Exhibit 99.2
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CONTAINER LEASING INTERNATIONAL, LLC
(D/B/A CARLISLE LEASING INTERNATIONAL, LLC)
MEMBERSHIP INTEREST PURCHASE AGREEMENT
JANUARY 28, 1999
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CONTAINER LEASING INTERNATIONAL, LLC
(D/B/A CARLISLE LEASING INTERNATIONAL, LLC)
MEMBERSHIP INTEREST PURCHASE AGREEMENT
This Membership Interest Purchase Agreement (the "Agreement") is
entered into as of January 28, 1999, by and among Container Leasing
International, LLC, a New York limited liability company doing business as
"Carlisle Leasing International, LLC" ("COMPANY"), MAC Reefers, Inc., a Delaware
corporation ("PURCHASER"), Carlisle Nevada Corp., a Nevada corporation
("SELLER"), Carlisle SynTec Incorporated (formerly known as "CL Reefers, Inc."),
a Delaware corporation ("SynTec"), Carlisle Companies Incorporated, a Delaware
corporation ("PARENT"), and Marubeni America Corporation, a New York corporation
("MAC"). Certain capitalized terms used in this Agreement are defined in Exhibit
A.
RECITALS
A. Prior to the date hereof, SynTec was the owner, beneficially and of
record, of a sixty percent (60%) Membership Interest in Company. SynTec has
transferred a fifty-one percent (51%) Membership Interest in Company to Seller.
B. As a result of the transfer described in Recital A, the current
ownership structure of Company is as follows: Seller owns, beneficially and of
record, a fifty-one percent (51%) Membership Interest in Company, SynTec owns,
beneficially and of record, a nine percent (9%) Membership Interest in Company,
Purchaser owns, beneficially and of record, a ten percent (10%) Membership
Interest in Company, and MCS Reefers, Inc., a Delaware corporation ("MCS"),
owns, beneficially and of record, a thirty percent (30%) Membership Interest in
Company.
C. Purchaser desires to purchase from Seller, and Seller desires to
sell to Purchaser, a fifty one percent (51%) Membership Interest in Company, on
the terms and subject to the conditions set forth in this Agreement.
D. Simultaneously with the consummation of the Transactions, Purchaser
shall purchase from MCS its thirty percent (30%) Membership Interest in Company,
on the terms and subject to the conditions set forth in a Membership Interest
Purchase Agreement dated the date hereof between Purchaser and MCS (the
"MCS-RELATED PURCHASE AGREEMENT").
E. Upon consummation of the Transactions and the transactions
contemplated by the MCS-Related Purchase Agreement, Seller will own,
beneficially and of record, a nine percent (9%) Membership Interest in Company
and Purchaser will own, beneficially and of record, a ninety one percent (91%)
Membership Interest in Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein, Purchaser, Company, Seller and Parent hereby agree as follows:
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1. AGREEMENT TO SELL AND PURCHASE THE PURCHASED MEMBERSHIP INTEREST.
1.1 SALE AND PURCHASE OF THE PURCHASED MEMBERSHIP INTEREST.
Upon the terms and subject to the conditions set forth in this
Agreement, Seller agrees to sell to Purchaser, and Purchaser agrees to purchase
from Seller, all of Seller's right, title and interest in and to a fifty one
percent (51%) Membership Interest of Company (the "Purchased Interest") for an
aggregate purchase price equal to the sum of (a) Fifty Million Dollars
($50,000,000) (the "INITIAL PURCHASE PRICE PAYMENT"), plus (b) the Premium
Payments, if any, required to be paid by Purchaser to Seller pursuant to Section
1.3 (the Initial Purchase Price Payment and the aggregate Premium Payments
being, collectively, the "PURCHASE PRICE").
1.2 PAYMENT OF INITIAL PURCHASE PRICE PAYMENT.
(a) The closing of the purchase and sale of the Purchased Interest
contemplated hereby (the "CLOSING") shall take place at the offices of Morrison
& Foerster LLP at 10:00 a.m. (Eastern time) on January 28, 1999 (the "CLOSING
DATE").
(b) At the Closing, Purchaser shall (i) pay to Seller an amount
equal to the Initial Purchase Price Payment by wire transfer in immediately
available funds to a bank account designated by Seller, and (ii) deliver the
documents and agreements required hereunder to be delivered by Purchaser at the
Closing.
(c) At the Closing, Seller shall deliver the documents and
agreements required hereunder to be delivered by Seller at Closing.
1.3 PAYMENT OF PREMIUM PAYMENTS.
(a) In respect of each of the calendar years 1999, 2000 and 2001,
Purchaser shall pay to Seller an amount equal to the Future Value of $1,100,000
(each payment a "PREMIUM PAYMENT") in the manner set forth in Section 1.3(b)
hereof, each such payment conditioned upon Company's Pre-Tax Net Income (as
defined in clause 1.3(e) below) for the applicable calendar year equaling or
exceeding the following amounts (each a "TARGET AMOUNT"):
CALENDAR YEAR TARGET AMOUNT
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1999 $13,100,000
2000 $14,300,000
2001 $16,600,000
(b) With respect to each Premium Payment, the "Future Value" means
$1,100,000 plus interest calculated (i) from the Closing Date to the date of
payment for 1999, (ii) from the Closing Date plus one year to the date of
payment for 2000 and (iii) from the Closing Date plus two years to the date of
payment for 2001, in each case using an eight percent (8%) interest rate,
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compounded annually. By way of example, assuming a Closing Date of January 28,
1999, the Premium Payments will be as follows:
CALENDAR YEAR PREMIUM PAYMENT
------------- ---------------
1999 $1,203,379
2000 $1,299,649
2001 $1,403,621
(c) Any Premium Payment required to be made with respect to a
particular calendar year shall be made by March 31 of the subsequent calendar
year unless the applicable Premium Payment is disputed in accordance with
Section 1.3(f), in which case such Premium Payment shall be paid to Seller
within five (5) days after the resolution of the dispute. By way of example, if
Company achieves the Target Amount for the 1999 calendar year, Purchaser shall
pay to Seller an amount equal to the Future Value of $1,100,000 on March 31,
2000 (assuming a Closing Date of January 28, 1999, the payment will equal
$1,203,379).
(d) The Premium Payments shall be cumulative, meaning that if
Company fails to achieve the Target Amount for a particular calendar year, but
subsequently achieves an Aggregate Target Amount, any previously unpaid Premium
Payment shall become payable. The Aggregate Target Amounts are as follows:
CALENDAR YEAR AGGREGATE TARGET AMOUNT
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2000 $27,400,000
2001 $44,000,000
In determining whether an Aggregate Target Amount is achieved, the parties
shall (i) with respect to the 2000 calendar year, combine the Pre-Tax Net
Income (as defined in clause (e) below) of Company for the 1999 and 2000
calendar years, and (ii) with respect to the 2001 calendar year, combine the
Pre-Tax Net Income of Company for the 1999, 2000 and 2001 calendar years. By
way of example, if Company fails to achieve the Target Amount in 1999, but
achieves the Aggregate Target Amount in 2000 (i.e., Company's aggregate
Pre-Tax Net Income for the 1999 and 2000 calendar years equals or exceeds
$27,400,000), Purchaser shall pay to Seller an amount equal to $2,503,028 on
March 31, 2001 (the sum of the Premium Payments for 1999 and 2000, assuming a
Closing Date of January 28, 1999). By way of further example, if Company
achieves the Target Amount in 1999, fails to achieve either the Target Amount
or the Aggregate Target Amount in 2000 and achieves the Aggregate Target
Amount in 2001 (i.e., Company's aggregate Pre-Tax Net Income for the 1999,
2000 and 2001 calendar years equals or exceeds $44,000,000), Purchaser shall
pay to Seller (i) an amount equal to the Future Value of $1,100,000 for the
1999 calendar year on March 31, 2000 (assuming a Closing Date of January 28,
1999, the payment will equal $1,203,379), and (ii) an amount equal to
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$2,703,270 for the 2000 and 2001 calendar years on March 31, 2002 (assuming a
Closing Date of January 28, 1999, this amount represents the sum of the
Premium Payments for 2000 and 2001). The chart below provides further
clarification.
PREMIUM PAYMENT
Payment Amount $1,100,000
Rate 8.0%
Assumed Closing Date 1/28/99
Payment Date 3/31/00
SCENARIO 1 - COMPANY ACHIEVES TARGET AMOUNT EVERY YEAR
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Year 1 Future Value $1,203,379
Year 2 Future Value $1,299,649
Year 3 Future Value $1,403,621
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$3,906,649
SCENARIO 2 - COMPANY FAILS TO ACHIEVE TARGET AMOUNT IN YEARS 1 AND 2, AND ACHIEVES AGGREGATE TARGET AMOUNT IN YEAR 3
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Year 1 Future Value $0
Year 2 Future Value $0
Year 3 Future Value $3,906,649
$3,906,649 (sum of future value of $1.1 million annual payments)
(e) Within ninety (90) days after the end of each of the 1999,
2000 and 2001 calendar years, Purchaser shall cause to be prepared and delivered
to Seller an unaudited income statement of Company for the applicable calendar
year (each a "Proposed Income Statement") containing a computation of Pre-Tax
Net Income. For purposes of this Agreement "Pre-Tax Net Income" means Company's
revenues for a particular calendar year less Company's related expenses for such
year determined in conformity with GAAP, applied on a basis consistent with
Company's historical income statements, PROVIDED, HOWEVER, that for purposes of
determining the Premium Payment only when calculating Pre-Tax Net Income, (i) no
effect shall be given to any step up in the basis of the assets of Company as a
result of the Transactions, (ii) all Valentine Litigation Expense shall be
excluded, provided that Parent, Seller or Syntec shall have absorbed 60% of such
Valentine Litigation Expense (whether by indemnification payment made pursuant
to Section 9.2(b) (iii) hereof, cash capital contribution to the Company, or a
charge to the capital account of SynTec); (iii) the EIP Accrual shall be
excluded, and (iv) any amortization or deduction of royalties paid in connection
with the Trademark License Agreement shall be excluded.
(f) Within twenty (20) days after delivery of an applicable
Proposed Income Statement and computation of Pre-Tax Net Income, Seller may
notify Purchaser in writing of any objections or changes to the computation of
Pre-Tax Net Income specifying in reasonable detail any such objections or
changes, and the parties shall attempt in good faith to resolve any such
dispute. If the parties cannot resolve such dispute within a period of thirty
(30) days commencing from Purchaser's receipt of Seller's notification, the
parties shall submit the matter to a mutually acceptable accounting firm (the
"Accountant") whose decision with respect to the disputed
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matter shall be binding on the parties. The prevailing party shall be entitled
to receive from the other party its costs and expenses, including reasonable
attorneys fees in connection with its objection or defense to the calculation of
Pre-Tax Net Income. The fees and expenses of the Accountant shall be paid by the
party against whom a decision is rendered. The prevailing party shall be the
party whose proposed Pre-Tax Net Income is closest to the amount finally
determined by the Accountant.
(g) Notwithstanding anything to the contrary contained in this
Agreement, in the event Company fails to achieve aggregate Pre-Tax Net Income of
$44,000,000 for the 1999, 2000 and 2001 calendar years (resulting in aggregate
Premium Payments to Seller of less than a principal amount of $3,300,000),
Purchaser agrees to pay Seller the Future Value of the TBD Amount (such payment,
the "Final Premium Payment"). For purposes of this Agreement, the "TBD Amount"
means an amount equal to $3,300,000 LESS any Premium Payment previously made to
Seller pursuant to this Section 1.3 MULTIPLIED BY the applicable Company
Performance Factor. The "Company Performance Factor" means the decimal factors
1.00, .90, .80 and .70 assigned to the following levels of aggregate Pre-Tax Net
Income (as defined in clause 1.3(e) above) for the 1999, 2000 and 2001 calendar
years:
IF AGGREGATE PRE-TAX NET
COMPANY PERFORMANCE FACTOR INCOME EQUALS OR EXCEEDS
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1.00 $44,000,00
.90 $39,600,000
.80 $35,200,000
.70 $30,800,000
The Final Premium Payment shall be made by March 31, 2002, unless disputed in
accordance with Section 1.3(f), in which case the Final Premium Payment shall be
paid to Seller within five (5) days after the resolution of such dispute.
By way of example, if Company generates Pre-Tax Net Income of
$13,500,000 in 1999, $12,000,000 in 2000 and $14,000,000 in
2001, resulting in an aggregate Pre-Tax Net Income of
$39,500,000 for the three-year period, Purchaser shall pay to
Seller on March 31, 2002, an amount equal to the Future Value
of $1,760,000, computed as follows: $3,300,000 LESS $1,100,000
Premium Payment for the 1999 calendar year MULTIPLIED BY a
Company Performance Factor of .80. Assuming a Closing Date of
January 28, 1999, the payment will equal $2,162,616.
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By way of further example, if the Company generated Pre-Tax
Net Income of $10,000,000 in 1999, $11,000,000 in 2000 and
$13,000,000 in 2001, resulting in an aggregate Pre-Tax Net
Income of $34,000,000 for the three-year period, Purchaser
shall pay to Seller on March 31, 2002, an amount equal to the
Future Value of $2,310,000, computed as follows: $3,300,000
LESS $0 (since Company failed to achieve any Pre-Tax Net
Income target amounts) MULTIPLIED BY a Company Performance
Factor of .70. Assuming a Closing Date of January 28, 1999,
the payment will equal $2,734,654.
(h) Any Premium Payment required hereunder shall be paid by wire
transfer of immediately available funds to a bank account designated by Seller.
2. CLOSING CONDITIONS.
2.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.
Purchaser's obligation to purchase the Purchased Interest at the
Closing is subject to the satisfaction of the following conditions:
(a) the representations and warranties made by Parent, Seller and
Company in Section 3 hereof or in any other Transaction Document shall be true
and correct in all material respects as of the Closing Date, except for any
representation or warranty made as of a specified date, which shall be true and
correct in all material respects as of such specified date;
(b) all covenants, agreements and conditions contained in this
Agreement or in any other Transaction Document to be observed by Parent, Seller
and/or Company on or prior to the Closing Date shall have been performed or
complied with in all material respects;
(c) on the Closing date, Parent, Seller, SynTec or Company, as the
case may be, shall have delivered the following documents to Purchaser:
(i) the Restated Operating Agreement, duly executed by each
of the parties specified therein;
(ii) the Trademark License Agreement, duly executed by each
of the parties specified therein;
(iii) each of the Bank Consents, duly executed by each of the
parties specified therein;
(iv) the Landlord Consent duly executed by each of the
parties specified therein;
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(v) the legal opinion of Steven J. Ford, Esq., counsel to
Seller, SynTec, and Parent, dated the Closing Date, in form and substance
satisfactory to Purchaser;
(vi) certification, in form and substance satisfactory to
Purchaser, to the effect that Seller is not a foreign person;
(vii) a Bill of Sale; and
(viii) the written resignations of Robert J. Ryan, Jr. and
Steven J. Ford as members, and of Richard Husted as chairman (but not as
member), of Company's Managers Committee;
(d) all corporate and other proceedings required to be taken on
the part of Company, Seller and Parent in connection with this Agreement, the
Transaction Documents and the Transactions, and all documents incident thereto,
shall be reasonably satisfactory in form and in substance to Purchaser and its
counsel;
(e) Purchaser's Board of Directors shall have ratified or approved
the execution of this Agreement and the other Transaction Documents by Purchaser
and shall have approved the consummation of the Transactions;
(f) each of the Consents described in Section 3.5 shall have been
obtained and shall be in full force and effect;
(g) there shall not have been a material adverse change in the
business, prospects, condition, assets, liabilities, operations or financial
performance of Company since the date of this Agreement;
(h) there shall not have been commenced or threatened against
Purchaser, Seller, Company or Parent, or any of their respective affiliates, any
Proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Transactions, or (b) that may have the effect of
preventing, delaying, making illegal or otherwise interfering with any of the
Transactions or having a material adverse effect on Company;
(i) no Person shall have made or threatened any claim asserting
that such Person (a) may be the holder or the beneficial owner of, or may have
the right to acquire or to obtain beneficial ownership of, any Membership
Interest or other security of Company, or (b) may be entitled to all or any
portion of the Purchase Price; and
(j) neither the consummation nor the performance of any of the
Transactions will, directly or indirectly (with or without notice or lapse of
time), contravene or conflict with or result in a violation of, or cause
Purchaser or Company, or any Person affiliated with Purchaser or Company, to
suffer any adverse consequence under, (a) any applicable Legal Requirement or
Order, or (b) any Legal Requirement or Order that has been proposed by or before
any Governmental Body.
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2.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER.
Seller's obligation to sell the Purchased Interests at Closing is
subject to the satisfaction of the following conditions:
(a) the representations and warranties made by Purchaser in
Section 4 or in any other Transaction Document shall be true and correct in all
material respects as of the Closing Date;
(b) all covenants, agreements and conditions contained in this
Agreement or in any other Transaction Document to be observed by Purchaser on or
prior to the Closing Date shall have been performed or complied with in all
material respects;
(c) simultaneously with the execution of this Agreement and the
other Transaction Documents, Purchaser shall have delivered the following
documents to Seller:
(i) the Restated Operating Agreement, duly executed by each
of the parties specified therein;
(ii) the Trademark License Agreement, duly executed by each
of the parties specified therein;
(iii) each of the Bank Consents, duly executed by each of the
parties specified therein;
(iv) the Landlord Consent, duly executed by each of the
parties specified therein; and
(v) legal opinions from counsel to Purchaser and MAC in form
and substance satisfactory to Seller;
(d) all corporate and other proceedings required to be taken on
the part of Purchaser and Company in connection with this Agreement, the
Transaction Documents and the Transactions, and all documents incident thereto,
shall be reasonably satisfactory in form and in substance to Seller and its
counsel;
(e) neither the consummation nor the performance of any of the
Transactions will, directly or indirectly (with or without notice or lapse of
time), contravene or conflict with or result in a violation of, or cause Seller
to suffer any adverse consequence under, (a) any applicable Legal Requirement or
Order, or (b) any Legal Requirement or Order that has been proposed by or before
any Governmental Body; and
(f) Company shall have repaid to Seller Nine Million One Hundred
Eighty Thousand Dollars ($9,180,000) which amount constitutes 51% of the
aggregate principal amount of subordinated debt owed by Company to the members
of the Company as of the Closing Date.
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3. REPRESENTATIONS AND WARRANTIES OF COMPANY, SELLER AND PARENT.
Each of Seller, Company and Parent hereby represents and warrants to
each Indemnitee (except that the representations in Section 3.24 are made solely
by Seller) as follows (it being understood and agreed by the parties that all
representations and warranties are made as of the date hereof, except for any
representation and warranty made as of a specified date, which representation
and warranty is made as of such specified date):
3.1 FORMATION, GOOD STANDING, QUALIFICATION.
(a) Company is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of New York and is
duly qualified to conduct business and is in good standing under the laws of
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties requires such qualification except where the failure
to be so qualified would not have a material adverse effect on Company or the
Business. Company has all requisite power and authority as a limited liability
company to own, operate and lease its properties and assets, to execute and
deliver this Agreement and the other Transaction Documents contemplated to be
executed and delivered by it, and to carry out the provisions hereof and
thereof, and to carry on its business as presently conducted and as presently
proposed to be conducted.
(b) Company has never approved, or commenced any proceeding for,
or made any election contemplating, the dissolution or liquidation of Company or
the winding up or cessation of Company's business or affairs.
(c) Company has no subsidiaries nor has ever owned, beneficially
or otherwise, any shares or other securities of, or any other direct or any
other indirect interest of any nature in, any Entity.
3.2 ARTICLES OF ORGANIZATION AND OPERATING AGREEMENT; RECORDS.
(a) Company has made available to Purchaser accurate and complete
copies of:
(i) Company's Certificate of Organization and operating
agreement, including all amendments thereto, as presently in effect;
(ii) the membership records of Company; and
(iii) the minutes and other records of the meetings and other
proceedings (including any actions taken by written consent or otherwise without
a meeting) of the Company's members and the Company's Managers Committee. There
have been no meetings or other proceedings of the members of Company, or the
Company's Managers Committee that are not fully reflected in such minutes or
other records.
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(b) Company has never conducted any business under or otherwise
used, for any purpose or in any jurisdiction, any fictitious name, assumed name,
trade name or other name, other than the names "Container Leasing International"
and "Carlisle Leasing International".
(c) There has not been a material violation of any of the
provisions of Company's Certificate of Organization or operating agreement or of
any resolution adopted by Company's members or the Company's Managers Committee,
and no event has occurred, and no condition or circumstance exists, that might
(with or without notice or lapse of time) constitute or result directly or
indirectly in such a violation.
(d) The books of account, stock or membership interest records,
minute books and other records of Company are accurate, up-to-date and complete,
and have been maintained in accordance with sound and prudent business
practices. All the records of Company are in the actual possession and direct
control of Company. Company has been administered, and Company's records have
been maintained, at all times as required by Legal Requirements to maintain the
separate legal existence of Company.
3.3 CAPITALIZATION.
(a) As of the Closing Date, without giving effect to the
Transactions and at all times prior to the Closing, the Membership Interest of
the Company is owned, beneficially and of record, as follows:
NAME OF MEMBER MEMBERSHIP INTEREST PERCENTAGE
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Seller 51%
SynTec 9%
MCS 30%
Purchaser 10%
(b) On the Closing Date, upon the consummation of the
Transactions, SynTec shall own, beneficially and of record, nine percent (9%) of
the Membership Interests of the Company.
All issued and outstanding Membership Interests in Company have been duly
authorized and validly issued, are fully paid and nonassessable, and have been
issued in full compliance with all applicable securities laws and other
applicable Legal Requirements.
(c) Except for interests under the Employee Incentive Plan and
except as set forth in the Restated Operating Agreement, there is no:
(i) outstanding subscription, option, call, warrant or right
(whether or not currently exercisable) to acquire any Membership Interest or
other securities of Company;
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(ii) outstanding security, instrument or obligation that is
or may become convertible into or exchangeable for any Membership Interest or
other securities of Company;
(iii) Contract under which Company is or may become obligated
to sell or otherwise issue any Membership Interest or any other securities; or
(iv) condition or circumstance that may directly or
indirectly give rise to or provide a basis for the assertion of a claim by any
Person to the effect that such Person is entitled to acquire or receive any
Membership Interest or other securities of Company.
(d) Company has never repurchased, redeemed or otherwise
reacquired (or agreed, committed or offered (in writing or otherwise) to
repurchase, redeem or otherwise reacquire) any Membership Interest or other
securities.
3.4 AUTHORITY; BINDING NATURE OF AGREEMENTS.
Company has the absolute and unrestricted right, power and authority to
enter into and to perform its obligations under this Agreement and the other
Transaction Documents to which it is or is contemplated to be a party, and the
execution, delivery and performance by Company of this Agreement and such
Transaction Documents have been duly authorized by all necessary action on the
part of Company and its members, managers committee and officers. This Agreement
and the other Transaction Documents constitute, or upon execution and delivery
will constitute, the legal, valid and binding obligations of Company,
enforceable against Company in accordance with their respective terms.
3.5 NON-CONTRAVENTION; CONSENTS.
The execution and delivery of this Agreement and the other Transaction
Documents, and the consummation of the Transactions, by Company will not,
directly or indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any
provisions of Company's Certificate of Organization or Operating Agreement, or
(ii) any resolution adopted by Company's managers committee or the members of
Company;
(b) contravene, conflict with or result in a violation of, or give
any Governmental Body or other Person the right to challenge any of the
Transactions or to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which Company or any assets owned or used by it is
subject;
(c) cause Company to become subject to, or to become liable for
the payment of, any Tax relating to any period (or portion thereof) ending on or
prior to the Closing date;
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(d) cause any assets owned or used by Company to be reassessed or
revalued by any taxing authority or other Governmental Body relating to any
period (or portion thereof) ending on or prior to the Closing date;
(e) contravene, conflict with or result in a material violation of
any of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is held by Company or any of its employees or that otherwise
relates to Company's business or to any of the assets owned or used by Company;
(f) contravene, conflict with or result in a material violation or
breach of, or default under, any provision of any Company Contract;
(g) give any Person the right to (i) declare a default or exercise
any remedy under any material Company Contract, (ii) accelerate the maturity or
performance of any material Company Contract, or (iii) cancel, terminate or
modify any material Company Contract;
(h) give any Person the right to any payment by Company or give
rise to any acceleration or change in the award, grant, vesting or determination
of options, warrants, rights, severance payments or other contingent obligations
of any nature whatsoever of Company in favor of any Person, in any such case as
a result of the change in control of Company or otherwise resulting from the
Transactions; or
(i) result in the imposition or creation of any Encumbrance upon
or with respect to any asset owned or used by Company.
As of the date hereof, all filings with, notices to and Consents from any Person
required in connection with the execution and delivery of this Agreement and the
other Transaction Documents or the consummation or performance of any of the
Transactions have been duly made, given or obtained and are in full force and
effect, other than those (i) where the failure to give such notice or obtain
such consent would not have a material adverse effect on Company or the
Business, or (ii) which by their nature are required to be made, given or
obtained after the Closing, all of which shall be made, given or obtained within
the time required therefor.
3.6 PROPRIETARY RIGHTS; PROPRIETARY INFORMATION AND INVENTIONS
AGREEMENT.
(a) Company owns or licenses each Proprietary Asset that is
material to the operation of the Business as presently conducted.
(b) Company has taken all measures and precautions necessary to
protect the confidentiality and value of each material Proprietary Asset that is
owned by or licensed to the Company or that is used or useful in connection with
the Business.
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(c) Any material inventions, trade secrets or proprietary
information created or obtained by any of Company's employees prior to their
employment by Company, which are necessary or useful in Company's business, have
been assigned to Company.
(d) Company is not infringing and has not at any time infringed or
received any notice or other communication (in writing or otherwise) of any
actual, alleged, possible or potential infringement of any Proprietary Asset
owned or used by any other Person. To the Knowledge of Company, no Person is
infringing, and no Proprietary Asset owned or used by any other Person infringes
or conflicts with, any Proprietary Asset owned or used by Company.
3.7 PROCEEDINGS; ORDERS.
(a) Except in respect of the Proceeding described in Section
9.2(b)(v), there is no material pending Proceeding, and, to Company's Knowledge,
no Person has threatened to commence any Proceeding that involves Company or
that otherwise relates to or might materially adversely affect Company's
business or any of the assets owned or used by Company (whether or not Company
is named as a party thereto).
(b) There is no pending Proceeding, and, to Company's Knowledge,
no Person has threatened to commence any Proceeding that challenges, or that may
have the effect of preventing, delaying, making illegal or otherwise interfering
with, any of the Transactions or Company's ability to comply with or perform its
obligations and covenants under the Transaction Documents; and no event has
occurred, and no claim, dispute or other condition or circumstance exists, that
might directly or indirectly give rise to or serve as a basis for the
commencement of any such Proceeding.
(c) Company has made available to Purchaser accurate and complete
copies of all pleadings, correspondence and other written materials to which
Company has access that relate to material Proceedings, if any.
(d) There is no Order (except such Orders which are publicly known
and which relate to matters of general applicability that will adversely affect
all comparable Entities) to which Company, or any of the assets owned or used by
Company, is subject.
(e) No officer or employee of Company is subject to any Order
(except such Orders which are publicly known and which relate to matters of
general applicability that will adversely affect all comparable Entities) that
prohibits such officer or employee from engaging in or continuing any conduct,
activity or practice relating to Company's business.
(f) To Company's Knowledge, there is no proposed Order (except
such proposed Orders which are publicly known and which relate to matters of
general applicability that will adversely affect all comparable Entities) that,
if issued or otherwise put into effect, (i) may have a material adverse effect
on Company's business, condition, assets, liabilities, operations, financial
performance, net income or prospects (or on any aspect or portion thereof) or on
the ability of Company to comply with or perform any covenant or obligation
under this Agreement
13
and the other Transaction Documents, or (ii) may have the effect of preventing,
delaying, making illegal or otherwise interfering with any of the Transactions.
3.8 OFFERING VALID.
Assuming the accuracy of the representations and warranties of
Purchaser contained in Section 4.2 hereof, the offer and sale of the Purchased
Interest by Seller will be exempt from the registration requirements of the
Securities Act and will have been registered or qualified (or are exempt from
registration and qualification) under the registration permit or qualification
requirements of, and otherwise will comply with, all applicable state securities
laws. Neither of Seller nor Company nor any agent on behalf of either of them
has solicited or will solicit any offers to sell or has offered to sell or will
offer to sell all or any part of the Membership Interests of the Company to any
person or persons so as to bring the offer or sale of the Membership Interests
by Seller to Purchaser within the registration provisions of the Securities Act
or any state securities laws.
3.9 FINANCIAL STATEMENTS.
(a) Company has made available to Purchaser the following
financial statements and notes (collectively, the "FINANCIAL STATEMENTS"):
(i) the audited balance sheet of Company as of December 31,
1997, and the related audited statements of operations of Company for the year
then ended;
(ii) the unaudited balance sheet of Company as of March 31,
1998, and the related unaudited statements of operations of Company for the
three (3) months then ended;
(iii) the unaudited balance sheet of Company as of June 30,
1998, and the related unaudited statements of operations of Company for the
three (3) months then ended; and
(iv) the unaudited balance sheet of Company as of September
30, 1998 (the "UNAUDITED INTERIM BALANCE SHEET"), and the related unaudited
statements of operations of Company for the three (3) months then ended.
(b) All Financial Statements are in accordance with the books and
records of Company, present fairly the financial position of Company as of the
respective dates thereof and the results of operations of Company for the
periods covered thereby and (except, with respect to the unaudited Financial
Statements, for the lack of footnotes and normal year-end adjustments) have been
prepared in accordance with GAAP, applied on a consistent basis throughout the
periods covered. Notwithstanding the foregoing, no representation or warranty is
made as to the adequacy of the reserve for the Employee Incentive Plan.
14
3.10 TITLE TO ASSETS.
(a) Company owns, and has good, valid and marketable title to, all
assets purported to be owned by it, free and clear of any Encumbrances, except
for those Encumbrances which would not have a material adverse effect on
Company's ownership of, or the value of, such assets, including:
(i) all assets reflected on the Unaudited Interim Balance
Sheet (except for inventory sold by Company since the date thereof in the
Ordinary Course of Business);
(ii) all assets acquired by Company since the date of the
Unaudited Interim Balance Sheet (except for inventory sold by Company since the
date of the Unaudited Interim Balance Sheet in the Ordinary Course of Business);
and
(iii) all other assets reflected in Company's books and
records as being owned by Company.
(b) Each asset owned by Company:
(i) is either (x) free of defects and deficiencies and in
good condition and repair, consistent with its age and intended use (ordinary
wear and tear excepted), or (y) covered by a manufacturer's warranty which is in
effect as of the Closing Date;
(ii) complies in all respects and, to Company's Knowledge, is
being operated and otherwise used in full compliance with all applicable Legal
Requirements; and
(iii) is adequate for the uses to which it is being put.
The assets owned by the Company are adequate for the conduct of Company's
business in the manner in which such business is currently being conducted.
(c) Company does not own any real property or any interest in real
property, except for leaseholds created under real property leases (the "LEASED
PREMISES"), copies of which have been made available to Purchaser. Company
enjoys peaceful and undisturbed possession of such premises.
(d) All leases pursuant to which Company leases real or personal
property are in good standing and are valid and effective in accordance with
their respective terms and, to the Knowledge of Company, there exists no default
thereunder or occurrence or condition that could result in a default thereunder
or termination thereof. Company's buildings and equipment are in good operating
condition and repair, consistent with their age and intended use (ordinary wear
and tear excepted) and are useable in the Ordinary Course of Business, and
Company owns, or has valid leasehold interests in, all assets necessary for the
conduct of its business as presently conducted.
15
3.11 CONTRACTS.
(a) All material Company Contracts are in writing except for
certain oral agreements pertaining to the operation of the Business, (i) the
Breach or termination of which oral agreements would not have a material adverse
effect on Company or the Business, or (ii) oral agreements with suppliers
relating to the payment of rebates to Company, the terms of which have been
disclosed to Purchaser. Company has made available to Purchaser accurate and
complete copies of all material Company Contracts which are in writing,
including all amendments thereto. The terms of the oral agreements to which
Company is a party, taken as a group, are not unreasonably burdensome to
Company.
(b) Each Company Contract is valid and in full force and effect,
and is enforceable by Company in accordance with its terms.
(c) Company is not in default under any Company Contract, and, to
the Knowledge of Company, (i) no Person has violated or breached, or declared or
committed any default under any Company Contract; (ii) no event has occurred,
and no circumstance or condition exists, that might (with or without notice or
lapse of time) (A) result in a violation or breach of any of the provisions of
any Company Contract, (B) give any Person the right to declare a default or
exercise any remedy under any Company Contract, or (C) give any Person the right
to accelerate the maturity or performance of any Company Contract or to cancel,
terminate or modify any Company Contract; and (iii) Company has not waived any
of its rights under any Company Contract.
(d) Company has never been a party to or been bound by (A) any
joint venture agreement, partnership agreement, profit sharing agreement, cost
sharing agreement, loss sharing agreement or similar Contract, or (B) any
Contract that creates or grants to any Person, or provides for the creation or
grant of, any stock or membership interest appreciation right, phantom stock or
membership interest right or similar right or interest, except for interests
under the Employee Incentive Plan and except as set forth in the Restated
Operating Agreement.
(e) The performance of Company Contracts will not result in any
violation of or failure to comply with any Legal Requirement.
(f) No party to any Company Contract has notified Company or made
a claim to the effect that Company has failed to perform an obligation
thereunder other than claims covered by manufacturer's warranties. To the
Knowledge of Company, there is no plan, intention or indication of any
contracting party to any Company Contract to cause the termination, cancellation
or modification of such Contract or to reduce or otherwise change its activity
thereunder so as to adversely affect the benefits derived or expected to be
derived therefrom by Company.
16
3.12 EMPLOYEES; EMPLOYEE BENEFITS.
(a) Company does not now have and has not in the past had in
effect any bonus, profit sharing, pension, deferred compensation or similar plan
or agreement for the benefit of any of its employees, other than the Employee
Incentive Plan.
(b) Company has no collective bargaining agreements, union
Contracts or similar Contracts with any of its employees. There is no labor
union organizing activity pending or, to Company's Knowledge, threatened with
respect to Company. Subject to applicable Legal Requirements, the employment of
each of Company's employees is terminable by Company at will; and no employee
has any agreement or contract, written or verbal, regarding his or her
employment.
(c) To Company's Knowledge, (i) no employee of Company, nor any
consultant with whom Company has contracted, is in violation of any term of any
employment contract, proprietary information agreement or any other agreement
relating to the right of any such individual to be employed by, or to contract
with, Company because of the nature of the business to be conducted by Company,
and (ii) the continued employment by Company of its present employees, and the
performance of Company's contracts with its independent contractors, will not
result in any such violation. Company has not received any notice (written or
otherwise) alleging that any such violation has occurred. No employee of Company
has been granted the right to continued employment by Company or to any material
compensation following termination of employment with Company. To the Knowledge
of Company, no member of Company's management intends to terminate his, or
their, employment with Company, and no employee of Company has received an offer
to join a business that is or likely would be competitive with Company's
business.
3.13 RECEIVABLES; MAJOR CUSTOMERS.
(a) All existing accounts receivable of Company (including those
accounts receivable reflected on the Unaudited Interim Balance Sheet that have
not yet been collected and those accounts receivable that have arisen since the
date of the Unaudited Interim Balance Sheet and have not yet been collected)
represent valid obligations of customers of Company arising from bona fide
transactions entered into in the Ordinary Course of Business.
(b) Company has not received any notice or other communication
from any significant customer or other Person indicating that it may cease
dealing with Company or may otherwise reduce the volume of business transacted
by such Person with Company below historical levels.
(c) Company has made available to Purchaser a copy of Company's
standard forms of customer contract for each sale or lease of goods or service
it offers to customers, and all Company's customer relationships are governed by
such standard contracts.
17
3.14 [INTENTIONALLY OMITTED].
3.15 COMPLIANCE WITH LEGAL REQUIREMENTS.
(a) Company is in full compliance with each Legal Requirement that
is applicable to it or to the conduct of its business or the ownership, use or
lease of any of its assets, except where the failure to be in compliance would
not have a material adverse effect on Company or the Business.
(b) No event has occurred, and no condition or circumstance
exists, that might (with or without notice or lapse of time) constitute or
result directly or indirectly in a violation by Company of, or a failure on the
part of Company to comply with, any Legal Requirement, except where the failure
to be in compliance would not have a material adverse effect on Company or the
Business.
(c) Company has not received, at any time, any notice or other
communication (in writing or otherwise) from any Governmental Body or any other
Person regarding (i) any actual, alleged, possible or potential violation of, or
failure to comply with, any Legal Requirement by Company, or (ii) any actual,
alleged, possible or potential obligation on the part of Company to undertake,
or to bear all or any portion of the cost of, any cleanup or any remedial,
corrective or response action of any nature.
(d) To the Knowledge of Company, no Governmental Body has proposed
or is considering any Legal Requirement (other than any Legal Requirement that
would be applicable generally to the container leasing industry) that, if
adopted or otherwise put into effect, (i) may have an adverse effect on
Company's business, condition, assets, liabilities, operations, financial
performance, net income or prospects of Company or on the ability of Company to
comply with or perform any covenant or obligation under this Agreement or any of
the other Transaction Documents, or (ii) may have the effect of preventing,
delaying, making illegal or otherwise interfering with any of the Transactions.
3.16 GOVERNMENTAL AUTHORIZATIONS.
(a) Company has all the Governmental Authorizations necessary (i)
to enable Company to conduct its business in the manner in which its business is
currently being conducted, and (ii) to permit Company to own and use its assets
in the manner in which they are currently owned and used.
3.17 TAX MATTERS.
(a) Each Tax required to have been paid, or claimed by any
Governmental Body to be payable, by Company (whether pursuant to any Tax Return
or otherwise) has been duly paid in full on a timely basis. Any Tax required to
have been withheld or collected by Company has been duly withheld and collected,
and (to the extent required) each such Tax has been paid to the appropriate
Governmental Body.
18
(b) All Tax Returns required to be filed by or on behalf of
Company with any Governmental Body with respect to any taxable period ending on
or before the Closing Date ("COMPANY RETURNS") (i) have been, or will be, filed
when due, and (ii) have been, or will be when filed, accurately and completely
prepared in full compliance with all applicable Legal Requirements. To the
extent due from Company or Seller, all amounts shown on Company Returns to be
due on or before the Closing Date, and all amounts otherwise payable in
connection with Company Returns on or before the Closing Date, have been paid on
or before the Closing Date. Company has made available to Purchaser copies of
all Company Returns filed for the fiscal periods ended December 31, 1996 and
December 31, 1997.
(c) Company's liability for unpaid Taxes for all periods ending on
or before the date of the Financial Statements, including any liability for
Taxes assumed under contract, does not, in the aggregate, exceed the amount of
the current liability accruals for Taxes (excluding reserves for deferred taxes)
reported in the Financial Statements. Company will establish, in the Ordinary
Course of Business, reserves adequate for the payment of all Taxes for the
period from December 31, 1997 through the Closing Date.
(d) Company has made available to Purchaser copies of all audit
reports and similar documents (to which Company has access) relating to Company
Returns. No extension or waiver of the limitation period applicable to any of
Company Returns (or any Tax Return of Seller relating to Company) has been
granted (by Company or any other Person), and no such extension or waiver has
been requested from Company.
(e) No claim or other Proceeding is pending or has been threatened
against or with respect to Company, or Seller with respect to Company, in
respect of any Tax and neither Seller nor Parent has any Knowledge of any facts
or circumstances that could give rise to any claim or Proceeding. Neither
Company nor its members has been, and will not be, required to include any
adjustment in taxable income for any tax period (or portion thereof) pursuant to
Section 481 or Section 263A of the Code or any comparable provision under state
or foreign Tax laws as a result of transactions or events occurring, or
accounting methods employed, prior to the Closing. Company has at all times been
taxable as a "partnership" for Federal income tax purposes and not as a
"corporation." Company is not liable for Taxes incurred by any individual,
trust, corporation, partnership or any other Entity either as a transferee,
pursuant to Treasury Regulations Section 1.1502-6, or pursuant to any other
provision of federal, territorial, state, local or foreign law or regulations.
Company is not a party to any joint venture, partnership or other arrangement or
contract which could be treated as a partnership for United States federal
income tax purposes. Company does not own any stock or other ownership interest
in any Entity.
(f) Except for the Employee Incentive Plan, Company is not party
to any agreement, plan, arrangement or other Contract covering any employee or
independent contractor or former employee or independent contractor of Company
that, individually or collectively, could give rise directly or indirectly to
the payment of any amount that would not be deductible pursuant to Section 280G
or Section 162 of the Code. Company is not, and has never been, a
19
party to or bound by any tax indemnity agreement, tax sharing agreement, tax
allocation agreement or similar Contract, and has not otherwise assumed the tax
liability of any other Person under contract.
(g) Neither the Company nor the Seller nor any director or officer
(or employee responsible for Tax matters) of either the Company or Seller
expects any authority to assess any additional Taxes with respect to the Company
for any period for which Tax Returns have been filed. There is no dispute or
claim concerning any Tax of the Company (or of the Members with respect to their
interest in the Company) either (A) claimed or raised by any authority in
writing or (B) as to which any of the Company, the Seller and the directors and
officers (and employees responsible for Tax matters) of the Company and the
Seller has Knowledge based upon personal contact with any agent of such
authority.
3.18 SECURITIES LAWS COMPLIANCE; REGISTRATION RIGHTS.
Company has complied with all federal and state securities laws in
connection with all offers and sales of securities issued by Company prior to
the date of this Agreement. Company has not heretofore granted any other
purchaser of its securities the right to require Company to register any
securities under the Securities Act or to qualify for any exemption thereunder.
3.19 FINDERS AND BROKERS; FEES.
(a) Neither Company nor any Person acting on behalf of Company has
negotiated with any finder, broker, intermediary or any similar person in
connection with the transactions contemplated herein.
(b) Company has not entered into a contract or other agreement
that provides that a fee shall be paid to any Person or Entity if the
Transactions are consummated.
3.20 ENVIRONMENTAL COMPLIANCE.
Company is and, to the Knowledge of Company, has been at all times in
compliance in all material respects with all Environmental Laws. Company has now
and at all times has had all the necessary permits required under Environmental
Laws for the operation of its business, and is not and has not been in violation
of any of the terms and conditions of any of its permits. Company has not
received any notice or other communication (in writing or otherwise) that
alleges that Company is not in compliance with any Environmental Law. Company
has not generated, manufactured, produced, transported, imported, used, treated,
refined, processed, handled, stored, discharged, released, or disposed of any
Hazardous Materials (whether lawfully or unlawfully) at any of the Leased
Premises occupied or controlled by Company on or at any time prior to the
Closing Date other than common household and office products in DE MINIMIS
quantities. To the Knowledge of Company: (a) there are not and have not been any
releases or threatened releases of any Hazardous Materials in any quantity
(other than common household and office products in DE MINIMIS quantities) at,
on, or from the Leased Premises; (b) there are no circumstances that may prevent
or interfere with Company's compliance with any Environmental
20
Law; and (c) no former owner or user of the Leased Premises engaged in any type
of manufacturing or commercial activity which might be reasonably expected to
generate, manufacture, produce, transport, import, use, treat, refine, process,
handle, store, discharge, release, or dispose of any Hazardous Materials
(whether lawfully or unlawfully) on the Leased Premises.
3.21 INSURANCE.
(a) Company has made available to Purchaser copies of all of the
insurance policies maintained by or at the expense of, or for the direct or
indirect benefit of, Company (including all renewals thereof and endorsements
thereto) and binders relating thereto indicating that such policies are in full
force and effect as of the date hereof, and all of the pending applications
relating thereto ("Company Policies").
(b) Each of the Company Policies is valid, enforceable and in full
force and effect, and has been issued by an insurance carrier that, to the
Knowledge of Company, is solvent, financially sound and reputable. All of the
information contained in the applications submitted in connection with said
policies was (at the times said applications were submitted) accurate and
complete, and all premiums and other amounts owing with respect to said policies
have been paid in full on a timely basis. The nature, scope and dollar amounts
of the insurance coverage provided by said policies are sufficient to both
adequately insure Company's business, assets, operations, key employees,
services and potential liabilities, and to meet the insurance maintenance
requirements, if any, under all Company Contracts. Each of the Company Policies
will continue in full force and effect following the Closing and Company has
paid all premiums due, and has otherwise performed all of its obligations, under
each policy to which it is a party or that provides coverage to it or any of its
directors or officers in connection with their performance of services to
Company.
(c) Except for the litigation claim named in Section 9.2(b)(iii)
hereof, there is no pending claim under or based upon any of the Company
Policies, and no event has occurred, and no condition or circumstance exists,
that might (with or without notice or lapse of time) directly or indirectly give
rise to or serve as a basis for any such claim.
(d) Company has not received:
(i) any notice or other communication (in writing or
otherwise) regarding the actual or possible cancellation or invalidation of any
of the Company Policies or regarding any actual or possible adjustment in the
amount of the premiums payable with respect to any of said policies;
(ii) any notice or other communication (in writing or
otherwise) regarding any actual or possible refusal of coverage under, or any
actual or possible rejection of any claim under, any of the Company Policies; or
21
(iii) any indication that the issuer of any of the Company
Policies may be unwilling or unable to perform any of its obligations
thereunder.
3.22 RELATED PARTY TRANSACTIONS.
Other than transactions with CCMC:
(a) No Related Party has, and no Related Party has at any time
since December 31, 1997, had, any direct or indirect interest of any nature in
any asset used in or otherwise relating to the business of Company.
(b) No Related Party is, or has at any time since December 31,
1997 been, indebted to Company for an amount, individually or in the aggregate,
in excess of $5,000 (all of which amounts have been paid in full as of the date
hereof).
(c) Since December 31, 1997, no Related Party has entered into, or
has had any direct or indirect financial interest in, any Contract, transaction
or business dealing of any nature involving Company.
(d) No Related Party is competing, or has at any time since
December 31, 1997 competed, directly or indirectly, with Company in any market
served by Company.
(e) No Related Party has any claim or right against Company.
(f) No event has occurred, and no condition or circumstance
exists, that might (with or without notice or lapse of time) directly or
indirectly give rise to or serve as a basis for any claim or right in favor of
any Related Party against Company.
3.23 ABSENCE OF CHANGES.
Except with the Knowledge and agreement of Company's Managers Committee
or its predecessor, since December 31, 1997:
(a) there has not been any material adverse change in Company's
business, condition, assets, liabilities, operations, financial performance, net
income or prospects (or in any aspect or portion thereof), and no event has
occurred that might have a material adverse effect on Company's business,
condition, assets, liabilities, operations, financial performance, net income or
prospects (or on any aspect or portion thereof);
(b) there has not been any material loss, damage or destruction
to, or any interruption in the use of, any of Company's assets (whether or not
covered by insurance) other than such loss, damage or destruction which is
covered by a manufacturer's warranty;
(c) Company has not repurchased, redeemed or otherwise reacquired
any of its Membership Interests or other securities;
22
(d) Company has not sold or otherwise issued (or granted any
warrants, options or other rights to purchase) any Membership Interests or any
other securities;
(e) Company has not amended its Certificate of Organization or
Operating Agreement and has not effected or been a party to any Acquisition
Transaction, recapitalization, reclassification of securities, securities split,
reverse securities split or similar transaction;
(f) Company has not purchased, leased, licensed or otherwise
acquired any asset from any other Person, except for those acquired by Company
in the Ordinary Course of Business;
(g) Company has not made any capital expenditure except in the
Ordinary Course of Business;
(h) Company has not sold, assigned or otherwise transferred, and
has not leased or licensed, any asset to any other Person, except for tangible
products sold by Company from its inventory in the Ordinary Course of Business;
(i) Company has not pledged or hypothecated any of its assets or
otherwise permitted any of its assets to become subject to any Encumbrance;
(j) Company has not made any loan or advance to any Person,
including without limitation Seller and Company's officers, employees and
members;
(k) Company has not (i) established or adopted any Employee
Benefit Plan, or (ii) paid any bonus or made any profit sharing or similar
payment to, or increased the amount of the wages, salary, commissions, fringe
benefits or other compensation or remuneration payable to, any of its members,
officers or employees except in the Ordinary Course of Business;
(l) there has been no resignation or termination of employment of
any member of the management of Company;
(m) there has been no labor dispute involving Company or its
employees and none is pending or, to Company's Knowledge, threatened;
(n) Company has not entered into, and none of the assets owned or
used by Company has become bound by, any material Contract, other than leases
relating to shipping containers entered into in the Ordinary Course of Business;
(o) no material Contract by which Company or any of the assets
owned or used by Company is or was bound, or under which Company has or had any
rights or interest, has been amended or terminated;
(p) there has been no borrowing or agreement to borrow by Company
or change in the contingent obligations of Company by way of guaranty,
endorsement, indemnity, warranty or otherwise or grant of a mortgage or security
interest in any property of Company, and
23
Company has not otherwise incurred, assumed or otherwise become subject to any
Liability in excess of $5,000, individually or in the aggregate, other than
accounts payable incurred by Company in the Ordinary Course of Business;
(q) Company has not discharged any Encumbrance or discharged, paid
or forgiven any indebtedness or other Liability in excess of $5,000,
individually or in the aggregate, except for accounts payable that (i) are
reflected as current liabilities in the "liabilities" column of the Unaudited
Interim Balance Sheet or have been incurred by Company since the date of the
Unaudited Interim Balance Sheet in the Ordinary Course of Business, and (ii)
have been discharged or paid in the Ordinary Course of Business;
(r) Company has not forgiven any debt or otherwise released or
waived any right or claim;
(s) Company has not changed any of its methods of accounting or
accounting practices in any respect;
(t) Company has not entered into any transaction or taken any
other action outside the Ordinary Course of Business;
(u) Company has not received notice that there has been a loss of,
or cancellation of a material order by, any customer of Company; and
(v) Company has not agreed, committed or offered (in writing or
otherwise), and has not attempted, to take any of the actions referred to in
clauses (c) through (u) above.
3.24 SELLER.
(a) Seller owns, beneficially and of record, a sixty percent (60%)
Membership Interest in Company free and clear of any Encumbrances.
(b) Seller has the absolute and unrestricted right, power and
authority to enter into and to perform its obligations under this Agreement and
the other Transaction Documents to which it is or is contemplated to be a party.
This Agreement and the other Transaction Documents constitute, or upon execution
and delivery will constitute, the legal, valid and binding obligations of
Seller, enforceable against Seller in accordance with their respective terms.
(c) The execution and delivery of this Agreement and other
Transaction Documents, and the consummation of the Transactions, by Seller will
not, directly or indirectly (with or without notice or lapse of time)
contravene, conflict with or result in a violation of, or give any Governmental
Body or other Person the right to challenge any of the Transactions or to
exercise any remedy or obtain any relief under, any Legal Requirement or any
Order to which Seller is subject.
(d) There is no pending Proceeding, and, to the Knowledge of
Seller, no Person has threatened to commence any Proceeding, that challenges, or
that may have the effect of
24
preventing, delaying, making illegal or otherwise interfering with, any of the
Transactions or Seller's ability to comply with or perform his obligations and
covenants under the Transaction Documents; and no event has occurred, and no
claim, dispute or other condition or circumstance exists, that might directly or
indirectly give rise to or serve as a basis for the commencement of any such
Proceeding.
(e) Seller is not subject to any Order that relates to Company's
business or to any of the assets owned or used by Company.
(f) There is no proposed Order that, if issued or otherwise put
into effect, may have an adverse effect on the ability of Seller to comply with
or perform any covenant or obligation under this Agreement or the other
Transaction Documents.
(g) To the Knowledge of Seller, no Governmental Body has proposed
or is considering any Legal Requirement (other than any Legal Requirement that
would be applicable generally to the ship container industry) that, if adopted
or otherwise put into effect, may adversely affect its ability to comply with or
perform any of his covenants or obligations under this Agreement or the other
Transaction Documents.
(h) Seller will indemnify Purchaser and Company and hold them
harmless from any liability or expense arising from any claim for brokerage
commissions, finder's fees or other similar compensation based upon any
agreement, arrangement or understanding made by or on behalf of Seller or
Company.
(i) All information regarding Seller that has been furnished to
Purchaser or any of its Representatives by or on behalf of Seller or any of its
Representatives is accurate and complete in all material respects.
(j) Seller has not, at any time, (i) made a general assignment for
the benefit of creditors, (ii) filed, or had filed against it, any bankruptcy
petition or similar filing, (iii) suffered the attachment or other judicial
seizure of all or a substantial portion of its assets, (iv) admitted in writing
its inability to pay its debts as they become due, or (v) taken or been the
subject of any action that may have an adverse effect on his ability to comply
with or perform its covenants or obligations under this Agreement.
(k) Seller has the capacity and financial capability to comply
with and perform all its covenants and obligations under this Agreement and each
of the other Transaction Documents. The Purchase Price represents reasonably
equivalent value for the Purchased Interests, and upon consummation of the
Closing, after giving effect to the consummation of all of the Transactions,
including without limitation receipt of the payments to be made to Seller
hereunder, Seller will not: (i) be insolvent (either because its financial
condition is such that the sum of its debts is greater than the fair value of
its assets or because the present fair salable value of its assets will be less
than the amount required to pay its probable liability on its debts as they
become absolute and matured); (ii) have unreasonably small capital with which to
engage in its
25
business; or (iii) have incurred (and reasonably believes it will not incur)
debts beyond its ability to pay as they become absolute and matured.
3.25 POWERS OF ATTORNEY.
Company has not given a power of attorney to any Person.
3.26 BENEFIT PLANS; ERISA.
(a) None of (i) Company "employee benefit plans" within the
meaning of Section 3(3) of ERISA, (ii) all employment agreements, including, but
not limited to, any individual benefit arrangement, policy or practice with
respect to any current or former employee or member of Company or Member of the
Controlled Group, and (iii) all other employee benefit, bonus or other incentive
compensation, stock option, stock purchase, stock appreciation, severance pay,
lay-off or reduction in force, change in control, sick pay, vacation pay, salary
continuation, retainer, leave of absence, educational assistance, service award,
employee discount or fringe benefit plans, arrangements, policies or practices,
whether legally binding or not, that Company or any Member of the Controlled
Group maintains, contributes to or has any obligation to or liability for
(collectively, the "Plans") is a Defined Benefit Plan, and neither Company nor
any Member of the Controlled Group has ever sponsored, maintained or contributed
to, or ever been obligated to contribute to, a Defined Benefit Plan.
(b) None of the Plans is a Multiemployer Plan, and neither Company
nor any Member of the Controlled Group has ever contributed to, or ever been
obligated to contribute to, a Multiemployer Plan.
(c) Company does not maintain or contribute to any welfare benefit
plan that provides health benefits to an employee after the employee's
termination of employment or retirement except as required under Section 4980B
of the Code and Sections 601 through 608 of ERISA.
(d) Each Plan that is an "employee benefit plan," as defined in
Section 3(3) of ERISA, complies by its terms and in operation with the
requirements provided by any and all statutes, orders or governmental rules or
regulations currently in effect and applicable to the Plan, including but not
limited to ERISA and the Code.
(e) All reports, forms and other documents required to be filed
with any government entity with respect to any Plan (including without
limitation, summary plan descriptions, Forms 5500 and summary annual reports)
have been timely filed and are accurate.
(f) Each Plan intended to qualify under Section 401(a) of the Code
has been determined by the Internal Revenue Service to so qualify after January
1, 1985, and each trust maintained pursuant thereto has been determined by the
Internal Revenue Service to be exempt from taxation under Section 501 of the
Code. Nothing has occurred since the date of the Internal Revenue Service's
favorable determination letter that could adversely affect the qualification of
26
the Plan and its related trust. Company and each Member of the Controlled Group
have timely and properly applied for a written determination by the Internal
Revenue Service on the qualification of each such Plan and its related trust
under Section 401(a) of the Code, as amended by the Tax Reform Act of 1986 and
subsequent legislation enacted through the date hereof, and Section 501 of the
Code.
(g) All contributions for all periods ending prior to the Closing
Date (including periods from the first day of the current plan year to the
Closing Date) have been made prior to the Closing Date by Company in accordance
with past practice and the recommended contribution in any applicable actuarial
report.
(h) All insurance premiums have been paid in full, subject only to
normal retrospective adjustments in the ordinary course, with regard to the
Plans for plan years ending on or before the Closing Date.
(i) With respect to each Plan:
(i) no prohibited transactions (as defined in Section 406 or
407 of ERISA or Section 4975 of the Code) have occurred for which a statutory
exemption is not available;
(ii) no action or claims (other than routine claims for
benefits made in the ordinary course of Plan administration for which Plan
administrative review procedures have not been exhausted) are pending,
threatened or imminent against or with respect to any Plan, any employer who is
participating (or who has participated) in any Plan or any fiduciary (as defined
in Section 3(21) of ERISA), of the Plan;
(iii) neither Company nor any fiduciary has Knowledge of any
facts that could give rise to any such action or claim; and
(iv) it provides that it may be amended or terminated at any
time and, except for benefits protected under Section 411(d) of the Code, all
benefits payable to current or terminated employees or any beneficiary may be
amended or terminated by Company at any time without liability.
(j) Neither Company nor any Member of the Controlled Group has any
liability or is threatened with any liability (whether joint or several) (i) for
any excise tax imposed by Sections 4971, 4975, 4976, 4977 or 4979 of the Code,
or (ii) to a fine under Section 502 of ERISA.
(k) All the Plans, to the extent applicable, are in compliance
with the continuation of group health coverage provisions contained in Section
4980B of the Code and Sections 601 through 608 of ERISA.
27
(l) Copies of all documents creating or evidencing any Plans, and
all reports, forms and other documents required to be filed with any
governmental entity (including, without limitation, summary plan descriptions,
Forms 5500 and summary annual reports for all Plans subject to ERISA), have been
made available to Purchaser. There are no negotiations, demands or proposals
which are pending or have been made that concern matters now covered, or that
would be covered, by the Plans.
(m) All expenses and liabilities relating to all of the Plans have
been, and on the Closing Date will be, fully and properly accrued on Company's
books and records and disclosed in accordance with GAAP and in Plan financial
statements.
3.27 SALE AND LEASE OF PRODUCTS; PERFORMANCE OF SERVICES.
Company is not subject to any material Liability arising directly or
indirectly from any product sold, leased, or financed by the Company, or any
repair services or other services performed by, Company. Except for claims which
are covered by manufacturer's warranties, no customer or other Person has
asserted or threatened to assert any material claim against Company (i) under or
based upon any warranty provided by or on behalf of Company, or (ii) under or
based upon any other warranty relating to any product sold or leased by Company
or any services performed by Company. To the Knowledge of Company, no event has
occurred, and no condition or circumstance exists, that likely would (with or
without notice or lapse of time) directly or indirectly give rise to or serve as
a basis for the assertion of any such claim.
3.28 FULL DISCLOSURE.
(a) Neither this Agreement nor any of the other Transaction
Documents contains or will contain any untrue statement of material fact; and
none of such documents omits or will omit to state any material fact necessary
to make any of the representations, warranties or other statements or
information contained herein or therein not misleading.
(b) Except for matters specifically disclosed or referred to
herein, there is no fact within the Knowledge of Company (other than publicly
known facts relating to matters of general applicability that will adversely
affect all comparable Entities) that (i) would reasonably be expected to have a
material adverse effect on Company's business, condition, assets, liabilities,
operations, financial performance, net income or prospects (or on any aspect or
portion thereof) or on the ability of Seller or such Company to comply with or
perform any covenant or obligation under this Agreement or any of the other
Transaction Documents to which it is or is contemplated to be a party, or (ii)
may have the effect of preventing, delaying, making illegal or otherwise
interfering with any of the Transactions.
3.29 DUE DILIGENCE INFORMATION.
Company has made available to Purchaser and Purchaser's Representatives
with full and complete access to all of Company's records and other documents
and data, and has produced all
28
documents and related materials in response to the itemized requests on
Purchaser's due diligence request list that was sent to Company in contemplation
of the Transactions.
3.30 PRODUCT LIABILITY CLAIMS; WARRANTY CLAIMS.
There are no product liability claims currently pending or threatened
against Company or the Business or of which Company is aware. There are no
warranty claims currently outstanding against Company or of which Company is
aware other than those covered by manufacturers warranties.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser hereby represents and warrants to Seller as follows:
4.1 ORGANIZATION, GOOD STANDING, QUALIFICATION.
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, is duly qualified to conduct
business and is in good standing under the laws of each jurisdiction in which
the nature of its business or the ownership or leasing of its properties
requires such qualification. Purchaser has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement and all other Transaction Documents contemplated to be executed
and delivered by Purchaser, and to carry out the provisions of this Agreement
and such other Transaction Documents, and to carry on its business as presently
conducted and as presently proposed to be conducted.
4.2 INVESTMENT REPRESENTATIONS.
(a) Purchaser understands that the Purchased Interest has not been
registered under the Securities Act. Purchaser also understands that the
Purchased Interest is being offered and sold pursuant to an exemption from
registration contained in the Securities Act based in part upon Purchaser's
representations contained in this Section 4.2.
(b) Purchaser is acquiring the Purchased Interests for Purchaser's
own account for investment only, and not with the intention of making a public
distribution thereof.
(c) Purchaser represents that by reason of its, or of its
management's business or financial experience, Purchaser has the capacity to
protect its own interests in connection with the Transactions contemplated in
this Agreement and the other Transaction Documents. Purchaser is able to bear
the loss of its entire investment in Company. Purchaser is not a corporation,
partnership or other entity specifically formed for the purpose of consummating
this transaction.
(d) Purchaser is an accredited investor as that term is defined in
Rule 501(a) of Regulation D, promulgated pursuant to the Securities Act.
29
4.3 CONSENTS.
All consents, approvals, orders, or authorizations of, or registration,
qualification, designation, declaration or filing with any governmental or
banking authority required on the part of Purchaser in connection with the
consummation of the Transactions contemplated in this Agreement and the other
Transaction Documents, have been or shall have been obtained prior to and shall
be effective as of the Closing.
4.4 OWNERSHIP OF COMPANY.
At the Closing, upon the consummation of the Transactions and the
transactions contemplated by the MCS-Related Purchase Agreement, Purchaser shall
own, beneficially and of record, ninety-one percent (91%) of the Membership
Interests of the Company.
5. [INTENTIONALLY OMITTED]
6. [INTENTIONALLY OMITTED]
7. OTHER AGREEMENTS.
7.1 COVENANT NOT TO COMPETE; NON-SOLICITATION.
(a) In order to induce Purchaser to enter into this Agreement and
to purchase the Purchased Interests from Seller, and to enable Purchaser to
obtain the full benefit of such purchase of the Purchased Interest, including
the goodwill of the acquired business, Seller and Parent, for itself and each of
its Subsidiaries agrees for a period (the "NONCOMPETITION PERIOD") from and
after the date hereof to and including the fifth anniversary of the Closing
Date, not to directly or indirectly engage or invest in, own, manage, operate,
finance, control, or participate in the ownership, management, operation or
control of, or render services to itself or any other Person in the selling,
leasing or financing of refrigerated containers which is competitive with any
such business engaged in by Company in any jurisdiction in which Company has
direct customers; PROVIDED, HOWEVER, that (i) Seller may purchase or otherwise
acquire up to one percent (1%), in the aggregate, of any class of securities of
any enterprise (but without otherwise participating in the activities of such
enterprise) if such securities are listed on any national or regional securities
exchange or have been registered under Section 12(g) of the Exchange Act, (ii)
Parent and CCMC may engage in such activities only to the extent it does so in
connection with the fulfillment of its obligations pursuant to Section 7.2
hereof, and (iii) Parent and/or any subsidiary of Parent may retain ownership,
beneficially and of record, of up to nine percent (9%) of the Membership
Interests of Company.
(b) For a period from and after the date hereof to and including
the fifth anniversary of the Closing Date, Seller agrees not to directly or
indirectly, either for itself or any other Person:
30
(i) induce or attempt to induce any employee to leave the
employ of Purchaser or any Entity under common control with
Purchaser, including Company;
(ii) in any way interfere with the relationship between
Purchaser (or any Entity under common control with Purchaser,
including Company) and any employee of Purchaser (or such Entity)
or;
(iii) employ, or otherwise engage as an employee, independent
contractor or otherwise, any employee of Purchaser or any Entity
under common control with Purchaser, including Company.
(c) For a period from and after the dates hereof to and including
the tenth anniversary of the Closing, Seller agrees not to directly or
indirectly either for itself or any other Person:
(i) induce or attempt to induce any customer, supplier,
licensee or business relation of Purchaser or any Entity under
common control with Purchaser, including any of Company, to cease
doing business with Purchaser or such Entity, or in any way
interfere with the relationship between any customer, supplier,
licensee or business relation of Purchaser or such Entity; or
(ii) solicit the manufacture or lease of refrigerated
containers or related business of any Person that has received
such services from Company prior to the Closing Date or that
otherwise is a customer of any of Company or any Entity under
common control with Company.
(d) In the event of a breach by Seller of any covenant set forth
in Section 7.1(a) above, the term of such covenant shall be extended by the
period of duration of such breach.
7.2 CCMC WARRANTIES
In order to induce Purchaser to enter into this Agreement and to
purchase the Purchased Interests from Seller, and to enable Purchaser to obtain
the full benefit of such purchase of the Purchased Interest, Parent hereby
agrees to cause CCMC to perform (or, alternatively, that Parent itself shall
perform) all of CCMC's obligations under the CCMC Warranties to the full extent
of such CCMC Warranties. Notwithstanding Section 7.1 hereof, Parent shall be
permitted to provide indemnification, goods or services to Purchaser or the
Company, as the case may be, in satisfaction of its obligation under the CCMC
Warranties.
7.3 TAX ELECTION
The Company, Purchaser, and Seller agree that a Section 754 election
will be made that will apply to Purchaser's acquisition of the Purchased
Interest, and the Company, Purchaser, Seller and Parent will cooperate and take
any action required to make such election.
31
7.4 FINDERS AND BROKERS.
Purchaser will indemnify Seller and Company and hold them harmless from
any liability or expense arising from any claim for brokerage commissions,
finder's fees or other similar compensation based upon any agreement,
arrangement or understanding made by or on behalf of Purchaser.
8. [INTENTIONALLY OMITTED]
9. INDEMNIFICATION, ETC.
9.1 SURVIVAL OF REPRESENTATIONS AND COVENANTS.
(a) The representations, warranties, covenants and obligations of
each party set forth in this Agreement or any other Transaction Document shall
survive the Closing Date. All representations and warranties of the parties in
this Agreement or any other Transaction Document shall terminate on the
Indemnification Termination Date.
(b) The representations, warranties, covenants and obligations of
the respective parties, and the rights and remedies that may be exercised by any
of them, shall not be limited or otherwise affected by or as a result of any
information furnished to, or any investigation made by, or the Knowledge of, any
of the parties or their respective Representatives.
(c) The representations, warranties, covenants and obligations of
each of Company, Seller and Parent are made to Purchaser and for the benefit of
each Indemnitee (as defined in Section 9.2(a) below).
9.2 INDEMNIFICATION BY SELLER AND PARENT.
(a) Each of Seller and Parent severally covenants and agrees to
defend, indemnify and hold harmless Purchaser and each of its officers,
directors, employees, agents and Representatives (collectively, the
"INDEMNITEES" and individually each an "INDEMNITEE") from and against, and shall
compensate and reimburse each of the Indemnitees for, any Damages which are
suffered or incurred by any of the Indemnitees (regardless of whether or not
such Damages relate to any third party claim) directly or indirectly arising or
resulting from or connected with:
(i) any Breach of the representations and warranties
contained in Section 3.24;
(ii) any Liability to the Company arising out of the CCMC
Warranties; and
32
(iii) any Breach of any covenant or obligation of Seller or
Parent under this Agreement or any other Transaction Document.
(b) Each of Seller and Parent, severally covenants and agrees to
defend, indemnify and hold harmless Purchaser and each of its officers,
directors, employees, agents and Representatives (collectively, the
"INDEMNITEES" and individually each an "INDEMNITEE") from and against, and shall
compensate and reimburse each of the Indemnitees for, sixty percent (60%) of any
Damages which are suffered or incurred by any of the Indemnitees (regardless of
whether or not such Damages relate to any third party claim) directly or
indirectly arising or resulting from or connected with:
(i) any Breach of any representation or warranty made by
Company, Seller or Parent in this Agreement (other than the representations and
warranties contained in Section 3.24), it being understood that all
representations and warranties set forth herein are made as of the date hereof,
except for any representation and warranty made as of a different specified
date, which representation and warranty is made as of such specified date;
(ii) any Liability arising out of the Total Storage
Transactions; and
(iii) any Liability (including, without limitation,
settlement obligations, liabilities and costs in respect thereof) arising from
or in connection with WALTER F. VALENTINE V. CARLISLE LEASING INTERNATIONAL
COMPANY ET AL., United States District Court for the Northern District of New
York, Docket Number 97-CV-1406.
(c) Each of the parties hereto acknowledges that any capital
contribution required of SynTec under the Restated Operating Agreement with
respect to any Damage sustained by Company and for which Purchaser or MAC has
been fully indemnified under Section 9.2(b) shall be the sole responsibility of
Purchaser.
9.3 INDEMNIFICATION BY PURCHASER.
Each of Purchaser and MAC severally covenants and agrees to defend,
indemnify and hold harmless Seller and its successors from and against, and
shall compensate and reimburse Seller for, any Damages that are suffered or
incurred by it (regardless of whether such Damages relate to any third party
claim), directly or indirectly arising or resulting from or connected with: (i)
any Breach of any representation or warranty made by Purchaser in this Agreement
or any other Transaction Document; or (ii) any Breach of any covenant or
obligation of Purchaser contained in this Agreement or any other Transaction
Document. Purchaser's obligations under this Section 9.3 shall terminate on the
later to occur of (a) the Indemnification Termination Date or (b) as to Section
4.1, the expiration of the statute of limitations period legally applicable to
it, including any statute of limitations governing fraud.
33
9.4 LIMITATIONS ON INDEMNITY OBLIGATIONS.
(a) Notwithstanding anything to the contrary contained in this
Agreement (a) the aggregate liability for Damages under this Article 9 of Seller
and Parent, on the one hand, and Purchaser and MAC, on the other hand, shall
not, in either instance, exceed $10,600,000, and (b) neither Seller or Parent,
on the one hand, nor Purchaser or MAC, on the other hand, shall be liable for
Damages under this Article 9 unless and only to the extent such Damages exceed
$500,000 in the aggregate. No party is required to make any indemnification
payment hereunder unless a claim is initiated prior to expiration of the
applicable survival period set forth in Section 9.1(a).
9.5 NO CONTRIBUTION.
(a) With respect to the matters for which Purchaser or any other
Indemnitee is entitled to indemnification pursuant to Section 9.2(a), Seller and
Parent hereby waive and acknowledge and agree that they shall not have and shall
not exercise or assert, or attempt to exercise or assert, against Purchaser,
Company or any Indemnitee, any right of contribution or right of indemnity or
any other right or remedy in connection with any indemnification obligation to
Purchaser or any Indemnitee to which Seller or Parent may become subject under
any of the Transaction Documents or otherwise in connection with any of the
Transactions. It is the intention of the parties that after the Closing the
remedy for Purchaser or any Indemnitee seeking indemnification from Seller or
Parent hereunder be a remedy solely against Seller or Parent and not against
Company; accordingly, Seller and Parent agree to the waivers contained in this
Section 9.5. Seller and Parent further acknowledge that the waivers,
acknowledgments and agreements of Seller and Parent contained in this Section
are an essential inducement to Purchaser in entering into this Agreement and
agreeing to consummate the Transactions.
(b) With respect to the matters for which Seller is entitled to
indemnification pursuant to Section 9.3, Purchaser hereby waives, and
acknowledges and agrees that it shall not have and shall not exercise or assert,
or attempt to exercise or assert, against Seller or Company, any right of
contribution or right of indemnity or any other right or remedy in connection
with any indemnification obligation to Seller to which Purchaser may become
subject under any of the Transaction Documents or otherwise in connection with
any of the Transactions. It is the intention of the parties that after the
Closing the remedy for Seller seeking indemnification from Purchaser hereunder
be a remedy solely against Purchaser; accordingly, Purchaser agrees to the
waivers contained in this Section 9.5. Purchaser further acknowledges that the
waivers, acknowledgments and agreements of Purchaser contained in this Section
are an essential inducement to Seller in entering into this Agreement and
agreeing to consummate the Transactions.
9.6 INTEREST.
To the extent any party does not pay Damages due from such party within
thirty (30) days after demand for indemnification hereunder in respect of which
it is ultimately determined that the party seeking indemnification is entitled
thereto, then such non-paying party shall also be
34
required to pay to such indemnified party interest on the amount of the related
Damages (for the period commencing as of the date on which payment was first
sought and ending on the date on which such payment is made). Such interest
shall accrue at a floating rate equal to the rate of interest publicly announced
by The Bank of Tokyo-Mitsubishi, New York branch from time to time as its prime,
base or reference rate, except to the extent interest has been included in the
amount of Damages awarded.
9.7 SETOFF.
In addition to any rights of setoff or other rights that any Person may
have at common law or otherwise, each Person shall have the right to set off any
amount that may be owed to it by the other under this Section 9 against any
amount otherwise payable by such Person hereunder (including, without
limitation, any Premium Payment otherwise payable by Purchaser).
9.8 DEFENSE OF THIRD PARTY CLAIMS.
In the event of the assertion or commencement by any Person of any
claim or Proceeding (whether against Purchaser, Company, Seller, Parent any
other Indemnitee or any other Person) with respect to which a party hereto may
become obligated hereunder to indemnify, hold harmless, compensate or reimburse
any Indemnitee pursuant to this Section 9, the party to be indemnified (the
"INDEMNIFIED PARTY") shall reasonably promptly, but in any event within thirty
(30) days following the Indemnified Party's actual knowledge thereof, notify the
Person providing the indemnification hereunder (the "INDEMNIFYING PARTY") of
such claim or Proceeding by providing notice to the Indemnifying Party. In any
such event, the Indemnifying Party and the Indemnified Party shall agree upon
mutually acceptable counsel and upon a mutually agreeable strategy for the
defense of such claim or Proceeding. The Indemnifying Party shall bear and pay
all costs and expenses (including fees and costs of counsel), in connection with
the defense of any such claim or Proceeding; PROVIDED that all such expenses
paid by Seller or Parent, combined with any other indemnification, will in no
event exceed the respective indemnification limitations set forth in Section
9.4.
With regard to the defense of any such claim or Proceeding:
(a) all expenses reasonably incurred and relating to the defense
of such claim or Proceeding (whether or not incurred by the Indemnified Party)
shall be borne and paid exclusively by the Indemnifying Party;
(b) the Indemnifying Party and the Indemnified Party shall make
available to one another any documents and materials in its possession or
control that may be necessary to the defense of such claim or Proceeding;
(c) the Indemnifying Party and the Indemnified Party shall keep
one another informed of all material developments and events relating to such
claim or Proceeding; and
35
(d) there shall be no settlement, adjustment or compromise of such
claim or Proceeding without the prior consent of both the Indemnifying Party and
the Indemnified Party, which consent shall not be unreasonably withheld by
either party.
9.9 SOLE REMEDY.
Other than rights to equitable relief, the sole remedy available to any
Indemnitee or other Person for Breaches of this Agreement or the other
Transaction Documents shall be limited to the rights set forth in this Section
9. The maximum aggregate amount payable by Seller to any and all Indemnitees for
any and all Damages arising out of, or in connection with, this Agreement, any
Transaction Document, any certificate, any other document delivered, or any of
the Transactions, are the amounts specified as limitations in Section 9.4
hereof. In no event will any other Person except the named Indemnitees have any
rights to any payments whatsoever.
9.10 EXERCISE OF REMEDIES BY INDEMNITEES OTHER THAN PURCHASER AND BY
SELLER.
No Person other than an Indemnitee (or any successor or assignee
thereof) shall be permitted to assert any indemnification claim or exercise any
other remedy under this Agreement unless Purchaser, Company and Seller (or any
successor assignee thereof) shall have consented to the assertion of such
indemnification claim or the exercising of such other remedy.
9.11 METHOD OF PAYMENT FOR INDEMNITY OBLIGATIONS OF SELLER AND PARENT.
(a) With respect to its obligations to indemnify Purchaser for
Damages under Section 9.2, Seller and Parent may satisfy such indemnity
obligations to Purchaser either by (i) paying the amount of such obligations to
Purchaser in cash, or (ii) irrevocably transferring to Purchaser or its
designee, free and clear of any Encumbrance, an additional Membership Interest
percentage with a value equal to the indemnity obligations being satisfied. For
purposes of this Section, the value of each 1% Membership Interest on any date
of determination shall be equal to the quotient of (A) (x) $106,000,000 less (y)
the amount of the Damages in respect of which the indemnity is being made,
divided by (B) 100.
(b) If the value of the Membership Interest owned by Seller is
insufficient to satisfy all of the indemnity obligations of Seller and Parent
owed to Purchaser in accordance with Section 9.11(a), then the remainder of such
indemnity obligation shall be paid in cash.
9.12 NO LIMITATION
It is understood and agreed by the parties that none of the provisions
of this Section 9 (including, without limitation, the survival period for
representations and warranties set forth in Section 9.1 and the deductibility
and cap amounts set forth in Section 9.4) shall in any way be deemed to limit
Purchaser's or Seller's right to commence an action against Seller or Purchaser,
as the case may be, for fraud at any time before expiration of the statute of
limitations governing such an action.
36
10. MISCELLANEOUS.
10.1 FURTHER ASSURANCES.
Each party hereto shall execute and cause to be delivered to each other
party hereto such instruments and other documents, and shall take such other
actions, as such other party may reasonably request (prior to, at or after the
Closing) for the purpose of carrying out or evidencing any of the Transactions.
10.2 FEES AND EXPENSES.
Purchaser, Seller, Company and Parent shall each bear and pay its own
fees, costs and expenses incurred or that are in the future incurred in
connection with the Transactions.
10.3 ATTORNEYS' FEES.
If any legal action or other legal proceeding (including arbitration)
relating to the Transactions or the enforcement of any provision of any of the
Transaction Documents is brought against any party hereto, the prevailing party
shall be entitled to recover reasonable attorneys' fees, costs and disbursements
(in addition to any other relief to which the prevailing party may be entitled).
10.4 TRANSFER TAXES.
Seller shall be responsible for sales, use and transfer taxes,
including but not limited to any value added, stock or membership interest
transfer, gross receipts, stamp duty and real, personal or intangible property
transfer taxes, due by reason of the consummation of the Transactions, including
but not limited to any interest or penalties in respect thereof.
10.5 GOVERNING LAW; VENUE.
(a) This Agreement shall be construed in accordance with, and
governed in all respects by, the laws of the State of New York.
(b) Any legal action or other legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement may be brought
or otherwise commenced in any state or federal court located in the County of
New York, New York. Each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in the County of New York,
New York (and each appellate court located in the State of New York) in
connection with any such legal proceeding;
(ii) agrees that each state and federal court located in the
County of New York, New York shall be deemed to be a convenient forum; and
37
(iii) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any state or federal court
located in the County of New York, New York any claim that such party is not
subject personally to the jurisdiction of such court, that such legal proceeding
has been brought in an inconvenient forum, that the venue of such proceeding is
improper or that this Agreement or the subject matter of this Agreement may not
be enforced in or by such court.
(c) The parties agree that if any Proceeding is commenced against
any Indemnitee by any Person in or before any court or other tribunal anywhere
in the world, then such Indemnitee may proceed against the applicable party in
such court or tribunal with respect to any indemnification claim or other claim
arising directly or indirectly from or relating directly or indirectly to such
Proceeding or any matters alleged therein or any of the circumstances giving
rise thereto.
(d) Nothing contained in Sections 10.5(b) or (c) shall be deemed
to limit or otherwise affect the right of any Indemnitee to commence any legal
proceeding or otherwise proceed against Seller in any other forum or
jurisdiction.
(e) Each of the parties irrevocably waives the right to a jury
trial in connection with any legal proceeding relating to this Agreement or the
enforcement of any provision of this Agreement.
10.6 SUCCESSORS AND ASSIGNS.
Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns,
heirs, executors and administrators of the parties hereto and the Indemnitees
and shall inure to the benefit of and be enforceable by each person who shall be
a holder Membership Interests in the Company from time to time. None of Company,
Seller, SynTec, Parent or Purchaser may assign any of its or his rights or
obligations hereunder to any other party (by contract, operation of law or
otherwise) without the prior written consent of the other parties hereto, and
any attempted assignment in violation thereof shall be void and of no effect;
provided, however, that Purchaser may assign its rights and obligations
hereunder to Marubeni Corporation or any direct or indirect wholly-owned
subsidiary of Marubeni Corporation.
10.7 ENTIRE AGREEMENT.
The Transaction Documents, the schedules and the exhibits thereto and
the other documents contemplated expressly thereby constitute the full and
entire understanding and agreement between the parties with regard to the
subjects thereof and supersede all prior agreements and understandings among or
between any of the Parties relating to the subject matter hereof.
38
10.8 SEPARABILITY.
In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
10.9 AMENDMENTS.
This Agreement may be amended or modified only upon the mutual written
consent of Seller, Company and Purchaser. Any amendment or modification effected
pursuant to this Section 10.9 shall be binding upon Seller, Company and
Purchaser.
10.10 NOTICES.
Any notice or other communication required or permitted to be delivered
to any party under this Agreement shall be in writing and shall be deemed
properly delivered, given and received when delivered (by hand, by registered
mail, by courier or express delivery service or by telecopier during business
hours) to the address or telecopier number set forth beneath the name of such
party below (or to such other address or telecopier number as such party shall
have specified in a written notice given to the other parties hereto):
if to Company, Seller or Parent:
c/o Carlisle Companies Incorporated
250 S. Clinton Street, Suite 201
Syracuse, New York 13202
Attention: Dennis J. Hall and Steven J. Ford
Telecopier: 315-474-2008
if to Purchaser:
c/o Marubeni America Corporation
450 Lexington Avenue
New York, New York 10017-3984
Attention: Masazumi Hasegawa and Edward G. Scheibler, Esq.
Telecopier: 212-450-0755
10.11 PUBLICITY AND USE OF CONFIDENTIAL INFORMATION.
(a) Seller, Company and Parent shall keep strictly confidential,
and shall not use, or disclose to any other Person, any non-public document or
other information in Seller's Parent's or Company's possession that relates
directly or indirectly to the business of Company, Purchaser or any affiliate of
Purchaser.
39
(b) Seller, Company, SynTec and Parent shall not issue or
disseminate any press release or other publicity concerning any of the
Transactions, or permit any press release or other publicity concerning any of
the Transactions to be issued or otherwise disseminated by or on behalf of
Seller, Company or Parent without Purchaser's prior consent.
(c) Purchaser shall keep strictly confidential, and shall not use,
or disclose to any other Person, any non-public document or other information in
Purchaser's possession that relates directly or indirectly to the business of
Company, Seller or any affiliate of Seller.
(d) Purchaser and MAC shall not issue or disseminate any press
release or other publicity concerning any of the Transactions, or permit any
press release or other publicity concerning any of the Transactions to be issued
or otherwise disseminated by or on behalf of Purchaser or Company without
Seller's prior consent.
10.12 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
10.13 DELAYS OR OMISSIONS; WAIVERS.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise or waiver of any such power, right, privilege or
remedy shall preclude any other or further exercise thereof or of any other
power, right, privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising out
of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
10.14 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE.
All remedies, either under this Agreement or by law or otherwise
afforded to the parties hereto, shall be cumulative and not alternative. Each of
the parties agrees that:
(a) In the event of any Breach or threatened Breach by a party or
Company of any covenant, obligation or other provision set forth in this
Agreement, the other party shall be entitled (in addition to any other remedy
that may be available to it) to (i) a decree or order of specific performance or
mandamus to enforce the observance and performance of such covenant, obligation
or other provision, and (ii) an injunction restraining such Breach or threatened
Breach; and
40
(b) neither Purchaser nor any other Indemnitee, on the one hand,
nor Seller, on the other, shall be required to provide any bond or other
security in connection with any such decree, order or injunction or in
connection with any related action or Proceeding.
10.15 HEADINGS.
The headings contained in this Agreement are for convenience of
reference only, shall not be deemed to be a part of this Agreement and shall not
be referred to in connection with the construction or interpretation of this
Agreement.
10.16 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise specified, all references in this
Agreement to "Sections" refer to Sections of this Agreement.
(e) All references to "this Agreement," "herein," "hereby,"
"hereto," and words of similar import refer to this Agreement, as it may be
amended from time to time.
[SIGNATURE PAGE FOLLOWS]
41
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
CONTAINER LEASING INTERNATIONAL, LLC.
(D/B/A/ CARLISLE LEASING INTERNATIONAL, LLC)
By: /s/ Kazuhiko Yamamoto
---------------------------
Name:
Title:
MAC REEFERS, INC.
By: /s/ Masazumi Hasegawa
---------------------------
Name:
Title:
CARLISLE SYNTEC INCORPORATED
(F/K/A CL REEFERS, INC.)
By: /s/ Dennis J. Hall
---------------------------
Name:
Title:
CARLISLE COMPANIES INCORPORATED
By: /s/ Dennis J. Hall
---------------------------
Name:
Title:
MARUBENI AMERICA CORPORATION
By: /s/ Katsuo Koh
---------------------------
Name:
Title:
42
CARLISLE NEVADA CORP.
By: /s/ Dennis J. Hall
---------------------------
Name:
Title:
43
MEMBERSHIP INTERESTS PURCHASE AGREEMENT
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of this Agreement:
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction involving:
(a) the sale, lease or other disposition of all or any portion of
Company's businesses or assets (other than the lease of
assets in the Ordinary Course of Business);
(b) the issuance, sale or other disposition of (i) any Membership
Interest in, or other security of, Company, (ii) any option,
call, warrant or right (whether or not immediately
exercisable) to acquire any Membership Interest in, or other
security of, Company, or (iii) any security, instrument or
obligation that is or may become convertible into or
exchangeable for any Membership Interest in, or other
security of, Company; or
(c) any merger, consolidation, business combination, security
exchange, reorganization or similar transaction involving
Company.
BANK CONSENTS. "Bank Consents" shall mean those certain consents
pursuant to which the banks with which the Company has outstanding loan and/or
credit agreements have agreed to the Transactions.
BEST EFFORTS. "Best Efforts" shall mean the efforts that a prudent
Person desiring to achieve a particular result would use in order to ensure that
such result is achieved as expeditiously as possible.
BREACH. There shall be deemed to be a "Breach" of a representation,
warranty, covenant, obligation or other provision if there is or has been (i)
any inaccuracy in or breach of, or any failure to comply with or perform, such
representation, warranty, covenant, obligation or other provision, or (ii) any
claim (by any Person) or other circumstance that is inconsistent with such
representation, warranty, covenant, obligation or other provision; and the term
"Breach" shall be deemed to refer to any such inaccuracy, breach, failure, claim
or circumstance.
BUSINESS. "Business" shall mean providing the services of selling,
leasing, or financing of refrigerated containers, to any current or prior
customers of any of Company.
CCMC. "CCMC" shall mean Carlisle Container Manufacturing Corporation, a
Delaware corporation, and a wholly owned subsidiary of Parent.
44
CCMC WARRANTIES. "CCMC Warranties" shall mean all warranties and
indemnification provided to Company by CCMC in connection with purchase
agreements or extensions, modifications or addenda thereto entered into by and
between Company and CCMC.
CLOSING. "Closing" shall have the meaning specified in Section 1.2(a).
CLOSING DATE. "Closing Date" shall have the meaning specified in
Section 1.2(a).
CODE. "Code" shall mean the Internal Revenue Code of 1986, as amended.
COMPANY. "Company" shall mean Container Leasing International, LLC.
COMPANY CONTRACT. "Company Contract" shall mean any Contract:
(a) to which Company is a party;
(b) by which Company or any of its assets is or may become bound or
under which Company has, or may become subject to, any obligation;
or
(c) under which Company has or may acquire any other right or
interest.
COMPANY RETURNS. "Company Returns" shall have the meaning specified in
Section 3.17(b).
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean, with respect to any Person, any
written, oral, implied or other agreement, contract, understanding, arrangement,
instrument, note, guaranty, indemnity, representation, warranty, deed,
assignment, power of attorney, certificate, purchase order, work order,
insurance policy, benefit plan, commitment, covenant, assurance or undertaking
of any nature to which such Person is a party or by which its properties or
assets may be bound or affected or under which it or its respective business,
properties or assets receive benefits. Without limiting the foregoing, each of
the Leases shall be deemed a Company Contract.
DAMAGES. "Damages" shall include any loss, damage, injury, decline in
value, lost opportunity, Liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including any legal fee, expert fee, accounting fee or
advisory fee), charge, cost (including any cost of investigation) or expense of
any nature (net of any insurance proceeds actually received by the Person
suffering such Damages).
DEFINED BENEFIT PLAN. "Defined Benefit Plan" shall mean either a plan
described in Section 3(35) of ERISA or a plan subject to the minimum funding
standards set forth in Section 302 of ERISA and Section 412 of the Code.
EIP ACCRUAL. "EIP Accrual" shall mean any future accrual required by
the Company's auditors for the Employee Incentive Plan by reason of an increase
in the enterprise valuation of
45
the Company based on a reevaluation of the enterprise valuation of the Company
after giving effect to the Transactions. The enterprise valuation of the Company
on which the amount of the accrual for the Employee Incentive Plan was based for
the 1998 fiscal year was $65 million.
EMPLOYEE BENEFIT PLAN. "Employee Benefit Plan" shall have the meaning
specified in Section 3.23(l) of ERISA.
EMPLOYEE INCENTIVE PLAN. "Employee Incentive Plan" shall mean the
Company's employee incentive plan titled "Carlisle Leasing International Company
Executive Incentive Plan", dated January 1, 1996, as amended from time to time.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, equity, trust, equitable
interest, claim, preference, right of possession, lease, tenancy, license,
encroachment, covenant, infringement, interference, Order, proxy, option, right
of first refusal, preemptive right, community property interest, legend, defect,
impediment, exception, reservation, limitation, impairment, imperfection of
title, condition or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any nonprofit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust or company (including any limited
liability company or joint stock company).
ENVIRONMENTAL LAW. "Environmental Law" shall mean any federal, state,
local or foreign Legal Requirement relating to pollution or protection of human
health or the environment.
ERISA. "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
ERISA AFFILIATE. "ERISA Affiliate" shall mean any Person that is, was
or would be treated as a single employer with Company under Section 414 of the
Code.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
FINANCIAL STATEMENTS. "Financial Statements" shall have the meaning
specified in Section 3.9(a).
GAAP. "GAAP" shall mean generally accepted accounting principles.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean
any:
46
(a) permit, license, certificate, franchise, concession, approval,
consent, ratification, permission, clearance, confirmation,
endorsement, waiver, certification, designation, rating,
registration, qualification or authorization issued, granted,
given or otherwise made available by or under the authority of any
Governmental Body or pursuant to any Legal Requirement; or
(b) right under any Contract with any Governmental Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any:
(a) nation, principality, state, commonwealth, province, territory,
county, municipality, district or other jurisdiction of any
nature;
(b) federal, state, local, municipal, foreign or other government;
(c) governmental or quasi governmental authority of any nature
(including any governmental division, subdivision, department,
agency, bureau, branch, office, commission, council, board,
instrumentality, officer, official, representative, organization,
unit, body or Entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) individual, Entity or body exercising, or entitled to exercise,
any executive, legislative, judicial, administrative, regulatory,
police, military or taxing authority or power of any nature.
HAZARDOUS MATERIALS. "Hazardous Material" shall mean any substance,
chemical, waste or other material which is or may be listed, defined or
otherwise identified as hazardous, toxic or dangerous under any Legal
Requirement, as well as any asbestos, polychlorinated biphenyls ("PCBs"),
petroleum, petroleum product or by-product, crude oil, natural gas, natural gas
liquids, liquefied natural gas, or synthetic gas useable for fuel, and "source,"
"special nuclear," and "by-product" material as defined in the Atomic Energy Act
of 1954, 42 U.S.C. ss.ss. 2011 ET seq.
INDEMNIFICATION TERMINATION DATE. "Indemnification Termination Date"
shall mean the second anniversary of the Closing Date.
INDEMNIFIED PARTY. "Indemnified Party" shall have the meaning specified
in Section 9.7.
INDEMNIFYING PARTY. "Indemnifying Party" shall have the meaning
specified in Section 9.7.
INDEMNITEE. "Indemnitee" shall have the meaning specified in Section
9.2(a).
KNOWLEDGE. An individual shall be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) such individual is actually aware of such fact or other matter; or
47
(b) a prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of
conducting a reasonably diligent and comprehensive investigation
concerning the truth or existence of such fact or other matter.
Company, Seller or Parent shall be deemed to have "Knowledge" of a particular
fact or other matter if any officer or employee (if such employee is charged
with responsibility for the aspect of the business relevant or related to the
fact at issue) of Company, Seller or of Parent, respectively, has Knowledge of
such fact or other matter.
LANDLORD CONSENT. "Landlord consent" shall mean consent from the
landlord of the Companies' office space to the Transactions.
LEASED PREMISES. "Leased Premises" shall have the meaning specified in
Section 3.10(c).
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, legislation, constitution,
principle of common law, resolution, ordinance, code, edict, decree,
proclamation, treaty, convention, rule, regulation, ruling, directive,
pronouncement, requirement, specification, determination, decision, opinion or
interpretation that is, has been or may in the future be issued, enacted,
adopted, passed, approved, promulgated, made, implemented or otherwise put into
effect by or under the authority of any Governmental Body.
LIABILITY. "Liability" shall mean any debt, obligation, duty or
liability of any nature (including any unknown, undisclosed, unmatured,
unaccrued, unasserted, contingent, indirect, conditional, implied, vicarious,
derivative, joint, several or secondary liability), regardless of whether such
debt, obligation, duty or liability would be required to be disclosed on a
balance sheet prepared in accordance with GAAP and regardless of whether such
debt, obligation, duty or liability is immediately due and payable.
MEMBER OF THE CONTROLLED GROUP. "Member of the Controlled Group" shall
mean each trade or business, whether or not incorporated, which would be treated
as a single employer with Company under Section 4001 of ERISA or Sections
414(b), (c), (m) or (o) of the Code.
MEMBERSHIP INTEREST. "Membership Interest" shall have the meaning set
forth in the Company's Restated Operating Agreement.
MULTIEMPLOYER PLAN. "Multiemployer Plan" shall mean a plan described in
Section 3(37) of ERISA.
NONCOMPETITION PERIOD. "Noncompetition Period" shall have the meaning
specified in Section 7.1(a).
48
ORDER. "Order" shall mean any:
(a) order, judgment, injunction, edict, decree, ruling, pronouncement,
determination, decision, opinion, verdict, sentence, subpoena,
writ or award that is or has been issued, made, entered, rendered
or otherwise put into effect by or under the authority of any
court, administrative agency or other Governmental Body or any
arbitrator or arbitration panel; or
(b) Contract with any Governmental Body that is or has been entered
into in connection with any Proceeding.
ORDINARY COURSE OF BUSINESS. An action taken by or on behalf of Company
shall be deemed to have been taken in the "Ordinary Course of Business" if:
(a) such action is recurring in nature, is consistent with Company's
past practices and is taken in the ordinary course of Company's
normal day-to-day operations;
(b) such action is taken in accordance with sound and prudent business
practices;
(c) such action is not required to be authorized by Company's members,
or the Company's Managers Committee and does not require any other
separate or special authorization of any nature; and
(d) such action is similar in nature and magnitude to actions
customarily taken, without any separate or special authorization,
in the ordinary course of the normal day to day operations of
other Entities that are engaged in businesses similar to Company's
business.
PARENT. "Parent" shall mean Carlisle Companies Incorporated, a Delaware
corporation.
PERSON. "Person" shall mean any individual, Entity or Governmental
Body.
PLANS. "Plans" shall have the meaning specified in Section 3.26(a).
PROCEEDING. "Proceeding" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding and any informal proceeding), prosecution,
contest, hearing, inquiry, inquest, audit, examination or investigation that is,
has been or may in the future be commenced, brought, conducted or heard by or
before, or that otherwise has involved or may involve, any Governmental Body or
any arbitrator or arbitration panel.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any patent, patent
application, trademark (whether registered or unregistered and whether or not
relating to a published work), trademark application, trade name, fictitious
business name, service mark (whether registered or unregistered), service mark
application, copyright (whether registered or unregistered), copyright
application, maskwork, maskwork application, trade secret, know-how, franchise,
system, computer software, invention, design, blueprint, proprietary product,
technology, proprietary right or other intellectual property right or intangible
asset.
49
PURCHASER. "Purchaser" shall mean MAC Reefers, Inc., a Delaware
corporation.
PURCHASE PRICE. "Purchase Price" shall have the meaning specified in
Section 1.1.
RELATED PARTY. Each of the following shall be deemed to be a "Related
Party":
(a) Seller;
(b) each individual who is, or who has at any time been, an officer of
Company;
(c) each member of the family of each of the individuals referred to
in clause (b) above; and
(d) any Entity (other than Company) that controls, is controlled by,
or is under common control with, any of the foregoing.
RELEASE. "Release" shall have the meaning specified in Section 2.1(c).
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, shareholders, attorneys, accountants, advisors and representatives.
Seller and all other Related Parties shall be deemed to be "Representatives" of
Company.
RESTATED OPERATING AGREEMENT. "Restated Operating Agreement" shall mean
the Restated Operating Agreement of the Company, dated as of January 28, 1999.
SEC. "SEC" shall mean the Securities and Exchange Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933,
as amended.
SELLER. "Seller" shall mean Carlisle Nevada Corp., a Nevada
corporation.
SYNTEC. "SynTec" shall mean Carlisle SynTec Incorporated (formerly
known as "CL Reefers, Inc.") a Delaware corporation.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, estimated tax, gross receipts tax, value-added tax, surtax,
excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax,
property tax, business tax, occupation tax, inventory tax, occupancy tax,
withholding tax or payroll tax), levy, assessment, tariff, impost, imposition,
toll, duty (including any customs duty), deficiency or fee, and any related
charge or amount (including any fine, penalty or interest), that is, has been or
in the future may be (a) imposed, assessed or collected by or under the
authority of any Governmental Body, or (b) payable pursuant to any tax-sharing
agreement or similar Contract.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information that
is, has been or in the future may be filed with or submitted to, or required to
be filed with or submitted to, any Governmental Body or any member in
50
connection with the determination, assessment, collection or payment of any Tax
or in connection with the administration, implementation or enforcement of or
compliance with any Legal Requirement relating to any Tax.
TOTAL STORAGE TRANSACTIONS. "Total Storage Transaction" shall mean the
sale or leasing of refrigerated containers as static storage or portable storage
to farmers, producer and other users (which operations are currently limited to
South America).
TRADEMARK LICENSE AGREEMENT. "Trademark License Agreement" shall mean
the trademark license agreement between Carlisle Management Company, a Delaware
corporation, and the Company, in form and substance satisfactory to Purchaser
and Seller, as the same may be amended, supplemented or otherwise modified from
time to time.
TRANSACTION EXPENSES. "Transaction Expenses" shall mean all fees, costs
and expenses that have been incurred or that are in the future incurred by or on
behalf of Company or Seller in connection with the sale of the Purchased
Interests and the preparation, execution and delivery of the Transaction
Documents.
TRANSACTION DOCUMENTS. "Transaction Documents" shall mean the
Agreement, the Trademark License, and all other agreements, certificates and
instruments executed or contemplated to be executed by any of the parties hereto
in connection with the Transactions.
TRANSACTIONS. "Transactions" shall mean (a) the execution and delivery
of this Agreement and the other Transaction Documents and (b) all the
transactions contemplated by this Agreement and the other Transaction Documents.
UNAUDITED INTERIM BALANCE SHEET. "Unaudited Interim Balance Sheet"
shall have the meaning specified in Section 3.9(a).
VALENTINE LITIGATION EXPENSE. "Valentine Litigation Expense" shall mean
any expense (including, without limitation, attorney's fees and settlement
costs) resulting from the litigation described in Section 9.2(b)(iii).
51
TABLE OF CONTENTS
PAGE
----
1. Agreement To Sell And Purchase the Purchased Membership Interest.........................................2
1.1 Sale and Purchase of the Purchased Membership Interest..........................................2
1.2 Payment of Initial Purchase Price Payment.......................................................2
1.3 Payment of Premium Payments.....................................................................2
2. Closing Conditions.......................................................................................6
2.1 Conditions Precedent to Obligations of Purchaser................................................6
2.2 Conditions Precedent to Obligations of Seller...................................................8
3. Representations and Warranties of Company, Seller and Parent.............................................9
3.1 Formation, Good Standing, Qualification.........................................................9
3.2 Articles of Organization and Operating Agreement; Records.......................................9
3.3 Capitalization.................................................................................10
3.4 Authority; Binding Nature of Agreements........................................................11
3.5 Non-Contravention; Consents....................................................................11
3.6 Proprietary Rights; Proprietary Information and Inventions Agreement...........................12
3.7 Proceedings; Orders............................................................................13
3.8 Offering Valid.................................................................................14
3.9 Financial Statements...........................................................................14
3.10 Title to Assets................................................................................15
3.11 Contracts......................................................................................16
3.12 Employees; Employee Benefits...................................................................17
3.13 Receivables; Major Customers...................................................................17
3.14 [INTENTIONALLY OMITTED]........................................................................18
i
3.15 Compliance With Legal Requirements.............................................................18
3.16 Governmental Authorizations....................................................................18
3.17 Tax Matters....................................................................................18
3.18 Securities Laws Compliance; Registration Rights................................................20
3.19 Finders and Brokers; Fees......................................................................20
3.20 Environmental Compliance.......................................................................20
3.21 Insurance......................................................................................21
3.22 Related Party Transactions.....................................................................22
3.23 Absence of Changes.............................................................................22
3.24 Seller.........................................................................................24
3.25 Powers of Attorney.............................................................................26
3.26 Benefit Plans; ERISA...........................................................................26
3.27 Sale and Lease of Products; Performance of Services............................................28
3.28 Full Disclosure................................................................................28
3.29 Due Diligence Information......................................................................28
3.30 Product Liability Claims; Warranty Claims......................................................29
4. Representations and Warranties of Purchaser.............................................................29
4.1 Organization, Good Standing, Qualification.....................................................29
4.2 Investment Representations.....................................................................29
4.3 Consents.......................................................................................30
4.4 Ownership of Company...........................................................................30
5. [INTENTIONALLY OMITTED].................................................................................30
6. [INTENTIONALLY OMITTED].................................................................................30
7. Other Agreements........................................................................................30
ii
7.1 Covenant Not To Compete; Non-Solicitation......................................................30
7.2 CCMC Warranties................................................................................31
7.3 Tax Election...................................................................................31
7.4 Finders and Brokers............................................................................32
8. [INTENTIONALLY OMITTED].................................................................................32
9. Indemnification, etc....................................................................................32
9.1 Survival of Representations and Covenants......................................................32
9.2 Indemnification by Seller and Parent...........................................................33
9.3 Indemnification by Purchaser...................................................................33
9.4 Limitations on Indemnity Obligations...........................................................34
9.5 No Contribution................................................................................34
9.6 Interest.......................................................................................34
9.7 Setoff.........................................................................................35
9.8 Defense of Third Party Claims..................................................................35
9.9 Sole Remedy....................................................................................36
9.10 Exercise of Remedies by Indemnitees Other Than Purchaser and by Seller.........................36
9.11 Method of Payment for Indemnity Obligations of Seller and Parent...............................36
9.12 No Limitation..................................................................................36
10. Miscellaneous...........................................................................................37
10.1 Further Assurances.............................................................................37
10.2 Fees and Expenses..............................................................................37
10.3 Attorneys'Fees.................................................................................37
10.4 Transfer Taxes.................................................................................37
10.5 Governing Law; Venue...........................................................................37
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10.6 Successors and Assigns.........................................................................38
10.7 Entire Agreement...............................................................................38
10.8 Separability...................................................................................39
10.9 Amendments.....................................................................................39
10.10 Notices........................................................................................39
10.11 Publicity and Use of Confidential Information..................................................39
10.12 Counterparts...................................................................................40
10.13 Delays or Omissions; Waivers...................................................................40
10.14 Remedies Cumulative; Specific Performance......................................................40
10.15 Headings.......................................................................................41
10.16 Construction...................................................................................41
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