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AGREEMENT
AGREEMENT (this "Agreement"), dated as of November 8, 1997,
among XXXXXXXX-XXXXXX INDUSTRIES, INC., a Delaware corporation ("Parent"), BFI
INTERNATIONAL, INC., a Delaware corporation ("International"), SUEZ LYONNAISE
DES EAUX, S.A., a societe anonyme organized under the laws of the Republic of
France ("Lion"), and SITA, S.A., a societe anonyme organized under the laws of
the Republic of France ("Purchaser").
W I T N E S S E T H :
WHEREAS, Parent and International, a direct wholly-owned
subsidiary of Parent, are primarily engaged, through direct or indirect
subsidiaries of Parent or International in the waste business, including the
collection, transportation, disposal, and processing of solid and medical waste,
the collection, transportation, processing and marketing or disposal of
recyclable materials, the collection, treatment and disposal of hazardous
materials and related activities, including quarrying operations, gas and
electricity production, transportation of sand, gravel and asphalt, and pipe
inspection and renovation, outside the United States, Canada and Mexico (the
"Waste Business");
WHEREAS, Parent and International wish to sell and transfer to
Purchaser, and Purchaser desires to purchase from Parent and International,
Parent's and International's respective right, title and interest in and to the
Waste
Business;
WHEREAS, in connection with such sale and transfer, Parent and
International wish to sell and transfer to Purchaser and/or subsidiaries of
Purchaser (or cause to be sold and transferred to Purchaser and/or subsidiaries
of Purchaser), and Purchaser desires to purchase and/or cause its subsidiaries
to purchase from Parent and International, all of the Shares (as defined
herein);
WHEREAS, in connection with such sale and transfer, prior to
the execution and delivery of this
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Agreement Purchaser and OHI Holding International B.V.("Oscar") have entered
into a shareholders agreement with respect to the Oscar Joint Venture (as
defined herein);
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and on the terms and subject to the conditions
set forth herein, the parties agree as follows:
1. (a) Specific Definitions. As used in this Agreement and
the attached Annexes, the following terms shall have the meanings set forth or
referred to below:
"Affiliate", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by or under common control with
such Person, including any Subsidiary of such Person.
"French GAAP" means generally accepted accounting principles
in France as applied from time to time by Purchaser.
"International Subsidiaries" means, collectively, the Persons
listed on the draft organizational chart attached as Annex A to this Agreement
and any other Subsidiary of Parent through which the Waste Business is
conducted, except as set forth in Annex A. The Parties shall consult concerning
whether any business entities should be added to or deleted from Schedule A in
order to cause Schedule A to conform to the financial statements for the Waste
Business previously provided by Parent to Purchaser and shall agree in good
faith on any revisions to Schedule A within 30 days of the date of this
Agreement.
"Oscar Joint Venture" means Xxxx Entsorgungsdienstleistungen
GmbH.
"Parent Subsidiaries" means, collectively, all of the
Subsidiaries of Parent, including but not limited to International and the
International Subsidiaries.
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"Person" means any individual, corporation, joint stock
company, limited liability company, partnership, firm, joint venture, trust,
association, unincorporated organization, governmental or regulatory body or
other entity.
"Purchaser Shares" means the ordinary shares, FF 50 par
value, of Purchaser.
"Selling Entities" means, collectively, any Parent
Subsidiaries that own, beneficially or of record, any of the Shares.
"Shares" means, collectively, the number and type of equity
securities and other ownership interests of the International Subsidiaries
specified in Schedule 1.
"Subsidiary" means, with respect to any Person, any other
Person, whether incorporated or unincorporated, of which at least a majority of
the securities or ownership interests having by their terms ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions is directly or indirectly owned or controlled by such Person
or by one or more of its direct or indirect Subsidiaries or by such Person and
any one or more of its respective Subsidiaries. The term Subsidiary, when used
with respect to Parent and International, shall be deemed to include the Oscar
Joint Venture.
"Waste Business" has the meaning set forth in the Recitals.
(b) Schedule of Definitions. As used in this Agreement, the
following terms shall have the meanings ascribed to them in the sections
indicated below.
Term Section
---- -------
Acquisition Documents................................... 8(b)(iv)
Agreement............................................... Preamble
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Term Section
---- -------
Ancillary Agreements................................................ Annex I,
Section 1.5
Approval............................................................ Annex I,
Section 1.7
Arbitration Rules................................................... 18(b)
Auditors............................................................ 3(e)
Cash Consideration.................................................. 2(a)
Closing............................................................. 2(b)
Closing Date........................................................ 2(b)
Consideration....................................................... 2(a)
Consideration Shares................................................ 2(a)
Contracts........................................................... Annex I,
Section 1.8
Contracts........................................................... Annex II,
Section 2.7
Environmental Law................................................... Annex I,
Section 1.25
Full Rights Subscription............................................ 2(d)(iv)
Governmental Entity................................................. 12
Hazardous Substance................................................. Annex I,
Section 1.25
International....................................................... Preamble
International Acquisition Proposal.................................. 6(a)
International Balance Sheet......................................... Annex I,
Section 1.9(a)
International Employee Benefit Plans................................ Annex I,
Section 1.26
International Existing Real Property
Lease.............................................................. Annex I,
Section 1.21
International Financial Statements.................................. Annex I,
Section 1.9(a)
International Income Statement...................................... Annex I,
Section 1.9(a)
International Intellectual Property................................. Annex I,
Section 1.23
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Term Section
---- -------
International Material Adverse Effect............................... Annex I,
Section 1.1
International Material Contracts.................................... Annex I,
Section 1.14
International Personal Property Leases.............................. Annex I,
Section 1.22(b)
Law................................................................. Annex I,
Section 1.8
Lion................................................................ Preamble
Local GAAP.......................................................... Annex I,
Section 1.9(a)
Loss................................................................ Annex VI,
Section 6.2
Measuring Date...................................................... 2(d)(i)
Measuring Price..................................................... 2(d)(i)
Net Short-term and Long-term Debt................................... 2(b)
Net Worth........................................................... 2(b)
Oscar............................................................... Recitals
Parent.............................................................. Preamble
Parent Closing Consents............................................. Annex I,
Section 1.10
Parent Contracts.................................................... Annex I,
Section 1.8
Parent Minimum...................................................... 2(d)(iv)
Proposed Parent Schedules........................................... 3(c)
Proposed Purchaser Schedules........................................ 3(d)
Purchased Entity.................................................... Annex I,
Section 1.3
Purchaser........................................................... Preamble
Purchaser Acquisition Proposal...................................... 6(b)
Purchaser Balance Sheet............................................. Annex II,
Section 2.8
Purchaser Balance Sheet Date........................................ Annex II,
Section 2.8
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Term Section
---- -------
Purchaser Closing Consents......................................... Annex II,
Section 2.9
Purchaser Contracts................................................ Annex II,
Section 2.7
Purchaser Employee Benefit Plans................................... Annex II,
Section 2.25
Purchaser Existing Real Property Annex II,
Leases............................................................ Section 2.20
Purchaser Financial Statements..................................... Annex II,
Section 2.8
Purchaser Income Statement......................................... Annex II,
Section 2.8
Purchaser Intellectual Property.................................... Annex II,
Section 2.22
Purchaser Material Adverse Effect.................................. Annex II,
Section 2.1
Purchaser Material Contracts....................................... Annex II,
Section 2.13(a)
Purchaser Personal Property Leases................................. Annex II,
Section 2.21(b)
Rights Offering.................................................... 8(b)(i)
Shareholders Agreement............................................. 8(b)(ii)
Shareholders Meeting............................................... 2(d)
Swire/BFI.......................................................... 2(b)
Tax Return......................................................... 4(c)
Taxes.............................................................. 4(a)
Technical Cooperation Agreement.................................... 8(b)(iii)
Transaction Agreement.............................................. 2(a)
Transfer Taxes..................................................... 4(c)
U.S. GAAP.......................................................... 3(e)
2. Purchase and Sale of Shares. (a) Each of the parties agrees
that it shall enter into a Transaction Agreement (the "Transaction Agreement"),
and such other local transfer agreements, as necessary, and Purchaser
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shall, and Parent shall cause the relevant Selling Entity or Selling Entities
to, enter into a Traite d'Apport providing for the purchase by Purchaser and/or
one or more of its Subsidiaries and the sale by Parent and International of all
of the Shares and various intercompany loans, in consideration for the payment
to Parent (and/or Subsidiaries of Parent) of an aggregate of US$1 billion in
cash, payable in U.S. dollars (the "Cash Consideration") and the issuance to
Parent (and/or wholly owned Subsidiaries of Parent) of the number of Purchaser
Shares determined as set forth in Section 2(d) (the "Consideration Shares" and,
collectively with the Cash Consideration, the "Consideration"). It is
anticipated that the Shares and intercompany loans of Waste Care, Ltd. and BFI
Acquisition, Ltd. will be contributed pursuant to the Traite d'Apport. The
allocation of the Shares as between the Traite d'Apport and the Transaction
Agreement shall be adjusted, if necessary, by the parties prior to the execution
of the Traite d'Apport such that the value of the assets is sufficient to permit
the Commissaire aux Apports to issue a favorable report.
(b) Purchaser agrees that, at the closing of the transaction
(which is expected to occur on the last day of a calendar month) (the
"Closing"), (i) the amount of Net Short-term and Long-term Debt (as defined
below) of the International Subsidiaries (including the Oscar Joint Venture)
will be no higher than $215.5 million; and (ii) the amount of Net Worth (as
defined below) will be no lower than $262 million. For purposes of this
Agreement, "Net Short-term and Long-term Debt" shall mean the sum of (i) 100%
of the short-term and long-term debt of the International Subsidiaries other
than the Oscar Joint Venture and Swire/BFI Waste Services, Ltd. ("Swire/BFI"),
less 100% of the cash and marketable securities of such Subsidiaries, (ii) 50%
of (A) the short-term and long-term debt of the Oscar Joint Venture and its
consolidated Subsidiaries, less (B) the cash and marketable securities of the
Oscar Joint Venture and such Subsidiaries, and (iii) 50% of (A) the short-term
and long-term debt of Swire/BFI and its consolidated Subsidiaries, less (B) the
cash and marketable securities of Swire/BFI and loans by Swire/BFI to the Swire
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group. Net Short-term and Long-term Debt shall exclude intercompany debt
transferred to the Purchaser pursuant to Section 2(c). For purposes of this
Agreement, "Net Worth" shall mean the difference of (i) the sum of shareholders
equity and intercompany loans of the International Subsidiaries (including
subordinated loans to the Oscar Joint Venture), and (ii) the amount of goodwill
of the International Subsidiaries. For purposes of applying the provisions of
this Section 2(b), the comparison of the amounts set forth herein and the
amounts for such items at Closing will be made on a constant currency basis and
the amounts for such items will be calculated based on a balance sheet prepared
in accordance with U.S. GAAP (as defined below). The Transaction Agreement will
provide for a post-closing adjustment in favor of Purchaser in the event that
any of the foregoing items is not satisfied. It is the intent of the Parties
that the foregoing provisions and post-closing adjustment operate to permit
Parent and International to retain the benefits of (or bear the cost of)
ordinary course net income (or losses) between the date of this Agreement and
the date of the Closing (the "Closing Date"). The foregoing provisions are not
intended to permit Parent and International to retain income generated outside
of the ordinary course of business (e.g., arising from a sale of assets out of
the ordinary course of business).
(c) At the Closing, Parent shall, and shall cause the Parent
Subsidiaries to, assign and transfer, for no additional consideration, all of
their respective rights as creditors with respect to indebtedness owed by the
International Subsidiaries, on the one hand, to Parent and the Parent
Subsidiaries which are not International Subsidiaries, on the other hand
(including the loan to the Oscar Joint Venture). At or prior to the Closing,
Parent shall, and shall cause the Parent Subsidiaries to, pay in full all
intercompany accounts which represent indebtedness of Parent or the Parent
Subsidiaries which are not International Subsidiaries owed to the International
Subsidiaries.
(d) The Closing Date of the transaction will be the date of
the extraordinary meeting of Purchaser's
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shareholders (the "Shareholders Meeting") to approve the issuance of the
Consideration Shares and the Rights Offering (as defined below). It is
contemplated by the parties that at the Closing, Parent shall receive Purchaser
Shares having a value approximating as closely as possible, pursuant to the
following procedure, FF 2,700,000,000. In this regard, the Transaction Agreement
shall contain provisions to the following effect:
(i) There shall be determined a "Measuring Price" for a
Purchaser Share which shall be the average per share closing
price per share on the Paris Stock Exchange for the 15
trading days ending on the last trading day which is 21
calendar days, or the next earlier trading day, prior to the
date on which the assemblee generale of Purchaser
contemplated by this Agreement (and at which the Rights
Offering is to be approved) is to be held, such date being
herein referred to as the "Measuring Date".
(ii) The "Measuring Price" shall be the per share price at which
the Purchaser Shares are to be offered pursuant to the
Rights Offering.
(iii) If the Measuring Price is equal to or greater than FF 1,080
on the Measuring Date, the number of Purchaser Shares to be
issued to Parent on the Closing Date shall be fixed as that
number of whole Purchaser Shares (rounding to the nearest
whole number) equal to the quotient obtained by dividing FF
2,700,000,000 by the Measuring Price. Such number of shares
so determined shall be issued to Parent on the Closing Date.
(iv) If the number of Purchaser Shares to be issued to Parent on
the Closing Date pursuant to the foregoing procedure shall
be less than 15% of the outstanding Purchaser Shares (the
"Parent Minimum") after the consummation of the transactions
contemplated hereby and assuming
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100% subscription ("Full Rights Subscription") of all
Purchaser Shares to be offered pursuant to the Rights
Offering, then either Parent or Purchaser shall have the
right to terminate (by action of their respective boards of
directors) the Transaction Agreement.
(v) If the Measuring Price is less than FF 1,080 on the
Measuring Date, Purchaser shall issue 2,500,000 Purchaser
Shares to Parent at Closing.
(vi) Lion, Purchaser and Parent agree that neither they nor any
of their respective Affiliates nor any other person under
the direction or at the request thereof shall, directly or
indirectly, effect purchases of Purchaser Shares during the
15 days prior to the Measuring Date.
(vii) Notwithstanding any provision to the contrary herein, if
following the issuance of the Purchaser Shares and assuming
Full Rights Subscription Lion would own less than 50.3% of
the outstanding Purchaser Shares, Lion shall have a right to
terminate this Agreement or the Transaction Agreement, as
the case may be.
(viii) Any determination by Purchaser or Parent, as the case may
be, to terminate the Transaction Agreement pursuant to the
foregoing provisions shall be exercised no later than five
business days after the Measuring Date.
(e) Parent and Purchaser agree that Purchaser will promptly
after the date hereof enter into and maintain a call option for US$1,000,000,000
at a price of not more than FF6 per US$1, exercisable at any time prior to the
Closing. Parent shall pay to Purchaser 27.5% of the cost of purchasing such call
option up to a maximum of US$2,000,000 no later than (i) the Closing, or (ii)
three days following the termination of this Agreement or the Transaction
Agreement, as the case may be. In the event of the
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termination of this Agreement or the Transaction Agreement, Purchaser shall sell
such call option and shall pay 27.5% of the net proceeds of such sale (if any)
to Parent up to a maximum of US$2,000,000.
3. Representations, Due Diligence and Conditions to the
Transaction Agreement. (a) The Transaction Agreement shall contain
representations by Parent and International as set forth in Annex I and of
Purchaser as set forth in Annex II, in each case with schedules included to
qualify, where appropriate, such representations
(b) Immediately following the execution of this Agreement,
Purchaser shall commence a 70-day due diligence review of the International
Subsidiaries and Parent shall commence a 70-day due diligence review of
Purchaser. Parent, International and Purchaser, as the case may be, shall
cooperate in full with such due diligence review and shall grant (and cause
their Subsidiaries to grant) reasonable access to their facilities, personnel,
books and records to the other Party and its investment bankers, accountants,
attorneys and other advisors in connection with such review.
(c) Prior to the fortieth day following the date of this
Agreement, Parent shall deliver to Purchaser a complete set of schedules
proposed to be appended to the Transaction Agreement in respect of Parent's
representations therein (the "Proposed Parent Schedules"). If (i) the Proposed
Parent Schedules or any amendments or supplements thereof (including the final
versions of the Schedules) refer to matters concerning the International
Subsidiaries, or there otherwise come to Purchaser's attention after the date
hereof as a result of Purchaser's due diligence review any other matters
concerning the International Subsidiaries which should be included in Parent's
Schedules, which in the aggregate have caused or resulted, or could reasonably
be expected to cause or result, in losses, claims, damages or liabilities not
specifically reserved for in the International Financial Statements in an amount
in excess of $25,000,000, or (ii) the Proposed Parent Schedules or any
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amendments or supplements thereto (including the final versions of the
Schedules) refer to, or there otherwise come to Purchaser's attention, any
non-competition agreements to which the International Subsidiaries are a party
that may extend to the operations of Purchaser or Lion which, in Purchaser's or
Lion's commercially reasonable judgment could have a material adverse effect on
the ability of either Purchaser or Lion to conduct its business as currently
conducted, then, in either such case, Purchaser shall have the right to
terminate this Agreement by giving notice to Parent within 70 days of the date
of this Agreement. Parent shall not amend or supplement the disclosure schedules
to the Transaction Agreement on or following the seventieth day following the
date of this Agreement.
(d) Prior to the fortieth day following the date of this
Agreement, Purchaser shall deliver to Parent a complete set of schedules
proposed to be appended to the Transaction Agreement in respect of Purchaser's
representations therein (the "Proposed Purchaser Schedules"). If the Proposed
Purchaser Schedules or any amendments or supplements thereof (including the
final versions of the Schedules) refer to matters concerning Purchaser, or there
otherwise come to Parent's attention after the date hereof as a result of
Parent's due diligence review any other matters concerning Purchaser which
should be included in Purchaser's Schedules, which have, in either case, not
theretofore been publicly disclosed with sufficient time so that the Market
Price of the Purchaser Shares to be delivered at Closing reflects information
concerning such matters and such matters, in the aggregate, have caused or
resulted, or could reasonably be expected to cause or result, in losses, claims,
damages or liabilities not specifically reserved for in the Purchaser Financial
Statements in an amount in excess of $25,000,000, Parent shall have the right to
terminate this Agreement by giving notice to Purchaser within 70 days of the
date of this Agreement. Purchaser shall not amend or supplement the disclosure
schedules to the Transaction Agreement on or following the seventieth day
following the date of this Agreement.
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(e) In addition to the provisions of Section 3(b), during the
70-day period following the date of this Agreement, an internationally
recognized firm of auditors independent of Parent and the Parent Subsidiaries
and retained by Purchaser (the "Auditors") shall conduct an examination of the
financial statements, books and records of the Selling Entities and the
International Subsidiaries. Parent and International shall, and shall cause the
Parent Subsidiaries to, cooperate in full with such examination and shall grant
(and cause the Parent Subsidiaries to grant) the Auditors reasonable access to
their facilities, personnel, books and records in connection with such
examination. If the Auditors shall issue a written determination that either (i)
the amount of Net Worth as of September 30, 1997 determined in accordance with
generally accepted accounting principles in the United States ("U.S. GAAP") is
10% or more less than $274 million (i.e., the U.S. GAAP Net Worth at September
30, 1997) or (ii) the amount of Net Worth as of September 30, 1997 determined in
accordance with French GAAP is 10% or more less than $284 million (i.e., the
French GAAP Net Worth at September 30, 1997), then Purchaser shall have the
right to terminate this Agreement by giving notice to Parent within 80 days of
the date hereof. In making such Net Worth determination, the Auditors shall use
the same French accounting principles as those previously communicated to Parent
by Purchaser (including, for example, goodwill amortization periods, depreciable
lives and methods, treatment of lease obligations, proportional consolidation in
Germany, treatment of general environmental reserves and municipal receivables
in Spain and nonrecognition of goodwill of Oscar Affiliates) and refrain from
making judgmental adjustments without an objective basis in fact, including
adjustments relating to environmental matters, loss contracts, receivable
reserves and goodwill realization. Such principles shall be set forth in a
written protocol furnished to Parent by Purchaser as promptly as possible
following the date hereof and approved by Purchaser, such approval not to be
unreasonably denied or withheld. Any adjustments associated with Australia,
Finland and New Zealand shall be taken into account only to the extent such
adjustments are in excess of $4,000,000. In the event that the difference in Net
Worth in U.S. GAAP or
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French GAAP is greater than 10% but less than 15%, Parent shall have the right,
but not the obligation, to increase the target Net Worth at Closing for purposes
of Section 2(b) by the greater of (i) the difference between $274 million and
Net Worth as of September 30, 1997, determined in accordance with U.S. GAAP, and
(ii) the difference between $284 million and Net Worth as of September 30, 1997,
determined in accordance with French GAAP. The provisions of this Section 3(e)
shall not affect Purchaser's rights under Section 2(b) of this Agreement.
(f) It shall be a condition precedent to each party's
execution of the Transaction Agreement that a commercial bank of national
standing in the United States or international standing in Europe shall have
issued to Purchaser a letter in customary form stating that it is "highly
confident" (or similar wording) that Purchaser will be able to borrow an
aggregate amount equivalent to or greater than $600 million from a commercial
bank or commercial banks on terms and subject to conditions customarily extended
to borrowers of size and creditworthiness similar to Purchaser, assuming (for
purposes of determining the size and creditworthiness of Purchaser) that the
transactions contemplated by this Agreement have been consummated.
4. Tax Matters. (a) Parent's Indemnification of Purchaser. The
Transaction Agreement shall provide that Parent and International shall be
liable for and shall indemnify and hold harmless Purchaser and its Affiliates
from, against and in respect of (i) any taxes (including without limitation,
income, gross receipts, windfall profits, gains, excise, severance, property,
production, sales, value added, use, transfer, license, franchise, employment,
withholding, capital, wage or similar taxes or assessments, together with
interest, additions or penalties with respect thereto and any interest in
respect of such interest, additions or penalties (collectively, "Taxes")),
imposed with respect to the Selling Entities, (ii) any Taxes imposed with
respect to any of the International Subsidiaries for the taxable periods, or
portions thereof, ended on or before the Closing Date, and (iii) any Transfer
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Taxes for which Parent is liable pursuant to Section 4(c) hereof, except with
respect to clauses (i) and (ii), Tax liabilities (A) previously paid, or (B)
previously reserved for and reflected in the International Financial Statements.
(b) Purchaser's Indemnification of Parent. The Transaction
Agreement shall provide that Purchaser shall indemnify and hold harmless Parent
and its Affiliates (other than the International Subsidiaries) from, against and
in respect of any Taxes imposed with respect to any of the International
Subsidiaries for any taxable period, or portion thereof, beginning after the
Closing Date.
(c) Transfer Taxes. All excise, sales, use, transfer, stamp,
documentary, filing, recording and other similar taxes and fees which may be
imposed or assessed as a result of the transactions effected pursuant to this
Agreement or the Transaction Agreement, together with any interest, additions or
penalties with respect thereto and any interest in respect of such interest,
additions or penalties ("Transfer Taxes"), shall be borne by Parent. Any return,
declaration, report, claim for refund or information return or statement
thereto, including any amendment thereof, relating to Taxes (each, a "Tax
Return") that must be filed in connection with Transfer Taxes shall be (i)
prepared and filed when due by the party primarily or customarily responsible
under the applicable local law for filing such Tax Return, (ii) prepared on a
basis that is consistent with the allocation of the Consideration determined
hereunder and (iii) provided to the other party at least 10 days prior to the
applicable due date.
(d) Cooperation. The Parties agree to negotiate in good faith
with respect to the provisions of the Transaction Agreement concerning
preparation of Tax Returns, conducting of Tax audits and contesting of Tax
disputes and cooperation with respect to Tax matters generally.
5. Interim Operations of International. (a) Parent and
International covenant and agree that, from the date hereof and prior to the
Closing (unless Purchaser shall
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have previously consented in writing and except as specifically provided by this
Agreement), International and the International Subsidiaries will not take any
of the actions described in Section 1.13 of Annex I.
(b) Purchaser covenants and agrees that, from the date hereof
and prior to the Closing (unless Parent shall have previously consented in
writing and except as specifically provided by this Agreement), Purchaser will
not take any of the actions described in Section 2.12 of Annex II.
(c) Until the Closing, Parent shall furnish to Purchaser
copies of interim monthly financial statements for International and the
International Subsidiaries (prepared in accordance with U.S. GAAP and, no less
frequently than each fiscal quarter, prepared for International and the
International Subsidiaries for such fiscal quarter on a combined basis) as soon
as practicable but in any event within 35 days after the end of each month or
quarter, as the case may be, together with any information ordinarily prepared
in connection with such financial statements. All such interim financial
statements shall fairly present in all material respects in accordance with U.S.
GAAP the separate company, combined or consolidated, as the case may be,
financial position of International and the International Subsidiaries covered
thereby at the respective dates thereof, and the results of their separate
company or consolidated, as the case may be, operations, stockholders' equity
and cash flows for International and the International Subsidiaries covered
thereby for the respective periods covered thereby, subject to year-end
adjustments (consisting of normal recurring accruals) and the omission of
explanatory footnote materials required by U.S. GAAP. Parent shall, and shall
cause its accountants to, assist Purchaser in translating all financial
statements provided pursuant to this Section into French GAAP.
(d) Until the Closing, Purchaser shall furnish to Parent
copies of such interim monthly financial statements for Purchaser (prepared in
accordance with French
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GAAP and, no less frequently than each fiscal quarter, prepared for Purchaser
for such fiscal quarter on a combined basis) as it prepares in the ordinary
course of its business, as soon as practicable but in any event within 35 days
after the end of each month or quarter, as the case may be, together with any
information ordinarily prepared in connection with such financial statements. To
the extent that such financial statements include balance sheets, all such
interim financial statements shall fairly present in all material respects in
accordance with French GAAP the financial position of Purchaser covered thereby
at the respective dates thereof, and, to the extent that such financial
statements include income statements and cash flow statements, the results of
consolidated operations, stockholders' equity and cash flows for Purchaser
covered thereby for the respective periods covered thereby, subject to year-end
adjustments (consisting of normal recurring accruals) and the omission of
explanatory footnote materials required by French GAAP. Purchaser shall, and
shall cause its accountants to, assist Parent in translating all financial
statements provided pursuant to this Section into U.S. GAAP.
(e) Until the Closing, Parent and International shall cause
the International Subsidiaries to have sufficient working capital to allow the
International Subsidiaries to maintain their working capital at prudent levels
which are sufficient to support their continued operations in the ordinary
course of their business and consistent with past practices.
(f) Parent agrees that it will not consent to any transfer of
an interest in the Oscar Joint Venture by any other shareholder in the Oscar
Joint Venture. Parent further agrees that, from September 30, 1997 through the
date of Closing, Parent and the Parent Subsidiaries have not taken, accepted or
received and will not take, accept or receive any dividends or distributions
paid in cash, stock or other assets in respect of its interest in the Oscar
Joint Venture or any payment of interest in respect of indebtedness owed by the
Oscar Joint Venture to Parent or the Parent Subsidiaries unless all such amounts
have been or
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will be loaned to the Oscar Joint Venture and will constitute intercompany loans
transferred to Purchaser without any additional consideration at the Closing.
6. Acquisition Proposals. (a) Parent agrees that, except as
otherwise agreed among the parties, neither Parent nor any Parent Subsidiaries
nor any of the respective employees, officers, directors, agents or
representatives (including counsel, financial advisors and accountants) of
Parent or the Parent Subsidiaries shall, and Parent shall cause such Persons not
to, initiate, solicit or encourage, directly or indirectly, any inquiries or the
making of any proposal or offer (including, without limitation, any proposal or
offer to stockholders of Parent or any Parent Subsidiary) with respect to a
merger, consolidation, acquisition, disposition or similar transaction
involving, or any purchase of all or any significant portion of the assets or
any equity securities or ownership interests of, International or any
International Subsidiary (any such proposal or offer being hereinafter referred
to as an "International Acquisition Proposal"), or engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any Person relating to an International Acquisition Proposal,
or otherwise facilitate any effort or attempt to make or implement an
International Acquisition Proposal. Parent shall immediately cease and cause to
be terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing. Parent shall
take all necessary steps to inform the Persons referred to in the first sentence
of this Section of the obligations undertaken by Parent in this Section. Parent
shall notify Purchaser immediately if any such inquiries or proposals are
received by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with Parent, any Parent
Subsidiary or, to its knowledge, any of the Persons referred to in the first
sentence of this Section. Parent shall promptly request each Person which has
heretofore executed a confidentiality agreement in connection with its
consideration of acquiring any assets, liabilities and/or equity securities or
ownership interests
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19
of International or any International Subsidiary to return all confidential
information heretofore furnished to such person by or on behalf of Parent or any
Parent Subsidiary.
(b) Purchaser and Lion agree that, except as otherwise agreed
among the parties, neither Purchaser, Lion nor any of their respective
Subsidiaries nor any of their respective employees, officers, directors, agents
or representatives (including counsel, financial advisors and accountants)
shall, and Purchaser and Lion shall cause such Persons not to, initiate, solicit
or encourage, directly or indirectly, any inquiries or the making of any
proposal or offer (including, without limitation, any proposal or offer to
stockholders of Purchaser, Lion or any of their respective Subsidiaries) with
respect to a merger, consolidation, acquisition, disposition or similar trans
action involving, or any purchase of all or any significant portion of the
assets or of the equity securities or ownership interests of Purchaser (any such
proposal or offer being hereinafter referred to as a "Purchaser Acquisition
Proposal"), or engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any Person
relating to a Purchaser Acquisition Proposal, or otherwise facilitate any effort
or attempt to make or implement a Purchaser Acquisition Proposal. Lion and
Purchaser shall immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing. Lion and Purchaser shall take all
necessary steps to inform the Persons referred to in the first sentence of this
Section of the obligations undertaken by Lion and Purchaser in this Section.
Lion and Purchaser shall notify Parent immediately if any such inquiries or
proposals are received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with
Purchaser, Lion, any of their respective Subsidiaries or, to its knowledge, any
of the Persons referred to in the first sentence of this Section. Purchaser and
Lion shall promptly request each Person which has heretofore executed a
confidentiality agreement in connection with its consideration of acquiring any
assets, liabilities and/or equity securities
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or ownership interests of Purchaser to return all confidential information
heretofore furnished to such person by or on behalf of Purchaser, Lion or any of
their respective Subsidiaries.
7. Meeting of Purchaser's Shareholders. The Transaction
Agreement shall provide that Purchaser shall take, consistent with applicable
law and its statuts, all action necessary to convene a special meeting of its
shareholders as promptly as practicable to consider and vote upon the approval
of the issuance of the Consideration Shares as well as the Rights Offering and
Debt Offering.
8. Certain Transactions. (a) Prior to the Closing, Purchaser
shall use its best efforts, subject to market conditions, to borrow an aggregate
amount equivalent to US$600,000,000 from a commercial bank or commercial banks
on terms and subject to conditions customarily extended to borrowers of size and
creditworthiness similar to Purchaser.
(b) Prior to or contemporaneously with the Closing:
(i) Purchaser shall take, consistent with applicable law and
its statuts, all actions necessary to commence, on the Closing Date, a rights
offering to raise approximately FF 2.4 billion from its existing shareholders
(the "Rights Offering").
(ii) Parent and Lion shall execute and deliver, each to the
other, a Shareholders Agreement in the form set forth in Annex B (the
"Shareholders Agreement").
(iii) Parent and Purchaser shall execute and deliver, each to
the other, a Technical Cooperation Agreement on the terms set forth in Annex C
(the "Technical Cooperation Agreement").
(iv) Parent shall assign to Purchaser the benefits (including
the benefits of any indemnification provisions) of each agreement, instrument,
contract or arrangement executed within the last five years pursuant to
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which Parent or any Parent Subsidiary acquired any assets, liabilities or
operations of the International Subsidiaries having a value of $5,000,000 or
more in the aggregate (collectively, the "Acquisition Documents") to the extent
that the Acquisition Documents relate to any assets, liabilities and operations
of the International Subsidiaries.
(v) Prior to Closing, Parent shall, or shall cause a
Subsidiary to, acquire all shares of Xxxxxxxx-Xxxxxx Industries Iberica S.A. not
currently held by Parent or its Subsidiaries. In connection with such
transaction, Parent may cause Xxxxxxxx-Xxxxxx Industries Iberica S.A. to reverse
the minority interest reserves included in its balance sheet at September 30,
1997 in respect of the acquisition of such interest.
(vi) Without the prior written consent of Purchaser, Parent
shall cause the International Subsidiaries not to prepay and refinance long-term
indebtedness with short-term indebtedness.
9. Regulatory Approvals. The Parties shall use their
respective best efforts to obtain all necessary regulatory consents and to
cooperate fully with each other in seeking to obtain such consents.
10. Conditions. Annex III sets out the conditions to the
obligations of all Parties to consummate the transactions contemplated by the
Transaction Agreement. Annex IV sets out the conditions to the obligations of
Parent and International to consummate the transactions contemplated by the
Transaction Agreement. Annex V sets out the conditions to the obligations of
Purchaser to consummate the transactions contemplated by the Transaction
Agreement. The Transaction Agreement shall not provide other conditions to be
satisfied.
11. Survival and Indemnification. The Transaction Agreement
shall provide for the survival of certain representations and indemnification
among the parties as set forth in Annex VI.
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12. Publicity. The initial press release concerning the
matters contemplated by this Agreement shall be a joint press release and
thereafter Parent and Purchaser shall consult with each other prior to issuing
any press releases or otherwise making public statements with respect to the
transactions contemplated hereby and prior to making any filings with any court,
tribunal, arbitrator, arbitration panel, or any governmental, administrative, or
regulatory authority, agency, commission, or body or similar entity
("Governmental Entity") or with any securities exchange with respect thereto.
Notwithstanding the foregoing, any party shall have the right to make such
disclosure of the matters contemplated by this Agreement as is required under
applicable law, provided, however, that the disclosing party shall give the
other parties reasonable prior notice of each such disclosure.
13. Amendment and Waiver. Any provision of this Agreement may
be amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Purchaser and Parent, or in the case of
a waiver, by the party against whom the waiver is to be effective. No failure or
delay by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
14. Assignment. No party to this Agreement may assign any of
its rights or obligations under this Agreement without the prior written consent
of the other party hereto.
15. Entire Agreement. This Agreement (including all Schedules
and Annexes hereto) contains the entire agreement between the parties hereto
with respect to the subject matter hereof and supersedes all prior agreements
and understandings, oral or written, with respect to such matters, which will
remain in full force and effect for the term provided for therein.
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23
16. Counterparts. This Agreement and any amendments hereto may
be executed in one or more counterparts, each of which shall be deemed to be an
original, and all of which shall be considered one and the same instrument.
17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE REPUBLIC OF FRANCE WITHOUT
REFERENCE TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
18. Resolution of Disputes. Any dispute between the parties
arising out of this Agreement, whether as to this Agreement's construction,
interpretation or enforceability or as to any party's breach or alleged breach
of any provision of this Agreement, shall be submitted to final and binding
arbitration in accordance with the following procedures:
(a) Any party may demand such arbitration by giving written
notice of that demand to the other party. Any such arbitration shall be before a
panel of three arbitrators, one selected by Parent, one selected by Purchaser
and the third (who shall serve as chairman of the tribunal) selected by the
agreement of each of the two arbitrators selected by the parties in the manner
set forth in Section 18(b). The notice pursuant to this Section 18(a) shall
state (x) the matter in controversy and (y) the name of the arbitrator selected
by the party giving the notice.
(b) Not more than 15 days after notice is given pursuant to
Section 18(a), the other party shall give written notice to the party who
demanded arbitration of the name of an arbitrator selected by the other party.
If the other party shall fail to give such notice within such 15 day period, a
second arbitrator shall be selected in accordance with the Arbitration Rules of
the International Chamber of Commerce (the "Arbitration Rules"). Not more than
30 days after the second arbitrator is so named, the two arbitrators shall
select a third arbitrator. If the two arbitrators shall fail to select a third
arbitrator within such 30 day period, the third arbitrator shall be named
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pursuant to the Arbitration Rules. All arbitrators shall be fluent in English
and French.
(c) The dispute shall be arbitrated at a hearing to be
conducted in French, although documents may be submitted in English or French.
The arbitration shall take place in Geneva or such other place as the parties
agree and shall be concluded as soon as practicable in accordance with the
Arbitration Rules. Any award, which may be made by a majority of the
arbitrators, shall be made as soon as possible following the conclusion of the
arbitration and shall be conclusive and binding on the parties and may be
entered as a judgment of any court having jurisdiction.
(d) Each party shall bear half the arbitrators' fees and
expenses and administrative expenses of the arbitration and its own legal and
other costs.
The agreement of the parties contained in the foregoing provisions of Section 18
shall be a complete defense to any action, suit or other proceeding instituted
in any court or before any administrative tribunal with respect to any dispute
between the parties arising out of this Agreement.
19. Board of Directors. This Agreement is subject to approval
by the Board of Directors of Parent, and Parent providing evidence thereof to
Purchaser, not later than November 10, 1997.
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IN WITNESS WHEREOF, the parties have executed or caused this
Agreement to be executed as of the date first written above.
XXXXXXXX-XXXXXX INDUSTRIES, INC.
By:
-------------------------------------
Name:
Title:
BFI INTERNATIONAL, INC.
By:
-------------------------------------
Name:
Title:
SUEZ LYONNAISE DES EAUX, S.A.
By:
-------------------------------------
Name:
Title:
SITA, S.A.
By:
-------------------------------------
Name:
Title:
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ANNEX A
List of International Subsidiaries
A-1
27
ANNEX B
Shareholders Agreement
B-1
28
SHAREHOLDERS AGREEMENT
This Shareholders Agreement dated as of __________, 1998
between Xxxxxxxx-Xxxxxx Industries, Inc., a corporation formed under the laws of
the State of Delaware, U.S.A. ("Blue") and Suez Lyonnaise des Eaux, S.A., a
societe anonyme formed under the laws of France ("Lion"), relating to SITA,
S.A., a societe anonyme formed under the laws of France ("Solid").
WHEREAS, Blue, Lion and Solid are parties to a Transaction
Agreement dated _________, 1998 (the "Transaction Agreement") providing, inter
alia, (i) for the sale and exchange on the Closing Date (as defined therein) of
certain stock held directly and indirectly by Blue, as set forth in the
Transaction Agreement, for the consideration specified therein, and (ii) the
undertaking by Solid of a capital increase through a rights offering (the
"Rights Offering") to its existing shareholders on the terms specified in the
Transaction Agreement;
WHEREAS, the parties anticipate that following the
consummation of the transactions contemplated in the Transaction Agreement,
including the Rights Offering, Lion will own [ ]% of the outstanding capital
stock of Solid and Blue will own [ ]% of the outstanding capital stock of Solid;
and
WHEREAS, Blue and Lion have agreed that they will participate
in the ownership of Solid, attend to its management and have such other
relationships with each other and with respect to Solid in accordance with, and
in the manner, contemplated hereby.
NOW, THEREFORE, in consideration of the promises and the
mutual covenants herein contained, Blue and Lion agree as follows:
1. DEFINITIONS. For purposes of this Shareholders Agreement:
(a) "Affiliate" means with respect to any Person, each other
Person that directly or indirectly (through one or more intermediaries or
otherwise) controls, is controlled by or is under common control with such
Person.
(b) "Arbitration Rules" shall have the meaning specified in
Section 4(b).
29
(c) "Blue" shall have the meaning specified in the preamble of
this Shareholders Agreement.
(d) "Blue Nominees" shall have the meaning specified in
Section 2(a).
(e) "Board" means the conseil d'administration of Solid.
(f) "Change in Control" shall have the meaning specified in
Section 3(e).
(g) "Consultation Period" shall have the meaning specified in
Section 2(c).
(h) "Discussion Matter" shall have the meaning specified in
Section 2 (d).
(i) "Lion" shall have the meaning specified in the preamble of
this Shareholders Agreement.
(j) "Lock-Up Period" shall have the meaning specified in
Section 3(b).
(k) "Market Value" per Solid Share for purposes of this
Shareholders Agreement means the average of the closing price for the shares of
Solid on the 20 trading days on the Bourse de Paris ending on the trading day
immediately preceding the date on which such Market Value is being determined,
provided, however, if less than 20% of the outstanding Solid Shares are held by
Persons other than Blue and Lion and other than Persons who hold in excess of 5%
of the Solid Shares (other than investment funds, mutual funds and institutional
investors), Market Value shall be determined in accordance with Section 6.
(l) "Minimum Number" shall have the meaning specified in
Section 2(a).
(m) "Other Matter" shall have the meaning specified in Section
2(d).
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30
(n) "Person" (i) means any natural person, corporation,
company, limited or general partnership, joint stock company, joint venture,
association, limited liability company, trust, bank, trust company, land trust,
business trust or other entity or organization organized or existing under any
law and (ii) shall, for purposes of the definition of "Change in Control" in
Section 3(e) only, also mean, as a single Person, any group or syndicate of
Persons, as defined by clause (i) hereof, acting in concert for the purpose of
acquiring, holding or disposing of securities of any other Person, as defined in
such clause (i).
(o) "Principals" means Blue and Lion and their respective
successors and assigns.
(p) "Prohibited Transferee" shall have the meaning specified
in Section 3(b).
(q) "Rights Offering" shall have the meaning specified in the
preamble of this Shareholders Agreement.
(r) "Significant Matter" shall have the meaning specified in
Section 2(d).
(s) "Solid" shall have the meaning specified in the preamble
of this Shareholders Agreement.
(t) "Solid Shares" means the ordinary shares, FF 50 par value,
of Solid.
(u) "Statuts" means the Statuts of Solid as in effect from
time to time.
(v) "Strategic Committee" means the committee of the Board
referred to in Section 2(c).
(w) "Subsidiary" means, with respect to any Person, any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person, are held by the
Person or one or more of its Subsidiaries.
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31
(x) "Transaction Agreement" shall have the meaning specified
in the preamble of this Shareholders Agreement.
(y) "Transfer" shall have the meaning specified in Section
3(b).
(z) "Wholly-Owned Subsidiary" means, with respect to a Person,
a Subsidiary of such Person all of the capital stock of which (other than
directors' qualifying shares) is owned by such Person.
2. MANAGEMENT OF SOLID.
(a) For so long as Blue holds 10% or more of the outstanding
Solid Shares (but subject to Section 2(h) below), Blue shall be entitled to
designate from time to time a number of Board members (the "Blue Nominees")
equal to the greater of (i) two and (ii) the largest whole number (the "Minimum
Number") that does not exceed 20% of the total number of Board members. In the
event that any of such Blue Nominees shall cease to serve as a director for any
reason, Lion and Blue agree, in their capacity as shareholders of Solid, to
cause the vacancy resulting thereby, subject to the terms of this Shareholders
Agreement, with a person designated by Blue (and such person shall be a "Blue
Nominee" for purposes hereof). Notwithstanding the foregoing, Lion shall not
have any obligation to support the nomination, recommendation or election of any
Blue Nominee pursuant to this Section 2(a) if Blue has acquired any Solid Shares
in violation of the terms of this Shareholders Agreement or otherwise materially
breached its obligations hereunder. The Principals agree that, during the term
of this Shareholders Agreement, they will vote their respective Solid Shares at
any meeting of shareholders of Solid at which directors are to be elected for
the number of Blue Nominees, if any, necessary so that following such election
of directors not fewer than the Minimum Number of Blue Nominees are serving on
the Board.
(b) Upon the termination of this Shareholders Agreement or in
the event of a breach of the terms hereof by Blue at any time, Blue shall have
no further rights under this Section 2 and shall cause all Blue Nominees on the
Board to resign promptly from the Board and any committees thereof. In addition,
if at any time Blue directly or indirectly owns Solid Shares representing less
than 10% of the outstanding Solid Shares, Blue shall cause to resign promptly
from the Board that number of Blue Nominees as shall exceed the number of
directors that Blue would then be entitled to designate pursuant to Section 2(a)
(i) or Section 2(a) (ii), as the case may be, provided, however, that if Blue is
entitled to acquire additional Solid Shares pursuant to Section 2(h), the Blue
Nominees shall not be required to resign until the passage of the 30-day notice
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32
period under Section 2(h) or, if notice is given pursuant to Section 2(h), until
the passage of the 180-day acquisition period under Section 2(h) in the event
that following the passage of such period Blue's ownership of Solid Shares
remains less than 10%.
(c) The Principals agree that, at any time Blue is entitled to
have Blue Nominees serve on the Board, all Significant Matters, Other Matters
and Discussion Matters shall be submitted to the Board for the prior approval by
the Board. The Principals further agree that the Board will establish a
"Strategic Committee" of the Board made up of two members of the Board
designated by Lion, one member of the Board designated by the Chief Executive
Officer of Solid and, for so long as Blue owns at least 10% of the outstanding
Solid Shares (but subject to Section 2(h)), one member of the Board who is a
Blue Nominee. Any party may designate any individual to substitute for any of
its representatives on the Strategic Committee at any meeting at which any such
representative does not attend, provided, that any such substitute need not
otherwise be a member of the Strategic committee.
The member of the Strategic Committee designated by the Chief
Executive Officer of Solid will be the Chairman of the Strategic Committee and
the member of the Strategic Committee designated by Blue will be the
Vice-Chairman of the Strategic Committee.
Unless the Strategic Committee unanimously determines not to
consider a Significant Matter, Other Matter or Discussion Matter, each
Significant Matter, Other Matter and Discussion Matters must be approved by the
Strategic Committee of the Board in accordance with the procedures set forth in
this Section 2(c) prior to proposal to the Board for its consideration,
provided, however, that if the Strategic Committee does not act on a Significant
Matter, Other Matter or Discussion Matter within seven days of notice being
given in accordance with this Section to consider any such Significant Matter,
Other Matter or Discussion Matter, the Board shall be free to vote on any such
issue without the prior vote of the Strategic Committee.
In the event that the Blue designee to the Strategic Committee
has voted against adoption of a proposal with respect to a Significant Matter or
an Other Matter that has been approved by a majority of the members present at a
meeting of the Strategic Committee, then, prior to submission of such
Significant Matter or Other Matter to the Board for approval, Blue and Lion
shall consult in good faith for a period of 30 days (the "Consultation Period")
in an effort to reach agreement on how to proceed with respect to such
Significant Matter or Other Matter. Following such Consultation Period with
respect to such Significant Matter or Other Matter, the Significant Matter or
Other Matter shall be resubmitted to the Strategic Committee for consideration
and, if approved by a
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33
majority of the members present at the meeting of the Strategic Committee, may
then be submitted to the Board for consideration. The foregoing provisions shall
not apply to Discussion Matters.
Meetings of the Strategic Committee may be called at any time
by the Board, the Chairman of the Strategic Committee or the Vice-Chairman of
the Strategic Committee. Meetings of the Strategic Committee may be held at any
time, in Paris or any other place as the Chairman of the Strategic Committee and
the Vice-Chairman of the Strategic Committee shall mutually agree. Reasonable
notice of meetings of the Strategic Committee (taking into account the urgency
of the matter to be considered) shall be given by the person or persons calling
the meeting. Members of the Strategic Committee may participate in a meeting of
such committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting shall constitute presence in person
at such meeting. At all meetings of the Strategic Committee a majority of the
entire Strategic Committee shall constitute a quorum for the transaction of
business, provided that at least one of the members present is a Blue designee.
The vote of a majority of the members of the Strategic Committee present at a
meeting at which a quorum is present shall be the act of the Strategic
Committee. In case at any meeting of the Strategic Committee a quorum shall not
be present, the members of the Strategic Committee present may adjourn the
meeting from time to time until a quorum shall attend. Any action required or
permitted to be taken at any meeting of the Strategic Committee may be taken
without a meeting if all members of the Strategic Committee consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Strategic Committee.
The validity, authorization or enforceability of any contract,
agreement or instrument entered into by Solid or any of its Subsidiaries shall
not be affected by the operation of this Section 2.
(d) A "Significant Matter" shall mean any action, or failure
to act, taking or having the effect of any of the following:
(i) Approval of the annual operating and capital
budgets of Solid for any year;
(ii) Approval of the acquisition, regardless of the
form thereof, by Solid or any Solid Subsidiary of the assets or
securities of another Person for consideration greater than $50 million
in value;
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34
(iii) Approval of the entry by Solid or any Solid
Subsidiary into any joint venture, partnership, strategic alliance,
merger or other business combination with another Person pursuant to
which the value of the consideration paid or received by Solid (or the
Solid Subsidiary) is greater than $50 million in value;
(iv) Approval of the sale or other divestiture of
assets of Solid or a Solid Subsidiary either (i) having a book value at
the time of sale or divestiture of greater than $50 million, (ii) for
consideration greater than $50 million or (iii) for consideration less
than the fair market value of the assets proposed to be sold or
divested (as determined in the sole discretion of the Board) or for no
consideration;
(v) A decision by the Board or the shareholders of
Solid to issue or authorize the issue of equity securities of, or any
other derivative security or financial instrument giving a right to an
equity participation in, Solid, in any case in an amount in excess of
$100 million or, in the case of a capital increase reserved to Lion or
any Affiliate of Lion, in any amount in excess of $10 million,
provided, however, that a proposed issuance of equity securities, or
such derivative securities or financial instruments, in excess of $100
million shall be deemed not to be a Significant Matter if Blue is given
the opportunity to subscribe for its pro rata share of such securities
(based on its percentage ownership of Solid's capital) of such
issuance;
(vi) Presenting resolutions to the shareholders to
approve an amendment of Solid's Statuts; and
(vii) Approval of any agreement as to any transaction
or series of related transactions between Solid (or any Subsidiary
thereof) and Blue or any Subsidiary or Affiliate of Blue or between
Solid (or any Subsidiary thereof) and Lion or any Subsidiary or
Affiliate of Lion involving consideration or value which is greater
than $10 million or the term of which exceeds one year or that is on
terms which are less favorable to Solid (or any Subsidiary thereof)
than could be obtained in arm's-length dealings with an independent
third party (as determined in the sole discretion of the Board).
An "Other Matter" shall mean any determination by Solid to
enter a new line of business, provided that (i) entering into a business related
or incidental to Solid's existing business operations shall be deemed not to be
entering into a new line of
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35
business and (ii) this provision shall not apply to a new line of business if
the aggregate expenditure by Solid involved in entering into such new line of
business is less than $50 million.
A "Discussion Matter" shall mean (i) a proposal by the
management of Solid to expand its Waste Business into new countries or (ii)
establishment of rates of return criteria for the operations of Solid.
(e) All meetings of the Board and of the Strategic Committee
may be conducted in French. Blue Nominees shall be entitled to be accompanied at
such meetings by a translator if they desire.
(f) Blue and Lion shall each be present, and shall cause any
of their respective Affiliates that hold Solid Shares to be present, in person
or by proxy, at all meetings of Solid shareholders. Blue and Lion agree that,
for a period of 10 years, to the extent permitted by applicable law, they shall
cast their votes at all meetings of shareholders in favor of the resolutions
submitted by the Board. No vote by Blue at a shareholders meeting with respect
to an item that constitutes a Significant Matter or Other Matter shall be deemed
to constitute a waiver by Blue of its rights under Section 3(d) with respect to
such Significant Matter or Other Matter. Lion and Blue shall vote its shares in
favor of the other's nominees to the Board.
(g) In the event Lion materially breaches any significant
obligation (i) to present Significant Matters or Other Matters to the Strategic
Committee or the Board or (ii) to vote its Solid Shares in support of the Blue
Nominees, each in accordance with the terms of this Section 2, Blue shall
promptly give Lion written notice thereof and if Lion does not cure such breach
within 30 days of such notice from Blue, Blue shall have the right at its option
to put all, but not less than all, of its Solid Shares to Lion at 110% of the
Market Value of such Solid Shares. The rights set forth in this subsection (g)
shall be in addition to any remedy Blue may otherwise have.
(h) For purposes of Sections 2(a) and 2(c), Blue shall not be
deemed to own 10% of the Solid Shares in the event that Blue has at any time
Transferred Solid Shares such that, following such Transfer, Blue owns less than
10% of the Solid Shares (whether or not Blue thereafter acquires additional
Solid Shares). In the event that, as a result of an issuance of additional Solid
Shares or as a result of a stock split, reclassification or other
recapitalization of Solid, Blue's ownership of Solid Shares decreases to below
10%, Blue shall notify Solid in writing within 30 days of such issuance, stock
split, reclassification or recapitalization whether Blue intends to acquire
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36
additional Solid Shares to increase its ownership to 10% or more and, if so,
Blue shall have a period of 180 days from the date of such issuance, stock
split, reclassification or other recapitalization to acquire additional Solid
Shares to increase its ownership of Solid Shares to 10%. If Blue gives such
notice and effects such acquisition during such 180 day period, Blue shall be
deemed for purposes of Section 2(a) and 2(c) to have owned 10% at all times.
(i) At any time Blue is entitled under the provisions of this
Section 2 to have a Blue Nominee serve on the Board, Blue shall be entitled to
have one Blue Nominee serve on the compensation committee of the Board.
3. TRANSFERS AND ACQUISITIONS OF SOLID SHARES.
(a) Transfers of Shares Between the Principals and their
Subsidiaries. Notwithstanding any other provision of this Agreement, Solid
Shares owned by Blue or a Subsidiary of Blue may be Transferred by Blue or such
Subsidiary, as the case may be, to any Wholly-Owned Subsidiary of Blue or, in
the case of Solid Shares issued to or owned or held by such Subsidiary, to Blue,
provided that (i) written notice of such Transfer is given to Lion by Blue and
(ii) any Wholly-Owned Subsidiary of Blue to which any Solid Shares are to be
Transferred agrees to be bound by all the terms and provisions of this
Shareholders Agreement applicable to Blue.
Solid Shares owned by Lion or a Subsidiary of Lion may be
Transferred by Lion or such Subsidiary, as the case may be, to any Subsidiary of
Lion, or in the case of Solid Shares issued to or owned or held by such
Subsidiary, to Lion, provided that (i) written notice of such Transfer is given
to Blue by Lion and (ii) such transferee agrees to be bound by all the terms and
provisions of this Shareholders Agreement applicable to Lion.
(b) Disposition of Shares. Other than as set forth in Sections
3(a), 3(d) and 3(e), except with the prior written consent of Lion (which may be
granted or withheld in Lion's sole discretion) neither Blue nor any Subsidiary
of Blue may sell or transfer (including by dividend, pledge or mortgage) or
otherwise dispose of (collectively, "Transfer"), or permit any pledgee or
mortgagee of Blue or any Subsidiary of Blue to Transfer, any Solid Shares (i)
for a period of three years from the Closing Date (the "Lock-Up Period") or (ii)
following the Lock-Up Period, except in accordance with the provisions of
Section 3(c). Notwithstanding anything to the contrary in this Section 3,
neither Blue nor any Subsidiary of Blue may Transfer, or permit any pledgee or
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37
mortgagee of Blue or any Subsidiary of Blue to Transfer, any Solid Shares to any
entity listed on Annex I hereto (a "Prohibited Transferee").
(c) Sale of Shares. In the event that, at any time after the
Lock-Up Period, Blue desires to Transfer all or any portion of its Solid Shares
(other than in accordance with Section 3(a)) (including, in the context of an
offre publique de vente or a private placement with unidentified purchasers, to
any underwriter or underwriters) for a fixed price in cash, then Blue shall
first offer or cause to be offered such stock for sale to Lion at a price and on
terms which Blue is prepared to accept, in accordance with the following
provisions:
(i) Blue shall give notice in writing to Lion
indicating the number of Solid Shares Blue desires to Transfer and
specifying the price and terms which it is prepared to accept and
irrevocably offering such Solid Shares to Lion or any Person designated
by Lion.
(ii) Within 30 days from the receipt of such notice,
Lion shall deliver a written notice to Blue stating whether Lion or its
designee accepts such offer. If Lion fails to deliver such notice
within such 30-day period, Lion shall be deemed conclusively not to
accept such offer.
(iii) In the event that, within 30 days from the
receipt of the notice of Blue referred to in Section 3(c)(i), Lion
delivers a written notice to Blue to the effect that Lion accepts such
offer, delivery of such notice shall constitute an agreement binding on
Blue and Lion to sell and to purchase (or to cause Lion's designee to
purchase, as the case may be), respectively, all of the Solid Shares
offered by Blue, subject to receipt of any required regulatory
approvals, at the price and upon the terms stated in the offer of Blue.
(iv) If Lion fails to accept the offer of Blue within
such 30-day period specified in Section 3(c)(ii), Blue shall be free
for a period of 90 days from the date of the notification to Lion under
Section 3(c)(i) to Transfer such Solid Shares to a third-party
purchaser or third-party purchasers at a price not less than the price
at which, and on terms no more favorable than, such Solid Shares were
offered to Lion as provided in the notice to Lion and, upon such
Transfer, such Solid Shares shall cease to be subject to the terms of
this Shareholders Agreement.
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38
(v) In the event that Blue (or its Subsidiary) does
not complete the Transfer contemplated by the foregoing Section
3(c)(iv) above within a period of 90 days from the date of the
notification to Lion under Section 3(c)(i) of its desire to sell Solid
Shares, all the provisions of this Section 3(c), including the notice
and offer provisions of Section 3(c)(i), (ii) and (iii), shall apply to
any proposed Transfer of such Solid Shares, other than as provided
under Section 3(a).
(vi) Any purchase of Blue's Solid Shares by Lion
pursuant to Section 3(c)(iii) shall be completed in any manner
permitted by then applicable French law and regulations upon payment of
the purchase price to Blue (provided that Blue or its Subsidiary, as
the case may be, shall have delivered good title to such Solid Shares
free of all encumbrances in the manner provided for by then applicable
French law).
(vii) In the event that Blue desires to Transfer all
or any portion of its Solid Shares (other than in accordance to Section
3(a)) for consideration other than a fixed price in cash, Lion shall
retain, at Blue's expense, a financial advisor independent of both Lion
and Blue to value such proposed consideration, Blue shall supply to
Lion and its financial advisors all information requested by them in
connection with such valuation, and Lion shall have the right to accept
Blue's offer to purchase such Solid Shares at the cash equivalent of
such consideration within 60 days from the receipt of the notice
referred to in Section 3(c)(i). Such offer and purchase shall
otherwise be governed by the provisions of this Section 3(c).
(d) Significant Matter; Other Matter. In the event that on two
separate occasions within any 12 month period during the duration of this
Agreement, (i) the Blue designee to the Strategic Committee shall have voted
against adoption of a proposal with respect to a Significant Matter at the
meeting of the Strategic Committee following the Consultation Period with
respect to such Significant Matter and (ii) such Significant Matter shall have
been approved by a meeting of the Board at which all Blue Nominees present or
represented voted against approval of such Significant Matter (such vote by the
Board being a "Triggering Event") then Blue (or any Subsidiary thereof, as the
case may be) may sell all, but not less than all, of its Solid Shares to any
Person other than a Prohibited Transferee in accordance with the provisions of
Section 3(c) (subject to Lion's right to purchase such Solid Shares in
accordance with Section 3(c) by giving written notice to Lion within 10 days of
such Triggering Event). In the event Blue has exercised its right pursuant to
the immediately preceding sentence and at the end of the 90-day period provided
under Section 3(c)(iv) Blue has not sold its Solid Shares, Blue shall have the
right for a period of 30 days to put all, but not less than all, of its Solid
Shares to Lion
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at a price of 99% of the Market Value on the date of the Triggering Event and,
if at the end of such 30-day period Blue has not exercised such put right, Lion
shall have a right for a period of 30 days to call all, but not less than all,
of such Solid Shares at a price of 101% of the Market Value on the date of the
Triggering Event. In the event that Blue does not transfer its Solid Shares
pursuant to the right of first offer, put or call provisions of this Section
3(d), all provisions of this Shareholders Agreement (including Section 3(d) in
the event of disagreements with respect to two additional Significant Matters)
shall continue to apply.
In the event that during the duration of this Agreement, (i)
the Blue designee to the Strategic Committee shall have voted against adoption
of a proposal with respect to an Other Matter at the meeting of the Strategic
Committee following the Consultation Period with respect to such Other Matter
and (ii) such Other Matter shall have been approved by a meeting of the Board
(at which all Blue Nominees present or represented voted against approval of
such Other Matter) then Blue (or any Subsidiary thereof, as the case may be) may
sell all, but not less than all, of its Solid Shares to any Person other than a
Prohibited Transferee in accordance with the provisions of Section 3(c) by
giving written notice to Lion within 10 days of such meeting of the Board
(subject to Lion's right to purchase such Solid Shares in accordance with
Section 3(c)). In the event that Blue does not transfer its Solid Shares
pursuant to the right of first offer provisions of this Section 3(d) within 90
days of such notice, all provisions of this Shareholders Agreement (including
Section 3(d)) shall continue to apply.
The Principals agree that neither they nor any of their
respective Affiliates shall effect purchases of Solid Shares during the 20
trading days prior to any date upon which Market Value is determined pursuant to
this Shareholders Agreement.
(e) Change in Control. In the event of a Change in Control of
Blue, Lion shall have the option either (i) to call from Blue (or its
Subsidiaries, as the case may be) all, but not less than all, of Blue's Solid
Shares at a price equal to 101% of the Market Value of such Solid Shares as of
the date of such Change in Control by giving written notice to Blue at any time
prior to the 30th day following receipt by Lion of written notice from Blue of
such Change in Control or (ii) to terminate this Shareholders Agreement by
giving written notice to Blue at any time prior to the 30th day following
receipt by Lion of written notice from Blue of such Change in Control.
In the event of a Change in Control of Lion, the Lock-Up
Period shall immediately terminate.
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40
A "Change in Control" shall be deemed to have occurred as to
Blue or Lion if any Person is or becomes the owner, directly or indirectly, of
more than 30% of the total voting power of all shareholders or other equity
holders of Blue or Lion, as the case may be, entitled to vote generally in the
election of directors of Blue or Lion, as the case may be, provided, however,
that a Change in Control shall be deemed not to have occurred with respect to
Blue if Lion has approved the acquisition by such Person in writing in advance
of the acquisition and that a Change in Control shall be deemed not to have
occurred with respect to Lion if Blue has approved the acquisition by such
Person in writing in advance of the acquisition.
(f) Pledge of Solid Shares. The provisions of Section 3(b) and
3(c) shall be deemed not to apply to any pledge or mortgage by Blue or any
Subsidiary thereof of the Solid Shares owned or held by it if such pledge or
mortgage is required or provided for under the terms of any mortgage, trust,
indenture or other agreement which provides that any Transfer of Solid Shares by
the pledgee or mortgagee shall be governed by the provisions of Sections 3(b)
and 3(c) of this Shareholders Agreement.
(g) Acquisitions of Solid, Lion and Blue Shares. At any time
this Shareholders Agreement is in effect, Blue agrees that none of Blue, any of
its Affiliates, or any group of which Blue or any such Affiliate is a member,
will acquire ownership (i.e., voting rights, economic rights or other rights) of
any Solid Shares (or securities convertible into or exercisable for Solid
Shares) except for (x) the acquisition of Solid Shares (provided that Blue has
not breached its obligations under this Shareholders Agreement) which would not,
after giving effect to such acquisition, result in ownership (i.e., voting
rights, economic rights or other rights) of Solid Shares representing more than
25% of the outstanding Solid Shares or 30% of the voting rights in respect of
the outstanding Solid Shares or (y) pursuant to a stock split, stock dividend,
rights offering, recapitalization, reclassification or similar transaction made
available to holders of Solid Shares generally; provided that any such Solid
Shares shall be subject to the restrictions of this Shareholders Agreement. In
the event that Blue directly or indirectly owns or acquires any Solid Shares in
violation of this Shareholders Agreement, such Solid Shares shall immediately be
disposed of to Persons who are not Affiliates of Blue (but only in compliance
with the provisions of this Shareholders Agreement relating to Transfers of
Solid Shares); provided, however, that Lion may also pursue any other available
remedy to which it may be entitled as a result of such violation. At any time
this Shareholders Agreement is in effect, Blue will give Solid reasonable prior
notice of any acquisition of Solid Shares by Blue, any of its Affiliates or any
group of which Blue or any such Affiliate is a member.
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41
At any time this Shareholders Agreement is in effect, Blue
agrees that none of Blue or any of its Affiliates, or any group of which Blue or
any such Affiliate is a member, will acquire ownership (i.e., voting rights,
economic rights or other rights) of any shares of Lion's ordinary shares, par
value FF____ per share (or securities convertible into or exercisable for Lion
ordinary shares). In the event that Blue owns or acquires any Lion ordinary
shares in violation of this Shareholders Agreement, such Lion ordinary shares
shall immediately be disposed of in an orderly fashion to Persons who are not
Affiliates of Blue and who will not, to the knowledge of Blue, after such
disposition, own more than 5% of the outstanding Lion ordinary shares, provided
that such 5% limitation shall not apply to transfers to investment funds, mutual
funds and other similar types of passive investors; provided, further however,
that Lion may also pursue any other available remedy to which it may be entitled
as a result of such violation. At any time this Shareholders Agreement is in
effect, Blue will give Solid reasonable prior notice of any acquisition of Lion
ordinary shares by Blue, any of its Affiliates or any group of which Blue or any
such Affiliate is a member.
At any time this Shareholders Agreement is in effect, Lion
agrees that none of Lion, Solid, any of their Affiliates, or any group of which
Lion, Solid or any such Affiliate is a member, will acquire ownership (i.e.,
voting rights, economic rights or other rights) of any shares of Blue's Common
Stock, par value $0.162/3 per share (or securities convertible into or
exercisable for Blue Common Stock) except for (x) the acquisition of Blue Common
Stock (provided that Lion has not breached its obligations under this
Shareholders Agreement) which would not, after giving effect to such
acquisition, result in ownership (i.e., voting rights, economic rights or other
rights) of Blue Common Stock representing more than 10% of the outstanding Blue
Common Stock or (y) pursuant to a stock split, stock dividend, rights offering,
recapitalization, reclassification or similar transaction made available to
holders of Blue Common Stock. In the event that Lion beneficially owns or
acquires any Blue Common Stock in violation of this Shareholders Agreement, such
Blue Common Stock shall immediately be disposed of in an orderly fashion to
Persons who are not Affiliates of Lion or Solid and who will not, to the
knowledge of Lion or Solid, after such disposition, own more than 5% of the
outstanding Blue Common Stock, provided that such 5% limitation shall not apply
to transfers to investment funds, mutual funds and other similar types of
passive investors; provided, further however, that Blue may also pursue any
other available remedy to which it may be entitled as a result of such
violation. At any time this Shareholders Agreement is in effect, Lion and Solid
will give Blue reasonable prior notice of any acquisition of Blue's Common Stock
by Lion, Solid, any of their Affiliates, or any group of which Lion, Solid or
any such Affiliate is a member.
(h) Other than with respect to a Transfer in accordance with
Section 3(a), the rights of Blue under this Shareholders Agreement shall not be
transferable and
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shall terminate with respect to any Solid Shares Transferred by Blue. Any Solid
Shares Transferred by Blue in accordance with the provisions of Section 3 shall
be free of any restrictions under this Shareholders Agreement.
4. RESOLUTION OF DISPUTES. Any dispute between the Principals arising
out of this Shareholders Agreement, whether as to this Shareholders Agreement's
construction, interpretation or enforceability or as to any Principal's breach
or alleged breach of any provision of this Shareholders Agreement, shall be
submitted to final and binding arbitration in accordance with the following
procedures:
(a) Either Principal may demand such arbitration by
giving written notice of that demand to the other Principal. Any such
arbitration shall be before a panel of three arbitrators, one selected
by each Principal and the third (who shall serve as chairman of the
tribunal) selected by the agreement of each of the two arbitrators
selected by the Principals in the manner set forth in Section 4(b). The
notice pursuant to this Section 4(a) shall state (x) the matter in
controversy and (y) the name of the arbitrator selected by the
Principal giving the notice.
(b) Not more than 15 days after notice is given
pursuant to Section 4(a), the other Principal shall give written notice
to the Principal who demanded arbitration of the name of an arbitrator
selected by the other Principal. If the other Principal shall fail to
give such notice within such 15 day period, a second arbitrator shall
be selected in accordance with the Arbitration Rules of the
International Chamber of Commerce (the "Arbitration Rules"). Not more
than 30 days after the second arbitrator is so named, the two
arbitrators shall select a third arbitrator. If the two arbitrators
shall fail to select a third arbitrator within such 30 day period, the
third arbitrator shall be named pursuant to the Arbitration Rules. All
arbitrators shall be fluent in English and French.
(c) The dispute shall be arbitrated at a hearing to
be conducted in French, although documents may be submitted in English
or French. The arbitration shall take place in Geneva or such other
place as the Principals agree and shall be concluded as soon as
practicable in accordance with the Arbitration Rules. Any award, which
may be made by a majority of the arbitrators, shall be made as soon as
possible following the conclusion of the arbitration and shall be
conclusive and binding on the parties and may be entered as a judgment
of any court having jurisdiction.
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(d) Each Principal shall bear half the arbitrators'
fees and expenses and administrative expenses of the arbitration and
its own legal and other costs.
The agreement of the Principals contained in the foregoing provisions of Section
4 shall be a complete defense to any action, suit or other proceeding instituted
in any court or before any administrative tribunal with respect to any dispute
between the Principals arising out of this Shareholders Agreement.
5. SALES BY LION. (a) Lion will not reduce its ownership of Solid
Shares to less than 40% of the outstanding Solid Shares voting rights unless
Lion receives a written opinion of a nationally recognized French law firm in
form and substance satisfactory to Blue, and delivers a copy of such opinion to
Blue, to the effect that Lion and Blue will not be obligated to launch a tender
offer for all of the outstanding Solid Shares as a result of such reduction in
ownership. The parties agree that the provisions of this Section 5(a) are in
addition to, and do not negate, the rights provided to Blue under the agreements
executed in connection with the transactions contemplated by this Shareholders
Agreement.
6. In the event that Market Value is being determined at any time when
less then 20% of the outstanding Solid Shares are held by Persons other than
Blue and Lion and other than Persons who hold in excess of 5% of the Solid
Shares (other than investment funds, mutual funds and institutional investors),
Market Value shall be determined as follows:
Blue shall designate and appoint an investment bank to
participate in establishing Market Value. Within 15 days after written notice of
the identity of such investment bank by Blue is given, Lion shall appoint an
investment bank to participate in establishing Market Value. Using generally
accepted valuation techniques and investment banking methodology, such
investment banks as so appointed shall endeavor to agree upon the Market Value
of the subject Solid Shares and shall, within 30 days following the engagement
of the second such investment bank, each deliver to the other in writing the
amount arrived at as representing its opinion as to Market Value. If such
amounts are the same (an "agreed value") or one of them shall be no less than 90
percent of the other, then the Market Value shall be the agreed value or the
arithmetic mean of the two. If the two investment banks are unable to agree
within 30 days after the appointment of its investment bank by Lion or if one of
the amounts proposed by one of such two investment banks shall be less than 90
percent of the other, then such Market Value shall be established by a third
investment bank appointed by the two investment banks named by the Principals
or, failing such appointment by such investment banks
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within five days after the expiry of their 30-day period of effort, then by the
President of the Paris Commercial Court. Such third investment bank shall be
instructed to establish such Market Value (which shall not be greater than the
larger of the two estimates nor less than the lesser of the two estimates),
using generally accepted valuation techniques and investment banking
methodology, as soon as possible and shall, upon completion of its task, so
notify the Principals.
7. AMENDMENT. This Shareholders Agreement may not be amended except by
a written instrument signed on behalf of each of the Principals.
8. NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and either delivered personally or by facsimile
transmission and shall be deemed given when received at the following addresses
or facsimile transmission numbers (or at such other address or facsimile
transmission number for a party as shall be specified by like notice):
(a) If to Blue: ________________, Attention: ________________
(facsimile transmission number: _______________); with a copy (which shall not
constitute notice) to ________________ (facsimile transmission number:
_______________).
(b) If to Lion: 0, Xxx x' Xxxxxx 00000 Xxxxx, Xxxxxx,
Attention: Le President du Directoire (facsimile transmission number:
_______________); with copies (which shall not constitute notice) to Le
Directeur Juridique (facsimile transmission number: _______________) and
Xxxxxxxx & Xxxxxxxx, Attention: Xxxxxxx X. Xxxxxxx (facsimile transmission
number: 212-558-3588).
9. SEVERABILITY. Any term or provision of this Shareholders Agreement
that is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Shareholders Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Shareholders Agreement
in any other jurisdiction. If any provision of this Shareholders Agreement is so
broad as to be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable.
10. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Shareholders
Agreement (together with the documents and instruments delivered by the parties
in connection with this Shareholders Agreement or specifically contemplated
hereby)
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(a) constitutes the entire agreement and supersedes all other prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof; (b) is agreed to in English and shall be read and
interpreted according thereto notwithstanding any translation hereof for the
convenience of the parties into French; and (c) is solely for the benefit of the
Principals hereto and, other than as provided herein, their respective
successors, legal representatives and assigns and does not confer on any other
person any rights or remedies hereunder.
11. APPLICABLE LAW. THIS SHAREHOLDERS AGREEMENT SHALL BE GOVERNED IN
ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF
FRANCE REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE
PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
12. ASSIGNMENT. Neither this Shareholders Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by either Principal
except as contemplated hereby without the prior written consent of the other
Principals. Subject to the preceding sentence, this Shareholders Agreement will
be binding upon, inure to the benefit of and be enforceable by the Principals
and their respective successors and permitted assigns.
13. WAIVERS. Either Principal hereto may, to the extent legally
allowed, (a) extend the time for the performance of any of the obligations or
other acts of the other Principal and (b) waive performance of any of the
covenants or agreements contained herein. Any agreement on the part of a
Principal to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such Principal. Except as specifically
and explicitly provided in this Shareholders Agreement, no action taken pursuant
to this Shareholders Agreement shall be deemed to constitute a waiver by the
Principal taking such action of compliance with any covenants or agreements
contained in this Shareholders Agreement. The waiver by any Principal of a
breach of any provision hereof shall not operate or be construed as a waiver of
any prior or subsequent breach of the same or any other provisions hereof.
14. This Shareholders Agreement shall terminate and expire at the later
of (i) the fifth anniversary of the Closing Date and (ii) the date on which Blue
owns less than 5% of the outstanding Solid Shares.
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46
SUEZ LYONNAISE DES EAUX, S.A.
By:
------------------------------------
Name:
Title:
XXXXXXXX-XXXXXX INDUSTRIES, INC.
By:
------------------------------------
Name:
Title:
Witnessed, as of the date hereof:
SITA, S.A.
By:
------------------------------------
Name:
Title:
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ANNEX I
- Generale des Eaux
- Waste Management
- Bouygues
- Tredi-EMC
- FCC
- Caisse des Depots
- EDF
- RWE
- VEW
- Rethmann
- Any affiliate of any of the foregoing entities.
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ANNEX C
Terms of Technical Cooperation Agreement
In consideration of the transactions contemplated by the
Transaction Agreement, including Parent's ongoing participation in Purchaser as
a significant shareholder, participation in Purchaser's management and
Purchaser's agreement not to engage in solid waste activities in the United
States, Canada and Mexico and Parent's agreement not to engage in such
activities outside of the United States, Canada and Mexico, Parent and Purchaser
will enter into a Technical Cooperation Agreement (the "Cooperation Agreement")
containing the following terms. For purposes of this Annex C, the "United
States" shall include the Commonwealth of Puerto Rico.
o Parent will undertake to cooperate with Purchaser in the development of and
share with Purchaser technical information, know-how, proprietary
information, intellectual property including patents, and assistance
regarding the Waste Business, particularly technical information, know-how
and assistance regarding solid waste technology in the United States,
Canada and Mexico and Parent will not engage in the Waste Business outside
of the United States, Canada and Mexico.
o Purchaser will undertake to cooperate with Parent in the development of and
share with Parent technical information, know-how, proprietary information,
intellectual property including patents, and assistance regarding the
collection, transportation, disposal, and processing or solid and medical
waste, the collection, transportation, processing and marketing or disposal
of recyclable materials (the "Business"), particularly technical
information, know-how and assistance regarding solid waste technology
outside of the United States, Canada and Mexico and Purchaser will not
engage in the Business in the United States, Canada and Mexico, except for
operations being conducted on the date of the Transaction Agreement.
C-1
49
o Each of Parent and Purchaser will agree to share with the other party,
among other things, (i) new methods and technologies (or methods known
to one party but not the other party) of waste collection,
transportation, disposal, processing, recycling, recycling processing
and other activities related to the Waste Business and Purchaser's
Business, as the case may be, (ii) standards and innovations to
improve logistical efficiency in the conduct of the Waste Business and
Purchaser's Business, as the case may be, (iii) standards and
innovations regarding the design and operation of landfills, transfer
stations and waste to energy facilities and (iv) standards to be
maintained and actions to be taken to improve environmental safety and
compliance with environmental regulations.
o Each of Parent and Purchaser will agree that any technological
information provided to the other party (as set forth above) will be
provided with a royalty-free license to use such technological
information in perpetuity.
o Parent will provide Purchaser with a royalty-free license to use
Parent's name outside the United States, Canada and Mexico following
the Closing in connection with the business of the International
Subsidiaries, which license shall be granted on reasonable terms for a
reasonable duration (not to exceed 90 days) following the Closing.
Parent and Purchaser shall negotiate concerning whether Parent will
agree to provide Purchaser with a royalty-free license to use Parent's
name independent of, or in conjunction with, Purchaser's name during
the term of the Cooperation Agreement.
o The sharing of technical information contemplated hereby shall be
provided (during the term of the Cooperation Agreement) on a
C-2
50
continuous basis without the need for requests for such information
from either party.
o Each of Parent and Purchaser will assist with the implementation and
incorporation of the technical information to be provided hereunder by
providing technical assistance and support to each other.
o Each of Parent and Purchaser will consult with the other party as to
the appropriate manner to aid in any technology sharing.
o Each of Parent and Purchaser will provide technicians to the other
party at such other party's expense who will work onsite to assist
with any technology sharing.
o Each of Parent and Purchaser (either, the "providing party") will
provide a reasonable number of the other party's technicians access to
its facilities at the providing party's expense for both short-term
and long-term training.
o For so long as Parent owns 10% or more of the outstanding Purchaser Shares,
Purchaser will prepare quarterly financial reports in accordance with
French GAAP at its own expense.
o Purchaser will retain one full time employee for the purpose of
reconciling Purchaser's quarterly and annual financial reports to U.S.
GAAP.
o Purchaser will commit to make its personnel available to and to
provide access to Purchaser's books and records to such employee to
enable such employee to discharge his responsibilities.
o Parent will reimburse Purchaser for the salary and benefits payable to
such employee.
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51
o Nothing contained herein shall be deemed to be a representation from
Purchaser as to the accuracy of the presentation of Purchaser's
financial reports in accordance with U.S. GAAP.
o The Cooperation Agreement will terminate and expire at the later of (i) the
fifth anniversary of the Closing Date, and (ii) the date on which Parent
owns less than 5% of the outstanding Purchaser Shares.
o The Cooperation Agreement will contain customary confidentiality
provisions.
o The Cooperation Agreement will be governed by French law.
C-4
52
ANNEX I
Representations and Warranties of
Parent and the Selling Entities
Parent and International will jointly and severally represent
and warrant to Purchaser as follows:
Section 1.1 Corporate Organization and Qualification. Each of
the International Subsidiaries has been duly organized and is validly existing
and in good standing under the laws of its jurisdiction of organization, and is
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the properties owned, leased or operated by it or the
business conducted by it require such qualification, except for such failures to
so qualify or be in good standing as a foreign corporation, which, in the
aggregate, could not have a material adverse effect on the general affairs,
business, assets, liabilities, financial condition, properties, operations or
results of operations of the International Subsidiaries taken as a whole, or on
the ability to operate or conduct the business of the International
Subsidiaries, taken as a whole, in the manner in which it is presently operated
or conducted (an "International Material Adverse Effect"), it being understood
that for purposes of the definition of International Material Adverse Effect
that any change, development or effect which could reasonably be expected to
cause or result in losses, damages, claims or liabilities to or against the
International Subsidiaries greater than $15,000,000 shall be deemed to be such a
material adverse effect. Each of the International Subsidiaries has the
corporate power and authority to carry on its business as currently conducted.
Parent has delivered to Purchaser a complete and correct copy of each
International Subsidiary's certificate of incorporation, by-laws or other
comparable governing instruments, each as amended to date. Such instruments are
in full force and effect.
Section 1.2 Authorized Capital. Schedule 1.2 contains a true
and complete list of all of the
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International Subsidiaries and sets forth with respect to each International
Subsidiary (i) its jurisdiction of incorporation, (ii) each jurisdiction in
which it is qualified to do business as a foreign corporation, (iii) its
authorized, issued and outstanding equity securities or ownership interests and
(iv) the holder or holders of all of its issued and outstanding equity
securities or ownership interests. The authorized capital stock or equity
capitalization of each International Subsidiary consists of the number and class
of equity securities or ownership interests set forth opposite such
International Subsidiary's name on Schedule 1.2. All of the Shares have been
duly authorized and validly issued, and are fully paid and (except as set forth
on Schedule 1.2) nonassessable.
Section 1.3 Ownership and Title. Except as set forth in
Schedule 1.3, (i) each of the Shares is owned, of record and beneficially,
either directly or indirectly, by the applicable Selling Entity free and clear
of all liens, pledges, security interests, voting trust arrangements, charges,
options, restrictions, claims or other encumbrances, and (ii) each of the
outstanding equity securities or ownership interests of each International
Subsidiary other than any issuer of the Shares (each, a "Purchased Entity") is
owned, of record and beneficially, either directly or indirectly, by a Purchased
Entity, free and clear of all liens, pledges, security interests, voting trust
arrangements, charges, options, restrictions, claims or other encumbrances,
except, in the case of clause (i) or clause (ii), for such encumbrances as could
not have a material adverse effect on the ability of any International
Subsidiary to operate or conduct its business in the manner in which it is
presently operated, or hinder or delay the performance by any party of its
obligations under this Agreement or hinder or delay the consummation of the
transactions contemplated herein with the result that the representation and
warranties set forth in the second sentence of this Section 1.3 will be true and
accurate. Immediately following the Closing, Purchaser or one or more of its
Subsidiaries shall have good and valid title to all of the Shares, free and
clear of any lien, pledge, security interest, voting trust arrangement, charge,
option,
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restriction, claim, or other encumbrance, except for any encumbrances on the
Shares arising or perfected following the Closing. Except as set forth in
Schedule 1.3, immediately following the transfer to Purchaser or one of its
Subsidiaries of the Shares, each of the outstanding equity securities or
ownership interests of each International Subsidiary will be owned, of record
and beneficially, either directly or indirectly, by Purchaser or one of its
Subsidiaries, free and clear of all liens, pledges, security interests, voting
trust arrangements, charges, options, restrictions, claims or other
encumbrances, except for any encumbrances arising following the Closing, and
Purchaser will have purchased and acquired all of Parent's direct or indirect
right, title and interest in and to the Waste Business. Except for the
International Subsidiaries, International does not have any Subsidiaries or own
of record or beneficially, or is obligated to acquire, any equity security or
ownership interest or investment in any Person. Except as set forth in Schedule
1.3, no International Subsidiary has any Subsidiaries or owns of record or
beneficially, or is obligated to acquire, any equity security or ownership
interest or investment in any Person.
Section 1.4 No Dilution. Except as set forth in Schedule 1.4,
no International Subsidiary has any equity securities or ownership interests
reserved for issuance. Except as set forth in Schedule 1.4, there are no
subscriptions, calls, commitments, rights, options, warrants, conversion rights,
stock appreciation rights, redemption rights, repurchase rights, agreements,
plans, arrangements or commitments with respect to the issuance, sale or
purchase of any equity securities or ownership interests of any International
Subsidiary or any securities or obligations convertible or exchangeable into or
exercisable for, or giving any Person a right to subscribe for or acquire,
equity securities or ownership interests of any International Subsidiary, and no
securities or obligations evidencing such rights are authorized, issued or
outstanding. Neither International nor any International Subsidiary has any
outstanding securities or instruments the holders of which have the right to
vote (or convert or
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exchange such securities or instruments into or for securities having the right
to vote) with the shareholders of any International Subsidiary on any matter.
Section 1.5 Corporate Authority. (a) Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority and has
taken all corporate action necessary in order to execute, deliver and perform
its obligations under the Transaction Agreement and the Ancillary Agreements (as
defined below) and to consummate the transactions contemplated thereby. Xxxxxx
Xxxxxxx & Co. Incorporated has rendered a written opinion to Parent to the
effect that the Consideration is fair to Parent from a financial point of view.
The Transaction Agreement is and as of and after the Closing will be, and as of
and after the Closing the Ancillary Agreements will be, valid and binding
agreements of Parent, enforceable against them in accordance with their
respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles. "Ancillary
Agreements" means, collectively, the Shareholders Agreement and the Operations
Agreement.
(b) Each of the Selling Entities is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has all requisite corporate power and authority
and has taken all corporate action necessary to transfer, convey and sell to
Purchaser the Shares held by it, and no other proceedings on the part of any
Selling Entity are necessary to authorize the transactions contemplated by the
Transaction Agreement.
Section 1.6 Conduct of Business. Parent and the Parent
Subsidiaries are engaged in the Waste Business only through the International
Subsidiaries, and neither Parent, nor any Parent Subsidiary conducts any
operations associated with, or owns any assets or properties used in, or holds
any permits or licenses used in, the Waste Business, except for operations which
after the Closing Date will be conducted
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pursuant to the Technical Services Agreement. None of the International
Subsidiaries is, or (to Parent's knowledge) has been, engaged in any material
business other than the Waste Business or owns or has owned any material assets
or properties which are used in any business other than the Waste Business.
Section 1.7 Governmental Filings. Other than the filings
and/or notices required by Council Regulation (EEC) No. 4064/89, [List
non-European antitrust or regulatory filings] and the filings and/or notices set
forth in Schedule 1.7, no notices, reports or other filings are required to be
made by Parent or any Parent Subsidiary with, nor are any consents,
registrations, Approvals (as defined below), permits or authorizations required
to be obtained by Parent or any Parent Subsidiary from, any Governmental Entity,
in connection with the execution and delivery of the Transaction Agreement by
Parent or International and the consummation by Parent or any Parent
Subsidiaries of the transactions contemplated hereby, except for notices,
reports, filings, consents, registrations, Approvals, permits or authorizations,
the failure to make or obtain which could not, in the aggregate, have an
International Material Adverse Effect, hinder or delay the performance by any
party of its obligations under this Agreement or hinder or delay the
consummation of the transactions contemplated herein. "Approval" means any
approval, authorization, consent, license, franchise, order or permit of or by,
or filing with, a Person.
Section 1.8 Non-Contravention. The execution, delivery and
performance of the Transaction Agreement and the Ancillary Agreements by Parent
and any Parent Subsidiaries party thereto, and the consummation by Parent and
any Parent Subsidiaries of the transactions contemplated in the Transaction
Agreement and therein, do not and will not (a) violate or conflict with, or
constitute a default under, any provision of the certificate of incorporation,
by-laws or comparable governing instruments of Parent or any Parent Subsidiary,
(b) violate any provision of, or constitute (or with notice or lapse of time or
both would constitute) a default under, or accelerate or permit the
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acceleration of the performance required by, any agreement, lease, contract,
note, mortgage, indenture, instrument, arrangement or other obligation
(collectively, "Contracts") to which Parent or any Parent Subsidiary is a party
or by which any of them or any of their respective assets or properties are
bound or subject (collectively, the "Parent Contracts"), (c) entitle any party
to cancel or terminate, or result in any change in the rights or obligations of
any party under, or require a consent or waiver by any party to, any Parent
Contract, (d) result in the creation of a lien, pledge, security interest,
voting trust arrangement, charge, option, restriction, claim, or other
encumbrance on the equity securities, ownership interests or on the assets of
Parent or any Parent Subsidiary, (e) violate any law, statute, rule, regulation,
ordinance, requirement, administrative ruling, order, judgment, injunction,
award, decree or process of any Governmental Entity (collectively, "Law") by
which or to which any of their respective assets or properties are bound or
subject, or (f) result in the loss or impairment of any Approval of or
benefitting Parent or any Parent Subsidiary; except (i) in the case of clauses
(b), (d), (e) and (f) of this Section, for such violations, defaults,
accelerations, losses or impairments as, when taken together with all other such
violations, defaults, accelerations, losses and impairments, could not have an
International Material Adverse Effect, and (ii) in the case of clauses (b) and
(c), for violations, defaults, accelerations, cancellations, terminations of and
changes in rights under the Contracts, instruments, agreements and obligations
listed in Schedule 1.8.
Section 1.9 Financial Statements; Projections. (a)(i) The
consolidated balance sheet of the International Subsidiaries dated September 30,
1997 contained in Schedule 1.9(a)(i) (the "International Balance Sheet") fairly
presents the consolidated assets, liabilities and financial position of the
International Subsidiaries as a whole as of such date in accordance with
generally accepted accounting principles in the United States ("U.S. GAAP") and
the accounting practices listed on Schedule 1.9(a)(ii), in each case
consistently applied, except as specifically noted therein. The consolidated
statement of income and of
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changes in financial position of the International Subsidiaries for the year
ended September 30, 1997 contained in Schedule 1.9(a)(i) (the "International
Income Statement," and, collectively with the International Balance Sheet, the
"International Financial Statements") fairly presents the consolidated results
of operations, retained earnings and changes in financial position, as the case
may be, of the International Subsidiaries as a whole for such period, in each
case in accordance with U.S. GAAP and the accounting practices listed in
Schedule 1.9(a)(ii), in each case consistently applied, except as specifically
noted therein. (ii) Except as set forth in Schedule 1.9(a)(iii), (A) each of the
balance sheets contained in Schedule 1.9(a)(iii) in respect of each individual
International Subsidiary fairly presents the assets, liabilities and financial
position of such International Subsidiary as of the date hereof in accordance
with the local jurisdiction accounting standards applicable to each such
Subsidiary ("Local GAAP"), and (B) each of the statements of income and of
changes in financial position contained in Schedule 1.9(a)(iii) in respect of
each individual International Subsidiary fairly presents the results of
operations, retained earnings and changes in financial position, as the case may
be, of such International Subsidiary for the period covered thereby in
accordance with Local GAAP.
(b) The projections regarding the financial performance of the
International Subsidiaries contained in Schedule 1.9(b) were based on
assumptions which Parent believes are reasonable; provided that the foregoing
does not constitute any representation or warranty with respect to the actual
results which will be achieved by the International Subsidiaries.
Section 1.10 Closing Consents. Except for the consents,
waivers and authorizations set forth in Schedule 1.10 (the "Parent Closing
Consents"), and other than as disclosed in Section 1.7, there are no Persons or
entities, other than Parent, whose approval, consent, waiver or authorization is
legally or contractually required to consummate the transactions contemplated by
this Transaction Agreement, except for consents, waivers and authorizations,
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the failure to obtain which could not, in the aggregate, have an International
Material Adverse Effect, hinder or delay the performance by any party of its
obligations under this Agreement or hinder or delay the consummation of the
transactions contemplated herein. As of the Closing, each of the Parent Closing
Consents shall have been duly authorized, executed and delivered by each of the
parties thereto and from and after the Closing shall be a valid and binding
agreement of each such party, enforceable against such party in accordance with
its terms.
Section 1.11 No Actions. There is no action, claim, dispute,
proceeding, suit, investigation or appeal pending or, to Parent's knowledge,
threatened, against Parent or any Parent Subsidiary which questions or
challenges the validity of this Transaction Agreement, any Ancillary Agreement
or any Parent Closing Consent, or any action taken or proposed to be taken by
Parent or any Parent Subsidiary pursuant hereto or thereto or in connection with
the transactions contemplated hereby and thereby, and to the knowledge of Parent
or any Parent Subsidiary no conditions exist which could reasonably be expected
to lead to any such action, claim, dispute, proceeding, suit, investigation or
appeal.
Section 1.12 No Undisclosed Liabilities. Notwithstanding any
other representation or warranty set forth in this Transaction Agreement and
except as set forth in Schedule 1.12, no International Subsidiary had, at
September 30, 1997, any liabilities of any nature (whether accrued, absolute,
fixed, contingent, liquidated or unliquidated or otherwise and whether due or to
become due, and whether or not required by generally accepted accounting
principles to be set forth on a balance sheet of any International Subsidiary),
except as and to the extent of the amounts specifically reflected or reserved
against in the International Balance Sheet or in the notes thereto and except
for liabilities which could not, in the aggregate, have an International
Material Adverse Effect.
Section 1.13 Absence of Certain Changes. Except as set forth
in Schedule 1.13 and except as specifically
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provided for in the Transaction Agreement or agreed in writing between Parent
and Purchaser, since September 30, 1997:
(a) each of the Selling Entities and the International
Subsidiaries has conducted its businesses only in the ordinary course of
business consistent with past practice;
(b) there has not occurred any damage, destruction or other
casualty loss with respect to any asset or real or tangible personal property
owned, leased or otherwise by International and the International Subsidiaries,
whether or not covered by insurance, which could have an International Material
Adverse Effect;
(c) no International Subsidiary has (i) sold, pledged or
agreed to sell or pledge any equity securities or ownership interests owned by
it in any of its Subsidiaries; (ii) amended or violated its certificate of
incorporation, by-laws or comparable governing documents; (iii) reclassified,
split, subdivided, combined or reclassified any of its equity securities or
ownership interests; or (iv) declared, set aside or paid any dividend payable in
securities or property other than cash with respect to any of its equity
securities or ownership interests; and no Selling Entity has sold, pledged or
agreed to sell or pledge any equity securities or ownership interests owned by
it in any of the International Subsidiaries;
(d) no Selling Entity nor any International Subsidiary has (i)
issued, sold, pledged, disposed of or encumbered any shares of, or securities
convertible or exchangeable for, or options, warrants, calls, commitments or
rights of any kind to acquire, any of its equity securities or ownership
interests or any of its other securities, property or assets; (ii) transferred,
leased, licensed, guaranteed, sold, mortgaged, pledged, disposed of or subjected
to or permitted the imposition of any lien, claim, restriction or encumbrance
(other than statutory liens for taxes not yet due and payable) on any of its
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assets or properties, other than in the ordinary course of business consistent
with past practice; (iii) acquired directly or indirectly, by purchase,
redemption or otherwise any of its equity securities or ownership interests;
(iv) incurred any indebtedness for borrowed money or guaranteed the obligations
of any Person, or made any loans or advances, in each case except in the
ordinary course of business consistent with past practice; (v) paid, discharged
or satisfied any liability other than the payment, discharge or satisfaction, in
the ordinary course of business consistent with past practice, of liabilities
reflected on or reserved against the financial statements contained in Schedule
1.9(a) or subsequently incurred in the ordinary course of business consistent
with past practice; (vi) entered into any International Material Contract (as
defined in Section 1.14) or agreement other than in the ordinary course of
business consistent with past practice; or (vii) authorized capital expenditures
in excess of $100,000,000 in the aggregate or made any direct or indirect
acquisition of, or investment in, assets or stock of any other Person;
(e) no International Subsidiary has, except in the ordinary
course of business consistent with past practice, (i) granted any severance or
termination pay to, or entered into any employment or severance agreement with,
or increased the compensation payable to, any director, officer or other
employee of any International Subsidiary; or (ii) established, adopted, entered
into, made any new grants or awards under or amended any International Employee
Benefit Plans (as defined in Section 1.26);
(f) no Selling Entity nor any International Subsidiary has
settled or compromised any claims or litigation or waived, assigned or released
any rights or claims involving liability or potential liability of the
International Subsidiaries or otherwise having a value of $5,000,000 per right,
claim or action or $10,000,000 in the aggregate or, except in the ordinary
course of business consistent with past practice, modified, amended or
terminated any International Material Contracts to which it is a party or by
which it or any of its properties is bound;
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(g) there has been no change in the accounting policies or
procedures of any Selling Entity or any International Subsidiary;
(h) no Selling Entity nor any International Subsidiary has
made any tax election or settled or compromised promised any Tax liability of
the International Subsidiaries or permitted any insurance policy naming an
International Subsidiary as a beneficiary or a loss payable payee to be canceled
or terminated, except, in any such case, in the ordinary course of business
consistent with past practice and except to the extent that such Tax liabilities
and insurance policy limits do not exceed $5,000,000 in the aggregate;
(i) no International Subsidiary has sold, disposed of or
otherwise abandoned, altered or written down the book value of (except for
amortization and depreciation thereof in accordance with U.S. GAAP or Local
GAAP, as the case may be), any item of the property, plant and equipment
reflected on the International Balance Sheet contained in Schedule 1.9(a) or on
the accounting records of International and the International Subsidiaries as of
the Closing, except for sales and dispositions not exceeding $5,000,000 in the
aggregate;
(j) no Selling Entity nor any International Subsidiary has
created any lien, claim, restriction or other encumbrance on or affecting title
to the real property occupied or used by any International Subsidiary, other
than liens not affecting the use, operation or value of such real property
created in the ordinary course of business consistent with past practice, or
entered into any leases or subleases for any real or personal property providing
for annual payments greater than $15,000,000 in the aggregate; and
(k) no Selling Entity nor any International Subsidiary has
authorized or entered into an agreement to do any of the foregoing.
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Section 1.14 Material Contracts. (a) Schedule 1.14(a) contains
a true and complete list of each agreement, instrument, contract or arrangement
to which any International Subsidiary is a party or by which it or any of their
respective properties or assets are bound: (i) which relates to the borrowing of
money and pursuant to which the outstanding indebtedness is in excess of
$5,000,000, or (ii) under which any International Subsidiary made or received
payments in excess of $5,000,000 during 1997 or is reasonably likely to make or
receive payments in excess of $5,000,000 during 1998; or (iii) which accounts
for two percent (2%) or more of any Purchased Entity's revenue per annum or
imposes any encumbrance, lien or restriction on any assets or properties
(including International Intellectual Property (as defined in Section 1.23))
used in the manufacture or sale of any such product or service (collectively,
the "International Material Contracts").
(b) Except as set forth in Schedule 1.14(b) and except for
such failures to be valid, binding and enforceable, breaches, defaults,
violations and events as could not, in the aggregate, have an International
Material Adverse Effect, hinder or delay the performance by any party of its
obligations under this Agreement or hinder or delay the consummation of the
transactions contemplated herein, (i) each International Material Contract is a
valid and binding obligation of each of the parties thereto and is enforceable
against it in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles, except for such failures to be valid and binding as could not,
individually or in the aggregate, have an International Material Adverse Effect,
(ii) no International Subsidiary is in violation or breach of, or in default
under, any International Material Contract and, to Parent's knowledge, no other
party to any International Material Contract is in violation or breach thereof,
or in default thereunder, except, in either case, for such violations, breaches
and defaults as could not, individually or in the aggregate, have an
International Material Adverse Effect, and (iii) to Parent's knowledge, no
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event has occurred that, with the passage of time or the giving of notice or
both, would permit the unilateral modification, acceleration, or termination of
any International Material Contract.
(c) Parent has caused to be delivered or made available to
Purchaser a true, complete and current copy of each International Material
Contract.
(d) Except as set forth on Schedule 1.14(d)(i), and except for
agreements providing, in the aggregate, for the nonstatutory compensation and
benefits summarized in Schedule 1.14(d)(ii), neither Parent nor any Parent
Subsidiary is a party to or bound by any agreement, instrument, contract or
arrangement (i) to which any directors, executive officers or affiliates of
Parent or any Parent Subsidiary, is a party or is bound, or (ii) which contains
any provision or covenant limiting (x) the ability of any International
Subsidiary to engage in any line of business, to compete with any Person, to do
business with any Person or in any location or to employ any Person or (y) the
ability of any Person to compete with or obtain products or services from any
International Subsidiary.
(e) Schedule 1.14(e) lists each Acquisition Document.
Section 1.15 Approvals. Each of the International Subsidiaries
has all Approvals required for the conduct of its business, except for
Approvals, the failure to obtain which could not, in the aggregate, have an
International Material Adverse Effect, hinder or delay the performance by any
party of its obligations under this Agreement or hinder or delay the
consummation of the transactions contemplated herein. All such Approvals are
valid and in full force and effect, and the International Subsidiaries are in
compliance with all such Approvals, except for such failures to be valid or to
be in compliance as could not, individually or in the aggregate, have an
International Material Adverse Effect. Except for such proceedings as could not,
individually or in the aggregate, have an International Material Adverse Effort,
there is no
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proceeding pending or, to Parent's or International's knowledge, threatened,
that disputes the validity of any such Approval or that is likely to result in
the revocation, cancellation or suspension, or any adverse modification of, any
such Approval.
Section 1.16 Compliance with Laws. Except as set forth in
Schedule 1.16:
(a) Parent, each Parent Subsidiary and their respective
businesses, facilities, operations and agreements have complied with all Laws
and Approvals, except for such instances of noncompliance as, when taken
together with all other instances of noncompliance, could not have an
International Material Adverse Effect.
(b) No investigation or review by any Governmental Entity with
respect to Parent, any Parent Subsidiary or any of their respective businesses,
facilities, operations or agreements is pending or, to Parent's knowledge,
threatened, except for investigations and reviews which could not, in the
aggregate, have an International Material Adverse Effect, hinder or delay the
performance by any party of its obligations under this Agreement or hinder or
delay the consummation of the transactions contemplated herein. To Parent's
knowledge, no Governmental Entity has indicated an intention to conduct the
same, except for such investigations and reviews as, when taken together with
all other investigations and reviews, could not have an International Material
Adverse Effect.
(c) Neither Parent nor any Parent Subsidiary has received any
notice or communication alleging any noncompliance by any International
Subsidiary with any Law or Approval that has not been cured, and no
International Subsidiary is subject to any unpaid fine or any continuing
sanction for any such noncompliance, except, in either case, for such instances
of noncompliance as, when taken together with all other instances of
noncompliance, could not have an International Material Adverse Effect.
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(d) Neither Parent nor any Parent Subsidiary is in violation
of or in default under, and to Parent's knowledge, no event has occurred which,
with the lapse of time or the giving of notice or both, would result in the
violation of or default under, the terms of any judgment, decree, order,
injunction or writ of any Governmental Entity, except for such violations or
defaults as, when taken together with all other violations and defaults, could
not have an International Material Adverse Effect.
Section 1.17 Insurance. Schedule 1.17 (i) contains a true and
accurate summary of the insurance coverage of the property, assets or business
liabilities of the International Subsidiaries as a whole specifying with respect
to each such type of coverage, the term of the policies or bonds, the limits and
layers of liability and the annual premiums, and (ii) lists any agreements,
arrangements or commitments under which any International Subsidiary indemnifies
any other Person or is required to carry insurance for the benefit of any other
Person in an amount in excess of $1,000,000 in the aggregate. The policies and
bonds summarized in Schedule 1.17 are in full force and effect, all premiums due
and payable thereon have been paid, no notice of cancellation or termination has
been received with respect to any such policy, and the Selling Entities and the
International Subsidiaries have complied with such policies and bonds. Such
policies and bonds will remain in full force and effect through the respective
dates set forth in Schedule 1.17 without the payment of additional premiums,
except in the ordinary course of business, and will not in any way be affected
by, terminate, or lapse by reason of the transactions contemplated by the
Transaction Agreement.
Section 1.18 Customers. Since September 30, 1997, to Parent's
and International's knowledge, no municipality or other customer of any
International Subsidiary accounting for one percent (1%) or more of the
consolidated annual revenue of the International Subsidiaries has canceled or
otherwise terminated its relationship with any International Subsidiary or has
at any time decreased significantly its usage of the services of
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International or any International Subsidiary and there has been no material
adverse change in the business relationship of any International Subsidiary with
any such municipality or customer, as the case may be. To Parent's and
International's knowledge, no such municipality or other customer intends to
cancel or otherwise terminate its relationship with any International Subsidiary
or to decrease significantly its usage of the services of any International
Subsidiary, as the case may be.
Section 1.19 Affiliate Interests. Except as set forth in
Schedule 1.19:
(a) Neither Parent, any Parent Subsidiary nor to the knowledge
of Parent (after reasonable investigation) any director, executive officer or
affiliate of Parent, any Parent Subsidiary, International or any International
Subsidiary (i) has any interest in any property, real or personal, tangible or
intangible, of any International Subsidiary, except for interests with a value
of not greater than $1,000,000 in the aggregate, (ii) has any cause of action or
other claim whatsoever against any International Subsidiary or their respective
assets or properties, or owes any amount to, or is owed any amount by, any of
them, except for claims and indebtedness not in excess of $1,000,000 in the
aggregate, or (iii) owns, directly or indirectly, any debt, equity or other
interest or investment in any Person which is a competitor, lessor, lessee,
customer or supplier of any International Subsidiary, except securities of any
publicly-held corporation which do not exceed one percent (1%) of the
outstanding voting securities of such corporation.
(b) There are no agreements, indebtedness, arrangements,
understandings, obligations or other rights or obligations between any
International Subsidiary, on the one hand, and Parent, any Parent Subsidiary,
International, or to the knowledge of Parent (after reasonable investigation)
any of their respective directors, officers, employees or Affiliates (other than
the International Subsidiaries), on the other hand, other than agreements,
indebtedness,
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arrangements, understandings, obligations and other rights which will not
survive the Closing.
Section 1.20 Title to Properties. Except as set forth on
Schedule 1.20, each International Subsidiary has good and marketable title to or
a valid leasehold interest in all of the properties and assets (real, personal,
mixed, tangible and intangible) which are necessary to the conduct of their
respective businesses as presently conducted, free and clear of all liens,
claims, defects, encumbrances, encroachments, easements, restrictions, security
interests, mortgages or deeds of trust, except (a) liens for current Taxes not
yet due and payable, (b) such liens, easements and zoning restrictions as are
matters of public record, are not substantial in character, amount or extent and
do not impair the use or occupancy of such property or assets or the business
operations of any International Subsidiary, and (c) liens noted in the
International Financial Statements.
Section 1.21 Leased Real Property. Except as set forth in
Schedule 1.21, and except for such failures to be valid, binding and
enforceable, breaches, defaults, violations and events as could not, in the
aggregate, have an International Material Adverse Effect, hinder or delay the
performance by any party of its obligations under this Agreement or hinder or
delay the consummation of the transactions contemplated herein, (i) each lease
of real property to which any International Subsidiary is a party (each, an
"International Existing Real Property Lease") is a valid and binding obligation
of each party thereto and is enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles, (ii) the International Subsidiaries are not in
violation or breach of, or in default under, any International Existing Real
Property Lease, and, to Parent's knowledge, no other party to any International
Existing Real Property Lease is in violation or breach thereof, or in default
thereunder, (iii) to Parent's and International's knowledge, no event has
occurred that, with the passage of time or the giving of notice or both, would
permit the
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unilateral modification, acceleration, or termination of any International
Existing Real Property Lease, and (iv) each International Subsidiary which is a
party to the International Existing Real Property Leases enjoys peaceful and
undisturbed possession under each International Existing
Real Property Lease.
Section 1.22 Personal Property. (a) The equipment and fixtures
used by the International Subsidiaries in connection with their respective
businesses are, in the aggregate, in substantially good repair (reasonable wear
and tear excepted) and are adequate for the uses to which they are being put.
(b) Schedule 1.22(b) sets forth a true and complete list of
all of the leases of personal property to which any International Subsidiary is
a party which provides for payments in excess of $2,000,000 per year
(collectively, the "International Personal Property Leases"). Parent has caused
to be delivered or made available to the Purchaser a true and complete copy of
each International Personal Property Lease.
(c) Except as set forth in Schedule 1.22(c), and except for
failures to be valid, binding or enforceable, defaults, and events which could
not, in the aggregate, have an International Material Adverse Effect, hinder or
delay the performance by any party of its obligations under this Agreement or
hinder or delay the consummation of the transactions contemplated herein, (i)
each International Personal Property Lease is a valid and binding obligation of
each party thereto and is enforceable against each such party in accordance with
its terms, (ii) there is no default or claim of default under any International
Personal Property Lease, and (iii) no event has occurred that, with the passage
of time or the giving of notice or both, would constitute a default by any party
to any International Personal Property Lease, or would permit unilateral
modification, acceleration, or termination of any International Personal
Property Lease.
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Section 1.23 Intellectual Property. Schedule 1.23 includes a
true, complete and current list of all patents, inventions, know-how that has
been acquired for value, trade names, registered and unregistered trademarks,
registered and unregistered service marks and registered and unregistered
copyrights owned or used by any International Subsidiary, and all pending
applications therefor and all licenses and other agreements relating thereto,
other than immaterial items (collectively, the "International Intellectual
Property"). Except as set forth in Schedule 1.23, an International Subsidiary
owns the entire right, title and interest in and to the International
Intellectual Property (including, without limitation, the exclusive right to use
and license the same) and each item constituting part of the International
Intellectual Property has been duly registered or filed with or issued by the
appropriate authorities in the countries indicated in Schedule 1.23 and, to
Parent's and International's knowledge, such registrations, filings and
issuances remain in full force and effect. To Parent's and International's
knowledge, there are no infringements or misappropriations of any proprietary
rights or International Intellectual Property owned by or licensed by or to any
International Subsidiary. The trademarks, service marks and trade names of the
International Subsidiaries are enforceable by such entities and all patents
comprising the International Intellectual Property are valid and enforceable by
the International Subsidiaries. Except as set forth on Schedule 1.23, no consent
of third parties will be required for the use of any International Intellectual
Property as a consequence of the consummation of the transactions contemplated
hereby. Except as set forth on Schedule 1.23, (i) no claims are currently being
asserted by any Person to the use of any of the International Intellectual
Property or challenging or questioning the validity or effectiveness of any such
license or agreement, and the use of the International Intellectual Property by
any International Subsidiary does not infringe on the rights of any Person and
no suits or proceedings are pending or threatened against with respect to the
foregoing; and (ii) no claims are currently being asserted, and, to Parent's and
International's knowledge, no conditions exist upon which
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such claims could be based, that any International Subsidiary is in default or
is not in full compliance with all licenses and other agreements under which it
is using any item of the International Intellectual Property. To Parent's and
International's knowledge there are no infringements of any proprietary rights
owned by or licensed by or to any International Subsidiary. The trademarks,
service marks and trade names of the International Subsidiaries are enforceable
by such entities and the patents of such entities are valid and enforceable by
the International Subsidiaries. The International Intellectual Property
constitutes all of the intellectual property necessary for the operation of the
International Subsidiaries' respective businesses as presently conducted and
provides the International Subsidiaries with all requisite rights to conduct
their respective businesses as presently conducted.
Section 1.24 Employees. (a) Since September 30, 1997, there
have been no increases in salaries, wages and fringe benefits of the employees
of the International Subsidiaries (other than increases in the ordinary course
of business of the International Subsidiaries consistent with past practice),
nor do any such employees that are within the scope of applicability of
collective bargaining agreements enjoy salary benefits in excess of what is
provided under the relevant collective bargaining agreement.
(b) Since September 30, 1997, there have been no changes in
the employment conditions of any International Subsidiaries' employees nor have
any additional employment relationships commenced or offers of employment been
given by any International Subsidiary, except in the ordinary course of business
consistent with past practice.
(c) The International Subsidiaries have neither signed, nor
are they liable under any policy of any life or like personal insurances in
excess of compulsory insurances, nor do any of the employees of the
International Subsidiaries enjoy any other benefits in excess of benefits
provided by Law, except as stated in Schedule 1.25.
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(d) The pension liability of the International Subsidiaries is
fully paid or provided for in the International Financial Statements and,
subsequent to the Closing, the International Subsidiaries will not incur any
costs in respect of any pension liability arising out of employment before the
Closing.
(e) With such exceptions as would not reasonably be likely to
have a material adverse effect on the ability of the International Subsidiaries
operating or conducting business in any particular country to operate or conduct
such business in such country, the International Subsidiaries have paid all
labor related charges.
(f) To Parent's and International's knowledge, there are not
pending any strikes, work stoppage or like in the International Subsidiaries.
(g) To Parent's and International's knowledge there are no
claims from present or former employees of the International Subsidiaries on
account for overtime pay, wages, salaries, vacations, discrimination or
termination of employment which could reasonably be expected to cause or result
in losses, damages, claims or liabilities to or against the International
Subsidiaries greater than $5,000,000 in the aggregate.
Section 1.25 Litigation. Except as set forth on Schedule 1.25
and except for such matters as could not, in the aggregate, have an
International Material Adverse Effect, hinder or delay the performance by any
party of its obligations under this Agreement or hinder or delay the
consummation of the transactions contemplated herein, there are no (i) civil,
criminal or administrative actions, suits, claims, hearings, investigations or
proceedings pending or, to the knowledge of Parent or International, threatened
against Parent or any Parent Subsidiary, or (ii) obligations or liabilities,
whether or not accrued, contingent or otherwise, including, without limitation,
those relating to matters involving any Environmental Law (as defined below) and
occupational safety and health matters. "Environmental Law" means any
multi-national, national, regional or local
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law, regulation, directive, treaty, convention, order, decree, permit,
authorization, common law or government requirement relating to: (i) the
protection, investigation or restoration of the environment, health, safety, or
natural resources, (ii) the handling, use, presence, disposal, release or
threatened release of any Hazardous Substance (as defined below) or (iii) noise,
odor, indoor air, employee exposure, wetlands, pollution, contamination or any
injury or threat of injury to persons or property relating to any Hazardous
Substance. "Hazardous Substance" means any substance that is: (i) listed,
classified or regulated as hazardous, toxic, or harmful pursuant to any
Environmental Law; (ii) any petroleum product or by-product, industrial,
commercial or special waste, asbestos-containing material, lead product,
hazardous material, polychlorinated biphenyls, radioactive materials or
manufacturing byproduct; and (iii) any other substance which is the subject of
regulatory action by any Governmental Authority in connection with any
Environmental Law.
Section 1.26 Employee Benefits. (a) Schedule 1.26 contains a
true and accurate summary, for each jurisdiction in which International or any
International Subsidiary conducts business, of the employees covered, amounts
payable and material terms of payment under the employment, severance, bonus,
incentive, deferred compensation, pension, profit sharing, stock option, stock,
stock based, death benefit, health, disability and other employee benefit plans
or agreements (the "International Employee Benefit Plans") maintained or
contributed to by International or any International Subsidiary in such
jurisdiction. Parent has delivered to Purchaser true, complete and correct
copies of (i) each International Employee Benefit Plan and (ii) each trust
agreement and annuity or other insurance contract relating to any International
Employee Benefit Plan.
(b) Neither International nor any International Subsidiaries
is in default of any material obligation to be performed under any of the
International Employee Benefit Plans. None of the International Employee Benefit
Plans is subject to the provisions of the United States Employee
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Retirement Income Security Act of 1974, as amended. Each International Employee
Benefit Plan has been administered in all material respects in accordance with
its terms. All the International Employee Benefit Plans are in compliance in all
material respects with the provisions of applicable law. All payments,
deductions from wages, reports, returns and similar documents with respect to
the International Employee Benefit Plans required to be filed with or paid to
any Governmental Entity or International Employee Benefit Plan or distributed to
any International Employee Benefit Plan participant have been duly and timely
filed, distributed or paid. There is no pending or, to the knowledge of Parent,
threatened litigation relating to any International Employee Benefit Plan, other
than routine claims for benefits. Each International Employee Benefit Plan which
is a pension plan has sufficient assets to discharge the liabilities for
benefits thereunder.
(c) Except as set forth on Schedule 1.26(c), the consummation
of the transactions contemplated by this Transaction Agreement and the Ancillary
Agreements will not (i) entitle any employees of International or any of
International Subsidiaries to severance pay or (ii) accelerate or provide any
other rights or credits under, or increase the amount payable or trigger any
other obligation pursuant to, any of the International Employee Benefit Plans.
Section 1.27 Environmental Matters. Except as disclosed in
Schedule 1.27, and except for such instances of noncompliance, release,
liability, deficiencies in permitting, use, circumstances, conditions, failures
to reserve orders, decrees, injunctions, directives as could not, individually
or in the aggregate, have an International Material Adverse Effect: (i) Parent
and the Parent Subsidiaries have complied at all times with all applicable
Environmental Laws; (ii) no property owned or operated by Parent or any Parent
Subsidiary (including landfills, transfer stations, incinerators, or any
storage, processing or recycling facility) has released any Hazardous Substance
into the environment; (iii) no property formerly owned or operated by Parent or
any Parent Subsidiaries has released
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any Hazardous Substance into the environment during such period of ownership or
operation; (iv) no International Subsidiary is subject to any liability for any
Hazardous Substance disposal or contamination on any owned or third party
property; (v) each International Subsidiary possesses all permits,
authorizations, licenses and approvals necessary to the current conduct of its
operations and businesses and is not aware of any circumstances that would
interfere with any future permit renewal, issuance or modification required for
any planned future operations or facility expansions; (vi) neither Parent nor
any Parent Subsidiary is subject to any order, decree, injunction, directive or
investigation by any Governmental Entity or to any indemnity, agreement or other
obligation to any third party relating to liability under any Environmental Law;
(vii) none of the properties of any International Subsidiary have been used for
the handling or disposal of any Hazardous Substances other than for the handling
and disposal of uncontaminated household waste and similar materials having the
same regulatory classification in compliance with all Environmental Laws; (viii)
there are no other circumstances or conditions involving any International
Subsidiary that could be expected to result in any claims, liabilities,
investigations, costs or restrictions on the ownership, use, or transfer of any
property in connection with any Environmental Law; (ix) the International
Subsidiaries have established appropriate reserves and posted all required
financial assurances required under any Environmental Law to address all
facility closure and post-closure obligations arising under any Environmental
Law. Except with respect to conditions which could not, individually or in the
aggregate, have an International Material Adverse Effect, (x) neither Parent nor
any Parent Subsidiary has received any notice, demand, letter, claim or request
for information indicating that it may be in violation of or subject to
liability under any Environmental Law; and (ii) Parent has delivered to
Purchaser copies of all environmental reports, studies, assessments, sampling
data and other environmental information in its possession relating to any
International Subsidiary or any of their current or former properties or
operations.
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Section 1.28 Landfills. Schedule 1.28 lists each landfill
owned or operated by International and the International Subsidiaries and
accurately describes each such landfill by its city or county and state or
province of location, total area (in square meters), permitted area (in square
meters), estimated remaining permitted capacity in cubic meters, estimated or
mandated closure date, and estimated closure, post-closure and reclamation
liability at its projected or mandated closure date (computed at the closure
date with and without discount to present value) and any other recorded or
unrecorded accruals, contingent or otherwise, or reserves related to landfill
liabilities of any type.
Section 1.29 Taxes. Except as disclosed in Schedule 1.29: (i)
Parent, International and the International Subsidiaries have timely filed all
Tax Returns that are required to be filed with respect to International or any
International Subsidiaries or any of their income, properties or operations;
(ii) such Tax Returns are true, complete and accurate in all material respects;
(iii) all Taxes due or shown as due on the returns described in clause (i) with
respect to International or any International Subsidiaries (without regard to
whether such Taxes have been assessed and without regard to whether the
liability for such Taxes is disputed) have been timely paid or have been
provided for in a reserve which is adequate for the payment of such Taxes and is
identified in Schedule 1.29; (iv) Parent, International and each of the
International Subsidiaries have maintained adequate provisions on their books
for all Taxes that have accrued but are not yet due; (v) no adjustments or
deficiencies relating to the Tax Returns referred to in clause (i) or any Taxes
attributable to International or any International Subsidiaries have been
assessed, proposed or asserted; (vi) there are no pending or (to the knowledge
of Parent) threatened actions or proceedings for the assessment or collection of
Taxes against International or any International Subsidiaries; (vii) there are
no outstanding waivers or agreements extending or tolling the applicable statute
of limitations for any period with respect to any Taxes of International or any
International Subsidiaries; (viii) no audit or
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examination with respect to International or any International Subsidiaries is
presently pending or (to the knowledge of Parent) threatened; (ix) no material
claim has ever been made by an authority in a jurisdiction where International
or any of the International Subsidiaries does not file Tax Returns that it is or
may be subject to Taxes by that jurisdiction; (x) there are no liens on any of
the assets of International or any International Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any Taxes; (xi) neither
International nor any of the International Subsidiaries is a party to any
allocation or sharing agreement or intercompany account system (whether written
or unwritten) in respect of Taxes.*
Section 1.30 Brokers and Finders. Neither Parent nor any of
its officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated in the Transaction Agreement,
except that Parent has employed Xxxxxx Xxxxxxx & Co. Incorporated as its
financial advisors, the arrangements with which have been disclosed in writing
to Purchaser prior to the date hereof.
Section 1.31 Aggregation. The imperfections, defects, orders,
actions, defaults, liabilities, inaccuracies and other items omitted from
disclosure in connection with the representations and warranties made in
Sections 1.1 through 1.30 on grounds of immateriality or failure to have an
International Material Adverse Effect do not and could not, taken as a whole,
cause or result in losses, damages, claims or liabilities greater than
$15,000,000.
--------
* [Other representations to be provided by non-U.S. tax counsel relevant to
jurisdictions where companies or their assets are located.]
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ANNEX II
Representations and Warranties of Purchaser
Purchaser will represent and warrant to Parent as follows:
Section 2.1 Corporate Organization and Qualification.
Purchaser is a societe anonyme duly organized and is validly existing and in
good standing under the laws of the Republic of France, and is qualified and in
good standing as a foreign corporation in each jurisdiction where the properties
owned, leased or operated by it or the business conducted by it require such
qualification, except for such failures to so qualify or be in good standing as
a foreign corporation, which, in the aggregate, could not have a material
adverse effect on the general affairs, business, assets, liabilities, financial
condition, properties, operations or results of operations of Purchaser and its
Subsidiaries, taken as a whole, or on the ability to operate or conduct the
business of Purchaser and its Subsidiaries, taken as a whole, in the manner in
which it is presently operated or conducted (a "Purchaser Material Adverse
Effect"), it being understood that for purposes of the definition of Purchaser
Material Adverse Effect that any change, development or effect which could
reasonably be expected to cause or result in losses, damages, claims or
liabilities to or against Purchaser greater than $15,000,000 shall be deemed to
be such a material adverse effect. Purchaser has the corporate power and
authority to carry on its business as currently conducted. Purchaser has made
available to Parent a complete and correct copy of its statuts, as amended to
date. Purchaser's statuts are in full force and effect.
Section 2.2 Authorized Capital. The authorized capital stock
or equity capitalization of Purchaser consists of ___ Purchaser Shares, all of
which were outstanding on ________, 1997. All of the outstanding Purchaser
Shares have been duly authorized and validly issued, and are fully paid and
(except as set forth on Schedule 2.2) nonassessable. All of the outstanding
equity securities or ownership interests of
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each of Purchaser's Subsidiaries is duly authorized and validly issued, and is
fully paid and (except as set forth in Schedule 2.2) nonassessable and, except
as set forth in Schedule 2.2, is owned, of record and beneficially, either
directly or indirectly, by Purchaser free and clear of all liens, pledges,
security interests, voting trust arrangements, charges, options, restrictions,
claims or other encumbrances, except for such encumbrances as could not, in the
aggregate, have a Purchaser Material Adverse Effect, hinder or delay the
performance by any party of its obligations under this Agreement or hinder or
delay the consummation of the transactions contemplated herein.
Section 2.3 No Dilution. Except as set forth in Schedule 2.3,
Purchaser does not have any Purchaser Shares reserved for issuance. Except as
set forth in Schedule 2.3, there are no subscriptions, calls, commitments,
rights, options, warrants, conversion rights, stock appreciation rights,
redemption rights, repurchase rights, agreements, plans, arrangements or
commitments with respect to the issuance, sale or purchase of any Purchaser
Shares or other equity securities or ownership interests or any securities or
obligations convertible or exchangeable into or exercisable for, or giving any
Person a right to subscribe for or acquire, Purchaser Shares or any equity
securities or ownership interests of Purchaser, and no securities or obligations
evidencing such rights are authorized, issued or outstanding. Purchaser does not
have any outstanding securities or instruments the holders of which have the
right to vote (or convert or exchange such securities or instruments into or for
securities having the right to vote) with the shareholders of Purchaser on any
matter.
Section 2.4 Corporate Authority. Subject only to the approval
of Purchaser shareholders, Purchaser has all requisite corporate power and
authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under the Transaction Agreement and the
Ancillary Agreements and to consummate the transactions contemplated hereby and
thereby. X.X. Xxxxxx & Co. Incorporated has rendered a written opinion to
Purchaser to
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the effect that the Consideration is fair to Purchaser from a financial point of
view. The Transaction Agreement is, and as of and after the Closing will be, and
as of and after the Closing the Ancillary Agreements will be, valid and binding
agreements of Purchaser enforceable against Purchaser in accordance with their
respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
Section 2.5 Consideration Shares. When issued at the Closing,
the Consideration Shares shall be duly authorized, validly issued, fully paid
and nonassessable.
Section 2.6 Governmental Filings. Other than the filings
and/or notices required by Council Regulation (EEC) No. 4064/89, [List
non-European antitrust or regulatory filings] and the filings and/or notices set
forth in Schedule 2.6, no notices, reports or other filings are required to be
made by Purchaser with, nor are any consents, registrations, Approvals, permits
or authorizations required to be obtained by Purchaser from, any Governmental
Entity, in connection with the execution and delivery of the Transaction
Agreement by Purchaser and the consummation by Purchaser of the transactions
contemplated hereby, except for notices, reports, filings, consents,
registrations, Approvals, permits or authorizations, the failure to make or
obtain which could not, in the aggregate, have a Purchaser Material Adverse
Effect, hinder or delay the performance by any party of its obligations under
this Agreement or hinder or delay the consummation of the transactions
contemplated herein.
Section 2.7 Non-Contravention. The execution, delivery and
performance of the Transaction Agreement and the Ancillary Agreements by
Purchaser, and the consummation by Purchaser of the transactions contemplated in
the Transaction Agreement and therein, do not and will not (a) violate or
conflict with, or constitute a default under, any provision of the statuts or
comparable governing instruments of Purchaser or any of its Subsidiaries,
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(b) violate any provision of, or constitute (or with notice or lapse of time or
both would constitute) a default under, or accelerate or permit the acceleration
of the performance required by, any Contracts to which Purchaser or any of its
Subsidiaries is a party or by which any of them or any of their respective
assets or properties are bound or subject (collectively, the "Purchaser
Contracts"), (c) entitle any party to cancel or terminate, or result in any
change in the rights or obligations of any party under, or require a consent or
waiver by any party to, any Purchaser Contract, (d) result in the creation of a
lien, pledge, security interest, voting trust arrangement, charge, option,
restriction, claim, or other encumbrance on the equity securities, ownership
interests or on the assets of Purchaser or any of its Subsidiaries, (e) violate
any Law, by which or to which any of their respective assets or properties are
bound or subject, or (f) result in the loss or impairment of any Approval of or
benefitting Purchaser or any of its Subsidiaries; except (i) in the case of
clauses (b), (d), (e) and (f) of this Section, for such violations, defaults,
accelerations, losses or impairments as, when taken together with all other such
violations, defaults, accelerations, losses and impairments, could not have a
Purchaser Material Adverse Effect, and (ii) in the case of clauses (b) and (c),
for violations, defaults, accelerations, cancellations, terminations of and
changes in rights under the Contracts, instruments, agreements and obligations
listed in Schedule 2.7.
Section 2.8 Financial Statements. The consolidated balance
sheet of Purchaser dated June 30, 1997 (the "Purchaser Balance Sheet Date")
contained in Schedule 2.8(a) (the "Purchaser Balance Sheet") fairly presents the
consolidated assets, liabilities and financial position of Purchaser and its
consolidated Subsidiaries as a whole as of such date in accordance with French
GAAP and the accounting practices listed on Schedule 2.8(a)(i), in each case
consistently applied, except as specifically noted therein. The consolidated
statement of income and of changes in financial condition dated June 30, 1997
contained in Schedule 2.8(a) of (the "Purchaser Income Statement", and,
collectively with the Purchaser Balance Sheet, the
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"Purchaser Financial Statements") fairly presents the consolidated results of
operations, retained earnings and changes in financial condition, as the case
may be, of Purchaser and its consolidated Subsidiaries for such period, in each
case in accordance with French GAAP and the accounting practices listed on
Schedule 2.8(a)(i), in each case consistently applied, except as specifically
noted therein.
Section 2.9 Closing Consents. Except for the consents, waivers
and authorizations set forth in Schedule 2.9 (the "Purchaser Closing Consents"),
and other than as disclosed in Section 2.6, there are no Persons or entities,
other than Purchaser, whose Approval, consent, waiver or authorization is
legally or contractually required to consummate the transactions contemplated by
this Transaction Agreement, except for consents, waivers and authorizations, the
failure to obtain which could not, in the aggregate, have a Purchaser Material
Adverse Effect, hinder or delay the performance by any party of its obligations
under this Agreement or hinder or delay the consummation of the transactions
contemplated herein. As of the Closing, each of the Purchaser Closing Consents
shall have been duly authorized, executed and delivered by each of the parties
thereto and from and after the Closing shall be a valid and binding agreement of
each such party, enforceable against such party in accordance with its terms.
Section 2.10 No Actions. There is no action, claim, dispute,
proceeding, suit, investigation or appeal pending or, to Purchaser's knowledge,
threatened, against Purchaser or any of its Subsidiaries which questions or
challenges the validity of this Transaction Agreement, any Ancillary Agreement
or any Purchaser Closing Consent, or any action taken or proposed to be taken by
Purchaser or any of its Subsidiaries pursuant hereto or thereto or in connection
with the transactions contemplated hereby and thereby, and (to the knowledge of
Purchaser or any Subsidiary of Purchaser) no conditions exist which could
reasonably be expected to lead to any such action, claim, dispute, proceeding,
suit, investigation or appeal.
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Section 2.11 No Undisclosed Liabilities. Notwithstanding any
other representation or warranty set forth in this Transaction Agreement and
except as set forth in Schedule 2.11, Purchaser did not have, as of June 30,
1997, any liabilities of any nature (whether accrued, absolute, fixed,
contingent, liquidated or unliquidated or otherwise and whether due or to become
due, and whether or not required by generally accepted accounting principles to
be set forth on Purchaser's Balance Sheet), except as and to the extent of the
amounts specifically reflected or reserved against in the Purchaser Balance
Sheet or in the notes thereto and except for liabilities which could not, in the
aggregate, have a Purchaser Material Adverse Effect.
Section 2.12 Absence of Certain Changes. Except as set forth
in Schedule 2.12 and except as specifically provided for in the Transaction
Agreement or agreed in writing between Parent and Purchaser, since the Purchaser
Balance Sheet Date:
(a) Purchaser has conducted its businesses only in the
ordinary course of business consistent with past practice;
(b) there has not occurred any damage, destruction or other
casualty loss with respect to any asset or real or tangible personal property
owned, leased or otherwise by Purchaser, whether or not covered by insurance,
which could have a Purchaser Material Adverse Effect;
(c) Purchaser has not (i) sold, pledged or agreed to sell or
pledge any equity securities or ownership interests owned by it in any of its
Subsidiaries; (ii) amended or violated its Statutes; (iii) reclassified, split,
subdivided, combined or reclassified any of its equity securities or ownership
interests; or (iv) declared, set aside or paid any dividend payable in
securities or property other than cash with respect to any of its equity
securities or ownership interests;
(d) Purchaser has not (i) issued, sold, pledged, disposed of
or encumbered any shares of, or securities convertible
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or exchangeable for, or options, warrants, calls, commitments or rights of any
kind to acquire, any of its equity securities or ownership interests or any of
its other securities, property or assets; (ii) transferred, leased, licensed,
guaranteed, sold, mortgaged, pledged, disposed of or subjected to or permitted
the imposition of any lien, claim, restriction or encumbrance (other than
statutory liens for taxes not yet due and payable) on any of its assets or
properties, other than in the ordinary course of business consistent with past
practice; (iii) acquired directly or indirectly, by purchase, redemption or
otherwise any of its equity securities or ownership interests; (iv) incurred any
indebtedness for borrowed money or guaranteed the obligations of any Person, or
made any loans or advances, in each case except in the ordinary course of
business consistent with past practice; (v) paid, discharged or satisfied any
liability other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice, of liabilities reflected on or
reserved against the financial statements contained in Schedule 2.8 or
subsequently incurred in the ordinary course of business consistent with past
practice; (vi) entered into any Purchaser Material Contract (as defined in
Section 2.13) or agreement other than in the ordinary course of business
consistent with past practice; or (vii) authorized capital expenditures in
excess of US$200,000,000 in the aggregate or made any direct or indirect
acquisition of, or investment in, assets or stock of any other Person having an
aggregate acquisition price in excess of US$20,000,000;
(e) Purchaser has not, except in the ordinary course of
business consistent with past practice, (i) granted any severance or termination
pay to, or entered into any employment or severance agreement with, or increased
the compensation payable to, any director, officer or other employee of
Purchaser; or (ii) established, adopted, entered into, made any new grants or
awards under or amended any Purchaser Employee Benefit Plans (as defined in
Section 2.25);
(f) Purchaser has not settled or compromised any claims or
litigation or waived, assigned or released any
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rights or claims involving liability or potential liability of Purchaser or
otherwise having a value of $5,000,000 per right, claim or action or $10,000,000
in the aggregate or, except in the ordinary course of business consistent with
past practice, modified, amended or terminated any Purchaser Material Contracts
to which it is a party or by which it or any of its properties is bound;
(g) there has been no change in the accounting policies or
procedures of Purchaser;
(h) Purchaser has not made any tax election or settled or
compromised any Tax liability or permitted any insurance policy naming it as a
beneficiary or a loss payable payee to be canceled or terminated, except, in any
such case, in the ordinary course of business consistent with past practice and
except to the extent that such Tax liabilities and insurance policy limits do
not exceed US$5,000,000 in the aggregate;
(i) Purchaser has not sold, disposed of or other wise
abandoned, altered or written down the book value of (except for amortization
and depreciation thereof in accordance with French GAAP), any item of the
property, plant and equipment reflected on the Purchaser Balance Sheet contained
in Schedule 2.8 or on the accounting records of Purchaser as of the Closing,
except for sales and dispositions not exceeding US$5,000,000 in the aggregate;
(j) Purchaser has not created any lien, claim, restriction or
other encumbrance on or affecting title to the real property occupied or used by
Purchaser, other than liens not affecting the use, operation or value of such
real property created in the ordinary course of business consistent with past
practice, or entered into any leases or subleases for any real or personal
property providing for annual payments greater than $15,000,000 in the
aggregate; and
(k) Purchaser has not authorized or entered into an agreement
to do any of the foregoing.
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Section 2.13 Material Contracts. (a) Schedule 2.13(a) contains
a true and complete list of each agreement, instrument, contract or arrangement
to which Purchaser is a party or by which it or any of their respective
properties or assets are bound: (i) which relates to the borrowing of money and
pursuant to which the outstanding indebtedness is in excess of US$5,000,000, or
(ii) under which Purchaser made or received payments in excess of US$5,000,000
during 1997 or is reasonably likely to make or receive payments in excess of
US$5,000,000 during 1998; or (iii) which accounts for two percent (2%) or more
of Purchaser's revenue per annum or imposes any encumbrance, lien or restriction
on any assets or properties (including Purchaser Intellectual Property, as
defined in Section 2.22) used in the manufacture or sale of any such product or
service (collectively, the "Purchaser Material Contracts").
(b) Except as set forth in Schedule 2.13(b) and except for
such failures to be valid, binding and enforceable, breaches, defaults,
violations and events as could not, in the aggregate, have a Purchaser Material
Adverse Effect, hinder or delay the performance by any party of its obligations
under this Agreement or hinder or delay the consummation of the transactions
contemplated herein, (i) each Purchaser Material Contract is a valid and binding
obligation of each of the parties thereto and is enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles,
except for such failures to be valid and binding as could not, individually or
in the aggregate, have a Purchaser Material Adverse Effect, (ii) Purchaser is
not in violation or breach of, or in default under, any Purchaser Material
Contract and, to Purchaser's knowledge, no other party to any Purchaser Material
Contract is in violation or breach thereof, or in default thereunder, except, in
either case, for such violations, breaches and defaults as could not,
individually or in the aggregate, have a Purchaser Material Adverse Effect, and
(iii) to Purchaser's knowledge, no event has occurred that, with the passage of
time or the giving of notice or both, would
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permit the unilateral modification, acceleration, or termination of any
Purchaser Material Contract.
(c) Purchaser has caused to be delivered or made available to
Parent a true, complete and current copy of each Purchaser Material Contract.
(d) Except as set forth on Schedule 2.13(d)(i), and except for
agreements providing, in the aggregate, for the nonstatutory compensation and
benefits summarized in Schedule 2.13(d)(ii), Purchaser is not a party to or
bound by any agreement, instrument, contract or arrangement (i) to which any
directors, executive officers or affiliates of Purchaser or any Purchaser
Subsidiary, is a party or is bound, or (ii) which contains any provision or
covenant limiting (x) the ability of Purchaser to engage in any line of
business, to compete with any Person, to do business with any Person or in any
location or to employ any Person or (y) the ability of any Person to compete
with or obtain products or services from Purchaser.
Section 2.14 Approvals. Purchaser has all Approvals required
for the conduct of its business, except for Approvals, the failure to obtain
which could not, in the aggregate, have a Purchaser Material Adverse Effect,
hinder or delay the performance by any party of its obligations under this
Agreement or hinder or delay the consummation of the transactions contemplated
herein. All such Approvals are valid and in full force and effect, and Purchaser
is in compliance with all such Approvals, except for such failures to be valid
or to be in compliance as could not, individually or in the aggregate, have a
Purchaser Material Adverse Effect. Except for such proceedings as could not,
individually or in the aggregate, have a Purchaser Material Adverse Effect,
there is no proceeding pending or, to Purchaser's knowledge, threatened, that
disputes the validity of any such Approval or that is likely to result in the
revocation, cancellation or suspension, or any adverse modification of, any such
Approval.
Section 2.15 Compliance with Laws. Except as set forth in
Schedule 2.15:
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(a) Purchaser, and its businesses, facilities, operations and
agreements have complied with all Laws and Approvals, except for such instances
of noncompliance as, when taken together with all other instances of
noncompliance, could not have a Purchaser Material Adverse Effect.
(b) No investigation or review by any Governmental Entity with
respect to Purchaser or any of its businesses, facilities, operations or
agreements is pending or, to Purchaser's knowledge, threatened, except for
investigations and reviews which could not, in the aggregate, have a Purchaser
Material Adverse Effect, hinder or delay the performance by any party of its
obligations under this Agreement or hinder or delay the consummation of the
transactions contemplated herein. To Purchaser's knowledge, no Governmental
Entity has indicated an intention to conduct the same, except for such
investigations and reviews as, when taken together with all other investigations
and reviews, could not have a Purchaser Material Adverse Effect.
(c) Purchaser has not received any notice or communication
alleging any noncompliance by Purchaser with any Law or Approval that has not
been cured, and Purchaser is not subject to any unpaid fine or any continuing
sanction for any such noncompliance, except, in either case, for such instances
of noncompliance as, when taken together with all other instances of
noncompliance, could not have a Purchaser Material Adverse Effect.
(d) Purchaser is not in violation of or in default under, and
to Purchaser's knowledge, no event has occurred which, with the lapse of time or
the giving of notice or both, would result in the violation of or default under,
the terms of any judgment, decree, order, injunction or writ of any Governmental
Entity, except for such violations or defaults as, when taken together with all
other violations and defaults, could not have a Purchaser Material Adverse
Effect.
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Section 2.16 Insurance. Schedule 2.16 (i) contains a true and
accurate summary of the insurance coverage of the property, assets or business
liabilities of Purchaser specifying with respect to each such type of coverage,
the term of the policies or bonds, the limits and layers of liability and the
annual premiums, and (ii) lists any agreements, arrangements or commitments
under which Purchaser indemnifies any other Person or is required to carry
insurance for the benefit of any other Person in an amount in excess of
US$1,000,000 in the aggregate. The policies and bonds summarized in Schedule
2.16 are in full force and effect, all premiums due and payable thereon have
been paid, no notice of cancellation or termination has been received with
respect to any such policy, and Purchaser has complied with such policies and
bonds. Such policies and bonds will remain in full force and effect through the
respective dates set forth in Schedule 2.16 without the payment of additional
premiums, except in the ordinary course of business, and will not in any way be
affected by, terminate, or lapse by reason of the transactions contemplated by
the Transaction Agreement.
Section 2.17 Customers. Since the Purchaser Balance Sheet
Date, to Purchaser's knowledge, no municipality or other customer of Purchaser
accounting for one percent (1%) or more of Purchaser's consolidated annual
revenue has canceled or otherwise terminated its relationship with Purchaser or
has at any time decreased significantly its usage of the services of Purchaser
and there has been no material adverse change in the business relationship of
Purchaser with any such municipality or customer, as the case may be. To
Purchaser's knowledge, no such municipality or other customer intends to cancel
or otherwise terminate its relationship with Purchaser or to decrease
significantly its usage of the services of Purchaser, as the case may be.
Section 2.18 Affiliate Interests. Except as set forth in
Schedule 2.18, neither Purchaser, any Purchaser Subsidiary nor to the knowledge
of Purchaser (after reasonable investigation) any director, executive officer or
affiliate of Purchaser or any Purchaser Subsidiary (i) has
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any interest in any property, real or personal, tangible or intangible, of
Purchaser, except for interests with a value of not greater than US$1,000,000 in
the aggregate (ii) has any cause of action or other claim whatsoever against
Purchaser or their respective assets or properties, or owes any amount to, or is
owed any amount by, any of them, except for claims and indebtedness not in
excess of US$1,000,000 in the aggregate, or (iii) owns, directly or indirectly,
any debt, equity or other interest or investment in any Person which is a
competitor, lessor, lessee, customer or supplier of Purchaser, except securities
of any publicly-held corporation which do not exceed one percent (1%) of the
outstanding voting securities of such corporation.
Section 2.19 Title to Properties. Except as set forth on
Schedule 2.19, Purchaser has good and marketable title to or a valid leasehold
interest in all of the properties and assets (real, personal, mixed, tangible
and intangible) which are necessary to the conduct of its businesses as
presently conducted, free and clear of all liens, claims, defects, encumbrances,
encroachments, easements, restrictions, security interests, mortgages or deeds
of trust, except (a) liens for current Taxes not yet due and payable, (b) such
liens, easements and zoning restrictions as are matters of public record, are
not substantial in character, amount or extent and do not impair the use or
occupancy of such property or assets or the business operations of Purchaser and
(c) liens noted in the Purchaser Financial Statements.
Section 2.20 Leased Real Property. Except as set forth in
Schedule 2.20, and except for such failures to be valid, binding and
enforceable, breaches, defaults, violations and events as could not, in the
aggregate, have a Purchaser Material Adverse Effect, hinder or delay the
performance by any party of its obligations under this Agreement or hinder or
delay the consummation of the transactions contemplated herein, (i) each lease
of real property to which Purchaser is a party (each, a "Purchaser Existing Real
Property Lease") is a valid and binding obligation of each party thereto and is
enforceable in accordance with its terms, subject to bankruptcy,
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insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles, (ii) Purchaser is not in violation or breach of, or in
default under, any Purchaser Existing Real Property Lease, and, to Purchaser's
knowledge, no other party to any Purchaser Existing Real Property Lease is in
violation or breach thereof, or in default thereunder, (iii) to Purchaser's
knowledge, no event has occurred that, with the passage of time or the giving of
notice or both, would permit the unilateral modification, acceleration, or
termination of any Purchaser Existing Real Property Lease, and (iv) Purchaser
enjoys peaceful and undisturbed possession under each Purchaser Existing Real
Property Lease.
Section 2.21 Personal Property. (a) The equipment and fixtures
used by Purchaser in connection with its businesses are, in the aggregate, in
substantially good repair (reasonable wear and tear excepted) and are adequate
for the uses to which they are being put.
(b) Schedule 2.21(b) sets forth a true and complete list of
all of the leases of personal property to which Purchaser is a party which
provides for payments in excess of $2,000,000 per year (collectively, the
"Purchaser Personal Property Leases"). Purchaser has caused to be delivered or
made available to Parent a true and complete copy of each Purchaser Personal
Property Lease.
(c) Except as set forth in Schedule 2.21(c), and except for
failures to be valid, binding or enforceable, defaults, and events which could
not, in the aggregate, have a Purchaser Material Adverse Effect, hinder or delay
the performance by any party of its obligations under this Agreement or hinder
or delay the consummation of the transactions contemplated herein, (i) each
Purchaser Personal Property Lease is a valid and binding obligation of each
party thereto and is enforceable against each such party in accordance with its
terms, (ii) there is no default or claim of default under any Purchaser Personal
Property Lease, and (iii) no event has occurred that, with the
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passage of time or the giving of notice or both, would constitute a default by
any party to any Purchaser Personal Property Lease, or would permit unilateral
modification, acceleration, or termination of Purchaser any Purchaser Personal
Property Lease.
Section 2.22 Intellectual Property. Schedule 2.22 includes a
true, complete and current list of all patents, inventions, know-how that has
been acquired for value, trade names, registered and unregistered trademarks,
registered and unregistered service marks and registered and unregistered
copyrights owned or used by any Purchaser Subsidiary, and all pending
applications therefor and all licenses and other agreements relating thereto,
other than immaterial items (collectively, the "Purchaser Intellectual
Property"). Except as set forth in Schedule 2.22, Purchaser owns the entire
right, title and interest in and to the Purchaser Intellectual Property
(including, without limitation, the exclusive right to use and license the same)
and each item constituting part of the Purchaser Intellectual Property has been
duly registered or filed with or issued by the appropriate authorities in the
countries indicated in Schedule 2.22 and, to Purchaser's knowledge, such
registrations, filings and issuances remain in full force and effect. To
Purchaser's knowledge, there are no infringements or misappropriations of any
proprietary rights or Purchaser Intellectual Property owned by or licensed by or
to Purchaser. The trademarks, service marks and trade names of Purchaser are
enforceable by Purchaser and all patents comprising the Purchaser Intellectual
Property are valid and enforceable by Purchaser. Except as set forth on Schedule
2.22, no consent of third parties will be required for the use of any Purchaser
Intellectual Property as a consequence of the consummation of the transactions
contemplated hereby. Except as set forth on Schedule 2.22, (i) no claims are
currently being asserted by any Person to the use of any of the Purchaser
Intellectual Property or challenging or questioning the validity or
effectiveness of any such license or agreement, and the use of the Purchaser
Intellectual Property by Purchaser does not infringe on the rights of any Person
and no suits or proceedings are pending or threatened against with respect to
the foregoing; and
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(ii) no claims are currently being asserted, and, to Purchaser's knowledge, no
conditions exist upon which such claims could be based, that Purchaser is in
default or is not in full compliance with all licenses and other agreements
under which it is using any item of the Purchaser Intellectual Property. To
Purchaser's knowledge there are no infringements of any proprietary rights owned
by or licensed by or to Purchaser. The trademarks, service marks and trade names
of Purchaser are enforceable by Purchaser and the patents of Purchaser are valid
and enforceable by Purchaser. The Purchaser Intellectual Property constitutes
all of the intellectual property necessary for the operation of Purchaser's
businesses as presently conducted and provides Purchaser with all requisite
rights to conduct its businesses as presently conducted.
Section 2.23 Employees. (a) Since the Purchaser Balance Sheet
Date, there have been no increases in salaries, wages and fringe benefits of the
employees of Purchaser (other than increases in the ordinary course of business
of Purchaser consistent with past practice), nor do any such employees that are
within the scope of applicability of collective bargaining agreements enjoy
salary benefits in excess of what is provided under the relevant collective
bargaining agreement.
(b) Since the Purchaser Balance Sheet Date, there have been no
changes in the employment conditions of Purchaser's employees nor have any
additional employment relationships commenced or offers of employment been given
by Purchaser, except in the ordinary course of business consistent with past
practice.
(c) Purchaser has neither signed, nor is it liable under any
policy of any life or like personal insurances in excess of compulsory
insurances, nor do any of the employees of Purchaser enjoy any other benefits in
excess of benefits provided by Law, except as stated in Schedule 2.23.
(d) With such exceptions as would not reasonably be likely to
have a material adverse effect on the ability
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of Purchaser operating or conducting business in any particular country to
operate or conduct such business in such country, Purchaser has paid all labor
related charges.
(e) To Purchaser's knowledge, there are not pending any
strikes, work stoppage or like in Purchaser.
(f) To Purchaser's knowledge there are no claims from present
or former employees of Purchaser on account for overtime pay, wages, salaries,
vacations, discrimination or termination of employment which could reasonably be
expected to cause or result in losses, damages, claims or liabilities to or
against Purchaser greater than US$5,000,000 in the aggregate.
Section 2.24 Litigation and Liabilities. Except as set forth
on Schedule 2.24 and except for such matters as could not, in the aggregate,
have a Purchaser Material Adverse Effect, hinder or delay the performance by any
party of its obligations under this Agreement or hinder or delay the
consummation of the transactions contemplated herein, there are no (i) civil,
criminal or administrative actions, suits, claims, hearings, investigations or
proceedings pending or, to the knowledge of Purchaser, threatened against
Purchaser or any of its Subsidiaries, or (ii) obligations or liabilities,
whether or not accrued, contingent or otherwise, including, without limitation,
those relating to matters involving any Environmental Law and occupational
safety and health matters.
Section 2.25 Employee Benefits. (a) Schedule 2.25 contains a
true and accurate summary, for each jurisdiction in which Purchaser conducts
business, of the employees covered, amounts payable and material terms of
payment under the employment, severance, bonus, incentive, deferred
compensation, pension, profit sharing, stock option, stock, stock based, death
benefit, health, disability and other employee benefit plans or agreements (the
"Purchaser Employee Benefit Plans") maintained or contributed to by Purchaser in
such jurisdiction. Purchaser has delivered to Parent true, complete and correct
copies of (i) each Purchaser Employee Benefit Plan and (ii) each trust
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agreement and annuity or other insurance contract relating to any Purchaser
Employee Benefit Plan.
(b) Purchaser is not in default of any material obligation to
be performed under any of the Purchaser Employee Benefit Plans. None of the
Purchaser Employee Benefit Plans is subject to the provisions of the United
States Employee Retirement Income Security Act of 1974, as amended. Each
Purchaser Employee Benefit Plan has been administered in all material respects
in accordance with its terms. All the Purchaser Employee Benefit Plans are in
compliance in all material respects with the provisions of applicable law. All
payments, deductions from wages, reports, returns and similar documents with
respect to the Purchaser Employee Benefit Plans required to be filed with or
paid to any Governmental Entity or Purchaser Employee Benefit Plan or
distributed to any Purchaser Employee Benefit Plan participant have been duly
and timely filed, distributed or paid. There is no pending or, to the knowledge
of Purchaser, threatened litigation relating to any Purchaser Employee Benefit
Plan, other than routine claims for benefits. Each Purchaser Employee Benefit
Plan which is a pension plan has sufficient assets to discharge the liabilities
for benefits thereunder.
(c) Except as set forth on Schedule 2.25(c), the consummation
of the transactions contemplated by this Transaction Agreement and the Ancillary
Agreements will not (i) entitle any employees of Purchaser to severance pay or
(ii) accelerate or provide any other rights or credits under, or increase the
amount payable or trigger any other obligation pursuant to, any of the Purchaser
Employee Benefit Plans.
Section 2.26 Environmental Matters. Except as disclosed in
Schedule 2.26 and except for such instances of noncompliance, release,
liability, deficiencies in permitting, use, circumstances, conditions, failures
to reserve orders, decrees, injunctions, directives and investigations as could
not, individually or in the aggregate, have a Purchaser Material Adverse
Effect,: (i) Purchaser has complied at all times with all applicable
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Environmental Laws; (ii) no property owned or operated by Purchaser (including
landfills, transfer stations, incinerators, or any storage, processing or
recycling facility) has released any Hazardous Substance into the environment;
(iii) no property formerly owned or operated by Purchaser has released any
Hazardous Substance into the environment during such period of ownership or
operation; (iv) Purchaser is not subject to any liability for any Hazardous
Substance disposal or contamination on any owned or third party property; (v)
Purchaser possesses all permits, authorizations, licenses and approvals
necessary to the current conduct of its operations and businesses and is not
aware of any circumstances that would interfere with any future permit renewal,
issuance or modification required for any planned future operations or facility
expansions; (vi) Purchaser is not subject to any order, decree, injunction,
directive or investigation by any Governmental Entity or to any indemnity,
agreement or other obligation to any third party relating to liability under any
Environmental Law; (vii) none of the properties of Purchaser have been used for
the handling or disposal of any Hazardous Substances other than for the handling
and disposal of uncontaminated household waste and similar materials having the
same regulatory classification in compliance with all Environmental Laws; (vii)
there are no other circumstances or conditions involving Purchaser that could be
expected to result in any claims, liabilities, investigations, costs or
restrictions on the ownership, use, or transfer of any property in connection
with any Environmental Law; (x) Purchaser has established appropriate reserves
and posted all required financial assurances required under any Environmental
Law to address all facility closure and post- closure obligations arising under
any Environmental Law. Except with respect to conditions which could not,
individually or in the aggregate, have a Purchaser Material Adverse Effect, (vi)
Purchaser has not received any notice, demand, letter, claim or request for
information indicating that it may be in violation of or subject to liability
under any Environmental Law; and (ii) Purchaser has delivered to Parent copies
of all environmental reports, studies, assessments, sampling data and other
environmental
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information in its possession relating to Purchaser or any
of its current or former properties or operations.
Section 2.27 Landfills. Schedule 2.27 lists each landfill
owned or operated by Purchaser and accurately describes each such landfill by
its city or county and state or province of location, total area (in square
meters), permitted area (in square meters), estimated remaining permitted
capacity in cubic meters, estimated or mandated closure date, and estimated
closure, post-closure and reclamation liability at its projected or mandated
closure date (computed at the closure date with and without discount to present
value) and any other recorded or unrecorded accruals, contingent or otherwise,
or reserves related to landfill liabilities of any type.
Section 2.28 Taxes. Except as disclosed in Schedule 2.28: (i)
Purchaser timely filed all Tax Returns that are required to be filed with
respect to Purchaser or any of its income, properties or operations; (ii) such
Tax Returns are true, complete and accurate in all material respects; (iii) all
Taxes due or shown as due on the returns described in clause (i) with respect to
Purchaser (without regard to whether such Taxes have been assessed and without
regard to whether the liability for such Taxes is disputed) have been timely
paid or have been provided for in a reserve which is adequate for the payment of
such Taxes and is identified in Schedule 2.28; (iv) Purchaser has maintained
adequate provisions on their books for all Taxes that have accrued but are not
yet due; (v) no adjustments or deficiencies relating to the Tax Returns referred
to in clause (i) or any Taxes attributable to Purchaser has been assessed,
proposed or asserted; (vi) there are no pending or (to the knowledge of
Purchaser) threatened actions or proceedings for the assessment or collection of
Taxes against Purchaser; (vii) there are no outstanding waivers or agreements
extending or tolling the applicable statute of limitations for any period with
respect to any Taxes of Purchaser; (viii) no audit or examination with respect
to Purchaser is presently pending or (to the knowledge of Purchaser) threatened;
(ix) no material claim has ever been made by an authority in a jurisdiction
where Purchaser does
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not file Tax Returns that it is or may be subject to Taxes by that jurisdiction;
(x) there are no liens on any of the assets of Purchaser that arose in
connection with any failure (or alleged failure) to pay any Taxes; (xi)
Purchaser is not a party to any allocation or sharing agreement or intercompany
account system (whether written or unwritten) in respect of Taxes.*
Section 2.29 Brokers and Finders. Neither Purchaser nor any of
its officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated in the Transaction Agreement,
except that Purchaser has employed X.X. Xxxxxx & Co. Incorporated as its
financial advisors, the arrangements with which have been disclosed in writing
to Parent prior to the date hereof.
Section 2.30 Aggregation. The imperfections, defects, orders,
actions, defaults, liabilities, inaccuracies and other items omitted from
disclosure in connection with the representations and warranties made in
Sections 2.1 through 2.29 on grounds of immateriality or failure to have a
Purchaser Material Adverse Effect do not and could not, taken as a whole, cause
or result in losses, damages, claims or liabilities greater than US$15,000,000.
--------
* Other representations to be provided by non-U.S. tax counsel relevant to
jurisdictions where companies or their assets are located.
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ANNEX III
Conditions to Obligations of Each Party
The obligations of the parties to consummate the transactions
contemplated by the Transaction Agreement will be subject to the satisfaction or
waiver of the following conditions:
(a) No court of competent jurisdiction shall have issued or
entered any order which is then in effect and has the effect of making any of
the transactions contemplated by the Transaction Agreement illegal or otherwise
prohibiting their consummation.
(b) Any waiting period (and any extension thereof) applicable
to the consummation of the transactions contemplated hereby under any
competition, merger control or similar Law, including Council Regulation (EEC)
No. 4064/89 and [List non-European antitrust and regulatory filings], shall have
expired or been terminated.
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ANNEX IV
Conditions to the Obligations of Purchaser
The obligation of Purchaser to consummate the transactions
contemplated by the Transaction Agreement will be subject to the satisfaction or
waiver of the following additional conditions:
(a) Each of the representations and warranties of Parent and
International contained in the Transaction Agreement shall be true and correct
in all material respects as of the Measuring Date and the Closing as though made
on and as of each such date, except that those representations and warranties
that address matters only as of a particular date shall remain true and correct
as of such date, and Purchaser shall have received a certificate of the Chief
Executive Officer and the Chief Financial Officer of Parent to such effect.
(b) Parent shall have performed or complied in all material
respects with all agreements and covenants required by the Transaction Agreement
to be performed or complied with by it on or prior to the Measuring Date and the
Closing, as the case may be, and Purchaser shall have received a certificate of
the Chief Executive Officer and the Chief Financial Officer of Parent to such
effect.
(c) Parent shall have furnished to Purchaser evidence
reasonably satisfactory to it that the aggregate consolidated indebtedness of
the International Subsidiaries as of the Closing does not exceed $215.5 million.
(d) Parent and the Parent Subsidiaries shall have obtained the
Parent Closing Consents.
(e) Parent shall have executed and delivered the Shareholders
Agreement.
(f) Parent shall have executed and delivered the Technical
Cooperation Agreement.
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ANNEX V
Conditions to the Obligations of Parent
The obligation of Parent to consummate the transactions
contemplated by the Transaction Agreement will be subject to the satisfaction or
waiver of the following additional conditions:
(a) Each of the representations and warranties of Purchaser
contained in the Transaction Agreement shall be true and correct in all material
respects as of the Measuring Date and the Closing, as though made on and as of
each such date, except that those representations and warranties that address
matters only as of a particular date shall remain true and correct as of such
date, and Parent shall have received a certificate of the Chief Executive
Officer and the Chief Financial Officer of Purchaser to such effect.
(b) Purchaser shall have performed or complied in all material
respects will all agreements and covenants required by the Transaction Agreement
to be performed or complied with by it on or prior to the Measuring Date and the
Closing, as the case may be, and Parent shall have received a certificate of the
Chief Executive Officer and the Chief Financial Officer of Purchaser to such
effect.
(c) Purchaser shall have obtained the Purchaser Closing
Consents.
(d) Purchaser shall have executed and delivered the
Shareholders Agreement.
(e) Purchaser shall have executed and delivered the Technical
Cooperation Agreement.
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ANNEX VI
Survival and Indemnification
Section 6.1 Survival. The representations of the parties shall
survive the Closing until the publication of audited financial statements of
Purchaser for the year ended December 31, 1999 (which is expected to be
approximately March 31, 2000), except that the representations as to Corporate
Organization and Qualification, Authorized Capital, Ownership and Title, No
Dilution and Corporate Authority shall survive in perpetuity, the
representations as to Environmental Matters shall survive until the fifth
anniversary of the Closing and the representations as to Taxes and Employee
Benefits shall survive until the expiration of all relevant statutes of
limitations.
Section 6.2 Indemnification. (a) Parent and International
shall jointly and severally indemnify Purchaser against any direct losses,
costs, expenses and damages of any kind or nature whatsoever (each, a "Loss")
arising in connection with: (i) any breach of any representation, as qualified
by schedules delivered in accordance with Section 3(a), made by Parent or
International in the Transaction Agreement or any other certificate or document
delivered pursuant to such Agreement, (ii) any breach or violation of, or
failure to perform fully, any covenant, agreement, undertaking or obligation of
Parent or International set forth in the Transaction Agreement, or (iii) any
Taxes for which Parent and International are liable, in accordance with Section
4(a), pursuant to the Transaction Agreement. Parent and International shall not
be liable for damages arising in connection with its indemnification obligations
until the amount of damages incurred exceeds $15,000,000 in the aggregate. In
such event, Parent and International shall be liable for all such damages
including the first $15,000,000.
(b) Purchaser shall indemnify Parent and International against
all Losses arising in connection with: (i) any breach of any representation (as
qualified by schedules delivered in accordance with Section 3(a), made by
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Purchaser in the Transaction Agreement or any other certificate or document
delivered pursuant to such Agreement) in respect of matters that were not
publicly disclosed prior to the twentieth day prior to the Measuring Date, (ii)
any breach or violation of, or failure to perform fully, any covenant,
agreement, undertaking or obligation of Purchaser set forth in the Transaction
Agreement, or (iii) any Taxes for which Purchaser is liable, in accordance with
Section 4(b), pursuant to the Transaction Agreement. Purchaser shall not be
liable for damages arising in connection with its indemnification obligations
until the amount of damages (calculated as set forth below) incurred exceeds
$15,000,000 in the aggregate. In such event, Purchaser shall be liable for all
such damages including the first $15,000,000. For purposes of calculating
damages to Parent and International in connection with any indemnity or claim,
damages to Parent or International, as the case may be, shall be calculated as
the damages to Purchaser in respect of such item multiplied by the fraction the
numerator of which is the aggregate number of Consideration Shares issued to
Parent and its Subsidiaries at Closing and the denominator of which is the
number of Purchaser Shares outstanding at Closing (including the issuance of the
Consideration Shares) (the "Parent Percentage Ownership"), such amount to be
increased by an amount equal to such amount multiplied by the Parent Percentage
Ownership. For purposes of calculating damages to Purchaser relating to an
International Subsidiary which is less than 100% owned, directly or indirectly,
by Parent, Purchaser may make a claim for indemnification for such Loss, subject
to the provisions of this Section 6, only up to a percentage of such Loss equal
to the percentage ownership of such International Subsidiary held, directly or
indirectly, by Parent on the Closing.
Section 6.3 Calculation of Loss. (a) In calculating the amount
of a Loss, there shall be deducted:
(i) an amount equal to any tax benefit (including the creation
or increase of a tax loss carried forward) actually realized as a
result of such Loss by any of the International Subsidiaries (if the
claim is made by
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the Purchaser) or by the Purchaser or any of its Affiliates (including,
with respect to any tax benefit realized after the Closing with respect
to a period prior to the Closing and not reflected on the closing
balance sheet prepared in connection with the post-closing adjustment
referred to in Section 2(b) of the Agreement, the International
Subsidiaries) (if the claim is made by Parent or International);
(ii) the amount of any specifically identified reserve or
provision included in the International Financial Statements (if the
claim is made by the Purchaser) or the Purchaser Financial Statements
(if the claim is made by International and/or Parent), with respect to
the facts or circumstances giving rise to such Loss;
(iii) the amount of (i) proceeds actually received under any
indemnification arrangement or any policy of insurance, paid to any
International Subsidiary (if the claim is made by the Purchaser) or to
the Purchaser or its Affiliates (if the claim is made by International
and/or Parent), with respect to such Loss, minus (ii) the costs of
collection of such proceeds and the insurance premiums paid with
respect to any such policy for the period covering such Loss.
(b) In the event that the amount of any deduction which shall
be applied pursuant to this Section 6.3 is determined after payment by a party
under this Agreement of the amount otherwise required pursuant to this Section
6, the indemnified party shall repay the paying party promptly after such
determination any amount that the paying party would not have had to pay
pursuant to this Section 6 had such determination been made at or prior to the
time of such payment.
Section 6.4 No party shall be entitled to make a claim for
indemnification for Losses against the other in respect of any tax audit or
claim which merely modifies the tax period during which a deductible charge or
amortization may be taken or in respect of any VAT assessment (except if such
VAT is not recoverable), except for any interest or penalties resulting
therefrom.
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