EXHIBIT 10.62
AGREEMENT
BY AND AMONG
SJMB, L.P.,
CHARLES E. UNDERBRINK,
JOHN L. THOMPSON
AND
BELLELI ENERGY SrL,
AND
HANOVER COMPRESSOR COMPANY
HANOVER COMPRESSION GENERAL HOLDINGS, LLC
HANOVER COMPRESSOR HOLDING COMPANY NL B.V.
HANOVER COMPRESSOR NIGERIA, INC.,
HANOVER COMPRESSION LIMITED PARTNERSHIP
HCC MANTOVA S.r.L.
September 20, 2002
TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS............................................................................................1
1.1. Definitions.....................................................................................1
1.2. Interpretation..................................................................................5
ARTICLE II. PURCHASE AND SALE OF THE SUBJECT QUOTAS...............................................................5
2.1. Capital Structure...............................................................................5
2.2. Purchase and Sale of the Quotas.................................................................5
2.3. Purchase Price..................................................................................5
ARTICLE III. CLOSING..............................................................................................6
3.1. Closing.........................................................................................6
3.2. SJMB Deliveries at Closing......................................................................6
3.3. Hanover Entities Deliveries at Closing..........................................................6
3.4. Recordation.....................................................................................7
ARTICLE IV. CONDITIONS PRECEDENT TO THE CLOSING...................................................................7
4.1. Conditions Precedent to Obligations of SJMB, Underbrink and Thompson............................7
4.2. Conditions Precedent to Obligations of the Hanover Entities.....................................8
ARTICLE V. OPTIONS TO PURCHASE....................................................................................9
5.1. SJMB Purchase Option............................................................................9
5.2. HCHC Purchase Option...........................................................................11
ARTICLE VI. BONDS AND LETTERS OF CREDIT..........................................................................13
6.1. Existing Belleli Financing.....................................................................13
6.2. Additional Financing...........................................................................13
6.3. Replacement of Scheduled Bonds or Letters of Credit and Repayment of Scheduled Cash............14
6.4. Interest Payments on Scheduled Letters of Credit and Scheduled Cash............................14
6.5. Invoices and Payment...........................................................................14
ARTICLE VII. BELLELI FINANCING AND CAPITAL STRUCTURE.............................................................14
7.1. Additional Financing...........................................................................14
7.2. Capital Contributions..........................................................................14
7.3. Additional Actions.............................................................................15
7.4. Capital Structure..............................................................................15
7.5. Assets.........................................................................................15
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7.6. Distributions..................................................................................16
7.7. Control........................................................................................16
7.8. Further Financing, Bonding, Letters of Credit, Guarantees, Etc.................................16
ARTICLE VIII. HCC MANTOVA FINANCING & CAPITAL STRUCTURE..........................................................16
8.1. Existing HCC Mantova Financing.................................................................16
8.2. Additional Financing...........................................................................16
8.3. Capital Contributions..........................................................................16
8.4. Capital Structure..............................................................................16
8.5. Assets.........................................................................................17
8.6. Distributions..................................................................................17
8.7. Control........................................................................................17
ARTICLE IX. ENTERPRISE VALUATION SALE............................................................................17
9.1. Enterprise Valuation Sale......................................................................17
9.2. Enterprise Valuation Sale to Unaffiliated Third Party..........................................18
9.3. Cooperation....................................................................................19
9.4. Representations and Warranties.................................................................19
ARTICLE X. REPRESENTATIONS AND WARRANTIES........................................................................19
10.1. Representations and Warranties of SJMB.........................................................19
10.2. Representations and Warranties of Non-Mantova Hanover Entities.................................21
10.3. Representations and Warranties of Belleli......................................................22
10.4. Representations and Warranties of HCC Mantova..................................................24
10.5. Representations and Warranties of HCHC.........................................................26
10.6. Representations and Warranties of HCLP.........................................................26
ARTICLE XI. INDEMNIFICATION AND GUARANTEE........................................................................27
11.1. Survival of Representations and Warranties.....................................................27
11.2. Indemnification................................................................................27
ARTICLE XII. TERMINATION OF OTHER AGREEMENTS AND RELEASES........................................................28
12.1. Termination of Other Agreements................................................................28
ARTICLE XIII. MISCELLANEOUS......................................................................................28
13.1. Notices........................................................................................28
13.2. Binding Effect; Benefits.......................................................................29
13.3. Waiver.........................................................................................29
13.4. Amendments.....................................................................................30
13.5. Assignability..................................................................................30
13.6. Governing Law..................................................................................30
13.7. Counterparts...................................................................................30
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13.8. Entire Agreement...............................................................................30
13.9. Severability...................................................................................30
13.10. Disputes...................................................................................... 30
13.11. Fees and Expenses..............................................................................30
13.12. Remedy.........................................................................................30
13.13. Cooperation....................................................................................31
13.14. Restriction on Sale of Subject Quotas..........................................................31
SCHEDULES
Schedule 3.2(a) SJMB Release
Schedule 3.2(d) Lease Consent (to lease of assets of business from HCC
Mantova to Belleli)
Schedule 3.2(f) Instrument of Transfer of the "Subject Quotas"
Schedule 3.3(a) Hanover Release
Schedule 3.3(e) Satisfaction, Release and Indemnification Agreement
Schedule 5.1(f) Representations and Warranties at Option Closing
Schedule 6.1-1 Hanover Entities Scheduled Bonds or Letters of Credit
Schedule 6.1-2 SJMB Scheduled Bonds or Letters of Credit
Schedule 6.1(a)-1 Hanover Entities Scheduled Cash
Schedule 6.1(a)-2 SJMB Scheduled Cash
Schedule 6.1(b) Hanover Capital Contribution
Schedule 10.3(c) Litigation against Belleli
Schedule 10.3(f) Belleli Unaudited Financial Statements as of June 30, 2002
Schedule 10.3(g) Belleli Capital Calls
Schedule 10.3(h) Belleli Distributions
Schedule 10.3(i) Belleli Material Assets
Schedule 10.4(e) Litigation against HCC Mantova
Schedule 10.4(i) HCC Mantova Unaudited Financial Statements as of
June 30, 2002
Schedule 10.4(j) HCC Mantova Capital Calls
Schedule 10.4(k) HCC Mantova Distributions
Schedule 10.4(l) HCC Mantova Material Assets
Schedule 12.1 Agreements Subject to Termination
Schedule 12.1-2 Agreements Not Subject to Termination
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THIS AGREEMENT (the "Agreement") is made and entered into
effective as of September 20, 2002 (the "Effective Date"), among SJMB, L.P., a
Delaware limited partnership ("SJMB"), Charles E. Underbrink ("Underbrink"),
John L. Thompson ("Thompson"), Belleli Energy, SrL, an Italian company
("Belleli"), Hanover Compressor Company, a Delaware corporation ("Hanover"),
Hanover Compression General Holdings, LLC, a Delaware limited liability company
("HCGH"), Hanover Compressor Holding Company NL B.V. ("HCHC"), a Dutch
corporation, Hanover Compressor Nigeria, Inc. a Delaware corporation (formerly
known as Hanover Compressor Colombia, Inc., a Delaware corporation) ("HCNI"),
Hanover Compression Limited Partnership, a Delaware limited partnership
("HCLP"), and HCC Mantova S.r.L., an Italian company, ("HCC Mantova"). SJMB,
Underbrink, Thompson, Belleli, Hanover, HCGH, HCHC, HCLP, HCNI, and HCC Mantova
are sometimes hereinafter referred to individually as a "Party" and collectively
as the "Parties".
WHEREAS, HCHC owns quotas of Belleli representing 40.31% of the
outstanding and issued quotas of Belleli;
WHEREAS, HCHC desires to purchase quotas of Belleli representing
an 10.69% ownership interest of Belleli from SJMB, on the terms and conditions
set forth below.
NOW, THEREFORE, in consideration of the mutual agreements and
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereto
hereby agree as follows.
ARTICLE I.
DEFINITIONS
1.1. Definitions. As used in this Agreement, the following
terms shall have the following meanings:
"Affiliate" shall mean, with respect to any person, any person
that directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with such person. The term "control"
(including "controlled by" or "under common control with") shall mean the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies, of a person, whether through the ownership of
voting securities, by contract or otherwise. The term "person" as used in this
Agreement shall be broadly interpreted to include, without limitation, any
corporation, company, partnership, individual or other entity.
"Additional Financing" shall have the meaning set forth in
Section 6.2 herein.
"Agreement" shall have the meaning set forth in the introductory
paragraph.
"Belleli" shall have the meaning set forth in the introductory
paragraph.
"Belleli-Related Business" shall have the meaning set forth in
Section 8.5 herein.
"Closing" shall have the meaning set forth in Section 3.1 herein.
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"Closing Date" shall have the meaning set forth in Section 3.1
herein.
"EBITDA" shall mean earnings before interest, taxes, depreciation
and amortization.
"Effective Date" shall have the meaning set forth in the
introductory paragraph.
"Encumbrance" shall mean any encumbrance, charge, lien, pledge,
condemnation award, claim, restriction, security interest, mortgage, defect of
title, joint ownership, right of first offer, option, right of first refusal or
other encumbrance or charge of any kind.
"Enterprise Valuation Purchase Price" shall have the meaning set
forth in Section 9.1 herein.
"Governmental Authority" shall mean any governmental authority or
judicial, regulatory, or administrative body of any country or political
subdivision thereof exercising jurisdiction over SJMB, Belleli, Hanover, HCGH,
HCHC, HCNI, HCLP or HCC Mantova.
"Hanover" shall have the meaning set forth in the introductory
paragraph.
"Hanover Capital Contribution" shall have the meaning set forth
in Section 6.1 herein.
"Hanover Entities" shall mean Hanover, HCGH, HCHC, HCNI, HCLP and
HCC Mantova.
"HCNI" shall have the meaning set forth in the introductory
paragraph.
"HCC Mantova" shall have the meaning set forth in the
introductory paragraph.
"HCC Mantova Assets" shall have the meaning set forth in Section
10.4 herein.
"HCC Mantova Assets, Taxes and Fees" shall have the meaning set
forth in Section 8.1 herein.
"HCGH" shall have the meaning set forth in the introductory
paragraph.
"HCHC" shall have the meaning set forth in the introductory
paragraph.
"HCHC Initial Belleli Quotas" shall have the meaning set forth in
Section 2.1 herein.
"HCHC Initial HCC Mantova Quotas" shall have the meaning set
forth in Section 10.4 herein.
"HCLP Initial HCC Mantova Quotas" shall have the meaning set
forth in Section 10.4 herein.
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"HCHC Ownership Interest in Belleli" shall have the meaning set
forth in Section 2.2 herein.
"HCHC Ownership Interest in HCC Mantova" shall have the meaning
set forth in Section 5.1 herein.
"HCLP Ownership Interest in HCC Mantova" shall have the meaning
set forth in Section 5.1 herein.
"HCHC Percentage Ownership" shall have the meaning set forth in
Section 2.2 herein.
"HCHC Purchase Option" shall have the meaning set forth in
Section 5.2 herein.
"HCHC Purchase Option Closing" shall have the meaning set forth
in Section 5.2 herein.
"HCHC Purchase Option Closing Date" shall have the meaning set
forth in Section 5.2 herein.
"HCHC Purchase Option Price" shall have the meaning set forth in
Section 5.2 herein.
"HCLP" shall have the meaning set forth in the introductory
paragraph.
"Losses" shall have the meaning set forth in Section 11.2 herein.
"Management Employees" shall have the meaning set forth in
Section 4.2 herein.
"Material Adverse Effect", with respect to any entity, shall mean
a material adverse change in, or effect on the business, financial position,
prospects or results of operations of such entity.
"Non-Mantova Hanover Entities" shall have the meaning set forth
in Section 5.1 herein.
"Other Party" shall have the meaning set forth in Section 9.1
herein.
"Party" and "Parties" shall have the meaning set forth in the
introductory paragraph.
"Proposing Party" shall have the meaning set forth in Section 9.1
herein.
"Purchase Price" shall have the meaning set forth in Section 2.3
herein.
"Quarterly EBITDA Notice" shall have the meaning set forth in
Section 9.1 herein.
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"Refund Distribution or Dividend" shall have the meaning set
forth in Section 8.6 herein.
"Selling Party's Percentage Ownership Interest" shall have the
meaning set forth in Section 9.1 herein.
"SJMB" shall have the meaning set forth in the introductory
paragraph.
"SJMB Initial Quotas" shall have the meaning set forth in Section
2.1 herein.
"SJMB Ownership Interest in Belleli" shall have the meaning set
forth in Section 2.2 herein.
"SJMB Percentage Ownership" shall have the meaning set forth in
Section 2.2 herein.
"SJMB Purchase Option" shall have the meaning set forth in
Section 5.1 herein.
"SJMB Purchase Option Closing" shall have the meaning set forth
in Section 5.1 herein.
"SJMB Purchase Option Closing Date" shall have the meaning set
forth in Section 5.1 herein.
"SJMB Purchase Option Price" shall have the meaning set forth in
Section 5.1 herein.
"Scheduled Advancer" shall have the meaning set forth in Section
6.3 herein.
"Scheduled Bond" shall have the meaning set forth in Section 6.1
herein.
"Scheduled Bonds or Letters of Credit" shall have the meaning set
forth in Section 6.1 herein.
"Scheduled Cash" shall have the meaning set forth in Section 6.1
herein.
"Scheduled Issuer" shall have the meaning set forth in Section
6.3 herein.
"Scheduled Letter of Credit" shall have the meaning set forth in
Section 6.1 herein.
"Subject Quotas" shall have the meaning set forth in Section 2.2
herein.
"Thompson" shall have the meaning set forth in the introductory
paragraph.
"Triggering Valuation" shall have the meaning set forth in
Section 9.1 herein.
"Unaffiliated Third Parties" shall have the meaning set forth in
Section 6.2 herein.
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"Underbrink" shall have the meaning set forth in the introductory
paragraph.
"U.S.$" or "Dollars" shall mean the legal currency and tender of
the United States of America.
1.2. Interpretation. Unless otherwise indicated:
The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement or section, unless otherwise
specified. The words "include" and "including" and words of similar import when
used in this Agreement shall not be limiting but shall rather be deemed to be
followed by the words "without limitation." The singular includes the plural,
and the plural includes the singular. Words importing any gender include the
other gender. The word "or" shall mean "and/or."
ARTICLE II.
PURCHASE AND SALE OF THE SUBJECT QUOTAS
2.1. Capital Structure. HCHC and SJMB acknowledge and agree
that, as of the Effective Date of this Agreement, (i) SJMB is the record holder
of 3,988,773 quotas, equal to a 59.58% interest in Belleli ("SJMB Initial
Quotas"), and (ii) HCHC is the record holder of 2,698,679 quotas, equal to a
40.31% interest in Belleli ("HCHC Initial Belleli Quotas").
2.2. Purchase and Sale of the Quotas. Pursuant to the terms of
this Agreement, subject to the satisfaction to the conditions precedent to
closing set forth in Article IV, SJMB hereby agrees to sell, transfer and
deliver, or cause to be sold, transferred and delivered to HCHC, and HCHC hereby
agrees to purchase 715,408 quotas of Belleli from SJMB ("Subject Quotas") such
that upon the transfer to HCHC by SJMB of the Subject Quotas as provided herein,
that (i) SJMB will be the record holder of 3,273,365 quotas (which quotas
together with any additional quotas in Belleli as SJMB may acquire after the
Effective Date and excluding any quotas which SJMB may dispose of after the
Effective Date shall collectively be referred to for purposes of this Agreement
as the "SJMB Ownership Interest in Belleli"), equal to a 48.898% interest in
Belleli ("SJMB Percentage Ownership") and (ii) HCHC will be the record holder of
3,414,087 quotas (which quotas together with any additional quotas in Belleli
that HCHC or its Affiliates may acquire after the Effective Date and excluding
any quotas which HCHC may dispose of after the Effective Date shall collectively
be referred to for purposes of this Agreement as the "HCHC Ownership Interest in
Belleli"), equal to a 51.000% interest in Belleli ("HCHC Percentage Ownership").
2.3. Purchase Price. The purchase consideration for the Subject
Quotas shall be the forgiveness of all indebtedness of any kind, including
principal and interest, owed any of the Hanover Entities or their Affiliates by
SJMB, Thompson and Underbrink and the release of all security interests,
guarantees, indemnifications, and liens previously granted by any of SJMB,
Thompson and Underbrink or their Affiliates to any of the Hanover Entities or
their Affiliates (including those security agreements included in prior
agreements between those parties) (the "Purchase Price").
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ARTICLE III.
CLOSING
3.1. Closing. The closing of the transactions contemplated
hereby (the "Closing") will be held in the offices of Latham & Watkins on
September 30, 2002 at 10:00 a.m. Central time (the "Closing Date"), or, if the
conditions to the Closing set forth in Article IV shall not have been satisfied
by such date, as soon as practicable after such conditions shall have been
satisfied.
3.2. SJMB Deliveries at Closing. At the Closing, SJMB shall
deliver to the Hanover Entities the following:
(a) an executed release by SJMB, SJMB, L.L.C., Thompson and
Underbrink in the form attached hereto as Schedule 3.2(a);
(b) a certificate signed by an authorized officer of SJMB to
the effect that each of the conditions specified in clause (d) of Section 4.2 of
this Agreement is satisfied;
(c) evidence satisfactory to HCHC that each of the conditions
specified in clause (e) of Section 4.2 of this Agreement is satisfied;
(d) an executed lease consent in the form attached hereto as
Schedule 3.2(d);
(e) a copy of resolutions of the Managers of SJMB, L.L.C., the
general partner of SJMB, certified as of the Closing Date by the Secretary or an
Assistant Secretary of SJMB, L.L.C., which certified resolutions shall duly
authorize the execution, delivery and performance of this Agreement, together
with a certificate as to the incumbency of the persons executing such documents
on its behalf, such certificate to be in a form and substance reasonably
satisfactory to HCHC; and
(f) an executed and notarized instrument of transfer
(substantially in the form attached hereto as Schedule 3.2(f)) in respect of the
Subject Quotas, as provided by and in accordance with Article 2479 of the
Italian Civil Code, it being understood and agreed that such instrument of
transfer shall not constitute a novation of the terms and conditions herein
contained and that the language of such instrument of transfer is subject to
adjustment to reflect (1) the precise number of quotas owned by HCHC and SJMB
before the transfer (including any subscription by HCHC and/or SJMB of the
quotas pertaining to unexercised options held by Impianti) and (2) the
consideration for the transfer.
3.3. Hanover Entities Deliveries at Closing. At the Closing,
the Hanover Entities shall deliver to SJMB, Underbrink and Thompson the
following:
(a) an executed release by the Hanover Entities in the form
attached hereto as Schedule 3.3(a);
(b) a certificate signed by the president or chief executive
officer of each of the Hanover Entities to the effect that each of the
conditions specified in clause (d) of Section 4.1 of this Agreement is
satisfied;
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(c) evidence satisfactory to SJMB that each of the conditions
specified in clause (e) of Section 4.1 of this Agreement is satisfied;
(d) a copy of resolutions of the Board of Directors or other
governing body of each of the Non-Mantova Hanover Entities, certified as of the
Closing Date by the Secretary or an Assistant Secretary of such Hanover Entity,
which certified resolutions shall duly authorize the execution, delivery and
performance of this Agreement, together with a certificate as to the incumbency
of the persons executing such documents on their behalf, such certificate to be
in a form and substance reasonably satisfactory to SJMB;
(e) an executed Satisfaction, Release and Indemnification
Agreement in the form attached hereto as Schedule 3.3(e);
(f) the original Unconditional Guaranty of Payment and
Performance by Underbrink dated February 4, 2000 marked "cancelled";
(g) the original Unconditional Guaranty of Payment and
Performance by Thompson dated February 4, 2000 marked "cancelled";
(h) the original $400,000 Promissory Note by SJMB to the order
of HCLP dated February 14, 2001 marked "paid in full";
(i) the original $1,500,000 Promissory Note by SJMB to the
order of HCLP dated July 31, 2001 marked "paid in full";
(j) executed UCC termination statements terminating all
security interests granted in the past by SJMB in favor of any of the Hanover
Entities in a form and substance reasonably satisfactory to St. James; and
(k) SJMB's Black Warrior Stock Certificate No. 0399
representing 5,017,481 common shares currently held in escrow by Stephenson &
Snokhous for the benefit of HCLP.
3.4. Recordation. The Parties shall each take such actions as
are necessary to cause the sale of the Subject Quotas to be recorded in the
quotaholders' ledger of Belleli promptly upon registration of the deed with
Belleli's registrar.
ARTICLE IV.
CONDITIONS PRECEDENT TO THE CLOSING
4.1. Conditions Precedent to Obligations of SJMB, Underbrink
and Thompson. The obligations of SJMB, Underbrink and Thompson set forth in this
Agreement shall be subject to the satisfaction at or prior to the Closing of
each of the following conditions:
(a) the representations and warranties made by the Hanover
Entities, and each of them, herein, without taking into account any materiality
qualifications therein, shall have been true and correct in all material
respects when made, and shall be true and correct in all material respects at
and as of the Closing, with the same force and effect as though made at the
Closing except to the extent that such representations and warranties relate to
an earlier date;
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(b) the Hanover Entities, and each of them, shall have
performed and complied in all material respects with all covenants, agreements
and obligations in this Agreement to be performed or complied with prior to or
at the Closing;
(c) no action, proceeding, suit or investigation shall have
been instituted nor shall governmental action before any court or other
Governmental Authority be threatened in writing, nor shall any order, judgment
or decree have been issued or proposed to be issued by any court or other
Governmental Authority which does, or is reasonably likely to: (1) set aside,
restrain, enjoin or prevent the consummation of transactions contemplated
hereby; or (2) otherwise have a Material Adverse Effect on Belleli or HCC
Mantova;
(d) all necessary authorizations, agreements, registrations,
orders, approvals and consents of any persons, entities or Governmental
Authorities to the consummation of the transactions contemplated by this
Agreement, or otherwise pertaining to the matters covered by it, shall have been
obtained and delivered to SJMB and shall be in full force and effect as of the
Closing Date, and no such authorizations, agreements, registrations, orders,
approvals or consents shall impose any burdensome or, in SJMB's reasonable
determination, unsatisfactory conditions or requirements on SJMB; and
(e) the Hanover Entities shall have released all existing
pledges and powers of attorney from SJMB to any of the Hanover Entities, HCHC
shall have returned full ownership of the SJMB Initial Quotas to SJMB and HCHC
shall have caused title to the SJMB Initial Quotas to be returned to SJMB,
without encumbrance of any kind, and shall have caused such clear title to be
reflected on the Register of Members of Belleli and in all appropriate public
records, other than Encumbrances created by the terms of this Agreement.
4.2. Conditions Precedent to Obligations of the Hanover
Entities. The obligations of the Hanover Entities set forth in this Agreement
shall be subject to the satisfaction at or prior to the Closing of each of the
following conditions:
(a) the representations and warranties made by SJMB herein,
without taking into account any materiality qualifications therein, shall have
been true and correct in all material respects when made, and shall be true and
correct in all material respects at and as of the Closing, with the same force
and effect as though made at the Closing except to the extent that such
representations and warranties relate to an earlier date;
(b) SJMB shall have performed and complied in all material
respects with all covenants, agreements and obligations in this Agreement to be
performed or complied with prior to or at the Closing;
(c) no action, proceeding, suit or investigation shall have
been instituted nor shall governmental action before any court or other
Governmental Authority be threatened in writing, nor shall any order, judgment
or decree have been issued or proposed to be issued by any court or other
Governmental Authority which does, or is reasonably likely to: (1) set aside,
restrain, enjoin or prevent the consummation of transactions contemplated
hereby; or (2) otherwise have a Material Adverse Effect on Belleli or HCC
Mantova;
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(d) all necessary authorizations, agreements, registrations,
orders, approvals and consents of any persons, entities or Governmental
Authorities to the consummation of the transactions contemplated by this
Agreement, or otherwise pertaining to the matters covered by it shall have been
delivered to HCHC and shall be in full force and effect as of the Closing Date,
and no such authorizations, agreements, registrations, orders, approvals or
consents shall impose any burdensome, or in HCHC's reasonable determination,
unsatisfactory conditions or requirements on HCHC; and
(e) SJMB shall have obtained and delivered to HCHC a release
from each of Sergio Garrone, Aldo Patrini and Ettorre Prucco (the "Management
Employees") for any obligation of Belleli or HCLP or its Affiliates to sell or
issue any equity interests in Belleli to such Management Employee.
ARTICLE V.
OPTIONS TO PURCHASE
5.1. SJMB Purchase Option. SJMB will have the option following
the Closing Date to purchase the HCHC Ownership Interest in Belleli, plus HCHC's
ownership interest in HCC Mantova, (which interest shall be equal to the HCHC
Initial HCC Mantova Quotas (as defined in Section 10.4 herein)) (the "HCHC
Ownership Interest in HCC Mantova"), plus the 0.01% ownership interest in HCC
Mantova owned by HCLP (which interest shall be equal to the HCLP Initial HCC
Mantova Quotas (as defined in Section 10.4 herein)) (the "HCLP Ownership
Interest in HCC Mantova"), as follows:
(a) Exercise Period. HCHC and HCLP grant to SJMB and its
assigns the right to acquire the HCHC Ownership Interest in Belleli, the HCHC
Ownership Interest in HCC Mantova, and the HCLP Ownership Interest in HCC
Mantova (the "SJMB Purchase Option"). Such purchase option is exercisable at any
time prior to June 30, 2003 by the delivery of irrevocable written notice to
HCHC at least 15 days prior to the closing of the purchase thereunder (the "SJMB
Purchase Option Closing"), which notice shall set forth the date of closing (the
"SJMB Purchase Option Closing Date").
(b) SJMB Purchase Option Price. The exercise price for the
SJMB Purchase Option (the "SJMB Purchase Option Price"), which shall be paid to
HCHC in full in cash at the SJMB Purchase Option Closing, shall be the sum of:
(i) Thirty-eight Million Six Hundred Twenty-two
Thousand Four Hundred Twenty Seven and 00/100 Dollars
(U.S. $38,622,427); plus,
(ii) the payment or satisfaction in full of all
obligations of SJMB to the Hanover Entities or their
Affiliates (not including HCC Mantova or Belleli) incurred
after the Effective Date (provided that such payment will
be made only with respect to such obligations as were
incurred in accordance with the terms of this Agreement);
plus,
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(iii) the repayment of any additional capital HCHC
has contributed after the Effective Date to Belleli or HCC
Mantova (provided that such capital contributions have
been made only in accordance with the terms of this
Agreement), excluding any capital contributions made by
the Hanover Entities or their Affiliates after the
Effective Date that are treated as debt for purposes of
Article IX hereof; plus,
(iv) the repayment of any loans made to Belleli by
any of the Hanover Entities or their Affiliates (not
including HCC Mantova) ("Non-Mantova Hanover Entities")
(provided that such loans have been disclosed or made only
in accordance with the terms of this Agreement),
including, without limitation, any capital contributions
made by the Non-Mantova Hanover Entities or their
Affiliates after the Effective Date that are treated as
debt for purposes of Article IX hereof; plus
(v) the greater of: (a) the product of (1) the
HCHC Percentage Ownership, and (2) Belleli's EBITDA, as
determined by Arthur Andersen, for the period commencing
January 1, 2002 and ending on the forty-fifth (45th) day
prior to the SJMB Purchase Option Closing Date; or (b)
$0.00; minus
(vi) the amount of any payments to HCHC or any
other Non-Mantova Hanover Entity in repayment of any of
the loans referenced in Section 5.1(b)(iv) hereof.
(c) Releases Upon Exercise of SJMB Purchase Option. At the
SJMB Purchase Option Closing, SJMB shall provide for the release and return of
all letters of credit, bonds, guarantees and other sureties provided by the
Non-Mantova Hanover Entities for the benefit of Belleli (provided that such
letters of credit, bonds, guarantees and other sureties have been disclosed or
made only in accordance with the terms of this Agreement).
(d) Cooperation. HCHC and HCC Mantova and Belleli shall
cooperate with and use their reasonable best efforts to assist SJMB and its
agents in obtaining a new equity partner or financing for the purpose of
exercising the SJMB Purchase Option, including access to the financial
information, physical assets, customers, and holders of liabilities of Belleli
and HCC Mantova, subject to non-interference with the business of Belleli and
HCC Mantova and the execution of confidentiality agreements with any such
prospective partner or financing source and their representatives.
(e) Duties Upon Close of SJMB Purchase Option. HCHC, HCLP and
HCC Mantova will, at the SJMB Purchase Option Closing, and thereafter to the
extent reasonable upon SJMB's request, take the following actions:
(i) HCHC will take all action as is required to
immediately cause good and marketable title to the HCHC
Ownership Interest in Belleli to be transferred to SJMB or
its assigns without counterclaims or setoffs, free of
Encumbrances;
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(ii) HCHC will further cause each person who is in
any way affiliated with HCHC or any Hanover Entity to
immediately resign any position as an officer or director
of Belleli;
(iii) HCHC and HCLP will further immediately cause
good and marketable title to the HCHC Ownership Interest
in HCC Mantova and the HCLP Ownership Interest in HCC
Mantova, respectively, to be transferred to SJMB or its
assigns without counterclaims or setoffs, free of
Encumbrances; and
(iv) HCHC and HCLP will further cause each person
who is in any way affiliated with HCHC, HCLP or any
Hanover Entity to immediately resign any position as an
officer or director of HCC Mantova.
(f) HCHC Representations and Warranties at SJMB Purchase
Option Closing. At the SJMB Purchase Option Closing, HCHC shall make such
representations and warranties as are customary in transactions of this sort
relating to the interests being sold and the assets and liabilities associated
therewith (including but not limited to the representations and warranties set
forth in Schedule 5.1(f)); provided, however, that HCHC shall not be required to
make any representation or warranty with respect to which (i) HCHC believes in
good faith is not true or will not be true when made or (ii) HCHC does not have
a good faith reasonable basis to believe is true and accurate when given or
made.
5.2. HCHC Purchase Option. HCHC will have the option following
the Closing Date to purchase the SJMB Ownership Interest in Belleli, as follows:
(a) Exercise Period. SJMB grants to HCHC and its assigns the
right to acquire the SJMB Ownership Interest in Belleli (the "HCHC Purchase
Option"). Such purchase option is exercisable at any time after June 30, 2003
and prior to September 30, 2003 by the delivery of irrevocable written notice to
SJMB at least 15 days prior to the closing of the purchase thereunder ("HCHC
Purchase Option Closing"), which notice shall set forth the date of closing
("HCHC Purchase Option Closing Date").
(b) HCHC Purchase Option Price. The exercise price for the
HCHC Purchase Option (the "HCHC Purchase Option Price") which shall be paid to
SJMB in full in cash at the HCHC Purchase Option Closing shall be the sum of:
(i) Eleven Million and 00/100 Dollars (U.S.
$11,000,000); plus,
(ii) the payment or satisfaction in full of all
obligations of the Hanover Entities to SJMB or its
Affiliates incurred after the Effective Date (provided
that such payment will be made only with respect to such
obligations as were incurred in accordance with the terms
of this Agreement); plus,
11
(iii) the repayment of any additional capital SJMB
has contributed after the Effective Date to Belleli
(provided that such capital contributions have been made
only in accordance with the terms of this Agreement),
excluding any capital contributions made by SJMB after the
Effective Date that are treated as debt for purposes of
Article IX hereof; plus,
(iv) the repayment of any loans made to Belleli by
SJMB (provided that such loans have been disclosed or made
only in accordance with the terms of this Agreement),
including, without limitation, any capital contributions
made by the SJMB after the Effective Date that are treated
as debt for purposes of Article IX hereof; plus,
(v) the greater of: (a) the product of (1) the
SJMB Percentage Ownership Interest, and (2) Belleli's
EBITDA, as determined by Arthur Andersen, for the period
commencing January 1, 2002 and ending on the forty-fifth
(45th) day prior to the SJMB Purchase Option Closing Date;
or (b) $0.00; minus,
(vi) the amount of any payments to SJMB in
repayment of any of the loans referenced in Section
5.2(b)(iv) hereof.
(c) Releases Upon Exercise of HCHC Purchase Option. At the
HCHC Purchase Option Closing, the Hanover Entities shall provide for the release
and return of all letters of credit, bonds, guarantees and other sureties
provided by SJMB or its Affiliates for the benefit of Belleli (provided that
such letters of credit, bonds, guarantees and other sureties have been disclosed
or made only in accordance with the terms of this Agreement).
(d) Duties Upon Close of HCHC Purchase Option. SJMB will, at
the HCHC Purchase Option Closing, and thereafter to the extent reasonable upon
HCHC's request, take the following actions:
(i) SJMB will take all action as is required to
immediately cause good and marketable title of the SJMB
Ownership Interest in Belleli to be transferred to HCHC or
its assigns without counterclaims or setoffs, free of
Encumbrances; and
(ii) SJMB will further cause each person who is in
any way affiliated with SJMB to immediately resign any
position as an officer or director of Belleli.
(e) SJMB Representations and Warranties at HCHC Purchase
Option Closing. At the HCHC Purchase Option Closing, SJMB shall make such
representations and warranties as are customary in transactions of this sort
relating to the interests being sold and the assets and liabilities associated
therewith (including but not limited to the representations and warranties set
forth in Schedule 5.1(f)); provided, however, that SJMB shall not be required to
make any representation or warranty with respect to which (i) SJMB believes in
good faith is not
12
true or will not be true when made or (ii) SJMB does not have a good faith
reasonable basis to believe is true and accurate when given or made.
ARTICLE VI.
BONDS AND LETTERS OF CREDIT
6.1. Existing Belleli Financing. As of the Effective Date
hereof, the current outstanding face amounts of bonds and letters of credit
issued by one or more of the Hanover Entities and SJMB are set forth on Schedule
6.1-1 and Schedule 6.1-2 attached hereto, respectively (collectively, "Scheduled
Bonds and Letters of Credit" and, individually "Scheduled Bond" or "Scheduled
Letter of Credit").
(a) As of the Effective Date hereof, the current outstanding
amount of any cash or other consideration advanced by one or more of the Hanover
Entities or SJMB to or for the benefit of Belleli (whether characterized as
constituting a loan to Belleli, as creating a debt, a repayment, or a
reimbursement obligation by Belleli or otherwise) is set forth on Schedule
6.1(a)-1 or Schedule 6.1(a)-2 attached hereto, respectively ("Scheduled Cash").
Scheduled Cash for purposes of hereof shall include any costs incurred by SJMB
and the Hanover Entities to issue any Scheduled Bond or Scheduled Letter of
Credit.
(b) Prior to the Effective Date, the Hanover Entities
contributed the cash advances set forth on Schedule 6.1(b) to the capital of
Belleli (the "Hanover Capital Contribution"). The Parties acknowledge and agree
that the Hanover Capital Contribution shall be treated as debt for purposes of
Article IX hereof.
(c) The Scheduled Bonds and Letters of Credit and Scheduled
Cash shall not constitute capital contributions to Belleli for purposes of
Section 5.1(b) or Section 5.2(b) hereof.
6.2. Additional Financing. Neither the Non-Mantova Hanover
Entities nor SJMB shall be required to advance additional cash or provide
additional bonds, letters of credit, guaranties or sureties to or for the
benefit of Belleli or HCC Mantova.
(a) If either of Belleli or HCC Mantova (for purposes of
Belleli-Related Business only) needs or desires to obtain additional financing
(whether in the form of loans, bonds, letters of credit, or other alternative
financing) ("Additional Financing"), Belleli, HCC Mantova, HCHC, and SJMB shall
use their reasonable best efforts to cause Belleli or HCC Mantova to obtain such
Additional Financing from HCC Mantova or third parties unaffiliated with SJMB or
the Non-Mantova Hanover Entities ("Unaffiliated Third Parties").
(b) No Additional Financing may be provided to or for the
benefit of Belleli or HCC Mantova by SJMB or the Non-Mantova Hanover Entities,
without the prior joint written consent of SJMB and HCHC; provided, however,
that such consent shall not be unreasonably withheld or delayed if: (1) Belleli,
HCC Mantova, HCHC or SJMB have used their reasonable best efforts to cause
Belleli or HCC Mantova to obtain such Additional Financing from HCC Mantova or
Unaffiliated Third Parties; and (2) SJMB and HCHC have determined in good faith
that such Additional Financing is otherwise necessary or desirable.
13
(c) Any cash, bond, or letter of credit so advanced to or for
the benefit of Belleli or HCC Mantova by SJMB or any of the Non-Mantova Hanover
Entities in accordance with the terms of this Agreement shall be treated as
Scheduled Cash, a Scheduled Bond, or a Scheduled Letter of Credit, respectively,
for purposes of this Article VI, except that the effective date of such
Scheduled Cash, Scheduled Bond, or Scheduled Letter of Credit for purposes of
Section 6.4 shall be the date that such cash, bond, or letter of credit is
advanced.
6.3. Replacement of Scheduled Bonds or Letters of Credit and
Repayment of Scheduled Cash.
(a) Belleli, HCHC, and SJMB or the Non-Mantova Hanover
Entities that have issued such Scheduled Bonds or Letters of Credit, whichever
applies ("Scheduled Issuer"), shall use their reasonable best efforts to cause
Belleli to replace as soon as practicable such Scheduled Bonds or Letters of
Credit with bonds, letters of credit or other alternative financing issued or
provided by HCC Mantova or Unaffiliated Third Parties.
(b) Belleli, HCHC, and SJMB or the Non-Mantova Hanover
Entities that have advanced such Scheduled Cash, whichever applies ("Scheduled
Advancer"), shall use their reasonable best efforts to cause Belleli to repay as
soon as practicable such Scheduled Cash; provided, however, that such repayment
shall not require a capital call or cause a working capital shortfall for
Belleli.
6.4. Interest Payments on Scheduled Letters of Credit and
Scheduled Cash. Commencing on the Effective Date and continuing until such
obligations have been paid, satisfied, replaced, released or terminated, Belleli
will pay to each Scheduled Issuer or Scheduled Advancer an amount equal to (i)
four percent (4%) per annum on the outstanding face amount of the Scheduled
Letter of Credit issued by such Scheduled Issuer, and (ii) twelve percent (12%)
per annum on any Scheduled Cash or draw on Scheduled Bonds or Letters of Credit
provided by a Scheduled Advancer.
6.5. Invoices and Payment. Each Scheduled Issuer or Scheduled
Advancer will send Belleli quarterly invoices in arrears for amounts due to any
Scheduled Issuer or Scheduled Advancer by Belleli. Belleli will pay in cash to
any such Scheduled Issuer or Scheduled Advancer all amounts due to such
Scheduled Issuer or Scheduled Advancer based upon the payment terms in such
invoices; provided, however, that such Scheduled Issuers or Scheduled Advancers
will not provide for payment terms, the effect of which would require any
additional capital call or the payment of which would cause a working capital
shortfall for Belleli.
ARTICLE VII.
BELLELI FINANCING AND CAPITAL STRUCTURE
7.1. Additional Financing. Additional Financing for Belleli
shall neither be required nor permitted except as set forth in Section 6.2
hereof.
7.2. Capital Contributions. Belleli shall not require and
neither HCHC nor SJMB shall be permitted or required to make any future capital
contributions to Belleli following
14
the Effective Date hereof without the prior joint written consent of HCHC and
SJMB, provided, however, that such consent shall not be unreasonably withheld or
delayed if: (i) such capital contributions are reasonably necessary in order to
maintain the solvency of Belleli and (ii) such capital contributions will not
result in the issuance of additional quotas to the contributing Party. Any
capital contributions in accordance with this Section 7.2 that do not result in
the issuance of additional quotas to the contributing Party shall be treated as
debt for purposes of Article IX hereof.
7.3. Additional Actions. HCHC and SJMB acknowledge and agree
that (i) no capital contribution pursuant to Section 7.2 hereof is intended to
result in a change in the number of quotas defined to equal the HCHC Ownership
Interest in Belleli or the SJMB Ownership Interest in Belleli or the percentage
of ownership defined to equal the HCHC Percentage Ownership or the SJMB
Percentage Ownership and (ii) capital contributions pursuant to Section 7.2
shall be treated as debt for purposes of Article IX hereof. If the Hanover
Capital Contribution or any capital contribution pursuant to Section 7.2 hereof
is deemed whether by operation of law or otherwise to result in a change in the
number of quotas defined to equal the HCHC Ownership Interest in Belleli or the
SJMB Ownership Interest in Belleli or the percentage of ownership defined to
equal the HCHC Percentage Ownership or the SJMB Percentage Ownership, any Party
shall, at the request of HCHC or SJMB, execute and deliver such additional
agreements, certificates, instruments or other documents and take such other
actions as the other Party may reasonably request to vest in HCHC and SJMB, as
applicable, valid title to the quotas defined to equal the HCHC Ownership
Interest in Belleli or the SJMB Ownership Interest in Belleli, respectively, or
to the percentage of ownership defined to equal the HCHC Percentage Ownership or
the SJMB Percentage Ownership, respectively. In addition, any Party shall, at
the request of SJMB or HCHC, execute and deliver such additional agreements,
certificates, instruments or other documents and take such other actions as the
other Party may reasonably request to confirm and effectuate the treatment of
any capital contributions pursuant to Section 7.2 as debt for purposes of
Article IX hereof.
7.4. Capital Structure. Neither HCHC nor SJMB shall sell,
transfer, assign or encumber all or a part of the HCHC Ownership Interest in
Belleli or the SJMB Ownership Interest in Belleli, respectively, following the
Effective Date hereof without the prior written joint consent of SJMB and HCHC,
or as provided for in Article V or Article IX of this Agreement. Belleli shall
not issue additional ownership interests or cause or approve a sale of existing
ownership interests following the Effective Date without the prior written joint
consent of HCHC and SJMB. Belleli shall not complete any capital transactions
(excluding debt financings in accordance with Article VI hereof) or enter into
any merger, joint venture or other similar transaction of any kind without the
prior written joint consent of HCHC and SJMB. The Parties shall take such action
as is necessary to include the foregoing restrictions in the By-Laws of Belleli.
7.5. Assets. Belleli shall not sell, transfer, assign or
encumber all or a part of its assets (other than partial sales of assets in the
ordinary course of business) following the Effective Date hereof without the
prior written joint consent of HCHC and SJMB. Belleli shall not make any
material purchase of assets outside the ordinary course of business without the
prior written joint consent of HCHC and SJMB.
15
7.6. Distributions. Belleli shall not make any distributions or
dividends following the Effective Date hereof without the prior written joint
consent of HCHC and SJMB.
7.7. Control. HCHC shall not use its control of Belleli to
cause Belleli to breach any covenant set forth in Article VII.
7.8. Further Financing, Bonding, Letters of Credit, Guarantees,
Etc. Following the Effective Date hereof, HCC Mantova will use its best efforts
to provide Additional Financing as feasible to the extent so requested by
Belleli.
ARTICLE VIII.
HCC MANTOVA FINANCING & CAPITAL STRUCTURE
8.1. Existing HCC Mantova Financing. The Non-Mantova Hanover
Entities acknowledge and agree that neither they nor their Affiliates has as of
the Effective Date: (i) issued letters of credit, bonds, guarantees, or other
sureties for the benefit of HCC Mantova; (ii) advanced cash or other
consideration to HCC Mantova or for the benefit of HCC Mantova that must be
repaid or reimbursed by HCC Mantova to such Non-Mantova Hanover Entities or
their Affiliates, except for 4,135,786 EURO equal to the amount paid by or on
behalf of HCC Mantova for value added tax or other taxes or fees in connection
with the purchase of the HCC Mantova Assets ("HCC Mantova Assets Taxes and
Fees") which amount shall be satisfied as provided in Section 8.6 hereof. The
Non-Mantova Hanover Entities further acknowledge and agree that any debts or
obligations to any Non-Mantova Hanover Entities or their Affiliates in excess of
the HCC Mantova Assets Taxes and Fees as reflected in the unaudited financial
statement of HCC Mantova as of June 30, 2002 (attached hereto) as Schedule
10.4(i) have been or are forgiven as part of the consideration for this
Agreement as of the Effective Date hereof.
8.2. Additional Financing. Additional Financing for HCC Mantova
shall neither be required nor permitted except as set forth in Section 6.2
hereof.
8.3. Capital Contributions. HCC Mantova shall not require and
neither HCHC nor HCLP shall be permitted or required to make any capital
contributions to HCC Mantova following the Effective Date hereof without the
prior written consent of SJMB.
8.4. Capital Structure. HCHC and HCLP shall not sell, transfer,
assign or encumber all or a part of the HCHC Ownership Interest in HCC Mantova
or the HCLP Ownership Interest in HCC Mantova following the Effective Date
hereof without the prior written consent of SJMB or as provided for in Article V
or Article IX of this Agreement. HCC Mantova shall not issue additional
ownership interests or cause or approve a sale of existing ownership interests
of HCC Mantova following the Effective Date hereof without the prior written
consent of SJMB. HCC Mantova shall not complete any capital transactions
(excluding debt financings in accordance with Article VI hereof) or enter into
any merger, joint venture or other similar transaction of any kind without the
prior written consent of SJMB. The Parties shall take such action as is
necessary to include the foregoing restrictions in the By-Laws of HCC Mantova.
16
8.5. Assets. HCC Mantova shall not sell, transfer, assign or
encumber all or a part of its assets (other than partial sales of assets in the
ordinary course of business or to provide funding for the business of Belleli or
to fund cash needs in connection with the ownership, maintenance, preservation,
operation or lease of the assets leased to Belleli (the "Belleli-Related
Business")) following the Effective Date hereof without the prior written
consent of SJMB. HCC Mantova shall not make any material purchase of assets
outside the ordinary course of business without the prior written consent of
SJMB.
8.6. Distributions. HCC Mantova shall not make any
distributions or dividends following the Effective Date hereof without the prior
written consent of SJMB; provided, however, that HCC Mantova shall have the
right to distribute and/or dividend to any Hanover Entity or any Affiliate
thereof any amounts received by HCC Mantova as a refund of the HCC Mantova
Assets Taxes and Fees ("Refund Distribution or Dividend"). In the case of such a
Refund Distribution or Dividend, HCC Mantova shall provide SJMB with a written
notice of the proposed Refund Distribution or Dividend, and SJMB's consent to
such Refund Distribution or Dividend will be required immediately upon receipt
of documentation sufficient to verify that the proposed Refund Distribution or
Dividend is an amount equal to or less than the amount of any refund to HCC
Mantova of VAT or other taxes or fees paid by or on behalf of HCC Mantova in
connection with its purchase of the HCC Mantova Assets. In no event, however,
shall the total amount of such Refund Distributions or Dividends exceed the
amount of the HCC Mantova Assets Taxes and Fees.
8.7. Control. HCHC shall not use its control of HCC Mantova to
cause HCC Mantova to breach any covenant set forth herein.
ARTICLE IX.
ENTERPRISE VALUATION SALE
9.1. Enterprise Valuation Sale.
(a) After November 1, 2002, either HCHC and HCLP or SJMB (the
"Proposing Party") may give notice to the other (the "Other Party") that the
Proposing Party is providing the Other Party with an enterprise valuation for
all of the equity interests in Belleli and HCC Mantova (the "Triggering
Valuation"). The notice shall be in writing and will include the amount of the
Triggering Valuation. The Triggering Valuation shall be used for the purpose of
determining the purchase price for the interest owned by either the Proposing
Party or the Other Party (the "Enterprise Valuation Purchase Price") which shall
be the Triggering Valuation multiplied by the HCHC Percentage Ownership, if HCHC
and HCLP are the sellers, or the SJMB Percentage Ownership, if SJMB is the
seller ("Selling Party's Percentage Ownership Interest"). At the closing of any
enterprise valuation sale pursuant to this Section 9.1, (i) the Enterprise
Valuation Purchase Price shall be paid in cash, (ii) all Scheduled Cash, all
loans made to Belleli in accordance with Article VI hereof, and all capital
contributions treated as debt for purposes of this Article IX provided by the
selling party shall be repaid in cash, and (iii) all Scheduled Bonds and Letters
of Credit provided by the selling party and its Affiliates shall be released.
17
(b) The Other Party shall have 30 days after receipt of the
notice from the Proposing Party to give the Proposing Party notice that it will
either sell its equity interest in Belleli and HCC Mantova to the Proposing
Party for the Enterprise Valuation Purchase Price or it will acquire the
Proposing Party's equity interest in Belleli and HCC Mantova for the Enterprise
Valuation Purchase Price. The purchasing party shall have 45 days from the date
of receipt of notice of the election by the Other Party to pay the Enterprise
Valuation Purchase Price and satisfy the other terms of sale set forth in this
paragraph. In the event that the purchasing party fails to pay the Enterprise
Valuation Purchase Price and satisfy the other terms of sale within the 45 day
period the purchasing party shall not be entitled to present another Triggering
Valuation as a Proposing Party under this Article IX for 18 months.
(c) Notwithstanding any other provision of this Section 9.1:
(i) Belleli shall provide to SJMB and HCHC within
sixty (60) days following the end of each quarter in the
calendar year (beginning on November 29, 2002), Belleli's
EBITDA, as determined by Arthur Andersen, for the period
commencing on January 1, 2002 and ending as of the date of
the quarter just completed ("Quarterly EBITDA Notice").
(ii) In no event shall HCHC and HCLP present a
Triggering Valuation which, together with the amounts
payable to SJMB pursuant to clause (ii) of the last
sentence of Section 9.1(a), would result in an aggregate
payment to SJMB under this Section 9.1 that is less than
the HCHC Purchase Option Price calculated in accordance
with Section 5.2(b), except that for purposes of
calculating the amount described in Section 5.2(b)(iv) the
amount of Belleli's EBITDA shall be equal to the EBITDA
reported in the Quarterly EBITDA Notice which most
recently preceded notice of such Triggering Valuation.
(iii) In no event shall SJMB present a Triggering
Valuation which, together with the amounts payable to HCHC
and its Affiliates pursuant to clause (ii) of the last
sentence of Section 9.1(a), would result in an aggregate
payment to HCHC under this Section 9.1 that is less than
the SJMB Purchase Option Price calculated in accordance
with Section 5.1(b), except that for purposes of
calculating the amount described in Section 5.1(b)(iv) the
amount of Belleli's EBITDA shall be equal to the EBITDA
reported in the Quarterly EBITDA Notice which most
recently preceded notice of such Triggering Valuation.
9.2. Enterprise Valuation Sale to Unaffiliated Third Party. In
the event that the Proposing Party gives notice to the Other Party of a
Triggering Valuation with the intent to conduct a sale of all of the equity
interests in or substantially all of the assets of Belleli and HCC Mantova to an
Unaffiliated Third Party, the Proposing Party shall so state in the notice to
the Other Party. If the Proposing Party elects to give such notice and the Other
Party elects to sell its interest to the Proposing Party as described in the
preceding paragraph, the Proposing Party shall have 150 days to pay the Other
Party the Enterprise Valuation Purchase Price and satisfy the other terms of
sale set forth in Section 9.1, provided, however, that the Enterprise
18
Valuation Purchase Price shall be adjusted higher by an amount equal to the
Selling Party's Percentage Ownership Interest in Belleli multiplied by the
difference between the Triggering Valuation of the Proposing Party and the price
actually paid by the Unaffiliated Third Party purchaser. This Enterprise
Valuation Purchase Price adjustment shall only be made if it increases the
Enterprise Valuation Purchase Price to be paid to the selling party.
9.3. Cooperation. The Proposing Party and the Other Party agree
to use their respective reasonable efforts to cooperate and assist in the sale
process regardless of whether the Other Party elects to purchase or sell and
regardless of whether the Proposing Party elects to conduct a sale to an
Unaffiliated Third Party as set forth in Section 9.2 hereof.
9.4. Representations and Warranties. Either HCHC and HCLP or
SJMB, if the selling party pursuant to Section 9.1, or each of them in the event
of a sale to an Unaffiliated Third Party pursuant to Section 9.2, shall make the
representations and warranties described in Section 5.1(e) (in the case of HCHC
and HCLP) or Section 5.2(e) (in the case of SJMB).
ARTICLE X.
REPRESENTATIONS AND WARRANTIES
10.1. Representations and Warranties of SJMB. SJMB hereby
represents and warrants to the Hanover Entities and Belleli as of the Effective
Date and the Closing Date as follows:
(a) Organization. SJMB is a limited partnership duly formed,
validly existing and in good standing under the laws of the jurisdiction of its
organization. SJMB has all requisite power and authority to: (i) own and operate
its properties and carry on its business as currently conducted; and (ii) to
execute this Agreement and perform its obligations hereunder.
(b) Qualification. SJMB is duly qualified to do business and
is in good standing in each jurisdiction in which the nature of its business as
now conducted or its assets make such qualification necessary, except where the
failure to be so qualified or in good standing would not have a Material Adverse
Effect on SJMB.
(c) Authorizations; Approvals. The execution and delivery by
SJMB of this Agreement and the performance of its obligations hereunder have
been duly and validly authorized by all requisite limited partnership action.
This Agreement has been duly executed and delivered by SJMB, and this Agreement
constitutes the legal, valid and binding obligation of SJMB enforceable against
SJMB in accordance with its terms (except as the enforceability thereof may be
limited by any applicable bankruptcy, reorganization, insolvency or other laws
affecting creditors' rights generally or by general principles of equity,
regardless of whether such enforceability is considered in equity or at law).
Upon the execution and delivery thereof, all agreements, contracts, documents
and instruments relating to this Agreement and the transactions contemplated
hereby that are to be executed and delivered by SJMB will be so executed and
delivered by a duly authorized officer of SJMB, will constitute the legal, valid
and binding obligations of SJMB, and will be enforceable against SJMB in
accordance with their terms (except as the enforceability thereof may be limited
by any applicable bankruptcy, reorganization, insolvency or other laws affecting
creditors' rights generally or by general
19
principles of equity, regardless of whether such enforceability is considered in
equity or at law). SJMB is not required to give any notice, make any filing or
register with, or obtain any consent, approval, authorization, waiver, permit,
certificate or order of any Governmental Authority or third party to consummate
the transactions contemplated by this Agreement to be consummated on the Closing
Date.
(d) Absence of Conflicts. Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
to be consummated on the Closing Date will: (i) conflict with, result in a
breach under, or give rise to any consent or preferential purchase right under
(A) any statute, law or regulation applicable to SJMB, (B) the constituent
documents of SJMB, (C) any material contract, agreement, lease, license or other
arrangement to which SJMB is a party or by which it or any of its properties is
bound, or (D) any order, judgment, injunction, award or decree of any court or
regulatory or governmental body, or (ii) result in the creation or imposition of
any Encumbrance on any of the property of SJMB.
(e) Litigation. There are no actions, suits, proceedings or
investigations pending or, to the knowledge of SJMB, threatened against SJMB
before or by any Governmental Authority that would reasonably be expected to
have a Material Adverse Effect on the ability of SJMB to sell the Subject Quotas
pursuant to this Agreement.
(f) Brokers. There is no broker or finder or other person
entitled to a commission or brokerage fee or payment in connection with this
Agreement or the transactions contemplated hereby (including the sale of the
Subject Quotas) as a result of any agreement of, or action taken by, SJMB, any
Affiliate of SJMB, or any partner, member, officer, or director of SJMB.
(g) Subject Quotas. As of the Closing Date, SJMB will be the
sole legal owner and holder of record of the Subject Quotas and will have good,
valid and marketable title to the Subject Quotas, free and clear of all
restrictions on transfer, purchase rights, warrants, options, contracts,
commitments, taxes, and other Encumbrances. Upon delivery to HCHC at the Closing
of a notarized instrument of transfer in respect of the Subject Quotas as
provided by and in accordance with, the provisions of Article 2479 of the
Italian Civil Code, and upon SJMB's receipt of the Purchase Price, and upon HCHC
being entered in the Register of Members of Belleli as the holder of the Subject
Quotas, good and valid title to the Subject Quotas will pass to HCHC, free and
clear of any Encumbrances of any kind. Other than this Agreement and the Statuto
of Belleli, the Subject Quotas are not subject to any voting trust agreement or
other contract, agreement, arrangement, commitment or understanding, including
any contract, agreement, arrangement, commitment or understanding restricting or
otherwise relating to the voting, dividend rights or disposition of the Subject
Quotas. The Subject Quotas have not been sold, pledged, hypothecated, assigned
or otherwise transferred, and neither SJMB nor any of its Affiliates has agreed
to sell, pledge, hypothecate, assign or otherwise transfer the Subject Quotas,
except as set forth in the Statuto of Belleli and pursuant to this Agreement.
Each of SJMB's representations and warranties set forth in this Section 10.1(g)
is subject to and contingent upon the Hanover Entities' compliance with their
obligations under Section 4.1(e) and Section 7.3 hereof.
20
(h) Prior Obligations. As of the Effective Date of this
Agreement, SJMB has not failed to perform or observe any covenant, agreement or
provision to be performed or observed by SJMB in any of the agreements or
obligations referenced in Article VI herein. SJMB has taken no action and has
refrained from taking any action as of the Effective Date of this Agreement that
would affect the validity or enforceability of any of the agreements referenced
in Article VI.
(i) Continuing Obligations. Prior to the release or
termination thereof by mutual agreement of the parties thereto or in accordance
with their respective terms, SJMB will take no action or refrain from taking any
action that would result in a breach of or effect the validity or enforceability
of the agreements or obligations referenced in Article VI herein.
10.2. Representations and Warranties of Non-Mantova Hanover
Entities. Each of the Non-Mantova Hanover Entities, severally and not jointly,
represents and warrants to SJMB and Belleli as of the Effective Date and the
Closing Date as follows:
(a) Organization. Such Non-Mantova Hanover Entity has been
duly formed and is validly existing and in good standing under the laws of the
jurisdiction of its organization. Such Non-Mantova Hanover Entity has all
requisite power and authority to: (i) own and operate its properties and carry
on its business as currently conducted; and (ii) to execute this Agreement and
perform its obligations hereunder.
(b) Qualification. Such Non-Mantova Hanover Entity is duly
qualified to do business and is in good standing in each jurisdiction in which
the nature of its business as now conducted or its assets make such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect on such Non-Mantova Hanover
Entity.
(c) Authorizations; Approvals. The execution and delivery by
such Non-Mantova Hanover Entity of this Agreement and the performance of its
obligations hereunder have been duly and validly authorized by all requisite
action. This Agreement has been duly executed and delivered by such Non-Mantova
Hanover Entity, and this Agreement constitutes the legal, valid and binding
obligation of such Non-Mantova Hanover Entity enforceable against it in
accordance with its terms (except as the enforceability thereof may be limited
by any applicable bankruptcy, reorganization, insolvency or other laws affecting
creditors' rights generally or by general principles of equity, regardless of
whether such enforceability is considered in equity or at law). Upon the
execution and delivery thereof, all agreements, contracts, documents and
instruments relating to this Agreement and the transactions contemplated hereby
that are to be executed and delivered by such Non-Mantova Hanover Entity will be
so executed and delivered by a duly authorized officer of such Non-Mantova
Hanover Entity, will constitute the legal, valid and binding obligations of such
Non-Mantova Hanover Entity, and will be enforceable against such Non-Mantova
Hanover Entity in accordance with their terms (except as the enforceability
thereof may be limited by any applicable bankruptcy, reorganization, insolvency
or other laws affecting creditors' rights generally or by general principles of
equity, regardless of whether such enforceability is considered in equity or at
law). Such Non-Mantova Hanover Entity is not required to give any notice, make
any filing or register with, or obtain any consent, approval, authorization,
waiver, permit, certificate or order of any
21
Governmental Authority or third party to consummate the transactions
contemplated by this Agreement to be consummated on the Closing Date.
(d) Absence of Conflicts. Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
to be consummated on the Closing Date will: (i) conflict with, result in a
breach under, or give rise to any consent or preferential purchase right under
(A) any statute, law or regulation applicable to such Non-Mantova Hanover
Entity, (B) the constituent documents of such Non-Mantova Hanover Entity, (C)
any material contract, agreement, lease, license or other arrangement to which
such Non-Mantova Hanover Entity is a party or by which such Non-Mantova Hanover
Entity or any of its properties is bound, or (D) any order, judgment,
injunction, award or decree of any court or regulatory or governmental body, or
(ii) result in the creation or imposition of any Encumbrance on any of the
property of such Non-Mantova Hanover Entity.
(e) Brokers. There is no broker or finder or other person
entitled to a commission or brokerage fee or payment in connection with this
Agreement or the transactions contemplated hereby (including the sale of the
Subject Quotas) as a result of any agreement of, or action taken by, such
Non-Mantova Hanover Entity, any of its Affiliates, or any partner, member,
officer, or director of such Non-Mantova Hanover Entity.
(f) Prior Obligations. As of the Effective Date of this
Agreement, such Non-Mantova Hanover Entity has not failed to perform or observe
any covenant, agreement or provision to be performed or observed by it in any of
the agreements or obligations referenced in Article VI. Such Non-Mantova Hanover
Entity has taken no action or has refrained from taking any action as of the
Effective Date of this Agreement that would affect the validity or
enforceability of any of the agreements referenced in Article VI.
(g) Continuing Obligations. Prior to the release or
termination thereof by mutual agreement of the parties thereto or in accordance
with their respective terms, such Non-Mantova Hanover Entity will take no action
or refrain from taking any action that would result in a breach of or effect the
validity or enforceability of the agreements or obligations referenced in
Article VI.
10.3. Representations and Warranties of Belleli. Belleli
represents and warrants to SJMB and the Hanover Entities as of the Effective
Date and the Closing Date as follows:
(a) Authorizations; Approvals. The execution and delivery by
Belleli of this Agreement and the performance of its obligations hereunder have
been duly and validly authorized by all requisite corporation action. This
Agreement has been duly executed and delivered by Belleli, and this Agreement
constitutes the legal, valid and binding obligation of Belleli enforceable
against Belleli in accordance with its terms (except as the enforceability
thereof may be limited by any applicable bankruptcy, reorganization, insolvency
or other laws affecting creditors' rights generally or by general principles of
equity, regardless of whether such enforceability is considered in equity or at
law). Upon the execution and delivery thereof, all agreements, contracts,
documents and instruments relating to this Agreement and the transactions
contemplated hereby that are to be executed and delivered by Belleli will be so
22
executed and delivered by a duly authorized officer of Belleli, will constitute
the legal, valid and binding obligations of Belleli, and will be enforceable
against Belleli in accordance with their terms (except as the enforceability
thereof may be limited by any applicable bankruptcy, reorganization, insolvency
or other laws affecting creditors' rights generally or by general principles of
equity, regardless of whether such enforceability is considered in equity or at
law). Belleli is not required to give any notice, make any filing or register
with, or obtain any consent, approval, authorization, waiver, permit,
certificate or order of any Governmental Authority or third party to consummate
the transactions contemplated by this Agreement on the Closing Date.
(b) Absence of Conflicts. Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
will: (i) conflict with, result in a breach under, or give rise to any consent
or preferential purchase right under (A) any statute, law or regulation
applicable to Belleli, (B) the constituent documents of Belleli, (C) any
material contract, agreement, lease, license or other arrangement to which
Belleli is a party or by which Belleli or any of its properties is bound, or (D)
any order, judgment, injunction, award or decree of any court or regulatory or
governmental body, or (ii) result in the creation or imposition of any
Encumbrance on any of the property of Belleli.
(c) Litigation. Except as disclosed on Schedule 10.3(c), since
May 9, 2001, there are no actions, suits, proceedings or investigations pending
or, to the knowledge of Belleli, threatened against Belleli before or by any
Governmental Authority that would have a Material Adverse Effect on the ability
of Belleli to perform its obligations pursuant to this Agreement.
(d) Brokers. There is no broker or finder or other person
entitled to a commission or brokerage fee or payment in connection with this
Agreement or the transactions contemplated hereby as a result of any agreement
of, or action taken by, Belleli, any Affiliate of Belleli, or any member,
officer, or director of Belleli.
(e) Capitalization. As reflected in the quotaholders' ledger
of Belleli on file with Belleli's registrar, (i) the authorized quotas of
Belleli consist of 6,694,287 quotas, (ii) SJMB is the record holder of 3,988,773
quotas, equal to a 59.58% interest in Belleli, and (iii) HCHC is the record
holder of 2,698,679 quotas, equal to a 40.31% interest in Belleli.
(f) Financial Condition. The unaudited financial statement of
Belleli as of June 30, 2002, is attached as Schedule 10.3(f). Such financial
statement was prepared by Belleli in good faith and is based on reasonable
assumptions.
(g) Capital Calls. Since May 9, 2001, Belleli has not made and
is currently not obliged to make any capital call not reflected in Schedule
10.3(g).
(h) Distributions. Since May 9, 2001, Belleli has not made and
is currently not obliged to make any distribution not reflected in Schedule
10.3(h).
(i) Assets. A list of the material assets of Belleli as of the
Effective Date is attached as Schedule 10.3(i) ("Belleli Assets"). Belleli has
not sold, transferred, assigned or encumbered and is not as of the Effective
Date hereof obliged to sell, transfer, assign or
23
encumber all or a part of the Belleli Assets, except to the extent that such
sale would be permitted under Section 7.5 hereof.
10.4. Representations and Warranties of HCC Mantova. HCC Mantova
represents and warrants to SJMB as of the Effective Date and the Closing Date as
follows:
(a) Organization. HCC Mantova is a company duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. HCC Mantova has all requisite power and authority to: (i) own and
operate its properties and carry on its business as currently conducted; and
(ii) to execute this Agreement and perform its obligations hereunder.
(b) Qualification. HCC Mantova is duly qualified to do
business and is in good standing in each jurisdiction in which the nature of its
business as now conducted or its assets make such qualification necessary,
except where the failure to be so qualified or in good standing would not have a
Material Adverse Effect on HCC Mantova.
(c) Authorizations; Approvals. The execution and delivery by
HCC Mantova of this Agreement and the performance of its obligations hereunder
have been duly and validly authorized by all requisite corporation action. This
Agreement has been duly executed and delivered by HCC Mantova, and this
Agreement constitutes the legal, valid and binding obligation of HCC Mantova
enforceable against HCC Mantova in accordance with its terms (except as the
enforceability thereof may be limited by any applicable bankruptcy,
reorganization, insolvency or other laws affecting creditors' rights generally
or by general principles of equity, regardless of whether such enforceability is
considered in equity or at law). Upon the execution and delivery thereof, all
agreements, contracts, documents and instruments relating to this Agreement and
the transactions contemplated hereby that are to be executed and delivered by
HCC Mantova will be so executed and delivered by a duly authorized officer of
HCC Mantova, will constitute the legal, valid and binding obligations of HCC
Mantova, and will be enforceable against HCC Mantova in accordance with their
terms (except as the enforceability thereof may be limited by any applicable
bankruptcy, reorganization, insolvency or other laws affecting creditors' rights
generally or by general principles of equity, regardless of whether such
enforceability is considered in equity or at law). HCC Mantova is not required
to give any notice, make any filing or register with, or obtain any consent,
approval, authorization, waiver, permit, certificate or order of any
Governmental Authority or third party to consummate the transactions
contemplated by this Agreement to be consummated on the Closing Date.
(d) Absence of Conflicts. Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
to be consummated on the Closing Date will: (i) conflict with, result in a
breach under, or give rise to any consent or preferential purchase right under
(A) any statute, law or regulation applicable to HCC Mantova, (B) the
constituent documents of HCC Mantova, (C) any material contract, agreement,
lease, license or other arrangement to which HCC Mantova is a party or by which
HCC Mantova or any of its properties is bound, or (D) any order, judgment,
injunction, award or decree of any court or regulatory or governmental body, or
(ii) result in the creation or imposition of any Encumbrance on any of the
property HCC Mantova.
24
(e) Litigation. Except as disclosed on Schedule 10.4(e), there
are no actions, suits, proceedings or investigations pending or, to the
knowledge of HCC Mantova, threatened against HCC Mantova before or by any
Governmental Authority that would reasonably be expected to have a Material
Adverse Effect on the ability of HCC Mantova to perform its obligations pursuant
to this Agreement.
(f) Brokers. There is no broker or finder or other person
entitled to a commission or brokerage fee or payment in connection with this
Agreement or the transactions contemplated hereby as a result of any agreement
of, or action taken by, HCC Mantova, any Affiliate of HCC Mantova, or any
member, officer, or director of HCC Mantova.
(g) Capitalization. The authorized capital quotas of HCC
Mantova consist of 20,688,934 quotas, and are duly authorized, validly issued,
fully paid and nonassessable. As of the Effective Date of this Agreement, HCHC
is the record and beneficial owner of 20,688,834 quotas, equal to a ninety-nine
and 99/100 percent (99.99%) interest in HCC Mantova ("HCHC Initial HCC Mantova
Quotas"). The remaining 1/100 of a percent (0.01%) of the quotas of HCC Mantova
are owned by HCLP ("HCLP Initial HCC Mantova Quotas"). There are, and have been,
no preemptive rights with respect to the issuance of such quotas or any other
capital quotas of HCC Mantova. There are no outstanding subscriptions, warrants,
options, rights, "phantom" stock rights, agreements, calls, convertible or
exchangeable securities or other commitments (contingent or otherwise) pursuant
to which HCHC, HCLP, or HCC Mantova is or may become obligated to issue, sell,
purchase, return or redeem any such quotas or any other capital quotas of HCC
Mantova.
(h) Compliance with Laws. Since its formation, HCC Mantova has
complied in all material respects with all laws, rules, regulations and orders
of Governmental Authorities applicable to HCC Mantova and its assets and
business.
(i) Financial Condition. The unaudited financial statement of
HCC Mantova as of June 30, 2002, is attached as Schedule 10.4(i). Such financial
statement was prepared by HCC Mantova in good faith and is based on reasonable
assumptions.
(j) Capital Calls. HCC Mantova has not made and is not obliged
to make any capital call not reflected in Schedule 10.4(j).
(k) Distributions. HCC Mantova has not made and is not obliged
to make any distribution or dividend not reflected Schedule 10.4(k).
(l) Assets. HCC Mantova purchased the assets it now owns in
accordance with Schedule 10.4(l) ("HCC Mantova Assets"). HCC Mantova has not,
other than in the ordinary course of business, sold, transferred, assigned or
encumbered and is not as of the Effective Date hereof obliged to sell, transfer,
assign or encumber all or a part of the material HCC Mantova Assets other than
in connection with providing financing and/or guaranties or sureties on behalf
of Belleli.
25
10.5. Representations and Warranties of HCHC. In addition to the
representations and warranties set forth in Section 10.2 hereof, HCHC represents
and warrants to SJMB as of the Effective Date as follows:
(a) HCHC Initial Belleli Quotas. HCHC is the sole legal owner
and holder of record of the quotas representing the HCHC Initial Belleli Quotas
and has good, valid and marketable title to the HCHC Initial Belleli Quotas,
free and clear of all restrictions on transfer, purchase rights, warrants,
options, contracts, commitments, taxes, and other Encumbrances. Other than this
Agreement and the Statuto of Belleli, the HCHC Initial Belleli Quotas are not
subject to any voting trust agreement or other contract, agreement, arrangement,
commitment or understanding, including any contract, agreement, arrangement,
commitment or understanding restricting or otherwise relating to the voting,
dividend rights or disposition of the HCHC Initial Belleli Quotas. The HCHC
Initial Belleli Quotas have not been sold, pledged, hypothecated, assigned,
transferred or otherwise encumbered, and neither HCHC nor any of its Affiliates
has agreed or is obliged to sell, pledge, hypothecate, assign, transfer or
otherwise encumber all or a part of the HCHC Initial Belleli Quotas, except as
set forth in the Statuto of Belleli and pursuant to this Agreement.
(b) HCHC Initial HCC Mantova Quotas. HCHC is the sole legal
owner and holder of record of the quotas representing the HCHC Initial HCC
Mantova Quotas and has good, valid and marketable title to the HCHC Initial HCC
Mantova Quotas, free and clear of all restrictions on transfer, purchase rights,
warrants, options, contracts, commitments, taxes, and other Encumbrances. Other
than this Agreement and the Statuto of HCC Mantova, the HCHC Initial HCC Mantova
Quotas are not subject to any voting trust agreement or other contract,
agreement, arrangement, commitment or understanding, including any contract,
agreement, arrangement, commitment or understanding restricting or otherwise
relating to the voting, dividend rights or disposition of the HCHC Initial HCC
Mantova Quotas. The HCHC Initial HCC Mantova Quotas have not been sold, pledged,
hypothecated, assigned, transferred or otherwise encumbered, and neither HCHC
nor any of its Affiliates has agreed or is obliged to sell, pledge, hypothecate,
assign, transfer or otherwise encumber all or a part of the HCHC Initial HCC
Mantova Quotas, except as set forth in the Statuto of HCC Mantova and pursuant
to this Agreement.
(c) Litigation. There are no actions, suits, proceedings or
investigations pending, or to the knowledge of HCHC, threatened against HCHC
before or by any Governmental Authority that would reasonably be expected to
have a Material Adverse Effect on the ability of HCHC to perform its obligations
pursuant to this Agreement.
10.6. Representations and Warranties of HCLP. In addition to the
representations and warranties set forth in Section 10.2 hereof, HCLP represents
and warrants to SJMB as of the Effective Date as follows:
(a) HCLP Initial HCC Mantova Quotas. HCLP is the sole legal
owner and holder of record of the quotas representing the HCLP Initial HCC
Mantova Quotas and has good, valid and marketable title to the HCLP Initial HCC
Mantova Quotas, free and clear of all restrictions on transfer, purchase rights,
warrants, options, contracts, commitments, taxes, and other Encumbrances. Other
than this Agreement and the Statuto of HCC Mantova, the HCLP
26
Initial HCC Mantova Quotas are not subject to any voting trust agreement or
other contract, agreement, arrangement, commitment or understanding, including
any contract, agreement, arrangement, commitment or understanding restricting or
otherwise relating to the voting, dividend rights or disposition of the HCLP
Initial HCC Mantova Quotas. The HCLP Initial HCC Mantova Quotas have not been
sold, pledged, hypothecated, assigned, transferred or otherwise encumbered, and
neither HCLP nor any of its Affiliates has agreed or is obliged to sell, pledge,
hypothecate, assign, transfer or otherwise encumber all or a part of the HCLP
Initial HCC Mantova Quotas, except as set forth in the Statuto of HCC Mantova
and pursuant to this Agreement.
(b) Litigation. Except as referenced and disclosed in
Hanover's quarterly report on Form 10-Q for the quarter ended June 30, 2002,
there are no actions, suits, proceedings or investigations pending, or to the
knowledge of HCLP, threatened against HCLP before or by any Governmental
Authority that would reasonably be expected to have a Material Adverse Effect on
the ability of HCLP to perform its obligations pursuant to this Agreement.
ARTICLE XI.
INDEMNIFICATION AND GUARANTEE
11.1. Survival of Representations and Warranties. The
representations and warranties of the Parties contained in this Agreement shall
lapse two (2) years following the Closing Date. Any representation or warranty
as to which a written claim shall have been asserted during the survival period
shall continue in effect with respect to such claims until such claim shall have
been finally resolved or settled.
11.2. Indemnification.
(a) SJMB covenants and agrees to defend, indemnify and hold
harmless the Hanover Entities and Belleli and their respective Affiliates from
and against any damages, claims, losses, liabilities, costs and expenses
(including, without limitation, settlement costs and any legal, accounting or
other expenses for defending any actions or threatened actions) (collectively,
"Losses"), arising out of or resulting from: (i) any inaccuracy in or breach of
any representation or warranty made by SJMB in this Agreement or in any writing
delivered pursuant to this Agreement or at the Closing; (ii) the failure of SJMB
to perform or observe fully any covenant, agreement or provision to be performed
or observed by SJMB pursuant to this Agreement or any other agreement between
the Parties still in effect following the Closing and (iii) any options,
subscriptions, warrants, rights, "phantom" stock rights, agreements, calls,
convertible or exchangeable securities or commitments (contingent or otherwise)
granted by or through SJMB or its Affiliates pursuant to which Belleli is or may
become obligated to issue, sell, purchase, return or redeem any quotas of
Belleli.
(b) Each Hanover Entity, severally and not jointly, covenants
and agrees to defend, indemnify and hold harmless SJMB, Underbrink, Thompson,
Belleli and their respective Affiliates from and against any Losses arising out
of or resulting from: (i) any inaccuracy in or breach of any representation or
warranty made by such Hanover Entity in this Agreement or in any writing
delivered pursuant to this Agreement or at the Closing; and (ii) the failure by
such Hanover Entity to perform or observe any covenant, agreement or provision
to be performed or
27
observed by it pursuant to this Agreement or any other agreement between the
Parties still in effect following the Closing.
(c) Belleli covenants and agrees to defend, indemnify and hold
harmless the Hanover Entities, SJMB, Underbrink, Thompson, and their respective
Affiliates from and against any Losses arising out of or resulting from: (i) any
inaccuracy in or breach of any representation or warranty made by Belleli in
this Agreement or in any writing delivered pursuant to this Agreement or at the
Closing; and (ii) the failure by Belleli to perform or observe any covenant,
agreement or provision to be performed or observed by it pursuant to this
Agreement or any other agreement between the Parties still in effect following
the Closing.
ARTICLE XII.
TERMINATION OF OTHER AGREEMENTS AND RELEASES
12.1. Termination of Other Agreements. All agreements among
SJMB, the Hanover Entities and Belleli are hereby terminated (including without
limitation, those listed on Schedule 12.1-1 attached hereto) excluding (i) this
Agreement and any other documents, instruments and certificates delivered or
executed in connection herewith and (ii) those agreements listed in Schedule
12.1-2.
ARTICLE XIII.
MISCELLANEOUS
13.1. Notices. Notices and other communications given under this
Agreement, if any, shall be in writing and delivered personally or by facsimile,
receipt confirmed, or sent by certified mail, return receipt requested, postage
prepaid, or by overnight delivery or courier service to the Parties to this
Agreement at the following addresses or to such other address as the Party to
this Agreement whose address it is shall specify by notice to the other:
if to SJMB: SJMB, L.P.
d/b/a SJMB Merchant Bankers, L.P.
4295 San Felipe, Suite 200
Houston, Texas 77027
Attn: John Thompson,
Chief Executive Officer
Facsimile: (713) 871-1028
with a copy to: Gardere Wynne Sewell LLP
1000 Louisiana, Suite 3400
Houston, Texas 77002-5007
Attn: John Nabors, Esquire
Attn: Orin Lewis, Esquire
Facsimile: (713) 276-5555
if to Mr. Thompson: John L. Thompson
4295 San Felipe, Suite 200
Houston, Texas 77027
Facsimile: (713) 871-1028
28
if to Mr. Underbrink: Charles E. Underbrink
4295 San Felipe, Suite 200
Houston, Texas 77027
Facsimile: (713) 871-1028
if to Hanover, HCHC Hanover Compressor Nigeria, Inc.
HCNI, HCC Mantova, Hanover Compression Limited Partnership
HCGH, or HCLP Hanover Compression General Holdings, LLC
HCC Mantova S.r.L.
c/o Hanover Compressor Company
12001 N. Houston Rosslyn
Houston, Texas 77086
Attn: Mark Berg, General Counsel
Facsimile: (281) 447-0821
with a copy to: Latham & Watkins
Sears Tower, Suite 5800
Chicago, Illinois 60606
Attn: Richard S. Meller, Esquire
Facsimile: (312) 993-9767
If to Belleli: Belleli Energy SrL
Via G. Taliercio, 3
46111 Mantova
ITALY
Attn: Sergio Garrone
Facsimile: 011+39 0376 333813
A notice shall be deemed to have been given to a party to whom it is directed
(i) upon actual receipt by courier, (ii) upon dispatch by facsimile (with
transmission confirmed), or (iii) one business day after sent by overnight
delivery service.
13.2. Binding Effect; Benefits. Subject to Section 13.5 below,
this Agreement shall be binding upon and inure to the benefit of the Parties and
their respective successors and permitted assigns. Nothing in this Agreement,
express or implied, is intended or shall be construed to give any person other
than the Parties and their respective successors or permitted assigns any legal
or equitable right, remedy or claim under or in respect of any agreement or any
provision contained herein.
13.3. Waiver. Any waiver of a provision hereof must be in
writing and signed by the waiving Party. No action taken pursuant to this
Agreement, including, without limitation, any investigation by or on behalf of
any Party, shall be deemed to constitute a waiver, by the Party taking such
action, of compliance by any other Party with any representations, warranties,
covenants or agreements contained herein. The waiver by any Party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any preceding or
29
succeeding breach and no failure by any Party to exercise any right or privilege
hereunder shall be deemed a waiver of such Party's rights or privileges
hereunder or shall be deemed a waiver of such Party's rights to exercise the
same at any subsequent time or times hereunder.
13.4. Amendments. This Agreement may only be amended, modified,
or supplemented by a written instrument executed by each of the Parties.
13.5. Assignability. None of the Parties may assign any rights
under this Agreement without the prior consent of the other Parties.
13.6. Governing Law. THIS AGREEMENT AND ANY CLAIMS RELATED TO
THIS AGREEMENT WHETHER CONTRACTUAL, TORT BASED OR OTHERWISE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, UNITED STATES
OF AMERICA, WITHOUT REFERENCE TO ITS CHOICE OF LAW PRINCIPLES. NOTWITHSTANDING
THE FOREGOING, THE APPLICABLE LAW GOVERNING THE PURCHASE AND DELIVERY OF THE
SUBJECT QUOTAS SHALL BE THE LAWS OF ITALY WITHOUT REFERENCE TO ITS CHOICE OF LAW
PRINCIPLES. EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT IT MAY HAVE TO RECEIVE
PUNITIVE DAMAGES IN CONNECTION WITH ANY JUDICIAL ACTION BROUGHT IN CONNECTION
WITH THIS AGREEMENT.
13.7. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument.
13.8. Entire Agreement. With the exception of the documents
required to be provided in satisfaction of conditions hereunder, this Agreement
shall constitute the entire agreement of the Parties hereto with respect to the
subject matter contained herein.
13.9. Severability. In case any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, the validity and
enforceability of the remaining provisions shall not in any way be affected
thereby.
13.10. Disputes. All Parties hereto shall submit to the
jurisdiction of and consent to have any disputes arising out of or related to
this Agreement adjudicated in the federal or state courts located in Houston,
Harris County, Texas.
13.11. Fees and Expenses. Each Party hereto shall pay its own
legal, accounting or other professional fees and disbursements of any kind
incurred by such Party arising out of the negotiation, preparation or execution
of this Agreement and the consummation of the transactions contemplated hereby.
In the event that a dispute between the Parties is litigated, the prevailing
Party shall be entitled to a reimbursement of professional fees, disbursements
and direct expenses from the other Party.
13.12. Remedy. The Parties hereto recognize that irrevocable
injury may result to one or more of such Parties in the event of a breach of
this Agreement and that the acceptance of this Agreement by all of the Parties
hereto was a material factor in each Party's decision to
30
enter into this Agreement and to consummate the transactions contemplated
herein. Each Party hereto agrees that if it engages in any acts in violation of
this Agreement, any other Party to this Agreement shall be entitled, in addition
to such other remedies and damages as may be available to such Party, in law or
equity, or otherwise, to a mandatory injunction compelling specific performance
of the offending Party's obligations hereunder.
13.13. Cooperation. After the execution hereof, the Parties
hereto agree to execute and deliver such other instruments and take such other
actions as are reasonably necessary to carry out such transactions as intended
by the Parties hereto.
13.14. Restriction on Sale of Subject Quotas. THE SUBJECT QUOTAS
SOLD AND PURCHASED PURSUANT TO THIS AGREEMENT WILL BE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER APPLICABLE SECURITIES LAWS. THE SUBJECT QUOTAS ALSO WILL BE
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY CONTAINED IN THE ARTICLES OF
ASSOCIATION OF BELLELI.
[Intentionally Left Blank-Signature Pages Follow]
31
IN WITNESS WHEREOF, the Parties have executed this Agreement
effective as of the date first written above.
SJMB, L.P.
By: SJMB, L.L.C., its General Partner
By: /s/ JOHN L. THOMPSON
------------------------------------
Name: John L. Thompson
----------------------------------
Title: CEO
---------------------------------
John L. Thompson
/s/ JOHN L. THOMPSON
---------------------------------------
Charles E. Underbrink
/s/ CHARLES E. UNDERBRINK
---------------------------------------
HANOVER COMPRESSOR COMPANY
Signed September 20, 2002 /s/ CCD By: /s/ CHAD C. DEATON
------------------------------------
Name: Chad C. Deaton
----------------------------------
Title: President and Chief Executive
Officer
---------------------------------
HANOVER COMPRESSION GENERAL
HOLDINGS, LLC
By: Hanover Compressor Company, its
sole member
Signed September 20, 2002 /s/ CCD By: /s/ CHAD C. DEATON
------------------------------------
Name: Chad C. Deaton
----------------------------------
Title: President
---------------------------------
S-1
HANOVER COMPRESSION LIMITED
PARTNERSHIP
By: Hanover Compression General
Holdings, LLC, its General Partner
By: Hanover Compressor Company,
its sole member
Signed September 20, 2002 /s/ CCD By: /s/ CHAD C. DEATON
------------------------------------
Name: Chad C. Deaton
----------------------------------
Title: President and Chief Executive
Officer
---------------------------------
HANOVER COMPRESSOR HOLDING
COMPANY NL B.V.
By: /s/ W.P. RUOFF
------------------------------------
Name: Equity Trust Co. N.V.
----------------------------------
Title: Managing Director
---------------------------------
S-2
HANOVER COMPRESSOR NIGERIA, INC.:
Signed September 20, 2002 /s/ JEJ By: /s/ JOHN E. JACKSON
------------------------------------
Name: John E. Jackson
----------------------------------
Title: Vice President & Treasurer
---------------------------------
HCC MANTOVA S.r.L.
Signed September 20, 2002 /s/ PGS By: /s/ PETER G. SCHRECK
------------------------------------
Name: Peter G. Schreck
----------------------------------
Title: President and Sole Director
---------------------------------
BELLELI ENERGY SrL
Signed September 20, 2002 /s/ ROP By: /s/ ROBERT O. PIERCE
-----------------------------------
Name: Robert O. Pierce
----------------------------------
Title: Chairman
---------------------------------
S-3