otherwise indicate any present association with any Group Company
or for the purposes of obtaining or retaining any business or custom
claim, represent or otherwise indicate any past association with any
Group Company;
7.4.3 without the consent of the Purchaser use, whether for himself or on
behalf of any third party, or divulge in any third party any
Confidential Information.
7.5 If the Company or any Group Company shall have obtained any Confidential
Information from any third party under an agreement including any
restriction on disclosure, each of the Vendors agrees with the Company and
the Purchaser that he will not at any time without the consent of the
Company infringe such restrictions.
7.6 Each of the Vendors agrees with the Company and the Purchaser that the
restrictive covenants herein contained are reasonable and necessary for the
protection of the value of the Shares and the Company and each of the
Vendors agrees that having regard to that fact those covenants do not work
harshly on him.
7.7 Whilst the restrictions aforesaid are considered by the parties to be
reasonable in all the circumstances, it is agreed that if any such
restrictions taken together shall be adjudged to go beyond what is
reasonable in all the circumstances for the protection of the interest of
the Purchaser but would be adjudged reasonable if part or parts of the
wording thereof were deleted or amended or qualified or the periods thereof
were reduced or the range of products or areas dealt with thereby reduced
in scope, then the relevant restriction or restrictions shall apply with
such modification or modifications as may be necessary to make it or them
valid and effective.
8. Vendors' Protection
8.1 The Vendors and the Purchaser agree that the provisions of Schedule 6 shall
apply.
9. General
9.1 No announcement of any kind shall be made in respect of the subject matter
of this agreement unless specifically agreed between the Purchaser and the
Vendor Committee or required by law or an announcement is required by the
NYSE (in which case the Purchaser and the Vendor Committee shall consult in
good faith with each other on the form of such announcement).
9.2 If any of the Shares shall at any time be sold or transferred, the benefit
of each of the Warranties or any Claim or any other claim against each of
the Vendors or the Warrantors may
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be assigned to the purchaser or transferee of those shares who shall
accordingly be entitled to enforce each of the Warranties (subject to
Schedule 6) or such claims against each of the Vendors or the Warrantors as
if he were named in this agreement as the Purchaser.
9.3 This agreement shall be binding upon each party's successors and assigns
and personal representatives (as the case may be) but, except as expressly
provided above, none of the rights of the parties under this agreement or
the Warranties may be assigned or transferred.
9.4 Subject to clause 3.7 all expenses incurred by or on behalf of the parties,
including all fees of agents, representatives, solicitors, accountants and
actuaries employed by any of them in connection with the negotiation,
preparation or execution of this agreement shall be borne solely by the
party who incurred the liability and no Group Company shall have any
liability in respect of them.
9.5 All notices which are required to be given hereunder shall be in writing
and shall be sent to the address of the recipient set out in this agreement
or such other address as the recipient may designate by notice given to
each of the other parties in accordance with the provisions of this
sub-clause. Any such notice may be delivered personally or by first class
prepaid letter, or facsimile transmission and shall be deemed to have been
served if by personal delivery when delivered, if by first class post two
working days following the date of posting and if by facsimile transmission
on the working day immediately following the date of despatch.
9.6 This agreement and the agreements referred to in it or entered into in
writing and witnessed by the Purchaser's Solicitors or the Company's
Solicitors constitute the entire agreement between the parties hereto with
respect to the matters dealt with therein and supersedes any previous
agreement between the parties hereto in relation to such matters. Each of
the parties hereto hereby acknowledges that in entering into this agreement
he or it has not relied on any representation or warranty save as expressly
set out herein or in any document referred to herein. No variation of this
agreement shall be valid or effective unless made by one or more
instruments in writing signed by such of the parties hereto which would be
affected by such variation.
36
<PAGE>
9.7 The Vendors shall from time to time and at all times after Completion (at
the reasonable cost of the Purchaser) execute all such deeds and documents
and do all such things as the Purchaser may reasonably require for
perfecting the transactions intended to be effected under or pursuant to
this agreement and for vesting in the Purchaser the full benefit of the
Shares and the Vendor Loan Stock.
9.8 Each of the Purchaser and the Guarantor shall (and shall procure that
insofar as it is able the Company shall) from time to time and at all times
after Completion (at the reasonable cost of the Vendors) execute all deeds
and documents and do all such things (not otherwise required by this
agreement) as the Vendor Committee may reasonably require for perfecting:-
9.8.1 the execution by the Purchaser and the Guarantor of this agreement
or any of the other documents executed or to be executed by them at
Completion; and
9.8.2 the release of the guarantees to be released pursuant to clause
4.10.
9.9 Notwithstanding any other provision of this agreement no provision hereof
which is of such a nature as to make this agreement liable to registration
under the Restrictive Trade Practices Act 1976 shall take effect until the
date after that on which particulars thereof have been duly furnished to
the Director General of Fair Trading pursuant to the said Act.
9.10 Subject to clause 9.9, all provisions of this agreement shall so far as
they are capable of being performed or observed continue in full force and
effect notwithstanding Completion except in respect of those matters then
remaining to be performed.
9.11 The constitution, validity and performance of this agreement shall be
governed by the laws of England and the parties hereby irrevocably agree
that they will submit to the non-exclusive jurisdiction of the English
Courts.
9.12 Each of the Vendors who has not from time to time an address in England and
Wales for service of proceedings as listed in Schedule hereby irrevocably
authorises and appoints any
37
<PAGE>
member of the Vendor Committee to accept service of all legal process
arising out of or connected with this agreement and service on any
such member shall be deemed to be service on the party concerned.
9.13 Each of the Loan Stock Vendors hereby:
9.13.1 waives any claim he may have against the Company and/or its officers
and employees in respect of any failure by the Company to repay the
whole or any part of any Vendor Loan Stock or make any payment of
interest due prior to the due date; and
9.13.2 acknowledges that, save for the Vendor Loan Stock indicated against
his name in Part II of Schedule 1, he had no claim or entitlement
whatsoever against any Group Company in respect of any Vendor Loan
Stock or indebtedness (howsoever arising) other than claims for
expenses arising in the ordinary course (not exceeding (pound) 3,000
in the case of any one individual).
9.14 Each Loan Stock Vendor undertakes to the Purchaser and the Vendors to
procure, on request, a waiver and acknowledgement in similar form from the
Additional Stock Vendors and any other person to whom he has transferred or
from whom he has received any Vendor Loan Stock or Additional Stock as the
case may be.
9.15 For the purposes of this agreement and all other Deeds and agreements
contemplated hereby, the knowledge of those of the Vendors who become
directors of the Purchaser, shall not be imputed to the Purchaser, or the
Guarantor. Furthermore the rights of the Purchaser or Guarantor shall not
be adversely affected by any actions or omissions in his capacity as
director of the Purchaser or Guarantor by any Vendor who becomes a director
of the Purchaser or Guarantor.
10. Appointment of Attorney
10.1 Each of the Vendors hereby irrevocably appoints the Purchaser as his lawful
attorney for the purpose of receiving notices of and attending and voting
at all meetings of the members of the
38
<PAGE>
Company from the date of this Agreement to the date on which the Purchaser
or its nominees is entered in the Register of Members of the Company as the
holder of the Shares.
10.2 For such purpose each of the Vendors hereby irrevocably authorises:
10.2.1 the Company to send any notice in respect of his holding of Shares
of the Company to the Purchaser; and
10.2.2 the Purchaser to complete in such manner as it thinks fit and to
return Proxy Cards, Consents to Short Notice and any other document
required to be signed by him in his capacity as a member.
AS WITNESS the hands of the parties the day and year first before written
39
<PAGE>
SCHEDULE 1
Part 1
Vendors' Holdings
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Vendor's Name and Address Number of Shares Consideration Loan Note Relevant
(pound) (Number) Percentage
%
<S> <C> <C> <C> <C>
Peter Berners-Price 865,545 154,548 865,545 23.68
Whitegates
Commonwood
Nr Kings Langley
Herts
WD4 9BB
Mark Wallace 548,250 97,893 548,250 15.00
Woodmans Cottage
Fingest Road
Nr Henly on Thames
Oxon RG9 6PU
Anthony Crawford 328,950 58,736 328,950 9.00
The End House
Parsons Wood
Parsonage Lane
Farnham Common
Bucks
SL2 3NZ
Bernard Bussy 219,300 39,157 219,300 6.00
Woodlands House
Whittle Close
Forest End Road
Sandhurst
Surrey
GU17 8JT
Timothy Elliott 214,800 38,354 214,800 5.88
66 Cumberland Road
Hanwell
London W7 2EB
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Laurence Croneen 214,800 38,354 214,800 5.88
5 Broomhouse Road
London
SW6 5QS
Richard Collison 178,250 31,828 178,250 4.88
19 Queens Court
Queens Road
Richmond
Surrey TW10 9LA
Rupert Evans 204,800 36,568 204,800 5.60
c/o Spectrum
Communications LLC
P.O. Box 14208
Bin Khedia Centre 3rd Floor
Al Garhoud Bridge Road
Dubai UAE
Arif Hamid 145,200 25,926 145,200 3.97
Flat 1
12 Larkfield Road
Richmond
Surrey TW9 2PF
Jeremy Garbett 178,250 31,828 178,250 4.88
33 St Peter's Grove
London
W6 NAY
Christine Chapman 108,650 19,400 108,650 2.97
18 Priory Avenue ------- ------- ----
Chiswick
London
W4 1TY
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name and Address Number of Shares Consideration Loan Note Relevant
in capital of Company (pound) Percentage
%
<S> <C> <C> <C> <C>
Clifford Zenker 14,579 2,603 14,579 0.40
Tile Cottage, The Square
Greatworth, Banbury
Oxon
OX17 1SP
Edward Marron 4,052 724 4,052 0.11
5 Braybrook Street
London
W12 OAB
Carol Lamb 10,544 1,883 10,544 0.29
206 Westcott Crescent
Hanwell
London
W7 1NU
Tina Straughan 14,023 2,504 14,023 0.38
c/o Spectrum
Communications LLC
P.O. Box 14208
Bin Khedia Centre, 3rd Floor
Al Garhoud Bridge Road
Dubai UAE
Ashley Redsell 14,542 2,597 14,542 0.40
Barton House
Wappenham Road
Syresham
Northants
NN13 5HQ
Micou Crawford 5,779 1,032 5,779 0.15
The Cottage, Sunnyside Farm
Wall Hill Road
Corley Moor
Coventry
CV7 8AH
Barbara Bright 3,500 625 3,500 0.10
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
103 Avondale Road
Mortlake
London
SW14 8PU
Taryn Fulton-Hart 2,000 357 2,000 0.05
1 Munster Mews
323a Lillie Road
London
SW6 7LL
Lucy Zeal 2,700 482 2,700 0.07
11 Neville Street
London
SW7 3AR
Trustees of Christopher
Harper Memorial Trust 2,544 454 2,544 0.07
16-18 Acton Park Estate
Stanley Gardens
The Vale
London W3 7QE
Paul Swan 73,100 13,052 73,100 2.00
Woodlands
Hollybush Hill
Stoke Poges
Slough
Berkshire SL2 4QN
Nicholas Matthews 71,272 12,726 71,272 1.95
Coombe Hill Court
Shacombe
Banbury
Oxfordshire OX17 2AN
Alison Lloyd-Adams 35,500 6,339 35,500 0.97
8 Priest Park Avenue
Harrow
London
HA2 ORB
Siobhan Maloney 34,000 6,071 34,000 0.93
87 Evergreen Way
Hayes
Middlesex
UB3 2BH
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Simon Ludgate 25,000 4,464 25,000 0.68
12 Willow Lodge
River Gardens
70 Stevenage Road
London SW6 6NW
Roland Moss 35,550 6,339 35,550 0.97
Flat 3, 202 Warpole Road
Wimbledon
London
SW20 8PN
David Zolkwer 60,000 10,713 60,000 1.64
72 All Saints Avenue
Maidenhead
Berkshire
SL6 6LZ
Claire Drewer 25,000 4,464 25,000 0.68
Flat 1
60 Salford Road
London SW2 4BG
Chantal Croneen 2,500 4.46 2,500 0.07
5 Broomhouse Road
London SW6 5QS
Mark Fogwill 9,070 1,619 9,070 0.25
Cobwebs
Hardwick Road
Witchchurch on Thames
Oxfordshire
RG8 7HL
Jennifer Zolkwer 3,000 536 3,000 0.08
72 All Saints Avenue
Maidenhead
Berkshire
SL6 6LZ
------ ------ ----
</TABLE>
44
<PAGE>
Part III
Loan Stock Vendors
1 2 3
Name and Address Nominal Amount Consideration
of Loan Stock (pound)
(pound)
Loan A Loan B Loan A Loan B
Peter Berners-Price 31,289 - 16,817
Whitegates
Commonwood
Nr Kings Langley
HertsWD4 9BB
Bernard Bussy 19,355 39,742 9,731 19,982
Woodlands House
Whittle Close
Forest End Road
Sandhurst
Surrey GU17 8JT
Anthony Crawford 19,355 17,692 12,292 11,236
The End House
Parsons Wood
Parsonage Lane
Farnham Common
Bucks SL2 3NZ
45
<PAGE>
PART IV
Additional Stock
Name and Address of Holder Nominal amount of Stock Consideration
(pound) (pound)
Loan A Loan B Loan A Loan B
Ann Beverley Bussy 32,000 32,000
Woodlands House
Whittle Close
Forest End Road
Sandhurst
Surrey GU17 8JT
Marilyn Crawford 54,050 38,186
The End House
Parsons Wood
Parsonage Lane
Farnham Common
Bucks
SL2 3NZ
Lee-Anne Pentony-Woolwich 27,214 20,251
"Lancresse"
11 Kinsley Avenue
Camberley
Surrey GU16 2NA
Martin Pentony-Woolwich 27,214 20,253
"Lancresse"
11 Kinsley Avenue
Camberley
Surrey GU16 2NA
Ronald Calcott 21,212 21,212
Boundary Elms
Burchetts Green Lane
Maidenhead
Berkshire SL6 3QP
Maxine Calcott 25,714 23,788
Boundary Elms
Burchetts Green Lane
Maidenhead
Berkshire SL6 3QP
46
<PAGE>
Paul Swan
Woodlands
Hollybush Hill
Stoke Poges
Slough
Berkshire SL2 4QN 33,871 18,529
Peter Berners-Price and Paul Swan 77,062 52,820
(Trustees of Peter Berners-Price Trust)
c/o: Whitegates
Commonwood
Nr Kings Langley
Herts WD4 9BB
Paul Swan and Peter Berners-Price 16,729 7680.1
(Trustees of Paul Swan Trust)
c/o: Woodlands
Hollybush Hill
Stoke Poges
Slough
Berkshire SL2 4QN
47
<PAGE>
SCHEDULE 2
Details of Group Companies
Part l: The Company
Company Number: 2467201
Date of Incorporation: 5 February 1990
Share Capital:
Authorised: 5,000,000 Ordinary Shares of 10p each
Issued: 3,655,000
Registered Office: 16-18 Acton Park Estate, Stanley Gardens,
The Vale, London, W3 7QE
Directors: Peter Devonald Berners-Price
Bernard Bussy
Anthony Crawford
Secretary: Peter Devonald Berners-Price
VAT Registration Number: 532 3884 42
48
<PAGE>
Part 2: Details of the Subsidiaries
<TABLE>
<CAPTION>
==============================================================================================================================
Name of Registered Share Capital % Shares Registered Directors
Subsidiary Number Auth'd/issued owned by Office
the Company
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mark Wallace 2688211 (pound)100,000/ 100 32 Berrymede Road Bernard Bussy
Associates (pound)100 Chiswick Mark Wallace
Limited London W4 5JD
- ------------------------------------------------------------------------------------------------------------------------------
Spectrum 1262135 (pound)102,700/ 100 16-18 Acton Park Estate Anthony Crawford
Communications (pound)102,700 Stanley Gardens Laurence Croneen
Limited ("SCL") The Vale Timothy Elliott
London W3 7QE Rupert Evans
Jeremy Garbett
- ------------------------------------------------------------------------------------------------------------------------------
Spectrum * 1479133 (pound)120/ 0.83 directly Harcourt House Bernard Bussy
Communications (pound)120 and 99.17 19 Cavendish Square Rupert Evans
(Birmingham) through SCL London
Limited W1A 2AW
- ------------------------------------------------------------------------------------------------------------------------------
Spectrum ** 140284 (pound)1,000/ 0 Craigmuir Chambers Peter Berners-Price
Communications (pound)10 Road Town
International Tortola
BVL Ltd British Virgin Islands
- ------------------------------------------------------------------------------------------------------------------------------
Spectrum * HRB 649-Na DM 200,000 100 Nagold Peter Berners-Price
Communications
GmbH
- ------------------------------------------------------------------------------------------------------------------------------
Spectrum CR 43021 Dh300,000/ 49 through P.O. Box 14208 Ibrahim Sharif
Communications LLC TL 235400 Dh300,000 SCL Bin Khedia Centre Peter Berners-Price
Garhond Bridge Road Rupert Evans
Dubai UAE
- ------------------------------------------------------------------------------------------------------------------------------
Pender Kenning 1321542 (pound)100/ 100 through Harcourt House Peter Berners-Price
& Holt Limited * (pound)100 SCL 19 Cavendish Square Bernard Bussy
London W1A 2AW
- ------------------------------------------------------------------------------------------------------------------------------
Friction Design 1270259 (pound)100/ 100 through Harcourt House Peter Berners-Price
Limited * (pound)100 SCL 19 Cavendish Square Bernard Bussy
London W1A 2AW
- ------------------------------------------------------------------------------------------------------------------------------
Graphic View 1438338 (pound)100/ 100 through Harcourt House Peter Berners-Price
Limited * (pound)100 SCL 19 Cavendish Square
London W1A 2AW
==============================================================================================================================
</TABLE>
* Dormant.
** Not currently a subsidiary as no shares in issue.
49
<PAGE>
SCHEDULE 3
Warranties
1. ACCOUNTS
1.1 The Principal Accounts
1.1.1 The Principal Accounts were prepared in accordance with the historical
cost convention; and (save as stated to the contrary in these accounts)
the bases and policies of accounting adopted for the purpose of
preparing the Principal Accounts are the same as those adopted in
preparing the audited accounts of each Group Company in respect of the
three last preceding accounting periods.
1.1.2 The Principal Accounts:
(a) give a true and fair view of the assets and liabilities of
each Group Company at the Last Accounts Date and its profits
or losses for the financial period ended on that date;
(b) comply with the requirements of the Companies Acts and other
relevant statutes;
(c) comply with all the statements of standard accounting practice
and FRS's which were at the relevant time applicable to a
United Kingdom company;
(d) are not affected by any extraordinary, exceptional or
non-recurring item (except as therein disclosed);
50
<PAGE>
(e) properly reflect the financial position of each Group Company
as at their date;
(f) disclose the assets of each Group Company as at the Last
Accounts Date to the extent required by the Companies Acts and
relevant statements of standard accounting practice and FRS's;
(g) to the extent required by the Companies Acts and the relevant
statements of standard accounting practice and FRS's make full
provision for or disclose or reserve for all known liabilities
and capital commitments of each Group Company outstanding at
the Last Accounts Date, including contingent, unquantified or
disputed liabilities.
1.1.3 No amount included in the Principal Accounts in respect of any asset,
whether fixed or current, exceeds its purchase price or production cost
(within the meaning of CA Schedule 4) or (in the case of current
assets) its estimated net realisable value on the Last Accounts Date.
1.2 Valuation of Work in Progress
1.2.1 In the Principal Accounts and in the accounts of each Group Company for
the three preceding financial years and the Warranted Accounts the work
in progress of each Group Company has been stated at the lower of cost
and net realisable value including all production related overheads and
the appropriate proportion of indirect overhead expenditure.
1.3 Depreciation of Fixed Assets
1.3.1 In the Principal Accounts and in the accounts of each Group Company for
the three preceding financial years, and the Warranted Accounts the
fixed assets of each Group Company have been depreciated in accordance
with relevant statements standard accounting practice and FRS's.
51
<PAGE>
1.4 Deferred Taxation
1.4.1 The Principal Accounts and the Warranted Accounts make provision for
deferred taxation in accordance with UK GAAP.
1.5 Accounting Reference Date
1.5.1 The accounting reference date of each Group Company for the purposes of
CA s 224 is 30 June and there has not at any time been any other such
date.
1.6 Book Debts
1.6.1 The aggregate amounts included in the Warranted Accounts, or
subsequently recorded in the books of any Group Company, as owing by
trade debtors net of any specific or general provision for bad or
doubtful debts has not proved to any extent to be irrecoverable and is
not now regarded by the relevant Group Company as irrecoverable in
whole or in part.
1.6.2 The Warrantors are not aware of any reason why the amounts due from
debtors as at Completion (less the amount of any relevant provision or
reserve, determined on the same basis as that applied in the Warranted
Accounts and disclosed in the Disclosure Letter) will not be
recoverable in full in the ordinary course of business after
Completion; and so far as the Warrantors are aware none of those debts
is subject to any counter-claim or set off except to the extent of any
such provision or reserve.
1.7 Books and Records
1.7.1 All the accounts, books, ledgers and financial records, of each Group
Company kept or made during the three years prior to the date of this
agreement:
(a) are in its possession or control; and
(b) have been fully properly and accurately kept and completed;
52
<PAGE>
(c) taken together provide the officers of the Company with
sufficient information to enable them to form a true and fair
view of its trading transactions, and its financial,
contractual and trading position.
1.8 The Warranted Accounts
1.8.1 The Warranted Accounts:-
(a) have been prepared on a basis consistent with the
Principal Accounts and give a fair representation of
the assets and capital commitments and to the extent
required by the Companies Acts make provision for all
known liabilities (including, contingent unquantified
or disputed liabilities) of each Group Company at the
Warranted Accounts Date;
(b) comply with all statements of standard accounting
practice and FRS's applicable at the date upon which
the Principal accounts were signed by the directors,
to a United Kingdom company;
(c) are not affected by any extraordinary, exceptional or
non-recurring item (except as disclosed therein);
(d) fully disclose prepayments from customers and clients
of all Group Companies.
1.9 The Disclosure Letter sets out a comprehensive list of all professional
costs (and related disbursements) to which any Group Company is
committed.
1.10.1 Europe On Line will pay to SCL the full amount of any debt
currently owing to SCL or any other Group Company by 30th
September 1996.
53
<PAGE>
1.10.2 no monies will be paid to General Motors in respect of any sum
or amounts which may be claimed by General Motors, their
agents or professional advisors in respect of invoices raised
by any of the Group Companies arising from the audit referred
to in the Disclosure Letter.
2. CORPORATE MATTERS
2.1 Directors and Shadow Directors
2.1.1 The only directors of the Group Companies are the persons
whose names are listed in relation to each Group Company in
Schedule 2.
2.1.2 No person is a shadow director (within the meaning of CA s
741) of a Group Company but is not treated as one of its
directors for all the purposes of that Act.
2.2 Subsidiaries, Associations and Branches
2.2.1 No Group Company:
(a) is the holder or beneficial owner of or has agreed to acquire
any share or loan capital of any company (whether incorporated
in the United Kingdom or elsewhere) other than the
Subsidiaries listed in Schedule 2;
(b) has outside the United Kingdom any branch, agency or place of
business, or any permanent establishment (as that expression
is defined in the relevant double taxation relief order
current at the date of this agreement).
2.2.2 The Company has no liability to make payment or guarantee or
provide security for or has any other obligation to the
Subsidiaries.
54
<PAGE>
2.3 Options Over Group Companies' Capital
2.3.1 Except as required by this agreement, there are no agreements
or arrangements in force which provide for the present or
future issue, allotment or transfer of or grant to any person
the right (whether conditional or otherwise) to call for or
require the issue, allotment or transfer of any share or loan
capital of any Group Company (including any option or right of
pre-emption or conversion).
2.3.2 There are no outstanding agreements or arrangements or
liabilities or obligations relating to the purchase by any
Group Company from any third party of any share or loan
capital of any Group Company.
2.4 New Issues of Capital
2.4.1 No share or loan capital has been issued or allotted, or
agreed to be issued or allotted, by any Group Company since
the Warranted Accounts Date.
2.5 Commissions
2.5.1 No-one is entitled to receive from any Group Company any
finder's fee, brokerage or other commission in connection with
the sale and purchase of the Shares under this agreement.
2.6 Memoranda and Articles of Association, Statutory Books and Resolutions
2.6.1 A copy of the Memorandum and Articles of Association of each
Group Company and all resolutions as are referred to in CA s
380 passed by each Group Company are contained in the
statutory books of the relevant Group Company.
55
<PAGE>
2.6.2 The register of members and other statutory books of each
Group Company have been properly kept and contain an accurate
and complete record of the matters with which they should
deal.
2.6.3 No notice or allegation that any of the foregoing is incorrect
or should be rectified has been received.
2.6.4 Since the Warranted Accounts Date no alteration has been made
to the Memorandum or Articles of Association of any Group
Company and no resolution of any kind of the shareholders of
any Group Company has been passed (other than resolutions
relating to business at Annual General Meetings which was not
special business).
2.7 Documents filed
2.7.1 All returns, particulars, resolutions and documents required
by the Companies Acts or any other legislation to be filed
with the Registrar of Companies, in respect of each Group
Company have been duly filed and were correct; and due
compliance has been made with all the provisions of the
Companies Acts (or the relevant laws of the jurisdiction in
which the Group Companies are incorporated) and other legal
requirements in connection with the formation of each Group
Company, the allotment or issue of shares, debentures and
other securities, the payment of dividends and the conduct of
its business.
2.7.2 All charges in favour of any Group Company have (if
appropriate) been registered in accordance with the provisions
of CA ss 395, 409, 410 and 424.
2.8 Possession of Documents
56
<PAGE>
2.8.1 All title deeds relating to the assets of each Group Company,
and an executed copy of all subsisting written agreements to
which any Group Company is a party, which are owned by or
which ought to be in the possession of any Group Company are
in its possession or under its control.
2.9 Investigations
2.9.1 So far as the Warrantors are aware there are not in existence,
any investigations or enquiries by, or on behalf of, any
governmental or other body in respect of the affairs of any
Group Company and none are pending.
2.10 Information Disclosed to Purchaser Correct
2.10.1 Without prejudice to clauses 2.10.2 and 2.10.3 below, save in
respect of projections or forecasts or as otherwise
specifically stated therein as being given at a specified
date, the information attached to the Disclosure Letter was,
when given, and is now accurate in all respects.
2.10.2 The budgets for the period ending 30th June 1997 have been
prepared on a prudent basis and any projections or forecasts
set out in the budgets are based on opinions reasonably and
honestly held.
2.10.3 Any statements of opinion set out in the Disclosure Letter are
reasonably and honestly held.
3. TAXATION
3.1 Administration
57
<PAGE>
3.1.1 All returns, computations and payments which should be or
should have been made by any Group Company for any Taxation
purpose have been made within the requisite periods and are up
to date, correct and on a proper basis and none of them is or,
so far as the Warrantors are aware, is likely to be the
subject of any dispute with the Inland Revenue or other
Taxation authorities.
3.1.2 All particulars furnished to the Inland Revenue or other
Taxation authorities, in connection with the application for
any consent or clearance on behalf of any Group Company, or
affecting any Group Company, made since the Last Accounts
Date, fully and accurately disclosed all facts and
circumstances material for the decision of those authorities;
any consent or clearance is valid and effective; and any
transaction, for which consent or clearance has previously
been obtained, has been carried into effect (if at all) only
in accordance with the terms of the relative application and
consent or clearance.
3.1.3 No Group Company has, since the Last Accounts Date, taken any
action which has had, or will have, the result of altering,
prejudicing or in any way disturbing any arrangement or
agreement which it has previously negotiated with the
Commissioners of Inland Revenue, the Commissioners of Customs
and Excise or other Taxation authorities.
3.1.4 No Group Company has, since the Last Accounts Date, paid or
become liable to pay any penalty or interest charged by virtue
of the provisions of TMA or any other Taxation statute.
3.1.5 Each Group Company has complied in all respects with the
provisions of the following sections, and all regulations made
under them, and has made and accounted for all deductions and
retentions which they specify or require:
58
<PAGE>
(a) ICTA s 43 (Non-residents);
(b) ICTA s 349 (Payments not out of profits or gains
brought into charge to income tax and annual
interest);
(c) ICTA Part XIII Chapter III (Entertainers and
Sportsmen);
3.1.6 No Group Company has received a notice under ICTA s 23
(Collection from lessees and agents) which remains
outstanding.
3.1.7 PAYE had been deducted as required by the PAYE Regulations and
has been accounted for to the Inland Revenue, in particular,
in respect of:
(a) tax free payments;
(b) ex-gratia payments and compensation for loss of
office;
(c) benefits in kind - form P11D have been properly
completed and submitted;
(d) benefits in kind - credit tokens, cash and other
vouchers;
(e) benefits in kind - relocation allowances and
reimbursements; and
(f) all special arrangements with the Inland Revenue have
been operated correctly.
3.1.8 National Insurance contributions have been deducted and have
been remitted, together with the appropriate employers
contributions, to the Inland Revenue as required by the Social
Security Acts and Regulations.
3.2 Taxation Claims, Liabilities and reliefs
3.2.1 There are set out in the Disclosure Letter with express
reference to this clause full details of all matters relating
to Taxation in respect of which any Group Company (either
alone or jointly with any other person) has, or at Completion
will have, an outstanding entitlement:-
(a) to make any claim (including a supplementary claim)
for relief under ICTA 1970, ICTA or any other
Taxation statute;
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(b) to make any election for one type of relief, or one
basis system or method of Taxation, as opposed to
another;
(c) to make any appeal (including a further appeal)
against an assessment to Taxation;
(d) to make any application for the postponement of
Taxation;
(e) to disclaim or require the postponement or reduction
of any allowance;
3.2.2 No Group Company has made a claim under TCGA s 24 (Assets lost
or destroyed, or whose value becomes negligible) or s 280
(Consideration payable by instalments) or under TCGA Schedule
4 (deferred charges on gains).
3.2.3 No Group Company is or will become liable to pay, or make
reimbursement or indemnity in respect of, any Taxation (or any
amount corresponding to Taxation) in consequence of the
failure by any other person (not being a Group Company) to
discharge that Taxation or amount within any specified period
or otherwise, where the Taxation or amount relates to a
profit, income or gain, transaction, event, omission or
circumstance arising, occurring or deemed to arise or occur
(whether wholly or partly) prior to Completion.
3.3 Distributions and Deductibility of Payments
3.3.1 Save as is set out in the Disclosure Letter no Group Company
has repaid, or agreed to repay or redeemed or agreed to redeem
its share or loan capital or capitalised or agreed to
capitalise in the form of redeemable shares or debentures any
profits or reserves of any class or description.
3.3.2 No security (within the meaning of ICTA s 254(1)
(Distributions: supplemental) issued by any Group Company and
outstanding at the date
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of this agreement was issued in such circumstances that the
interest payable on it, or any other payment in respect of it,
falls to be treated as a distribution under ICTA s 209
(Matters to be treated as distributions).
3.3.3 No rents, interest, annual payments or other sums of an income
nature paid or payable since the Last Accounts Date by any
Group Company or which any Group Company is under an
obligation to pay in the future are or may be wholly or
partially disallowable as deductions in computing profits or
as charges against profits, for the purposes of corporation
tax, by reason of the provisions of ICTA s 74 (general rules
as to deductions not allowable) ICTA s 125 (annual payments
for non-taxable consideration) ICTA s 338 (Allowance of
charges on income and capital), ICTA s 770 (Sales, etc. at
undervalue or overvalue), ICTA ss 779 - 785 (Leased assets),
ICTA 787 (Restriction of relief for payments of interest) or
otherwise.
3.3.4 No Group Company has received a capital distribution to which
the provisions of TCGA s 189 (Corporation Tax attributable to
chargeable gains: recovery from shareholder) could apply.
3.3.5 No Group Company has, since the Last Accounts Date, incurred
expenditure which will not be wholly deductible in computing
or against profits as a trading expense or expense of
management, or as a charge on income, or in computing income
for the purposes of Schedule A, except for expenditure on the
acquisition of an asset to be held otherwise than as
stock-in-trade, details of which are set out in the Disclosure
Letter.
3.4 Carry Forward of Losses and ACT
3.4.1 Nothing has been done, and no event or series of events has
occurred, which might cause in relation to any Group Company
the disallowance of the carry forward of losses, excess
charges or advance corporation
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tax under the provisions of ICTA s 393 (Losses other than
terminal losses), ICTA s 768 (Change in ownership of company:
disallowance of trading losses) s 768A (Change in ownership:
disallowance of carry back of trading losses) or ICTA s 245
(Change in ownership of company: calculation and treatment of
ACT).
3.5 Close Companies
3.5.1 No distribution within ICTA s 418 (Payments etc to
participators and associates) has been made by any Group
Company.
3.5.2 No loan within ICTA s 419 has been made by any Group Company.
3.6 Group Relief and Surrender of Surplus ACT
3.6.1 The Group Companies comprise a group for the purposes of ICTA
Part X Chapter IV (Group relief), and there is nothing in ICTA
s 410 (Group relief: effect of arrangements for transfer of
company to another group, etc) which precludes any Group
Company from being regarded as a member of such group.
3.6.2 No Group Company has since the Last Accounts Date made or
agreed to make, otherwise than to or from another Group
Company:
(a) a surrender of, or claim for, group relief pursuant to ICTA
Part X Chapter IV (Group relief);
(b) a surrender of any amount of surplus advance corporation tax
pursuant to ICTA s 240 (Setting off of company's surplus ACT
against subsidiary's liability);
3.6.3 No Group Company is liable to make or entitled to receive a
payment for group relief or for the surrender of advance
corporation tax, otherwise than to or from another Group
Company.
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3.6.4 No Group Company has made or received a payment for group
relief or for the surrender of advance corporation tax
(otherwise than to or from another Group Company), which may
be liable to be refunded in whole or in part.
3.6.5 All claims for group relief made by each Group Company were
valid and have been allowed by way of relief from corporation
tax.
3.6.6 Where any Group Company became a Group Company after the Last
Accounts Date, the provisions of ICTA s 409 (Group relief:
apportionment) will not apply so as to permit the
apportionment of profits and losses to be made otherwise than
on a time basis according to the respective lengths of the
component accounting periods.
3.6.7 No Group Company has at any time since 1st April, 1987 been a
dual resident investment company within the meaning of ICTA s
404 (Limitation of group relief in relation to certain dual
resident companies).
3.7 Capital Allowances
3.7.1 All expenditure which any Group Company has incurred on the
provision of machinery or plant has qualified (if not
deductible as a trading expense of a trade carried on by the
relevant Group Company) for writing down allowances under CAA
Section 24 (Writing down allowances and balancing
adjustments).
3.7.2 All capital allowances made or to be made to each Group
Company in respect of capital expenditure incurred prior to
the date of this agreement or to be incurred under any
subsisting commitment have been made or will be made in taxing
its trade.
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3.7.3 Since the Last Accounts Date no Group Company has done, nor
omitted to do, nor agreed to do, nor permitted to be done, any
act as a result of which any disposal value may be brought
into account under CAA s 24 (Writing-down allowances and
balancing adjustments) or there may be any recovery of excess
relief within CAA s 46 (Recovery of excess relief: new
expenditure).
3.7.4 No capital expenditure incurred or to be incurred by any Group
Company has been or will be deemed, under the provisions of
CAA s 159 (Capital Expenditure capital sums and time when
capital expenditure is incurred), to have been or be incurred
on a date other than that upon which the obligation to pay the
expenditure became or becomes unconditional.
3.7.5 No election has been made by any Group Company under CAA s 53
(Expenditure incurred by equipment lessor) or s 55
(Expenditure incurred by incoming lessee: transfer of
allowances) in relation to any fixtures.
3.8 Transactions not at Arm's Length
3.8.1 No Group Company has carried out or been engaged in, any
transaction or arrangement to which the provisions of ICTA ss
770 and 773 (Sale, etc. at undervalue or overvalue) have been
or may be applied.
3.8.2 No Group Company owns or has agreed to acquire any asset, or
has received or agreed to receive any services or facilities
(including without limitation the benefit of any licences or
agreements), the consideration for the acquisition or
provision of which was or will be in excess of its market
value or determined otherwise than on an arm's length basis.
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3.8.3 No Group Company has disposed of or acquired any asset in such
circumstances that the provisions of TCGA s 17 (Disposals and
acquisitions treated as made at market value) could apply.
3.9 Base Values and Acquisition Costs
3.9.1 No Group Company has elected that disposals made by it shall
fall outside sub section (3) of TCGA s 35 (Assets held on 31st
March 1982).
3.9.2 No Group Company has elected that disposals made by it shall
fall outside sub section (3) of TCGA s 35 (Assets held on 31st
March 1982).
3.9.3 No Group Company has, since the Last Accounts Date engaged in
any transaction in respect of which there may be substituted
for any purpose of Taxation a different consideration for the
actual consideration given or received by it.
3.10 Tax Avoidance
3.10.1 No Group Company has since the Last Accounts Date engaged in
or been a party to any scheme or arrangement of which the main
purpose, or one of the main purposes, was the avoidance of
liability to Taxation; and, in particular but without
limitation, no Group Company has been a party to or otherwise
involved in any transaction to which any of the following
provisions could apply:
(a) ICTA ss 729 to 737 (inclusive) (Tax avoidance: other
provisions about securities);
(b) ICTA s 774 (Transactions between dealing company and
associated company);
(c) ICTA s 779 (Land sold and leased back: limitation of
tax reliefs);
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(d) ICTA ss 781 and 785 (Assets leased to traders and
others);
(e) ICTA s 786 (Transactions associated with loans or
credit);
(f) ICTA s 240(11) (Setting of company's surplus advance
corporation tax against subsidiary's liability);
(g) ICTA s 410 (Group relief: effect of arrangements for
transfer of company to another group etc); s 395
(Leasing contracts: effect on claims for losses of
company reconstructions); and s 116 (Partnerships
involving companies: effect of arrangements for
transferring relief);
(h) TCGA s 106 (Disposal of shares and securities within
prescribed period of acquisition);
(i) TCGA s 29 (Value shifting).
3.10.2 No Group Company has since the Last Accounts Date been a party
to any transaction to which any of the following provisions
has been or could be applied other than transactions in
respect of which all necessary consents or clearances have
been obtained:
(a) TCGA s 139(5) (Company reconstruction or
amalgamation: transfer of assets);
(b) ICTA ss 703 to 709 (Cancellation of tax advantages
from certain transactions in securities);
(c) ICTA ss 765 to 767 (Migration, etc. of companies);
(d) ICTA s 776 (Artificial transactions in land);
(e) TCGA ss 135, 136, 137 and 138 (Company
reconstructions and amalgamations).
3.11 Deprecatory Transactions
3.11.1 No allowable loss, which may accrue on the disposal by any
Group Company of any asset, is likely to be reduced by reason
of the provisions of TCGA s 176 (Transactions in a group) or
TCGA s 177
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(Dividend stripping) and no chargeable gain or allowable loss
arising on a disposal is likely to be adjusted in accordance
with TCGA s 30 (Tax free benefits).
3.12 Unremittable Income and Capital Gains
3.12.1 No Group Company has either received or become entitled to any
income which is "unremittable income" within the meaning of
ICTA s 584 (Relief for unremittable income), or any gain to
which the provisions of TCGA s 279 (Foreign assets: delayed
remittances) could apply.
3.13 Demergers and Purchase of Own Shares
3.13.1 No Group Company has been engaged in or been a party to any of
the transactions set out in ICTA ss 213 to 218 (Demergers) or
has made or received a chargeable payment as defined in s 214
(chargeable payment connected with exempt distributions).
3.13.2 No Group Company has at any time redeemed, repaid or purchased
or agreed to redeem, repay or purchase, any of its own shares.
3.14 Transfer of Overseas Trade:
3.14.1 No Group Company has transferred a trade, carried on by it
outside the United Kingdom through a branch or agency, to a
company not resident in the United Kingdom in circumstances
such that a chargeable gain may be deemed to arise at a date
after such transfer under TCGA s 140 (Postponement of charge
on transfer of assets to non-resident company).
3.15 Sale and Leaseback of Land
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3.15.1 No Group Company has since the Last Accounts Date entered into
any transaction to which the provisions of ICTA s 780 (Land
sold and leased back: taxation of consideration received) have
been or could be applied.
3.16 Stock Dividends and Deep Discount Securities
3.16.1 No Group Company has issued any share capital to which the
provisions of ICTA ss 249, 251, 687, 701 (Stock dividends) or
TCGA s 141 (Stock dividends: consideration for new holding)
could apply, nor does any Group Company own any such share
capital.
3.16.2 No Group Company has at any time since 13th March 1984 owned
or issued any deep discount security within the meaning of
ICTA s 57 and Schedule 4 (Deep discount securities).
3.17 Controlled Foreign Companies
3.17.1 No notice of the making of a direction under ICTA s 747
(Imputation of chargeable profits and creditable tax of
controlled foreign companies) has been received by any of the
Group Companies and no circumstances exist which would entitle
the Inland Revenue to make such a direction and to apportion
any profits of a controlled foreign company to any of the
Group Companies pursuant to ICTA s 752 (Apportionment of
chargeable profits and creditable tax).
3.17 The Purchaser's rights hereunder shall not be discharged or impaired by
any legal limitation, disability, incapacity or other circumstance in
relation to any Vendor or any Minority Shareholder or any irregularity
or invalidity of any obligation of any other part to this agreement or
any other Transaction Document so that the rights of the Purchaser will
remain in full force and effect and this document shall be construed
accordingly as if there had been no such irregularity, unenforceability
or invalidity.
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3.18 Chargeable Gains
3.18.1 In determining the liability to corporation tax on chargeable
gains in respect of any asset which has been acquired or
provided by a Group Company or which a Group Company has
agreed to acquire or provide (whether conditionally,
contingently or otherwise):
(a) the sums allowable as a deduction will be determined
solely in accordance with the provisions of TCGA s 38
(Expenditure: general);
(b) the amount or value of the consideration, determined
in accordance with the provisions of TCGA s 38, will
not be less than the amount or value of the
consideration actually given by it for that asset;
(c) the amount of any expenditure on enhancing the value
of that asset, determined in accordance with the
provisions of TCGA s 38, will not be less than the
amount or value of all expenditure actually incurred
by it on that asset.
3.18.2 No Group Company is owed a debt (not being a debt on a
security) upon the disposal or satisfaction of which a
liability to corporation tax on chargeable gains will arise by
reason of the provisions of TCGA s 251 (Debts).
3.18.3 No part of the consideration given by a Group Company for a
new holding of shares (within the meaning of TCGA s 126
(Application of ss 127 to 131) ) will be disregarded by virtue
of TCGA s 128(2) (Consideration given or received by holder).
3.18.4 No asset owned by a Group Company has been the subject of a
deemed disposal under TCGA Schedule 2 (Assets held on 6th
April 1965), so as
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to restrict the extent to which the gain or loss over the
period of ownership may be apportioned by reference to
straight line growth.
3.18.5 There is no liability for Taxation recoverable from any Group
Company:
3.18.5.1 as a shareholder in another company where a capital
distribution has been received from another company;
3.18.5.2 in respect of chargeable gains of other companies
(not necessarily Group Companies).
3.18.6 No claim has been made to pay by instalments tax on chargeable
gains where consideration for the disposal of the asset is
receivable in instalments.
3.18.7 No claim has been made to defer tax on delayed remittances of
chargeable gains realised outside the UK.
3.18.8 No disposals have been made which are linked to transactions
with connected persons.
3.19 Capital Losses
3.19.1 No Group Company has incurred a capital loss to which the
provisions of TCGA s 18 (Transactions between connected
persons) are applicable.
3.20 Acquisitions From Group Members
3.20.1 No Group Company owns any asset which was acquired from
another company which was at the time a member of the same
group of companies (as defined in TCGA s 170 (Groups of
companies: definitions) ), as the relevant Group Company and
which owned that
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asset otherwise than as trading stock within the meaning of
TCGA s 173 (Transfers within a group: trading stock).
3.20.2 The execution or completion of this agreement will not result
in any profit or gain being deemed to accrue to a Group
Company for Taxation purposes, whether pursuant to TCGA s 178
to 181 (Company ceasing to be a member of a group) or
otherwise.
3.21 Replacement of Business Assets
3.21.1 No Group Company has made a claim under TCGA s 175
(Replacement of business assets by members of a group) or TCGA
ss 23 (Capital sums: compensation and insurance money) 247
(Roll-over relief on compulsory acquisition) 152 (Roll-over
relief), 153 (Assets only partly replaced) or 154 (New assets
which are depreciating assets) which would affect the amount
of the chargeable gain or allowable loss which would but for
such claim have arisen on a disposal of any of its assets.
3.22 Gifts involving Group Companies
3.22.1 No Group Company has held or holds shares in a company (not
being another Group Company) which has made any such transfer
as is referred to in TCGA s 125 (Shares in close company
transferring assets at an undervalue); and no Group Company
has received any assets by way of gift as mentioned in TCGA s
282 (Gifts: recovery from donee).
3.23 Gains Accruing to Non-resident Companies
3.23.1 No gain has accrued in respect of which any Group Company may
be liable to corporation tax on chargeable gains by virtue of
the provisions of TCGA s 13 (Non-resident company).
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3.24 Value Added Tax
3.24.1 Each Group Company:
(a) has duly registered and is a taxable person for the
purposes of value added tax;
(b) has complied in all material respects with all
statutory requirements, orders, provisions,
directions or conditions relating to value added tax;
(c) maintains complete, correct and up to date records
for the purposes of the relevant legislation;
(d) is not in arrears with any payment or returns, or
liable to any abnormal or non-routine payment, or any
forfeiture or penalty, or to the operation of any
penal provision;
(e) has not been required by the Commissioners of Customs
and Excise to give security;
(f) has not applied for treatment as a member of a group
which includes any company other than the Group
Companies;
3.24.2 No document has left the possession of any Group Company
which, if improperly used by a third party, would lead to any
liability on its part to pay any amount of value added tax
under VATA Schedule 11 paragraph 5 (Recovery of tax, etc)
which but for such use would not have been payable by it.
3.24.3 No Group Company has within the period of twelve months
preceding the date of this agreement received a surcharge
liability notice under VATA s 59 (The default surcharge).
3.24.4 No Group Company has received a penalty liability notice under
VATA s 64 (persistent misdeclaration resulting in
understatements or overclaims).
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3.24.5 The Company has not made an election pursuant to Schedule 9
VATA.
3.24.6 No Group Company has made and does not make exempt supplies
for VAT purposes.
3.25 Capital Transfer Tax and Inheritance Tax
3.25.1 No transfer of value (as defined in ITA s 3 (Transfers of
Value)) has at any time been made by any Group Company.
3.25.2 So far as the Warrantors are aware there is not outstanding
any Inland Revenue charge for unpaid capital transfer tax or
inheritance tax (as provided by ITA ss 237 and 238 (Inland
Revenue charge for unpaid tax)) over any asset of any Group
Company, or in relation to any shares in the capital of any
Group Company.
3.25.3 So far as the Warrantors are aware there are not in existence
any circumstances whereby any power mentioned in ITA s 212
(Powers to raise tax) could be exercised in relation to any
shares, securities or other assets of any Group Company, or
could be exercised but for ITA s 204(6) (Limitation of
liability).
3.26 Stamp Duty and Capital Duty
3.26.1 Within the five years ending on the date of this agreement, no
Group Company has made any claim for relief or exemption under
FA 1927 s 55 (Relief from capital and transfer stamp duty in
case of reconstructions or amalgamations of companies) or FA
1930 s 42 (Relief from transfer stamp duty in case of transfer
of property as between associated companies) or FA 1973
Schedule 19 Part III (Stamp Duty on documents relating to
chargeable transactions of capital companies).
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3.27 General
3.27.1 There have been no transactions between any Group Company and
the Trustees of the Spectrum Communications Holding Employee
Trust (including without limitation the writing off of any
loans) which would give rise to a liability to Taxation.
4. FINANCE
4.1 Capital Commitments
4.1.1 There were no commitments on capital account outstanding at
the Warranted Accounts Date and since the Warranted Accounts
Date no Group Company has made or agreed to make any capital
expenditure, nor incurred nor agreed to incur any capital
commitments exceeding (pound) 5,000 per item or (pound) 25,000
in aggregate nor has it disposed of or realised any capital
assets or any interest therein.
4.2 Dividends and Distributions
4.2.1 Since the Last Accounts Date no dividend or other distribution
(as defined in ICTA Part VI Chapter II as extended by ICTA s
418) has been or is treated as having been declared, made or
paid by any Group Company.
4.2.2 All dividends or distributions declared, made or paid by each
Group Company have been declared, made or paid in accordance
with its articles of association and the applicable provisions
of the Companies Acts.
4.3 Bank and Other Borrowings
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4.3.1 All written agreements relating to each Group Company's bank
overdraft facilities are set out in the Disclosure Letter.
4.3.2 The total amount borrowed by each Group Company from each of
its bankers does not exceed its respective overdraft
facilities.
4.3.3 The total amount borrowed by each Group Company (as determined
in accordance with the provisions of the relevant instrument)
does not exceed any limitation on its borrowing powers
contained in its articles of association, or in any debenture
or other deed or document binding upon it.
4.3.4 No Group Company has outstanding, or has agreed to create or
issue, any loan capital; nor has it factored any of its debts,
or engaged in financing of a type which would not require to
be shown or reflected in the Warranted Accounts, or borrowed
any money which it has not repaid, save for borrowings not
exceeding the amounts shown in the Warranted Accounts.
4.3.5 No Group Company has since the Warranted Accounts Date repaid
or become liable to repay any loan or indebtedness in advance
of its stated maturity.
4.3.6 No Group Company has received notice (whether formal or
informal) which remain outstanding from any lenders of money
to it, requiring repayment or intimating the enforcement of
any security the lender may hold over any of its assets; and
so far as the Warrantors are aware, there are no circumstances
likely to give rise to any such notice.
4.4 Loans by and Debts due to Group Companies
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4.4.1 No Group Company has lent any money which has not been repaid
to it, or owns the benefit of any debt (whether or not due for
payment), other than debts which have arisen in the ordinary
course of its business; and no Group Company has made any loan
contrary to the Companies Acts.
4.5 Liabilities
4.5.1 There has been no exercise, purported exercise or claim for
any charge, lien, encumbrance or equity over any of the fixed
assets of any Group Company; and so far as the Warrantors are
aware there is no dispute directly or indirectly relating to
any of its fixed assets.
4.6 Bank Accounts
4.6.1 A statement of the bank accounts of each Group Company dated
within 7 days of Completion has been supplied to the
Purchaser.
4.7 Government Grants
4.7.1 Full details of all grants, subsidies or financial assistance
applied for or received by the Group Companies in excess of
(pound) 10,000 from any governmental department or agency or
any local or other authority are set out in the Disclosure
Letter.
4.7.2 So far as the Warrantors are aware, no Group Company has done
or omitted to do any act or thing which could result in all or
any part of any investment grant, employment subsidy or other
similar payment made, or due to be made, to it becoming
repayable or being forfeited or withheld in whole or in part.
5. TRADING
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5.1 Changes since Accounts Date
5.1.1 Since the Last Accounts Date:
(a) the business of each Group Company has been continued
in the ordinary and normal course;
(b) there has been no deterioration in the turnover or
the financial or trading position of any Group
Company;
(c) so far as the Warrantors are aware, no Group Company
has by doing or omitting to do anything prejudiced
its goodwill;
(d) no part of the business of any Group Company has been
affected by any abnormal factor not affecting similar
businesses to a like extent;
5.1.2 An aged creditors list as at a date not more than 7 days
before Completion is attached to the Disclosure Letter.
5.1.3 The value of the net realisable assets (after depreciation in
accordance with the accounting principles used in the
preparation of the Principal Accounts) of each Group Company
is not now less than at the Warranted Accounts Date.
5.2 Warrantors' Other Interests and Liabilities to Group Companies
5.2.1 The Warrantors do not have any rights or interests, directly
or indirectly, in any business other than those now carried on
by the Group Companies which are or are likely to be or become
competitive with the businesses of the Group Companies, save
as registered holder or beneficial owner of any class of
securities of any company which is listed on The London Stock
Exchange or dealt in on the Alternative Investment Market of
The London Stock Exchange, and in respect of which a Vendor
holds and is beneficially interested in less than 3 per cent
of any single class of the securities in that company.
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5.2.2 There is no outstanding indebtedness of any Warrantor to a
Group Company.
5.3 Effect of Sale of Shares
5.3.1 The Warrantors have no knowledge, information or belief that
after Completion (whether by reason of an existing agreement
or arrangement or otherwise) or as a result of the proposed
acquisition of the Company by the Purchaser:
(a) any supplier of any Group Company will cease
supplying it or may substantially reduce its supplies
to it;
(b) any customer of any Group Company will cease to deal
with it or may substantially reduce its existing
level of business with it;
(c) any Group Company will lose the benefit of any right
or privilege which it enjoys;
(d) any officer or senior employee of a Group Company
will leave;
(e) any customer on the Customer List shall cease to
trade with any Group Company or seek to re-negotiate
the terms upon which it trades with the Group
Company.
5.3.2 Compliance with the terms of this agreement does not and will
not:-
(a) result in the breach of, or constitute a default
under, any of the terms, conditions or provisions of
any agreement or instrument to which any Group
Company is a party, or any provision of the
memorandum or articles of association of any Group
Company or any encumbrance, lease, contract, order,
judgment, award, injunction or regulation by which or
to which any asset of any Group Company is bound or
subject;
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(b) relieve any person from any contractual obligation to
any Group Company or enable any person to determine
any such obligation or any contractual right or
benefit enjoyed by any Group Company, or to exercise
any contractual right, in respect of any Group
Company;
(c) result in the creation, imposition, crystallisation
or enforcement of any encumbrance whatsoever on any
of the assets of any Group Company;
(d) result in any present or future indebtedness of any
Group Company becoming due and payable or capable of
being declared due and payable prior to its stated
maturity.
5.4 Conduct of Businesses in accordance with Memoranda and Articles of
Association
5.4.1 Each Group Company has in the last 3 years carried on business
and conducted its affairs in all respects in accordance with
its memorandum and articles of association for the time being
in force and any other documents to which it is or has been a
party.
5.4.2 Each Group Company is empowered and duly qualified to carry on
business in all jurisdictions in which it now carries on
business.
5.5 Joint Ventures and Partnership
5.5.1 No Group Company is or has agreed to become a member of any
joint venture, consortium, partnership or other unincorporated
association; and no Group Company is or has agreed to become a
party to any agreement or arrangement for sharing commissions
or other income.
5.6 Agreements relating to the Management and Business
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5.6.1 There are no arrangements or understandings (whether legally
enforceable or not) between a Group Company and any person who
is a shareholder or the beneficial owner of any interest in
it, or in any company in which any Group Company is
interested, or any Associate of any such person, relating to
the management of any Group Company's business, or the
appointment or removal of directors of any Group Company, or
the ownership or transfer of ownership or the letting of any
of the assets of any Group Company, or the provision, supply
or purchase of finance, goods, services or other facilities
to, by or from any Group Company, or in any other respect
relating to its affairs.
5.7 Agency Agreements and Agreements Restricting Business
5.7.1 No Group Company is a party to any agency, distributorship,
marketing, purchasing, manufacturing or licensing agreement,
or any restrictive trading or other agreement pursuant to
which any part of its business is carried on, or which in any
way restricts its freedom to carry on the whole or any part of
its business in any part of the world in such manner as it
thinks fit.
5.7.2 No Group Company is a party to any undertaking or assurances
given to any court or governmental agency or other competent
authority which is still in force.
5.8 Unfair Trade and Restrictive Practices
5.8.1 No Group Company has committed or omitted to do any act or
thing which could give rise to any fine or penalty resulting
from a Group Company being a party to any agreement, practice
or arrangement which in whole or in part:
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(a) contravenes the provisions of The Trade Descriptions
Acts 1968 and 1972;
(b) would or might result in a reference to a consumer
trade practice, within the meaning of the Fair
Trading Act 1973 s 13, or be liable to reference to
the Consumer Protection Advisory Committee under Part
II of the said act;
(c) contravenes the provisions of the Consumer Credit Act
1974;
(d) contravenes or is invalidated (in whole or in part)
by or is subject to registration under the
Restrictive Trade Practices Acts 1976 and 1977;
(e) contravenes any provisions of the Treaty of Rome;
(f) contravenes any other anti-trust, anti-monopoly or
anti-cartel legislation or regulations.
5.8.2 No Group Company has engaged in any anti-competitive
practice as defined in the Competition Act 1980.
5.9 Litigation, Disputes and Winding Up
5.9.1 No Group Company is engaged in any litigation or arbitration
proceedings as plaintiff or defendant except for the
collection of debts not exceeding (pound) 10,000 in the
ordinary course of business; there are no proceedings pending
or threatened either by or against any Group Company; and so
far as the Warrantors are aware there are no circumstances
which are likely to give rise to any litigation or
arbitration.
5.9.2 There is no dispute with any revenue or other official,
department in the United Kingdom or elsewhere, in relation to
the affairs of any Group Company, and so far as the Warrantors
are aware there are no facts which may give rise to any
dispute.
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5.9.3 There are no claims threatened against any Group Company by an
employee or workman or third party, in respect of any accident
or injury, which are not believed by the Warrantors on
reasonable grounds to be fully covered by insurance and so far
as the Warrantors are aware none are pending.
5.9.4 No order has been made or petition presented or resolution
passed for the winding up of any Group Company; nor has any
distress, execution or other process been levied in respect of
any Group Company which remains undischarged; nor is there any
unfulfilled or unsatisfied judgment or court order outstanding
against any Group Company.
5.10 Compliance with Statutes
5.10.1 Each Group Company has conducted and is conducting its
business in all respects in accordance with all applicable
laws and regulations of the country in which it was
incorporated and in which it carries on business.
5.10.2 No Group Company carries on (or has, at any time when not an
authorised person under Chapter III, Financial Services Act
1986, carried on) investment business in the United Kingdom
within the meaning of the Financial Services Act 1986, s 1.
5.11 Data protection
5.11.1 Each Group Company has duly complied with all relevant
requirements of the Data Protection Act 1984 including
compliance with the following:
(a) the data protection principles established in that
Act;
(b) requests from data subjects for access to data held
by it;
(c) the requirements relating to the registration of data
users.
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5.11.2 No Group Company has received a notice or allegation from
either the data protection registrar or a data subject
alleging non-compliance with the data protection principles or
prohibiting the transfer of data to a place outside the United
Kingdom.
5.11.3 No individual has claimed or, so far as the Warrantors are
aware, will have the right to claim compensation from any
Group Company under that act for loss or unauthorised
disclosure of data.
5.12 Documents stamped
5.12.1 All documents which in any way affect the right, title or
interest of any Group Company in or to any of its property,
undertaking or assets, or to which a Group Company is a party,
and which attract stamp duty have been duly stamped.
5.13 Business Names
5.13.1 No Group Company uses a name for any purpose other than its
full corporate name.
5.14 Powers of Attorney and Authority
5.14.1 No power of attorney given by any Group Company (except for
those contained in a document as an incidental provision) is
in force.
5.14.2 There are not outstanding any express authorities by which any
person may enter into any contract or commitment to do
anything on behalf of a Group Company.
5.15 Licences and Consents
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5.15.1 Each Group Company has obtained all necessary licences and
consents (other than in respect of Industrial Property Rights)
from any person, authority or body for the proper carrying on
of its business (short particulars of each licence and consent
being set out in the Disclosure Letter) and all the licences
and consents are valid and subsisting.
5.15.2 No Group Company is in breach of any of the terms or
conditions of any of the licences or consents falling within
clause 5.15.1 and so far as the Warrantors are aware there are
no breaches of such licences or consents which are likely to
prevent their renewal or continuation.
5.16 Subsisting Contracts
5.16.1 The Customer List contains a true and accurate list of all
present customers and clients of the Group Companies who
individually generate (or are projected in the budget to 30th
June 1997 to generate) fees of more than (pound) 50,000 per
annum and the terms upon which the Group Companies deals with
such customers and clients.
5.16.2 The Disclosure Letter contains particulars of any contract or
liability which:
(a) is of an unusual or abnormal nature or outside the
ordinary and proper course of business;
(b) is of a long-term nature (that is, unlikely to have
been fully performed in accordance with its terms
more than six months after Completion);
(c) is incapable of termination by the Group Company in
accordance with its terms on sixty day's notice or
less;
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(d) is of a loss-making nature (that is, known to be
likely to result in a loss to it on completion of
performance);
(e) so far as the Warrantors are aware, cannot readily be
fulfilled or performed by it on time without undue or
unusual expenditure of money, effort or personnel;
(f) involves payment by the Group Company of amounts
determined by reference to fluctuations in the index
of retail prices or any other index or in the rate of
exchange for any currency;
(g) involves an aggregate outstanding expenditure by it
of more than (pound) 10,000;
(h) involves or is likely to involve the provision of
services the aggregate value of which will represent
in excess of 10 per cent of the Group's turnover for
the preceding financial year;
(i) is a contract for hire or rent, hire purchase or
purchase by way of credit sale or periodical payment.
5.17 Defaults under Agreements by Group Company
5.17.1 So far as the Warrantors are aware, no Group Company is:
(a) in default under any agreement or covenant to which
it is a party or in respect of any other obligations
or restrictions binding upon it;
(b) in default under any obligations existing by reason
of membership of any association or body;
(c) liable in respect of any representation or warranty
(whether express or implied) or any matter giving
rise to a duty of care on its part.
5.17.2 No threat or claim of default under any agreement, instrument
or arrangement to which any Group Company is a party has been
made and is outstanding against it; and so far as the
Warrantors are aware there is
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nothing whereby any such agreement, instrument or arrangement
may be prematurely terminated or rescinded (other than for
reasons of default or insolvency) by any other party or
whereby the terms may be worsened.
5.18 Other Party's Defaults
5.18.1 So far as the Warrantors are aware, no party to any agreement
with or under an obligation to any Group Company is in default
under it, being a default which would be material in the
context of the Group's financial or trading position.
5.19 Outstanding Offers
5.19.1 No offer, tender or the like is outstanding which is capable
of being converted into an obligation of any Group Company by
acceptance or other act of some other person, firm or company.
5.20 Guarantees and Indemnities
5.20.1 There is not now outstanding in respect of any Group Company
any guarantee, or agreement for indemnity or for suretyship,
given by it or for its accommodation.
5.21 Insider Contracts
5.21.1 There has not at any time during the three years prior to the
date of this agreement been any contract or arrangement to
which any Group Company is a party and which any Warrantor or
any director of any Group Company is or has been interested,
whether directly or indirectly.
5.21.2 No Group Company is a party to, nor have its profits or
financial position during the three years prior to the date of
this agreement been
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affected by, any contract or arrangement which is not of an
entirely arm's length nature.
5.22 Management Reports
5.22.1 So far as the Warrantors are aware having made no enquiry
there have been no reports directly concerning any Group
Company, by financial or management consultants produced on
behalf of the Company's bankers or any prospective purchaser
of the Company within the period of three years prior to the
date of this agreement.
6. EMPLOYMENT
6.1 Employees and Terms of Employment
6.1.1 Full particulars of the identities, dates of commencement of
employment, or appointment to office, and terms and conditions
of employment of all the employees and officers of each Group
Company, including without limitation profit sharing,
commission or discretionary bonus arrangements, are fully and
accurately set out in the Disclosure Letter.
6.1.2 There are no agreements or other arrangements (whether or not
legally binding) between any Group Company and any trade union
or other body representing employees.
6.1.3 No contract of service exists between any Group Company and a
director or employee in relation to which any relevant
requirements of CA s 319 have not been fulfilled.
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6.2 Bonus Schemes
6.2.1 There are no schemes in operation by, or in relation to, any
Group Company whereunder any employee of any Group Company is
entitled to a commission or remuneration of any other sort,
calculated by reference to the whole or part of the turnover,
profits or sales of any Group Company.
6.2.2 Other than the scheme operated by Mark Wallace Associates Ltd
(full details of which are attached to the Disclosure Letter)
no Group Company has registered a profit-related pay scheme
under the provisions of ICTA Part V Chapter III.
6.2.3 The termination of the profit related pay scheme operated by
Spectrum Communications Limited has been completed and there
are no further liabilities or costs arising from such scheme
or its termination.
6.3 Changes in Remuneration
6.3.1 During the period to which the Warranted Accounts relate and
since the Warranted Accounts Date or (where employment or
holding of office commenced after the beginning of such
period) since the commencing date of the employment or holding
of office:
(a) no change has been made in the rate of remuneration, or the
emoluments or pension benefits, of any officer, ex-officer or
senior executive of any Group Company (a senior executive
being a person in receipt of remuneration in excess of (pound)
20,000 per annum);
(b) no change has been made in any other terms of employment of
any officer or senior executive.
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6.3.2 No Group Company is bound or accustomed to pay any moneys
other than in respect of remuneration or emoluments of
employment or pension benefits to or for the benefit of any
officer or employee of any Group Company.
6.3.3 No negotiations for any increase in the remuneration or
benefits of any officer or employee of any Group Company are
current or are required to take place within six months after
the date of Completion.
6.4 Termination of Contracts of Employment
6.4.1 All subsisting contracts of service to which any Group Company
is a party are determinable at any time on three months'
notice or less without compensation (other than compensation
in accordance with the Employment Protection (Consolidation)
Act 1978, as amended by the Employment Act 1982).
6.4.2 Since the Warranted Accounts Date no executive of any Group
Company, who is in receipt of remuneration in excess of
(pound) 20,000 per annum, and no officer of any Group Company
has given or received notice terminating his employment,
except as expressly contemplated in this agreement, and no
such executive or officer will be entitled to give such notice
as a result of the provisions of this agreement.
6.4.3 No Group Company has any liability or continuing obligation of
any nature to any ex-employee or ex-director of any Group
Company and there are no claims outstanding against any Group
Company from ex-employees or ex-directors of the Group Company
and arising from the termination of their employment or loss
of office.
6.5 Industrial Disputes and Negotiations
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6.5.1 None of the Group Companies or their respective employees is
involved in any industrial dispute.
6.6 Industrial Agreements
6.6.1 No Group Company has entered into any recognition agreement
with a trade union nor has it done any act which might be
construed as recognition.
6.7 Redundancies
6.7.1 No employee will become redundant and be entitled to a
redundancy payment as a result of any provision of this
agreement.
6.8 Pensions
6.8.1 Save for The Spectrum Communications Group Personal Pension
Scheme (hereinafter called the "Scheme") there are no:
(a) agreements or arrangements (whether legally
enforceable or not and howsoever established) in
operation of the date of this agreement for the
provision by any of the Group Companies of any
retirement or other benefit (including any pension,
annuity, lump sum, gratuity or other like benefit to
be given on retirement or in anticipation of
retirement or after retirement in connection with
past service or to be given on or in anticipation of
or in connection with any change in the nature of the
service of the person in question) for any officer or
any employee or former officer or employee of the
Group Companies or for any dependents of any such
person; or
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(b) informal or ex-gratia pension arrangements or schemes
involving the Group Companies; or
(c) schemes or arrangements the purpose of which is to
provide benefits for any officer or any employee of
the Group Companies in excess of the earnings cap as
defined in section 590C of the Income and Corporation
Taxes Act 1988.
6.8.2 The Disclosure Letter contains true copies of:
(a) any announcements to employees of the Group Companies
relating to pension matters in respect of benefit
improvement or other amendments not yet incorporated
into the documentation of the Scheme;
(b) the current explanatory booklets issued to employees
of the Group Companies who are members of the Scheme.
6.8.3 All lump sum benefits payable under the Scheme on the death of
members thereof are at the date hereof fully insured under a
policy effected with an insurance company of good repute and
each member has been covered for such insurance by such
insurance company at its normal rates and on its normal terms
of persons in good health.
6.8.4 The Scheme holds no securities issued by the Group Companies
or properties leased to or occupied by the Group Companies and
has made no loans which are at the date hereof outstanding to
the Group Companies.
6.8.5 There are no actions, suits or claims (other than routine
claims for benefits) outstanding, pending or so far as the
Warrantors are aware threatened against the trustees or
administrator of the Scheme or against any Group Company in
respect of any act, event, omission or other matter arising
out of or in connection with the Scheme.
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6.8.6 The Group Companies are the only employers participating in
the Scheme.
6.8.7 At the date hereof all contributions to the Scheme (including
contributions payable by or in respect of members thereof)
which have fallen due have been paid to the trustees of the
Scheme at the rates stipulated by the actuaries to the Scheme.
6.8.8 The pension benefits provided by the Scheme are not related in
any way, either by express terms within the constitution of
the Scheme or by assurances made to members by the Group
Companies to the final salary or earnings of the members of
the Scheme.
6.8.9 The Scheme is approved by the Board of Inland Revenue for the
purposes of Chapter I of Part XIV of the Income and
Corporation Taxes Act 1988 and the Warrantors are not aware of
any circumstances which might give the Inland Revenue reason
to withdraw such approval.
6.8.10 So far as the Warrantors are aware the Scheme has been
administered in accordance with the requirements of all other
relevant pension schemes legislation and Inland Revenue
Practice relating to pensions and subject thereto in
accordance with the trusts powers and provisions of the Scheme
and overriding legislation.
6.8.11 The only pension scheme conducted in the past by the Group
Companies (which pension scheme is referred to as "the Plan")
is The Spectrum Communications Group Staff Benefits Plan and
copies of all material documentation information and details
relating to the Plan were provided to KPMG in connection with
their recent report set out in the Disclosure Letter.
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6.8.12 The Plan was discontinued on 31st July 1995 and is in the
process of being wound up. None of the Group Companies has any
liability under the Plan including any current liability to
pay benefits or any future or contingent liability to pay
benefits.
6.8.13 No augmentation to existing benefits have been made under the
Scheme and no additional benefits have been granted without
the relevant actuary's confirmation in each case that such
augmentation or addition can be borne by the Scheme in
question within the existing funding rate without detriment to
the benefit of the members or the payment of other additional
contributions which the actuary deems necessary to secure such
augmentation or additional benefits.
6.8.14 The persons named as trustees of the Scheme in the Disclosure
Letter are all the present trustees of the Pension Scheme.
6.8.15 No undertaking or assurance has been given as to the
continuance or introduction or increase or improvement of any
pension right or entitlement which the Group Companies would
be required to implement in accordance with good industrial
relations practice whether or not there is any legal
obligation to do so.
7. ASSETS
7.1 Ownership of Assets
7.1.1 The Group Companies owned at the Warranted Accounts Date and
(except for current assets subsequently sold or realised in
the ordinary course of business) still own all assets included
in the Warranted Accounts and all assets acquired since the
Warranted Accounts Date and not subsequently sold or realised
as aforesaid. For the purposes of this
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clause 7.1.1 "assets" excludes the Properties and all assets
supplied subject to a reservation of title clause and all
assets supplied under any hire purchase, trade rental or
similar agreement.
7.1.2 No Group Company has created or granted or agreed to create or
grant any security interest or other encumbrance in respect of
any of the fixed assets included in the Warranted Accounts or
acquired or agreed to be acquired since the Warranted Accounts
Date, otherwise than in the ordinary course of its business.
7.2 Insurance
7.2.1 All the assets and undertakings of each Group Company of an
insurable nature are and have at all material times been,
insured in amounts representing their full replacement or
reinstatement value against fire and other risks normally
insured against by persons carrying on the same business as
that carried on by such Group Company.
7.2.2 Each Group Company is now and has at all material times been
adequately covered against accident, damage, injury, third
party loss (including product liability), loss of profits and
other risks normally insured against by persons carrying on
the same business.
7.2.3 All insurance is currently in full force and effect, and so
far as the Warrantors are aware nothing has been done or
omitted to be done which could make any policy of insurance
void or voidable or which is directly likely to result in an
increase in premium.
7.2.4 None of the policies is subject to any special or unusual
terms or restrictions or to the payment of any premium in
excess of the rate normally paid for similar businesses.
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7.2.5 No claim is outstanding or may be made under any of the said
policies and no circumstances exist which are likely to give
rise to such a claim.
7.3 Leased Assets
7.3.1 No circumstance has arisen in relation to any asset held by a
Group Company under a lease or similar agreement whereby the
rental payable increased other than increases caused by
interest rate rises or changes in Taxation legislation.
7.4 Plant in Working Order
7.4.1 The plant, machinery, vehicles and other equipment used in
connection with the business of each Group Company:
(a) are in its possession and control, and are its absolute
property, save for those items the subject of the hire
purchase, leasing or rental agreements or in respect of which
the outstanding payments do not exceed (pound) 5,000.00;
(b) do not require replacements or additions at a cost in excess
of (pound) 10,000 within six months from the date of this
agreement;
(c) are all capable and (subject to normal wear and tear) will
remain capable throughout the respective periods of time
during which they are each written down to a nil value in the
accounts of the Group Companies (in accordance with the normal
recognised accounting principles consistently applied prior to
the date hereof) of doing the work for which they were
designed or purchased.
7.4.2 Maintenance contracts are in full force and effect in respect
of all assets of the Group Companies which it is normal to
have maintained by
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independent or specialist contractors and in respect of all
assets which any Group Company is obliged to maintain or
repair under any leasing or similar agreement.
7.5 Industrial Property Rights and Trade Secrets
7.5.1 All Industrial Property Rights used or required by any Group
Company in connection with its business are in full force and
effect and are vested in and beneficially owned by it.
7.5.2 The Group Companies are the sole beneficial owners of the
Industrial Property Rights listed in the Disclosure Letter and
(where registration is possible) a Group Company has been and
is registered as proprietor, and each of those rights is valid
and none of those rights is being opposed or attacked by any
other person.
7.5.3 No right or licence has been granted to any person by any
Group Company to use in any manner or to do anything which
would or might otherwise infringe any of the Industrial
Property Rights referred to in clause 7.7.1 above; and no act
has been done or omission permitted by any Group Company
whereby those rights or any of them have ceased or might cease
to be valid and enforceable.
7.5.4 So far as the Warrantors are aware the business of each Group
Company (and of any licensee under a licence granted by any
Group Company) as now carried on does not and is not likely to
infringe any Industrial Property Rights of any other person or
give rise to a liability to pay compensation pursuant to the
Patents Act 1977 ss 40 and 41 and all licences to any Group
Company in respect of any such right are in full force and
effect.
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7.5.5 No Group Company has (otherwise than in the ordinary and
normal course of business) disclosed or permitted to be
disclosed or undertaken or arranged to disclose to any person
other than its professional advisers, the Purchaser and the
Purchaser's professional advisers any of its know-how, trade
secrets, confidential information, price lists or lists of
customers or suppliers.
7.5.6 So far as the Warrantors are aware nothing has been done or
omitted by any Group Company which would enable any licensee
under a licence granted by a Group Company to be terminated or
which in any way constitutes a breach of terms of any licence.
8. ENVIRONMENTAL MATTERS
8.1 Each Group Company complies and has at all times complied in all
material respects with all Environmental Laws from time to time in
force relating to the Properties and any of the land used or occupied
by any Group Company for its business carried on at any time therein so
far as the Warrantors are aware and there is nothing in or over or
under the Properties the presence, existence or conditions of which
constitute a breach of the Environmental Laws nor is any manufactory
storage generation servicing treatment disposal or other process
carried on at the Properties in such a way as to amount to a breach of
the same.
8.2 Except as set out in the Disclosure Letter no Group Company has
deposited, disposed of, kept, treated, imported, exported, transported,
handled, processed, manufactured, collected, sorted, or produced or
caused or consented to the presence of any Relevant Substance on the
Properties in breach of the Environmental Laws.
8.3 No notice, notification, demand, request for information, summons,
complaint or order has been issued and so far as the Warrantors are
aware no investigation or review is pending by any statutory body or
any person with respect to any
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alleged violation by or liability of any Group Company or the
Warrantors in relation to any Environmental Laws.
8.4 During the period of time in which the Group Companies have had an
interest in the Properties no works have been carried out on the
Properties by any public local or other statutory authority under the
Environmental Laws in respect of which such authority is entitled to
recover costs nor have the Group Companies received any notice or has
any information indicating that it is or may be responsible for all or
some portion of the costs of investigation treating contain removing
from any place or otherwise addressing any Relevant Substances.
8.5 The Warrantors are not aware of any regulatory proposed health safety
or environmental requirements (whether in relation to the Properties or
any activities processes or substances from time to time by the Group
Companies on the Properties) which if adopted would have a material
adverse impact upon any of the Group Companies.
8.6 So far as the Warrantors are aware each Group Company's Directors,
Secretary, Managers and other similar officers have no liability
(actual or contingent) arising out of any Environmental Matter or any
act, error or omission in relation to any Environmental Matter on the
part of any Group Company in the conduct of their respective businesses
prior to Completion and there are no facts or matters which are likely
to form the basis of such liability.
9. PROPERTIES
9.1 Title
9.1.1 The Properties comprise:-
9.1.1.1 all the properties owned, occupied or otherwise used
in connection with their business by the Group
Companies; and
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9.1.1.2 all the estate interest right title whatsoever
(including for the avoidance of doubt interests in
the nature of options and rights in the nature of
contractual licences) of the Group Companies in
respect of any land or premises.
9.1.2 Those of the Properties which are occupied or otherwise used
by the Group Companies in connection with their businesses are
so occupied or used by right of ownership or under lease or
licence.
9.1.3 The Group Companies are the legal and beneficial owners of the
Properties.
9.1.4 The information contained in the Disclosure Letter as to the
tenure of each of the Properties, the principal terms of the
leases or licences held by the Group Companies, and the
principal terms of the tenancies and licences subject to and
with the benefit of which the Properties are held is true and
accurate in all respects.
9.1.5 The Group Companies have a good title to each of the
Properties and where any Group Company has prior to the date
hereof transferred or conveyed to a third party land adjoining
or neighbouring the Properties there were in the transfer or
conveyance excepted and reserved to the Group Companies all
necessary and appropriate easements and other rights and there
were imposed on such third parties all necessary and
appropriate covenants and restrictions for the benefit of the
Properties.
9.1.6 Where the title to any of the Properties is registered the
Group Companies are the proprietor of the Properties
registered at HM Land Registry with absolute title and the
Land Certificate in respect of each of such Properties is in
the possession or under the control of the Group Companies.
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9.1.7 Where the title of any of the Properties is unregistered it is
properly constituted by and can be deduced from duly stamped
documents of title which are in the possession or under the
control of the Group Companies. No event has occurred in
consequence of which registration should have been effected at
H M Land Registry.
9.1.8 In the case of leases of any of the Properties granted for
more than twenty one years from the date of the grant the
requirements as to registration continued within s 123 of the
Land Registration Act 1925 have been complied with and no
dispositionary lease remains unregistered.
9.2 Encumbrances
9.2.1 The Properties are free from any mortgage, debenture, charge
(whether specific or floating legal or equitable),
rent-charge, lien or other encumbrance securing the repayment
of monies or other obligation or liability of the Group
Companies or any other person.
9.2.2 The Properties are not subject to any outgoings other than
non-domestic rates, water rates and insurance premiums rent
and service charges.
9.2.3 Save for the normal clauses contained in a standard commercial
lease, the Properties are not subject to any restrictive
covenants, stipulations, easements, profits a prendre,
wayleaves, licences, grants, restrictions, overriding
interests or other such rights vested in third parties nor any
agreement to create the same.
9.2.4 Where any such matters as are referred to in clauses 9.2.1,
9.2.2 and 9.2.3 have been disclosed in the Disclosure Letter
the Warrantors have received no notice of any breach of the
obligations and liabilities
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imposed and arising under them and any payments in respect of
them due and payable have been duly paid.
9.2.5 The Properties are not subject to any agreement or right to
acquire the same nor any option, right of pre-emption or right
of first refusal and the Warrantors have not been notified of
any outstanding actions claims or demands between any of the
Group Companies and any third parties affecting or in respect
of the Properties.
9.2.6 The Properties are free from any local land charges land
charge caution inhibition or notice.
9.2.7 The Warrantors are unaware of any person who is in occupation
(other than pursuant to any of the tenancies referred to or in
the Disclosure Letter) or who has or claims any rights or
easements of any kind in respect of the Properties adversely
to the estate interest right or title of the Group Companies
therein.
9.2.8 There are no compulsory purchase notices, orders or
resolutions affecting the Properties nor are the Warrantors
aware of any circumstances likely to lead to any being made.
9.3 Planning Matters
9.3.1 The use of each of the Properties is the permitted and lawful
use for the purposes of the Planning Acts and no such use is
subject to planning conditions of an onerous or unusual nature
(including any of a personal or temporary nature).
9.3.2 Planning permission has been obtained or is deemed to have
been granted for the purposes of the Planning Acts with
respect to all development of the Properties and any
subsequent alteration extension or
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other improvement of the same and no such permission has been
revoked suspended or called in or the subject of a High Court
challenge and no application for planning permission is
awaiting decision or the subject of an appeal.
9.3.3 Such Building regulation consents and bye law consents and
approvals as may be necessary have been obtained with respect
of all alterations and improvements to the Properties.
9.3.4 Compliance is being made and has at all times been made in all
respects with planning permissions, building regulations and
bye law consents for the time being in force with respect of
the Properties and with all orders, directions and regulations
issued under the Planning Acts, the London Building Acts and
building regulation consents and bye-laws.
9.3.5 There have been no agreements or undertakings relating to the
Properties under S 106 of the Town & Country Planning Act
1990, S 38 and 278 of The Highways Act 1980, s 104 of the
Water Industry Act 1991 or any similar legislation or earlier
legislation of the same nature "Statutory Agreements".
9.3.6 Compliance is being and has at all times been made with all
Statutory Agreements relating to the Properties.
9.3.7 None of the Properties is listed as being of special historic
or architectural importance or located in a conservation area
nor are the Properties affected by any tree preservation
orders and the Warrantors are not aware of any circumstances
which may lead to the same.
9.3.8 All development charges, monetary claims and liabilities under
the Planning Acts or any other such legislation have been
discharged and no such liability, contingent or otherwise, is
outstanding in respect of the Properties.
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9.3.9 None of the Properties is affected or is likely to be
adversely affected by any proposals contained in any structure
plan, local plan or unitary development plan prepared in
respect of areas in which the Properties is situate.
9.3.10 All statements made and all information supplied by or on
behalf of the Group Companies in support of applications
lodged for the grant of certificates of lawfulness of existing
use or development and certificates of lawfulness of proposed
use or development under the Planning Acts in respect of the
Properties were and remain true, accurate and complete in all
material respects and the Warrantors are not aware of any
circumstances which may lead to the revocation of any such
certificates.
9.3.11 No planning contravention notices, breach of condition notices
enforcement notices or stop notices have been issued by any
local planning authority in respect of the Properties nor has
any other enforcement action (including the exercise of any
right of entry or proceedings for injunctive relief) been
taken by any such authority and the Vendor is not aware of any
circumstances which may lead to the same.
9.3.12 There are no closing demolition or clearance orders affecting
the Properties nor are the Warrantors aware of any
circumstances likely to lead to any being made.
9.4 Statutory Obligations
9.4.1 The Warrantors have not been notified of any breach of any
statutory and bye-law requirements with respect to the
Properties.
9.4.2 There is no outstanding and unobserved or unperformed
obligation with respect to the Properties necessary to comply
with the requirements
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(whether formal or informal) of any competent authority
exercising statutory or delegated powers.
9.4.3 There are not in force or required to be in force any licences
whether under the Licensing Act 1988 or otherwise which apply
to any of the Properties or relate to or regulate any
activities carried on therein.
9.5 Condition of the Properties
9.5.1 The Warrantors have not been notified of any breach of its
repairing obligations contained in the Leases.
9.5.2 There are not subsisting in relation to such buildings or
structures any collateral warranties, guarantees, indemnities
or latent defects insurance policies the benefit of which is
vested in the Group Companies.
9.5.3 There are no disputes with any adjoining or neighbouring owner
with respect to boundary walls and fences or with respect to
any easement, right or means of access to the Properties.
9.5.4 The principal means of access to the Properties is either over
roads which have been taken over by the local or other highway
authority and which are maintainable at the public expense or
the Leases grant adequate means of access to the relevant
property.
9.5.5 Either each of the Properties enjoys the main services of
water, drainage, electricity and gas through media located
entirely on in or one the Properties or the Leases grant
adequate rights in this respect.
9.5.6 None of the Properties is located in an area or subject to
circumstances particularly susceptible to flooding.
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9.5.7 None of the Properties is affected past or present by mining
activity nor is the Property such to any rights of common.
9.7 Insurance
9.7.1 The Properties are insured in accordance with the terms of the
Leases.
9.7.2 The information in the Disclosure Letter with respect to the
insurance policies is up to date and true and accurate in all
respects.
9.8 Leasehold Properties
9.8.1 The relevant Group Companies have paid the rent and have not
been notified of any breach of the covenants on the part of
the tenant and the conditions contained in any leases (which
expressions includes underleases) under which the Properties
are held, and the last demand (or receipts for rent if issued)
were unqualified, and all such leases are valid and in full
force.
9.8.2 All licences, consents and approvals required from the
landlords and any superior landlords under any leases of the
Properties and from their respective mortgagees (if any) have
been obtained and the covenants on the part of the tenant
contained in such licences, consents and approvals have been
duly performed and observed.
9.8.3 There are no notices negotiations or proceedings pending in
relation to any rent reviews nor is any rent liable at the
date hereof to be reviewed under the leases of the Properties
held by the Group Companies and time is not expressly or
impliedly of the essence in respect of any steps to be taken
in the conduct of rent reviews.
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9.8.4 There is not outstanding and unobserved or unperformed any
obligation necessary to comply with any notice or other
requirements given by the landlord under any leases of the
Properties.
9.8.5 There is no obligation to reinstate any of the Properties by
removing or dismantling any alteration made to it by the
relevant Group Companies or any predecessor in title to the
relevant Group Companies.
9.8.6 The Group Companies are in occupation of all parts of the
Property for the purposes of business carried on by it and the
security of tenure provisions of Part II of the Landlord and
Tenant Act 1954 are not excluded nor is the right to
compensation for disturbance and no notices or requests have
been served or received under section 25 or section 26 of such
Act.
9.8.7 There are no circumstances which would entitle any such
landlord to exercise any powers of entry or take possession
whether by means of peaceable re-entry or proceedings or which
would otherwise restrict the continued possession and
enjoyment of the Properties.
9.9 Occupational Tenancies
9.9.1 The Properties are held subject to and with the benefit of the
tenancies (which expression includes subtenancies) as set out
in the Disclosure Letter and none other.
9.9.2 With respect to such tenancies there are accurately disclosed
in the Disclosure Letter full particulars of:
(a) the rent and any rent reviews and, with respect to
rent reviews, the date for giving notice of exercise
of such reviews and the operative review date;
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(b) the term and any rights to break or renew the term;
(c) the obligations of the landlord and tenant in respect
of outgoings, repairs, insurance services, and
service charge;
(d) any options, pre-emption or first refusal rights;
(e) the user required or permitted under the terms of the
tenancies;
(f) any entitlement of a tenant of the whole or any part
of the Properties to compensation on quitting the
premises let to him in respect of disturbance and
improvements or otherwise; and
(g) any unusual provisions; and there are no subtenancies
derived out of such tenancies.
9.9.3 The Warrantors are not aware of any material or persistent
breaches of covenant by a tenant of any of the Properties and
no surety has been released expressly or by implication.
9.9.4 All such tenancies are incapable of any form of alienation
without the previous written consent of the relevant Group
Companies and prohibit absolutely dealings with part (as
opposed to the whole) of the premises comprised in the same.
9.9.5 All such tenancies are on full repairing and insuring terms so
that the occupational tenants or other occupants are together
contractually responsible to the relevant Group Companies
(whether by way of service charge or otherwise) for payment of
the whole of the non-domestic rates and all other outgoings
(including but without limitation the insurance repair
decoration maintenance and rebuilding of the Properties and
amortisation of plant and machinery thereat) payable in
respect of the Properties so that there is no residual
liability on the part of the Group Companies and all
expenditure by the Group Companies (other than rent payable
under the leases vest in the Company) in respect of the
Properties is recoverable by the Group Companies and the
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relevant Group Company as landlord is entitled to charge
reasonable management fees.
9.9.6 No notices or requests have been served or received under
Section 25 or Section 26 of the Landlord and Tenant Act 1954
nor are there any outstanding notices (whether served by or on
behalf of the Group Companies or by or on behalf of the
occupational tenants or other occupants) of any other nature.
9.9.7 No tenant or licensee has commuted any rent or licence fee or
made any payment thereof before the due date therefor and no
rent reviews are currently being negotiated or imminent.
9.10 Residual Liabilities
9.10.1 The Group Companies are not and have not at any time since the
date of their incorporation been either the original lessee of
any property or given a guarantee or entered into any direct
covenant with either a lessor or assignor of any property on
any assignment of leasehold property;
9.10.2 There are no existing liabilities or potential or contingent
liabilities in respect of any properties previously owned or
occupied by any of the Group Companies, including (without
limitation) any leasehold premises assigned, surrendered or
otherwise disposed of, any covenants given by the Group
Companies either as original contracting party or by virtue of
any direct covenants having been given on a sale or assignment
to any Group Companies or as a surety for the obligations of
any other persons in relation to such property.
10. General
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10.1 The sale of 40 Ordinary Shares in Delegate Management Services
Limited owned by the Company was completed on the 11 March
1996 and the consideration for the sale of such Shares has
been received by the Company. The Company has no obligations
or liabilities whether actual, contingent or otherwise to
Delegate Management Services Limited or its shareholders or
directors nor does Delegate Management Services Limited have
any liability of whatever nature to the Group Companies.
10.2 In relation to Spectrum Communications LLC ("SCLLC"):
10.2.1 No payments have been made of any nature by SCLLC to
Spectrum Communications International BVI.
10.2.2 Other than the Dubai Agreements there are no
agreements in force whether in writing or oral
between any Group Company, its directors or
employees, Mr Ibrahim Sharif, SCLLC, or Spectrum
Communications International BVI or any other third
party relating to Spectrum Communications
International BVI or SCLLC or the business of SCLLC;
10.2.3 Having regard to the purpose for which such unaudited
management accounts of SCLLC up to 31 March 1996 were
prepared, the management accounts of SCLLC are not
misleading in any respect and neither over-state the
value of the assets nor under-state the liabilities
of SCLLC as at the date to which they were drawn up
and do not over-state the profits of SCLLC in respect
of the periods to which they relate.
10.3 The Spectrum Communications Holdings Employee Trust has at all
times acted and operated in accordance with the terms of the
settlement creating the trust and its rules. The Group
Companies have no liability of whatever nature in relation to
the said Trust.
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10.4 There are no subsisting guarantees given by any Group Company
in the Warrantors' favour.
10.5 Save as set out in the Disclosure Letter, the Warranties are
true and accurate in all respects at the date of this
Agreement;
10.6 The contents of the Disclosure Letter are true and accurate in
all respects and fairly, clearly and accurately disclose every
matter to which they relate;
10.7 No former shareholder of any Group Company shall have any
claim against any Group Company, the Warrantors or the
Purchaser as a consequence of the Completion of this agreement
or the Completion of this agreement upon its particular terms.
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SCHEDULE 4
Form of Tax Deed
Date: __ June 1996
Parties:
1. "the Covenantors": the persons named as signatories to this deed.
2. "the Purchaser": Caribiner Holdings (UK) Limited (registered no
3189671) whose registered office is at Steam Packet
House, 76 Cross Street, Manchester, M2 4JU
Recital:
This deed is entered into pursuant to an agreement made between the Covenantors
(1) and the Purchaser (2) and the Guarantor (3) relating to the sale of all the
ordinary share capital of the Company ("the Agreement").
Operative Provisions:
1. Definitions
In this Deed:
1.1 Words and expressions defined in the Agreement shall, except where
otherwise provided or expressly defined below, have the same meaning in
this deed.
1.2 Where the context admits "Company" includes each Group Company, so that
this Deed shall apply to each Group Company as if it were the Company.
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1.3 "Liability to Taxation" means any liability to make a payment in
respect of Taxation including:
1.3.1 the loss, counteracting or clawing back of any Relief which
would otherwise have been available to the Company;
1.3.2 the nullifying, cancellation or set-off of a right to
repayment of Taxation which would otherwise have been
available to the Company.
1.4 "Claim for Taxation" includes any notice, demand, assessment, letter or
other document issued, or action taken, by or on behalf of the Inland
Revenue or Customs and Excise authorities or any other statutory or
governmental authority or body whatsoever in any part of the world,
whereby it appears that the Company is or may be subject to a Liability
to Taxation (whether or not it is primarily payable by the Company and
whether or not the Company has or may have any right of reimbursement).
1.5 "Final Determination" means in relation to a Claim for Taxation where
there is an appeal against that assessment:
1.5.1 an agreement under TMA s 54 or any legislative provision
corresponding to that section; or
1.5.2 a decision of a court or tribunal from which either no appeal
lies, or in respect of which no appeal is made within the
prescribed time limit.
2. Covenant
2.1 Subject as provided below, the Covenantors jointly and severally
covenant with the Purchaser to pay to the Purchaser an amount equal to:
2.1.1 either any Liability to Taxation of the Company arising by
reason of or in consequence of or in connection with any
Liability to Taxation arising
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wholly or partly in respect of, or in consequence of any acts,
omissions or transactions whatsoever of the Company or of the
Covenantors occurring or entered into on or before the date of
this Deed;
2.1.2 any settlement of a Claim for Taxation pursuant to clause 6
(Conduct of Claims) where the Claim related to a Liability to
Taxation to which clause 2.1.1 would have applied;
2.1.3 the reasonable costs incurred by the Company in relation to
any demands, actions, proceedings and claims in respect of
Liabilities to Taxation or Claims for Taxation.
2.2 In respect of any payment due from the Covenantors under clause 2.1,
the Purchaser may if it is satisfied that it will be or has been
subject to a Liability to Taxation calculate and demand in writing from
the Covenantors from time to time such amount as will ensure that the
net receipt to the Purchaser (after Taxation) in respect of the payment
is the same as it would have been were the payment not subject to
Taxation in the hands of the Purchaser.
3. Exclusions and Limitations
3.1 The provisions of Schedule 6 (other than clauses 1.1.1 and 1.1.3) to
the Agreement shall apply to the covenant in clause 2.1.
4. Over provisions
4.1 If the auditors for the time being of the Company certify (at the
request and reasonable expense of the Covenantors) that any provision
for Taxation in the Principal Accounts other than a provision for
deferred tax) has proved to be an overprovision, then the amount of
that Overprovision as adjusted in accordance with Clause 4.2 (the
"Overprovision"), shall be dealt with in accordance with this clause 4.
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4.2 The amount of the Overprovision shall be calculated on the basis that
no Overprovision may arise or be increased by:-
4.2.1 a retrospective change in the law of Taxation announced after
Completion;
4.2.2 any relief arising after Completion; or
4.2.3 any act of the Purchaser or the Company carried out after
Completion.
4.3 The amount of the Overprovision shall be used as follows:-
4.3.1 the Overprovision shall be set against any payment then or
subsequently due from the Covenantors under this Deed or under
the Taxation Warranties.
4.3.2 to the extent there is an excess, a refund shall be made to
the Covenantors of any previous payment or payments made by
the Covenantors under this Deed (and not previously refunded
under this Deed) up to the amount of the excess.
5. Corresponding Benefit
5.1 If any of the Group Companies or the Purchaser or any subsidiary of the
Purchaser receives a benefit or makes a saving which it would not have
received or made but for the circumstances giving rise to a claim under
this Deed, then:-
5.1.1 the Purchaser shall procure that full details thereof are
given to the Covenantors as soon as is reasonably practicable
and, in any event within 14 days;
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5.1.2 the Purchaser shall procure that any payment already made by
the Covenantors in respect of the claim is forthwith repaid to
the Covenantors up to the amount in aggregate of the benefit
or saving (including any interest or repayment supplement);
and
5.1.3 so far as not so repaid or paid, the amount of the benefit or
saving (including any interest or repayment supplement) shall
be set against any liability of the Covenantors in respect of
the claim and any future payment or payments which become due
from the Covenantors under this Deed.
6. Conduct of Claims
6.1 The Purchaser shall notify the Covenantors promptly in writing of any
Claim for Taxation which comes to its notice whereby it appears that
the Covenantors are or may become liable under this Deed. Where a time
limit for appeal applies to the Claim, the notification shall be given
as soon as reasonably possible after the date on which the Claim comes
to the notice of the Purchaser and in any event, within twenty-one days
but, where no time limit applies or the period to which the limit
relates has not commenced, the notification shall be given within
twenty-eight days of that date.
6.2 The Purchaser shall ensure that a Claim for Taxation to which this deed
applies, is, so far as reasonably practicable, dealt with separately
from claims to which it does not apply and is not paid prematurely; and
for this purpose any payment made to avoid incurring interest or any
penalty in respect of unpaid taxation shall be deemed not to be paid
prematurely.
6.3 Subject to clause 6.6, the Purchaser shall ensure at the request in
writing of the Covenantors that the Covenantors are placed in a
position to dispute on behalf of the Company any Claim for Taxation to
which this deed applies and shall render, or cause to be rendered, to
the Covenantors at their expense all such
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assistance as the Covenantors, or a majority of them, may reasonably
require in disputing any Claim for Taxation.
6.4 Subject to clause 6.5, the Covenantors shall be entitled on behalf of
the Company to instruct such solicitors or other professional advisers
as the Covenantors, or a majority of them, may nominate to act on
behalf of the Covenantors or the Company, to the intent that the
conduct, and costs and expenses, of the dispute shall be delegated
entirely to and be borne solely by the Covenantors.
6.5 In connection with the conduct of any dispute relating to a Claim for
Taxation to which this deed applies:
6.5.1 the Covenantors shall keep the Purchaser fully informed of all
relevant matters and the Covenantors shall promptly forward or
procure to be forwarded to the secretary of the Purchaser
copies of all correspondence and other written communications
pertaining thereto;
6.5.2 the appointment of solicitors or other professional advisers
shall be subject to the approval of the Purchaser, such
approval not to be unreasonably withheld or delayed;
6.5.3 the Covenantors shall make no settlement or compromise of the
dispute, nor agree any matter in the conduct of the dispute
which is likely to affect the amount involved or the future
Liability to Taxation of the Company adversely without the
prior approval of the Purchaser, such approval not to be
unreasonably withheld or delayed;
6.5.4 if any dispute arises between the Purchaser and the
Covenantors as to whether the Claim should at any time be
settled in full or contested in whole or in part, the dispute
shall be referred to the determination of a senior tax counsel
of at least ten years standing appointed by agreement
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between the Purchaser and the Covenantors, or (if they do not
agree) upon the application by either party to the President
for the time being of The Law Society, whose determination
shall be final. The counsel shall be asked to advise whether
in his opinion an appeal against the Claim for Taxation would
on the balance of probabilities be likely to succeed and as to
how the costs of such dispute of and arising from the
determination should be allocated between the Covenantors and
the Purchaser. Only if his opinion is in the affirmative shall
an appeal be made and that Claim for Taxation not then
settled. Any further dispute arising between the Covenantors
and the Purchaser as to whether any further appeal should be
pursued following determination of an earlier appeal (whether
or not in favour of the Company) shall be resolved in a
similar manner. In the event that the counsel does not
determine the costs of the determination then such costs shall
be borne as to one half by the Covenantors and as to the other
half by the Purchaser.
6.6 The Covenantors shall at the request of the Purchaser provide, to the
reasonable satisfaction of the Purchaser, reasonable security or
indemnities, or both, in respect of all the reasonable costs and
expenses of disputing any Claim for Taxation to which this deed
applies.
6.7 The Purchaser shall not be subject to any claim by or liability to, any
of the Covenantors on the ground that it has not complied with the
foregoing provisions, if it has bona fide acted in accordance with the
instructions or approval of the Vendor's Committee.
7. Dates for and Quantum of Payments
7.1 This clause shall apply solely for determining the date on which any
payments or repayments shall be made by or to the Covenantors pursuant
to this deed and (where expressly provided) the amounts of the payments
or repayments.
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7.2 The Covenantors shall make payment to the Purchaser to the extent that
and on the date on which the Company discharges or is deemed to
discharge a Liability to Taxation in respect of which the Purchaser is
entitled to be indemnified under this deed.
7.3 The Purchaser shall make a repayment to the Covenantors to the extent
that and on the date on which the Company receives any repayment of any
amount paid in respect of any Liability to Taxation pursuant to clause
7.2. Any repayment to the Covenantors pursuant to this clause 7.3 shall
not prejudice the right of the Purchaser to recover from the
Covenantors under this deed in the event that a further Liability to
Taxation is imposed upon the Company, whether in respect of matters to
which the repayment relates or otherwise.
7.4 For the purposes of clause 7.2, the Company shall be deemed to
discharge a Liability to Taxation:
7.4.1 on the date on which the Company pays any amount of Taxation;
7.4.2 on the date on which any Liability to Taxation would have
fallen due but for Reliefs, rights of repayment or other
rights or claims of a similar nature made by the Company
and/or the Purchaser in accordance with Schedule 7 of the
Agreement.
7.5 For the purposes of clause 7.3, the Company shall be deemed to receive
a repayment:
7.5.1 on the date on which the Company receives a repayment of
Taxation to which clause 7.2 applies;
7.5.2 if and when the Company would have received a repayment but
for a Liability to Taxation in respect of which the Purchaser
is not entitled to be indemnified under this deed;
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7.5.3 if and when the Company would have received a repayment had
the Liability to Taxation been discharged by a payment of
Taxation; or
7.5.4 if and when the Company is able to obtain the benefit of a
reduction in its Liability to Taxation as a result of the
right to repayment.
7.6 Upon Final Determination of a relevant Claim for Taxation the
Covenantors shall promptly pay to the Purchaser such amount or further
amount in addition to any sums already paid under this deed as is
required to cover the full liability of the Covenantors under this
deed.
7.7 Any dispute in relation to the provisions of clauses 7.4, 7.5 or 7.6
may be referred, by the Purchaser or the Covenantors, to the auditors
for the time being of the Company, acting as experts and not as
arbitrators, whose certificate shall be final and binding upon the
parties in the absence of manifest error.
8. General
8.1 The Purchaser shall use its reasonable endeavours to procure that each
other Group Company performs its obligations under this deed.
8.2 This deed shall be binding on the Covenantors and their respective
successors and personal representatives.
8.3 The benefit of this deed may not be assigned in whole or in part by the
Purchaser.
8.4 The provisions of the Agreement relating to notices, shall apply to any
notice to be given under, or in connection with, this deed.
8.5 The construction, validity and performance of this deed shall be
governed by the laws of England.
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8.6 This Deed may be entered into in any number of counterparts and by the
parties to it on separate counterparts, each of which when so executed
and delivered shall be an original, but all counterparts shall together
constitute one and the same instrument.
Executed as a Deed by Peter )
Berners-Price of Whitegate )
Commonwood, Nr Kings Langley )
Herts WD4 9BB in the presence of:- )
Executed as a Deed by Mark )
Wallace of Woodmans Cottage, )
Fingest Road, Nr Henly on Thames )
Oxon RG9 6PU in the presence of:- )
Executed as a Deed by Anthony )
Crawford of The End House, )
Parsons Wood, Parsonage Lane, )
Farnham Common, Bucks SL2 3NZ )
in the presence of:- )
Executed as a Deed by Bernard )
Bussy of Woodlands House, Whittle )
Close, Forest End Road, Sandhurst )
Surrey GU17 8JT in the )
presence of:- )
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Executed as a Deed by Laurence )
Croneen of 5 Broomhouse Road )
London SW6 5QS in the presence )
of:- )
Executed as a Deed by Richard )
Collison of 19 Queens Court )
Queens Road, Richmond, Surrey )
TW10 9LA in the presence of:- )
Executed as a Deed by )
Rupert Evans of )
c/o Spectrum )
Communications Plc )
P.O. Box 14208 )
Bin Khedia Centre 3rd Floor )
Al Garhoud Bridge Road )
Dubai UAE )
in the presence of:- )
Executed as a Deed by )
Arif Hamid of )
Flat 1 )
12 Larkfield Road )
Richmond )
Surrey TW9 2PF )
in the presence of:- )
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Executed as a Deed by )
Jeremy Garbett of )
33 St Peter's Grove )
London )
W6 NAY )
in the presence of:- )
Executed as a Deed by )
Christine Chapman of )
18 Priory Avenue )
Chiswick )
London )
W4 1TY )
in the presence of:- )
Executed as a Deed by )
Clifford Zenker of )
Tile Cottage, The Square )
Greatworth, Banbury )
Oxon )
OX17 1SP )
in the presence of:- )
Executed as a Deed by )
Edward Marron of )
5 Braybrook Street )
London )
W12 OAB )
in the presence of:- )
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Executed as a Deed by )
Carol Lamb of )
206 Westcott Crescent )
Hanwell )
London )
W7 1NU )
in the presence of:- )
Executed as a Deed by )
Tina Straughan of )
c/o Spectrum )
Communications LLC )
P.O.Box 14208 )
Bin Khedia Centre, 3rd Floor )
Al Garhoud Bridge Road )
Dubai UAE )
Executed as a Deed by )
Ashley Redsell of )
Barton House, Wappenham Road )
Syresham, Northants, NN13 5HQ )
Executed as a Deed by )
Micou Crawford of )
The Cottage, Sunnyside Farm )
Wall Hill Road, Corley Moor )
Coventry, CV7 8AH )
Executed as a Deed by )
Barbara Bright of )
103 Avondale Road, Mortlake )
London SW14 8PU )
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Executed as a Deed by )
Taryn Fulton-Hart of ) 1
Munster Mews, 323a Lillie Road )
London SW6 7LL )
Executed as a Deed by )
Lucy Zeal of )
11 Neville Street, London W7 3AR )
Executed as a Deed by )
Trustees of Christopher Harper )
Memorial Fund c/o R Calcott )
The Elms Consultancy, Boundary )
Elms, Burchetts Green Lane, )
Burchetts Green, Nr Maidenhead )
Berkshire SL6 3QP )
Executed as a Deed by )
Paul Swan of )
Woodlands House, Whittle Close, )
Forest End Road, Sandhurst, )
Surrey GU17 8JT )
Executed as a Deed by )
Nick Matthews of Combe Hill Court )
Shacombe, Banbury, Oxfordshire )
OX17 2AN )
Executed as a Deed by )
Alison Lloyd-Adams of 8 Priest Park)
Avenue, Harrow, London HA2 ORB )
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Executed as a Deed by )
Siobhan Maloney of 87 Evergreen )
Way, Hayes, Middlesex UB3 2BH )
Executed as a Deed by )
Simon Ludgate of 12 Willow Lodge )
River Gardens, 70 Stevenage Road )
London SW6 6NW )
Executed as a Deed by )
Mark Fogwill of Cobwebs, Hardwick )
Road, Witchchurch on Thames )
Oxfordshire RG8 7HL )
Executed as a Deed by )
Jennifer Zolkwer of 72 All Saints )
Avenue, Maidenhead, Berkshire )
SL6 6LZ )
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SCHEDULE 5
Short Particulars of the Properties
1. Units 16, 17 and 18, Acton Park Industrial Estate, The Vale, Acton W3
2. Unit 14, Acton Park Industrial Estate, The Vale, Acton W3
3. 32 Berrymede Road, London W4
4. 257 Summer Lane, New Town, Birmingham
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SCHEDULE 6
Warrantors' Protection Provisions
1. Limitations on Claims
The liability of the Warrantors shall be limited in accordance with
this Schedule but without prejudice to clause 9.15 of the agreement:-
1.1 Disclosure Matters
1.1.1 Disclosure Letter: subject to paragraph 1.8.2 of this
Schedule no claim shall arise in respect of any
matter which has been fairly disclosed in the
Disclosure Letter.
1.1.2 Accounts: no Claim shall arise to the extent that
proper provision or allowance has been made in
relation to the circumstance giving rise to such
Claim in the Principal Accounts or the Warranted
Accounts and the amount of any Claim shall be reduced
to the extent provided for or reserved in the
Principal Accounts or the Warranted Accounts in
relation to the subject matter of the Claim.
1.1.3 Prior Knowledge of Breach: subject to paragraph 1.8.1
of this Schedule no Claim shall arise if and to the
extent that prior to Completion, the Purchaser or
Guarantor was fully aware of the fact, matter or
event which constitutes the breach and knew (or ought
reasonably to have known) prior to Completion, such
fact, matter or event would give rise to a Claim.
1.2 Time Limits
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1.2.1 No Claim shall arise unless the Warrantors are given
written notice by the Purchaser containing details of
the Claim including the Purchaser's estimate of the
amount of the Claim within of six months of the end
of the Earn Out Years in respect of any Claim.
1.2.2 Any such Claim shall (if not previously satisfied,
settled or withdrawn) be deemed to have been waived
or withdrawn by 31st March 2000 unless proceedings in
respect thereof have already been commenced against
any of the Warrantors and served upon (or a copy
delivered to) at least one member of the Vendor
Committee.
1.2.3 Until the determination of EBITDA for the year ending
30th September 1999 the Purchaser shall not enforce
any award for damages for a breach of the Warranties
nor under the Tax Deed save to the extent that the
Warrantors prior to such determination receive cash
under the terms of the Loan Notes issued to them by
way of consideration.
1.3 Financial Limits
1.3.1 Deductible: the Warrantors shall not be liable in
respect of any Warranty Claim unless and until the
aggregate amount of the Warrantors' liability for all
Warranty Claims exceeds (pound) 100,000 in which
event the Purchaser shall be entitled to claim the
full amount of such Warranty Claims and not just the
excess.
1.3.2 Limitation of Liability: the aggregate liability of
the Warrantors in respect of Claims shall not exceed
the aggregate of (pound) 1,142,000 and the Earn Out
Payments.
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1.3.3 The aggregate liability of each Vendor under the
Warranties and the Tax Deed (and, in the case of the
trustees of the Christopher Harper Memorial Fund, all
liabilities whatsoever and howsoever arising under
this agreement and the agreements and Deed
contemplated by this agreement) shall not exceed the
consideration received by each under this agreement
net of any income tax assessed against him in
consequence of the transfer to him of Shares
immediately prior to this agreement.
1.4 Mitigation/Defence of Claims
1.4.1 Mitigation: nothing in this agreement shall in any
way restrict or limit the general obligation at law
of the Purchaser and each Group Company to mitigate
any loss or damage which it might suffer in
consequence of any breach of the Warrantors of the
terms of this agreement or any fact matter event or
circumstance giving rise to a Claim.
1.4.2 Third Party Claims: where the Purchaser or any Group
Company is or becomes entitled to recover from a
person (including, without limitation, an insurer or
the Inland Revenue or other taxing authority) (but
excluding the Warrantors) a sum in respect of a
Claim, then:
1.4.2.1 the Purchaser shall give the Warrantors full
details thereof as soon as is reasonably
practicable and, in any event, within 14
days;
1.4.2.2 the Purchaser shall repay or procure the
repayment to the Warrantors any sum
recovered so far as it does not exceed any
payments already made by the Warrantors in
respect of the Claim
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and pay to the Warrantors any interest or
repayment supplement received in respect of
that sum so far as repaid;
1.4.2.3 so far as it is so repaid or paid, the
amount of the sum recovered (including any
interest or repayment supplement) shall be
set against the liability of the Warrantors
in respect of the Claim.
1.4.3 Warrantors' Right to Defend/Mitigate: the provisions
of Clause 6 of the Tax Deed shall apply to any claim
made under the Tax Deed or in respect of the Taxation
Warranties. In respect of the Warranties other than
the Taxation Warranties, no Claim shall be made
unless the Purchaser gives notice in writing to the
Warrantors of any claim, action, demand or other
event or circumstance giving rise to the Claim of
which it has become aware within a reasonable time of
the Purchaser becoming aware that a Claim could be or
has been made.
1.5 Subject to paragraph 1.8.2 of this Schedule, the Warrantors'
liability for breach of any of the Warranties or under the Tax
Deed shall be reduced to the extent that the Purchaser's
liability to make Earn Out Payments under this agreement are
reduced as a result of the circumstances giving rise to the
Claim.
In the event that a Claim by the Purchaser is satisfied in
whole or in part by the Vendor, the Covenantors or the
Warrantors, as appropriate, and the matter complained of
adversely affects EBITDA for a subsequent financial year, then
in that subsequent financial year EBITDA shall be increased by
an amount equal to the lesser of:-
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(1) the amount paid to the Purchaser (by way of set off
or otherwise) in respect of that Claim; and
(2) the amount by which EBITDA is reduced as a result of
the circumstances giving rise to the Claim
1.6 Insurance: the amount of a Claim shall be reduced by the
amount of any recovery in respect of the subject matter of the
Claim under any policy of insurance effected by or for the
benefit of any Group Company which actually is received by or
on behalf of any Group Company less the total amount by which
the premiums in respect of such policy of insurance in the 3-
1/2 years following such claim might reasonably be expected to
increase due to such claim being made by the Group Company.
1.7 Post Completion Events: no Claim shall arise or be increased
as a result of:-
1.7.1 any alteration in rates of Taxation after Completion
with retrospective effect or which results in a
provision or reserve in the Principal Accounts or
Warranted Accounts being insufficient; or
1.7.2 the passing of, withdrawal of or any change in, any
legislation or Inland Revenue published practice
after Completion whether or not the change or changes
purport to have retrospective effect; or
1.7.3 any change in accounting policy or practice of any
Group Company after Completion, including, without
limitation, any Claim arising or being increased as a
result of any change to Taxation following from the
co-ordination of the bases upon which any Group
Company and the Purchaser (or any subsidiary of the
Purchaser) value their respective assets or any other
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change in the basis on which any Group Company values
its assets; or
1.7.4 any major change after Completion in the nature or
conduct of any trade or business carried on by or in
the ownership of any Group Company.
1.8 Exclusions:
1.8.1 none of the provisions of this Schedule 6 shall apply
in respect of the warranties contained in clauses
5.1, 5.2, 5.3 and 5.5 of this agreement save that a
Warrantor shall have no liability for a breach of the
warranties contained in clause 5.1, 5.2 and 5.3 in
the event that the matter or matters giving rise to
such breach occurred wholly in a period when the
Warrantor was neither a shareholder nor an employee
of any Group Company and the Warrantor had no
knowledge of such matter or matters prior to the date
of this agreement.
1.8.2 the disclosures made in the Disclosure letter in
relation to non-payment of amounts owing to Group L
Companies by Europe-On-Line (reference: paragraph
1.6) and an audit of a project carried out by a Group
Company for General Motors (reference: paragraph
2.9.1) shall not be deemed to limit the liability of
the Warrantors under any paragraph of Schedule 3
(including but not limited to paragraph 1.10 of that
Schedule) in respect of such potential liabilities;
(i) the maximum aggregate liability of the
Warrantors under the agreement and, in
particular, this Schedule 6 shall be limited
to (pound) 160,000; and
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(ii) no Claim shall be enforced (whether by set
off or otherwise however) until after
determination of EBITDA for the year ending
30 September 1999.
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SCHEDULE 7
Purchaser's Covenants
1. Application
For the avoidance of doubt the provisions of this Schedule 7 shall not
apply to any Group Company:
1.1 to the extent that the Purchaser obtains the prior written
consent of the Vendor Committee to a specific disapplication
of any such provision; or
1.2 after 30th September 1999; or
1.3 which becomes unable to pay its debts as they fall due
(otherwise than as a result of action by the Purchaser or any
of its subsidiaries in breach of the provisions in this
Schedule 7) ; or
1.4 if compliance by the Purchaser with such provision would cause
it to be in material breach of any obligation, promise or
agreement entered into or given by it or any of the Vendors
prior to Completion; or
1.5 if the EBITDA for any of the Earnout Years falls below (pound)
1m or if in the reasonable opinion of the Board of the Company
taking account of seasonal trends in the business of the Group
Companies and of the industry in general there is a
significant likelihood that in any Earnout Year the EBITDA
will fall below (pound) 1m; or
1.6 if the Group Companies do not remain in all material respects
within the budgets set out by the Board of Directors of the
Company in accordance with paragraph 5 below other than by
reason of any breach of any agreement by the Purchaser or the
Guarantor.
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Unless in the case of paragraphs 1.3, 1.5 or 1.6 the relevant
event or circumstance has arisen as a direct or foreseeable
result of the use by an "A" Director or any Director with any
analogous power of any weighted voting right.
2. Operating Control
2.1 The Purchaser shall allow the Vendor Executives and Management
Committees of all Group Companies' Boards to have day to day
operational control of the business of the Group (and for the avoidance
of doubt of each Group Company) but subject to the overall control of
the Board of Directors of the Company nominated by the Purchaser in
respect of financial and policy matters.
2.2 In the event that an "A" Director or any other director having an
analogous power exercises any weighted voting right as a director of
any Group Company the Purchaser will agree with the Vendor Committee,
in the form of an EBITDA Memorandum, a reasonable adjustment to reflect
any adverse effect of such exercise PROVIDED THAT nothing in this
paragraph shall in any way be deemed to affect or restrict the right of
such director to exercise such right.
2.3 The Purchaser agrees that it shall not and shall procure that its
subsidiary companies shall not take any action to remove any director
from their office as director of the Company or any of its subsidiaries
until after 30th September 1999 unless:
(a) circumstances which would permit the relevant Company lawfully
to terminate his employment contract or
(b) he has resigned from his employment in circumstances where he
has not been constructively or unlawfully dismissed; or
(c) the prior consent of the Management Committee is obtained.
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2.4 Whilst the Purchaser recognises that the Vendors will work
substantially full time for the benefit of the Group Companies the
Vendors may from time to time be required by the Purchaser at its
reasonable request to devote time to matters outside the business of
the Group Companies.
2.5 Other than in the case of Mr Berners-Price (in whose case up to half of
his time may be devoted to seeking acquisition of similar businesses to
that of the Company in Europe and the Middle East) the Purchaser agrees
that it would be unreasonable to make requests under paragraph 2.3
above if the consequence of complying with such request would be likely
materially to adversely affect EBITDA during the Earn Out Years;
2.6 Promptly upon (as appropriate) request the Purchaser shall reimburse it
or the Company and/or Mr Berners-Price for any expenses reasonably
incurred by it or him (and which the Purchaser knew or ought reasonably
to have expected he would incur) in seeking an acquisition of a similar
business on behalf of the Guarantor and its subsidiaries unless such
business is acquired by a Group Company.
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3. Clients
3.1 The Purchaser shall not compel or prevent the Group to or from trading
or dealing with any particular person, firm or company whether for
goods or services and shall not impose any requirements on the Group to
buy or sell goods or provide or receive services at any particular
price or on any particular terms so that all trading and related
transactions of the Group will be freely negotiated at arms length
provided that if the Purchaser is of the reasonable opinion that it is
in the best long term interests of the Group not to deal or trade with
any particular person, firm or company, then the restriction in this
paragraph 3 shall not apply (so long as the same is applied to the
Purchaser and all other subsidiaries of the Purchaser) and the
Purchaser shall at the time of making such decision agree to a
reasonable adjustment to the earn out formula in the form of an EBITDA
Memorandum to reflect any material adverse effect on EBITDA arising
from such decision.
4. Branding
The Purchaser shall during the Earn Out Years allow the Group to
continue to use the brand of MWA and Spectrum in relation to their
respective businesses and clients.
5. Budgets
By an agreed date prior to the commencement of each financial year the
Vendor Committee will procure that the boards of each operating Group
Company shall produce and circulate to the directors of the Company
draft operating budgets for each Group Company which will be produced
in a format reasonably requested by the Purchaser.
The parties commit to endeavours in good faith to agree an operating
budget for the year to which the budget relates as soon as practicable
and in any event
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prior to the commencement of the financial year to which it relates and
to endeavour in good faith to finalise a budget by consensus rather
than dictate.
The Purchaser shall take all reasonable steps within its control to
ensure that so far as reasonably practicable it makes available such
financial and other resources to the Group Companies as are envisaged
by the annual budget agreed by the Board of the Company for each
financial year. Reasonable ongoing working capital shall be made
available by the Purchaser as envisaged by the annual budget and also
to accommodate unforeseen circumstances and seasonal variations in the
Group's trading position.
6. Acquisitions and Disposals
6.1 In the event that the Guarantor or any of its subsidiaries other than a
Group Company acquires sets up or disposes of any business operation in
Europe or the Middle East (which for the avoidance of doubt includes
the Gulf Co-operation Council States) then the Purchaser will agree, in
the form of an EBITDA Memorandum with the Vendor Committee, a
reasonable adjustment to reflect any adverse effect of such
acquisition, disposal or set up on the consideration payable under
clause 3.3 of this Agreement provided that nothing in this paragraph
shall restrict in any way or be deemed to restrict in any way the right
of the Purchaser to make such acquisitions, disposals or set ups.
6.2 The parties agree that during the Earn Out Years neither the Company
nor any of its subsidiaries will acquire or agree to acquire any shares
in any company or any assets constituting a business unless and until
the parties have agreed an EBITDA Memorandum to take account of such
acquisition.
6.3 The parties agree that during the Earn Out Years no material departure
from its prevailing ordinary course of business shall be made by any
Group Company without prior discussion at a meeting of the directors of
the Company.
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7. Management Charges
The Purchaser shall not make any management or other charges to the
Group Companies other than those charges for services reasonably
required by the Group Companies or those contained in the agreed annual
budgets.
8. No Manipulation of EBITDA
Each of the Vendors and the Purchaser shall co-operate in good faith to
allow the management of the Group to continue to operate the businesses
in the ordinary course and in accordance with the agreed annual budget.
The parties shall not do any act or omit to do anything whereby the
invoicing of any work-in progress or the incurring of any cost is
delayed or accelerated so as to artificially affect the EBITDA in the
Earn Out Years.
9. Accounting Bases
The Vendors and the Purchaser shall use their respective best
endeavours to procure that the statutory accounts of the Group
Companies for the year ending 30th September 1996 and each financial
year falling within the Earnout period are prepared in accordance with
UK GAAP as applicable to and on the same basis, principles and policies
adopted in the Warranted Accounts.
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SCHEDULE 8
PART I
FORM OF
1998 LOAN NOTES
Dated 1st October 1997
CARIBINER HOLDINGS (UK) LIMITED
LOAN NOTE INSTRUMENT
relating to (pound) 36,650 unsecured loan notes 1998
Wacks Caller
Steam Packet House
76 Cross Street
Manchester
M2 4JU
Tel: 0161 957 8888
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THIS INSTRUMENT is made the 1st day of October 1997 by CARIBINER HOLDINGS (UK)
LIMITED (Registered Number 3189671) ("the Company") having its Registered Office
at [o]
WHEREAS The Company has by a resolution of its board of directors passed on the
day of [o] 199[o] created (pound) 36,650 unsecured loan notes 1998 and has
determined to constitute and issue the same in the manner and upon terms set out
below.
NOW THIS INSTRUMENT WITNESSETH and the Company HEREBY DECLARES as follows:-
1. Interpretation
(a) In this Instrument and the Schedules hereto, unless the context
otherwise requires:
"Agreement" the Share Sale Agreement of even date and made
between (1) Peter Devonald Berners-Price and
others and (2) the Company
"Articles" means the Articles of Association of the Company
for the time being in force
"Business Day" a day when UK clearing banks are open for normal
retail banking business in the City of London
(excluding Saturday and Sunday)
"CA" Companies Act 1985 as amended by the Companies
Act 1989
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"Certificate" the certificate to be sent to each Noteholder
evidencing the principal amount of Notes
registered in the name of such Noteholder in the
form appearing in Schedule One of this Instrument
"Conditions" the conditions endorsed on the Notes to be in the
form set out in Schedule Two
"Group Companies" SCH and the Subsidiaries
"Guarantor" Caribiner International Inc a Company
incorporated in the State of New York, USA)
"Interest Rate" the base rate of the National Westminster Bank
plc from time to time less 1% unless and whilst
the Company shall be in breach of its obligation
to make any payment hereunder in which case it
shall be the base rate of the said bank plus 3%.
"Notes" the (pound) 36,650 Unsecured Guaranteed Loan
Notes 1998 of the Company constituted by this
Instrument
"Noteholders" the holder or holders of all or any of the
Certificates being the person or persons for the
time being entered into the register hereinafter
mentioned as such holder or holders
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"Premium" in relation to each Note the amount of the
Repayment Premium to which such Note may be
entitled on repayment under the Conditions
"Repayment Date" the date which is 7 days after either the
certification of EBITDA for the financial year
ending 30th September 1997 is agreed by the
Vendor's Committee and the Company or the date of
determination of EBITDA for the financial year
ending 30th September 1997 by the Independent
Accountant in accordance with clause 3.11 of the
Agreement or 6th April 1998 whichever shall be
the later
"Repayment Premium" the amount which is the lesser of:
i) 50% of the amount which is produced by using
the following formula:
(Y x 3.5)
-------
3
where Y is the amount by which EBITDA for
the financial year ending 30th September
1997 exceeds (pound) 1,000,000;
ii) (pound) 530,000
less in either case the total of:
a) the sum of (pound) 60,000; and
b) the nominal amount of the Notes
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"SCH" SCH International Limited (Registered No 2467201)
"the Subsidiaries" the Companies listed in Schedule 2, Part 11 of
the Agreement
(b) Words denoting persons only shall include corporations and the singular
shall include the plural and vice versa.
(c) Words and expressions defined in the Agreement shall have the same
meaning in this Instrument and the Schedules hereto unless otherwise
expressly provided below.
2. Principal Amount
The aggregate principal amount of the Notes is limited to (pound)
36,650 and the Notes will be issued in denominations and integral
multiples of (pound) 0.01p.
3. Guarantee
All obligations of the Company in respect of the Notes under shall be
guaranteed by the Guarantor under the term of clauses 3.15 of the
Agreement.
4. Notes
(a) The Notes shall be in the form set out in Schedule One hereto and shall
have endorsed thereon the Conditions. The Notes shall be executed as a
deed by the Company in accordance with the provisions of the Articles.
(b) The Notes shall be held subject to and with the benefit of the
Conditions and such Conditions shall be binding on the Company and the
Noteholders. A
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person on becoming a Noteholder is entitled without charge to one
Certificate for the total principal amount of the Notes registered in
his name. The Company and the Noteholders shall comply with the
provisions of this Deed and of the Schedules hereto and the Notes shall
be held subject in all respects to such provisions all of which shall
be binding upon the Company and the Noteholders.
5. Repayment
(a) The Company shall on such date as the Notes or any of them shall become
repayable in accordance with the provisions of the Conditions, pay to
the relevant Noteholders the amounts as shall have become so repayable
under Condition 3 of the Conditions.
6. Interest
(a) Each Note shall, from the date of issue until the whole of the
principal amount of the Note in question shall have been repaid bear
interest on its principal and Premium amount at the Interest Rate (such
interest shall accrue on the basis that the Premium determined in
accordance with the terms of this Deed is deemed to have accrued
interest from 6 April 1998 and to be calculated on the basis of actual
days elapsed and a year of 365 days) which shall accrue from day to day
and be payable on the date that such Note is repayable in accordance
with the provisions of the Conditions.
(b) All payments of interest to be made in respect of Notes will be made
after any withholding or deduction for, or on account of, any present
or future tax or duty of whatsoever nature or levied by any authority
in the United Kingdom having power to tax such payment.
7. Register
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(a) The Company will keep, procure to be kept or appoint an agent to keep
at its registered office or such other place in England (whether or not
at a nominated address of its agent) as it shall from time to time
determine and notify to Noteholders a register of Noteholders and will
enter or procure to be entered therein the issue or repayment (in whole
or in part) together with the names and addresses of the Noteholders.
(b) The said register shall be open to inspection without payment by any
Noteholder at all reasonable times and upon reasonable notice (being
not more than two working days) to the Company (or its appointed
registrar) during office hours.
(c) The said register may be closed at such times and for such periods as
the Company may from time to time determine PROVIDED that it shall not
be closed for more than thirty days in any calendar year and not for
any period exceeding five consecutive working days.
8. Governing Law
This Deed and the Notes issued pursuant hereto shall be governed by and
construed in accordance with the laws of England and Wales and the
Company, the Guarantor and the Noteholders shall be deemed to have
submitted to the non-exclusive jurisdiction of the Courts of England
and Wales.
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9. Notices
All notices to the Company and the Noteholders shall be given in the
manner specified in Condition 7.
10. Company's Powers
Without prejudice to all other powers of the Company, or any of the
provisions of the Articles of the Company, nothing contained herein or
in the Schedules hereto shall prevent the Company:
(i) by resolution of its board of directors from creating or
issuing further loan notes; or
(ii) from exercising its borrowing powers in such manner as is
permitted under its Articles; or
(iii) from charging or otherwise encumbering, whether by means of a
debenture, mortgage or otherwise, or disposing of, all or any
part of its assets, business or undertaking.
11. Conditions
(a) The Conditions contained in Schedule Two shall have effect in the same
manner as if such conditions were herein set out.
IN WITNESS WHEREOF the Company has entered into this Instrument as a Deed and
delivered the day and year first before written.
Executed as a Deed for and on behalf of )
Caribiner Holdings (UK) Limited )
by means of these signatories: )
Director
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Director/Secretary
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SCHEDULE ONE
Registered No. 3189671
Caribiner Holdings (UK) Limited
(pound) 36,650 Unsecured Guaranteed Loan Notes 1998
Issue of Unsecured Guaranteed Loan Notes being a series of Notes created by a
resolution of the board of directors of the Company passed on [ ] 199[o] and
constituted and issued pursuant to an Instrument of the Company dated [ ]
199[o] ("the Instrument") and under the authority of the Memorandum and Articles
of Association of Caribiner Holdings (UK) Limited ("the Company").
NOTE
Number Principal Amount of Note
[ ] [(pound) ]
1. The Company will on the date the principal monies hereby covenanted to
be paid shall become payable in accordance with the Conditions endorsed
hereon pay to [o] such sums being the principal and any Premium and
accrued interest to which [o] shall be entitled in accordance with the
Conditions hereon enclosed.
2. This Note is issued subject to and with the benefit of the Conditions
endorsed hereon which are deemed to be part of this Note.
THIS IS TO CERTIFY that [______________] of [______________] is/are the
holder(s) of (pound) [ ] principal amount of the above Notes issued with the
benefit of and subject to the provisions contained in the Instrument including
the Conditions endorsed hereon.
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Interest is payable in respect of the principal amount of this Note in
accordance with the provisions of the Instrument and the Schedules thereto. The
Company shall be entitled to deduct or withhold from any such payments any
present or future tax required by any statutory provision (including any
statutory instrument or legally binding regulations made thereunder) to be
deducted or withheld therefrom.
Executed as a Deed for and on behalf of )
Caribiner Holdings (UK) Limited )
by means of these signatories:- )
Director
Director/Secretary
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SCHEDULE TWO
CONDITIONS
1. Definitions
(a) In these Conditions unless there is something in the subject
or context inconsistent therewith expressions defined in the
Deed of the Company dated the [o] day of [o] 199[o] (the
"Instrument") have the same meanings wherever used herein.
2. Status
(a) The Loan Stock is an unsecured obligation of the Company.
3. Payment
(a) The principal amount of the Notes together with any Premium
and accrued interest shall be repaid in accordance with the
following provisions of this Condition 3 such repayment being
subject to any deduction or withholding required by any
statutory provision (including any statutory instrument or
legally binding regulations made thereunder) in respect of any
tax or any set off deduction or withholding pursuant to clause
3.8 onwards of the Agreement
(b) Subject to the condition 3(c), on the Repayment Date the
Company shall repay the nominal amount of the Notes together
with the Repayment Premium (which shall be apportioned between
the Notes equally) and any accrued interest on each Note up to
the Repayment Date.
(c) In the event that the amount of the Repayment Premium is, on
applying the formula contained in the definition of Repayment
Premium, nil or a negative amount then in consideration of the
guarantee in clause 3.15 of the Agreement Caribiner
International Inc shall become entitled to
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receive all monies payable by the Company in relation to the
Notes as consideration for the provision by it of the
guarantee contained therein and the Company shall have no
further obligation in relation to the Notes (as regards the
payment of principal, Premium, interest or otherwise to the
Noteholders) under the provisions of the Instrument or the
conditions or otherwise.
(d) On or before the Repayment Date and as a condition precedent
for such repayment the Noteholder shall surrender the relevant
certificate representing the Note(s) to the Company at its
registered office or, if so notified by the Company to
Noteholders, to the nominated office of any registrar
appointed by the Company with respect to the Notes.
(e) Any Note which is repaid under the terms of these Conditions
shall be cancelled. No cancelled Note shall be available for
re-issue.
(f) The interest payable in respect of a Note, the principal
monies (or any part thereof) and any Premium due in respect of
such Note will be paid to the Noteholder by the despatch by
first class post (at the risk of the Noteholder(s)) of a
cheque for the full amount payable drawn in sterling on an
account at a branch of a bank in the United Kingdom and such
cheque shall be drawn in favour of the Noteholder and crossed
account payee only. Any such cheque which has been
unconditionally drawn, despatched and honoured when duly
presented for payment by the named payee shall for all
purposes be deemed to be payment and satisfaction of the
interest, the principal monies and any Premium represented
thereby.
4. Transfer
(a) The Notes represented by the Certificates shall not be
transferable or assignable in whole or in party by a
Noteholder and a Noteholder shall
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not be able to otherwise dispose of, charge, pledge, grant
option over, settle on trust or encumber in any way whatsoever
the Notes. In the event that a Noteholder disposes of,
charges, pledges, grant options over, settles on trust or
encumbers in any way the Notes or attempts to do any of the
aforesaid or if in the reasonable opinion of the Company
beneficial ownership in the Notes has passed from the
Noteholder to a third party (save for a person becoming
entitled to the Notes in consequence of the death or
bankruptcy of a Noteholder) then no premium shall be payable
in respect of that Noteholder's Notes and the relevant Notes
shall be cancelled and neither the Company nor the Guarantor
shall have any further obligation (as regards the payment of
principal, Premium or interest) in respect of the relevant
Notes under the provisions of the Instrument, the conditions
or otherwise.
(b) No application shall be made for the Notes to be admitted to
listing or to be dealt in on any stock exchange.
5. Title
(a) The Company shall only recognise and treat the registered
Noteholder as the sole absolute owner of the Note(s)
represented by his Certificate and as alone entitled to
receive and give effectual discharges for the principal any
Premium and interest payable in respect thereof. The Company
shall not be affected by notice of any trust whether express,
implied or constructive to which the Notes or any of them may
be subject or of any right, title or claim of any person other
than the Noteholder to such Note(s).
(b) Any person becoming entitled to any Notes in consequence of
the death or bankruptcy of a registered Noteholder shall, upon
producing such evidence of his title or interest as the
Company acting reasonably shall think sufficient, be
registered himself as the holder of such Note and the
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Company shall be at liberty to retain any interest payable in
respect of any Notes to which this paragraph applies until
such person shall be registered as aforesaid.
6. Replacement of Certificate
If any Certificate is worn out, defaced, lost or destroyed it may be
renewed on payment of such fee not exceeding (pound) 10 and on such
terms as to evidence, identity, indemnity and expense incurred by the
Company or its agents in investigating or verifying title as the
directors of the Company think fit provided that in the case of a worn
out or defaced Certificate the worn out or defaced Certificate must be
surrendered before the new Certificate is issued. Any stamp or other
duty payable on such renewal shall be borne by the Noteholder.
7. Notices
(a) Notices hereunder or in connection with the provisions
contained in the Deed may be given by the Noteholder or by the
Company by posting the same in a prepaid letter by first class
post addressed to the Company at its Registered Office or (as
the case may be) to the Noteholder at his address as shown in
the register of Noteholders.
(b) Notices required to be give by the Noteholder in writing shall
be signed by the Noteholder.
(c) Any notice or document may be served on the person or persons
entitled to this Note in consequence of the death or
bankruptcy of any Noteholder by sending the same by registered
first-class pre-paid post addressed to him or them by name or
by the title of the representative or trustees of such holder
at the address (if any) in the United Kingdom supplied for the
purpose by such persons or (until such address is
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supplied) by giving notice in the manner in which it would
have been given if the death or bankruptcy had not occurred.
(d) Any notice or document served by post shall be deemed to have
been served at the time when it is posted and in proving such
service it shall be sufficient to prove that the letter
containing the notice was properly addressed, stamped and
posted.
8. Company Purchase
The Company is entitled at any time to purchase any Notes by tender or
private treaty at any price agreed with the relevant Noteholder(s).
9. Copies
A copy of the Instrument may be supplied to a Noteholder free of charge
upon receipt by the Company of a written request from such Noteholder.
10. The Noteholder shall send to the Company a copy of any demand or other
notice sent by it to the Guarantor at the same time as it sends the
same to the Guarantor and, without prejudice to the Noteholder's right
to make a demand for payment under the Guarantee in accordance with its
terms, shall consult with the Company in respect of any matter
reasonably likely to result in any dispute between the Company and the
Guarantor in respect of the Guarantee.
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<PAGE>
11. Jurisdiction
This Note and the Instrument shall be governed by and construed in
accordance with the laws of England and Wales.
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SCHEDULE 8 - PART 2
1999 "Loan Note"
Same as 1998 Loan Notes subject to the following:
(a) all agreement dates (except references to companies Act to be one year
later;
(b) "Repayment Premium" - same as 1998 except refer to financial year to
30th September 1998 and figure to be (pound) 1,100,000, not (pound)
1,000,000.
2000 Loan Note
Same as 1999 Loan Notes subject to the following:-
(a) all agreement dates (except reference to Companies Act) to be one year
later;
(b) "Repayment Premium" - the amount which is the lesser of:-
(i) the amount produced by using the following formula
((Y) - (pound) 1,103,000) x 3.5
---
( 3
Where Y is the aggregate of EBITDA for the three financial years ending 30th
September 1999; and
(pound) 8,000,000
less in either case the aggregate of:
(i) the First Earn Out payment and the Second Earn Out Payment;
and
(ii) the Wallace Prepayment; and
(iii) the nominal amount of the Notes; and
(iv) (pound) 62,000
SCHEDULE 9
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1. In this Schedule 9 the following words and expressions shall have the
following respective meanings:-
"Instruction" means a single instrument, in the form annexed
hereto, signed by the Warrantors whose Relevant
Percentages when aggregated amount to 51% or
more agreeing to make payment of a Claim; and
"Relevant Percentage" means, in relation to any of the Warrantors,
the percentage set against that Warrantor's
name in Schedule 1 hereto reflecting that
Warrantors holding of the Company's issued
share capital at Completion;
2. Upon receiving notice or intimation of a Claim or potential Claim any
Warrantor shall forthwith by written notice to each other Warrantor
(delivered to the address set out in Schedule 1 against the name of
that Warrantor or such other address as any Warrantor may notify to all
other Warrantors from time to time) convene a meeting of all the
Warrantors to be held not less than 5 business days nor more than 15
business days thereafter, at such reasonable time and place as may be
appropriate. At that meeting, which shall be quorate if attended by two
or more Warrantors or persons holding powers of attorney therefor, a
decision shall be made as to how to respond to the Claim or potential
Claim, whether by conceding , defending or settling the same or by
agreeing to schedule a further Warrantors' meeting or otherwise; and
the Warrantors may appoint one or more of their number as their agent
will full authority to represent them in this respect. Decisions shall
be made by a simple majority of votes cast by those Warrantors present,
and for this purpose each Warrantor shall be entitled to cast a number
of votes equivalent in amount to his Relevant Percentage. A decision
may be made at that meeting, or any subsequent meeting agreed to be
held and of which due notice has been given to all Warrantors in
respect of all of any part of that Claim.
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3. No Warrantor shall join in giving an Instruction or enter into any
other arrangement with the Purchaser in relation to a Claim except
pursuant to a meeting of the Warrantors validly convened and held
pursuant to this agreement. For the avoidance of doubt, the terms of
this Schedule 9 shall survive, and continue in force notwithstanding,
any breach of this paragraph 3.
4. At any meeting held pursuant to this agreement the Warrantors may
decide to instruct such professional or other advisers or agents as
they see fit in connection with any Claim, and the costs of such
advisers or agents shall be borne by all the Warrantors in shares
equivalent to the Relevant Percentages.
5. The Warrantors mutually agree with one another that as between
themselves each will contribute to any Instruction relating to
liability in respect of any Claim in proportion to his Relevant
Percentage of any such liability. Any Warrantor who may have paid any
amounts in respect of an Instruction which may be less than his
Relevant Percentage shall pay to any other Warrantor to the extent that
any such other Warrantor may have paid any amount in respect of the
Instructions which may be more than the Relevant Percentage applicable
to him PROVIDED THAT no Warrantor shall be required to pay an amount
which (together with any amounts already paid by him in respect of the
Instruction) shall exceed the Relevant Percentage of such liability.
6. If any Warrantor is declared bankrupt or remains uncontactable his
Relevant Percentage of any liability shall be borne by the other
Warrantors in proportion to their own Relevant Percentages.
7. The provisions of this Schedule 9 shall apply mutatis mutandis to any
claim made against a Major Warrantor in respect of a breach of any of
the warranties set out in clauses 5.1 to 5.3 of the agreement, save
that, in respect of each such warranty, the maximum liability of each
Warrantor (other than the named Major Warrantor or Major Warrantors in
such warranty) shall not exceed the
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consideration received by him under the agreement net of any income tax
assessed in consequence of the receipt by him of Shares from the ESOP
prior to the sale of such Shares under this agreement.
8. Claims
8. In respect of any claim against a Major Warrantor in respect of a
breach of the warranties set out in clauses 5.1 to 5.3 of the
agreement, where such warranties are given jointly and severally by
more than one Major Warrantor, each of such Major Warrantors mutually
agree with one another that, as between themselves, in respect of each
such warranty, each named Major Warrantor shall contribute to any
excess liability in respect of any such claim in proportion to their
own Relevant Percentages.
Where any excess liability means the amount of any such claim in excess
of the amount contributed by Warrantors who are not Major Warrantors in
respect of such Warranty.
9. Accordingly (and for the avoidance of doubt) it is intended that the
provisions of paragraphs 7 and 8 of this Schedule 9 shall ensure that:
(a) small claims under clauses 5.1 to 5.3 of the agreement against
Major Warrantors are borne by all Warrantors (pro rata to
their Relevant Percentages); and
(b) substantial claims under clauses 5.1 to 5.3 of the agreement
are borne first by all Warrantors as in paragraph (a) above up
to the maximum amount of consideration received by him (net of
tax) referred to in paragraph 7 above and, any excess
liability above such maximum being borne by the Major
Warrantors named in the relevant Warranty in proportion to
their own Relevant Percentages.
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<PAGE>
10. Conduit
10.1 The Warrantors agree that they shall not be entitled to commence any
proceedings in relation to a breach by the Purchaser, or any "A"
Director, of a provision of Schedule 7 (an "Action") unless with the
prior written consent of the Vendor Committee and that neither the
Purchaser nor the Guarantor shall have any liability in relation to
such Action and no action in law shall lie against either of them in
relation to the matter giving rise to such Action unless such consent
is given.
10.2 To the extent that any Warrantor commences any proceedings in relation
to an Action in breach of paragraph 10.1, upon the request in writing
at any time served upon him by the Vendor Committee, he shall
immediately withdraw such proceedings.
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<PAGE>
Executed and delivered as a deed by )
PETER BERNERS-PRICE ) /s/ Peter Berners-Price
in the presence of:- )
/s/ Susan A. Radice
as above
1 London Bridge 5EI
Executed and delivered as a deed by )
MARK WALLACE ) /s/ Mark Wallace
in the presence of:- )
/s/ Susan A. Radice
as above
Executed and delivered as a deed by )
ANTHONY CRAWFORD ) /s/ Anthony Crawford
in the presence of:- )
/s/ Susan A. Radice
as above
Executed and delivered as a deed by )
BERNARD BUSSY ) /s/ Bernard Bussy
in the presence of:- ) by his attorney
Peter Berners-Price
/s/ Susan A. Radice
as above
Executed and delivered as a deed by )
TIMOTHY ELLIOTT ) /s/ Timothy Elliott
in the presence of:- ) by his attorney
Peter Berners-Price
/s/ Susan A. Radice
as above
Executed and delivered as a deed by )
LAURENCE CRONEEN ) /s/ Laurence Croneen
in the presence of:- ) by his attorney
Peter Berners-Price
/s/ Susan A. Radice
as above
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<PAGE>
Executed and delivered as a deed by )
RICHARD COLLISON ) /s/ Richard Collison
in the presence of:- ) by his attorney
Peter Berners-Price
/s/ Susan A. Radice
as above
Executed and delivered as a deed by )
RUPERT EVANS ) /s/ Rupert Evans
in the presence of:- ) by his attorney
Peter Berners-Price
/s/ Susan A. Radice
as above
Executed and delivered as a deed by )
JEREMY GARBETT ) /s/ Jeremy Garbett
in the presence of:- ) by his attorney
Peter Berners-Price
/s/ Susan A. Radice
as above
Executed and delivered as a deed by )
CHRISTINE CHAPMAN ) /s/ Christine Chapman
in the presence of:- ) by his attorney
Peter Berners-Price
/s/ Susan A. Radice
as above
Executed and delivered as a deed by )
CARIBINER HOLDINGS (UK) LIMITED )
acting by its aforementioned officers )
Director /s/ Brian Shepherd
Secretary /s/ Harold E. Schwartz
163
<PAGE>
Executed and delivered as a deed by )
CARIBINER INTERNATIONAL, INC. ) /s/ Arthur F. Dignam
acting by its aforementioned officers )
Executive Vice President
Secretary /s/ Harold E. Schwartz
164
<PAGE>
Executed and delivered as a deed by ) /s/ Arif Hamid
ARIF HAMID )
in the presence of: )
/s/ Susan A. Radice
as above
165
DATED 13th JUNE 1996
(1) Clifford Zenker and Others
(2) Caribiner Holdings (UK) Limited
(3) Peter Devonald Berners-Price
(4) Mark Wallace
(5) Caribiner International, Inc
SHARE PURCHASE AGREEMENT
Wacks Caller
Steam Packet House
76 Cross Street
Manchester
M2 4JU
0161 957 8888
<PAGE>
THIS AGREEMENT is made the 13th day of June 1996
BETWEEN :
(1) THE PERSONS whose names and addresses are set out in Column 1 of Part
II of Schedule 1 of the Share Sale Agreement
(2) CARIBINER HOLDINGS (UK) LIMITED (Registered No. 3189671) whose
registered office is at Steam Packet House, 76 Cross Street,
Manchester, M2 4JU ("the Purchaser")
(3) PETER DEVONALD BERNERS-PRICE of Whitegates, Common Wood, Nr Kings
Langley, Hertfordshire ("Mr Berners-Price")
(4) MARK WALLACE of Woodmans Freith, Nr Lane End, Buckinghamshire ("Mr
Wallace")
(5) CARIBINER INTERNATIONAL, INC whose Principal Office is at 16 West Sixty
First Street, New York, New York 10023, USA ("the Guarantor").
WHEREAS the Vendors have agreed to sell and the Purchaser has agreed to purchase
the Shares in the Company upon the terms and conditions hereinafter appearing.
Operative Provisions:
1. Interpretation
1.1 Words and expressions defined in the Share Sale Agreement (as defined
below) shall, except where expressly provided herein or expressly
defined below, have the same meaning in this Agreement.
1.2 In the Recitals and this Agreement the following words and expressions
shall have the following meanings, unless they are inconsistent with
the context:-
"Company" SCH International Limited (registered
number : 2467201);
2
<PAGE>
"Completion" completion of the purchase of the Shares in
accordance with clause 6
"Majority Shareholders" the persons whose names and addresses are
set out in Part I of Schedule 1 of the
Share Sale Agreement
"Shares" the Ordinary Shares of 10 pence each in the
capital of the Company registered in the
names of the Vendors as set out in Part II
of Schedule 1 of the Share Sale Agreement.
"Shareholders Agreements" i) a shareholders agreement dated 15th July
1993 and made between GiroCredit Bank
Aktiengesellschaft Der Sparkassen and
certain of the Vendors and the Minority
Shareholders.
ii) a shareholders agreement dated 19th
April 1995 between Mr Berners-Price (1)
Paul and Anthony Swan (2) Anthony Bruce
Crawford (3) Bernard Philip Bussy (4)
and Timothy Martin Elliott (5) relating
to the affairs of the Company
"Share Sale Agreement" a Share Sale Agreement to be entered into
by the Majority Shareholders and others (1)
and the Purchaser (2) relating to the
purchase by the Purchaser of shares in the
capital of the
3
<PAGE>
Company not the subject of this Agreement
and the Vendor Loan Stock
"Vendors" means the persons selling shares under this
agreement as referred to in the Share Sale
Agreement as the "Minority Shareholders"
1.3 Any reference to the Vendors includes, where appropriate, their
personal representatives.
1.4 Except where the context otherwise requires, words denoting the
singular include the plural and vice versa; words denoting any one
gender include all genders; words denoting persons include firms and
corporations and vice versa.
1.5 Clause headings in this Agreement are for ease of reference only and do
not affect the construction of any provision.
2. Agreement for Sale
2.1 Subject to the terms and conditions of this Agreement and with effect
from Completion, each of the Vendors shall sell with full title
guarantee the Shares set opposite his name in column (2) of Part II of
Schedule 1 of the Share Sale Agreement to the Purchaser free from all
liens, charges and encumbrances and with all rights attaching to them
and the Purchaser shall purchase the Shares.
2.2 Each of the Vendors hereby waives any option or pre-emption rights he
may have in relation to any of the Shares or in relation to the shares
being sold under the Share Sale Agreement and/or the GiroCredit
Agreement whether under the Articles of Association of the Company or
otherwise.
4
<PAGE>
3. Purchase Consideration
3.1 The purchase consideration for the Shares shall be the payment to the
Vendors of a cash price set out in column (3) of Part II of Schedule 1
of the Share Sale Agreement to which the Vendors shall be respectively
entitled in the amount set opposite their respective names in column
(1) of Part II of Schedule 1 of the Share Sale Agreement.
3.2 By way of further consideration for the sale by the Vendors of the
Shares (subject to clauses 3.4, 3.5 and 3.6 of the Share Sale
Agreement) the Purchaser shall:-
3.2.1 issue to the Vendors on the 1st October 1997 the 1998 Loan
Notes in the nominal amounts set out in column (4) of Part II
of Schedule 1 opposite each Vendor's name in column (1) of
Part II of Schedule 1;
3.2.2 issue to the Vendors on the 1st October 1998 the 1999 Loan
Notes in the nominal amounts set out in column (4) of Part II
of Schedule 1 opposite each Vendor's name in column (1) of
Part II of Schedule 1;
3.2.3 issue to the Vendors on the 1st October 1999 the 2000 Loan
Notes in the nominal amounts set out in column (4) of Part II
of Schedule 1 opposite each Vendor's name in column (1) of
Part II of Schedule 1.
3.3 The parties agree that the further consideration payable under the
provisions of clause 3.2 shall be payable subject to the provisions of
clauses 3.4 - 3.6, 3.8, 3.9 and 3.10 of the Share Sale Agreement but
with the benefit of Schedule 7 thereof (Purchaser's Covenants) as if
the same were set out in full herein mutatis mutandis.
3.4 The Guarantor as a surety only (and not as a principal obligor)
unconditionally and irrevocably guarantees as a continuing obligation
the proper and punctual performance
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<PAGE>
by the Purchaser and/or the Company of their respective obligations
(but with the benefit against all rights of the Purchaser and/or the
Company) under:-
3.4.1 this Agreement; and/or
3.4.2 all other agreements entered into at or after Completion by
the Purchaser and/or the Company in favour of the Vendors or
any of them whether or not referred to in this Agreement or
the Share Sale Agreement (including, without limitation, the
Loan Notes to be issued or in issue at any time after
Completion) (each a "Transaction Document").
3.5 The Guarantor's liability hereunder shall not be discharged or impaired
by:
3.5.1 any failure to exercise or delaying the exercise of any right
or remedy (except a specific duly authorised written waiver or
release signed pursuant to Schedule 9 of the Share Sale
Agreement) and no partial exercise of any right or remedy
shall preclude any further or other exercise;
3.5.2 any legal limitation, disability, incapacity or other
circumstance in relation to the Purchaser, any Group Company
or any irregularity or invalidity of any obligation of the
Purchaser or any Group Company or any other person under or
pursuant to this Agreement or any other Transaction Document
so that the obligations of the Guarantor hereunder will remain
in full force and effect and this Guarantee will be construed
accordingly as if there were no such irregularity,
unenforceability or invalidity.
3.6 The Guarantor hereby waives any right it may have of first requiring
the Vendors to proceed against, or enforce any right against, the
Purchaser.
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<PAGE>
3.7 Any amounts payable hereunder shall be paid in full without deduction
or withholding whatsoever (whether in respect of set-off, counterclaim,
duties, charges, taxes or otherwise) except that the amounts due to any
individual Vendor are subject to set-off claims against that Vendor in
accordance with the terms of the Transaction Documents.
4. Warranties and Undertakings
4.1 The Vendors severally warrant and represent to and undertake with the
Purchaser in the terms of clause 5.5 of the Share Sale Agreement
subject to the provisions of paragraph 1.8.1 of Schedule 6 of the Share
Sale Agreement.
4.2 Each of the Vendors and (by virtue of the Share Sale Agreement) the
Majority Shareholders jointly and severally warrants and represents to
and undertakes with the Purchaser in the terms of the Warranties (set
out in Schedule 3 of the Share Sale Agreement) subject to the
provisions of Schedule 6 of the Share Sale Agreement (Warrantors
Protection Provisions).
4.3 The provisions of clauses 5.7 to 5.10 (inclusive) of the Share Sale
Agreement shall apply to this Agreement as if the same were set out in
full in this Agreement mutadis mutandis.
4.4 Each of the Vendors hereby covenants with the Purchaser that:
4.4.1 he will at all times after Completion comply to the best of
his ability with the terms of his service agreement with the
Company or the Subsidiaries; and
4.4.2 without the consent of the Purchaser in writing he will not
waive any remuneration, commission, bonus or any other payment
to which he may be
7
<PAGE>
entitled to whether under the terms of his service agreements
with any Group Company or otherwise; and
4.4.3 he will indemnify the Company in respect of any claims that
may be made against the Company in respect of his income tax
or national insurance contributions relating to the payment to
him of the Earn Out Payments.
5. Condition
5.1 The purchase of the Shares is conditional upon the completion of the
Share Sale Agreement and if this condition is not fulfilled by midnight
on 14th June 1996 this Agreement shall cease to have effect and each
party shall have no claim under it against the others.
6. Completion
6.1 Completion shall take place at the offices of the Vendor's Solicitors
forthwith after this Agreement has ceased to be conditional under
clause 5.1 when all transactions mentioned in the following sub-clauses
shall take place.
6.2 The Vendors shall deliver to the Purchaser duly completed and signed
transfers in favour of the Purchaser (or as it shall direct) in respect
of the Shares together with any relative share certificates which have
been issued to them.
6.3 Other than amounts advanced to the Vendors on account of expenses the
Vendors shall repay all monies then owing by them to any Group Company
whether due for payment or not.
6.4 Such of the Vendors as are required to do so by the Purchaser shall
enter into service agreements with the Company and/or one of its
subsidiaries in the Agreed Form.
8
<PAGE>
6.5 Upon completion of the matters referred to in clauses 6.2-6.4
(inclusive) the Purchaser shall deliver to Mr Berners-Price cheques for
each of the Vendors for each Vendor's entitlement to the consideration
referred to in clause 3.1.
7. Power of Attorney
7.1 Each of the Vendors hereby appoints Peter Devonald Berners-Price of
White Gates, Commonwood, Kings Langley, Hertfordshire WD4 9BB or
failing him Mark Wallace of Woodmans, Cottage, Fingest Road, Nr Henley
on Thames, Oxon RG9 6PU (hereinafter called the Attorney) to be his
true and lawful attorney with full power and authority in his name and
on his behalf to do, sign, execute all acts, documents or deeds as may
be necessary or desirable in connection with the sale of his Shares and
the sale of the whole of the issued share capital of the Company
(including without limitation any confirmation, acknowledgement, notice
or waiver to be given by any Vendor relating to his rights in the
issued share capital of the Company) and to approve consent to or make
whatever amendments or modifications to this Agreement that the
Attorney considers in his absolute discretion necessary.
7.2 Each of the Vendors hereby undertakes to ratify and confirm any act or
document whatsoever that the Attorney shall do or lawfully cause to be
done by virtue of this Power of Attorney. The authority of the Attorney
under this Power of Attorney shall cease on the expiry of 2 months from
the date hereof.
8. Shareholders Agreement
8.1 In accordance with the terms of the Shareholders Agreements such of the
Vendors as are parties thereto hereby confirm the termination with
effect from Completion of the Shareholders Agreements and further
confirm that none of them have any claim against any other party to the
Shareholders Agreements arising under the terms of the
9
<PAGE>
Shareholders Agreements or arising from a breach of the terms of the
Shareholders Agreements or otherwise.
9. Restrictive Agreement
9.1 Each of the Vendors agrees as a separate and distinct covenant with the
Purchaser on its own behalf and as trustee on behalf of each Group
Company that he will not, whether by himself, or as an employee or
agent or otherwise howsoever, for a period from Completion to the end
of the Earn Out Years directly or indirectly in relation to the
Restricted Services or any of them, solicit or canvas or otherwise deal
with the clients of the Group Companies in the Customer List and
against whose name the Vendor is listed as that client's contact.
9.2 Each of the Vendors agrees with the Company and the Purchaser that he
will not at any time after Completion or after the termination of his
employment with any Group Company, whether by himself, his employees or
agents or otherwise howsoever without the consent of the Purchaser use,
whether for himself or on behalf of any third party, or divulge to any
third party any Confidential Information.
9.3 If the Company or any Group Company shall have obtained any
Confidential Information from any third party under an agreement
including any restriction on disclosure, each of the Vendors agrees
with the Company and the Purchaser that he will not at any time without
the consent of the Company infringe such restrictions.
9.4 Each of the Vendors agrees with the Company and the Purchaser that the
restrictive covenants herein contained are reasonable and necessary for
the protection of the value of the Shares and the Company and each of
the Vendors agrees that having regard to that fact those covenants do
not work harshly on him.
10
<PAGE>
9.5 While the restrictions aforesaid are considered by the parties to be
reasonable in all the circumstances, it is agreed that if any such
restrictions taken together shall be adjudged to go beyond what is
reasonable in all the circumstances for the protection of the interest
of the Purchaser but would be adjudged reasonable if part or parts of
the wording thereof were deleted or amended or qualified or the periods
thereof were reduced or the range of products or areas dealt with were
thereby reduced in scope, then the relevant restriction or restrictions
shall apply with such modification or modifications as may be necessary
to make it or them valid and effective.
10. General
10.1 No announcement of any kind shall be made in respect of the subject
matter of this agreement unless specifically agreed between the
Purchaser and the Vendor Committee or required by law or an
announcement is required by the NYSE (in which case the Purchaser shall
consult in good faith with the Vendor Committee on the form of such
announcement).
10.2 If any of the Shares shall at any time be sold or transferred, the
benefit of each of the Warranties or any Claim or any other claim
against each of the Warrantors may be assigned to the purchaser or
transferee of those shares who shall accordingly be entitled to enforce
each of the Warranties (subject to Schedule 6) or such claims against
the Warrantors as if he were named in this agreement as the Purchaser.
10.3 This Agreement shall be binding upon each party's successors and
assigns and personal representatives (as the case may be) but, except
as expressly provided above, none of the rights of the parties under
this agreement or the Warranties may be assigned or transferred.
10.4 Subject to clause 3.7 of the Share Sale Agreement, all expenses
incurred by or on behalf of the parties, including all fees of agents,
representatives, solicitors,
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accountants and actuaries employed by any of them in connection with
the negotiation, preparation or execution of this agreement shall be
borne solely by the party who incurred the liability and no Group
Company shall have any liability in respect of them.
10.5 All notices which are required to be given hereunder shall be in
writing and shall be sent to the address of the recipient set out in
this agreement or such other address as the recipient may designate by
notice given to each of the other parties in accordance with the
provisions of this sub-clause. Any such notice may be delivered
personally or by first class prepaid letter, or facsimile transmission
and shall be deemed to have been served if by personal delivery when
delivered, if by first class post two working days following the date
of posting and if by facsimile transmission on the working day
immediately following the date of despatch.
10.6 This Agreement and the agreements and Deed referred to in it constitute
the entire agreement between the Vendors, the Purchaser and the
Guarantor with respect to the matters dealt with therein and supersedes
any previous agreement between them in relation to such matters. Each
of the Vendors and the Purchaser and the Guarantor hereby acknowledge
that in entering into this Agreement he or it has not relied on any
representation or warranty from any other save as expressly set out
herein or in any document referred to herein. No variation of this
Agreement shall be valid or effective unless made by one or more
instruments in writing signed by such of the parties hereto which would
be affected by such variation.
10.7 The Vendors shall from time to time and at all times after Completion
(at the reasonable cost of the Purchaser) execute all such deeds and
documents and do all such things as the Purchaser may reasonably
require for perfecting the transactions intended to be effected under
or pursuant to this agreement and for vesting in the Purchaser the full
benefit of the Shares.
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10.8 The Purchaser shall and the Guarantor shall (and shall procure that
insofar as it is able the Company shall) from time to time and at all
times after Completion (at the reasonable cost of the Vendors) execute
all deeds and documents and do all such things (not otherwise required
by this agreement) as the Vendor Committee may reasonably require for
perfecting:-
10.8.1 the execution by the Purchaser and the Guarantor of this
agreement or any of the other documents executed or to be
executed by them at Completion; and
10.8.2 the release of the guarantees to be released pursuant to
clause 4.10.
10.9 Notwithstanding any other provision of this agreement no provision
hereof which is of such a nature as to make this agreement liable to
registration under the Restrictive Trade Practices Act 1976 shall take
effect until the date after that on which particulars thereof have been
duly furnished to the Director General of Fair Trading pursuant to the
said Act.
10.10 Subject to clause 10.9, all provisions of this Agreement shall so far
as they are capable of being performed or observed continue in full
force and effect notwithstanding Completion except in respect of those
matters then remaining to be performed.
10.11 The constitution, validity and performance of this agreement shall be
governed by the laws of England and the parties hereby irrevocably
agree that they will submit to the non-exclusive jurisdiction of the
English Courts.
11. Further Appointment of Attorney
11.1 Each of the Vendors hereby irrevocably appoints the Purchaser as his
lawful attorney for the purpose of receiving notices of and attending
and voting at all meetings of the
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members of the Company from the date of this Agreement to that date on
which the Purchaser or its nominees is entered in the Register of
Members of the Company as the holder of the Shares.
11.2 For such purpose each of the Vendors hereby authorises:
11.2.1 the Company to send any notice in respect of his holding of
Shares of the Company to the Purchaser; and
11.2.2 the Purchaser to complete in such manner as it thinks fit and
to return Proxy Cards, Consents to Short Notice and any other
document required to be signed by him in his capacity as a
member.
12. Contribution
12.1 The Vendors, Mr Berners-Price and Mr Wallace (for themselves and on
behalf of the Majority Shareholders) hereby agree that the provisions
of Schedule 9 of the Share Sale Agreement (relating to the liability of
the Warrantors as between themselves) shall apply as between themselves
and the Majority Shareholders as if the same were set out in full in
this Agreement mutatis mutandis.
AS WITNESS whereof the parties hereto have duly executed this Agreement the day
and year first before written.
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SIGNED as a deed by ) /s/ Clifford Zenker
CLIFFORD ZENKER ) by his attorney
in the presence of:- ) /s/ Peter Devonald Berners-Price
/s/ A.B. Crawford
The End House
Parsons Wood
Farnham Common
SIGNED as a deed by ) /s/ Edward Marron
EDWARD MARRON ) by his attorney
in the presence of:- ) /s/ Peter Devonald Berners-Price
/s/ A.B. Crawford
as above
SIGNED as a deed by ) /s/ Carol Lamb
CAROL LAMB ) by her attorney
in the presence of:- ) /s/ Peter Devonald Berners-Price
/s/ A.B. Crawford
as above
SIGNED as a deed by ) /s/ Tina Straughan
TINA STRAUGHAN ) by her attorney
in the presence of:- ) /s/ Peter Devonald Berners-Price
/s/ A.B. Crawford
as above
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<PAGE>
SIGNED as a deed by ) /s/ Ashley Redsell
ASHLEY REDSELL ) by his attorney
in the presence of:- ) /s/ Peter Devonald Berners-Price
/s/ A.B. Crawford
as above
SIGNED as a deed by ) /s/ Micou Crawford
MICOU CRAWFORD ) by his attorney
in the presence of:- ) /s/ Peter Devonald Berners-Price
/s/ A.B. Crawford
as above
SIGNED as a deed by ) /s/ Barbara Bright
BARBARA BRIGHT ) by her attorney
in the presence of:- ) /s/ Peter Devonald Berners-Price
/s/ A.B. Crawford
as above
SIGNED as a deed by ) /s/ Taryn Fulton-Hart
TARYN FULTON-HART ) by his attorney
in the presence of:- ) /s/ Peter Devonald Berners-Price
/s/ A.B. Crawford
as above
SIGNED as a deed by ) /s/ Lucy Zeal
LUCY ZEAL ) by her attorney
in the presence of:- ) /s/ Peter Devonald Berners-Price
/s/ A.B. Crawford
as above
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SIGNED as a deed by ) /s/ R. Calcott
R. Calcott and John Stocker ) /s/ John Stocker
and David Stocker and )
Adrian Cahill and Philip )
McAdam Trustees of the )
Christopher Harper ) /s/ Adrian Cahill
Memorial Fund ) /s/ Philip McAdam
in the presence of:- ) /s/ David Stocker
/s/ A.B. Crawford
as above
SIGNED as a deed by ) /s/ Paul Swan
PAUL SWAN ) by his attorney
in the presence of:- ) /s/ Peter Devonald Berners-Price
/s/ A.B. Crawford
as above
SIGNED as a deed by ) /s/ Nick Matthews
NICK MATTHEWS ) by his attorney
in the presence of:- ) /s/ Peter Devonald Berners-Price
/s/ A.B. Crawford
as above
SIGNED as a deed by ) /s/ Allison Lloyd-Adams
ALISON LLOYD-ADAMS ) by her attorney
in the presence of:- ) /s/ Peter Devonald Berners-Price
/s/ A.B. Crawford
as above
SIGNED as a deed by ) /s/ Siobhan Maloney
SIOBHAN MALONEY ) by her attorney
in the presence of:- ) /s/ Peter Devonald Berners-Price
/s/ A.B. Crawford
as above
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<PAGE>
SIGNED as a deed by ) /s/ Simon Ludgate
SIMON LUDGATE ) by his attorney
in the presence of:- ) /s/ Peter Devonald Berners-Price
/s/ A.B. Crawford
as above
SIGNED as a deed by ) /s/ Roland Moss
ROLAND MOSS ) by his attorney
in the presence of:- ) /s/ Peter Devonald Berners-Price
/s/ A.B. Crawford
as above
SIGNED as a deed by ) /s/ David Zolkwer
DAVID ZOLKWER ) by his attorney
in the presence of:- ) /s/ Peter Devonald Berners-Price
/s/ A.B. Crawford
as above
SIGNED as a deed by ) /s/ Jennifer Zolkwer
JENNIFER ZOLKWER ) by her attorney
in the presence of:- ) /s/ Peter Devonald Berners-Price
/s/ A.B. Crawford
as above
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SIGNED as a deed by ) /s/ Claire Drewer
CLAIRE DREWER ) by her attorney
in the presence of:- ) /s/ Peter Devonald Berners-Price
/s/ A.B. Crawford
as above
SIGNED as a deed by ) /s/ Chantal Croneen
CHANTEL CRONEEN ) by her attorney
in the presence of:- ) /s/ Peter Devonald Berners-Price
/s/ A.B. Crawford
as above
SIGNED as a deed by ) /s/ Mark Fogwill
MARK FOGWILL ) by his attorney
in the presence of:- ) /s/ Peter Devonald Berners-Price
/s/ A.B. Crawford
as above
Executed as a deed by )
and on behalf of )
Caribiner Holdings (UK) )
Limited )
by means of )
these signatories )
a director /s/ Brian Shepherd
and the Secretary /s/ Harold E. Schwartz
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SIGNED as a deed by ) /s/ Peter Devonald Berners-Price
PETER DEVONALD )
BERNERS-PRICE )
in the presence of:- )
/s/ A.B. Crawford
as above
SIGNED as a deed by ) /s/ Mark Wallace
MARK WALLACE )
in the presence of:- )
/s/ A.B. Crawford
as above
Executed as a Deed by ) /s/ Harold E. Schwartz
Caribiner International )
Inc by its duly authorised )
attorney )
<PAGE> EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CARIBINER INTERNATIONAL ACQUIRES
SPECTRUM COMMUNICATIONS HOLDINGS INTERNATIONAL LIMITED
-- Caribiner Re-enters Europe through the Acquisitions
of Spectrum Communications and MWA --
NEW YORK, June 13, 1996 -- Caribiner International, Inc. (NYSE: CWC) today
announced that it has acquired all of the outstanding stock of Spectrum
Communications Holdings International Limited, a leading London-based business
communications company with a significant presence in the United Kingdom and
Europe. The acquisition comprises Spectrum Communications in London, Spectrum
Communications in Dubai and MWA which became part of the Spectrum Group in
1992. The initial purchase price including the assumption of debt was
approximately $5 million (Pound3.2 million) in cash. In addition, there will
be contingent cash payments in the event that the acquired business meets
certain performance goals in the future. Spectrum reported revenue of
approximately $32 million (Pound21.1 million) in 1995.
Commenting on the announcement, Raymond S. Ingleby, Chairman and Chief
Executive Officer of Caribiner, stated, "This is a very important acquisition
that positions our Company for international expansion. For the past four
years, we have been aggressively building and improving our network in the
United States where we now have offices in ten cities. The acquisition marks
Caribiner's return to Europe, where the Company had one of its original
offices. We now have acquired a leading player in the European market where
our clients will benefit enormously from our combined expertise. We have been
tracking Spectrum for some time and are delighted to welcome them to our team.
Together, we are now a major force in business communications world-wide."
Mr. Ingleby continued, "As a result of this acquisition, together with other
recent acquisitions and internal growth, Caribiner is now one of the largest
business to business communications companies in the world. Our recent initial
public offering and listing on the New York Stock Exchange have provided us with
the resources to continue to build a global network of operations that will
offer international companies an unparalleled mix of business communications
services."
"This is what we have been aiming towards for 20 years," commented Peter
Berners-Price, Group Chairman of Spectrum Communications. "We have built-up a
very strong presence in Europe and the Middle East, and already trade in the Far
East. The time has definitely come to offer our clients a fully integrated
global service. We have a marvelous portfolio of clients, and a great team of
people. Together with Caribiner, we are creating one of the largest world-wide
organizations in our industry. This will help us to achieve our own goals. The
potential opportunities for both referral business between the
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two organizations, as well as the synergy in the way we manage communications
services for international clients, have never been so great as with Caribiner."
On the operational side, the transfer of skills and experience between the
two companies has already begun. "This is an incredible opportunity for all of
our people," said Spectrum Group Managing Director, Mark Wallace. "Although our
systems are remarkably similar, there is still much that we can learn from each
other. We have already held discussions that will influence our joint approach
to information technology, cost control, buying and staff reward schemes. This
will be an exciting place to be, as we can help our clients plan and manage
communications programs and events leading up to the Millennium and beyond."
"This European initiative is a key component of our international
development strategy," said Brian Shepherd, responsible for Caribiner's
international growth outside of North America. "As London is widely
acknowledged as being at the center of our industry in Europe, it was a logical
first step in our expansion. We are very fortunate to have been able to acquire
Spectrum and MWA. The fact that we have been able to add a strong presence in
the Middle East has been an additional bonus. I am excited by the prospect of
working with the Spectrum team as we continue our growth and acquisition plans
in Europe."
Caribiner International, Inc. is a leading business communications company
providing strategic, creative and production services that enable businesses to
inform, sell to and train their sales forces, dealers, franchisees, partners,
shareholders and employees. Caribiner International's clients include some of
the world's largest companies. The Company has offices in Atlanta, Boston,
Chicago, Dallas, Detroit, Houston, Los Angeles, New York, San Francisco and
White Plains (NY) in North America, as well as in London and Dubai.
Caribiner International, Inc. is listed on The New York Stock Exchange and
trades under the symbol CWC.
###
For further information, contact:
United States:
Diana Brainerd/Chris Plunkett
Brainerd Communicators, Inc.
212-986-6667
United Kingdom:
Andy Nash
Spectrum/MWA Press Office
011-44-181-740-4444
Investors:
Arthur Dignam
Chief Financial Officer
Caribiner International, Inc.
011-44-181-740-4444
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