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Exhibit 10.4
MAY 2000
SHARE PURCHASE AGREEMENT
BY AND BETWEEN
THE EXECUTORS OF THE UNITED KINGDOM ESTATE OF
XXXX XXXXX (DECEASED)
XXXXXX XXXXX
XXXXXX XXXXX
XXXXX XXXXX
XXXXXXX XXXXX
FIRST COURT LIMITED
MAYGARDEN LIMITED
THE TEMPORARY ADMINISTRATOR OF THE UNITED STATES ESTATE OF
XXXX XXXXX (DECEASED)
MTL ACQUISITION CORP.
WEIL, GOTSHAL & XXXXXX
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TABLE OF CONTENTS
Page
1 CERTAIN DEFINITIONS .............................................. 1
2 SALE OF SHARES AND RELATED MATTERS ............................... 6
3 THE CLOSING ...................................................... 7
4 REPRESENTATIONS AND WARRANTIES OF SELLERS ........................ 9
5 REPRESENTATIONS AND WARRANTIES OF SECURITY VILLAGE AND
BUYER ............................................................ 17
6 COVENANTS OF THE PARTIES ......................................... 18
7 CONDITIONS TO SELLERS' OBLIGATIONS ............................... 22
8 CONDITIONS TO BUYER'S OBLIGATIONS ................................ 23
9 INDEMNIFICATION AND RELATED MATTERS .............................. 24
10 TERMINATION AND ABANDONMENT ...................................... 26
11 MISCELLANEOUS PROVISIONS ......................................... 27
ANNEX A - Opinion of Schiffman, Berger, Xxxxxxx and Xxxxxx .............. 33
ANNEX B - Officer's Certificate of Buyer ................................ 41
ANNEX C - Seller's Certificate .......................................... 42
ANNEX D - Schedule of Incentive Payments ................................ 43
ANNEX E - Tax and Indemnity Deed ........................................ 45
ANNEX F - Working Capital Calculation ................................... 56
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This Share Purchase Agreement (the "AGREEMENT") is entered into as of __ May,
2000, by and between Xxxxxx Xxxxx and Xxxxx Xxxxx (as co-executors of the United
Kingdom estate of Xxxx Xxxxx (deceased)), Xxxxxx Xxxxx, Xxxxxx Xxxxx, Xxxxx
Xxxxx, Xxxxxxx Xxxxx, First Court Limited and Maygarden Limited (collectively,
"TIMESMASTER HOLDERS"), Xxxxx Xxxxx (as Temporary Administrator of the United
States estate of Xxxx Xxxxx (deceased)) ("XXXXX") and MTL Acquisition Corp., a
Delaware corporation ("BUYER"). Timesmaster Holders and Xxxxx are collectively
referred to as "Sellers."
WHEREAS:
(A) Timesmaster Holders, collectively, are the beneficial and record owners of
15,110 ordinary shares (the "TIMESMASTER SHARES") of Timesmaster Limited,
an English limited company (the "COMPANY"), constituting all of the issued
share capital of the Company.
(B) The Company is the beneficial and record owner of all of the issued share
capital of LWG Holdings Limited, an English limited company ("LWG"), which
is the beneficial and record owner of all of the issued and outstanding
shares of capital stock of Griptight Holdings, Inc., a New Jersey
corporation ("GRIPTIGHT").
(C) Griptight is the beneficial and record owner of eight (8) shares of common
stock, no par value per share (the "GRIPTIGHT SHARES"), of Monital Signal
Corporation, a New York corporation ("MONITAL"), constituting 80% of the
issued and outstanding shares of capital stock of Monital.
(D) Xxxxx is the beneficial and record owner of two (2) shares of common stock,
no par value per share of Monital (the "XXXXX SHARES") constituting 20% of
the issued and outstanding shares of capital stock of Monital. The Xxxxx
Shares and the Timesmaster Shares are hereinafter referred to as the
"SHARES".
(E) Sellers desire to sell to Buyer, and Buyer wishes to purchase from Sellers,
the Shares for the Purchase Price upon the terms and conditions set forth
in this Agreement.
Certain terms used in this Agreement are defined in Article I.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1 CERTAIN DEFINITIONS
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the United States Securities and Exchange Act of 1934, as
amended.
"AGREEMENT" has the meaning ascribed to it in the Preamble hereto.
"BASKET" has the meaning ascribed to such term in Section 9.3(a) hereof.
"BUSINESS DAY" means any day on which banks are open for business in London,
England and New York City.
"BUYER" has the meaning assigned to it in the Preamble hereto.
"BUYER GROUP" means Buyer and Buyer's Affiliates and their respective successors
and assigns.
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"BUYER INDEMNIFIED PARTIES" has the meaning ascribed to such term in Section
9.1(a) hereof.
"CLAIM NOTICE" has the meaning ascribed to such term in Section 9.4(a) hereof.
"CLOSING" means the closing of the transactions contemplated by this Agreement.
"CLOSING DATE" means the date on which the Closing actually occurs and the
transactions contemplated hereby become effective.
"CLOSING DATE BALANCE SHEET" means the balance sheet of Monital as of the
Closing Date, prepared on the same basis as used in the calculation entitled
"Working Capital Adjustment" attached as Annex F.
"CODE" means the United States Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning ascribed to it in the Preamble hereto.
"COMPANY SUBSIDIARY" means any subsidiary of the Company or any subsidiary of
such subsidiary.
"CONFIDENTIALITY AGREEMENT" means the Confidentiality Agreement, dated 20
August, 1999, and as amended, between SecureTech Partners LLC and Nomura
International PLC, on behalf of Security Xxxxxxx.xxx Inc.
"CONSENT" means a consent, waiver, approval, authorisation or permit.
"CONTRACT" means any of the items referred to in sections (a) through (g) of
Section 4.10 hereof.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule dated the date hereof
delivered by Sellers to Buyer.
"ERISA" means the United States Employee Retirement Income Security Act of 1974,
as amended.
"ENCUMBRANCE" means a claim, lien, encumbrance, easement, security interest,
third-party rights, charge or restriction on transfer of any nature whatsoever.
"ENVIRONMENTAL LAWS" means all applicable United States federal, state or local
or foreign laws, rules, statutes, regulations, codes, ordinances, orders,
decrees, directives, all common law decisions and any other applicable legally
binding requirement of any Governmental Entity, in each case as in effect on the
Closing Date, relating to pollution or protection of the environment, including
without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act, the Resource Conservation and Recovery Act, the Clean Air Act,
the Clean Water Act, the Federal Insecticide, Fungicide and Rodenticide Act, the
Toxic Substance and Control Act, the Safe Water Drinking and Toxic Enforcement
Act of 1986 and the Occupational Safety and Health Act (but only to the extent
it regulates occupational exposure to Hazardous Materials) and similar state and
local laws.
"ESCROW AGENT" means Schiffman, Berger, Xxxxxxx, Xxxxxxx & Xxxxxx, P.C., United
States counsel to Sellers, or any other person designated by Sellers pursuant to
the Escrow Agreement and reasonably acceptable to Buyer.
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"ESCROW AGREEMENT" means the Escrow Agreement, dated as of 22 November, 1999,
among the Sellers, Security Xxxxxxx.xxx Inc. and the Escrow Agent, which governs
the custody of the Escrow Deposit.
"ESCROW DEPOSIT" means the U.S.$100,000 deposited by Buyer with Escrow Agent,
together with any interest or other amounts earned thereon, pursuant to the
terms of the Escrow Agreement.
"FACILITIES" shall mean all buildings and improvements on the Property.
"FINANCIAL STATEMENTS" means the (x) audited balance sheets of LWG, Griptight
and Monital and the related statements of earnings, retained earnings and cash
flows (including any related notes) as of and for the fiscal year ended 31 March
1999 and (y) the unaudited balance sheet of Monital as of 31 March 2000.
"GAAP" means generally accepted accounting principles in the United Kingdom or
the United States, as the case may be, as of the date hereof applied on a
consistent basis during the periods involved.
"GOVERNMENTAL ENTITY" means a governmental or regulatory authority, agency or
commission, including courts of competent jurisdiction, domestic or foreign.
"GRIPTIGHT" has the meaning ascribed to it in the Recitals hereto.
"GRIPTIGHT SHARES" has the meaning ascribed to it in the Recitals hereto.
"HAZARDOUS MATERIALS" means any substance, material or waste that is regulated,
identified or classified as "HAZARDOUS" "TOXIC", a "POLLUTANT", "CONTAMINANT" or
words of similar meaning under any Environmental Law, including, without
limitation, petroleum (including crude oil or any fraction thereof),
polychlorinated biphenyls and asbestos.
"XXXXX" has the meaning ascribed to it in the Preamble hereto.
"XXXXX SHARES" has the meaning ascribed to it in the Recitals hereto.
"INCENTIVE PAYMENT AMOUNT" means the sum of US$1,126,864.
"IRS" means the United States Internal Revenue Service.
"ISRA" means the New Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6, et
seq.
"INDEMNIFIED PARTY" has the meaning ascribed to such term in Section 9.4(a)
hereto.
"INDEMNIFYING PARTY" has the meaning ascribed to such term in Section 9.4(a)
hereto.
"INSURANCE POLICIES" means all insurance policies with respect to the property,
assets, operations and business of the Company and any Company Subsidiaries,
whether purchased directly by or on behalf of the Company and any Company
Subsidiaries.
"INTELLECTUAL PROPERTY RIGHTS" means, wherever existing in the world, (i)
patents, whether in the form of utility patents or design patents, and all
pending applications for registration thereof, (ii) trademarks, trade names,
service marks, domain names, designs, logos, trade dress and trade styles,
whether or not registered, and all pending applications for registration
thereof, (iii) copyrights, whether or not registered, and all pending
applications for registration thereof, (iv)
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know-how, inventions, research records, trade secrets, confidential information,
product designs, engineering specifications and drawings, technical information,
formulae, customer lists, supplier lists and market analyses, (v) computer
software and programmes, including, without limitation, computer programmes
embedded in semiconductor chips or otherwise embodied, and related flow charts,
programmer notes, documentation, updates and data, whether in object or source
code form, and (vi) all other similar intellectual property rights, whether or
not registered.
"KNOWLEDGE" as applied herein to Sellers means such knowledge as any Seller
would have had had he made reasonable enquiry of Xxx Xxxxx and Xxx Xxxxxx.
"KNOWLEDGE" as applied to a corporation means actual knowledge of an executive
officer (Vice President or higher) or of a member of the Board of Directors.
"LWG" has the meaning ascribed to such term in the Recitals.
"LWG Holdback" means the sum of $80,000 to be held back from the Purchase Price
on the terms set out in the Tax and Indemnity Deed.
"LOSSES" has the meaning ascribed to such term in Section 9.1(a) hereof.
"MAYGARDEN SETTLEMENT" means the settlement dated 21 January 1986 between
Penelope Xxxx Xxxx Xxxxxxx (formerly Gancikov ) and Rothschild Trust Guernsey
Limited (formerly Rothschild Trust Company (C.I.) Limited )(as amended).
"MONITAL" has the meaning ascribed to it in the Recitals.
"NOTICE PERIOD" has the meaning ascribed to such term in Section 9.4(a) hereof.
"OBLIGATION" means an indenture, mortgage, note, bond, licence, government
registration, contract, lease, agreement or other instrument or obligation.
"ORDER" means an order, writ, judgment, injunction, decree, statute, ordinance,
rule or regulation.
"PBGC" means the United States Pension Benefit Guaranty Corporation.
"PERSON" means any individual, corporation, limited liability company,
partnership, trust or other entity of whatever nature.
"PLAN" means each "EMPLOYEE BENEFIT PLAN" as such term is defined in Section
3(3) of ERISA, as amended, and any severance, bonus or other incentive
compensation, deferred compensation, relocation, tuition assistance, stock
purchase, stock option or award, vacation or disability plans, programmes or
policies, whether written or otherwise, that the Company or any of the Company
Subsidiaries maintains or contributes to on behalf of its current or former
employees for which the Company or any Company Subsidiary has any potential
liability.
"PROPERTY" shall mean all real property leased or owned by, or otherwise used in
the conduct of the business of, the Company or any Company Subsidiary, either
currently or in the past.
"PURCHASE PRICE" means U.S.$10,988,825. A portion of the Purchase Price will be
satisfied by payment to Sellers of the Escrow Deposit.
"SECURITIES ACT" means the United States Securities Act of 1933, as amended.
"SELLERS" has the meaning ascribed to it in the Preamble hereto.
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"SHARES" has the meaning ascribed to it in the Recitals hereto.
"SUBSIDIARY" means any corporation, association or other business entity of
which more than 50% of the total voting power of stock entitled to vote in the
election of directors or managers thereof is at the time owned or controlled,
directly or indirectly, by such Person.
"TAX AND INDEMNITY DEED" means the Tax and Indemnity Deed in the agreed form
annexed hereto as Exhibit E, to be entered into by Sellers (other than Xxxxx)
and Buyer, in relation to tax, real estate and other liabilities relating to
Timesmaster and LWG.
"TIMESMASTER HOLDERS" has the meaning ascribed to such term in the Preamble
hereto.
"TIMESMASTER SHARES" has the meaning ascribed to it in the Recitals hereto.
"TRANSACTION DOCUMENTS" means (i) this Agreement, (ii) the Escrow Agreement,
(iii) the Tax and Indemnity Deed, (iv) the Confidentiality Agreement as made a
part hereof and (v) any other agreement or certificate executed by any Seller or
Buyer in connection with the transactions contemplated herein.
"WORKING CAPITAL" shall mean the difference between the Total Current Assets and
the Total Current Liabilities of Monital, calculated on the same basis as used
in the calculation entitled "Working Capital Adjustment" attached as Annex F.
"WORKING CAPITAL DIFFERENTIAL" shall mean the differential between a negative
Working Capital of US$1,104,105 and the Working Capital at the close of business
in New York on the Closing Date as reflected in the Closing Date Balance Sheet.
2 SALE OF SHARES AND RELATED MATTERS
2.1 THE SALE Upon the terms and subject to the conditions of this Agreement, at
the Closing, Sellers will sell, assign, transfer and deliver to Buyer with (in
the case of the Timesmaster Shares), full title guarantee, and Buyer will
purchase from Sellers, the Shares.
2.2 PURCHASE PRICE In consideration of the aforesaid sale, assignment, transfer
and delivery of the Shares at the Closing, Buyer will pay or cause to be paid to
the Escrow Agent on behalf of the Sellers (whose receipt shall be a valid
release of the Buyer from the provisions of this Section), in immediately
available funds, the cash Purchase Price less the amount of the Escrow Deposit.
2.3 PURCHASE PRICE ADJUSTMENT
(a) No later than sixty (60) calendar days following the Closing, Sellers shall
prepare the Closing Date Balance Sheet and calculate the Working Capital
Differential and shall deliver same to Buyer. Buyer shall deliver to
Sellers its written acceptance or rejection of the submission within ten
(10) calendar days after receipt from Sellers and a failure to provide
notice shall be deemed an acceptance. If the parties are unable to agree on
adjustments to the Closing Date Balance Sheet within an additional five (5)
calendar days, then the open issue or issues shall be submitted to binding
arbitration by a disinterested Certified Public Accountant mutually
selected by the parties. If the parties are unable to agree upon an
arbitrator within an additional five (5) calendar days, then either party
may apply to a Judge of a Superior Court of New Jersey, Monmouth County,
for the selection of a qualified Certified Public Accountant to serve as
arbitrator. The arbitrator shall have free access to all pertinent records
maintained by Buyer and Sellers
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and shall issue a written decision within thirty (30) days of his or her
appointment conclusively establishing the Closing Date Balance Sheet and
the Working Capital Differential.
(B) If the Working Capital Differential reflects a decrease in Working Capital
exceeding US$10,000, then Sellers shall within 2 business days after final
resolution of the Working Capital Differential pay Buyer the amount of the
Working Capital Differential. If the Working Capital Differential reflects
a decrease in Working Capital of US$10,000 or less, no payment shall be due
from the Sellers to the Buyer.
(C) If the Working Capital Differential reflects an increase in Working Capital
exceeding US$10,000, then Buyer shall within 2 business days after final
resolution of the Working Capital Differential pay to Sellers (care of
their attorney's bank account details of which are set out in section 3.3)
the amount of the Working Capital Differential, up to a maximum of
US$160,000. If the Working Capital Differential reflects an increase in
Working Capital of US$10,000 or less, no payment shall be due from the
Buyer to the Sellers.
(D) All deliveries pursuant to this Section 2.3 shall be in accordance with
Section 11.5.
3 THE CLOSING
3.1 TIME AND PLACE OF CLOSING Upon the terms and subject to the conditions
contained in this Agreement, the Closing will take place at the offices of Weil,
Gotshal & Xxxxxx, One Xxxxx Xxxxx, Xxxxxx XX0X 0XX immediately following
satisfaction or waiver of all conditions set forth in Articles 7 and 8 hereof.
3.2 DELIVERIES BY SELLERS At the Closing, Sellers will deliver or cause to be
delivered the following to Buyer:
(A) Certificates representing the Shares accompanied by duly executed
instruments of transfer from each Seller in the name of Buyer or its
nominee.
(B) The resignations (including releases of liability) of all members of the
Board of Directors of the Company and each Company Subsidiary.
(C) The certificate contemplated by Section 8.4 hereof in the form of Annex C.
(D) A copy of the resolutions of the board of directors of the Company
authorising the execution, delivery and performance of this Agreement,
together with a copy of a board minute of the Company authorising
registration of the Buyer as holder of the Timesmaster Shares.
(E) Certificates of good standing, or the functional equivalent thereof, of the
Company and each Company Subsidiary from the appropriate governmental
office of each jurisdiction of organisation, and each jurisdiction where
qualified to conduct business, dated not more than thirty (30) days prior
to the Closing.
(F) An Opinion of Schiffman, Berger, Xxxxxxx, Xxxxxxx & Xxxxxx, P.C., United
States counsel to Sellers, addressed to Buyer and dated the Closing Date,
substantially in the forms attached hereto as Annex A.
(G) THE Tax and Indemnity Deed in the form of Annex E, duly executed by each
Seller.
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(H) The duly executed release of all charges to which the assets of the Company
or any Company Subsidiary are subject and of all guarantees given by the
Company or any Company Subsidiary, including without limitation the deed of
negative pledge in favour of Lloyds Bank Plc entered into by LWG on 11 July
1985.
(I) Written confirmation by X. Xxxxx, X. Xxxxxxxxx, X. Xxxxxx, Xxx Xxxxxxx and
Xxxxx Xxxxx that transactions contemplated herein do not trigger change of
control provisions in their contracts and releases of any obligation of
Monital to make any payment in respect of any future change of control.
(J) The duly executed release by each of the Sellers releasing the Company and
each Company Subsidiary from all and any claims which Sellers may have
against any such Company other than claims and liabilities arising pursuant
to this agreement.
(K) Such other documents reasonably necessary or appropriate to give full force
and effect to this Agreement as Buyer may request not less than five (5)
business days prior to the Closing.
3.3 DELIVERIES BY BUYER At the Closing, Buyer will deliver or cause to be
delivered the following to Sellers:
(A) The Purchase Price in immediately available funds (which Buyer authorises
Weil, Gotshal & Xxxxxx LLP to pay on its behalf) to the Sellers, care of
their attorney's bank account, details of which are as follows:
Schiffman, Berger, Xxxxxxx, Xxxxxxx & Xxxxxx, P.C.
Account No. 000000000 0000000000
Bank: Valley National Bank
Three Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Routing Number 000000000
(ABA Number)
(B) The certificate contemplated by Section 7.4 hereof.
(C) A copy of the resolutions of the board of directors of Buyer authorising
the execution, delivery and performance of this Agreement, and a
certificate of the secretary or assistant secretary of Buyer, dated as of
the Closing Date, to the effect that such resolutions were duly adopted and
are in full force and effect.
(D) The Tax and Indemnity Deed duly executed by Buyer.
(E) Such other documents reasonably necessary or appropriate to give full force
and effect to this Agreement as Buyer may request not less than five (5)
business days prior to the Closing.
3.4 INCENTIVE PAYMENTS At Closing, Buyer will pay (and authorises Weil, Gotshal
& Xxxxxx LLP to pay on its behalf) to the Escrow Agent the Incentive Payment
Amount and Buyer and Sellers hereby authorise the Escrow Agent to apply the
Incentive Payment Amount on behalf of Monital immediately after Closing in
making incentive payments to Xxxxxxx Xxxxx and other employees of Monital in
accordance with the schedule at Annex D, which payments Sellers warrant shall be
in full and final settlement of all claims by employees of Monital against
Monital
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in respect of the sale of the Shares and any subsequent change of control of
Griptight or Monital, direct or indirect.
3.5 DEBT REPAYMENTS At Closing, Buyer will pay (and authorises Weil, Gotshal &
Xxxxxx LLP to pay on its behalf) to the Escrow Agent the sum of US$224,311 and
Buyers and Sellers hereby authorize and instruct the Escrow Agent to pay such
amount to Xxxxx Xxxxx Griptight Limited, on behalf of Griptight as to US$68,765
and on behalf of LWG as to US$155,546, which Sellers warrant will be in full and
final satisfaction of all and any liabilities Griptight or LWG to Xxxxx Xxxxx
Griptight Limited.
For the avoidance of doubt, (i) the repayment of the intercompany loan
outstanding at Closing from Griptight to Xxxxx Xxxxx Griptight Limited will be
funded by an intercompany loan from the Buyer to LWG and a capital contribution
in similar amount by LWG to Griptight; and (ii) the repayment of the
intercompany loan outstanding at Closing from LWG to Xxxxx Xxxxx Griptight
Limited will be funded by an intercompany loan from the Buyer to LWG. Buyer
confirms these arrangements will not result in any liability to Griptight.
4 REPRESENTATIONS AND WARRANTIES OF SELLERS
Subject to Section 4.27, Sellers hereby jointly and severally represent
and warrant to Buyer as follows:
4.1 CORPORATE ORGANISATION; Etc The Company is a limited company duly
incorporated, validly existing and in good standing under the laws of England.
The Company has all requisite corporate power and authority to conduct its
business as it is now being conducted and to own, lease and operate its property
and assets. True and complete copies of the Memorandum and Articles of
Association of the Company have been heretofore delivered to Buyer. To the
knowledge of the Sellers all other copies of documents supplied to Buyer are in
all material respects true and complete copies of the original documents they
represent.
4.2 CAPITALISATION OF THE COMPANY The authorised capital stock of the Company
consists of 20,000 ordinary shares of (pound)0.05 each, of which the Timesmaster
Shares are the only shares issued and outstanding as of date hereof. Timesmaster
Holders are the record and beneficial owners of the Timesmaster Shares, and each
of the Timesmaster Holders has good and valid title to his or her Timesmaster
Shares, free and clear of all Encumbrances. All of the Timesmaster Shares are
duly authorised, validly issued, fully paid and non-assessable and were not
issued in violation of any pre-emptive rights. Except as set forth in Schedule
4.2 of the Disclosure Schedule, there are no outstanding (a) securities
convertible into or exchangeable for the capital stock of the Company, (b)
options, warrants or other rights to purchase or subscribe for capital stock of
the Company or (c) contracts, commitments, agreements, understandings or
arrangements of any kind relating to the issuance of any capital stock of the
Company, any such convertible or exchangeable securities or any such options,
warrants or rights, pursuant to which, in any of the foregoing cases, the
Company is subject or bound. The consummation of the transactions contemplated
hereby will convey to Buyer good and valid title to the Shares, free and clear
of all proxies, voting agreements and other Encumbrances.
4.3 COMPANY SUBSIDIARIES Each Company Subsidiary is listed in Schedule 4.3 of
the Disclosure Schedule together with its jurisdiction of incorporation or
organisation and the percentage interest held directly or indirectly by the
Company. All issued and outstanding capital stock or membership interest of each
Company Subsidiary is validly issued, fully paid and non-assessable, and, except
as set forth in Schedule 4.3 of the Disclosure Schedule, is owned directly or
indirectly by the Company free and clear of all Encumbrances. There are no
outstanding (a) securities convertible into or exchangeable for the capital
stock or membership interest of any
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Company Subsidiary, (b) options, warrants or other rights to purchase or
subscribe for capital stock or membership interest of any Company Subsidiary or
(c) contracts, commitments, agreements, understandings or arrangements of any
kind relating to the issuance of any capital stock or membership interest of any
of the Company Subsidiaries, any such convertible or exchangeable securities or
membership interest or any such options, warrants or rights pursuant to which,
in any of the foregoing cases, the Company or Company Subsidiaries are subject
or bound. Each Company Subsidiary is a duly organised and validly existing
corporation or limited liability company or other entity in good standing under
the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to own its properties and carry on its business as
presently conducted. Except as set forth on Schedule 4.3 as to Monital, each
Company Subsidiary is qualified or licensed to do business as a foreign
corporation or to act as a provincial corporation in each jurisdiction wherein
the nature of its activities or its properties owned or leased makes such
qualification necessary, except where the failure to be so qualified or licensed
would not have a material adverse effect on its business. True and complete
copies of the Memorandum and Articles of Association or the Certificate of
Incorporation and By-Laws (or comparable organisational documents) of each
Company Subsidiary, as presently in effect, have been heretofore delivered to
Buyer.
4.4 AUTHORITY RELATIVE TO THIS AGREEMENT AND THE TRANSACTION DOCUMENTS Each
Seller has all requisite authority and power to execute and deliver this
Agreement and each Transaction Document to which any Seller is a party and to
consummate the transactions contemplated hereby or thereby. The execution and
delivery of this Agreement and each Transaction Document to which any Seller is
a party and the consummation of the transactions contemplated hereby and thereby
have been duly and validly authorised by all required action and no other
proceedings on the part of any Seller is necessary to authorise this Agreement
or any Transaction Document to which any Seller is a party, or to consummate the
transactions contemplated hereby and thereby. This Agreement and each
Transaction Document to which any Seller is a party has been duly and validly
executed and delivered by such Seller and, assuming this Agreement and the
Transaction Documents have been duly authorised, executed and delivered by
Buyer, constitutes a valid and binding agreement of such Seller, enforceable
against such Seller in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganisation, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
4.5 CONSENTS AND APPROVALS; NO VIOLATIONS Except as set forth in Schedule 4.5 of
the Disclosure Schedule, neither the execution and delivery of this Agreement or
any of the Transaction Documents to which any Seller is a party nor any Seller's
consummation of the transactions contemplated hereby or thereby will (a)
conflict with or violate any provision of the Certificate or Articles of
Incorporation or By-Laws (or other comparable governing documents) of the
Company or any Company Subsidiary, (b) require any material Consent of, or
filing with or notification to, any Governmental Entity, except such as shall
have been lawfully and validly obtained prior to the Closing, (c) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration of any obligation to repay), including, without limitation,
under any provision relating to changes of control, under any of the terms,
conditions or provisions of any material Obligation to which any Seller, the
Company or any Company Subsidiary is a party or by which any Seller, the Company
or any Company Subsidiary or any of their respective property or assets may be
bound except such violations, breaches and defaults as to which requisite
waivers or consents have been, or will be prior to the Closing, obtained, (d)
violate any material Order of any Governmental Entity applicable to any Seller,
the Company or any Company Subsidiary or
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(e) result in the creation of any Encumbrance against or with respect to the
Shares or any assets of the Company or any Company Subsidiary.
4.6 FINANCIAL STATEMENTS Schedule 4.6 of the Disclosure Schedule sets forth the
Financial Statements. The Financial Statements present fairly the financial
position and earnings and cash flows of LWG, Griptight and Monital, in each case
as of the dates or for the periods presented therein in conformity with GAAP,
except as otherwise noted therein.
4.7 ABSENCE OF CERTAIN CHANGES Except as set forth in Schedule 4.7 of the
Disclosure Schedule, since 31 December 1999, neither the Company nor any Company
Subsidiary has (a) suffered any material adverse change in its business,
operations or financial position, (b) (to the best of the knowledge of the
Shareholders) suffered any material damage, destruction or loss, whether covered
by insurance or not, to its properties, assets or business, (c) (to the best of
the knowledge of the Shareholders) conducted its business in any material
respect not in the ordinary and usual course consistent with past practice,
except pursuant to the terms of this Agreement or any of the Transaction
Documents, (d) changed in any material respect any accounting principle or
policy, (e) except in the ordinary course of business consistent with past
practice, sold, transferred or otherwise disposed of, any of its material
properties or assets, (f) made any loan to or entered into any other transaction
with, any of its consultants or agents, directors or officers or its
stockholders, (g) made any material capital expenditures other than in the
ordinary course of business consistent with past practice, (h) sold any of its
inventory other than in the ordinary course of business consistent with past
practice, (i) made any payments to Affiliates other than in the ordinary course
of business, (j) made any declaration, setting aside or payment of any dividend
or other distribution in respect of its capital stock or membership interest, as
applicable, any direct or indirect redemption, retirement, purchase or other
acquisition by it of any shares of its capital stock, (k) incurred any
indebtedness for borrowed money, (l) made any change in existing credit
arrangements with any bank or other institution, (m) entered into or assumed any
contract, agreement, arrangement, lease (as lessor or lessee), licence or other
commitment, whether written or oral, involving more than U.S.$25,000 in each
instance, except in the ordinary course of business, (n) made any payment of, or
commitment to pay, any severance or termination pay to any officer, director or
consultant that is a natural person or stockholder, (o) discharged or satisfied
any material Encumbrance or paid any liability, except in the ordinary course of
business, (p) cancelled or compromised any debts owed to it or known claims
against others exceeding U.S.$25,000 in the aggregate, other than in the
ordinary course of business or (q) made any sale, transfer or grant of any
Intellectual Property Rights other than in the ordinary course of business.
4.8 NO UNDISCLOSED LIABILITIES
(a) Neither the Company nor any Company Subsidiary has any liability (whether
accrued, absolute, contingent or otherwise and whether known or unknown)
other than liabilities (a) of a nature not required to be disclosed or
reflected in a balance sheet prepared in accordance with GAAP or the notes
thereto, (b) reflected or reserved against (to the extent of the reserves
therefor) in the Financial Statements (or, to the extent expressly
quantified therein, in the notes thereto), (c) incurred or arising in the
ordinary course of business since 31 December 1999, (d) relating to
subscriber monitoring contracts or (e) with respect to the matters
described in the Disclosure Schedule (including, without limitation,
Schedule 4.8 thereof).
(b) Without prejudice to the generality of Section 4.8(a), no Company
Subsidiary other than Monital has any indebtedness other than the sums of
US$68,765 owed by Griptight to Xxxxx Xxxxx Griptight Limited and the sum of
US$155,546 owed by LWG to Xxxxx Xxxxx Griptight Limited.
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4.9 COMPLIANCE WITH LAW; GOVERNMENTAL AUTHORISATIONS Except as set forth in
Schedule 4.9 of the Disclosure Schedule, each Seller, the Company and any
Company Subsidiary has complied and is currently in compliance with all
applicable material Orders of any Governmental Entity in all material respects.
Except as set forth in Schedule 4.9 of the Disclosure Schedule, the Company and
each Company Subsidiary has all material governmental licences and permits
necessary to conduct itself in the ordinary course of business. Each of the
Company and any Company Subsidiary has obtained each United States federal,
state, county, local or foreign governmental consent, licence, permit, grant, or
other authorisation of a Governmental Entity (i) pursuant to which such company
currently operates or holds any interest in any of its properties or (ii) that
is required for the operation of such company's business or the holding of any
such interest ((i) and (ii) herein collectively called "Authorisations"), and
all of such Authorisations are in full force and effect.
4.10 CONTRACTS AND COMMITMENTS Schedule 4.10 of the Disclosure Schedule sets
forth a complete list of all (a) collective bargaining agreements to which the
Company or each Company Subsidiary are a party, (b) agreements which require
aggregate future payments by or to the Company or any Company Subsidiary of more
than U.S.$25,000 which are not terminable by such entity on less than ninety
(90) days' notice without penalty, (c) agreements containing covenants limiting
the freedom of the Company or any Company Subsidiary to compete with any person
in any line of business or in any area or territory, (d) licence agreements with
respect to the Intellectual Property Rights, (e) indentures, mortgages and notes
or other debt instruments evidencing indebtedness of the Company or any Company
Subsidiary involving more than U.S.$25,000 in each instance, (f) leases for real
property to which the Company or any Company Subsidiary is a party and (g)
agreements to which the Company or any Company Subsidiary is a party under which
it has advanced or loaned any amount to any of its directors or officers. Except
as set forth in Schedule 4.10 of the Disclosure Schedule, all of the Contracts
are in full force and effect and, as to each Contract, there does not exist
thereunder any material default on the part of the Company or any Company
Subsidiary, or to the best of any Seller's knowledge, any other party thereto.
Schedule 4.10 of the Disclosure Schedule lists all Contracts that require a
novation or consent to assignment, as the case may be, prior to the Closing Date
as a result of the transactions contemplated hereby in order for such Contracts
to continue in full force and effect following the Closing.
4.11 LITIGATION Except as set forth in Schedule 4.11 of the Disclosure Schedule,
as of the date hereof, there is no material action, suit or proceeding pending
or, to the knowledge of any Seller, threatened, or unserved against either the
Company or any Company Subsidiary.
4.12 TAXES. Each of the Company and each Company Subsidiary, and any
consolidated, combined, unitary or aggregate group for Tax (as defined below)
for the purposes of which any of the Company or any Company Subsidiary is or has
been a member ("Tax Group"), has timely filed all material Tax Returns required
to be filed by it and has paid all Taxes shown thereon to be due. Such Tax
Returns are true, correct and complete in all material respects. There is (i) no
material claim for Taxes being asserted against the Company or any Company
Subsidiary, (ii) no audit of any Tax Return of the Company or any Company
Subsidiary being conducted by a Tax Authority, (iii) no extension of the statute
of limitations on the assessment of any Taxes granted by the Company or any
Company Subsidiary currently in effect, (iv) no agreement, contract or
arrangement to which the Company or any Company Subsidiary is a party that would
result in the payment of any amount that would not be deductible by reason of
Section 280G of the Code and (v) no material unpaid Tax for which the Company or
any of the Company Subsidiaries could be held liable as a transferee of any
other contributed assets. Neither the Company nor any Company Subsidiary is a
party to any Tax sharing or Tax allocation agreement and neither does the
Company nor any of the Company Subsidiaries has any liability or potential
liability to another party under any such agreement. Neither the Company nor any
Company Subsidiary has
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ever been a member of a consolidated, combined or unitary group for United
States or English Tax purposes, except that Monital and Griptight have at all
times filed consolidated tax returns. None of the Tax Returns of Griptight or
Monital have ever been audited by any Tax Authority. For purposes of this
Agreement, the following terms have the following meanings: "TAX" (and, with
correlative meaning, "TAXES" and "TAXABLE") means (i) any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, value added, capital, transfer, franchise, profits, licence,
withholding, payroll, employment, social security, registration, excise,
severance, stamp, occupation, Pension Benefit Guaranty Corporation, premiums,
property, environmental or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or any penalty, addition to tax or additional amount
imposed by any governmental entity (a "TAX AUTHORITY") responsible for the
imposition of any such Tax either in the United States or in any non-United
States jurisdiction, including (but not limited to) England, (ii) any liability
for the payment of any amounts of the type described in section (i) above as a
result of being a member of an affiliated, consolidated, combined or unitary
group for any Taxable period and (iii) any liability for the payment of any
amounts of the type described in sections (i) or (ii) above as a result of being
a transferee of or successor to any person or as a result of any express or
implied obligation to indemnify any other person. As used herein, "TAX RETURN"
shall mean any return, statement, report or form (including, without limitation,
estimated tax returns and reports, withholding tax returns and reports and
information reports and returns) required to be filed with respect to Taxes.
4.13 EMPLOYEE BENEFIT PLANS; ERISA
(a) Schedule 4.13 of the Disclosure Schedule contains a complete list of all
Plans for the Company's U.S. Subsidiaries (the "US PLANS"). With respect to
each U.S. Plan, Sellers have heretofore delivered or made available to
Buyer, to the extent applicable: (i) true and complete copies of each U.S.
Plan (including all amendments), (ii) complete copies of the most recent
Form 5500 filed for the past three (3) years with respect to each U.S. Plan
with the IRS and (iii) copies of the most recent IRS determination letters
issued with respect to each U.S. Plan. None of the U.S. Plans is a
multi-employer plan within the meaning of Section 3(37) of ERISA.
(b) Except as set forth in Schedule 4.13 of the Disclosure Schedule: (i) there
have been no non-exempt prohibited transactions within the meaning of
Section 406 of ERISA, or Section 4975 of the Code with respect to any of
the U.S. Plans; (ii) there is no outstanding liability under Title IV of
ERISA with respect to any of the U.S. Plans other than for payment of
premiums to the PBGC (which have been paid when due) or contributions not
yet due; (iii) the PBGC has not instituted proceedings to terminate any of
the U.S. Plans; (iv) each of the U.S. Plans has been operated and
administered in accordance with its terms and applicable laws except for
any failures that would not result in a liability (including any Tax or
penalty under ERISA, the Code or any foreign law, the cost to correct such
failure and reasonable professional fees) material to the relevant U.S.
Plan; (v) there are no unfunded benefit liabilities within the meaning of
Section 4001(a)(18) of ERISA with respect to any defined benefit plan
maintained by the Company or any Company Subsidiary, as determined under
the actuarial assumptions used in the most recent valuation report for the
U.S. Plan; (vi) neither the Company nor any Company Subsidiary has taken
any actions to terminate any Plan for which there is any outstanding
liability; and (vii) the Company and the Company Subsidiaries have made or
properly accrued on the books and records (as of the end of the month prior
to the Closing Date) of the Company and the Company Subsidiaries all
contributions (including periodic instalments) required by law or contract
to be made to any U.S. Plan;
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(c) The Company, LWG and Griptight have no Plans of any type. None of the
Monital Plans is maintained outside the United States or covers employees
employed outside the United States.
(d) Neither the Company, LWG nor Griptight has any liability, actual or
contingent, to make any payment to any person arising out of or in respect
of or in connection with any employment or alleged employment of any person
by either of them, except as set forth on Schedule 4.13.
4.14 TITLE TO PROPERTIES Schedule 4.14 lists all real property owned or leased
by the Company or any Company Subsidiary. The Company and all Company
Subsidiaries have good, valid and, in the case of real property, marketable fee
simple title to all of the assets and properties which it owns and which are
reflected on the Financial Statements (except for assets and properties sold,
consumed or otherwise disposed of by Company or any Company Subsidiary in the
ordinary course of business since 29 February 2000, which are sold or disposed
of on or prior to the Closing). Such assets and properties are owned free and
clear of all Encumbrances, except for (i) Encumbrances listed in Schedule 4.14
of the Disclosure Schedule, (ii) liens for current Taxes not yet due and payable
or for Taxes the validity of which is being contested in good faith, (iii)
mechanics', materialmens' and other Encumbrances which have arisen in the
ordinary course of business and which, in the case of such other Encumbrances,
are not material in the aggregate, (iv) zoning, entitlement, building and other
land use and environmental regulations by any Governmental Entity, provided that
such regulations have not been materially violated and (v) such other
imperfections in title, including Encumbrances that do not materially interfere
with the present use or marketability of any assets or property subject thereto
or affected thereby, including all matters reflected on the policy of title
insurance and the survey annexed to Schedule 4.14 respecting the real property
owned by Monital (and Buyer agrees to accept title to said real property subject
to all facts disclosed on said policy of title insurance).
4.15 INTELLECTUAL PROPERTY RIGHTS Schedule 4.15 of the Disclosure Schedule sets
forth (i) a list of the Intellectual Property Rights and (ii) the owner or
licensor and any licensee of the Intellectual Property Rights. Except as set
forth in Schedule 4.15 of the Disclosure Schedule, (a) the Company and the
Company Subsidiaries own or possess adequate licences or other valid rights to
use all registered Intellectual Property Rights and, to the knowledge of any
Seller, all unregistered Intellectual Property Rights, (b) the Intellectual
Property Rights are, to the knowledge of any Seller, valid and the validity of
the Intellectual Property Rights and the title thereto of the Company or the
Company Subsidiary, as the case may be, are not being questioned in any
litigation to which the Company or any Company Subsidiary is a party nor, to the
knowledge of any Seller, is any such litigation threatened and (c) to the
knowledge of any Seller (i) the conduct of the business of the Company and the
Company Subsidiary as now conducted does not infringe or otherwise conflict with
any Intellectual Property Rights of others and (ii) neither the Company nor any
Company Subsidiary has received written notice alleging any such conflict.
4.16 INSURANCE The Insurance Policies are in full force and effect and neither
the Company nor any Company Subsidiary is in material default of any provision
thereof. Such insurances are issued on an "occurrence" basis. Sellers have
heretofore delivered or made available to Buyer copies of all Insurance Policies
that have been issued by carriers. Sellers make no representation or warranty
that such Insurance Policies will be continued or are continuable after the
Closing.
4.17 ENVIRONMENTAL MATTERS
(a) Except as set forth in Schedule 4.17 of the Disclosure Schedule, the
Company and each Company Subsidiary has timely obtained, complied with and
currently possesses all
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material permits, licences or authorisations required by Environmental Laws
("ENVIRONMENTAL PERMITS"), and are in material compliance with all such
Environmental Permits and applicable Environmental Laws.
(b) (i) No methylene chloride or asbestos is contained in or has been used at
or released from the Facilities except in material compliance with all
applicable Environmental Laws; (ii) all Hazardous Materials have been
disposed of in accordance with all applicable Environmental Laws; (iii)
neither the Company nor any Company Subsidiary has received any notice
(verbal or written) of any material non-compliance of the Facilities or its
past or present operations with Environmental Laws; (iv) no administrative
actions or suits are pending or threatened relating to a violation of any
Environmental Law; (v) there have not been in the past, and are not now,
any Hazardous Materials on, under or migrating to or from the Facilities or
Property so as to give rise to any material liability under applicable
laws; (vi) there have not been in the past, and are not now, any
underground tanks or underground improvements at, on or under the Property,
including, without limitation, treatment or storage tanks or sumps or
water, gas or oil xxxxx except those placed and maintained in material
compliance with all applicable Environmental Laws; and (vii) the Property
is not affected by any pollution or other negative environmental conditions
which, regardless of the source, would create the obligation to assume any
material obligation of clearance of the land or similar liability under
Environmental Laws or any other material liability towards third parties
under the same laws.
4.18 LABOUR RELATIONS None of the employees of the Company or any Company
Subsidiary is covered by a collective bargaining agreement. Neither the Company
nor any Company Subsidiary has ever suffered or experienced a strike, work
stoppage, material slowdown or other material labour dispute. To the knowledge
of Sellers, no employee of the Company or any Company Subsidiary has expressed
an intention to terminate his or her employment as a result of the transactions
contemplated by this Agreement.
4.19 BROKERS AND FINDERS Neither the Company nor any Company Subsidiary nor any
Seller or any of their respective officers, directors or employees has employed
any broker or finder or incurred any liability for any investment banking fees,
brokerage fees, commissions or finders' fees in connection with the transactions
contemplated by this Agreement or the Transaction Documents, other than
SecureTech Partners, L.L.C., which has been partially paid by Monital, on or
before 31 March 2000, and any balance of which not paid as of 31 March 2000
shall be paid by Sellers.
4.20 ACCOUNTS RECEIVABLE Subject to any reserves set forth in the Financial
Statements and to the best of the knowledge of the Sellers, the accounts
receivable shown on the Financial Statements represent bona fide claims against
debtors for sales and other charges, and are not subject to discount except for
normal cash and immaterial trade discounts. The amount carried for doubtful
account and allowances disclosed in the Financial Statements was calculated in
accordance with GAAP and in a manner consistent with prior periods.
4.21 CUSTOMERS Except as set forth on Schedule 4.21 of the Disclosure Schedule,
none of the customers of the Company or any Company Subsidiary representing
U.S.$25,000 or more of revenues during the fiscal year ended 31 December 1999
has cancelled or otherwise terminated, or, to the knowledge of Sellers,
threatened to cancel or otherwise terminate, its relationship with the Company
or any Company Subsidiary between 31 December 1999 and the close of business on
the date immediately prior to the date hereof.
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4.22 RESTRICTIONS ON BUSINESS ACTIVITIES There is no agreement, judgment,
injunction, order or decree binding upon either the Company or any Company
Subsidiary which has or could reasonably be expected to have the effect of
prohibiting or materially impairing (i) any current business practice of any of
them or (ii) any acquisition of property by any of them.
4.23 CERTAIN AGREEMENTS AFFECTED Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby or a sale
of the Shares or any issuance of shares in Griptight to Monitoring Acquisition
Corporation will (i) result in any payment (including, without limitation,
severance, unemployment compensation, golden parachute, bonus or otherwise)
becoming due to any director or employee of the Company or any Company
Subsidiary, other than Xxxxxxx Xxxxx pursuant to separate agreement, which will
be paid by Monital at Closing in accordance with Section 2.3 (ii) materially
increase any benefits otherwise payable by the Company or any Company
Subsidiary, or (iii) result in the acceleration of the time of payment or
vesting of any such benefits.
4.24 YEAR 2000 So far as Sellers are aware, having made reasonable enquiries,
except as a result of errors or "bugs" contained in data that are generated by
third parties, none of the products and services sold, licensed, rendered or
otherwise provided by the Company or any Company Subsidiary in the conduct of
its business will malfunction, will cease to function, will generate materially
incorrect data or will produce materially incorrect results and will not
directly cause any of the above with respect to the property or business of
third parties using such products or services when processing, providing or
receiving (i) date-related data from, into and between the twentieth (20th) and
twenty-first (21st) centuries, or (ii) date-related data in connection with any
valid date in the twentieth (20th) and twenty-first (21st) centuries. Other than
certifications as to Year 2000 compliance given to customers in the ordinary
course, neither the Company nor any Company Subsidiary has made any
representations or warranties specifically relating to the ability of any
product or service sold, licensed, rendered or otherwise provided by the Company
or any Company Subsidiary in the conduct of its business to operate without
malfunction, to operate without ceasing to function, to generate correct data or
to produce correct results when processing, providing or receiving (i)
date-related data from, into and between the twentieth (20th) and twenty-first
(21st) centuries, and (ii) date-related data in connection with any valid date
in the twentieth (20th) and twenty-first (21st) centuries.
4.25 NO PRIOR OPERATION The Company has not had any operation and has no assets
or liabilities other than its shareholding in LWG.
4.26 RELEASE BY ESTATE OF XXXX XXXXX The Estate of Xxxx Xxxxx hereby represents
and warrants that it has no claim to acquire any shares, options or other
securities of the Company or any Company Subsidiary (including, without
limitation, Monital) and that it hereby unconditionally and irrevocably releases
the Company, each Company Subsidiary, Buyer and Security Village from any claim
with respect thereto.
4.27 THE WARRANTIES Notwithstanding anything to the contrary in this Section 4,
the warranties are given on the following basis:
(a) Xxxxx does not give any warranty or other representation, undertaking or
indemnity with respect to the Company or LWG and gives its warranties
severally and the liability of Xxxxx for all claims pursuant to this
Agreement shall not exceed the aggregate Purchase Price received by it;
(b) Each of Maygarden Limited and First Court Limited gives its warranties
severally. The liability of each of Maygarden Limited and First Court
Limited for all claims pursuant to this Agreement and the Tax and Indemnity
Deed shall not, in any event, exceed the lower
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of (i) the aggregate cash Purchase Price received by either or (ii) the
value of the capital assets of the Maygarden Settlement including, without
limitation, those capital assets held by First Court Limited as nominee for
Maygarden Limited from time to time (excluding the value of the existing
loans made to beneficiaries of the Maygarden Settlement prior to the date
of this Agreement ) provided in relation to (ii) that neither the Maygarden
Settlement nor First Court Limited in its capacity as nominee of Maygarden
Limited has after the date of this Agreement made distributions of capital
(including, without limitation, by way of further loans, or guarantees of
any obligations of beneficiaries of the Maygarden Settlement or directly or
indirectly making capital payments to them in consideration for consulting
or other services) whilst they respectively retain liability under this
Agreement or the Tax and Indemnity Deed provided further that the Maygarden
Settlement, in any financial year, shall be entitled to make capital loans
to such beneficiaries which, when aggregated with all income distributions
from the Maygarden Settlement, do not exceed in aggregate the value of the
income derived by the Maygarden Settlement from the aggregate cash Purchase
Price so received or investments derived therefrom; and
(c) all warranties relating to Griptight are given on an absolute basis and
not subject to the knowledge of the Sellers.
4.28 CERTAIN TRUSTS The Sellers acknowledge that the proportion of the Purchase
Price to be received by certain of the Sellers is as follows:
Maygarden Limited 47.75 per cent
First Court Limited 6.84 per cent
5 REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer jointly and severally represent and warrant to Sellers as follows:
5.1 CORPORATE ORGANISATION; ETC Buyer is a corporation duly organised, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to conduct its business as it is now
being conducted and to own, lease and operate its property and assets.
5.2 AUTHORITY RELATIVE TO THIS AGREEMENT AND THE TRANSACTION DOCUMENTS Buyer has
all requisite corporate authority and power to execute and deliver this
Agreement and each of the Transaction Documents to which it is a party and to
consummate the transactions contemplated hereby or thereby. The execution and
delivery of this Agreement, each of the Transaction Documents to which it is a
party and the consummation of the transactions contemplated hereby or thereby
have been duly and validly authorised by all required corporate action on the
part of Buyer and no other corporate proceedings on the part of Buyer are
necessary to authorise this Agreement, any Transaction Document to which it is a
party or to consummate the transactions contemplated hereby or thereby. This
Agreement and each Transaction Document to which Buyer is a party have been duly
and validly executed and delivered by Buyer and, assuming this Agreement and
each Transaction Document have been duly authorised, executed and delivered by
each Seller, constitutes a valid and binding agreement of Buyer, enforceable
against Buyer in accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganisation, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
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5.3 CONSENTS AND APPROVALS; NO VIOLATIONS Except as set forth in Schedule 5.3
of the Disclosure Schedule, neither the execution and delivery of this Agreement
or any of the Transaction Documents by Buyer nor the consummation by Buyer of
the transactions contemplated hereby or thereby will (a) conflict with or
violate any provision of the certificate or their respective Certificates of
Incorporation or By-Laws, (b) require any material Consent of, or filing with or
notification to, any Governmental Entity, except such as shall have been
lawfully and validly obtained prior to the Closing, (c) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration
or any obligation to repay) under, any of the terms, conditions or provisions of
any material Obligation to which Buyer is a party or by which Buyer or any of
its properties or assets may be bound, except such violations, breaches and
defaults as to which requisite waivers or consents have been, or will be prior
to the Closing, obtained or (d) violate any material Order of any Governmental
Entity applicable to Buyer.
5.4 FINANCIAL CAPABILITY Buyer has, and on the Closing Date will have,
sufficient funds to effect the Closing and all other transactions contemplated
by this Agreement or the Transaction Documents.
5.5 NO REPRESENTATION Buyer has satisfactorily completed a thorough due
diligence investigation of the Company and each Company Subsidiary and
acknowledge that no representation or warranty is given by Sellers in respect of
the same except as set out in this Agreement.
5.6 BROKERS AND FINDERS Neither the Buyer nor any of its respective officers,
directors or employees has employed any broker or finder or incurred any
liability for investment banking fees, brokerage fees, commissions or finders'
fees in connection with this Agreement or the Transaction Documents which is or
may become a liability of the Sellers other than in relation to SecureTech
Partners LLC.
6 COVENANTS OF THE PARTIES
6.1 CONDUCT OF BUSINESS OF THE COMPANY AND THE COMPANY SUBSIDIARIES Except as
contemplated by this Agreement, as set forth in Schedule 6.1 of the Disclosure
Schedule or with the prior written consent of Buyer during the period from the
date of this Agreement to the Closing Date, Sellers will cause the Company and
the Company Subsidiaries to: (i) conduct its business and operations in the
ordinary course of business consistent with past practice, except as
contemplated by the terms of this Agreement or any Transaction Document and
except for acquisition from time to time by Monital of portfolios of contracts
for the provision of security services; and (ii) use all commercially reasonable
efforts consistent therewith to preserve intact its properties, assets and
business organisations, to keep available the services of its officers and
employees and to maintain satisfactory relationships with customers, suppliers,
distributors and others having commercially beneficial business relationships
with them, in each case in the ordinary course of business consistent with past
practice. Without limiting the generality of the foregoing, and except as
otherwise provided in this Agreement or any Transaction Document or as
contemplated hereby or thereby or as set forth in Schedule 6.1 of the Disclosure
Schedule, Sellers will cause the Company and the Company Subsidiaries not to,
prior to the Closing Date, without the prior written consent of Security Village
and Buyer, which consent shall not be unreasonably withheld or delayed:
(a) issue, sell or pledge, or authorise or propose the issuance, sale or
pledge of (i) additional shares of capital stock, or securities
convertible into any such shares, or any rights, warrants or options to
acquire any such shares or other convertible securities or (ii) any
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other securities in respect of, in lieu of or in substitution for, the
shares of capital stock of the Company or any Company Subsidiary
outstanding on the date hereof;
(b) declare or pay any dividend or distribution on any of the Shares;
(c) redeem, purchase or otherwise acquire any outstanding shares of the Company
or any Company Subsidiary;
(d) amend the Memorandum and Articles of Association or Certificates of
Incorporation and By-Laws (or other comparable governing documents) of the
Company or any Company Subsidiary;
(e) sell, transfer or otherwise dispose of, any of its material property or
assets (other than inventory in the ordinary course of business) or
mortgage or encumber any of its material property or assets;
(f) enter into other material agreements, commitments or contracts, except
agreements, commitments or contracts made in the ordinary course of
business consistent with past practice;
(g) fail to pay any material obligation or liability, except in the ordinary
course of business or unless being contested in good faith;
(h) incur any indebtedness for borrowed money or enter into any capital leases;
(i) make any capital expenditures (or commitment therefor) in excess of
U.S.$25,000 (excluding any capital expenditures in progress as of the date
hereof);
(j) allow any insurance policy of the Company or any Company Subsidiary to
lapse or be discontinued; or
(k) agree or commit to take any of the foregoing actions.
6.2 ACCESS TO INFORMATION From the date of this Agreement to the Closing Date,
Sellers will cause the Company and the Company Subsidiaries to (i) give Buyer
and its authorised representatives reasonable access to all books, records,
offices and other facilities and properties of the Company and the Company
Subsidiaries, (ii) permit Buyer to make such inspections thereof as Buyer may
reasonably request, (iii) cause their officers to furnish Buyer with such
financial and operating data and other information with respect to the business
and properties of the Company and the Company Subsidiaries as Buyer may from
time to time reasonably request, (iv) permit an authorised representative of
Buyer to have access to appropriate personnel of the Company or any Company
Subsidiary as well as the offices and other facilities and properties of the
Company or any Company Subsidiary for the purpose of reviewing and observing the
day-to-day financial and accounting functions of the Company and the Company
Subsidiaries; provided, however, that (i) any such access shall be conducted at
a reasonable time and in such a manner as not to interfere unreasonably with the
operation of the business of the Company or any Company Subsidiary; (ii) the
rights hereunder shall not be construed as affording a further due diligence
period or contingency (Buyer agreeing that it has completed its due diligence
investigation); and (iii) no information or statements obtained by or
communicated to Buyer in the course of such access shall be construed as a
representation or warranty of Sellers nor shall any such information be relied
upon by the Buyer. All such information and access shall be subject to the terms
and conditions of the Confidentiality Agreement which shall be binding upon the
Buyer and its representatives.
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6.3 CONSENTS AND APPROVALS Each of the parties hereto shall use its commercially
reasonable efforts to obtain as promptly as practicable all Consents required in
connection with the consummation of the transactions contemplated by this
Agreement.
6.4 FILINGS Promptly after the execution of this Agreement, each of the parties
hereto shall (and Sellers shall use their best efforts to cause the Company and
the Company Subsidiaries to) prepare and make or cause to be made any required
filings, submissions and notifications under the laws of any domestic or foreign
jurisdictions to the extent that such filings are necessary to consummate the
transactions contemplated hereby and will use its commercially reasonable
efforts to take all other actions necessary to consummate the transactions
contemplated hereby in a manner consistent with applicable law. Each of the
parties hereto will furnish to the other parties such necessary information and
reasonable assistance as such other parties may reasonably request in connection
with the foregoing.
6.5 LEGAL REQUIREMENTS Each party will, and will cause their respective
subsidiaries to, take all reasonable and necessary steps to comply in all
material respects promptly with all legal requirements which may be imposed on
them with respect to the consummation of the transactions contemplated by this
Agreement and will promptly cooperate with and furnish information to any party
hereto necessary in connection with any such requirements imposed upon such
other party in connection with the consummation of the transactions contemplated
by this Agreement and will take all reasonable actions necessary to obtain (and
will cooperate with the other parties hereto in obtaining) any consent,
approval, order or authorisation of, or any registration, declaration or filing
with, any Governmental Entity or other person, required to be obtained or made
by them in connection with the taking of any action contemplated by this
Agreement.
6.6 COVENANT TO SATISFY CONDITIONS Sellers will use their best efforts to ensure
that the conditions set forth in Article 7 hereof are satisfied, insofar as such
matters are within the control of Sellers, and Security Village and Buyer will
use their reasonable efforts to ensure that the conditions set forth in Article
8 hereof are satisfied, insofar as such matters are within the control of
Security Village and Buyer.
6.7 FURTHER ASSURANCES Subject to the terms and conditions herein provided, each
of the parties hereto agrees to use its reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement. If at any time after
the Closing Date any further action is necessary or desirable to carry out the
purposes of this Agreement, the parties hereto shall take or cause to be taken
all such necessary actions, including, without limitation, the execution and
delivery of such further instruments and documents as may be reasonably
requested by any party for such purposes or otherwise to consummate and make
effective the transactions contemplated hereby.
6.8 NO SHOP Sellers and the Company acknowledge and agree to refrain from, and
will cause their Affiliates and their Affiliates' officers, directors,
shareholders, advisers, employees and contractors to refrain from soliciting or
encouraging or entering into any discussions or negotiations with any party with
respect to the due diligence or the potential purchase or sale of the Shares or
assets of the Company or any Company Subsidiary or any potential business
combination with any of them.
6.9 CONFIDENTIALITY The parties acknowledge that the Confidentiality Agreement
shall continue in full force and effect in accordance with its terms and the
parties adopt same, make it a part hereof by reference and agree to be bound by
all of its terms. In addition, the parties agree that the terms and conditions
of the transactions contemplated hereby and information exchanged
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in connection with the execution hereof shall be subject to the same standard of
confidentiality as is set forth in the Confidentiality Agreement.
6.10 PUBLIC DISCLOSURE Unless otherwise permitted by this Agreement, the
parties shall follow the procedures and requirements at Section 11.8 before
issuing any press release or otherwise making any public statement or making any
other public (or non-confidential) disclosure (whether or not in response to an
inquiry) regarding the terms of this Agreement and the transactions contemplated
hereby.
6.11 PROPRIETARY INFORMATION All information (i) about the Company or any
Company Subsidiary, including, without limitation, the identity of their
customers and suppliers, and all of their internal procedures and processes,
costs, materials, special customer requirements, pricing techniques, business
plans, and operational procedures and policies, and (ii) about any Intellectual
Property Rights is referred to herein as "PROPRIETARY INFORMATION". Proprietary
Information shall not include, however, information which is or becomes
generally available to the public other than as a result of a disclosure by
Sellers or their directors, officers, employees, agent and advisers (including,
without limitation, financial advisors, attorneys and accountants)
(collectively, "REPRESENTATIVES"), as required by law or a court or regulatory
authority or which becomes publicly available other than by a breach by Sellers
of this Agreement. Unless otherwise agreed in writing by Buyer, Sellers shall
keep all Proprietary Information confidential, shall not disclose or reveal any
Proprietary Information to any person and shall not use Proprietary Information
for any purpose. Sellers shall be responsible for any breach of the terms of
this provision by it or its Representatives. The provisions of this Section
shall survive the Closing for a period of five (5) years.
6.12 COVENANTS REGARDING EMPLOYEES AND COVENANT NOT TO INTERFERE, COMPETE OR
SOLICIT BUSINESS
(a) Each Seller agrees that, commencing on the date hereof, neither it nor any
of its Affiliates shall induce or encourage, or assist others to induce or
encourage, any current employee of the Company or any Company Subsidiary to
end or decline an employment arrangement with Monital, or interfere in any
manner with the relationship between such Company and such employee and
each Seller hereby agrees that for a period of two years from the Closing
Date, neither it nor any of its Affiliates shall induce or encourage, or
assist others to induce or encourage, any current employee of any such
company to leave Monital's employ.
(b) Each Seller hereby agrees that commencing on the date hereof and ending on
the second anniversary of the Closing Date, neither it nor any of its
Affiliates shall directly or indirectly in any manner whatsoever induce or
assist others to induce any customer of the Company or any Company
Subsidiary to terminate its association with such entity or do anything,
directly or indirectly, to interfere with the business relationship between
such entity and any of its current or prospective customers.
(c) In furtherance of the sale of the Shares to Buyer and more effectively to
protect the business and good will of the Company and the Company
Subsidiaries, upon the consummation of the transactions contemplated
hereby, each Seller agrees that, for a period commencing on the Closing
Date and ending on the third anniversary of the Closing Date, it and (other
than in the case of Maygarden Limited (which agrees for itself only) and
First Court Limited (which agrees solely in its capacity as nominee for
Maygarden Limited)) its Affiliates will not: directly or indirectly
(whether as an employer, employee, partner, stockholder, consultant,
investor, director, representative or otherwise) anywhere within the world
own, manage, operate, control or be employed by,
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participate in, consult with or be otherwise connected in any manner with
the ownership, management or operation of any business involving the
monitoring of security alarm accounts located within the United States of
America (the "COVERED ACTIVITIES"). Notwithstanding the foregoing, nothing
herein shall restrict any Seller or (other than in the case of Maygarden
Limited (which agrees for itself only) and First Court Limited (which
agrees solely in its capacity as nominee for Maygarden Limited)) its
Affiliates from owning, solely for investment purposes, up to five per
cent. (5%) of any class of securities of any publicly traded company
engaged in the Covered Activities. As to First Court Limited, conduct
solely in its capacity as nominee for persons other than Maygarden Limited
or any other Seller would not violate this covenant.
(d) Without limiting the rights of the parties to pursue all other legal and
equitable rights available to them for violation of this Section 6.12 or
Section 6.11 by any of the other parties hereto, it is agreed that other
remedies cannot fully compensate a party for such a violation and that the
parties shall be entitled to injunctive relief to prevent the violation or
the continuing violation thereof. It is the intent and understanding of
each party hereto that if, in any action before any Governmental Entity
legally empowered to enforce this Section 6.12 or Section 6.11, any term,
restriction, covenant or promise in this Section 6.12 or Section 6.11 is
found to be unreasonable and for that reason unenforceable, then such term,
restriction, covenant or promise shall be deemed modified to the extent
necessary to make it enforceable by such court or agency.
6.13 BEST EFFORTS AND FURTHER ASSURANCES Each of the parties to this Agreement
shall use its best efforts to effectuate the transactions contemplated hereby
and to fulfil and cause to be fulfilled the conditions to Closing under this
Agreement.
6.14 SECTION 338 ELECTION Following Closing, Buyer shall procure that LWG shall
make a Section 338 election under the Code effective on or prior to the Closing
Date and neither Griptight nor Monital shall have made a Section 338 election on
or prior to the Closing Date; providing, however, that all tax liabilities
resulting from the Section 338 election shall be paid and satisfied by the
Buyer.
7 CONDITIONS TO SELLERS' OBLIGATIONS
The obligations of Sellers to effect the transactions contemplated hereby shall
be subject to the fulfilment, or written waiver by Sellers, at or prior to the
Closing of each of the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES TRUE The representations and warranties of
Buyer contained herein qualified as to materiality shall be true and correct,
and the representations and warranties of Buyer contained herein not qualified
as to materiality shall be true and correct in all material respects, at and as
of the Closing Date as though such representations and warranties were made at
and as of such date (except for such representations and warranties which are by
their terms made as of an earlier date, which shall speak only as of such date).
7.2 PERFORMANCE Buyer shall have performed and complied in all material respects
with all agreements, obligations, covenants and conditions required by this
Agreement to be performed or complied with by it on or prior to the Closing.
7.3 NO INJUNCTION OR PROCEEDING No Order shall have been enacted, entered,
promulgated or enforced by any Governmental Entity which prohibits or restricts
the consummation of the transactions contemplated hereby. No action or
proceeding by any Governmental Entity shall have been commenced (and be pending)
against Buyer, any Seller, the Company or any Company
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Subsidiary or any of their respective Affiliates, associates, officers or
directors seeking to prevent or delay the transactions contemplated hereby or
challenging any of the terms or provisions of this Agreement or seeking material
damages in connection therewith.
7.4 CERTIFICATES Buyer shall have furnished Sellers with certificates to
evidence its compliance with the conditions set forth in this Article 7 in the
form attached hereto as Annex B.
7.5 TRANSACTION DOCUMENTS Each of the Transaction Documents shall be executed
and delivered by the parties thereto in a form reasonably satisfactory to Buyer
and Sellers.
8 CONDITIONS TO BUYER'S OBLIGATIONS
The obligation of Buyer to effect the transactions contemplated hereby shall be
subject to the fulfilment, or written waiver by Buyer, at or prior to the
Closing of each of the following conditions:
8.1 REPRESENTATIONS AND WARRANTIES TRUE The representations and warranties of
Sellers contained herein qualified as to materiality shall be true and correct,
and the representations and warranties of Sellers contained herein not qualified
as to materiality shall be true and correct in all material respects, at and as
of the Closing Date as though such representations and warranties were made at
and as of such date (except for such representations and warranties which are by
their terms made as of an earlier date, which shall speak only as of such date).
8.2 PERFORMANCE Sellers shall have performed and complied in all material
respects with all agreements, obligations, covenants and conditions required by
this Agreement to be performed or complied with by it on or prior to the
Closing.
8.3 NO INJUNCTION OR PROCEEDING No Order shall have been enacted, entered,
promulgated or enforced by any Governmental Entity which prohibits or restricts
the consummation of the transactions contemplated hereby. No action or
proceeding by any Governmental Entity shall have been commenced (or be pending
or threatened) against Buyer, Sellers, the Company or any Company Subsidiary or
any of their respective Affiliates, associates, officers or directors seeking to
prevent or delay the transactions contemplated hereby or challenging any of the
terms or provisions of this Agreement or seeking material damages in connection
therewith.
8.4 CERTIFICATES Sellers shall have furnished Buyer with certificates to
evidence compliance by Sellers with the conditions set forth in this Article 8
in the form attached hereto as Annex C.
8.5 NO MATERIAL ADVERSE CHANGE No act, event or condition shall have occurred
to the Company or any Company Subsidiary after the date hereof which has had or
could have or is likely to have a material adverse effect on the Company's or
the Company Subsidiaries' business results of operations, condition (financial
or otherwise) or prospects, and which is not remedied by Sellers.
8.6 TRANSACTION DOCUMENTS Each of the Transaction Documents shall be executed
and delivered by the parties thereto in a form reasonably satisfactory to Buyer
and Sellers.
8.7 [INTENTIONALLY LEFT BLANK]
8.8 LIMITATION ON INDEBTEDNESS The Company and the Company Subsidiaries shall
not have indebtedness in excess of U.S.$1,400,000 at the Closing Date. For the
purposes of this section 8.8 "indebtedness" shall mean all debts of the Company
and Company Subsidiaries which
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should be stated on the balance sheet of the Company and/or the Company
Subsidiaries under GAAP, including but not limited to the current portion of
long term debt, long term debt and notes and specifically excluding (i) the
intercompany balance of US$331,312 owed by Monital to Griptight, the US$155,546
owed by LWG to Xxxxx Xxxxx Griptight Limited and the US$68,765 owed by Griptight
to Xxxxx Xxxxx Griptight (ii) deferred revenue (iii) corporate income taxes
payable (iv) accounts payable and accrued expenses as shown within current
liabilities on the balance sheet, (v) dealer holdbacks on acquisitions and (vi)
the intercompany loans provided by Buyer pursuant to Section 3.5.
8.9 BOARD RESIGNATIONS All board members of the Company and each Company
Subsidiary shall have resigned as directors and the persons designated by Buyer
shall have been appointed in their place, effective as at Closing.
8.10 CANCELLATION OF INTRA-GROUP RECEIVABLES AND PAYABLES At Closing, Sellers
shall procure that the balance of inter-company receivables and payables between
the Company and any Company Subsidiaries or between the Company Subsidiaries is
nil (save for the sum of US$331,312 owing from Monital to Griptight, which will
be left outstanding). To the extent that any tax charge arises in the Company or
any Company Subsidiary as a result of the cancellation of any such receivable or
payable, the Sellers shall indemnify the Buyer in respect of such charge which
shall upon demand be paid by the Sellers to the Buyer.
9 INDEMNIFICATION AND RELATED MATTERS
9.1 INDEMNIFICATION
(a) Subject to the provisions of this Article 9 and the limiting provisions in
Section 4.27, Sellers agree to jointly and severally indemnify and hold
harmless the Buyer Group and the Buyer Group's respective directors,
officers, attorneys, accountants, agents and employees and their respective
heirs, successors and assigns (the "BUYER INDEMNIFIED PARTIES"), from and
against any and all liabilities, obligations, damages, losses,
deficiencies, costs, Taxes, penalties, interest and expenses (including,
without limitation, reasonable accountants' and attorneys' fees), but
excluding consequential damages and lost profits (except to the extent due
to a third party pursuant to a third-party claim) (collectively, "LOSSES"),
including, without limitation, those arising from third-party claims,
arising out of, based upon, attributable to or resulting from:
(i) the failure of any of the representations or warranties of Sellers set
forth in Article 4 or the Sellers' Certificate at Annex C to be true
and correct as of Closing Date; or
(ii) the breach of any covenant on the part of Sellers under the terms of
this Agreement.
(b) Subject to the provisions of this Article 9, Buyer hereby agrees to, and
shall cause the Company and the Company Subsidiaries to, jointly and
severally indemnify and hold harmless Sellers and their respective heirs,
successors and assigns from and against any and all Losses, including,
without limitation, those arising from third-party claims, arising out of,
based upon, attributable to or resulting from:
(i) the failure of any of the representations or warranties of Buyer set
forth in Article 5 to be true and correct as of the Closing Date; or
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(ii) the breach of any covenant on the part of Buyer under the terms of
this Agreement.
9.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
(a) The parties hereto hereby agree that the representations and warranties
contained in this Agreement shall survive the execution and delivery of
this Agreement and the Closing hereunder; provided, however, that (subject
to sub-section 9.2(c) any claims or actions with respect thereto shall
terminate unless by July 31, 2001 (or in the case of a claim pursuant to
any warranty in section 4.12, by July 31 2003) written notice of such
claims setting forth the nature of the claims with reasonable specificity
is given to the Indemnifying Party (as defined in Section 9.4(a) below) or
such actions are commenced.
(b) In the case of a claim under section 4.12, the claim shall survive after
July 31, 2001 only to the extent that any tax audit giving rise to the
claim is triggered other than as a result of the actions outside the
ordinary course of business of the Buyer, and the relevant claim shall be
reduced to the extent that a credit in relation to tax losses in the
relevant companies existing at Closing is available to the Buyer or, having
been available, has been used by Buyer to offset other tax liabilities
arising within the Buyer's group of companies.
(c) Notwithstanding the provisions of section 9.2(a) (and subject to section
9.2(b)), any claims or actions with respect to any representation or
warranty relating to Griptight shall terminate unless by the fifth
anniversary of Closing written notice of such claim setting forth the
nature of the claim with reasonable specificity is given to the Indemnified
Party (as defined in section 9.4(a) below) or such actions are commenced.
9.3 LIMITATIONS ON INDEMNIFICATION BY SELLERS
(a) Sellers shall not have any liability under Section 9.1(a)(i) hereof unless
the aggregate amount of Losses to the Buyer Indemnified Parties finally
determined to arise thereunder exceeds U.S.$225,000 (the "Basket") and, in
such event, Sellers shall be required to pay the entire amount of such
Losses in excess of the Basket, subject to the limitations set forth in
Section 9.3(b) hereof; provided, however, that such limitation shall not
apply to any Loss due to the failure of any of the representations and
warranties set forth in Sections 4.1, 4.2, 4.3, 4.8(b), 4.12, 4.13, 4.17,
4.19, 4.25 and 4.26 to be true and correct as of the date hereof and as of
the Closing Date.
(b) The aggregate amount that the Buyer Indemnified Parties shall be entitled
to recover pursuant to this Article 9 for any Loss or Losses shall be
limited to the Purchase Price.
9.4 INDEMNIFICATION PROCEDURES
(a) Any Person entitled to make a claim for indemnification under Section 9.1
(an "INDEMNIFIED PARTY") not involving a claim or demand by a third party,
may make a claim for indemnification by giving written notice of the
assertion of such claim covered by this indemnity to the Person from whom
it is seeking indemnification (the "INDEMNIFYING PARTY"). With respect to
third-party claims, all claims for indemnification by any Indemnified Party
hereunder shall be asserted and resolved as set forth below in this Section
9.4. In the event that any written claim or demand for which the
Indemnifying Party would be liable to any Indemnified Party hereunder is
asserted against or sought to be collected from any Indemnified Party by a
third party, such Indemnified Party shall promptly, but in no event more
than thirty (30) days following
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such Indemnified Party's receipt of such claim or demand, notify the
Indemnifying Party of such claim or demand and the amount or the estimated
amount thereof to the extent then feasible (which estimate shall not be
conclusive of the final amount of such claim or demand) (the "CLAIM
NOTICE"); provided, however, that the Indemnified Party's failure to
provide such notice in not more than thirty (30) days shall not preclude
the Indemnified Party from being indemnified for such claim or demand,
except to the extent that the failure to give timely notice results in the
forfeiture of substantive defences available to the Indemnifying Party. The
Indemnifying Party shall have thirty (30) days (or such shorter period as
may be necessary under the circumstances) from the personal delivery or
mailing of the Claim Notice (the "NOTICE PERIOD") to notify the Indemnified
Party whether or not it desires to defend the Indemnified Party against
such claim or demand. All costs and expenses incurred by the Indemnifying
Party in defending such claim or demand shall be a liability of, and shall
be paid by, the Indemnifying Party. Except as hereinafter provided, in the
event that the Indemnifying Party notifies the Indemnified Party within the
Notice Period that it desires to defend the Indemnified Party against such
claim or demand, the Indemnifying Party shall have the right to defend the
Indemnified Party by appropriate proceedings and shall have the sole power
to direct and control such defence and to negotiate, settle or otherwise
deal with such claim or demand. If any Indemnified Party desires to
participate in any such defence, it may do so at its sole cost and expense.
The Indemnified Party shall not settle a claim or demand without the prior
written consent of the Indemnifying Party. To the extent the Indemnifying
Party shall direct, control or participate in the defence or settlement of
any third-party claim or demand, the Indemnified Party will give the
Indemnifying Party and its counsel, without charge, access to, during
normal business hours, the relevant business records and other documents,
and shall permit them to consult with the employees and counsel of the
Indemnified Party. The Indemnified Party shall use its commercially
reasonable best efforts in the defence of all such claims or demands.
(b) Except in the case of common law fraud, this Article 9 shall be the
exclusive remedy of the Indemnified Parties for any Losses arising out of
this Agreement or the transactions contemplated hereby.
9.5 TAX TREATMENT OF INDEMNITY PAYMENTS The parties agree that any indemnity
payment made pursuant to this Article 9 shall be treated by the parties on their
respective tax returns as an adjustment to the Purchase Price.
9.6 COMPUTATION OF LOSSES The amount of any Loss subject to indemnification
under this Article 9 shall be calculated net of (i) any Tax benefit actually
realised by the Indemnified Party on account of such Loss and (ii) insurance
proceeds (net of direct collection expenses and deductibles) received by the
Indemnified Party on account of such Loss. In the event that a Tax benefit is
actually realised as set forth in section (i) above or an insurance recovery is
made by the Indemnified Party with respect to any Loss for which any such Person
previously has been indemnified, then a refund equal to the aggregate amount of
the realised Tax benefit or recovery (net of all direct collection expenses,
deductibles and Taxes payable with respect thereto) shall be made promptly to
the Indemnifying Party. Each party shall use best endeavours (at the cost of the
Indemnified Party) to obtain waiver of subrogation rights from its insurers on
all policies of insurance for the benefit of the other.
10 TERMINATION AND ABANDONMENT
10.1 TERMINATION This Agreement may be terminated at any time prior to the
Closing Date:
(a) by mutual consent of all Sellers and Buyer;
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(b) by either all Sellers or Buyer at any time after the expiration of sixty
(60) days from the date hereof if, through no fault of the party seeking
termination, the Closing shall not have occurred; or
(c) by either Buyer or (together) all the Sellers if there shall be in
effect any Order of a Governmental Entity of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby or contemplated under any Transaction
Document.
10.2 PROCEDURE AND EFFECT OF TERMINATION In the event of termination of this
Agreement and abandonment of the transactions contemplated hereby by any or all
of the parties pursuant to Section 10.1 hereof, written notice thereof shall
forthwith be given to the other party or parties hereto and this Agreement shall
terminate and the transactions contemplated hereby shall be abandoned, without
further action by any of the parties hereto, except that all confidentiality
obligations for the protection of the respective parties and their Affiliates
shall remain in full force and effect and shall survive any termination of this
Agreement. If this Agreement is terminated as provided herein, then each of the
parties shall be relieved of their duties and obligations arising under this
Agreement after the date of such termination and such termination shall be
without liability to the parties hereto; provided, however, that, with respect
to any termination pursuant to Section 10.1(b) or (c), nothing in this Section
10.2 shall be deemed to constitute a waiver of any rights or remedies otherwise
available under this Agreement, by operation of law or otherwise, to the party
who so terminates.
11 MISCELLANEOUS PROVISIONS
11.1 AMENDMENT AND MODIFICATION This Agreement may be amended, modified or
supplemented at any time by the parties hereto. This Agreement may be amended
only by an instrument in writing signed on behalf of the parties hereto.
11.2 EXTENSION; WAIVER At any time prior to the Closing Date, the party entitled
to the benefits of the respective term or provision may (a) extend the time for
the performance of any of the obligations or other acts of the other party
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document, certificate or writing delivered pursuant
hereto or (c) waive compliance with any obligation, covenant, agreement or
condition contained herein. Any agreement on the part of any party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of the party entitled to the benefits of such extended or
waived term or provision.
11.3 ENTIRE AGREEMENT; ASSIGNMENT This Agreement (a) constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof (other than the
Confidentiality Agreement and the Transactional Documents) and (b) shall not be
assigned or transferred by Buyer by operation of law or otherwise; provided,
however, that Buyer may assign the benefits of the representations, warranties,
covenants and indemnities in this Agreement to Monitoring Acquisition
Corporation in connection with their investment in the business and operations
of Griptight and/or Monital; providing that the assignee shall remain subject to
all offsets and defenses which could have been asserted against the assignor and
no assignee shall acquire the status of a holder in due course". This Agreement
shall be binding upon and insure to the benefit of the parties and their
respective successors and permitted assigns.
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11.4 VALIDITY The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
11.5 NOTICES All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or by facsimile transmission or three (3) days after being mailed by registered
or certified mail (return receipt requested), postage pre-paid, to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice; provided that notices of a change of address shall be
effective only upon receipt thereof):
(a) if to Sellers other than First Court Limited or Maygarden Limited, to:
Xxxxxxx Xxxxxxx
Xx Xxxx'x Xxxxx
00 Xxxxxx Xxxxx
Xxxxxx on Xxxxxx
Xxxx, XX0 0XX
00000-000-000 (telephone)
00000-000-000 (facsimile)
Attention: Xxxxxxx Xxxxxxx
with copies to:
Xxxxxxx X. Xxxxxx, Esq.
Schiffman, Berger, Xxxxxxx, Xxxxxxx & Xxxxxx, P.C.
Three University Plaza, Suite 410
X.X. Xxx 000
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
000-000-0000 (telephone)
000-000-0000 (facsimile)
Attention: Xxxxxxx Xxxxxx
if to First Court Limited or Maygarden Limited, to:
XX Xxx 000
St Peter's House
Xx Xxxxxxx
St Xxxxx Port
Guernsey GY1 6AX
(b) if to Buyer, to:
Xxxxx Xxxxxxxxx
c/o WG&M Secretaries Limited,
Xxx Xxxxx Xxxxx
Xxxxxx, XX0X 0XX
Xxxxxxx
x00 (0) 000 000 0000 (telephone)
x00 (0) 000 000 0000 (facsimile)
Attention: Xxxxxxx Xxxxxx, Esq.
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with a copy to: K C Acquisition Corp.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxx
Xxx Xxxxxx
00000
Attention: Xxxxxx Few Senior
11.6 GOVERNING LAW This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
principles of conflicts of laws thereof.
11.7 ARBITRATION OF DISPUTES; SUBMISSION TO JURISDICTION; CONSENT TO SERVICE
OF PROCESS
(a) Any and all disputes or controversies arising under, out of, in connection
with or in relation to this Agreement shall be determined and settled by
binding arbitration, held in Bergen County, New Jersey, in accordance with
this Section 11.7 and in accordance with the Arbitration Rules of the
American Arbitration Association. Upon the occurrence of a dispute or
controversy, a party may submit the dispute or controversy for such
arbitration pursuant to this Section 11.7 by delivery of written notice to
the other party demanding an arbitration and specifying the controversy or
dispute to be arbitrated. Within ten (10) Business Days of the delivery of
such notice, the parties shall agree upon a single arbitrator. If the
parties are unable to select a single arbitrator within such ten (10) day
period, each party shall within five (5) Business Days thereafter select an
arbitrator and the arbitrators so chosen shall select the single
arbitrator. If any party fails to select an arbitrator, the arbitrator
chosen by the other party shall act as the sole arbitrator. The arbitration
shall be held in accordance with the rules of the American Arbitration
Association and judgment upon any award rendered by the single arbitrator
shall be valid, binding, final and non-appealable. No arbitrator shall have
authority to disregard or modify any provisions of this Agreement. The
arbitrator(s) shall have authority to award counsel fees and costs to the
prevailing party. The reference to the rules and procedures of the American
Arbitration Association shall not require arbitration by that entity unless
otherwise agreed by the parties.
(b) For the purpose of enforcement of any arbitral award hereunder, the parties
hereto hereby irrevocably submit to the exclusive jurisdiction of the
United States District Court for the District of New Jersey over any
dispute arising out of or relating to this Agreement or any of the
transactions contemplated hereby and each party hereby irrevocably agrees
that all claims in respect of such dispute or any suit, action or
proceeding related thereto may be heard and determined in such court. The
parties hereby irrevocably waive, to the fullest extent permitted by
applicable law, any objection which they may now or hereafter have to the
laying of venue of any such dispute brought in such court or any defence of
inconvenient forum for the maintenance of such dispute. Each of the parties
hereto agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law.
(c) Each of the parties hereto hereby consents to process being served by any
party to this Agreement in any suit, action or proceeding by the mailing of
a copy thereof in accordance with the provisions of Section 11.5 hereof.
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11.8 PUBLICITY Buyer and Sellers will consult with each other before issuing,
and provide each other a reasonable opportunity to provide input with respect
to, any press release or other public statements or filings with respect to the
transactions contemplated by this Agreement, and shall not issue any such press
release or make any such public statement or filing prior to providing such
opportunity, except as may be required by applicable law, court process or
obligations pursuant to the requirement of any stock exchange upon which the
securities of Buyer are listed.
11.9 DESCRIPTIVE HEADINGS The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
11.10 COUNTERPARTS This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement shall be
effective upon execution and delivery of either manually signed or
facsimile-signed signature pages.
11.11 FEES AND EXPENSES Whether or not the transactions contemplated by this
Agreement or the Transaction Documents are consummated, all legal, accounting
and other costs and expenses incurred in connection with the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses (save for the avoidance of doubt legal, accounting and brokerage fees
paid by Monital prior to 31 March 2000).
11.12 PARTIES IN INTEREST This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and all direct successors and assigns
and nothing in this Agreement, express or implied, is intended by or shall
confer upon any other Person any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed by
its duly authorised officers as of the date first above written.
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SELLERS:
---------------------------------------
XXXXXX XXXXX
---------------------------------------
XXXXXX XXXXX
---------------------------------------
XXXXX XXXXX
---------------------------------------
XXXXXXX XXXXX
---------------------------------------
MAYGARDEN LIMITED
By:
------------------------------------
Name:
Title:
---------------------------------------
FIRST COURT LIMITED
By:
------------------------------------
Name:
Title:
ESTATE OF XXXX XXXXX
By:
------------------------------------
Xxxxx Xxxxx
Surviving Spouse and Temporary
Executrix of the Estate of Xxxx Xxxxx,
Deceased
By:
------------------------------------
Xxxxxx Xxxxx
Co-executor of Last Will and Testament of Xxxx Xxxxx (UK)
By:
------------------------------------
Xxxxx Xxxxx
Co-executor of Last Will and Testament of Xxxx Xxxxx (UK)
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MTL ACQUISITION CORP:
By:
------------------------------------
Name:
Title:
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