On 1 April 2010, SMIT received a claim form from KDAM seeking a mandatory injunction arising from a breach of the Management Warrants Deed and in particular claiming that SMIT issue 51,602 warrants to KDAM.
SMIT has sought legal advice and disputes the claims made by KDAM and KDAM's interpretation of the terms of the management agreement and the management warrants deed.
KDAM and their associates are more materially adverse for SMIT than anticipated by the provisions made in the Formula Asset Value calculation.
management warrants issued to Knox D'Arcy Asset Management Ltd and certain other contingent liabilities relating to KDAM, a transaction with an insurance company associated with KDAM and VAT on fees paid to another former investment manager, further information about which is set out in note 9 & 10 of Unaudited Interim Results for the six months ended 31 December 2009.
d) The Company is aware that KDAM is contesting the amount of the management fees paid to KDAM on termination of the investment management agreement between the Company and KDAM (the "Management Agreement").
In addition, although the Company has received no claim from KDAM, the Company understands that KDAM may assert that it is entitled to an additional 117,693 Management Warrants following termination of the Management Agreement pursuant to the terms of the management warrants deed between the Company and KDAM.