Exhibit 4.16
SHARE PURCHASE AGREEMENT
between
1. Baumwall "7" Einhundertachtundachtzigste Verwaltungsgesellschaft mbH
registered in Hamburg under Number HRB 85989
- hereinafter the "Purchaser"-,
and
2. Electra European Fund (LP), Alexander House, PO Box 431, 13-15 Victoria
Road, St. Peter Port, Guernsey, registered in the register of limited
partnerships of the Island of Guernsey under Number 140
- hereinafter the "Funds"-,
and
3. Bates Deutschland Holding GmbH, Hanauer Landstrasse 287, 60314 Frankfurt am
Main, registered in the commercial register of the local court of Frankfurt
am Main under HR B 8508
- hereinafter the "Seller"-,
and
4. Cordiant Communications Group plc, (Registered No. 1320869) a public
limited liability company with its registered office at 1-5 Midford Place,
London W1T 5BH, England
- hereinafter "Cordiant"-,
- collectively hereinafter the "Parties"-,
-2-
Definitions
In this document the following terms shall have the following meanings:
"Additional Purchase Price" shall mean the amount of EUR 1,461,191;
"Agreement" means this Share Purchase Agreement including all exhibits and
schedules;
"Business Day" means any day other than (i) Saturday or Sunday or (ii) any
other day on which banking institutions are authorized or required by law
to remain closed in Berlin or in London;
"Circular" means the Circular to shareholders of Cordiant referred to in
para. 5 of Section 2;
"Closing Date" means the date when the Initial Purchase Price has been paid
in full;
"Company" means SCHOLZ & FRIENDS AG, Berlin, a German Stock Corporation,
registered in the commercial register of the local court of
Berlin-Charlottenburg under HR B 74085;
"Company Financial Statements" means the annual financial statements for
the Company prepared in accordance with German law and accounting standards
(HGB) as audited and opined on by KPMG;
"Company Shares" means all shares of the capital of SCHOLZ & FRIENDS AG;
"Consolidated Financial Statements" means the consolidated annual financial
statements for the Company and its subsidiaries prepared under
International Accounting Standards as audited and opined on by KPMG;
"Cordiant's Knowledge" means the knowledge of Mr. David Hearn. Mr. Andrew
Boland and Mr. Michael Bungey;
"Cordiant Group" means Cordiant and its subsidiaries other than the Group;
"EBITA" means the consolidated earnings before interest, taxation and
amortisation of the Group as shown in the Consolidated Financial
Statements, prepared under
-3-
International Accounting Standards, and adjusted to reflect UK GAAP as
stated under Cordiant's UK accounting policies, calculated on a consistent
basis with the accounting policies and practices used in preparing the
equivalent 2002 comparatives as set out and explained in schedule 4.4, as
adjusted to exclude any one-off charges or income provided that such
one-off charges or income are not individually less than EUR100,000;
"Effective Date" means the date defined in Section 2 para. 9;
"Electra Europe" means Electra Europe GmbH & Co. KG, An der Hauptwache 5,
60313 Frankfurt am Main, registered in the commercial register of the local
district court at Frankfurt am Main under HR A 29983;
"EURO Loan Facility" means the loan facility granted by Cordiant Holdings
GmbH to Scholz & Friends Group GmbH pursuant to an agreement dated 1 June
2001, as amended, a copy of which is attached to this Agreement as Exhibit
C the balance of which at 31 May 2003 is EUR 2,878,617.28 plus accrued
interest for April and May 2003 totalling EUR 21,949.00, with further
interest accruing at the rate of 3 months EURIBOR plus two percent per
annum, payable quarterly;
"GBP Term Loan Agreement" means the loan to be granted by Bates UK Limited
to Scholz & Friends London Limited on the Closing Date, in the form
attached to this Agreement as Exhibit D, replacing the current intercompany
Overdraft Facility Agreement dated 9 April 2003;
"Group" means the Company and its direct and indirect subsidiaries;
"Group Structure Chart" means the structure chart of the Group attached to
this Agreement at Exhibit A;
"Initial Purchase Price" means the amount set out in Section 4 para. 1 of
this Agreement;
"KPMG" means KPMG Deutsche Treuhand-Gessellschaft Aktiengesellschaft
Wirtschaftsprufungsgesellschaft, Ludwig-Erhard Strasse 11, 20459 Hamburg;
"KPMG Certificate" means the certificate to be delivered by KPMG pursuant
to Section 4 para. 4 of this Agreement;
"Lender Approval" has the meaning defined in Section 2 para. 5;
-4-
"LIBOR" means three months London Interbank Offered Rate of Euro as
determined by the British Bankers Association.
"Management Protocol" means the Management Protocol the agreed from of
which dated 23 April 2003 is attached hereto as Exhibit B;
"Management Team" means Thomas Heilman, Sebastian Turner, Christian
Tiedemann and those senior managers of the Group who, by virtue of their
position, are [illegible] hereunder.
"Party" means either the Purchaser, the Funds, Cordiant or the Seller;
"Parties" means collectively the Purchaser, the Funds, Cordiant and the
Seller.
"Public Duties" means collectively all obligations with regard to taxes,
social security contributions ("Sozialversicherungsbeitrage") and other
public levies (Abschopfungen"), charges ("Gebuhren"), contributions
(Beitrage"), other duties ("Sonstige Abgaben"), membership dues (e.g.
payments to the Pension Security Association ("Pensionssicherungsverin"),
tax deductions at source (Steuerabzugsbertrage), supplementary claims
(Nebenforderungen), surcharges (Zuschlage), duties (Zolle), interest
(Zinsen) on taxes due for payment, and fines and additions (Geldbussen,
Strafen and Zuschlage) and similar obligations;
"Repayment Date" shall mean the date defined in Section 5 para. 1 of this
Agreement;
"Revenues" means the consolidated revenues of the Group shown in the
Consolidated Financial Statements, prepared under International Accounting
Standards, and adjusted to reflect UK GAAP as stated under Cordiant's UK
accounting policies, calculated on a consistent basis with the accounting
policies and practices used in preparing the equivalent 2002 comparatives
as set out and explained in schedule 4.4;
"Shareholder Approval" has the meaning defined in Section 2 para. 5
"Shareholder Loans" means collectively the GBP Term Loan Agreement and the
EURO Loan Facility;
"Shares" means 16,589,000 non-par value bearer shares of SCHOLZ & FRIENDS
AG ;
-5-
"Signing Date" means the date when all parties have signed this Agreement;
"UK Listing Rules" means the listing rules made by the UK Listing Authority
pursuant to Part VI of the Financial Services and Markets Act 2000 of the
United Kingdom as amended from time to time.
Section 1
Subject of the Agreement
1. The Seller is a shareholder of the Company. The share capital of the
Company amounts to nominal EUR 21, 460,000 and is divided into 21,460,000
non-par value bearer shares (nennwertlose Inhaber-Stuckaktien). The Company
Shares are listed at the General Standard as part of Geregelter Markt of
Frankfurter Wertpapierborse (WKN 697280/ISIN DE0006972805).
2. The Seller holds 16,589,000 shares in the Company deposited at ABN Amro
Bank Deutschland AG (depository number 8040118/700), which shall be sold
and transferred to the Purchaser subject to the terms and conditions of
this Agreement.
Section 2
Sale and Transfer of Shares
1. The Seller hereby sells and transfers (ubereignet) the Shares to the
Purchaser. The Purchaser accepts the sale and the transfer of the Shares.
Such sale and transfer shall encompass any and all rights resulting from
the Shares, especially any profit participation rights (Gewinnbezugsrechte)
for the current business year. On the Signing Date the Seller shall
transfer the Shares to a blocked deposit (Sperrdepot) at Hamburger
Landesbank to be held there until the Closing Date and to be released to
the Purchaser thereupon.
2. Subject to para. 6 of this Section, in order to effect the transfer of the
Shares, the Seller herewith assigns its claims for return
(Herausgabeanspruche) of the Shares against (i) Clearstream Banking AG,
Frankfurt as general securities depository (Girosammelverwahrstelle) and
(ii) ABN Amro Bank Deutschland AG as depository bank (Depotbank), to the
Purchaser, including but not limited to claims for return according to
Sections 7 and 8 of the German Depositary Act (Depotgesetz).
-6-
3. The Purchaser has arranged a deposit of securities (Wertpapierdepot) at a
financial institution (Kreditinstitut), which itself has a deposit of
securities at Clearstream Banking AG. The Seller shall instruct its
depository bank by means of a separate declaration (i) to notify the
transfer of the Shares to Clearstream Banking AG and (ii) to transfer the
Shares on the date the Initial Purchase Price is paid (Closing Date) by
means of a securities transfer (Verfahren des Wertpapierubertrages) to the
deposit of securities of the Purchaser's depository bank at Clearstream
Banking AG.
4. The sale and transfer (including the obligations under Sections 5 and 11 of
this Agreement) shall be subject to [illegible] conditions a), b) or c);
(ii) the first to occur of the following conditions d), e) or f); and (iii)
the first to occur of the following conditions h), i), or j):
a) Expiry of a period of one month after the Purchaser has notified the
acquisition of the Shares to the German Federal Cartel Office
(Bundeskartellamf) as a merger pursuant to Section 39 of the German
Act against Restraints of Competition unless, prior to the expiry of
such period, the German Federal Cartel Office prohibits the merger or
notifies that it has initiated an evaluation of the merger.
b) Written confirmation given by the German Federal Cartel Office that
the acquisition of the Shares by the Purchaser shall not qualify for a
prohibition according to Section 36 para. 1 of the German Act against
Restraints of Competition.
c) Expiry of a period of four months after the Purchaser has notified the
acquisition of the Shares with the German Federal Cartel Office as a
merger, unless the German Federal Cartel Office prohibits the merger.
d) Expiry of a period of four seeks after both, the Austrian Federal
Competition Agency and the Austrian Federal Cartel Attorney, have
received the notification of the acquisition of shares under the
Austrian Cartel Act.
e) Written confirmation from the Austrian Cartel Court that the
acquisition of shares by the Purchaser is not deemed a concentration
in the sense of Section 41 of the Austrian Cartel Act or written
confirmation that the transaction does not qualify for prohibition
under the Austrian Cartel Act or that the merger does not qualify for
prohibition under the Austrian Cartel subject to terms and conditions
which are satisfactory to the Purchaser acting reasonably provided
that the Purchaser shall be obliged to accept any term or condition
which is not material.
- 7 -
f) Expiry of a period of five months after the Austrian Cartel Court
received the notification of the acquisition of the Shares, unless the
Austrian Cartel Court prohibits the transaction within that period.
h) Expiry of a period of one month after the date on which the Irish
Competition Authority receives a complete notification of the
acquisition of the Shares unless, prior to the expiry of such period
the Irish Competition Authority prohibits the transaction or sends
notice to the parties that a full investigation is necessary in order
to [illegible] competition.
i) Written Confirmation from the Irish Competition Authority that the
acquisition of Shares by the Purchaser does not qualify for a
prohibition under the Irish Competition Act of 2002.
j) Expiry of a period of four months after the date on which the Irish
Competition Authority receives a complete notification of the
acquisition of the Shares, unless prior to the expiry of such period,
the Irish Competition Authority prohibits the envisaged transaction.
The Purchaser is entitled to waive the conditions specified in paragraphs
h), i) and j) above.
Upon signing of this Agreement, the Seller and the Purchaser shall jointly
prepare the notification letters regarding the sale of the Shares and
undertake all reasonable efforts necessary or useful to obtain merger
clearance, and shall in particular submit all required information to the
relevant authorities. The Purchaser may withdraw from this Agreement within
a period of one month from prohibition by the relevant authorities of the
acquisition of the Shares by the Purchaser or upon clearance subject to
conditions and/or obligations that are unacceptable to the Purchaser acting
as a reasonable purchaser in the context of all of the Purchaser's
circumstances.
5. The sale and transfer (including the obligations under Section 5 and 11 of
this Agreement) shall also be subject to the condition precedent that
Cordiant's shareholders in general meeting shall, if required by the UK
listing authority, have passed a resolution to approve the sale and
transfer (the "Shareholder Approval"). Cordiant shall use its reasonable
endeavours (subject always to the fiduciary duties of its directors) to
procure the satisfaction of this condition no later than 15 July 2003.
-8-
The Purchaser shall promptly provide to Cordiant such information and
cooperation as may be reasonably requested by Cordiant to prepare a
circular to its shareholders for the purposes of convening a general
meeting to obtain the Shareholder Approval. Cordiant shall afford the
Purchaser and its professional advisers a reasonable opportunity prior to
publication of the Circular to review and comment on those portions of the
draft Circular which relate to the Purchaser, the terms of this Agreement
and the matters contemplated by this Agreement and shall endeavour in good
faith to accommodate any reasonable comments made in a [illegible]
obligations of Cordiant under the UK Listing Rules, the City Code on
Takeovers and Mergers and all applicable laws and regulations, and to the
fiduciary duties of the Cordiant directors.
The sale and transfer (including the obligations under Section 5 and 11 of
this Agreement) shall also be subject to the condition precedent that
Cordiant confirms in writing to the Purchaser that its lenders have
approved the sale and transfer of the Shares and that no member of the
Group has any liability for the indebtedness of any member of the Cordiant
Group (the "Lender Approval") and in the case of any such liability
referred to on Schedule 13.5, evidence to the reasonable satisfaction of
the Purchaser that such liability has been released, it being understood
that Cordiant shall use its best efforts (subject always to the fiduciary
duties of its directors) to procure the satisfaction of this condition.
6. The sale and transfer (including the obligations under Section 5 and 11 of
this Agreement) shall also be subject to the following conditions
precedent:
a) The Seller and Cordiant shall have fully performed and complied with
all covenants and other obligations required to be performed or
complied by them pursuant to this Agreement on or by Closing Date and
which are material in the context of the sale and transfer hereunder;
b) Cordiant shall have received evidence reasonably acceptable to
Cordiant that (i) Mr. Christian Tiedemann has waived all of his rights
under the Option Agreement dated 20 December 2001 with the Seller and
(ii) Mr. Peter Schoning has waived all of his rights under the Option
Agreement dated 20 December 2001 with the Seller upon the terms of the
agreements attached as Schedule 2;
c) Bates UK Limited and Scholz & Friends London Limited shall have
executed the GBP Term Loan Agreement and those companies and Scholz
-9-
& Friends Group GmbH having agreed in the same document to terminate
the Intercompany overdraft facility dated 9 April 2003 and confirmed
that no amounts remain payable under such facility.
7. If the conditions specified in paragraphs 5 and 6 above have not been
satisfied by 15 July 2003, or in the case of the conditions specified in
para. 6 a) and c), satisfied or waived by the Purchaser, this Agreement
(except for para. 10 of this Section and Sections 9, 10 and 12) shall be
null and void and of no further effect and the Parties shall be released
and discharged from their respective obligations under this Agreement.
Cordiant shall notify the Purchaser in writing of the satisfaction of the
conditions specified in paragraphs 5 and 6 lit. b) above. The Purchaser
shall be entitled to waive the condition contained in paragraphs 6 lit. a)
above and shall also be entitled to waive the condition contained in
paragraph 6 lit. c) if the companies referred to therein do not execute the
Term Loan Agreement by 15 July 2003.
8. The transfer of the Shares shall furthermore be subject to the condition
precedent that the Initial Purchase Price has been fully paid.
9. The Effective Date shall be the day on which all conditions in para. 4, 5
and 6 have been fulfilled or waived where permitted.
10. If any required Shareholder Approval or Lender Approval is not obtained by
Cordiant on or before 15 July 2003, or this Agreement is not completed due
to the breach of Cordiant or the Seller of their respective obligations
under this Agreement, Cordiant shall pay to the Funds (or as the Funds
shall direct) a break-up fee of EUR 750,000 plus VAT, if applicable, within
ten Business Days of written demand from the Funds.
Section 3
Duties of the parties between Signing Date and Closing Date
1. Between the Signing Date and the Closing Date the Seller shall not consent
to any amendment of the articles of association of the Company, especially
any capital increase, unless agreed by the Purchaser in writing prior to
such amendment.
2. Furthermore, between the Signing Date and the Closing Date the Seller shall
not consent to any change in the composition of the Supervisory Board,
unless agreed by the Purchaser in writing prior to such consent.
3. The Seller, insofar as it is able in its capacity as a shareholder of the
Company,
-10-
shall insure that each member of the Group shall not, between the Signing
Date and the Closing Date:
(i) declare, pay or make a dividend or distribution; or
(ii) pass a shareholder's resolution
without the prior written consent of the Purchaser.
Section 4
Purchase Price
1. The Initial Purchase Price shall be EUR 22,404,934 (in words: Euro twenty
two million four hundred and four thousand nine hundred and thirty-four).
2. The Initial Purchase Price shall be due and payable five Business Days
after the Effective Date, provided that Cordiant has delivered the written
notification referred to in Section 2 para. 7. If payment of the Initial
Purchase Price has not been made within ten Business Days after the
Effective Date (the "Payment Period"), Cordiant and the Seller shall have
the right (i) to claim compensation by way of damages from the Purchaser or
(ii) to rescind this Agreement, provided that Cordiant shall have informed
the Purchaser in writing of its intention to rescind the Agreement in case
of non-payment of the Initial Purchase Price during the Payment Period.
Moreover, the Seller shall have the right to claim default interest
according to Sec. 288 of the German Civil code (Burgerliches Gesetzbuch).
3. The Purchaser shall instruct its depository bank to place the Initial
Purchase Price when due at Clearstream Banking AG's disposal for purpose of
money clearing (Geldverrechnungsverkehr).
4. The Purchaser shall pay the Additional Purchase Price to the Seller within
five Business Days from receipt by the Purchaser of a certificate issued by
KPMG (hereinafter: the "KPMG Certificate") confirming that:
a) the Revenues for the business year 2003 as calculated using the
calculation schedule attached in schedule 4.4 was at least EUR 70.0
million; and
-11-
b) the EBITA for the business year 2003 as calculated using the
calculation schedule attached in schedule 4.4 was at least EUR 6.5
million.
The Additional Purchase Price shall carry Interest at the rate of
LIBOR plus one percent per annum from the Closing Date until the date
the Additional Purchase Price is paid to the Seller. Such Interest
shall be due and payable together with the Additional Purchase Price.
If the annual general meeting takes place after the Closing Date, the
Purchaser shall [illegible] Seller shall procure) that KPMG is
mandated by the annual general meeting (Hauptversammlung) of the
Company to audit the Consolidated Financial Statements of the Company
for the business year 2003. The Purchaser shall procure that all
information required for the preparation of such financial statements
is delivered to KPMG in due time so as to enable KPMG to finalise the
preparation of the Consolidated Financial Statements of the Company
for the business year 2003 no later than 31 March 2004. In addition,
the Purchaser shall procure that all additional information required
by KPMG for preparing the KPMG Certificate is delivered to KPMG
without undue delay. Cordiant will pay the reasonable costs agreed
with KPMG in preparing the KPMG certificate.
Section 5
Shareholder Loans
1. In the event the Shareholder Loans are not repaid in full by the respective
borrowers on the Repayment Date the Funds shall procure that the balance of
the Shareholder Loans as of the Repayment Date shall be paid to the
respective lenders up to a maximum amount of EUR 9,000,000 within five
Business Days from the Repayment Date in the respective two currencies,
notwithstanding any insolvency, overindebtedness (Uberschuldung), or
liquidation of the Company or any of its subsidiaries, plus interest
accrued until the date of such payment. The term "Repayment Date" shall
mean the earlier of
a) the date on which the Purchaser has acquired 100% of the Company
Shares or gained access to the cash flow of the Company by way of an
agreement in the meaning of Section 291 para. 1 of the German Stock
Corporation Act or an integration of the Company in the meaning of
Section 319 para. 1 of the German Stock Corporation Act; or
-12-
b) 31 December 2003.
The Purchaser will use its best efforts to gain access to the cash flow of
the Company at the earliest reasonable opportunity after the Closing Date.
2. Subject to para. 1 of this Section, the terms of the loan agreements for
the GBP Term Loan Agreement and the Euro Loan Facility shall remain
unaffected hereby.
3. Upon repayment of the Shareholder Loans plus accrued interest pursuant to
para. 1 of this Section, Cordiant will [illegible] obligations of any
member of the Group pursuant to such loan agreements are satisfied in full.
Section 6
Representations and Warranties of Cordiant
1. As of the Signing Date Cordiant represents and warrants to the Purchaser
the following:
a) Each member of the Group has been duly established under applicable
law and is validly existing and, to the extent the concept exists
under the relevant jurisdiction, is in good standing under the laws of
its foundation (Grundung). The Group Structure Chart is correct and
includes all members of the Group.
b) The statements rendered in Section 1 of this Agreement are correct.
c) Each of the Company and its subsidiaries has unrestricted legal and
beneficial title to all of the shareholdings detailed on the Group
Structure Chart as owned by it. The Shares, and all shares in any
member of the Group held directly or indirectly by the Company, are
fully paid in, no capital contribution on any of them has been repaid
either directly or indirectly, and they are free and clear of any
liens, encumbrances or other rights of third parties. There are no
pre-emptive rights, rights of first refusal, options (other than the
options referred to in Section 2 para. 6 lit, b) of this Agreement
held by Mr. Christian Tiedemann and Mr. Peter Schoning), voting
arrangements or other rights of third parties to acquire any of the
shares in any member of the Group which are directly or indirectly
sold under this Agreement, in each case excluding statutory rights
under
-13-
applicable law.
d) The Shares are the unrestricted property of the Seller, free from any
third party right or claim. No third parties are entitled to exercise
option rights or rights of first refusal.
e) Cordiant may freely dispose of the Shares and therefore does not
require any approval by any third party, except as set out in Section
2 para. 5 of this Agreement, nor does such disposal constitute a
violation of any third party right or any other rules.
f) No insolvency proceedings have been instituted by resolution of the
competent court pursuant to Sec. 27 para. 1 InsO in respect of the
Company, Scholz & Friends Group GmbH, Scholz & Friends Hamburg GmbH or
Scholz & Friends Berlin GmbH, nor to the best of Cordiant's knowledge,
in respect of any other member of the Group.
g) No liquidation proceedings pursuant to Sec. 262 para. 1 AktG in
respect of the Company, nor to the best of Cordiant's knowledge, in
respect of any other member of the Group, have been initiated.
h) To the best of Cordiant's knowledge, there are no facts that might
lead to the termination of material contracts or departure of key
personnel of any member of the Group.
i) To the best of Cordiant's Knowledge, since 31 December 2002 the
operations of the Company have been conducted within the ordinary
course of business.
j) All members of the Group have punctually fulfilled all Public Duties
due for payment and paid all Public Duties that have become liable to
pay. If not yet due, provisions for such Public Duties have been made
in the books of the members of the Group, sufficient for the payment
of all unpaid Public Duties payable by a member of the Group
attributable to all periods ending on or before the Effective Date.
k) The Company Financial Statements for the business year 2002 have been
prepared according to the laws and regulations and pursuant to the
generally accepted accounting principles in Germany, considering the
continuity principle in Germany. The Consolidated Financial Statements
for the business year 2002 have been prepared in accordance with
-14-
International Accounting Standards. The Consolidated Financial
Statements for the business year 2002 give a fair and true view of the
assets, the financial and profit situation (Vermogens-, Finanz- und
Ertragslage) of the Company and its subsidiaries as of 31 December
2002.
2. As of the Closing Date, Cordiant represents and warrants to the Purchaser
the following:
a) The Company has been duly established under applicable law and is
[illegible] (Grundung).
b) The statements rendered in Section 1 of this Agreement are correct
subject to any increase in share capital due to the issue of shares in
the capital of the Company as a result of the acquisition of deep blue
Networks AG or the acquisition of Couch Potatoes Fernsehproduktions
GmbH & Co. KG.
c) The Shares are fully paid in, no capital contribution on any of them
has been repaid either directly or indirectly, and they are free and
clear of any liens, encumbrances or other rights of third parties.
There are no pre-emptive rights, rights of first refusal, options
(other than the options referred to in Section 2 para. 6 lit. b) of
this Agreement held by Mr. Christian Tiedemann and Mr. Peter
Schoning), voting arrangements or other rights of third parties to
acquire any of the Shares in each case excluding statutory rights
under applicable law.
d) The Shares are the unrestricted property of the Seller, free from any
third party right or claim. No third parties are entitled to exercise
option rights or rights of first refusal.
e) Cordiant may freely dispose of the Shares and therefore does not
require any approval by any third party, except as set out in Section
2 para. 5 of this Agreement, nor does such disposal constitute a
violation of any third party right or any other rules.
f) No insolvency proceedings have been instituted by resolution of the
competent court pursuant to Sec. 27 para. 1 InsO in respect of the
Company. No insolvency proceedings have been instituted by resolution
of the competent court pursuant to Sec. 27 para. 1 InsO in respect of
Scholz & Friends Group GmbH, Scholz & Friends Hamburg GmbH or Scholz &
Friends Berlin GmbH, nor to the best of Cordiant's knowledge in
respect of
-15-
any other member of the Group other than any proceedings which may
have been instituted by or at the direction of the Purchaser, the
Funds, Electra Europe or any member of the Group.
g) No liquidation proceedings pursuant to Sec. 262 para. 1 AktG in
respect of the Company, nor to the best of Cordiant's knowledge, in
respect of any other member of the Group, have been initiated.
h) The Company Financial Statements for the Business year 2002 have been
[illegible] generally accepted accounting principles in Germany,
considering the continuity principle in Germany. The Consolidated
Financial Statements for the business year 2002 have been prepared in
accordance with International Accounting Standards. The Consolidated
Financial Statements for the business year 2002 give a fair and true
view of the assets, the financial and profit situation (Vermogens-,
Finanz- und Ertragslage) of the Company and its subsidiaries as of 31
December 2002.
3. The Purchaser acknowledges that Electra Europe, acting on behalf of the
Purchaser has conducted a due diligence review on the Company and the
Group, has been granted unlimited access by the Company to certain
documents and other materials (the "Data Room"), copies of which have been
stored in boxes sealed by a representative of each of the Purchaser and
Cordiant which will be kept at the offices of Haarmann Hemmelrath &
Partner, Berlin, until all claims of the Purchaser for breach of
representations and warranties shall have become time barred in accordance
with Section 7 para. 5 of this Agreement. The Purchaser acknowledges that
Electra Europe has conducted such due diligence review of the Data Room on
behalf of the Purchaser and neither of them knows of any incorrectness or
inaccuracy of the statements, representations and warranties in para. 1 of
this Section 6 other than in relation to paragraph 1 lit. j) of this
Section 6. The Purchaser also acknowledges that Electra Europe has been
granted unrestricted access to the Management Team and has been supplied by
them with such information as has requested concerning the affairs of the
Company. Other than in relation to para. 1 lit. j) of this Section 6, no
representation or warranty will be deemed to have been given by Cordiant to
the extent that information with respect to such representation or warranty
was fairly disclosed in a document or other material contained in the Data
Room. In addition, no representation or warranty will be deemed to have
been given by Cordiant under para. 1 lit. k) or para. 2 lit. h) in respect
of any events or facts that were known to a member of the Management Team
but not disclosed to the Purchaser, the Funds or Electra Europe, unless
Cordiant receives a copy of the Management Protocol, duly signed by Mr.
Thomas Heilmann, Mr. Sebastian Turner
-16-
and Mr. Christian Tiedemann, prior to the Signing Date.
4. Section 442 and Section 444 of the German Civil Code shall not apply.
5. Any warranty (Gewahrieistung), including any statutory warranty, of the
Seller relating to or in connection with the sale of the Shares is hereby
excluded.
6. No knowledge or deemed knowledge on the part of the Purchaser, the Funds or
Electra Europe shall operate to prevent or reduce a claim pursuant to para.
1 lit. j) of [illegible].
Section 7
Legal Effects
1. In case of a breach of the representations and warranties made in Section 6
of this Agreement the Purchaser may require Cordiant to establish the
status that would exist if the statements had been true. This must be
completed within a reasonable period of time but not later than three
months after such request. If Cordiant shall not establish the status in
compliance with the Agreement, or if this not possible, Cordiant shall pay
to the Purchaser (or as the Purchaser shall direct) on demand the amount
necessary to put the Group into the position which would have existed had
such representations and warranties not been breached, together with all
costs and expenses incurred by the Purchaser or any member of the Group as
a result of such breach. Subject to para. 3 below, in relation to any
payment in respect of Public Duties Cordiant shall in any event pay all
amounts of Public Duties and taxes not sufficiently provided for in the
audited Consolidated Financial Statements.
2. The Purchaser shall in no case be entitled to rescind the Agreement
(Rucktritt), to annul this Agreement based on the absence of a material
quality, or to rescind or adjust this Agreement based on frustration of
contract.
3. In respect of the representations and warranties set out in Section 6 para.
1 lit. j) damages (as established in para. 1) may be claimed only if the
individual claim exceeds EURO 2,000 and the aggregate amount of such claims
exceeds EURO 50,000. In respect of the representations and warranties set
out in Section 6 para. 1 lit. j), the overall liability for damages (as
established in para. 1) shall in no event be higher than 50 per cent of the
Initial Purchase Price.
4. In respect of all other representations and warranties set out in Section 6
para. 1,
-17-
damage compensation (as established in para. 1) may be claimed only if the
individual claim exceeds EURO 20,000 and the aggregate amount of such
claims exceeds EURO 200,000. In respect of these other representations and
warranties set out in Section 6 para. 1, the overall liability for damages
(as established in para. 1) shall in no event be higher than 50 per cent of
the purchase price.
5. All warranty claims of the Purchaser pursuant to Section 6 and this Section
7 with the exception of Section 6 para. 1 lit. j) shall become time barred
unless raised within a period of twelve months from the Effective Date.
Warranty claims of the [illegible] to each period and each Public Duty
payable by any member of the Group unless raised within four weeks after
the respective assessments have become final and binding (unabaenderbar)
for the competent tax authorities and public duty authorities. If the
competent tax authorities and public duty authorities execute a tax field
audit (stauerliche AuBenprufung) or public duty authorities' audit (or
foreign equivalents) for the periods up to the Closing Date the relevant
assessments are those made after the audits. Limitation periods shall be
interrupted (unterbrochen) by the first written assertion of the claim by
the Purchaser.
Section 8
Information and Notice Requirements
1. The Parties will inform each other of any and all circumstances relevant to
the implementation of this Agreement and will conduct any legal action
necessary for or in furtherance of the implementation of this Agreement.
2. To the extent not already taken care of, the Seller and the Purchaser will
secure that the following notices required under German law will be duly
filed with the competent authorities:
a) The Seller will immediately but not later than seven calendar days
after the Closing Date notify the Company and the Bundesanstalt fur
Finanzdienstleistungsaufsicht, Frankfurt in writing that its
shareholding in the Company has moved by sale below 5 per cent of the
voting rights, indicating among others its address and the Closing
Date (Section 21 para. 1 German Securities Trading Act
(Wertpapierhandelsgesetz)).
b) The Purchaser will immediately but not later than seven calendar days
after the Effective Date notify the Company and the Bundesanstalt fur
-18-
Finanzdienstleistungsaufsicht, Frankfurt in writing that it has
reached by purchase a shareholding in the Company which exceeds 75 per
cent of the voting rights, indicating among others its address and the
Effective Date (Section 21 para. 1 German Securities Trading Act
(Wertpapierhandelsgesetz).
c) The Seller and the Purchaser will secure that the Company publishes
the notification made in accordance with lit. a) and b) above
immediately, at the latest within 9 (nine) calendar days of its
receipt, in the German language in [illegible] Party shall be
identified in the announcement by name or business name and the state
of residence or the registered office (Section 25 para. 1 German
Securities Trading Act (Wertpapierhandelsgesetz)).
3. The Seller and Cordiant shall promptly provide to the Purchaser, upon the
Purchaser's written request, all information and co-operation as may be
reasonably requested by the Purchaser in order to prepare the documentation
necessary in the context of the takeover offer (mandatory or voluntary) for
the remaining minority shareholdings in the Company pursuant to the
provisions of the German Securities Acquisition and Takeover Act
(Wertpapierubernahmegesetz). The Seller irrevocably undertakes not to
accept such takeover offer.
Section 9
Mediation/Arbitration
1. The Parties undertake to attempt a good faith compromise prior to
commencing arbitration proceedings. Upon request of a Party a mediator can
be appointed by mutual agreement who will work with the Parties towards an
amicable settlement. The mediator who preferably shall have obtained the
qualification to serve as a judge under German law or shall be similarly
qualified will determine the course of the mediation proceedings. Each
Party is entitled to end the mediation proceedings at any time and commence
arbitration proceedings. The Parties will negotiate the costs of the
mediator with the mediator. The costs of the mediation proceedings will be
divided equally between the Parties, whereas each Party shall bear its own
expenses.
2. Any dispute arising out of or in connection with this Agreement shall be
finally settled by arbitrators in accordance with the arbitration rules of
the German Institution of Arbitration e.V. (Deutsche Institution fuer
Schledsgerichtsbarkeit e.V.)
-19-
without recourse to the ordinary courts of law.
3. Before the arbitration tribunal renders its decision, the persons involved
are entitled to be heard. The holding of the arbitration tribunal's
decision shall be rendered in writing.
4. Sections 91 seq. of the German Civil Procedure Rules (ZPO) apply
correspondingly to the costs in connection with arbitration proceedings.
The competent arbitrator will also decide the allocation of costs.
5. Arbitration proceedings will be held in Berlin, the language will be
English.
Section 10
Costs
Unless this Agreement provides otherwise, each Party shall bear its own costs in
connection with the preparation, execution and implementation of this Agreement,
including attorneys', tax accountants', certified auditors' fees as well as fees
for investment banks and any other advisory fees as well as any costs in
connection with any necessary powers of attorney. Cordiant confirms it has
agreed separately with the Management Team to pay EUR 85,000 of costs incurred
by the Group in relation to the transaction the subject of this Agreement (the
"Transaction"). Cordiant confirms that no other costs relating to the
Transaction will be charged to any member of the Group.
Section 11
Non-solicitation Clause
1. Cordiant shall not, and shall procure that its subsidiaries in the meaning
of Section 15 et seq. of the German Stock Corporation Act shall not,
solicit for employment any member of senior management of the Group for a
period of two years following the Closing Date, other than by means of a
recruitment advert in the trade or other press that is not directed
specifically at such persons.
2. The Purchaser, Electra Europe and the Funds shall not, and shall procure
that its subsidiaries in the meaning of Section 15 et seq. of the German
Stock Corporation Act shall not, solicit for employment any member of
senior management of Cordiant who has been involved in any way with either
the Group or the sale and transfer
-20-
hereunder for a period of two years following the Closing Date, other than
by means of a recruitment advert in the trade or other press that is not
directed specifically at such persons.
Section 12
Assumption of Obligations under Lease
The Purchaser shall [illegible] Cordiant's obligations under the Lease
Agreement dated 20 January 2000 between Scholz & Friends London Limited,
Clerkenwell Holdings Limited, and Cordiant (the "Lease") with effect from
the Closing Date. In the event Clerkenwell Holdings Limited does not
consent to such assumption of obligations, or otherwise refuses to release
Cordiant from the guarantee given under the Lease, the Purchaser shall
indemnify, or shall procure that the Company indemnifies, Cordiant from and
against all and any liability under the Lease arising in respect of periods
after the Closing Date. In the event that Cordiant makes payments to
Clerkenwell Holdings Limited under the Lease, the Purchaser shall
reimburse, or shall procure that the Company reimburses, these payments to
Cordiant.
Section 13
Cordiant Procurance Obligations
1. The Purchaser acknowledges that Network Atlas GmbH ("Atlas") does not have
any liabilities to any member of the Group other than as disclosed on
Schedule 13.1 (plus interest from the date of such Schedule) and to the
extent any other liabilities exist, shall procure that they are waived.
Cordiant confirms that no expenses incurred by Atlas in respect of Peter
Schoning will be recharged to any member of the Group, notwithstanding any
contract or agreement in existence to the contrary.
2. Cordiant will procure that Atlas sells its shareholding in United Visions
TV & Film, Productions GmbH ("UVTV & Film") to the Company (or as the
Company shall direct) for the sum of EURO 1, as soon as reasonably
practicable following the Closing Date.
3. Cordiant and the Purchaser will procure that the current dispute between
Scholz & Friends London Ltd and Healthworld UK Limited concerning the
breach of a
-21-
restrictive covenant shall be settled and that neither party shall have any
claim or liability against the other in respect of the same.
4. Subject to any liability specifically imposed by this Agreement, (i)
Cordiant will procure that all members of the Group are released from any
liability (whether actual, potential or contingent) in respect of any
indebtedness or liabilities of any member of the Cordiant Group ("Cordiant
Indebtedness"); and (ii) the Purchaser shall procure that all members of
the Cordiant Group are released from any liability (whether actual,
potential or contingent) in respect of any indebtedness or liabilities of
any member of the Group.
5. Cordiant undertakes to the Purchaser that the only liabilities of which it
is aware as at the Signing Date of any member of the Group in respect of
any Cordiant Indebtedness is as set out on Schedule 13.5.
Section 14
Miscellaneous
1. This Agreement supersedes and replaces any prior written or oral agreements
among the Seller and the Purchaser regarding its subject matter.
2. Should any provision of this Agreement be ineffective or not workable or
should this Agreement be incomplete, the effectiveness of this Agreement
shall remain unaffected. In such event the ineffective/unworkable provision
shall be deemed to be replaced by an effective and workable provision which
comes as close as possible to the economic purpose of the ineffective or
unworkable provision. The same applies should this Agreement be incomplete.
3. Modifications and amendments of this Agreement shall be made in writing
unless law requires a stricter form, especially notarisation. The
requirement of written form for amendments may only be waived in writing.
4. This Agreement shall be governed by the laws of the Federal Republic of
Germany.
5. All Exhibits and Schedules are part of this Agreement.
6. The Parties shall treat this Agreement confidentially unless agreed
otherwise in this Agreement or required by applicable law. Any disclosure
to third parties with regard to the sale and purchase of the Shares, in
particular any press releases and disclosure of information to the media,
shall require the prior written approval of
-22-
Cordiant.
- 23 -
Exhibits, Schedules and Appendices
Exhibit A Group Structure Chart
Exhibit B Management Protocol
Exhibit C Euro Loan Facility Agreement
Exhibit D GBP Term Loan Agreement
Schedule 2 Option Waiver Agreements
Schedule 4.4 Additional Consideration Comparatives
Schedule 13.1 Atlas Indebtedness to Scholz & Friends
Schedule 13.5 Cordiant Indebtedness
-24-
On behalf of
Baumwall "7" Einhundertachtundachtzlgste Venualtungsgesellschaft mbH;
/s/ [illegible]
- --------------------------------------
Name:
On behalf of
Electra European Fund (LP)
/s/ M. Wiedenfels
- --------------------------------------
Name: M. Wiedenfels
On behalf of
Bates Deutschland Holding GmbH;
/s/ RJ Humphries
- --------------------------------------
Name: RJ Humphries
On behalf of
Cordiant Communications Group plc
/s/ A. Boland
- --------------------------------------
Name: A. Boland
SCHEDULE 4.4
EBITA Calculation Schedule SCHOLZ & FRIENDS AG
I. Comparative Income Statement for the year ended 31 December 2003
(IAS-Figures)
2003 2002
TEUR TEUR
1. Revenue 68,973
2. Changes in work in progress -202
3. Other operating income 4,078
4. Cost of sales -11,753
[illegible]
6. Depreciation and amortisation expense -16,128
7. Other operating expenses -19,381
8. Income from investments 0
9. Income from associated companies 60
10. Other interest and similar income 336
11. Interest and similar expenses -1,096
----------- -----------
12. Result from ordinary operations 0 -10,416
----------- -----------
13. Income taxes - actual 311
14. Income taxes - deferred -677
15. Other taxes -389
16. Minority interest -44
----------- -----------
17. Net result for the period 0 -11,215
=========== ===========
II. Calculation of the key financial figure EBITA
Result from ordinary operations (as shown in the income statement) 0 -10,416
Exceptional one-off Items (1) 0 0
----------- -----------
Result from ordinary operations after exceptional items 0 -10,418
plus Interest and similar expenses (as shown in the income statement) 0 1,095
less Other interest and similar income (as shown in the income statement) 0 -336
----------- -----------
EBIT SCHOLZ & FRIENDS AG 0 -9,656
plus Goodwill amortisation (as shown in the notes) 12,407
----------- -----------
EBITA SCHOLZ & FRIENDS AG 0 2,751
----------- -----------
(1) Exceptional one-off items as defined in the definition of EBITA in the
Share Purchase Agreement attached hereto.
(2) If the acquisition of Couch Potatoes Fernsehproduktions GmbH will not be
closed in 2003:
- the reference value of the EBITA for 2003 of TEUR 6,500 should be
adjusted by the prior year EBITA of Couch Potatoes and, hence, amounts
to TEUR 3,700.
- the reference value for the Revenue for 2003 of TEUR 70,000 should be
adjusted by the prior year Revenue of Couch Potatoes and, hence,
amounts to TEUR 81,400 (70.0-13.9+5.3)
SCHEDULE 4.4 (continued)
EBITA Calculation Schedule SCHOLZ & FRIENDS AG
I. Reconciliation of IAS Income Statement to Cordiant/UK GAPP
TARGET (2)
2003 2003 2002
TEUR TEUR TEUR
-------- ---------- --------
Revenue according to IAS Income Statement 0.0 89.0
-------- ---------- --------
Prior Year Pro-Forma adjustment Net sales deepblue networks AG - 4.0
Prior Year Pro-Forma adjustment Net sales Couch Potatoes Fernsehproduktions GmbH - 13.9
Net balance of direct costs against revenue Couch Potatoes Fernsehproduktions GmbH
(accounts [illegible]) -5.3
Net balance of direct costs against revenue UVE package (account [illegible] excl. account 5900) -5.3
Net balance of direct costs against revenue S&F Berlin package ([illegible]G sales S&F
Agenda/Appel [illegible]) -0.6
Net balance of direct costs against revenue S&F Hamburg package ([illegible]G sales S&F
Hamburg/deepblue regarding [illegible]) -1.0
Non-consolidation of [illegible] GmbH as per April 2002 -0.7
[illegible] revenue: different exchange rates (S&F International) - -0.2
-------- ---------- --------
[illegible]
Revenue according to Cordiant/UK GAAP Income Statement (FY 2002: based on [illegible]) 0.0 70.0 74.4
-------- ---------- --------
II. Calculation of the key financial figure EBITA
-------- ---------- --------
EBITA according to IAS Income Statement 0.0 2.8
-------- ---------- --------
Prior Year Pro-Forma adjustment; EBITA deepblue networks AG 0.2
Prior Year Pro-Forma adjustment: EBITA Couch Potatoes Fernsehproduktions GmbH 2.8
Non-consolidation of [illegible] GmbH as per April 2002 -0.1
[illegible] 2002 severance costs, [illegible] in IM 0.5
Vacant property provision S&F London, included in IAS but not included in IM 1.2
Reclassification tax accrual S&F Berlin -0.4
Bonus accrual according to UK GAAP higher by EUR 101k (S&F Neumark) -0.1
Profit from sales of 30% S&F Madrid not under UK GAAP but under IAS (S&F Group) -0.2
Income from associates (included in EBITA according to IAS) -0.1
Reverse of accruals for holiday pay shown under IAS but not in UK GAAP -0.1
-------- ----------- -----------
EBITA according to Cordiant/UK GAAP Income Statement (FY 2002: based on UBS IM) 0.0 [illegible] [illegible]
-------- ----------- -----------
(2) If the acquisition of Couch Potatoes Fernsehproduktions GmbH will not be
closed in 2003:
- the reference value of the EBITA for 2003 of TEUR 8,500 should be
adjusted by the prior year EBITA of
Termination Agreement
between
BATES Deutschland Holding GmbH
Hanauer LandstraBe 287-289
60314 Frankfurt
(referred to as "BATES")
and
Mr. Christian Tiedemann
Chausseestrasse 8/E
10115 Berlin
(referred to as the "Waiving Party")
Preamble
The parties to this agreement (referred to as the "Termination Agreement")
entered into an option agreement on 20 December 2001 (referred to as the "Option
Agreement") according to which the Waiving Party was granted an option to
purchase 214,599 fractional shares of SCHOLZ & FRIENDS AG (referred to as "S&F
AG") from BATES.
The right to exercise these options commenced on 1 January 2002 and should end
on 31 December 2011.
It is intended that BATES sells its entire shareholding in S&F AG in the context
of a management buy-out transaction.
Accordingly, BATES will no longer be in a position to fulfill its obligations
under the Option Agreement in the event that the Waiving Party would exercise
the option to purchase shares.
Therefore the parties herewith agree on the following termination of the Option
Agreement:
1. Termination
The Option Agreement shall be terminated with immediate effect. However,
condition precedent for the termination of the Option Agreement is the
conclusion and effectiveness of the share purchase agreement between by
which the management buy-out transaction is executed. "Effectiveness" shall
mean the effective and valid transfer of the shares ("dinglicher Obergang")
BATES to Baumwal "7" Einhundertachrundachtzigste Verwaltungsgesellschaft
mbH.
For the avoidance of doubt, termination means that the parties herewith
waive all right and obligations as agreed in the Option Agreement in
particular, but not limited to the option granted to the Waiving Party to
purchase 214,599 fractional shares of S&F AG from BATES.
2. Costs
The parties do not expect any costs, taxes or other expenses to be caused
by the termination. If, however, costs, taxes or other expenses arise, each
party will bear its own costs.
3. Final provisions
Any changes and supplements to this Termination Agreement, including a
waiver to this written-form requirement, have to be made in writing.
2
Should any provisions of this Termination Agreement be held or become
invalid, this shall not affect the validity of the remaining provisions
hereof. The invalid provision shall be replaced by a valid provision coming
as close as possible to the economic purpose pursued by the parties. The
same shall apply for any loophole of this Termination Agreement.
This Termination Agreement is governed by the laws of the Federal Republic
of Germany. Place of performance and place of jurisdiction shall be Berlin.
s/ Christian Tiedemann
- --------------------------------- -------------------------
BATES Deutschland Holding GmbH Christian Tiedemann
3
Termination Agreement
between
BATES Deutschland Holding GmbH
Hanauer LandstraBe 287-289
60314 Frankfurt
(referred to as "BATES")
and
Mr. Peter Schoning
Isestr. 125
20149 Hamburg
(referred to as the "Waiving Party")
Preamble
The parties to this agreement (referred to as the "Termination Agreement")
entered into an option agreement on 20 December 2001 (referred to as the "Option
Agreement") according to which the Waiving Party was granted an option to
purchase 214,599 fractional of SCHOLZ & FRIENDS AG (referred to as "S&F AG")
from BATES.
The right to exercise these options commenced on 1 January 2002 and should end
on 31 December 2011.
[illegible] in S&F AG in the context of a management buy-out transaction.
Accordingly, BATES will no longer be in a position to fulfil it obligations
under the Option Agreement in the event that the Waiving Party would exercise
the option to purchase shares.
Therefore the parties herewith agree on the following termination of the Option
Agreement:
1. Termination
The Option Agreement shall be terminated with immediate effect. However,
condition precedent for the termination of the Option Agreement is the
conclusion and effectiveness of the share purchase agreement between by
which the management buy-out transaction is executed. "Effectiveness" shall
mean the effective and valid transfer of the shares ("dinglicher Ubergang")
BATES to Baumwall"7" Einhunderrachtundachtzigste Verwaltungsgesellschaft
mbH.
For the avoidance of doubt, termination means that the parties herewith
waive all rights and obligations as agreed the Option Agreement in
particular, but not limited to the option granted to the Waiving Party to
purchase 214,599 fractional shares of S&F AG from BATES.
2. Costs
The parties do not expect any costs, taxes or other expenses to be caused
by the termination. If, however, costs, taxes or other expenses arise, each
party will bear its own costs.
3. Final provisions
Any changes and supplements to this Termination Agreement, including a
waiver to this written-form requirement, have to be made in writing.
2
Should any provision of this Termination Agreement be held or become
invalid, this shall not effect the validity of the remaining provisions
hereof. The invalid provision shall be replaced by a valid provision coming
as close as possible to the economic purpose pursued by the parties. The
same shall apply for any loophole of this Termination Agreement.
This Termination Agreement is governed by the laws of the Federal Republic
of Germany. Place of performance and place of jurisdiction shall be Berlin.
Berlin, 06, June 2003
/s/ Peter Martin Schoning
- --------------------------------- -------------------------
BATES Deutschland Holding GmbH Peter Martin Schoning
3
DATED [illegible] June 2001
Exhibit C
SCHOLZ & FRIENDS GROUP GMBH
AS BORROWER
AS LENDER
--------------------------------------
LOAN AGREEMENT
--------------------------------------
THIS AGREEMENT is made on 1st June 2001
BETWEEN
(1) SCHOLZ & FRIENDS Group Gmbh, & German limited liability company registered
in the Commercial Register of the Local Court of Hamburg under No. HRB
27884
(the "Borrower"); and
(2) Cordiant Holdings GmbH, a German limited liability company registered in
Germany (the "Lender"),
IT IS AGREED as follows:
1. GRANT OF THE FACILITY
The Lender has granted to the Borrower a loan facility in an aggregate
amount of EURO 6,000,000.00 (in words: Euro six million).
2. REPAYMENT
The Borrower shall repay this loan facility in yearly installments
amounting to EURO 2,000,000.00 (in words: EURO two million) each. The
instalments are due on October 1 of each year, starting on October 1, 2001
if the merger between NewCo AG and United Visions Entertainment AG has then
already been registered in the relevant Commercial Registers of both
companies. The schedlule of repayment is for the principal amount on the
existing loan of EURO 6,000,000.00 and does not include intercompany
trading, recharges or dividend payments which have to be paid in addition
to the instalment amount above.
Interim cash advances paid by the borrower to the lender will be used as
temporary partial repayment of the outstanding principle and will be
returned to the borrower provided that the borrower repays the facility as
detailed above.
For the avoidance of doubt, all other sums not covered by this Agreement or
any other specific loan agreement owing from the Borrower to the Lender are
repayable on demand.
3. PAYMENT AND CALCULATION OF INTEREST
3.1 Payment of Interest
The Borrower shall pay interest at a rate of 3 months BURIBOR plus a margin
of 2%. Interest should be paid quarterly within 14 days at the invoice
date. Interest will be calculated on the relevant basis as set out in
Clause 3.2.
3.2 Calculation of interest
The rate of interest will be calculated quarterly for the quarter ended 31
March, 30 June, 30 September and 31 December each year on a 360 day basis.
4. PAYMENT TO THE LENDER
On each date on which this Agreement requires an amount to be paid by the
Borrower, the Borrower shall make the same available to the Lender for
value on the due date at such time and in such funds and to such account
with such bank as the Lender shall specify from time to time.
5. No Set-off
All payments required to be made by the Borrower hereunder be calculated
without reference to any set-off counterclaim and shall be made free and
clear of and without any deduction for or on account of any set-off or
counterclaim.
6. Business Days
6.1 Any payment which is due to be made on a day that is not a Business
Day shall be made on the next Business Day in the same calendar month
(if there is one) or the preceding Business Day (if there is not).
6.2 During any extension of the due date for payment of any principal
under this Agreement interest is payable on the principal at the rate
payable on the original due date.
7. ASSIGNMENT AND TRANSFERS
7.1 Binding Agreement
This Agreement shall be binding upon and [illegible] to the benefit of each
party hereto and its or any subsequent successors and transferees.
7.2 No Assignments and Transfers by the Borrower
The Borrower shall not be entitled to assign or transfer all or any of its
rights, benefits and obligations hereunder.
7.3 Assignments and Transfers by the Lender
The Lender may, at any time, assign all or any of its rights and benefits
under this Agreement or transfer all or any of its rights, benefits and
obligations under this Agreement to any of its subsidiaries.
8. CALCULATIONS AND EVIDENCE OF DEBT
8.1 Basis of Accrual
Interest shall accrue from day to day and shall be calculated on the basis
of a year of 360 days or, in any case where market practice differs, in
accordance with market practice and the actual number of days elapsed.
8.2 Evidence of Debt
The Lender shall maintain in accordance with its usual practice accounts
evidencing the amounts owing to it hereunder.
8.3 Prima Facie Evidence
In any legal action or proceeding arising out of or in connection with this
Agreement, the entries made in the accounts maintained pursuant to Clause
[illegible] 8.2 (Evidence of Debt) shall (save for manifest error) be prima
facie evidence of the existence and amounts of the specified obligations of
the Borrower.
9. [illegible] Invalidity
If, at any time, any provision hereof is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither the
legality, validity or enforceability of the remaining provisions hereof nor
the legality, validity or enforceability of such provision under the law of
any other jurisdiction shall in any way be affected or impaired thereby.
10. NOTICES
10.1 Communication in Writing
Each communication to be made hereunder shall be made in writing and,
unless [illegible].
10.2 Delivery
Any communication or document to be made or delivered by one person to
another pursuant to this Agreement shall:
10.2.1 if by way of fax (unless that other person has by fifteen days'
notice specified another number) be made to such other person to
the fax number identified with its signature below and shall be
deemed to have been received when transmission has been
completed; and
10.2.2 if by way of letter (unless that other person has be fifteen
days' notice specified another address) be delivered to that
other person at the address identified with its signature below
and shall be deemed to have been delivered when left at that
address or, as the case may be, ten days after being deposited in
the post postage prepaid in an envelope addressed to its at that
address.
11. COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument.
12. GOVERNING LAW AND JURISDICTION
This Agreement is governed by, and shall be construed in accordance with,
German law.
12.1 The courts of Germany have exclusive jurisdiction to hear and decide any
action or proceedings which may rise in connection with this Agreement
("Proceedings") and, for this purpose, each party irrevocably submits to
the jurisdiction of the courts Germany.
12.2 Process by which any Proceedings are begun in Germany may be served on the
Borrower by being delivered in accordance with Clause 10 (Notices). Nothing
contained in Clause 10 (Notices) affects the right to serve process in any
other manner permitted by law.
12.3 This Agreement is drawn up in the English language. If this Agreement is
translated into another language, the English language text is to prevail.
This Agreement has been entered into on the date stated at the beginning of this
Agreement.
SIGNATURES
/s/ [illegible]
- -------------------------------
The Borrower
SCHOLZ & FRIENDS Group GmbH
- -------------------------------
The Lender
Cordiant Holdings GmbH
AMENDMENT AGREEMENT
Between
(1) SCHOLZ & FRIENDS Group GmbH. a German limited liability company registered
in the Commercial Register of the Local Court of Hamburg under No. HRB
27884
-hereinafter the "Borrower"-
and
(2) Cordiant Holdings GmbH, a German limited liability company registered in
the Commercial Register of the Local Court of Frankfurt Am Main under No.
HRB 37900
-hereinafter the "Lender"-
it is hereby agreed as follows:
On 1st June 2001 the parties have entered into an agreement pursuant to which
the Lender has granted to the Borrower a loan facility in an aggregate amount of
(euro) 6,000,000.00 (the "Loan Agreement"). The current balance of the loan
facility is (euro) 2,878,617.28 plus accrued interest. The parties now wish to
amend the payment schedule of the loan.
1. The first paragraph of Section 2 of the Loan Agreement is hereby amended to
the effect that the outstanding amount of the loan facility of currently
(euro) 2,878,617.28 shall be repaid in two installments. The first
installment in the amount of (euro) 818,617.28 shall be due and payable on
31st January 2005. The second installment the amount of (euro) 2,050,000.00
shall be due and payable on 30th June 2005.
2. All other provisions of the Loan Agreement shall remain in full force and
effect and shall not be effected hereby.
Hamburg, 09, April 2003 Frankfurt 14, Mar 2003
/s/ Christian Tiedemann /s/ [illegible]
- ------------------------------ -------------------------
Scholz & Friends Group GmbH Cordiant Holdings GmbH
Christian Tiedemann
DATE JUNE 2003
Exhibit D
SCHOLZ & FRIENDS LONDON LIMITED
BATES UK LIMITED
SCHOLZ & FRIENDS GROUP GmbH
TERM LOAN AGREEMENT
Macfarlanes
10 Norwich Street
London EC4A 1BD
CZL/2187896.2
4 June 2003
Draft 2
TERM LOAN AGREEMENT
DATE June 2003
PARTIES
1 SCHOLZ & FRIENDS LONDON LIMITED (Registered No. 3398022) a
limited liability company with its registered office at 121-141
Westbourne Terrace, London W2 6JR ("the Borrower");
2 BATES UK LIMITED (Registered No. 913184) a limited liability
company with its registered office at 721-141 Westbourne Terrace,
London W2 6JR ("the Lender"); and
3 SCHOLZ & FRIENDS GROUP GmbH a German company registered in the
Commercial Register of [the Amstgericht Berlin Charlottenburg]
under No. [*] with its office at [Inder Lokfabrik,
Chausseestrasse 8/E, 10115 Berlin] ("the Guarantor").
IT IS AGREED as follows:
1 Grant of Term Loan
Subject to the terms of this Agreement, the Lender hereby grants
to the Borrower a term loan ("the Term Loan") in an aggregate
maximum amount, subject to Clause 5.2, of (pound)3,250,000 ("the
Limit").
2 Conditions Precedent
This Agreement shall become effective ("the Effective Time") upon
the Lender confirming that it has received, or having waived the
requirement to receive, the following documents and evidence in
form and substance satisfactory to it:
2.1 a certified copy of a board resolution of the Borrower
authorising a named person to sign this Agreement and any
documents to be delivered pursuant hereto and approving the
execution, delivery and performance by the Borrower of this
Agreement; and
2.2 an excerpt from the commercial register ("Handelsregisterauszug")
with regard to the Guarantor and (unless the persons authorized
to represent the Guarantor pursuant to such excerpt from the
commercial register are signing on behalf of the Guarantor) a
notarized power of attorney of the Guarantor, each dated no
earlier than 10 days prior to receipt by the Lender authorizing a
named person to sign this Agreement and any documents to be
delivered pursuant hereto.
3 Utilisation of the Term Loan
3.1 At the Effective Time, the Borrower shall be deemed to have drawn
an advance ("the Advance") under the Term Loan, which shall
forthwith be applied to refinance such amount ("the Refinance
Amount") of principal and interest owed to the Lender by the
Borrower under the intercompany overdraft facility agreement
2
(the "Overdraft Facility Agreement") dated 9 April 2003 and made
between the Borrower, the Lender and Scholz & Friends Group GmbH.
3.2 Upon the refinancing referred to in Clause 3.1, the facility
granted under the Overdraft Facility Agreement shall cease to be
available to the Borrower and any amounts outstanding thereunder
shall, notwithstanding the terms of the Overdraft Facility
Agreement, be immediately due and payable. The Overdraft Facility
Agreement shall be terminated upon repayment in full of all
amounts outstanding thereunder.
3.3 The Term Loan shall only be (i) utilised for the purpose of
refinancing the Refinancing Amount and (ii) drawn only by way of
the Advance.
3.4 The amount of the Advance shall be determined by the Lender (in
its discretion) as the amount necessary to refinance the
Refinance Amount, provided that under no circumstances shall the
Advance be greater than the Limit. The Lender shall notify the
Borrower of the amount of the Advance following its
determination.
3.5 The Borrower and the Guarantor hereby irrevocably authorise the
Lender to apply the amount of the Advance to the credit of the
Account and the repayment of the Refinance Amount.
4 Interest
4.1 The rate of interest payable by the Borrower on the Loan shall be
2% per annum over the base rate from time to time of HSBC Bank
plc.
4.2 Interest shall accrue on a daily basis on the Loan. Interest
shall be paid by the Borrower to the Lender on the last Business
Day of each month (or, if later, the date falling 14 days after
written demand therefor) in respect of interest accrued during
that month.
5 Repayment, Prepayment and Reduction
5.1 The Borrower shall repay all amounts of principal and interest
outstanding under the Term Loan in full on or before the earlier
of (i) the date on which the Purchaser has acquired all the
shares of the capital of the Borrower or otherwise gained access
to the cash flow of the Borrower by way of an agreement in the
meaning of Section 291 para. 1 of the German Stock Corporation
Act or an integration of the Borrower in the meaning of Section
319 para. 1 of the German Stock Corporation Act and (ii) 31
December 2003.
5.2 Notwithstanding the provisions of Clause 5.1, the Borrower shall
repay such amounts of the Loan in order to ensure that the Loan
shall not, on and from each of the dates set out in the table
below, exceed the amount set out opposite each such date; so that
the amount of the Term Loan and the Limit are each reduced to
such amounts on such dates and cancelled in full on the last of
such dates:
Date Limit
31 July 2003 (pound)2,845,000
31 October 2003 (pound)1,699,000
31 December 2003 nil
3
5.3 The Borrower shall ensure that the Loan does not, at any time,
exceed the Limit. In the event that the Loan is in excess of the
Limit, the Borrower shall forthwith pay such excess amount to the
Lender.
5.4 Any amounts repaid or prepaid shall not be redrawn.
6 Representations and Warranties
Each of the Borrower and the Guarantor represents and warrants to
the Lender that:
6.1 [illegible] incorporation and has full power to own its assets
and carry on business wherever it owns assets or carries on
business;
6.2 no event such as is specified in Clause 10 has occurred and
remains unremedied;
6.3 it has power to enter into and perform this Agreement and has
taken all necessary corporate action to authorise the execution,
delivery and performance of this Agreement; and
6.4 the execution, delivery and performance of this Agreement will
not contravene any law or regulation to which it is subject or
any provision of its constitutional documents and all
governmental or other consents requisite for such execution,
delivery and performance are in full force and effect.
7 Taxes
All payments to be made by the Borrower and the Guarantor
hereunder shall be made free and clear of any set-off,
counterclaim, deduction or withholding. If the Borrower or the
Guarantor is required by law to make any deduction or withholding
on account of tax or otherwise from any payment, the sum due from
it in respect of such payment shall be increased to the extent
necessary to ensure that, after the making of such deduction or
withholding, the Lender receives a net sum equal to the sum which
it would have received had no deduction or withholding been
required to be made.
8 Change in Circumstances
If by reason of the introduction of or any change in or in the
interpretation of any law or regulation the Lender is liable to
pay any tax (other than tax on the Lender's overall net income),
levy, impost, duty, charge, expense or fee imposed on or
calculated by reference to any sum received or receivable by it
under this Agreement, the Borrower will on demand indemnify the
Lender against such liability. Any determination by the Lender of
the amount of any liability shall be conclusive and binding on
the Borrower and the Guarantor for all purposes.
9 Guarantee
9.1 The Guarantor irrevocably and unconditionally guarantees to
the Lender the due and punctual observance and performance of all
the terms and conditions and covenants on the part of the
Borrower contained in this Agreement.
4
9.2 The Guarantor agrees to pay from time to time on demand by the
Lender any and every sum or sums of money which the Borrower is
at any time liable to pay to the Lender under or pursuant to this
Agreement and which has become due and payable but has not been
paid at the time such demand is made.
9.3 The Guarantor indemnifies the Lender on demand against any cost,
loss or liability suffered by the Lender if any obligation
guaranteed by it is or becomes unenforceable, invalid or illegal.
The amount of the cost, loss or liability shall be equal to the
amount which the Lender would otherwise have been entitled to
recover.
9.4 This guarantee is a continuing guarantee and will extend to the
ultimate balance of [illegible] payable by the [illegible],
regardless of any [illegible] payment or discharge in whole or in
part. The obligations of the Guarantor hereunder will not be
affected by an act, omission, matter or thing which, but for this
Clause, would reduce, release or prejudice any of its obligations
hereunder (without limitation and whether or not known to it or
the Lender) including:
9.4.1 any time, waiver or consent granted to, or composition with, the
Borrower or any other person;
9.4.2 the release of the Borrower under the terms of any composition or
arrangement with any creditor thereof;
9.4.3 any incapacity or lack of power, authority or legal personality
of or dissolution or change in the members or status of any
person;
9.4.4 any amendment (however fundamental) or replacement of this
Agreement;
9.4.5 any unenforceability, illegality or invalidity of any obligation
of any person hereunder; or
9.4.6 any insolvency or similar proceedings.
9.5 Until all amounts which may be or become payable by the Borrower
hereunder have been irrevocably paid in full, the Guarantor will
not exercise any rights which it may have by reason of
performance by it of its obligations hereunder to be indemnified
by the Borrower or to take the benefit (in whole or in part and
whether by way of subrogation or otherwise) of any rights of the
Lender.
10 Events of Default
If any of the following events occurs and so long as it remains
unremedied, the Lender may be notice to the Borrower declare the
Loan, together with accrued interest, to be immediately due and
repayable, whereupon such amounts shall be immediately repaid and
the Term Loan cancelled: that is to say if:
10.1 the Borrower fails to pay any sum due hereunder on the due date;
or
10.2 any representation or warranty made by the Borrower or the
Guarantor in or in connection with this Agreement or any
certificate, statement or document delivered or made by the
Borrower or the Guarantor pursuant hereto proves to have been
incorrect or inaccurate when made; or
5
10.3 any indebtedness of the Borrower or the Guarantor for borrowed
money becomes due and payable, or capable of being declared due
and payable, prior to its specified maturity; or the Borrower or
the Guarantor fails to repay any borrowed money when due or to
pay any sum due to be paid by it under any guarantee; or
10.4 the Borrower or the Guarantor is unable or fails or admits its
inability to pay its debts as they fall due or makes a general
assignment for the benefit of, or a composition with, its
creditors; or
10.5 a resolution is passed or a petition is presented in relation to
the Borrower or the [illegible] of an administration order in
respect of it; or
10.6 an encumbrancer takes possessions or a liquidator, receiver,
administrative receiver or similar officer is appointed over all
or any part of the undertaking or assets of the Borrower or the
Guarantor or any liquidation, bankruptcy, insolvency,
re-organisation or similar proceedings are instituted by or
against the Borrower or the Guarantor in any jurisdiction,
including, in the case of the Guarantor, a dismissal of a
petition in bankruptcy for lack of assets (Abweisung mangels
Masse); or
10.7 (a) the Purchaser ceases to own the legal and beneficial title to
the Shares (as defined in the Share Purchase Agreement) or (b)
the Borrower ceases to be a wholly owned subsidiary of the
Guarantor.
11 Indemnity
The Borrower shall indemnify the Lender against any damage,
claim, cost, loss or expense incurred by the Lender as a result
of default by the Borrower in the due payment of any sum due
under this Agreement or any other breach by the Borrower of any
of the provisions of this Agreement.
12 Benefit of Agreement
12.1 This Agreement shall bind and [illegible]ure to the benefit of
each party hereto and their respective successors and assigns but
neither the Borrower nor the Guarantor may assign or transfer its
rights or obligations hereunder without the prior written consent
of the Lender.
12.2 The Lender may assign or transfer all or any of its rights and/or
obligations under this Agreement to any of its subsidiaries (and
for this purpose may disclose to a potential assignee or
transferee such information about the Borrower and the Guarantor
and this Agreement as it thinks fit).
13 Set-off
The Lender may set-off any matured obligation due from the
Borrower or the Guarantor hereunder against any matured
obligation owed by the Lender to the Borrower or, as the case may
be, the Guarantor. If the obligations are in different
currencies, the Lender may convert either obligation at a market
rate of exchange in its usual course of business for the purpose
of the set-off.
6
14 Notices
14.1 Each notice, request, demand or other document to be given or
made hereunder shall be in writing, (i) if by way of letter
(unless that party has by 15 days' notice specified another
address), addressed to the relevant party at the address
identified with its signature below or (ii) if by way of fax
(unless that party has by 15 days' notice specified another
number), be made to such party to the fax number identified with
its signature below.
14.2 Any notice, request, demand or other communications to be given
or made to the Borrower or, as the case may be, the Guarantor
shall be deemed made (i) when [illegible] by facsimile
transmission) or (ii) when left at the address mentioned above or
ten days after posting addressed as required above (if given or
made by letter).
15 Miscellaneous
15.1 "Account" means the bank account in the name of the Borrower held
with HSBC Bank, The Cross, Gloucester, Gloucestershire GL1 2AP,
sort code 40-22-09, account number 01630067.
15.2 "Business day" means a day (other than a Saturday or Sunday) on
which banks generally are open for business in London.
15.3 "Loan" means the aggregate amount outstanding from time to time
under the Term Loan.
15.4 "Purchaser" means Baumwall "7" Einhundertachtundachtzigste
Verwaltungsgeselleschaft mbH.
15.5 "Share Purchase Agreement" means the share sale and purchase
agreement dated on or about the date of this Agreement between,
inter alia, the Lender as seller and the Purchaser.
15.6 "(pound)" and "sterling" denote the lawful currency of the United
Kingdom.
15.7 All payments to be made by the Borrower and the Guarantor
hereunder shall be made in sterling and in same day funds to and
for account of the Lender at such account as it may have
notified.
15.8 All sums falling due hereunder by way of interest shall be
calculated on the basis of a year of 365 days for the actual
number of days elapsed.
15.9 A person who is not a party to this Agreement has no right under
the Contracts (Rights of Third Parties) Act 1999 to enforce or
enjoy the benefit of any term of this Agreement.
16 Evidence of debt
16.1 The Lender shall maintain in accordance with its usual practice
accounts evidencing the amounts owing to it hereunder.
7
16.2 In any legal action or proceeding arising out of or in connection
with this Agreement, the entries made in the accounts maintained
pursuant to Clause 16.1 shall (save for manifest error) be prima
facie evidence of the existence and amounts of the specified
obligations of the Borrower.
17 Partial invalidity
If, at any time, any provisions of this Agreement is or becomes
illegal, invalid or unenforceable in any respect under any law of
any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions nor the legality,
validity or enforceability of such provision under the law of any
other [illegible].
18 Counterparts
This Agreement may be executed in any number of counterparts, and
this has the same effect as if the signatures on the counterparts
were on a single copy of this Agreement.
19 Law and jurisdiction
19.1 This Agreement shall be governed by English law.
19.2 The courts of England shall have exclusive jurisdiction to hear
and decide any action or proceedings which may arise in
connection with this Agreement ("Proceedings") and, for this
purpose, each party irrevocably submits to the jurisdiction of
the courts of England.
19.3 Process by which any Proceedings are begun in England may be
served on the Borrower or, as the case may be, the Guarantor by
being delivered in accordance with Clause 14. Nothing contained
in Clause 14 affects the right to serve process in any other
manner permitted by law.
19.4 Without prejudice to any other mode of service allowed under any
relevant law, the Guarantor:
19.4.1 irrevocably appoints the Borrower as its agent for service of
process in relation to any proceedings before the English courts
in connection herewith (which appointment the Borrower hereby
irrevocably accepts); and
19.4.2 agrees that failure by a process agent to notify it of the
process will not invalidate the proceedings concerned.
20 Waiver
The Lender hereby waives any Event of Default in respect of
clause 10.7 of the Overdraft Facility Agreement which arises as a
result of the transfer of the shares pursuant to the Share
Purchase Agreement.
8
This Agreement has been entered into on the date stated at the beginning of this
Agreement.
________________________________________
For and on behalf of the Borrower )
SCHOLZ & FRIENDS LONDON )
LIMITED )
Address:
--------------------------------
--------------------------------
--------------------------------
Attn: --------------------------------
Fax: --------------------------------
Tel: --------------------------------
________________________________________
For and on behalf of the Lender )
BATES UK LIMITED )
Address:
--------------------------------
--------------------------------
--------------------------------
Attn: --------------------------------
Fax: --------------------------------
Tel: --------------------------------
________________________________________
For and on behalf of the Guarantor )
SCHOLZ & FRIENDS GROUP GmbH )
Address:
--------------------------------
--------------------------------
--------------------------------
Attn: --------------------------------
Fax: --------------------------------
Tel: --------------------------------
9
[letterhead]
[ ] April 2003
Dear Sirs
[Ref.:]
As you are aware Cordiant Communications Group plc ("CCG") and Bates Deutschland
Holding GmbH ("Bates") are currently considering a number of strategic options
relating to the shares of Scholz & Friends AG ("Scholz") held by Bates (the
"Shares") which may result in a sale of the Shares (the "Transaction").
We understand that as part of the Transaction process you, comprising Thomas
Heilmann, Sebastian Turner, and Christian Tiedemann (collectively the
"Management Team"), may wish to explore the possibility of making an offer for
the Shares through a company to be formed by you or on your behalf ("Newco") and
in conjunction with as yet unidentified providers of debt and equity finance
("MBO Financers") (an "MBO", and the proposal, the "MBO Proposal"). Also, as
part of the Transaction process, CCG and its investment bankers, UBS Warburg
("UBS") may identify certain potential purchasers for the Shares ("Potential
Purchasers") other than MBO Financers. Such Potential Purchasers and MBO
Financers are collectively hereinafter referred to as "Investors".
A number of potential conflict issues may arise in the context of the
Transaction and, on behalf of Bates and of CCG, we are writing to you with a
view to ensuring that such issues shall from and after the date of this letter
be managed in accordance with the terms of this letter.
1. Legal and other obligations to Scholz
1.1 As employees employed by Scholz and as directors of Scholz, the members of
the Management Team have a range of statutory, fiduciary and contractual
obligations in respect of Scholz. Amongst other things, these include
obligations:
1.1.1 to act in good faith in the best interests of Scholz and not to
misuse information;
1.1.2 to avoid positions of conflict between your personal interests and
[illegible] employment to your own advantage or otherwise for an
improper purpose; and
1.1.3 to continue to devote your full working-time and working-power to
the discharge of your duties as employees and directors of Scholz.
1.2 The primary duty of the members of the Management Team remains to act in
the best interests of Scholz at all times, and supporting the Transaction
shall not deflect the members of the Management Team from the requirements
of Scholz. The terms of this letter, and any consents granted by CCG under
it, do not vary or lessen the legal and contractual duties that the members
of the Management Team owe as directors and employees.
1.3 In accordance with the statutory duties of each of the members of the
Management Team as representatives of Scholz the members of the Management
Team shall procure with all diligence of a prudent businessman that the
budgets and other financial information prepared in relation to Scholz will
be prepared in good faith and will fairly represent the genuine prospects
for Scholz.
1.4 It is understood that this paragraph 1 does not create any obligation or
liability of the Management Team vis-a-vis CCG, Bates or any third party.
2. Disclosure of Information to Investors
The Management Team, CCG and Bates (individually, a "Party" and
collectively, the "Parties") agree that in the given situation the
Transaction is in the primary interest of CCG and Bates and at the same
time in the best interest of Scholz. Therefore, the Parties will act in
good faith in order to conclude the Transaction as soon as possible and to
protect and respect their individual interests in the Transaction in a
balanced manner. For that purpose the Parties agree upon the
2
following rules of procedure for the process of submitting information on
Scholz to potential investors:
2.1 No Party shall disclose, discuss or enable access to any confidential
information relating to the business or affairs of Scholz to any person
(including, without limitation, Investors, the Management Team, financiers
or equity participants or proposed financiers or proposed equity
participants) except:
2.1.1 to any other Party and its advisers, provided that these advisers
are [illegible] or contractual obligation to maintain
confidentiality with regard to any information communicated;
2.1.2 to Agreed Investors (as defined in paragraph 2.4) and their
advisers, subject to paragraph 2.4 to 2.10;
2.1.3 as part of any process of gathering information required for a data
room relating to the Transaction, provided that only (i) employees
of Scholz and (ii) advisors who are under a statutory or contractual
obligation to maintain confidentiality with regard to information
obtained in the exercise of their professional functions will be
involved in such process;
2.1.4 in the ordinary course of business and where that business does not
relate directly or indirectly to the Transaction, subject to the
provisions of the second sentence of paragraph 3 hereof; or
2.1.5 to the extent that disclosure of information is required by law or
by the rules or regulations of any stock exchange or self-regulatory
body.
2.2 Each member of the Management Team shall, for the duration of the
Transaction process:
2.2.1 report to CCG promptly on material developments within Scholz to the
extent permitted under Sec. 93 para. 1 of the German Stock
Corporation Act (AktG) and Sec. 14 para. 1 no. 2 German Securities
Trade Act (WpHG);
2.2.2 keep CCG regularly informed of progress in relation to the MBO
Proposal by email on a weekly basis as long as such MBO Proposal is
pursued by the Management Team.
3
2.3 For the duration of the Transaction process each member of the Management
Team shall assist CCG to conduct and implement the Transaction in a timely
and lawful manner in accordance with the terms of this letter and any
applicable law or rules or regulations of any stock exchange or
self-regulatory body, including making, to the extent permitted under Sec.
93 para. 1 of the German Stock Corporation Act (AktG) and Sec. 14 para. 1
no. 2 German Securities Trade Act (WphG), timely, full and accurate
disclosure to CCG, to the best of the knowledge and ability of the
respective member of the Management Team, of any matters of which the
respective member of the Management Team is aware to be relevant to CCG or
Scholz in considering, implementing or making a recommendation regarding
the transaction. [illegible] pursuant to Sec. 328 German Civil Code (BGB)
from all necessary external costs relating to the Transaction. It is
understood, that CCG shall not be required to indemnify Scholz for or to
bear any costs that relate to the MBO. Prior to incurring any such costs,
Scholz shall inform CCG of the cost to be incurred and procure CCG's
consent to proceed with the action it proposes to take that will cause it
to incur such costs. It is further understood that prior to the signing of
this letter agreement Scholz has incurred costs relating to the Transaction
that it has informed CCG are in the approximate amount of 85,000 EUR. CCG
shall promptly reimburse Scholz for such costs upon receipt of
documentation supporting such costs.
2.4 CCG and the Management Team hereby authorize UBS Warburg to hand out the
Information Memorandum compiled by UBS Warburg to Agreed Investors as
defined hereafter.
"Agreed Investors" shall mean the Investors listed in Schedule 2.4(a) to
this letter (as approved by the resolution of the management board of
Scholz attached to this letter as Schedule 2.4(b)) that have signed a
confidentiality agreement with UBS or CCG substantially in the form of
Schedule 2.4(c) to this letter pursuant to which Scholz is a third-party
beneficiary in the meaning of or comparable to (depending on applicable
law) Sec. 328 of the German Civil Code (Vertrag zugunsten Dritter) (the
"Confidentiality Agreement"), provided that CCG confirms to Scholz that
such Investor is interested in a possible acquisition of CCG's shareholding
in Scholz and provided CCG confirms to Scholz that under applicable New
York law, Scholz is a third-party beneficiary under the Confidentiality
Agreement entered into by UBS with such Agreed Investor and under New York
law has the same rights to enforce breaches of that agreement by the Agreed
Investor that cause damage to Scholz as if it had been a signatory to such
Confidentiality Agreement. Additions to the list of Investors included
under Schedule 2.4(a) may be agreed between CCG and Scholz from time to
time. A copy of each Confidentiality Agreement will be submitted to Scholz.
With respect to Investors who are MBO Financiers, CCG shall grant
permission for any
4
such MBO Financer to engage in conversations directly with the Management
Team in the event that the Confidentiality Agreement that such MBO Financer
has entered into with either UBS or CCG contains a provision prohibiting
direct conversations between such MBO Financer and the Management Team.
2.5 CCG and the Management Team agree that access to the data room assembled by
the Management Team and to be opened at the offices of Haarmann Hemmelrath
in Berlin (the "Data Room") and to meetings and discussions with the
Management Team will be granted to an Agreed Investor.
2.6 Subject to 2.7 hereof, the Management Team will disclose all further
written or verbal information (in addition to the information contained in
the Information Memorandum and the Data Room) that may be requested by an
Agreed Investor to CCG, provided that CCG confirms to Scholz that such
Investor has submitted an indicative offer to acquire the Shares. CCG shall
pass on this information to the Investors, provided that CCG shall have the
right to decide in its sole discretion to what extent this information
shall be passed on to Investors other than MBO Financers. It is understood
that UBS intends to request Agreed Investors to submit such indicative
offer, if any, within ten weeks from the end of their visit to the data
room. It is understood that the Management Team is entitled to disclose
further written or verbal information to MBO Financers or their advisors
directly provided that the Management Team also discloses such information
to CCG and UBS immediately after such disclosure to such MBO Financer(s) or
their advisors.
2.7 If an Agreed Investor is a competitor of Scholz, the Management Team shall
disclose customer contracts and employment agreements with the members of
the management board and with senior employees ("Special Information") to
such Investor if CCG confirms to Scholz that the Investor and CCG have
agreed on all material terms of a share purchase agreement. CCG shall
indemnify the Management Team from and against all liability to Scholz
incurred as a result of the misuse of Special Information by the respective
Investor in violation of the Confidentiality Agreement, provided that
Scholz shall have asserted and pursued its claim for damages against such
Investor resulting from such misappropriation in every economically and
legally reasonable way. It is understood that Investors that are not
competitors of Scholz will have access to Special Information during the
data room review.
2.8 All information disclosed to Agreed Investors will also be submitted to CCG
and UBS by way of admission to the data room and the ability of CCG and UBS
5
to make copies of any and all documents contained in the data room. In the
event that additional information is requested by Agreed Investors the
provisions of paragraph 2.6 shall apply.
2.9 Any disclosure of confidential information to investors who are not Agreed
Investors, including the content and timing of such disclosure, will in
each case be jointly agreed by CCG and the Management Team. It is
understood that the Parties may independently engage in preliminary talks
with persons potentially interested in acquiring the Shares or in financing
such acquisition, provided that no confidential information regarding
Scholz and the Shares must be disclosed to such persons.
2.10 The members of the Management Team shall not intentionally misinform any
Investor. If any member of the Management Team becomes aware of any
inconsistency in the information it has provided, it must immediately
notify the misinformed party and CCG.
3. Confidentiality
The Parties shall keep all details concerning the Transaction strictly
confidential. This shall not apply to the extent that (i) disclosure of
information is required by law or by the rules or regulations of any stock
exchange or self-regulatory body, such as, without limitation, the UKLA, or
(ii) customers of Scholz have to be informed about the status of the
Transaction in order to protect the relationship to such customer,
provided, however, that CCG is informed of such disclosure immediately
afterwards.
4. No representation
CCG shall not intentionally misinform the members of the Management Team or
any Investor. It is understood that CCG is not obliged to disclose to the
Management Team any purchase prices offered by Investors.
5. Shares of the Management Team
5.1 The members of the Management Team who own shares of Scholz or have
options to acquire shares of Scholz shall not enter into any purchase
and sale agreement or similar contract regarding Scholz shares with
any potential buyer of these shares or its advisers, lenders or other
associated parties, without the prior written consent of CCG, nor
shall members of the
6
Management Team directly or indirectly acquire additional shares of
Scholz, or procure that any third party do so.
5.2 In the event a member of the Management Team breaches his obligation
under Sec. 5.1, he shall be subject to a contractual penalty of EUR
500,000,000 without prejudice to any potential claims for damages,
and, additionally, forfeiting his or her right to participate in
incentivisation arrangements which may be proposed to the Management
Team.
6. Withdrawal
CCG reserves the right to:
6.1 reject any MBO Proposal and/or to not further consider an MBO at any
time; and/or
6.2 withdraw from the Transaction at any time.
The Management Team reserves the right to withdraw from the MBO Proposal at
any time.
7. Other Matters
7.1 References in this letter to the Management Team includes each member
of the Management Team. The obligations of the Management Team in this
letter are joint and several.
7.2 In the event individual provisions of this letter should, in their
entirety or partially, be or become invalid or impracticable the
validity of the remaining provisions of the letter shall be
unaffected. Instead of the invalid or impracticable provision such
reasonable provision shall apply which corresponds as closely as
legally possible to what the Parties - if they had considered the
matter initially in light of such invalidity or impracticability -
would have agreed according to the sense and purpose of this letter.
It is explicitly understood and agreed by the Parties to this letter
that none of the obligations and rights set forth herein shall be in
conflict with the applicable German law, and as a result, a provision
in conflict with German law is void without affecting the validity of
the remainder of this letter.
7.3 The obligations resulting from this letter will end upon the
occurrence of the first of the following events:
7
- at closing of the Transaction,
- in case of a withdrawal of CCG according to paragraph 6.2 or
- on September 30th 2003.
The parties will agree on an extension of the duration of this
agreement, if needed.
7.4 This letter shall be governed by and construed in accordance with
German Law.
If you have any questions or wish to discuss any aspect of this letter, please
do not hesitate to telephone.
Could you please confirm that you understand and accept the terms of this letter
by signing and returning the enclosed duplicate copy.
Yours faithfully
We accept the terms of the above letter
/s/ [illegible]
-----------------------------
/s/ [illegible]
-----------------------------
/s/ [illegible]
-----------------------------
8
Schedule 2.4(a)
Agreed Investors
Havas
Interpublic Group
TBWA
Omnicom
Publicis Groupe SA
Electra Europe (MBO Financer)
This shall in each case include all subsidiaries of the Agreed Investors.
9