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Table of Contents
PAGE
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ARTICLE I INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
1.2 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE II AMOUNT AND TERMS OF CONVERTIBLE LOAN AND PREFERRED INVESTMENT. . . . . . . . 62
2.1 Commitment to Make Convertible Loan . . . . . . . . . . . . . . . . 62
2.2 Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
2.3 Interest; Default Interest . . . . . . . . . . . . . . . . . . . . . 62
2.4 Interest and Principal Payments . . . . . . . . . . . . . . . . . . 62
2.5 Mandatory Prepayment . . . . . . . . . . . . . . . . . . . . . . . . 62
2.6 Prepayment Premium . . . . . . . . . . . . . . . . . . . . . . . . . 63
2.7 Optional Conversion . . . . . . . . . . . . . . . . . . . . . . . . 63
2.8 Company Conversion . . . . . . . . . . . . . . . . . . . . . . . . . 65
2.9 Taxes on Conversion . . . . . . . . . . . . . . . . . . . . . . . . 65
2.10 Ordinary Shares, American Depositary Receipts . . . . . . . . . . . 65
2.11 Gross-Up Protection . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE III CONDITIONS OF OBLIGATIONS OF THE LENDER . . . . . . . . . . . . . . . . . . 66
3.1 Conditions to Lender's Obligations to make the Convertible Loan . . 66
ARTICLE IV REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . 68
4.1 Representations and Warranties of the Company . . . . . . . . . . . 68
4.2 Representations and Warranties of the Lender . . . . . . . . . . . . 73
ARTICLE V AFFIRMATIVE COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . 73
5.1 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
5.2 Accounts and Records . . . . . . . . . . . . . . . . . . . . . . . . 74
5.3 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
5.4 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 74
5.5 Ordinary Shares/AIM . . . . . . . . . . . . . . . . . . . . . . . . 75
5.6 American Depositary Receipts/AMEX . . . . . . . . . . . . . . . . . 75
5.7 Observer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
5.8 Shareholders Meeting . . . . . . . . . . . . . . . . . . . . . . . . 75
5.9 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . 75
5.10 Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
5.11 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE VI NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
6.1 Borrowed Money Indebtedness . . . . . . . . . . . . . . . . . . . . 76
6.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
6.3 Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . 77
6.4 Mergers, Consolidations and Dispositions and Acquisitions of Assets 77
6.5 Redemption, Dividends and Distributions . . . . . . . . . . . . . . 78
6.6 Nature of Business . . . . . . . . . . . . . . . . . . . . . . . . . 78
6.7 Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . 78
6.8 Loans and Investments . . . . . . . . . . . . . . . . . . . . . . . 78
6.9 Organizational Documents . . . . . . . . . . . . . . . . . . . . . . 78
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6.10 Sale/Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . 78
6.11 Issuance of Stock . . . . . . . . . . . . . . . . . . . . . . . . . 78
6.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
6.13 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . 79
6.14 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE VII DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.2 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
7.3 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
7.4 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE VIII INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
8.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 81
8.2 Shareholder Communications . . . . . . . . . . . . . . . . . . . . . 81
8.3 Indemnification Process . . . . . . . . . . . . . . . . . . . . . . 82
ARTICLE IX RESTRICTIONS ON TRANSFER OF CONVERTIBLE DEBENTURE . . . . . . . . . . . . . 82
9.1 Securities Laws Restrictions on Transfer . . . . . . . . . . . . . . 82
9.2 Restrictive Legend . . . . . . . . . . . . . . . . . . . . . . . . . 83
9.3 Transfer to Affiliates . . . . . . . . . . . . . . . . . . . . . . . 83
9.4 Transfer to Competitors. . . . . . . . . . . . . . . . . . . . . . . 84
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
10.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
10.2 Amendment, Supplement and Waiver . . . . . . . . . . . . . . . . . . 85
10.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.4 Duplicate Originals . . . . . . . . . . . . . . . . . . . . . . . . 85
10.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.6 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . 86
10.7 No Adverse Interpretation of Other Agreements . . . . . . . . . . . 86
10.8 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . 87
10.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
10.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
10.11 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . 87
<FN>
Exhibit A -Convertible Debenture
Exhibit B -Preferred Shares
Exhibit C -Registration Rights Agreement
Exhibit D -Competitors
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This LOAN AND INVESTMENT AGREEMENT (the "Agreement") is dated as of 10
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January 2002 between VI Group plc, a public limited company organized in England
and Wales (the "Company"), and Hemisphere Capital LLC a Delaware limited
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liability company (the "Lender" and together with the Company, the "Parties").
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WHEREAS, the Lender proposes to make (a) a convertible loan to the Company
in an aggregate principal amount of $1,000,000 upon the terms and conditions set
forth herein and in the Convertible Debenture and (b) a further convertible
preferred equity investment in the Company of between $2,000,000 and $4,000,000
in aggregate principal amount upon the terms and conditions set forth herein
(the "Preferred Investment");
---------------------
WHEREAS, the Lender has agreed that, provided all of the conditions to
conversion of the loan set forth herein shall have been completed, the loan
shall convert to Ordinary Shares, subject to an ADR Election;
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration the receipt, adequacy and sufficiency
of which are hereby acknowledged, it is agreed by and among the Parties hereto
as follows:
ARTICLE I
INTERPRETATION
1.1 Definitions. Capitalized terms not otherwise defined herein shall have
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the meanings set forth in this Section 1.1.
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"Accelerated Repayment Election" has the meaning set forth in Section 2.5
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of this Agreement.
"Accelerated Repayment Period" has the meaning set forth in Section 2.5 of
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this Agreement.
"Act" means the Companies Act 1985 and 1989 of England and Wales and every
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statutory re-enactment thereof.
"ADR" means American Depositary Receipt.
---
"ADR Election" has the meaning set forth in Section 2.7 of this Agreement.
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"Affiliate" means, in relation to any Person, any other Person that,
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directly or indirectly, controls, is controlled by or is under common control
with such Person. For purposes of this definition, "control" will mean, as to
any Person, the power direct or indirect: (i) to vote more than 50% of the
securities having ordinary voting power for the election of directors of such
Person, or (ii) to direct or cause the direction of the management and policies
of such Person, whether by ownership of securities, contract or otherwise. With
respect to the Lender, Affiliates shall also include Persons advising or advised
by it and the partners, managers, members, shareholders and employees of the
Lender, its Affiliates and their respective advisors.
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"Agreement" has the meaning set forth in the preamble of this Agreement.
---------
"AIM" means the Alternative Investment Market of the London Stock Exchange
---
plc.
"AMEX" means the American Stock Exchange and any successor thereto.
----
"Board Certificate" has the meaning set forth in Section 6.14.
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"Board of Directors" means the Board of Directors of the Company or any
--------------------
committee of the Board authorized to act for it hereunder.
"Borrowed Money Indebtedness" means, with respect to any Person as of the
----------------------------
date hereof, without duplication:
(a) all obligations of such Person for borrowed money;
(b) all obligations of such Person evidenced by bonds, debentures,
notes or similar instruments;
(c) all obligations of such Person under conditional sale or other
title retention agreements relating to Property purchased by such Person;
(d) all obligations of such Person issued or assumed as the deferred
purchase price of Property or services (excluding obligations of such Person to
creditors for raw materials, inventory, services and supplies and deferred
payment for services to employees and former employees incurred in the ordinary
course of such Person's business);
(e) all capital lease obligations;
(f) all obligations of others secured by any Lien on Property or
assets owned or acquired by such Person, whether or not the obligations secured
thereby have been assumed;
(g) all outstanding letters of credit, surety bonds and currency swap
or similar agreements issued for the account of such Person; and
(h) all guarantees of such Person for obligations of the type
described above.
"Business Day" means any day which is neither a Saturday nor a Sunday nor
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a legal holiday on which banks are authorized or required to be closed in
London, England or New York, New York.
"Capital Stock" means any and all shares, interests, participations or
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other equivalents of or interests in (however designated) equity of the Company,
including any preferred stock, but excluding any debt securities convertible
into such equity prior to such conversion.
"Change of Control" means a transaction in which (i) any unrelated Person
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becomes the beneficial owner of (x) more than 50% of the voting equity of the
Company, or (y) any unrelated Person obtains the power to designate a majority
of the Board of Directors of the Company or ensure that the Company's affairs
are conducted in accordance with the directions of such Person
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or (z) any merger, consolidation, recapitalization or other significant
corporate transaction as a result of which the beneficial owners of the voting
equity of the Company immediately before such transaction do not hold at least
60% of the equity interests in the surviving or resulting entity.
"Company" means the party named as such in the preamble above until a
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successor replaces it pursuant to the applicable provision hereof and thereafter
means the successor to such party.
"Company Intellectual Property" has the meaning set forth in Section
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4.1.12 of this Agreement.
-
"Company's Bank Account" means Barclays Bank plc, 18 King Street, Stroud,
-----------------------
Gloucestershire GL5 3DF, England, Account: Vero International Software UK
Limited, Sort Code: 20-33-83, Account No.:79726400, or such other bank account
as the Company may specify to the Lender prior to the Loan Completion Date.
"Company Conversion" has the meaning set forth in Section 2.8 to this
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Agreement.
"Company Conversion Election" has the meaning set forth in Section 2.8 to
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this Agreement.
"Competitor" means any Person listed on Exhibit D.
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"Convertible Debenture" means the convertible debenture of the Company, in the
----------------------
form attached as Exhibit A hereto, evidencing the Convertible Loan.
----------
"Convertible Loan" means the loan made by the Lender to the Company
-----------------
pursuant to Section 2.1 of this Agreement.
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"Depository" means the Bank of New York.
----------
"Depository Agreement" means that agreement between the Company and the
---------------------
Bank of New York dated as of 31 January 2002 relating to the deposit of Ordinary
Shares and the issue of ADRs.
"Derivative Securities" has the meaning set forth in Section 4.1.2(a) of
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this Agreement.
"EBITDA" means earnings before interest, taxes, depreciation and
------
amortization.
--
"Environmental Laws" means all laws, rules, regulations, codes,
-------------------
ordinances, orders, decrees, judgments, injunctions, written notices or binding
agreements issued, promulgated or entered into, by or with any Governmental
Authority, relating in any way to the environment, preservation or reclamation
of natural resources, the handling, treatment, storage, management, disposal,
release or threatened release of any Hazardous Material or to the effect of the
environment (including workplaces) on health and safety.
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"Environmental Liability" means any liability, contingent or otherwise
------------------------
(including any liability for damages, natural resource damage, costs of
environmental remediation, administrative oversight costs, fines, penalties or
indemnities), of the Company or any Subsidiary directly or indirectly resulting
from or based upon (a) an actual or alleged violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) actual or alleged exposure to any
Hazardous Materials, (d) the actual or alleged presence, release or threatened
release of any Hazardous Materials into the environment or (e) any contract,
agreement or other consensual arrangement pursuant to which liability is assumed
or imposed with respect to any of the foregoing.
"Event of Default" has the meaning set forth in Section 7.1 of this
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Agreement.
"Excess" has the meaning set forth in Section 2.7.5 of this Agreement.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
-------------
"Final Maturity Date" means 10 January 2005.
---------------------
"Financial Statements" has the meaning set forth in Section 4.1.8(a) of
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this Agreement.
"GAAP" means generally accepted accounting principles as in effect from
----
time to time.
"Governmental Authority" means the government of any nation or any
-----------------------
political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.
"Hazardous Materials" means all explosive or radioactive substances or
--------------------
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes,
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Historical Financial Statements" has the meaning set forth in Section
--------------------------------- -------
4.1.8(a) of this Agreement.
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"Indebtedness" means and includes:
------------
(a) all items which in accordance with US GAAP would be included on
the liability side of a balance sheet on the date as of which Indebtedness is to
be determined (excluding capital stock, surplus reserves and deferred credits);
(b) all guaranties, letter of credit, contingent reimbursement
obligations and other contingent obligations in respect of, or any obligations
to purchase or otherwise acquire, indebtedness of others; and
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(c) all indebtedness secured by any Lien existing on any interest of
the Person with respect to which indebtedness is being determined in Property
owned subject to such Lien whether or not the indebtedness secured thereby shall
have been assumed.
"Indemnified Party" has the meaning set forth in Section 8.1 of this
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Agreement.
"Indemnifying Party" has the meaning set forth in Section 8.3 of this
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Agreement.
"Intellectual Property" has the meaning set forth in Section 4.1.12 of
---------------------- --------------
this Agreement.
"Interest Cover" means in respect of any period, the aggregate amount of
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the interest (including the interest element of finance leasing or capital
leasing, and hire purchase payments), commissions, fees, discounts and other
finance payments accrued by the Company and any Subsidiary, but (a) including
any commission, fees, discounts and other finance payments payable by any of the
Company and its Subsidiaries under any interest rate hedging agreement during
such period, and (b) deducting any interest receivable by the Company or any
Subsidiary on any deposit or bank account.
"Investment" means the purchase or other acquisition of any Indebtedness
----------
of, or the making of any loan, advance or capital contribution to, or the
incurring of any liability, contingent or otherwise, in respect of the
Indebtedness of, any Person.
"Lender" has the meaning set forth in the preamble to this Agreement.
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"Lien" means any mortgage, pledge, charge, encumbrance, security interest,
----
collateral assignment or other lien or restriction of any kind, whether based on
common law, constitutional provision, statute or contract, and shall include
reservations, exceptions, encroachments, easements, rights of way, covenants,
conditions, restrictions and other title exceptions.
"Loan Completion Date" means the date on which all of the conditions set
----------------------
forth in Section 3.1 shall have been satisfied or waived by the Lender or such
-----------
other date as may be agreed between the Parties.
"Loan Documents" means this Agreement and the Convertible Debenture.
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"Loss" has the meaning set forth in Section 8.1of this Agreement.
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"Mandatory Prepayment" has the meaning set forth in Section 2.5 of this
--------------------- -----------
Agreement.
"Mandatory Prepayment Date" means 30 June 2003.
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"Material Adverse Effect" means, when used in connection with the Company,
-----------------------
any development, change or effect that is materially adverse to the business,
Properties (including, without limitation, Intellectual Property), assets, net
worth, financial condition, results of operations or future prospects
(including, without limitation, future equity value) of the Company and its
Subsidiaries taken as a whole.
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"New Convertible Debenture" has the meaning set forth in Section 2.7.2 of
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this Agreement.
"Optional Conversion Date" has the meaning set forth in Section 2.7.2 of
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this Agreement.
"Optional Conversion Election" has the meaning set forth in Section 2.7.1.
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"Ordinary Shares" means the ordinary shares of the Company having the
----------------
rights set forth in the Articles of Association of the Company in the form filed
with Companies House as of the Loan Completion Date.
"Party" has the meaning set forth in the preamble of this Agreement.
-----
"Permitted Liens" means each of the following:
----------------
(a) artisans' or mechanics' Liens arising in the ordinary course of
business, and Liens for taxes, but only to the extent that payment thereof shall
not at the time be due or if due, the payment thereof is being diligently
contested in good faith and adequate reserves computed in accordance with US
GAAP have been set aside with respect thereto;
(b) Liens in effect on the Loan Completion Date and disclosed to the
Lender in the Financial Statements, provided that neither the Borrowed Money
Indebtedness secured thereby nor the Property covered thereby shall increase
after the Loan Completion Date without the prior written consent of the Lender,
provided that, for purposes of this sub-section (b), the accrual of interest on
such Borrowed Money Indebtedness, so long as it is not converted to principal,
shall not be deemed to increase such Borrowed Money Indebtedness;
(c) normal encumbrances and restrictions on title which do not secure
Borrowed Money Indebtedness and which do not have a material adverse effect on
the value or utility of the applicable Property;
(d) Liens incurred or deposits made in the ordinary course of business
(i) in connection with workmen's compensation, unemployment insurance, social
security and other like laws, or (ii) to secure insurance in the ordinary course
of business, the performance of bids, tenders, contracts, leases, licenses,
statutory obligations, surety, appeal and performance bonds and other similar
obligations incurred in the ordinary course of business, but not, in any of the
cases specified in this clause (ii), incurred in connection with the borrowing
of money, the obtaining of advances or the payment of the deferred purchase
price of Property;
(e) attachments, judgments and other similar Liens arising in
connection with court proceedings, provided that the execution and enforcement
of such Liens are effectively stayed and the claims secured thereby are being
actively contested in good faith with adequate reserve made therefore in
accordance with US GAAP;
(f) Liens imposed by law, such as carriers', warehousemen's,
mechanics', materialmen's and vendors' liens incurred in good faith in the
ordinary course of business and securing obligations which are not yet due or
which are being contested in good faith by
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appropriate proceedings if adequate reserves with respect thereto are maintained
in accordance with US GAAP;
(g) zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, and restrictions on the use of
Property, and which do not in any case singly or in the aggregate materially
impair the present use or value of Property subject to any such restriction or
materially interfere with the ordinary conduct of the business of the Company
and its Subsidiaries, if any; and
(h) extensions, renewals and replacements of Liens referred to in
subsections (a) through (g) of this Section; provided that any such extension,
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renewal or replacement Lien shall be limited to the Property or assets covered
by the Lien extended, renewed or replaced and that the Borrowed Money
Indebtedness secured by any such extension, renewal or replacement Lien shall be
in an amount not greater than the amount of the Indebtedness secured by the Lien
extended, renewed or replaced.
"Person" means any individual, corporation, association, company, business
------
trust, partnership, joint venture, joint-stock company, limited liability
company, trust, unincorporated organization or association or government or any
agency or political subdivision thereof.
"Preference Shares" means the proposed senior participating convertible
------------------
preference shares of the Company to be issued to the Lender on or prior to the
Mandatory Prepayment Date with the rights and obligations set forth in Annex A.
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"Preferred Investment" has the meaning set forth in the preamble to this
---------------------
Agreement.
"Prepayment Percentage" means (a) between the Loan Completion Date and the
---------------------
first anniversary thereof, 2.0%, (b) between the first anniversary of the Loan
Completion Date and the date falling 180 days thereafter, 1.0%, and (c)
thereafter, 0%.
"Prepayment Premium" has the meaning set forth in Section 2.6 of this
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Agreement.
"Property" means any interest in any kind of property or asset, whether
--------
real, personal or mixed, tangible or intangible of the Company.
"Ratio" has the meaning set forth in Section 5.11 of this Agreement.
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"Registration Rights Agreement" means the registration rights agreement
-------------------------------
between the Company and the Lender in the form attached hereto as Exhibit C.
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"Requirements" has the meaning set forth in Section 2.7.4 of this
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Agreement.
-
"Sale" means the sale of all or substantially all of the assets of the
----
business of the Company.
"SEC" means the United States Securities and Exchange Commission.
---
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"Securities" means (i) the Convertible Debenture and (ii) the Ordinary
----------
Shares and ADRs issuable pursuant to Sections 2.7 and 2.8 of this Agreement.
------------ ---
"Securities Act" means the Securities Act of 1933, as amended.
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"Shareholders" means, at any time, the holders of shares of Capital Stock
------------
in the Company at such time.
"Significant Event" means a (a) Change of Control or (b) a Sale, provided
------------------ --------
that if the Lender shall have approved a Change of Control or Sale in writing in
advance of the completion thereof and waived application of Section 2.5
-----------
(Mandatory Prepayment) with respect thereto, then such Change of Control or
Sale, as the case may be, shall not constitute a Significant Event.
"Subscription Election" has the meaning set forth in Section 2.5 of this
---------------------- -----------
Agreement.
"Subscription Period" has the meaning set forth in Section 2.5 of this
-------------------- -----------
Agreement.
"Subscription Price" has the meaning set forth in Section 2.5 of this
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Agreement.
"Subsidiary" of a Person means any corporation, association, partnership,
----------
joint venture or other business entity of which more than fifty percent (50%) of
the voting stock or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the Person, or
one or more of the Subsidiaries of the Person, or a combination thereof.
"Westminster Engagement Letter" means the engagement letter dated as of 15
-----------------------------
November 2001 between the Company and Westminster Securities Corp. as amended
from time to time.
"2002 Financial Statements" has the meaning set forth in Section 4.1.9(a)
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of this Agreement.
1.2 Rules of Construction. Unless the context otherwise requires:
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1.2.1 a term has the meaning assigned to it;
1.2.2 an accounting term not otherwise defined herein has the meaning
assigned to it in accordance with US GAAP;
1.2.3 "or" is not exclusive;
1.2.4 words in the singular include the plural and in the plural
include the singular;
1.2.5 provisions apply to successive events and transactions; and
1.2.6 "herein", "hereof" and other words of similar import refer to
this Agreement as a whole and not to any particular Article, Section or other
subdivision.
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ARTICLE II
AMOUNT AND TERMS OF CONVERTIBLE LOAN
2.1 Commitment to Make Convertible Loan. In reliance upon the
---------------------------------------
representations and warranties of the Company as set forth herein and subject to
the terms and conditions contained in this Agreement and the Convertible
Debenture, the Lender agrees to lend to the Company on the Loan Completion Date
an aggregate principal amount of $1,000,000 (the "Convertible Loan"). The
-----------------
proceeds of the Convertible Loan shall be disbursed by wire transfer on the Loan
Completion Date to the Company's Bank Account.
2.2 Maturity. The Convertible Loan will mature and the aggregate principal
--------
amount outstanding and all accrued but unpaid interest shall be immediately due
and payable on the earliest to occur of (a) the Final Maturity Date, (b) the
date of the Optional Conversion Election, (c) a Mandatory Prepayment, (d) a
Significant Event, (e) an Event of Default, and (f) a Company Conversion
Election.
2.3 Interest.
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2.3.1 Interest Rate. Interest on the unpaid principal balance of the
--------------
Convertible Loan and all accrued but unpaid interest thereon will accrue from
the Loan Completion Date at a rate per annum equal to 9%.
2.3.2 Basis of Computation of Interest; Payment of Interest. All
----------------------------------------------------------
interest shall be calculated for actual days elapsed on the basis of a 360-day
year and shall be payable in cash quarterly in arrears.
2.4 Interest and Principal Payments. All amounts paid with respect to the
----------------------------------
Convertible Loan shall first be applied to any accrued but unpaid interest. All
payments required to be made by the Company under this Agreement and the
Convertible Debenture shall be paid to the Lender by wire transfer in
immediately available funds to an account of the Lender notified to the Company
in writing.
2.5 Mandatory Prepayment. The principal amount outstanding of the
---------------------
Convertible Loan and any accrued but unpaid interest thereon shall be due and
payable immediately by the Company on the date which is 90 days after: (a) the
earliest to occur of (i) the date on which the Board of Directors and the
shareholders of the Company hold an extraordinary general meeting prior to the
Mandatory Prepayment Date which considers but does not authorize the creation of
the Preference Shares by adoption of new Articles of Association and all
necessary Shareholder resolutions in compliance with the Act and (ii) the
Mandatory Prepayment Date, if the Board of Directors and the shareholders of the
Company fail to hold an extraordinary general meeting prior to the Mandatory
Prepayment Date to consider authorizing the creation of the Preference Shares by
adoption of new Articles of Association and all necessary Shareholder
resolutions in compliance with the Act, and (iii) the last day of the
Subscription Period if the Preference Shares have not been issued and allotted
to the Lender in conformance with the Act and a Subscription Election has been
made by the Lender, and (b) the Lender elects by written notice to the Company
to require immediate repayment of the Convertible Loan (collectively,
the"Mandatory Prepayment"). In the event that (x) the Board of Directors and
the Shareholders of the Company
E-59
shall have authorized the terms and conditions of the Preference Shares in
compliance with the Act and (y) offered to issue the Preference Shares to the
Lender, then the Lender shall have 120 days from the date of offer of the
Preference Shares to it by the Company (the "Subscription Period") to deliver
-------------------
notice of its election to subscribe for such Preference Shares (the
"Subscription Election") and payment of the subscription price thereof (being a
-----------------------
minimum aggregate amount of $2,000,000 and a maximum aggregate amount of
$4,000,000 (the "Subscription Price"). Subject in all circumstances to the
-------------------
Lender's right to convert the Convertible Loan pursuant to Section 2.7, if the
-----------
Company makes the Preference Shares available to the Lender but the Lender does
not subscribe for such Preference Shares within the Subscription Period and for
the Subscription Price, then the Company may, from the date immediately
following the last day of the Subscription Period to the date ninety days later
(such period, the "Accelerated Repayment Period"), at its election (the
------------------------------
"Accelerated Repayment Election") and upon 7 Business Days prior written notice
-------------------------------
to the Lender, repay the entire principal amount outstanding of the Convertible
Loan and any accrued but unpaid interest thereon, but no Prepayment Premium
shall be payable in the event of a repayment pursuant to this sentence.
2.6 Prepayment Premium. In the event of a Mandatory Prepayment or a
-------------------
Significant Event, in addition to payment by the Company to the Lender of the
outstanding principal in accordance therewith, the Company shall also pay to the
Lender a premium amount equal to the Prepayment Percentage multiplied by the
principal amount of the Convertible Loan to be repaid pursuant to Section 2.5
(Mandatory Payment), Section 2.2 (Maturity upon Significant Event), as
applicable (such amount, the"Prepayment Premium").
2.7 Optional Conversion.
--------------------
2.7.1 Subject to Section 2.7.2, the Lender may at any time, in its
--------------
sole discretion, elect to convert some or all of the outstanding principal
amount of the Convertible Loan (the "Optional Conversion Election") into a
----------------------------
number of Ordinary Shares to be issued by the Company to it or its nominee, with
such number of Ordinary Shares determined by dividing the principal amount of
the Outstanding Loan to be converted by $4.5429 (the "Effective Conversion
--------------------
Price"), and multiplying the resulting number by 20 as adjusted pursuant to
Section 2.7.3. Upon conversion of a portion of the principal amount of the
- --------------
Convertible Loan calculated in accordance with the preceding sentence, all
accrued and unpaid interest on such portion of principal amount shall be paid in
full in cash as of the date of conversion. For the avoidance of doubt, no
redemption, Significant Event or action of the Company shall interfere with the
Lender's ability to covert some or all of the Convertible Loan into Ordinary
Shares pursuant to this Section 2.7. In the event of a conversion pursuant to
-----------
this Section 2.7 or a Company Conversion pursuant to Section 2.8, either the
Lender or the Company may elect to require such Ordinary Shares as may be issued
upon such conversion be deposited with the Depositary in exchange for the
issuance of ADRs reflecting the American Depositary Shares arising from such
deposit (an "ADR Election"), provided that this sentence shall only apply so
long as the Company maintains an ADR program on terms substantially similar to
the terms of the Depositary Agreement and provided further that the Company
undertakes to the Lender and its transferees to use its best efforts to
facilitate the prompt issuance of ADRs to the Lender and its transferees by the
Depositary following any ADR Election.
E-60
2.7.2 The Lender shall notify the Company promptly of its election to
convert a portion of the principal amount of the Convertible Loan in accordance
with Section 2.7.1 above. The Company shall allot and issue the Ordinary Shares
-------------
into which the relevant portion of the Convertible Loan shall be converted no
later than three Business Days after receipt of notice of the Optional
Conversion Election from the Lender. The date of issuance of such Ordinary
Shares to the Lender or its nominee pursuant to this Section 2.7.2 shall be
-------------
referred to herein as the "Optional Conversion Date". The Company agrees that
------------------------
in addition to the Ordinary Shares to be issued to the Lender or its nominee on
the Optional Conversion Date it shall, following receipt of the Convertible
Debenture from the Lender, cancel such Convertible Debenture and execute and
deliver a new convertible debenture (the "New Convertible Debenture") in an
-------------------------
aggregate principal amount equal to the original principal amount of the
Convertible Debenture less that portion of the principal converted into Ordinary
Shares in accordance with the terms of Section 2.7.1 above. Any New Convertible
-------------
Debenture issued in accordance with this Section 2.7.2 shall be dated as of the
-------------
Loan Completion Date and all interest which shall have accrued since the Loan
Completion Date on the principal amount of such New Convertible Debenture and
remain unpaid as of the Optional Conversion Date shall remain payable in
accordance with the terms of this Agreement. Upon issue, a New Convertible
Debenture shall be deemed to be a Convertible Debenture for the purposes of this
Agreement.
2.7.3 If and whenever on or after the date of issue of the Convertible
Debenture the Company allots, issues or sells any Ordinary Shares (or securities
convertible into or exchangeable for Ordinary Shares) for a consideration per
Ordinary Share less than an amount equal to the Effective Conversion Price in
effect immediately prior to such time divided by 20, then immediately upon such
issue or sale (or deemed issue or sale) the Effective Conversion Price specified
above shall be reduced to an amount equal to the product of 20 and the lowest
net price per share at which any such Ordinary Share has been issued or sold.
If the Company at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) its ordinary share capital into a greater number
of shares then the Effective Conversion Price in effect immediately prior to
such subdivision shall be proportionately reduced (based on an initial Effective
Conversion Price of $4.5429 per ADR (representing 20 Ordinary Shares)). If the
Company at any time combines or consolidates (by reverse stock split or
otherwise) its ordinary share capital into a smaller number of shares, the
Effective Conversion Price in effect immediately prior to such combination shall
be proportionately increased (based on an initial Effective Conversion Price of
$4.5429 per ADR (representing 20 Ordinary Shares)). If and whenever on or after
the date of issue of the Convertible Debenture the Company issues or sells any
Ordinary Shares (or securities convertible into or exchangeable for Ordinary
Shares, including ADRs) pursuant to the Westminster Engagement Letter and
warrants arising therefrom, then immediately upon such allotment, issue or sale
(or deemed issue or sale) the Lender or its nominee shall be issued by the
Company such number of bonus Ordinary Shares (which shall in the event of an ADR
Election, be deposited with the Depository and exchanged for ADRs) as shall,
when aggregated with the conversion rights of the outstanding Convertible Loan
and any securities previously issued upon conversion of some or all of the
Convertible Loan, cause the Lender to retain the same fully-diluted percentage
ownership of the Company as the Lender held prior to the allotment, issuance or
sale resulting from the Westminster Engagement Letter.
E-61
2.7.4 Notwithstanding Section 2.7.1, following the Lender making one
--------------
or more Optional Conversion Elections or the Company making a Company Conversion
Election, the maximum aggregate principal amount of the Convertible Loan that
can be converted pursuant to this Section 2.7 shall be that principal amount of
-----------
Convertible Loan that can be converted into Ordinary Shares without causing the
Lender to acquire a voting interest greater than 29.9% of the aggregate voting
rights in the Company or such other maximum number of Ordinary Shares as shall
not trigger the tender offer or compulsory acquisition requirements under Rule 9
of the City Code on Takeovers and Mergers, as amended from time to time, or any
similar requirement (such requirements, collectively, the "Requirements").
------------
2.7.5 In the event of one or more Optional Conversion Elections or a
Company Conversion Election which would, but for the operation of Section 2.7.4,
-------------
cause the issue of Ordinary Shares carrying voting rights in the Company greater
than 29.9% of the aggregate voting rights in the Company or otherwise trigger a
tender offer requirement under the Requirements (the excess amount, the
"Excess"), then the Company shall, unless otherwise agreed with the Lender at
the time of conversion, pay such amount of the Convertible Loan as is
represented by the Excess in cash and not by conversion into Ordinary Shares.
2.8 Company Conversion. Notwithstanding Section 2.2, the Company may
-------------------
elect, by prior written notice to the Lender (a "Company Conversion Election"),
---------------------------
to convert all of the outstanding principal amount of the Convertible Loan as of
the Final Maturity Date into Ordinary Shares at the Effective Conversion Price
in effect immediately prior to such time divided by 20 (a "Company Conversion"),
------------------
provided that the Company shall pay to the Lender in cash all accrued but unpaid
- --------
interest on the Convertible Loan as a condition precedent to the conversion
described herein.
2.9 Taxes on Conversion. The Company agrees that it shall pay any
---------------------
documentary, stamp or similar issue or transfer tax due on the issue of Ordinary
Shares and ADRs to the Lender and on the issuance of any New Convertible
Debenture to the Lender, provided that the obligations of the Company in this
--------
Section 2.9 shall not cause the net assets of the Company to be reduced by a
- -------
material extent within the meaning of Section 152(1)(a)(iv) of the Companies Act
1985 (as amended).
2.10 Ordinary Shares, American Depositary Receipts
-------------------------------------------------
2.10.1 At all times prior to the full repayment of the Convertible
Loan, the Company shall maintain sufficient authorized but unalloted and
unissued Ordinary Shares to permit the conversion of the aggregate principal
amount of the Convertible Loan into Ordinary Shares in accordance with Section
-------
2.7 and 2.8. If upon conversion of the Convertible Loan to Ordinary Shares
- -------------
pursuant to Section 2.7 or 2.8, a residual principal amount remains outstanding
----------- ---
which is insufficient to entitle the Lender to an additional Ordinary Share,
then such principal amount shall be paid in cash to the Lender and such amount
of Convertible Loan cancelled.
2.10.2 The Company will comply, at its own expense, with all
securities laws regulating the delivery of the Ordinary Shares, the ADRs and any
New Convertible Debenture on any Optional Conversion Date or in the event of a
Company Conversion.
E-62
2.11 Gross-Up Protection
--------------------
2.11.1 . The Company shall make all payments to be made by it under
this Agreement and the Convertible Debenture without deduction for any tax,
unless such deduction is required by law. If a tax deduction is required by law
to be made by the Company, the amount of the payment to the Lender due from the
Company will be increased by an amount which (after making the tax deduction)
leaves an amount equal to the payment which would have been due if no such tax
deduction had been required. The Company shall promptly notify the Lender of
any tax deduction required by law and the date of payment by the Company
thereof.
ARTICLE III
CONDITIONS OF OBLIGATIONS OF THE LENDER
3.1 Conditions to Lender's Obligations to make the Convertible Loan. The
----------------------------------------------------------------
obligation of the Lender to make the Convertible Loan is subject to the
fulfillment to its reasonable satisfaction, or, the waiver by the Lender, on or
prior to the Loan Completion Date of each of the following conditions precedent:
3.1.1 Representations and Warranties. The representations and
--------------------------------
warranties of the Company in Article IV hereof shall be (x) true and correct on
----------
and as of the date hereof and (y) true and correct on and as of the Loan
Completion Date with the same force and effect as if they had been made on and
as of the Loan Completion Date.
3.1.2 Compliance Certificate. The Company shall have delivered to the
----------------------
Lender a certificate of the Company's Secretary, dated the Loan Completion Date,
certifying to the fulfillment of the conditions specified in Sections 3.1.4 and
--------------
3.1.5.
- -----
3.1.3 No Impediments. No statute, judgment, order or decree of any
---------------
court, regulatory body, administrative agency or any other governmental agency
or body of any jurisdiction shall be in effect which would impose any material
limitation on the ability of the Lender to exercise its full rights of ownership
of the Securities.
3.1.4 No Defaults. The Company shall not be in default under any
------------
indenture, mortgage, agreement, instrument or commitment evidencing or under
which there is at the time outstanding any Indebtedness of the Company or any
Subsidiary, in excess of $50,000, or which results in such Indebtedness, in an
aggregate amount (with other defaulted Indebtedness) in excess of $50,000
becoming due and payable prior to its due date.
3.1.5 No Material Adverse Events. Since June 30, 2002, there shall
-----------------------------
have been no Material Adverse Effect with respect to the Company.
3.1.6 Legal Investment. The purchase of the Convertible Debenture by
-----------------
the Lender hereunder shall be legally permitted by all statutes, rules and
regulations of any jurisdiction to which the Lender and the Company are subject.
3.1.7 Qualifications. All authorizations, approvals or permits, if
--------------
any, of any Governmental Authority or stock exchange or regulatory body that are
now required in connection with the lawful issuance and sale of the Convertible
Debenture and the Ordinary Shares pursuant to this Agreement shall have been
duly obtained and shall be in full force and effect.
E-63
3.1.8 Issuance Taxes. All taxes imposed by law in connection with the
--------------
initial issuance, sale and delivery of the Convertible Debenture shall have been
fully paid by the Company, and all laws imposing such taxes shall have been
fully complied with at the time of such issuance.
3.1.9 Proceedings and Other Documents. All corporate and other
----------------------------------
proceedings in connection with the transactions contemplated by this Agreement
shall have been taken, and the Lender shall have received such other documents
and instruments in form and substance reasonably satisfactory to it and its
counsel, as to such other matters incident to the transaction contemplated
hereby as it may reasonably request.
3.1.10 Opinion of Counsel. The Lender shall have received an opinion
-------------------
(i) of Kleban & Samor, P.C., New York counsel to the Company, and (ii) of
Theodore Goddard, English counsel to the Company, each opinion to be dated as of
the Loan Completion Date and in form and substance satisfactory to the Lender.
3.1.11 Consents, Waivers, Etc. The Company shall have obtained all
------------------------
consents or waivers necessary to execute and deliver this Agreement and the
other Loan Documents, issue the Securities and carry out the transactions
contemplated hereby and thereby, and all such consents and waivers shall be in
full force and effect.
3.1.12 Documents. The Company shall have delivered to the Lender:
---------
(a) the Convertible Debenture executed by the Company;
(b) a certified copy of the Company's Memorandum and Articles of
Association;
(c) the Registration Rights Agreement executed by the Company;
and
(d) certified copies of all shareholder, board and third-party
approvals obtained in accordance with this Section 3.1.
------------
3.1.13 Diligence. Satisfactory completion (in the Investor's sole
---------
discretion) of the Investor's business, technical, legal, accounting and tax due
diligence.
3.1.14 Investment Committee Approval. The Lender shall have received
------------------------------
final written approval from its internal investment committee to provide the
Convertible Loan.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company . The Company represents
---------------------------------------------
and warrants to the Lender as follows:
4.1.1 Organization and Existence, etc. The Company and each of its
----------------------------------
Subsidiaries (i) is duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of organization, and has all requisite
corporate power and authority to carry on its business as now
E-64
conducted and as proposed to be conducted, and (ii) is duly qualified to do
business in each jurisdiction in which the conduct of its business requires such
qualification.
4.1.2 Capitalization.
--------------
(a) As of the date hereof, (x) Schedule 4.1.2 (a) accurately
------------------
reflects the Company's authorized and issued Capital Stock; and (y) Schedule
--------
4.1.2 (b) accurately reflects the Company's outstanding securities which are
- ----------
convertible into or exercisable or exchangeable for Common Stock (the
"Derivative Securities").
- -----------------------
(b) All issued and outstanding Capital Stock are free of
preemptive and similar rights and have been offered, issued, sold and delivered
by the Company in transactions in compliance with the securities laws of each
applicable jurisdiction. There are no outstanding agreements or commitments
requiring the Company to issue Capital Stock or Derivative Securities and no
such agreements are currently contemplated.
4.1.3 Authorization; Binding Obligations.
------------------------------------
(a) The Company has full power and authority to execute, deliver
and perform this Agreement and such other documents furnished or to be furnished
by the Company hereunder. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a legal, valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
subject to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity. The issuance of the Securities pursuant to this
Agreement, the compliance by the Company with the provisions of this Agreement,
the Convertible Debenture and the Securities, and the consummation of the other
transactions contemplated hereby or thereby will not result in the creation or
imposition of any Lien upon any of the assets of the Company pursuant to the
terms or provisions of, or result in a breach or violation of or conflict with
any of the terms or provisions of, or constitute a default under, or give any
other party a right to terminate any of its obligations under, or result in the
acceleration of any obligation under, (A) the Memorandum or Articles of
Association (or similar organizational documents) of the Company or of any of
its Subsidiaries, (B) any contract or other agreement to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective properties is bound, or (C) any
judgment, ruling, decree, order, statute, rule or regulation of any court or
other governmental agency or body, domestic or foreign, applicable to the
business or properties of the Company or any of its Subsidiaries.
(b) The Convertible Debenture has been duly authorized for
issuance and, prior to the Optional Conversion Date, the Ordinary Shares
issuable upon conversion of the Convertible Debenture and the ADRs to be issued
in the event of an ADR Election will have been duly authorized and reserved for
issuance to the Lender. When the Convertible Debenture has been duly executed
and delivered by the Company in accordance with its terms and this Agreement (A)
the Convertible Debenture will constitute the valid and legally binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to general
principles of equity and (B) the Ordinary Shares
E-65
issuable on an Optional Conversion Date or pursuant to Section 2.8, when issued
-----------
and delivered in accordance with the provisions of this Agreement and the
Convertible Debenture, will be validly issued, fully paid and non-assessable.
4.1.4 Compliance with Instruments, etc. Neither the Company nor any of
--------------------------------
its Subsidiaries is in breach or violation of, or in default under, any term or
provision of (i) its Memorandum and Articles of Incorporation (or similar
organizational documents), (ii) any indenture, mortgage, deed of trust, voting
trust agreement, stockholders agreement, note agreement, debt instrument or
other agreement or instrument to which it is a party or by which it is bound or
to which any of its Property is subject, the effect of which breach, violation
or default, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect, or (iii) any applicable statute, judgment,
decree, order, rule or regulation of any arbitrator or any Governmental
Authority having jurisdiction over the Company or any of its Subsidiaries or any
of their respective activities or properties and the effect of which breach,
violation or default, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.
4.1.5 Properties.
----------
(a) Each of the Company and its Subsidiaries has good title to, or
valid leasehold interests in, all its real and personal property material to its
business.
(b) Schedule 4.1.5(b) sets forth the address of each real property
that is owned or leased by the Company or any of its Subsidiaries as of the date
hereof.
4.1.6 Litigation and Environmental Matters.
---------------------------------------
(a) There are no actions, suits, proceedings or investigations
pending, or, to the knowledge of the Company, threatened, against the Company or
any of its Subsidiaries before or by any arbitrator or Governmental Authority,
which would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, or any actions, suits, proceedings or investigations
pending, or, to the knowledge of the Company, threatened, which challenges the
validity of any action taken or to be taken pursuant to or in connection with
this Agreement or the issuance of the Securities, which would, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) Except with respect to any matters that, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect, neither the Company nor any of its Subsidiaries (i) has failed to comply
with any Environmental Law or to obtain, maintain or comply with any permit,
license or other approval required under any Environmental Law, (ii) has become
subject to any Environmental Liability, (iii) has received written notice of any
claim with respect to any Environmental Liability or (iv) knows of any basis for
any Environmental Liability.
4.1.7 Investment Company Act. Neither the Company nor any of its
------------------------
Subsidiaries is (a) an "investment company" as defined in, or subject to
regulation under, the United States Investment Company Act of 1940, as amended.
The consummation of the transactions described
E-66
herein does not and will not violate any provision of such act or any rule,
regulation or order issued by the SEC thereunder.
4.1.8 Financial Statements; Taxes.
-----------------------------
(a) The Company has previously delivered to the Lender, true,
correct and complete copies of (i) its audited financial statements for the year
ended 31 December 2001 (the "Historical Financial Statements"), (ii) its
---------------------------------
unaudited financial statements for the 10 months ended 31 October 2002, and
(iii) unaudited management projections since 31 October 2002 ((ii) and (iii)
together, the "2002 Financial Statements", and together with the Historical
---------------------------
Financial Statements the "Financial Statements"). The Financial Statements
---------------------
through 30 June 2002 have been prepared in accordance with US GAAP and the
Financial Statements dated after 30 June 2002 have been prepared in accordance
with UK GAAP and all of the Financial Statements fairly present the financial
position of the Company as of the respective dates thereof and the results of
operations and cash flows of the Company for the periods then ended (subject to
normal year-end adjustments in the case of the 2002 Financial Statements). As
of the respective dates of the Financial Statements, the Company had no material
liabilities or obligations of any nature (absolute, accrued, contingent or
otherwise) whether or not required by GAAP to be reflected on a balance sheet or
disclosed in the notes thereto except as were reflected on any balance sheet or
disclosed in any notes contained in the Financial Statements.
(b) The Company has filed or obtained extensions for all necessary
income, franchise and other material tax returns, domestic and foreign, all such
returns are correct in all material respects, and the Company has paid all taxes
shown as due thereunder (except in the case where the Company is contesting such
matter in good faith and except in such circumstances where such failure would
not reasonably be expected to have a Material Adverse Effect), and the Company
has no knowledge of any tax deficiency which might be assessed against the
Company which would reasonably be expected to have a Material Adverse Effect.
(c) The Company has withheld and paid all taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
4.1.9 Offering. Subject to the Lender's representations and warranties
--------
in Section 4.2, the issuance of the Securities to the Lender as contemplated by
-----------
this Agreement is not subject to the registration requirements of the Securities
Act and neither the Company, nor anyone acting on its behalf, has taken or will
take any action that would cause such registration requirements to be
applicable.
4.1.10 Permits; Governmental and Other Approvals. The Company has all
------------------------------------------
licenses, permits, consents, orders, approvals and other authorizations
necessary for the conduct of its business as now being conducted. No approval,
consent, authorization or other order of, and no designation, filing,
registration, qualification or recording with, any Governmental Authority,
domestic or foreign, is required for the Company's performance of this
Agreement, the Convertible Debenture or the consummation of the transactions
contemplated hereby.
E-67
4.1.11 Sales Representatives, Customers and Key Employees. To the
-------------------------------------------------------
knowledge of (a) the directors of the Company and (b) the senior mangers of the
Company responsible for such matters, after reasonable investigation, no
independent sales representative or key employee or group of employees of, or
customer of, or party or Person providing services to, the Company has any
intention to terminate his, her or its relationship with the Company or, in the
case of employees, to leave the employ of the Company and the entry of the
Company into this Agreement and the consummation of the transactions
contemplated hereby, will not cause any such termination or departures.
4.1.12 Intellectual Property.
----------------------
(a) To the Company's knowledge, the Company has full and exclusive
right, title and interest in and to, or, to the extent set forth in Schedule
--------
4.1.12(a), license rights to, all (A) patents, patent applications, registered
- ---------
or unregistered trademarks, service marks, tradenames, and applications
therefor, registered or unregistered copyrights and applications therefor,
know-how, proprietary rights and processes, trade secrets, customer lists,
methodologies (to the extent practicable), proprietary developments and
marketing information, (B) know-how, inventions, inventors' notes (to the extent
such notes exist), drawings and designs associated with the foregoing and (C)
other confidential information, (all of the foregoing collectively,
"Intellectual Property") used in or necessary for the ongoing conduct of its
- -----------------------
business ("Company Intellectual Property"), free and clear of all Liens of any
------------------------------
nature and, except as set forth on Schedule 4.1.12(a), the Company has no
------------------
material obligation to any other Person or entity with respect to Company
Intellectual Property or any developed or under development product or process
of the Company utilizing or embodying any Company Intellectual Property.
Schedule 4.1.12(a) is a complete and accurate schedule of all patents, patent
- -------------------
applications, registered trademarks, service marks, trade names and applications
therefor, registered copyrights and applications therefor, and license
agreements used in or necessary for the ongoing conduct of the Company's
business.
(b) There is (A) no infringement, misuse or misappropriation of
any Intellectual Property owned, licensed or controlled by any third party
arising out of any product or process now being used, manufactured, developed,
under development, or distributed, or ever having been used, manufactured,
developed, under development, or distributed at any time previously, by or on
behalf of the Company, (B) no pending or, to the knowledge of the Company,
threatened claim or challenge of or proceeding for infringement, misuse or
misappropriation of or interference with any Intellectual Property owned,
licensed or controlled by any third party arising out of any product or process
now being used, manufactured, developed or distributed, or ever having been
used, manufactured, distributed or developed at any time previously, by or on
behalf of the Company, (C) no pending or, to the knowledge of the Company,
threatened claim, challenge or proceeding by the Company against any third party
for infringement, misuse or misappropriation of or interference with any
Intellectual Property owned, licensed or controlled by the Company or (D) no
notice from any another party to the Company to the effect that, or, to the
knowledge of the Company, facts or information which, in the reasonable opinion
of the Company, would render any Company Intellectual Property owned, invalid or
unenforceable, nor is there any allegation that any such Company Intellectual
Property is invalid or unenforceable.
E-68
(c) The Company has not disclosed any material confidential
information developed or utilized by the Company to any third party except on a
confidential basis and pursuant to a written confidentiality agreement, nor, to
the knowledge of the Company, has any third party disclosed confidential
information developed or utilized by the Company to any Person in material
breach of such confidentiality agreement.
4.1.13 Ordinary Course. Except as disclosed on Schedule 4.1.13, since
---------------- ---------------
June 30, 2002, the Company has conducted its business in the ordinary course,
has not incurred any material obligation, absolute or contingent, or entered
into any material transactions not in the ordinary course of business and has
not declared or paid any dividends or distributions on its Capital Stock or
reacquired any shares of its Capital Stock.
4.1.14 Disclosure. The Company has disclosed to the Lender all
----------
agreements, instruments and corporate or other restrictions to which the Company
or any of the Subsidiaries is subject, and all other matters known to the
Company that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.
4.1.15 Subsidiaries. Schedule 4.1.15 sets forth the name of, and the
------------ ----------------
ownership interest of the Company in, each Subsidiary.
4.1.16 Insurance. Schedule 4.1.16 sets forth a description of all
--------- ----------------
insurance maintained by or on behalf of the Company and its Subsidiaries as of
the date hereof. As of the date hereof, all required premiums in respect of
such insurance have been paid. The Company believes that the insurance
maintained by or on behalf of the Company and the Subsidiaries is adequate.
4.1.17 Labor Matters. There are no strikes, lockouts or slowdowns
--------------
against the Company or any of its Subsidiaries pending or, to the knowledge of
the Company, threatened. The hours worked by and payments made to employees of
the Company and its Subsidiaries have not been in violation of any applicable
law dealing with such matters. All payments due from the Company or any of its
Subsidiaries, or for which any claim may be made against the Company or any of
its Subsidiaries, on account of wages and employee health and welfare insurance
and other benefits, have been paid or accrued as a liability on the books of the
Company or such Subsidiary. The consummation of the transactions described
herein will not give rise to any right of termination or right of renegotiation
on the part of any union under any collective bargaining agreement to which the
Company or any Subsidiary is bound.
4.1.18 Solvency. Immediately after the consummation of the
--------
transactions to occur on the Loan Completion Date and after giving effect to the
application of the proceeds of the Convertible Loan, (a) the fair value of the
assets of the Company, at a fair valuation, will exceed its debts and
liabilities, subordinated, contingent or otherwise; (b) the present fair
saleable value of the property of the Company and each Subsidiary will be
greater than the amount that will be required to pay the probable liability of
its debts and other liabilities, subordinated, contingent or otherwise, as such
debts and other liabilities become absolute and matured; (c) the Company and
each Subsidiary will be able to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; and (d) each Company and each Subsidiary will not have unreasonably
small capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted
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following the Loan Completion Date. No administrator, receiver or
administrative receiver or any other equivalent officers has been appointed in
respect of the Company or any Subsidiary or in respect of any part of the assets
or undertakings of any such Person. No petition has been presented, no order
has been made, no resolution has been passed and no meeting has been convened
for the winding up of the Company or any Subsidiary or for an administration
order or other form of bankruptcy in any jurisdiction. No distress, distraint,
charging order, garnishee order, execution or other equivalent process in the
jurisdiction of formation has been levied or applied for in respect of the whole
or any material part of the property, assets and/or undertakings of the Company
or any Subsidiary and remains outstanding.
4.2 Representations and Warranties of the Lender . Lender represents and
-----------------------------------------------
warrants to the Company that:
4.2.1 it is an "accredited investor" as that term is defined in Rule
501(a) promulgated under the Securities Act;
4.2.2 it has the requisite knowledge and experience in financial and
business matters to be capable of evaluating the merits and risks of an
investment in the Company;
4.2.3 it has had an opportunity to discuss the Company's business,
management and financial affairs with the Company's management;
4.2.4 it is acquiring the Securities for investment for its own account
and not with a view to, or for resale in connection with, any distribution
thereof, nor with any present intention of distributing or selling the same; and
Lender has no present or contemplated agreement, undertaking, arrangement,
obligation, indebtedness or commitment providing for the disposition thereof;
and
4.2.5 it understands that the Securities have not been registered under
the Securities Act and it will not offer, sell, transfer, pledge, hypothecate or
otherwise dispose of any Securities except pursuant to an exemption from, or
otherwise in a transaction not subject to, the registration requirements of the
Securities Act or pursuant to an effective registration statement under the
Securities Act, and, in each case, in accordance with any applicable state
securities or "blue sky" laws.
ARTICLE V
AFFIRMATIVE COVENANTS OF THE COMPANY
5.1 Reports . The Company will deliver to the Lender the following:
-------
5.1.1 promptly after transmission thereof, copies of all financial
statements, proxy statements, reports and other communications which the Company
sends to its stockholders, copies of all registration statements and all
regular, special or periodic reports which it files with the SEC or with any
securities exchange on which any of the securities of the Company are then
listed or proposed to be listed, and copies of all press releases made generally
available by the Company to the public concerning material developments in the
business of the Company and its Subsidiaries, if any;
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5.1.2 promptly after the occurrence thereof (but in any event within
two (2) days after such occurrence is known to the Company) notice of any
condition or event which constitutes (i) an event which would lead the Company
to believe that the Company is not in compliance in material respects with the
covenants in this Agreement, (ii) an Event of Default, (iii) the institution or
threatened institution of an action, suit or proceeding against the Company or
any of its Subsidiaries by or before any court, regulatory authority,
administrative agency or any other governmental agency or body, domestic or
foreign, which, if adversely decided, could have a Material Adverse Effect or
(iv) any other development that results in, or could reasonably be expected to
result in, a Material Adverse Effect;
5.1.3 within 30 days of the Closing Date, evidence satisfactory to the
Lender that the Company and each of its Subsidiaries is in good standing in each
jurisdiction in which the conduct of its business requires such qualification by
reason of the ownership or leasing of property or otherwise;
5.1.4 within 90 days of the Loan Completion Date, its audited financial
statements for the year ended December 31, 2002, such statements to include an
unqualified audit opinion from the auditors.
5.2 Accounts and Records. The Company shall keep true records and books of
---------------------
account in which entries will be made of all dealings or transactions in
relation to the business and affairs of the Company and its Subsidiaries, if
any, in accordance with US GAAP, to the extent applicable, applied on a
consistent basis.
5.3 Inspection. The Company shall permit the Lender or any of its officers,
----------
employees, representatives or such other Person as the Lender may designate,
during regular business hours of the Company, upon reasonable prior notice, to
visit and inspect the offices and properties of the Company and to (i) review
and make extracts or copies of the books, accounts and records of the Company,
and (ii) discuss the affairs, finances and accounts of the Company, with the
Company's directors, independent accountants, consultants and attorneys.
5.4 Use of Proceeds. The Company shall use the proceeds received from the
-----------------
Convertible Loan and the Preferred Investment to support the expansion of the
Company's operations, through mergers, acquisitions and organize growth, and for
general corporate purposes.
5.5 Ordinary Shares/AIM. The Company shall maintain a sufficient number of
--------------------
authorized but un-issued Ordinary Shares to permit the conversion of the
Convertible Loan pursuant to Sections 2.7 and 2.8. The Company shall maintain
------------ ---
its listing of Ordinary Shares on AIM (including any Ordinary Shares issued
pursuant to the terms of this Agreement) and shall comply in all respects with
the rules and regulations relating thereto.
5.6 American Depositary Receipts/AMEX. The Company shall maintain an ADR
-----------------------------------
program on substantially the same terms set forth in the Depository Agreement
and shall (and shall use best efforts to cause the Depository to) maintain the
listing of its ADRs (including ADRs issued hereunder) on AMEX and shall (and
shall use best efforts to cause the Depository to) comply in all respects with
the rules and regulations thereto. The Company shall (and shall use best
efforts to cause the Depository to) at all times maintain a sufficient number of
authorized but un-issued
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ADRs to allow the immediate conversion of Ordinary Shares into ADRs in
accordance with an ADR Election.
5.7 Observer. For so long as the Board of Directors shall not have a member
--------
nominated or appointed by the Lender or its Affiliates, the Lender shall be
entitled to appoint one observer to receive notice of, attend and speak at (but
not vote at) meetings of the Board of Directors and any committees thereof.
Such observer shall receive all materials forwarded to the Board of Directors at
the same time and in the same manner as the Board of Directors. The Lender
acknowledges that the Issuer is a public company and that the use or
transmission of any confidential information received by the observer appointed
pursuant to this Section 5.7 may be subject to restrictions under applicable
------------
securities laws and the rules and regulations of AMEX and the London Stock
Exchange plc as they relate to AIM.
5.8 Shareholders Meeting. The Company covenants to the Lender that it shall
--------------------
convene and hold an extraordinary general meeting of shareholders no earlier
than 27 February 2003 and no later than 30 June 2003 in order to (a) adopt a new
Memorandum and Articles of Association of the Company incorporating the terms of
the Preference Shares and (b) authorize the allotment and issue of such
Preference Shares to the Lender should the Lender choose to subscribe.
5.9 Further Assurances. From time to time the Company shall execute and
-------------------
deliver to Lender such other instruments, certificates, agreements and documents
and take such other action and do all other things as may be reasonably
requested by Lender in order to implement or effectuate the terms and provisions
of this Agreement, including but not limited to the conversion of the
Convertible Debenture and the authorization, allotment and issuance of the
Preferred Shares.
5.10 Milestones. The Company acknowledges that it has discussed a business
----------
development plan prepared in conjunction with the Lender. In furtherance of
such business development plan, the Company covenants with the Lender that it
shall use its best efforts to achieve the following goals by the end of 2003:
(a) the development, documentation and adoption by the Board of
Directors of a strategic framework for sales and organizational development in
conjunction with the Lender;
(b) the articulation to the Lender of the Company's future
investment and acquisition criteria;
(c) the adoption of a policy for the improvement of operating
credit metrics including days sales outstanding; and
(d) the completion of a review of market opportunities in
non-Japan Asia, specifically China.
5.11 Ratio Test. For so long as the Company shall not be subject to
-----------
Sections 6.1 to 6.12 and Sections 5.7 and 5.10 pursuant to the operation of
- ------------- ---- ------------ ----
Section 6.14, the Company shall use its best efforts not to undertake or
- -------------
complete any action or transaction without the consent of the Lender which could
be reasonably expected to cause the Company to have a EBITDA to Interest Cover
ratio (the "Ratio") of less than 3:1 as of the date of such action or
-----
transaction.
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5.12 Termination. The covenants and agreements of the Company set forth in
-----------
this Article V shall terminate and be of no further force or effect at such time
---------
as no principal or interest on the Convertible Debenture are outstanding
(whether as a result of the payment of all outstanding principal and accrued
interest on the Convertible Debenture or the conversion of the Convertible
Loan).
ARTICLE VI
NEGATIVE COVENANTS
Subject to Sections 6.14 and 6.15 hereof, the Company hereby covenants and
------------- ----
agrees that it will not, will not agree to, and will not suffer or permit any
Subsidiary of the Company (except with respect to Section 6.5) to do any of the
following without the consent of the Lender:
6.1 Borrowed Money Indebtedness . Create, incur, suffer or permit to exist,
---------------------------
or assume or guarantee, or become or remain liable with respect to any Borrowed
Money Indebtedness, except the following:
6.1.1 the Convertible Debenture and any New Convertible Debenture;
6.1.2 the Borrowed Money Indebtedness existing on the date of this
Agreement and disclosed in the Financial Statements, and all renewals,
extensions and replacements of any of the foregoing, provided that the accrual
of interest on such liabilities, so long as it is not converted to principal,
shall not be deemed to increase such liabilities; and
6.1.3 reasonable bank debt or other commercial financings entered into
in the ordinary course of business on market terms.
6.2 Liens . Create or suffer to exist any Lien upon any of its Property now
-----
owned or hereafter acquired, or acquire any Property upon any conditional sale
or other title retention device or arrangement or any purchase money security
agreement; provided, however, that the Company and Subsidiaries of the Company
may create or suffer to exist Permitted Liens.
6.3 Contingent Liabilities . Directly or indirectly guarantee the
-----------------------
performance or payment of, or purchase or agree to purchase, or assume or
contingently agree to become or be secondarily liable in respect of, any
obligation or liability of any other Person except for:
6.3.1 the endorsement of checks or other negotiable instruments in the
ordinary course of business;
6.3.2 obligations disclosed to Lender in the Financial Statements (but
not increases of such obligations after the date hereof, provided that the
accrual of interest on such obligations, so long as it is not converted to
principal, shall not be deemed to increase such obligations);
6.3.3 those liabilities permitted under Section 6.1 hereof.
------------
E-73
6.4 Mergers, Consolidations and Dispositions and Acquisitions of Assets .
----------------------------------------------------------------------
In any single transaction or series of related transactions, directly or
indirectly:
(a) liquidate, wind up or dissolve;
(b) be a party to any merger or consolidation;
(c) sell, convey or lease all or substantially all of its assets;
(d) acquire all or a substantial portion of the assets or stock of
any Person whether by merger or otherwise; or
(e) pledge, transfer or otherwise dispose of any equity interest
in any of its Subsidiaries or issue or permit any of its Subsidiaries to issue
any additional equity interests except to the Company or another of its
Subsidiaries.
6.5 Redemption, Dividends and Distributions . At any time, (a) redeem,
------------------------------------------
retire or otherwise acquire, directly or indirectly, any equity interest of the
Company or (b) make any distributions of any property or cash or dividends in
respect of any of the Capital Stock of the Company.
6.6 Nature of Business . Change the nature of its business or enter into
--------------------
any business which is substantially different from the business conducted by it
as of the date hereof.
6.7 Affiliate Transactions . Enter into any transaction or agreement with
-----------------------
any officer, director, employee or beneficial owner of Capital Stock in the
Company or any of its Subsidiaries (or any Affiliate of any such Person) unless
the transaction is upon no less favorable terms than those that are obtainable
from wholly unrelated sources.
6.8 Loans and Investments . Make any loan, advance, extension of credit or
----------------------
capital contribution to, or make or have any Investment in, any Person, or make
any commitment to make any such extension of credit or Investment.
6.9 Organizational Documents . Amend, modify, restate or supplement its
-------------------------
Memorandum and Articles of Association or other organizational documents.
6.10 Sale/Leasebacks . Enter into any sale/leaseback transactions.
---------------
6.11 Issuance of Stock . Issue or allot or become obligated to issue or
-------------------
allot shares of Capital Stock or Derivative Securities, except for (i) Ordinary
Shares and Preference Shares the allotment and issuance of which is contemplated
by this Agreement and (ii) rights, warrants, convertible notes or options to
purchase Capital Stock issued or granted prior to the date hereof and previously
disclosed to the Lender.
6.12 Subsidiaries . Form, create or acquire any Subsidiary or permit any
------------
Person other than the Company or a wholly owned Subsidiary to hold an equity
interest in any Subsidiary.
E-74
6.13 Capital Expenditures. The Company shall not make any capital
---------------------
expenditures (or series of related capital expenditures) either involving more
than $ 100,000 or outside the ordinary course of business.
6.14 Abeyance . Subject to delivery of the Board Certificate described in
--------
the next two sentences and the requirements of Section 5.11, in the event that
------------
(a) the Board of Directors and the Shareholders of the Company shall have
authorized the terms and conditions of the Preference Shares in compliance with
the Act and offered to issue the Preference Shares to the Lender, (b) the Lender
does not make a Subscription Election to acquire Preference Shares during the
Subscription Period, and (c) the Company does not make an Accelerated Repayment
Election to repay the Convertible Loan during the Accelerated Repayment Period,
then, for so long thereafter as the Company maintains a Ratio of at least 3:1,
the negative covenants and agreements of the Company set forth in Sections 6.1
------------
to 6.13 and the affirmative covenants and agreements of the Company set forth in
----
Sections 5.7 (Observer) and 5.10 (Milestones) shall be non-binding on the
- ------------- ----
Company. On the last day of the Accelerated Repayment Period the Company shall
deliver to the Lender a certificate of the Board of Directors of the Company (i)
setting forth the Company's calculation of the Ratio on an un-audited basis as
of such date, and (ii) representing and warranting that such directors believe
after reasonable investigation and review that the calculation of the Ratio set
forth in the certificate is true and correct in all material respects (a "Board
-----
Certificate"). Thereafter, the Company shall, in conjunction with the
- -----------
preparation of each set of audited accounts of the Company after delivery of the
initial Board Certificate (whether monthly, quarterly or annual and regardless
of the reason for the Company's preparation thereof (e.g., pursuant to the Act,
securities laws or applicable stock exchange regulation)) deliver to the Lender
on each date of release of such audited accounts a Board Certificate in the form
described in the preceding sentence (except that the calculation of the Ratio
shall be audited in all Board Certificates except for the initial Board
Certificate), with such Board Certificate and the Ratio contained therein taking
the place of the preceding Board Certificate and Ratio for purposes of this
Section 6.14 thereafter. In the event the Company ceases to maintain a 3:1
- -------------
Ratio as demonstrated by the most recent Board Certificate, then the provision
of Sections 6.1 to 6.13 and Sections 5.7 and 5.10 shall again be binding on the
------------ ---- ------------ ----
Company.
6.15 Termination . The covenants and agreements of the Company set forth in
-----------
this Article VI shall terminate and be of no further force or effect at such
-----------
time as no principal or interest on the Convertible Debenture is outstanding or
payable (whether a result of the payment of all outstanding principal and
accrued interest on the Convertible Debenture or the conversion of the
Convertible Debenture and payment of the interest thereon).
ARTICLE VII
DEFAULTS AND REMEDIES
7.1 Events of Default . An "Event of Default" occurs if:
------------------- ------------------
7.1.1 the Company defaults in the payment of interest on or the
principal of the Convertible Debenture when the same becomes due and payable,
upon acceleration or otherwise and such default is not remedied by the Company
within 5 Business Days after notice from the Lender;
E-75
7.1.2 the Company defaults in the performance of any covenants under
Article VI of this Agreement;
- -----------
7.1.3 the Company fails to comply with any of the provisions of this
Agreement (other than Article VI) and such failure is not remedied by the
-----------
Company within 5 Business Days after notice from the Lender;
7.1.4 the Company defaults in payment on Borrowed Money Indebtedness
(giving effect to any applicable grace periods and any extensions thereof) of at
least $100,000 aggregate principal amount;
7.1.5 there has been an acceleration of the final stated maturity of
any Borrowed Money Indebtedness of the Company if the aggregate principal amount
of such Borrowed Money Indebtedness, together with the principal amount of any
other such Borrowed Money Indebtedness in default for failure to pay principal
at maturity or which has been accelerated, aggregates $100,000 or more at any
time;
7.1.6 any representation or warranty of the Company under this
Agreement shall prove to have been incorrect in any material respect when made;
7.1.7 there exists an outstanding unsatisfied final judgment which,
either alone or together with other outstanding unsatisfied final judgments
against the Company, exceeds an aggregate of $100,000 (to the extent not covered
by insurance) and such judgment shall have continued undischarged or unstayed
for 20 Business Days after entry thereof;
7.1.8 if the Company is declared insolvent, or a receiver or custodian
is appointed with respect to any Property;
7.1.9 if any distress, execution, sequestration, or other processes is
levied or enforced or issued against any Property and is not discharged within
seven days of being levied;
7.1.10 if the Company is unable to pay its debts within the meaning of
any applicable statute or law or is certified as being unable to pay its debts
as and when they fall due or is declared insolvent
7.1.11 if the Company makes any voluntary arrangement with its
creditors or becomes subject to an administration order;
7.1.12 if the Company ceases or threatens to cease to carry on
business; or
7.1.13 a Material Adverse Effect occurs.
7.2 Acceleration. If an Event of Default occurs and is continuing, the
------------
Lender by notice to the Company, may declare the principal of and any accrued
interest on the Convertible Debenture to be due and payable. Upon such
declaration such principal and interest shall be due and payable immediately.
If an Event of Default specified in Sections 7.1.8 to 7.1.12 occurs, all unpaid
-------------- ------
principal and accrued interest on the Convertible Debenture then outstanding
shall ipso facto
E-76
become and be immediately due and payable without any declaration or other act
on the part of the Lender.
7.3 Other Remedies . Notwithstanding any other provision of this Agreement,
--------------
if an Event of Default occurs and is continuing, the Lender may pursue any
available remedy by proceeding at law or in equity to collect the principal of
or interest then due on the Convertible Debenture. Without limiting the
foregoing, the Company and the Lender acknowledge and agree that the remedies of
the Lender at law for a breach or threatened breach of any of the provisions of
this Agreement would be inadequate and, in recognition of that fact, agree that,
in the event of a breach or threatened breach by the Company of any of the
provisions of this Agreement, in addition to any remedies specified herein, at
law or otherwise, the Lender, without posting any bond shall be entitled to seek
equitable relief in the form of specific performance, a temporary restraining
order, a temporary or permanent injunction or any other equitable remedy which
may then be available. A delay or omission by the Lender in exercising any
right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. All
remedies shall be cumulative.
7.4 Waiver of Past Defaults . Any Event of Default and its consequences may
-----------------------
be waived in accordance with Section 10.2.
-------------
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification . Each Party shall indemnify each other Party (the
---------------
"Indemnified Parties") for all actions, suits, proceedings, hearings,
- ---------------------
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, liabilities, obligations, taxes, liens, losses, expenses and
fees, (including, without limitation, reasonable attorneys' fees and expenses)
(each a "Loss" and collectively, the "Losses") suffered by the Indemnified
---- ------
Parties resulting from, arising out of, relating to, in the nature of, or caused
by (a) a breach of any representation or warranty or covenant of a Party
contained in this Agreement.
8.2 Shareholder Communications . The Company will indemnify and hold
---------------------------
harmless the Lender, each of its directors and officers and each Person, if any,
who controls the Lender against any Losses, joint or several, to which the
Lender may become subject under applicable securities laws, insofar as such
Losses arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in any communication to Shareholders as
of the date on which it is distributed to the Shareholders and as of the date of
and meeting of Shareholders, (ii) any omission or alleged omission to state a
material fact required to be stated in any communication to shareholders or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading as of the date on which any communication
to Shareholders is distributed to the Shareholders and as of the date of the
Shareholders Meeting, and the Company will reimburse the Lender for any legal or
any other expenses reasonably incurred by the Lender in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any untrue statement or omission made in any communication to shareholders
in
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reliance upon and in conformity with information furnished to the Company, in
writing, by or on behalf of the Lender specifically for use in the preparation
thereof.
8.3 Indemnification Process . Each Indemnified Party shall give notice to
------------------------
the party required to provide indemnification (the "Indemnifying Party")
-------------------
promptly after such Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought, and shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation resulting therefrom; provided,
--------
that counsel for the Indemnifying Party, who shall conduct the defense of such
claim or litigation, shall be approved by the Indemnified Party (whose approval
shall not be unreasonably withheld); and, provided, further, that the failure
--------
of any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 8.3 except to the
-----------
extent that the Indemnifying Party is adversely affected by such failure. The
Indemnified Party may participate in such defense at such party's expense;
provided, however, that the Indemnifying Party shall pay such expense if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential conflicting
interests between the Indemnified Party and any other party represented by such
counsel in such proceeding; provided further that in no event shall the
--------
Indemnifying Party be required to pay the expenses of more than one law firm per
jurisdiction as counsel for the Indemnified Party. The Indemnifying Party also
shall be responsible for the expenses of such defense if the Indemnifying Party
does not elect to assume such defense. No Indemnifying Party, in the defense of
any such claim or litigation shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
of such claim or litigation, and no Indemnified Party shall consent to entry of
any judgment or settle such claim or litigation without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld.
ARTICLE IX
RESTRICTIONS ON TRANSFER OF CONVERTIBLE DEBENTURE
9.1 Securities Laws Restrictions on Transfer . None of the Convertible
--------------------------------------------
Debenture, or the Ordinary Shares issuable as a result of an Optional Conversion
Election or a Company Conversion shall be sold or transferred unless either (a)
they first shall have been registered under the Securities Act or (b) the
Company shall have been furnished with an opinion of legal counsel, reasonably
satisfactory to the Company, to the effect that such a transfer is exempt from
the registration requirements of the Securities Act.
9.2 Restrictive Legend . For so long as such securities are not registered
-------------------
or otherwise transferable under the Securities Act, the Convertible Debenture,
any New Convertible Debenture, any Ordinary Shares and any ADRs issued upon
conversion pursuant to Sections 2.7 and 2.8 shall be stamped or otherwise
------------- ---
imprinted with a legend in the following form (in addition to any legend
required under applicable state securities laws):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES
---
LAWS AND MAY NOT BE TRANSFERRED, SOLD OR
E-78
OFFERED FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED."
The foregoing legend may be removed after the second anniversary of the
later of (a) the issue date of the security and (b) the last date upon
which the Company or any Affiliate of the Company was the owner of such
security (or such shorter period of time as permitted by Rule 144(k) under
the Securities Act or any successor provision).
9.3 Transfer to Affiliates.
9.3.1 This Agreement, the Convertible Debenture and the rights and
obligations hereunder and thereunder may be transferred or assigned in whole or
in part by the Lender to any of its Affiliates or any Person managed or advised
by it; provided, that (a) the transferee provides written notice of such
--------
assignment to the Company stating its name and address, (b) the Company receives
the written instrument provided in Section 9.3.2 below, and (c) that such
--------------
transfers or assignments are in conformance with applicable securities laws.
Any transferee to whom a transfer is made in accordance with the immediately
preceding sentence shall be deemed to be the Lender for purposes of this
Agreement and any convertible debenture held by such transferee shall be deemed
to be a Convertible Debenture for purposes of this Agreement.
9.3.2 Any transferee to whom rights hereunder are transferred shall, as
a condition to such transfer, deliver to the Company a written instrument by
which such transferee agrees to be bound by the obligations imposed upon the
Lender under this Agreement to the same extent as if such transferee were a
party hereto. Upon transfer of a portion of the Convertible Debenture, the
holders shall deliver the pre-existing Convertible Debenture to the Company for
cancellation and the Company shall reissue Convertible Debentures to the holders
reflecting the aggregate principal amounts of such Convertible Debentures.
9.3.3 A transferee to whom such rights are transferred pursuant to this
Section 9.3 may not again transfer such rights to any other Person, other than
- ------------
as provided in this Section 9.3.
------------
9.4 Transfer to Competitors.
9.4.1 Notwithstanding the transfer rights set forth in this Article IX,
----------
neither this Agreement nor any part of the Convertible Debenture may be
transferred to any Competitor of the Company or any Person who holds more than
10% of the fully diluted equity of a Competitor without the prior written
consent of the Company.
ARTICLE X
MISCELLANEOUS
10.1 Notices . All notices, requests, demands, claims, and other
-------
communications to any party hereunder or pursuant to the terms hereof shall be
-
in writing. Any such notice, request, demand, claim, or other communication to
any party hereunder shall be deemed duly delivered (a) five Business Days after
it is sent by registered or certified mail, return receipt requested, postage
E-79
prepaid, or (b) one Business Day after it is sent via a reputable international
overnight courier service, in each case to the intended recipient as set forth
below:
If to the Lender, to:
--------------------
Hemisphere Capital LLC
20 Farnham Circle
Needham, MA 02492
UNITED STATES OF AMERICA
Facsimile: +44-20-7968-4801
Attention: Daniel W. Sasaki
with a copy (which shall not constitute notice) to:
--------------------------------------------------
Kirkland & Ellis International
Tower 42
25 Old Broad Street
London EC2N 1HQ
ENGLAND
Attention: Matthew H. Hurlock
If to the Company, to:
---------------------
VI Group plc
The Mill
Briscombe Port
Stroud, Gloucestershire
GL5 2QG
ENGLAND
Facsimile: +44-8707-429-771
Attention: Peter Wharton
with a copy (which shall not constitute notice) to:
--------------------------------------------------
Kleban & Samor, P.C.
2425 Post Road
Southport, CT 06890
UNITED STATES OF AMERICA
Facsimile: +1-213-259-9617
Attention: Alexander W. Samor
Any Party may give any such notice, request, demand, claim, or other
communication using any other means (including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail, or electronic mail),
but no such notice, request, demand, claim, or other communication shall be
deemed to have been duly given unless and until it actually is received by the
Party for whom it is intended. Any Party may change the address to which
notices,
E-80
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
10.2 Amendment, Supplement and Waiver . No provision of this Agreement or
----------------------------------
the Convertible Debenture may be amended, supplemented or waived without the
written consent of the Lender and the Company, and no existing Event of Default
(other than a Event of Default in the payment of the principal of, premium, if
any, or interest on the Convertible Debenture, other than a payment default
resulting from an acceleration that has been rescinded) and no compliance with
any provision of this Agreement or the Convertible Debenture may be waived
without the written consent of the Lender.
10.3 Survival . All covenants, agreements, representations and warranties
--------
made by the Company in the Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon by the Lender
and shall survive the execution and delivery of the Loan Documents and the
making of the Convertible Loan, regardless of any investigation made by the
Lender or on its behalf and notwithstanding that the Lender may have had notice
or knowledge of any Event of Default or incorrect representation or warranty at
the time the Convertible Loan was made, and shall continue in full force and
effect as long as the principal of or any accrued interest on the Convertible
Loan or any fee or any other amount payable under this Agreement is outstanding
and unpaid. The provisions of Article VIII shall survive and remain in full
------------
force and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Convertible Loan or the termination of this
Agreement or any provision hereof.
10.4 Duplicate Originals . The parties may execute this Agreement by
--------------------
separate counter-part, all of which when taken together shall constitute one and
the same agreement.
10.5 Governing Law.
--------------
10.5.1 The laws of the State of New York, without regard to the
principles of conflicts of law contained therein, shall govern this Agreement
and the Convertible Debenture.
10.5.2 The Company hereby irrevocably and unconditionally submits to
the nonexclusive jurisdiction of the Supreme Court of the State of New York
sitting in New York County and of the United States District Court of the
Southern District of New York, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Agreement or the
Convertible Debenture, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and my be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement or any other Loan Document shall affect any right that
the Lender may otherwise have to bring any action or proceeding relating to this
Agreement or any other Loan Document against the Company, its Subsidiaries or
any of their respective properties in the courts of any jurisdiction.
E-81
10.5.3 The Company hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the extent it may legally and effectively do so,
any objection that it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement or any
other Loan Document in any court referred to in Section 10.5.2. Each of the
--------------
Parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
10.5.4 Each Party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.1. Nothing in this
------------
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
10.6 Waiver of Jury Trial . Each Party hereto hereby waives, to the fullest
--------------------
extent permitted by applicable law, any right it may have to a trial by jury in
any legal proceeding directly or indirectly arising out of or relating to this
Agreement, any other Loan Document or the transactions contemplated hereby
(whether based on contract, tort or any other theory). Each Party hereto (a)
certifies that no representative, agent or attorney of any other Party has
represented, expressly or otherwise, that such other Party would not, in the
event of litigation, seek to enforce the foregoing waiver and (b) acknowledges
that it and the other Parties hereto have been induced to enter into this
Agreement by, among other things, the mutual waivers and certifications in this
Section 10.6.
- -------------
10.7 No Adverse Interpretation of Other Agreements . This Agreement may not
---------------------------------------------
be used to interpret another indenture, loan or debt agreement of the Company or
a Subsidiary. No such indenture, loan or debt agreement may not be used to
interpret this Agreement.
10.8 Successors and Assigns . All agreements of the Company in this
------------------------
Agreement and the Securities shall bind its successors and assigns. All
agreements of the Lender in this Agreement shall bind its successors and
assigns.
10.9 Severability . In case any provision in this Agreement or the
------------
Convertible Debenture shall be invalid, illegal or unenforceable for any reason,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
10.10 Headings . The Headings of the Articles, Sections and subsections of
--------
this Agreement have been inserted for convenience of reference only, are not to
be considered a part hereof and shall in no way modify or restrict any of the
terms or provisions hereof.
10.11 Confidentiality . The Lender agrees that it will keep confidential
---------------
and will not disclose, divulge or use for any purpose other than to monitor its
investment in the Company any confidential, proprietary or secret information
which Lender may obtain from the Company pursuant to financial statements,
reports and other materials submitted by the Company to the Lender pursuant to
this Agreement, or pursuant to visitation or inspection rights granted
hereunder, unless such information is known, or until such information becomes
known, to the public (other than as a result of a breach of this Section 10.11
-------------
by the Lender); provided, that the Lender may disclose such information if
--------
required by law, provided that the Lender provides prior
--------
E-82
written notice to the Company of such proposed disclosure and takes reasonable
steps to avoid and/or minimize the extent of any such required disclosure. The
Lender further acknowledges and agrees that certain of the confidential,
proprietary or secret information which it may obtain hereunder may be material
non-public information and that neither it nor any of its Affiliates shall
engage in any acquisition, disposition or other similar transaction involving
the Company's securities on the basis of such material non-public information.
* * * * *
E-83
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above set forth.
VI GROUP PLC
By: ______________________________
Name: Elliot I. Miller
Title: Deputy Chairman
HEMISPHERE CAPITAL LLC
By: ______________________________
Name:
Title:
E-84
SCHEDULE 4.1.2
CAPITALIZATION
--------------
(a) Share Capital
SHARES NOMINAL VALUE
Authorized share capital of 0.5p ordinary shares: 80,000,000 Pounds400,000
Issued share capital of 0.5p ordinary shares 37,261,166 Pounds186,305
(b) Derivative Securities
Share Options
NUMBER OF OPTIONS OPTION PRICE PERIOD EXERCISABLE
OUTSTANDING
Approved 142,857 21p 21/10/01-21/10/08
Approved 51,000 50p 2/4/01-2/4/08
Unapproved 283,000 50p 2/4/01-2/4/05
-------
TOTAL 476,857
Authority was given in the Annual General Meeting held on 18 June 2002 for the
Board of Directors to adopt in addition to the existing share option schemes of
the Company, such further employee incentive schemes as they deem fit provided
the aggregate nominal amount of shares which may be placed under option shall
not exceed 10% of the ordinary capital of the Company from time to time in
issue.
Other obligations to issue shares or derivatives to issue convertible into
- --------------------------------------------------------------------------------
shares
- ------
The Company has an obligation to Westminster Securities Corp. acting in their
capacity as placement agent, to issue warrants equal to 10% of the amount raised
and exercisable at the same price paid by the Lender in relation to the issue of
Capital Stock or other security.
E-85
Schedule 4.1.5
Properties
----------
LEASE
COMPANY ADDRESS OWNED/LEASED EXPIRATION
DATE
Vero International Software The Mill Leased 2008
(UK) Ltd
Brimscombe Port
Stroud
Gloucestershire
GL5 2SG
Vero International Software Unit 2 Leased 2007
(UK) Ltd
Bowden Drive
Padge Road
Beeston
Nottingham
Vero International Software 29 Bis Leased
(UK) Ltd Chemin de Genas
69800 Saint Priest
France
Vero International Software Via Prelle, 30 Partially 2003
S.r.l 10090 owned/
Romano Canavese (To) partially leased
Italy
Vero Sistemi & Consulenze Viale San Marco Leased 2004
S.r.l 38 30020
Marcon (ve)
Italy
E-86
Vero Tecnologie Spa Via Maestri del Lavoro 29 Leased 2013
I-20025 LEGANO (MI)
Italy Principal offices of
Vero Tecnologie S.p.A
Vero International Inc. 30150 Telegraph Road Leased 2005
Suite 183
Bingham Farms
MI 48025
USA
Vero Tooling Solutions 3600 Billingscourt Leased 2005
Unit 109
Burlington
Ontario
Canada
E-87
Schedule 4.1.12
The Company has full exclusive, title and interest in the following software
products:
VISI-CAD
VISI-CAM
VISI-Series
Machining Strategist
VISI-CAD, VISI-CAM, VISI-Series and Machining Strategist are copyrights of Vero
International Software UK Ltd
The copyrights are not registered
Machining Strategist was acquired from NC Graphics (Cambridge) Ltd passing
exclusive use of the name to the UK subsidiary of the Company. The copyright was
passed as a joint copyright with the prior owners, allowing both entities
distribution and development rights. The prior owner passed all rights to the
Machining Strategist name to the Company and so no longer promotes or sells
Machining Strategist as a product.
The following trade marks are registered:
VISI-CAD in USA, Canada, UK
VISI-CAM in USA, Canada, UK
VISI in UK
The following trade marks have been applied for:
VISI-CAD applied to World Intellectual Property Organisation
VISI-CAM applied to World Intellectual Property Organisation
VISI applied to World Intellectual Property Organisation, USA and Canada
VISI-Series applied to World Intellectual Property Organisation, USA and Canada
E-88
Schedule 4.1.13
MATERIAL TRANSACTIONS SINCE JUNE 30, 2002
a) American Stock Exchange Listing
b) Acquisition of Vero Tooling Solutions, Inc.
c) Events reported in Forms 6K filed with the U.S. Securities and
Exchange Commission dated September 13, 2002, October 10, 2002, October 22,
2002, October 29, 2002 and December 2, 2002.
E-89
Schedule 4.1.15
Ownership of Subsidiaries
-------------------------
VI Group plc has the following Subsidiaries:
PROPORTION OF SHARE
%
Vero International Software S.r.l. 100
Vero International Software UK Limited 100
Vero International, Inc. 100
Vero Tooling Solution Inc. 100
*Vero Tecnologie S.p.A. 100
*Vero Sistemi e Consulenze S.r.l. 100
**Vero Japan 100
<FN>
*Vero Tecnologie and Vero Sistemi e Consulenze S.r.l. are due to be merged into
Vero International Software Srl during the first quarter of 2003.
** The Board of VI has approved the formation of a 100% subsidiary in Japan.
Steps are in progress to form the company early on in 2003.
E-90
Schedule 4.1.16
- ----------------
Insurance
POLICY HOLDER INSURANCE POLICY LIMIT OF UNDERWRITER NOTE
INDEMNITY
- --------------------------------------------------------------------------------------------------------------------------
Vero International MBertipaglia's Death: Euro Allianz Subalpina
Sw srl accident insurance 258.228,00 spa
Policy no.72041189 Total permanent
incapacity:
Euro 361.519,00
- --------------------------------------------------------------------------------------------------------------------------
Vero International MBertipaglia's Euro 144.608,00 Allianz Subalpina
Sw srl illness insurance spa
Policy no. 607790
- --------------------------------------------------------------------------------------------------------------------------
Vero International Office Insurance Euro 101.225,00 Allianz Subalpina
Sw srl (computers) spa
Policy no.
72.67910539
- --------------------------------------------------------------------------------------------------------------------------
Vero International Office insurance Euro 516.456,00 Allianz Subalpina
Sw srl spa
(s/w info's dissemination)
Policy no.
30.61452835
- --------------------------------------------------------------------------------------------------------------------------
Vero International Office insurance Euro 67.139,00 Allianz Subalpina
Sw srl (theft) spa
Policy
no.10.61454591
- --------------------------------------------------------------------------------------------------------------------------
Vero International Office insurance Euro 67.139,00 Allianz Subalpina
Sw srl (fire) spa
Policy no.
00.61454534
- --------------------------------------------------------------------------------------------------------------------------
Vero International Office insurance Euro 361.519,00 Allianz Subalpina This insurance
Sw srl (fire for loan bank spa expired the
- --------------------------------------------------------------------------------------------------------------------------
E-91
- --------------------------------------------------------------------------------------------------------------------------
CRT) 16/12/2002
Policy no.
00.67912220
- --------------------------------------------------------------------------------------------------------------------------
Vero International Office insurance Euro 578.431,00 Allianz Subalpina This insurance will
Sw srl (fire for loan bank spa expires on
Bcc Vische) 18/04/2003
Policy no. 00.49218332
- --------------------------------------------------------------------------------------------------------------------------
Vero International Business Travel Death Euro 51.645,00 Allianz Subalpina
Sw srl Insurace employees spa
Total permanent incapacity
Policy no.
72042062 Euro 51.645,00
Refund cost hospital
Euro 10.329,00
- --------------------------------------------------------------------------------------------------------------------------
Vero International MCignetti's Death Euro 154.937,00 Allianz Subapina
Sw srl accident insurance spa
Total permanent
Policy no. 72042351 incapacit
Euro 361.519,00
- --------------------------------------------------------------------------------------------------------------------------
Vero International Sw srl EGalardo's accident DeathEuro 361.519,00 Allianz Subapina For year 2003 this
insurance spa insurance has not
Total permanent been renewed
Policy no. incapacity
20.89341093 Euro 361.519,00
- --------------------------------------------------------------------------------------------------------------------------
Vero International EGalardo'illness insurance Euro 51.645,00 Allianz Subalpina For year 2003 this
Sw srl spa insurance has not
Policy no. been renewed
26.89341077
- --------------------------------------------------------------------------------------------------------------------------
Vero International EGalardo's illness Total permanent Allianz Subalpina For year 2003 this
Sw srl insurance incapacity spa insurance has not
Euro 154.937,00 been renewed
Policy no.
26.89341101
- --------------------------------------------------------------------------------------------------------------------------
MVergerio's Unlimited. Allianz Subalpina
business travel spa
Insurance
E-92
- --------------------------------------------------------------------------------------------------------------------------
Vero Internartional Policy no.
Sw sr 104524665
- --------------------------------------------------------------------------------------------------------------------------
CARS
POLICY HOLDER INSURANCE LIMIT OF INDEMNITY UNDERWRITER NOTE
POLICY
- --------------------------------------------------------------------------------------------------
Vero International Fiat Multipla Euro Allianz Subalpina
Sw srl 12.911,00fire&theft spa
Policy
no.13142611 +
unlimited for personal
liability
- --------------------------------------------------------------------------------------------------
Vero International Peugeot 607 Euro27.633,00fire&theft Allianz Subalpina
Sw srl spa
Policy no. +
103489020
unlimited for persona
liability
- --------------------------------------------------------------------------------------------------
Vero International Peugeot 307 Euro 18.000,00fire& theft Allianz Subalpina
Sw srl spa
Policy no. +
104667163
unlimited for personal
liability
- --------------------------------------------------------------------------------------------------
Vero International Fiat Ulisse Euro 12.950,00fire&theft Allianz Subalpina
Sw srl spa
Policy no. +
103142550
unlimited for personal
liability
- --------------------------------------------------------------------------------------------------
Vero International Fiat Marengo Euro 15.593,00fire& theft Allianz Subalpina
Sw srl spa
Policy no. +
101001858
Euro 1549370,00 for
E-93
- --------------------------------------------------------------------------------------------------
personal liability
- --------------------------------------------------------------------------------------------------
Vero International Renault Scenic Euro 5.500,00 fire & theft Allianz Subalpina
Sw srl spa
Policy no. +
103142886
unlimited for personal
liability
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
POLICY HOLDER INSURANCE POLICY LIMIT OF INDEMNITY UNDERWRITER
- --------------------------------------------------------------------------------------------------
Vero Tecnologie Office Insurance General property Toro
SpA Euro 53,143 Assicurazioni
Policy No. F15.59.00804828
Liabilities Euro 531,434
- --------------------------------------------------------------------------------------------------
Car Insurance (plate CB738LB) Genialloyd
Policy No. 177235091
- --------------------------------------------------------------------------------------------------
Car Insurance (plate CC298JE) Genialloyd
Policy No. 177631349
- --------------------------------------------------------------------------------------------------
POLICY HOLDER INSURANCE POLICY LIMIT OF INDEMNITY UNDERWRITER
- --------------------------------------------------------------------------------------------------
VI Group plc Directors and Officers 5,000,000 Pounds New Hampshire
Insurance
Policy No. 33561571 Company
- --------------------------------------------------------------------------------------------------
E-94
POLICY HOLDER INSURANCE POLICY LIMIT OF INDEMNITY UNDERWRITER
- --------------------------------------------------------------------------------------------------
Don Babbs, Key Man 1,000,000 Pounds Swiss Life
- --------------------------------------------------------------------------------------------------
Gerry O'Driscoll, Key Man 500,000 Pounds Swiss Life
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
Vero International Professional Indemnity 250,000 Pounds any one MMA Insurance
Software UK Ltd Insurance claim and in all
Policy No. F2903HAAMF 10,000 Pounds excess
each and every claim
- --------------------------------------------------------------------------------------------------
Public and Product Liability 1,000,000 Pounds Norwich Union
Policy No. 23623525
- --------------------------------------------------------------------------------------------------
Office Insurance Stroud Norwich Union
Contents 52,353 Pounds
Policy No. CSJ 2344 6174
Tenants improvements
10,791 Pounds
Includes Employers Liability
and Public Liability
Cambridge
Contents 20,000 Pounds
Nottingham
Contents 30,000 Pounds
Tenants improvements
10,000 Pounds
E-95
POLICY HOLDER INSURANCE POLICY LIMIT OF INDEMNITY UNDERWRITER
- --------------------------------------------------------------------------------------------------
Computer Insurance Anywhere required in Norwich Union
UK 67,000 Pounds
Policy no. JX925903057
Brimscombe Mill,
Telecoms equip
12,000 Pounds
- --------------------------------------------------------------------------------------------------
Motor Fleet Insurance All vehicles, owned, Norwich Union
hired, borrowed or
Policy No. 34FLW1372032 leased
- --------------------------------------------------------------------------------------------------
Business Travel Insurance Includes unlimited Royal and
medical insurance Sunalliance
Policy No. PARKK150629 outside UK
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
Vero International Commercial General Liability Each occurrence Cincinnati
Inc $1,000,000 Insurance Co.
Policy No. CPP0742324
Fire damage $100,000
Med Exp $5,000
Personal & adv injury
$1,000,000
- --------------------------------------------------------------------------------------------------
Workers compensation and Each accident $100,000 Cincinnati
employers liability Casualty
Disease ea. Emp. Company
$100,000
Disease policy limit
$500,000
- --------------------------------------------------------------------------------------------------
E-96
POLICY HOLDER INSURANCE POLICY LIMIT OF UNDERWRITER NOTE
INDEMNITY
- ---------------------------------------------------------------------------
Vero Sistemi Office insurance Euro 67.139,00 Generali Spa
(theft)
srl
Policy
no.998008481
- ---------------------------------------------------------------------------
Vero Sistemi Office insurance Euro 11.070,00 Generali Spa
(fire) goods
srl
Policy no. Euro 16.600,00
998008480 computers
Euro 221.300,00
damages to thirds
Euro 110.700,00
damages to
builder's owner
- ---------------------------------------------------------------------------
CARS
POLICY HOLDER INSURANCE POLICY LIMIT OF UNDERWRITER NOTE
INDEMNITY
- ---------------------------------------------------------------------------
Vero Sistemi Skoda Octavia SW Euro 18.650,00 fire& Reale Mutua
theft
Srl Policy no.324458
+
Euro 1.549.370,00
personal liability
- ---------------------------------------------------------------------------
Vero Sistemi Ford Mondeo SW Euro 28.000,00 fire& Reale Mutua
theft
Srl Policy no.324201
+
Euro 1.549.370,00
personal liability
- ---------------------------------------------------------------------------
Vero Sistemi Chrysler Vojager Euro 18.950,00 fire& Reale Mutua
- ---------------------------------------------------------------------------
E-97
- ---------------------------------------------------------------------------
Srl Policy no.324202 theft
+
Euro 1.549.370,00
personal liability
- ---------------------------------------------------------------------------
Vero Sistemi Fiat Bravo Euro 1.549.370,00 Reale Mutua
personal liability
Srl Policy no.323078
- ---------------------------------------------------------------------------
Vero Sistemi Ford Escori SW Euro 1.549.370,00 Reale Mutua
personal liability
Srl Policy no.321206
- ---------------------------------------------------------------------------
E-98
Exhibit A
E-99
Exhibit B
E-100
Exhibit C
E-101
Exhibit D
Competitors
-----------
Cimatron
Delcam plc
Pathtrace plc
IBM/Dassault Systemes
EDS PLM Solutions
Missler Infomatique
Hitachi Zosen
Think3 Inc
Graphic Products
Parametric Technology Corp
Tebis
Open Mind
Mensch und Maschine
DP Technology
CNC Software
Gibbs
Camtek
Surfware
Teksoft
SolidCAM
Sescoi
Auton
Lightworks
NC Graphics
Jetcam
Radan
Autodesk
Cadkey
VX Corporation
E-102