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MANCHESTER HOUSE Private Placing Memorandum for sophisticated, high net worth and professional investors only Delivered upon request of

For His/Her Exclusive Use Copy Number


2


The content of this promotion has not been approved by an authorised person within the meaning of Financial Services and Markets Act 2000 (as amended) (“FSMA”). Reliance on this promotion for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the property or other assets invested.

THIS DOCUMENT IS IMPORTANT AND

87 of FSMA, London Stock Exchange plc or any

REQUIRES YOUR IMMEDIATE ATTENTION. If

other authority or regulatory body.

you are in any doubt about the contents of this Document and/or the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other independent financial adviser duly authorised under FSMA. Investment in the Company is speculative and involves a high degree of risk. Your attention is also drawn to the section headed “Risk Factors” in Part 6 of this Document. The circulation of this Document is strictly limited. Each of these Documents is numbered and addressed to a specific person and may not be passed to anyone other than the person to whom

This offering is only directed to investment professionals, certified sophisticated investors, certified high net worth individuals and other persons to whom it is lawfully addressed for the purposes of FSMA and, as such, this Document is exempt from the general restriction (in section 21 of FSMA) on the communication of invitations or inducements to engage investment activity. No assurances are made or representations given as to compliance with the laws or regulatory requirements of any other country. Manchester House Bar and Restaurant Limited

it is addressed.

(Incorporated in England and Wales under the

To the best of the knowledge of the Directors

8337227).

and the Company (who have taken all reasonable care to ensure that such is the case),

Companies Act 2006 with registered number Open Offer of up to 30 ‘B’ Ordinary Shares at

the information contained in this Document

£25,000 per share)(Offer Shares).

is in accordance with the facts and does

This Document should be read as a whole. The

not omit anything likely to affect the import of

Offer Shares will have the same nominal value

such information.

and will have the rights attaching to them as are

Neither the Directors or the Company warrant or

set out in the Company’s Articles of Association.

represent that any forecast or estimate will turn out

The Open Offer relates to shares in Manchester

to be accurate or true.

House Bar and Restaurant Limited, whose shares

This Document is not a prospectus for the purposes of the Prospectus Rules and has not been prepared in accordance with the

are not traded on any public market. As such the Open Offer relates to illiquid investments which do not have a certain market value.

Prospectus Rules. This Document is not required to

The Open Offer closes at 3.00pm. on 25 March

be a prospectus as it is being circulated to fewer

2013. If you are an Addressee and wish to apply

than 150 people. Accordingly, this Document has

for Offer Shares under the Open Offer you

not been, and will not be, reviewed or approved

should follow the procedure set out in Part 2 of

by the Financial Services Authority of the United

this Document and, where relevant, complete and

Kingdom (“FSA”), pursuant to sections 85 and

return the accompanying Application Form.

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Contents Page

4

Definitions

5

PART 1 Purpose of Open Offer and Company Business

6

PART 2 Details of the Open Offer

11

PART 3 Financial Information on the Company

13

PART 4 Offer Share Terms

16

PART 5 Australasia Case Study

17

PART 6 Risk Factors

19

Annex ‘A’ Shareholding Structure

21

Annex ‘B’ Application Form

22

Annex ‘C’ Articles of Association of the Company

24

Annex ‘D’ Self-Certification Documents

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Definitions ‘Application Form’ means the form at Annexe B of this Document. ‘Board’ means the board of directors of the Company. ‘Company’ means Manchester House Bar and Restaurant Limited; a company registered in England and Wales with company number 8337227. ‘Directors’ means the directors of the Company, being Tim Bacon and Jeremy Roberts. ‘Document’ means this offer document. ‘Enlarged Issued Share Capital’ means 100 shares of £1 each split as to 52’A’ ordinary shares and 48 ‘B’ ordinary shares. ‘FSA’ means the Financial Services Authority. ‘FSMA’ means the Financial Services and Markets Act 2000. ‘HQ charge’ means the management charge (fixed at 8% of revenue) paid by the Company to LV. ‘LV’ means the ‘Living Ventures’ group of companies. For the avoidance of doubt each of the companies comprising the LV group has varying ownership. ‘MPI’ means Member Partner Investor. ‘Offer Shares’ means the 30 ‘B’ ordinary shares in the capital of the Company. ‘Open Offer’ means the offer of the Offer Shares as set out in this Document. ‘Open Offer Record Date’ means 3pm on 25 March 2013.

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Part 1

Purpose of Open Offer and Company Business 1. COMPANY BUSINESS Manchester House Restaurants Ltd (“the Company” - Company number 8337227) is a collaboration between The Living Ventures group of companies (“LV”) and Michelin Award-winning chef Aiden Byrne. The Company has been set up specifically to create and develop an independent fine dining restaurant for Manchester, accompanied by a world class 24 hour lounge. Both businesses will be housed in Tower 12 in Avenue North within the Spinningfields area of Manchester. The shares in the Company are currently owned by the founding directors of LV Tim Bacon and Jeremy Roberts and senior management of the LV organisation, together with Aiden Byrne in the proportions set out in Annexe ‘A’. 2. THE MANAGEMENT Tim Bacon (48) and Jeremy Roberts (50) set up LV in 1999 following the successful development and sale of their first ventures Via Vita and Life Café in the late 1990’s and subsequently of The Living Room in 2007. The latter achieved an enterprise value of £28m. The LV business (split across several companies) currently comprises the Gusto Italian Restaurant brand, Blackhouse (including The Grill on the Alley), The Alchemist, Australasia and the New World Pub Company (including The Oast House). Turnover for all LV businesses to March 2013 is estimated to be circa £45m. Full details of LV brands can be viewed at www.livingventures.com. The LV head office located in Knutsford now operates a range of catering businesses, which are diverse in character but which are linked by a common dedication to quality of product and service. This is underpinned by a culture which sets commitment to training and excellence of delivery at its core. This has been recognised by the Skills Council in 2010 by accreditation of LV’s training programs for craft and management and in the achievement of ‘Outstanding’ and 28th place in the Sunday Times survey of the ‘Best Companies to Work For’ in the UK. This year LV has been rated in the highest 3 star “Extraordinary” category and its new ranking is 9th as revealed on 28th February 2013. The LV businesses are unashamedly entrepreneurial in their attitude but have consistently demonstrated their ability to operate successfully with investors. Since LV’s inception it has worked in partnership or joint venture with public companies such as Marston, Thompson and Evershed PLC, Wolverhampton & Dudley PLC, Whitbread PLC and The Restaurant Group PLC (“TRG”), who currently remain a major shareholder in a part of the LV business (Gusto and Blackhouse brands). The LV business has also worked with private equity investors; in 2001 Bowmark capital invested in The Living Room and achieved a rate of return of 3.9x its initial cost with an IRR of 45% on its exit in April 2005, when TRG invested in its place. Accordingly the Directors have a track-record of running businesses alongside investors and are familiar with the corporate governance issues it creates.

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Since the sale of The Living Room in 2007 Tim Bacon and Jeremy Roberts have led LV into the development of two exciting brands; The Alchemist and New World Pub Company (” NWPC”). Both of these businesses are well known to the Manchester market with the Alchemist operating in Spinningfields and New York Street and NWPC operating The Oast House (also in Spinningfields) and The Botanist in Alderley Edge. New outlets of both brands are anticipated to open in Leeds in March 2013. LV currently operate six restaurant and bar businesses in the centre of Manchester including the successful Australasia Restaurant and Bar, which has demonstrated LV’s ability to operate successfully at the upper end of the eating-out market. Australasia turned over more than £4m (net of VAT) in its first year of operation and is forecast to achieve turnover of £4.5m (net of VAT) this year with site profit circa £900k in the current financial year. (See Australasia Case Study at Part 5). Aiden Byrne (40) earned a Michelin star at the age of 22 in Adlards in Norwich. He remains the youngest chef to achieve this accolade and went on to work at a number of Michelin-starred establishments; including Tom Aikens at Pied a Terre, Danesfield House in Marlow and The Commons Restaurant in Dublin. He became the head chef of The Dorchester Hotel in London in 2009 before returning to the North West to run his own business at Church Green in Lymm. Aiden has undertaken a number of media projects including publishing and TV work. He is a regular contestant in the ‘Great British Chefs’ annual competition and this year is a finalist, and the BBC have commissioned a 6 part series detailing the development of Manchester House to be aired later in 2013. 3. CURRENT TRADING AND PROSPECTS The business intends to commence trading in July 2013. Since he joined the LV business in October 2013, Aiden Byrne has been engaged in menu development at LV’s development kitchen facility in Didsbury. The rest of the management team (the majority of which will be drawn from existing LV operations) will join three months before opening to ensure that staff are trained and that the product is ready, utilising LV’s existing and well-established training and marketing resources and facilities. The restaurant will occupy circa 5600 sq feet on the second floor of Tower 12 situated in Avenue North, Spinningfields. The Lounge will occupy circa 5300 ft on level 12 of the building. Dedicated lifts will take customers to each floor accompanied by a host at all times of the day and night. Leases on both sites have been agreed with a combination of base rent, turnover fee and generous incentives in the first 2 years. Work is due to commence in March 2013 and is scheduled to complete in June 2013 with a scheduled opening date for both elements of the business in late July 2013. Prior to receiving investment from this offer, the business is being funded principally by two main sources; (1)

LV will provided an unsecured loan of £600,000 repayable over 10 years with an interest and repayment holiday of 12 months, thereafter the interest will revert to 2.5% over base rate.

(2)

LV have secured from the landlord of Tower 12 a reverse premium capital injection of £550,000 plus a loan of £150,000 at an interest rate of 5% per annum, repayable over 5 years with a 12 month repayment holiday at commencement.

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In addition, the final funding source is planned to be achieved by this fundraising of £750,000, less fees, which are estimated at circa £20,000 + VAT. LV will provide head office services to the Company including: human resource management, training at craft and management level, accounting and financing services, head office administration and facilities, design and property management services, business development and marketing services, procurement services and Board level expertise. These services will be provided by LV and a charge to the Company will be made equal to 8% of the Company’s revenue. This management ‘HQ’ charge is consistent with that made to all LV businesses and will be regulated by an Operating Company Agreement with TRG, who own a significant proportion of the LV ‘Gusto’ and ‘Blackhouse’ brands. This underlines the environment of corporate governance under which the LV businesses operate. In the opinion of the Directors, this HQ charge represents clear value for money for a start up business of this nature. It is more likely that either many of these services simply could not be provided by an alternative operator, or the % to revenue would be significantly higher in the early years for this level of service and expertise. For the avoidance of doubt no other payments will be made to the Directors of the Company as these are included within the HQ charge to LV, with the exception of Aiden Byrne whose salary as Executive Chef will be charged directly to the Company. The Directors believe that based on their knowledge and track record of launching businesses in Manchester, The Restaurant and the Lounge will hit the ground running in terms of sales and profitability. LV has a history of creating businesses that deliver operational profit in the first year of trading and the Directors believe that Manchester House could also do so. Therefore it is anticipated that (once distributable reserves allow) dividend payments can commence. The Lounge (capacity 175) with its 360 degree views of the city’s roof-scape will be Manchester’s first truly 24-hour licensed bar operation, one of only three 24-hour premises licences in the city and will provide lounge and bar services from breakfast to early evening with complimentary Wi-Fi and business facilities. The Lounge will facilitate canopies and drinks for both lunch and evening diners prior to them taking their seats in the Restaurant, alongside a casual dining menu and afternoon teas. The evening will see the Lounge transform into Manchester’s coolest lounge bar offering full table service, a 15-metre bar and 4 external corner terraces. The ‘members only’ policy after midnight will allow management to ensure that a discerning clientele at all times is maintained. The Restaurant at Manchester House (70 covers) plus the external terrace will seek to provide a new level of dining experience unrivalled in Manchester’s city centre, ‘contemporary fine dining with a twist’. The combination of award winning training, marketing and leadership from the LV team and Aiden Byrne’s culinary expertise, will seek to produce a solid business capable of creating both short and long term success. As previously stated Aiden was the youngest chef ever to be awarded a Michelin star in the UK and still holds that record. Aiden has gained a Michelin star twice in his career to date. The intention is that MH will gain him his 3rd and bring a star back to Manchester, which as a city has been without one since 1974. The forecast provided at Part 3 is based upon managements’ experience to date and in particular of its recent experience at Australasia. The main difference between the two businesses being the anticipated larger liquor sales and gross margin in the Lounge due to the longer opening hours, larger bar area and higher price points. The management believe that its knowledge of the Manchester restaurant and bar market, its

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recruitment of a high calibre chef, its proven track record of operating successful businesses of this kind and the ability to plug-in specific procurement and management advantages at commencement, all provide a strong underpinning for these forecasts. It should however be noted that the forecasts are estimates only and are based on a number of key assumptions, which are set out alongside the forecasts at Part 3. 4. REASONS FOR THE OFFER Member Partner Investors (“MPIs”) are being sought to establish a cadre of like minded Manchester-based ambassadors to provide early stage support. It is expected that by this innovative approach to fundraising, a synergy of opportunity will be created. MPIs can expect to receive not only the potential financial benefits of an EIS qualifying investment but ground level investment and immediate benefits via the Member Investment Rewards program. The business will hope to secure investors who will not only patronise the business themselves but encourage regular use of the Lounge and Restaurant by their friends and colleagues, thereby enhancing the value of their investment and acting as marketing ambassadors to the business. Benefits of the investment include: The investment has received advance assurance from HMRC that EIS qualification will be achieved for the Company. This will allow qualifying individuals a tax credit of 30% of the investment to be recouped, with future gains from the investment potentially free of capital gains tax subject, to a minimum investment holding period. Dividend distribution of at least 50% of post tax profits after taking into account the capital requirements of the business and any legislative requirements. Plus the Member Partner Rewards program:

Benefits as an MPI from day 1 in the form of restaurant credit reflecting an amount equal to a notional 5% yield per annum on each MPI’s initial investment

(i.e. £1250 restaurant credit per annum per £25k investment).

Personalised bar cupboard in the 12th floor Lounge stocked and replenished with your personal choice. (separate “locker” agreement will apply).

Monthly expense account facilities (subject to separate standard terms and conditions).

Priority booking via shareholders’ page on the restaurant website.

5. EXIT The Directors believe that the Company represents an excellent lifestyle opportunity for an MPI as it offers a unique opportunity to invest in an exclusive venture. The Member Partner Rewards program will offer MPIs immediate benefits from the outset in the form of the priority treatment of MPI’s when they frequent the Lounge and Restaurant. The Directors consider that if the financial projections are delivered, there will be a likelihood of the Company paying dividends to MPIs in the early stages of the Company’s development. This is on the basis that the project is a single-site operation, so it is unlikely that there will be a high level of requirement to reserve profits for future site acquisition and development.

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The Directors do not have immediate plans to sell the Company in its early years but a private equity sale is always a possibility if the Company can prove its ability to deliver the Directors’ concept and vision for the venture. In addition a trade sale of such investments at a premium to the market is also possible and there are several high profile examples of similar businesses in the recent past that have been sold at significant premiums e.g. Haakersan and Zuma. In addition to the long term exit scenarios the Articles of Association provide for a mechanism to allow individual MPIs to exit in certain limited scenarios at a valuation based on a prescribed profit multiple, subject to conditions. (See Articles of Association).

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Part 2

Details of the Open Offer INTRODUCTION Addressees may apply for Offer Shares under the following procedure. OPEN OFFER The Company hereby invites the Addressee to apply for Offer Shares at a price of £25,000 per Offer Share payable in cash in full on application. The basis of allotment of Offer Shares will be determined by the Directors in their absolute discretion. The Directors reserve the right:

(a) to reject any application in whole or in part or to scale down any application or to

accept applications on a ‘first-come, first-served’ basis; or

(b) to extend the period during which the subscription list remains open; and

(c) to treat any application as valid and binding on an applicant even if the Application

Form is not complete in all respects.

Offer Shares are issued on the terms set out in this Document, and may be rounded down to the nearest whole number of Offer Shares, as appropriate. In the Application Form, Addressees may make applications for Offer Shares. Any monies paid in excess of the amount due in respect of an application by an Addressee will be returned to the applicant (at the applicant’s risk and without interest) within 14 days of the Open Offer Record Date by way of cheque. The Offer Shares issued pursuant to the Open Offer will, when issued and fully paid, carry the capital and dividend rights set out in the Company’s Articles of Association. The Open Offer is not a rights issue. Addressees should note that the Application Form is not a negotiable Document and cannot be traded or transferred. Addressees should also be aware that in the Open Offer, unlike in a rights issue, any Offer Shares not applied for will not be sold in the market or placed for the benefit of Addressees who do not apply under the Open Offer. The Offer Shares (if subscribed to its limits) will represent approximately, in aggregate, thirty per cent of the Enlarged Issued Share Capital (assuming full take up of the Open Offer). Further terms of the Open Offer are set out in this Part 2 and, where relevant, in the Application Form. PROCEDURE FOR APPLICATION All Addressees are required to complete and return the Application Form to the address set out on the Application Form if they wish to apply for other Offer Shares under the Open Offer, together with a cheque or banker’s draft for the amount due. Cheques must be made payable to ‘George Davies Solicitors LLP’ and crossed ‘Not negotiable’ and should be drawn in sterling. Applications must be for a minimum of one Offer Share and thereafter in multiples of single Offer Shares.

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If for any reason it becomes necessary to adjust the expected timetable as set out in this Document, the Company will send each recipient a notice containing the details of any such adjustment. GENERAL Addressees will have received an Application Form enclosed with this Document. The instructions and other terms set out in the Application Form constitute part of the terms of the Open Offer. MONEY LAUNDERING REGULATIONS Upon the Board accepting any application by and Addressee, the Addressee shall furnish the Board with the appropriate documentation to satisfy any legal requirements of the Company under the Money Laundering Regulations 2007 or other legislation the Board deems reasonably necessary. This may include the Company’s lawyers conducting a verification check with CallCredit to verify the Addressee’s address.

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Part 3

Financial Information on the Company It should be noted that the following financial information is based on forecasts only and the Directors cannot predict with certainty the ‘Sales’ data due to the Company having not yet traded.

P&L 2013/14 £’000

2014/15 £’000

2015/16 £’000

2016/17 £’000

2017/18 £’000

Sales Restaurant Sales Bar TOTAL SALES

1,560 1,248 2,808

2,600 2,080 4,680

2,678 2,142 4,820

2,758 2,207 4,965

2,841 2,273 5,114

Cost of sales

(752)

(1,253)

(1,291)

(1,329)

(1,369)

Gross profit

2,056

3,427

3,529

3,636

3,745

Wages Overheads

(872) (508)

(1,230) (732)

(1,267) (755)

(1,305) (777)

(1,344) (800)

EBITDARR

676

1,465

1,507

1,554

1,601

Total Property

(93)

(355)

(390)

(417)

(435)

Site EBITDA

583

1,110

1,117

1,137

1,166

HQ costs

(191)

(374)

(362)

(348)

(358)

Company EBITDA

392

736

756

789

808

Preopening Depreciation Interest - landlord loan Interest - LV loan

(200) (141) (6) -

(188) (6) (27)

(188) (5) (24)

(188) (3) (21)

(188) (2) (18)

Profit before tax

46

515

540

578

601

Taxation

(24)

(135)

(140)

(149)

(155)

Retained profit

22

380

399

429

447

Gross profit % Wage % Overheads % EBITDARR % Site EBITDA % HQ costs % Restaurant Sales per week Bar sales per week Total Sales per week Assumes opens 1 July 2013

73.2% 31.1% 18.1% 24.1% 20.8% 6.8% 40 32 72

73.2% 26.3% 15.6% 31.3% 23.7% 8.0% 50 40 90

73.2% 26.3% 15.7% 31.3% 23.2% 7.5% 52 41 93

73.2% 26.3% 15.6% 31.3% 22.9% 7.0% 53 42 95

73.2% 26.3% 15.6% 31.3% 22.8% 7.0% 55 44 98

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Balance Sheet Projections

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2013/14 £’000

2014/15 £’000

2015/16 £’000

2016/17 £’000

2017/18 £’000

Fixed assets

1,309

1,172

1,034

897

759

TOTAL fixed assets

1,309

1,172

1,034

897

759

Stock Debtors / Prepayments Cash

42 31 559

52 89 1,111

54 98 1,569

55 104 2,058

57 109 2,562

TOTAL Current assets

632

1,252

1,721

2,217

2,728

Creditors Corporation tax LV loan

(396) (4) (600)

(457) (129) (540)

(468) (140) (480)

(479) (153) (420)

(493) (161) (360)

TOTAL Current liabilities

(1,000)

(1,127)

(1,088)

(1,052)

(1,015)

Landlord loan Deferred tax

(150) (19)

(120) (25)

(90) (26)

(60) (22)

(30) (16)

NET ASSETS

772

1,152

1,551

1,980

2,427

Share capital and retained earnings Share capital Retained earnings

750 22

750 402

750 801

750 1,230

750 1,677

772

1,152

1,551

1,980

2,427


Cash Flow Projections 2013/14 £’000

2014/15 £’000

2015/16 £’000

2016/17 £’000

2017/18 £’000

EBITDA

392

736

756

789

808

Pre-opening costs Working capital movement

(200) 323

(7)

0

3

8

Cash generated from operations

515

729

756

792

816

Other sources of cash Landlord loan LV loan Share capital Landlord contribution

150 600 750 550

-

-

-

-

Total cash generated

2,565

729

756

792

816

Uses of cash Capital expenditure Landlord loan repayment LV loan repayment Corporation tax paid Landlord interest paid LV interest paid

(2,000) (6) -

(50) (30) (60) (4) (6) (27)

(50) (30) (60) (129) (5) (24)

(50) (30) (60) (140) (3) (21)

(50) (30) (60) (153) (2) (18)

Total uses of cash

(2,006)

(177)

(298)

(304)

(312)

Net cash generated

559

552

458

488

504

Cash at the beginning of the year

-

559

1,111

1,569

2,058

Cash at the end of the year

559

1,111

1,569

2,058

2,562

ASSUMPTIONS Tax including VAT and corporation tax remain at similar levels to existing. Food cost remains at similar levels and any sharp increases in specific commodities can be engineered to maintain gross profit margins. Duty increases on liquor remain at or below the current policy of 2% above inflation. Wages and variable costs are in line with recent experience at Australasia. Rates are in line with normal expected policy. Utility costs are able to be fixed at similar rates to LV group.

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Part 4

Offer Share Terms (Summary of Key Points from Articles of Association) The conditions set out below will be endorsed on each of the Offer Shares: The following summary does not constitute legal advice but seeks to clarify key terms of the Open Offer for the Addressee to consider in conjunction with the Risk Factors. ARTICLE 2 SHARE CAPITAL The share capital is split into ‘A’ ordinary and ‘B’ ordinary shares and the different classes of share have different rights. ARTICLE 3 SHARE RIGHTS The share classes rank pari passu in respect of income and capital but the ‘B’ ordinary shares (which the Offer Shares comprise) shall not carry any voting rights It should be noted that the declaration of any dividend will be subject to Investor Consent and can only be undertaken if the Company has sufficient distributable reserves within the definition provided by the Companies Act 2006. ARTICLE 7 ISSUE OF SHARES Any new shares to be issued in the capital of the Company shall be offered (in the case of new ‘A’ and ‘B’ ordinary shares) first to holders of ‘A’ ordinary shares and secondly to holders of ‘B’ ordinary shares. Accordingly it is possible that the holders of ‘B’ ordinary shares could have their percentage holdings diluted in the future. ARTICLE 9 TRANSFER OF SHARES It should be noted that there is not a ready market for the sale of Offer Shares once they are subscribed for. Any holder of ‘B’ ordinary shares must first notify the Company of any proposed transfer so that Committee Consent can be obtained, which is not guaranteed. The proposed transferee shall be selected by the Company not by the holder of ‘B’ ordinary shares, unless Majority Consent is obtained. The price for the shares being transferred shall be calculated in accordance with the ‘Fair Price’ calculation. This sets the Fair Price as a sum equal to 4x Company EBITDA for the preceding 12 month period, multiplied by the % holding of the shares being sold, e.g. if a shareholder was transferring 1% of the Company’s shares and Company EBTIDA was £500,000, the Fair Price would be £20,000 (500,000 x 4 x 0.01%). It is possible that (depending on the Company’s financial performance), the Fair Price is determined to be less than the £25,000 subscription price, which could result in a holder of ‘B’ ordinary shares suffering a loss when his shares are sold. The ‘Good Leaver’ and ‘Bad Leaver’ provisions do not apply to Addressees unless they satisfy the definition of a ‘Leaver’ in the Articles. ARTICLE 11 TAG ALONG AND DRAG ALONG This article provides that the holders of the ‘A’ ordinary shares can require the ‘B’ ordinary shares to transfer their shares to a third party purchaser in certain circumstances. This is very important as the holders of ‘B’ ordinary shares will appoint the Accepting Shareholders to sign any forms required to effect the sale for him, such as stock transfer forms.

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Part 5

Additional Information Australasia Case Study Opened in May 2011. This was LV’s first casual fine dining venture. Situated in circa 8000sqft in the basement of 1 the Avenue on Deansgate. Leased at a passing rent of £250,000 per annum. The capital spend was circa £1.5m with pre-opening expenditure of £180,000. FIRST 6 MONTHS SALES PERFORMANCE TO NOV 2011 Month

1

2

3

4

5

6

Revenue £000

£230

£276

£326

£292

£301

£420

Weekly Sales £000

£58

£69

£65

£73

£75

£84

CURRENT YEAR FORECAST TO MARCH 2013 (9 MONTH ACTUAL - 3 MONTH FORECAST) £000

MANCHESTER HOUSE MATURE SALES FORECAST £000

Annual

£4,498

£4,680

Weekly

£86.5

£90

AUSTRALASIA CURRENT YEAR Average Spend (Current Year)

Covers

Lunch

£24.80

24,055

28%

Dinner

£47.10

61,857

72%

Total

Restaurant Revenue £000

85,912

£597

17%

£2,913

82%

£3,553 Bar sales

£945 £4,498

MANCHESTER HOUSE MATURE SALES Average Spend (Current Year)

Restaurant Revenue £000

Covers

Lunch

£42.41

13,520

41%

£573

22%

Dinner

£103.67

19,552

59%

£2,027

78%

Total

33,072

£2,600 Bar sales

£2,080 £4,680

The forecast above is illustrative of the Australasia venture and the Company’s sales figures are forecasts only.

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P & L: Australasia First Year of trading (10 months) £000

Current Year Trading (9 months Actual 3 months forecast) £000

Manchester House First Year Mature Trading £000

Total Revenue

3,321

4,498

4,680

Cost of Sales

966

1,295

1,253

Gross Profit

2,355

3,203

3,427

Wages

1,104

1,350

1,230

Overheads

545

643

732

EBITDARR

706

1,210

1,465

RENT & RATES, Service Charge

223

322

355

EBITDA

482

888

1,110

HQ

191

360

374

Company EBITDA

291

528

736

Depreciation

52

72

188

Pre - opening

171

0

6

Interest

0

0

27

Profit before Tax

67

456

515

Gross profit %

71%

71%

73%

Wage %

33%

30%

26%

Overheads %

16%

14%

16%

EBITDARR %

18%

27%

31%

Site EBITDA %

15%

20%

24%

HQ costs %

6%

8%

8%

Restaurant Sales per week

£58

£68

£50

Lounge sales per week

£18

£18

£40

Total Sales per week

£76

£87

£90

Total COGS

18


Part 6 Risk Factors

The investment detailed in this Document may not be suitable for all its recipients. Before making an investment decision, Addressees are advised to consult an investment adviser authorised under FSMA who specialises in investments of the kind described in this Document. Addressees should consider carefully whether an investment in the Offer Shares is suitable for them in the light of their personal circumstances and the financial resources available to them, as investment in the Offer Shares involves a high degree of risk. If any of the risks set out in this Part 6 occur, the Company’s business, financial condition, capital resources, results or future operations could be materially adversely affected. In this event, the price of the Offer Shares could decline and investors may lose all or part of their investment. Each Addressee must carefully consider the risks described below and the other information set out in this Document before deciding to invest in the Offer Shares. Risks are not limited to those detailed below. In addition to the other relevant information set out in this Document, the following specific factors should be considered carefully in evaluating whether to make an investment in the Company: 1

the Offer Shares will not be traded on any public market. As such these investments are illiquid in nature and do not have a certain market value. Realisation of the investment is dependent on a successful exit, the occurrence of which is uncertain;

2

the value of the Offer Shares may go down and an Addressee may lose some or all of the value of his investment;

3

the Company cannot be certain of its future financing needs or that suitable financing will be available in amounts or on terms acceptable to the Directors. The Company’s future capital needs, and other business reasons, will require the Company to issue additional equity or obtain an additional credit facility. If additional equity or equity-linked securities were to be issued, this will result in dilution for shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict the Company’s operations or the Company’s ability to pay dividends to shareholders;

4 Investors in the Company will rank behind the Company’s providers of debt facilities on any insolvency event and in such insolvency circumstances would likely lose their investment; 5

this Document has been prepared in accordance with current UK tax legislation, practice, concession and interpretation. Any change in the Company’s tax status or the tax applicable to a holding of Offer Shares or in taxation legislation or its interpretation, could affect the value of the investments held by the Company, affect the Company’s ability to provide returns to shareholders and/or alter the post-tax returns to shareholders;

6

a short operating history (with no trade having commenced) implies a somewhat greater uncertainty of future performance than for a longstanding business with a sustained track record;

7

there is no market, nor in the short term is there intended to be a market, for the Offer Shares and accordingly it may be difficult for an investor to sell the Offer Shares;

19


20

8

the success of the Company is dependent upon the Directors of the Company, whilst life cover is in place for the Directors the value of such payout is unlikely to completely compensate the Company for loss of one of the Directors;

9

there is no certainty that the Company will generate sufficient distributable reserves to allow it to pay dividends;

10

The Company’s competitors activity cannot be predicted and could impact the success of the Company;

11

The Company’s sales and financial figures are all forecasts only.


Annexe A

Shareholding Structure A

Tim Bacon

22

31%

A

Jeremy Roberts

22

31%

A

Paul Moran

2

3%

A

Sue Crimes

2

3%

A

Andrew Haigh

2

3%

A

John Branagan

2

3%

B

Katie Muncaster

1

1%

B

Anthony Griffin

1

1%

B

Christopher Hill

1

1%

B

Aiden Byrne

15

15%

100 100%

N.B. The Company is owned by the individuals above and is not owned by or part of LV.

21


Annexe B Application Form

HOW TO COMPLETE THE APPLICATION FORM The following instructions should be read in conjunction with the Application Form and the terms and conditions of application set out in this Document. 1 Insert in Box 1 (in figures) the number of Offer Shares for which you are applying. 2 Insert in Box 2 (in figures) the amount of your cheque or banker’s draft. The minimum value per application is £25,000 (this minimum value applies for single and joint applications). 3 Insert your full name and address in BLOCK CAPITALS in Box 3. 4 Sign and date the application form in Box 4. 5 You must attach a single cheque or banker’s draft to your completed Application

Form. The cheque or banker’s draft must be payable to ‘George Davies Solicitors LLP’ and where possible should be made from a UK Bank.

6

You may apply jointly with one other person. If you are applying jointly you must arrange for the Application Form to be completed by both applicants. The second applicant’s full name and address should be inserted in BLOCK CAPITALS in Box 5 (the first applicant should complete Box 3).

7 Send the competed Application Form and signed copy of the applicable certificate in Annexe D by post to: Rosie Rogers George Davies Solicitors LLP 8th Floor 1 New York Street Manchester M1 4AD before the Open Offer Record Date.

22


Manchester House

Bar and Restaurant Limited (the Company) APPLICATION FORM IMPORTANT: Before completing this Application Form you should read the Risk Factors and Offer Terms contained in the Offer Document. All Addressees must complete boxes 1-4. Your remittance should also be attached to this form. Please return your completed application to [name] by post or deliver it to 1. I/We irrevocably offer to subscribe for [ ] ‘B’ ordinary shares at £25,000 each in the Company on the terms and conditions set out in the Open Offer Document of which this Application Form is part. 2. I/We attach a cheque or banker’s draft made payable to ‘Manchester House Bar and Restaurant Limited’ for

the amount payable namely £[

] made payable to ‘George Davies Solicitors LLP’.

PLEASE USE BLOCK CAPITALS: 3. Mr/Mrs/Ms/Miss or title ................................................................................................................................................................... Surname ...................................................................................................................................................................................................

Address in full ..........................................................................................................................................................................................

.....................................................................................................................................................................................................................

.....................................................................................................................................................................................................................

I confirm that I have read the attached Terms and Conditions of Application and the section headed ‘Risk Factors’

4 Signature ....................................................................................................................................................... Date ……………………….

If you are applying jointly, the Application Form must be completed by or on behalf of each joint applicant. Their full names and address should be inserted in BLOCK CAPITALS in Box 5 and 6 and must be signed by or on behalf of each joint applicant.

5. Mr/Mrs/Ms/Miss or title ..................................................................................................................................................................

Forenames in full ......................................................................................................................................................................................

Surname ..................................................................................................................................................................................................

Address in full ...........................................................................................................................................................................................

....................................................................................................................................................................................................................

.....................................................................................................................................................................................................................

I confirm that I have read the attached Terms and Conditions of Application and the section headed ‘Risk Factors’

6 Signature ....................................................................................................................................... Date ...............................................

23


Annexe C

Articles of Association of the Company CONTENTS Clause 1 PRELIMINARY 

3

2

SHARE CAPITAL 

8

3

SHARE RIGHTS 

8

4

CLASS RIGHTS 

9

5

LIEN AND CALLS 

6

CALLS ON SHARES AND FORFEITURE 

7

ISSUES OF SHARES 

11

8

PROVISIONS APPLYING ON EVERY TRANSFER OF SHARES

12

9

TRANSFERS OF SHARES 

13

9 10

10 TRANSFER ARRANGEMENTS 

14

11 TAG ALONG & DRAG ALONG RIGHTS 

16

12 COMPLIANCE 

17

13 GENERAL MEETINGS 

17

14 DIRECTORS 

17

15 CHAIRMAN 

22

16 DIVIDENDS 

22

17 INDEMNITIES 

22

18 INSURANCE 

22

Company No 8337227 THE COMPANIES ACT 2006 COMPANY LIMITED BY SHARES NEW ARTICLES OF ASSOCIATION of MANCHESTER HOUSE BAR & RESTAURANT LIMITED (the “Company”) (Adopted by written resolution passed on)

1.

PRELIMINARY IN THESE ARTICLES:

1.1 “Accounts”

management accounts of the Company for the financial period ending on the last day of the month preceding the Leaving Date

“A Ordinary Share”

means an ‘A’ ordinary share of £1.00 in the capital of the Company

“Acquired Price” means, in relation to a Share, (i) where the Share was issued to the current holder, the Issue Price or (ii) where the Share was transferred to the current holder for value, the price paid by the current holder

“Act”

“Auditors” means the auditors of the Company from time to time

“B Ordinary Share”

means the Companies Act 2006 means a ‘B’ ordinary share of £1.00 in the capital of the Company

“Board”

means the board of directors of the Company (or any duly authorised committee thereof) from time to time

“Board Multiple”

means the multiple set annually by the Board and prior to the service of any Transfer Notice or Leaver Transfer Notice for application in determining the Fair Price

“Business Day”

means a day (other than a Saturday) on which clearing banks in the City of London are normally open for usual sterling banking business

“Committee Consent” means the giving of prior written consent by the Committee of Shareholders pursuant to the provisions of Article 9.3

24

“Conflict Situation”

means any matter which (unless authorised in accordance with these Articles) might result in a director infringing his duties under section 175 of the Act to avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or may possibly conflict, with the interests of the Company and which may reasonably be regarded as likely to give rise to a conflict of interest

means earnings before interest, tax, depreciation and amortisation

“EBITDA”


“Employee”

means a person who from time to time is a director and/or an employee of any Group Company or any LVR Group Company whose services are made available to any Group Company or any LVR Group Company under the terms of an agreement with any Group Company or any LVR Group Company from time to time (and “employment” shall be construed accordingly to include such an agreement)

“Employee Trust”

means a trust established with Investor Consent and whose beneficiaries are the bona fide employees of any Group Company

“Equity Shares”

means the ‘A’ Ordinary Shares and ‘B’ Ordinary Shares

“Equity Shareholders” means the holders of Equity Shares

“Excess Shares”

has the meaning given in Article 7.1.3

“Fair Price”

means:-

(a)

in respect of any ‘A’ Ordinary Shares, an amount (A) calculated in accordance with the following formula:- A = (B x C)/D where:-

B = the current EBITDA (as stated in the Accounts) of the sites operated by the Company multiplied by the Board Multiple

C = the percentage that the Shares held by the Leaver bears to the total number of Shares in the capital of the Company (stated as a decimal amount)

D = the total number of Shares held by the Leaver; or

(b)

in respect of any classes of Shares other than ‘A’ Ordinary Shares, the price agreed between the holder of such Shares and the Majority Investor or in the absence of agreement as determined in accordance with Article 10.2.2

“Financial year” and “Financial Period”

an accounting reference period (as defined by the Act) of the Company

“Good Leaver”

means:

(a)

a person who ceases to be an Employee where such cessation occurs for one of the following reasons:

(i)

that person’s death;

(ii)

illness or disablement of that person which, in the sole opinion of the Majority Investors, gives ise to permanent incapacity to continue in employment;

(iii)

that person’s retirement at normal retirement age, as determined by that person’s contract of employment, or otherwise.

(b)

a person who ceases to be an Employee where the Majority Investors resolve that such person is to be treated as a Good Leaver; or

(c)

an Employee who remains an Employee but becomes entitled due to illness or disablement causing permanent incapacity to receive benefits under any permanent health insurance scheme of the Company or any other Group Company

“Group”

means the Company and its subsidiary undertakings from time to time and “member of the Group” and “Group Company” shall be construed accordingly

means the Income and Corporation Taxes Act l988

“ICTA”

“Independent Expert”

means: the Auditors; or if the Auditors are unwilling or unable to act, another umpire:nominated by the parties concerned within 15 Business Days of the Trigger Date; or in the event that no such an umpire is nominated in such period, appointed by the President from time to time of the Institute of Chartered Accountants in England and Wales, and the Auditors or such other umpire shall act as an expert and not as an arbitrator

“Investor Consent”

means the giving of a prior written consent by the Majority Investors

“Investor Direction”

means the giving of a prior written direction by the Majority Investors

“Issue Price”

means, in relation to a Share, the price at which such Share is issued, being the aggregate of the amount paid up or credited as paid up in respect of the nominal value of such Share and any share premium thereon

“Leaver”

means:

any person who ceases to be an Employee for whatever reason;

(a)

(b)

any Shareholder (not being an Investor, an Employee Trust or the Company) to whom shares have been transferred by any Employee (other than pursuant to Articles 9.2 or 11 who ceases to be an Employee);

any person who becomes entitled to any Shares:

(c)

(i)

on the death or bankruptcy of a Shareholder (if an individual); or

(ii)

on the exercise of an option after ceasing to be an Employee;

(d)

any Shareholder holding Shares as a nominee for any person who ceases to be an Employee; or

(e)

any Employee who remains an Employee but becomes entitled due to illness or disablement causing permanent incapacity to receive benefits under any permanent health insurance

25


26

scheme of the Company or any other Group Company

means:-

“Leaver’s Shares”

(a)

in relation to a Leaver who holds ‘A’ Ordinary Shares and/or ‘B’ Ordinary Shares which represent more than 10% of the entire issued share capital of the Company on the Leaving Date, 25% of the ‘A’ Ordinary Shares and/or

‘B’ Ordinary Shares held by such Leaver, or to which he is entitled, on the Leaving Date and any ‘A’ Ordinary Shares and/or ‘B’ Ordinary Shares acquired by a Leaver after the Leaving Date, whether under an employees’ share scheme or otherwise;

(b)

in relation to a Leaver who holds ‘A’ Ordinary Shares which represent 10% or less of the entire issued share capital of the Company on the Leaving Date, all of the ‘A’ Ordinary Shares held by such Leaver, or to which he is entitled, on the Leaving Date and any ‘A’ Ordinary Shares acquired by a Leaver after the Leaving Date, whether under an employees’ share scheme or otherwise; or

(c)

in relation to a Leaver who holds ‘B’ Ordinary Shares, all of the ‘B’ Ordinary Shares held by such Leaver, or to which he is entitled, on the Leaving Date and any ‘B’ Ordinary Shares acquired by a Leaver after the Leaving Date, whether under an employees’ share scheme or otherwise.

“Leaving Date”

means:

(a)

the date on which the relevant person becomes a Leaver; or

(b)

in the case of a Leaver under paragraph (c) of the definition of ‘Leaver’, the date upon which the Shareholder is made bankrupt or dies; or any person to whom an option is granted exercises that option); or,

(c)

where a Shareholder will become a Leaver because a person has given, or been given, notice under his employment agreement such that he will cease to be an Employee on the expiry of the relevant notice period (if any), the date on which such notice is given; or

(d)

where a person is a Leaver under paragraph (e) of the definition of “Leaver”, the date on which the first payment is made to such person under such permanent health insurance scheme

“LVR Group”

means Living Ventures Restaurants Group Limited (No 6237237) and its subsidiary undertakings from time to time

“LVR Group Company” means any member of the LVR Group

“Majority Investors”

means:-

(a)

in relation to any direction, decision or consent to be made in relation to Article 9.2, the holders at the relevant time of 50% or more of the ‘A’ Ordinary Shares in issue from time to time excluding any ‘A’ Ordinary Shares held by the relevant Leaver; and

(b)

in relation to any other direction, decision or consent to be made pursuant to these Articles, the holders at the relevant time of 50% or more of the ‘A’ Ordinary Shares in issue from time to time

“Model Articles”

the model articles for private companies limited by shares contained in Schedule 1 of the Companies (Model Articles) Regulations 2008 (SI 2008/3229) as amended prior to the date of adoption of these Articles

“Pre-Authorised Situations”

means the following Conflict Situations: holding any office, employment or engagement with any Group Company; participating in any scheme, transaction or arrangement for the benefit of the employees or former employees of any Group Company (including any pension fund or retirement, death or disability scheme or any bonus or employee benefit scheme); or

holding, or otherwise being interested, directly or indirectly, actually or potentially, in any shares or debentures or other securities or interests (or any rights to acquire or options over or any other rights in respect of any shares or debentures) in any Group Company

has the meaning given in Article 10.1

“Sale Price”

“Share”

means any share in the capital of the Company from time to time (and “Shares” shall be construed accordingly)

“Shareholder”

means a holder of any Share

“voting rights”

shall be construed in accordance with section 736(A) of the Act

1.2

In these Articles, a reference to a “subsidiary undertaking” or a “group undertaking” is to be construed in accordance with sections 1162 and 1161 respectively of the Act and a reference to a “subsidiary” or “holding company” is to be construed in accordance with section 1159 of the Act.

1.3

In these Articles, a reference to any other document is a reference to that other document as amended, varied, novated or supplemented (other than in breach of the provisions of the relevant other document) from time to time

1.4

The Model Articles shall apply to the Company save insofar as they are excluded or varied by these Articles.


1.5

Any written consent or approval given by the Majority Investors after a matter or event in respect of which Investor Consent is required shall, unless such consent or approval expressly states otherwise, be deemed to be an Investor Consent for the purpose of these Articles.

1.6

A reference in these Articles to a statute, statutory provision or subordinate legislation (other than in the definition of “Model Articles”) is a reference to it as it is in force from time to time, taking account of:-

1.6.1

any subordinate legislation from time to time made under it; and

1.6.2 any amendment or re-amendment and includes any statute, statutory provision or subordinate legislation which it amends or re-enacts. 1.7

Articles 8, 9(2) to 9(4) (inclusive), 11, 14, 17, 18, 21, 30(5) to 30(7) (inclusive), 38, 52 and 53 of the Model Articles shall not apply to the Company.

1.8

Unless the context otherwise requires (for example, where otherwise defined herein), words or expressions as at the date of adoption of these Article defined in or having a meaning provided by the Act shall have the same meaning when used in these Articles.

1.9

Where an ordinary resolution of the Company is expressed to be required for any purpose, a special resolution is also effective for that purpose.

1.10

The headings in these Articles are for convenience only and shall not affect their meaning.

1.11

In construing these Articles, general words introduced by the word “other” shall not be given a restrictive meaning by reason of the fact that they are preceded by words indicating a particular class of acts, matters or things and general words shall not be given a restrictive meaning by reason of the fact that they are followed by particular examples intended to be embraced by the general words.

2.

SHARE CAPITAL

The share capital of the Company is divided into ‘A’ Ordinary Shares and ‘B’ Ordinary Shares.

3.

SHARE RIGHTS

Except as expressly provided otherwise in these Articles, the Equity Shares shall rank pari passu in all respects. 3.1 Income The income rights attaching to each class of Equity Shares shall be as set out in this Article: 3.1.1

subject to (i) the Board recommending payment of the same and (ii) Investor Consent, any profits of the Company available for distribution which the Company may by ordinary resolution determine to distribute in respect of any financial year shall be distributed amongst holders of the Equity Shares according to the number of Equity Shares held (pari passu as if the same constituted one class of share); and

3.1.2

the Company shall procure (so far as it is able) that each of its subsidiaries and each of its subsidiary undertakings which has profits available for distribution shall from time to time declare and pay to the Company (or, as the case may be, the relevant Group Company that is its immediate holding company or parent undertaking) such dividends as are necessary to permit lawful payment by the Company of any dividend and (subject to the Act) shall endeavour in each accounting period of the Company to pay at least 50 per cent of the profits of the Company available for distribution by way of cash dividend (after taking account of any capital expenditure requirements).

3.2 Capital On a return of assets on liquidation or capital reduction or otherwise, the assets of the Company remaining after the payment of its liabilities (including under or in connection with any loan notes and/or any debt owed to LVR Group) shall be distributed amongst the holders of the Equity Shares (pari passu as if the same constituted one class of share). 3.3 Voting Subject to any special rights or restrictions as to voting attached to any Equity Shares by or in accordance with these Articles (including Article 9.2.2), on a show of hands every Shareholder holding ‘A’ Ordinary Shares (a “Voting Shareholder”) who:

(a)

(being an individual) is present in person or by proxy; or

(b) (being a corporation) is present by a representative not being himself a Voting Shareholder or by a proxy, shall have one vote, and on a poll every Voting Shareholder who is present in person or by proxy or (being a corporation) is present by a representative or by proxy shall (except as hereinafter provided) have one vote for every ‘A’ Ordinary Share of which he is the holder.

For the avoidance of doubt the ‘B’ Ordinary Shares shall be non-voting.

4.

CLASS RIGHTS

Whenever the capital of the Company is divided into different classes of shares the special rights attached to any class may be varied or abrogated with Investor Consent.

5.

LIEN AND CALLS

5.1

The Company shall have a first and paramount lien on every share (not being a fully paid share) for all moneys (whether presently payable or not) payable at a fixed time or called in respect of that share. The directors may at any time declare any share to be wholly or in part exempt from the provisions of this Article. The Company’s lien on a share shall extend to any amount payable in respect of it.

27


5.2

The Company may sell in such manner as the directors determine any shares on which the Company has a lien if a sum in respect of which the lien exists is presently payable and is not paid within fourteen clear days after notice has been given to the holder of the share or to the person entitled to it in consequence of the death or bankruptcy of the holder, demanding payment and stating that if the notice is not complied with the shares may be sold.

5.3

To give effect to a sale the directors may authorise some person to execute an instrument of transfer of the shares sold to, or in accordance with the directions of, the purchaser. The title of the transferee to the shares shall not be affected by any irregularity or invalidity in the proceedings in reference to the sale.

5.4

The net proceeds of the sale, after payment of the costs, shall be applied in payment of so much of the sum for which the lien exists as is presently payable, and any residue shall (upon surrender to the Company for cancellation of the certificate for the shares sold and subject to a like lien for any moneys not presently payable as existed upon the shares before the sale) be paid to the person entitled to the shares at the date of the sale.

6.

CALLS ON SHARES AND FORFEITURE

6.1

Subject to the terms of allotment, the directors may make calls upon the members in respect of any moneys unpaid on their shares (whether in respect of nominal value or premium) and each member shall (subject to receiving at least fourteen clear days’ notice specifying when and where payment is to be made) pay to the Company as required by the notice the amount called on his shares. A call may be required to be paid by instalments. A call may, before receipt by the Company of any sum due thereunder, be revoked in whole or in part and payment of a call may be postponed in whole or part. A person upon whom a call is made shall remain liable for calls made upon him notwithstanding the subsequent transfer of the shares in respect of which of the call was made.

6.2 A call shall be deemed to have been made at the time when the resolution of the directors authorising the call was passed.

28

6.3

The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof.

6.4

If a call remains unpaid after it has become due and payable the person from whom it is due and payable shall pay interest on the amount unpaid from the day it became due and payable until it is paid at the rate fixed by the terms of allotment of the share or in the notice of the call or, if no rate is fixed, at the appropriate rate (as defined by the Act) but the directors may waive payment of the interest wholly or in part.

6.5

An amount payable in respect of a share on allotment or at any fixed date, whether in respect of nominal value or premium or as an instalment of a call, shall be deemed to be a call, and if it is not paid when due all the provisions of the Articles shall apply as if that amount had become due and payable by virtue of a call.

6.6

Subject to the terms of allotment, the directors may make arrangements on the issue of shares for a difference between the holders in the amounts and times of payment of calls on their shares.

6.7

If a call remains unpaid after it has become due and payable the directors may give to the person from whom it is due not less than fourteen clear days’ notice requiring payment of the amount unpaid, together with any interest which may have accrued. The notice shall name the place where payment is to be made and shall state that if the notice is not complied with the shares in respect of which the call was made will be liable to be forfeited.

6.8

If the notice is not complied with any share in respect of which it was given may, before the payment required by the notice has been made, be forfeited by a resolution of the directors and the forfeiture shall include all dividends or other moneys payable in respect of the forfeited shares and not paid before the forfeiture.

6.9

Subject to the provisions of the Act, a forfeited share may be sold, re-allotted or otherwise disposed of on such terms and in such manner as the directors determine either to the person who was before the forfeiture the holder or to any other person and at any time before a sale, re-allotment or other disposition, the forfeiture may be cancelled on such terms as the directors think fit. Where for the purposes of its disposal a forfeited share is to be transferred to any person the directors may authorise some person to execute an instrument of transfer of the share to that person.

6.10

A person any of whose shares have been forfeited shall cease to be a member in respect of them and shall surrender to the Company for cancellation the certificate for the shares forfeited but shall remain liable to the Company for all moneys which at the date of forfeiture were presently payable by him to the Company in respect of those shares with interest at the rate at which interest was payable on those moneys before the forfeiture or, if no interest was so payable, at the appropriate rate (as defined in the Act) from the date of forfeiture until payment but the directors may waive payment wholly or in part or enforce payment without any allowance for the value of the shares at the time of forfeiture or for any consideration received on their disposal.

6.11

A statutory declaration by a director or the secretary that a share has been forfeited on a specified date shall be conclusive evidence of the facts stated in it as against all persons claiming to be entitled to the share and the declaration shall (subject to the execution of an instrument of transfer if necessary) constitute a good title to the share and the person to whom the share is disposed of shall not be bound to see to the application of the consideration, if any, nor shall his title to the share be affected by any irregularity in or invalidity of the proceedings in reference to the forfeiture or disposal of the share.

7.

ISSUES OF SHARES

7.1

Subject to these Articles (including Article 7.2) the pre-emption provisions of sub-section (1) of section 561 and sub-sections (1) to (5) of section 562 of the Act shall apply to any allotment of the Company’s Equity Shares, provided that:

7.1.1

any unissued Shares in the capital of the Company from time to time shall before they are issued be offered to the Shareholders as follows;


(1)

(2)

(3)

Class of new shares

First Priority

Second Priority

‘A’ Ordinary Shares

Existing holders of ‘A’ Ordinary Shares

Existing holders of ‘B’ Ordinary Shares

‘B’ Ordinary Shares

Existing holders of ‘A’ Ordinary Shares

Existing holders of ‘B’ Ordinary Shares

7.1.2

the period specified in section 562(5) of the Act shall be 5 Business Days;

7.1.3

the Equity Shareholders who accept Shares pursuant to the offer made under Article 7.1.1 above shall be entitled to indicate that they would accept Shares over and above their pro rata entitlement that have not been accepted by other Equity Shareholders (“Excess Shares”) on the same terms as originally offered to the relevant Shareholders and the following provisions shall apply:

(a)

it shall be a term of the allotment that, if Equity Shareholders of more than one class indicate that they would accept some or all of the Excess Shares, the Excess Shares shall be treated as having been offered, first, to all Equity Shareholders holding Shares of the same class as the Excess Shares in priority to all other classes of Equity Shareholder and thereafter, to the extent that all of the Excess Shares have not been applied for by such class of Equity Shareholder, the Excess Shares shall be treated as having been offered to all of the Equity Shareholders holding the other class of Shares;

(b)

subject always to Article 7.1.3(a), any Shares not so accepted shall be allotted to the Equity Shareholders who have indicated they would accept Excess Shares;

(c)

such Excess Shares shall be allotted in the numbers in which they have been accepted by Equity Shareholders or, if the number of Excess Shares is not sufficient for all Equity Shareholders to be allotted all the Excess Shares they have indicated they would accept, then the Excess Shares shall be allotted as nearly as practicable in the proportion that the number of Excess Shares each Equity Shareholder indicated he would accept bears to the total number of Excess Shares applied for; and

7.1.4

subject to the other provisions of this Article 7, for the purposes of those sub-sections of the Act the Equity Shares shall be treated as one class save that all Equity Shares issued pursuant to this Article 7:

(a)

to any holder of ‘A’ Ordinary Shares shall be designated or re-designated ‘A’ Ordinary Shares prior to registration;

(B)

to any holder of ‘B’ Ordinary Shares shall be designated or re-designated B Ordinary Shares prior to registration.

7.2

The pre-emption provisions of sub-section (1) of section 561 and sub-sections (1) to (5) of section 562 of the Act shall not apply where so agreed in writing by the Company and the Majority Investors.

8.

PROVISIONS APPLYING ON TRANSFER OF SHARES

8.1

The Board shall refuse to register any transfer of Shares made in contravention of the provisions of these Articles but (subject to Article 26(5) of the Model Articles) shall not otherwise be entitled to refuse to register any transfer of shares. For the purpose of ensuring that a particular transfer of Shares is permitted under the provisions of these Articles, the directors may request the transferor, or the person named as transferee in any transfer lodged for registration, to furnish the Company with such information and evidence as the directors may reasonably think necessary or relevant. Failing such information or evidence being furnished to the satisfaction of the directors within a period of 28 days after such request the directors shall be entitled to refuse to register the transfer in question. Any transfer of Shares made or purported to be made in contravention of the provisions of these Articles shall be of no effect.

8.2

No Shares may be transferred unless an Investor Consent (and Committee Consent in the case of the transfer of ‘B’ Ordinary Shares only) has been obtained and any conditions to that Investor Consent have been satisfied and subject to any restrictions in such Investor Consent.

8.3

Transfer of ‘B’ Ordinary Shares

In addition to the provisions of Article 8.2 above, no ‘B’ Ordinary Shares shall be transferred (except pursuant to Article 11) other than in accordance with the provisions of Article 9.3 .

9.

TRANSFERS OF SHARES

9.1

Permitted Transfers

9.1.1

Transfers from an Employee Trust

Notwithstanding any other provision of these Articles, the trustee or trustees of an Employee Trust may, with Investor Consent, at any time transfer all or any Shares held by it to an Employee (and subject to any conditions or restrictions including as to price in such consent) at a price not less than the price paid per Share by the Employee Trust.

9.1.2

Transfers to the Company

Any holder of Shares may at any time, with Investor Consent (and subject to any conditions or restrictions including as to price in such consent), transfer Shares to the Company in accordance with the Act and these Articles.

9.1.3

Transfers of ‘A’ Ordinary Shares with Investor Consent

Notwithstanding any other provision of these Articles a transfer of any ‘A’ Ordinary Shares made with Investor Consent may be made without restriction as to price or otherwise (save for any restrictions in such consent and subject to the satisfaction of any conditions in such consent).

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9.1.4

Transfers pursuant to Article 11

Not withstanding any other provision of these Articles, a transfer of any Share made pursuant to and in accordance with Article 11 (“Tag Along and Drag Along”) may be made without restriction as to price or otherwise (save as provided in Article 11).

9.2

Transfers in respect of Leavers

9.2.1 At any time after the Leaving Date the Majority Investors may direct the Company immediately to serve a notice (a “Leaver Transfer Notice”) on a Leaver notifying him that he is, with immediate effect, deemed to have offered for sale to such person or persons (including the Company) specified in the notice (the “Offeree(s)”) such number and class of his Leaver’s Shares as the Majority Investors may require (the “Sale Shares”) at the Sale Price and the Company shall immediately serve the Leaver Transfer Notice. 9.2.2

Unless otherwise provided by an Investor Direction, no Leaver Shares shall, with effect from the Leaving Date, confer any right to receive notice of, attend or vote at any general meeting of the Company or meeting of the holders of Shares of the same class and such Shares shall not be counted for the purposes of determining the total number of votes which may be cast at any such meeting or for the purposes of a written resolution or a written consent of any Shareholder or class of Shareholders (including a consent to short notice) and the holder of such Shares shall not be entitled to participate in any allotment of Shares pursuant to Article 7 (provided that any such restrictions on the rights of such Leaver Shares shall cease to apply upon the transfer of such Shares to a person who is not a Leaver).

9.3

Transfer of B Ordinary Shares

9.3.1

In addition to the requirement for Investor Consent pursuant to Article 8.2, no ‘B’ Ordinary Shares may be transferred unless Committee Consent has also been obtained.

9.3.2

Committee Consent shall be provided or refused by a committee of three Shareholders comprising two holders of ‘A’ Ordinary Shares and one holder of ‘B’ Ordinary Shares being a person nominated by the Majority Investors from time to time (such three Shareholders being the ‘Committee’).

9.3.3

Upon a Transfer Notice (as provided for in Article 10.1) in respect of ‘B’ Ordinary Shares being served on the Company (‘B’ Transfer Notice) (other than in circumstances pursuant to Article 11), the Majority Investors shall within 5 Business Days of receipt, provide the Committee with a copy of the ‘B’ Transfer Notice, inform the Committee of the circumstances relating to the ‘B’ Transfer Notice and the identity of the proposed transferee that the Majority Investors have selected pursuant to Article 10.1.4 (‘B’ Share Transferee’).

9.3.4

The Committee shall, within 5 Business Days of receipt of the ‘B’ Transfer Notice from the Majority Investors, review any information requested from the ‘B’ Share Transferee by the directors pursuant to Article 8.1.

9.3.5

Provided that the ‘B’ Share Transferee has provided all information required by the directors, the Committee shall then have a further 5 Business Days from receipt of the information to provide Committee Consent to the Majority Investors in respect of the ‘B’ Transfer Notice.

9.3.6

In determining whether the Committee shall provide Committee Consent the Committee shall only have regard to:

9.3.6.1 the provisions of these Articles of Association; and 9.3.6.2 the information provided by the ‘B’ Share Transferee pursuant to Article 8.1. 9.3.7

If the Committee has not raised any objection to the Majority Investors by the expiry of the 5 Business Day period referred to in Article 9.3.5, Committee Consent shall be deemed to have been provided.

9.3.8

If the Committee object to the ‘B’ Share Transferee, the ‘B’ Transfer Notice shall lapse and the transfer of ‘B’ Ordinary Shares shall not be valid or capable of registration.

10. TRANSFER ARRANGEMENTS 10.1

Transfer Notice

10.1.1 Before transferring or purporting to transfer Shares, a holder of Shares wishing to sell his Shares (‘Seller’) shall give written notice (to include email) to the Majority Investors (a ‘Transfer Notice’) specifying: (a)

the number of Shares which he proposes to sell (Sale Shares) being all and not some only of the Shares in the Company held by the Seller;

confirmation that the Sale Shares shall be sold for the Sale Price in accordance with Article 10.2.

(b)

10.1.2 Once given, a Transfer Notice may not be withdrawn without Investor Consent. 10.1.3 A Transfer Notice appoints the Majority Investors the agent of the Seller for the sale of the Sale Shares. 10.1.4 As soon as possible following the receipt of a Transfer Notice the Majority Investors shall offer the Sale Shares to proposed transferees (an ‘Offeree’). Each offer shall be in writing and give details of the number of Sale Shares and the Sale Price. 10.2

Sale Price

10.2.1 Save as otherwise provided in these Articles, the price per Share (or price per Share of each different class held) applicable on a transfer of Shares pursuant to Article 9 or this Article (the “Sale Price”) shall be:

(a)

in the case of a Leaver or Seller who holds A Ordinary Shares, the Fair Price;

(b)

in the case of a Leaver who holds B Ordinary Shares and who is a Good Leaver, the Fair Price; or

(c)

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in the case of any Leaver who holds B Ordinary Shares and who is not a Good Leaver, the lower of the Acquired Price and the Fair Price; or


(d)

in the case of a Seller who holds ‘B’ Ordinary Shares which are transferred validly in accordance with these Articles, the Fair Price.10.2.2.

10.2.2 If the Fair Price applicable to any B Ordinary Shares falls to be determined by an Independent Expert: (a)

the Company shall instruct the Independent Expert to determine the Fair Price which shall be calculated as an amount (A) calculated in accordance with the following formula:-

A = (B x C)/D

where:

B = the current EBITDA (as stated in the Accounts) of the sites operated by the Company multiplied by 4

C = the percentage that the Shares held by the Leaver or Seller bears to the total number of Shares in the capital of the Company (stated as a decimal amount)

D = the total number of Shares held by the Leaver or Seller; or

(b)

the Independent Expert shall certify the Fair Price as soon as possible after being instructed by the Company and, in so certifying, the Independent Expert shall be deemed to be acting as an expert and not as an arbitrator and the Arbitration Act 1996 shall not apply;

(c)

the certificate of the Independent Expert shall, in the absence of clear or manifest error, be final and binding for the purposes of these Articles; and

(d)

the Company shall procure that any certificate required hereunder is obtained with due expedition and the cost of determining the Fair Price and obtaining such certificate shall be borne by the Company unless:

(i)

(ii)

such an arrangement would not be permitted by the Act; or the Fair Price as determined by the Independent Expert is not more than 110% of that price (if any) which the Board had previously notified to the Leaver or Seller as being in its opinion the Fair Price,

in which event the cost shall be borne by the Leaver or Seller.

10.3

Completion Notice

10.3.1

Where a Transfer Notice has been served and the Majority Investor has identified a willing purchaser, the Majority Investor shall give written notice to the Offeree and the Seller setting out the number of Sale Shares (of each class) allocated to the Offeree, the aggregate price payable therefor, the Sale Price and the name and address of the Offeree (each a “Completion Notice”).

10.3.2

Completion of the sale and purchase of the Sale Shares shall take place within 5 Business Days of the date of service of the Completion Notice whereupon the Seller shall, subject (save where the Offeree is the Company) to payment by each Offeree to the Company on behalf of the Seller of the price due in respect thereof, transfer the Sale Shares to the Offeree as specified in the Completion Notice and deliver the relevant share certificate(s) to the Company. Provided it has received the relevant share certificate(s) and duly executed stock transfer form(s), the Company shall release and pay to the Seller the purchase monies for the Sale Shares.

10.3.3

If the Seller defaults in transferring any Sale Shares pursuant to Article 10.3.2 to any Offeree or Offerees, the Company may hold the relevant purchase money received from the Offeree(s) and may nominate some person to execute a stock transfer form or forms in respect of such Sale Shares in the name of and on behalf of the Seller. On receipt of the relevant Seller, the Company shall release and pay to the Seller the purchase monies for such Sale Shares. As security for its obligations under this Article 10.3.3 and the other Articles, each holder of B Ordinary Shares hereby irrevocably appoints the Company as its attorney to execute and deliver any document and to take any action in its own name and on its own behalf which it is required to execute or take under these Articles together with any other documents or actions necessary or desirable in connection with such obligations.

10.3.4

Following stamping of any stock transfer form(s) executed by the Seller or on its behalf in accordance with Articles 10.3.2 or 10.3.3, the directors shall register the transfer(s). The Company’s receipt for any purchase monies received under Articles 10.3.2 shall be a good discharge to the Offeree(s) and the Company shall hold any such purchase monies on trust for the Seller and the Company shall not pay any interest to the Seller or Offeree nor be under any obligation to pay any such interest (which shall be for the benefit of the Company). After the name of an Offeree has been so entered in the register of members, the transfer shall be validly registered.

11.

TAG ALONG& DRAG ALONG RIGHTS

11.1

Tag Along

11.1.1

If at any time one or more Shareholders (the “Proposed Sellers”) propose to sell (with Investor Consent), in one or a series of related transactions, a majority in nominal value of the Equity Shares (the “Majority Holding”) other than pursuant to Article 9 or Article 10, the Proposed Sellers may only sell the Majority Holding if they comply with the provisions of this Article.

11.1.2 The Proposed Sellers shall give written notice (the “Proposed Sale Notice”) to the other holders of Equity Shares of such intended sale at least 10 Business Days prior to the intended date thereof. The Proposed Sale Notice shall set out, to the extent not described in any accompanying documents, the identity of the proposed buyer (the “Proposed Buyer”), the purchase price and other terms and conditions of payment, the proposed date of sale (the “Proposed Sale Date”) and the number of Shares proposed to be purchased by the Proposed Buyer (the “Proposed Sale Shares”). 11.1.3 Any other holder of Equity Shares shall be entitled, by written notice given to the Proposed Sellers within 5 Business Days of receipt of the Proposed Sale Notice, to be permitted to sell all of his Shares to the Proposed Buyer on the same terms and conditions as those set out in the Proposed Sale Notice.

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11.2

Drag Along

11.2.1 In these Articles a “Qualifying Offer” shall mean an offer in writing by or on behalf of any person (the “Offeror”) for the entire equity share capital in the Company not already owned by the Offeror or persons connected with the Offeror. 11.2.2 If the Majority Investors (the “Accepting Shareholders”) have indicated in writing to the Company they wish to accept the Qualifying Offer, then the provisions of this Article 11.2 shall apply. 11.2.3

The Accepting Shareholders shall give written notice to the remaining holders of the equity share capital (the “Other Shareholders”) of their wish to accept the Qualifying Offer and shall thereupon become entitled to transfer their Shares to the Offeror (or his nominee) and the Other Shareholders shall thereupon become bound to accept the Qualifying Offer and to transfer their Shares to the Offeror (or his nominee) with full title guarantee on the date specified by the Accepting Shareholders.

11.2.4

If any Other Shareholder shall not, within 5 Business Days of being required to do so, execute and deliver such documents and take such other action necessary or desirable in connection with the transfer (including executing and delivering stock transfer form(s) in respect of the Shares held by him and delivering the certificate(s) in respect of the same (or a suitable indemnity in lieu thereof)), then any Accepting Shareholder shall be entitled to execute, and shall be entitled to authorise and instruct such person as he thinks fit to execute and deliver any such documents and take any such other action on such Other Shareholder’s behalf and, against receipt by the Company (on trust for such Shareholder) of the consideration payable for the relevant Shares, deliver such stock transfer form(s) and certificate(s) or indemnities to the Offeror (or his nominee) and the directors shall register such Offeror (or his nominee) (or any such other documents) as the holder thereof and, after such registration, any such transfer shall be validly registered. The Company shall not pay nor be under any obligation to pay any interest to any Other Shareholder (or Offeror) on any such consideration held on trust by the Company for any Other Shareholder (and any such interest shall be for the benefit of the Company). The Company shall pay to the Other Shareholder any such consideration held by the Company following receipt of the relevant share certificates.

12. COMPLIANCE 12.1

For the purpose of ensuring compliance with the transfer provisions of these Articles, the Company shall immediately on an Investor Direction and may with Investor Consent require any Leaver or other Shareholder to procure that:

12.1.1 he; or

12.1.2 any proposed transferee of any Shares; or

12.1.2 such other person as is reasonably believed to have information and/or evidence relevant to such purpose

provides to the Company any information and/or evidence relevant to such purpose and until such information and/or evidence is provided the Company shall refuse to register any relevant transfer (otherwise than with Investor Consent).

12.2

Each holder of ‘B’ Ordinary Shares from time to time hereby irrevocably appoints the Company as his attorney (with the power to appoint any member of the Board as a substitute and to delegate to that substitute all or any powers hereby conferred, other than this power of substitution, as if he had been originally appointed by this power of attorney) to give effect to the provisions of these Articles and the Investment Agreement.

13.

GENERAL MEETINGS

13.1

The directors may call general meetings and may be required to call a meeting by the Shareholders pursuant to the provisions of the Act.

13.2

No meeting of Shareholders shall be quorate unless those Shareholders present include the Majority Investors (whether in person or by a duly authorised representative or a proxy).

13.3

Article 47 of the Model Articles shall be modified by the substitution in paragraph (a) of the words “at any time” in place of “not less than 48 hours”.

14. DIRECTORS 14.1

Numbers of Directors

The number of directors (excluding alternate directors) shall not be less than two in number.

14.2

Quorum for directors’ meetings

14.2.1 At a directors’ meeting, unless a quorum is participating, no proposal is to be voted on, except a proposal to call another meeting. 14.2.2 Subject to Article 14.2.3, the quorum for the transaction of business at a meeting of the directors is any two directors. 14.2.3 For the purposes of any meeting (or part of a meeting) held pursuant to Article 14.10 to authorise a director’s conflict of interest, where there is only one director in office who is not party to the relevant conflict, the quorum for such a meeting (or part of a meeting) shall be one eligible director. 14.2.4 If the total number of directors in office for the time being is less than the quorum required, the directors must not take any decision other than a decision:-

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(a)

to appoint further directors; or

(b)

to call a general meeting so as to enable the shareholders to appoint further directors.


14.3

Methods of appointing directors

14.3.1 Any person who is willing to act as a director, and is permitted by law to do so, may be appointed to be a director:

(a)

by a decision of the directors.

(b)

14.3.2 14.4

by ordinary resolution; or

In any case where, as a result of death or bankruptcy, the Company has no shareholders and no directors, the transmittee of the last shareholder to have died or to have a bankruptcy order made against him has the right, by notice in writing, to appoint a natural person (including a transmittee who is a natural person) who is willing to act and is permitted to do so, to be a director.

Appointment and removal of alternates

14.4.1 Any director (the “appointor”) may appoint as an alternate any director, or any other person approved by resolution of the directors, to:

(a)

exercise that director’s powers, and

(b)

carry out that director’s responsibilities,

in relation to the taking of decisions by the directors in the absence of the alternate’s appointor.

14.4.2 Any appointment or removal of an alternate must be effected by notice in writing to the Company signed by the appointor, or in any other manner approved by the directors. 14.4.3 The notice must:

(a)

(b) 14.5

identify the proposed alternate, and in the case of a notice of appointment, contain a statement signed by the proposed alternate that the proposed alternate is willing to act as the alternate of the director giving the notice.

Rights and responsibilities of alternate directors

14.5.1 An alternate director has the same rights, in relation to any directors’ meeting or directors’ written resolution, as the alternate’s appointor. 14.5.2 Alternate directors:

(a)

are, subject to Articles 14.4 and 14.6, deemed for all purposes to be directors;

(b)

are liable for their own acts and omissions;

(c)

are subject to the same restrictions as their appointors; and

(d)

are not deemed to be agents of or for their appointors.

14.5.3 A person who is an alternate but not a director: (a)

may be counted as participating for the purposes of determining whether a quorum is participating (but only if that person’s appointor is not participating), and

(b)

may sign a written resolution (but only if it is not signed or to be signed by that person’s appointor).

No alternate may be counted as more than one director for such purposes.

14.5.4 An alternate director is not entitled to receive any remuneration from the Company for serving as an alternate director except such part of the alternate’s appointor’s remuneration as the appointor may direct by notice in writing made to the Company. 14.6

Termination of alternate directorship

14.6.1 An alternate director’s appointment as an alternate terminates: (a)

when the alternate’s appointor revokes the appointment by notice to the Company in writing specifying when it is to terminate;

(b)

on the occurrence in relation to the alternate of any event which, if it occurred in relation to the alternate’s appointor, would result in the termination of the appointor’s appointment as a director;

on the death of the alternate’s appointor; or

(c)

(d)

when the alternate’s appointor’s appointment as a director terminates, except that an alternate’s appointment as an alternate does not terminate when the appointor retires by rotation at a general meeting and is then re-appointed as a director at the same general meeting.

14.7

Proceedings of Directors

14.7.1

Notice of every meeting of the directors shall be given to each director at any address in the United Kingdom supplied by him to the Company for that purpose whether or not he is present in the United Kingdom provided that any director may waive notice of any meeting either prospectively or retrospectively and if he does so it shall be no objection to the validity of the meeting that notice was not given to him. Not less than 5 Business Days prior notice of a Board meeting shall be given unless the requirement for notice is waived by the directors or otherwise agreed by Investor Consent.

14.7.2 Notices of meetings of the directors shall be given to each director, but need not be in writing. 14.8 Minutes

Minutes of meetings of the Board shall be prepared and circulated as soon as practicable and circulated to each director not more than 10 Business Days after the meeting and Article 15 of the Model Articles shall be modified accordingly.

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14.9

Transactional Conflicts

14.9.1 Subject to the provisions of the Act and provided that he has disclosed to the directors the nature and extent of any material interest of his, a director notwithstanding his office: (a)

may be a party to or otherwise interested in any transaction or arrangement with the Company or in which the Company is in any way interested;

(b)

may be a director or other officer of or employed by or be a party to any transaction or arrangement with or otherwise interested in any body corporate promoted by the Company or in which the Company is in any way interested;

(c) may (and any firm or company of which he is a partner or member or director may) act in a professional capacity for the Company or any body corporate in which the Company is in any way interested; (d)

shall not by reason of his office be accountable to the Company for any benefit which he derives from such office service or employment or from any such transaction or arrangement or from any interest in any such body corporate and no such transaction or arrangement shall be liable to be avoided on the ground of any such interest or benefit; and

(e)

shall, subject to Articles 14.9.2 and 14.10.4, be entitled to vote and be counted in the quorum on any matter concerning the foregoing paragraphs of this Article.

14.9.2 For the purposes of Article 14.9.1: (a)

a general notice to the directors that a director is to be regarded as having an interest of the nature and extent specified in the notice in any transaction or arrangement in which a specified person or class of persons is interested shall be deemed to be a disclosure that the director has an interest in any such transaction of the nature and extent so specified;

(b)

an interest of which a director has no knowledge and of which it is unreasonable to expect him to have knowledge shall not be treated as an interest of his; and

(c) an interest of a person who is for any purpose of the Act (excluding any statutory modification not in force when these Articles were adopted) connected with a director shall be treated as an interest of the director and in relation to an alternate director an interest of his appointor shall be treated as an interest of the alternate director without prejudice to any interest which the alternate director has otherwise. Authorisation of Situational Conflicts 14.9.3

To the fullest extent possible by law and subject to the other provisions of the Articles, for the purposes of section 180(4)(a) of the Act, any director shall be authorised in respect of the Pre-Authorised Situations provided that the Board (with Investor Consent) may revoke, or make subject to such terms and conditions as it thinks fit, any such authorisation.

14.9.4 To the fullest extent permitted by law and subject to the other provisions of these Articles, the directors (for the purposes of section 175(4)(b) of the Act) and the Company by ordinary resolution (for the purposes of section 180(4)(a) of the Act) may authorise any Conflict Situation. 14.9.5 Any authorisation under Article 14.10.2 shall:

(a)

be subject to Investor Consent;

(b)

be on such terms and conditions as may be set out in such Investor consent or (if the authorisation relates only to one or more director), as resolved by the Company or the Board (and any such terms and conditions may be revoked or varied by Investor Consent or members of the Board resolution as appropriate);

(c)

extend to any actual or potential Conflict Situation which may reasonably be expected to arise out of the matters expressly authorised.

14.9.6

Without prejudice to Article 14.10.5(a), at any meeting of the directors where the authorisation of a Conflict Situation pursuant to Article 14.10.2 is being considered any resolution of the directors authorising the Conflict Situation can only be passed where any directors to whom that Conflict Situation relates do not vote or would have been passed without counting the votes of any such interested director who votes.

14.9.7 Subject to authorisation of a Conflict Situation in accordance with these Articles (including under Article 14.10.1) and any terms or conditions applying to such authorisation, a director: (a)

may count in the quorum for and vote at any meeting (or part of a meeting) of the Board at which the authorised Conflict Situation is considered (and may receive notices of and documents and information relating to such meetings/parts of meetings);

(b)

shall not be required to disclose to the Company any confidential information obtained as a result of the authorised Conflict Situation (save where also lawfully obtained as a result of his position as a director of the Company) where do so would result in the director breaching a duty of confidentiality owed as a result of or in relation to the authorised Conflict Situation;

(c)

shall not be accountable to the Company for any benefit he (or a person connected with him) derives from any matter relating to the authorised Conflict Situation and any contract or arrangement relating to the Conflict Situation shall not be liable to be avoided on the ground of any such benefit.

14.9.8 Where proposals concerning the authorisation by the directors of Conflict Situations of two or more directors under Article 14.10.2 are under consideration, such directors’ interests may be divided and considered separately for each director and each such director may form part of the quorum and vote in relation to each resolution except

34


any resolution(s) concerning his own Conflict Situation(s) (provided he is not otherwise precluded from voting or forming part of the quorum).

14.9.9 Each director shall comply with any obligations imposed on him pursuant to any such authorisation (whether by the directors, the Shareholders or as set out in the relevant Investor Consent). 14.9.10 For the purposes of this Article 14.10:

(a)

any reference to a conflict of interest includes a conflict of interest and duty and a conflict of duties;

(b)

an interest of a person connected with a director for the purposes of the Act shall be treated as an interest of the director; and

(c)

an interest of the appointor of an alternate director shall be treated as an interest of the alternate director (together with any interest which the alternative director has otherwise).

15. CHAIRMAN 15.1

The Majority Investors shall have the right at any time and from time to time by notice in writing to the Board to instruct the Board to appoint one of the directors of the Company or any other person as Chairman of the Board (and any such other person shall be appointed a director of the Company for the duration of such appointment) and shall have the right to instruct the Board to remove from the office of Chairman of the Board any person appointed by it pursuant to this Article and to appoint another director or any other person as Chairman of the Board in his place (such appointment or removal to have effect as otherwise set out in such notice).

15.2

The provisions of Article 12 of the Model Articles are subject to the overriding provisions of Article 15.1 above.

16. DIVIDENDS 16.1

Articles 30(1) to 30(4) (inclusive) of the Model Articles shall be subject to Article 3.1.

17.

INDEMNITIES

17.1

Subject to Article 17.2, but without prejudice to any indemnity to which a relevant officer is otherwise entitled:-

each relevant officer shall be indemnified out of the Company’s assets against all costs, charges, losses, expenses and liabilities incurred by him as a relevant officer in the actual or purported execution and/or discharge of his duties, or in relation to them including (in each case) any liability incurred by him in defending any civil or criminal proceedings, in which judgment is given in his favour or in which he is acquitted or the proceedings are otherwise disposed of without any finding or admission of any material breach of duty on his part or in connection with any application in which the court grants him, in his capacity as a relevant officer, relief from liability for negligence, default, breach of duty or breach of trust in relation to the Company’s (or any associated company’s) affairs; and

the Company may provide any relevant officer with funds to meet expenditure incurred or to be incurred by him in connection with any proceedings or application referred to in Article 17.1.1 and otherwise may take any action to enable any such relevant officer to avoid incurred such expenditure.

This Article does not authorise any indemnity which would be prohibited or rendered void by any provision of the Companies Acts or by any other provision of law.

In this Article:-

companies are associated if one is a subsidiary of the other or both are subsidiaries of the same body corporate, and

a “relevant officer” means any director or other officer or former director or other officer of the Company or an associated company (including any company which is a trustee of an occupational pension scheme (as defined by section 235(6) of the Act, but excluding in each case any person engaged by the Company (or associated company) as auditor (whether or not he is also a director or other officer), to the extent he acts in his capacity as auditor).

18. INSURANCE 18.1

The directors may decide to purchase and maintain insurance, at the expense of the Company, for the benefit of any relevant officer in respect of any relevant loss.

18.2

In this Article:-

18.2.1 a “relevant officer” means any director or other officer or former director or other officer of the Company or an associated company (including any such company which is a trustee of an occupational pension scheme (as defined by section 235(6) of the Act, but excluding in each case any person engaged by the Company (or associated company) as auditor (whether or not he is also a director or other officer), to the extent he acts in his capacity as auditor), 18.2.2

a “relevant loss” means any loss or liability which has been or may be incurred by a relevant officer in connection with that relevant officer’s duties or powers in relation to the Company, any associated company or any pension fund or employees’ share scheme of the Company or associated company, and

18.2.3 companies are associated if one is a subsidiary of the other or both are subsidiaries of the same body corporate.

35


Annexe D

Certified Statement for Certified High Net Worth Individuals I declare that I am a certified high net worth individual for the purposes of the Financial Services and Markets Act 2000 (Financial promotion) Order 2005. I understand that this means: (a)

I can receive financial promotions that may not have been approved by a person authorised by the

Financial Services Authority;

(b)

the content of such financial promotions may not conform to rules issued by the Financial Services

Authority; (c)

by signing this statement I may lose significant rights;

(d)

I may have no right to complain to either of the following:

(i) the Financial Services Authority; or

(ii) the Financial Ombudsman Scheme;

(e)

I may have no right to seek compensation from the Financial Services Compensation Scheme.

I am a certified high net worth individual because at least one of the following applies: (a)

I had, during the financial year immediately preceding the date below, an annual income to the

value of ÂŁ100,000 or more;

(b)

I held, throughout the financial year immediately preceding the date below, net assets to the value of

ÂŁ250,000 or more. Net assets for these purposes do not include:

(i) the property which is my primary residence or any loan secured on that residence;

(ii) any rights of mine under a qualifying contract of insurance within the meaning of the Financial

Services and Markets Act 2000 (Regulated Activities) Order 2005; or

(iii) any benefits (in the form of pensions or otherwise) which are payable on the termination of my

service or on my death or retirement and to which I am (or my dependants are), or may be entitled.

I accept that I can lose my property and other assets from making investment decisions based on financial promotions. I am aware that it is open to me to seek advice from someone who specialises in advising on investments.

Signature .................................................................................................................Date: ........................................................

36


Annexe D

Certified Statement for Self-certified Sophisticated Investors I declare that I am a self-certified sophisticated investor for the purposes of the Financial Services and Markets Act 2000 (Financial promotion) Order 2005. I understand that this means: (a)

I can receive financial promotions that may not have been approved by a person authorised by the

Financial Services Authority;

(b)

the content of such financial promotions may not conform to rules issued by the Financial Services

Authority; (c)

by signing this statement I may lose significant rights;

(d)

I may have no right to complain to either of the following:

(i) the Financial Services Authority; or

(ii) the Financial Ombudsman Scheme;

(e)

I may have no right to seek compensation from the Financial Services Compensation Scheme.

I am a self-certified sophisticated investor because at least one of the following applies: (a)

I am a member of a network or syndicate of business angels and have been so for at least the last

six months prior to the date below;

(b)

I have made more than one investment in an unlisted company in the two years prior to the date

below; (c)

I am working, or have worked in the two years prior to the date below, in a professional capacity in

the private equity sector, or in the provision of finance for small and medium enterprises;

(d)

I am currently, or have been in the two years prior to the date below, a director of a company with

an annual turnover of at least ÂŁ1 million.

I accept that I can lose my property and other assets from making investment decisions based on financial promotions. I am aware that it is open to me to seek advice from someone who specialises in advising on investments.

Signature .................................................................................................................Date: ........................................................

37


38


39


Manchester House Private Placing Memorandum  

Manchester House Private Placing Memorandum

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