Dated August 19, 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
878157v1
CONTENTS
CLAUSE PAGE
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.........................................................24
12. WAIVER, AMENDMENT........................................................24
13. FURTHER ASSURANCES.......................................................25
14. NOTICES..................................................................25
15. COUNTERPARTS.............................................................26
16. INVALIDITY...............................................................26
17. ASSIGNMENT...............................................................26
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
THIS AGREEMENT is made on August 19, 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").
1
(D) The Vendors are at the date hereof the beneficial owners of all of the
Equity Interests, being:
(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);
2
"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);
"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;
3
"Escrow Shares" has the meaning given to it in clause 3.6 of this
agreement;
"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;
4
"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;
"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;
5
"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;
"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.
6
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.
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.
7
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 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):-
8
(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.
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;
9
(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
(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;
10
(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:-
(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.
11
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.
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.
12
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.
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;
13
(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:-
(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$250,000;
PROVIDED ALWAYS that:-
(i) where there is a series of claims arising within the periods
stipulated in clause 4.11 from the same or closely related
facts or circumstances, such claims shall be aggregated and
treated as one claim for the purpose of this clause; and
(ii) if in the case of a claim under Warranty 4.7, the Purchaser
has not previously consulted with the Vendors'
Representative prior to settling any such claim with a third
party, the limitations in paragraphs (a) and (b) above shall
apply.
4.13 Save in the case of fraud or fraudulent concealment by any of the
Vendors, and notwithstanding their joint and several liability
hereunder:-
14
(a) the aggregate liability of the Vendors in respect of all
General Indemnified Claims shall not in any circumstances
exceed an amount in US$ 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
(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;
15
(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;
(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:
16
(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.
(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:-
17
(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 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;
18
(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.
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
19
(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.
(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;
20
(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 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).
21
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" 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;
22
(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 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.
23
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.
24
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.
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
25
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
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.
26
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.
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.
27
Signed as a deed by CAVERSHAM TRUSTEES LIMITED )
as trustee of THE BARON SETTLEMENT acting by a )
director duly authorised for these purposes )
)
)
Director
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
Secretary/Director
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
Secretary/Director
Signed as a deed by LISDAR LIMITED acting by a )
director and its secretary/two directors )
)
Director
Secretary/Director
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
Secretary/Director
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
Secretary/Director
Signed as a deed by CAVERSHAM TRUSTEES LIMITED )
as trustee of THE GOODMAN TRUST acting by a )
director duly authorised for the purpose )
)
Director
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
Secretary/Director
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
Secretary/Director
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
Secretary/Director
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
Secretary/Director
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
Secretary/Director
Signed as a deed by CARLYLE CORPORATE SERVICES )
LIMITED acting by its sole director )
)
)
Director
Signed as a deed by CARLYLE CORPORATE SERVICES )
(CI) LIMITED acting by a director and its )
secretary/two directors )
)
Director
Secretary/Director
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
Director/Secretary
Signed as a deed by THE PROFIT RECOVERY GROUP )
INTERNATIONAL, INC. acting by:- )
)
Duly Authorised Officer
Duly Authorised Officer
LIST OF SCHEDULES
Schedules Description
SCHEDULE 1 The Vendors
SCHEDULE 2 Particulars relating to the Company
SCHEDULE 3 Particulars relating to Subsidiaries
SCHEDULE 4 Warranties
SCHEDULE 5 Purchaser Warranties
SCHEDULE 6 The Properties
SCHEDULE 7 Dispute Resolution and Arbitration Procedure
SCHEDULE 8 Affiliate Loan Schedule