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Securities and Exchange Commission
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO
RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
The Profit Recovery Group International, Inc.
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(Name of Issuer)
Common Stock, no par value per share
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(Title of Class of Securities)
743 168 106
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(CUSIP Number)
Nathan Kirsh
Natex Village
Ezulwini
Swaziland
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 19, 1999
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(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box. [ ]
Page 1 of 9
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CUSIP No.: 743 168 106 13D Page 2 of 10 Pages
- ------------------------ ------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON S.S. OR I.R.S. ID NO. OF ABOVE PERSON
Ki Corporation Ltd
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ]
PURSUANT TO ITEM 2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Liberia
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NUMBER OF SOLE VOTING POWER 2,698,191
SHARES -------------------------------------------------------------
BENEFICIALLY SHARED VOTING POWER 0
OWNED -------------------------------------------------------------
BY EACH SOLE DISPOSITIVE POWER 2,698,191
REPORTING -------------------------------------------------------------
PERSON WITH SHARED DISPOSITIVE POWER 0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON 2,698,191
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES [ ]
CERTAIN SHARES
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.7%
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14 TYPE OF REPORTING PERSON OO
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Page 2 of 9
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CUSIP No.: 743 168 106 13D Page 3 of 10 Pages
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1 NAME OF REPORTING PERSON S.S. OR I.R.S. ID NO. OF ABOVE PERSON
Eurona Foundation
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ]
PURSUANT TO ITEM 2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Liechtenstein
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NUMBER OF SOLE VOTING POWER 48,600
SHARES -------------------------------------------------------------
BENEFICIALLY SHARED VOTING POWER 0
OWNED -------------------------------------------------------------
BY EACH SOLE DISPOSITIVE POWER 48,600
REPORTING -------------------------------------------------------------
PERSON WITH SHARED DISPOSITIVE POWER 0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON 48,600
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES [ ]
CERTAIN SHARES
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.1%
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14 TYPE OF REPORTING PERSON OO
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Page 3 of 9
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ITEM 1. SECURITY AND ISSUER
This Schedule 13D relates to the Common Stock, no par value per share, of
The Profit Recovery Group International, Inc., a Georgia corporation (the
"Company"), whose principal executive offices are located at 2300 Windy Ridge
Parkway, Suite 100 North, Atlanta, Georgia 30339.
ITEM 2. IDENTITY AND BACKGROUND
This statement is filed jointly by Ki Corporation Ltd, a Liberian
corporation ("Ki"), and The Eurona Foundation, a Liechtenstein foundation
("Eurona"). Ki is engaged principally in the business of securities investment.
Its principal business office is c/o Salisbury House, 1-9 Union Street, St
Helier, Jersey JE2 3RF, The Channel Islands. The share capital of Ki is wholly
owned by Eurona. The purpose of Eurona, the Trustees of which are Prinz Michael
von Liechtenstein and Nathan Kirsh, is to provide for the education, maintenance
and support of the family of Nathan Kirsh and such other persons as Eurona's
Board may at any time and from time to time determine. The principal business
office of Eurona is Altenbach 8, P.O. Box 339, FL-9490 Vaduz, Liechtenstein.
The name, business address, principal occupation or employment and
citizenship of each director and executive officer of Ki are set forth on Annex
A hereto, which is incorporated by reference. All information in this Schedule
13D with respect to the persons listed on Annex A is given to the knowledge of
Ki.
During the past five years, neither Ki, Eurona nor any of the persons listed
on Annex A has been (i) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a result of which
such person was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On August 19, 1999, the Company; Ki, Eurona and the other vendors named
therein (collectively, the "Vendors"); and Mr. Nathan Kirsh (as the Vendors'
representative) entered into an agreement (the "Sale and Purchase Agreement")
for the acquisition by the Company of the whole of the issued share capital and
other equity interests of Meridian VAT Corporation Limited, a private limited
company incorporated in Jersey, The Channel Islands ("Meridian"), owned by the
Vendors. Pursuant to the Sale and Purchase Agreement, the consideration for the
transfer of the shares of Common Stock listed in Item 5(a) to Ki and Eurona was
the transfer to the Company by Ki and Eurona of their respective shareholdings
in Meridian and the assignment to the Company of certain loans made by Ki and
Eurona to Meridian.
Page 4 of 9
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ITEM 4. PURPOSE OF TRANSACTION
On August 19, 1999, the Company, the Vendors and Mr. Nathan Kirsh (as the
Vendors' representative) entered into the Sale and Purchase Agreement. The Sale
and Purchase Agreement provides for the acquisition of the whole of the issued
share capital of Meridian by the Company. Following the acquisition, Meridian
became a wholly owned subsidiary of the Company. Ki and Eurona have acquired the
shares of Common Stock pursuant to the Sale and Purchase Agreement as an
investment.
Neither Ki nor Eurona have current plans or proposals that relate to or
would result in: (a) the acquisition by any person of additional securities of
the Company, or the disposition of securities of the Company; (b) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Company of any of its subsidiaries; (c) a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries; (d) any change in the present board of directors or management of
the Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board; (e) any material
change in the present capitalization or dividend policy of the Company; (f) any
other material change in the Company's business or corporate structure; (g)
changes in the Company's charter, bylaws or instruments corresponding thereto or
other actions which may impede the acquisition of control of the Company by any
person; (h) causing a class of securities of the Company to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) a class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Act; or (j) any
action similar to any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) The Company's definitive proxy statement, filed with the Securities and
Exchange Commission on August 27, 1999, relating to the Special Meeting of
Stockholders of the Company to be held on September 30, 1999 states that, as of
August 2, 1999, there were 41,320,247 shares of Common Stock outstanding. On
August 19, 1999, the Company issued 6,114,375 shares of Common Stock in
connection with the acquisition of the issued share capital and other equity
interests of Meridian. The percentages set forth in this Item 5(a) were derived
using the sum of such numbers.
Ki is the beneficial owner of 2,698,191 shares of Common Stock, which
constitute approximately 5.7% of the outstanding shares of Common Stock, and
Eurona is the beneficial owner of 48,600 shares of Common Stock, which
constitute approximately 0.1% of the outstanding shares of Common Stock No
shares of Common Stock are beneficially owned by any of the persons listed on
Annex A.
(b) Each of Ki and Eurona has sole power to vote and to dispose of the
shares of Common Stock owned by it.
Page 5 of 9
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(c) During the last sixty days, neither Ki, Eurona nor any person listed on
Annex A has effected any transactions in the shares of Common Stock other than
the transfer of the shares of Common Stock to Ki and Eurona pursuant to the Sale
and Purchase Agreement reported hereby.
(d) Of the 2,698,161 shares of Common Stock beneficially owned by Ki and the
48,600 shares of Common Stock beneficially owned by Eurona, 269,819 shares and
4,859 shares, respectively (the "Escrow Shares"), are subject to the Indemnity
Escrow and Stock Pledge Agreement, dated 19 August 1999, among the Company; the
Vendors; Mr. Nathan Kirsh (as the Vendors' representative); and First Union
National Bank, as escrow agent (the "Escrow Agreement"). The Escrow Agreement
provides that the Escrow Shares shall form part of the escrow account held by
the escrow agent to satisfy potential warranty and indemnity claims under the
Sale and Purchase Agreement in respect of which a determination is made during
the period August 19, 1999 through August 19, 2000. During such period, any
dividends paid on the Escrow Shares and any proceeds of sale from the Escrow
Shares shall be deposited into the escrow account and shall be held by the
escrow agent subject to the provisions of the Escrow Agreement.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
Pursuant to the Sale and Purchase Agreement (described in Item 3), Ki,
Eurona, the Vendors and the Company entered into the Escrow Agreement (described
in Item 5), a Deed of Indemnity and a Registration Rights Agreement. The Deed of
Indemnity is an agreement pursuant to which the Vendors indemnify the Company in
respect of claims for tax. The Registration Rights Agreement is an agreement
between the Vendors and the Company pursuant to which the Company provides the
Vendors with certain rights to register shares of the Company's Common Stock.
Pursuant to the Sale and Purchase Agreement, each of the Vendors appointed Mr.
Nathan Kirsh as the Vendors' representative and empowered Mr. Kirsh as Vendors'
Representative to act as the Vendors' agent and attorney with respect to the
Sale and Purchase Agreement and the Escrow Agreement, including without
limitation, the power to act for the Vendors with regard to all warranty and
indemnification matters referred to in the Sale and Purchase Agreement and the
Escrow Agreement. By separate agreements entered into between each of the
Vendors and Mr. Kirsh, each of the Vendors agreed to deliver to Mr. Kirsh a
share certificate representing 10% of each of the Vendor's Shares in the Company
which were acquired pursuant to the Sale and Purchase Agreement and authorized
Mr. Kirsh to deal with such shares in order, inter alia, to enable Mr. Kirsh in
his discretion to make payments to, or compensate, any Vendor who by reason of a
claim made by the Company pursuant to the Sale and Purchase Agreement not made
amongst the Vendors in proportion to their individual entitlements to the
consideration thereunder has made a payment in excess of its proportionate
shares or to make payments to satisfy any liability to any third party in
respect of any expenses payable in connection with the Sale and Purchase
Agreement.
Page 6 of 9
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Other than as stated above, neither Ki, Eurona, nor any person listed on
Annex A has any contract, arrangement, understanding or relationship (legal or
otherwise) with any other person with respect to the securities of the Company,
including, but not limited to, the transfer or voting of any of the securities
of the Company, finder's fees, joint ventures, loan or option arrangements, puts
or calls, guarantees or profits, division of profits or loss, or the giving or
withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1 - - Joint Filing Agreement, dated August 30, 1999
Exhibit 2 - - Agreement, dated 19 August 1999, among the Company; Ki, Eurona
and the other vendors named therein; and Mr. Nathan Kirsh (as the vendors'
representative) for the acquisition of the whole of the issued share capital and
other equity interests of Meridian VAT Corporation Limited
Exhibit 3 - - Indemnity Escrow and Stock Pledge Agreement, dated 19 August
1999, among the Company; Ki, Eurona and the other vendors named therein; Mr.
Nathan Kirsh (as the vendors' representative); and First Union National Bank, as
escrow agent
Page 7 of 9
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SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief, we
certify that the information set forth in this statement is true, complete and
correct.
Date: August 31, 1999 KI CORPORATION LTD
By: /s/ Myra A. Salkinder
--------------------------------
Name: MYRA A. SALKINDER
Title: Director
THE EURONA FOUNDATION
By: /s/ Nathan Kirsh
--------------------------------
Name: NATHAN KIRSH
Title: Foundation Council Member
Page 8 of 9
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Annex A
Set forth below are the name, business address, principal occupation or
employment and citizenship of each director and executive officer of Ki.
Name and Business Address Principal Occupation or Employment
- ------------------------- ----------------------------------
Nathan Kirsh Chairman of the Board of Directors and
Treasurer
Natex Village
Ezulwini
Swaziland
(Citizenship: Swazi)
Myra A. Salkinder Director and Secretary
Kirsh Industries Limited Managing Director of Kirsh Industries
9 Summit Road Limited
Dunkeld West
Sandton
Republic of South Africa
(Citizenship: South African)
Page 9 of 9
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Exhibit 1
JOINT FILING AGREEMENT
(PURSUANT TO RULE 13D-1(K)(1))
The undersigned hereby acknowledge and agree that only one statement
containing the information required by Schedule 13D (or any amendment thereof)
need be filed on their behalf with respect to the beneficial ownership of any
equity securities of The Profit Recovery Group International, Inc. or any
subsequent acquisitions or dispositions of equity securities of The Profit
Recovery Group International, Inc. by any of the undersigned. This agreement may
be executed in any number of counterparts and all of such counterparts taken
together shall constitute one and the same instrument.
Date: August 30, 1999
KI CORPORATION LTD
By: /s/ Myra A. Salkinder
--------------------------------
Name: MYRA A. SALKINDER
Title: Director
THE EURONA FOUNDATION
By: /s/ Nathan Kirsh
--------------------------------
Name: NATHAN KIRSH
Title: Foundation Council Member
<PAGE>
CONFORMED COPY
Dated 19 August 1999
(1) THE PROFIT RECOVERY GROUP INTERNATIONAL, INC.
(2) THE VENDORS (AS DEFINED HEREIN)
- AND -
(3) MR. NATHAN KIRSH (AS VENDORS' REPRESENTATIVE (AS DEFINED HEREIN))
----------
AGREEMENT
for the acquisition of the whole
of the issued share capital and other equity interests
of Meridian VAT Corporation Limited
----------
The securities to be issued in accordance with this agreement have not been
registered under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
or under the securities laws of any other jurisdiction, and may not be offered
or sold unless the securities are registered under the Securities Act or an
exemption from the registration requirements of the Securities Act is available,
which may include offers and sales in compliance with Regulation S under the
Securities Act. Hedging transactions involving these securities may also not be
conducted unless in compliance with the Securities Act.
ASHURST MORRIS CRISP
Broadwalk House
5 Appold Street
London EC2A 2HA
Tel: 0171-638-1111
Fax: 0171-972-7990
MAM/DRS/P99700001
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CONTENTS
<TABLE>
<CAPTION>
CLAUSE PAGE
<S> <C>
1. INTERPRETATION..................................................................... 2
2. SALE AND PURCHASE.................................................................. 8
3. COMPLETION......................................................................... 9
4. WARRANTIES......................................................................... 12
5. PURCHASER'S WARRANTIES............................................................. 19
6. RESTRICTIONS....................................................................... 20
7. ANNOUNCEMENTS, ETC................................................................. 22
8. APPOINTMENT OF VENDORS' REPRESENTATIVE............................................. 22
9. COSTS.............................................................................. 23
10. EFFECT OF COMPLETION............................................................... 24
11. ENTIRE AGREEMENT................................................................... 25
12. WAIVER, AMENDMENT.................................................................. 25
13. FURTHER ASSURANCES................................................................. 25
14. NOTICES............................................................................ 25
15. COUNTERPARTS....................................................................... 26
16. INVALIDITY......................................................................... 27
17. ASSIGNMENT......................................................................... 27
18. GOVERNING LAW AND DISPUTE MECHANISM................................................ 27
SCHEDULE 1............................................................................. 28
The Vendors............................................................................ 28
SCHEDULE 2............................................................................. 39
Particulars relating to the Company.................................................... 39
SCHEDULE 3............................................................................. 40
Particulars relating to Subsidiaries................................................... 40
SCHEDULE 4............................................................................. 59
Warranties............................................................................. 59
SCHEDULE 5............................................................................. 86
Purchaser Warranties................................................................... 86
SCHEDULE 6............................................................................. 89
The Properties......................................................................... 89
SCHEDULE 7............................................................................. 98
Dispute Resolution and Arbitration Procedure........................................... 98
SCHEDULE 8............................................................................. 103
Affiliate Loan Schedule................................................................ 103
</TABLE>
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THIS AGREEMENT is made on 19 August 1999
BETWEEN:-
(1) THE PROFIT RECOVERY GROUP INTERNATIONAL, INC, a Georgia corporation whose
principal address is at 2300 Windy Ridge Parkway, Suite 100 North,
Atlanta, Georgia 30339, USA (the "PURCHASER" or "PRG");
(2) the persons or entities whose names and addresses are set out in column 1
of schedule 1 (individually a "VENDOR" and together the "VENDORS"); and
(3) MR. NATHAN KIRSH, care of Kirsh Industries Limited, 9 Summit Road,
Dunkeld West, Johannesberg 2196, South Africa ("MR. KIRSH").
RECITALS
(A) PRG is in the business of auditing accounts payable, expenses, capital
expenditures, freight bills and invoices and various other payment
arrangements or obligations between its clients and their suppliers,
vendors, carriers, landlords and taxing authorities for the purpose of
identifying and documenting overbilling by and refund, credit or
chargeback claims for overpayments to, the clients' suppliers, vendors,
carriers, landlords and taxing authorities or future cost reductions,
efficiencies or other savings (the "AUDIT ACTIVITIES"), managing,
processing, handling, reporting and transmitting freight information,
data and/or records, freight payment, logistics (including rate
negotiation and supply chain management) and other related services (the
"FREIGHT ACTIVITIES") and rendering management advisory services
associated with the Audit Activities and Freight Activities (the
"ADVISORY ACTIVITIES") (collectively, such Audit Activities, Freight
Activities and Advisory Activities being the "PRG BUSINESS").
(B) Meridian VAT Corporation Limited (the "COMPANY") is a private limited
company incorporated in Jersey under number 18278, further details of
which are set out in schedule 2.
(C) The Company is a holding company for a group of companies engaged in the
business of:-
(i) collecting, evaluating, processing and submitting claims
for refunds of value added tax ("VAT") paid on business
services purchased primarily in the countries forming part
of the European Union;
(ii) collecting, evaluating, processing and submitting claims
for refunds of VAT paid by European haulage companies on
their foreign fuel purchases through a net-invoicing
service company known as Transporter's VAT Reclaim Limited
("TVR") a joint venture operated in conjunction with
Deutscher Kraftverkehr, Ernst Grimmke GmbH & Co. KG
("DKV"); and
(iii) performing related VAT registration services for existing
and prospective client companies
(the "BUSINESS").
(D) The Vendors are at the date hereof the beneficial owners of all of the
Equity Interests, being:
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(i) the numbers of Shares of which each of the Vendors is the
beneficial owner being set out opposite his or its name in
columns 2, 3 and 4 of part A of schedule 1; and
(ii) the amount of the Affiliate Loans in which each of the Vendors
is beneficially interested being set out opposite his or its
name in columns 4 and 8 of part B of schedule 1,
such Equity Interests including the whole of the issued share capital of
the Company.
(E) Mr. Kirsh has agreed to act as representative of the Vendors in certain
respects.
(F) This Agreement sets out the terms and conditions pursuant to which at
Completion the Vendors will sell and the Purchaser will purchase all of
the Equity Interests.
THE PARTIES HEREBY AGREE AS FOLLOWS:-
1. INTERPRETATION
1.1 The following provisions shall have effect for the interpretation of
this agreement.
1.2 The following words and expressions and abbreviations shall, unless the
context otherwise requires, have the following meanings:-
"ACCOUNTS" means the audited consolidated financial statements of the
Group comprising the balance sheet of the Company, the consolidated
balance sheet, profit and loss account and cash flow statement of the
Group together with the notes thereon, directors' report and auditors'
certificate, as at and for the financial period ended on the Accounts
Date;
"ACCOUNTS DATE" means 31 December 1998;
"AFFILIATE" means any Key Employee, director or Significant Shareholder
of any member of the Group and any person who is connected with or
controls any of the foregoing persons or entities;
"AFFILIATE LOANS" means the loans to the Company or any Subsidiary made
by any Affiliate, the principal amounts and interest owing on which are
set out in columns 2, 3, 6 and 7 of part B of schedule 1 and the
movements on which in the two years prior to the date of this agreement
are set out in schedule 8;
"BANK OF IRELAND FACILITY" means a facility agreement dated 15 March
1994 between Meridian VAT Processing (International) Limited and others
as borrowers, Meridian VAT Reclaim Limited and The Investment Bank of
Ireland (as the same may from time to time be amended);
"BHF LOAN AGREEMENT" means a loan agreement dated 3 April 1996 between
TVR and BHF BANK AG (as the same may from time to time be amended);
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"BUSINESS INTELLECTUAL PROPERTY" means Intellectual Property used in the
business of the Company and the Subsidiaries;
"CLOSING PRICE" means the closing sale price per share of PRG Common
Stock at Completion, or, if Completion occurs at a time when the United
States NASDAQ National Market is closed, the closing sale price per
share of PRG Common Stock for the previous business day's trading (in
each case such price being as reported in The Wall Street Journal
published on the immediately following business day);
"COMPANY" means the company described in Recital (B), save for the
purposes of schedule 4, where it shall have the meaning given to it in
clause 4.22;
"COMPLETION" means the completion of the sale and purchase of the Equity
Interests in accordance with clause 3;
"COMPLETION DATE" means the date on which Completion takes place, in
accordance with clause 3.1;
"COMPUTER SYSTEMS" means all computer systems including without
prejudice to the generality of the foregoing, computer processors,
computer programs, data entered into, created and currently stored by
such computer systems and all other computer hardware, software or
peripherals;
"CONSIDERATION SHARES" means 6,114,375 shares of PRG Common Stock, to be
issued in accordance with clause 2.4;
"DEED OF INDEMNITY" means the deed of indemnity in respect of Tax in the
agreed form;
"DISCLOSURE LETTER" means a letter of today's date together with the
attachments thereto addressed by the Vendors' Representative on behalf
of the Vendors to the Purchaser, disclosing exceptions to the
Warranties;
"ENCUMBRANCE" means any mortgage, charge (whether fixed or floating),
pledge, lien, security interest or other third party right or interest
(legal or equitable) over or in respect of the relevant asset, security
or right;
"EQUITY INTERESTS" means the Shares and the Affiliate Loans;
"ESCROW AGENT" means the First Union National Bank appointed as escrow
agent pursuant to the Indemnity Escrow and Stock Pledge Agreement;
"ESCROW FUND" shall have the meaning given to such term in clause 3.1 of
the Indemnity Escrow and Stock Pledge Agreement;
"ESCROW SHARES" has the meaning given to it in clause 3.6 of this
agreement;
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"FEROLITO NON COMPETITION AGREEMENT" means the agreement to be entered
into on Completion between the Purchaser and Ms. Ferolito in the agreed
form;
"FINANCIAL STATEMENTS" means the unaudited financial statements of the
Group, comprising the consolidated balance sheet and consolidated profit
and loss account of the Group, as at and for the six months ended on 30
June 1999;
"GAAP" means the generally accepted accounting principles of the
relevant jurisdiction;
"GROUP" means the Company and the Subsidiaries;
"HOLDING COMPANY" has the meaning given to it in section 736 of the
Companies Act 1985;
"INDEMNITY ESCROW AND STOCK PLEDGE AGREEMENT" means the agreement to be
entered into on Completion between the Purchaser, the Vendors, the
Vendors' Representative and the Escrow Agent in the agreed form;
"INTELLECTUAL PROPERTY" means any and all patents, trade marks, rights
in designs, get-up, trade, business or domain names, e-mail addresses,
copyrights, and topography rights, (whether registered or not and any
applications to register or rights to apply for registration of any of
the foregoing), rights in inventions, know-how, trade secrets and other
confidential information, rights in databases and all other intellectual
property rights of a similar or corresponding character which now
subsist in any part of the world;
"KEY EMPLOYEE" means any senior management employee of the Group who has
executive responsibilities in relation to a significant business unit of
the Group or who is capable of influencing the policy and direction of
the Group;
"LIQUIDITY FACILITY" means the liquidity agreement between, amongst
others, Euro VAT Securitisation Limited and National Westminster Bank
plc dated 29 May 1998;
"MERIDIAN RECLAIM SUBSCRIPTION AGREEMENT" means the subscription
agreement dated 12 August 1993 between Ki Corporation (1), Denor Trust
(2), Caversham Trustees Limited (on behalf of The Baron Settlement) (3)
Deborah Ferolito (4) and Meridian VAT
Reclaim Limited (5);
"MR. STIEFEL" means Mr. Barry Abraham Stiefel of 5 Carlyle Close, London
N2 0QU, a director of the Company and chairman of Meridian VAT Reclaim
Operations Limited;
"MS. FEROLITO" means Deborah Ferolito, a director of the Company and the
Vendor listed at number 5 in part A of schedule 1;
"POOLING OF INTERESTS" has the meaning given to such expression in the
United States Accounting Principles Board Opinion No 16 and related
literature;
"PRG COMMON STOCK" means the common stock of PRG, no par value per
share, in issue from time to time;
-4-
<PAGE>
"PRG GROUP" means PRG and its subsidiary undertakings and associated
companies from time to time, all of them and each of them as the context
admits;
"PROPERTIES" means the properties described in schedule 6 or any part or
parts thereof and "PROPERTY" means any one of them;
"PURCHASER'S DISCLOSURE LETTER" means a letter of today's date together
with attachments thereto addressed by the Purchaser to the Vendors
disclosing exceptions to the Purchaser's Warranties;
"PURCHASER'S SOLICITORS" means Ashurst Morris Crisp of Broadwalk House,
5 Appold Street, London EC2A 2HA and Arnall Golden & Gregory, LLP, 2800
One Atlantic Center, 1201 West Peachtree Street, Atlanta, Georgia
30309-3450;
"PURCHASER'S WARRANTIES" means the warranties set out in schedule 5;
"RECEIVABLES FINANCING AGREEMENT" means the receivables financing
agreement dated 30 June 1999 between Barclays Bank plc and Meridian VAT
Processing (International) Limited and others (as the same may from time
to time be amended);
"REGISTRATION RIGHTS AGREEMENT" means the agreement to be executed on
Completion by the Purchaser and the Vendors in the agreed form;
"RELEVANT SUBSIDIARIES" means Meridian VAT Reclaim Operation Limited,
Meridian VAT Processing (International) Limited, Meridian VAT Processing
(N. America) Limited, Meridian VAT Processing (Japan) Limited, Meridian
VAT Reclaim (UK) Limited, Vatclaim International (UK) Limited, Meridian
VAT Reclaim GmbH and Meridian VAT Reclaim Inc.;
"SEC" means the United States Securities and Exchange Commission;
"SECURITIES ACT" means the United States Securities Act of 1933, as
amended from time to time;
"SECURITY ASSIGNMENT OF CONTRACTS" means a security assignment of
contracts dated 30 June 1999 between Barclays Bank Plc and Meridian VAT
Processing (International) Limited and others (as the same may from time
to time be amended) entered into in connection with the Receivables
Financing Agreement;
"SHARES" means the issued shares in the capital of the Company specified
in schedule 2;
"SIGNIFICANT SHAREHOLDER" means any person who holds 10 per cent. or
more of the issued share capital of the relevant company;
"SUBSIDIARY" means a subsidiary undertaking of the Company, details of
which are set out in schedule 3;
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"SUBSIDIARY" has the meaning given to it in section 736 of the Companies
Act 1985, save in the case of Warranty 1.8, where the meaning given in
Article 2 of the Companies (Jersey) Law 1991 shall apply;
"SUBSIDIARY UNDERTAKING" has the meaning given to it in section 258 of
the Companies Act 1985 as amended by the Companies Act 1989;
"T.A." means the Income and Corporation Taxes Act 1988;
"TAGS FACILITY" means the US$100 million multicurrency revolving credit
facility dated 29 May 1998 between, amongst others, Euro VAT
Securitisation Limited as borrower and Thames Asset Global
Securitisation No.1, Inc;
"TAX" means any tax, and any duty, contribution, impost, withholding
levy or charge in the nature of tax, whether domestic, local, state,
federal or foreign, and any fine, penalty, surcharge or interest
connected therewith, including (without prejudice to the foregoing)
taxes on profits, income, gains, and distributions, payroll taxes,
corporation tax, advance corporation tax, income tax (including tax
falling to be deducted or withheld from or accounted for in respect of
any payment), national insurance or other social security or like
contributions, payroll, employment, capital gains tax, inheritance tax,
taxes on turnover or added value (including value added tax), customs
excise and import duties, stamp duty, stamp duty reserve tax, taxes or
duties on the raising of capital, insurance premium tax, air passenger
duty, and any other payment whatsoever which the Company is or may be or
become bound to make to any person and which is or purports to be in the
nature of taxation or otherwise by reason of any taxation statutes;
"TRANSACTION DOCUMENTS" means the Deed of Indemnity, the Indemnity
Escrow and Stock Pledge Agreement and the Registration Rights Agreement;
"VENDORS' REPRESENTATIVE" means the representative of the Vendors
appointed pursuant to clause 8;
"VENDORS' SOLICITORS" means Baker & McKenzie of 100 New Bridge Street,
London EC4V 6JA; and
"WARRANTIES" means the warranties set out in schedule 4.
1.3 Words, expressions and abbreviations defined in the Deed of Indemnity
shall have the same meanings in this agreement and clause 1.2 of the
Deed of Indemnity shall apply to this agreement.
1.4 References to the parties hereto include their respective permitted
assignees and/or the respective successors in title to substantially the
whole of their respective undertakings and, in the case of individuals,
to their respective estates and personal representatives.
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1.5 References to persons shall include bodies corporate and unincorporated,
associations, partnerships, trusts and individuals. Words denoting the
singular shall include the plural and words denoting any gender shall
include all genders.
1.6 References to statutes or statutory provisions include references to any
orders or regulations made thereunder and references to any statute,
provision, order or regulation include references to that statute,
provision, order or regulation as amended, modified, re-enacted or
replaced from time to time whether before or after the date hereof
(subject as otherwise expressly provided herein), save where any such
amendment, modification, re-enactment or replacement is made after the
date hereof and has retrospective effect.
1.7 Headings to clauses, paragraphs and descriptive notes in brackets are
for information only and shall not form part of the operative provisions
of this agreement and shall be ignored in construing the same.
1.8 References to recitals, clauses or schedules are to recitals to, clauses
of and schedules to this agreement. The recitals and schedules form part
of the operative provisions of this agreement and references to this
agreement shall, unless the context otherwise requires, include
references to the recitals and the schedules.
1.9 In warranting to the Purchaser in the terms of the Warranties each of
the Vendors shall be deemed to have all of the knowledge in any way
relating to the Business and its conduct by the Company and each of the
Subsidiaries, of each other, of Mr. Kirsh, of Mr. Stiefel and of the
directors of the Company and the directors of Meridian VAT Reclaim
Operations Limited.
1.10 Save as set out in clauses 4.13 and 6.7, the obligations and liabilities
of the Vendors under this agreement shall be joint and several.
1.11 Any question of whether a person is connected with another shall be
determined in accordance with section 839 of the TA (except that, save
in the case of Warranty 12, in construing section 839 "CONTROL" has the
meaning given by section 840 or section 416 of the TA so that there is
control whenever section 840 or 416 requires) which shall apply in
relation to this agreement as it applies in relation to the TA.
1.12 References to any documents being "IN THE AGREED FORM" mean in a form
agreed, and for the purposes of identification signed, by or on behalf
of the parties.
1.13 For purposes of this agreement, a "BUSINESS DAY" is a day on which banks
in the City of London and in New York are open for business and shall
not include a Saturday or Sunday or legal holiday. Notwithstanding
anything to the contrary in this agreement, no action shall be required
of the parties hereto except on a business day and in the event an
action is required on a day which is not a business day, such action
shall be required to be performed on the next succeeding day which is a
business day.
1.14 If for the purposes of this agreement, a monetary amount is specified in
a currency other than United States of America dollars ("US$") and
conversion is required, then conversion shall take place at a rate of
exchange which is equal to National Westminster Bank plc's spot rate of
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exchange (at or about 11.00a.m. London time on the day in question) for
the purchase of US$ with the relevant currency for delivery two business
days later.
2. SALE AND PURCHASE
2.1 Upon the terms and subject to the conditions of this agreement each of
the Vendors:-
(a) set out in part A of schedule 1 shall sell as legal and
beneficial owner or shall procure the transfer of the legal and
beneficial interest, in either case with full title guarantee and
the Purchaser shall purchase the Shares set out opposite such
Vendor's name in part A of schedule 1; and
(b) set out in part B of schedule 1 shall assign to the Purchaser as
legal and beneficial owner, or shall procure the assignment to
the Purchaser of the legal and beneficial interest in, all right
title and interest to and in the Affiliate Loans set out opposite
such Vendor's name in part B of schedule 1;
in each case with effect from Completion free from any Encumbrances and
together with all accrued interest, benefits and rights attaching
thereto and all dividends or other distributions (if any) declared after
the Accounts Date in respect of the Equity Interests.
2.2 The Vendors waive any rights or restrictions conferred upon any of them
which may exist either:
(a) in relation to the Shares under the articles of association of
the Company or otherwise; or
(b) arising out of or in connection with the Meridian Reclaim
Subscription Agreement.
2.3 The Purchaser shall not be obliged to complete the sale and purchase of
any of the Equity Interests unless the sale and purchase of all of the
Equity Interests is completed simultaneously, but completion of the
purchase of some of the Equity Interests shall not affect such rights as
the Purchaser may have in respect of any other Equity Interests.
2.4 The consideration for the sale and purchase of the Shares and the
assignment of the Affiliate Loans pursuant to clause 2.1 shall be
satisfied by issue of the Consideration Shares free from any Encumbrance
(save, for the avoidance of doubt, any Encumbrance arising pursuant to
the Registration Rights Agreement):-
(a) on Completion, to the Vendors in such numbers as are set out
against each Vendor's name in column 2 of part C of schedule 1;
and
(b) on Completion, to the Escrow Agent in such numbers as are set out
against each Vendor's name in column 3 of part C of schedule 1.
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3. COMPLETION
3.1 Completion shall take place at the offices of Mourant du Feu & Jeune, 22
Grenville Street, St Helier, Jersey immediately after the execution of
this agreement.
3.2 On Completion the Vendors shall deliver to, or procure the delivery to
the Purchaser of:-
(a) transfers in common form relating to all the Shares duly executed
in favour of the Purchaser (or as it may have directed in writing
prior to the date hereof);
(b) share certificates relating to the Shares;
(c) effective written resignations executed as their respective deeds
of Mr Kirsh and Dr F W Hinteregger from their offices as director
and any office or employment of or by the Company containing a
confirmation that they have no claim against the Company for
compensation for loss of office or termination of employment or
otherwise whether statutory or otherwise or for unpaid
remuneration;
(d) the Deed of Indemnity duly executed by the Vendors;
(e) a release duly executed as a deed by each of the Vendors in the
agreed form, releasing the Company and the Subsidiaries from any
liability whatsoever (actual or contingent) which may be owing to
the Vendors by the Company or any of the Subsidiaries;
(f) a certified copy of the release given by Bank of Ireland in
relation to all security granted pursuant to the Bank of Ireland
Facility;
(g) written confirmation from Barclays Bank plc that the initial
conditions precedent contained in the Receivables Financing
Agreement have been satisfied;
(h) a copy of a legal opinion given by A & L Goodbody that there is a
true sale in respect of the Receivables Financing Agreement;
(i) a certified copy of an amendment agreement in respect of the TAGS
Facility and the Liquidity Facility;
(j) a copy of a legal opinion given by A & L Goodbody to, amongst
others, National Westminster Bank Plc confirming that their
opinion dated 29 May 1998 and given in respect of the TAGS
Facility remains accurate and correct;
(k) written confirmation from BHF BANK AG that it will not exercise
any of its rights to demand the repayment of any amounts
outstanding under the BHF Loan Agreement arising as a result of
the acquisition;
(l) the Indemnity Escrow and Stock Pledge Agreement duly executed by
each of the Vendors and the Vendors' Representative, together
with the 10 stock powers described in clause 3.1 of such
agreement;
(m) the Registration Rights Agreement duly executed by each of the
Vendors; and
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(n) opinions in the agreed forms from the Vendor's Solicitors and the
legal advisers to the Vendors and the Company in each relevant
jurisdiction relating, inter alia, to the right, power and
authority of the Vendors to enter into this agreement and the
Transaction Documents.
3.3 On Completion the Vendors shall make available to, or procure the
availability to the Purchaser of:-
(a) the common seals, certificates of incorporation and statutory
books and share certificate books of the Company and the
Subsidiaries;
(b) to the extent that they are in the possession or control of the
Company or the relevant Subsidiary, all books of account or
reference as to customers and other records and all insurance
policies in any way relating to or concerning the respective
businesses of the Company and the Subsidiaries;
(c) to the extent that they are in the possession or control of the
Company or the Subsidiaries all licences, consents, permits and
authorisations obtained by or issued to the Company or the
Subsidiaries or any other person in connection with the business
carried on by it and them and such contracts, deeds or other
documents (including assignments of any such licences) as shall
have been required by the Purchaser's Solicitors prior to the
date hereof;
(d) all land certificates, charge certificates, leases, title deeds
and other documents relating to the Properties which are located
in Ireland, Japan and the United States of America (save to the
extent that the same are in the possession of mortgagees thereof
disclosed in writing by or on behalf of the Vendors to the
Purchaser or its representatives); and
(e) share certificates relating to all of the issued shares of each
of the Subsidiaries.
3.4 At Completion (and prior to the taking effect of the resignations of the
directors referred to in clause 3.2 (c)) the Vendors shall procure the
passing of board resolutions of the Company:-
(a) sanctioning for registration (subject where necessary to due
stamping) the transfers in respect of the Shares;
(b) appointing such persons as the Purchaser may nominate to be
additional directors of the Company; and
(c) amending bank mandates by the removal and appointment of such
persons as the Purchaser may nominate as authorised signatories.
3.5 On Completion the Purchaser shall deliver to the Vendors'
Representative:-
(a) written confirmation from the Purchaser's transfer agent
("TRANSFER AGENT") that stock certificates evidencing that:-
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(i) the Consideration Shares, other than the Escrow Shares,
have been issued to and in the name of each Vendor in the
amounts set out opposite each Vendor's name in column 2 of
part C of schedule 1; and
(ii) the Escrow Shares have been issued to and in the name of
the Escrow Agent (as nominee of the Vendors) in the
aggregate amounts set out in column 3 of part C of schedule
1;
(b) a certified copy of a resolution of the board of directors of the
Purchaser authorising the entry into of this agreement by the
Purchaser and the allotment of the Consideration Shares;
(c) an opinion in the agreed form from Arnall Golden & Gregory
relating, inter alia, to the right, power and authority of the
Purchaser to enter into this agreement and the Transaction
Documents;
(d) the Registration Rights Agreement duly executed by the Purchaser;
and
(e) the Indemnity Escrow and Stock Pledge Agreement duly executed by
the Purchaser.
3.6 On Completion, and on behalf of each of the Vendors, the Purchaser shall
procure that the Transfer Agent shall deposit into escrow that aggregate
number of Consideration Shares set out in column 3 of part C of schedule
1 in respect of the General Indemnified Claims (as defined in clause 4.7
below) (the "ESCROW SHARES"), which Escrow Shares shall be held by the
Escrow Agent as a non-exclusive source for claims for indemnification
hereunder in accordance with the terms of the Indemnity Escrow and Stock
Pledge Agreement.
3.7 As soon as reasonably practicable following Completion and in any event
no later than 5 business days after Completion, the Purchaser shall
procure that the Transfer Agent shall despatch to the Vendors'
Representative (for these purposes, care of the Vendors' Solicitors)
stock certificates in respect of the Consideration Shares referred to in
clause 3.5(a)(i) above and shall despatch to the Escrow Agent stock
certificates in respect of the Escrow Shares referred to in clause
3.5(a)(ii) above.
4. WARRANTIES
4.1 The Vendors jointly and severally warrant to the Purchaser in the terms
of the Warranties.
4.2 Any information supplied by or on behalf of the Company or the
Subsidiaries to the Vendors or their agents or accountants, solicitors
or other advisers in connection with the Warranties, the Disclosure
Letter or otherwise in relation to the business and affairs of the
Company or the Subsidiaries shall not constitute a representation or
warranty or guarantee as to the accuracy thereof by the Company or any
of the Subsidiaries and the Vendors hereby waive any and all claims
which they might otherwise have against the Company or the Subsidiaries
or, save in the case of fraud or fraudulent concealment, any of their
respective employees, in respect thereof.
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4.3 Each of the Warranties shall be construed as an independent and separate
warranty and (save as expressly provided to the contrary) shall not be
limited by the terms of any of the other Warranties or by any other term
of this agreement (other than this clause 4).
4.4 The Vendors shall be under no liability under the Warranties in relation
to any matter forming the subject matter of a claim thereunder to the
extent that the same or circumstances giving rise thereto are fairly
disclosed in the Disclosure Letter (save in the case of Warranty 13.22
against which no disclosure shall be made, or be deemed to be made) or
expressly provided for or stated to be exceptions under the terms of
this agreement. No letter, document or other communication shall be
deemed to constitute a disclosure for the purposes of the Warranties
unless the same is fairly disclosed in the Disclosure Letter.
4.5 The Purchaser acknowledges that it is not entering into this agreement
in reliance upon any representations or warranties other than the
Warranties.
4.6 Each of the Vendors shall give to the Purchaser and its representatives
after Completion such information as is known to them and documentation
as they may have in their possession relating to the Company and its
Subsidiaries as the Purchaser shall reasonably require to enable it to
satisfy itself as to the accuracy and observance of the Warranties.
4.7 In addition and without prejudice to the indemnification obligations of
the Vendors under clause 9.1, the Vendors hereby jointly and severally
indemnify and hold harmless the Purchaser and each other member of the
PRG Group from and against all claims, liabilities, legal proceedings,
costs, damages and expenses (including, without limitation, reasonable
legal fees and expenses incurred in litigation or otherwise) of any
nature whatsoever sustained by any of them arising out of or otherwise
in connection with:-
(a) any breach of any Warranty; or
(b) any claim pursuant to the Deed of Indemnity
(collectively, with the indemnification obligations of the Vendors under
clause 9.1, the "GENERAL INDEMNIFIED CLAIMS"). The indemnification
obligations set out in this clause 4.7 shall be limited to payments by
the Vendors of (i) the amounts necessary to put the Company or the
relevant member of the Group into the position, US$ for US$, in which it
would have been if there had been no breach of the relevant Warranty
and/or no claim pursuant to the Deed of Indemnity and (ii) all costs and
expenses (including, without limitation, reasonable legal fees and
expenses incurred in litigation, arbitration or otherwise) incurred by
the Purchaser (acting reasonably) arising directly out of or directly in
connection with such breach of the relevant Warranty or such claim
pursuant to the Deed of Indemnity.
4.8 For the avoidance of doubt, the sole remedy of any member of the PRG
Group in respect of any General Indemnified Claim shall be to be
indemnified pursuant to clause 4.7 of this agreement and no member of
the PRG Group shall have any right to claim on any other basis in
respect of any General Indemnified Claim.
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4.9 The provisions of schedule 7 shall govern the resolution of any dispute,
controversy, proceeding or claim of whatever nature arising out of or in
any way relating to a General Indemnified Claim.
4.10 During the period of one year following the date of this agreement, the
Purchaser shall:-
(a) inform the Vendors' Representative in writing promptly of any
fact or matter which comes to its notice or the notice of any
other member of the PRG Group whereby it appears that the Vendors
are or may be liable to make any payment in respect of any
General Indemnified Claim or whereby it appears that any member
of the PRG Group is likely to become entitled to recover from
some other person a sum which is referable to a payment already
made by the Vendors in respect of such a General Indemnified
Claim; and
(b) thereafter keep the Vendors' Representative informed of all
material facts and developments in relation thereto as soon as
reasonably practicable following any member of the PRG Group
becoming aware of the same; and
(c) as soon as reasonably practicable provide to the Vendors'
Representative such information and documentation in connection
therewith as the Vendors' Representative shall reasonably
request.
4.11 The Vendors shall be under no liability in respect of any claim under
the Warranties or the Deed of Indemnity unless:-
(a) a Claim Notice in respect of the relevant claim in the form
prescribed by paragraph 1 of the Dispute Resolution and
Arbitration Procedures in part (A) of schedule 7 (the
"ARBITRATION PROCEDURES") shall have been served on the Vendors'
Representative:-
(i) in the case of a claim under the Warranties or the Deed of
Indemnity where the liability of the Vendors thereunder can
be conclusively settled or determined through the audit
process, by not later than 5.00 p.m. London time on the
date of issuance of the independent auditor's report in
respect of the first audited financial statements of the
Group or the date of issuance of the independent auditor's
report in respect of the first audited financial statements
of the Group and the PRG Group combined (in each case after
the date hereof), such date expected to be no later than 15
April 2000, but in any event, for the purposes of this
clause, by no later than 5.00 p.m. London time on the
business day prior to the first anniversary of the date
hereof;
(ii) in the case of a claim under the Warranties, other than a
claim covered by clause 4.11(a)(i) above, and/or a claim
under the Deed of Indemnity, by not later than 5.00 p.m.
London time on the business day prior to the first
anniversary of the date hereof; and
(b) in any case the claim shall have been resolved at the end of each
such relevant period specified in clause 4.11(a) in one of the
following ways:-
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(i) the Vendors' Representative has concurred in the claim
asserted by the Claim Notice in the manner prescribed by
paragraph 2 of the Arbitration Procedures; or
(ii) the Vendors' Representative and the Purchaser have
concluded a written agreement setting out the terms upon
which the claim asserted by the Claim Notice is finally
settled; or
(iii) the Arbitrator appointed pursuant to the Arbitration
Procedures to resolve the claim which is the subject of the
Claim Notice (or, as the case may be, the Dispute (as
defined in the Arbitration Procedures)), has made his final
award in respect of such claim or Dispute.
4.12 Save in the case of fraud or fraudulent concealment by any of the
Vendors, the Vendors shall be under no liability in respect of any claim
under the Warranties other than Warranty 4.7 of schedule 4 (and
excluding, for the avoidance of doubt, any claim under the Deed of
Indemnity):-
(a) where the liability of the Vendors in respect of that claim would
(but for this paragraph) have been less than US$10,000; and
(b) unless and until the liability in respect of that claim when
aggregated with the liability of the Vendors in respect of all
other claims (other than claims excluded by clause 4.12(a) above)
shall exceed US$500,000, whereupon the Vendors shall be liable
only for the aggregate amount of such claims in excess of
US$250,000;
PROVIDED ALWAYS that
(i) where there is a series of claims arising within the
periods stipulated in clause 4.11 from the same or closely
related facts or circumstances, such claims shall be
aggregated and treated as one claim for the purpose of this
clause; and
(ii) if in the case of a claim under Warranty 4.7, the Purchaser
has not previously consulted with the Vendors'
Representative prior to settling any such claim with a
third party, the limitations in paragraphs (a) and (b)
above shall apply.
4.13 Save in the case of fraud or fraudulent concealment by any of the
Vendors, and notwithstanding their joint and several liability
hereunder:-
(a) the aggregate liability of the Vendors in respect of all General
Indemnified Claims shall not in any circumstances exceed an
amount in US$ equal to 50 per cent. of the total value of the
Consideration Shares as at the Completion Date (valued at the
average closing sale price per Consideration Share (as reported
in The Wall Street Journal) for the thirty trading days ending
two trading days prior to the Completion Date (such valuation per
share being the "CONSIDERATION SHARE VALUE")); and
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(b) the aggregate liability of each Vendor individually in respect of
all General Indemnified Claims shall be limited to an amount in
US$ equal to 50 per cent. of the Consideration Share Value of the
Consideration Shares received by that Vendor pursuant to this
agreement.
4.14 The Purchaser shall have the right to set-off against the Escrow Shares
in accordance with the Indemnity Escrow and Stock Pledge Agreement any
amounts payable by the Vendors to the Purchaser pursuant to this
agreement. The right of set-off shall not be exclusive of any other
right or remedy the Purchaser may have with respect to any amounts
payable by the Vendors to the Purchaser pursuant to this agreement,
whether under this agreement, at law or in equity.
4.15 Any General Indemnified Claim shall be dealt with in the following
manner during the term of the Indemnity Escrow and Share Pledge
Agreement:-
(a) Escrow Shares held in the Escrow Fund to satisfy General
Indemnified Claims (the "GENERAL INDEMNITY SHARES") may only be
used to satisfy such claims and no other claims;
(b) if and to the extent that the Escrow Fund contains only Escrow
Shares and the General Indemnified Claim can be fully satisfied
from the value of the Escrow Shares (valued for the purposes of
determining the number of such Escrow Shares to be transferred to
the Purchaser in satisfaction of such claim at the Closing Price
(such valuation per Escrow Share being the "ESCROW SHARE
VALUE")), then such claim shall be satisfied in Escrow Shares at
the Escrow Share Value and in accordance with the procedure set
out in clause 4.16 below;
(c) if and to the extent that the Escrow Fund contains partly Escrow
Shares and partly cash proceeds from the prior sale of Escrow
Shares by any of the Vendors (in accordance with the Indemnity
Escrow and Stock Pledge Agreement) and the General Indemnified
Claim can be fully satisfied from the value of the Escrow Shares
and the amount of the Escrow Share Cash Equivalent (for these
purposes "ESCROW SHARE CASH EQUIVALENT" meaning the amount of the
cash proceeds that would have been received by the relevant
Vendor had the Escrow Shares sold been valued at the Escrow Share
Value); then such claim shall be fully satisfied pro rata in
Escrow Shares and cash (by reference to the number of Escrow
Shares and the amount of cash held in the Escrow Fund and valued
at the Escrow Share Value and the value of the Escrow Share Cash
Equivalent respectively) and in accordance with the procedure set
out in clause 4.16 below;
(d) if and to the extent that the Escrow Fund contains only cash
proceeds from the prior sale of Escrow Shares by any of the
Vendors (in accordance with the Indemnity Escrow and Stock Pledge
Agreement) and the General Indemnified Claim can be fully
satisfied from the amount of the Escrow Share Cash Equivalent,
then such claim shall be fully satisfied in cash valued at the
Escrow Share Cash Equivalent and in accordance with the procedure
set out in clause 4.16 below;
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(e) if and to the extent that the General Indemnified Claim exceeds
the value of the Escrow Fund (being the aggregate value of the
Escrow Shares valued at the Escrow Share Value and/or cash
proceeds from the prior sale of Escrow Shares by any of the
Vendors (in accordance with the Indemnity Escrow and Stock Pledge
Agreement) valued at the Escrow Share Cash Equivalent (as the
case may be)), then the claim shall be partly satisfied from the
Escrow Fund and the Purchaser shall have the general right to
bring legal proceedings against the Vendors for any such excess
(the "ESCROW EXCESS") provided always that if any Vendor holds
any Consideration Shares at the time any such proceedings are
settled or finally determined (pursuant to the procedures set out
in clause 18 and schedule 7 of this agreement or by a court of
competent jurisdiction), the Purchaser shall first recover from
such Vendor such number of Consideration Shares as shall equal
(as nearly as may be) the amount of that Vendor's proportionate
share of the Escrow Excess (the Consideration Shares being valued
for these purposes at the Escrow Share Value).
4.16 (a) PRG may serve a Disbursement Instruction (as defined in clause
4.1 of the Indemnity Escrow and Stock Pledge Agreement) on the
Escrow Agent provided that a Determination of Claim (as defined
in clause 4.16(b) below) has occurred in no event later than the
first anniversary of the date of this agreement. A copy of any
Disbursement Instruction shall be sent concurrently to the
Vendors' Representative.
(b) A "DETERMINATION OF CLAIM" shall be the earliest to occur of the
following after the Vendors' Representative receives a Claim
Notice from the Purchaser pursuant to paragraph (A)1 of schedule
7:
(i) delivery by the Vendors' Representative of an Acceptance
Notice to the Purchaser pursuant to paragraph (A)2(2) of
schedule 7 concurring in the claim asserted by the Claim
Notice;
(ii) 15 business days after receipt by the Vendors'
Representative of the Claim Notice, unless the Vendors'
Representative shall have given to the Purchaser and the
Escrow Agent a Notice of Dispute as defined in and pursuant
to paragraph (A)2(1) of schedule 7 that he disputes the
claim asserted by the Claim Notice; or
(iii) in the event that the Vendors' Representative has given to
the Purchaser a Notice of Dispute, then upon the date of:
(A) a joint written notice signed by the Purchaser and
the Vendors' Representative stating that such
dispute has been resolved in one of the ways set out
in clause 4.11(b) of this agreement;
(B) a binding and final arbitration award made pursuant
to part (B) of schedule 7 (certified as such by the
Purchaser's Solicitors); or
(C) a final judgement, order or decree of a court of
competent jurisdiction.
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(c) Any Escrow Shares or Escrow Share Cash Equivalent distributed to
PRG hereunder shall be distributed without regard to the
proportion of the total number of Escrow Shares originally
deposited with the Escrow Agent in respect of any Vendor or to
whether or not the basis for any claims was related to a
particular Vendor.
4.17 The Vendors shall not be liable for any claim under the Warranties other
than those Warranties set out in paragraph 13 of schedule 4 (the "TAX
WARRANTIES") (for the purposes of this clause 4.17, a "CLAIM"):-
(a) if and to the extent to which the Claim would not have arisen but
for, or to the extent the Claim is increased directly as a result
of:-
(i) any voluntary act or omission of the Company or any
Subsidiary or the Purchaser or any member of the PRG Group
after Completion which such member of the PRG Group knew,
or ought reasonably to have known, would give rise to such
a liability otherwise than a voluntary act or omission of
the Company occurring in the ordinary course of business of
the Company as carried on at the date hereof; or
(ii) any act, matter or thing done or omitted to be done prior
to Completion by, or at the written request of or with the
written approval of, the Purchaser or its advisers;
(b) if the Claim is based upon a liability which is contingent only
unless and until such contingent liability becomes an actual
liability and is due and payable;
(c) to the extent that specific provision or specific reserve is made
in the Accounts in respect of the matter giving rise to the Claim
or to the extent that payment or discharge of such matter has
been specifically taken into account therein;
(d) to the extent that recovery is made by the Purchaser or any
member of the PRG Group under any policy of insurance effected by
or for the benefit of the Purchaser or any member of the PRG
Group or the Company or any Subsidiary;
(e) to the extent that a Claim arises or to the extent the Claim is
increased directly as a result of, or any provision or reserve in
the Accounts is insufficient only by reason of:-
(i) any increase in rates of Tax since the Accounts Date; or
(ii) the passing of, or any change in, any law, regulation,
directive, requirement or any published practice of any
government, governmental department or agency or regulatory
body after the Completion Date; or
(iii) any change in the accounting policy or accounting practices
of the Purchaser or the Company or any Subsidiary on or
after Completion save where such change
-17-
<PAGE>
is required in order to ensure that the relevant accounts comply
with the relevant GAAP applicable as at the Accounts Date;
(f) if the Claim is made after the benefit of the agreement has been
assigned to a person or persons who are not connected with the
Purchaser, or its successor.
4.18 The Vendors shall not be liable for any claim under the Tax Warranties
if and to the extent that any of the limitations set out in clauses
2.3(a) to (n) inclusive of the Deed of Indemnity are applicable to such
claim.
4.19 Subject to clause 4.20, if the Vendors pay to any member of the PRG
Group (or to any other person in accordance with the written
instructions of a member of the PRG Group) an amount in respect of any
claim and the Purchaser or the Company or any Subsidiary or member of
the PRG Group subsequently recovers from a third party an identifiable
and quantifiable benefit otherwise than from the Vendors which would not
have been received but for the circumstance giving rise to the claim in
respect of which payment was made, the Purchaser shall, once it or the
relevant company referred to above has received such benefit, repay to
the Vendors' Representative on behalf of the Vendors an amount equal to
the lesser of the amount of such benefit (net of the Purchaser's or the
relevant company's, as the case may be, reasonable costs relating to
such recovery and any Tax which the Purchaser or the relevant company
incurs in respect of such recovery) and the aggregate payment made by
the Vendors.
4.20 The provisions of clause 4.19 shall not apply in relation to the
recovery of any amount referred to in that clause by any member of the
PRG Group where such recovery occurs following expiry of the time period
set out in clause 4.11(a) which is referable to the claim for which
recovery was made.
4.21 The Purchaser shall not be entitled to recover damages or claim
indemnity or otherwise obtain reimbursement or restitution more than
once in respect of the same loss whether pursuant to a claim under the
Warranties or otherwise under this agreement or the Deed of Indemnity.
4.22 For the purposes of the Warranties, references to the Company shall be
construed as follows:-
(a) in the case of the Warranties other than those set out in
paragraphs 1.5 and 1.6 of section 1, section 2, section 12,
paragraph 13.33 of section 13 (in each case of schedule 4), the
Company includes for those purposes the Subsidiaries, all of them
and each of them as the context admits;
(b) in the case of the Warranties set out in paragraphs 1.5 and 1.6
of section 1, section 12 and paragraph 13.33 of section 13 (in
each case of schedule 4), the Company means Meridian VAT
Corporation Limited only;
(c) in the case of the Warranties set out in section 2 of schedule 4,
the Company includes for those purposes each of the Subsidiaries
for which audited accounts were prepared for the financial year
ended 31 December 1998 (the "AUDITED SUBSIDIARIES"), all of the
Audited Subsidiaries and each of the Audited Subsidiaries as the
context admits.
-18-
<PAGE>
5. PURCHASER'S WARRANTIES
5.1 The Purchaser warrants to the Vendors in the terms of the Purchaser's
Warranties, but shall be under no liability under the Purchaser's
Warranties in relation to any matter forming the subject matter of a
claim thereunder to the extent that the same or circumstances giving
rise thereto are fairly disclosed in the Purchaser's Disclosure Letter.
No letter, document or other communication shall be deemed to constitute
a disclosure for the purpose of the Purchaser's Warranties unless the
same is fairly disclosed in the Purchaser's Disclosure Letter.
5.2 The Purchaser shall be under no liability in respect of any claim under
the Purchaser's Warranties unless:-
(a) a Claim Notice in respect of the relevant claim in the form
prescribed by paragraph 1 of the Arbitration Procedures shall
have been served on the Purchaser:-
(i) in the case of a claim under the Purchaser's Warranties
where the liability of the Purchaser thereunder can be
conclusively settled or determined through the audit
process, by not later than 5.00 p.m. London time on the
date of issuance of the independent auditor's report in
respect of the first audited financial statements of the
PRG Group or the date of issuance of the independent
auditor's report in respect of the first audited financial
statements of the Group and the PRG Group combined (in each
case after the date hereof), such date expected to be no
later than 15 April 2000, but in any event, for the
purposes of this clause, by no later than 5.00 p.m. London
time on the business day prior to the first anniversary of
the date hereof;
(ii) in the case of a claim under the Purchaser's Warranties,
other than a claim covered by clause 5.2(a)(i) above, by
not later than 5.00 p.m. London time on the business day
prior to the first anniversary of the date hereof; and
(b) in any case the claim shall have been resolved at the end of each
such relevant period specified in clause 5.2(a) in one of the
following ways:-
(i) the Purchaser has concurred in the claim asserted by the
Claim Notice in the manner prescribed by paragraph 2 of the
Arbitration Procedures; or
(ii) the Vendors' Representative and the Purchaser have
concluded a written agreement setting out the terms upon
which the claim asserted by the Claim Notice is finally
settled; or
(iii) the Arbitrator appointed pursuant to the Arbitration
Procedures to resolve the claim which is the subject of the
Claim Notice (or; as the case may be, the Dispute (as
defined in the Arbitration Procedures)), has made his final
award in respect of such claim or Dispute.
-19-
<PAGE>
(c) if and to the extent that the liability in respect of that claim
exceeds 50 per cent. of the total value of the Consideration
Shares as at the Completion Date, valued at the Consideration
Share Value.
5.3 Each of the Purchaser's Warranties shall be construed as a independent
and separate warranty and (save as expressly provided to the contrary)
shall not be limited by the terms of any of the other Purchaser's
Warranties or by any other term of this agreement (other than this
clause 5).
5.4 The Purchaser shall not be liable for any claim under the Purchaser's
Warranties to the extent such claim arises, or is increased directly as
a result of, or any provision or reserve in the accounts of the
Purchaser for its financial year ended on the Accounts Date is
insufficient only by reason of:-
(a) any increase in rates of Tax since the Accounts Date; or
(b) the passing of, or any change in, any law, regulation, directive,
requirement or any published practice of any government,
governmental department or agency or regulatory body after the
Completion Date; or
(c) any change in the accounting policy or accounting practices of
the Purchaser after the Completion Date save where such change is
required in order to ensure that the relevant accounts comply
with the relevant GAAP applicable as at the Accounts Date.
6. RESTRICTIONS
6.1 (Except as otherwise agreed in writing with the Purchaser) each of the
Vendors (which for purposes of this clause 6.1 shall exclude Ms.
Ferolito who shall enter into the Ferolito Non Competition Agreement)
hereby undertakes that it will not either solely or jointly with any
other person (either on its own account or as the agent of any other
person):-
(a) for a period of 5 years from Completion carry on or be engaged or
concerned or (except as the holder of shares in a listed company
which confer not more than five per cent. of the votes which can
generally be cast at a general meeting of the company) interested
directly or indirectly in a business which competes with the
Business carried on by any member of the Group at Completion in
the territories in which the Business is currently conducted;
(b) for a period of 5 years from Completion solicit or accept the
custom of any person in respect of services competitive with
those supplied pursuant to the Business by any member of the
Group during the period of 12 months prior to Completion, such
person having been a customer of the Company in respect of such
services during such period and in the case of individual Vendors
(with the exception of Ms. Ferolito), customers with which the
relevant Vendor was concerned or had personal contact in the 12
months prior to Completion;
(c) for a period of 5 years from Completion induce, solicit or
endeavour to entice to leave the service or employment of any
member of the Group, any person who during the
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<PAGE>
period of 12 months prior to Completion was a senior employee or
a consultant of any member of the Group likely (in the reasonable
opinion of the Purchaser) to be:-
(i) in possession of confidential information relating to; or
(ii) able to influence the customer relationships or connections
of any member of the Group and in the case of individual
Vendors (with the exception of Ms. Ferolito), senior
employees with whom the relevant Vendor worked closely in
the period of 12 months prior to Completion; or
(d) use any trade or domain name (including the expressions Meridian
and/or Meridian VAT Reclaim or any combination thereof) or e-mail
address used by any member of the Group at any time during the 2
years immediately preceding the date of this agreement or any
other name intended or likely to be confused with any such trade
or domain name or e-mail address.
6.2 Each of the Vendors hereby covenants with the Purchaser that it will not
at any time divulge to any third party whatsoever or use for its own or
another's advantage any of the trade secrets or confidential know-how or
confidential financial or trading information as to customers or
suppliers or in relation to the business, finances, dealings or affairs
of the Company or the Subsidiaries save only (a) insofar as the relevant
Vendor may prove the same has become a matter of public knowledge
(otherwise than by reason of a breach by it of this clause 6.2) or (b)
insofar as may be required by law.
6.3 The Vendors (other than Ms. Ferolito in the case of clause 6.1) agree
that the covenants and undertakings contained in this clause 6 are
reasonable and are entered into for the purpose of protecting the
goodwill of the business of the Company and the Subsidiaries and that
accordingly the benefit of the covenants and undertakings may be
assigned by the Purchaser and its successors in title without the
consent of the Vendors.
6.4 Each covenant and/or undertaking contained in this clause 6 shall be
construed as a separate covenant and/or undertaking and if one or more
of the covenants and/or undertakings contained in this clause is held to
be against the public interest or unlawful or in any way an unreasonable
restraint of trade the remaining covenants and/or undertakings shall
continue to bind the Vendors (other than Ms. Ferolito in the case of
clause 6.1).
6.5 If any covenant or undertaking contained in this clause 6 would be void
as drawn but would be valid if the period of application were reduced or
if some part of the covenant or undertaking were deleted the covenant or
undertaking in question shall apply with such modification as may be
necessary to make it valid and effective.
6.6 No provision of this agreement, by virtue of which this agreement is
subject to registration (if such be the case) under the Restrictive
Trade Practices Act 1976, shall take effect until the day after
particulars of this agreement have been furnished to the Director
General of Fair Trading pursuant to section 24 of that Act. For this
purpose the expression this "AGREEMENT"
-21-
<PAGE>
includes any agreement or arrangement of which this agreement forms part
and which is registrable or by virtue of which this agreement is
registrable.
6.7 Notwithstanding the provisions of clause 1.10, the obligations of the
Vendors (other than Ms. Ferolito in the case of clause 6.1) under this
clause 6 shall be several only, and in the event of any breach by any
Vendor of any provision of this clause 6, only such Vendor in breach
shall have any liability therefor.
7. ANNOUNCEMENTS, ETC
Neither the making of this agreement nor its terms shall be disclosed by
any party hereto without the prior consent of the other parties unless
disclosure is required by law or the rules of any regulatory or
governmental body, including the SEC.
8. APPOINTMENT OF VENDORS' REPRESENTATIVE
8.1 For the period of one year following the date of this agreement each of
the Vendors hereby appoints Mr. Kirsh as the Vendors' Representative
(and Mr. Kirsh hereby accepts such appointment for such period) and
authorises and empowers Mr. Kirsh as the Vendors' Representative as such
Vendors' true and lawful agent and attorney to act in the name, place
and stead of such Vendors with respect to this agreement and the
Indemnity Escrow and Stock Pledge Agreement (and the instruction letters
and ancillary documents associated therewith) and to do or refrain from
doing all such acts and things as such Vendors' Representative shall
deem necessary or appropriate in order to accept and to give effect to
the terms of this agreement, the Transaction Documents and the
transactions contemplated thereby, including, without limitation, the
power:-
(a) to act for the Vendors with regard to all Warranty and
indemnification matters referred to in this agreement and the
Indemnity Escrow and Stock Pledge Agreement including, without
limitation, the power to compromise or settle any claim on behalf
of the Vendors up to the aggregate amount held in the Escrow Fund
from time to time during the one year period of Mr. Kirsh's
appointment under this clause 8.1 (whether such amount is held in
the form of Escrow Shares or cash);
(b) to receive all demands, notices and other communications directed
to the Vendors and to do or refrain from doing any further acts
or deeds on behalf of such Vendors which the Vendors'
Representative deems necessary or appropriate;
(c) to distribute amongst the Vendors all Consideration Shares
(including the Escrow Shares) received by the Vendors'
Representative in such capacity during the period of his
appointment.
8.2 The appointment of the Vendors' Representative pursuant to clause 8.1
shall be irrevocable up to and including the first anniversary of the
date of this agreement, at which date such appointment shall
automatically terminate and the provisions of clause 8.4 shall apply.
For the duration of the appointment of the Vendors' Representative
pursuant to clause 8.1, the
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<PAGE>
Purchaser and any other person may conclusively and absolutely rely,
without enquiry, upon any action of the Vendors' Representative in
accordance with this provision as an act of all of the Vendors in all
matters referred to in this agreement and the Transaction Documents.
Each Vendor hereby ratifies and confirms all and any acts which the
Vendors' Representative shall do or cause to be done in his capacity as
Vendors' Representative.
8.3 In the event of the death or incapacity of Mr. Kirsh during the one year
period referred to in clause 8.1, the Vendors shall agree upon a
successor for the remainder of that year within the 30 day period
immediately following the date of notification of the death or
incapacity of Mr. Kirsh. The appointment of a successor to the Vendors'
Representative pursuant to this provision shall be promptly notified in
writing to the Purchaser.
8.4 From the day following the first anniversary of the date of this
agreement to the date when all claims made by the Purchaser under this
agreement and the Transaction Documents shall have been resolved,
settled or withdrawn (on which date this appointment shall determine),
each of the Vendors hereby appoints the Vendors' Solicitors as its agent
in order to receive all demands, notices and other communications
directed to the Vendors and to distribute such demands, notices and
communications to such Vendor.
9. COSTS
9.1 All of the expenses incurred by the Purchaser in connection with and
incidental to the negotiation, preparation, authorisation, execution and
performance of this agreement and the other agreements and transactions
contemplated herein, including, without limitation, all legal and
accounting expenses incurred by the Purchaser, shall be paid by the
Purchaser. All expenses incurred by the Company prior to Completion and
by the Vendors (at any time before or after Completion) in connection
with the negotiation, preparation, authorisation, execution and
performance of this agreement and the other agreements and transactions
contemplated herein, whether or not such transactions are consummated,
including, without limitation, all legal, accounting and investment
banking expenses, costs incurred in negotiating this agreement, the
Transaction Documents, preparation of the Disclosure Letter and costs
incurred in responding to the Purchaser's due diligence requests shall
be paid by the Vendors and shall not be paid by or charged back to the
Company, other than such expenses as are set out in clause 9.2 (such
other expenses being the "COMPANY EXPENSES"). At Completion the Vendors
shall reimburse the Company in full for any such expenses, other than
Company Expenses, incurred on behalf of the Vendors and which are paid
by the Company prior to Completion ("PAID VENDOR EXPENSES"). If any Paid
Vendor Expenses are not reimbursed to the Company in accordance with
this clause, the Vendors hereby undertake to promptly repay to the
Company following Completion all Paid Vendor Expenses and to indemnify
the Purchaser and hold the Purchaser harmless from any liability which
the Company or any other member of the PRG Group may suffer or incur
arising out of or in connection with any failure by the Vendors to repay
such Paid Vendor Expenses to the Company.
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<PAGE>
9.2 For the purposes of clause 9.1, Company Expenses shall mean:-
(a) the professional fees of KPMG (Dublin) incurred by the Company in
connection with:-
(i) the preparation of any financial statements, including the
Accounts and the Financial Statements;
(ii) the conversion of certain Group accounts to United States
GAAP;
(iii) changes to certain of the accounting policies within the
Group;
(iv) a limited review of the Financial Statements undertaken
prior to Completion by KPMG;
(b) costs and expenses incurred by the Company which would have been
incurred by it in any case if the transaction contemplated by
this agreement were not consummated; and
(c) costs and expenses incurred by the Company in connection with the
Receivables Financing Agreement and the Security Assignment of
Contracts.
10. EFFECT OF COMPLETION
The terms of this agreement shall insofar as not performed at Completion
and subject as specifically otherwise provided in this agreement
continue in force after and notwithstanding Completion.
11. ENTIRE AGREEMENT
This agreement (together with any documents referred to herein)
constitutes the entire agreement between the parties hereto in
connection with the subject matter of this agreement. No party has
relied upon any representation save for any representation expressly set
out in this agreement (or any document referred to herein).
12. WAIVER, AMENDMENT
12.1 No waiver of any term, provision or condition of this agreement shall be
effective unless such waiver is evidenced in writing and signed by the
waiving party.
12.2 No omission or delay on the part of any party hereto in exercising any
right, power or privilege hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right, power or
privilege preclude any other or further exercise thereof or of any other
right, power or privilege. The rights and remedies herein provided are
cumulative with and not exclusive of any rights or remedies provided by
law.
12.3 No variation to this agreement shall be effective unless made in writing
and signed by all the parties.
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<PAGE>
13. FURTHER ASSURANCES
13.1 At any time after Completion the Vendors shall at their own expense
execute all such documents and do such acts and things as the Purchaser
may reasonably require for the purpose of vesting in the Purchaser the
full legal and beneficial title to the Equity Interests and giving to
the Purchaser the full benefit of this agreement.
13.2 At any time after Completion the Purchaser shall at its own expense
execute all such documents and do such acts and things as the Vendors'
Representative may reasonably require for the purpose of vesting in the
Vendors the full legal and beneficial title to the Consideration Shares
and giving to the Vendors the full benefit of this agreement.
14. NOTICES
Save as specifically otherwise provided in this agreement any notice,
demand or other communication to be served under this agreement may be
served upon any party hereto only by sending the same by a reputable
international courier firm or sending the same by facsimile transmission
to the party to be served at its address given below, or facsimile
number given below or at such other address or number as he or it may
from time to time notify in writing to the other parties hereto:-
If to the Vendors Vendors' Representative
c/o Kirsh Industries Limited
9 Summit Road
Dunkeld West
Johannesburg 2196
South Africa
Fax: 00 27 11 880 1096
In either case,
with a copy to: Baker & McKenzie
100 New Bridge Street
London EC4V 6JA
Attention: The partner in charge of the Litigation
Department/Service of Process (Ref. MDC/JDS)
Fax: 0207-919 1999
If to the Purchaser: The Profit Recovery Group International, Inc.
2300 Windy Ridge Parkway
Suite 100, North
Atlanta, Georgia 30339-8426
Attention: Clinton McKellar, Jr.
Senior Vice President
General Counsel and Secretary
Fax: (770) 779-3034
with a copy to: Ashurst Morris Crisp
Broadwalk House
5 Appold Street
London EC2A 2HA
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<PAGE>
Attention: The partner in charge of the Litigation
Department/Service of Process (Ref. MAM/DRS)
Fax: 0207-972 7990
and: Arnall Golden & Gregory, LLP
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3400
Attention: Jonathan Golden, Esq.
Fax: (404) 873-8701
The parties agree that notices or other communications sent (i) by fax
will be deemed received on the day sent or on the business day
thereafter if not sent on a business day and (ii) by a reputable
international courier firm will be deemed received on the second
business day immediately following the date sent.
15. COUNTERPARTS
This agreement may be executed in any number of counterparts and by the
several parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all the counterparts
shall together constitute one and the same instrument.
16. INVALIDITY
If at any time any one or more of the provisions hereof is or becomes
invalid, illegal or unenforceable in any respect under any law of any
jurisdiction, the validity, legality and enforceability of the remaining
provisions hereof shall not be in any way affected or impaired thereby.
17. ASSIGNMENT
17.1 It is hereby agreed and declared that the benefit of this agreement may
be assigned by the Purchaser to any company of which it is a subsidiary
or to any other company which is a subsidiary of it or its holding
company.
17.2 Save as aforesaid this agreement and all rights and benefits hereunder
and personal to the parties hereto may not be assigned at law or in
equity without the prior written consent of the other parties hereto.
18. GOVERNING LAW AND DISPUTE MECHANISM
18.1 This agreement (and, subject to clause 18.2, any dispute, controversy,
proceedings or claim of whatever nature arising out of or in any way
relating to this agreement or its formation) shall be governed by and
construed in accordance with English law.
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<PAGE>
18.2 The dispute resolution and arbitration procedures and rules set out in
schedule 7 shall govern the resolution of any dispute, controversy,
proceeding or claim of whatever nature arising out of or in any way
relating to a General Indemnified Claim.
18.3 Subject to clause 18.2 and the provisions of schedule 7, the parties
hereby irrevocably submit to the non-exclusive jurisdiction of the High
Court of Justice in London for the purpose of hearing and determining
any dispute arising out of or in connection with this agreement and for
the purpose of enforcement of any judgement against their respective
assets, save that the Indemnity Escrow and Stock Pledge Agreement shall
be governed by and construed in accordance with the laws of the state of
Georgia, USA.
18.4 Without prejudice to any other permitted mode of service the parties
agree that service of any claim form, notice or other document
("DOCUMENTS") for the purpose of any proceedings begun in England shall
be duly served upon it if delivered personally or sent by registered
post, in the case of:-
(a) the Vendors to the Vendors' Solicitors; and
(b) the Purchaser to the Purchaser's Solicitors.
or such other person and address in England and/or Wales as the parties
shall notify each other in writing from time to time.
IN WITNESS whereof this agreement has been executed as a deed on the date first
above written.
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<PAGE>
SCHEDULE 1
THE VENDORS
PART A
THE SHARES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1 2 3 4 5
Consideration
Number of ordinary Number of A Number of B Shares due in
shares of US$0.01 preference shares of preference shares of respect of the
Name & addresses of the Vendors each held US$0.01 each held US$0.01 each held Shares
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Caversham Trustees Limited as trustee of 754,500 505,520
The Baron Settlement,
PO Box 258,
Malzard House,
15 Union Street,
St Helier,
Jersey JE4 8TY, Channel Islands
- -----------------------------------------------------------------------------------------------------------------------------------
2. Ki Corporation Ltd, 2,127,000 90,000 821,250 2,050,795
c/o Salisbury House
1-9 Union Street
St Helier
Jersey
JE2 3RF, Channel Islands
- -----------------------------------------------------------------------------------------------------------------------------------
3. Dr Steinbrugger as trustee of the Denor 1,674,000 911,250 1,745,482
Trust
C/o Vermogensverwaltung
Dr F.W. Hintergger AG
Blelcherweg 18
CH 8022
Zurich
Switzerland
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1 2 3 4 5
Consideration
Number of ordinary Number of A Number of B Shares due in
shares of US$0.01 preference shares of preference shares of respect of the
Name & addresses of the Vendors each held US$0.01 each held US$0.01 each held Shares
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
4. Lisdar Limited, 131,250 87,707
PO Box 258,
Malzard House,
15 Union Street,
St Helier,
Jersey JE4 8TY, Channel Islands
- -----------------------------------------------------------------------------------------------------------------------------------
5. Deborah P. Ferolito, 401,250 268,132
c/o Meridian VAT Reclaim, Inc.
125 West 55 Street
8th Floor
New York, NY 10019
- -----------------------------------------------------------------------------------------------------------------------------------
6. Normandy Investments Inc., 75,000 150,000 151,157
c/o Heritage Trust Limited
Polygon Hall
PO Box 135,
Le Marchant Street,
St Peter Port,
Guernsey GY1 4EL, Channel Islands
- -----------------------------------------------------------------------------------------------------------------------------------
7. Caversham Trustees Limited as trustee of 75,000 90,000 90,000 171,204
The Goodman Trust,
PO Box 258,
Malzard House,
15 Union Street,
St Helier,
Jersey JE4 8TY, Channel Islands
- -----------------------------------------------------------------------------------------------------------------------------------
8. Industrie und FinanzKontor as trustee of 22,500 15,035
the Eurona Foundation (a/c PK),
Postfach 339,
Altenbach 8,
FL 9490
Vaduz
Liechtenstein
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1 2 3 4 5
Consideration
Number of ordinary Number of A Number of B Shares due in
shares of US$0.01 preference shares of preference shares of respect of the
Name & addresses of the Vendors each held US$0.01 each held US$0.01 each held Shares
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9. Industrie und FinanzKontor as trustee of 22,500 22,500 30,312
the Eurona Foundation (a/c LM),
Postfach 339
Altenbach 8,
FL 9490
Vaduz
Liechtenstein
- -----------------------------------------------------------------------------------------------------------------------------------
10. Radcliffes Trustee Company SA and Central 2,370 52,500 36,692
Independent Trustees Limited as trustees
of the Bordeaux Trust,
12 Rue de L'Arquebuse,
1204 Geneva,
Switzerland
- -----------------------------------------------------------------------------------------------------------------------------------
11. Steven Krell, 22,500 15,035
2502 Kinderhook Lane
Colorado Springs
Colorado 80919
USA
- -----------------------------------------------------------------------------------------------------------------------------------
12. Staci Krell, 1,020 693
28 Meadowbrook Road,
Short Hills,
NJ 07078, USA
- -----------------------------------------------------------------------------------------------------------------------------------
---------
TOTAL 5,263,890 450,000 1,822,500 5,077,764
=========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-30-
<PAGE>
PART B
THE AFFILIATE LOANS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9
Name & Affiliate Interest Total Consideration Affiliate Interest Total Consideration
addresses of Loans - accrued on Affiliate Shares due in Loans - accrued on Affiliate Shares due
the Vendors subordinated Affiliate Loans - respect of short term Affiliate Loans - in respect
(principal) Loans - subordinated Affiliate (principal) Loans - short term of Affiliate
subordinated Loans - short term Loans -
subordinated short term
(US $) (US $) (US $) (US $) (US $) (US $) (US $) (US $) (US $)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Caversham Trustees 341,960 185,799 527,759 18,001
Limited as trustee
of The Baron
Settlement,
PO Box 258,
Malzard House,
15 Union Street,
St Helier,
Jersey JE4 8TY,
Channel Islands
- -----------------------------------------------------------------------------------------------------------------------------------
2. Ki Corporation Ltd, 6,721,360(1) 3,542,548 10,263,908 350,087 7,118,002(2) 1,598,543 8,716,545 297,309
c/o Salisbury House
1-9 Union Street
St Helier
Jersey JE2 3RF,
Channel Islands
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-31-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9
Name & Affiliate Interest Total Consideration Affiliate Interest Total Consideration
addresses of Loans - accrued on Affiliate Shares due in Loans - accrued on Affiliate Shares due
the Vendors subordinated Affiliate Loans - respect of short term Affiliate Loans - in respect
(principal) Loans - subordinated Affiliate (principal) Loans - short term of Affiliate
subordinated Loans - short term Loans -
subordinated short term
(US $) (US $) (US $) (US $) (US $) (US $) (US $) (US $) (US $)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3. Dr Steinbrugger 5,847,9203 3,220,945 9,068,865 309,326 829,570 0 10,162 839,732 28,642
as trustee of
the Denor Trust
c/o
Vermogerisver-
waltung Dr F.W.
Hinteregger AG
Blelcherweg 18
CH 8022
Zurich
Switzerland
- -----------------------------------------------------------------------------------------------------------------------------------
4. Normandy 206,000 111,927 317,927 10,844
Investments Inc.,
c/o Heritage
Trust Limited
Polygon Hall
PO Box 135
Le Marchant
Street,
St Peter Port,
Guernsey GY1 4EL,
Channel Islands
- -----------------------------------------------------------------------------------------------------------------------------------
5. Industrie und 61,800 33,578 95,378 3,253
FinanzKontor as
trustee of
the Eurona
Foundation
(a/c LM)
Postfach 339,
Altenbach 8,
FL 9490
Vaduz
Liechenstien
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-32-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9
Name & Affiliate Interest Total Consideration Affiliate Interest Total Consideration
addresses of Loans - accrued on Affiliate Shares due in Loans - accrued on Affiliate Shares due
the Vendors subordinated Affiliate Loans - respect of short term Affiliate Loans - in respect
(principal) Loans - subordinated Affiliate (principal) Loans - short term of Affiliate
subordinated Loans - short term Loans -
subordinated short term
(US $) (US $) (US $) (US $) (US $) (US $) (US $) (US $) (US $)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6. Radcliffes 6,509 2,790 9,299 317
Trustee
Company SA and
Central Independent
Trustees Limited as
trustees of the
Bordeaux Trust,
12 Rue de
L'Arquebuse,
1204 Geneva,
Switzerland
- -----------------------------------------------------------------------------------------------------------------------------------
7. Staci Krell, 2,801 1,201 4,002 137
28 Meadowbrook
Road,
Short Hills,
NJ 07078, USA
- -----------------------------------------------------------------------------------------------------------------------------------
8. Carlyle Corporate 313,545(4) 86,913 400,458 13,659
Services Limited
Meridian House,
202-204 Finchley
Road,
London NW3 6BX
- -----------------------------------------------------------------------------------------------------------------------------------
9. Carlyle Corporate 103,729 43,944 147,673 5,036
Services (CI)
Limited
PO Box 258,
Malzard House,
15 Union Street,
St Helier,
Jersey JE4 8TY,
Channel Islands
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-33-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9
Name & Affiliate Interest Total Consideration Affiliate Interest Total Consideration
addresses of Loans - accrued on Affiliate Shares due in Loans - accrued on Affiliate Shares due
the Vendors subordinated Affiliate Loans - respect of short term Affiliate Loans - in respect
(principal) Loans - subordinated Affiliate (principal) Loans - short term of Affiliate
subordinated Loans - short term Loans -
subordinated short term
(US $) (US $) (US $) (US $) (US $) (US $) (US $) (US $) (US $)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL
---------- --------- ---------- ------- --------- --------- ----------
13,188,350 7,098,788 20,287,138 691,965 8,364,845 1,739,562 10,104,407 344,646
========== ========= ========== ======= ========= ========= ==========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------------
(1) THIS AMOUNT COMPRISES: (US$)
-----
Subordinated loan : 5,471,360
6% Subordinated loan : 1,250,000
---------
6,721,360
---------
<TABLE>
<CAPTION>
(US$)
<S> <C> <C> <C> <C>
(2) THIS AMOUNT COMPRISES: (US$) 1999 SHORT TERM LOAN DATE CAPITAL
Short term loan 5,842,957 ADVANCES AND REPAYMENTS: 1 Jan 1999 225,045
1999 short term loans 925,045 31 Mar 1999 400,000
MV Trustees short term loans 350,000 6 Apr 1999 (400,000)
--------- 28 May 1999 300,000
7,118,002 12 August 1999 400,000
--------- -------
925,045
-------
</TABLE>
(3) THIS AMOUNT COMPRISES: (US$)
Subordinated loan 4,597,920
6% Subordinated loan 1,250,000
---------
5,847,920
---------
(4) THIS AMOUNT COMPRISES: (US$)
Interest bearing short term loan 132,367
-34-
<PAGE>
- -------------------------------------------------------------------------------
Interest free short term loan 181,178
-------
313,545
-------
-35-
<PAGE>
PART C
ISSUE OF CONSIDERATION SHARES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
1 2 3
Number of Consideration
Shares to be issued
to the Escrow Agent
Name & addresses of the Vendors Number of Consideration on Completion in respect
Shares to be issued of General Indemnified
directly to Claims and held
Vendor on Completion in escrow
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Caversham Trustee Limited as trustee of The Baron Settlement, 471,169 52,352
PO Box 258,
Malzard House,
15 Union Street,
St Helier, Jersey JE4 8TY,
Channel Islands
- ---------------------------------------------------------------------------------------------------------------------------------
2. Ki Corporation, Ltd,
PO Box 183 2,428,372 269,819
Thorp House
Rouge Bouillon
St Helier
Jersey JE4 8RH, Channel Islands
- ---------------------------------------------------------------------------------------------------------------------------------
3. Dr Steinbrugger as trustee of the Denor Trust
c/o Vermogensverwaltung 1,875,105 208,345
Dr F.W. Hinteregger AG
Blelchersweg 18
CH 8022
Zurich
Switzerland
- ---------------------------------------------------------------------------------------------------------------------------------
4. Lisdar Limited,
PO Box 258, 78,937 8,770
Malzard House,
15 Union Street,
St Helier, Jersey JE4 8TY,
Channel Islands
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-36-
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
1 2 3
Number of Consideration
Shares to be issued
to the Escrow Agent
Name & addresses of the Vendors Number of Consideration on Completion in respect
Shares to be issued of General Indemnified
directly to Claims and held
Vendor on Completion in escrow
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
5. Deborah P. Ferolito,
c/o Meridian VAT Reclaim, Inc. 241,319 26,813
125 West 55 Street
8th Floor
New York, NY 10019
- ---------------------------------------------------------------------------------------------------------------------------------
6. Normandy Investments Inc.,
c/o Heritage Trust Limited 145,801 16,200
Polygon Hall
PO Box 135
Le Marchant Street
St Peter Port,
Guernsey GY1 4EL,
Channel Islands
- ---------------------------------------------------------------------------------------------------------------------------------
7. Caversham Trustees Limited as trustee of The Goodman Trust
PO Box 258, 154,084 17,120
Malzard, House,
15 Union Street,
St Helier, Jersey JE4 8TY,
Channel Islands
- ---------------------------------------------------------------------------------------------------------------------------------
8. Industrie und FinanzKontor as trustee of the Eurona
Foundation 13,532 1,503
(a/c PK),
Postfach 339,
Altenbach 8,
FL 9490
Vaduz
Liechtenstein
- ---------------------------------------------------------------------------------------------------------------------------------
9. Industrie und FinanzKontor as trustee of the Eurona
Foundation 30,209 3,306
(a/c LM),
Postfach 339,
Altenbach 8,
Liechtenstein
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-37
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
1 2 3
Number of Consideration
Shares to be issued
to the Escrow Agent
Name & addresses of the Vendors Number of Consideration on Completion in respect
Shares to be issued of General Indemnified
directly to Claims and held
Vendor on Completion in escrow
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
10. Radcliffes Trustee Company SA and Central Independent
Trustees Limited as Trustees of the Bordeaux Trust 33,308 3,701
12 Rue de L'Arquebuse,
1204 Geneva,
Switzerland
- ---------------------------------------------------------------------------------------------------------------------------------
11. Steven Krell,
2502 Kinderhook Lane 13,532 1,503
Colorado Springs
Colorado 80919
USA
- ---------------------------------------------------------------------------------------------------------------------------------
12. Staci Krell,
28 Meadowbrook Road, 747 83
Short Hills,
NJ 07078, USA
- ---------------------------------------------------------------------------------------------------------------------------------
13. Carlyle Corporate Services Limited
Meridian House, 12,293 1,366
202-204 Finchley Road,
London NW3 6BX
- ---------------------------------------------------------------------------------------------------------------------------------
14. Carlyle Corporate Services (CI) Limited
PO Box 258, 4,533 503
Malzard House,
15 Union Street,
St Helier,
Jersey JE4 8TY, Channel Islands
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL 5,502,941 611,434
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-38-
<PAGE>
SCHEDULE 2
PARTICULARS RELATING TO THE COMPANY
<TABLE>
<S> <C>
Authorised 450,000 A Preference Shares of US$
Share capital: 0.01 each; 1,822,500 B Preference Shares
of US$0.01 each; 3,610 C Convertible
Preference Shares of US$0.01 each;
12,723,890 Ordinary shares of US$ 0.01
each
Issued 450,000 A Preference Shares of US$
Share capital: 0.01 each; 1,822,500 B Preference Shares
of US$0.01 each, 5,263,890 Ordinary
shares of US$ 0.01 each
Directors: N Kirsh, G A Evans, D P Ferolito, Dr
F W Hinteregger, A J D Rabet, B A
Stiefel
Secretary: A J D Rabet
Auditors: KPMG, 1 Stokes Place, St. Stephens
Green, Dublin 2
Accounting reference date: 31 December
Registered Office: PO Box 183, Thorp House, Rouge Bouillon,
St. Helier, Jersey, Channel Islands
JE4 8RH
</TABLE>
-39-
<PAGE>
SCHEDULE 3
PARTICULARS RELATING TO SUBSIDIARIES
MERIDIAN VAT RECLAIM OPERATIONS LIMITED
<TABLE>
<S> <C>
Registered Number: 197185
Date and place of Incorporation: 21 December 1992, Dublin
Address of Registered Office: 6 Fitzwilliam Place, Dublin 2
Directors: D P Ferolito, R L Folsom, J P Harris, M A
Salkinder, T Sasanuma, B A Stiefel, P W Ellis
Secretary: First Island Secretaries Limited
Auditors: KPMG, Chartered Accountants, 1 Stokes Place,
St Stephens Green, Dublin 2
Accounting Reference Date: 31 December
Authorised Share Capital: 5,000,000 ordinary shares of IR(pound)1.00 each
Issued Share Capital: 1,000,000 ordinary shares of IR(pound)1.00 each
VAT number:
Registered Shareholders & identity of beneficial owners:
Meridian VAT Corporation Limited 999,999 shares
B A Stiefel (nominee) 1 share
</TABLE>
-40-
<PAGE>
MERIDIAN VAT PROCESSING (INTERNATIONAL) LIMITED
<TABLE>
<S> <C>
Registered Number: 197186
Date and place of Incorporation: 21 December 1992, Dublin
Address of Registered Office: 6 Fitzwilliam Place, Dublin 2
Directors: D P Ferolito, J P Harris, B A Stiefel
Secretary: First Island Secretaries Limited
Auditors: KPMG, Chartered Accountants, 1 Stokes Place,
St Stephens Green, Dublin 2
Accounting Reference Date: 31 December
Authorised Share Capital: 250,000 ordinary shares of IR(pound)1.00 each
Issued Share Capital: 100,000 ordinary shares of IR(pound)1.00 each
VAT number: IE 6597186 E (Group Registration)
Registered Shareholders & identity of beneficial owners:
Meridian VAT Reclaim Operations Limited 99,999 shares
B A Stiefel (nominee) 1 share
</TABLE>
-41-
<PAGE>
MERIDIAN VAT PROCESSING (JAPAN) LIMITED
<TABLE>
<S> <C>
Registered Number: 202433
Date and place of Incorporation: 7 May 1993, Dublin
Address of Registered Office: 6 Fitzwilliam Place, Dublin 2
Directors: D P Ferolito, J P Harris, B A Stiefel,
R Folsom, T Sasanuma
Secretary: First Island Secretaries Limited
Auditors: KPMG, Chartered Accountants, 1 Stokes Place,
St Stephens Green, Dublin 2
Accounting Reference Date: 31 December
Authorised Share Capital: 250,000 ordinary shares of IR(pound)1.00
Issued Share Capital: 100,000 ordinary shares of IR(pound)1.00 each
VAT number: IE 6597186 E (Group Registration)
Registered Shareholders & identity of beneficial owners:
Meridian VAT Reclaim Operations Limited 51,000 shares
T Sasanuma 17,500 shares
R Folsom 17,500 shares
O Sasaki 10,000 shares
B Dandoy 3,000 shares
T Yahagi 1,000 shares
</TABLE>
-42-
<PAGE>
MERIDIAN VAT PROCESSING (N. AMERICA) LIMITED
<TABLE>
<S> <C>
Registered Number: 197184
Date and place of Incorporation: 21 December 1992, Dublin
Address of Registered Office: 6 Fitzwilliam Place, Dublin 2
Directors: D P Ferolito, J P Harris, B A Stiefel
Secretary: First Island Secretaries Limited
Auditors: KPMG, Chartered Accountants, 1 Stokes Place,
St Stephens Green, Dublin 2
Accounting Reference Date: 31 December
Authorised Share Capital: 250,000 ordinary shares of IR(pound)1.00 each
Issued Share Capital: 100,000 ordinary shares of IR(pound)1.00 each
VAT number: IE 6597186 E (Group Registration)
Registered Shareholders & identity of beneficial owners:
Meridian VAT Reclaim Operations Limited 99,999 shares
B A Stiefel (nominee) 1 share
</TABLE>
-43-
<PAGE>
JA EWING, INC
<TABLE>
<S> <C>
Registered Number: 13-5570752
Date and place of Incorporation: 29 January 1931 New York
Address of Registered Office: 125 West 55th Street, 8th Floor, New York
NY10019
Directors: D P Ferolito, B A Stiefel, S Fleishman
Secretary: Not required
Auditors: KPMG, 345 Park Avenue, New York NY 10154
Accounting Reference Date: 31 December
Authorised Share Capital: 11,500 shares of $100
Issued Share Capital: 8,883 shares of $100
VAT number: -
Registered Shareholders & identity of beneficial owners:
Meridian VAT Corporation Ltd 8,883 shares of $100
</TABLE>
-44-
<PAGE>
MERIDIAN VAT RECLAIM AUSTRALIA PTY LIMITED
<TABLE>
<S> <C>
Registered Number: ACN 057 195 990
Date and place of Incorporation: 24 August 1992
Address of Registered Office: 26th Floor, AMP Centre, 50 Bridge Street,
Sydney NSW 2000
Directors: C Fuchs, A W Biet
Secretary: M L Loughland
Auditors: KPMG, Sydney
Accounting Reference Date: 31 December
Authorised Share Capital: 1,000,000 ordinary shares of A$1
Issued Share Capital: 2 ordinary shares of A$1
VAT number: -
Registered Shareholders & identity of beneficial owners:
Meridian VAT Reclaim (UK) Limited 2 shares
</TABLE>
-45-
<PAGE>
MERIDIAN VAT RECLAIM CANADA INC.
<TABLE>
<S> <C>
Registered Number: 989282
Date and place of Incorporation: 2 June 1992, Ontario
Address of Registered Office: 8500 Leslie Street, Thornhill Ontario L3T 7M8
Directors: D P Ferolito
Secretary: Not required
Auditors: KPMG, 345 Park Avenue, New York NY 10154
Accounting Reference Date: 31 December
Authorised Share Capital: Unlimited
Issued Share Capital: 100 Common
VAT number: 13 323 04 33 (GST)
Registered Shareholders & identity of beneficial owners:
Meridian VAT Processing (N America) Limited 100 shares
</TABLE>
-46-
<PAGE>
MERIDIAN VAT RECLAIM HONG KONG LIMITED
<TABLE>
<S> <C>
Registered Number: 365138
Date and place of Incorporation: 30 June 1992 Hong Kong
Address of Registered Office: Suite 505, Gitic Centre, 28 Queens Road
East, Wanchai, Hong Kong
Directors: B A Stiefel, C S Fuchs, M L Loughland
Secretary: Gannon Corporate Services Limited
Auditors: Francis Wong CPA Co Limited, Room 1605,
Evergo House, 38 Gloucester Road, Wanchai,
Hong Kong
Accounting Reference Date: 31 December
Authorised Share Capital: 2,500 ordinary shares of HK$10
Issued Share Capital: 2,500 ordinary shares of HK$10
VAT number: -
Registered Shareholders & identity of beneficial owners:
Meridian VAT Processing (International) Limited 2,499 shares
C S Fuchs (nominee) 1 share
</TABLE>
-47-
<PAGE>
MERIDIAN VAT RECLAIM KOREA CO LIMITED
<TABLE>
<S> <C>
Registered Number: 110111-1136939
Date and place of Incorporation: 13 March 1995 Seoul
Address of Registered Office: 19F, 198 Eul-Jilo, 2-Ka, Chung-ku, Seoul,
Korea
Directors: R Folsom, S Torigoe, O Sasaki
Secretary: Not required
Auditors: KPMG
Accounting Reference Date: 31 December
Authorised Share Capital: KOW 200 million (40,000 shares)
Issued Share Capital: KOW 50 million (10,000 shares)
VAT number: 102-81-36953
Registered Shareholders & identity of beneficial owners:
Meridian VAT Reclaim Japan Inc. KOW 50 million (10,000 shares)
</TABLE>
-48-
<PAGE>
MERIDIAN VAT RECLAIM SERVICES LIMITED
<TABLE>
<S> <C>
Registered Number: 2835964
Date and place of Incorporation: 14 July 1993, UK
Address of Registered Office: Meridian House, 202-204 Finchley Road,
London NW3 6BX
Directors: J P Harris, B A Stiefel, M C Molony
Secretary: S Gomer
Auditors: KPMG, P O Box 486, 1 Puddle Dock, London
EC4V 3PD
Accounting Reference Date: 31 December
Authorised Share Capital: 1,000 ordinary shares of(pound)1
Issued Share Capital: 2 ordinary shares of(pound)1
VAT number: 646 2026 54
Registered Shareholders & identity of beneficial owners:
Meridian VAT Corporation Ltd 2 shares
</TABLE>
-49-
<PAGE>
VATCLAIM INTERNATIONAL (UK) LIMITED
<TABLE>
<S> <C>
Registered Number: 2653159
Date and place of Incorporation: 10 October 1991, UK
Address of Registered Office: Meridian House, 202-204 Finchley Road,
London NW3 6BX
Directors: B A Stiefel
Secretary: S Gomer
Auditors: KPMG, P O Box 486, 1 Puddle Dock, London
EC4V 3PD
Accounting Reference Date: 31 December
Authorised Share Capital: 100 ordinary shares of(pound)1
Issued Share Capital: 70 ordinary shares of(pound)1
VAT number: 660 4865 24
Registered Shareholders & identity of beneficial owners:
Meridian VAT Reclaim (UK) Limited 69 shares
Meridian VAT Reclaim Operations Limited 1 share
</TABLE>
-50-
<PAGE>
MERIDIAN VAT RECLAIM GMBH
<TABLE>
<S> <C>
Registered Number: 4602
Date and place of Incorporation: 1 October 1996 Autsgericht Konigstein in
Taunus
Address of Registered Office: Konigsteiner Strasse 107 65812 Bad Soden
Directors: B A Stiefel
Secretary: Not required
Auditors: Dr Frei, Blumenauer & Partner, Bad Sodem
Accounting Reference Date: 31 December
Authorised Share Capital: DEM 100,000
Issued Share Capital: DEM 100,000
VAT number: 40 239 1735 6
Registered Shareholders & identity of beneficial owners:
Meridian VAT Reclaim (UK) Limited DEM 100,000
</TABLE>
-51-
<PAGE>
MERIDIAN VAT RECLAIM (INDIA) PRIVATE LIMITED
<TABLE>
<S> <C>
Registered Number: 11-74733
Date and place of Incorporation: 26 October 1993, Bombay
Address of Registered Office: E-18, B-1 Extension, Mohan Co-operative
Industrial Estate, Mathura Road, Badarpur,
New Delhi
Directors: J P Harris, P D Gupta, R Krishnan, S N Talwar
Secretary: R Krishnan
Auditors: Sanjay Pandey & Associates, B-1/9 Lajpat
Nagar, New Delhi 110024
Accounting Reference Date: 31 December
Authorised Share Capital: 50,000 Equity Shares of Rs 10
Issued Share Capital: 50,000 Equity Shares of Rs 10
VAT number: -
Registered Shareholders & identity of beneficial owners:
Meridian VAT Processing (International) Ltd 49,998 shares
Meridian VAT Reclaim Operations Ltd 2 shares
</TABLE>
-52-
<PAGE>
MERIDIAN VAT RECLAIM JAPAN INC.
<TABLE>
<S> <C>
Registered Number: 029464
Date and place of Incorporation: 22 March 1993, Tokyo
Address of Registered Office: 7F Shiba Daimon Bldg, 2-3-4 Shiba-Koen,
Minato-ku, Tokyo
Directors: T Sasanuma, R Folsom, O Sasaki, B A Stiefel,
D P Ferolito, T Yahagi
Secretary: n/a
Auditors: KPMG, The Japan Red Cross Building, 1-3
Shiba Daimon, 1-Chome Minato-ku, Tokyo, Japan
Accounting Reference Date: 31 December
Authorised Share Capital: Y200 million (4,000 shares)
Issued Share Capital: Y50 million (1,000 shares)
VAT number: (top) 00661821
Registered Shareholders & identity of beneficial owners:
Meridian VAT Processing (International) Ltd 51%
Taisuke Sasanuma 17.5%
Richard Folsom 17.5%
Osamu Sasaki 10%
B. Dandoy 3%
Tsuneo Yahagi 1%
</TABLE>
-53-
<PAGE>
MERIDIAN VAT RECLAIM INC.
<TABLE>
<S> <C>
Registered Number: 133692024
Date and place of Incorporation: October 20, 1992, Delaware, USA
Address of Registered Office: 125 West 55th Street, 8th Floor, New York,
NY 10019
Directors: D P Ferolito, B A Stiefel
Secretary: S Boyarsky
Auditors: KPMG, 345 Park Avenue, New York NY 10154
Accounting Reference Date: 31 December
Authorised Share Capital: 1,000 shares of US$1
Issued Share Capital: 100 shares of US$1
VAT number: -
Registered Shareholders & identity of beneficial owners:
Meridian VAT Processing (N America) Ltd 100 shares of US$1
</TABLE>
-54-
<PAGE>
MERIDIAN VAT RECLAIM (PROPRIETARY) LIMITED
<TABLE>
<S> <C>
Registered Number: 73/02054/07
Date and place of Incorporation: 20 February 1973, Pretoria, South Africa
Address of Registered Office: 9 Summit Road, Dunkeld West, Johannesburg
2196
Directors: M A Salkinder, E R Lucey, D P Ferolito
Secretary: M A Salkinder
Auditors: Fisher Hoffman Sithole, FHS House, 15 Girton
Road, Parktown 2193
Accounting Reference Date: 31 December
Authorised Share Capital: 4,000 ordinary shares of SAR1
Issued Share Capital: 2001 ordinary shares of SAR1
VAT number: -
Registered Shareholders & identity of beneficial owners:
Meridian VAT Processing (International) Ltd 2001 shares
</TABLE>
-55-
<PAGE>
MERIDIAN VAT RECLAIM (UK) LIMITED
<TABLE>
<S> <C>
Registered Number: 2528477
Date and place of Incorporation: 7 August 1990, UK
Address of Registered Office: Meridian House, 202-204 Finchley Road,
London NW3 6BX
Directors: B A Stiefel, J P Harris, L M Whiting
Secretary: S Gomer
Auditors: KPMG, P O Box 486, 1 Puddle Dock, London
EC4V 3PD
Accounting Reference Date: 31 December
Authorised Share Capital: 100,000 ordinary shares of(pound)1
Issued Share Capital: 100,000 ordinary shares of(pound)1
VAT number: 544 7010 64
Registered Shareholders & identity of beneficial owners:
Meridian VAT Processing (International) Ltd 99,999 shares
B A Stiefel (nominee) 1 share
</TABLE>
-56-
<PAGE>
MERIDIAN VAT RECLAIM (SCHWEIZ) AG
<TABLE>
<S> <C>
Registered Number: CH-020.3.004.292-0
Date and place of Incorporation: 20 October 1993, Zurich (Hauptregister)
Address of Registered Office: Trockenloostrasse 47, 8105 Regensdorf
Directors: Dr F Hinteregger, Dr H Tschopp, L Whiting
Secretary: Not required
Auditors: Interna Treuhand-Gesellschaft, Zurich
Accounting Reference Date: 31 December
Authorised Share Capital: 1,000 shares of CHF 100
Issued Share Capital: 1,000 shares of CHF 100
VAT number: 381751
Registered Shareholders & identity of beneficial owners:
Meridian VAT Processing (International) Limited 1000 shares of CHF 100
</TABLE>
-57-
<PAGE>
VATCLAIM INTERNATIONAL (PTY) LTD
<TABLE>
<S> <C>
Registered Number: 65/08530/07
Date and place of Incorporation: 12 October 1965, South Africa
Address of Registered Office: 9 Summit Road, Dunkeld West, Sandton
Directors: M A Salkinder
Secretary: M A Salkinder
Auditors: Fisher Hoffman Stride
Accounting Reference Date: 31 December
Authorised and issued Share Capital: 610,000 ordinary shares of R 2 each
VAT number: -
Registered Shareholders:
Meridian VAT Reclaim (Proprietary) Limited 610,000 shares of R 2 each
</TABLE>
-58-
<PAGE>
SCHEDULE 4
WARRANTIES
1. Constitution
2. Accounts
3. Business
4. Intellectual Property
5. Information Technology
6. Directors and Employees
7. Properties
8. Pensions
9. The Group and its Bankers
10. Accuracy of Information
11. Investment Intent
12. Pooling of Interests
13. Tax
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1. CONSTITUTION
1.1 ORGANISATION
Each of the Company and its Subsidiaries is a corporation duly
incorporated, validly existing and duly organised under the laws of the
jurisdiction of their incorporation, has been in continuous existence
since incorporation and has the corporate power to own its properties
and to carry on its business as now conducted, and is not required to be
qualified to do business in any other jurisdiction.
1.2 VALID AND BINDING AGREEMENT
This agreement, the Transaction Documents and the other agreements,
instruments and documents to be executed in connection herewith, when
duly executed and delivered shall constitute legal, valid and binding
obligations of the Company and the Vendors and are enforceable against
them as applicable, in accordance with their respective terms.
1.3 AUTHORITY
The execution and delivery of this agreement and the Transaction
Documents and the consummation thereof do not breach, or result in a
breach of, or constitute a default under, the articles or memorandum of
association or equivalent constitutional documents of the Company or any
of the Subsidiaries, or any agreement to which the Company, the
Subsidiaries or the Vendors is, or are, a party to or by which any of
them is bound where such breach of any agreement would have a material
adverse effect on the Business. No authorisation, approval or consent
of, or notice to or filing with, any governmental authority of any kind
whatsoever or any third party is required for the execution, delivery or
performance of this agreement by the Company and the Vendors.
1.4 MEMORANDUM AND ARTICLES
The memorandum and articles of association or equivalent constitutional
documents of the Company and each of the Subsidiaries in the form of the
copies supplied to the Purchaser are complete and accurate and so far as
the Vendors are aware have embodied therein or annexed thereto copies of
all resolutions and agreements as are required by the relevant local
legislation, and all amendments thereto (if any) were duly and properly
made.
1.5 REGISTER OF MEMBERS
The register of members of the Company contains true and accurate
records of the members from time to time of the Company and the Company
has not been subject to any application under Article 47 of the
Companies (Jersey) Law 1991 for rectification of such register.
1.6 RETURNS
All such resolutions returns and other documents required by the
Companies (Jersey) Law 1991 to be delivered to the Registrar of
Companies have been duly delivered and are true and accurate.
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1.7 POWERS OF ATTORNEY
The Company has not executed any power of attorney or conferred on any
person other than its directors, officers and employees any authority to
enter into any transaction on behalf of or to bind the Company in any
way, except for powers of attorney entered into with clients or fiscal
agents acting on behalf of the Company in relation to the processing of
VAT claims in the ordinary course of business.
1.8 SUBSIDIARIES
The Company does not have any subsidiaries or subsidiary undertakings
(direct or indirect) other than those listed in schedule 3 nor does the
Company own any shares or stock in the capital of nor have any
beneficial interest in any other company or business organisation nor
does the Company control or take part in the management of any other
company or business organisation. Each of the Subsidiaries is a
wholly-owned subsidiary of the Company, save as otherwise indicated in
schedule 3. The issued shares of each of the Subsidiaries are owned by
the Company or by another member of the Group free and clear of all
liens, claims and encumbrances and there are no existing options,
warrants, call or commitments of any kind relating to the authorised and
issued shares of any such Subsidiary.
1.9 SHARE CAPITAL
Schedule 2 contains a true, correct and complete list of the authorised
and issued share capital of the Company. All of the issued shares of the
Company have been duly authorised, are validly issued, fully paid and
non-assessable and are beneficially owned by the Vendors in the amounts
set out in columns 2, 3 and 4 of part A of schedule 1. No one other than
the Vendors has any beneficial or other interest in the share capital of
the Company and in the two years prior to the date of this agreement
none of the Vendors has disposed of or acquired any Shares and there has
been no change of control in relation to any of the Vendors. Each of the
Vendors warrants for itself that it is the lawful owner of, and has good
and marketable title to, the number of shares in the Company's issued
share capital as set out in columns 2, 3 and 4 of part A of schedule 1
free and clear of any mortgage, pledge, claim, lien, charge, encumbrance
or other right in any third party (including any right to purchase, vote
or direct the voting of, any shares thereof). The Company has not issued
any convertible securities, options, warrants or entered into any
contracts, commitments, agreements, understandings, arrangements or
restrictions by which it is bound to issue any additional shares to any
person.
1.10 DIVIDENDS
Since the Accounts Date, the Company has not issued, declared or paid
any dividend on, or declared or made any distribution on, or authorised
the creation or issuance of, or effected any split-up or any
recapitalisation of, any of its share capital or, directly or indirectly
redeemed, purchased or otherwise acquired or authorised the acquisition
of any of its issued share capital.
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1.11 AFFILIATE LOANS
The details of all of the Affiliate Loans set out in part B of schedule
1 and in schedule 8 are true, complete and accurate and no other
Affiliate Loans exist. Each of the Vendors warrants that it has lent to
the Company the amounts set out opposite its name in columns 2 and 6 of
part B of schedule 1 in the form of subordinated loans and short term
loans respectively and that the total interest accrued on such
subordinated loans and short term loans and is as set out in columns 3
and 7 of part B of schedule 1 respectively. Each of the Vendors further
warrants that:-
(a) all amounts which are owed to such Vendor by the Company are
indicated in part B of schedule 1; and
(b) all payments, repayments and other movements on the amount of
the Affiliate Loans in the two years prior to the date of this
agreement are as set out in schedule 8;
(c) that no other sums are owed to such Vendor by the Company or
any member of the Group; and
(d) no penalty, fee or charge of any nature will be incurred by
the Company or any member of the Group arising out of or in
connection with the prepayment of any Affiliate Loan.
1.12 RESIDENCY
None of the Vendors, nor any person who is beneficially interested in
any trust of which a Vendor is a trustee, is resident in Jersey.
2. ACCOUNTS
2.1 ACCOUNTS
The Accounts (including any related notes and schedules) have been
prepared in accordance with the requirements of all relevant statutes
and with GAAP and are true, accurate and complete in all respects so far
as they are stated to be facts and not estimates, and accordingly give a
true and fair view of all the assets and liabilities (whether present or
future, actual or contingent) and of the state of affairs, financial
position and results of the Company as at and up to the Accounts Date.
Without prejudice to the generality of the foregoing, the Accounts:-
(a) make adequate provision or reserve for depreciation, bad or
doubtful debts and other actual liabilities to the extent
required by GAAP;
(b) either make adequate provision or reserve for or make fair
disclosure in notes of all contingent, postponed or deferred
liabilities to the extent required by GAAP;
(c) do not overvalue assets or understate liabilities to the extent
required by GAAP; and
(d) have not (save as disclosed in the Accounts) been affected by any
extraordinary, exceptional or non-recurring item or by any other
fact or circumstance rendering the profits or losses for the
relevant period unusually high or low.
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2.2 FINANCIAL STATEMENTS
The Financial Statements:-
(a) have been prepared with due care and attention and in accordance
with GAAP and on a basis consistent with those employed in the
preparation of the Accounts; and
(b) fairly reflect the state of affairs, financial position and
results of the Company in all material respects as at and for the
six months up to 30 June 1999 and, save as specifically disclosed
in the Disclosure Letter, there are no outstanding liabilities or
obligations of the Company of any nature whatsoever which in
aggregate exceed US$50,000 except for those that are specifically
reflected, provided for or reserved in the Financial Statements.
2.3 ACCOUNTING POLICY
The Accounts have been prepared on a basis consistent with the basis
upon which all audited accounts of the Company have been prepared since
1 January 1995.
2.4 ACCOUNTS RECEIVABLE AND WORK IN PROGRESS
All accounts receivable, notes receivable, employee advances, rights to
receive payments from customers for claims filed by or on behalf of
customers of the Company (collectively "ACCOUNTS RECEIVABLE") are bona
fide, arose in the ordinary course of business and neither the Company
nor any of the Vendors is aware of any dispute in relation to, or any
claims capable of being off set against, any such Accounts Receivables
(save for those in respect of which specific provision has been made in
the Accounts or the Financial Statements).
2.5 OFF BALANCE SHEET FINANCING
The Company has not engaged in any financing (including without
prejudice to the generality of the foregoing the incurring of any
borrowing or any indebtedness in the nature of borrowing including
without limitation liabilities in the nature of acceptances or
acceptance credits) of a type which would not be required to be shown or
reflected in the Accounts.
2.6 FOREIGN EXCHANGE
There are no derivative contracts of any nature, or foreign currency
losses of any kind, for the period from the Accounts Date up to
Completion except as disclosed in the Disclosure Letter.
2.7 BOOKS OF ACCOUNT
The Company has properly kept and maintained all books of account
(reflecting in accordance with GAAP all transactions effected by the
Company or to which it is or has been a party) minute books, register of
members and other statutory books. All such documents are up-to-date,
true and accurate and all deeds and documents (properly stamped where
stamping is necessary for enforcement thereof) belonging to the Company
or which ought to be in the
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possession of the Company and the common seal of the Company are in the
possession of the Company.
3. BUSINESS
3.1 BUSINESS SINCE THE ACCOUNTS DATE
Since the Accounts Date there has been no material adverse change in the
business of Company or in the financial or trading position of the
Company and the business of the Company has been conducted on a normal
basis and the Company has not disposed of any of its assets otherwise
than in the normal course of business or made any loan or other payment
other than in the normal course of business.
3.2 ACQUISITION AND DISPOSAL OF ASSETS
The Company has not since the Accounts Date acquired or agreed to
acquire any asset for a consideration which is higher than the market
value at the time of acquisition and has not disposed of or agreed to
dispose of any asset for a consideration which is lower than the market
value or the value thereof as shown in the books of the Company at the
time of disposal.
3.3 CHARGES AND TITLE TO ASSETS
The Company has not created or agreed to create or suffered to arise any
Encumbrance over any part of its undertaking or assets and the Company
has and will at Completion have a good and marketable title to all the
assets included in the Accounts and to all other assets (tangible or
intangible) used for the purpose of the Company's business at the date
hereof and to all assets acquired since the Accounts Date and prior to
Completion.
3.4 LEASING ETC. AGREEMENTS
Full and accurate details of any hiring or leasing agreement, hire
purchase agreement, credit or conditional sale agreement or agreement
for payment on deferred terms which requires aggregate payments to be
made in excess of US$25,000 per annum to which the Company is a party
are contained in the Disclosure Letter and copies annexed thereto.
3.5 ONEROUS OBLIGATIONS
The Company is not a party to any contract, transaction or arrangement
which:-
(a) gives rise to a liability of an unusual or abnormal nature, or
outside the ordinary and proper course of business; or
(b) is for a fixed term of more than six months; or
(c) by its terms involves an aggregate outstanding expenditure by the
Company of more than US$150,000 in any one year; or
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(d) restricts its freedom to engage in any activity or business or
confines its activity or business to a particular place.
3.6 CONTRACTS WITH CONNECTED PERSONS
The Company has no contractual or other arrangements of any sort with
any of the Vendors or any body corporate or person connected or
associated with any of the Vendors.
3.7 EVENTS OF DEFAULT
(a) No event has occurred or is subsisting which constitutes or would
with the giving of notice constitute a default or the
acceleration of any obligation of the Company under any agreement
or arrangement to which the Company is a party or by which it or
any of its properties, revenues or assets are bound.
(b) The Company is not a party to any agreement or arrangement which
is capable of termination (without liability for compensation) by
any other person on a change in the management control or
shareholding of the Company or by reason of the sale of the
Shares under this agreement.
(c) To the best of the Vendors' knowledge, information and belief,
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):-
(i) no supplier of the Company has informed the Company that it
will cease supplying the Company or may substantially
reduce its supplies to the Company;
(ii) no customer of the Company has informed the Company that it
will cease to deal with the Company or may substantially
reduce its existing level of business with the Company; and
(iii) the Company has not been informed that it will lose the
benefit of any right or privilege which is provided by any
of the Vendors or any Affiliate and which it enjoys as at
Completion.
3.8 GUARANTEES ETC.
The Company has not given any guarantee, indemnity, warranty or bond or
incurred any other similar obligation or created any security for or in
respect of liabilities, actual or contingent, of any party other than
another company in the Group other than as expressly referred to or
identifiable in the audited accounts of the Company for the three
financial years ending on the Accounts Date.
3.9 OPTIONS OVER SHARES ETC.
None of the Vendors is under any obligation of any kind whatsoever
whether actual or contingent to sell, charge or otherwise dispose of any
of the Shares or any interest therein to any other person.
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3.10 LITIGATION
(a) The Company is not engaged in any litigation, arbitration,
prosecution or other legal proceedings (whether as plaintiff,
defendant or third party) and there are no such proceedings
pending, or to the best of the Vendors' knowledge threatened, or
any such proceedings in respect of which the Company is or might
be liable to indemnify any other person concerned therein and to
the best of the Vendors' knowledge there are no claims, facts or
events which are likely to give rise to any such proceedings.
(b) The Company is not engaged in and has not in the last six years
been engaged in, and to the best of the Vendors' knowledge no
facts or events exist or have occurred which the Vendors know
will, or are likely to, cause the Company to be involved in,
proceedings or enquiries before any governmental or municipal
board of enquiry or commission or any other administrative body
(whether judicial quasi-judicial or otherwise) as a result of
which any unfavourable judgement or decision would or, to the
best of the Vendors' knowledge, might adversely affect the
business of the Company or the value of any of its assets.
3.11 BUSINESS NAME
The Company does not carry on, and has not in the past three years
carried on, any business under any name other than its corporate name.
3.12 PROPERTY IN OTHER COMPANIES
The Company is not liable to offer for sale, transfer or otherwise
dispose of or purchase or otherwise acquire any assets, including shares
held by it in other bodies corporate under their articles of association
or any agreement or arrangement or to take or suffer any action as a
result of the proposed acquisition of the Company by the Purchaser.
3.13 INSURANCE
(a) The Company has produced to the Purchaser all insurance policies
in effect in relation to its business and assets and all such
policies are in full force and effect.
(b) There is no individual claim in excess of US$15,000 outstanding
and there are no claims in excess of US$50,000 in aggregate
outstanding under any such policy nor are the Vendors aware of
any circumstances likely to give rise to such a claim.
3.14 COMPLIANCE WITH LAW
So far as the Vendors are aware, neither the Company, nor any of its
officers or employees (during the course of their duties in relation to
the Company) have committed, or omitted to do, any act or thing the
commission or omission of which is in contravention of any applicable
law, order or regulation in the United Kingdom, Republic of Ireland or
elsewhere and which:-
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(a) is punishable by fine or other penalty or for which any other
liabilities have arisen on the Company or causes the Company to
be in breach of any agreement to which it is a party; and
(b) in any event would have a material adverse effect on the
financial position of the Company.
3.15 COMPETITION
The Company is not nor has been a party to or concerned in any agreement
or arrangement, or conducted itself (whether by omission or otherwise)
in a manner, which:-
(a) infringes Articles 81 and/or 82 of the Treaty of Rome or their
equivalent provisions under the European Economic Area Agreement
or any other anti-trust or similar legislation in any
jurisdiction; or
(b) is registrable, unenforceable or void (whether in whole or in
part) or renders it liable to civil, criminal or administrative
proceedings by virtue of any anti-trust, anti-monopoly,
anti-cartel, consumer law or any other similar legislation in any
jurisdiction.
3.16 LICENCES
The Company has all licences, permissions, permits, consents and
authorisations required for the carrying on of its business and, so far
as the Vendors are aware, is not in breach of the terms or conditions of
such licences, permissions, permits, consents and authorisations and
there are no pending or threatened proceedings which might adversely
affect the validity of such licences, permissions, permits, consents and
authorisations and the Vendors are not aware of any other reason why any
of them should be suspended, threatened or revoked or be invalid.
3.17 GRANTS
The Company has not applied for nor received any financial assistance
from any supranational, national or local agency, body or authority
other than the Irish Industrial Development Authority. No such financial
assistance would be required to be repaid or other penalty incurred by
the Company in relation thereto arising out of or in connection with the
transaction contemplated by this Agreement.
3.18 BROKER'S FEES
Neither the Company nor any of the Vendors has retained or utilised the
services of any broker, finder or intermediary, or paid or agreed to
pay any fee or commission to any other person or entity for or on
account of the transactions contemplated by this agreement, or had any
communications with any person or entity with respect thereto, which
would obligate the Company and/or any member of the PRG Group to pay
any such fees or commissions.
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3.19 PRIMARY CLIENTS
For purposes of this Warranty, "PRIMARY CLIENTS" means those 20 Clients
of the Company which as of the end of any calendar year after 1998 (or
in respect of 1999, as of the period from January 1, 1999 to the date
hereof) accounted for the highest percentage of the revenues of the
Company during such calendar year (or in respect of 1999, such part
thereof). Save as set out in the Disclosure Letter, there are no Primary
Clients who have, within the 12 months immediately preceding the date
hereof, expressed to the Company material dissatisfaction with the
Company's services and no compensation in excess of US$5000 has been
paid on any one occasion to any single Primary Client in respect of any
failure by the Company to provide its services in a proper and efficient
manner and no compensation in excess of US$250,000 in aggregate has been
paid in the 12 months prior to the date of this agreement.
3.20 TRUSTEE ARRANGEMENTS
True, accurate and complete copies of all the documents which govern the
arrangements of the Company with Meridian VAT Trustees Limited
("TRUSTEES") are annexed to the Disclosure Letter and there are no other
arrangements (whether or not in writing) which in any way govern the
Company's relationship with Trustees. No person other than Trustees
holds funds on behalf of the Company's clients and all funds held or
processed by Trustees have at all times been held and applied in the
ordinary and proper course of the Company's business in accordance with
the terms of the disclosed documents referred in this paragraph 3.20 and
for no other purpose whatsoever.
3.21 INSOLVENCY
Neither the Company nor any of the Vendors are unable to pay their
respective debts within the meaning of section 123 of the Insolvency Act
1986. No order has been made, petition presented or resolution passed
for the winding up or for the appointment of a provisional liquidator to
the Company or any of the Vendors. No administration order has been made
and no petition for an administration order has been presented in
respect of the Company or any of the Vendors. No receiver, receiver and
manager or administrative receiver has been appointed of the whole or
part of the Company's or the whole or part of any Vendors' business or
assets.
4. INTELLECTUAL PROPERTY
4.1 (a) Save for the Intellectual Property which is licensed to the
Company, the Company is the sole and absolute legal and
beneficial owner of the Business Intellectual Property and where
appropriate the Business Intellectual Property is registered in
or registrations have been applied for in the name of the
Company.
(b) The Business Intellectual Property is free from Encumbrances and,
in the case of confidential information, any disclosure
obligation, and is subsisting, valid, exercisable and
enforceable.
4.2 (a) All registration and renewal fees have been paid in relation
to the registered and applied for Business Intellectual Property
and so far as the Vendors are aware all
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reasonable steps have been taken for the prosecution and
maintenance of the registered and applied for Business
Intellectual Property.
(b) So far as the Vendors are aware all reasonable steps have been
taken for the maintenance and protection of all unregistered
Business Intellectual Property.
4.3 The Business Intellectual Property is all the Intellectual Property
necessary for the operation of the Business as presently conducted and,
so far as the Vendors are aware, will not be adversely affected by the
transaction contemplated by this agreement.
4.4 The terms of all licences or rights which have been granted by or to the
Company or which the Company or the Vendors intend to enter into for the
purposes of the Business or which are being currently negotiated or
other agreements or consents or undertakings entered into by the Company
relating to the Business Intellectual Property and Intellectual Property
of third parties are set out in the Disclosure Letter and save as
disclosed neither the Company nor any of the Vendors are obliged to
enter into any such agreement relating to the Company's business. There
has been or is no breach nor so far as the Vendors are aware is there
any fact or matter which would or may create a breach of such licences
or undertakings.
4.5 The terms of any order given or measure imposed by a court or other body
of competent jurisdiction relating to the Business Intellectual Property
against or in favour of the Company, any of the Vendors are set out in
the Disclosure Letter and there is no breach of any such orders.
4.6
(a) So far as the Vendors are aware, the use by the Company of the
Business Intellectual Property does not infringe the Intellectual
Property of any other person.
(b) No proceedings or claims have been brought or, so far as the
Vendors are aware, threatened, by any third party or competent
authority in relation to the Business Intellectual Property
concerning title, subsistence, validity or enforceability or
grant of any right or interest in the Business Intellectual
Property.
(c) No third party is infringing or misusing or, so far as the
Vendors are aware, threatening, to infringe or misuse the
Business Intellectual Property.
(d) The Company is not subject to any injunction, undertaking or
court order or order of any other authority of competent
jurisdiction not to use or restricting the use any Business
Intellectual Property.
4.7 The Company is the sole and absolute legal and beneficial owner of all
of the Intellectual Property created or updated by any employee or
consultant employed or retained (as the case may be) from time to time
by East & West Limited ("E&W") (excluding Maria Sandler) at any time
during the period in which E&W has been retained by the Company to
provide services to the Company in connection with its Computer Systems.
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5. INFORMATION TECHNOLOGY
5.1 The Computer Systems used in the business of the Company are all the
systems required for its immediate needs including (without limitation)
system capacity and the ability to process current peak volumes and
anticipated volumes in a timely manner.
5.2 The Company has performed the reviews and testing of the Computer System
reasonably required to ascertain whether the Computer System will be
adversely affected by either any changes in and to date information used
therein or any changes to inputs, outputs and other manipulations of
data in relation to dates before on or after 1 January 2000 and such
reviews and test results indicated that the Computer Systems will not be
adversely affected.
5.3 All Computer Systems, excluding software, used in the Company's business
are owned and operated by and are under the control of the Company.
5.4 The Company either solely owns or is validly licensed to use the
software used in the Business.
5.5 The Company has in place adequate back-up systems disaster recovery
provisions and security arrangements in relation to all Computer Systems
used in its business.
5.6 The Computer Systems used in the Company's business are capable of
effecting conversions between the Euro and national currencies required
by the Company's Business.
5.7 Save as set out in the Disclosure Letter, the Company does not have any
public, private or reserved presence on the world wide web, multi-party
extranet, virtual private network, or similar internet based, linked
system ("INTERNET PRESENCE"). The Company's domain name(s) are currently
registered with the currently authorised Internet Domain Name Registrar,
are transferable to the Purchaser, and are in good standing.
6. DIRECTORS AND EMPLOYEES
6.1 The names of the directors and secretaries shown in schedules 2 and 3
are true and complete and no person not named therein as such is a
director or secretary of the Company or any of the Subsidiaries.
6.2 The Disclosure Letter contains copies of all the standard terms and
conditions, staff handbooks and policies which apply to all employees of
the Company employed in the United Kingdom, Ireland and the United
States and identifies which terms and conditions apply to which
employees.
6.3 No past or present director, officer, employee or any dependant thereof
has made any claim against the Company during the past 12 months
resulting in a cost to the Company in excess of US$10,000.
6.4 There are no unusual terms of employment or engagement of all employees,
agents, consultants and professional advisers of the Company and such
terms of employment or engagement may be terminated by not more than
three months notice given at any time without liability for any payment
including by way of compensation or damages (except for unfair dismissal
or a statutory redundancy payment).
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6.5 The Company has not entered into any agreement or arrangement for the
management or operation of its business or any part thereof other than
with its directors or employees.
6.6 Since the Accounts Date the Company has not made, announced or proposed
any changes to the emoluments or benefits of or any bonus to any of its
directors or employees and the Company is under no obligation to make
any such changes with or without retrospective operation.
6.7 No past or present director or employee of the Company or any
predecessor in business has made any claim against the Company including
any claim:-
(a) in respect of any accident or injury which is not fully covered
by insurance; or
(b) for breach of contract of services or for services; or
(c) for loss of office or arising out of or connected with the
termination of his office or employment (including any redundancy
payment)
and so far as the Vendors are aware no such claim has been threatened.
6.8 Within the three years preceding the date hereof the Company has not
been engaged or involved in any trade dispute with any employee, trade
union, staff association or any other body representing workers and so
far as the Vendors are aware no industrial action involving employees of
the Company, official or unofficial, is now occurring or threatened.
6.9 The Company has not within the three years preceding the date hereof
acquired or entered into any agreement which involved or may involve it
acquiring any undertaking or part of one such that the EC Council
Directive 77/187 as amended (the "ACQUIRED RIGHTS DIRECTIVE") applied or
may apply thereto.
6.10 No trade union, staff association or any other body representing workers
is recognised by the Company for the purposes of collective bargaining.
6.11 There are no amounts owing or agreed to be loaned or advanced by the
Company to any directors, officers and employees of the Company (other
than amounts representing remuneration accrued due for the current pay
period which remuneration shall be discharged in full in respect of the
period up to Completion, accrued holiday pay for the current holiday
year or for reimbursement of expenses).
6.12 There are no enquiries or investigations existing or threatened
affecting the Company in relation to any directors, officers or
employees by the Equal Opportunities Commission, the Commission for
Racial Equality or the Health and Safety Executive.
6.13 No director or officer of the Company and none of M. O'Riordon, V.
Maher, J.Harris, P. Ellis, L. Whiting, S. Gomer, B. Harte, G. Shankey
and U. Tipp (each an "IMPORTANT EMPLOYEE") has given or received notice
to terminate his employment and no director, officer or Important
Employee has informed the Company that he intends to leave the Company
after Completion.
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6.14 There are no directors or Key Employees of the Company who are on
secondment, maternity leave or absent on grounds of disability or other
leave of absence (other than normal holidays or absence of no more than
one month due to illness).
6.15 There are no terms and conditions in any contract with any director or
employee of the Company pursuant to which such person will be entitled
to receive any payment or benefit or such person's rights will change as
a direct consequence of the transaction contemplated by this agreement.
6.16 A copy of the form of each document prepared and/or distributed in
relation to the Company's phantom stock plan are annexed to the
Disclosure Letter, together with a true, accurate and complete list of
all grants, awards and claims made pursuant to the Company's phantom
stock plan.
6.17 The Disclosure Letter sets out with respect to the United States
operations of the Company and its Subsidiaries a true and complete list
of each "employee benefit plan" (as defined by Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
and any other bonus, profit sharing, pension, compensation, deferred
compensation, stock option, stock purchase, fringe benefit, severance,
post-retirement, scholarship, disability, sick leave, vacation,
commission, bonus, payroll practice, retention, or other plan,
agreement, policy, trust fund or arrangement (other than normal
practices for the payment of salary or wages, including such payments
during short absences for illness, vacation and the like, and
governmentally mandated benefits) for the benefit of current or former
directors or employees of the Company or any other persons currently or
formerly performing services for the Company, and/or beneficiaries of
any such persons (collectively, "BUSINESS EMPLOYEES") with respect to
which the Company or any "ERISA AFFILIATE" (hereby defined to include
any entity other than the Company, or treated under section 414 of the
Code as a single employer with the Company) has any obligation on behalf
of any Business Employee (each such plan, agreement, policy, trust fund
or arrangement is referred to herein as an "EMPLOYEE BENEFIT PLAN", and
collectively the "EMPLOYEE BENEFIT PLANS").
6.18 The Company has delivered to the Purchaser, with respect to each
Employee Benefit Plan, true and complete copies of (a) the documents
embodying and relating to the plan, including, without limitation, the
current plan documents and documents creating any trust maintained
pursuant thereto, all amendments, group annuity contracts, insurance
contracts, collective bargaining agreements, the most recent summary
plan description with each summary of material modification, if any, and
employee handbooks, (b) annual reports, including but not limited to
Forms 5500, 990 and 1041, for the last three (3) years for the plan and
any related trust, (c) actuarial valuation reports and financial
statements for the last three (3) years, and (d) each communication
involving the plan or any related trust to or from the Internal Revenue
Service ("IRS"), Department of Labor ("DOL"), or any other governmental
authority including, without limitation, the most recent determination
letter received from the IRS pertaining to any Employee Benefit Plan
intended to qualify under sections 401(a) or 501(c)(9) of the Code.
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6.19 No Employee Benefit Plan is (a) a "multiple employer welfare
arrangement" (within the meaning of section 3(40) of ERISA), (b) a "plan
maintained by more than one employer" (within the meaning of section
413(c) of the Code), or (c) subject to Title IV of ERISA.
6.20 The Purchaser will not, as a result of the transactions contemplated by
this agreement (or any employment by the Purchaser of any Business
Employee) become liable for any contribution, tax, lien, penalty, cost,
damage or other similar type of liability or expense of the Company or
any ERISA Affiliate with regard to any Employee Benefit Plan other than
ordinary costs of plan administration and operation and payments of
benefits therefrom in the ordinary course of such administration and
operation.
6.21 Except as set out in the Disclosure Letter, no Employee Benefit Plan in
any way provides for any benefits of any kind whatsoever (other than
under COBRA, the Federal Social Security Act, or any Employee Benefit
Plan qualified under section 401(a) of the Code) to any Business
Employee who, at the time the benefit is to be provided, is a former
director or former employee of, or other former provider of services to,
the Company or an ERISA Affiliate (or a beneficiary of any such person),
or any other former Business Employee, nor have any representations,
agreements, covenants or commitments been made to provide such benefits.
6.22 Any contribution, insurance premium, excise tax, interest charge or
other liability or charge imposed or required with respect to any
Employee Benefit Plan which is attributable to any period or any portion
of any period prior to Completion is reflected as a liability on the
Financial Statements.
7. PROPERTIES
Save in respect of Warranty 7.10, for the purposes of this paragraph the
expression the "PROPERTIES" shall include where the context so admits
the individual properties comprising the same.
7.1 The Properties comprise all the land and premises occupied or otherwise
used by the Company.
7.2 The Company has exclusive and unencumbered possession of the Properties
and is lawfully in occupation of them.
7.3 There are no covenants, restrictions, burdens, stipulations, wayleaves,
easements, conditions, outgoings, terms, overriding interests, rights or
licences affecting any of the Properties which are of an unusual or
onerous nature or which adversely affect the use of the Properties for
which they are currently used.
7.4 The Vendors are not aware of any outstanding disputes or complaints
relating to the Properties.
7.5 Neither the Company nor the Vendors have received notice of any breach
of any legislation or of any lease or licence by virtue of which the
Company is in occupation in respect of the Properties.
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7.6 So far as the Vendors are aware, the Properties are not affected by any
order or notice of or proceedings involving any governmental or local
authority or other body or any agreement with any of the same or by any
notices served by the Company on any such body or authority.
7.7 The Company has no actual or contingent obligations or liabilities
(whether as principal contracting party or guarantor or otherwise) in
relation to any lease, licence or other interest in or agreement
relating to land apart from the Properties.
7.8 So far as the Vendors are aware, the Company has duly performed observed
and complied with all covenants, restrictions, exceptions, reservations,
conditions, agreements, statutory and legal requirements affecting the
Properties and the uses of the Properties including the terms of any
lease or licence under which any part of any of the Properties is held
and all outgoings have been paid to date and all rents and service
charges have been paid to date and no notice of any alleged breach of
any of the terms of any such lease or licence has been served on the
Company.
7.9 Each of the Properties is held under the lease or licence brief details
of which are set out in schedule 6.
7.10 Save for rent due and payable in the ordinary course of business
consistent with past practice, there are no outstanding sums whatsoever
or howsoever arising owing by the Company to any Vendor, Affiliate,
Company Affiliate or any person connected with any of the foregoing in
respect of the property located at 202-204 Finchley Road, London NW3
6BX.
8. PENSIONS
8.1 UNDERTAKINGS AND ASSURANCES
No undertaking or assurance (whether legally binding or not) has been
given or will before the Completion Date be given by the Company in
connection with the Schemes (as defined in Warranty 8.2 below) to any
person as to the continuance, introduction, increase or improvement of
any such benefit of the Schemes.
8.2 MONEY PURCHASE BENEFITS ONLY
In addition to lump sum death in service benefits provided by the
Meridian (Ireland) Money Purchase Scheme and Meridian VAT Reclaim (UK)
Limited Pension Fund ("THE SCHEMES ") the Schemes provide only money
purchase benefits (as defined in section 181 of the Pension Schemes Act
1993) and no promise or assurance (oral or written) has been given to
any beneficiary that his or her benefits under that scheme (other than
lump sum death in service benefits) will be calculated by reference to
any person's remuneration or equate (approximately or exactly) to any
particular amount.
8.3 PENSION ARRANGEMENTS DISCLOSED
Save in respect of the Employee Benefit Plans and the Schemes disclosed
the Company is under no obligation or commitment, nor is it a party to
any custom or practice, to pay, provide
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or contribute towards any "RELEVANT BENEFITS" within the meaning of
section 612 of the T.A., or sickness or disability benefits, to or in
respect of any person.
8.4 DISCLOSURE OF DOCUMENTS
All material details of the Schemes have been supplied to the Purchaser
or the Purchaser's Solicitors.
8.5 PAYMENT OF CONTRIBUTIONS
All contributions and premiums which are payable by the participating
companies under the Schemes and all contributions due from members of
the Schemes have been duly made.
8.6 LEGAL COMPLIANCE
So far as the Vendors are aware, the Schemes have at all times been
administered in accordance with the trusts, powers and provisions of
their governing documentation and have been administered in accordance
with and comply with all applicable legislation and the general
requirements of trust law.
8.7 NO CLAIMS OR LITIGATION
No claim has been made or threatened against the trustees or
administrator of the Schemes or any company participating therein or
against any person whom the Company is or may be liable to indemnify or
compensate (including any complaint under the internal dispute
resolution procedure or to the Pensions Ombudsman or the Occupational
Pensions Regulatory Authority) in respect of any act, event, omission or
other matter arising out of or in connection with either of the Schemes
(other than routine claims for benefits).
9. THE GROUP AND ITS BANKERS
9.1 BORROWINGS
The total amount borrowed by the Company from its bankers does not
exceed its facilities and the total amount borrowed by the Company from
whatsoever source does not exceed any limitation on its borrowing
contained in its articles of association, or in any debenture or loan
stock deed or other instrument.
9.2 CONTINUANCE OF FACILITIES
Full and accurate details of all overdrafts, loans or other financial
facilities outstanding or available to the Company have been supplied to
the Purchaser and none of the Vendors nor the Company has done anything
whereby the continuance of any such facilities in full force and effect
might be materially prejudiced.
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9.3 EVENTS OF DEFAULT - INDEBTEDNESS
No circumstances have arisen or, to the best of the knowledge,
information and belief of each of the Vendors, are about to arise in
consequence of the acquisition of the Company or by reason of any
default by the Company or any of its Subsidiaries such that:
(a) any person is, or will, or would with the giving of notice and/or
lapse of time become entitled to require payment before its
stated maturity of, or security for, any indebtedness in respect
of borrowed money of the Company which has not been satisfied in
full; or
(b) any commitment, agreement or arrangement with any third party to
extend any credit to the Company would be cancelled or
terminated.
The Company has complied with all original payment schedules for any
indebtedness.
9.4 RECEIVABLES FINANCING AGREEMENT
No notice has been received by the Company to terminate the Receivables
Financing Agreement and so far as the Vendors are aware, no such notice
of termination is pending or threatened. The Receivables Financing
Agreement is in full force and effect.
10. ACCURACY OF INFORMATION
All information contained in this agreement and the Disclosure Letter
and, so far as the Vendors are aware, all other information (other than
expressions of opinion or any forecasts, estimates or budgets) given to
the Purchaser, its solicitors, accountants, agents or other
representatives by or on behalf of the Vendors concerning the Company
or its business, assets or liabilities was when given and is now true
and correct in all respects and, so far as the Vendors are aware, no
matter or fact has not been disclosed the omission of which renders any
such information untrue or misleading.
11. INVESTMENT INTENT
11.1 Each of the Vendors warrants for itself that the Consideration Shares to
be acquired by such Vendor at Completion in accordance with this
agreement are being acquired solely for the Vendor's own account for
investment purposes and not with a view to or in connection with any
sale or other distribution thereof, within the meaning of the Securities
Act, except to the extent that such Consideration Shares may be sold
under an effective registration statement under the Securities Act and
any applicable state securities law, or pursuant to exemptions from the
registration requirement under the Securities Act and any applicable
state securities law, supported by opinion of counsel reasonably
acceptable to the Purchaser in respect of the availability if such
exemptions.
11.2 Each of the Vendors further warrants for itself to the Purchaser that:
(a) All of the Consideration Shares acquired by it are to be issued
and sold to such Vendor without registration and in reliance upon
certain exemptions under the
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Securities Act, and in reliance upon certain exemptions from
registration requirements under any other applicable securities
laws.
(b) Such Vendor is not (and hereby so certifies) (a) a natural person
resident in the United States; (b) a partnership or corporation
organised or incorporated under the laws of the United States;
(c) an estate of which any executor or administrator is a U.S.
Person (as defined below); (d) a trust of which any trustee is a
U.S. Person (as defined below); (e) an agency or branch of a
foreign entity located in the United States; (f) a
non-discretionary account or similar account (other than estate
or trust) held by a dealer or other fiduciary for the benefit or
account of a U.S. Person (as defined below); (g) any
discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary organised,
incorporated, or (if an individual) resident in the United
States; or (h) a partnership or corporation that (1) is organised
or incorporated under the laws of any foreign jurisdictions; and
(2) was formed by a U.S. Person (as defined below) principally
for the purpose of investing in securities not registered under
the Securities Act, unless such Vendor was organised or
incorporated, and is owned, by "accredited investors" (as defined
in Rule 501(a) of Regulation D promulgated pursuant to the
Securities Act) who are not natural persons, estates or trusts.
Each of the foregoing except to the extent deemed not to be a
U.S. person in accordance with the terms of Rule 902(k)(2) of
Regulation S under the Securities Act shall be collectively
referred to herein as a "U.S. PERSON".
(c) Such Vendor will make no transfer or assignment of any of the
Consideration Shares except in compliance with the Securities Act
and any other applicable securities laws.
(d) Such Vendor agrees that, during the period ending on the
anniversary of the Completion Date, prior to any transfer or
disposition not registered under the Securities Act of any of the
Consideration Shares, or any shares received from PRG on account
of such Consideration Shares pursuant to a stock dividend, stock
split, or similar event, such Vendor will give written notice to
PRG, expressing the Vendor's intention to effect such transfer or
disposition and describing the proposed transfer or disposition.
Such notice shall be accompanied by an opinion of counsel for the
Vendor, reasonably acceptable to PRG, that the proposed transfer
is exempt from the registration requirement under the Securities
Act and any applicable state securities laws.
(e) Each Vendor acknowledges that if such Vendor is a U.S. Person,
the Consideration Shares to be issued to him, her or it will be
inscribed with the following legend, or other legend to the same
effect, and agrees to the restrictions set forth therein:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act") or under the securities laws of any other
jurisdiction, in reliance upon exemptions from the
registration requirements of such laws. The shares represented
by this certificate may not be sold or otherwise transferred,
nor will an assignee or endorsee hereof be recognised as an
owner of the shares by the issuer unless (i) a registration
statement under the Securities Act and other applicable
securities laws with respect to the shares and the transfer
shall then be in effect at the time of such sale or transfer,
or (ii) in the
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opinion of counsel reasonably satisfactory to the issuer, the
shares are transferred in a transaction which is exempt from
the registration requirements of such laws."
(f) Each Vendor acknowledges that, if such Vendor is not a U.S.
Person, the Consideration Shares to be issued to him, her or it
will be inscribed with the following legend, or other legend to
the same effect, and agrees to the restrictions set forth
therein:
"These securities have not been registered under the Securities
Act of 1933, as amended (the "Securities Act"), or under the
securities laws of any other jurisdiction, and may not be offered
or sold in the United States or to U.S. Persons (other than
distributors) unless the securities are registered under the
Securities Act or an exemption from the registration requirements
of the Securities Act is available, which may include offers and
sales in compliance with Regulation S under the Securities Act.
Hedging transactions involving these securities may also not be
conducted unless in compliance with the Securities Act."
(g) In addition to, and not in limitation of, the foregoing, each
Vendor that is a Company Affiliate, regardless of whether he, she
or it is a U.S. Person, acknowledges that the Consideration
Shares to be issued to him, her or it will be inscribed with the
following legend, or other legend to the same effect, and agrees
to the restrictions set forth therein:
"The shares represented by this certificate are subject to
certain restrictions on sale, transfer or other disposition
pursuant to a sale and purchase agreement dated 1999,
a copy of which is available for inspection at the offices of the
issuer."
(h) Such Vendor hereby certifies that if he, she or it is not a U.S.
Person, he, she or it is not acquiring the Consideration Shares
for the account or benefit of any U.S. Person.
(i) Such Vendor acknowledges that the Purchaser shall be required
pursuant to this agreement to refuse to register any transfer of
Consideration Shares not made pursuant to registration under the
Securities Act, or pursuant to an available exemption from
registration, which may include transfers in compliance with
Regulation S.
(j) Such Vendor is aware that no federal or state agency has made any
recommendation or endorsement of the Consideration Shares or any
finding or determination as to the fairness of the investment in
such Consideration Shares.
(k) To the best of such Vendors' knowledge, neither the Purchaser nor
any person acting on its behalf has offered the Consideration
Shares to the Vendor by means of newspaper or magazine
advertisements, by broadcast media, or at any seminar or meeting
whose attendees were solicited by such means.
(l) Such Vendor acknowledges that the Purchaser has made available
all information concerning the Purchaser and its business,
assets, liabilities, and rights which the undersigned has
requested to obtain, including, without limitation, its articles
of incorporation, amended and restated bylaws, the Purchaser's
prospectus dated 8
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January 1999 (the "PRG PROSPECTUS"), Report on Form 10-K for the
year ended 31 December 1998, annual report of the Purchaser to
shareholders for the year ended 31 December 1998, proxy statement
for the 1998 annual meeting of shareholders, preliminary proxy
statement for special meeting of shareholders to be held on 15
September 1999, Form 10-Q for the quarters ended 31 March 1999
(as amended and restated on 12 August 1999) and 30 June 1999 and
copies of all press releases issued by the Purchaser since 31
December 1998 including, without limitation to the generality of
the foregoing, the press releases dated 19 July 1999 and 26 July
1999 (collectively, the "PRG PUBLIC FILINGS"). PRG has made
available, and hereby agrees to continue to make available, any
additional information which the undersigned may wish to obtain
to the extent the Purchaser possesses such information or can
acquire it without unreasonable effort or expense necessary to
verify the accuracy of any information contained in the documents
described above.
(m) Such Vendor hereby acknowledges that the Consideration Shares are
a speculative investment. Such Vendor represents that it can bear
the economic risks of such an investment for an indefinite period
of time.
(n) Such Vendor has such knowledge and experience in financial and
business matters, and particularly the business conducted by the
Purchaser, and is capable of evaluating the risk of the
investment in PRG Common Stock contemplated by this agreement.
(o) Such Vendor has carefully read this agreement and discussed its
requirements and other applicable limitations (including those
set forth in Rule 144 of the Securities Act) upon the transfer or
other disposition of the Consideration Shares with legal counsel.
(p) Such Vendor acknowledges that the desirability of an investment
in the Purchaser may be influenced by the federal income tax
consequences of its ownership of the Consideration Shares and by
the various state and local tax consequences, arising from the
transactions contemplated by this agreement. Because such tax
effects depend, among other things, on the specific facts,
circumstances and intentions of such Vendor, each Vendor confirms
that it has consulted its own tax adviser with respect to tax
consequences and has not relied upon the Purchaser or its
representatives as to such matters. Each Vendor and such Vendor's
advisers have taken into account the effects of federal, state
and local tax laws on the Vendor's receipt of the Consideration
Shares.
11.3 Each of the Vendors listed at numbers 1, 2, 3, 5, 7, 8 and 9 of part A
of schedule 1 and each of the Vendors listed at numbers 8 and 9 of part
B of schedule 1 (each a "RELEVANT VENDOR") hereby warrants for itself
that it has not sold or otherwise reduced its investment risk
(including, without limitation, pursuant to any hedging transaction)
with respect to any Equity Interest at any time within the thirty-day
period immediately prior to the Completion. Each Relevant Vendor
covenants and agrees that it will not sell or otherwise reduce its
investment risk in the Consideration Shares or in any other equity
securities of the Purchaser that such Relevant Vendor now owns or may
hereafter acquire until such time as the Purchaser publishes its
financial results for at least 30 days of combined operations of the
Purchaser and the Group.
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12. POOLING OF INTERESTS
For the purposes of this Warranty 12 only, an entity is considered to be
a subsidiary of another entity if that other entity (a) controls more
than 50 per cent. of the voting stock of such entity or (b) has the
ability to appoint more than 50 per cent. of the directors of such
entity.
12.1 The Company owns no shares of the outstanding common stock of PRG.
12.2 There have been no transactions which have changed the total Equity
Interests in the two years prior to Completion, including, without
limitation, any alteration in the PSP or any creation, alteration or
repayment of any Affiliate Loans in contemplation of the Pooling of
Interests contemplated by this agreement.
12.3 The Company has purchased no treasury shares prior to the date of this
agreement.
12.4 The Consideration Shares will be distributed pro rata amongst the
Vendors by reference to their relative fair value ownership of the
Equity Interests with the effect that, following Completion each Vendor
will hold the same proportionate interest in Consideration Shares as it
held in Equity Interests prior to Completion.
12.5 The Company has not been a subsidiary of, or controlled by, another
entity.
12.6 No Vendor is under any obligation, contractual or otherwise, to vote in
a certain fashion or as any person or entity may direct, with respect to
any matter which may be put to a vote or otherwise come before the
Company's equity holders.
12.7 Except for the Equity Interests, there are no outstanding shares,
warrants, options, calls, debts, convertible securities or convertible
debt, in each case of any nature whatsoever in relation to the Company,
and there are in existence no contracts, commitments, agreements,
arrangements or understandings in relation thereto, which could be
considered to be equity interests in the Company.
12.8 In the two years prior to Completion, the Company has not made any
written plans or entered into any verbal agreements or commitments which
involve the potential issuance of, or changes in, any form of equity
instrument of the Company in contemplation of the Pooling of Interests
contemplated by this Agreement.
12.9 In the two years prior to Completion, no dividends or interest (save for
interest paid in respect of the loan made by the Vendor listed at number
3 of part B of schedule 1 and of which the Purchaser has been made
aware) has been paid to any Vendors on any Equity Interests.
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13. TAXATION
RETURNS
13.1 The Company has paid all Tax which it has become liable to pay and is
not under any liability to pay any penalty, interest, surcharge or fine
in connection with any Tax.
13.2 The Company has made all returns, maintained all records, supplied all
information and given all notices to any taxation authority as required
by law within any requisite period and all such returns, information and
notices were made on a proper basis and so far as the Vendors are aware
they are not the subject of any dispute and to the best of the Vendors'
knowledge and belief there are no facts or circumstances likely to give
rise to or be the subject of any such dispute.
13.3 The Company has properly deducted Tax at source and paid over such Tax
in accordance with the system applicable in any relevant jurisdiction in
respect of any Income Tax "Pay as You Earn" system and has duly paid and
accounted for all national insurance, social security or like
contribution required by any relevant jurisdiction and has complied with
all its reporting obligations in connection with the benefits with a
value in excess of(pound)500 provided for employees and directors in
accordance with such system.
13.4 The Company is not involved in any dispute in relation to Tax and no
taxation authority has investigated or indicated that it intends to
investigate the Tax affairs of the Company other than under the normal
tax audit procedures of the relevant taxation authority.
13.5 No action has been taken by the Company in respect of which any consent
or clearance from a taxation authority was required save in
circumstances where such consent or clearance was validly obtained.
DISPOSAL OF ASSETS
13.6 No claim has been made for the depreciation of any asset of the Company
for Tax purposes in circumstances in which the claim is likely to be
disallowed.
13.7 Since the Accounts Date, the Company has not been involved in any
transaction which has given or may give rise to a liability to Tax on
the Company (or would have given or might give rise to such liability
but for the availability of any relief, allowance, deduction or credit)
other than taxation in respect of normal trading receipts of the Company
arising from transactions entered into in the ordinary course of
business.
13.8 The Company is not liable to pay taxation in respect of any hidden
distributions of profit in any relevant jurisdiction.
13.9 The Company has not been involved in any share for share exchange or any
scheme of reconstruction or amalgamation.
13.10 None of the assets owned by the Company at the date hereof and acquired
by the Company in the six years ending on the date hereof were acquired
from any company which at the time of acquisition was a member of the
same group in the same jurisdiction for tax purposes as the first
mentioned company and which will not be a member of the same group as a
result of Completion.
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STAMP DUTY AND DOCUMENTARY TAXES
13.11 All documents which in the enforcement of which the Company is
interested have been duly stamped and all such duty, interest and
penalties have been duly paid.
13.12 The Company has no outstanding liability for any tax or duty on any
contributions of capital whether formal or informal.
ACCOUNTS
13.13 The Accounts for the Company make proper provision on reserve in respect
of any period ended on or before the Accounts Date for all Tax assessed
or liable to be assessed on the Company or for which it is accountable
at the Accounts Date whether or not the Company has or may have any
right of reimbursement against any other person including in particular
(but without prejudice to the generality of the foregoing) Tax in
respect of property (of whatever nature) income, profits or gains held,
earned, accrued or received by or to a person on or before the Accounts
Date or by reference to any event occurring, acts done or circumstances
existing on or before that date including distributions made down to
such date or provided for in the Accounts and proper provision has been
made and shown in the Accounts for deferred taxation in accordance with
generally accepted accounting principles.
VALUE ADDED TAX
13.14 The Company is registered for the purposes of the VAT legislation (or
the equivalent Tax legislation in each jurisdiction where it carries on
business "VAT legislation") and has made, given, obtained and kept
complete, correct and up to date records, invoices and other documents
required for the purposes of the relevant VAT legislation and, is not in
arrears with any payment or returns due under the VAT legislation and
has not been required by the relevant taxation authority in any
applicable jurisdiction to give security under the VAT legislation.
13.15 The Company is not a member of a group of companies for the purposes of
any relevant VAT legislation.
13.16 The Company has not within the last 12 months been in default in respect
of any accounting period for VAT so as to give rise to any liability for
a surcharge for default under the relevant VAT legislation.
DUTIES
13.17 All VAT payable on the importation of goods and all excise or other
import charges or duties payable to any relevant authority in respect of
any assets (including without limitation, trading assets and stock)
imported by the Company have been paid or provided for in full.
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SUBVENTIONS
13.18 The Company is not so far as the Vendors are aware under any current
liability to repay any Tax, credit, subvention, subsidy or similar
amount received from any taxation authority or other authority, body or
person whatsoever.
13.19 No transaction, act, omission or event has occurred (including without
limitation the execution or implementation of this agreement) in
consequence of which the Company is or so far as the Vendors are aware
may be held liable for any Tax or may otherwise be held liable for or to
indemnify any person in respect of any Tax which is primarily or
directly chargeable against or attributable to any person other than the
Company.
13.20 No transaction, act, omission or event has occurred which has resulted
or so far as the Vendors are aware could result in any charge, lien,
security interest, encumbrance or other third party right arising over
any of the Company's assets in respect of unpaid Tax.
TRANSFER PRICING
13.21 The consideration (if any) charged or received or paid by the Company on
all transactions entered into by it has been equal to the consideration
which might have been expected to be charged, received or paid (as
appropriate) between independent persons dealing at arm's length and no
notice or enquiry by any taxation authority has been made in connection
with any such transaction.
RESIDENCE
13.22 The Company is not liable to Tax in any jurisdiction other than the
jurisdiction in which it is incorporated nor does the Company have or
has ever had a permanent establishment in a jurisdiction other than the
jurisdiction of incorporation.
DISTRIBUTIONS
13.23 The Company has not, in the last six years, made a distribution save as
shown in the Accounts.
13.24 The Company has not, in the previous six years, deemed, repaid or
purchased any of its own shares or agreed to redeem its share capital or
capitalised or agreed to capitalise in the form of redeemable shares or
debentures any profits or reserves of any kind or description.
TAX AVOIDANCE
13.25 The Company has not entered into nor been a party to nor otherwise been
involved in any marketed scheme or arrangement designed wholly or mainly
for the purposes of avoiding, deferring or reducing a liability to Tax.
DOUBLE TAXATION
13.26 The Company has made all claims necessary to obtain relief from double
taxation under any relevant bilateral convention relation to double
taxation in respect of income, profits, gains or payments accrued in the
Accounts or made prior to the Accounts Date.
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13.27 The Company is not an agent of another company for the purpose of
assessing the latter to Tax (other than Vat) in the country of residence
of the first company.
13.28 To the best of the Vendors' knowledge and belief the Company has not
changed its country of residence without obtaining the appropriate
mandatory consent from the relevant taxation authority.
WITHHOLDINGS
13.29 The Company has deducted Tax from all payments in excess of (pound)1,000
made where required by applicable legislation and accounted to the
relevant taxation authority for Tax so deducted.
CONTROLLED FOREIGN COMPANIES
13.30 The Company has not been liable to Tax on the undistributed profits of
any overseas subsidiary where the Company has a shareholding in excess
of ten per cent. of such subsidiary.
TAX SHARING
13.31 The Company is not bound by or party to (nor will it become bound by or
party to) any tax indemnity, tax sharing or tax allocation agreement in
respect of which claims would not be time barred.
GROUPS
13.32 The Company is not and has never in the last 6 years been a member of a
group of companies or a fiscal consolidation or a fiscal unity for the
purposes of any corporate income Tax.
EXEMPT COMPANY
13.33 The Company is an exempt company within the meaning of Article 123A of
the Income Tax (Jersey) Law 1961.
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SCHEDULE 5
PURCHASER WARRANTIES
1. PRG PUBLIC FILINGS AND PROXY STATEMENT
(a) The PRG Public Filings (as defined in Warranty 11.2 in schedule
4) comply in all material respects with the applicable
requirements of the Securities Act and the Securities and
Exchange Act of 1934, as amended, and, as of the dates thereof,
to the Purchaser's knowledge, did not contain any untrue
statement of any material fact or omit to state a material fact
required therein to be stated or omit to state a material fact in
order to make the statements therein not misleading. All
financial statements set forth in the PRG Public Filings present
fairly the financial condition of the Purchaser and its
affiliates on a consolidated basis as of (or for the period
ending on) their respective dates.
(b) Notwithstanding the foregoing, in respect of the Private
Securities Litigation Reform Act of 1995, statements made by the
Purchaser in the PRG Public Filings which are not historical
facts, including projections, statements of plans, objectives,
expectations, or future economic performance, are forward looking
statements that involve risks and uncertainties and are subject
to the safe harbour created by the Private Securities Litigation
Reform Act of 1995. The Purchaser's future financial performance
could differ significantly from that set forth in the PRG Public
Filings, and from the expectation of management. Important
factors that could cause the Purchaser's financial performance to
differ materially from past results and from those expressed in
any forward looking statements include, without limitation,
seasonality of the Purchaser's business, fluctuations in its
quarterly operating results, dependence on key clients, the
Purchaser's ability to replace revenues from clients who
discontinue engagements with the Purchaser with revenues from new
or existing clients, client bankruptcies, uncertainty of revenue
recognition estimates and collection of contract receivables,
risks associated with acquisitions and the Purchaser's management
of expanding operations, and risks associated with international
operations. For further information and other risk factors,
please refer to the PRG Public Filings, including the "RISK
FACTORS" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" sections thereof.
2. ORGANISATION AND EXISTENCE
The Purchaser is a corporation duly incorporated, validly existing and
in good standing under the laws of Georgia and has all corporate powers
and all material governmental licenses, authorisations, consents and
approvals required to carry on its business as now conducted.
3. CORPORATE AUTHORISATION
The execution, delivery and performance by the Purchaser of this
agreement and the consummation by the Purchaser of the transactions
contemplated hereby are within the corporate powers of the Purchaser and
have been duly authorised by all necessary corporate
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action on the part of the Purchaser. This agreement constitutes a valid
and binding agreement of the Purchaser, enforceable against it in
accordance with its terms.
4. GOVERNMENTAL AUTHORISATION
The execution, delivery and performance by the Purchaser of this
agreement requires no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than such actions
or filings that have been taken or made on or prior to the date hereof.
5. NON-CONTRAVENTION
The execution, delivery and performance by the Purchaser of this
agreement does not contravene or conflict with the Articles of
Incorporation or By-Laws of the Purchaser or so far as the directors of
the Purchaser are aware, any provision of any law, regulation, judgment,
injunction, order or decree binding upon the Purchaser.
6. FINDER'S FEE
There is no investment banker, broker, finder or other intermediary
which has been retained by or is authorised to act on behalf of the
Purchaser who might be entitled to any fee or commission from the
Vendors upon consummation of the transactions contemplated by this
agreement.
7. LITIGATION
There is no action, suit, investigation or proceeding pending against,
or to the best of the Purchaser's knowledge, threatened against or
affecting the Purchaser before any court or arbitrator or any
governmental body, agency or official which in any manner challenges or
seeks to prevent, enjoin, alter or materially delay the transactions
contemplated hereby.
8. SHARES
All of the Consideration Shares issued to the Vendor's Representative on
behalf of the Vendors in connection with the transactions contemplated
hereby are duly authorised, validly issued, fully paid and nonassessable
shares of common stock of the Purchaser and are free from any
Encumbrance.
9. NO UNDISCLOSED MATERIAL LIABILITIES: NO MATERIAL ADVERSE CHANGE
Other than as disclosed in the Purchaser's filings with the United
States Securities and Exchange Commission pursuant to the Securities
Act, or the Securities Exchange Act of 1934, as amended, or in the
Purchaser's Disclosure Letter (i) there have been no material
liabilities incurred by the Purchaser other than those incurred in the
ordinary course of business consistent with past practice and (ii) there
has not been any material adverse change in the business, assets or
financial condition of the Purchaser.
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10. ACCURACY OF INFORMATION
All information contained in this agreement and the Purchaser's
Disclosure Letter and, so far as the Purchaser is aware, all other
information (other than expressions of opinion or any forecasts,
estimates or budgets) given to the Vendors, their solicitors,
accountants, agents or other representatives by or on behalf of the
Purchaser concerning the Purchaser or its business, assets or
liabilities was when given and is now true and correct in all respects
and, so far as the Purchaser, is aware no matter or fact has not been
disclosed the omission of which renders any such information untrue or
misleading.
11. POOLING OF INTERESTS
For the purposes of this Purchaser's Warranty 11 only an entity is
considered to be a subsidiary of another if that other entity (a)
controls more than 50 per cent. of the voting stock of such entity or
(b) has the ability to appoint more than 50 per cent. of the directors
of such entity.
11.1 The Purchaser owns no shares in the capital of the Company.
11.2 There have been no transactions which have changed the total equity
interests of the Purchaser in the two years prior to Completion in
contemplation of the Pooling of Interests contemplated by this
agreement.
11.3 There have been no grants of stock options under the Purchaser's stock
plans in the two years prior to Completion in contemplation of the
Pooling of Interests contemplated by this agreement.
11.4 The decision to dispose of shares in the Purchaser by officers in the
PRG Group in secondary offerings in 1997 and 1998 was not taken in
contemplation of a Pooling of Interests with the Company.
11.5 The Purchaser has purchased no treasury shares prior to the date of this
agreement.
11.6 The Purchaser has not been a subsidiary of, or controlled by, another
entity.
11.7 In the two years prior to Completion, the Purchaser has not made any
written plans or entered into any verbal agreement or commitments which
involve the potential issuance of, or changes in, any form of equity
instrument of the Purchaser in contemplation of the Pooling of Interests
contemplated by this agreement.
11.8 The Purchaser has not paid any dividends on any of its equity interests.
11.9 There are no relationships between the Purchaser and the Company which
would cause a breach of the independence condition required in respect
of a Pooling of Interests.
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SCHEDULE 6
THE PROPERTIES
1. ADDRESS OF PROPERTY: Meridian House
202-204 Finchley Road
London
NW3 6BX
See Note below
2. ADDRESS OF PROPERTY: 9 Summit Road
Dunkeld West 2196
Johannesburg
South Africa
See Note below
NOTE: Meridian VAT Reclaim (UK) Limited,
Meridian VAT Reclaim Services
Limited, and Vatclaim International
(UK) Limited occupy premises at
Meridian House, 202-204 Finchley
Road, London NW3 6BX under an
informal arrangement with Carlyle
Corporate Services Limited (the
"LANDLORD") which is owned by a
trust of which a director of the
Vendor may be a beneficiary.
Vatclaim International (Pty)
Limited and Meridian VAT Reclaim
(Pty) Limited occupy premises at 9
Summit Road, Dunkeld West 2196,
Johannesburg, South Africa under an
informal arrangement with the
lessee of those premises.
The continued occupancy of these
premises and the terms and
conditions of any continuing
occupancy are matters which the
Purchaser considers should be
negotiated and agreed between the
Landlord of Meridian House and the
lessee of the Dunkeld premises and
the Purchaser.
3. PROPERTY: Suite 505, Gicec Centre, 28 Queen's
Road East, Wanchai, Hong Kong.
DESCRIPTION: Office space
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DATE AND TERM OF LEASE: Commencement - 1 April 1999 -
Duration 2 years
TENANT: Meridian VAT Reclaim Hong Kong
Limited
LANDLORD: Tech Base Enterprises Limited
ANNUAL RENT: HK$108,000
4. PROPERTY: Trockenloostrasse 47,
8105 Regensford, CH-8002, Zurich
DESCRIPTION: Office Nr.2 - 80 sq metres
DATE AND TERM OF LEASE: Commencement - 1 July 1994 -
6 month notice period
TENANT: Meridian VAT Reclaim (Schweiz) A G
LANDLORD: Treuhandburo Eisenegger AG
ANNUAL RENT: CHF 11,556
5. PROPERTY: Glockengiesserwall 26, D-20095
Hamburg
DESCRIPTION: Office space 15 s. metres
DATE AND TERM OF LEASE: Commencement - 1 February 1999 -
3 month notice period
TENANT: Meridian VAT Reclaim GmbH
LANDLORD: Pedus Dussman GmbH & Co KG
ANNUAL RENT: DM 33,408
6. PROPERTY: Heinrich-Heine Allee 53 D-40213
Dusseldorf
DESCRIPTION: Office space - 24 sq metres
DATE AND TERM OF LEASE: Commencement -1 December 1998 -
November 1999
TENANT: Meridian VAT Reclaim GmbH
LANDLORD: Regus Business Centre GmbH
ANNUAL RENT: DM 87,624
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<S> <C> <C>
7. PROPERTY: Ridler Strasse 11, D-80339, Munchen
DESCRIPTION: 1) Office space - 21 sq metres
2) Office space - 16 sq metres
DATE AND TERM OF LEASE: 1) Commencement - 1 November 1996 - 3 month
notice period
2) Commencement - 1 March 1999 - 31 December 1999
TENANT: Meridian VAT Reclaim GmbH
LANDLORD: Partnership Buroservice und Dienstleistung GmbH
ANNUAL RENT: 1) DM 36,156
2) DM 26,699
8. PROPERTY: Karntner Ring 5-7/7
1010 Wien
Austria
DESCRIPTION: Office
DATE AND TERM OF LEASE: Commencement - 15 January 1999 - 15 June 1999 -
6 month notice period
TENANT: Meridian VAT Reclaim GmbH
LANDLORD: WNC+F Buroservice GmbH
ANNUAL RENT: ATS 93,180
9. ADDRESS OF PROPERTY: Meridian VAT Reclaim (India) Pvt Ltd
E18, B-1 Extm, Mohan Co-op Industrial Estate New
Delhi 110044
10. ADDRESS OF PROPERTY: Meridian VAT Reclaim (India) Pvt Ltd
612, Embassy Centre, Nariman Point,
Mumbai - 400 021
</TABLE>
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<S> <C> <C>
11. ADDRESS OF PROPERTY: Meridian VAT Reclaim (India) Pvt Ltd
Room No. 3, 2nd Floor,
Fagun Chambers No. 26A,
Commander in Chief Road
Madras - 600 105
12. ADDRESS OF PROPERTY: Meridian VAT Reclaim (India) Pvt Ltd
35/10, Langford Road Cross
Bangalore - 560 025
13. ADDRESS OF PROPERTY: Meridian VAT Reclaim (India) Pvt. Ltd.
1, Aahirl Pukur Lane,
Calcutta - 700 019
Meridian India has entered into informal rental agreements with Banaras House,
the managing director of which is also the chairman of Meridian India
14. PROPERTY: Portion of 8th Floor 125 West 55th Street,
New York
DESCRIPTION: Office space
DATE AND TERM OF LEASE: Lease runs until 28/2/2001. Lease dated
23/9/93.
LANDLORD: MAK West 55th Street Associates
TENANT: Meridian VAT Reclaim Inc.
ANNUAL RENT: $235,907 Commencement date to first anniversary
$279,996 First anniversary to
second anniversary $289,419 Second
anniversary to third anniversary
$298,842 Third anniversary to
Expiration Date
PRESENT USE: Office Space
15. PROPERTY: 209 La Salle Street, Chicago, Illinois 60604
DESCRIPTION: Office space
DATE AND TERM OF LEASE: Commencement 1/3/98. Term 2 years 10 months
Expiry Date 31 December 2000
TENANT: Norwest Bank Minnesota, NA
SUBTENANT: Meridian VAT Reclaim Inc
</TABLE>
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<S> <C> <C>
MONTHLY BASE RENT: $1,280.09 (1st 11 months) $1,305.69
(next 12 months) $1,331.30 (onwards)
PRESENT USE: Office Space
16. PROPERTY: Suite 315, 2630 Fountainview, Houston, Texas
DESCRIPTION: Office Space 553 sq feet
DATE AND TERM OF LEASE: Commencement Date: 15 September 1998
Expiry Date: 15 September 2000
LANDLORD: Waco Investments Corporation
TENANT: Meridian VAT Reclaim Inc
ANNUAL BASE RENTAL $6,360
PRESENT USE: Office Space
17. PROPERTY: Suite 402, 4th Floor, 75 Miller Street, North
Sydney
DESCRIPTION: Office space on 4th Floor of the building
DATE AND TERM OF LEASE: Term 3 yrs. Commencement dated 19/3/97
Termination Date 18/3/2000
LANDLORD: Glebe Administration Board
TENANT: Meridian VAT Reclaim Australia Pty Ltd
ANNUAL RENTAL: A$34,450
NEXT RENT REVIEW: Was on 19/3/97
PRESENT USE: Office Space
18. PROPERTY: Suite 5, Level 1 (80 sq m)
14 Queens Road Melbourne
DESCRIPTION: Office Space
DATE AND TERM OF LEASE: Term 3 years commencement date 1/8/1997
</TABLE>
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<S> <C> <C>
LANDLORD: Hendine PTY Ltd
TENANT: Meridian VAT Reclaim Australia (PTY) Ltd
ANNUAL RENTAL: A$ 12,000 (1st year) A$ 12,600 (2nd year)
A$ 13,230 (3rd year)
PRESENT USE: Office Space
19. PROPERTY: Suite 550, Le Parc Office Tower, 8500 Leslie
Street, Markham
DESCRIPTION: 805 square feet (Usable Area) + 879 feet
(Rentable Area)
DATE AND TERM OF LEASE: 5 years from commencement date 1 May 1999
Expiring on 30 April 2004
LANDLORD: Shatsford Developments Inc.
TENANT: Meridian VAT Reclaim Canada Inc
ANNUAL RENTAL: C$14,943
PRESENT USE: Office Space
20. PROPERTY: Suite No 420 of Candler Building/127 Peachtree
Street, Atlanta, Georgia
DESCRIPTION: 900 square feet
DATE AND TERM OF LEASE: 1/9/94 - 31/8/99
LANDLORD: REM Associates LP / The Candler Building
TENANT: Meridian VAT Reclaim, Inc.
ANNUAL RENTAL: $1,151.25 per month
PRESENT USE: Office Space
</TABLE>
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<S> <C> <C>
21. PROPERTY: Leasehold Property Premises at Tallaght Business
Park, Dublin
Area A: 10,000 square feet, Area B: 5,000 square
feet and Area C: 5,000 square feet.
DATE AND TERM OF LEASE: ENDS: 03/05/2001
LANDLORD: The Industrial Development Agency (Ireland)
TENANT: Meridian VAT Processing (International) Ltd
ANNUAL RENTAL: 3rd May 1997 - 3rd May 2001: IR(pound)120,000
PRESENT USE: Processing Centre
SUPPLEMENTARY LEASE: 4000 square feet
TERM: April 1999 to September 1999
RENTAL: IR(pound)9000
22. PROPERTY: Suite 530 152 North Third Street San Jose CA
95113
DESCRIPTION: Office space on 5th floor of office building
867 sq ft
DATE AND TERM OF LEASE: Commencement date 1 November 1998
3 years
LANDLORD: Cornerstone Properties II, LLC
TENANT: Meridian VAT Reclaim, Inc.
MONTHLY RENTAL: Year 1 $2,037-45
Year 2 $2,124-15
Year 3 $2,210.85
PRESENT USE: Office Space
23. PROPERTY: 7F Shiba Building, 2-3-4 Shiba-koen, Minato-ku,
Tokyo
</TABLE>
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<S> <C> <C>
DESCRIPTION: 7th Floor of a 30 year old 9 storey office
building (approx 1625 sq ft)
DATE AND TERM OF LEASE: 1/7/99 - 30/6/2001
LANDLORD: Sub-leased from Advantage Partner's Inc
TENANT: Meridian VAT Reclaim Japan Inc Tokyo Office
ANNUAL RENTAL: Yen 8,607,756 (Yen 717,313 per month). Rental
fee is discounted
NEXT RENT REVIEW: 1/9/99
PRESENT USE: Main office for Meridian Japan
24. PROPERTY: Walther - Wilshire Building
2530 Wilshire Boulevard
Santa Monica
California
DESCRIPTION: 3rd Floor Office Space
DATE AND TERM OF LEASE: Commencement - 15 December 1998
Expiry date 15 January 2001
TENANT: Meridian VAT Reclaim Inc
LANDLORD: Henry W Walther and Janet C Walther
MONTHLY RENT: $1,050
PRESENT USE: Office Space
25. PROPERTY: Hanahara Building, 6-8-8 Nishinakajima,
Yodagawa-ku, Osaka
DESCRIPTION: Part of 3rd floor of a 5 year old 8 storey
office building (approx 890 sq ft)
DATE AND TERM OF LEASE: 31/1/98 - 2 years, but terminating on 31/7/99
LANDLORD: Hanahara Aiko
TENANT: Meridian VAT Reclaim Japan Inc
</TABLE>
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<TABLE>
<S> <C> <C>
ANNUAL RENTAL: Yen 4,277,544
NEXT RENT REVIEW: 31/1/2000
PRESENT USE: Osaka Office
26. PROPERTY: 19F, 198 Eul-Jilo, 2-Ka, Chung-ku, Seoul, Korea
DESCRIPTION: Small section of shared office in large 25
storey office building (approx 340 sq ft)
DATE AND TERM OF LEASE: 28/2/98 - 2 year
LANDLORD: Sub-leased from Telecom Corporation
TENANT: Meridian VAT Reclaim Korea Co Ltd
ANNUAL RENTAL: KOW 22,248,000 (Korean currency)
NEXT RENT REVIEW: 28/2/2000
PRESENT USE: Main office for Meridian Korea
27. PROPERTY: Doshomachi Goto Building
2-2-6, Doshomachi
Chuo-Ku, Osaka
DESCRIPTION: 8th Floor of a 10 year old 9 storey office
building (284.11 square metres)
DATE AND TERM OF LEASE: 25/2/99 - 2 years
LANDLORD: Sub-leased from Choei Advantage Co. Ltd
TENANT: Meridian VAT Reclaim Japan Inc.
ANNUAL RENTAL: Yen 1,942,920
PRESENT USE: New Osaka Office
</TABLE>
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SCHEDULE 7
DISPUTE RESOLUTION AND ARBITRATION PROCEDURE
(A) DISPUTE RESOLUTION AND ARBITRATION PROCEDURES
Any dispute, controversy, proceeding or claim of whatever nature arising out of
or in any way relating to either a General Indemnified Claim or a claim under
the Purchaser Warranties shall be governed by the following procedures and the
Arbitration Rules attached as schedule 7(B):
1. PRG (in the case of a General Indemnified Claim) or the Vendors'
Representative (in the case of a claim under the Purchaser Warranties)
("CLAIMANT") shall deliver to the Vendors' Representative and the Escrow
Agent (in the case of a General Indemnified Claim) or to the Purchaser
(in the case of a claim under the Purchaser Warranties) ("RESPONDENT")
written notice (the "CLAIM NOTICE") asserting the making by the Claimant
of a claim, identifying the warranty or indemnity under which the claim
is made, and stating the disputed amount in US$ together (in the case of
a General Indemnified Claim) with a calculation of the estimated number
of Escrow Shares of equivalent value (in US$) to the disputed amount
(the "CLAIM"). The Claim Notice shall set out full particulars of the
Claim and shall be accompanied by copies of all documents on which the
Claimant relies in support of its Claim and written statements from all
witnesses on whose evidence the Claimant relies in support of its Claim.
2. In the event that the Claim is disputed, no more than 15 business days
after receipt of the Claim Notice the Respondent shall deliver to the
Claimant and in the case of a General Indemnified Claim the Escrow
Agent, either (1) written notice (the "NOTICE OF DISPUTE") that the
Claim is disputed, such notice to include the grounds and reasonable
details of such dispute or (2) a notice stating that the Claim is not
disputed (the "ACCEPTANCE NOTICE") and, in the case of a General
Indemnified Claim, a request that the Escrow Agent deliver to PRG the
number of Escrow Shares identified in the Claim Notice.
3. In the event that the Respondent timely gives to the Claimant a Notice
of Dispute relating to the Claim in accordance with paragraph 2 above,
senior representatives of the Claimant and the Respondent shall meet and
attempt in good faith to resolve the dispute as identified in the Notice
of Dispute (the "DISPUTE") within a period of 10 business days after the
Claimant's receipt of the Notice of Dispute (the "INFORMAL NEGOTIATION
PERIOD"). If the Claimant and the Respondent resolve the Dispute within
this period, the Respondent shall, in the case of General Indemnified
Claim, notify the Escrow Agent in writing of the number of Escrow Shares
which the parties have agreed will satisfy the Claim (if any) and
request the Escrow Agent to deliver the same to PRG. (All notices given
pursuant to these Dispute Resolution and Arbitration Procedures shall be
given in accordance with the Agreement.)
4. If the Dispute is not resolved by the end of the Informal Negotiation
Period, the Dispute shall be finally resolved by arbitration and the
Respondent shall, within 10 business days (the "APPOINTMENT PERIOD")
after the end of the Informal Negotiation Period or the failure to
resolve the Dispute, whichever is earlier, select from the Approved
Arbitrators List attached as schedule 7(C) hereto an arbitrator who is
willing and able to conduct the arbitration in accordance with these
procedures and the Arbitration Rules attached as schedule 7(B) hereto
(the "ARBITRATOR"). The Respondent shall notify the Claimant in writing
of the appointment
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of the Arbitrator prior to the expiration of the Appointment Period and
shall provide a copy of the Arbitrator's acceptance of such appointment
to the Claimant.
5. If the Respondent fails to appoint an Arbitrator in accordance with
paragraph 4 above or fails to give a Notice of Dispute or an Acceptance
Notice to the Claimant and, in the case of General Indemnified Claim,
the Escrow Agent in accordance with paragraph 2 above, the Claimant
shall appoint an Arbitrator from the Approved Arbitrators List and shall
notify the Respondent in writing of the appointment of the Arbitrator
within 2 business days after the appointment thereof and shall provide a
copy of the Arbitrator's acceptance of such appointment to the
Respondent.
6. Following the appointment of the Arbitrator in accordance with paragraph
4 or 5 above, the Arbitrator, after consultation with the parties,
within 3 business days of his or her appointment, shall schedule an
arbitration hearing (the "ARBITRATION") to be conducted over a period
not to exceed 3 consecutive business days in London, England and shall
notify the parties in writing of the Arbitration date (the date of such
notification being hereinafter referred to as the "NOTIFICATION DATE").
The date of the Arbitration shall be not less than 15 business days and
not more than 30 business days after the Notification Date. If the
Arbitrator is unable to schedule and complete the Arbitration according
to these Arbitration Procedures and the Arbitration Rules, for any
reason, the party who appointed the Arbitrator shall appoint a
replacement from the Approved Arbitrators List within 2 business days of
receiving notice from the Arbitrator of his inability to act and if such
replacement appointment is not made within 2 business days the other
party shall appoint a replacement within a further 2 business days. In
the event that a replacement arbitrator is appointed, the Arbitration
Procedures shall apply from the date of the appointment as if such
appointment had been made in accordance with paragraph 4 or 5 above.
7. It is understood and agreed that the Arbitrator's award shall relate
solely to the Dispute (or, in the absence of a Notice of Dispute or an
Acceptance Notice, the Claim), shall determine only the entitlement of
the party or parties to, in the case of General Indemnified Claim, that
portion of the Escrow Shares or, in the case of a claim under the
Purchaser Warranties ,the payment, which is the subject of the Dispute
(or the Claim) and shall in no way determine fault or breach for any
other purpose or involve any other matter relating to the Agreement or
the Escrow Agreement. PRG and the Vendors' Representative agree that the
Arbitrator's award shall be final and binding upon them with respect to
the Dispute.
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(B) ARBITRATION RULES
1. Within 10 business days after the Notification Date, the Claimant and
the Respondent shall deliver to each other and the Arbitrator:
(a) a list of the witnesses which it intends to call at the
Arbitration hearing and written statements of each witness which,
in the case of the Claimant shall be the same as accompanied the
Claim Notice. The maximum number of witnesses (including experts)
that each party may call is two;
(b) a copy of all documents on which such party intends to rely in
any oral or written presentation to the Arbitrator;
(c) a brief outline of the specific arguments to be made and the
legal authorities upon which the party intends to rely; and
(d) a submission by each party of its proposed ruling and remedy,
such submission not to exceed 20 pages and to specify all
relevant amounts in US$.
The Claimant shall not be entitled to rely on any documents copies of
which did not accompany the Claim Notice and shall not be entitled to
rely on the evidence of any witnesses whose written statements did not
accompany the Claim Notice.
2. Each party shall have the right to require the Arbitrator to hear each
witness at the Arbitration hearing and to cross-examine the other
party's witnesses. The brief summary of evidence in paragraph 1(a) above
should stand as evidence in chief. The cross-examination of each witness
shall not exceed 3 hours and the re-examination shall not exceed 1/2
hour. Each party shall be entitled to 1 day to introduce its case and
make all other representations.
3. The Arbitrator shall rule on the Dispute and make his award within 3
business days following completion of the Arbitration hearing. Such
ruling and award shall adopt in its entirety either the Claimant's or
the Respondent's proposed ruling and remedy referred to in paragraph
1(d) above. The Arbitrator shall not issue any written opinion or
otherwise explain the basis of the ruling and award.
4. The fees of the Arbitrator together with the reasonable legal and, if
any, expert fees (as agreed or, in the absence of agreement, as
determined by the Arbitrator) of the prevailing party shall be paid in
full by the losing party.
5. The ruling of the Arbitrator shall be final, binding and non-appealable
and may be entered as a final judgement in any court having
jurisdiction.
6. Except as required by law, the existence of the dispute, any settlement
negotiations, the Arbitration, any submissions or documents referred to,
disclosed or used and the rulings shall be deemed confidential
information and shall not be disclosed or used by any party (unless such
information is or becomes ascertainable from public sources or the
public disclosure of
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such information is, in the good faith judgement of the disclosing
party, required by law or regulatory requirement).
7. Save as provided otherwise above, the Arbitration Act 1996 shall apply
to the Arbitration.
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(C) APPROVED ARBITRATORS LIST
1. John Kendall, The Manor House, St David's Street, Presteigne, Powys LD8
2BP, Wales
2. Philip Naughton QC, 3 Serjeants' Inn, London EC3Y 1BQ
3. Bernard Eder QC, Essex Court Chambers, 24 Lincolns Inn Fields, London
WC2A 3ED
4. Bruce Brodie, 39 Essex Street, London WC2R 3AJ
5. Any other person who by written agreement of the parties is added to
this Approved Arbitrators List following completion.
6. An arbitrator nominated by the then Registrar of the LCIA (such an
arbitrator to be selected only in the event that none of the other
arbitrators listed above is able, for any reason, to accept an
appointment pursuant to paragraph 4 or 5 of the Arbitration Procedures).
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<PAGE>
SCHEDULE 8
AFFILIATE LOAN SCHEDULE
-102-
<PAGE>
Signed as a deed by CAVERSHAM TRUSTEES )
LIMITED as trustee of THE BARON )
SETTLEMENT acting by a director duly )
authorised for these purposes )
)
Director S. Whale
Signed as a deed by WARREN FINANCIAL )
SERVICES LIMITED as attorney of KI )
CORPORATION, LTD pursuant to a power of )
attorney dated 5 August 1999, WARREN )
FINANCIAL SERVICES LIMITED acting by a )
director and its secretary/two directors )
)
Director A. Evans
Secretary/Director T. Coote
Signed as a deed by WARREN FINANCIAL )
SERVICES LIMITED as attorney for DR )
STEINBRUGGER as trustee of the DENOR )
TRUST pursuant to a power of attorney )
dated 9 July 1999, WARREN FINANCIAL )
SERVICES LIMITED acting by a director )
and its secretary/two directors )
)
Director A. Evans
Secretary/Director T. Coote
-103-
<PAGE>
Signed as a deed by LISDAR LIMITED )
acting by a director and its )
secretary/two directors )
Director S. Whale
Secretary/Director N. Bell
Signed as a deed by WARREN FINANCIAL SERVICES )
LIMITED as attorney for DEBORAH P. FEROLITO )
pursuant to a power of attorney dated 9 July )
1999, WARREN FINANCIAL SERVICES LIMITED acting )
by a director and its secretary/two directors )
)
Director A. Evans
Secretary/Director T. Coote
Signed as a deed by WARREN FINANCIAL )
SERVICES LIMITED as attorney for )
NORMANDY INVESTMENTS INC. pursuant to a )
power of attorney dated 9 July1999, )
WARREN FINANCIAL SERVICES LIMITED )
acting by a director and its )
secretary/two directors )
)
Director A. Evans
Secretary/Director T. Coote
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<PAGE>
Signed as a deed by CAVERSHAM TRUSTEES )
LIMITED as trustee of THE GOODMAN TRUST )
acting by a director duly authorised )
for the purpose )
Director S. Whale
Signed as a deed by WARREN FINANCIAL )
SERVICES LIMITED as attorney for )
INDUSTRIE UND FINANZKONTOR as trustee )
of the EURONA FOUNDATION (A/C/ PK) )
pursuant to a power of attorney dated 5 )
August 1999, WARREN FINANCIAL SERVICES )
LIMITED acting by a director and its )
secretary/two directors )
)
Director A. Evans
Secretary/Director T. Coote
Signed as a deed by WARREN FINANCIAL )
SERVICES LIMITED as attorney for )
INDUSTRIE UND FINANZKONTOR as trustee )
of the EURONA FOUNDATION (A/C LM) )
pursuant to a power of attorney dated )
5 August 1999, WARREN FINANCIAL )
SERVICES LIMITED acting by a director )
and its secretary/two directors )
)
Director A. Evans
Secretary/Director T. Coote
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<PAGE>
Signed as a deed by WARREN FINANCIAL )
SERVICES LIMITED as attorney for )
RADCLIFFES TRUSTEE COMPANY SA AND )
CENTRAL INDEPENDENT TRUSTEES LIMITED as )
trustees of the BORDEAUX TRUST pursuant )
to powers of attorney dated 2 August )
and 5 August 1999 respectively, WARREN )
FINANCIAL SERVICES LIMITED acting by a )
director and its secretary/two directors )
)
)
Director A. Evans
Secretary/Director T. Coote
Signed as a deed by WARREN FINANCIAL SERVICES )
LIMITED as attorney for STEVEN KRELL pursuant )
to a power of attorney dated )
9 July 1999, WARREN FINANCIAL SERVICES LIMITED )
acting by a director and its secretary/two )
directors )
Director A. Evans
Secretary/Director T. Coote
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<PAGE>
Signed as a deed by WARREN FINANCIAL SERVICES )
LIMITED as attorney for STACI KRELL pursuant )
to a power of attorney dated 9 July 1999, )
WARREN FINANCIAL SERVICES LIMITED acting by a )
director and its secretary/two directors )
)
Director A. Evans
Secretary/Director T. Coote
Signed as a deed by CARLYLE CORPORATE )
SERVICES LIMITED acting by its sole )
director )
)
Director B.A. Stiefel
Signed as a deed by CARLYLE CORPORATE )
SERVICES (CI) LIMITED acting by a )
director and its secretary/two directors )
)
Director S. Whale
Secretary/Director N. Bell
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<PAGE>
Signed as a deed by WARREN FINANCIAL )
SERVICES LIMITED as attorney for NATHAN )
KIRSH pursuant to a power of attorney )
dated 5 August 1999, WARREN FINANCIAL )
SERVICES LIMITED acting by a director )
and its secretary/two directors in the )
presence of:- )
)
Director A. Evans
Director/Secretary T. Coote
Signed as a deed by THE PROFIT RECOVERY )
GROUP INTERNATIONAL, INC. acting by:- )
)
Duly Authorised Officer C. McKellar Jr.
Duly Authorised Officer T.M. Mills
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<PAGE>
Dated 19 August 1999
--------------------
THE PROFIT RECOVERY GROUP INTERNATIONAL, INC.
- and -
THE VENDORS
- and -
MR NATHAN KIRSH (AS VENDORS' REPRESENTATIVE)
- and -
FIRST UNION NATIONAL BANK
--------------------------------------------------------
INDEMNITY ESCROW AND STOCK PLEDGE AGREEMENT
--------------------------------------------------------
ASHURST MORRIS CRISP
Broadwalk House
5 Appold Street
London EC2A 2HA
Tel: 0171-638 1111
Fax: 0171-972 7990
MAM/DRS/P99700001
<PAGE>
THIS INDEMNITY ESCROW AND STOCK PLEDGE AGREEMENT (the "ESCROW AGREEMENT") is
made on 19 August 1999
BETWEEN:-
(1) THE PROFIT RECOVERY GROUP INTERNATIONAL, INC. a Georgia corporation whose
principal address is at 2300 Windy Ridge Parkway, Suite 100 North,
Atlanta, Georgia 30339 ("PRG");
(2) the persons and entities listed in schedule 2 attached hereto, being all
of the vendors (collectively, the "VENDORS" and individually, a "VENDOR")
of Meridian VAT Corporation Ltd., a Jersey corporation ("MERIDIAN" or the
"COMPANY");
(3) MR NATHAN KIRSH care of Kirsh Industries Limited, 9 Summit Road, Dunkeld
West, Johannesburg 2196, South Africa (the "VENDORS' REPRESENTATIVE");
and
(4) FIRST UNION NATIONAL BANK, a national banking association, whose address
is at c/o Administrator, Capital Management Group, Corporate Trust
Division, 999 Peachtree Street, Suite 1100M/C GA 9094 Atlanta, GA
30309-9094, as escrow agent (the "ESCROW AGENT").
RECITALS
(A) Pursuant to an agreement for the acquisition of the whole of the issued
share capital and certain other equity interests of Meridian (the "SALE
AGREEMENT") of even date between PRG, the Vendors and the Vendors'
Representative, PRG is acquiring all of the issued share capital and
certain other equity interests of Meridian from the Vendors.
(B) This Escrow Agreement is executed and delivered by the parties hereto
pursuant to clause 3.2 of the Sale Agreement.
(C) Pursuant to the Sale Agreement, the Vendors have appointed and authorised
the Vendors' Representative to act as their agent and attorney in
carrying out the provisions of this Escrow Agreement, the Sale Agreement
and Deed of Indemnity.
THE PARTIES AGREE AS FOLLOWS:-
1. DEFINITIONS
All capitalised terms not defined herein shall have the meanings assigned
to them in the Sale Agreement.
2. ESCROW AGENT
2.1 APPOINTMENT
PRG and the Vendors' Representative hereby appoint the Escrow Agent to
serve as escrow agent hereunder and the Escrow Agent hereby accepts such
appointment and agrees to perform all duties that are expressly set forth
in this Escrow Agreement.
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<PAGE>
2.2 COMPENSATION
The Escrow Agent will be entitled to compensation in accordance with its
customary fee schedule, a copy of which is attached hereto as schedule 1.
The Escrow Agent's fees shall be paid as to one-half by PRG and as to
one-half by the Vendors' Representative.
2.3 RESIGNATION
The Escrow Agent may resign at any time upon giving the other parties
hereto 30 days' prior written notice. In such event, the Escrow Agent
shall deliver the Escrow Fund (as defined in clause 3 below) and any and
all documents relating thereto then in its possession to a successor
escrow agent; the successor to the Escrow Agent shall be such person,
firm or corporation as shall be mutually agreed upon by PRG and Vendors'
Representative.
Such resignation shall not be effective until a successor agrees to act
hereunder; provided, however, that if no successor is appointed and
acting hereunder within 30 days after such notice is given, the Escrow
Agent may pay and deliver the Escrow Fund into a court of competent
jurisdiction and shall have no further responsibility hereunder.
Any successor appointed pursuant to this clause 2.3 shall be subject to
all the provisions of this Escrow Agreement and the Sale Agreement to the
same extent and in the same manner as the Escrow Agent it succeeds.
2.4 LIABILITIES AND INDEMNIFICATION OF ESCROW AGENT
The Escrow Agent shall not be liable for any damages, or have any
obligations other than the duties prescribed herein in carrying out or
executing the purposes and intent of this Escrow Agreement; provided,
however, that nothing herein contained shall relieve the Escrow Agent
from liability arising out of its own wilful misconduct or gross
negligence. The Escrow Agent's duties and obligations under this Escrow
Agreement shall be entirely administrative and not discretionary. The
Escrow Agent shall not be liable to any party hereto or to any third
party as a result of any action or omission taken or made by the Escrow
Agent in good faith. PRG and the Vendors' Representative shall, jointly
and severally, indemnify the Escrow Agent, hold the Escrow Agent
harmless, and reimburse the Escrow Agent from, against and for, all fees
and expenses of the Escrow Agent hereunder and any and all liabilities,
costs, fees and expenses (including reasonable attorneys' fees) that the
Escrow Agent may suffer or incur by reason of its execution and
performance of this Escrow Agreement. As between PRG and Vendors'
Representative, all such fees and expenses or other indemnified amounts
as described above shall be borne equally (as to one-half by PRG and as
to one-half by the Vendors' Representative). In the event any legal
questions arise concerning the Escrow Agent's duties and obligations
hereunder, the Escrow Agent may consult its legal counsel and rely
without liability upon written opinions given to it by such counsel. The
Escrow Agent shall be protected in acting upon any written notice,
request, waiver, consent, authorisation, or other paper or document which
the Escrow Agent, in good faith, believes to be genuine and what it
purports to be.
-2-
<PAGE>
3. THE ESCROW FUND
3.1 DELIVERY OF ESCROW SHARES
Concurrently with the execution hereof, PRG shall procure that there
shall be deposited with the Escrow Agent an aggregate of 611,437 shares
of PRG Common Stock (the "ESCROW SHARES"), to be held by the Escrow Agent
pursuant to and in accordance with the terms of this Escrow Agreement.
The Escrow Shares shall be represented by stock certificates in the name
of "First Union National Bank, as Escrow Agent under the Escrow Agreement
dated 19 August 1999" in respect of each Vendor in the number of
shares listed in column 3 of schedule 2.
Notwithstanding the foregoing, during the term of this Escrow Agreement,
title to the Escrow Shares will be in the name of the Escrow Agent for
record holder purposes only. The parties acknowledge that the Vendors are
the beneficial owners of the Escrow Shares, subject to the terms and
conditions of the Agreement and this Escrow Agreement, and each Vendor
will retain all rights to vote in respect of those of the Escrow Shares
reflected in respect of the Vendor in columns 3 and 4 of schedule 2 and
that are not released from escrow and transferred to PRG pursuant to
clause 4 below. PRG agrees that under current law it would accept a legal
opinion from a law firm reasonably acceptable to PRG, including without
limitation Baker & McKenzie, in relation to the transfer of the Escrow
Shares pursuant to an exemption from the registration requirements of the
Securities Act of 1933, as amended (the "SECURITIES ACT"), which is
premised on the respective Vendors being treated as holding the Escrow
Shares to which they have beneficial ownership from the date of
Completion of the Sale Agreement, notwithstanding that the Escrow Agent
will be the record holder of such Escrow Shares during the term of this
Escrow Agreement, that the transfer complies with the requirements of
Rule 144 under the Securities Act.
The Escrow Shares are delivered into escrow hereunder on behalf of the
Vendors in the same relative proportion as the Consideration Shares
received by each Vendor pursuant to the Agreement and as listed in column
2 of schedule 2 ("PROPORTIONATE INTEREST").
All cash dividends ("CASH DIVIDENDS") on the Escrow Shares shall be
deposited directly into an escrow account created by the Escrow Agent for
the purpose of holding such cash dividends (the "DIVIDEND ACCOUNT").
Shares resulting from stock dividends, stock splits, and other shares or
securities issued in respect of the Escrow Shares ("SHARE DIVIDENDS")
shall upon issuance be added to and become part of the Escrow Shares,
shall be issued in the name of the Escrow Agent, and shall be held by the
Escrow Agent subject to the provisions of this Escrow Agreement.
The Escrow Shares, Cash Dividends, Share Dividends and any other cash or
other property held by the Escrow Agent hereunder shall be referred to as
the "ESCROW FUND". The Escrow Fund is to be held in escrow and
distributed by the Escrow Agent pursuant to the terms of this Escrow
Agreement.
3.2 RECEIPT
The Escrow Agent hereby acknowledges receipt of the Escrow Shares and
agrees to hold and disburse the same in accordance with the terms and
conditions of this Escrow Agreement.
-3-
<PAGE>
3.3 INVESTMENT
The Escrow Agent shall, pending the disbursement or release of the Escrow
Fund pursuant to this Escrow Agreement, invest any cash in the Escrow
Fund in accordance with any instructions signed by both the Vendors'
Representative and PRG in:
(a) interest bearing savings accounts (the terms of which have no
restrictions as to the date of withdrawal) in a federally insured
banking or thrift institutions (including, without limitation, the
Escrow Agent or any affiliate);
(b) commercial paper having the highest rating conferred by a
nationally-recognised investment rating agency;
(c) money market funds which are investment companies registered under
the Investment Company Act of 1940, including, without limitation,
those for which Escrow Agent or an affiliate acts as investment
adviser; and/or
(d) securities issued or insured by the United States Government or an
agency or instrumentality thereof with a remaining term to
maturity of no more than one year;
provided that all such investments can be liquidated without penalty to
cash promptly in order to allow timely disbursement of cash in accordance
with this Escrow Agreement.
3.4 SALES OF ESCROW SHARES
(a) In the event a Vendor desires to sell all or a percentage of its
Escrow Shares, the Vendors' Representative shall notify the Escrow
Agent and PRG in writing of the number of Escrow Shares to be sold
and the identity of the Vendor of the respective Escrow Shares
which are proposed to be sold, and shall certify or obtain
certification reasonably acceptable to PRG (i) that the proposed
sale complies with any Pooling of Interests restrictions to which
the Vendor is subject and (ii) that the proposed sale will comply
with this Escrow Agreement and shall otherwise comply with
applicable state and federal securities laws.
(b) No Escrow Shares shall be sold by any of the Vendors listed at
numbers 1, 2, 3, 5, 7, 8 and 9 of part A of schedule 1 and listed
at numbers 8 and 9 of part B of schedule 1 of the Sale Agreement
(each a "RELEVANT VENDOR") prior to such time as PRG publishes its
financial results for at least 30 days of the combined operations
of PRG and the Group.
(c) The proceeds from the sale of any Escrow Shares shall remain in
(or be returned to) the Escrow Fund until otherwise distributed as
provided for by this Escrow Agreement.
-4-
<PAGE>
3.5 RELEASE OF ESCROW FUND
Within five (5) business days of the first anniversary of Completion, the
Escrow Agent shall deliver to the Vendors' Representative the Escrow Fund
then remaining in escrow hereunder ("RELEASE"). The Escrow Fund so
released shall be allocated among the Vendors by the Vendors'
Representative (without any liability to or responsibility of PRG or the
Escrow Agent for such allocation).
4. DISBURSEMENT OF ESCROW FUND
The following procedures shall govern all payments out of the Escrow Fund
in the period prior to the Release of the Escrow Fund:
4.1 DISBURSEMENT BY ESCROW AGENT
(a) Upon receipt by the Escrow Agent of a written notice from PRG:-
(i) confirming that the Vendor's Representative has received a
copy of such notice no less than five (5) business days
previously and has not since made any objection thereto;
and
(ii) including confirmation from KPMG that the manner and
calculation of the disbursement set out in such notice is
in accordance with the requirements of the Pooling of
Interests accounting treatment;
and giving instructions to the Escrow Agent to disburse any
portion of the Escrow Fund (a "DISBURSEMENT INSTRUCTION"), then
the Escrow Agent shall, within five (5) business days of the date
of the Disbursement Instruction, disburse the Escrow Shares as
designated therein.
(b) All certificates for Escrow Shares released from escrow pursuant
hereto will bear the same legends as the certificates issued to
each of the Vendors upon Completion and that were not deposited
into escrow and shall be subject to the same restrictions on
resale and otherwise as such shares that were not deposited into
escrow.
4.2 LIMITATION ON INDEMNIFICATION
PRG's right to indemnification from the escrow created hereunder shall
apply only in respect of claims for which a Determination of Claim occurs
prior to the first anniversary of the date hereof.
5. TERMINATION
The escrow created by this Escrow Agreement shall terminate on the
earlier to occur of the following events (a "TERMINATION DATE"):
(a) the Release of the Escrow Fund pursuant to clause 3.5; or
-5-
<PAGE>
(b) the disbursement of the final part of the Escrow Fund in
accordance with this Escrow Agreement; or
(c) receipt by the Escrow Agent of a notice signed both by PRG and the
Vendors' Representative stating that this Escrow Agreement is
terminated.
On the relevant Termination Date, the Escrow Fund shall be distributed by
the Escrow Agent to the Vendors' Representative.
No fractional shares of PRG Common Stock shall be distributed and the
Escrow Agent is authorised and directed to sell Escrow Shares in order to
avoid distribution of fractional interests and to deliver the cash
equivalent thereof.
6. RIGHTS AND OBLIGATIONS OF THE VENDORS' REPRESENTATIVE
The Vendors hereby authorise and direct the Vendors' Representative to
take, on their behalf, any actions deemed by him appropriate or necessary
to carry out the provisions of, and to determine the rights of the
parties under, this Escrow Agreement.
The Vendors' Representative:
(a) shall not be liable to any of the Vendors for any error of
judgment, act done or omitted by him as Vendors' Representative in
good faith, or mistake of fact or law unless caused by his own
gross negligence or wilful misconduct;
(b) shall be entitled to treat as genuine any letter or documents
furnished to him by PRG, any of the Vendors or the Escrow Agent
and believed by him to have been signed and presented by the
proper party or parties; and
(c) shall be entitled to recover any reasonable out-of-pocket expenses
from the Escrow Fund prior to any distribution to the Vendors
under clause 5 above.
In case of the resignation, death or inability to act of the Vendors'
Representative or any successor thereto, a successor shall be designated
in accordance with clause 8.3 of the Agreement. Each successor Vendors'
Representative shall as soon as reasonably practicable inform the Escrow
Agent of this appointment and shall have the power, authority, rights and
privileges hereby conferred upon an original Vendors' Representative, and
the term as used herein shall be deemed to include each such successor
Vendors' Representative.
-6-
<PAGE>
7. VENDORS
Schedule 2 hereto states the name of each Vendor as of the date hereof,
each Vendor's percentage ownership of outstanding Equity Interests
immediately prior to Completion (being such Vendor's Proportionate
Interest) and the number of Escrow Shares registered in the name of the
Escrow Agent in respect of each Vendor. The social security number for
each Vendor who is a U.S. individual is also set forth in exhibit A
attached hereto. The Escrow Agent may rely conclusively on exhibit A for
all purposes of this Agreement; provided, however, that the Escrow Agent
shall amend exhibit A from time to time as appropriate to reflect any
changes in the number of Escrow Shares held hereunder and shall give
notice of all such amendments to PRG and the Vendors' Representative.
8. MISCELLANEOUS
8.1 NOTICES
Save as specifically otherwise provided in this agreement, any notice,
demand or other communication to be served under this agreement may be
served upon any party hereto only by sending the same by a reputable
international courier firm or sending the same by facsimile transmission
to the party to be served at its address given below, or facsimile number
given below or at such other address or number as he or it may from time
to time notify in writing to the other parties hereto:-
If to Meridian: MR. BARRY STIEFEL
Managing Director
Meridian VAT Reclaim (UK) Limited
Meridian House
202-204 Finchley Road
London, England NW3 6BX
If to the Vendors MR. NATHAN KIRSH, VENDORS' REPRESENTATIVE
c/o Kirsh Industries Limited
9 Summit Road
Dunkeld West
Johannesburg 2196
South Africa
Fax: 00 27 11 880 1096
with a copy to: Baker & McKenzie
100 New Bridge Street
London EC4V 6JA
Attention: MICHAEL CARO
Fax: (44) 207 919 1999
If to PRG: The Profit Recovery Group International, Inc.
2300 Windy Ridge Parkway
Suite 100, North
Atlanta, Georgia 30339-8426
Attention: CLINTON MCKELLAR, JR.
-7-
<PAGE>
Senior Vice President -
General Counsel and Secretary
Fax: (770) 779-3034
with a copy to: Ashurst Morris Crisp
Broadwalk House
5 Appold Street
London EC2A 2HA
Attention: ALASTAIR MACPHERSON
Fax: (44) 207 972 7990
with a copy to: Arnall Golden & Gregory, LLP
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3400
Attention: JONATHAN GOLDEN, ESQ.
Fax: (404) 873-8701
If to the Escrow Agent: First Union National Bank
Administrator, Capital Management Group
Corporate Trust Division
999 Peachtree Street
Suite 1100 M/C GA 9094
Atlanta GA 30309-9094
Attention: BRIAN K JUSTICE
Fax: (404) 827 7305
or at such other address as any party hereto notifies to the other
parties in writing. The parties agree that notices or other
communications sent (i) by fax will be deemed received on the day sent or
on the business day thereafter if not sent on a business day, and (ii) by
a reputable international courier firm will be deemed received on the
second business day immediately following the date sent. For purposes of
this agreement, a "BUSINESS DAY" is a day on which banks in the City of
London and in New York are open for business and shall not include a
Saturday or Sunday or a legal holiday. Notwithstanding anything to the
contrary in this agreement, no action shall be required of the parties
hereto except on a business day and in the event an action is required on
a day which is not a business day, such action shall be required to be
performed on the next succeeding day which is a business day.
8.2 COUNTERPARTS
This Escrow Agreement may be executed in two or more counterparts, all of
which taken together shall be deemed one original.
8.3 ENTIRE AGREEMENT
This Escrow Agreement, the Registration Rights Agreement and the Sale
Agreement contain the entire agreement among the parties with respect to
the Escrow Fund save that the Escrow Agent shall not be bound by the
terms or provisions of any agreement to which it is not a party. This
Escrow Agreement may not be amended or supplemented, and no provision
-8-
<PAGE>
hereof may be waived, except by an instrument in writing signed by all of
the parties hereto. No waiver of any provision hereof by any party shall
be deemed a continuing waiver of any matter by such party.
8.4 BENEFIT AND ASSIGNMENT
The rights and obligations of each party under this Escrow Agreement may
not be assigned without the prior written consent of all other parties.
Subject to paragraph 8.5 below, this Escrow Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. In the event that the Vendors' Representative is
replaced pursuant to the Sale Agreement, such replacement Vendors'
Representative shall have the rights and obligations of the Vendors'
Representative hereunder, but the Escrow Agent shall be entitled to rely
on the continuation of the then existing Vendors' Representative until it
receives notice of a replacement in accordance with clause 6 of this
Escrow Agreement.
8.5 INTEREST OF VENDORS' REPRESENTATIVE
No right or interest of the Vendors' Representative in the Escrow Fund
shall be assignable or transferable, or be subject to any lien, in whole
or in part, either directly or by operation of law or otherwise,
including without limitation, by execution, levy, garnishment,
attachment, pledge, bankruptcy or in any other manner.
8.6 RIGHTS CUMULATIVE
The rights, powers and remedies given to each party by this Escrow
Agreement shall be in addition to all rights, powers and remedies given
to such party by virtue of any statute or rule of law and all such
rights, powers and remedies are cumulative and not alternative, and may
be exercised and enforced successively or concurrently. Any forbearance
or failure or delay by a party in exercising any right, power or remedy
hereunder shall not be deemed to be a waiver of such right, power or
remedy, and any single or partial exercise of any right, power or remedy
hereunder shall not preclude the further exercise thereof; and every
right, power and remedy of a party hereunder shall continue in full force
and effect until such right, power or remedy is specifically waived by an
instrument in writing executed by such party.
8.7 GOVERNING LAW
This Escrow Agreement shall be governed by and construed under the laws
of the State of Georgia, exclusive of the conflict of laws provisions
thereof. Each of the Vendors and the Vendors' Representative hereby agree
to submit to the jurisdiction of the courts of the State of Georgia and
the federal courts within the State of Georgia for the purpose of hearing
and determining any dispute arising out of the operation of this Escrow
Agreement.
8.8 FURTHER ASSURANCES
The parties to this Escrow Agreement agree to execute and deliver any
additional information, documents or agreements contemplated hereby
and/or necessary or appropriate to effect and perform the actions
contemplated hereby.
-9-
<PAGE>
8.9 PRONOUNS
All personal pronouns in this Escrow Agreement, whether used in the
masculine, feminine or neuter gender shall include all other genders, and
the singular shall include the plural and the plural shall include the
singular.
IN WITNESS whereof this agreement has been executed on the date first above
written.
-10-
<PAGE>
Signed by CAVERSHAM TRUSTEES LIMITED as trustee )
of THE BARON SETTLEMENT LIMITED acting by a )
director )
Director S. Whale
Signed by WARREN FINANCIAL SERVICES LIMITED as )
trustee of KI CORPORATION, LTD pursuant to a )
power of attorney dated 5 August 1999, WARREN )
FINANCIAL SERVICES LIMITED acting by a director )
Director A. Evans
Signed by WARREN FINANCIAL SERVICES LIMITED as )
attorney for DR STEINBRUGGER as trustee of the )
DENOR TRUST pursuant to a power of attorney )
dated 9 July 1999, WARREN FINANCIAL SERVICES )
LIMITED acting by a director )
Director A. Evans
-11-
<PAGE>
Signed by LISDAR LIMITED acting by a director )
)
Director S. Whale
Secretary N. Bell
Signed by WARREN FINANCIAL SERVICES LIMITED as attorney )
for DEBORAH P. FEROLITO pursuant to a power of attorney )
dated 9 July 1999, WARREN FINANCIAL SERVICES LIMITED )
acting by a director )
Director A. Evans
Signed by WARREN FINANCIAL SERVICES LIMITED as )
attorney for NORMANDY INVESTMENTS INC. pursuant )
to a power of attorney dated 9 July 1999, )
WARREN FINANCIAL SERVICES LIMITED acting by a )
director )
Director A. Evans
Signed by CAVERSHAM TRUSTEES LIMITED as )
trustees of THE GOODMAN TRUST acting by a )
director )
Director S. Whale
-12-
<PAGE>
Signed by WARREN FINANCIAL SERVICES LIMITED as )
attorney for INDUSTRIE UND FINANZKONTOR as )
trustee of the EURONA FOUNDATION (A/C/ PK) )
pursuant to a power of attorney dated 5 August )
1999, WARREN FINANCIAL SERVICES LIMITED acting )
by a director )
Director A. Evans
Signed by WARREN FINANCIAL SERVICES LIMITED as )
attorney for INDUSTRIE UND FINANZKONTOR as )
trustee of the EURONA FOUNDATION (A/C LM) )
pursuant to a power of attorney dated 5 August )
1999, WARREN FINANCIAL SERVICES LIMITED acting )
by a director )
Director A. Evans
Signed by WARREN FINANCIAL SERVICES LIMITED as )
attorney for RADCLIFFES TRUSTEE COMPANY SA AND )
CENTRAL INDEPENDENT TRUSTEES LIMITED as )
trustees of the BORDEAUX TRUST pursuant to )
powers of attorney dated 2 August and 5 August )
1999 respectively, WARREN FINANCIAL SERVICES )
LIMITED acting by a director )
Director A. Evans
-13-
<PAGE>
Signed by WARREN FINANCIAL SERVICES LIMITED as )
attorney for STEVEN KRELL pursuant to a power )
of attorney dated 9 July 1999, WARREN FINANCIAL )
SERVICES LIMITED acting by a director )
)
Director A. Evans
Signed by WARREN FINANCIAL SERVICES LIMITED as )
attorney for STACI KRELL pursuant to a power )
of attorney dated 9 July 1999, WARREN FINANCIAL )
SERVICES LIMITED acting by a director )
Director A. Evans
Signed by CARLYLE CORPORATE SERVICES LIMITED )
acting by a director )
Director B. Stiefel
Signed by CARLYLE CORPORATE SERVICES (CI) )
LIMITED acting by a director )
Director S. Whale
Director N. Bell
-14-
<PAGE>
Signed by WARREN FINANCIAL SERVICES LIMITED as )
attorney for NATHAN KIRSH pursuant to a power )
of attorney dated 5 August 1999, WARREN )
FINANCIAL SERVICES LIMITED acting by a director )
Director A. Evans
Signed by THE PROFIT RECOVERY GROUP )
INTERNATIONAL, INC. acting by a duly )
authorised officer )
Duly Authorised Officer C. McKellar
-15-
<PAGE>
Signed by the ESCROW AGENT: )
FIRST UNION NATIONAL BANK )
By: )
Name: )
Title: )
-16-
<PAGE>
SCHEDULE 1
FEE SCHEDULE OF THE ESCROW AGENT
Payment Due Upon Receipt Account #3072000685
- -------------------------------------------------- ------------ ---------
For Services Rendered as Follows:
- -------------------------------------------------- ------------ ---------
First Union National Bank as Escrow Agent for:
The Profit Recovery Group International Inc and
the Vendors of Meridian VAT Corporation Ltd
Escrow Agent Acceptance Fee: 500.00
Annual Escrow Administration Fee: 3000.00
8/19/99 - 8/19/00
- -------------------------------------------------- ------------ ---------
TOTAL $3,500.00 $0.00
- -------------------------------------------------------------------------
PLEASE REMIT THIS AMOUNT FOR FEES AND EXPENSES >>>>>>>> $3,500.00
- -------------------------------------------------------------------------
Please Remit Payment Along With Account Number Reference To:
CHECK: WIRE:
First Union National Bank First Union National Bank
Corporate Trust Department ABA #053-000-219
Suite 1100 Acct #5000000016439
Attn: Brian K. Justice FFC: Acct #3072000685
999 Peachtree Street, NE Ref: PRG/Meridian Escrow
Atlanta, Georgia 30309 Attn: Brian K. Justice
-17
<PAGE>
SCHEDULE 2
ESCROW SHARES
TOTAL NUMBER OF ESCROW SHARES 611,434
NUMBER AND PROPORTION OF ESCROW SHARES ATTRIBUTABLE TO EACH VENDOR:
<TABLE>
<CAPTION>
- ------------------------------- ------------------------------- --------------------------------
(1) (2) (3)
Name of Vendor Proportionate Interest of total Total Escrow Shares
number of Escrow Shares attributable to each Vendor
- ------------------------------- ------------------------------- --------------------------------
<S> <C> <C>
The Baron Settlement 0.0856 52,352
Ki Corporation Limited 0.4413 269,819
The Denor Trust 0.3407 208,345
Lisdar Limited 0.0143 8,770
Deborah Ferolito 0.0439 26,813
Normandy Investments Inc 0.0265 16,200
The Goodman Trust 0.0280 17,120
Eurona Foundation (a/c PK) 0.0025 1,503
Eurona Foundation (a/c LM) 0.0055 3,356
The Bordeaux Trust 0.0061 3,701
Steven Krell 0.0025 1,503
Staci Krell 0.0001 83
Carlyle Corporate Services 0.0022 1,366
Limited
Carlyle Corporate Services (CI) 0.0008 503
Limited
- ------------------------------- ------------------------------- --------------------------------
TOTAL 1.0000 611,434
- ------------------------------- ------------------------------- --------------------------------
</TABLE>
-18-
<PAGE>
SCHEDULE 3
IRREVOCABLE STOCK POWER
FOR VALUE RECEIVED, First Union National Bank as Escrow Agent does hereby sell,
assign and transfer unto ____________________________________________________
____________________ shares of the common stock of The Profit Recovery Group
International, Inc. ("PRG") standing in its name on the books of PRG represented
by Certificate No. ________ and does irrevocably constitute and appoint
_____________________________________________ attorney to transfer the said
stock on the books of PRG with full power of substitution in the premises.
Dated:
First Union National Bank, as Escrow Agent )
)
)
By :___________________________ )
Name: Brian K. Justice )
Title: Administrator, )
Capital Management Group,
Corporate Trust Division
SIGNATURE GUARANTEED:
(Name of Medallion National Bank or a member of the New York Stock Exchange)
By:
Title:
-19-
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
EXHIBIT A
THE PROFIT RECOVERY GROUP INTERNATIONAL, INC.
New Stockholder via Acquisition - Stock Ownership
======================================================================================================================
A B C D1 D2
NAME AND, WHERE APPLICABLE, ADDRESS FOR RECEIPT OF COUNTRY OR # OF SHARES FOR # OF SHARES FOR
SOCIAL SECURITY NUMBER PROXY SOLICITATION AND OTHER CERTIFICATE 1 (80%) CERTIFICATE 2
OTHER SHAREHOLDER JURISDICTION OF (10%)
INFORMATION RESIDENCE OR
ORGANIZATION
============================= ======================== ================= ===================== ==================
<S> <C> <C> <C> <C>
1. Caversham Ttees Ltd c/o Harris Crichton
TTEES of The Baron Bell Cayman Island
Settlement apptd by deed PO Box 258 Trust 418,817 52,352(1)
dtd 09/10/90(3) Malzard House
15 Union Street Jersey Trustee
St. Helier,
Jersey JE4 8TY
Channel Islands
============================= ======================== ================= ===================== ==================
2. Ki Corporation Limited c/o Warren Financial
Services Ltd Liberia
PO Box 183 2,158,553 269,819
Thorp House
Rouge Bouillon
St. Helier
Jersey JEH 8RH
Channel Islands
============================= ======================== ================= ===================== ==================
<CAPTION>
============================= ================== ======================================
============================= ================== ======================================
A D3 E F
NAME AND, WHERE APPLICABLE, #OF SHARES FOR # OF SHARES TO BE RESTRICTIONS(2)
SOCIAL SECURITY NUMBER ESCROW INCLUDED IN THE
CERTIFICATE AGGREGATE NUMBER
OF SHARES ISSUED
OF RECORD TO
FIRST UNION
NATIONAL BANK
PURSUANT TO ITEM
15 (10%)(1)
============================= ================= =================== =================
<S> <C> <C> <C>
1. Caversham Ttees Ltd Legend B
TTEES of The Baron NA Legend C
Settlement apptd by deed
dtd 09/10/90(3) 52,352(1)
FOR INFORMATION
ONLY. DO NOT
ISSUE SEPARATE
CERTIFICATES FOR
THESE SHARES
============================= ================= =================== =================
2. Ki Corporation Limited Legend B
NA Legend C
269,819(1)
FOR INFORMATION
ONLY. DO NOT
ISSUE SEPARATE
CERTIFICATES FOR
THESE SHARES
============================= ================= =================== =================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
EXHIBIT A
THE PROFIT RECOVERY GROUP INTERNATIONAL, INC.
New Stockholder via Acquisition - Stock Ownership
======================================================================================================================
A B C D1 D2
NAME AND, WHERE APPLICABLE, ADDRESS FOR RECEIPT OF COUNTRY OR # OF SHARES FOR # OF SHARES FOR
SOCIAL SECURITY NUMBER PROXY SOLICITATION AND OTHER CERTIFICATE 1 (80%) CERTIFICATE 2
OTHER SHAREHOLDER JURISDICTION OF (10%)
INFORMATION RESIDENCE OR
ORGANIZATION
============================= ======================== ================= ===================== ==================
<S> <C> <C> <C> <C>
3. Dr Steinbrugger TTEE of Dr Steinbrugger
the Denor Trust U/T dtd c/o Leichtenstein
04/01/81(4) Vermongensverwaltung 1,666,760 208,345
Blelcherway 18
CH 8022
Zurich
Switzerland
============================= ======================== ================= ===================== ==================
4. Lisdar Limited c/o Harris Crichton
Bell British Virgin
PO Box 258 Islands 70,166 8,771
Malzard House
15 Union Street
St. Helier,
Jersey JE4 8TY
Channel Islands
============================= ======================== ================= ===================== ==================
<CAPTION>
=============================== ================== ======================================
=============================== ================== ======================================
A D3 E F
NAME AND, WHERE APPLICABLE, #OF SHARES FOR # OF SHARES TO BE RESTRICTIONS(2)
SOCIAL SECURITY NUMBER ESCROW INCLUDED IN THE
CERTIFICATE AGGREGATE NUMBER
OF SHARES ISSUED
OF RECORD TO
FIRST UNION
NATIONAL BANK
PURSUANT TO ITEM
15 (10%)(1)
============================= ================= =================== =================
<S> <C> <C> <C>
3. Dr Steinbrugger TTEE of Legend B
the Denor Trust U/T dtd NA Legend C
04/01/81(4)
208,345(1)
FOR INFORMATION
ONLY. DO NOT
ISSUE SEPARATE
CERTIFICATES FOR
THESE SHARES
============================= ================= =================== =================
4. Lisdar Limited Legend B
NA
8,770(1)
FOR INFORMATION
ONLY. DO NOT
ISSUE SEPARATE
CERTIFICATES FOR
THESE SHARES
============================= ================= =================== =================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
EXHIBIT A
THE PROFIT RECOVERY GROUP INTERNATIONAL, INC.
New Stockholder via Acquisition - Stock Ownership
======================================================================================================================
A B C D1 D2
NAME AND, WHERE APPLICABLE, ADDRESS FOR RECEIPT OF COUNTRY OR # OF SHARES FOR # OF SHARES FOR
SOCIAL SECURITY NUMBER PROXY SOLICITATION AND OTHER CERTIFICATE 1 (80%) CERTIFICATE 2
OTHER SHAREHOLDER JURISDICTION OF (10%)
INFORMATION RESIDENCE OR
ORGANIZATION
============================= ======================== ================= ===================== ==================
<S> <C> <C> <C> <C>
5. Deborah P. Ferolito c/o Meridian VAT
Reclaim Inc U.S.A.
Social Security No.: 125 West 55th Street 214,506 26,813
O51-46-3514 8th Floor
New York
NY 10019
============================= ======================== ================= ===================== ==================
6. Normandy Investments PO Box 135
Inc. Polygon Hall Republic of
Le Marchant Street Panama 129,601 16,200
St Peter Port
Guernsey GY1 4EL
Channel Islands
============================= ======================== ================= ===================== ==================
<CAPTION>
============================= ================== ======================================
============================= ================== ======================================
A D3 E F
NAME AND, WHERE APPLICABLE, #OF SHARES FOR # OF SHARES TO BE RESTRICTIONS(2)
SOCIAL SECURITY NUMBER ESCROW INCLUDED IN THE
CERTIFICATE AGGREGATE NUMBER
OF SHARES ISSUED
OF RECORD TO
FIRST UNION
NATIONAL BANK
PURSUANT TO ITEM
15 (10%)(1)
============================= ================= =================== =================
<S> <C> <C> <C>
5. Deborah P. Ferolito Legend A
NA Legend C
Social Security No.:
O51-46-3514 26,813(1)
FOR INFORMATION
ONLY. DO NOT
ISSUE SEPARATE
CERTIFICATES FOR
THESE SHARES
============================= ================= =================== =================
6. Normandy Investments Legend B
Inc. NA
16,200(1)
FOR INFORMATION
ONLY. DO NOT
ISSUE SEPARATE
CERTIFICATES FOR
THESE SHARES
============================= ================= =================== =================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
EXHIBIT A
THE PROFIT RECOVERY GROUP INTERNATIONAL, INC.
New Stockholder via Acquisition - Stock Ownership
======================================================================================================================
A B C D1 D2
NAME AND, WHERE APPLICABLE, ADDRESS FOR RECEIPT OF COUNTRY OR # OF SHARES FOR # OF SHARES FOR
SOCIAL SECURITY NUMBER PROXY SOLICITATION AND OTHER CERTIFICATE 1 (80%) CERTIFICATE 2
OTHER SHAREHOLDER JURISDICTION OF (10%)
INFORMATION RESIDENCE OR
ORGANIZATION
============================= ======================== ================= ===================== ==================
<S> <C> <C> <C> <C>
7. Caversham Trustees Ltd c/o Harris Crichton
TTEES of The Goodman Trust Bell Jersey 136,963 17,121
U/T dtd 12/31/89(5) PO Box 258
Malzard House
15 Union Street
St. Helier,
Jersey JE4 8TY
Channel Islands
============================= ======================== ================= ===================== ==================
8. Industrie und c/o Industrie und
FinanzKontor TTEE of Eurona FinanzKontor Liechtenstein 12,028 1,504
Foundation (a/c PK), inc Postfach 339
04/24/72(6) Altenbach 8
FL 9490
Vaduz
Liechtenstein
============================= ======================== ================= ===================== ==================
<CAPTION>
============================= ================== ======================================
============================= ================== ======================================
A D3 E F
NAME AND, WHERE APPLICABLE, #OF SHARES FOR # OF SHARES TO BE RESTRICTIONS(2)
SOCIAL SECURITY NUMBER ESCROW INCLUDED IN THE
CERTIFICATE AGGREGATE NUMBER
OF SHARES ISSUED
OF RECORD TO
FIRST UNION
NATIONAL BANK
PURSUANT TO ITEM
15 (10%)(1)
============================= ================= =================== =================
<S> <C> <C> <C>
7. Caversham Trustees Ltd Legend B
TTEES of The Goodman Trust NA Legend C
U/T dtd 12/31/89(5)
17,120(1)
FOR INFORMATION
ONLY. DO NOT
ISSUE SEPARATE
CERTIFICATES FOR
THESE SHARES
============================= ================= =================== =================
8. Industrie und Legend B
FinanzKontor TTEE of Eurona NA Legend C
Foundation (a/c PK), inc
04/24/72(6) 1,503(1)
FOR INFORMATION
ONLY. DO NOT
ISSUE SEPARATE
CERTIFICATES FOR
THESE SHARES
============================= ================= =================== =================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
EXHIBIT A
THE PROFIT RECOVERY GROUP INTERNATIONAL, INC.
New Stockholder via Acquisition - Stock Ownership
======================================================================================================================
A B C D1 D2
NAME AND, WHERE APPLICABLE, ADDRESS FOR RECEIPT OF COUNTRY OR # OF SHARES FOR # OF SHARES FOR
SOCIAL SECURITY NUMBER PROXY SOLICITATION AND OTHER CERTIFICATE 1 (80%) CERTIFICATE 2
OTHER SHAREHOLDER JURISDICTION OF (10%)
INFORMATION RESIDENCE OR
ORGANIZATION
============================= ======================== ================= ===================== ==================
<S> <C> <C> <C> <C>
9. Industrie und c/o Industrie und
FinanzKontor TTEE of Eurona FinanzKontor Liechtenstein 26,852 3,357
Foundation (a/c LM), inc Postfach 339
04/24/72(7) Altenbach 8
FL 9490
Vaduz
Liechtenstein
============================= ======================== ================= ===================== ==================
10. Radcliffes Ttee Co SA c/o Radcliffes Trustee
& Cen Ind Ttees Ltd TTEES Company SA and Central Jersey 29,607 3,701
Bordeaux Trust U/T 12/18/91(8) Independent Trustees
Ltd
12 Rue de L'Arquebuse
1204 Geneva
Switzerland
============================= ======================== ================= ===================== ==================
<CAPTION>
============================= ================== ======================================
============================= ================== ======================================
A D3 E F
NAME AND, WHERE APPLICABLE, #OF SHARES FOR # OF SHARES TO BE RESTRICTIONS(2)
SOCIAL SECURITY NUMBER ESCROW INCLUDED IN THE
CERTIFICATE AGGREGATE NUMBER
OF SHARES ISSUED
OF RECORD TO
FIRST UNION
NATIONAL BANK
PURSUANT TO ITEM
15 (10%)(1)
============================= ================= =================== =================
<S> <C> <C> <C>
9. Industrie und Legend B
FinanzKontor TTEE of Eurona NA Legend C
Foundation (a/c LM), inc
04/24/72(7) 3,356(1)
FOR INFORMATION
ONLY. DO NOT
ISSUE SEPARATE
CERTIFICATES FOR
THESE SHARES
============================= ================= =================== =================
10. Radcliffes Ttee Co SA Legend B
& Cen Ind Ttees Ltd TTEES NA
Bordeaux Trust U/T 12/18/91(8)
3,701(1)
FOR INFORMATION
ONLY. DO NOT
ISSUE SEPARATE
CERTIFICATES FOR
THESE SHARES
============================= ================= =================== =================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
EXHIBIT A
THE PROFIT RECOVERY GROUP INTERNATIONAL, INC.
New Stockholder via Acquisition - Stock Ownership
======================================================================================================================
A B C D1 D2
NAME AND, WHERE APPLICABLE, ADDRESS FOR RECEIPT OF COUNTRY OR # OF SHARES FOR # OF SHARES FOR
SOCIAL SECURITY NUMBER PROXY SOLICITATION AND OTHER CERTIFICATE 1 (80%) CERTIFICATE 2
OTHER SHAREHOLDER JURISDICTION OF (10%)
INFORMATION RESIDENCE OR
ORGANIZATION
============================= ======================== ================= ===================== ==================
<S> <C> <C> <C> <C>
11. Steven Krell 2502 Kinderhook Lane
Colorado Springs U.S.A. 12,028 1,504
SOCIAL SECURITY NO.: Colorado 80919
###-##-#### USA
============================= ======================== ================= ===================== ==================
12. Staci Krell 28 Meadowbrook Road
Short Hills, U.S.A 664 83
SOCIAL SECURITY NO.: NJ 07078
###-##-#### USA
============================= ======================== ================= ===================== ==================
<CAPTION>
============================= ================== ====================================
============================= ================== =====================================
A D3 E F
NAME AND, WHERE APPLICABLE, #OF SHARES FOR # OF SHARES TO BE RESTRICTIONS(2)
SOCIAL SECURITY NUMBER ESCROW INCLUDED IN THE
CERTIFICATE AGGREGATE NUMBER
OF SHARES ISSUED
OF RECORD TO
FIRST UNION
NATIONAL BANK
PURSUANT TO ITEM
15 (10%)(1)
============================= ================= =================== =================
<S> <C> <C> <C>
11. Steven Krell Legend A
NA
SOCIAL SECURITY NO.:
###-##-#### 1,503(1)
FOR INFORMATION
ONLY. DO NOT
ISSUE SEPARATE
CERTIFICATES FOR
THESE SHARES
============================= ================= =================== =================
12. Staci Krell Legend A
NA
SOCIAL SECURITY NO.:
###-##-#### 83(1)
FOR INFORMATION
ONLY. DO NOT
ISSUE SEPARATE
CERTIFICATES FOR
THESE SHARES
============================= ================= =================== =================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
EXHIBIT A
THE PROFIT RECOVERY GROUP INTERNATIONAL, INC.
New Stockholder via Acquisition - Stock Ownership
======================================================================================================================
A B C D1 D2
NAME AND, WHERE APPLICABLE, ADDRESS FOR RECEIPT OF COUNTRY OR # OF SHARES FOR # OF SHARES FOR
SOCIAL SECURITY NUMBER PROXY SOLICITATION AND OTHER CERTIFICATE 1 (80%) CERTIFICATE 2
OTHER SHAREHOLDER JURISDICTION OF (10%)
INFORMATION RESIDENCE OR
ORGANIZATION
============================= ======================== ================= ===================== ==================
<S> <C> <C> <C> <C>
Meridian House
13. Carlyle Corporate 202-204 Finchley Road UK 10,927 1,366
Services Limited London NW3 6BX
============================= ======================== ================= ===================== ==================
<CAPTION>
============================= ================== ====================================
============================= ================== =====================================
A D3 E F
NAME AND, WHERE APPLICABLE, #OF SHARES FOR # OF SHARES TO BE RESTRICTIONS(2)
SOCIAL SECURITY NUMBER ESCROW INCLUDED IN THE
CERTIFICATE AGGREGATE NUMBER
OF SHARES ISSUED
OF RECORD TO
FIRST UNION
NATIONAL BANK
PURSUANT TO ITEM
15 (10%)(1)
============================= ================= =================== =================
<S> <C> <C> <C>
NA Legend B
13. Carlyle Corporate Legend C
Services Limited
1,366(1)
FOR INFORMATION
ONLY. DO NOT
ISSUE SEPARATE
CERTIFICATES FOR
THESE SHARES
============================= ================= =================== =================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
EXHIBIT A
THE PROFIT RECOVERY GROUP INTERNATIONAL, INC.
New Stockholder via Acquisition - Stock Ownership
======================================================================================================================
A B C D1 D2
NAME AND, WHERE APPLICABLE, ADDRESS FOR RECEIPT OF COUNTRY OR # OF SHARES FOR # OF SHARES FOR
SOCIAL SECURITY NUMBER PROXY SOLICITATION AND OTHER CERTIFICATE 1 (80%) CERTIFICATE 2
OTHER SHAREHOLDER JURISDICTION OF (10%)
INFORMATION RESIDENCE OR
ORGANIZATION
============================= ======================== ================= ===================== ==================
<S> <C> <C> <C> <C>
c/o Harris Crichton
14. Carlyle Corporate Bell Jersey 4,029 504
Services (CI) Ltd PO Box 258
Malzard House
15 Union Street
St. Helier,
Jersey JE4 8TY
Channel Islands
============================= ======================== ================= ===================== ==================
<CAPTION>
============================= ================== ====================================
============================= ================== =====================================
A D3 E F
NAME AND, WHERE APPLICABLE, #OF SHARES FOR # OF SHARES TO BE RESTRICTIONS(2)
SOCIAL SECURITY NUMBER ESCROW INCLUDED IN THE
CERTIFICATE AGGREGATE NUMBER
OF SHARES ISSUED
OF RECORD TO
FIRST UNION
NATIONAL BANK
PURSUANT TO ITEM
15 (10%)(1)
============================= ================= =================== =================
<S> <C> <C> <C>
NA Legend B
14. Carlyle Corporate Legend C
Services (CI) Ltd
503(1)
FOR INFORMATION
ONLY. DO NOT
ISSUE SEPARATE
CERTIFICATES FOR
THESE SHARES
============================= ================= =================== =================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
EXHIBIT A
THE PROFIT RECOVERY GROUP INTERNATIONAL, INC.
New Stockholder via Acquisition - Stock Ownership
======================================================================================================================
A B C D1 D2
NAME AND, WHERE APPLICABLE, ADDRESS FOR RECEIPT OF COUNTRY OR # OF SHARES FOR # OF SHARES FOR
SOCIAL SECURITY NUMBER PROXY SOLICITATION AND OTHER CERTIFICATE 1 (80%) CERTIFICATE 2
OTHER SHAREHOLDER JURISDICTION OF (10%)
INFORMATION RESIDENCE OR
ORGANIZATION
============================= ======================== ================= ===================== ==================
<S> <C> <C> <C> <C>
c/o Brian K Justice
15. First Union National First Union National USA NA NA
Bank as Escrow Agent Bank
Administrator, Capital
Management Group
Corporate Trust
Division
999 Peachtree Street
Suite 1100 M/C GA 9094
Atlanta GA 30309-9094
============================= ======================== ================= ===================== ==================
<CAPTION>
============================= ================== ====================================
============================= ================== =====================================
A D3 E F
NAME AND, WHERE APPLICABLE, #OF SHARES FOR # OF SHARES TO BE RESTRICTIONS(2)
SOCIAL SECURITY NUMBER ESCROW INCLUDED IN THE
CERTIFICATE AGGREGATE NUMBER
OF SHARES ISSUED
OF RECORD TO
FIRST UNION
NATIONAL BANK
PURSUANT TO ITEM
15 (10%)(1)
============================= ================= =================== =================
<S> <C> <C> <C>
N/A Legend B
15. First Union National FOR INFORMATION Legend C
Bank as Escrow Agent 611,434(9) ONLY. DO NOT Legend D
ISSUE SEPARATE
CERTIFICATES FOR
THESE SHARES
============================= ================= =================== =================
</TABLE>
- ----------
1. Indicates the number of shares being issued to First Union National Bank
as Escrow Agent pursuant to item 15 above, which are being issued in
respect of the person or entity named in this item. Such shares are part
of the single aggregate certificate issued of record to First Union
National Bank as Escrow Agent and deposited in escrow with First Union
National Bank. TRANSFER AGENT: DO NOT ISSUE SEPARATE CERTIFICATES FOR ANY
OF THE SHARES LISTED IN COLUMN E. ALL OF THESE SHARES ARE REFLECTED IN
THE CERTIFICATE ISSUED TO FIRST UNION NATIONAL BANK AS ESCROW AGENT
REFLECTED IN COLUMN D3 OF ITEM 15 ABOVE.
2 This column shows which of the relevant Legends on Exhibit B attached
hereto should be affixed to each certificate evidencing the shares
described above. Stop transfer orders should be entered with respect to
all shares.
3 Full name: Caversham Trustees Limited as trustees of The Baron Settlement
pursuant to a deed dated 10 September 1999
4 Full name: Dr Steinbrugger as trustee of the Denor Trust pursuant to a
trust deed dated 1 April 1981
5 Full name: Caversham Trustees Limited as trustees of The Goodman Trust
pursuant to a trust deed dated 31 December 1989
6 Full name: Industrie und FinanzKontor trustee of Eurona Foundation (a/c
PK), incorporated in Leichtenstein on 24 April 1972
7 Full name: Industrie und FinanzKontor trustee of Eurona Foundation (a/c
LM), incorporated in Leichtenstein on 24 April 1972
8 Full name: Radcliffes Trustee Company SA & Central Independent Trustees
Limited as trustees of the Bordeaux Trust pursuant to a trust deed dated
18 December 1981
9 The certificate for the shares issued to First Union National Bank as
Escrow Agent will be delivered to First Union National Bank to be held in
escrow in accordance with an indemnity escrow and stock pledge agreement.
<PAGE>
EXHIBIT B
LEGEND A:
GENERAL RESTRICTIVE LEGEND FOR U.S. PERSONS:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE
SECURITIES LAWS OF ANY OTHER JURISDICTION, IN RELIANCE UPON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF SUCH LAWS. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE SOLD OR OTHERWISE TRANSFERRED, NOR WILL AN ASSIGNEE OR
ENDORSEE HEREOF BE RECOGNIZED AS AN OWNER OF THE SHARES BY THE ISSUER, UNLESS
(1) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND OTHER APPLICABLE
SECURITIES LAWS WITH RESPECT TO THE SHARES AND THE TRANSFER SHALL THEN BE IN
EFFECT, OR (2) IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER, THE SHARES
ARE TRANSFERRED IN A TRANSACTION WHICH IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF SUCH LAWS."
LEGEND B:
GENERAL RESTRICTIVE LEGEND FOR NON-U.S. PERSONS
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR UNDER THE SECURITIES LAWS OF ANY OTHER
JURISDICTION, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S.
PERSONS (OTHER THAN DISTRIBUTORS) UNLESS THE SECURITIES ARE REGISTERED UNDER THE
SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT IS AVAILABLE, WHICH MAY INCLUDE OFFERS AND SALES IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT. HEDGING TRANSACTIONS INVOLVING THESE
SECURITIES MAY ALSO NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES
ACT."
LEGEND C:
RELEVANT VENDOR RESTRICTIVE LEGEND:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
ON SALE, TRANSFER OR OTHER DISPOSITION PURSUANT TO A SALE AND PURCHASE AGREEMENT
DATED ______________, 1999, A COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE
PRINCIPAL OFFICE OF THE PROFIT RECOVERY GROUP INTERNATIONAL, INC."
LEGEND D:
ESCROW SHARES RESTRICTIVE LEGEND:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN PLEDGED TO THE PROFIT
RECOVERY GROUP INTERNATIONAL, INC. AND ARE SUBJECT TO AN INDEMNITY ESCROW AND
STOCK PLEDGE AGREEMENT DATED _________ ____, 1999. A COPY OF SUCH AGREEMENT MAY
BE INSPECTED AT THE PRINCIPAL OFFICE OF THE PROFIT RECOVERY GROUP INTERNATIONAL,
INC."
<PAGE>
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1. Indicates the number of shares being issued to First Union National Bank
as Escrow Agent pursuant to item 15 above, which are being issued in
respect of the person or entity named in this item. Such shares are part
of the single aggregate certificate issued of record to First Union
National Bank as Escrow Agent and deposited in escrow with First Union
National Bank. TRANSFER AGENT: DO NOT ISSUE SEPARATE CERTIFICATES FOR ANY
OF THE SHARES LISTED IN COLUMN E. ALL OF THESE SHARES ARE REFLECTED IN
THE CERTIFICATE ISSUED TO FIRST UNION NATIONAL BANK AS ESCROW AGENT
REFLECTED IN COLUMN D3 OF ITEM 15 ABOVE.
2 This column shows which of the relevant Legends on Exhibit B attached
hereto should be affixed to each certificate evidencing the shares
described above. Stop transfer orders should be entered with respect to
all shares.
3 Full name: Caversham Trustees Limited as trustees of The Baron Settlement
pursuant to a deed dated 10 September 1999
4 Full name: Dr Steinbrugger as trustee of the Denor Trust pursuant to a
trust deed dated 1 April 1981
5 Full name: Caversham Trustees Limited as trustees of The Goodman Trust
pursuant to a trust deed dated 31 December 1989
6 Full name: Industrie und FinanzKontor trustee of Eurona Foundation (a/c
PK), incorporated in Leichtenstein on 24 April 1972
7 Full name: Industrie und FinanzKontor trustee of Eurona Foundation (a/c
LM), incorporated in Leichtenstein on 24 April 1972
8 Full name: Radcliffes Trustee Company SA & Central Independent Trustees
Limited as trustees of the Bordeaux Trust pursuant to a trust deed dated
18 December 1981
9 The certificate for the shares issued to First Union National Bank as
Escrow Agent will be delivered to First Union National Bank to be held in
escrow in accordance with an indemnity escrow and stock pledge agreement.
