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3 Sep 2012 14:05
3 September 2012 TEP Exchange Group PLC ("TEP" or "the Company") Further re: licence agreement
Further to the announcement made on 30 July 2012, the Company announces that it has agreed with SL Investment Management Limited ("SL") to extend the licence agreement, as announced on 12 November 2010, to 31 October 2012 ("the initial period"). Following the initial period, the terms of the agreement have been amended such that the quarterly fee payable to TEP for the exclusive rights to develop and modify the electronic platform ("the Licence Agreement") will be £ 30,000. There will be no change to the existing arrangements between TEP and SL in the licence of the Company's electronic platform and all technology to SL for a quarterly fee payable to TEP of £20,000. The non-exclusive licence between TEP Limited (the trading subsidiary of TEP) and SL ("the Sub-Licence") will continue at a quarterly fee of £25,000 payable by TEP Limited to SL.
In addition, SL will now have the right to terminate the Licence Agreement upon giving 30 days' prior written notice to TEP. In the event that SL terminates the Licence Agreement, the Sub-Licence between TEP Limited and SL will also terminate.
The income that is now expected to be generated from the licensing arrangements for 2011 and 2012 is forecasted to be £1,866,666. Under the terms of the warrants that were issued as part of the equity subscription announced by the Company on 3 October 2011 the warrant holders could exercise the warrants in full in the event of the Company achieving consolidated revenue of at least £ 900,000 in each of the financial years ending 31 December 2011 and 31 December 2012. The warrants holders, being SL, Close Horizons Limited and Preferred Asset Management (together "the Concert Party") have now agreed to waive 3,870,000,000 of the 4,500,000,000 warrants held by them in recognition of the reduction in the ongoing recurring income stream of TEP. The warrants are exercisable at 0.002p per ordinary share and under the new arrangements between TEP and the Concert Party the warrants can be exercised for 12 months commencing from 1 October 2012 provided the Company has declared, made and paid a dividend of at least £250,000 to all shareholders prior to the exercise of the warrants.
Following the cancellation of part of the warrants, the current Concert Party shareholding and the Concert Party shareholding following the exercise of the warrants (assuming the warrants are exercised and assuming that no other ordinary shares have been issued by the Company) would be as follows:
Current shareholding Maximum holding following exercise of the warrants Number of Percentage Number of Percentage Ordinary of enlarged Ordinary of enlarged Shares issued Shares issued ordinary share capital share capital SL Investment Management 408,032,798 48.00 ,708,032,798 47.84Limited Close Horizons Limited 186,833,333 21.98 386,833,333 26.14 Preferred Asset Management 85,000,000 10.00 215,000,000 14.53Limited Totals 679,866,131 79.98 1,309,866,131 88.51
The amendment to the Licence Agreement and the Sub-Licence are related party transactions in accordance with AIM Rule 13. The Independent Directors, being George Kynoch, Moses Kraus and Abraham Weitz, consider, having consulted with the Company's nominated adviser, Merchant Securities Limited, that the terms of the transactions are fair and reasonable insofar as its shareholders are concerned.
For further information please contact:
TEP Exchange Group plc David Roxburgh 00 353 1 260 7746 Merchant Securities Limited Simon Clements/Virginia Bull 020 7628 22007
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