EXHIBIT 2.2
SHARE PURCHASE AGREEMENT
BY AND AMONG
MOBILE STORAGE GROUP, INC.,
MOBILE STORAGE (U.K.) LIMITED
AND
THE SHAREHOLDERS OF
MOBILE STORAGE (U.K.) LIMITED
Dated as of June 30, 2000
SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT, dated as of June 30, 2000 by and among
(i) Mobile Storage Group, Inc., a California corporation (the "Purchaser"), (ii)
Mobile Storage (U.K.) Limited, an English Private Company Limited By Shares (the
"Company"), and (iii) each of Ronald F. Valenta and James S. Robertson
(collectively, the "Shareholders," and each, individually, a "Shareholder").
W I T N E S S E T H:
WHEREAS, the Purchaser and the Company have each determined that the
Share Purchase and the other Transactions (as defined below) is advisable and
fair and in the best interests of their respective equityholders;
WHEREAS, the Shareholders are the holders of record of all of the issued
and allotted Ordinary Shares of the Company; and
WHEREAS, concurrently herewith, as an essential inducement for the
Purchaser entering into this Agreement, all Shareholders have executed written
consents pursuant to which such Shareholders have unanimously voted in favor of
the Share Purchase and the other Transactions (as defined below); and
WHEREAS, as an essential inducement for the Purchaser entering into this
Agreement, certain Shareholders of the Company have entered into non-competition
and non-solicitation agreements with the Company.
NOW, THEREFORE, in consideration of the foregoing premises and the
respective representations, warranties, covenants and agreements set forth in
this Agreement, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1
THE CLOSING
SECTION 1.1 Closing. Unless this Agreement shall have been terminated
pursuant to Article 8 hereof, and subject to the satisfaction or, if
permissible, waiver of the conditions set forth in Article 7, the Share Purchase
(as defined below) will take place on the Closing Date (the "Closing") at the
offices of Gibson, Dunn & Crutcher LLP, 333 South Grand Avenue, Los Angeles,
California 90071, unless another date, time or place is agreed to in writing by
the Parties.
SECTION 1.2 Deliveries at Closing. Subject to the provisions of Articles
7 and 8, at the Closing there shall be delivered by the Company the opinions,
certificates and other documents and instruments required then to be delivered
pursuant to Articles 2 and 7 hereof.
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ARTICLE 2
THE SHARE PURCHASE
SECTION 2.1. The Share Purchase. On the Closing Date (as defined below)
and upon the terms and subject to the conditions of this Agreement and in
accordance with The Companies Acts 1985 to 1989 (the "Companies Acts") and the
California Corporations Code (the "CCC"), the Shareholders shall sell to the
Purchaser, and the Purchaser shall buy from the Shareholders, all of the issued
and allotted Ordinary Shares (the "Share Purchase"). The Purchaser hereby
approves the Share Purchase, the other Transactions, and this Agreement. Each
Shareholder hereby approves the Share Purchase, the other Transactions, and this
Agreement.
SECTION 2.2. Initial Per Share Consideration. Subject to the other
provisions of this Article 2, on the Closing Date, by virtue of the Share
Purchase and without any action on the part of the Purchaser, the Company or any
holder of the Company's Ordinary Shares or Preference Shares except the delivery
by the Shareholders to the Purchaser of certificates evidencing all of the
issued and allotted Ordinary Shares accompanied by executed stock transfers:
A. Initial Per Share Consideration. The Purchaser shall deliver
to the Shareholders at the Closing a number of shares of Purchaser Common Stock
on account of each Ordinary Share (the "Initial Per Share Consideration"),
subject to adjustment as provided in Section 2.2(B) and Section 2.2(C), equal to
(i)(x) 28,001.43 plus (y) the number of shares resulting from the formula set
forth in Section 2.2(C)(i)(1), if any, minus (z) the number of shares resulting
from the formula set forth in Section 2.2(C)(i)(2), if any, divided by (ii) the
number of Ordinary Shares allotted as of the Closing.
B. Certain Adjustments. If between the date of this Agreement and
the Closing Date, the number of allotted Ordinary Shares is changed into a
different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split-up,
combination, exchange of shares, or the like, the Initial Per Share
Consideration set forth in this Section 2.2 will be correspondingly adjusted to
reflect such change.
C. Determination of Actual Funded Liabilities; Payment of
Adjustment Amount; Adjustment of Consideration.
(i) The Funded Liabilities as of the close of business on
April 30, 2000 (the "Estimated Funded Liabilities") shall be calculated
by the Company and a copy of the calculation thereof (the "Funded
Liabilities Statement") shall be delivered by the Shareholder
Representative to the Purchaser on or before the Closing Date.
(1) If the Estimated Funded Liabilities as calculated
pursuant to this Section 2.2 divided by the amount of Pro Forma Runrate
EBITDA is greater than 5.0, then the Initial Per Share Consideration
payable by the Purchaser pursuant to Section 2.2(A)
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shall be decreased by a number of shares of Purchaser Common Stock equal
to (A) (i) the Estimated Funded Liabilities minus (ii) 5.0 times the Pro
Forma Runrate EBITDA, and divided by (B) $403.55.
(2) If the amount of Estimated Funded Liabilities
as calculated pursuant to this Section 2.2 divided by the amount of Pro
Forma Runrate EBITDA is equal to or less than 5.0, then there shall be
no change to the Initial Per Share Consideration payable by the
Purchaser pursuant to Section 2.2(A).
(ii) The actual Funded Liabilities of the Company as of
the Closing shall be the "Actual Funded Liabilities."
(iii) Within twenty (20) days after the Closing, the
Company shall deliver to the Purchaser an Actual Funded Liabilities
Statement setting forth the Actual Funded Liabilities as of Closing (the
"Actual Funded Liabilities Statement"). The Purchaser shall have access
to all data, schedules and work papers used by the Company in preparing
the Actual Funded Liabilities Statement and the Funded Liabilities
Statement. The calculation of Actual Funded Liabilities set forth in the
Actual Funded Liabilities Statement shall become the final calculation
of Actual Funded Liabilities and shall become final and binding upon the
Parties on the 60th calendar day following receipt thereof by the
Purchaser unless the Purchaser delivers written notice of disagreement
("Funded Liabilities Notice of Disagreement") to the Shareholder
Representative prior to such date. Any Funded Liabilities Notice of
Disagreement shall specify the amounts set forth on the Actual Funded
Liabilities Statement with which the Purchaser disagrees. If an Actual
Funded Liabilities Notice of Disagreement is sent by the Purchaser, then
the Actual Funded Liabilities (as recalculated in accordance with clause
(x) or (y) below) shall become final and binding upon the Parties on the
earlier of (x) the date the Parties hereto resolve in writing any
differences they have with respect to any matter specified in the Funded
Liabilities Notice of Disagreement or (y) the date any disputed amounts
are finally determined in accordance with the balance of this paragraph.
During the 30-day period following the delivery of a Funded Liabilities
Notice of Disagreement, the Shareholders' Representative and the
Purchaser shall seek in good faith to resolve in writing any differences
which they may have with respect to any amount specified in the Funded
Liabilities Notice of Disagreement during said 30-day period. If, at the
end of such 30-day period, the Shareholders' Representative and the
Purchaser have not reached agreement on such amounts, the amounts which
remain in dispute shall be recalculated by an accounting firm mutually
agreed upon by the Shareholders Representative and the Purchaser (the
"Funded Liabilities Independent Accountants"). The Funded Liabilities
Independent Accountants shall make a ratable allocation of its charges
for such work as a part of its determination based on the proportion by
which the amount in dispute was determined in favor of one Party or the
other. Any amounts so recalculated shall be final and binding on the
Parties.
(iv) If the amount of Actual Funded Liabilities as
calculated pursuant to this Section 2.2 is less than the amount of
Estimated Funded Liabilities and if the Actual Funded Liabilities as
calculated pursuant to this Section 2.2 divided by the amount of Pro
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Forma Runrate EBITDA is greater than 5.0, then the Purchaser shall
deliver to the Shareholders within twenty days after final determination
of the Actual Funded Liabilities an aggregate number of shares of
Purchaser Common Stock equal to (A) the amount of Estimated Funded
Liabilities minus the amount of Actual Funded Liabilities divided by (B)
$403.55 (with such aggregate amount being allocated among the Ordinary
Shares in proportion to their pro rata ownership of the Ordinary Shares
on the Closing Date); provided, however, that the total number of shares
of Purchaser Common Stock issuable to the Shareholders shall not exceed
28,001.43. If the amount of Actual Funded Liabilities as calculated
pursuant to this Section 2.2 is greater than the amount of Estimated
Funded Liabilities and if the Actual Funded Liabilities as calculated
pursuant to this Section 2.2 divided by the amount of Pro Forma Runrate
EBITDA is greater than 5.0, then the Shareholders shall promptly deliver
to the Purchaser within ten days after final determination of the Actual
Funded Liabilities an aggregate number of shares of Purchaser Common
Stock equal to (A) the amount of Actual Funded Liabilities minus the
amount of Estimated Funded Liabilities divided by (B) $403.55 (with such
aggregate amount being allocated among the Ordinary Shares in proportion
to their pro rata ownership of the Ordinary Shares on the Closing Date).
(v) If all of the Acquisitions are not consummated on or
before the Closing Date, a number of shares of Purchaser Common Stock
issuable to the Shareholders equal to (A) 28,001.43 minus (B)(i) Pro
Forma Runrate EBIDTA of the Acquisition(s) not yet consummated divided
by (ii) the Pro Forma Runrate EBIDTA of the Company (calculated as if
each Acquisition were consummated), shall be held in escrow by the
Purchaser until such date as the Acquisition(s) have been consummated.
On the date upon which any such Acquisition has been consummated, the
Purchaser shall deliver certificates to the Shareholders representing
the shares of Purchaser Common Stock escrowed in connection with such
then-consummated Acquisition. If an Acquisition is not consummated,
regardless of the reason therefor, the shares of Purchaser Common Stock
escrowed in connection with such unconsummated Acquisition shall be
forfeited by the Shareholders and the Purchaser shall promptly cancel
any such escrowed shares.
D. Transfer Fees. The Purchaser shall pay all charges and
expenses in connection with the exchange of Common Stock for Ordinary Shares.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS
As an inducement to the Purchaser to enter into this Agreement and
consummate the transactions contemplated hereby, each of the Shareholders and
the Company, jointly and severally, represents, warrants and covenants to, and
agrees with, the Purchaser, as of the date of execution of this Agreement and
again as of the Closing (other than those representations, warranties and
covenants specifically made as of a certain date), as follows:
SECTION 3.1 Organization and Business; Power and Authority; Effect of
Transaction.
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A. The Company:
(i) is a company duly organized and validly existing under
the laws of England and Wales;
(ii) has all requisite corporate power and authority to
own or hold under lease its properties and to conduct its business as
now conducted and has in full force and effect all Governmental
Authorizations and Private Authorizations and has made all Governmental
Filings, to the extent required for such ownership and lease of its
property and conduct of its business; and
(iii) has duly qualified and is authorized to do business
and is in good standing as a foreign corporation in each jurisdiction
set forth in Section 3.1(A)(iii) of the Company Disclosure Schedule and,
except as otherwise set forth in Section 3.1(A)(iii) of the Company
Disclosure Schedule, in each jurisdiction which the character of its
property or the nature of its business or operations requires such
qualification or authorization.
B. The Company has all requisite power and authority (corporate
and other) and, other than the filing and termination of the waiting period
pursuant to the HSR Act and UK and European Union competition laws, has in full
force and effect all Governmental Authorizations and Private Authorizations in
order to enable it to execute and deliver, and to perform its obligations under,
this Agreement and each Collateral Document executed or required to be executed
by it pursuant hereto or thereto and to consummate the Share Purchase and the
Transactions. The execution, delivery and performance by the Company and each
Shareholder that is not a natural person of this Agreement and each Collateral
Document executed or required to be executed pursuant hereto or thereto have
been duly authorized by all requisite corporate or other action. Without
limiting the generality of the foregoing, the Company's board of directors has
unanimously (i) approved and declared advisable this Agreement, the Share
Purchase and the other transactions contemplated hereby, (ii) resolved to
recommend approval and adoption of this Agreement, the Share Purchase and the
other transactions contemplated hereby by the Shareholders and (iii) has not
withdrawn or modified such approval or resolution to recommend. The holders of a
majority of the Ordinary Shares entitled to vote thereon have approved this
Agreement, the Share Purchase and the other transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Company and each
Shareholder and constitutes, and each Collateral Document executed or required
to be executed pursuant hereto or thereto or to consummate the Share Purchase
and the Transactions, when executed and delivered by the Shareholders, the
Company or any of its Affiliates will constitute, legal, valid and binding
obligations of the Shareholders, the Company and each such Affiliate,
enforceable in accordance with their respective terms, except as such
enforceability may be subject to bankruptcy, moratorium, insolvency,
reorganization, arrangement, voidable preference, fraudulent conveyance or other
similar laws relating to or affecting the rights of creditors, and except as the
same may be subject to the effect of general principles of equity.
C. Neither the execution and delivery of this Agreement or any
Collateral Document executed or required to be executed pursuant hereto or
thereto, nor the consummation of the Share Purchase or the Transactions, nor
compliance with the terms, conditions and provisions
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hereof or thereof by the Company or any of the other parties hereto or thereto
which is Affiliated with the Company:
(i) will conflict with, or result in a breach or violation
of, or constitute a default under, any Applicable Law on the part of the
Company or any Subsidiary or will conflict with, or result in a breach
or violation of, or constitute a default under, or permit the
acceleration of any obligation or liability in, or but for any
requirement of giving of notice or passage of time or both would
constitute such a conflict with, breach or violation of, or default
under, or permit any such acceleration in, any Contractual Obligation of
the Company or any Subsidiary,
(ii) will result in or permit the creation or imposition
of any Lien (except to the extent set forth in Section 3.1(C) of the
Company Disclosure Schedule) upon any property now owned or leased by
the Company or any Subsidiary or any such other Party, or
(iii) will require any Governmental Authorization or
Governmental Filing or Private Authorization, except for compliance with
the HSR Act and UK and European Union competition laws.
SECTION 3.2 Financial and Other Information.
A. The Company has heretofore furnished to the Purchaser copies
of the unaudited consolidated financial statements of the Company for the
four-month period ended April 30, 2000 (the "Company Financial Statements"). The
Company Financial Statements, including in each case the notes thereto, have
been prepared in accordance with U.K. GAAP applied on a consistent basis with
the Company's past practice throughout the periods covered thereby, are true and
correct in all material respects and present fairly the consolidated financial
position and results of operations and of cash flows of the Company and its
Subsidiaries on the bases therein stated, as of the respective dates thereof,
and for the respective periods covered thereby.
B. The Company does not own any capital stock or equity or
proprietary interest in any Entity or enterprise and has no Subsidiaries,
however organized and however such interest may be denominated or evidenced,
except as set forth in Section 3.2(B) of the Company Disclosure Schedule. With
respect to any Subsidiaries disclosed in such Section 3.2(B), the Company owns,
and at the Closing will own, 100% of the issued and allotted share capital and
all Convertible Securities and Option Securities of such Subsidiary, and all of
such securities are, and at the Closing will be, duly authorized, validly
issued, fully paid and non-assessable and free of preemptive rights and Liens.
C. The gross assets of the Company, after giving effect to the
Acquisitions consummated on or before the Closing Date, are less than Pound
Sterling30 million.
D. The Company's cumulative share of the mobile storage container
rental market in the United Kingdom is less than 25% of the relevant market for
purposes of United Kingdom competition laws.
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SECTION 3.3 Authorized and Allotted Share Capital. As of the date of
this Agreement, the authorized share capital of the Company is Pound
Sterling11,000,000 divided into 1,000,000 ordinary shares of Pound Sterling1
each (the "Ordinary Shares"), of which 100 are allotted, and 10,000,000
preference shares of Pound Sterling1 each (the "Preference Shares"), of which
none are allotted. All of such allotted share capital has been duly authorized
and validly issued, is fully paid and nonassessable and is not subject to any
preemptive or similar rights. There is neither allotted nor has the Company
agreed to grant or issue any additional equity securities or any Option Security
or Convertible Security. The Company is not a party to or bound by any
agreement, put or commitment pursuant to which it is obligated to purchase,
redeem or otherwise acquire any equity securities or any Option Security or
Convertible Security. Except as contemplated by this Agreement, between the date
hereof and the Closing, the Company will not, and will cause its Subsidiaries
not to, issue, sell or purchase or agree to issue, sell or purchase any equity
securities or any Option Security or Convertible Security of the Company or any
Subsidiary of the Company. All of the issued and allotted shares of share
capital of the Company have been issued in compliance with applicable United
States and United Kingdom securities laws. The identities and equity holdings of
each of the Equity Holders of the Company are as set forth in Section 3.3 of the
Company Disclosure Schedule.
SECTION 3.4 Changes in Condition. Since the date of the most recent
unaudited financial statements forming part of the Company Financial Statements,
except to the extent specifically described in Section 3.4 of the Company
Disclosure Schedule, there has been no Adverse Change in the Company. There is
no Event known to the Company which Adversely Affects the Company except to the
extent set forth in Section 3.4 of the Company Disclosure Schedule.
SECTION 3.5 Liabilities. At the date of the most unaudited recent
balance sheet forming part of the Company Financial Statements, the Company had
no obligations or liabilities, past, present or deferred, accrued or unaccrued,
fixed, absolute, contingent or other, except as disclosed in Section 3.5 of the
Company Disclosure Schedule (or immaterial items not required to be disclosed
thereon), in such balance sheet, or the notes thereto, and since such date (and
in respect of each Subsidiary since the date of its acquisition by the Company)
no such obligations or liabilities have been incurred, other than obligations
and liabilities incurred in the ordinary course of business consistent with past
practice, which do not, in the aggregate, Adversely Affect the Company except to
the extent set forth in Section 3.5 of the Company Disclosure Schedule. The
Company has not Guaranteed, and is not otherwise primarily or secondarily liable
in respect of, any obligation or liability of any other Person, except for
endorsements of negotiable instruments for deposit in the ordinary course of
business, consistent with prior practice, or as disclosed in the most recent
audited balance sheet, or the notes thereto, forming part of the Company
Financial Statements or in Section 3.5 of the Company Disclosure Schedule.
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SECTION 3.6 Title to Properties; Leases. To the Company's knowledge:
A. The Company has good, legal and insurable title, with respect
to all real property owned or leased (in fee simple with full title guarantee if
owned and leasehold if leased) and good, clear, record and marketable title if
owned (in fee simple), if any, reflected as an asset on the most recent audited
balance sheet forming part of the Company Financial Statements, or held by the
Company for use in its business if not so reflected, and good and clear
indefeasible and merchantable title to all other assets, tangible and
intangible, reflected on such balance sheet, or (excluding leased property) held
by the Company for use in its business if not so reflected, or purported to have
been acquired by the Company since such date, except inventory sold or depleted,
or property, plant and other equipment used up or retired, since such date, in
each case in the ordinary course of business consistent with past practice, free
and clear of all Liens, except (x) such as are reflected in the most recent
audited balance sheet, or the notes thereto, forming part of the Company
Financial Statements, (y) Liens securing taxes, assessments, governmental
charges or levies, or the claims of materialmen, carriers, landlords and like
persons, which are not yet due or payable, or (z) as set forth in Section 3.6(A)
of the Company Disclosure Schedule or the Acquisition Disclosure Bundles. Each
Lease or other occupancy or other agreement under which the Company holds real
or personal property has been duly authorized, executed and delivered by the
Company; each such Lease is a legal and valid obligation of the Company. The
Company has a valid leasehold interest in and enjoys peaceful and undisturbed
possession under all Leases pursuant to which it holds any real property or
tangible personal property. All of such Leases are valid and subsisting and in
full force and effect; and neither the Company nor, to the knowledge of the
Company, any other party thereto, is in default in the performance, observance
or fulfillment of any obligation, covenant or condition contained in any such
Lease.
B. Section 3.6(B) of the Company Disclosure Schedule contains a
true, correct and complete description of all real estate owned or leased by the
Company (the "Real Property") and all Leases and an identification of all
material items of fixed assets and machinery and equipment. The real property
(other than land), fixtures, fixed assets and machinery and equipment of the
Company are in operational condition, reasonable wear and tear excepted. The
Company (or a Subsidiary of the Company) owns, rents or leases all tangible
assets necessary for the conduct of the combined business of the Company and its
Subsidiaries as presently conducted and as presently proposed to be conducted
until the Closing.
C. With respect to each parcel of such real property owned by the
Company, except as set forth in Section 3.6(C) of the Company Disclosure
Schedule:
(i) there are no pending or, to the knowledge of the
Company, threatened resolution or proposal for compulsory acquisition by
any Governmental Authority relating to such parcel, and there are no
pending or, to the knowledge of the Company, threatened litigation or
administrative actions relating to such parcel or other matters
adversely affecting the use, occupancy or value thereof;
(ii) the buildings and improvements may be used as of
right under applicable zoning and land use laws (including, without
limitation, the Planning Acts and any relevant bye-laws, building
regulations and other relevant legislation) for the operation of the
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business of the Company as now conducted (the "Current Uses") and such
buildings and improvements are located within the boundary lines of the
described parcels of land, are not in violation of Applicable Laws and
do not encroach on any easement which may burden the land; the land does
not serve any adjoining property for any purpose inconsistent with the
use of the land; and such parcel is not located within any flood plain
or subject to any similar type restriction for which any permits or
licenses necessary to the use thereof have not been obtained;
(iii) there are no outstanding options or rights of first
refusal to purchase such parcel, or any portion thereof or interest
therein;
(iv) all facilities located on such parcel are supplied
with utilities and other services necessary for the operation of such
facilities, including gas, electricity, water, telephone, sanitary sewer
and storm sewer, all of which services are adequate for the Current Uses
and in accordance with all Applicable Laws, and are provided via public
roads or via permanent, irrevocable, appurtenant easements benefiting
such parcel;
(v) such parcel abuts on and has direct vehicular access
to a public road or access to a public road via a permanent,
irrevocable, appurtenant easement benefiting such parcel;
(vi) the Company has received no written notice of any
proposed or pending proceeding to change or redefine the zoning
classification of all or any portion of the parcels; and
(vii) each parcel is an independent unit which does not
rely on any facilities (other than the facilities of public utility and
water companies) located on any other property (a) to fulfill any
zoning, building code, or other municipal or governmental requirement,
(b) for structural support or the furnishing of any essential building
systems or utilities, including, but not limited to electric, plumbing,
mechanical, heating, ventilating, and air conditioning systems, or (c)
to fulfill the requirements of any Lease. No building or other
improvement not included in the parcels relies on any part of the
parcels to fulfill any requirement of Applicable Laws or for structural
support or the furnishing of any essential building systems or
utilities. Each of the parcels is assessed by local property assessors
as a tax parcel or parcels separate from all other tax parcels.
D. With respect to each Lease, except as set forth in Section
3.6(D) of the Company Disclosure Schedule:
(i) there are no disputes, oral agreements or forbearance
programs in effect as to any Lease;
(ii) all facilities occupied under each Lease are supplied
with utilities and other services necessary for the operation of said
facilities as now conducted;
(iii) to the knowledge of the Company, the owner of the
facility occupied under each Lease has good and clear record and
marketable title to the parcel of real property,
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free and clear of any Lien, except for recorded easements, covenants,
and other restrictions which do not impair the Current Uses, occupancy
or value of the property subject thereto; and
(iv) no Event has occurred which, with notice or lapse of
time, would constitute a breach or default or permit termination,
modification or acceleration of any Lease.
SECTION 3.7 Inventory and Rental Equipment. To the Company's knowledge,
the inventory and rental equipment of the Company and its Subsidiaries on the
date hereof is and on the Closing Date will be, in good and merchantable
condition, and in reasonably useable, leaseable, rentable or saleable condition
in the ordinary course of business, except for (A) obsolete or defective
materials and (B) any excess stock items which alone and in the aggregate are
not Material. To the Company's knowledge, there is no Adverse condition
currently affecting the supply of materials, inventory or rental equipment
available to the Company. The Company owns at least 7,000 units of rental
equipment.
SECTION 3.8 Accounts and Notes Receivable. To the Company's knowledge,
all accounts and notes receivable reflected on the most recent balance sheet in
the Company Financial Statements and all accounts and notes receivable arising
subsequent to the date of such balance sheet have or will have arisen in the
ordinary course of business, represent valid obligations to the Company, and
have been collected or are collectible in the aggregate amounts thereof recorded
on the books of the Company, in each case net of the reserve for bad debts
reflected on such balance sheet.
SECTION 3.9 Compliance with Private Authorizations. To the Company's
knowledge, Section 3.9 of the Company Disclosure Schedule set forth a true,
correct and complete list and description of each Private Authorization, all of
which are in full force and effect except as expressly indicated therein. To the
Company's knowledge, the Company has obtained all Private Authorizations which
are necessary for its ownership of its properties and the conduct of its
business as now conducted. To the Company's knowledge, the Company is not in
breach or violation of, or in default in the performance, observance or
fulfillment of, any Private Authorization. No Private Authorization is the
subject of any pending or, to the Company's knowledge, threatened attack,
revocation or termination.
SECTION 3.10 Compliance with Governmental Authorizations and Applicable
Law. To the Company's knowledge:
A. Section 3.10(A) of the Company Disclosure Schedule contains a
description of:
(i) all Legal Actions which are pending or, to the
Company's knowledge, threatened or contemplated against, and which in
any manner relate to, the Company or the business, operations or
properties, or the officers or directors in connection therewith; and
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(ii) each Material Governmental Authorization to which the
Company is subject and which relates to the business, operations,
properties, prospects, condition (financial or other), or results of
operations of the Company, all of which are in full force and effect.
B. The Company has obtained all Governmental Authorizations which
are necessary for the ownership or uses of its properties and the conduct of its
business as now conducted or as presently proposed to be conducted by it or
which, if not obtained and maintained, could singly or in the aggregate, have
any Adverse Effect on the Company, except as otherwise described in Section
3.10(B) of the Company Disclosure Schedule. No Governmental Authorization is the
subject of any pending or, to the Company's knowledge, threatened attack,
revocation or termination. The Company is not, and at no time since the date of
its incorporation, has been, or is or has during such time been charged with, or
to the Company's knowledge, is threatened or under investigation with respect to
any material breach or violation of, or default in the performance, observance
or fulfillment of any Governmental Authorization or any Applicable Law, except
as otherwise described in Section 3.10(B) of the Company Disclosure Schedule.
C. Except as set forth in Section 3.10(C) of the Company
Disclosure Schedule, the Company, and the conduct and operations of its
business, is in compliance with all Applicable Laws which (i) affect or relate
to this Agreement or the Transactions or (ii) are applicable to it or its
business, except, with respect to clause (ii) only, for any violation of, or
default under, any Applicable Law which reasonably may be expected not to have a
Material Adverse effect on the Company.
SECTION 3.11 Intangible Assets; Intellectual Property. To the Company's
knowledge:
A. Section 3.11 of the Company Disclosure Schedule sets forth a
true, correct and complete description of all Governmental Authorizations
relating to Intangible Assets or Intellectual Property or rights with respect
thereto, that are necessary for the present conduct of the Company's
consolidated business, including without limitation the nature of the Company's
interest in each and the extent to which the same have been duly registered in
the offices as indicated therein. The Company owns or possesses or otherwise has
the right to use all Governmental Authorizations, Intangible Assets and
Intellectual Property necessary for the conduct of the Company's business free
and clear of all Liens and without any conflict with the rights of others.
Except as otherwise described in Section 3.11 of the Company Disclosure
Schedule, no Governmental Authorization, Intangible Asset or Intellectual
Property has been or is now involved in any opposition, invalidation, or
cancellation, and no Intellectual Property infringes any trade name, trademark
or service mark of any third party. The Company has taken all necessary or
desirable action to protect each item of Intellectual Property that it owns or
uses. The Company has not interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of third
parties, and the Company has never received any charge, complaint, claim, or
notice alleging any such knowledge of the Company, no third party has interfered
with, infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of any of the Company.
B. With respect to each item of Intellectual Property that the
Company owns:
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(i) the identified owner possesses all right, title, and
interest in and to the item;
(ii) the item is not subject to any outstanding judgment,
order, decree, stipulation, injunction, or charge;
(iii) no charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand is pending or, to the knowledge
of the Company, is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(iv) the Company has never agreed to indemnify any person
or entity for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
C. Section 3.11 of the Company Disclosure Schedule also
identifies each item of Intellectual Property that any third party owns and that
the Company uses pursuant to license, sublicense, agreement or permission. The
Company has supplied the Purchaser with correct and complete copies of all such
licenses, sublicenses, and permissions (as amended to date). With respect to
each such item of used Intellectual Property:
(i) the license, sublicense, agreement or permission
covering the item is legal, valid, binding, enforceable and in full
force and effect;
(ii) the license, sublicense, agreement or permission will
continue to be legal, valid, binding, enforceable and in full force and
effect on identical terms following the Closing;
(iii) no party to the license, sublicense, agreement or
permission is in material breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or default
or permit termination, modification or acceleration thereunder;
(iv) no party to the license, sublicense, agreement or
permission has repudiated any provision thereof;
(v) with respect to each sublicense, the representation
and warranties set forth in subsections (i) through (iv) above are true
and correct with respect to the underlying license;
(vi) the underlying item of Intellectual Property is not
subject to any outstanding judgment, order, decree, stipulation,
injunction or charge;
(vii) no charge, complaint, Legal Action, investigation,
claim, or demand is pending, or, to the knowledge of the Company and the
directors and officers (and employees with responsibility for
Intellectual Property matters) of the Company, is threatened which
challenges the legality, validity, or enforceability of the underlying
item of Intellectual property; and
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(viii) the Company has not granted any sublicense or
similar right with respect to the license, sublicense, agreement or
permission.
SECTION 3.12 Related Transactions. Section 3.12 of the Company
Disclosure Schedule sets forth a true, correct and complete description of any
Contractual Obligation or transaction between the Company and any of its
officers, directors, employees, Equity Holders, or any Affiliate of any thereof
(other than reasonable compensation for services as officers, directors and
employees and reimbursement for out-of-pocket expenses reasonably incurred in
support of the Company's business), including without limitation any providing
for the furnishing of services to or by, providing for rental of property, real,
personal or mixed, to or from, or providing for the lending or borrowing of
money to or from or otherwise requiring payments to or from, any officer,
director, Equity Holder, employee, or any Affiliate of any thereof.
SECTION 3.13 Insurance. To the Company's knowledge, the Company has been
covered since the date of its incorporation by insurance in scope and amount
reasonable for the business in which they have been engaged during such period.
Section 3.13 of the Company Disclosure Schedule lists all insurance policies
maintained by the Company and includes the insurers' names, policy numbers,
expiration dates, risks insured against, amounts of coverage, annual premiums,
exclusions, deductibles and self-insured retention and describes in reasonable
detail any retrospective rating plan, fronting arrangement or any other
self-insurance or risk assumption agreed to by the Company (or a Subsidiary of
the Company) or imposed upon the Company (or a Subsidiary of the Company) by any
such insurers, as well as any self-insurance program that is in effect. To the
Company's knowledge, the Company is not in breach or violation of or in default
under any such policy, and all premiums due thereon have been paid, and each
such policy or a comparable replacement policy will continue to be in force and
effect up to and including the Closing Date. To the Company's knowledge, the
Company has not received any written notice from the insurer disclaiming
coverage or reserving rights with respect to a particular claim or such policy
in general. To the Company's knowledge, the Company has not incurred any loss,
damage, expense or liability covered by any such insurance policy that is
individually or in the aggregate material for which it has not properly asserted
a claim under such policy.
SECTION 3.14 Tax Matters.
A. The Company has filed no Tax Returns. All Taxes which the
Company is required by law to withhold and collect have been duly withheld and
collected, and have been paid over, in a timely manner, to the proper
Authorities to the extent due and payable, except as set forth on Section
3.14(A) of the Company Disclosure Schedule. The Company has not executed any
waiver to extend, or otherwise taken or failed to take any action that would
have the effect of extending, the applicable statute of limitations in respect
of any Tax liabilities. All applicable Tax laws and agreements have been fully
complied with in all material respects. Neither the Shareholders nor the Company
have taken any action not in accordance with past practice that would have the
effect of deferring any material Tax liability of the Company or any Subsidiary
of the Company from any taxable period or portion thereof ending on or before or
including the Closing to any subsequent period. The Company is not liable for
the Taxes of any other person, except as provided in Section 3.14(A) of the
Company Disclosure Schedule. Except as set forth in Section 3.14(A) of the
Company Disclosure Schedule, adequate provision has been made on the
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most recent balance sheet forming part of the Company Financial Statements for
all Taxes of any kind, including interest and penalties in respect thereof,
whether disputed or not, and whether past, current or deferred, accrued or
unaccrued, fixed, contingent, absolute or other.
B. The Company has paid all Material (determined in the
aggregate) Taxes which have become due.
C. Since the date of its incorporation, the Company has made no
payment on account of any Taxes except regular payments required in the ordinary
course of business, with respect to current operations or property presently
owned.
D. No issue has been raised in connection with an audit,
examination, or other proceeding with respect to Taxes that could reasonably be
expected to be raised with respect to taxable periods (or portions thereof)
following the Closing. No power of attorney granted by the Company or any Tax
Affiliate with respect to Taxes is in force. There are no liens for Taxes (other
than for current Taxes not yet due and payable) upon the assets of the Company.
E. The Company is not a party to any tax sharing agreement or
arrangement, offer in compromise, closing agreement or other agreement with
respect to Taxes, except as set forth in Section 3.14(E) of the Company
Disclosure Schedule.
F. The Company currently has no, and has never had, a permanent
establishment in any foreign (i.e., non-United Kingdom) country, as defined in
any applicable Tax treaty or convention between the United Kingdom and such
foreign country and the Company has not engaged in a trade or business within
any foreign country. The Company is and always has been resident for taxation
purposes only in the jurisdiction in which it is incorporated, and that is the
only jurisdiction whose tax authorities seek to charge tax on the worldwide
profits or gains of the Company. The Company has never paid tax on income,
profits or gains to any tax authority in any other jurisdiction.
G. The Company is not a party to any joint venture, partnership,
or other arrangement or contract which could be treated as a partnership for
United Kingdom income tax purposes.
H. Section 3.14(H) of the Company Disclosure Schedule sets forth
the taxpayer identification number and principal address of the Company and each
of its Subsidiaries.
I. Section 3.14(I) of the Company Disclosure Schedule sets forth
all local or foreign jurisdictions in which the Company is subject to any
Material Tax.
J. No payment hereunder will be subject to withholding under any
provision of the Code or other Applicable Law.
K. All payments by the Company to any person which should have
been made under deduction of tax have been so made, and the Company has (if
required by law to do so) provided certificates of deduction to such person and
accounted to the Inland Revenue for the tax so deducted.
14
L. The Company has not at any time entered into, or been a party
to, a transaction or series of transactions, either (i) containing steps
inserted without any commercial or business purpose or (ii) being transactions
to which any of the following provisions could apply: Sections 703 (cancellation
of tax advantage), 729 (sale and repurchase of securities), 730 (transfers of
income arising from securities), 737 (manufactured dividends: treatment of tax
deducted), 739 (prevention of avoidance of income tax), 770 (sales etc. at an
undervalue or overvalue), 774 (transactions between dealing company and
associated company), 776 (transactions in land: taxation of chargeable gains),
779 (sale and lease-back: limitation on tax reliefs), 780 (sale and lease-back:
taxation of consideration received), 781 (assets leased to traders and others)
or 786 (transactions associated with loans or credit) of the Taxes Act 1988
without, in the appropriate cases, having received clearance in respect thereof
from the Inland Revenue.
M. The Company has never been requested to furnish information
under notices served under Section 745 (power to obtain information) or 778
(power to obtain information) of the Taxes Act 1988.
N. Except as provided herein, the Company has not disposed of to,
or acquired any asset from any person connected with it within the meaning of
Section 839 (connected persons) of the Taxes Act 1988, or in circumstances such
that the provisions of Section 17 (disposals and acquisitions treated as made at
market value) of the Taxation of Chargeable Gains Act 1992 (the "TCGA 1992"),
could apply to such disposal or acquisition. The Company has not made, and is
not entitled to make, a claim pursuant to Section 172 (transfer of United
Kingdom branch or agency) of the TCGA 1992.
O. Except as provided herein, the Company has not been a party to
any scheme of reconstruction or reorganization to which the provisions of
Section 139 (reconstruction or amalgamation including transfer of business) of
the TCGA 1992, Section 703 (cancellation of tax advantage) or Section 343
(Company reconstructions without a change of ownership) of the Taxes Act 1988
could apply.
P. No gain chargeable to corporation tax will accrue to the
Company on the disposal of any debt owing to the Company. The Company has not
acquired benefits under any policy of assurance otherwise than as original
beneficial owner.
Q. There are no circumstances under which the Company may become
liable to tax under Section 191 (non payment of tax by non-resident companies)
of the TCGA 1992.
R. The Company is not liable to taxation under the provisions of
Sections 34 (treatment of premiums etc. as rent or Schedule D profits), 35
(Schedule D charge on assignment of lease granted at an undervalue) and 36
(Schedule D charge on sale of land with right to reconveyance) of the Taxes Act
nor does it own any leasehold interest to which Section 35 may apply.
S. The Company has properly operated the Pay As You Earn system
deducting tax as required by law from all payments to, or treated as made to
employees and ex-employees of the Company, and punctually accounted to the
Inland Revenue for all tax so deducted. All returns
15
required under Section 203 (Pay As You Earn) of the Taxes Act 1988 and under its
regulations have been punctually made and are accurate and complete in all
respects. Section 3.14(W) of the Company Disclosure Schedule contains full
details of all dispensations obtained by the Company and all details of any
visit from the Audit office of the Inland Revenue within the last six years
including full details of any settlement made as a result of it.
T. The Company has paid all national insurance contributions for
which it is liable, and has kept proper books and records relating to the same.
The Company has not been a party to any scheme or arrangements to avoid any
liability to account for primary or secondary national insurance contributions.
U. The Company has duly paid or has procured to be paid all stamp
duty on documents to which it is a party or in which it is interested, and which
are liable to stamp duty. The Company has made all returns and paid all stamp
duty reserve tax in respect of any transaction in securities in which it has
been a party, or in respect of which it is liable to account for stamp duty
reserve tax.
V. Value Added Tax.
(i) The Company has complied with all statutory provisions
and regulations relating to value added tax legislation in the United
Kingdom and has duly paid or provided for all amounts of value added tax
for which the Company is liable.
(ii) All supplies made by the Company are taxable
supplies.
(iii) All input tax for which the Company has claimed
credit has been paid by the Company in respect of supplies made to it
relating to goods or services used or to be used for the purpose of the
Company's business.
(iv) The Company is not and has not been, for value added
tax purposes, a member of any group of companies, and no act or
transaction has been effected in consequence whereof the Company is or
may be held liable for any value added tax chargeable against some other
company.
(v) The Company has not received any penalty liability
notice under Section 64 of the Value Added Tax Act 1994 (repeated
misdeclarations), surcharge liability notice under Section 59 of the
Value Added Tax Act 1994 (the default surcharge), or written warning
issued under Section 63 of that Act.
(vi) The Company has not been required to give security
under Section 48(7) and Schedule 11 (Administration, Collection and
Enforcement) of the Value Added Tax Act 1994.
(vii) Section 3.14(V) of the Company Disclosure Schedule
contains details and copies of all elections, together with the relevant
notification, made by the Company under Schedule 10 (buildings and land)
of the Value Added Tax Act 1994.
16
(viii) The Company has not paid and is not liable to pay
any interest under Section 7 (interest on tax etc. recovered or
recoverable by assessment) of the Value Added Tax Act 1994.
(ix) Section 3.14(V) of the Company Disclosure Schedule
contains full details of any assets of the Company to which the
provisions of Part XV of the Value Added Tax (General) Regulations 1995
(the Capital Goods Scheme) apply and in particular: (a) the identity,
date of acquisition and cost of the asset and (b) the proportion of
input tax for which credit has been claimed (either provisionally or
finally in a tax year and stating which).
SECTION 3.15 Pensions; Employee Benefits. The Company does not operate
an occupational pension scheme and there are no schemes offered to the employees
of the Company by the Company.
SECTION 3.16 Employment Arrangements.
A. The Company has no obligation or liability, contingent or
other, under any Employment Arrangement (whether or not listed in Section
3.15(A) of the Company Disclosure Schedule), other than those listed or
described in Section 3.16(A) of the Company Disclosure Schedule. The Company is
not now nor during the past three (3) years has been subject to or involved in
or, to the Company's knowledge, threatened with any union elections, petitions
therefor or other organizational activities, except as described in Section
3.16(A) of the Company Disclosure Schedule. None of the employees of the Company
is represented by any labor union or other employee collective bargaining
organization and there are no pending grievances, disputes or controversies with
any union or any other employee collective bargaining organization of such
employees.
B. Except as set forth in Section 3.16(B) of the Company
Disclosure Schedule, no employee shall accrue or receive additional benefits,
service or accelerated rights to payments of benefits under any Employment
Arrangement, including the right to receive any parachute payment, as defined in
Section 280G of the Code, or become entitled to severance, termination allowance
or similar payments as a direct result of this Agreement, the Share Purchase or
the Transactions.
C. The Company has complied in all material respects so far as
relevant to its employees with: (i) all codes of conduct and practice and
customs and practices with which it has agreed to comply; and (ii) all
recommendations (if any) and awards and declarations respectively made by the
Advisory Conciliation and Arbitration Service and the Central Arbitration
Committee.
D. Other than in respect of the transfer of business pursuant to
this Agreement, no person's employment has been transferred to or from the
Company under the Transfer of Undertakings (Protection of Employment)
Regulations 1981. In respect of the transfer of business pursuant to this
Agreement, the Company has complied with its duties under the Transfer of
Undertakings (Protection of Employment) Regulations 1981 to inform and consult
any relevant trade union.
17
E. Within the twelve month period ending on the date hereof, the
Company has not given notice to the Secretary of State of any redundancies, or
started consultation with any trade union under Part IV of the Trade Union and
Labour Relations (Consolidation) Act 1992.
SECTION 3.17 Material Agreements. Listed in Section 3.17 of the Company
Disclosure Schedule are all Material Agreements relating to the ownership or
operation of the business and property of the Company presently held or used by
it or to which it is a party or to which it or any of its property is subject or
bound. True, complete and correct copies of each of the Material Agreements have
been made available by the Company to the Purchaser (or, if oral, true, complete
and correct descriptions thereof have been set forth in Section 3.17 of the
Company Disclosure Schedule). All of the Material Agreements are valid, binding
and legally enforceable obligations of the Company and, to the Company's
knowledge, the other parties thereto (except as such enforceability may be
subject to bankruptcy, moratorium, insolvency, reorganization, arrangement,
voidable preference, fraudulent conveyance and other similar laws relating to or
affecting the rights of creditors and except as the same may be subject to the
effect of general principles of equity), and the Company is validly and lawfully
operating its business and owning its property under each of the Material
Agreements. Except as disclosed in Section 3.17 of the Company Disclosure
Schedule: (i) the Company is not in default in the payment or performance of any
of its obligations under any Material Agreement; (ii) no Event which, with the
giving of notice or the passage of time, or both, constitutes an event of
default by the Company under any Material Agreement has occurred and is
continuing; and (iii) to the knowledge of the Company, no other party to any
Material Agreement is in default in any material respect in the payment or
performance of its obligations thereunder and no Event which, with the giving of
notice or the passage of time, or both, constitutes an event of default by such
other party under any Material Agreement has occurred and is continuing.
SECTION 3.18 Ordinary Course of Business.
A. The Company, from the date of its incorporation, and each of
its Subsidiaries, since the date of its respective acquisition by the Company,
except as may be described on Section 3.18(A) of the Company Disclosure
Schedule:
(i) has operated its business in the normal, usual and
customary manner in the ordinary course of business, consistent with
prior practice;
(ii) has not sold or otherwise disposed of, or contracted
to sell or otherwise dispose of, any of its properties or assets, other
than in the ordinary course of business;
(iii) except in each case in the ordinary course of
business, consistent with prior practice,
(a) has not incurred any Indebtedness, obligations
or liabilities (fixed, contingent or other);
(b) has not entered into any commitments;
(c) has not canceled any debts or claims; and
18
(d) has not prepaid any Indebtedness in advance of
its contractual maturity date.
(iv) has not made or committed to make, any additions to
its property or any purchases of machinery or equipment, except for
machinery and equipment purchases in the ordinary course of business,
consistent with past practice, and normal maintenance and replacements;
(v) has not discharged or satisfied, any Lien, except in
the ordinary course of business, consistent with past practices, and has
not paid any obligation or liability (absolute or contingent) other than
current liabilities or obligations under contracts then existing or
thereafter entered into in the ordinary course of business, consistent
with prior practice, and commitments under Leases existing on that date
or incurred since that date in the ordinary course of business;
(vi) has not created or permitted to be created any Lien
on any of its tangible property (other than Liens granted pursuant to
the Financing Transactions);
(vii) has not transferred or created, or permitted to be
created, any Lien on any Intangible Assets;
(viii) except in the ordinary course of business,
consistent with prior practice, has not increased the compensation
payable or to become payable to any of its directors, officers,
employees, advisers, consultants, salesmen or agents or otherwise alter,
modify or change the terms of their employment or engagement;
(ix) has not suffered any material damage, destruction or
loss (whether or not covered by insurance) or any acquisition or taking
of property by any Authority;
(x) has not waived any rights of material value without
fair and adequate consideration;
(xi) has not experienced any work stoppage;
(xii) has not entered into, amended or terminated any
Lease, Governmental Authorization, Private Authorization, Material
Agreement or Employment Arrangement or any Contractual Obligation or
transaction with any Affiliate, except for amendments or terminations in
the ordinary course of business, consistent with prior practice, in
accordance with the terms thereof (in the case of any amendment or
termination), and except for the termination of all outstanding option,
employment and severance agreements as of the Closing Date;
(xiii) has not amended or terminated and will not amend or
terminate, and has kept in full force and effect including without
limitation renewing to the extent the same would otherwise expire or
terminate, all insurance policies and coverage;
19
(xiv) has not entered into any other transaction or series
of related transactions which individually or in the aggregate is
material to the Company, except in the ordinary course of business,
consistent with prior practice;
(xv) has not incurred any Indebtedness owing to any
Shareholder and has not made any loans or advances to any Shareholder;
(xvi) has not split, combined or reclassified any of the
Company's share capital or issued or authorized the issuance of any
securities in respect of, in lieu of or in substitution of any shares of
the Company's share capital;
(xvii) has not issued, sold or otherwise disposed of any
of its share capital, or issued Option Securities or Convertible
Securities or preemptive rights or other rights to purchase or obtain
any of its share capital, and has not declared, set aside, or paid any
dividend or distributions with respect to its share capital or redeemed,
purchased, or otherwise acquired any of its share capital;
(xviii) has not amended any of its Organic Documents;
(xix) has not changed any method of accounting or
accounting practice or policy, except as required by Applicable Law or
by U.K. GAAP; and
(xx) has not accelerated accounts receivable, delayed
accounts payable, or liquidated inventory, except in the ordinary course
of business consistent with past practice.
B. Since the date of its incorporation, except as described in
Section 3.18(B) of the Company Disclosure Schedule, the Company has not
declared, made or paid, or agreed to declare, make or pay, any Distribution,
except dividends paid in the ordinary course of business consistent with past
practice on its Preference Shares in accordance with the terms thereof.
C. No order has been made or petition presented or resolution
passed for the winding up of the Company. No administration order has been made
in respect of the Company, no distress, execution or other process has been
levied against the Company or its assets, and no action has been take to
repossess goods in the possession of the Company. The Company has not stopped
payment nor is it insolvent or unable to pay its debts within the meaning of
Section 123 of the Insolvency Act 1986 and there is no unsatisfied judgment,
order or award outstanding against the Company. No steps have been taken for the
appointment of an administrator, receiver or administrative receiver and manager
in respect of the Company or any part of its assets or undertaking. No floating
charge created by the Company has crystallized, and, to the Company's knowledge,
there are no circumstances likely to cause such a floating charge to
crystallize. The Company has not been a party to any material transaction at an
undervalue for the purpose of Section 238 of the Insolvency Act 1986 nor has the
Company given or received any material preference for the purposes of Section
239 of the Insolvency Act 1986 in either case within a period of two years
ending on the date hereof.
20
SECTION 3.19 Broker or Finder. No Person assisted in or brought about
the negotiation of this Agreement, or the subject matter of the Transactions in
the capacity of broker, agent or finder or in any similar capacity on behalf of
the Company (or a Subsidiary).
SECTION 3.20 Environmental Matters. Except as set forth in Section 3.20
of the Company Disclosure Schedule:
A. To the Company's knowledge, the Company and all Affiliates of
the Company are, and within the period of all applicable statutes of limitation
have been, in compliance with all applicable federal, state, local and foreign
laws, regulations, orders, decrees, permits, authorizations, opinions, common
law or agency requirements relating to (i) the protection, investigation or
restoration of the environment, health and safety, or natural resources; (ii)
the handling, use, presence, disposal, release or threatened release of any
Hazardous Material and (iii) noise, odor, wetlands, pollution, contamination or
any injury or threat of injury to persons or property (collectively,
"Environmental Laws").
B. As of the date hereof, to the Company's knowledge, no
underground storage tanks are present under any property that the Company or any
Affiliate of the Company has at any time owned, operated, occupied or leased. As
of the date hereof, to the Company's knowledge, no Hazardous Materials, but
excluding office and janitorial supplies, are present, as a result of the
actions of the Company or, to the Company's knowledge, any actions of any third
party or otherwise, in, on or under any property, including the land and the
improvements, ground water and surface water, that the Company or any Affiliate
of the Company has at any time owned, operated, occupied or leased.
C. The Company is not aware of any Event which could involve the
Company in any environmental litigation or impose upon the Company any
environmental liabilities.
D. To the Company's knowledge, at no time has the Company or an
Affiliate of the Company transported, stored, used, manufactured, disposed of,
released or exposed its employees or others to Hazardous Materials, nor has the
Company or any Affiliate of the Company disposed of, transported, sold, or
manufactured any product containing a Hazardous Material (collectively,
"Hazardous Materials Activities"), which Hazardous Materials Activities are
reasonably expected to give rise to liability of the Company or any Affiliate of
the Company under any Environmental Law.
E. To the Company's knowledge, the Company currently holds all
material environmental approvals, permits, licenses, clearances and consents
(the "Environmental Permits") necessary for the conduct of its activities and
businesses as such activities and businesses are currently being conducted. The
Company reasonably believes that each of its Environmental Permits currently in
effect will be renewed effective prior to the expiration of such Environmental
Permit.
F. To the Company's knowledge, no action, proceeding, revocation
proceeding, amendment procedure, writ injunction or claim is pending or
threatened concerning any Environmental Permit or any Hazardous Materials
Activity of the Company or relating to compliance with or liability under any
Environmental Law.
21
G. Neither the Company nor any Affiliate of the Company has
received any notice, demand, letter, claim or request for information alleging
that the Company or any Affiliate of the Company may be in violation of or
liable under any Environmental Law.
H. Neither the Company nor any Affiliate of the Company is
subject to any orders, decrees, injunctions or other arrangements with any
Governmental Entity or is subject to any indemnity or other agreement with any
third party relating to liability under any Environmental Law or relating to
Hazardous Materials.
I. Neither the Company nor any Affiliate of the Company is
required to make any capital or other expenditure to comply with any
Environmental Law nor is there any reasonable basis on which any Governmental
Entity could take action that would require such expenditures.
J. The Company has not performed an environmental site
assessment, nor has such an assessment been conducted by or on behalf of the
Company at any property owned or leased by the Company.
SECTION 3.21 Books and Records. The copy of the Memorandum and Articles
of Association of the Company attached to the Company Disclosure Schedule is
accurate and complete in all respects and has annexed or incorporated copies of
all resolutions or agreements required by the Companies Act to be so annexed or
incorporated. The Company has at all times carried on its business and affairs
in all respects in accordance with its Memorandum and Articles of Association.
The register of members and other statutory books and registers of the Company
have been properly kept, and no notice or allegation that they are incorrect or
should be rectified has been received. All returns, particulars, resolutions and
other documents required under any legislation to be delivered on behalf of the
Company to the Registrar of Companies have been properly and correctly made up
and duly filed or delivered on behalf of the Company except where failure to do
so would not have a material adverse effect.
SECTION 3.22 Customers and Suppliers. Section 3.22 of the Company
Disclosure Schedule sets forth a list of the ten (10) largest suppliers and a
list of the ten (10) largest customers of the Company and its Subsidiaries based
on dollar values of purchases during the twelve-month period ended December 31,
1999. Neither the Company nor any of its Subsidiaries has any reason to believe
that any customer or supplier listed on Section 3.22 of the Company Disclosure
Schedule has any plan or intention to materially alter its relationship with the
Company or any Subsidiary of the Company.
SECTION 3.23 Officers and Directors. Section 3.23 of the Company
Disclosure Schedule sets forth a true and complete list of all officers,
directors, members and managers of the Company and its Subsidiaries.
SECTION 3.24 Bank Accounts. Section 3.24 of the Company Disclosure
Schedule sets forth all checking accounts, savings accounts, custodial accounts,
certificates of deposit, safe deposit boxes or other similar accounts maintained
by the Company and its Subsidiaries, together with the name of each person with
signature authority for each such account.
22
SECTION 3.25 Anti-takeover Statutes Not Applicable. No "fair price",
"moratorium", "control share acquisition" or other form of anti-takeover statute
or regulation is applicable to the Company's or the Shareholders' entering into
this Agreement and consummating the transactions contemplated hereby.
SECTION 3.26 Litigation. Section 3.26 of the Company Disclosure Schedule
sets forth each instance in which any of the Company and its Subsidiaries (i) is
subject to any unsatisfied judgment, order, decree, stipulation, injunction, or
charge or (ii) is a party or, to the knowledge of the Company, is threatened to
be made a party to any charge, complaint, Legal Action or investigation of or in
any court or quasi-judicial or administrative agency of any federal, state,
local or foreign jurisdiction or before any arbitrator. None of the charges,
complaints, Legal Actions, and investigations set forth in Section 3.26 of the
Company Disclosure Schedule could result in any Adverse Change to the Company.
SECTION 3.27 Product Warranty. Each product manufactured, distributed,
sold, or delivered by the Company has been in conformity with all applicable
contractual commitments and all express and implied warranties, and the Company
has no liability for damages in connection therewith. No product manufactured,
sold, distributed, serviced, leased, or delivered by the Company is subject to
any guaranty, warranty, or other indemnity of the Company beyond the applicable
standard terms and conditions of sale or lease.
SECTION 3.28 Product Liability. Except as set forth in Section 3.26 or
3.28 of the Company Disclosure Schedule, the Company has no liability (that
individually or in the aggregate is Material) arising out of any injury to
persons or property as a result of the ownership, possession, or use of any
product manufactured, distributed, sold, leased, serviced or delivered by any of
the Company.
SECTION 3.29 Fair Trading.
A. No agreement, practice or arrangement carried on by the
Company or to which the Company is a party:
(i) is, should be, or should have been registered in
accordance with the provisions of the RTPA or is or has been the subject
of any inquiry, investigation or proceeding under any of those Acts;
(ii) to the Company's knowledge, has been the subject of
any inquiry, investigation, reference or report under the Fair Trading
Act 1973 (or any previous legislation relating to monopolies or mergers)
or the Competition Act 1980;
(iii) has been subject to any inquiry, investigation or
proceeding in respect of Articles 85 and 86 of the Treaty of Rome; or
(iv) has been notified to the Directorate General of
Competition of the Commission of the European Community.
23
B. The Company has not given any assurance or undertaking to the
Restrictive Practices Court, the Director General of Fair Trading, the Director
General of Telecommunications, the Secretary of State for Trade and Industry,
the Commission or Court of Justice of the European Communities nor has the
Company given any material assurance or undertaking to any governmental agency
outside the normal course of business and is not subject to any decision,
regulation, order or other instrument made by any of them relating to any
assurance or undertaking referred to in this Section 3.29(B).
SECTION 3.30 Disclosure. The Company and each Shareholder has disclosed
to the Purchaser all facts known to such Parties (after reasonable investigation
and inquiry) material to the Company and its business, properties, operations,
prospects and financial condition. Except as disclosed in this Agreement,
neither the Company nor any Shareholder knows of any fact or circumstance which
might result in any material adverse effect on the business, business prospects,
financial condition or results of operations of the Company. None of the
statements or information contained in any of the representations, warranties or
covenants of the Company or any Shareholder set forth in this Agreement or any
document, statement, certificate, schedule or exhibit furnished or made
available, or to be furnished or made available, to the Purchaser by or on
behalf of the Company or any Shareholder at the request of the Purchaser or its
representatives or otherwise pursuant hereto, contains any untrue statement of a
material fact or omits to state any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
SECTION 3.31 Continuing Representations and Warranties. Except for those
representations and warranties which speak as of a specific date, all of the
representations and warranties of the Company set forth in this Article shall be
true and correct on the Closing Date with the same force and effect as though
made on and as of that date and those, if any, which speak as of a specific date
shall be true and correct as of such date on the Closing Date.
SECTION 3.32 Representations and Warranties in the Acquisition
Agreements. Except for those representations and warranties made by the sellers
in the Acquisition Agreements that specifically relate to the ownership of share
capital prior to the consummation of the Acquisition(s), all of the
representations and warranties made by the vendors in the Acquisition Agreements
(attached hereto as Exhibit B), subject to the disclosures provided by the
sellers in the Acquisition Disclosure Bundles (attached hereto as Exhibit C),
are true and correct as of the date hereof and shall be true and correct on the
Closing Date with the same force and effect as though made on and as of that
date.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents, warrants and covenants to, and agrees with,
the Shareholders as follows:
SECTION 4.1 Organization and Business; Power and Authority; Effect of
Transaction.
24
A. It is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of California.
B. It has all requisite power and authority (corporate and other)
and, other than the filing and termination of the waiting period pursuant to the
HSR Act and UK competition laws, and as set forth in Section 4.1(B) of the
Purchaser Disclosure Schedule, has in full force and effect all Governmental
Authorizations and Private Authorizations in order to enable it to execute and
deliver, and to perform its obligations under, this Agreement and each
Collateral Document executed or required to be executed by it pursuant hereto or
thereto and to consummate the Share Purchase and the Transactions, and the
execution, delivery and performance of this Agreement and each Collateral
Document executed or required to be executed pursuant hereto or thereto have
been duly authorized by all requisite corporate or other action. This Agreement
has been duly executed and delivered by the Purchaser and constitutes, and each
Collateral Document executed or required to be executed pursuant hereto or to
consummate the Share Purchase and the Transactions, when executed and delivered
by the Purchaser will constitute, legal, valid and binding obligations of the
Purchaser, enforceable in accordance with their respective terms, except as such
enforceability may be subject to bankruptcy, moratorium, insolvency,
reorganization, arrangement, voidable preference, fraudulent conveyance or other
similar laws relating to or affecting the rights of creditors, and except as the
same may be subject to the effect of general principles of equity.
C. Except as set forth in Section 4.1(C) of the Purchaser
Disclosure Schedule, neither the execution and delivery of this Agreement or any
Collateral Document executed or required to be executed pursuant hereto or
thereto, nor the consummation of the Share Purchase or the Transactions, nor
compliance with the terms, conditions and provisions hereof or thereof by the
Purchaser:
(i) will conflict with, or result in a breach or violation
of, or constitute a default under, any Applicable Law on the part of the
Purchaser or will conflict with, or result in a breach or violation of,
or constitute a default under, or permit the acceleration of any
obligation or liability in, or but for any requirement of giving of
notice or passage of time or both would constitute such a conflict with,
breach or violation of, or default under, or permit any such
acceleration in, any Contractual Obligation of the Purchaser, or
(ii) will require any Governmental Authorization or
Governmental Filing or Private Authorization and filing requirements
except for compliance with the HSR Act and UK competition laws.
SECTION 4.2 Authorized and Outstanding Capital Stock of the Purchaser.
Immediately prior to the consummation of the merger of Windward Acquisition/MS,
LLC with and into the Company, the authorized capital stock of the Purchaser
consists of 165,700 shares of Series A Convertible Preferred Stock, $10.00 par
value, of which no shares are outstanding, 5,000,000 shares of Series B 10%
Convertible Cumulative Preferred Stock, $10.00 par value, of which 2,938,213
shares are issued and outstanding, 1,000,000 shares of Series C 8.5% Cumulative
Preferred Stock, $20.00 par value, of which 50,226.5 shares are issued and
outstanding, 1,000,000 shares of Series E Preferred Stock, of which 83,318
shares are issued and outstanding, and 2,000,000
25
shares of Common Stock, $1.00 par value, of which 217,750.09 shares are issued
and outstanding.
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE SHAREHOLDERS
Each Shareholder, for himself or itself only, hereby represents and
warrants to, and agrees with, the Purchaser as follows:
SECTION 5.1 Ownership. Such Shareholder is the lawful owner of record
and beneficial owner with full title guarantee of the number of Ordinary Shares
set forth opposite his or its name in Section 5.1 of the Company Disclosure
Schedule. Such Shareholder is not party to or bound by any agreement or
commitment pursuant to which it is obligated to purchase or otherwise acquire
any equity securities, Option Securities or Convertible Securities of the
Company, and between the date hereof and the Closing, such Shareholder will not
sell or purchase, or agree to sell or purchase, any equity securities, Option
Securities or Convertible Securities of the Company.
SECTION 5.2 Liens. The Ordinary Shares owned by such Shareholder are
free and clear of all Liens (except as may be imposed by state, U.S. federal and
United Kingdom securities laws), and none of such Ordinary Shares is subject to
any written or oral agreement whatsoever with respect to the voting thereof, the
sale of pledge thereof (including, without limitation, any option or right of
first refusal to sell any such shares) or any like matter, nor has any proxy
been granted to any Person with respect to any such Ordinary Shares.
SECTION 5.3 Authorization of Agreement. This Agreement has been duly
executed and delivered by such Shareholder and constitutes, and each Collateral
Document executed or required to be executed pursuant hereto or thereto or to
consummate the Share Purchase and the Transactions, when executed and delivered
by such Shareholder will constitute, legal, valid and binding obligations of
such Shareholder, enforceable in accordance with their respective terms, except
as such enforceability may be subject to bankruptcy, moratorium, insolvency,
reorganization, arrangement, voidable preference, fraudulent conveyance or other
similar laws relating to or affecting the rights of creditors, and except as the
same may be subject to the effect of general principles of equity.
SECTION 5.4 No Governmental Consents. Except as set forth in Section 5.4
of the Company Disclosure Schedule, no Governmental Authorization or
Governmental Filing or Private Authorization is required to be obtained or made
by the Company or such Shareholder in connection with the Share Purchase and the
Transactions except for compliance with the HSR Act and UK and European Union
competition laws.
SECTION 5.5 Waiver of Preemptive Rights. Each Shareholder waives all of
his rights of preemption arising under the Company's Articles of Association.
26
ARTICLE 6
ADDITIONAL COVENANTS
SECTION 6.1 Access to Information; Best Efforts.
A. The Company will afford to the Purchaser's Representatives
full access during normal business hours throughout the period prior to the
Closing Date to all of its properties, books, contracts, commitments, records
(including, without limitation, Tax Returns), customers, distributors and
suppliers and, during such period, shall furnish promptly upon request all
information relating to the Company or its customers, distributors or suppliers,
that the Purchaser or any of its Representatives reasonably requires.
B. Each of the Parties shall use its best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under Applicable Law to consummate the Share
Purchase and make effective the Transactions, including using its best efforts
(i) to prepare and file with the applicable Authorities as promptly as
practicable after the execution of this Agreement all requisite applications and
amendments thereto, together with related information, data and exhibits,
necessary to request issuance of orders approving the Share Purchase and the
Transactions by all such applicable Authorities; (ii) to obtain all necessary or
appropriate waivers, consents and approvals, and (iii) to effect all necessary
registrations, filings and submissions (including, without limitation, filings
under state, U.S. federal or United Kingdom securities laws or the HSR Act and
any other submissions requested by the United States Federal Trade Commission or
United States Department of Justice) and (iv) to lift any injunction or other
legal bar to the Share Purchase and the Transactions (and, in such case, to
proceed with the Share Purchase and the Transactions as expeditiously as
possible). Each of the Parties recognizes that the consummation of the Share
Purchase and the Transactions is subject to the reacquisition notification
requirements of the HSR Act and UK competition laws. Each agrees that, to the
extent required by Applicable Law to consummate the Share Purchase, it will file
with the Antitrust Division of the United States Department of Justice and the
United States Federal Trade Commission a Notification and Report Form in a
manner so as to constitute substantial compliance with the notification
requirements of the HSR Act. Each covenants and agrees to use its best efforts
to achieve the prompt termination or expiration of any waiting period or any
extension thereof under the HSR Act.
C. Each of the Parties agrees to take such actions as may be
necessary to obtain any Governmental Authorizations legally required for the
consummation of the Share Purchase and the Transactions, including the making of
any Governmental Filings, publications and requests for extensions and waivers.
D. The Company will use its best efforts on or prior to the
Closing Date (i) to obtain the satisfaction of the conditions specified in
Sections 7.1 and 7.2; and (ii) if requested by the Purchaser, to obtain the
consents (to the extent required) to the continued existence in accordance with
its then-stated terms of all long-term debt of each of the Company and each
Subsidiary of the Company. The Purchaser will use its best efforts on or prior
to the Closing Date to obtain the satisfaction of the conditions applicable to
it specified in Sections 7.1 and 7.3.
27
SECTION 6.2 Notification of Certain Matters. The Company shall give
prompt notice to the Purchaser, and the Purchaser shall give prompt notice to
the Company, of the occurrence or non-occurrence of any Event the occurrence or
non-occurrence of which would be likely to cause (i) any representation or
warranty of the Company or the Purchaser, as the case may be, contained in this
Agreement to be untrue or inaccurate, or (ii) in the case of the Company and any
Shareholder, any change to be made in the Company Disclosure Schedule and any
failure of the Company or the Purchaser, as the case may be, to comply with or
satisfy, or be able to comply with or satisfy, any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice hereunder shall not limit or otherwise affect
the liability of any Party giving such notice or the remedies available
hereunder to the Party receiving such notice.
SECTION 6.3 Public Announcements. Except as may be required by
applicable law, the Parties agree that there will not be any press release or
public announcement pertaining to the transactions contemplated hereby and shall
endeavor to agree on the text of such release or the making of such public
announcement. The foregoing shall not restrict in any way the method and timing
of any Party's compliance with securities or other laws applicable to it, even
if the same require a unilateral public disclosure of the matters addressed in
this Agreement or any Collateral Document. Any Party making any public
disclosure of the matters addressed herein pursuant the foregoing sentence,
shall give the other Parties prompt notice thereof, in advance of public
disclosure if practicable and legally permissible.
SECTION 6.4 Tax Matters.
A. Shareholders' Indemnification Obligations With Respect to
Taxes. The Shareholders shall be jointly and severally liable for, and shall
indemnify, defend and hold harmless the Purchaser (and, after the Closing Date,
the Company and its Subsidiaries) from and against (i) all Taxes of the Company
and any Subsidiary of the Company, and all Taxes with respect to which the
Company or any Subsidiary of the Company is or could be liable, that are due
with respect to periods (or portions of periods) ending on or prior to the
Closing Date ("Pre-Closing Taxes"), (ii) all such Taxes that are due with
respect to periods ("Straddle Periods") that include but do not end on the
Closing Date to the extent attributable to the portion of the Straddle Period
ending at the close of business on the Closing Date ("Pre-Closing Straddle
Period Taxes"), which shall be calculated by means of a closing of the books and
records of the Company and its Subsidiaries as of the close of the Closing Date,
as if such taxable period ended as of the close of the Closing Date; provided
that exemptions, allowances or deductions that are calculated on an annual basis
(including, depreciation and amortization deductions) shall be allocated between
the period ending on the Closing Date and the period after the Closing Date in
proportion to the number of days in each such period, and (iii) all Claims
imposed on or sustained by the Purchaser or its affiliates (including the
Company and its Subsidiaries after the Closing Date), directly or indirectly, by
reason of or in connection with the foregoing amounts.
B. Pre-Closing Returns. The Shareholders will be responsible for
and will cause to be prepared and duly filed all Tax Returns of the Company and
its subsidiaries for all taxable periods ending on or before the Closing Date.
All such Tax Returns shall be prepared in a manner consistent with prior
periods. All such Tax Returns shall be submitted to the Purchaser no later than
thirty days prior to the due date and filing thereof, and the Purchaser shall
have the right to review
28
and comment thereon (without affecting the indemnification obligations of the
Shareholders under this Agreement). Upon reasonable review and comment by the
Purchaser, such Tax Returns, as modified by reasonable comments of the
Purchaser, shall be filed with applicable Taxing Authorities. The Shareholders
shall pay or cause to be paid any and all Taxes due with respect to such Tax
Returns.
C. Straddle Period Returns. The Purchaser will prepare or cause
to be prepared all Returns of the Company and its Subsidiaries for any and all
Straddle Periods. All such Tax Returns that are material shall be submitted to
the Shareholders no later than thirty days prior to the due date and filing
thereof, and the Shareholders shall have the right to review and comment
thereon. Upon reasonable review and comment by the Shareholders, such Tax
Returns, as modified by reasonable comments of the Shareholders, shall be filed
with applicable taxing authorities. Any Pre-Closing Straddle Period Taxes
payable by the Shareholders pursuant hereto shall be remitted to the Purchaser
at least ten business days prior to the due date for the payment of such Taxes
pursuant to written notice by the Purchaser of such due date.
D. Tax Information. After the Closing, the Shareholders, on the
one hand, and the Purchaser and the Company, on the other hand, will make
available to the other, as reasonably requested, all information, records or
documents relating to liabilities for Taxes for all periods prior to or
including the Closing Date and will preserve such information, records or
documents until six (6) months after the expiration of any applicable statute of
limitations (including extensions thereof) with respect to the assessment of
such Taxes.
E. Redeterminations of Tax Liability. If there is a
redetermination of the Pre-Closing Taxes or the Pre-Closing Straddle Period
Taxes of the Company or any of its subsidiaries pursuant to a "Final
Determination" (as defined below), the payments required to be made by the
Shareholders to the Purchaser pursuant to Section 6.4(A) and 6.4(B) hereof shall
be recomputed by substituting the amount of the Tax liability as so
redetermined. Such payment shall be made no later than three (3) business days
after the date that such payment is made to the relevant taxing authority by
reason of such redetermination. "Final Determination" shall mean (i) a decision,
judgment, decree or other order by any court of competent jurisdiction, which
has become final and is either no longer subject to appeal or for which a
determination not to appeal has been made; (ii) a closing agreement made under
Section 7121 of the Code or any comparable foreign, state, local, municipal or
other Taxing statute; (c) a final disposition by any Tax authority of a claim
for refund; or (d) any other written agreement or other state of facts which
results in a redetermination of Pre-Closing Taxes or Pre-Closing Straddle Period
Taxes becoming final and prohibits such Tax authority from seeking any further
legal or administrative remedies with respect to such Taxes.
SECTION 6.5 Conveyance Taxes. The Parties shall cooperate with one
another in the preparation, execution and filing of all Returns, questionnaires,
applications, or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp Taxes, any transfer,
recording, registration and other fees, and any similar Taxes which become
payable in connection with the Transactions that are required or permitted to be
filed on or before the Closing Date.
29
SECTION 6.6 No Solicitation. The Company shall not, and shall cause its
Representatives not to, and no Shareholder shall, during the period commencing
on the date hereof and ending with the earlier to occur of the Closing or the
termination of this Agreement in accordance with its terms, directly or
indirectly (i) solicit or initiate the submission of proposals or offers from
any Person for, (ii) participate in any discussions pertaining to, or (iii)
furnish any information to any Person other than the Company and its
Representatives relating to, any acquisition or purchase of any of the share
capital of the Company or all or a material portion of the assets of the
Company, or a merger, consolidation or business combination of the Company (or a
Subsidiary of the Company), or any Other Transaction (other than the Share
Purchase).
SECTION 6.7 Environmental Inspections.
A. Prior to the Closing, the Purchaser shall have the right to
conduct environmental and other tests, audits, studies and assessments of the
real property owned or leased by the Company (or a Subsidiary of the Company)
and the buildings and improvements thereon, and to review such records and
documents as may be required by the Purchaser to enable it to evaluate the
condition of and potential liabilities affecting such property.
B. If, in the course of the Purchaser's tests, audits, studies,
assessments and review pursuant to subsection (A) above, the Purchaser shall
determine that any of the Company's representations and warranties set forth in
Section 3.20 are untrue in any material respect, the Purchaser may terminate
this Agreement pursuant and subject to Section 8.1(F).
SECTION 6.8 Ordinary Course of Business. The Company (which term for
purposes of this Section 6.8 shall include any Subsidiary of the Company), from
the date hereof and until the Closing Date, except as may expressly be required
or permitted by the terms of this Agreement or except as may be necessary to
consummate any of the Acquisitions (other than issuing any Ordinary Shares or
Preference Shares):
(i) will continue to operate its business in the normal, usual
and customary manner in the ordinary course of business, consistent with prior
practice;
(ii) will not sell or otherwise dispose of or contract to sell or
otherwise dispose of, any of its properties or assets, other than in the
ordinary course of business;
(iii) except in each case in the ordinary course of business,
consistent with prior practice,
(a) will not incur any Indebtedness, obligations or
liabilities (fixed, contingent or other);
(b) will not enter into any commitments;
(c) will not cancel any debts or claims; and
(d) will not prepay any Indebtedness in advance of its
contractual maturity date.
30
(iv) will not make or commit to make any additions to its
property or any purchase of machinery or equipment, except for machinery and
equipment purchases in the ordinary course of business, consistent with past
practice, and normal maintenance and replacements;
(v) will not discharge or satisfy any Lien, except in the
ordinary course of business, consistent with past practices, and will not pay
any obligation or liability (absolute or contingent) other than current
liabilities or obligations under contracts then existing or thereafter entered
into in accordance with the terms of this Agreement, and commitments under
Leases existing on that date or incurred since that date;
(vi) will not create or permit to be created any Lien on any of
its tangible property;
(vii) will not transfer or create, or permit to be created, any
Lien on any Intangible Assets;
(viii) except in the ordinary course of business, consistent with
prior practice, will not increase the compensation payable or to become payable
to any of its directors, officers, employees, advisers, consultants, salesmen or
agents or otherwise alter, modify or change the terms of their employment or
engagement;
(ix) will not waive any rights of material value without fair and
adequate consideration;
(x) will not enter into, amend or terminate any Lease,
Governmental Authorization, Private Authorization, Material Agreement or
Employment Arrangement or any Contractual Obligation or transaction with any
Affiliate, except for amendments or terminations in the ordinary course of
business, consistent with prior practice, in accordance with the terms thereof
(in the case of any amendment or termination), and except for the termination of
all outstanding option, employment and severance agreements as of the Closing
Date;
(xi) will not amend or terminate and will keep in full force and
effect including without limitation renewing to the extent the same would
otherwise expire or terminate, all insurance policies and coverage;
(xii) will not enter into any other transaction or series of
related transactions which individually or in the aggregate is material to the
Company, except in the ordinary course of business, consistent with prior
practice;
(xiii) will not incur any Indebtedness owing to any Shareholder
and will not make any loans or advances to any Shareholder;
(xiv) will not split, combine or reclassify any of the Company's
share capital or issued or authorized the issuance of any securities in respect
of, in lieu of or in substitution of any shares of the Company's share capital;
(xv) will not issue, sell or otherwise dispose of any of its
share capital, or issue Option Securities or Convertible Securities or
preemptive rights or other rights to purchase or obtain
31
any of its share capital, and will not declare, set aside, or pay any dividend
or distributions with respect to its share capital, or redeem, purchase, or
otherwise acquire any of its share capital;
(xvi) will not amend any of its Organic Documents;
(xvii) will not change any method of accounting or accounting
practice or policy, except as required by Applicable Law or by U.K. GAAP;
(xviii) will not accelerate accounts receivable, delay accounts
payable, or liquidate inventory, except in the ordinary course of business
consistent with past practice;
(xix) will not make any material Tax election inconsistent with
past practice or settle or compromise any material federal, state, local or
foreign tax liability or agree to an extension of a statute of limitations; and
(xx) will not file or cause to be filed any amended Tax Return
with respect to the Company or any Subsidiary of the Company, file or cause to
be filed claim for refund of Taxes paid by or on behalf of the Company or any
Subsidiary of the Company, or prepare or file any Tax Return of the Company or
any Subsidiary of the Company inconsistent with past practice in preparing or
filing similar Tax Returns in prior periods or, on any such Tax Return, take any
position, make any election, or adopt any method that is inconsistent with
positions taken, elections made or methods used in preparing or filing similar
Tax Returns in prior periods, in each case except to the extent required by law.
ARTICLE 7
CONDITIONS TO CONSUMMATION OF THE SHARE PURCHASE
SECTION 7.1 Conditions to Each Party's Obligations to Effect the Share
Purchase. The respective obligations of each Party to effect the Share Purchase
shall be subject to the fulfillment at or prior to the Closing of the following
conditions, none of which may be waived:
A. Governmental Consents. All authorizations, consents, orders or
approvals of, or declarations or filings with, and all expirations of waiting
periods imposed by, any governmental or regulatory authority or agency which are
necessary for the consummation of the Transactions, including without limitation
the Share Purchase, shall have been filed, occurred or been obtained (all such
authorizations, orders, declarations, approvals, filings and consents and the
lapse of all such waiting periods being referred to as the "Requisite Regulatory
Approvals") and all such Requisite Regulatory Approvals shall be in full force
and effect.
B. No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the transactions contemplated by this Agreement
shall be in effect; nor shall there be any statute, rule or regulation enacted,
enforced or deemed applicable to the Share Purchase which makes the consummation
of the Share Purchase illegal.
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SECTION 7.2 Conditions to the Obligations of the Purchaser to Effect the
Share Purchase. The obligations of the Purchaser to effect the Share Purchase
shall be further subject to the satisfaction or written waiver by the Purchaser,
at or prior to the Closing, of the following conditions:
A. Absence of Material Adverse Changes. There shall not have
occurred any change since the Company's date of incorporation in the assets,
liabilities, business, operations, results of operations, financial condition or
prospects of the Company which has had, individually or in the aggregate, an
Adverse Effect on the Company.
B. Representations and Warranties; Performance of Obligations.
The obligations of the Company and the Shareholders required to be performed by
it or them at or prior to the Closing pursuant to the terms of this Agreement
shall have been duly performed and complied with and the representations and
warranties of the Company and the Shareholders contained in this Agreement shall
be true and correct as of the date of this Agreement and as of the Closing as
though made at and as of the Closing (except as otherwise specifically
contemplated by this Agreement and except as to any representation or warranty
which specifically relates to an earlier date) and the Company shall have
received certificates to that effect signed on behalf of the Company by the
chairman or president and the chief financial officer or chief accounting
officer of the Company and by each Shareholder.
C. Third-Party (Non-Governmental) Approvals. Any and all Private
Authorizations or notices to all Persons other than Authorities which are
necessary in connection with the consummation of the Share Purchase and the
Transactions and are required to be received, made or obtained by the Company or
the Shareholders, shall have been so received, made or obtained. Without
limiting the foregoing, all required consents by holders of Ordinary Shares to
the Share Purchase and the Transactions shall have been obtained.
D. Burdensome Condition. None of the Requisite Regulatory
Approvals shall impose any term, condition or restriction upon the Company, any
of its Subsidiaries, or the Purchaser that the Purchaser in good faith
reasonably determines would so materially adversely impact the economic or
business benefits of the Share Purchase and the Transactions as to render
inadvisable in the reasonable judgment of the Purchaser the consummation of the
Transactions.
E. Legal Opinion. The Purchaser shall have received the opinion
from counsel in the United Kingdom in form and substance satisfactory to it in
its sole discretion regarding the due organization of each Shareholder that is
an Entity, the enforceability of the Agreement and each Collateral Document with
respect to each Shareholder that is an Entity party thereto, and such other
matters as the Purchaser shall request.
F. Litigation. There shall be no pending or threatened Legal
Action which, in the judgment of the Purchaser, makes it inadvisable to proceed
with the Share Purchase and the Transactions; nor shall there be issued and in
effect any Injunction limiting or restricting the conduct of the business of the
Company by the Purchaser after the Share Purchase and the Transactions.
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G. Cancellation of Options. All outstanding options and other
securities convertible or exchangeable into share capital of the Company, if
any, shall have been canceled or exchanged.
H. Due Diligence. The Purchaser shall have satisfactorily (as
determined at the Purchaser's sole discretion) completed its due diligence
review, including without limitation: (i) the Purchaser shall have
satisfactorily completed its diligence with respect to business, legal,
accounting, environmental and tax matters; and (ii) the terms and amount of all
Indebtedness of the Company and its Subsidiaries immediately prior to the Share
Purchase shall be satisfactory to the Purchaser.
I. Financial Condition. The following shall be true and correct:
(i) on the Closing Date, the Company shall have at least $10,000 of cash on
hand; and (ii) the Company shall have a Pro Forma Runrate EBITDA of at least
Five Million Two Hundred Thousand Dollars ($5,200,000) for the fiscal year 1999,
and the Company shall have delivered evidence thereof satisfactory to the
Purchaser in its sole discretion.
J. Transaction Expenses. The Company shall have paid by wire
transfer or check all Transaction Expenses due and payable prior to or
substantially contemporaneously with the Closing, including without limitation,
a transaction fee in the amount of Three Hundred Thirty Thousand Dollars
($330,000) payable by the Company to Windward Capital Management L.L.C.
K. Resignations. Each member of the board of directors of the
Company, other than Ronald F. Valenta, James S. Robertson and Kevin Mellifont,
shall have tendered, effective at the Closing, their resignations as directors.
L. Financing Arrangements. The Purchaser shall have executed and
delivered a subordinated debt financing facility providing for the financing of
up to Twenty-Five Million Dollars (US$25,000,000) and the Purchaser shall have
executed and delivered a senior debt financing facility with a commitment of not
less than One Hundred Million Dollars (US$100,000,000).
M. Stock Transfer Form. Each Seller shall have delivered to the
Purchaser a fully-executed Stock Transfer Form, evidencing the transfer of all
of such Seller's Ordinary Shares to the Purchaser.
In addition to the foregoing, the Company will furnish the
Purchaser with such additional certificates, instruments or other documents in
the name or on behalf of the Company executed by appropriate officers or others,
including without limitation certificates or correspondence of governmental
agencies or authorities or nongovernmental third parties, to evidence
fulfillment of the conditions set forth in this Section 7.2 as the Purchaser may
reasonably request.
SECTION 7.3 Conditions to the Obligations of the Company and the
Shareholders to Effect the Share Purchase. The obligations of the Company and
the Shareholders to effect the Share Purchase shall be further subject to the
satisfaction or written waiver by the Company, at or prior to the Closing, of
the following conditions:
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A. Representations and Warranties; Performance of Obligations.
The obligations of the Purchaser required to be performed by it at or prior to
the Closing pursuant to the terms of this Agreement shall have been duly
performed and complied with and the representations and warranties of the
Purchaser contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing as though made
at and as of the Closing (except as otherwise specifically contemplated by this
Agreement and except as to any representation or warranty which specifically
relates to an earlier date) and the Company shall have received a certificate to
that effect signed by the president and chief financial officer (or other
authorized officer(s)) of the Purchaser.
B. In addition to the foregoing, the Purchaser will furnish the
Company with such additional certificates, instruments or other documents in the
name or on behalf of the Purchaser, executed by appropriate officers or others,
including without limitation certificates or correspondence of governmental
agencies or authorities or nongovernmental third parties, to evidence
fulfillment of the conditions set forth in this Section 7.3 as the Company may
reasonably request.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 Termination. This Agreement may be terminated at any time
prior to the Closing Date:
A. by mutual consent of the Purchaser and the Company;
B. by either the Purchaser or the Company if any permanent
injunction, decree or judgment by any Authority preventing the consummation of
the Share Purchase shall have become final and nonappealable;
C. by the Company: (i) in the event of a material breach of this
Agreement by the Purchaser that has not been cured, or if any representation or
warranty of the Purchaser shall have become untrue in any material respect,
which in either case is incapable of being cured by the Closing Date or will
prevent or delay consummation of the Share Purchase by or beyond the Termination
Date; or (ii) if the Closing shall not have occurred on or before the
Termination Date by reason of the failure of any condition precedent under
Section 7.1 or 7.3 hereof (unless the failure results primarily from the
Company's or any Shareholder's breaching any representation, warranty or
covenant contained in this Agreement or any Collateral Document);
D. by the Purchaser: (i) in the event of a material breach of
this Agreement by the Company or the Shareholders that has not been cured, or if
any representation or warranty of the Company or the Shareholders shall have
become untrue in any material respect, which in either case is incapable of
being cured by the Closing Date or will prevent or delay consummation of the
Share Purchase by or beyond the Termination Date; or (ii) if the Closing shall
not have occurred on or before the Termination Date by reason of the failure of
any condition precedent under Section 7.1
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or 7.2 hereof (unless the failure results primarily from the Purchaser's
breaching any representation, warranty or covenant contained in this Agreement
or any Collateral Document); or (iii) if the Company amends the Company
Disclosure Schedule pursuant to Section 10.12; or
E. by the Purchaser, if the Company or its Board of Directors or
any Shareholder takes any action prohibited by Section 6.8; or
F. by the Purchaser, if during the course of the Purchaser's due
diligence investigation, the Purchaser acquires knowledge of any Material Event
that renders inadvisable in the sole discretion of the Purchaser the
consummation of the Share Purchase and the Transactions.
SECTION 8.2 Effect of Termination. Except as provided in Sections 6.1
and 8.5, in the event of the termination of this Agreement pursuant to Section
8.1, this Agreement shall forthwith become void, there shall be no liability on
the part of any Party, or any of their respective officers or directors, to the
other and all rights and obligations of any Party shall cease; provided,
however, that such termination shall not relieve any Party from liability for
the breach of any of its representations, warranties, covenants or agreements
set forth in this Agreement.
SECTION 8.3 Amendment. This Agreement may be amended by the parties
hereto at any time prior to the Closing Date by an agreement in writing signed
by each of the parties hereto.
SECTION 8.4 Waiver. At any time prior to the Closing Date, except to the
extent Applicable Law does not permit, either the Purchaser or the Company may
extend the time for the performance of any of the obligations or other acts of
the other, subject, however, to the terms and conditions of Section 8.1, waive
any inaccuracies in the representations and warranties of the other contained
herein or in any document delivered pursuant hereto, and waive compliance by the
other with any of the agreements, covenants or conditions contained herein. Any
such extension or waiver shall be valid only if set forth in an agreement in
writing signed by the Party or parties to be bound thereby.
SECTION 8.5 Fees, Expenses and Other Payments.
A. In the event of termination of this Agreement, all costs and
expenses incurred in connection with this Agreement, the Share Purchase and the
Transactions, and compliance with Applicable Law and Contractual Obligations as
a consequence hereof and thereof, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred by the
parties shall be borne solely and entirely by the Party which has incurred such
costs and expenses.
B. In the event of a Closing of the Share Purchase, all
Transaction Expenses (including payment of stamp tax, if any) shall be paid by
the Company.
SECTION 8.6 Effect of Investigation. The right of any Party to terminate
this Agreement pursuant to Section 8.1 prior to Closing shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any Party, any Person controlling any such Party or any of their
respective Representatives whether prior to or after the execution of this
Agreement.
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ARTICLE 9
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
SECTION 9.1 Effectiveness of Representations, etc.
A. Regardless of any investigation made by or on behalf of any
other Party hereto, any Person controlling such Party or any of their respective
Representatives whether prior to or after the execution and consummation of this
Agreement:
(i) the representations, warranties, covenants and
agreements set forth in Sections 3.1, 3.3, 3.14, 3.15, 4.1, 5.1, 5.2,
5.3 and 6.4 and all claims in respect of any breach thereof shall
survive the Closing and be in full force and effect until ninety (90)
days following the expiration of the applicable statute of limitations,
including extensions thereof;
(ii) the representations, warranties, covenants and
agreements set forth in Section 3.20 and all claims in respect of any
breach thereof shall survive the Closing and be in full force and effect
for a period of five (5) years from and after the date of the Closing;
(iii) the representations, warranties, covenants and
agreements set forth in Article 3 and Article 4 and Article 5 hereof not
described in clauses (i) and (ii) above and all claims in respect of any
breach thereof shall survive the Closing and be in full force and effect
for a period of eighteen (18) months from and after the date of Closing;
and
(iv) claims in respect of any breach of any
representations, warranties, covenants and agreements arising from fraud
or willful misconduct shall survive the Closing and be in full force and
effect indefinitely.
B. None of the Shareholders or the Company shall have any
liability to the Purchaser, which shall have no claim whatsoever against them or
any of them, in respect of any breach of any of the representations, warranties
or covenants given by the Shareholders and the Company under Articles 3, 4 and 6
if and to the extent that such breach or claim occurs as a result of any
legislation not in force at the date hereof which takes effect retrospectively
or occurs as a result of any increase in the rates of taxation in force at the
date hereof or occurs as a consequence of a change in the interpretation of the
law after the date hereof.
C. The Shareholders shall not be liable under the representations
and warranties set forth in Articles 3 and 4 or in respect of any requirement to
make a payment pursuant to any claim under Article 9:
(i) in respect of any liability for Tax which would not
have arisen but for any claim, election, surrender, revocation or
disclaimer made or notice or consent given after Closing (other than one
the giving or the doing of which was taken into account in preparing the
Company Financial Statements) under the provision of any enactment or
regulation relating to Tax;
37
(ii) which arises or is increased because of timing
differences or changes in accounting practice or policy in future
accounts of the Company from those adopted in the Company Financial
Statements; and
(iii) for any Claim which would not have arisen or would
have been reduced or eliminated but for any act, omission, event,
transaction, arrangement, a default performed or allowed to occur by the
Purchaser or the Company after Closing, otherwise than in the ordinary
course of business or under a commitment entered into prior to the date
of this Agreement and which the Purchase knew or should have reasonably
known would give rise to a claim under this Agreement.
SECTION 9.2 Indemnification.
A. The Shareholders, jointly and severally, agree to make whole,
indemnify and hold the Purchaser and its Affiliates, partners, board members,
officers, employees, agents, successors and assigns (collectively, the "Buyer
Indemnified Parties") harmless as a result of, from or against:
(i) any and all Claims of the Buyer Indemnified Parties or
other Persons based upon, attributable to or resulting from any
inaccuracy in or breach of any representation or warranty on the part of
any one or more of the Company or any Shareholder under this Agreement
or any Collateral Document;
(ii) any and all Claims of the Buyer Indemnified Parties
or other Persons based upon, attributable to or resulting from the
breach of any covenant or other agreement on the part of any one or more
of the Company or any Shareholder under this Agreement or any Collateral
Document;
(iii) any and all Claims of the Buyer Indemnified Parties
or other Persons based upon any Tax payable as a result of or in
connection with the Share Purchase and the Transactions;
(iv) any and all Environmental Damages incurred by any
Buyer Indemnified Party arising from the presence of Hazardous Materials
upon, about or beneath the Real Property or the Former Real Property
during any periods through and including the Closing Date, or arising
from the generation, transportation or disposal or any Hazardous
Materials present on the Real Property or the Former Real Property or
associated with any operations or activities of the Company or any of
its Subsidiaries existing as of or due to acts or omissions on or prior
to the Closing Date, or arising in any manner whatsoever out of the
violation during periods through and including the Closing Date, of any
Environmental Requirements pertaining to the Real Property or the Former
Real Property and the activities thereon, whether or not disclosed on
the Company Disclosure Schedule or otherwise known by the Purchaser or
the Company or any of its Subsidiaries and regardless of whether the
existence of such Hazardous Material or the violation of Environmental
Requirements arose prior to the present ownership or operation of the
Real Property; provided, however, that any
38
Claim pursuant to this Section 9.2(iv) shall be made by the applicable
Buyer Indemnified Party or Parties prior to the date five (5) years
after the date of the Closing; and
(v) any and all Claims of the Buyer Indemnified Parties or
other Persons incident to the foregoing or to the enforcement of this
Section 9.2(A).
B. The Purchaser hereby agrees to make whole, indemnify and hold
the Company, the Shareholders and their respective Affiliates, agents, heirs,
successors and assigns (collectively, the "Company Indemnified Parties")
harmless as a result of, from or against:
(i) any and all Claims of the Company Indemnified Parties
or other Persons based upon, attributable to or resulting from any
inaccuracy in or breach of any representation or warranty on the part of
the Purchaser under this Agreement or any Collateral Document;
(ii) any and all Claims of the Company Indemnified Parties
or other Persons based upon, attributable to or resulting from the
breach of any covenant or other agreement on the part of the Purchaser;
and
(iii) any and all Claims of the Company Indemnified
Parties or other Persons incident to the foregoing or to the enforcement
of this Section 9.2(B).
C. Notwithstanding the foregoing:
(i) None of the Shareholders shall be required to pay any
amount for indemnification to the Buyer Indemnified Parties in
connection with Shareholder Limited Claims (as defined below) under this
Section 9.2 except to the extent the aggregate amount of such
Shareholder Limited Claims asserted against the Shareholders under this
Section 9.2 exceeds Two Hundred Fifty Thousand Dollars ($250,000) in the
aggregate, and then only with respect to such Shareholder Limited Claims
in excess of such sum;
(ii) The aggregate amount that the Shareholders shall be
required to pay for indemnification to the Buyer Indemnified Parties in
connection with Shareholder Limited Claims under this Section 9.2 shall
be limited to Three Million Dollars ($3,000,000) in the aggregate, and
shall not, in any event, exceed in value (as of the Closing Date) of the
consideration paid or delivered to the Shareholders pursuant to Article
2 (which shall be deemed to equal $403.55 per share of Purchaser Common
Stock); and
(iii) As used herein, "Shareholder Limited Claims" means
any Claim based solely on a breach of the representations and warranties
of the Company and the Shareholders set forth in Sections 3.2, 3.4, 3.5,
3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.16, 3.17, 3.18, 3.19,
3.21, 3.22, 3.23, 3.24, 3.25, 3.26, 3.27, 3.28 and 3.32.
D. Notwithstanding the foregoing:
(i) The Purchaser shall not be required to pay any amount
for indemnification to the Company Indemnified Parties in connection
with Purchaser Limited
39
Claims (as defined below) except to the extent the aggregate amount of
such Claims asserted against the Purchaser under this Section 9.2
exceeds One Hundred Thousand Dollars ($100,000) in the aggregate, and
then only with respect to such Claims in excess of such sum;
(ii) The aggregate amount that the Purchaser shall be
required to pay for indemnification to the Company Indemnified Parties
in connection with Purchaser Limited Claims under this Section 9.2 shall
be limited to Seven Hundred Thousand Dollars ($700,000) in the
aggregate;
(iii) As used herein, "Purchaser Limited Claims" means any
Claim based on a breach of the representations and warranties of the
Purchaser set forth in Section 4.1.
E. Subject to being indemnified by the Shareholders against all
reasonable related costs, the Purchaser shall take reasonable efforts to avoid
or mitigate any loss or liability which might give rise to a Claim under this
Agreement.
SECTION 9.3 Procedures Concerning Claims by Third Parties; Payment of
Damages; etc.
A. In the event that any Legal Action shall be instituted or
asserted by any Person other than such indemnified party in respect of which
payment may be sought hereunder, the indemnified party shall reasonably and
promptly cause written notice of the assertion of any Legal Action of which it
has knowledge which is covered by the indemnities under Section 9.2 to be
forwarded to the indemnifying party. In such event, unless in such indemnified
party's reasonable judgment a conflict of interest between the indemnified party
and the indemnifying party may exist in respect of the Claims, the indemnifying
party shall have the right, at its sole option and expense, to be represented by
counsel of its choice, which must be reasonably satisfactory to the indemnified
party, and to assume the defense of any Legal Action which relates to any Claims
instituted or asserted by any Person other than such indemnified party and
indemnified against hereunder, provided that the indemnifying party (x)
acknowledges its obligation to indemnify the indemnified party in respect of the
entire amount of all of the Claims asserted therein and (y) provides assurances
reasonably satisfactory to the indemnified party that the indemnifying party
will be financially able to satisfy the entire amount of all of the Claims
asserted therein. The indemnifying party shall not agree or enter into any
settlement of any Claim without obtaining (x) the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld, conditioned
or delayed and (y) an unconditional release of liability of the indemnified
party to the Person(s) asserting such Claim as part of such settlement. If the
indemnifying party elects to defend against, negotiate, settle or otherwise deal
with any Legal Action which relates to any such Claims, it shall within thirty
(30) days (or sooner, if the nature of the Legal Action so requires) notify the
indemnified party of its intent to do so. If the indemnifying party elects not
to defend against, negotiate, settle or otherwise deal with any Legal Action
which relates to any such Claims, fails to notify the indemnified party of its
election as herein provided or contests its obligation to indemnify the
indemnified party for such Claims under this Agreement, or the indemnified party
determines that a conflict of interest may exist, the indemnified party may
defend against, negotiate, settle or otherwise deal with such Legal Action. If
the indemnified party defends any Legal Action, then the indemnifying party
shall
40
reimburse the indemnified party for Claims incurred in defending such Legal
Action upon submission of periodic bills. The indemnified party may not settle
any Legal Action without the prior written consent of the indemnifying party,
which consent shall not be unreasonably withheld, conditioned or delayed. If the
indemnifying party shall assume the defense of any Legal Action instituted or
asserted by any Person other than an indemnified party, the indemnified party
may participate in the defense of such Legal Action at such party's own expense.
B. After any final judgment or award shall have been rendered by
a court, arbitration board (which may be engaged as required by law or contract
or upon the consent of each of the indemnifying party and the indemnified
parties) or administrative agency of competent jurisdiction and the expiration
of the time in which to appeal therefrom, or a settlement shall have been
consummated, or the indemnified party and the indemnifying party shall have
arrived at a mutually binding agreement with respect to a Legal Action
hereunder, the indemnifying party shall deliver to the indemnified party, by
wire transfer of immediately available funds, an amount equal to the sums due
and owing to the indemnified party within five business days after the date of
notice of such judgment or award.
C. The failure of the indemnified party to give reasonably prompt
notice of any Legal Action instituted or asserted by any Person other than such
indemnified party and indemnified against hereunder shall not release, waive or
otherwise affect the indemnifying party's obligations with respect thereto
except to the extent that the indemnifying party can demonstrate actual material
loss or material prejudice as a result of such failure. The indemnified parties
shall not be deemed to have notice of any Legal Action by virtue of knowledge
acquired on or prior to the Closing Date by an employee or other Representative
of the Company or the Purchaser.
D. No Legal Action to enforce a claim for indemnity shall be
stayed or dismissed for failure to join one or more indemnifying parties or to
permit an indemnifying party to cross-claim against another indemnifying party,
nor shall the failure to join an indemnifying party be deemed grounds for
preventing a separate or subsequent Legal Action to enforce a Claim for
indemnification against such party, each such Legal Action being deemed a
separate and independent Claim for indemnification.
E. Notwithstanding anything herein to the contrary, with respect
to any indemnification claim by the Purchaser for Claims arising out of any
breach or inaccuracy of any representation or warranty made by the Company and
the Shareholders set forth in Section 3.14 hereof with respect to Taxes, the
Shareholders shall have the right to participate in any Tax audit or
administrative, judicial or other proceeding to the extent such audit,
proceeding or determination affects the amount of the Claim for which the
Company and Shareholders are liable under Section 9.2 hereof.
SECTION 9.4 Manner of Indemnification.
A. The Buyer Indemnified Parties may seek payment for any and all
Claims for indemnification hereunder by cash payment from any or all of the
Shareholders. The Company shall remain liable for amounts which the Buyer
Indemnified Parties do not recover from the Shareholders. Any and all Claims
shall be satisfied by the payment of cash to the Buyer Indemnified
41
Parties for the full amount of such claim. If the indemnifying parties fail to
satisfy a Claim for indemnity through the payment of cash, the Buyer Indemnified
Parties, in their sole discretion, without prejudice to any other legal remedy
available to them, may offset the full or partial amount of such Claim against
any or all payments, where currently due and payable or payable in the future,
under any other agreement between the indemnifying party and the Purchaser.
B. Notwithstanding the foregoing, before seeking payment from
either of the Shareholders for any Claims for indemnification based upon a
breach of the representations made in Section 3.32, the Buyer Indemnified
Parties (or the Company at the direction of the Buyer Indemnified Parties) shall
first seek payment from the vendors under the Acquisition Agreements. If, after
taking all reasonable acts, including pursuing litigation, the Buyer Indemnified
Parties are unable to recover the full amount of such Claim(s) from such
vendors, then the Buyer Indemnified Parties may seek payment from the
Shareholders for the unpaid balance of such Claims.
C. For purposes of this Agreement, the Shareholders, without any
further action on the part of any such Shareholder, shall be deemed to have
consented to the appointment of the Shareholder Representative as
attorney-in-fact for and on behalf of each such Shareholder, and the taking by
the Shareholder Representative of any and all actions and the making of any
decisions required or permitted to be taken by him under this Agreement,
including the exercise of the power to (i) agree to, negotiate, enter into
settlements and compromises of and comply with the orders of courts and awards
of arbitrators with respect to Claims of the Buyer Indemnified Parties, (ii)
resolve any Claims asserted by the Buyer Indemnified Parties, and (iii) take all
actions necessary in the judgment of the Shareholder Representative for the
accomplishment of the foregoing and all of the other terms, conditions and
limitations of this Agreement. Accordingly, the Shareholder Representative has
unlimited authority and power to act on behalf of each Shareholder with respect
to this Agreement and the disposition, settlement or other handling of all
Claims asserted by the Buyer Indemnified Parties, rights or obligations arising
from and taken pursuant to this Agreement. The Shareholders will be bound by all
actions taken by the Shareholder Representative in connection with this
Agreement, and the Purchaser shall be entitled to rely in all respects on any
action or decision of the Shareholder Representative. The Shareholder
Representative will incur no liability with respect to any action taken or
suffered by him in reliance upon any notice, direction, instruction, consent,
statement or other document believed by him to be genuine and to have been
signed by the proper person (and shall have no responsibility to determine the
authenticity thereof), nor for any other action or inaction, except his own
willful misconduct or gross negligence. At any time, the holders of a majority
in interest of the Ordinary Shares may appoint a new Shareholder Representative
by written consent by sending notice and a copy of the written consent
appointing such new Shareholder Representative signed by the holders of a
majority in interest of the Ordinary Shares to the Purchaser. Such appointment
will be effective upon the later of the date indicated in the consent or the
date such consent is received by the Purchaser.
SECTION 9.5 Exclusive Remedy. The indemnification provisions set forth
in this Article 9 and in Section 6.4 shall be the exclusive remedy following and
subject to the Closing for any breaches or alleged breaches of any
representation, warranty or covenant contained in this Agreement or any
Collateral Document, except for breaches arising from intentional fraud or
intentional misconduct.
42
SECTION 9.6 Net Recovery.
A. The amount to which a Buyer Indemnified Party or a Company
Indemnified Party may become entitled in respect of any Claim under this Article
9 shall be reduced by any insurance or other third party recovery, reimbursement
or benefit received in respect of such Claim (other than any net tax benefit
described in Section 9.6(B) below) before the expiration of two years after
payment of such Claim by the indemnifying party. The amount of any such
recovery, less all reasonable costs, charges and expenses incurred by the
relevant Buyer Indemnified Party or Company Indemnified Party, as the case may
be, in obtaining such recovery from the third party, shall be repaid by the
relevant Buyer Indemnified Party or Company Indemnified Party, as the case may
be, to the relevant indemnifying Party promptly upon the receipt thereof from
the third party.
B. The amount of any Claim for which indemnification is provided
shall be (A) increased to take account of any net tax cost incurred by the
indemnified party arising from the receipt of indemnity payments hereunder
(grossed up for such increase) and (B) reduced to take account of any net tax
benefit realized by the indemnified party arising from the incurrence or payment
of any such Loss. In computing the amount of any such tax cost or tax benefit,
the indemnified party shall be deemed to recognize all other items of income,
gain, loss, deduction or credit before recognizing any item arising from the
receipt of any indemnity payment hereunder or the incurrence or payment of any
indemnified Loss. Any indemnification payment hereunder shall initially be made
without regard to this paragraph and shall be increased or reduced to reflect
any such net tax cost (including gross-up) or net tax benefit only after the
indemnified party has Actually Realized such cost or benefit. For purposes of
this Agreement, an indemnified party shall be deemed to have "Actually Realized"
a net tax cost or a net tax benefit to the extent that, and at such time as, the
amount of Taxes payable by such indemnified party is increased above or reduced
below, as the case may be, the amount of Taxes that such indemnified party would
be required to pay but for the receipt of the indemnity payment or the
incurrence or payment of such Loss, as the case may be. The amount of any
increase or reduction hereunder shall be adjusted to reflect any final
determination (which shall include the execution of Form 870-AD or successor
form) with respect to the indemnified party's liability for taxes, and payments
among the parties to reflect such adjustment shall be made if necessary. In the
event subsequent facts result in a reduction of a tax benefit (due, for
instance, to a carryback of losses), the amount of such tax benefit shall be
repaid to the indemnified party by the indemnifying party.
SECTION 9.7 Indemnification of Officers and Directors. From and after
the Closing Date, the Company shall indemnify persons who served as directors,
officers and agents of the Company with respect to matters arising out of their
conduct in such capacities on or before the Closing in accordance with and
subject to the provisions of the Company's current Memorandum of Association and
Articles of Association as delivered to the Purchaser prior to the execution of
this Agreement until the date that is three years after the Closing Date.
43
ARTICLE 10
GENERAL PROVISIONS
SECTION 10.1 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered or transmitted, and shall be effective upon
receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses or sent by electronic transmission to the facsimile number specified
below (or at such other address or facsimile number for a party as shall be
specified by like changes of address):
A. If to the Purchaser:
Mobile Storage Group, Inc.
2450 Foothill Blvd., 2nd Floor
La Crescenta, California 91214
Attention: Ronald F. Valenta
Facsimile No.: (818) 541-9260
with copies to:
Windward Capital Management LLC
1177 Avenue of the Americas, 42nd Floor
New York, New York 10036
Attn: Peter S. Macdonald
Facsimile No.: (212) 382-6534
and
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, California 90071
Attn: Jonathan K. Layne, Esquire
Facsimile No.: (213) 229-7520
B. If to the Company or the Shareholders:
Mobile Storage (U.K.) Limited
c/o Mobile Storage Group, Inc.
2450 Foothill Blvd., 2nd Floor
La Crescenta, California 91214
Attention: Ronald F. Valenta
Facsimile No.: (818) 541-9260
with copies to:
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BP Collins, Solicitors
Collins House
32-38 Station Road
Gerrards Cross
Buckinghamshire
SL9 8EL United Kingdom
Attn.: David Stanning, Esquire
Facsimile No.: (44) 1753 889851
Windward Capital Management LLC
1177 Avenue of the Americas, 42nd Floor
New York, New York 10036
Attn: Peter S. Macdonald
Facsimile No.: (212) 382-6534
and
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, California 90071
Attn: Jonathan K. Layne, Esquire
Facsimile No.: (213) 229-7520
SECTION 10.2 Headings. The headings contained in this Agreement are for
purposes of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 10.3 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Share Purchase is not affected in any manner Adverse to any
party. Upon determination that any term or other provision is invalid, illegal
or incapable of being enforced, the Purchaser and the Company shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible to the fullest extent permitted by Applicable Law
in an acceptable manner to the end that the Transactions are fulfilled to the
extent possible.
SECTION 10.4 Entire Agreement. This Agreement (together with the Company
Disclosure Schedule, the Purchaser Disclosure Schedule and the other Collateral
Documents delivered in connection herewith), constitutes the entire agreement of
the Parties and supersedes all prior agreements and undertakings, both written
and oral, between the Parties, or any of them, with respect to the subject
matter hereof.
SECTION 10.5 Assignment. This Agreement shall not be assigned by
operation of law or otherwise and any purported assignment shall be null and
void; provided, however, that the Purchaser may assign all or any portion of
their rights and obligations under this Agreement to any Affiliate of the
Purchaser.
45
SECTION 10.6 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each Party, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any Person any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 10.7 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the substantive laws of the State of New York
governing contracts made and to be performed in such jurisdiction, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law.
SECTION 10.8 Specific Enforcement The Company and the Shareholders
acknowledge that the Company and its business are unique and that the Purchaser
will have no adequate remedy at law and may suffer irreparable damage if the
Company or the Shareholders breach any covenant contained herein or fail to
perform any of their obligations under this Agreement. Accordingly, the Company
and the Shareholders agree that the Purchaser shall have the right, in addition
to any other rights which they may have, to specific performance and equitable
injunctive relief if the Company or the Shareholders shall fail or threaten to
fail to perform any of their obligations under this Agreement.
SECTION 10.9 Consent to Jurisdiction.
A. Each Party, by its signature hereto, hereby submits to
personal jurisdiction and waives any objection as to venue in the state of New
York. Any controversy, dispute or claim arising out of, in connection with, or
in relation to the interpretation, performance or breach of this Agreement,
including any claim based on contract, tort or statute, shall be adjudicated by
a court of competent jurisdiction located in New York, New York, subject to the
provisions of Section 10.9(B) below.
B. At the request of any Party hereto, and subject to the rights
of the Purchaser pursuant to Section 10.8 and to the rights of the parties under
Section 10.9(C), any controversy, dispute or claim arising out of, in connection
with, or in relation to the interpretation, performance or breach of this
Agreement, including any claim based on contract, tort or statute, shall be
settled by arbitration conducted in New York, New York, before and in accordance
with the then existing Rules of Commercial Arbitration of the American
Arbitration Association ("AAA"), and judgment upon any award rendered by the
arbitrator may be entered by any state or federal court having jurisdiction
thereof. Any controversy concerning whether a dispute is an arbitrable dispute
shall be determined by the arbitrator. The parties intend that this agreement to
arbitrate be valid, specifically enforceable and irrevocable. The designation of
a situs or specifically a governing law for this Agreement or the arbitration
shall not be deemed an election to preclude application of the Federal
Arbitration Act, if it would be applicable. The sole arbitrator, who shall be
selected in accordance with the procedures of the AAA, shall be a retired or
former judge of any federal court appointed under Article III of the United
States Constitution who presided in a court located in the state in which the
arbitration is conducted, or a retired or former judge of a trial court of
general jurisdiction or a higher court of the state in which the arbitration is
conducted. The arbitrator shall award to the prevailing party in any arbitration
proceeding commenced hereunder, and the court shall include in its judgment for
the prevailing party in any claim arising under this Agreement or relating to
the
46
transactions contemplated hereby, the prevailing party's costs and expenses
(including expert witness expenses and reasonable attorneys' fees) of
investigating, preparing and presenting such arbitration claim or cause of
action.
C. Any Party hereto may request a court of competent jurisdiction
in to grant provisional injunctive relief to such Party solely for the purpose
of maintaining the status quo until an arbitrator can render an award on the
matter in question and such award can be confirmed by a court having
jurisdiction thereof.
SECTION 10.10 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different Parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 10.11 Mutual Drafting. This Agreement is the result of the joint
efforts of the Purchaser and the Company, and each provision hereof has been
subject to the mutual consultation, negotiation and agreement of the parties and
there shall be no construction against any Party based on any presumption of
that Party's involvement in the drafting thereof.
SECTION 10.12 Disclosure Supplements. From time to time prior to the
Closing Date, each Party will promptly supplement or amend its respective
Disclosure Schedule delivered in connection herewith with respect to any matter
which, if existing, occurring or known at the date of this Agreement, would have
been required to be set forth or described in such Company Disclosure Schedule
or which is necessary to correct any information in such Company Disclosure
Schedule which has been rendered inaccurate thereby. If the Company amends or
supplements the Company Disclosure Schedule prior to the Closing Date, the
Purchaser may, in its sole discretion, (i) elect to terminate the Agreement
pursuant to Article 8 or (ii) waive its right to terminate the Agreement for
such reason and consummate the Transactions. In the event that the Purchaser
waives its right to terminate the Agreement for such reason and the Share
Purchase and the Transactions are consummated, neither the Purchaser nor any
other Buyer Indemnified Party shall be deemed to have waived any right to
indemnity pursuant to Article 9 for breach of the representation, warranty or
covenant to which such amended or supplemented disclosure applies, and the
Purchaser or any other Buyer Indemnified Party shall be entitled to seek such an
indemnity pursuant to Article 9 with respect to the representation, warranty or
covenant to which such amended or supplemented disclosure applies as if such
supplemented disclosure had not been made.
SECTION 10.13 Company Disclosure Schedule. The Company Disclosure
Schedule shall be organized in sections corresponding to the section numbers
contained in this Agreement. Disclosures in the Company Disclosure Schedule
shall be deemed to apply to only to the particular section under which they
appear regardless of whether such statements could be otherwise deemed to apply
to other sections of this Agreement.
47
ARTICLE 11
DEFINITIONS
As used herein, unless the context otherwise requires, the following
terms (or any variant in the form thereof) have the following respective
meanings. Terms defined in the singular shall have a comparable meaning when
used in the plural, and vice versa, and the reference to any gender shall be
deemed to include all genders. Unless otherwise defined or the context otherwise
clearly requires, terms for which meanings are provided herein shall have such
meanings when used in the Disclosure Schedules and each Collateral Document,
notice, certificate, communication, opinion or other document executed or
required to be executed pursuant hereto or thereto or otherwise delivered, from
time to time, pursuant hereto or thereto. Unless otherwise specifically provided
herein, all references to monetary amounts in this Agreement, including the
schedules and exhibits hereto, are in United States Dollars.
AAA shall have the meaning given to it in Section 10.9(B).
ACTUAL FUNDED LIABILITIES shall have the meaning given to it in
Section 2.2(C).
ACQUISITION AGREEMENTS shall mean the definitive acquisition
documents executed in connection with the Acquisitions.
ACQUISITION DISCLOSURE BUNDLES shall mean the disclosure
materials provided to the Company by the sellers in connection with the
Acquisitions, copies of which are attached hereto as Exhibit C.
ACQUISITIONS shall mean the transactions described in the
Acquisition Schedule attached hereto.
ADVERSE, ADVERSELY, when used alone or in conjunction with other
terms (including without limitation "Affect," "Change" and "Effect") shall mean,
with respect to the Company, or to the Purchaser, as the case may be, any Event
which could reasonably be expected to (a) adversely affect the validity or
enforceability of this Agreement or any Collateral Document executed or required
to be executed pursuant hereto or thereto, or (b) adversely affect the business,
properties, assets, results of operations, financial condition or prospects of
the Company or any of its Subsidiaries or the Purchaser, as the case may be, or
(c) impair the ability of the Company and/or and of its Subsidiaries or the
Purchaser, as applicable, to fulfill its obligations under the terms of this
Agreement or any Collateral Document executed or required to be executed
pursuant hereto or thereto, or (d) adversely affect the aggregate rights and
remedies of the Purchaser or the Company and/or any of its Subsidiaries, as the
case may be, under this Agreement or any Collateral Document executed or
required to be executed pursuant hereto or thereto, in all cases, unless
otherwise specifically set forth, in a material respect or manner or to a
material degree.
AFFILIATE, AFFILIATED shall mean, with respect to any Person, (a)
any other Person at the time directly or indirectly controlling, controlled by
or under direct or indirect common control with such Person, (b) any other
Person of which such Person at the time owns, or has the right to
48
acquire, directly or indirectly, twenty percent (20%) or more of any class of
the capital stock or beneficial interest, (c) any other Person which at the time
owns, or has the right to acquire, directly or indirectly, twenty percent (20%)
or more of any class of the capital stock or beneficial interest of such Person,
(d) any executive officer or director of such Person, (e) with respect to any
partnership, joint venture or similar Entity, any general partner thereof, and
(f) when used with respect to an individual, shall include any member of such
individual's immediate family or a family trust.
AGREEMENT shall mean this Share Purchase Agreement as originally
in effect, including unless the context otherwise specifically requires, all
schedules, including the Disclosure Schedules and exhibits hereto, and as the
same may from time to time be supplemented, amended, modified or restated in the
manner herein or therein provided.
APPLICABLE LAW shall mean any Law of any Authority, whether
domestic or foreign, including without limitation all state, U.S. federal and
United Kingdom securities laws and Environmental Laws and European Union
Directives and Regulations, to or by which a Person or it or any of its business
or operations is subject or any of its property of assets is bound.
AUTHORITY shall mean any governmental or quasi-governmental
authority, whether administrative, executive, judicial, legislative or other, or
any combination thereof, including without limitation any federal, state,
territorial, county, municipal or other government or governmental or
quasi-governmental agency, arbitrator, authority, board, body, branch, bureau,
central bank or comparable agency or Entity, commission, corporation, court,
department, instrumentality, master, mediator, panel, referee, system or other
political unit or subdivision or other Entity of any of the foregoing, whether
domestic or foreign.
BEST EFFORTS shall mean commercially reasonable, good faith
efforts.
BUYER INDEMNIFIED PARTIES shall have the meaning given to it in
Section 9.2(A).
CCC shall have the meaning given to it in Section 2.1.
CLAIM shall mean any debt, liability, obligation, loss, damage
(including any indirect or consequential damage), deficiency, assessment or
penalty, together with any Legal Action, pending or threatened, or any claim or
judgment of whatever kind and nature relating thereto, and all fees, costs,
expenses and disbursements (including without limitation reasonable attorneys'
and other legal fees, costs and expenses) relating to any of the foregoing.
CLOSING shall have the meaning given to it in Section 1.1.
CLOSING DATE shall mean June 30, 2000, or such later date (prior
to the Termination Date) as all the conditions to Closing have been waived
and/or satisfied.
CODE shall mean the United States Internal Revenue Code of 1986,
as amended.
COLLATERAL DOCUMENT shall mean any agreement, instrument,
certificate, opinion, memorandum, schedule or other document delivered by a
Party pursuant to this Agreement or in
49
connection with the Transactions, including, without limitation, this Agreement,
the Company Disclosure Schedule, the Purchaser Disclosure Schedule.
COMPANY shall have the meaning given to it in the preamble to
this Agreement.
COMPANY DISCLOSURE SCHEDULE shall mean the Company Disclosure
Schedule attached hereto.
COMPANY FINANCIAL STATEMENTS shall have the meaning given to it
in Section 3.2.
COMPANY INDEMNIFIED PARTIES shall have the meaning given to it in
Section 9.2(B).
CONTRACT, CONTRACTUAL OBLIGATION shall mean, with regard to any
Person, any term, condition, provision, representation, warranty, agreement,
covenant, undertaking, commitment, indemnity or other obligation set forth in
the Organic Documents of such Person or which is outstanding or existing under
any instrument, contract, lease or other contractual undertaking (including
without limitation any instrument relating to or evidencing any Indebtedness) to
which such Person is a party or by which it or any of its business is subject or
property or assets is bound.
CONTROL (including the terms "controlled," "controlled by" and
"under common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management or policies of a Person, or the disposition of such Person's assets
or properties, whether through the ownership of stock, equity or other
ownership, by contract, arrangement or understanding, or as trustee or executor,
by contract or credit arrangement or otherwise.
CONVERTIBLE SECURITIES shall mean any evidences of indebtedness,
share capital (other than Ordinary Shares) or other securities directly or
indirectly convertible into or exchangeable for equity securities, whether or
not the right to convert or exchange thereunder is immediately exercisable or is
conditioned upon the passage of time, the occurrence or non-occurrence or
existence or non-existence of some other Event, or both.
CURRENT USES shall have the meaning given to it in Section
3.6(C).
DISTRIBUTION shall mean, with respect to a Party: (a) the
declaration or payment of any dividend (except dividends payable in common stock
of such Party) on or in respect of any shares of any class of capital stock of
such Party or any equity securities of any Subsidiary owned by a Person other
than such Party or a Subsidiary, (b) the purchase, redemption or other
retirement of any shares of any class of capital stock of such Party or any
shares of capital stock of any Subsidiary owned by a Person other than such
Party or a Subsidiary, and (c) any other distribution on or in respect of any
shares of any class of capital stock of such Party or any shares of capital
stock of any Subsidiary owned by a Person other than such Party or a Subsidiary.
EBITDA shall mean, as of any date of determination, with respect
to the applicable Reference Period, an amount equal to (i) consolidated net
income (or loss) for such Reference Period, plus (ii) consolidated interest
expense for such Reference Period, plus (iii) the amount of taxes, based on or
measured by income, deducted in the determination of consolidated net income
50
(or loss) for such Reference Period, plus (iv) the amount of depreciation and
amortization expense deducted in the determination of consolidated net income
(or loss) for such Reference Period, minus (v) non-recurring gains for such
Reference Period (including without limitation any such gains on the sale or
disposal of assets other than in the ordinary course of business), plus (vi)
non-recurring losses for such Reference Period (including without limitation any
such gains on the sale or disposal of assets other than in the ordinary course
of business), in each case determined with respect to the Company and its
Subsidiaries on a consolidated basis and in accordance with U.K. GAAP.
EMPLOYMENT ARRANGEMENT shall mean, with respect to any Person,
any employment, consulting, retainer, severance or similar contract, agreement,
plan, arrangement or policy (exclusive of any which is terminable within thirty
(30) days without liability, penalty or payment of any kind by such Person or
any Affiliate), or providing for severance, termination payments, insurance
coverage (including any self-insured arrangements), workers compensation,
disability benefits, life, health, medical, dental or hospitalization benefits,
supplemental unemployment benefits, vacation or sick leave benefits, pension or
retirement benefits or for deferred compensation, profit-sharing, bonuses, stock
options, stock purchase or appreciation rights or other forms of incentive
compensation or post-retirement insurance, compensation or benefits, or any
collective bargaining or other labor agreement.
ENTITY shall mean any corporation, firm, unincorporated
organization, association, partnership, limited liability company, trust, estate
of a deceased, insane or incompetent individual, business trust, joint stock
company, joint venture or other organization, entity or business, whether acting
in an individual, fiduciary or other capacity, or any Authority.
ENVIRONMENTAL DAMAGES shall mean all claims, judgments, damages,
losses, penalties, fines, liabilities (including strict liability),
encumbrances, liens, costs and expenses of defense of a claim (whether or not
such claim is ultimately defeated), good faith settlements of judgment, and
costs and expenses of reporting, investigating, removing and/or remediating
Hazardous Materials, of whatever kind or nature, contingent or otherwise,
matured or unmatured, foreseeable or unforeseeable, including without limitation
reasonable attorney's fees and disbursements and consultants' fees, any of which
arise out of or relate to the existence of Hazardous Materials at, upon, about
or beneath the Real Property or Former Real Property, or migrating or
threatening to migrate to or from the Real Property or Former Real Property or
transported to, from, or across any Real Property or Former Real Property.
ENVIRONMENTAL LAWS shall have the meaning given to it in Section
3.20(A).
ENVIRONMENTAL PERMITS shall have the meaning given to it in
Section 3.20(E).
ENVIRONMENTAL REQUIREMENTS shall mean all applicable statutes,
regulations, rules, ordinances, codes, policies, advisories, actions, licenses,
permits, orders, approvals, plans, authorizations, concessions, franchises and
similar items of all federal state, and local governmental branches agencies,
departments, commissions, boards, bureaus or instrumentalities domestic and
foreign, having jurisdiction and all applicable judicial and administrative and
regulatory decrees, judgments and orders and all covenants running with the land
that relate to the protection of health or the environment, including without
limitation those that relate to the existence, handling,
51
manufacture, treatment, storage, use, generation, release, discharge, refining,
recycling, reclaiming or disposal of Hazardous Materials.
EQUITY HOLDERS shall mean the holders of the Company's share
capital, including without limitation the holders of the Company's Ordinary
Shares and Preference Shares.
ESTIMATED FUNDED LIABILITIES shall have the meaning given to it
in Section 2.2(C).
EVENT shall mean the occurrence or existence of any act, action,
activity, circumstance, condition, event, fact, failure to act, omission,
incident or practice, or any set or combination of any of the foregoing.
FINAL DETERMINATION shall have the meaning given to it in Section
6.4(E).
FORMER REAL PROPERTY shall mean any real property in which the
Company or any of its Subsidiaries heretofore held but no longer holds a fee,
leasehold or other legal, beneficial or equitable interest or otherwise operated
or occupied, but no longer does so.
FUNDED LIABILITIES shall mean the sum of (x) the Indebtedness of
the Company and its Subsidiaries and (y) the total liquidation preference of the
issued and allotted Preference Shares.
FUNDED LIABILITIES INDEPENDENT ACCOUNTANTS shall have the meaning
given to it in Section 2.2(C).
FUNDED LIABILITIES NOTICE OF DISAGREEMENT shall have the meaning
given to it in Section 2.2(C).
FUNDED LIABILITIES STATEMENT shall have the meaning given to it
in Section 2.2(C).
GOVERNMENTAL AUTHORIZATIONS shall mean, with regard to any
Person, all approvals, concessions, consents, franchises, licenses, permits,
plans, registrations and other authorizations of all Authorities that are
material to such Person.
GOVERNMENTAL ENTITY shall mean any federal, state or local
governmental agency, board or authority.
GOVERNMENTAL FILINGS shall mean all filings, including franchise
and similar Tax filings, and the payment of all fees, assessments, interest and
penalties associated with such filings, with all Authorities.
GUARANTY OR GUARANTEED shall mean any agreement, undertaking or
arrangement by which a Party guarantees, endorses or otherwise becomes or is
liable, directly or indirectly, contingently or otherwise, upon any Indebtedness
of any other Person including without limitation the payment of amounts drawn
down by beneficiaries of letters of credit (other than by endorsements of
negotiable instruments for deposit or collection in the ordinary course of
business). The amount of the obligor's obligation under any Guaranty shall be
deemed to be the outstanding amount (or
52
maximum permitted amount, if larger) of the Indebtedness directly or indirectly
guaranteed thereby (subject to any limitation set forth therein).
HAZARDOUS MATERIALS shall mean any substance: (A) the presence of
which requires reporting, investigation, removal or remediation under any
Environmental Requirement; (B) that is defined as a "hazardous waste,"
"hazardous substance" or "pollutant" or "contaminate" under any Environmental
Requirement; (C) that is toxic, explosive, corrosive, flammable, ignitable,
infectious, radioactive, reactive, carcinogenic, mutagenic or otherwise
hazardous and is regulated under any Environmental Requirement; (D) the presence
of which on any Real Property or Former Real Property causes a nuisance upon any
Real Property or Former Real Property or to adjacent properties or poses a
hazard to the health or safety of persons on or about any Real Property or
Former Real Property; (E) the presence of which on adjacent properties
constitutes a trespass by the Company or any of its Subsidiaries; (F) that
contains gasoline, diesel fuel or other petroleum hydrocarbons; or (G) that
contains PCBs, asbestos or urea formaldehyde foam insulation.
HAZARDOUS MATERIALS ACTIVITIES shall have the meaning given to it
in Section 3.20(D).
HSR ACT shall mean the Hart-Scott-Rodino Antitrust Improvement
Act of 1976, and the rules and regulations thereunder, all as from time to time
in effect, or any successor law, rules or regulations, and any reference to any
statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
INDEBTEDNESS shall mean, with respect to a Party as of any date
of determination, (a) all items which in accordance with U.K. GAAP would be
included in determining total liabilities as shown on the liability side of a
balance sheet of such Party and its Subsidiaries on a consolidated basis
(adjusted to reflect the then full principal amount of all such items), except
(i) items of capital stock or of surplus on the consolidated balance sheet of
such Party, (ii) deferred Taxes, and (iii) current liabilities, other than (x)
short term debt and (y) the current portion of such Party's long term debt and
capital leases; (b) all obligations secured by any Lien to which any property or
asset owned or held by such Party is subject, whether or not the obligation
secured thereby shall have been assumed; and (c) to the extent not otherwise
included, all Contractual Obligations of such Party constituting capitalized
leases and all obligations of such Party with respect to Leases constituting
part of a sale and leaseback arrangement and off-balance sheet financing
(including, without limitation, synthetic leases and other similar financing
arrangements).
INITIAL PER SHARE CONSIDERATION shall have the meaning given to
it in Section 2.2(B).
INJUNCTION shall have the meaning given to it in Section 7.1(B).
INTANGIBLE ASSETS shall mean all assets and property lacking
physical properties the evidence of ownership of which must customarily be
maintained by independent registration, documentation, certification,
recordation or other means.
INTELLECTUAL PROPERTY means all (a) patents, patent applications,
patent disclosures, and improvements thereto, (b) trademarks, service marks,
trade dress, logos, trade names, and
53
corporate names and registrations and applications for registration thereof, (c)
copyrights and registrations and applications for registration thereof, (d) mask
works and registrations and applications for registration thereof, (e) computer
software, data, and documentation, (f) trade secrets and confidential business
information (including ideas, formulas, compositions, inventions (whether
patentable or unpatentable and whether or not reduced to practice), know-how,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposal, technical data,
copyrightable works, financial, marketing, and business data, pricing and cost
information, business and marketing plans, and customer and supplier lists and
information), (g) other proprietary rights, and (h) copies and tangible
embodiments thereof (in whatever form or medium).
KNOWLEDGE of a Party means actual knowledge after reasonable
investigation (or what such party would have known if reasonable investigation
had been made).
LAW shall mean any (a) administrative, judicial, legislative or
other action, code, consent decree, constitution, decree, directive, enactment,
finding, guideline, law, injunction, interpretation, judgment, order, ordinance,
policy statement, proclamation, promulgation, regulation, requirement, rule,
rule of law, rule of public policy, settlement agreement, statute, or writ or
any Authority, domestic or foreign; (b) the common law, or other legal or
quasi-legal precedent; or (c) arbitrator's, mediator's or referees award,
decision, finding or recommendation; including, in each such case or instance,
any interpretation, directive, guideline or request, whether or not having the
force of law including, in all cases, without limitation any particular section,
part or provision thereof.
LEASE shall mean any lease or sublease of property, whether real,
personal or mixed, and all amendments thereto.
LEGAL ACTION shall mean any litigation or legal or other actions,
arbitrations, counterclaims, investigations, proceedings, requests for material
information by or pursuant to the order of any Authority, or suits, at law or in
arbitration, equity or admiralty commenced by any Person, whether or not
purported to be brought on behalf of a party hereto affecting such party or any
of such party's business, property or assets.
LIEN shall mean any of the following: mortgage; lien (statutory
or other); preference, priority or other security agreement, arrangement or
interest; hypothecation, pledge or other deposit arrangement; assignment; fixed
or floating charge; levy; executory seizure; attachment; garnishment;
encumbrance (including any easement, exception, variance, reservation or
limitation, right of way, zoning restriction, building or use restriction,
encroachment, and the like except utility and similar easements which do not
interfere in any material respect with the use of the property involved or which
materially reduces the fair market value of such property); conditional sale,
title retention or other similar agreement, arrangement, device or restriction;
preemptive or similar right; any financing lease involving substantially the
same economic effect as any of the foregoing; the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction; restriction on sale, transfer, assignment, disposition, Lease or
other alienation, or any option, equity, claim or right of or obligation to, any
other Person, of whatever kind and character.
54
MATERIAL for the purposes of this Agreement, shall, unless
specifically stated to the contrary, be deemed not to include amounts equal to
or less than Fifty Thousand Dollars ($50,000).
MATERIAL AGREEMENT OR MATERIAL COMMITMENT shall mean, with
respect to a Party, any Contractual Obligation which (a) was not entered into in
the ordinary course of business, (b) was entered into in the ordinary course of
business which (i) involves the purchase, sale or lease of goods or materials or
performance of services aggregating more than Fifty Thousand Dollars ($50,000),
(ii) extends for more than three (3) months, or (iii) is not terminable on
thirty (30) days or less notice without penalty or other payment, (c) involves
Indebtedness for money borrowed in excess of Fifty Thousand Dollars ($50,000),
(d) is or otherwise constitutes a written agency, dealer, license,
distributorship, sales representative or similar written agreement, or (e) would
account for more than ten percent (10%) of purchases or sales projected to be
made by such Party during its current fiscal year.
OPTION SECURITIES shall mean all rights, options and warrants,
and calls or commitments evidencing the right, to subscribe for, purchase or
otherwise acquire share capital or Convertible Securities, whether or not the
right to subscribe for, purchase or otherwise acquire is immediately exercisable
or is conditioned upon the passage of time, the occurrence or non-occurrence or
the existence or non-existence of some other Event.
ORDINARY SHARES shall have the meaning given to it in Section
3.3.
ORGANIC DOCUMENT shall mean, (a) with respect to a Person which
is a corporation, its charter, its by-laws and all agreements, voting trusts and
similar arrangements applicable to any of its capital stock, (b) with respect to
a Person which is a partnership, its agreement and certificate of partnership,
any agreements among partners, and any management and similar agreements between
the partnership and any general partners (or any Affiliate thereof), (c) with
respect to a Person which is a limited liability company, its certificate of
organization and operating agreement, any agreements among members, and any
management and similar agreements between the limited liability company and any
members (or any Affiliate thereof); and (d) with respect to a Person which is a
Company, its memorandum of association, its articles of association and all
agreements, voting trusts and similar agreements applicable to any of its share
capital.
OTHER TRANSACTION shall mean a transaction or series of related
transactions (other than the Share Purchase) resulting in (a) any change in
control of the Company, (b) any merger or consolidation of the Company or any
Subsidiary, regardless of which is the surviving Entity, (c) any tender offer or
exchange offer for, or any acquisition of, any securities of the Company, or (d)
any sale or other disposition of assets of the Company or any Subsidiary not
otherwise permitted under Section 3.18 hereof.
PARTY shall mean a signatory to this Agreement.
PERSON shall mean any natural individual or any Entity.
PRE-CLOSING TAXES shall have the meaning given to it in Section
6.4(A).
55
PRE-CLOSING STRADDLE PERIOD TAXES shall have the meaning given to
it in Section 6.4(A).
PREFERENCE SHARES shall have the meaning given to it in Section
3.3.
PRIVATE AUTHORIZATIONS mean all approvals, concessions, consents,
franchises, licenses, permits, and other authorizations of all Persons (other
than Authorities) including without limitation those with respect to agreements,
leases, contracts, patents, trademarks, service marks, trade names, copyrights,
computer software programs, technology and know-how.
PRO FORMA RUNRATE EBITDA means, as of any date of determination,
EBITDA, as adjusted to reflect the EBITDA as if any acquisitions completed by
the Company during the applicable Reference Period had been completed on the
first day of such Reference Period, as further adjusted for changes in billing,
selling, general and administrative expense reductions and duplicative costs as
of the date of closing of such acquisition(s), in each case in a manner
consistent with past practice.
PURCHASER shall mean Mobile Storage Group, Inc., a California
corporation.
PURCHASER DISCLOSURE SCHEDULE shall mean the Purchaser Disclosure
Schedule attached hereto.
PURCHASER LIMITED CLAIMS shall have the meaning given to it in
Section 9.2(C).
REAL PROPERTY shall have the meaning given to it in Section
3.6(B).
REFERENCE PERIOD shall mean the Company's 1999 fiscal year.
REPRESENTATIVES (of a Party) shall mean the officers, directors,
employees, accountants, counsel, financial advisors, consultants, financing
sources, and other representatives (of such Party or its Affiliates).
REQUISITE REGULATORY APPROVALS shall have the meaning given to it
in Section 7.1(A).
SEC shall mean the United States Securities and Exchange
Commission.
SHAREHOLDER LIMITED CLAIMS shall have the meaning given to it in
Section 9.2(C).
SHAREHOLDERS shall have the meaning given to it in the preamble
of this Agreement.
SHAREHOLDER REPRESENTATIVE shall mean Ronald F. Valenta.
STRADDLE PERIODS shall have the meaning given to it in Section
6.4(A).
SUBSIDIARY shall mean, with respect to a Person, any Entity a
majority of the capital stock ordinarily entitled to vote for the election of
directors of which, or if no such voting stock is outstanding, a majority of the
equity interests of which, is owned directly or indirectly, legally or
beneficially, by such Person or any other Person controlled by such Person.
56
TAX (and "Taxable", which shall mean subject to Tax), shall mean,
with respect to a Party, (a) all taxes (domestic or foreign), including without
limitation any income (net, gross or other including recapture of any tax items
such as investment tax credits), alternative or add-on minimum tax, gross
income, gross receipts, gains, sales, use, leasing, lease, user, ad valorem,
transfer, recording, franchise, profits, property (real or personal, tangible or
intangible), fuel, license, withholding on amounts paid to or by such Party,
payroll, employment, unemployment, social security, excise, severance, stamp,
occupation, premium, estimated environmental, environmental or windfall profit
tax, custom, duty or other tax, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest, levies, assessments,
charges, penalties, addition to tax or additional amounts imposed by any
Authority, (b) any joint or several liability of such Party with any other
Person for the payment of any amounts of the type described in (a), and (c) any
liability of such Party for the payment of any amounts of the type described in
(a) as a result of any express or implied obligation to indemnify any other
Person or otherwise by operation of law.
TAX RETURN OR RETURNS shall mean all returns, consolidated or
otherwise (including without limitation information returns), required to be
filed with any Authority with respect to Taxes.
TAXING AUTHORITY shall mean any Authority responsible for the
imposition of any Tax.
TERMINATION DATE shall mean June 30, 2000.
TRANSACTION EXPENSES shall mean all fees and expenses of the
Company, the Purchaser and its Affiliates, and the Shareholders relating to or
arising out of the Share Purchase and the other Transactions, including without
limitation attorneys' and accountants' fees and expenses, the fee payable to
Windward Capital Management, L.L.C. and HSR filing fees.
TRANSACTIONS shall mean, collectively, the Share Purchase and the
other transactions contemplated in this Agreement or any Collateral Document
executed or required to be executed in connection herewith.
U.K. GAAP shall mean generally accepted accounting principles as
in effect from time to time in the United Kingdom.
[The remainder of this page is intentionally blank.]
57
IN WITNESS WHEREOF, the Purchaser, the Company and the Shareholders have
caused this Agreement to be executed as of the date first written above.
MOBILE STORAGE GROUP, INC.
By: /s/ RONALD F. VALENTA
------------------------------------
Name: Ronald F. Valenta
Title: President
MOBILE STORAGE (U.K.) LIMITED
By: /s/ RONALD F. VALENTA
------------------------------------
Name: Ronald F. Valenta
Title: Director
S-1
SHAREHOLDERS
/s/ RONALD F. VALENTA
----------------------------------------
Name: Ronald F. Valenta
/s/ JAMES S. ROBERTSON
----------------------------------------
Name: James S. Robertson
S-2
EXHIBITS
Exhibit A Form of Company counsel opinion
Exhibit B Acquisition Agreements
Exhibit C Acquisition Disclosure Bundles
SCHEDULES
Company Disclosure Schedule
Purchaser Disclosure Schedule
Acquisition Schedule
ACQUISITION SCHEDULE
ESTIMATED TENTATIVE TRANSACTION
STATUS TARGET EBITDA(*) PRICE(*) TYPE CLOSING DATE
------ ------ --------- --------- ------------ ------------
Astro $368,094 $1,909,900 Share Purchase 2/29/2000
CCA $1,038,295 $4,609,840 Share Purchase 4/15/2000
Celtic $602,710 $2,377,440** Share Purchase 5/19/2000
CHL $1,569,637 $5,250,820 Share Purchase 4/14/2000
CSH $1,854,901 $7,157,340 Share Purchase 3/03/2000
- ------------
(*) In $US.
(**) Celtic price excludes $420,000 allocated to real estate.
TABLE OF CONTENTS
Page
----
ARTICLE 1 THE CLOSING..................................................................1
SECTION 1.1 Closing........................................................1
SECTION 1.2 Deliveries at Closing..........................................1
ARTICLE 2 THE SHARE PURCHASE...........................................................2
SECTION 2.1. The Share Purchase.............................................2
SECTION 2.2. Initial Per Share Consideration................................2
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS...........4
SECTION 3.1 Organization and Business; Power and Authority; Effect of
Transaction....................................................4
SECTION 3.2 Financial and Other Information................................6
SECTION 3.3 Authorized and Allotted Share Capital..........................7
SECTION 3.4 Changes in Condition...........................................7
SECTION 3.5 Liabilities....................................................7
SECTION 3.6 Title to Properties; Leases....................................8
SECTION 3.7 Inventory and Rental Equipment................................10
SECTION 3.8 Accounts and Notes Receivable.................................10
SECTION 3.9 Compliance with Private Authorizations........................10
SECTION 3.10 Compliance with Governmental Authorizations and
Applicable Law .............................................10
SECTION 3.11 Intangible Assets; Intellectual Property......................11
SECTION 3.12 Related Transactions..........................................13
SECTION 3.13 Insurance.....................................................13
SECTION 3.14 Tax Matters...................................................13
SECTION 3.15 Pensions; Employee Benefits...................................17
SECTION 3.16 Employment Arrangements.......................................17
SECTION 3.17 Material Agreements...........................................18
SECTION 3.18 Ordinary Course of Business...................................18
SECTION 3.19 Broker or Finder..............................................21
SECTION 3.20 Environmental Matters.........................................21
SECTION 3.21 Books and Records.............................................22
SECTION 3.22 Customers and Suppliers.......................................22
SECTION 3.23 Officers and Directors........................................22
SECTION 3.24 Bank Accounts.................................................22
SECTION 3.25 Anti-takeover Statutes Not Applicable.........................23
SECTION 3.26 Litigation....................................................23
SECTION 3.27 Product Warranty..............................................23
SECTION 3.28 Product Liability.............................................23
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SECTION 3.29 Fair Trading..................................................23
SECTION 3.30 Disclosure....................................................24
SECTION 3.31 Continuing Representations and Warranties.....................24
SECTION 3.32 Representations and Warranties in the Acquisition Agreements..24
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASER.................................24
SECTION 4.1 Organization and Business; Power and Authority; Effect of
Transaction...................................................24
SECTION 4.2 Authorized and Outstanding Capital Stock of the Purchaser.....25
ARTICLE 5 REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE SHAREHOLDERS..............26
SECTION 5.1 Ownership.....................................................26
SECTION 5.2 Liens.........................................................26
SECTION 5.3 Authorization of Agreement....................................26
SECTION 5.4 No Governmental Consents......................................26
SECTION 5.5 Waiver of Preemptive Rights...................................26
ARTICLE 6 ADDITIONAL COVENANTS........................................................27
SECTION 6.1 Confidentiality; Access to Information........................27
SECTION 6.2 Notification of Certain Matters...............................28
SECTION 6.3 Public Announcements..........................................28
SECTION 6.4 Tax Matters...................................................28
SECTION 6.5 Conveyance Taxes..............................................29
SECTION 6.6 No Solicitation...............................................30
SECTION 6.7 Environmental Inspections.....................................30
SECTION 6.8 Ordinary Course of Business...................................30
ARTICLE 7 CONDITIONS TO CONSUMMATION OF THE SHARE PURCHASE............................32
SECTION 7.1 Conditions to Each Party's Obligations to Effect the Share
Purchase......................................................32
SECTION 7.2 Conditions to the Obligations of the Purchaser to Effect the
Share Purchase................................................33
SECTION 7.3 Conditions to the Obligations of the Company and the
Shareholders to Effect the Share Purchase.....................34
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER...........................................35
SECTION 8.1 Termination...................................................35
SECTION 8.2 Effect of Termination.........................................36
SECTION 8.3 Amendment.....................................................36
SECTION 8.4 Waiver........................................................36
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SECTION 8.5 Fees, Expenses and Other Payments.............................36
SECTION 8.6 Effect of Investigation.......................................36
ARTICLE 9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.................37
SECTION 9.1 Effectiveness of Representations, etc.........................37
SECTION 9.2 Indemnification...............................................38
SECTION 9.3 Procedures Concerning Claims by Third Parties; Payment of
Damages; etc..................................................40
SECTION 9.4 Manner of Indemnification.....................................41
SECTION 9.5 Exclusive Remedy..............................................42
SECTION 9.6 Net Recovery..................................................43
SECTION 9.7 Indemnification of Officers and Directors.....................43
ARTICLE 10 GENERAL PROVISIONS.........................................................44
SECTION 10.1 Notices.......................................................44
SECTION 10.2 Headings......................................................45
SECTION 10.3 Severability..................................................45
SECTION 10.4 Entire Agreement..............................................45
SECTION 10.5 Assignment....................................................45
SECTION 10.6 Parties in Interest...........................................46
SECTION 10.7 Governing Law.................................................46
SECTION 10.8 Specific Enforcement..........................................46
SECTION 10.9 Consent to Jurisdiction.......................................46
SECTION 10.10 Counterparts..................................................47
SECTION 10.11 Mutual Drafting...............................................47
SECTION 10.12 Disclosure Supplements........................................47
SECTION 10.13 Company Disclosure Schedule...................................47
ARTICLE 11 DEFINITIONS................................................................48
iii