‘[The enclosed draft term sheet] lays out the key points on the management equity incentive scheme that I hope will be acceptable to you guys. … You will notice that we have included 15% equity overall (with the same splits as before) as opposed to the overall 18% that you described from the consortium. This does take on more impact given the higher price we are paying compared to the consortium, and whilst we wanted to ensure you guys were in a $ same position on day 1, and hence 15% @$250m = 18% @$210m (and I think the$210m is being a little generous given the deferred), we don’t want the lower headline % to be an issue and we have been mulling this internally. There are two things that are not built into this document. The first is in relation to the above, where we are thinking about having that additional 3% to be available to be awarded but based on performance. I think we are very much open to that, but need to do more thinking so welcome your thoughts. The other point that we have been mulling, and it would be good to get your views on this also, would be for some of the management teams vesting equity (say 2.5% of the 7.5%) to be awarded to them on completion as opposed to all vesting over 3 years. We are keen to ensure everyone is bought in on day one and motivated and think this may be a good way to achieve that. Perhaps we can discuss to get your views? … This is drafted as a term sheet as opposed to a final doc as there will be items we need to do more work on regarding structure (as we have discussed) and implications for employees in different locations, but we have tried to make it as fulsome as possible such that it covers commercial points….’
‘spoke to Chris and I understand that you want to go over the equity allocation and the performance conditions mechanism’
‘The Lead Investor will use reasonable efforts to procure that the grants will be under the “capital gains route” under Section 102 of the Israeli Tax Ordinance’
‘In accordance with Clause 2.1 of your employment contract dated5 December 2012 (which transferred from PTVB Management Limited to the Finalto Group on completion of Gopher’s acquisition of the Finalto Group Limited from Playtech plc) which is governed by English law (the “Employment Contract”) and the amendment letter to that Employment Contract dated9 January 2017 (the “Amendment Letter”), we write to provide you with twelve months’ notice of termination of your employment with effect from today’s date. In accordance with Clause 14.2 of your Employment Contract we have exercised our sole and absolute discretion to make a payment to you in lieu of such notice. As such, your last day of employment with us is today’s date and we shall make the following payments to you: i. Termination payment: we believe will amount to the equivalent of nine and 10/12 months’ basic salary; ii. Payment in lieu of notice: the equivalent of 12 months’ basic salary in lieu of 12 months’ notice of termination; iii. Bonus payment: a pro rata amount of the bonus paid to you in respect of the last financial year; and iv. Holiday pay: pay in respect of any outstanding but untaken holiday in the current holiday year carried forward from the previous holiday year.’
‘Hi, I’m attaching an invoice for the months of July and August. Sums are aligned with the new commercials agreed with Gopher. For now, Still going out as invoices. After the signing on the new employment agreement, the consideration will switch and be paid as a salary.’
‘When an employer elects to terminate a contract on notice and offers payment in lieu of that notice it elects for a clean break. It takes the risk that it may subsequently discover matters which would have justified summary termination for breach, just as it takes the risk that the employee might subsequently have died or found a more attractive job elsewhere. The employers here obtained precisely that for which they had bargained. There is no basis upon which they either can or in my view should be able to deny to their employee that for which correspondingly he bargained.’
‘(a) There are no existing contracts or arrangements between, on the one hand, any Group Company and, on the other hand, any Management Warrantor, any person who is or was a shareholder in a Group Company, or any person connected with any of them other than on normal commercial terms in the ordinary and usual course of business. (b) No Group Company is a party to any material contract, arrangement or understanding with any current or former Worker, or any person connected with any of such persons, or in which any such persons is interested (whether directly or indirectly) other than on normal commercial terms in the ordinary and usual course of business.’
‘Mark Lauterstein Trading related arrangements are in place with Finalto 360 client Lead Capital (see documents in folder 2.7.5.8 – Client E) which is owned (or majority) owned by a former employee of the Group, Mark Lauterstein. These are on ordinary course (and arms-length) terms. … A loan was made in 2019 to Mark by [FGL] … to support his business activities (See document 2.7.15) This loan has been repaid. Mark Lauterstein (as a former employee) participated in the Tradetech Holding Limited Performance Share Plan (see document 1.6.4.1.2 for his option agreement). By agreement between Mark and Finalto (see document 2.7.5.8.2.1 para 7), the Loan was repaid by Mark out of the proceeds of the award from that plan (in November 2020). Pursuant to a domain name sale agreement (doc 2.7.9) the tradefx.com domain was sold to a company in the Lead Capital group (called Silverclip Holdings at the time and now called Trade Capital Holdings Limited) with the consideration of$3m to be paid over a period of 20 years. This payment obligation was novated to Mark Lauterstein in March 2020 (see novation doc at 1.3.22.4).’
‘3.1 The Purchaser [ie GI] agrees that, notwithstanding any other provision of this Deed: (a) it will not be entitled to make, and will not make: (i) any Claim against the Management Warrantors [viz the Claimants] (other than a Conduct Claim) [viz a claim in respect of conduct between the date of the MWD and Completion] except to the extent of£1.00 (one (1)) pound sterling in aggregate; or … (b) its sole recourse in respect of all Claims (other than any Conduct Claim) shall, except to the extent of£1.00 (one (1)) pound sterling, be to make a claim under the W&I Policy; and (c) the absence of a recourse of the Purchaser under the W&I Policy in respect of any Claim (other than any Conduct Claim, including, without limitation, as the result of any limitation, exclusion, deduction or derogation under, or any invalidity or illegality of, the W&I Policy) and/or any inability of the Purchaser to obtain any remedy in respect of a Claim (other than any Conduct Claim) under the W&I Policy for any reason whatsoever (including, without limitation, any winding up, bankruptcy or other insolvency proceedings affecting the W&I Insurer, any failure of the W&I Insurer to perform its obligations under the W&I Policy or any deductible, threshold or other financial limitation applying to the W&I Policy) shall not affect or increase the liability of the Management Warrantors under this Deed. … 3.3. The Purchaser covenants and warrants to the Management Warrantors that: (a) the W&I Policy includes terms pursuant to which the W&I Insurer agrees to not exercise any rights of subrogation it may have against any Management Warrantor except where any loss that is under the W&I Policy arises as a result of any fraud by that Management Warrantor in giving the Warranties (provided always that the fraud or fraudulent misrepresentation of any such Management Warrantor shall not in any way increase or otherwise affect the liability of, or the ability for the W&I Insurer to exercise any rights of subrogation against, any other Management Warrantor)…’
‘It does not seem to me that they have that dual quality. I find that they are warranties only, and not representations, for the following reasons: (i) There is a clear distinction in law between representations and warranties, and that would be understood by the draftsman of the SPA. That is likely to be the case in any transaction of this nature, but is also apparent from the SPA itself. Representations are referred to in clause 16.3, and Warranties (with a capital “W”) are referred to elsewhere. (ii) The warranties in this case are clearly, and at all times, described as such, and are nowhere described as representations. Those giving the warranties are described as “Warrantors” (again with a capital “W”). The relevant wording is always in terms of warranties. (iii) The words of the warranting provision (clause 5) are words of warranty not representation. There is a legal distinction between the two and (subject to a point made about a later reference to representations, as to which see below) there is no reason to extend the words beyond their natural meaning. In order to make the relevant material a representation one has to find something in the SPA which is capable of doing that. It is not enough that the subject matter of the warranty is capable of being a representation. One has to find out why those words are there. One finds that in clause 5; and what one finds is words of warranty, not words of representation. (iv) The Disclosure Letter (itself referred to in the SPA) also distinguishes between representations and warranties - “The disclosure of any matter shall not imply any representation, warranty or undertaking not expressly given in the Agreement …”. (v) Clause 8 of the SPA contains significant limitations on the liability under the “Warranties”. It does not refer to representations. The clause is obviously a significant part of the overall structure of liability. If the warranties were capable of amounting to representations as well, then on the strict wording of this clause it would not apply to any such misrepresentation. The sellers would thus be deprived of a large part of their protection and limitation. That would be a strange and uncommercial state of affairs, and can hardly have been intended. This is strikingly so in relation to clause 8.2 containing the overall cap on recoveries and on what could be recovered from each warrantor, (unless, in relation to the overall cap a misrepresentation claim were construed as a claim under the Agreement, which would be a forced construction). If this cap does not apply then Mr Dawson could find himself liable for£17m , when he had contracted for a cap of£317,000 . It is also true of clause 8.1. This consequence would be avoided if one construed claims under the “Warranties” as including representations made in the warranty provisions, but again that would, in my view, be a very forced construction. (vi) There is a conceptual problem in characterising provisions in the contract as being representations relied on in entering into the contract. The timing does not work. The normal case in misrepresentation involves the making of a representation, and as a result the entering into of the contract. That does not work where the only representation is said to be in the contract itself. Miss Newman expressly disclaimed the relevant representations being made at any earlier time. In some cases that problem is solved by an express provision making certain contractual statements representations. In such a case the parties have agreed as to their nature and how they should be treated. However, that is not the present case.’
‘When a seller, by the terms of the contract under which he sells, “warrants” something about the subject matter sold, he is making a contractual promise. Nothing less. But also I think (and all things being equal) nothing more. That is so just as much for a warranty as to some then present or past matter of fact as it is for a warranty as to the future. By contracting on terms by which he warrants something, the seller is not purporting to impart information; he is not making a statement to his buyer. He is making a promise, to which he will be held as a matter of contract in the sense that any breach of the warranty will be actionable as a breach of contract, subject to any other relevant terms of the contract and to general principles of the law of contract, for example as to remedies. In argument in the present case, I posed the simple case of a seller contracting to sell grain from a warehouse, “warranted at date of contract free from” some identified impurity. It would I think be quite novel, and wrong, to suggest that this would amount to a statement of fact, made by the seller to the buyer, that the grain was then free from the impurity in question. In the absence of additional facts, I do not think there could be any question of claiming rescission for misrepresentation, or damages for misrepresentation under the 1967 Act, if in fact the grain contained the impurity (so that there was a breach of the warranty). The same would be true, I think, in respect of any buyer’s warranty given by him by the terms of the contract (for example, in this case Clause 7.1 and Schedule 5 of the SPA contained various warranties by Idemitsu about itself and its entitlement and ability to enter into and complete the transaction).’
‘[19]As I said before quoting Mann J.’s reasoning, it seems to me its basic underlying premise, I think a sound premise, is that the act of concluding a contract on terms that include contractual warranties does not amount to or involve the making by the warrantor to the counterparty of any relevant statement. That is seen most clearly, perhaps, if even then it is not stated quite so explicitly as I have done, in the following sentences from [203(iii)]: “In order to make the relevant material a representation one has to find something in the SPA which is capable of doing that. It is not enough that the subject matter of the warranty is capable of being a representation. One has to find out why those words are there. One finds that in clause 5; and what one finds is words of warranty, not words of representation.” [20] By contrast, in Invertec Ltd at [363], Arnold J. simply asserts the conclusion that contractual warranties, if they be as to matters of past or present fact, “also amount to representations of fact”. With respect, it seems to me, as it did to Mann J., that Arnold J. there confused a finding of material that is by nature factual, so that a statement in terms thereof could be in law a representation, with a finding that there was a communication amounting to or involving such a statement in the first place. Arnold J. further concluded that the fact that the warranties in Invertec Ltd had been negotiated over a period prior to the conclusion of the contract (as is typical) might be an answer to the possible conundrum that a representation only made by the act of concluding a contract could not induce that act. That view as to inducement in a claim for damages for misrepresentation may itself be difficult: see, e.g., Leofelis SA et al. v Lonsdale Sports Ltd et al.[2008] EWCA Civ 640 , obiter per Lloyd LJ at [140]-[141], and Sycamore Bidco, supra, per Mann J. at [203(vi)]. But even if prior knowledge of what was to be in a contract might be used to claim that representations made by it induced its conclusion, the question will remain whether indeed any representations were so made in any given case. For the reasons I have expressed, and those of Mann J. in Sycamore Bidco, in my judgment if a contractual provision states only that a party gives a warranty, that party does not by concluding the contract make any statement to the counterparty that might found a misrepresentation claim. [21] Mr Choo-Choy QC submitted that Mann J.’s reasoning asserted or assumed either or both of two unsound propositions, and so was erroneous. Mann J., it was said, erred by reasoning that: (1) a statement of fact must be agreed to be, or expressly designated as, a representation in order to be one; or (2) an express agreement to give a statement of fact the status of a contractual warranty excluded it from being or having been (also) a representation. I do not think Mann J. erred in either respect. Rather, he simply searched for a communication that could amount to a statement of fact in the first place. That search was in vain in circumstances where the only material relied on was the existence, in the contract as concluded, of a contractual warranty. In such a case, as I see it and have sought to explain above, there is no representation, at all events in the absence of some provision saying otherwise, i.e. saying (in so many words or in effect) that the warranty is also to take effect as, or to be treated as, a representation. An example of a case involving provisions saying otherwise, decided some months before Sycamore Bidco but not, I think, referred to by Mann J., is the decision of Simon J., as he was then, in Bikam OOD, Central Investment Group SA v Adria Cable S.a.r.l.[2012] EWHC 621 (Comm) , another share purchase case. There “Sellers’
‘The better analysis is that a warranty does not, without more, imply any representation, because a vendor might quite properly agree to compensate the purchaser if losses exceed a given figure without representing that they will not do so. As explained most clearly by Andrew Baker QC in Idemitsu, parties may agree that a matter (for example an accounting quantity) is warranted so that the vendor will compensate the purchaser for any difference between the true figure and the warranty, without the vendor necessarily representing that it is true. A warranty itself cannot be a representation, because it is not pre-contractual, but given at the moment of contracting. A promise to enter into a warranty is also not a representation because it is a mere promise. The real issue that arises in these cases is whether there is any other context, statement or conduct that transforms the promise to enter into a warranty into a representation that the subject matter of the warranty is true. That may be the position, but equally it may not, and it certainly does not follow from the mere willingness of the vendor to give the warranty. If this is the correct analysis, then the consequence is that even a fraud claim cannot be based on a promise to enter into a warranty, nor on a warranty once given, without some further fact to turn that promise into a representation.’
‘[58] Stepping back from all of this, I would suggest that the simple proposition of law which emerges (especially from Idemitsu, but also from Sycamore Bidco and the various cases which have followed those two decisions) is that the giving of a contractual warranty does not, without more, amount to the making of an actionable representation. [59] Beyond that, I would suggest, it all depends. There is no doubt that providing draft contractual documents which are not themselves warranties can involve making representations (see Eurovideo and MDW Holdings), but will certainly not always do so (see Arani). It seems likely that it is necessary to show that a reason for making the factual statement is to provide information to the other party, as opposed to only for the purpose of making a contractual promise (see Sycamore Bidco). However, as Males LJ put it in SK Shipping, it “would depend on the particular facts of any given case”.’
‘I disagree with how you’re describing it. You’re detaching it from the rest of the arrangement with Mark Lauterstein. This was not sold to a third party for 3 million and that’s it. This is not the arrangement. The arrangement was we will sell it for this amount over a long time, whereby the logic was Lead Capital to operate that business, using business introducers, transferring the flow to Finalto for us to enjoy to generate revenues. This was a super commercial agreement for Finalto and for Playtech, which made significant revenues and profits throughout the years.’
‘That is a commercial decision. From this point onwards, it was agreed that that amount would be deducted. It still keeps the mechanism of the loan arrangement and the stickiness to the company there, meaning the concept was always you buy the trade brand for 3 million. You pay it over time. As long as you continue to generate revenues for Finalto, then we’re getting – we are generating revenue, we benefit from it. If you at any point want to decide that you leave the business, you have to pay the outstanding balance. That was the mechanism. It made sense. So deducting that 12.5 amount, not deducting – first of all, 12.5 amount is not a material amount in the context of the revenue generated so eventually we generated between 3 to 6 million a year from Lead Capital. That [ie the$12,500 ] is immaterial in the context of the numbers, but it still kept and that’s a commercial decision, which I stand behind. I believe it was agreed with Mor but I stand behind it 100%. Even if it’s deducted, that’s fine. We still generate between$3 to$6 million every single year. We still have the mechanism that if Mark leaves, he needs to pay the outstanding balance of the loan so netting it or crediting it or however you want to call it, is a commercial decision that I stand behind.’
‘I didn’t provide any personal promises. Anything I did was always in full co-ordination with Playtech’s management, with Mor Weizer, with Alex, either with one of them or both of them. I did nothing by myself. I had no personal interest anywhere. There is no side deal or anything that you’re implying to.’ 207. And: ‘To clarify, I most definitely did not have any side deals with Mark or any promises from me to him to give him the brand for free.’
‘I don’t see how that is not commercial.’
‘We are trying to bring much more deals like this. … I specifically tried for many years to bring such much more deals to Finalto and they did not succeed it. And you can see that they continuously negotiate the terms with us in order to push them down…. 90% for the broker and 10% for us is a very good deal to Finalto…’
‘this is the nature of business negotiations … [i]t’s a give and take relationship’
‘We generate significant revenues from Tavi.’
‘Q. And you knew them to be false? A. Incorrect. Q. May I ask when you made that statement, that disclosure, did you consciously think one way or the other about the Lead Capital terms and the manner in which they were negotiated? A. This letter, the entirety of the warranty deed, was a process managed by Michael Jadeja, the GC of Finalto, a well experienced -- very experienced, very smart lawyer of Finalto. The process was cumbersome, long, included many of the management team of Finalto. He went through all the points with all of the management team. He interviewed different managers for different parts to make sure. There was a whole questionnaire. He was managing the running draft. He managed the entire process impeccably and I trusted his judgment on what needs to be in there and what doesn't need to be in there and how it needs to be presented and we discussed this in numerous calls throughout that process with the management team on a call with everyone where he was leading that call, given his knowledge of doing processes like that. Q. I'm sorry that's a process point. The substance of the representations were -- warranties were your statements, yes? A. We signed the statements, we accept the statements, but there is a process to be made before doing that, which is to make sure that you don't just do it out of your memory, that you go through a process internally with entirety of the management team. Before we signed it, it was approved and agreed by the managers that this is correct and we all feel comfortable, all of us, not just myself, and you see from the emails there were meetings after meetings on this and Michael was doing his own interviews with specific people to make sure that whatever is drafted there is correct and right and we supported that. Q. It does seem that it's always someone else. Did you care if these statements were true or false? A. Of course. Q. So you take personal responsibility -- it's not Mr Jadeja or anyone else, you personally considered each of these transactions and considered if these statements were true? A. This is why we took this process very, very seriously. This is why we do this process accordingly, because it's not just about me just putting my words on a paper. It needs to be done properly with the involvement of the entire management team so we don't miss anything. So if someone has something to say that they disagree with it that we talk about it and we understand what are those comments and then we do a final draft that we all support and that was the case here. Q. Yes, but it's not a collective responsibility, it's you and Mr Greenbaum's statements. A. I'm not suggesting it's collective, I'm suggesting on how it was formed. Q. Because I suggest to you either you didn't care about what was in here or you did think about it and then you must have known they were untrue? A. They are not untrue, they are not untrue and I stand behind them. Q. I suggest that for each of the points I'm putting to you the alternative is you didn't care? A. I did.’
‘The crucial issue in the present applications … is how one identifies the criteria for determining whether a number of separate contracts are part of a single overall transaction for the purposes of the rule against rescission of part of a transaction… If a representee is induced to enter into separate contracts A&B by the same misrepresentation, it may be that performance of contract B depends on the prior performance of contract A. In that case one cannot rescind contract A without also rescinding contract B. To permit the survival of contract B would be inconsistent with the principles of restitutio in integrum. But there may be cases where, although both contracts were induced by the same misrepresentation either can be performed without performance of the other. In that case the representee may rescind unless the contract not sought to be rescinded would never have been entered into by the parties without also entering into the other. Thus, for example, in a case where the transaction is divided into different contracts simultaneously negotiated, it may be that the consideration for the whole bargain is written into one contract, leaving only nominal consideration in the other contract. In that event it would not be open to the representee to leave open the contract that gave him the main consideration while rescinding the other contract under which his primary performance obligation lay. Again, to do otherwise would not effect restitutio in integrum. Or there may be cases where it is clear from the terms of the contracts and the matrix evidence that the subject matter of the contracts is so interrelated that, although it would be theoretically possible to perform each separately, one would never have been entered into without that contract sought to be rescinded. However, in the absence of structural interdependence between separate contracts, the most usual determinant of inseparability is likely to be the distribution of consideration for the whole bargain between the separate contracts.’
‘[338] It is clear, therefore, that the bar on partial rescission applies not only to inseverable parts of a single contract but also to contracts which form part of an indivisible bargain. The underlying principle is that a party seeking rescission should not be allowed to pick and choose which parts of the transaction to perform since that would involve rewriting the parties’ bargain.’
‘Q.Well, the case that’s been run against us is this advice was for the benefit of the management team? A. As I explained before, from first of all the management team is not only Ron and Liron, it was a wide group of employees within Finalto. And similar to other, for example in Playtech, when a share option plan, an employee share option plan, “ESOP”, was created, then the company paid for the legal advice for that consulting about the ESOP. And in this specific case, with ZES for example, my employee Tal Gueta, the head of tax, had direct interaction with ZES on the 102 form for Israel and the options and the – a nominee how the whole process of ESOP was constructed in Israel, not only for Ron and Liron but for the rest of the employees.’
‘I remember that I had an approval from him for ZES.’