EXHIBIT 10.2
SHARE PURCHASE AGREEMENT
by and among
P-Com, Inc., a Delaware corporation,
P-Com (UK) Services Limited, an English company,
R T Masts Limited, an English company
and
Certain Individuals and Entities Defined Herein
Dated as of October 14, 1997
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE, SALE AND SURRENDER OF SECURITIES................................ 3
Section 1.1 Purchase, Sale and Surrender of Securities................................ 3
Section 1.2 Waiver of Pre-Emption Provisions.......................................... 3
ARTICLE II PURCHASE PRICE............................................................ 4
Section 2.1 Consideration............................................................. 4
Section 2.2 Amount.................................................................... 4
ARTICLE III REPRESENTATIONS AND WARRANTIES............................................ 5
Section 3.1 Representations and Warranties of the Company and Each Securityholder..... 5
(a) Organization of Company................................................... 5
(b) Capital Structure......................................................... 6
(c) Authorization of Company and Securityholders.............................. 7
(d) Conflict.................................................................. 7
(e) No Consent Required....................................................... 7
(f) Financial Information..................................................... 8
(g) Absence of Certain Changes and Events..................................... 8
(h) Conduct of Business....................................................... 9
(i) Undisclosed Liabilities................................................... 9
(j) Inventory................................................................. 9
(k) Taxes..................................................................... 10
(l) General................................................................... 11
(m) Taxable Profits........................................................... 12
(n) Capital Assets............................................................ 12
(o) Capital Allowances........................................................ 13
(q) Distributions and ACT..................................................... 13
(r) Stamp Duty................................................................ 14
(s) Anti-avoidance............................................................ 14
(t) Inheritance Tax........................................................... 14
(u) Events Since 30 September 1996............................................ 14
(v) VAT....................................................................... 15
(w) VAT on Property........................................................... 16
(x) Customs Duties............................................................ 16
(y) Employee Matters.......................................................... 16
(z) Compliance With Law....................................................... 17
(aa) Governmental Consents..................................................... 17
(ab) Intellectual Property Rights.............................................. 17
(ad) Restrictive Documents or Orders........................................... 18
(ae) Contracts and Commitments................................................. 19
(af) Title to the Property..................................................... 19
(ag) Litigation................................................................ 23
(ah) Labor Relations........................................................... 23
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(ai) Brokers' and Finders' Fees/Contractual Limitations........................ 28
(aj) Interested Party Relationships............................................ 28
(ak) Certain Payments.......................................................... 28
(al) Products Liability........................................................ 29
(am) Product Warranties........................................................ 29
(an) Returns................................................................... 29
(ao) Customers................................................................. 29
(ap) Suppliers................................................................. 29
(aq) Books and Records......................................................... 29
(ar) Complete Disclosure....................................................... 29
(au) Insurance................................................................. 30
(av) Environmental Matters..................................................... 30
(aw) Backlog................................................................... 30
(ax) Accounts Receivable....................................................... 31
(ay) Regulation S.............................................................. 31
(az) No Directed Selling Efforts............................................... 31
(ba) Offshore Transaction...................................................... 31
(bb) Non U.S. Person........................................................... 32
(bc) Prior Agreements.......................................................... 34
(bd) Agents, Guarantees etc.................................................... 34
(be) Data Protection Act....................................................... 34
(bg) Purchase of Shares........................................................ 34
(bh) No Loans.................................................................. 35
(bi) No Partnership or Insider Contracts....................................... 35
(bj) No Market Conditioning.................................................... 35
(bk) Pooling of Interests...................................................... 35
Section 3.2 Representations and Warranties of P-Com................................... 35
(a) Organization.............................................................. 35
(b) Brokers' and Finders' Fees................................................ 36
(c) SEC Filings............................................................... 36
(d) Valid Issuance of Purchase Shares......................................... 36
(e) Authorization of P-Com and Purchaser...................................... 36
(f) Government Consents....................................................... 36
(g) Litigation................................................................ 37
(h) No Conflict or Default.................................................... 37
(i) Limitation on Liability................................................... 37
(j) Absent Fraud, Termination of Liability and Representations,
Warranties, Covenants and Agreements...................................... 37
(k) FIRPTA.................................................................... 37
ARTICLE IV COVENANTS.......................................................................... 38
Section 4.1 Covenants Against Disclosure.............................................. 38
Section 4.2 Accounts.................................................................. 38
Section 4.3 Non-Competition........................................................... 40
Section 4.4 Maintenance of Business................................................... 44
Section 4.5 Access to Information..................................................... 47
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Section 4.6 Regulation S Compliance................................................... 47
Section 4.7 Necessary Consents........................................................ 48
Section 4.8 Best Efforts.............................................................. 48
Section 4.9 Exclusivity; Acquisition Proposals........................................ 49
Section 4.10 Breach of Representations, Warranties, Agreements and
Covenants................................................................. 50
Section 4.11 Legal Conditions.......................................................... 50
Section 4.12 Shareholders' Meeting..................................................... 50
Section 4.13 No Transfer............................................................... 50
Section 4.14 Legal Conditions of the Company and the Securityholders................... 50
Section 4.15 Pooling Treatment......................................................... 51
ARTICLE V CLOSING............................................................................. 51
Section 5.1 Time of Closing........................................................... 51
Section 5.2 Deliveries by Company and Securityholders................................. 51
(a) Certificates and Instruments.............................................. 51
(b) Escrow Agreement.......................................................... 52
(c) Corporate Minute Books.................................................... 52
(d) Certificate of Good Standing.............................................. 52
(e) Closing Documents......................................................... 52
(f) Books and Records......................................................... 52
(g) Consents.................................................................. 52
(h) Certificate............................................................... 52
(j) Service Agreements........................................................ 52
(k) Deed of Tax Indemnity..................................................... 52
(l) Resignations.............................................................. 52
(m) Pooling Opinions.......................................................... 52
(n) Charges and Liens......................................................... 53
(o) Disclosure Letter......................................................... 53
(p) Bank Loans................................................................ 53
(q) Minutes................................................................... 53
(r) Deed of Resignation and Appointment of Trustees........................... 53
(s) Non-Competition Agreements................................................ 53
(t) Service Agreements........................................................ 53
(u) Other Documents........................................................... 53
Section 5.3 Sale of all Securities.................................................... 53
Section 5.4 Deliveries by Purchaser................................................... 54
Section 5.5 Further Assurances........................................................ 55
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS................................................ 55
Section 6.1 Conditions to Obligations of P-Com and Purchaser.......................... 55
(a) Certificates for Securities............................................... 55
(b) Representations and Warranties............................................ 55
(c) Performance of Agreement.................................................. 55
(d) No Material Adverse Effect................................................ 56
(e) Absence of Governmental or Other Objection................................ 56
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(f) Certificate of Managing Director and Securityholders...................... 56
(g) Execution of Escrow Agreement............................................. 56
(h) Third Party Consents...................................................... 56
(i) Proprietary Agreements.................................................... 56
(j) Securityholder Agreement.................................................. 56
(k) Documents................................................................. 56
(l) Schedules................................................................. 56
(m) Tax Forms................................................................. 56
(n) Other Matters............................................................. 57
(o) Tax Deed.................................................................. 57
(p) Pooling of Interests Transaction.......................................... 57
Section 6.2 Conditions to Obligations of the Company and the
Securityholders........................................................... 57
ARTICLE VII INDEMNIFICATION................................................................... 58
Section 7.1 Survival of Representations, Warranties, Covenants and
Agreements................................................................ 58
Section 7.3 Termination of Indemnity and Representations and Warranties............... 61
Section 7.4 Limitation on Indemnification............................................. 62
Section 7.5 Limitations............................................................... 62
ARTICLE VIII MISCELLANEOUS PROVISIONS......................................................... 64
Section 8.1 Notice.................................................................... 64
Section 8.2 Entire Agreement.......................................................... 65
Section 8.3 Binding Effect; Assignment................................................ 65
Section 8.4 Expenses of Transaction................................................... 65
Section 8.5 Waiver; Consent........................................................... 65
Section 8.6 Third-Party Beneficiaries................................................. 66
Section 8.7 Counterparts.............................................................. 66
Section 8.8 Severability.............................................................. 66
Section 8.9 Governing Law............................................................. 66
Section 8.10 No Reliance............................................................... 67
Section 8.11 Other Remedies............................................................ 67
Section 8.12 Mutual Drafting........................................................... 67
Section 8.13 Attorneys Fees............................................................ 67
Section 8.14 Appointment and Indemnity of Escrow Committee............................. 68
Section 8.15 Guarantee................................................................. 68
Section 8.16 Non-Competition Agreements................................................ 68
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EXHIBIT 2.2 ESCROW AGREEMENT
EXHIBIT 5.2 POWER OF ATTORNEY
[EXHIBIT 5.2(j)(i) PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT]
EXHIBIT 5.2(j)(ii) SERVICE AGREEMENTS
EXHIBIT 5.2(k) DEED OF TAX INDEMNITY
EXHIBIT 5.2(l) DEED OF RESIGNATION OF DIRECTORS AND OFFICERS
EXHIBIT 5.2(r) DEED OF RESIGNATION AND APPOINTMENT OF TRUSTEES
EXHIBIT 6.1(j) SECURITYHOLDER AGREEMENT
EXHIBIT 8.16 NON-COMPETITION AGREEMENTS
SCHEDULE 3.1 DISCLOSURE LETTER
SCHEDULE 3.1(b) CAPITAL STRUCTURE
SCHEDULE 3.1(j) INVENTORY
SCHEDULE 3.1(z) GOVERNMENTAL PERMITS
SCHEDULE 3.1(ab) INTELLECTUAL PROPERTY RIGHTS
SCHEDULE 3.1(ae) CONTRACTS
SCHEDULE 3.1(af) PROPERTIES
SCHEDULE 3.1(ah) EMPLOYEES
SCHEDULE 3.1(ao) CUSTOMERS
SCHEDULE 3.1(ap) SUPPLIERS
SCHEDULE 3.1(au) INSURANCE
SCHEDULE 3.1(aw) BACKLOG
SCHEDULE 3.1(ax) ACCOUNTS RECEIVABLE
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SHARE PURCHASE AGREEMENT
THIS AGREEMENT is dated as of October 14, 1997 by and among:
1. P-Com, Inc., a Delaware corporation, of 0000 X Xxxxxxxxxx Xxxxxxxxx,
Xxxxxxxx, Xxxxxxxxxx 00000, Xxxxxx Xxxxxx of America ("P-Com");
2. P-COM Services (UK) Limited, a company incorporated in England and Wales
with registered number 3416747 whose registered office is at Xxxxxxxxx
Xxxxx, 00 Xxxxxxxxxxx, Xxxxxx XX0X 0XX ("Purchaser");
3. R.T. Masts Limited, a company incorporated in England and Wales with
registered number 01981078 whose registered office is at 0/0 Xxxxxx Xxxxx,
Xxxx Xxxx Xxxxx, Xxxxxxxxxxxxxx, Xxxxxxxxx XX0 0XX (the "Company");
4. Xxxxxx Xxxxxxx Xxxxxxx of 00 Xxxxxxxx Xxxxxx, Xxxxxx Xxxxxxx, Xxxxxxxxxxx
XX0 0XX, Xxxx Xxxxxxx of 0 Xxxxxxx Xxx, Xxxxxxxx, Xxxxxx Xxxxxx XX00 0XX,
Xxxx Xxxxxx Xxxxxxx of 00 Xxxxxxxx Xxxxx, Xxxxxxxx Xxxx, Xxxxxxxxxxx XX0
0XX, Xxxxxxxxxx Xxxxxxx of 24 Magnolia Close aforesaid, Xxxxx Xxxxx Xxxxxxx
of 00 Xxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxxxxxxx XX0 0XX and Xxxxx Xxxxxxx of
32 Obelisk Rise aforesaid (in respect of the securities legally and
beneficially owned by them) (together called the "Non-Trustee
Securityholders");
5. Xxxxxxx Xxxxxx Xxxxxxx of 0 Xxxxxxx Xxx, Xxxxxxxx, Xxxxxx Xxxxxx XX00 0XX,
Xxxx Xxxxxxx, Xxxx Xxxxxx Xxxxxxx and Xxxxxx Xxxxxxx Xxxxxxx as trustees of
the trust known as the Xxxxxx Xxxxxxx Trust constituted on February 14,
1995;
6. Xxxxxxx Xxxxxx Xxxxxxx, Xxxx Xxxxxxx, Xxxx Xxxxxx Xxxxxxx and Xxxxxx
Xxxxxxx Xxxxxxx as trustees of the trust known as the Xxxx Xxxxxxx Trust
constituted on February 16, 1995;
7. Xxxx Xxxxxx Xxxxxxx and Xxxxxx Xxxxxxx Xxxxxxx as trustees of the trust
known as The Xxxxxxx 1997 Trust constituted on September 29, 1997;
8. Xxxxx Xxxxxxx and Xxxxx Xxxxx Xxxxxxx as trustees of the trust known as The
Xxxxxxx 1997 Interest in Possession Trust constituted on September 29,
1997;
9. Xxxx Xxxxxx Xxxxxxx and Xxxxxxxxxx Xxxxxxx as trustees of the trust known
as the Xxxx Xxxxxxx Trust constituted on September 29, 1997;
10. Xxxx Xxxxxx Xxxxxxx and Xxxxxxxxxx Xxxxxxx as trustees of the trust known
as the Xxxxx Xxxxxxx Trust constituted on September 29, 1997; and
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11. Xxxx Xxxxxx Xxxxxxx and Xxxxxxxxxx Xxxxxxx as trustees of the trust known
as the Xxxxxxx Xxxxxxx Trust constituted on September 29, 1997
(collectively, the persons in paragraphs 5 to 11 comprising the "Trustee
Securityholders" and the Non-Trustee Securityholders and the Trustee
Securityholders shall together be called the "Securityholders").
WHEREAS, Purchaser desires to acquire all of the rights of share ownership of
the Securityholders through the purchase by Purchaser of all of the issued share
capital of the Company and by payment for the surrender of all outstanding
options and all other rights to acquire share capital of the Company; and
WHEREAS, in furtherance thereof, and at the request of Purchaser, P-Com will pay
to each Securityholder consideration in the form of shares of the Common Stock
of P-Com for the issued share capital of the Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth
herein, the parties hereby agree as follows:
DEFINITIONS AND INTERPRETATIONS
1. In this Agreement, unless the context otherwise requires, the following
words and expressions shall have the following meanings:
"AGREED FORM" means in a form agreed by the relevant parties thereto and
initialled by or on behalf of such parties;
"OFFICE STAFF" means M Tillcock, R Xxxxx, R Xxxxxx, A Xxxxxx, N Tittertan, S
Doll, X X Xxxxxx, T Xxxxxx, A Dewin, S Xxxxx, A Edmead, N York, J Spick, A
Xxxxxx;
"PRINCIPAL SECURITYHOLDERS" means Xxxxxxx Xxxxxx Xxxxxxx, Xxxx Xxxxxxx, Xxxx
Xxxxxxx, Xxxxxx Xxxxxxx and Xxxxx Xxxxxxx;
"SECURITYHOLDERS' SOLICITORS" means Xxxxx Xxxxxxxx of 000 Xxxxx Xxxxx Xxxxxx,
Xxxxxxx Xxxx Xxxx, Xxxxxxx Xxxxxx Xxxxxx, XX0 0XX;
"WARRANTIES" means the representations and warranties set out in Section 3.1;
"SECURITYHOLDERS' ACCOUNTANTS" means Coopers and Xxxxxxx of Central Business
Exchange, Xxxxxxxxx Xxxxxxxxx, Xxxxxxx Xxxxxx Xxxxxx, XX0 0XX (or any successor
to such firm);
"NET ASSETS" means the aggregate of the following for the Company as shown in
the Agreed Execution Accounts and the Agreed Completion Accounts (as defined in
Section 4.2 and as appropriate) of the Company:
a) tangible fixed assets (less accumulated depreciation) plus
investments; plus
2
b) current assets; less
c) all liabilities.
2. Where any representation or warranty refers to the knowledge or awareness
of the Principal Securityholders the Principal Securityholders undertake that
(unless specifically provided otherwise) they have made due inquiry including
without limitation of Coopers & Xxxxxxx, Xxxxx Xxxxxxxx and Xxxxxxx Xxxxx.
3. References to the United Kingdom include to England and Wales, Great
Britain and each of the countries thereof a reference to each of the parts
thereof.
ARTICLE I PURCHASE, SALE AND SURRENDER OF SECURITIES
Section 1.1 Purchase, Sale and Surrender of Securities.
----------- ------------------------------------------
(a) Upon the terms and subject to the conditions of this Agreement,
the Securityholders shall sell to Purchaser and Purchaser shall purchase from
the Securityholders all of the shares in the share capital of the Company and
all other equity interests of the Company held by the Securityholders, and the
Securityholders shall surrender all options and other rights to purchase such
shares held by the Securityholders (collectively, the "Securities") at the
Closing (as defined in Section 5.1 hereof). The Securities shall be sold fully
paid free from all liens, charges, encumbrances and other equities of any
description together with the benefit of all rights and profits attaching
thereto including all rights to dividends and other distributions declared, made
or payable thereon but excluding rights to any dividends already paid.
(b) The Non-Trustee Securityholders shall sell with full title
guarantee for the purposes of the UK Law of Property (Miscellaneous Provisions)
Xxx 0000. The Trustee Securityholders shall sell with limited title guarantee
for the purposes of the UK Law of Property (Miscellaneous Provisions) Xxx 0000
free from all charges, liens and encumbrances. In this Section the covenants
implied under the Law of Property (Miscellaneous Provisions) Xxx 0000 by the
words "with full title guarantee" are limited to the covenants that would be
implied if the words "other than any charges, encumbrances or rights which that
person does not and could not reasonably be expected to know about" in Section
3(1) were omitted. In the case of sales by the Non-Trustee Securityholders and
sales by the Trustee Securityholders, Section 6(2) of the Law of Property
(Miscellaneous Provisions) Xxx 0000 shall be omitted.
Section 1.2 Waiver of Pre-Emption Provisions. Each of the Securityholders
----------- --------------------------------
hereby waives and undertakes to procure the waiver of all pre-emption and
similar rights over the Securities or any of them to which he or any other
person may be entitled under the Articles of Association of the Company or
otherwise in relation to the sale and purchase of the same pursuant to this
Agreement.
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ARTICLE II PURCHASE PRICE
Section 2.1 Consideration. Upon the terms and subject to the conditions
----------- -------------
contained in this Agreement, in consideration for the Securities and in full
payment therefor, Purchaser will pay, or cause to be paid, the purchase price
set forth in Section 2.2.
Section 2.2 Amount. The purchase price ("Purchase Price") for the Securities
----------- ------
shall consist of shares of Common Stock of P-Com to be issued directly from P-
Com at the request of Purchaser to each of the Securityholders of the Company,
in accordance with their pro rata ownership interest in the capital stock of the
Company (the "Purchase Shares").
The aggregate number of Purchase Shares payable to the Securityholders at
the Time of Closing shall be determined by dividing the amount of Nine Million
Two Hundred and Fifty Thousand British Pounds Sterling ((Pounds)9,250,000) by
the average closing sales price (ex dividend) of P-Com's Common Stock as quoted
on the National Association of Securities Dealers Automated Quotation System
National Market ("Nasdaq National Market") for the 30 trading days ending three
trading days prior to the Time of Closing, as adjusted for any stock splits,
stock dividends and other stock recapitalisations or reorganisations in such 30
trading days (the "Closing Date Average Price").
The Purchase Shares shall be paid as follows:
(i) One Hundred Percent (100%) of the total number of Purchase Shares
shall be issued at the Time of Closing. Purchase Shares of a value equal to
Nine Hundred Thousand British Pounds Sterling ((Pounds)900,000) as determined in
accordance with Section 2.2 shall be held in an escrow account (the
"Securityholder Escrow Shares") pursuant to an escrow agreement attached hereto
as Exhibit 2.2 (the "Escrow Agreement"). The balance of the Purchase Shares
shall be delivered to the Securityholders at the Time of Closing.
(ii) Except as set forth in this Agreement, the Securityholder Escrow
Shares shall be retained by the Escrow Agent (as defined in the Escrow
Agreement) and held until the earlier of March 31, 1998 and the date of filing
of Form 10-K that includes the independent accountants report for the
consolidated operation of P-Com and the Company for the fiscal year ended
December 31, 1997 in an escrow account pursuant to the Escrow Agreement as
collateral, in part, for the indemnification obligations set forth in this
Agreement and the Escrow Agreement.
(iii) For all conversions of currency from U.S. Dollars to British
Pounds Sterling and vice versa the exchange rate shall be the average closing
exchange rate for the 30 trading days ending 3 trading days prior to the Time of
Closing set out in the Currency Crossrates table of the European edition of the
Wall Street Journal.
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ARTICLE III REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Company and Each
----------- ------------------------------------------------------
Securityholder. Except as set forth fully and fairly in a letter (Schedule 3.1)
--------------
referring to a particular section of this Section 3.1 of this Agreement (the
"Disclosure Letter") delivered by the Company and the Securityholders to P-Com
and Purchaser signed as accepted by P-Com and Purchaser at the date of this
Agreement or at the Time of Closing (as applicable to the time of the
representations and warranties), Xxxxx X Xxxxxxx and Xxxxx Xxxxxxx hereby
severally and the Company and each other Securityholder hereby, jointly and
severally, represent and warrant to P-Com and Purchaser that:
(a) Organization of Company. The Company is a corporation
-----------------------
headquartered, duly organized and validly existing as a private company limited
by shares under the laws of England and Wales. Full details of the Company's
registered address, officers and shareholders are set out in the Disclosure
Letter. The Company has all requisite power and authority to own, operate and
lease its assets and to conduct its business in the manner in which it is now
conducted. The Company is not in default under its Memorandum or Articles of
Association. True and complete copies of the current Memorandum and Articles of
Association of the Company together with all amendments thereto have been
furnished to Purchaser or its counsel and attached to the Disclosure Letter.
The Company does not own or lease any assets or conduct any business in any
jurisdiction other than the United Kingdom. The Company owns all of the
outstanding equity interests of each Subsidiary, RT Masts (Property) Limited and
Skymasts Limited (collectively, the "Subsidiaries"), free and clear of all
liens, charges and encumbrances. Save for the Subsidiaries, the Company does
not have, never has had and has not agreed to acquire any subsidiaries or
subsidiary undertakings; nor is it or ever has been and has not agreed to become
the legal or beneficial owner of any share or loan capital of any company; and
nor does the Company control or take part in the management of any other company
or business organization and it has never done so or agreed to do so within the
six years prior to the date hereof. The Company and its subsidiaries do not
have any directors, shadow directors or alternate or associate directors other
than the persons listed in the Disclosure Letter. The Subsidiaries have been
dormant for at least six years prior to the date of this Agreement. The
information in the Disclosure Letter in relation to the Company and the
Subsidiaries headed "Corporate Structure" is true and accurate in all respects.
The Company has only one class of shares being ordinary shares. The Company
only carries on business in the United Kingdom. Each of the Company and each of
the Securityholders has no real property in the United States and has no
interest in any person, body or partnership who has any real property in the
United States.
So far as the Principal Securityholders and Office Staff are aware the
Company has not during a relevant time been a party to any transaction to which
the provisions of Sections 238 to 246 (inclusive) of the Insolvency Xxx 0000 may
be applicable. No order has been made or resolution passed or so far as the
Principal Securityholders and the Office Staff are aware petition presented for
the winding up or administration of the Company, no receiver or administrator or
administrative receiver has been appointed or an event occurred which
5
would entitle the same to be appointed by any person of the Company's business
or assets or any part thereof, the Company is not insolvent and has not stopped
payment and is not unable to pay its debts (within the meaning of Section 123 of
the Insolvency Act 1986) and the Company is capable of meeting its liabilities
as and when they fall due.
(b) Capital Structure.
-----------------
(i) As of the date of this Agreement, there were no shares
reserved for issuance upon the exercise of options in respect of shares of the
Company (the "Company Options"). There are no rights to purchase shares or
equity securities of Company (collectively, "Company Capital Stock"), other than
as described in the preceding sentence.
(ii) All issued shares of the Company are duly authorized,
validly issued, fully paid and not subject to preemptive rights created by the
Company's Articles of Association or to any agreement to which the Company is a
party or by which the Company may be bound. To the best of the Principal
Securityholders' knowledge all issued share capital has been issued in
compliance with applicable United Kingdom laws. There are no options, warrants,
calls, conversion rights, commitments or agreements of any character to which
the Company is a party or by which the Company may be bound that do or may
obligate the Company to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of the Company or that do or may obligate the Company
to grant, extend or enter into any such option, warrant, call, conversion right,
commitment or agreement, other than those described in Section 3.1(b)(i) above.
No person has any right to call for the issue of any debenture or share or loan
capital of the Company. The Securities represent 100% of the issued share
capital of the Company. The Securityholders of the Company and their holdings
are as shown in Schedule 3.1(b). Each Securityholder who is an individual is a
citizen and all Securityholders are residents of the United Kingdom.
(iii) Except for any restrictions imposed by applicable United
Kingdom laws, there is no right of first refusal, co-sale right, right of
participation, right of first offer, option or other restriction on transfer
applicable to any shares of the Company's share capital.
(iv) The Company is not a party or subject to any agreement or
understanding, and there is no agreement or understanding between or among any
persons that affects or relates to the voting or giving of written consent with
respect to any issued share capital of the Company.
(v) The Trustee Securityholders described as trustees of the
trusts referred to in the list of parties above are the continuing and current
trustees of each trust in respect of which they are described as being trustees
and there are no other trustees of any such trust. In respect of each such
trust, the Trustee Securityholders described as trustees of each such trust are
the registered holders of the Securities held by each such trust and they hold
the Securities contained in each such trust free from all charges, liens and
encumbrances.
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(c) Authorization of Company and Securityholders. The Company and
--------------------------------------------
each Securityholder has in each capacity in which they enter into this Agreement
and collectively the trustees in respect of each of the trusts referred to at
the start of this Agreement have full power and authority to enter into this
Agreement and the Escrow Agreement, to perform their obligations hereunder and
thereunder, and to consummate the transactions contemplated hereby and thereby,
including, without limitation, the execution and delivery of this Agreement and
the stock transfers, and other deeds, documents and instruments delivered in
accordance with Section 5.2 hereunder (the "Closing Documents") and the Escrow
Agreement. Each of the Company and the Securityholders has taken all necessary
and appropriate action with respect to the execution and delivery of this
Agreement, the Escrow Agreement and the Closing Documents. This Agreement, the
Escrow Agreement and each of the Closing Documents constitute valid and binding
obligations of the Company and the Securityholders, enforceable in accordance
with their respective terms, except as limited by applicable bankruptcy,
insolvency, moratorium, reorganization, or other laws affecting creditors'
rights and remedies generally or equitable principles affecting enforcement of
restrictive covenants.
(d) Conflict. Subject to satisfaction of the conditions set forth in
--------
this Agreement, the execution, delivery and performance of this Agreement, the
Escrow Agreement and the Closing Documents by the Company and the
Securityholders does not, and the performance and consummation of the
transactions contemplated hereby will not, conflict with or result in any
violation of any material statute, law, rule, regulation, judgment, order,
decree, or by-law of the United Kingdom applicable to the Company or any
Securityholder or its respective properties or assets, or conflict with or
result in any conflict with, breach or violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation, forfeiture or acceleration of any material obligation or the loss
of a material benefit under, or result in the creation of a lien or encumbrance
on any of the properties or assets of the Company or the Securities of any
Securityholder pursuant to (i) any provision of the Memorandum or Articles of
Association of the Company or (ii) any agreement, contract, note, mortgage,
indenture, lease, instrument, permit, concession, franchise or license to which
the Company or any Securityholder is a party or by which the Company or any
Securityholder or any of the Company's respective properties or assets or the
Securityholders' Securities may be bound or affected.
(e) No Consent Required. No consent, approval, order or authorization
-------------------
of, or registration, declaration of, or qualification or filing with, any third
party, court, administrative agency, commission, regulatory authority or other
governmental or administrative body or instrumentality, of the United Kingdom (a
"Governmental Entity"), is required by or with respect to the Company or any
Securityholder or any Subsidiary in connection with the execution, delivery and
performance of this Agreement, the Escrow Agreement and the Closing Documents by
the Securityholders or the Company or the consummation by the Securityholders or
the Company of the transactions contemplated hereby and thereby. No consent,
approval or authorization of the Company's Board of Directors (or any committee
thereof), Securityholders or of any third party is required in connection with
the Securityholders' and the Company's consummation of the transactions
contemplated hereunder that has not been obtained or (where capable of waiver)
waived by the Closing.
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(f) Financial Information. The Company has furnished to Purchaser a
---------------------
complete and accurate copy of its audited balance sheet and profit and loss
accounts as of September 30, 1994, 1995 and 1996 (the "Financial Statements")
and its Company-prepared balance sheet and profit and loss account for the
eleven month period ended August 31, 1997 (the "Management Accounts"). The
Financial Statements have been prepared in accordance with generally accepted
accounting principles in the United Kingdom ("GAAP") consistently applied and
give a true and fair view of the financial position of the Company as at the
dates thereof and the Company's results of operations for the periods then ended
and are consistent with the books and records of the Company and the Management
Accounts show with reasonable accuracy the financial position of the Company and
have been prepared in accordance with GAAP consistently applied. The projections
of the Company were prepared in good faith and are based on reasonable
assumptions.
(g) Absence of Certain Changes and Events. Except as contemplated
-------------------------------------
herein, since September 30, 1996, there has not been:
(i) Any material adverse change in the financial position of the
Company;
(ii) Any event, including, without limitation, shortage of
materials or supplies, fire, explosion, accident, requisition or taking of
property by any governmental agency, flood, drought, earthquake, or other
natural event, riot, act of God or a public enemy, or damage, destruction, or
other casualty, whether covered by insurance or not, which has had a material
adverse effect on the business or assets of the Company;
(iii) Any material transaction relating to the business of the
Company (other than the transactions contemplated herein) which was entered into
or carried out by the Company other than in the ordinary and usual course of
business;
(iv) Any change made by the Company in its method of operating
its business or its accounting practices relating thereto;
(v) Any mortgage, pledge, debenture, lien, security interest,
hypothecation, charge or other encumbrance imposed or agreed to be imposed on or
with respect to the assets of the Company other than liens arising with respect
to taxes not yet due and payable, and such minor liens and encumbrances, if any,
which arise in the ordinary course of business and are not material in nature or
amount either individually or in the aggregate, and which do not detract from
the value of the assets of the Company or impair the operations conducted
thereon or any discharge or satisfaction thereof;
(vi) Any sale, lease, or disposition of, or any agreement to
sell, lease, or dispose of any of the assets of the Company, other than sales,
leases, or dispositions in the usual and ordinary course of business and
consistent with prior practice;
(vii) Any modification, waiver, change, amendment, release,
8
rescission, accord and satisfaction, or termination of, or with respect to, any
material term, condition, or provision of any contract, agreement, license, or
other instrument to which the Company is a party and relating to or affecting
the business or the assets of the Company, other than any satisfaction by
performance in accordance with the terms thereof in the usual and ordinary
course of business and consistent with prior practice;
(viii) Any labor disputes or disturbances materially affecting in
an adverse fashion the business or the financial condition of the Company;
(ix) Any notice (written or unwritten) from any employee of the
Company who provides any services to the Company that such employee has
terminated, or intends to terminate, such employee's employment with the
Company;
(x) Any written notice or, so far as the Principal
Securityholders and the Office Staff are aware, any unwritten notice from any of
the Company's suppliers that any such supplier will not continue to supply the
current level and type of goods currently being provided by such supplier to the
Company on terms and conditions no less favourable to the Company;
(xi) So far as the Company and the Securityholders are aware any
adverse relationships or conditions with customers that may have a material
adverse effect on the business, prospects or assets of the Company;
(xii) Any other event or condition of any character which
materially adversely affects the assets or the results of operations, prospects
or financial condition of the Company; or
(xiii) Any purchase or lease of or any agreements to purchase or
lease capital assets relating to the business of the Company in excess of
(Pounds)10,000 individually, or in excess of (Pounds)25,000 in the aggregate.
(h) Conduct of Business. At all times since December 31, 1996, the
-------------------
Company has conducted its business in the ordinary course thereof and used
reasonable commercial efforts to preserve intact the organization of its
business and the goodwill of its customers, suppliers, and others having
material business relations with the Company.
(i) Undisclosed Liabilities. There will be no debts, liabilities, or
-----------------------
obligations to repay money of the Company, whether liquidated, unliquidated,
accrued or absolute that are not specifically identified in the Exchange
Accounts and the Completion Accounts. There are no contingent liabilities.
(j) Inventory. Schedule 3.1(j) lists all inventory owned by the
---------
Company relating to the business of the Company, including goods supplied to the
Company by suppliers, goods on consignment, and all other goods customarily sold
by the Company (whether located on the business premises of the Company, in
transit to or from such business
9
premises, in other storage facilities, or otherwise) (collectively, the
"Inventory") and identifies whether such Inventory is owned by the Company or
held on consignment. The Inventory is valued at a current file cost basis
(meaning latest supplier price less trade discounts) (and not on a last-in
first-out basis) or market, whichever is lower, with adequate allowances for
excess and obsolete materials and materials below standard quality in accordance
with GAAP and the accounting policies of the Company consistently applied. The
quality and quantity of the Inventory is such that the Inventory is readily
usable and saleable in the ordinary course of business of the Company, except
such amounts as are reserved in accordance with GAAP consistently applied. All
Inventory materially in excess of reasonable estimated requirements for the
Company based on current operations as of the date hereof are set forth in
Schedule 3.1(j). Except as disclosed in Schedule 3.1(j), the Company holds no
Inventory manufactured to customer specifications effectively rendering the
Inventory saleable only to that customer. The Company has continued to
replenish the Inventory in a normal and customary manner consistent with past
practices.
(k) Taxes.
-----
(i) Definitions. For purposes of this Agreement:
-----------
a. the term "Taxes" means (A) all United Kingdom or
foreign, local and other net income, gross income, corporation, advance
corporation, value added, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service, service use, withholding, payroll,
employment, PAYE, capital gains, excise, severance, stamp, occupation, premium,
property, customs, duties or other taxes, fees, assessments or charges of any
kind whatever, together with any interest and any penalties, additions to tax or
additional amounts with respect thereto, (B) any liability for payment of
amounts described in clause (A) whether as a result of secondary liability, of
being a member of an affiliated, consolidated or combined group for any period,
or otherwise through operation of law, and (C) any liability for the payment of
amounts described in clauses (A) or (B) as a result of any tax sharing, tax
indemnity or tax allocation agreement or any other express or implied agreement
to indemnify any other person; and the term "Tax" means any one of the foregoing
Taxes; and
(ii) The Company has properly completed and filed on a timely
basis and in correct form all returns, given all notices and supplied all other
information required to be supplied to any competent fiscal authority in any
part of the world required to be filed on or prior to the Time of Closing. As of
the time of filing, the foregoing information, returns and notices were correct
and complete in all material respects, made on a proper basis and correctly
reflected the facts regarding the income, the business and assets of the
Company, operations, activities, status or other matters of the Company or any
other information required to be shown thereon. All Taxes due or payable and all
interest and penalties thereon have been duly paid by the Company within the
time limits set out by law.
(iii) So far as the Principal Securityholders and the Office
Staff are aware, with respect to all amounts in respect of Taxes imposed upon
the Company, or for which the Company is or could be liable, whether to taxing
authorities (as, for example, under
10
law) or to other persons or entities (as, for example, under tax allocation
agreements), with respect to all taxable periods ending on or before the Time of
Closing and portions of periods commencing before the Time of Closing and ending
after the Time of Closing, all applicable tax laws and agreements have been
fully complied with, and all such amounts required to be paid by the Company to
taxing authorities or others on or before the Closing have been paid, and all
such amounts required to be paid by the Company to taxing authorities or others
after the Closing which have not been paid are reflected on the Financial
Statements.
(iv) Definitions.
-----------
"ACT" means advance corporation tax;
"CAA" means the Capital Xxxxxxxxx Xxx 0000;
"IHTA" means the Inheritance Tax Xxx 0000;
"Revenue" means all fiscal authorities (national or local) of the United Kingdom
or elsewhere;
"Taxes Act" means the Income and Corporation Taxes Xxx 0000;
"TCGA" means the Taxation of Chargeable Gains Xxx 0000;
"VAT" means value added tax;
"VATA" means the Value Added Tax Xxx 0000.
(l) General.
-------
(i) The Company is not the subject of a back duty investigation
or in depth enquiry by any fiscal authority and there are no known facts which
may give rise to the same.
(ii) All income tax under the PAYE system and payments due in
respect of employees' contributions to national insurance and graduated state
pension have been properly deducted by the Company and (together with any
employers contribution) have been fully and correctly paid to the appropriate
authority and proper records thereof have been maintained.
(iii) All taxation required to be deducted from any payments made
by the Company which it is obliged or entitled to make under Schedules 13 and 16
of the Taxes Act has been deducted and accounted in full to the appropriate
authority.
(iv) The Company has never been requested to furnish information
pursuant to notices served under Section 745 or 778 Taxes Act.
(v) No transactions have been undertaken falling within Sections
765 or 765A Taxes Act.
(vi) The Company is not and has at no time been an investment
company, a close investment company or an investment trust company for taxation
purposes.
(vii) The Company has not taken any action which has had, or
might
11
have, the result of altering or prejudicing or in any way disturbing any
arrangement or agreement which it has previously negotiated with the Revenue.
(viii) The taxation computations for all accounting periods of
the Company ended on or before the last Financial Statements date have been
agreed with the Revenue.
(ix) The Company is and has always been resident only in the
United Kingdom for taxation purposes and has never carried on any trade,
business or other activities outside the United Kingdom other than the export of
its goods and/or services in the ordinary and normal course of its business.
(m) Taxable Profits.
---------------
(i) The Company has not directly or indirectly paid any
remuneration, emoluments or compensation for loss of office or made any
gratuitous payment or transferred any assets to any of its present or former
directors or employees, the cost of which will not be deductible for taxation
purposes.
(ii) There have been no events or circumstances such that Section
343 Taxes Act has been or could be applied.
(iii) The Company has not made and is under no obligation
pursuant to which it is or at any time may become liable to make any payment of
interest, annuity or other annual payment such as may be disallowed as a
deduction as a set-off or as a charge on income or otherwise be unrelieved for
corporation tax purposes whether by virtue of Section 125 or Section 787 Taxes
Act or otherwise.
(iv) No transactions or arrangements involving the Company have
taken place or are in existence such that the provisions of Section 770 Taxes
Act could be or have been applied.
(v) The Company has no trading loss for taxation purposes.
(n) Capital Assets.
--------------
(i) There are no chargeable assets for the purposes of Section
210 TCGA held by the Company which have been subject to rollover claims under
Sections 152 and 153 TCGA and its predecessor Sections.
(ii) No asset has been acquired otherwise than by way of a
bargain made at arms length and for a consideration equal to its market value.
(iii) The Company is not subject to any contingent liability as
is mentioned in Section 49 TCGA.
12
(iv) The Company has not effected or been a party to any demerger
such as is mentioned in Section 213 to 218 Taxes Act.
(v) The Company will not be subject to corporation tax on the
disposal of any debt owing to the Company.
(vi) Each and every loan made by the Company is a "qualifying
loan" for the purpose of Section 253 TCGA.
(vii) The Company is not entitled to any loss to which Section
18(3) TCGA applies.
(viii) The Company does not own and has not owned and has never
issued any qualifying corporate bonds (as defined in Section 117 TCGA).
(o) Capital Allowances.
------------------
(i) The Company has not been a party to or involved in any
transaction whereby a balancing allowance would be denied or reduced by virtue
of Section 5 CAA.
(ii) No allowances have been claimed by the Company which are
liable to be reduced or withdrawn by virtue of Sections 1(6), 42 or 47 CAA.
(iii) No capital expenditure has been incurred which is subject
to the provisions of Section 75 CAA.
(p) [Deleted]
(q) Distributions and ACT.
---------------------
(i) No event or series of events has occurred which might cause
the disallowance of the carry forward of losses or excess charges or such that
any of Sections 245 or 245A or 245B Taxes Act have applied or could apply.
(ii) The Company has not issued any share capital to which the
provisions of Section 249 Taxes Act or Section 141(1) TCGA could apply nor does
it own any such share capital nor granted options or rights to any person which
entitles that person to require the issue of any share capital.
(iii) The Company will be entitled in respect of any qualifying
distribution made by it to a full set off of its corresponding payments of ACT
under Section 239(1) Taxes Act or in so far as there is no set off under Section
239(1) or in so far as any set off is restricted under Section 239(3).
13
(r) Stamp Duty.
----------
All instruments (other than those which have ceased to have a
legal effect) executed by the Company (and which are or were subject to stamp
duty) have been duly stamped and the Company has not executed any other
instrument relating to any property situation in or to any matter or thing done
or to be done in any part of the United Kingdom.
(s) Anti-avoidance.
--------------
The Company has not been party to any other transaction or
arrangement of any nature which could give rise to a charge to taxation under
Part XVII Taxes Act.
(t) Inheritance Tax.
---------------
(i) The Company has not entered into any transaction which has
given or will or may give rise to a charge to taxation under the provisions of
the IHTA.
(ii) There is no Inland Revenue charge as defined in Section 237
of the Inheritance Tax Xxx 0000 outstanding in respect of any asset of the
Company or the Shares.
(iii) There are not in existence any circumstances whereby the
power mentioned in Section 212(1) of the Inheritance Tax Act 1984 could be
exercised in relation to the Shares or any assets of the Company.
(u) Events Since 30 September 1996.
------------------------------
Since 30 September 1996:
(i) The Company has not disposed of any asset (including trading
stock) or made any supply of any service or business facility of any kind
(including loan of money or the letting, hiring or licensing of any property
whether tangible or intangible) in circumstances where the consideration
actually received or receivable for such disposal or supply is less than the
consideration which could be deemed to have been received for the purposes of
taxation;
(ii) No event has occurred which gives rise to a liability to
taxation to the Company on deemed (as opposed to actual) income, profits or
gains or which results in the Company becoming liable to pay or bear a liability
to taxation directly or primarily chargeable against or attributable to another
person, firm or company;
(iii) The Company has not made or received any distributions for
any taxation purpose;
14
(iv) The Company has not surrendered or claimed any ACT under
Chapter V Taxes Act or any losses by way of group relief under the Taxes Act;
and
(v) The Company has not paid any remuneration (including
emoluments as defined by Section 131 and Sections 153 to 168 Taxes Act) to any
officer, director or employee or to any member of his family or household in
excess of such amount as will be deductible in computing the taxable profits of
the Company.
(v) VAT.
---
(i) In relation to VAT the Company has complied with all
statutory provisions, rules, regulations, orders and directions and made all
necessary returns and within the prescribed time limits provided all necessary
information and documents to H M Customs and Excise and paid all amounts due to
the proper person.
(ii) The Company has at all times kept complete correct and up to
date records, invoices and other documents required for the purposes of VAT.
(iii) The Company has not been required by H M Customs and Excise
to give security under paragraph 4 of Schedule 11 to the VATA.
(iv) All VAT payable upon the importation of goods has been paid
in full.
(v) No act or transaction has been effected in consequence
whereof the Company is or may be held liable for any VAT calculated by reference
to the supply of goods and services by any other company.
(vi) The Company is not liable:
a. to interest under Section 74 VATA; or
b. to a surcharge under Section 59 VATA.
(vii) Neither the Company nor any of its officers or directors is
or will (in respect of anything done before Closing) be liable to a penalty
under Section 16 VATA or Section 61 VATA.
(viii) The Company is not and has not at any time been a member
of a group of companies for VAT purposes.
(ix) The Company is not and has not agreed to become an agent,
manager or factor for the purposes of Section 47 VATA of any person who is not
resident in the United Kingdom.
(x) No act or transaction has been effected in consequence of
which
15
the Company is or may be held liable by the Commissioners of Customs and Excise
for any VAT calculated by reference to the supply of goods or services by any
other company.
(w) VAT on Property.
---------------
(i) The Company does not own the fee simple in any building or
civil engineering work which is uncompleted or which was completed (within the
meaning of Note (4) to Group 1 Schedule 9 VATA) less than three years before the
date of this Agreement.
(ii) The Company has not made any election under paragraph 2
Schedule 10 VATA to waive exemption from VAT in relation to any land and no such
election has been made in relation to any land by any member or former member of
any group of companies of which the Company is or was registered for VAT
purposes.
(iii) The Company has not given or accepted any certificate as to
zero rating under the provisions referred to in Section 62 VATA.
(iv) The representations and warranties contained in this
paragraph shall apply as if references to the Company include not only the
Company but also every other company which is or was at any time a member of the
same group of companies for VAT purposes or for which an application to become
such a group member has been made within the preceding three months (including
without limitation any parent of the Company or parent or subsidiary of such
parent).
(x) Customs Duties.
--------------
The Company has complied with all statutory provisions, rules,
regulations, orders and directions and made all necessary returns in relation to
the collection and payment of Customs duties, Excise duties and other charges
having an equivalent effect and the Company has provided all necessary
information and documents and paid all amount due to H M Customs and Excise in
relation to such charges within the prescribed time limits.
(y) Employee Matters.
----------------
(i) The hours worked by the Company employees have not been in
material breach of any applicable European, United Kingdom or local laws dealing
with such matters.
(ii) All payments due from the Company on account of private
employee health and welfare insurance have been paid.
(iii) All severance and holiday payments by the Company which are
or were due under the terms of any agreement or otherwise have been paid in
full.
16
(z) Compliance With Law. Schedule 3.1(z) sets forth all of the
-------------------
Company's franchises, licenses, permits, use permits, consents, authorizations,
and approvals of any United Kingdom, German or Eire or local regulatory,
administrative, or other governmental agency or body (collectively referred to
herein as "Governmental Permits"). The Company has complied and is in
compliance in all material respects with all applicable United Kingdom, German
and Eire and, to the best of the Principal Securityholders' and the Office
Staff's knowledge, local laws, statutes, licensing requirements, rules, and
regulations, and judicial or governmental administrative decisions and
applicable decisions of the European court. To the best of the Principal
Securityholders' and Office Staff's knowledge, the Company has been granted all
licenses, permits (temporary and otherwise), authorizations, and approvals from
United Kingdom, German and Eire and local government regulatory bodies necessary
to carry on its business and maintain its assets, all of which are currently
valid and in full force and effect. All such licenses, permits, authorizations,
and approvals shall, to the best of the Principal Securityholders' and Office
Staff's knowledge, not be adversely impacted by the change in ownership of the
Company's issued share capital provided under this Agreement. There is no order
or notice served on the Company or to the best of the Principal Securityholders'
and Office Staff's knowledge order issued, investigation, or proceeding pending
or threatened with respect to any violation of any law, ordinance, order, writ,
decree, directive, rule, or regulation issued by any United Kingdom, German,
Eire, European, or local court or governmental agency applicable to the Company.
The Company does not directly export or import goods or services from or to the
United Kingdom. The Company has no taxable presence outside the United Kingdom.
(aa) Governmental Consents. To the best of the Principal
---------------------
Securityholders' and Office Staff's knowledge, no consent, approval, order, or
authorization of, or registration, qualification, designation, declaration, or
filing with any United Kingdom, German, Eire, European or local governmental
authority on the part of the Company or any Securityholder is required in
connection with the consummation of the transactions contemplated hereunder.
(ab) Intellectual Property Rights.
----------------------------
(i) To the best of the Principal Securityholders' and Office
Staff's knowledge, the Company owns, or is licensed or otherwise entitled to
exercise, without restriction all rights it does exercise to, all patents,
trademarks, trade names, service marks, copyrights, trade secret rights and
other intellectual property rights, and any applications or registrations
therefor, and all schematics, technology, source code, know-how, computer
software programs and all other tangible and intangible information or material
used or usable in the Company's business (collectively, the "Intellectual
Property Rights") without any conflict or infringement of the rights of others.
All of such patents, trademarks, trade names, service marks and proprietary
computer software and applications therefor are set forth in Schedule 3.1(ab).
(ii) [Deleted]
(iii) [Deleted]
17
(iv) The Company has taken all actions and made all applications
and filings pursuant to applicable laws to perfect or protect their interests in
Intellectual Property Rights listed in Schedule 3.1(ab).
(v) No claims with respect to the Intellectual Property Rights
have been asserted or threatened by any person against the Company, and neither
the Principal Securityholders nor any of the Office Staff knows of any claims
(i) to the effect that the manufacture, marketing, license, sale or use of any
product as now used or offered for sale by the Company infringes any copyright,
patent, trade secret, or other intellectual property right of any third party or
violates any license or agreement with any third party, (ii) contesting the
right of the Company to use, sell, license or dispose of any Intellectual
Property Rights, or (iii) challenging the ownership, validity or effectiveness
of any of the Intellectual Property Rights.
(vi) To the best of the knowledge of the Principal
Securityholders and the Office Staff:
a. there has not been and there is not now any unauthorized
use, infringement or misappropriation of any of the Intellectual Property
Rights by any third party, including, without limitation, any service
provider of the Company;
b. the Company has not been sued or charged as a defendant
in any claim, suit, action or proceeding which involves a claim of
infringement of any patents, trademarks, service marks, copyrights or other
intellectual property rights and which has not been finally terminated
prior to the date hereof; there are no such charges or claims outstanding;
and
c. the Company does not have any infringement liability
with respect to any patent, patent application, trademark, service xxxx,
copyright or other intellectual property right of another.
(vii) No Intellectual Property Right other than the non-
proprietary computer software is subject to any outstanding order, judgment,
decree, stipulation or agreement restricting in any manner the licensing thereof
by the Company. The Company has not entered into any agreement to indemnify any
other person against any charge of infringement of any Intellectual Property
Right. The Company has not entered into any agreement granting any third party
the right to bring infringement actions with respect to, or otherwise to enforce
rights with respect to, any Intellectual Property Right. The Company has the
exclusive right to file, prosecute and maintain all applications and
registrations with respect to the Intellectual Property Rights.
(ac) [Deleted]
(ad) Restrictive Documents or Orders. Neither the Company nor any
-------------------------------
Securityholder is a party to or bound under any agreement, contract, order,
judgment, or
18
decree, or any similar restriction not of general application which adversely
affects, or reasonably could be expected to adversely affect the continued
operation by the Company of its business after the Time of Closing on
substantially the same basis as said business was theretofore operated.
(ae) Contracts and Commitments.
-------------------------
(i) There is set forth on Schedule 3.1(ae) a list of all
outstanding written contracts not terminable by giving less than three months'
notice and of all material contracts (with an individual purchase or sale value
or aggregate sale or purchase value with any party in excess of (Pounds)25,000
(excluding value added tax)), whether or not in writing, to which the Company or
any of the Securityholders is a party, to which any of the Company's assets are
subject or that relate to any aspect of the business of the Company (the
"Contracts"). Each such Contract is valid and binding on all parties thereto and
in full force and effect.
(ii) The Company and each Securityholder, as the case may be, has
performed all of its material obligations under the terms of each Contract, and
is not in material default thereunder. To the best of the Principal
Securityholders' and the Office Staff's knowledge, no event or omission has
occurred which but for the giving of notice or lapse of time or both would
constitute a default by any party thereto under any such Contract. The Company
has received no written (or so far as the Principal Securityholders and the
Office Staff are aware unwritten notice) of default, cancellation, or
termination in connection with any such Contract. The Company has paid, or will
pay, all debts and performed all obligations required in accordance with its
normal business practice as of the Time of Closing under the terms of all
Contracts.
(iii) The Company has performed all of its material obligations
under the terms of each contract not limited to those defined in Section
3.1(ae)(i) above, and is not in material default thereunder. To the best of the
Principal Securityholders' and the Office Staff's knowledge, no event or
omission has occurred which but for the giving of notice or lapse of time or
both would constitute a material default by any party thereto under any such
contract. The Company has received no written (or so far as the Principal
Securityholders and the Office Staff are aware unwritten notice) of default,
cancellation, or termination in connection with any such contract. The Company
has paid, or will pay, all debts and performed all obligations required in
accordance with its normal business practice as of the Time of Closing under the
terms of all such contracts.
(iv) Schedule 3.1(ae) also lists all sole or limited source
suppliers.
(af) Title to the Property.
---------------------
(A) Schedule 3.1(af) hereto lists all leases of property to which
the Company is a party (each a "Property" and together the "Properties"). The
Company has good and marketable title to the Property and has not entered into
an agreement to sell or
19
lease or otherwise dispose of its title to any of the Properties. Save as
contained in the copy leases and the HMLR land or charge certificates supplied
to Purchaser or its solicitors so far as the Principal Securityholders and the
Office Staff are aware there are no material restrictions on the use of the
Properties which prevent or impair the carrying on of the business now conducted
by the Company or any other matter which prevents to a material extent the use
of such properties for the purpose now used. The Company has not received any
outstanding written notice of any alleged breach of any of the covenants or
conditions in any of the leases so copied.
(B) [Deleted]
(C) So far as the Principal Securityholders and the Office Staff
are aware neither the whole nor any portion of the Properties has been or is
likely to be condemned or otherwise taken by any public authority.
(D) No notices of violation relating to any laws or regulations
relating to planning permissions or use or calling attention to the need for any
work, repairs, constructions, alterations or installations, have been received
by the Company.
(E) Other property information.
(1) The Company owns no freehold property.
(2) The Securityholders' solicitors have supplied Purchaser's
counsel prior to the date of this Agreement with a complete and accurate
copy of the Charge Certificate in respect of Unit No. 2 (3 Xxxxxx Close)
and the Lease dated 1 September 1986 in respect of Unit No. 3 (3 Xxxxxx
Close).
(3) There are no matters of which the Principal
Securityholders and Office Staff are aware which cast any doubt on the
right or title of the Company to the Properties.
(4) So far as the Principal Securityholders and Office Staff
are aware, the Company is not under any liability (actual or contingent) in
respect of any obligation which it may have undertaken as tenant, licensee,
assignee or surety relating to any property other than the Properties.
(F) Title.
All material documents of title to the Properties shall if
required be produced to Purchaser's solicitors for inspection on or before
Closing and, save where they are held by mortgagees, all such documents are
in the possession or under the control of the Company.
(G) Encumbrances.
20
(1) The Company has exclusive possession and occupation of
all the Properties and save as referred to in the Schedule 3.1(af), none of
the Properties is subject to any lease, tenancy, license to occupy or
agreement to grant any of them.
(2) So far as the Principal Securityholders and the Office
Staff are aware the Properties are not save as contained in the documents
referred to in sub-paragraph (af)(A) above subject to any covenants,
licenses, easements, charges, overriding interests and other rights
affecting the same.
(3) The Company's title to the Properties are not subject to
any options, rights of pre-emption or rights of first refusal.
(4) Save as contained in the documents referred to in the
document referred to in sub-paragraph (af)(A) above, there are no outgoings
affecting the Properties which are of an unusual and onerous nature.
(5) [Deleted]
(6) So far as the Principal Securityholders and the Office
Staff are aware, light and air to all windows and apertures of the
Properties and pedestrian and vehicular access to and egress from the
properties are in each case enjoyed as of right.
(H) Disputes.
(1) So far as the Principal Securityholders and the Office
Staff are aware, there are no disputes concerning boundaries, easements,
covenants, rights, means of access or other similar matters relating to the
Properties or their use or occupation and so far as the Principal
Securityholders and the Office Staff are aware, no such disputes are
anticipated or pending.
(I) Planning.
(1) In this paragraph:
"development" has the meaning given by Section 55 of the Town and
-----------
Country Planning Xxx 0000; and
"Planning Acts" means the Town and Country Planning Acts 1990 the
-------------
Planning (Listed Buildings and Conservation Areas) Xxx 0000, the Planning
(Hazardous Substances) Xxx 0000, the Planning (Consequential Provisions)
Xxx 0000 and all other statutes referred to in any of them, to the extent
that they remain in force.
(2) So far as the Principal Securityholders and the Office Staff
are aware, the present use of the properties is the permitted use for the
purpose
21
of the Planning Acts and such use is not adversely affected or likely to be
adversely affected by any planning proposals and is not a use permitted
only for a temporary period or a particular occupier or class of occupiers
or a use subject to onerous or unusual conditions or conditions giving rise
to abnormal expenditure.
(3) No planning permission in respect of the properties has
been revoked or suspended.
(4) So far as the Principal Securityholders and the Office
Staff are aware, there is no outstanding notice or complaint by any
competent authority in relation to any development carried out at the
Properties.
(5) So far as the Principal Securityholders and the Office
Staff are aware no development has been carried out in relation to the
Properties without first obtaining any requisite consent under the Planning
Acts or without complying with any such consent.
(C) Insurance.
(1) All buildings and structures comprised in the properties
including fixtures, fittings and contents are insured under policies (the
"Policies") with reputable insurers against loss or damage by fire and such
other risks as are normally covered by a comprehensive policy for buildings
of the type and in the geographic locality of the properties.
(2) The sum insured under the Policies is not less than the
full reinstatement value of the properties plus architects' and surveyors'
fees and other incidental expenses and in the case of premises which are
let, not less than 3 years' loss of rent.
(D) Leasehold Properties.
(1) In this paragraph the "Leases" means each of the leases,
tenancies, licenses and agreements under which the properties are held by
the Company, details of all of which are contained in the Schedule 3.1(af)
and in the case of a license, references to landlord, tenant and rent are
references to the licensor, licensee and the license fee respectively.
(2) There are no material arrears of rent or other monies
payable under the Leases.
(3) There are no rent or license fee reviews in the course
of being negotiated or determined or exercisable by the landlord pursuant
to any of the Lease.
22
(ag) Litigation. None of the Company, the Securityholders nor any of
----------
the Company's officers or directors is engaged in, or has received any threat
of, any litigation, arbitration, investigation, claim or other proceeding
relating to the Company or its officers, directors, employees, benefit plans,
properties, Intellectual Property Rights, business, assets, licenses, permits,
or goodwill; or against or affecting the actions taken or contemplated in
connection therewith, nor, to the best of the Principal Securityholders' and
Office Staff's knowledge, is there any reasonable basis therefor. The
Securityholders are not involved in any litigation which impacts on the business
of the Company or this Agreement, nor to the best of each's knowledge, is there
any reasonable basis therefor. So far as the Principal Securityholders and
Office Staff are aware, there is no action, suit, proceeding, or investigation
pending or threatened against the Company, or the Securityholders, or the
officers or directors of the Company, that questions the validity of this
Agreement, the Escrow Agreement or any Closing Documents, or the right of the
Company or the Securityholders to enter into this Agreement, the Escrow
Agreement, the Closing Documents, or to consummate the transactions contemplated
hereby or thereby, or which might result in any material adverse change in the
assets, business, condition, prospects or properties of the Company which
impacts or will impact directly on the Company. There is no action, suit,
proceeding, or investigation by the Company (or the Securityholders) which
impacts or will impact directly on the Company currently pending or which any of
them currently intends to initiate. None of the Company, the Securityholders,
nor any of the Company's officers or directors is bound by any judgment, decree,
injunction, ruling or order of any court, governmental, regulatory or
administrative department, commission, agency, arbitrator or any other person
which would or could:
(a) have a materially adverse effect on the business of the Company;
(b) impose any limitations or restrictions on the ability of the
Company to sell its products in the jurisdiction in which it currently
sells them, nor to the knowledge of the Company and the Securityholder, any
other jurisdictions.
(ah) Labor Relations.
---------------
a. To the best of the Principal Securityholders' and Office
Staff's knowledge, the Company has not failed to comply in any respect with
all applicable United Kingdom, European, German, Eire and local laws,
rules, and regulations relating to employment, and all such applicable
laws, rules and regulations governing payment of minimum wages and overtime
rates, and the withholding and payment of taxes from compensation of
employees.
b. There are no strikes affecting the Company or industrial
disputes between the Company and any of its employees (the "Employees" or
officers or former officers or employees) or any labor union or other
collective bargaining unit representing any of the Employees and so far as
the Principal Securityholders are aware none are pending or threatened.
23
c. The Company has never entered into a collective bargaining
agreement or other labor union contract applicable to the Employees and no
trade union is recognized or has claimed recognition by the Company.
d. Schedule 3.1(ah) contains an accurate and complete list of all
officers and employees of the Company as at the date of this Agreement and
at the Closing, showing all remuneration payable and other benefits
provided or which the Company is bound to provide either now or in the
future.
e. All appropriate notices relating to terms and conditions have
been properly issued under relevant employment legislation to all employees
(including directors) of the Company.
f. There are no service or consultancy agreements or arrangements
outstanding between the Company and any other person apart from those
disclosed in the Disclosure Letter.
g. The Company is not bound or accustomed to make periodical or
other payments (other than normal fixed salaries and wages) to employees,
ex employees, officers, consultants or others and no employee, officer or
consultant has remuneration on a profit sharing or commission basis or by
reference to the turnover, profits, sales or assets of the Company.
h. The Company does not have and never has had any share option,
share incentive, profit sharing or any other similar scheme.
i. No general increase in the wages of the employees of the
Company or any section or class of such employees has been made or agreed
to be made (whether legally binding or not) either with the employees or
their representatives nor has any negotiation or demand for such increase
been entered into by or made to the Company; and
j. the Company has not received or been notified of any wage
claim.
k. All contracts of employment between the Company and its
officers or employees are lawfully determinable by the Company without
compensation save for statutory compensation by notice (not exceeding the
relevant statutory minimum period of notice or three (3) months, whichever
is greater).
l. The Company has no reason to dismiss (nor does it wish to
dismiss) any of its employees.
m. No person who is or was a director or employee of the Company
has any right or made any claim (which has not yet been settled) to any
24
compensation or other payment by reason of the termination of his
employment (whether such termination constitutes unfair or wrongful
dismissal redundancy or otherwise) or any breach by the Company of his
terms of engagement or employment; so far as the Principal Securityholders
are aware, there are no circumstances likely to lead to any such claims
being made; and no gratuitous payment has been made within the last 12
months or promised and not been paid by the Company in connection with the
termination or proposed termination of employment of any past or present
director or employee.
n. No order has been made in the twelve (12) months prior to the
date of this Agreement or may be made for the reinstatement or re-
engagement of any employee of the Company.
o. In the five years before the date of this Agreement, there is
not and never has been any strike, picket, lock-out, go-slow, work to rule
or any other similar form of industrial dispute taken or threatened against
the Company and to the best of knowledge, information and belief of the
Securityholders or officers of the Company there are no facts or
circumstances which might lead to any such industrial dispute.
p. Pension Scheme. The Company has no pension schemes other
--------------
than the pension schemes referred to in the Disclosure Letter (such schemes
hereinafter referred to as the "Pension Schemes"). The Pension Schemes are
approved by the Superannuation Funds Office of the Inland Revenue as exempt
approved schemes under Chapter I Part XIV Taxes Act and has at all times
been administered in accordance with the provisions of that Act and of the
Social Security Xxx 0000 and with the applicable provisions of the Social
Security Pensions Act 1973 and in accordance with any other applicable
legislation, regulations and requirements; and nothing has been done or
omitted to be done which may result in the Pension Schemes ceasing to be
such exempt approved schemes. Details of the pension entitlements of each
of the officers, employees, former officers and former employees of the
Company or for which the Company is liable and of all contributions paid
and payable to such persons are set out in Schedule 3.1(ah).
q. If the Pension Schemes are contracted out, a Contracting-out
Certificate has been issued to or in respect of the Company by the
Occupational Pensions Board under the provisions of the Social Security
Xxxxxxxx Xxx 0000 in relation to the Pension Schemes and so far as the
Principal Securityholders and the Office Staff are aware nothing has been
done or omitted to be done which may cause such certificate to be
withdrawn.
r. The Company is not under any legal liability or obligation to
provide any relevant benefits (as defined in Section 612(l) of the Taxes
Act) or any death or disability benefits not within that definition for any
past or present officer or employee of their dependants otherwise than
under the Pension
25
Schemes and is not under any such liability or obligation to pay
contributions to any Personal Pension Scheme (as defined in Xxxxxxx 000
Xxxxx Xxx).
s. The Company has not given any undertakings or assurances to
its officers, employees or consultants regarding the continuance,
introduction or improvement of any retirement, death or disability benefits
(whether or not there is any obligation to do so) or regarding the payment
of contributions to Personal Pension Schemes (whether or not there is any
obligation to do so).
t. In the six years prior to the date of this Agreement the
Company has not granted any ex gratia pension or other like payment to any
of its past or present officers, employees, consultants or their
dependants.
u. The Company has complied in all material respects with all its
obligations under the Pension Schemes and has paid all amounts due to the
Trustees of the Pension Schemes (the "Trustees") and contributions made to
the Pension Schemes have been made at the rate or rates recommended by the
actuary or insurance company advising on the funding of the Pension
Schemes.
v. [Deleted]
w. All benefits under the Pension Schemes payable on death
before normal retirement age are fully insured with a reputable insurance
company.
x. There are no actions, suits or claims (other than normal
claims for benefits) in relation to the Pension Schemes and so far as the
Principal Securityholders and the Office Staff are aware, none are pending
or threatened.
y. The following liabilities of the Company (whether contractual
or otherwise) have been fully met:
- to pay contributions to the Pension Schemes; and
- to make direct payments of pension to ex employees in retirement or
their relatives and dependants.
z. The trustees of the Pension Schemes (the "Trustees") are not
treated as carrying on investment business under the terms of Section 191
of the Financial Services Xxx 0000 ("FSA"). Neither the Trustees nor any
individuals employed by them in their capacity as such Trustees carry on or
purport to carry on in the United Kingdom investment business within the
meaning of FSA.
aa. Copies of all relevant trust instruments, rules and other
documents governing the Pension Schemes (including members' booklets and
announcements) and the latest actuarial report and trustees' report and
Financial Statements, together with copies of all insurance policies,
annuity contracts and
26
proposals for such policies or contracts which are pending, a list of all
employees of the Company for whom contributions are being paid or are
payable showing the amount of contributions for each employee, details of
internal dispute resolution procedure, payment schedule and statement of
investment principles for the purpose of the Pensions Xxx 0000, details of
arrangements to comply with Sections 16 to 21 of that Act, details of all
investments and assets of each Pension Scheme have been provided to
Purchaser and all such disclosed documents are true, complete, accurate in
all material respects and contain no material omission or inaccuracies.
bb. Membership. Every person who has at any time had the right
----------
to join, or apply to join, the Pension Schemes has been properly advised of
that right. No employee or former employee of the Company has been excluded
from membership of the Pension Schemes or from any of the benefits
thereunder in contravention of Art 119 of the Treaty of Rome, the Xxxxxxxx
Xxx 0000 or other applicable laws or requirements or the provisions of the
Pension Schemes or otherwise.
cc. Transfer Payments. No transfer value has been paid
-----------------
(directly or indirectly) to the Pension Schemes from another arrangement
for any member of the Pension Schemes under which any benefits referable to
that member contravened Art 119 of the Treaty of Rome, Section 62 of the
Pensions Xxx 0000 or other applicable law or requirement.
dd. No Other Employer. The Company is the only employer for the
-----------------
time being participating in the Pension Schemes. No employer which has
previously participated in the Pension Schemes has any claim under the
Pension Schemes and in respect of any such employer the period of
participation has been terminated and benefits have been provided in
accordance with the provisions of the Pension Schemes.
ee. No Pay Restructuring. There has not in the last four years
--------------------
been any restructuring of the earnings of all or any members or
prospective members of the Pension Schemes (by way of example, but without
limitation, consolidation of bonuses into basic pay).
ff. Investments. None of the assets of the Pension Scheme:
-----------
(1) is in any form other than cash deposited with a UK
clearing bank in accounts requiring signatures of every trustee to
release sums so held; or
(2) is invested in any description of employer-related
investments (within the meaning of Section 40 of the Pensions Act
1995); or
(3) save for deposits with banks, building societies and
other financial institutions and save for any instrument creating or
27
acknowledging an indebtedness listed on any recognised stock exchange
of repute, is loaned to any one person; or
(4) is subject to any encumbrance or agreement or commitment
to give or create any encumbrance.
gg. [Deleted]
hh. [Deleted]
ii. Winding-Up. The date of commencement of the winding up
----------
of the Pension Scheme referred to as the RT Masts Limited Pension Scheme in the
Disclosure Letter has been fixed at August 31, 1997. Such schemes liabilities
have been properly valued on the prescribed actuarial basis known as the Minimum
Funding Requirement.
jj. Contributions. The Company's contributions to the Pension
-------------
Schemes on behalf of employees does not exceed and no action has been taken or
agreement or arrangement entered into to make the same exceed 5% of the basic
salary of each employee per annum.
(ai) Brokers' and Finders' Fees/Contractual Limitations. The Company
--------------------------------------------------
is not obligated to pay any fees or expenses of any broker or finder in
connection with the origin, negotiation, or execution of this Agreement or in
connection with any transactions contemplated hereby. Neither the Company nor
any officer, director, employee, shareholder, agent, or representative of the
Company (collectively "Agent/Representatives") are or have been subject to any
agreement, letter of intent, or understanding of any kind which prohibits,
limits, or restricts the Company or Agent/Representatives from negotiating,
entering into and consummating this Agreement and the transactions contemplated
hereby.
(aj) Interested Party Relationships. Neither the Securityholders nor
------------------------------
the Company (nor any family member of the Securityholders or any corporation,
partnership, or other entity which, directly or indirectly, alone or together
with others, controls, is controlled by, or is in common control with the
Securityholders, the Company, or any such family member) have any material
financial interest, direct or indirect, in any material supplier or customer,
any party to any contract which is material to the Company, or any competitor
with the Company nor has (or has in the last two years had) a trading
relationship with the Company nor have any of them in the last two years entered
into any other type of transaction or arrangement outside the normal course of
business with the Company and none of them provides or has provided goods or
services in connection with the Company.
(ak) Certain Payments. To the best of the knowledge of the Principal
----------------
Securityholders and the Office Staff, in connection with its business, the
Company has not and no person directly or indirectly on behalf of the Company
has made or received any payment that was not legal to make or receive.
28
(al) Products Liability. There are no claims received by Company,
------------------
fixed or contingent, asserting (a) any damage, loss or injury caused by any
Product or (b) any breach of any express or implied product warranty or any
other similar claim with respect to any Product other than standard warranty
obligations (to replace, repair or refund) made by Company in the ordinary
course of business, except for those claims that, if adversely determined
against Company, would not have a material adverse change on the business,
results of operations, financial condition of the Company. As used herein,
"Product" shall mean any products manufactured, designed, developed,
distributed, sold, re-sold, customized or serviced by the Company.
(am) Product Warranties. The Company has provided to Purchaser copies
------------------
of its warranty policies and all outstanding warranties or guarantees relating
to any of the Company's products, if any (other than warranties or guarantees
implied by law) and its terms and conditions of sale, including any warranties
or guarantees, if applicable.
(an) Returns. There are no agreements or arrangements, written or
-------
oral, that expressly entitle any agent, distributor or joint venture partner or
customer of the Company to return products sold, delivered or shipped by the
Company to such business partner or customer.
(ao) Customers. Except as indicated on Schedule 3.1(ao) attached
---------
hereto, no single customer of the Company accounted for more than 5% of the net
sales of the Company during the twelve-month period ended September 30, 1997.
The Company has furnished Purchaser with complete and accurate copies or
descriptions of all material written current agreements with such customers,
which are set forth on the list of contracts. Neither the Principal
Securityholders nor the Office Staff are aware of any event, (without having
made any inquiry of customers) or fact which would lead it or him to believe
that any of such customers will reduce their current level of purchases after
the Time of Closing to a material extent.
(ap) Suppliers. Schedule 3.1(ap) hereto lists all suppliers of goods
---------
to the Company where the supplies exceed (Pounds)10,000 in value over the last
12 months. The Principal Securityholders and the Office Staff are not aware
(but without having made inquiries of suppliers) of any event, happening, or
fact which would lead them to believe that any of such suppliers will reduce the
supply materially below the current level and type of goods currently being
provided to the Company on similar terms and conditions other than due to any
reduction in sales by the Company.
(aq) Books and Records. The statutory books and records of the
-----------------
Company to which Purchaser and its accountants and attorneys have been given
access are the true books and records of the Company and contain all matters
that they are required to contain by the Companies Xxx 0000 (as amended).
(ar) Complete Disclosure. No document, written information,
-------------------
statement, financial statement, certificate, schedule or exhibit prepared and
furnished or to be prepared
29
and furnished by the Company or any Securityholder or its respective
representatives (being the Securityholders' Solicitors, the Securityholders'
Accountants and Xxxxxxx Xxxxx) pursuant hereto or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements or facts contained herein or therein not materially
misleading in light of the circumstances under which they were furnished. To the
best knowledge of the Principal Securityholders, (except that where this
Agreement elsewhere provides that specific enquiries shall not have been made
they shall not have been deemed made for the purpose of this sentence), there is
no event, fact or condition that has resulted in, or could reasonably be
expected to result in any event, change or effect that is materially adverse to
the condition (financial or otherwise), properties, assets, liabilities,
businesses, operations, results of operations or prospects of the Company taken
as a whole that has not been set forth in this Agreement or in the Disclosure
Letter. The Company and its subsidiaries do not have any directors, shadow
directors or alternate or associate directors other than the persons listed in
the Disclosure Letter.
(as) [Deleted]
(at) [Deleted]
-------
(au) Insurance. Schedule 3.1(au) lists all insurance policies and
---------
bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of the Company, the amounts of coverage under
each such policy and bond of the Company. To the best of the knowledge of the
Principal Securityholders and the Office Staff, the Company has not been refused
any requested coverage and no material claim made by the Company has been denied
by the underwriters of such policies or bonds. All premiums due and payable
under all such policies and bonds have been paid, and the Company is otherwise
in full compliance with the terms of such policies and bonds (or other policies
and bonds providing substantially similar insurance coverage). So far as the
Company and the Securityholders are aware, there is no notice of termination of,
the invalidation of any coverage of or material premium increase with respect
to, any of such policies.
(av) Environmental Matters. The Company has complied in all material
---------------------
respects with its obligations under all applicable statutes and/or regulations
and/or orders or other provisions of law and/or compulsory codes of practice
(including without limitation the laws of tort) in each case of the United
Kingdom and of the European Community which protect or relate to the protection
of the environment and/or the health and well being of individuals and/or other
living creatures. Without limiting the foregoing none of the Properties (or
land that adjoins the Properties) has been contaminated by the Company and so
far as the Principal Securityholders and Office Staff are aware (without having
conducted an environmental audit or property survey) none of the Properties is
situate on reclaimed or filled land. The business of the Company carried on
thereat does not require the Company to obtain any licence under the Environment
Xxx 0000 and subordinate legislation.
(aw) Backlog. Schedule 3.1(aw) hereto sets forth a per-customer best
-------
30
estimate of the backlog of orders relating to the business of the Company which
it is to ship and contract work to be performed within three days of the date of
this Agreement and of the Time of Closing. The Company either possesses
sufficient inventory of parts, materials and personnel to produce the same
within their scheduled delivery dates or such parts or materials have lead times
such that the Company can acquire such parts and materials in time to produce
and ship such backlog in accordance with its scheduled shipping date, as of the
Closing.
(ax) Accounts Receivable. The amount of all debts of the Company as
-------------------
at the date of this Agreement and as at the Time of Closing will be good and
collectible in full in the ordinary course of business by March 15,1998; all
accounts receivable arise from bona fide transactions in the ordinary course of
business; no contest with respect to the amount or validity of any amount is
pending; and none of such accounts receivable is or will at the Closing be
subject to any counterclaim or setoff. The value at which accounts receivable
are carried reflect the accounts receivable valuation policy of the Company. As
of August 31, 1997 and as of the Closing, except as set forth in Schedule
3.1(ax), there is and will be (i) no debtor overdue in its payment by more than
30 days, (ii) no debtor that has refused (or threatened to refuse) to pay its
obligation for any reason, (iii) no debtor that is insolvent or bankrupt, and
(iv) no debt which is pledged or factored to any third party by the Company.
The Company holds no deposits from customers and has received no prepaid service
contract revenue or other prepaid revenue. P-Com and Purchaser shall make no
claim for uncollected debts up to the amount of the bad debt provision contained
in the Agreed Execution Accounts or the Completion Accounts (as defined below)
nor for any amount for which a claim is made under Section 4.2(i) hereof.
(ay) Regulation S. Each Securityholder has complied with the
------------
requirements of Regulation S under the United States Securities Act of 1933, as
amended ("Regulation S").
(az) No Directed Selling Efforts. The Securityholders are not aware
---------------------------
without having made any inquiry save of Xxxxxxxxx Xxxxxxx Xxxxx & Xxxxx of any
Directed Selling Efforts (as hereinafter defined) having been made in the United
States with respect to the Purchase Shares by P-Com, Purchaser or its
affiliates, or any person acting on behalf of any of the foregoing. In
addition, the Company, its affiliates (comprising its officers, directors,
shareholders holding more than 5% or more of the issued share capital of the
Company or holding or subsidiary companies (as defined in Section 736 of the
Companies Act 1985)), the Securityholders, and persons acting on behalf of the
foregoing have not made any Directed Selling Efforts in the United States with
respect to the Purchase Shares. For purposes of this Agreement, "Directed
Selling Efforts" include any activity undertaken for the purpose of, or that
could reasonably be expected to have the effect of, conditioning the market in
the United States for the Purchase Shares, including, but not limited to, the
placement of an advertisement in a publication with a general circulation in the
United States that refers to the offering of the Purchase Shares, the mailing of
promotional materials to persons located in the United States or the holding of
promotional meetings or seminars in the United States.
(ba) Offshore Transaction. The offer and sale of the Purchase Shares
--------------------
31
qualifies as an Offshore Transaction. For purposes of this Agreement, the term
"Offshore Transaction" means that:
(1) The Company and each Securityholder was outside the United
States at the time the Purchase Shares were offered to the Company and each
Securityholder; and
(2) The Company and each Securityholder was outside the United
States at the time the Company or Securityholder originated the buy order
for the Purchase Shares, including, but not limited to, the time when the
Company and each Securityholder signed and delivered this Agreement and
otherwise subscribed for or agreed to purchase the Shares.
In this Agreement, the term "United States" means the United States of
America, its territories and possessions, any State of the United States, and
the District of Columbia. Notwithstanding the foregoing definition of "Offshore
Transaction," the offer and sale of the Purchase Shares to the Securityholders
shall not constitute an "Offshore Transaction" if the Securityholders are
acquiring the Shares for the account or benefit of any specifically targeted,
identifiable group of U.S. citizens abroad, such as members of the U.S. armed
forces serving overseas, but shall constitute an "Offshore Transaction" if the
Securityholder is a person excluded from the definition of "U.S. Person"
pursuant to Section 3.1(bb)(1)(f) of this Agreement or is a person holding an
account excluded from the definition of "U.S. Person" pursuant to Section
3.1(bb)(2)(a) of this Agreement, solely in its capacity as a holder of such an
account.
(bb) Non U.S. Person. The Company and each Securityholder is not a
---------------
U.S. Person, as such term is defined below, and is not acquiring the Purchase
Shares for the account or benefit of any U.S. Person.
(1) Definition of U.S. Person. For purposes of this Agreement,
-------------------------
the term "U.S. Person" means:
(a) Any natural person resident in the United States;
(b) Any partnership or corporation organized or incorporated
under the laws of the United States;
(c) Any estate of which any executor or administrator is a U.S.
Person;
(d) Any trust of which any trustee is a U.S. Person;
(e) Any agency or branch of a foreign entity located in the
United States;
32
(f) Any non-discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary organized,
incorporated, or (if an individual) resident in the United States; and
(g) Any discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary organized,
incorporated, or (if an individual) resident in the United States; and
(h) Any partnership or corporation if organized or incorporated
under the laws of any foreign jurisdiction, and formed by a U.S.
Person principally for the purpose of investing in securities not
registered under the Securities Act, unless it is organized or
incorporated, and owned, by accredited investors (as defined in Rule
501(a) under the Securities Act), who are not natural persons, estates
or trusts.
(2) Exclusions from Definition. Notwithstanding the foregoing
--------------------------
definition of "U.S. Person":
(a) Any discretionary account or similar account (other than an
estate or trust) held for the benefit or account of a non-U.S. Person
by a dealer or other professional fiduciary organized, incorporated,
or (if an individual) resident in the United States shall not be
deemed a U.S. Person.
(b) Any estate of which any professional fiduciary acting as
executor or administrator is a U.S. Person shall not be deemed a U.S.
Person if an executor or administrator of the estate who is not a U.S.
Person has sole or shared investment discretion with respect to the
assets of the estate, and the estate is governed by foreign law.
(c) Any trust of which any professional fiduciary acting as
trustee is a U.S. Person shall not be deemed a U.S. Person if a
trustee who is not a U.S. Person has sole or shared investment
discretion with respect to the trust assets, and no beneficiary of the
trust (and no settlor if the trust is revocable) is a U.S. Person.
(d) An employee benefit plan established and administered in
accordance with the laws of a country other than the United States and
customary practices and documentation of such country shall not be
deemed a U.S. Person.
(e) Any agency or branch of a U.S. Person located outside the
United States shall not be deemed a U.S. Person if the agency or
branch operates for valid business reasons, and the agency or branch
is engaged in the
33
business of insurance or banking and is subject to substantive
insurance or banking regulation, respectively, in the jurisdiction
where located.
(f) The International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American Development Bank,
the Asian Development Bank, the African Development Bank, the United
Nations, and their agencies, affiliates and pension plans, and any
other similar international organizations, their agencies, affiliates
and pension plans shall not be deemed U.S. Persons.
(bc) Prior Agreements. Neither the Company nor any Securityholder has
----------------
entered into, or authorized any agent or representative on its behalf to enter
into, any agreement or understanding (i) to sell, transfer or dispose the
Purchase Shares or any part thereof to any U.S. Person or any person in the
United States, or (ii) to make any short sale in the Common Stock of P-Com in
the United States.
(bd) Agents, Guarantees etc.
----------------------
(1) No person is authorized to act as agent for the Company or to
bind the Company otherwise than the directors of the Company and its
employees.
(2) There are no powers of attorney, guarantees, suretyships,
indemnities or similar commitments (whether secured or unsecured) given by
the Company in respect of which obligations or liabilities of any person
other than the Company (whether actual or contingent) are still
outstanding.
(be) Data Protection Act. The Company has complied in all material
-------------------
respects with requirements of the Data Protection Xxx 0000 and in particular:
(1) has registered as a data user under that Act for all purposes
for which registration is required by the business as carried on by the
Company;
(2) has complied with the data protection principles; and
(3) the Company has not received any written notice, letter or
complaint and to the best of the knowledge of the Principal Securityholders
and the Office Staff no unwritten notice or complaint alleging a breach by
it of the provisions of the Data Protection Xxx 0000 and the Principal
Securityholders and Office Staff have no reason to believe that
circumstances exist which may give rise to such a notice letter or
complaint.
(bf) [Deleted]
(bg) Purchase of Shares.
------------------
34
(1) The Company has not at any time acted in breach of Section
151 of the Companies Act and nor has it ever given financial assistance in
connection with the acquisition of its own or any holding company's shares
in accordance with the provisions of section 155 of the Companies Act.
(2) The Company has never reduced, purchased or redeemed its
share capital or agreed to do so.
(bh) No Loans. The Company has not made in the three years prior to
--------
the date of this Agreement or received any material loans or advanced any
material monies or credit to any person, firm or company (other than credit
given on normal commercial terms in the ordinary and normal course of business)
which remain outstanding.
(bi) No Partnership or Insider Contracts. The Company is not a party
-----------------------------------
to, nor have its profits or financial position during the three years prior to
the date hereof been affected by any contract or arrangement which is not of an
entirely arms length nature made on open market terms.
(bj) No Market Conditioning. Neither the Company nor any
----------------------
Securityholder nor any representative or agent of the Company or any
Securityholder has undertaken any activity for the purpose of, or that
reasonably could be expected to have the effect of, conditioning the market in
the United States for the offer of the Purchase Shares.
(bk) Pooling of Interests. None of the Company nor any of its
--------------------
Subsidiaries and no other "affiliate" of the Company has taken or failed to
take, any action which would prevent P-Com or Purchaser from accounting for the
purchase of the Securities for financial accounting and reporting purposes as a
pooling of interests in accordance with United States generally accepted
accounting principles and the pronouncements of the SEC.
(bl) [Deleted]
Section 3.2 Representations and Warranties of P-Com. Except as set forth in a
----------- ---------------------------------------
letter, if applicable, referring to a particular section of this Section 3.2 of
this Agreement (the "P-Com Disclosure Letter") delivered by P-Com to the
Securityholders, P-Com hereby represents and warrants to the Company and each
Securityholder that:
(a) Organization. P-Com is a corporation duly organized and validly
------------
existing under the laws of the State of Delaware and Purchaser is a company duly
organized and validly existing under the laws of England and Wales and each has
all corporate power and authority to lease, own, and operate its respective
properties and assets and carry on its respective business and operations and to
directly own, lease, and operate its assets. Each of P-Com and Purchaser is
duly qualified or licensed to do business as a corporation, and is in good
standing in each jurisdiction where the failure to qualify would have a material
adverse effect on the consolidated business and operations of P-Com.
35
(b) Brokers' and Finders' Fees. Neither P-Com nor Purchaser is
--------------------------
obligated to pay any fees or expenses of any broker or finder in connection with
the origin, negotiation, or execution of this Agreement, the Escrow Agreement or
the Closing Documents, or in connection with any transactions contemplated
hereby that the Company would be required or obligated to make or pay.
(c) SEC Filings. P-Com has filed all forms, reports and documents
-----------
required to be filed with the United States Securities and Exchange Commission
("SEC") since March 2, 1995 (collectively, the "P-Com SEC Reports"). The P-Com
SEC Reports were prepared in accordance with the requirements of the United
States Securities Act of 1933, as amended ("Securities Act") or the United
States Securities Exchange Act of 1934 ("Exchange Act"), as amended, as the case
may be. None of such forms, reports or documents (including any financial
statements or schedules included or incorporated by reference therein) filed by
P-Com contained, when filed (in the case of documents filed pursuant to the
Exchange Act) or when declared effective by the SEC (in the case of registration
statements filed under the Securities Act), any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) Valid Issuance of Purchase Shares. The Purchase Shares, when
---------------------------------
issued and delivered in accordance with the terms hereof and for the
consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable and, subject to the warranties given by the Securityholders and
the Company in paragraphs (ay), (az), (ba), (bb) and (bc) of Article III,
Section 3.1 being true and accurate, the Purchase Shares will be issued in
compliance with all applicable United States and state securities laws.
(e) Authorization of P-Com and Purchaser. Each of P-Com and Purchaser
------------------------------------
has full power and authority to enter into this Agreement and the Escrow
Agreement, if applicable, to perform its obligations hereunder and thereunder,
and to consummate the transactions contemplated hereby and thereby, including,
without limitation, the execution and delivery of this Agreement and the Escrow
Agreement, if applicable, and those other documents and instruments referred to
herein or therein (the "Purchaser Closing Documents"). Each of P-Com and
Purchaser has taken all necessary and appropriate action with respect to the
execution and delivery of this Agreement, the Escrow Agreement and the other
Purchaser Closing Documents, as applicable. This Agreement, the Escrow
Agreement, and the other Purchaser Closing Documents constitute valid and
binding obligations of P-Com or Purchaser (as the case may be), enforceable in
accordance with their respective terms except as limited by applicable
bankruptcy, insolvency, moratorium, reorganization, or other laws affecting
creditors' rights and remedies generally or by general principles of equity.
(f) Government Consents. No consent, approval, order, or
-------------------
authorization of, or registration, qualification, designation, declaration, or
filing with any federal, state, local, or provincial governmental authority on
the part of Purchaser or P-Com is required in connection with the consummation
of the transactions contemplated hereunder.
36
(g) Litigation. There is no action, suit, proceeding, or
----------
investigation pending or, to the best knowledge of P-Com or Purchaser,
threatened against either P-Com or Purchaser that questions the validity of this
Agreement, the Escrow Agreement, the other Purchaser Closing Documents or the
right of either P-Com or Purchaser to enter into this Agreement, the Escrow
Agreement or the other Purchaser Closing Documents or to consummate the
transactions contemplated hereby or thereby.
(h) No Conflict or Default. Neither the execution and delivery of
----------------------
this Agreement nor the Purchaser Closing Documents, nor compliance with the
terms and provisions hereof and thereof, including, without limitation, the
consummation of the transactions contemplated hereby and thereby, will conflict
with or result in the breach of any term, condition, or provision of, in the
case of P-Com, its certificate of incorporation or bylaws, and in the case of
Purchaser, its Memorandum and Articles of Association, or of any material
agreement, deed, contract, mortgage, indenture, writ, order, decree, legal
obligation or instrument to which either P-Com or Purchaser is a party or by
which it is or may be bound, or constitute a default (or an event which, with
the lapse of time or the giving of notice, or both, would constitute a default)
thereunder.
(i) Limitation on Liability. Notwithstanding any provision of this
-----------------------
Agreement, neither P-Com nor Purchaser shall be liable hereunder for a breach of
its respective representations, warranties, covenants and agreements until the
aggregate amount of all liabilities to the Securityholders hereunder exceeds
65,000 British Pounds Sterling, at which point such Securityholders shall be
entitled to the full liability amount pursuant to this Agreement including such
liability cushion.
(j) Absent Fraud, Termination of Liability and Representations,
-----------------------------------------------------------
Warranties, Covenants and Agreements. The liability of P-Com and Purchaser
------------------------------------
pursuant to this Agreement (and the representations, warranties, covenants and
other agreements of P-Com and Purchaser set forth in this Agreement, except
otherwise set forth herein) for a breach or inaccuracy of, or a failure to
perform or comply with, any or all of P-Com's or Purchaser's respective
representations, warranties, covenants and agreements and all other rights,
claims, actions and causes of action at law or in equity in respect of such
representations, warranties, covenants and agreements shall, subject to Section
7.1(f), terminate upon the date of the publication of the independent
accountants' report in P-Com's Annual Report on Form 10K that includes the
audited results for the Company for the fiscal year ended December 31, 1997.
(k) FIRPTA. The Company does not own any real estate in the United
------
States, nor does it own any equity or ownership interest in any corporation,
partnership or other entity which owns real estate in the United States.
37
ARTICLE IV COVENANTS
Section 4.1 Covenants Against Disclosure. The parties agree to maintain the
----------- ----------------------------
confidentiality of the terms and conditions of this Agreement, except to the
extent required by law and pursuant to the public reporting obligations of P-
Com. No party shall disseminate (except to the parties to this Agreement) any
press release or announcement concerning the transactions contemplated by this
Agreement or the Escrow Agreement or the parties hereto or thereto without the
prior written consent of P-Com and Xxxx Xxxxxxx or Xxxxxxx Xxxxxxx as
representatives of the Securityholders, except as required under the public
reporting obligations of P-Com or as may be required to obtain consents
necessary pursuant to Sections 6.1(h) and 6.2(d) hereof to consummate the
transactions contemplated herein; provided that P-Com shall issue a press
release describing the transaction contemplated herein at any time after the
date hereof, in a form reasonably satisfactory to the Company.
Section 4.2 Accounts.
----------- --------
(a) On the date of this Agreement the Securityholders and the Company
shall deliver to P-Com and Purchaser a draft balance sheet and profit and loss
account of the Company for the year ended September 30, 1997 prepared by the
Company in accordance with GAAP applied consistently with its audited balance
sheet and profit and loss accounts for the year ended September 30, 1996.
(b) As soon as practicable after the date of this Agreement and no
later than October 31, 1997 the Securityholders and the Company shall deliver to
P-Com and Purchaser a final balance sheet and profit and loss account of the
Company for the year ended September 30, 1997 prepared in accordance with GAAP
applied consistently with its audited balance sheet and profit and loss accounts
for the year ended September 30, 1996 (the "Execution Accounts"). A provision
for Corporation Tax will be made in the Execution Accounts based upon the
taxable profits for the period from October 1, 1996 to September 30, 1997 (the
"Period"). The Period will be treated as if it were a separate accounting
period for taxation purposes. Full regard will be taken of taxable income,
allowable expenditure incurred in the period and appropriate capital allowances.
For the avoidance of doubt, allowable expenditure will include the provision for
staff bonuses of (Pounds)150,000 and the bonus for M Tillcock of (Pounds)500,000
including employers' National Insurance. The rate of Corporation Tax will be
the rates applicable to the profits chargeable to Corporation Tax for the period
taking into account the maximum number of associated companies for the period
prior to September 30, 1997.
(c) At Closing (as defined below) the Securityholders and the Company
shall deliver to P-Com and Purchaser a draft balance sheet and profit and loss
account of the Company for the period from October 1, 1996 to Closing prepared
in accordance with GAAP consistently with the accounts prepared in accordance
with Section 4.2(b) above and with the audited balance sheet and profit and loss
accounts for the year ended September 30, 1996.
38
(d) Subject to Closing taking place, as soon as practicable after the
Time of Closing and no later than December 31, 1997 the Securityholders shall
deliver to P-Com and Purchaser the final balance sheet and profit and loss
account of the Company as at Closing prepared by the Company (as approved by the
Securityholders' Accountants if required by and at the cost of the
Securityholders) in accordance with GAAP applied consistently with the accounts
referred to in 4.2(b) above and with the audited balance sheet and profit and
loss accounts for the year ended September 30, 1996 (the "Completion Accounts").
The total bad debt provision in the Completion Accounts will not exceed the
total bad debt provision in the Execution Accounts.
(e) At all times the Securityholders and the Company and P-Com and
Purchaser shall procure that P-Com, Purchaser, the Securityholders and their
respective representatives shall be given all reasonable access to the Company
and its premises, books, files, accounts, records and other assets and
information and to the Company's accountants' books, files, records and
information related to the Company and the preparation of the accounts referred
to in clauses (a), (b), (c) and (d) above.
(f) P-Com/Purchaser and its accountants shall review the Execution
Accounts and the Completion Accounts and no later than March 15, 1998 shall
deliver to Xxxxxxx Xxxxxxx or Xxxx Xxxxxxx as representatives for the
Securityholders written details of potential claims against the Securityholders
under Section 4.2(i) below.
(g) If, within 10 days of service of the notice referred to in Section
4.2(f) above (or such longer period as the Securityholders and Purchaser may
agree in writing), potential claims of Purchaser and the amounts to be paid to
Purchaser under Section 4.2(i) are not agreed by or on behalf of the
Securityholders and Purchaser, such claims settled in accordance with Section
4.2(i) and the Execution Accounts or the Completion Accounts modified
accordingly (where relevant) Xxxx Xxxxxxx or Xxxxxxx Xxxxxxx as representatives
of the Securityholders or Purchaser may give written notice to the other to have
the disputed items referred for determination in accordance with Section 4.2(h)
below.
(h) If any dispute in connection with the notices served in accordance
with Section 4.2(f) cannot be resolved by agreement it shall be determined, on
the referral of the Securityholders or Purchaser pursuant to Section 4.2(f)
above, to an independent firm of chartered accountants of England and Wales to
be agreed between the Securityholders and Purchaser or, in the absence of
agreement within 5 days of notification of referral pursuant to Section 4.2(f)
above, to an independent firm of chartered accountants appointed by the
President for the time being of the Institute of Chartered Accountants in
England and Wales upon the application of either party. Such independent firm
of chartered accountants shall act as experts and not as arbitrators and:
(i) their fees and costs will be borne in equal shares by the
Securityholders (as to one part) and Purchaser (as to another part (unless such
firm directs otherwise in order to reflect the conduct of any party);
39
(ii) they will have the power to receive submissions made by or
on behalf of the Securityholders or Purchaser in such form as they may decide;
(iii) they shall be allowed access to all relevant information,
records and personnel and to the relevant working papers of Purchaser's
accountants and the Securityholders' Accountants;
(iv) their decision shall, in the absence of manifest error, be
final and binding on the Securityholders and Purchaser.
(i) If the Net Assets as at September 30, 1997 and/or as at the Time
of Closing as determined by reference to the Execution Accounts and the
Completion Accounts respectively (as agreed or determined in accordance with
Section 4.2(g) or (h) (the "Agreed Execution Accounts" and the "Agreed
Completion Accounts" respectively) are less than One Million Three Hundred
Eighty Six Thousand Pounds ((Pounds)1,386,000) (the "Minimum Net Assets"), then
a payment shall be made by the Securityholders, (at P-Com's election) to P-Com
or Purchaser as follows within five (5) working days of the Net Assets as at
September 30, 1997 and at the Time of Closing being agreed or determined:
(i) If the Net Assets are below the Minimum Net Assets at
September 30, 1997 and at the Time of Closing then the payment shall be equal to
the difference between (A) the Minimum Net Assets and the Net Assets at
September 30, 1997 and (B) the Minimum Net Assets and the Net Assets at the Time
of Closing, whichever provides the greater difference (and, for the avoidance of
doubt, not the aggregate of the differences).
(ii) If the Net Assets at September 30, 1997 are greater than the
Minimum Net Assets and at the Time of Closing less than the Minimum Net Assets
(or vice versa) the payment shall be equal to the amount by which the Minimum
Net Assets exceeds the lower of such Net Assets.
If the Securityholders do not make the payment in cash within the
time set forth above, Purchaser shall be entitled to deduct from the shares of
Common Stock held pursuant to the Escrow Agreement that number of common stock
with a fair market value sufficient to cover the payment owed by the
Securityholders such common stock to be valued as reported on the Nasdaq
National Market on the date such common stock are deducted sufficient to cover
the payment owed by the Company and the Securityholders and whether payment is
made in cash or in such common stock the figure of (Pounds)9,250,000 referred to
in Section 2.2 shall be reduced by the amount of the payment and read
accordingly.
Section 4.3 Non-Competition.
----------- ---------------
(a) Commencing on the Time of Closing and continuing for five
(5) years thereafter Xxxxxxx Xxxxxxx (in consideration of payments to the trust
of which Xxxxxxx
40
Xxxxxxx is a beneficiary) agrees that he shall not (except in his capacity as an
officer, director, and/or employee or consultant of P-Com, Purchaser or the
Company), directly or indirectly, whether on his own account or as a shareholder
(other than as a less than 3% shareholder of a publicly-held company (other than
P-Com)), partner, director, joint venturer, employee, consultant, advisor,
and/or agent, of any person, firm, corporation, or other entity, in any or all
of the following activities worldwide:
(i) Enter into or engage in any business of the Company, P-Com or
Purchaser (or any parent or subsidiary), either presently or during the term of
this Section 4.3(a);
(ii) Solicit customers, suppliers, or business patronage which
results in competition with the Company, P-Com or Purchaser (and any parent or
subsidiary); or
(iii) Encourage or solicit any employees of the Company, P-Com or
Purchaser (and any parent or subsidiary) to leave the employment of the Company,
P-Com or Purchaser (and any parent or subsidiary) for any reason; or
(iv) Promote or assist, financially or otherwise, any person,
firm, association, corporation, or other entity engaged in the business of the
Company, P-Com or Purchaser and any parent or subsidiary; or
(v) Notwithstanding the five (5) year time limitation set forth
above, ever establish or continue any business in the future using the name R T
Masts Limited, RT Masts or any name capable of confusion therewith.
(b) Without limitation, Xxxxxxx Xxxxxxx, the Company, P-Com and
Purchaser agree and intend that the covenants contained in Section 4.3(a) shall
be deemed to be a series of separate covenants and agreements, one for each and
every country, each state and political subdivision worldwide. If, in any
judicial proceeding, a court shall refuse to enforce in such action any of the
separate covenants deemed included herein, then at the option of P-Com, wholly-
unenforceable covenants shall be deemed eliminated from the provisions hereof
for the purpose of such proceeding to the extent necessary to permit the
remaining separate covenants to be enforced in such a proceeding.
(c) Xxxxxxx Xxxxxxx, the Company, P-Com and Purchaser agree that due
to the unique nature of the services and capabilities of Xxxxxxx Xxxxxxx, there
can be no adequate remedy at law for any breach of his obligations hereunder,
that any such breach may allow Xxxxxxx Xxxxxxx and/or third parties to unfairly
compete with the Company, P-Com or Purchaser resulting in irreparable harm to
the Company, P-Com or Purchaser, and therefore, that upon any such breach or any
threat thereof, the Company, P-Com or Purchaser shall be entitled to appropriate
equitable relief in addition to whatever remedies it might have at law.
(d) Xxxxxxx Xxxxxxx agrees that the covenants in Section 4.3(a) are
41
reasonably necessary for the protection of the Company's, P-Com's and
Purchaser's interests under this Agreement and are not unduly restrictive upon
Xxxxxxx Xxxxxxx.
(e) Commencing on the Time of Closing and continuing for three (3)
years thereafter Xxxx Xxxxxxx (in consideration of payments to the trust of
which Xxxx Xxxxxxx is a beneficiary) agrees that he shall not (except in his
capacity as an officer, director, and/or employee of P-Com, Purchaser or the
Company), directly or indirectly, whether on his own account or as a shareholder
(other than as a less than 3% shareholder of a publicly-held company (other than
P-Com)), partner, director, joint venturer, employee, consultant, advisor,
and/or agent, of any person, firm, corporation, or other entity, in any or all
of the following activities worldwide:
(i) Enter into or engage in any business of the Company, P-Com or
Purchaser (or any parent or subsidiary), either presently or during the term of
this Section 4.3(e);
(ii) Solicit customers, suppliers, or business patronage which
results in competition with the Company, P-Com or Purchaser (and any parent or
subsidiary); or
(iii) Encourage or solicit any employees of the Company, P-Com or
Purchaser (and any parent or subsidiary) to leave the employment of the Company,
P-Com or Purchaser (and any parent or subsidiary) for any reason; or
(iv) Promote or assist, financially or otherwise, any person,
firm, association, corporation, or other entity engaged in the business of the
Company, P-Com or Purchaser and any parent or subsidiary; or
(v) Notwithstanding the three (3) year time limitation set forth
above, ever establish or continue any business in the future using the name R T
Masts Limited, RT Masts or any name capable of confusion therewith.
(f) Without limitation, Xxxx Xxxxxxx, the Company, P-Com and Purchaser
agree and intend that the covenants contained in Section 4.3(e) shall be deemed
to be a series of separate covenants and agreements, one for each and every
country, each state and political subdivision worldwide. If, in any judicial
proceeding, a court shall refuse to enforce in such action any of the separate
covenants deemed included herein, then at the option of P-Com, wholly-
unenforceable covenants shall be deemed eliminated from the provisions hereof
for the purpose of such proceeding to the extent necessary to permit the
remaining separate covenants to be enforced in such a proceeding.
(g) Xxxx Xxxxxxx, the Company, P-Com and Purchaser agree that due to
the unique nature of the services and capabilities of Xxxx Xxxxxxx, there can be
no adequate remedy at law for any breach of his obligations hereunder, that any
such breach may allow Xxxx Xxxxxxx and/or third parties to unfairly compete with
the Company, P-Com or
42
Purchaser resulting in irreparable harm to the Company, P-Com or Purchaser, and
therefore, that upon any such breach or any threat thereof, the Company, P-Com
or Purchaser shall be entitled to appropriate equitable relief in addition to
whatever remedies it might have at law.
(h) Xxxx Xxxxxxx agrees that the covenants in Section 4.3(e) are
reasonably necessary for the protection of the Company's, P-Com's and
Purchaser's interests under this Agreement and are not unduly restrictive upon
Xxxx Xxxxxxx.
(i) Commencing on the Time of Closing and continuing for three (3)
years thereafter Xxxxxx Xxxxxxx (in consideration of payments to the trust of
which Xxxxxx Xxxxxxx is a beneficiary) agrees that he shall not (except in his
capacity as an officer, director, and/or employee of P-Com, Purchaser or the
Company), directly or indirectly, whether on his own account or as a shareholder
(other than as a less than 3% shareholder of a publicly-held company (other than
P-Com, Purchaser or the Company)), partner, director, joint venturer, employee,
consultant, advisor, and/or agent, of any person, firm, corporation, or other
entity, in any or all of the following activities worldwide:
(i) Enter into or engage in any business competing with the
business of the Company as at the date of this Agreement; or
(ii) Solicit customers, suppliers, or business patronage which
results in competition with the Company in the business of the Company as at the
date of this Agreement; or
(iii) Encourage or solicit any employees of the Company,
Purchaser and any of its subsidiaries and other affiliates to leave the
employment of the Company, for any reason; or
(iv) Promote or assist, financially or otherwise, any person,
firm, association, corporation, or other entity engaged in the business of the
Company as at the date of this Agreement; or
(v) Notwithstanding the three (3) year time limitation set forth
above, ever establish or continue any business in the future using the name R T
Masts Limited, RT Masts or any name capable of confusion therewith.
(j) Without limitation, Xxxxxx Xxxxxxx, the Company, P-Com and
Purchaser agree and intend that the covenants contained in Section 4.3(i) shall
be deemed to be a series of separate covenants and agreements, one for each and
every country, each state and political subdivision worldwide. If, in any
judicial proceeding, a court shall refuse to enforce in such action any of the
separate covenants deemed included herein, then at the option of P-Com, wholly-
unenforceable covenants shall be deemed eliminated from the provisions hereof
for the purpose of such proceeding to the extent necessary to permit the
remaining separate covenants to be enforced in such a proceeding.
43
(k) Xxxxxx Xxxxxxx, the Company, P-Com and Purchaser agree that due to
the unique nature of the services and capabilities of Xxxxxx Xxxxxxx, there can
be no adequate remedy at law for any breach of his obligations hereunder, that
any such breach may allow Xxxxxx Xxxxxxx and/or third parties to unfairly
compete with the Company, P-Com or Purchaser resulting in irreparable harm to
the Company, P-Com or Purchaser, and therefore, that upon any such breach or any
threat thereof, the Company, P-Com or Purchaser shall be entitled to appropriate
equitable relief in addition to whatever remedies it might have at law.
(l) Xxxxxx Xxxxxxx agrees that the covenants in Section 4.3(i) are
reasonably necessary for the protection of the Company's, P-Com's and
Purchaser's interests under this Agreement and are not unduly restrictive upon
Xxxxxx Xxxxxxx.
(m) Insofar as any of the restrictions contained in this Agreement are
registerable under the Restrictive Trade Practices Act 1976 (the "RTPA") such
restrictions shall to such extent not come into force until the day following
the day upon which such particulars relating thereto as are required to be filed
with the Office of Fair Trading ("OFT") pursuant to the RTPA shall have been
received by the OFT for filing. P-Com and Purchaser shall be responsible for
making such filing and the Company and the Securityholders agree to provide
reasonable cooperation and assistance in relation thereto.
Section 4.4 Maintenance of Business. During the period from the date of this
----------- -----------------------
Agreement and continuing until the earlier of the termination of this Agreement
or the Time of Closing, the Company shall carry on its business in the usual and
ordinary course in substantially the same manner as conducted prior to the date
of this Agreement and, to the extent consistent with such business, use all
reasonable efforts to preserve intact its present business organizations, keep
available the services of its present service providers and preserve its
relationships with customers, suppliers, distributors, licensors, licensees, and
others having business dealings with it, with the intent that its goodwill and
ongoing businesses shall be unimpaired at the Time of Closing. The Company
shall promptly notify P-Com and Purchaser in writing of any event or occurrence
not in the ordinary course of business of the Company, and any event which could
have a material and adverse effect on the business condition of the Company.
References in this Section 4.4 to the Disclosure Letter shall mean the
Disclosure Letter as at the date of this Agreement. Except as expressly
contemplated by this Agreement, the Company, without the prior written consent
of P-Com and Purchaser shall not:
(a) Accelerate, amend or change the period of exercisability of
options, warrants, stock or purchase rights or authorize cash payments in
exchange therefor or perform any actions that would prohibit the pooling of
interests accounting treatment, except to the extent disclosed in the Disclosure
Letter;
(b) Enter into any commitment or transaction not in the ordinary
course of business to be performed over a period longer than six (6) months in
duration, or, except as in accordance with its existing capital budget
previously disclosed to P-Com and
44
Purchaser, to purchase fixed assets with an aggregate purchase price exceeding
(Pounds)12,000;
(c) Grant any severance or termination pay to any service provider,
except to the extent disclosed in the Disclosure Letter;
(d) Transfer to any person or entity any rights to the Company's
Intellectual Property Rights, except licenses of Intellectual Property Rights in
connection with the sale of the Company's products in the ordinary course of
business consistent with past practice;
(e) Enter into or amend any agreements pursuant to which any other
party is granted marketing or other similar rights of any type or scope with
respect to any products of Company;
(f) Violate, amend or otherwise modify in any material way the terms
of any contract except that with respect to transactions of the type
contemplated in Section 3.1(aj) of this Agreement which shall not be violated,
amended or modified in any way.
(g) Except with prior consultation with P-Com and Purchaser, commence
a lawsuit other than for the routine collection of bills;
(h) Except to the extent disclosed in the Disclosure Letter declare or
pay any dividends on or make any other distributions or pay any bonus or other
form of compensation or any other consideration outside the normal course of
business (whether in cash, stock or property) in respect of any shares of the
Company or otherwise, or split, combine or reclassify any of its shares or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of the Company, or repurchase or otherwise
acquire, directly or indirectly, any shares of the Company except repurchases of
shares of the Company at cost from former service providers in accordance with
the terms of agreements providing for the repurchase of shares in connection
with any termination of service to the Company;
(i) Except to the extent disclosed in the Disclosure Letter issue,
deliver or sell or authorize or propose the issuance, delivery or sale of or
authorization of, the purchase of any shares of the Company or securities
convertible into, or subscriptions, rights, warrants or options to acquire, or
other agreements or commitments of any character obligating it to issue any such
shares or other convertible securities, other than the issuance of shares of the
Company upon the exercise of previously outstanding options and warrants to
purchase Company's capital stock;
(j) Cause or permit any amendments to Company's Memorandum or
Articles of Association;
(k) Acquire or agree to acquire by merging or consolidating with, or
45
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire any
assets which are material, individually or in the aggregate, to the business
condition of the Company;
(l) Sell, lease, license or otherwise dispose of any of its properties
or assets except in the ordinary course of business;
(m) Incur any indebtedness for borrowed money other than trade debts
in the normal course of business or guarantee any such indebtedness or issue or
sell any debt securities or guarantee any debt securities of others;
(n) Except to the extent disclosed in the Disclosure Letter adopt or
amend any employee benefit plans, or enter into any employment contract, pay any
bonus or remuneration to any service provider, or increase the salaries or wage
rates of its employees other than pursuant to scheduled employee reviews under
the Company's normal employee review cycle or in connection with the hiring of
employees other than officers in the ordinary course of business, in all cases
consistent with past practice, or otherwise increase or modify the compensation
or benefits payable or to become payable by the Company to any of its service
providers;
(o) Revalue any of its assets, including, without limitation, writing
down the value of inventory or accounts receivable;
(p) Liquidate or discount any debt or subject any debt to a claim or
setoff;
(q) Except to the extent disclosed in the Disclosure Letter pay,
discharge or satisfy in an amount in excess of (Pounds)5,000 in any one case any
claim, liability or obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction in
the ordinary course of business consistent with past practice of liabilities
reflected or reserved against in the Financial Statements or the Management
Accounts;
(r) Make any material Tax election other than in the ordinary course
of business and consistent with past practice, change any material tax election,
adopt any material Tax accounting method other than in the ordinary course of
business and consistent with past practice, change any material Tax accounting
method, file any material Tax return (other than any estimated tax returns,
payroll tax returns or sales tax returns) or any amendment to a material Tax
return other than in the ordinary course of business, enter into any closing
agreement, settle any Tax claim or assessment or consent to any Tax claim or
assessment;
(s) Fail to pay or otherwise satisfy its material monetary obligations
as they become due or consistent with past practice, except such as are being
contested in
46
good faith;
(t) Waive or commit to waive any rights of substantial value;
(u) Cancel, amend or, other than in the ordinary course upon
expiration of a policy term, renew any material insurance policy;
(v) Alter, or enter into any commitment to materially alter, its
interest in any corporation, association, joint venture, partnership or business
entity in which the Company directly or indirectly holds any interest on the
date hereof;
(w) Intentionally take or agree to take (in writing or otherwise) any
action which any of the Securityholders knew or had reason to believe would make
any of the representations and warranties materially incorrect or untrue; or
(x) Except as set forth in the Disclosure Letter, enter into any
transactions with any affiliates of the Company.
(y) Maintain the Subsidiaries as dormant companies.
Section 4.5 Access to Information. The Company will give P-Com and Purchaser
----------- ---------------------
and their respective accountants, legal counsel and other representatives all
reasonable access, during normal business hours, to all of the properties,
books, contracts, commitments, and records relating to the Company's business
(provided that such access shall be conducted in a manner that is not
unreasonably disruptive to the Company's business) and the Company will furnish
to P-Com and Purchaser, their respective accountants, legal counsel, and other
representatives during such period all such information concerning its business
or assets as P-Com or Purchaser may reasonably request; provided, that any
furnishing of such information pursuant hereto or any investigation by P-Com or
Purchaser shall not affect P-Com's or Purchaser's right to rely on, or remedies
in relation to any breach of the representations, warranties, agreements and
covenants made by the Company and the Securityholders in this Agreement. The
Company and the Securityholders shall provide such cooperation as P-Com and
Purchaser shall reasonably require in relation to the financial statements of
the Company for the period ending on or before December 31, 1997, including, but
not limited to, executing any and all written representations reasonably
required by Purchaser's accountants.
Section 4.6 Regulation S Compliance. The Company and each Securityholder
----------- -----------------------
agrees to comply with all requirements of Regulation S. For a period of 40 days
from the Time of Closing (the "Restricted Period"), neither it nor any of its
affiliates will:
(a) offer or sell any Purchase Shares;
(b) engage in any Directed Selling Efforts with respect to such
Purchase Shares;
47
(c) offer or sell such Purchase Shares other than: (A) in
accordance with Rule 903 or Rule 904 of Regulation S; (B) pursuant to
registration under the Securities Act or (c) pursuant to an available exemption
therefrom;
(d) offer or sell such Purchase Shares to any U.S. Person or for
the account or benefit of any U.S. Person;
(e) enter into any short sales with respect to the Common Stock
of Purchaser, and
(f) otherwise violate Regulation S.
Section 4.7 Necessary Consents. Prior to the Closing, the Company and the
----------- ------------------
Securityholders will obtain such written consents and take such other actions as
may be necessary or appropriate to comply with the obligations of the Company
and the Securityholders under this Agreement, the Escrow Agreement and the
Closing Documents to allow the consummation of the transactions contemplated
thereby. The Company and the Principal Securityholders shall use all reasonable
endeavours (in conjunction with P-Com and Purchaser if appropriate) to obtain
such written consents and take such other actions as may be necessary or
appropriate to allow the Company to continue its business after Closing when the
Securities are transferred to Purchaser.
Section 4.8 Best Efforts.
----------- ------------
(a) The Company will perform and fulfil all obligations to be
performed and fulfilled under this Agreement by it, and all the conditions
precedent to the consummation of the transactions to be timely satisfied, to the
end that the transactions contemplated by this Agreement shall be effected
substantially in accordance with its terms. The Securityholders and the Company
will cooperate with Purchaser in such actions and in securing requisite
approvals and shall deliver such further documents as Purchaser may reasonably
request as necessary to evidence such transactions. The Securityholders
guarantee the performance by the Company of its obligations hereunder up to and
including the Time of Closing and for the avoidance of doubt this guarantee of
such obligations up to and including the Time of Closing shall not be affected
by Closing. This guarantee and Purchaser's rights under it shall not be
affected or prejudiced by Purchaser varying, releasing or omitting or neglecting
to enforce any of the terms of this Agreement or by any time being given to any
indulgence granted to the Company or any other facts or circumstances which
would or might discharge a surety or guarantee.
(b) Purchaser and P-Com will obtain such written consents and take
such other actions as may be necessary or appropriate to comply with its
obligations under this Agreement, the Escrow Agreement and the Closing Documents
to allow the consummation of the transactions contemplated thereby. Purchaser
and P-Com will perform and fulfil all obligations to be performed and fulfilled
by it under this Agreement and all the conditions precedent to the consummation
of the transactions contemplated by this Agreement
48
shall be effected substantially in accordance with its terms. Purchaser and P-
Com will cooperate with the Company and the Securityholders in such actions and
in securing requisite approvals and shall deliver such further documents as the
Company or the Securityholders may reasonably request as necessary to evidence
such transactions.
Section 4.9 Exclusivity; Acquisition Proposals.
----------- ----------------------------------
(a) The Securityholders and the Company shall not knowingly, directly
or indirectly, through any officer, director, agent or representative of the
Company (including, without limitation, investment bankers, attorneys,
accountants and consultants), or otherwise:
(i) solicit, initiate or further the submission of proposals or
offers from, or enter into any agreement with, any firm, corporation,
partnership, association, group or other person or entity, individually or
collectively (including, without limitation, any managers or employees of the
Company or any affiliates), other than Purchaser and its professional advisors
(a "Third Party"), relating to any acquisition or purchase or license of all or
any material portion of the assets of, or any equity interest in, the Company or
any merger, consolidation or business combination with the Company;
(ii) participate in any discussions or negotiations regarding, or
furnish to any Third Party any confidential information with respect to the
Company, P-Com or Purchaser in connection with any acquisition or purchase or
license of all or any material portion of the assets of, or any equity interest
in, the Company or any merger, consolidation or business combination with the
Company; or
(iii) cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any Third Party to undertake
or seek to undertake any acquisition or purchase or license of all or any
material portion of the assets of, or any equity interest in, the Company or any
merger, consolidation or business combination with the Company.
(b) In the event that, prior to termination of this Agreement, the
Company receives any offer or indication of interest from any Third Party
relating to any acquisition or purchase or license of all or any portion of the
assets of, or any equity interest in, the Company or any merger, consolidation
or business combination with the Company, the Securityholders shall cause the
Company to promptly notify Purchaser in writing, and shall in any such notice,
set forth in reasonable detail the identity of the Third Party and the terms and
conditions of any proposal.
(c) The Securityholders shall cause the Company to immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any Third Party with respect to any of the foregoing.
49
Section 4.10 Breach of Representations, Warranties, Agreements and Covenants.
------------ ---------------------------------------------------------------
The Company and the Securityholders shall not intentionally take, or
deliberately fail to take, any action between the date hereof and the Time of
Closing which they know would cause or constitute a material breach of any of
the Warranties. In the event of, and promptly after becoming aware of, the
actual, pending or threatened occurrence of any event which would cause or
constitute such a breach or inaccuracy, the Securityholders and the Company
shall give detailed written notice thereof to P-Com and Purchaser and shall use
all reasonable endeavours to prevent or promptly remedy such breach or
inaccuracy.
Section 4.11 Legal Conditions. P-Com and Purchaser shall take all reasonable
------------ ----------------
actions necessary to comply promptly with all legal requirements which may be
imposed on either of them with respect to the consummation of the transactions
set forth herein and will promptly cooperate with and furnish information to the
Company and the Securityholders in connection with any such requirements imposed
upon them in connection with the consummation of the transactions set forth
herein. P-Com and Purchaser shall take all reasonable actions to obtain (and to
cooperate with the Company and the Securityholders in obtaining) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity required to be obtained or made by P-Com or Purchaser) in connection with
the consummation of the transactions set forth herein or the taking of any
action contemplated thereby or by this Agreement, and to defend such lawsuits or
other legal proceedings challenging this Agreement or the consummation of the
transactions contemplated hereby as P-Com and Purchaser deem advisable in good
faith, to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated hereby as P-Com and Purchaser deem it advisable in good faith, and
to effect all necessary registrations and filings and submissions of information
as P-Com and Purchaser deem advisable in good faith required by any Governmental
Entity, and to fulfil all conditions to this Agreement.
Section 4.12 Shareholders' Meeting. The Securityholders shall, unless they
------------ ---------------------
otherwise resign, cause all directors and current officers of the Company and
the Subsidiaries to resign as of the Closing.
Section 4.13 No Transfer. Each Securityholder agrees not to sell, offer for
------------ -----------
sale, assign, transfer or otherwise encumber any of the Securities to any third
party other than Purchaser. Each Securityholder also waives any rights of first
offer or refusal or similar rights that it has with respect to the transfer of
any Security by any Securityholder to P-Com or Purchaser.
Section 4.14 Legal Conditions of the Company and the Securityholders. The
------------ -------------------------------------------------------
Company and the Securityholders shall take all reasonable actions necessary to
comply promptly with all legal requirements which may be imposed on them with
respect to the consummation of the transactions set forth herein and will
promptly cooperate with and furnish information to P-Com or Purchaser in
connection with any such requirements imposed upon them in connection with the
consummation of the transactions set forth herein. The Company and the
Securityholders shall take all reasonable actions to obtain (and to cooperate
with P-Com and Purchaser in obtaining) any consent, authorization, order or
approval of, or any exemption by,
50
any Governmental Entity required to be obtained or made by the Company and the
Securityholders in connection with the consummation of the transactions set
forth herein or the taking of any action contemplated thereby or by this
Agreement and to defend such lawsuits or other legal proceedings challenging
this Agreement or the consummation of the transactions contemplated hereby as
the Company and the Securityholders deem advisable in good faith, to lift or
rescind any injunction or restraining order or other order adversely affecting
the ability of the parties to consummate the transactions contemplated hereby as
the Company and the Securityholders deem it advisable in good faith, and to
effect all necessary registrations and filings and submissions of information as
the Company and the Securityholders deem advisable in good faith required by any
Governmental Entity and to fulfil all conditions to this Agreement.
Section 4.15 Pooling Treatment. Purchaser, the Company and each Securityholder
------------ -----------------
agree that they will not take any action, or fail to take any action, to prevent
P-Com and Purchaser from accounting for the purchase of the Securities for
financial accounting and reporting purposes as a pooling of interests in
accordance with United States generally accepted accounting principles and the
pronouncements of the SEC. Concurrently with the execution of this Agreement,
the accountants for each of P-Com and the Company shall provide the other with a
draft opinion in writing in a form acceptable to the other that such transaction
may be accounted for as a pooling of interests transaction.
ARTICLE V CLOSING
Section 5.1 Time of Closing. The transactions contemplated by this Agreement
----------- ---------------
shall be completed (the "Closing") with the expectation that the Closing shall
occur on or about November 24, 1997, and no later than December 1, 1997 unless
otherwise agreed to in writing by Purchaser and the Securityholders (the "Time
of Closing"). The Closing shall take place at the London office of Xxxxxxx,
Xxxx and Xxxx or at such other place or date as may be agreed to in writing by
P-Com and Purchaser, Xxxxxxx Xxxxxxx or Xxxx Xxxxxxx as representatives of the
Securityholders and the Company. The "Closing" shall mean the deliveries to be
made by the parties hereto at the Time of Closing in accordance with this
Agreement.
Section 5.2 Deliveries by Company and Securityholders. At the Closing, the
----------- -----------------------------------------
Securityholders and the Company, as applicable, shall deliver to Purchaser, all
duly and properly executed, the following:
(a) Certificates and Instruments. Certificates representing the
----------------------------
Securities accompanied by duly executed stock transfers accompanied by
irrevocable powers of attorney in the form attached hereto as Exhibit 5.2 duly
executed by each Securityholder authorizing Purchaser or its nominee to exercise
all voting or other rights attaching to the securities until registration of
Purchaser or its nominee as the holders thereof or, in the case of Securities to
be surrendered, instruments effecting such surrender.
51
(b) Escrow Agreement. The Escrow Agreement in the form attached
----------------
hereto as Exhibit 2.2 duly executed by the Company and each Securityholder.
(c) Corporate Minute Books. The corporate minute books of the Company
----------------------
and its subsidiaries duly updated as of the Closing accompanied by the share
certificates of all the issued shares of the Subsidiaries.
(d) Certificate of Good Standing. Certificate of Good Standing dated
----------------------------
as of a recent date, with respect to the Company and its subsidiaries issued by
Companies House.
(e) Closing Documents. All other Closing Documents and performance of
-----------------
the transactions contemplated hereby.
(f) Books and Records. All of the existing share registers and
-----------------
statutory records of the Company and such subsidiaries including certificates of
incorporation, the company seal, register of members, share certificate book.
(g) Consents. Evidence that all consents, approvals, or
--------
authorizations of or notifications to any third parties (including governmental
agencies), if any, required to issue and exchange the Securities for the
consideration set forth herein, and to consummate the transactions contemplated
hereby, have been obtained or made, as applicable, by the Company and/or the
Securityholders.
(h) Certificate. A certificate from the Managing Director of the
-----------
Company and the Securityholders, dated the Closing Date, containing the
information required pursuant to Section 6.1(f).
(i) [Deleted]
(j) Service Agreements. Executed Service Agreements in the form
------------------
attached hereto as Exhibit 5.2(j)(ii) executed by Xx. X. Xxxxxxx and Xxxxxxx
Xxxxxxxx.
(k) Deed of Tax Indemnity. A deed of tax indemnity (the "Tax Deed")
---------------------
in the form attached hereto as Exhibit 5.2(k) duly executed as a deed by each of
the Securityholders.
(l) Resignations. Resignations of the directors and officers of the
------------
Company and each Subsidiary, each such resignation to be in the form attached
hereto as Exhibit 5.2(l) and executed as a deed and the resignation of Coopers &
Xxxxxxx as independent accountants of the Company and of each subsidiary.
(m) Pooling Opinions. An opinion from Coopers & Xxxxxxx as to that
----------------
firm's concurrence regarding the appropriateness of pooling of interests
accounting for the purchase of the Securities under the Accounting Principles
Board Opinion No. 16.
52
(n) Charges and Liens. All liens other than those arising in the
-----------------
ordinary course of business and all charges on the Company's assets shall have
been discharged and removed and all necessary filings made at Companies House in
relation thereto.
(o) Disclosure Letter. A disclosure letter updated at the Time of
-----------------
Closing in a form and substance accepted in writing by P-Com, such acceptance
not to be unreasonably withheld or delayed in respect of disclosures arising
after the date of this Agreement.
(p) Bank Loans. Statements of account for every current, deposit,
----------
loan and other account of the Company as of Closing.
(q) Minutes. Minutes of the board of directors of the Company and of
-------
each of the Subsidiaries accepting the resignations of the directors and
officers referred to in Section 5.2(l) above and appointing the nominees of
Purchaser to the board and as Company Secretary.
(r) Deed of Resignation and Appointment of Trustees. The deed of
-----------------------------------------------
resignation and appointment of the trustees of the R T Masts Pension Schemes in
the form set out in Exhibit 5.2(r).
(s) Non-Competition Agreements. Non-Competition Agreements in the
--------------------------
form attached hereto as Exhibit 8.16, duly executed by each of Xxxxxxx Xxxxxxx,
Xxxx Xxxxxxx and Xxxxxx Xxxxxxx.
(t) Service Agreements. Services Agreements in the form attached
------------------
hereto as Exhibit 5.2(j)(ii), duly executed by each of Xxxx Xxxxxxx and Xxxxxxx
Xxxxxxxx.
(u) Other Documents. Such other documents and instruments as
---------------
Purchaser or its counsel shall reasonably deem necessary to consummate the
transactions contemplated hereby.
All documents delivered to P-Com and Purchaser under this Agreement shall
be in form and substance reasonably satisfactory to P-Com and Purchaser.
Documents in the Agreed Form or in the form attached to this Agreement are in a
form satisfactory to P-Com and Purchaser. Nothing in this Agreement shall
oblige Purchaser to buy any of the securities or otherwise complete this
Agreement unless the sale and purchase of all operable securities is reasonably
completed simultaneously.
Section 5.3 Sale of all Securities.
----------- ----------------------
(a) Purchaser may in its absolute discretion waive in writing any
requirement contained in Section 5.2 or Section 6.1.
(b) The Securityholders (acting unanimously) may in their
absolute discretion waive any requirement contained in Section 5.4 or Section
6.2.
53
(c) Purchaser shall not be obliged to complete the purchase of
any of the Securities unless the purchase of all the Securities is completed in
accordance with this Agreement.
Section 5.4 Deliveries by Purchaser. At the Closing, Purchaser shall deliver,
----------- -----------------------
or cause to be delivered, to the Company and/or the Securityholders or into
escrow, as applicable, all duly and properly executed, the following:
(a) Payment. (Pounds)8,350,000 of the Purchase Shares, as calculated
-------
in accordance with Section 2.2 hereof, shall be delivered to the Securityholders
at the Time of Closing. (Pounds)900,000 of the Purchase Shares, as calculated
in accordance with Section 2.2 hereof, shall be delivered at the Time of Closing
into escrow set forth in Section 2.2(i) and evidence satisfactory to the
Securityholders' Solicitors that both such payments have been made. For the
avoidance of doubt, receipt by the Securityholders' Solicitors of faxed copies
of the share certificates in respect of the Purchase Shares and written faxed
confirmation by the issuing transfer agent that the Purchase Shares have been
issued shall be deemed to be evidence satisfactory to the Securityholders'
Solicitors.
(b) Resolutions. A copy of the resolutions of the Board of Directors
-----------
of P-Com and Purchaser, certified by their corporate secretary as having been
duly and validly adopted and being in full force and effect, authorizing
execution and delivery of this Agreement, the Escrow Agreement and the Closing
Documents and performance of the transactions contemplated hereby by P-Com and
Purchaser.
(c) Consents. Evidence that all consents, approvals or authorizations
--------
of or notifications to any third parties (including governmental agencies), if
any, required to purchase the Securities and to consummate the transactions
contemplated hereby have been obtained or made, as applicable, by P-Com and
Purchaser.
(d) The Escrow Agreement in the form attached hereto as Exhibit 2.2
duly executed by P-Com, Purchaser and by Xxxxxxx, Xxxxxxx & Xxxxxxxx.
(e) The Service Agreements and Proprietary Information and Inventions
Agreements referred to in Section 5.2(j) duly executed by P-Com, Purchaser
and/or the Company as appropriate.
(f) The Tax Deed duly executed as a Deed by Purchaser and/or P-Com in
the form attached hereto as Exhibit 5.2(k).
(g) Disclosure Letter. Any Disclosure Letter of P-Com or Purchaser
-----------------
updated at the Time of Closing in a form and substance accepted in writing by
Xxxx Xxxxxxx or Xxxxxxx Xxxxxxx as representatives of the Securityholders, such
acceptance not to be unreasonably withheld or delayed in respect of disclosures
arising after the date of this Agreement.
54
(h) Pooling Opinion. An opinion from Price Waterhouse as to that
---------------
firm's concurrence regarding the appropriateness of pooling of interests
accounting for the purchase of the Securities under the Accounting Principles
Board Opinion No. 16.
(i) Other Documents. Such other documents and instruments as the
---------------
Securityholders or their counsel reasonably shall deem necessary to consummate
the transactions contemplated hereby.
All documents delivered to the Securityholders shall be in form and
substance reasonably satisfactory to the Securityholders.
Section 5.5 Further Assurances. At or after the Time of Closing, each party
----------- ------------------
shall prepare, execute, and deliver, at the expense of the party requesting the
actions or execution, such further instruments of conveyance, sale, assignment,
or transfer, and shall take or cause to be taken such other or further action
within their immediate control, as any party shall reasonably request of any
other party at any time or from time to time in order to perfect, confirm, or
evidence in Purchaser title to the Securities or to consummate, in any other
manner, the terms and provisions of this Agreement or to comply with any
applicable United Kingdom or United States laws, statutes, local laws, licensing
requirements, rule and regulations and judicial and governmental administration
decisions.
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS
Section 6.1 Conditions to Obligations of P-Com and Purchaser. Each and every
----------- ------------------------------------------------
obligation of Purchaser to be performed at the Closing shall be subject to the
satisfaction as of or before the Time of Closing of the following conditions
(unless waived in writing by P-Com or Purchaser):
(a) Certificates for Securities. Purchaser shall have received all
---------------------------
written certificates and other documents evidencing the Securities.
(b) Representations and Warranties. The Company and the
------------------------------
Securityholders shall deliver to P-Com and Purchaser an updated Disclosure
Letter dated as of the Time of Closing as set out in Section 5.2(o) in respect
of disclosures arising after the date of this Agreement. The representations and
warranties of the Company and the Securityholders set forth in Section 3.1 of
this Agreement shall be true and correct when made and shall be true and correct
at and as of the Time of Closing as if such representations and warranties were
made as of such date and time.
(c) Performance of Agreement. All covenants, conditions, and other
------------------------
obligations under this Agreement which are to be performed or complied with by
the Securityholders and the Company, as the case may be, including Board of
Directors and shareholder approval, shall have been fully performed and complied
with at or prior to the Time of Closing, including the delivery of the
instruments and documents in accordance with
55
Section 5.2 hereof.
(d) No Material Adverse Effect. During the period from September 30,
--------------------------
1997 to the Closing, there shall not have been any material and adverse effect
on the business condition or prospects of the Company.
(e) Absence of Governmental or Other Objection. There shall be no
------------------------------------------
pending or threatened lawsuit challenging the transaction by any body or agency
of the United Kingdom, U.S federal, state, or local government, and the
consummation of the transaction shall not have been enjoined by a court of
competent jurisdiction as of the Time of Closing.
(f) Certificate of Managing Director and Securityholders. The Company
----------------------------------------------------
shall have delivered to Purchaser a certificate executed by its Managing
Director and the Securityholders, dated the date of the Closing, to the effect
that the conditions set forth in subsections (a), (b), (c) and (d) of this
Section 6.1, have been satisfied.
(g) Execution of Escrow Agreement. Purchaser shall have received
-----------------------------
fully executed copies of the Escrow Agreement from each of the Securityholders.
(h) Third Party Consents. The Company shall as detailed in Section
--------------------
3.1(ae) have obtained all third party change of control or ownership consents
and approvals required under any of the Contracts.
(i) Proprietary Agreements. The Company shall have delivered such
----------------------
Proprietary Information and Inventions Agreements in the form attached hereto as
Exhibit 5.2(j)(i) as have been signed by employees and consultants of the
Company.
(j) Securityholder Agreement. The Company shall have delivered a
------------------------
Securityholder Agreement in the form attached hereto as Exhibit 6.1(j), duly
executed by each Securityholder.
(k) Documents. All documents delivered to P-Com or Purchaser under
---------
this Agreement shall be in form and substance reasonably satisfactory to P-Com
or Purchaser. Documents in the Agreed Form or in the form attached to this
Agreement are in a form satisfactory to Purchaser.
(l) Schedules. If necessary or appropriate, the Company shall have
---------
updated or amended all schedules required by this Agreement, all such updated or
amended schedules in form and substance accepted by P-Com in writing such
acceptance not to be unreasonably withheld in respect of updates or amendments
arising after the date of this Agreement.
(m) Tax Forms. Each of the Securityholders shall have provided to P-
---------
Com and Purchaser an executed Form W-8 or Form W-9 properly reporting the
transactions set forth in this Agreement.
56
(n) Other Matters.
-------------
(i) Between September 30, 1997 and the Closing Date, the Company
shall not have suffered any damage, destruction or loss by reason of fire,
flood, accident, or other casualty, of such character as would interfere in a
materially adverse way with the continuous operation of the Company's business,
regardless of whether or not such loss was covered by insurance;
(ii) no strike shall be on-going on the Closing Date.
(o) Tax Deed. P-Com and Purchaser shall have received fully executed
--------
copies of the Tax Deed.
(p) Pooling of Interests Transaction. P-Com shall have received an
--------------------------------
opinion from Price Waterhouse, LLP and the Company shall have received an
opinion from Coopers & Xxxxxxx to the Company regarding each firms' concurrence
regarding the appropriateness of pooling of interests accounting for the
purchase of the Securities under the Accounting Principles Board opinion No. 16.
(q) The Company shall have delivered a Non-Competition Agreement in
the form attached hereto as Exhibit 8.16, duly executed by each of Xxxxxxx
Xxxxxxx, Xxxx Xxxxxxx and Xxxxxx Xxxxxxx.
(r) The Company shall have delivered Service Agreements in the form
attached hereto as Exhibit 5.2(j)(ii), duly executed by each of Xxxx Xxxxxxx and
Xxxxxxx Xxxxxxxx.
Section 6.2 Conditions to Obligations of the Company and the Securityholders.
----------- ----------------------------------------------------------------
Each and every obligation of the Company and the Securityholders to be performed
at the Time of Closing shall be subject to the satisfaction as of or before such
time of the following conditions (unless waived in writing by the Company or
Xxxxxxx Xxxxxxx or Xxxx Xxxxxxx as representatives of the Securityholders):
(a) Performance of Agreement. All covenants, conditions, and other
------------------------
obligations under this Agreement which are to be performed or complied with by,
as the case may be, P-Com or Purchaser shall have been fully performed and
complied with at or prior to the Time of Closing, including the delivery of the
instruments and documents in accordance with Section 5.4 hereof.
(b) Execution of Escrow Agreement. The Securityholders shall have
-----------------------------
received fully executed copies of the Escrow Agreement.
(c) Absence of Governmental or Other Objection. There shall be no
------------------------------------------
pending or threatened lawsuit challenging the transaction by any body or agency
of the United Kingdom, US federal, state or local government, and the
consummation of the transaction
57
shall not have been enjoined by a court of competent jurisdiction as of the Time
of Closing.
(d) No Material Adverse Effect. During the period from the date
--------------------------
hereof until the Closing, there shall have been no material and adverse effect
on the financial condition of P-Com and its subsidiaries taken as a whole. For
purposes of this Section 6.2(e), a "material and adverse effect" shall be
defined as the bankruptcy of P-Com, the placing of P-Com into receivership or a
similar catastrophic event relating to the value of the Purchase Shares (but not
including a change in the value of P-Com's Common Stock as quoted on the Nasdaq
NMS).
(e) The Securityholders shall have received all written certificates
and other documents evidencing (Pounds)8,350,000 of the Purchase Shares, as
calculated in accordance with Section 2.2 hereof, and Xxxxxxx Phleger & Xxxxxxxx
LLP shall have received all written certificates and other documents evidencing
(Pounds)900,000 of the Purchase Shares, as calculated in accordance with Section
2.2 hereof, and has confirmed (in writing) such receipt to the Securityholders'
Solicitors.
(f) The representations and warranties of P-Com and Purchaser set
forth in Section 3.2 of this Agreement were true and correct when made save as
disclosed in the P-Com Disclosure Letter and shall be true and correct as of the
Time of Closing as if such representations and warranties were made as of such
date and time.
(g) The Securityholders shall have received fully executed copies of
the Tax Deed.
(h) The Securityholders shall have received an opinion from Coopers &
Xxxxxxx and P-Com shall have received an opinion of Price Waterhouse LLP to P-
Com regarding each firms' concurrence regarding the appropriateness of pooling
of interests accounting for the purchase of the securities under the Accounting
Principles Board Opinion No. 16.
ARTICLE VII INDEMNIFICATION
Section 7.1 Survival of Representations, Warranties, Covenants and Agreements.
----------- -----------------------------------------------------------------
(a) Notwithstanding any investigation conducted at any time with
regard thereto by or on behalf of any party, all representations, warranties,
covenants, and agreements of the Company and each Securityholder shall survive
the execution, delivery, and performance of this Agreement, except as set forth
herein. All representations and warranties of the Company and the
Securityholders set forth in this Agreement shall be deemed to have been made
again by the Company and each Securityholder at and as of the Closing. No
investigation made by or on behalf of P-Com or Purchaser or any of their
respective affiliates with respect to the Company (including the Subsidiaries)
and the Securityholders shall be deemed to affect P-Com's or Purchaser's
reliance on the representations, warranties, covenants
58
and agreements of the Company and the Securityholders and shall not be a waiver
of P-Com's or Purchaser's or any of their respective affiliates' rights to
indemnification as herein provided. No investigation made by or on behalf of
the Company or the Securityholders or any of its respective affiliates with
respect to P-Com or Purchaser shall be deemed to affect the Company's or the
Securityholders' reliance on the representations, warranties, covenants and
agreements of P-Com and Purchaser and shall not be a waiver of the Company's or
the Securityholders' rights to indemnification as herein provided. All
representations and warranties of Purchaser and P-Com set forth in this
Agreement shall be deemed to have been made again by P-Com and Purchaser at and
as of Closing.
(b) As used in this Article VII, except as otherwise indicated in this
Article VII, any reference to a representation, warranty, agreement, or covenant
contained in any Section of this Agreement shall include the schedule relating
to such Section.
(c) P-Com and Purchaser may take action for any breach or non-
fulfilment of any warranties, covenants, undertakings, agreements and
representations on behalf of any other party or parties before or after Closing
notwithstanding that such breach or non-fulfilment was known to or discoverable
by P-Com and/or Purchaser before completion and notwithstanding that P-Com
and/or Purchaser should delay or otherwise fail to exercise its rights hereunder
or generally in such response.
(d) Nothing in this Agreement shall be construed as limiting in any
way the remedies that may be available to a party in the event of fraud relating
to any of the representations, warranties, agreements or covenants made by any
other party in this Agreement.
(e) Notwithstanding the expiration date of the representations,
warranties, covenants and agreements of the Company and the Securityholders set
forth herein, if Purchaser or any parent (including without limitation P-Com) or
subsidiary of Purchaser shall notify the Securityholders, the Escrow Agent or
the Escrow Committee pursuant to the Escrow Agreement with respect to the
submission of a claim during the time period of survivability of the
representations, warranties, covenants and agreements of the Company and the
Securityholders, each Securityholders' liability or obligation for Damages (as
hereinafter defined) shall continue in full force and effect until settled.
(f) Notwithstanding the expiration date of the representations,
warranties, covenants and agreements of P-Com and Purchaser set forth herein if
the Securityholders or the Company shall notify P-Com or Purchaser with respect
to the submission of a claim during the time period of survivability of the
representations, warranties, covenants and agreements of P-Com or Purchaser each
of P-Com's and Purchaser's liability shall continue in full force and effect
until settled, provided that the Securityholders and the Company notify brief
particulars of the claim to Purchaser and P-Com forthwith on becoming aware of
the same and within three months of the date of such notification the claim is
settled or proceedings are issued and served on P-Com and Purchaser in respect
of the same.
59
Section 7.2 Indemnification; Escrow Deposit of Purchase Shares.
----------- --------------------------------------------------
(a) The Company and each of the Securityholders (regardless of the
party making the representation, warranty, covenant or agreement) shall, to the
extent of the Escrow Shares, indemnify, reimburse, defend and hold harmless each
of P-Com, Purchaser and each of its respective parent, holding and subsidiary
companies as defined in Section 736 of the Companies Xxx 0000 (other than the
Securityholders) against any and all losses, liabili ties, damages, demands,
claims, suits, actions, judgments, and causes of action, assessments, costs, and
expenses, including, without limitation, interest, penalties, attorneys' and
other reasonable fees, and expenses properly incurred in investigating,
preparing, and defending against any litigation, commenced or threatened, and
any claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation (collectively, "Damages"), asserted against, resulting from, imposed
upon, or incurred or suffered, directly or indirectly, by P-Com and/or Purchaser
and any of its respective affiliates (other than the Securityholders), directly
or indirectly, as a result of or arising from or in connection with any
inaccuracy in or breach or non-fulfilment of any of the representations,
warranties, covenants, or agreements made by any of the Securityholders or the
Company in this Agreement or the Escrow Agreement or any facts or circumstances
constituting such an inaccuracy, breach, or non-fulfilment.
(b) The Company and the Securityholders hereby agree, jointly and
severally, to indemnify and hold harmless P-Com and Purchaser and each of their
respective parent, holding and subsidiary companies (as defined in Section 736
of the Companies Act 1985) against any and all losses, liabilities, damages and
courses of action, assessments, costs and expenses, including without
limitation, interest, penalties, attorneys' fees and any and all expenses
incurred in investigating, preparing and defending against any litigation
commenced or threatened:
(i) which arises as a result of the assets of any of the Pension
Schemes being insufficient to secure fully any relevant benefits for
members of such Pension Schemes accrued in respect of service up to August
31,1997 on the basis of the Minimum Funding Requirement basis of valuation
and in relation to any shortfall between such Minimum Funding Requirement
calculation and actual liabilities under the Pension Schemes;
(ii) as a result of benefits payable under the Pension Schemes
not complying with Article 119 of the Treaty of Rome.
(c) Absent fraud (for which the liability of the Securityholders shall
not be limited hereunder) and except for the Securityholders' obligations with
respect to the representations, warranties, covenants and agreements contained
in Sections 3.1(m)(i), 3.1(m)(iii) and 4.2 of this Agreement, for which the
Securityholders shall be liable to P-Com, Purchaser or each of its respective
parent, holding and subsidiary companies in an amount not to exceed
(Pounds)2,250,000 Purchaser shall use the Escrow Shares as its sole and
exclusive recourse
60
for the Company's and the Securityholders' obligations, representations,
warranties and agreements (or breach thereof) pursuant to this Agreement, the
Tax Deed and the Escrow Agreement.
Absent fraud (for which the liability of P-Com and Purchaser shall not
be limited hereunder) the liability of P-Com and Purchaser for their respective
obligations, representations, warranties, covenants and agreements (or breach
thereof) pursuant to this Agreement and the Escrow Agreement shall be limited to
(Pounds)900,000 in the aggregate.
(d) The parties agree that the procedure for indemnification provided
for in this Article VII of this Agreement shall be subject to and effected in
accordance with the provisions set forth in the Escrow Agreement.
(e) The liability of the Company under the warranties and
representations set out in Section 3.1 ceases absolutely at the Time of Closing.
Section 7.3 Termination of Indemnity and Representations and Warranties.
----------- -----------------------------------------------------------
(a) Absent fraud or a breach of the obligations of the Securityholders
pursuant to Section 4.3 hereof (for which the liability of the Securityholders
shall not be limited in amount or duration hereunder), the indemnity obligations
of the Company and the Securityholders pursuant to this Article VII (and the
representations, warranties, covenants and other agreements of the Company and
the Securityholders set forth in this Agreement, except otherwise set forth
herein) for a breach or inaccuracy of, or a failure to perform or comply with,
any or all of the Company's and the Securityholders' respective representations,
warranties, covenants and agreements and all other rights, claims, actions and
causes of action at law in respect of such representations, warranties,
covenants and agreements and all liabilities of the Company and the
Securityholders under the Tax Deed shall terminate upon the earlier of March 31,
1998 or the publication date of the independent accountants' report in P-Com's
Annual Report on Form 10-K that includes the audited results for the Company for
the fiscal year ended December 31, 1997; provided, however that the indemnity
obligations of the Securityholders with respect to representations and
warranties contained in Sections 3.1(m)(i) and 3.1(m)(iii) and such
representations and warranties shall terminate upon the date one (1) year from
and after the Time of Closing. For purposes of the indemnifications set forth
herein, the fair market value of one share of P-Com, Inc. Common Stock shall
equal the per share price used in calculating the Purchase Price.
(b) Absent fraud (for which the liability of P-Com and Purchaser shall
not be limited in amount or duration hereunder), the obligations of P-Com and
Purchaser pursuant to the representations, warranties, covenants and other
agreements of P-Com and Purchaser set forth in this Agreement, except otherwise
set forth herein for a breach or inaccuracy of, or a failure to perform or
comply with, any or all of P-Com's and Purchaser's respective representations,
warranties, covenants and agreements and all other rights, claims, actions and
causes of action at law in respect of such representations, warranties,
covenants and agreements and all liabilities of P-Com and Purchaser shall
terminate upon the earlier of
61
March 31, 1998 or the publication date of the independent accountants' report in
P-Com's Annual Report on Form 10-K that includes the audited results for the
Company for the fiscal year ended December 31, 1997.
Section 7.4 Limitation on Indemnification. Notwithstanding any provision of
----------- -----------------------------
this Article VII, P-Com and Purchaser shall each be entitled to indemnification
under this Article VII, and all other rights, claims, actions and causes of
action in respect of the representations, warranties, covenants and agreements
herein contained and under the Tax Deed, only when the aggregate amount of all
entitlements to indemnification hereunder and under the Tax Deed exceeds 65,000
British Pounds Sterling, at which point P-Com or Purchaser shall be entitled to
the full amount pursuant to this Article VII and not just the excess over
(Pounds)65,000 including such liability cushion. P-Com and Purchaser shall not
be entitled to both claim more than once in respect of each matter giving rise
to indemnification. This Section 7.4 shall not apply to any claim made in
respect of Section 4.2.
Section 7.5 Limitations.
----------- -----------
(a) Provided that (i) where the total of all claims made by Purchaser,
P-Com and its affiliates pursuant to this Agreement and the Tax Deed is less
than (Pounds)900,000 and the Securityholders have previously irrevocably and
unconditionally satisfied in full such claims or (ii) where the total of all
such claims is more than (Pounds)900,000 and the Securityholders have previously
irrevocably and unconditionally satisfied to the fullest extent possible such
claims by the Escrow Shares, P-Com and Purchaser shall and shall procure that
the Company and the parent, holding company and subsidiary of P-Com, Purchaser
or Company shall (subject to the remainder of this Section 7.5(a)) reimburse to
the Securityholders all amounts (not exceeding the aggregate sum paid by the
Securityholders) paid by the Securityholders in respect of any claim which is
subsequently recovered by Purchaser, P-Com or the Company and the parent,
holding company and subsidiary of P-Com, Purchaser or Company (as the case may
be) from any insurance company or other third party directly referable to the
subject matter of such claim. Such reimbursement shall be paid by Purchaser, P-
Com or the Company (as the case may be) promptly after the receipt of such
amount from the relevant insurance company or third party. Purchaser, P-Com or
the Company (as the case may be) shall deduct from any amounts received (x) its
costs and expenses incurred in recovering such sum from the third party or
insurance company (including any taxation payable by reason of the receipt
thereof) and (y) (where the foregoing (ii) above applies) the amount of any
unsatisfied claims;
(b) Subject to Purchaser, P-Com and the Company being secured and
indemnified to their respective satisfaction against all costs and expenses
which they may incur, Purchaser hereby undertakes to use and to procure that the
Company uses its reasonable endeavours to enforce any rights to recover such
sums from insurers or other third parties and will keep the Securityholders
fully informed of its actions and take such action as they reasonably request;
(c) No Claims under the Agreement shall be made against the
Securityholders:
(i) to the extent that the breach giving rise to a possible claim
occurs or is
62
increased by reason of any voluntary act or transaction which occurs after
Closing carried out or effected by Purchaser or the Company where the act or
transaction is not in the ordinary course of its business and is not carried out
by or under the direction of any Securityholder or as a consequence of any act
or omission on or before Closing of any of the Securityholders or the Company or
any shareholder or officer thereof or any associate or connected person of all
or any of the foregoing; and Purchaser was aware (otherwise than through the
knowledge of any Securityholder or any present director officer or employee of
the Company) or ought reasonably to have been so aware through disclosures
fairly and expressly made in the Disclosure letter that such act or transaction
would give rise to the claim concerned;
(ii) by reason of any matter which would not have arisen but for the
coming into force of any legislation not in force at the date of this Agreement
which takes effect retrospectively to the period before Closing or;
(iii) by reason of the withdrawal of any extra statutory concession
made by the Inland Revenue (or any other fiscal authority) and presently in
operation;
(iv) to the extent specific allowance, provision or reserve has been
or is made in the Financial Statements or the Agreed Execution Accounts or the
Agreed Completion Accounts in respect of the matter to which such liability
relates;
(v) to the extent that the breach giving rise to a possible claim
arises as a result of any change in the basis of accounting after the date of
this Agreement except where effected in order to conform to GAAP not previously
adopted by the Company or any change in the accounting reference date of the
Company after the date of this Agreement;
(d) Purchaser shall be entitled to claim both under the Agreement and the
Tax Deed by reference to the same subject matter but the Securityholders shall
not be liable in respect of any breach of any warranty, undertaking or agreement
given in this Agreement if and to the extent that the loss occasioned thereby
has been recovered under the Tax Deed and vice versa;
(e) Notwithstanding anything expressed or implied in this Agreement or the
Escrow Agreement or the Closing Documents to the contrary, any payment by the
Securityholders pursuant to a claim shall be treated for all purposes by the
parties as a reduction in the consideration payable for the Securities and the
purchase consideration shall be modified accordingly;
(f) The provisions of Clause 3 of the Tax Deed shall apply mutatis mutandis
to any claims under the Tax Warranties set out in paragraphs (k) to (x)
inclusive of Article III and shall be deemed to be set out herein in full.
(g) Nothing in this Section 7.5 shall limit the liability of any
Securityholder thereunder to the extent that such Securityholder has been
fraudulent or wilfully deceptive or has deliberately failed to disclose to
Purchaser information known to him or her.
63
ARTICLE VIII MISCELLANEOUS PROVISIONS
Section 8.1 Notice. All notices and other communications required or permitted
----------- ------
under this Agreement shall be delivered to the parties at the address set forth
below their respective signature blocks, or at such other address that they
designate by notice to all other parties in accordance with this Section 8.1:
If to the Company
or Securityholders: X X Xxxxxxx
c/o Coopers & Xxxxxxx
Corporate Finance Department
Central Business Exchange
Xxxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxxx Xxxxxx
XX0 0XX
Xxxxxx Xxxxxxx
Telecopy No.: 00-0000-000000
with a copy to: Xxxxx Xxxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Grafton Gate Xxxx
Xxxxxxx Xxxxxx Xxxxxx
XX0 0XX
Xxxxxx Xxxxxxx
Attn.: Xxxxxxx X. Xxxxxxx
Telecopy No.: 00-0000 000000
If to P-Com: P-Com, Inc.
0000 X. Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx Sophie
Telecopy No.: (000) 000-0000
If to Purchaser: P-Com Services (UK) Limited
0000 Xxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxxxx Xxxxx
Telecopy No.: (000) 000-0000
64
with a copy to: Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Two Embarcadero Place
0000 Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
All notices and communications shall be deemed to have been received: (i) in
the case of personal delivery, on the date of such delivery; (ii) in the case of
facsimile transmission, on the date on which the sender receives confirmation by
telex or facsimile transmission that such notice was received by the addressee,
provided that a copy of such transmission is additionally sent by mail as set
forth in (iv) below; (iii) in the case of overnight air courier, on the second
business day following the day sent, with receipt confirmed by the courier; and
(iv) in the case of mailing by first class certified or registered mail, postage
prepaid, return receipt requested, on the fifth business day following such
mailing.
Section 8.2 Entire Agreement. This Agreement, the exhibits and schedules
----------- ----------------
hereto, and the documents referred to herein embody the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof,
and supersede all prior and contemporaneous agreements and understandings, oral
or written, relative to said subject matter other than any misrepresentation or
breach of warranty which constitutes fraud.
Section 8.3 Binding Effect; Assignment. This Agreement and the various rights
----------- --------------------------
and obligations arising hereunder shall inure to the benefit of and be binding
upon the Securityholders, their successors and permitted assigns, the Company,
its successors and permitted assigns, P-Com, its successors and permitted
assigns and Purchaser and their successors and permitted assigns. Neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
transferred or assigned (by operation of law or otherwise) (i) by any of
Purchaser, P-Com or the Company without the prior written consent of X X Xxxxxxx
or M Xxxxxxx acting as representative of all the stockholders, (ii) by any
Securityholder without the prior written consent of P-Com and Purchaser.
Section 8.4 Expenses of Transaction. P-Com and Purchaser shall bear their own
----------- -----------------------
respective costs and expenses in connection with this Agreement and the
transactions contemplated hereby for their own account. The Securityholders
shall bear their own costs and expenses in connection with this Agreement and
the transactions contemplated hereby. The Company shall not (unless stated
otherwise in this Agreement, the Escrow Agreement or the Closing Documents) be
liable for any costs or expenses in connection with this Agreement and the
transactions contemplated.
Section 8.5 Waiver; Consent. This Agreement may not be changed, amended,
----------- ---------------
terminated, augmented, rescinded, or discharged (other than by performance), in
whole or in part, except by a writing executed by the parties hereto, and no
waiver of any of the provisions or conditions of this Agreement or any of the
rights of a party hereto shall be effective or binding unless such waiver shall
be in writing and signed by the party claimed to have given
65
or consented thereto. Except to the extent that a party hereto may have
otherwise agreed in writing, no waiver by that party of any condition of this
Agreement or breach by the other party of any of its obligations or
representations hereunder or thereunder shall be deemed to be a waiver of any
other condition or subsequent or prior breach of the same or any other
obligation or representation by the other party, nor shall any forbearance by
the first party to seek a remedy for any noncompliance or breach by the other
party be deemed to be a waiver by the first party of its rights and remedies
with respect to such noncompliance or breach.
Section 8.6 Third-Party Beneficiaries. Except as otherwise expressly provided
----------- -------------------------
for in this Agreement, nothing herein, expressed or implied, is intended or
shall be construed to confer upon or give to any person, firm, corporation, or
legal entity, other than the parties hereto, any rights, remedies, or other
benefits under or by reason of this Agreement other than rights of beneficiaries
under the trusts referred to in the list of parties to this Agreement.
Section 8.7 Counterparts. This Agreement may be executed simultaneously in
----------- ------------
multiple counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
Section 8.8 Severability. If one or more provisions of this Agreement are held
----------- ------------
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
Section 8.9 Governing Law.
----------- -------------
(a) Save as provided in paragraph (b) of this Section 8.9, this
Agreement and the Escrow Agreement shall in all respects be construed in
accordance with and governed by the laws of England and Wales.
(b) The issue, listing and dealing in the Purchase Shares and the
representations, warranties, covenants and agreements related thereto shall be
governed by the laws of the State of California, United States and the Federal
laws of the United States.
(c) Except as set forth in this Agreement and the Escrow Agreement,
the parties hereto submit to the non-exclusive jurisdiction of the High Court in
London, England for the purpose of hearing and determining any dispute arising
out of this Agreement and the Escrow Agreement and for the purpose of
enforcement of any judgment against their respective assets.
(d) Except as set forth in this Agreement and the Escrow Agreement,
none of the parties will object to any disputed matter arising from this
Agreement and the Escrow Agreement being dealt with, heard or transferred to the
High Court of London.
(e) The parties hereby agree that service of any Writ, notice or other
66
document for the purpose of any proceedings in such Court shall be duly served
upon it if delivered or sent by registered post in the case of the
Securityholders to the Securityholders Solicitors marked for the attention of
Ref: BWR and in the case of Purchaser Xxxxxxx, Xxxx and Xxxx, Xxxxxxxxx Xxxxx,
00 Xxxxxxxxxxx, Xxxxxx XX0X 0XX marked for the attention of Ref: JHB/DMG.
(f) In the case of the issue, listing and dealing in the Purchase
Shares and the representations, warranties, covenants and agreements relating
thereto, the parties hereto submit to the non-exclusive jurisdiction of the
courts in the County of Santa Xxxxx or the Federal Courts in California, U.S.A.
None of the parties will object to such disputed matters being dealt with, heard
or transferred to such courts.
Section 8.10 No Reliance. The Company and the Securityholders understand and
------------ -----------
agree that they are relying solely on their own investigations of P-Com and
Purchaser to enter into this Agreement and are not relying on any oral or
written representation or warranty (including, without limitation, any forecasts
or projections) other than those representations and warranties of P-Com and
Purchaser specifically set forth in writing herein. Moreover, the Company and
the Securityholders understand and agree that the market price of P-Com's Common
Stock has fluctuated significantly in the past and will fluctuate significantly
in the future and such fluctuations are often unrelated to the operating
performance of P-Com. The Company and the Securityholders have read and
understand (or have had the opportunity to read) the risk factors set forth in
P-Com's report on Form 10Q for the quarter ended June 30, 1997 and the
registration statement on Form S-3 declared effective on July 31, 1997 provided
or made available to the Company and the Securityholders and have received
advice thereon from Coopers & Xxxxxxx. The Company and the Securityholders
agree that the analyst reports about P-Com provided to them have not been
written, adopted or endorsed by P-Com or its management and represent
independent views of independent parties.
Section 8.11 Other Remedies. Any and all remedies set forth in this Agreement
------------ --------------
and in the Closing Documents and related agreements conferred upon a party will
be deemed cumulative with and not exclusive of any other remedy conferred hereby
or by law or equity on such party; and the exercise of any one remedy will not
preclude the exercise of any other.
Section 8.12 Mutual Drafting. This Agreement is the joint product of
------------- ---------------
Purchaser, the Company and the Securityholders, and each provision hereof has
been subject to the mutual consultation, negotiation and agreement of Purchaser,
the Company and the Securityholders, and their respective counsel, and shall not
be construed for or against any party hereto.
Section 8.13 Attorneys Fees. If any action at law or in equity is necessary to
------------ --------------
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
67
Section 8.14 Appointment and Indemnity of Escrow Committee.
------------ ---------------------------------------------
(a) By approval of this Agreement, the Securityholders shall appoint
Xxxxxxx Xxxxxxx and Xxxxxx Xxxxxxx as committee members pursuant to the Escrow
Agreement. Such committee (the "Escrow Committee") shall have all of the
authority granted pursuant to the Escrow Agreement.
(b) The members of the Escrow Committee and the escrow agent shall not
be liable to anyone whatsoever by reason of any error or judgment or of any act
done or step taken or omitted by it in good faith or for any mistake of fact or
law as is provided in the Escrow Agreement.
Section 8.15 Guarantee.
------------ ---------
(a) In consideration of the Company and the Securityholders agreeing
to enter into this Agreement P-Com as primary obligor hereby guarantees to each
of the Company and the Securityholders the due performance by Purchaser of all
Purchaser's obligations under this Agreement, the Escrow Agreement and the
Closing Documents.
(b) The liability of P-Com under its guarantee under Clause 8.15(a)
shall not be discharged or impaired by any amendment to or variation of this
Agreement, the Escrow Agreement or the Closing Documents by any release of or
granting of time or other indulgence to Purchaser or any third party or any
other act, event or omission which but for this Section would operate to impair
or discharge the liability of P-Com under its guarantee.
Section 8.16 Non-Competition Agreements. The Securityholders understand and
------------ --------------------------
agree that the Non-Competition Agreements for Xxxxxxx Xxxxxxx, Xxxx Xxxxxxx and
Xxxxxx Xxxxxxx, duly executed copies of which are attached hereto as Exhibits
8.16(a), 8.16(b) and 8.16(c) respectively, form part of the consideration for P-
Com and Purchaser to enter into this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first above written.
68
Executed (but not delivered until )
the date hereof) as a deed )
by P-COM, INC. )
a Delaware Corporation )
acting by: )
................................
Director
................................
Director/Officer
Executed (but not delivered until )
the date hereof) as a deed )
by P-COM SERVICES (UK) LIMITED )
acting by: )
................................
Director
................................
Director/Secretary
69
Executed (but not delivered until )
the date hereof) as a deed )
by R.T. MASTS LIMITED )
acting by: )
................................
Director
................................
Director/Secretary
Executed (but not delivered until )
the date hereof) as a deed )
by XXXXXX XXXXXXX XXXXXXX )
in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
Executed (but not delivered until )
the date hereof) as a deed )
by XXXX XXXXXXX in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
70
Executed (but not delivered until )
the date hereof) as a deed )
by XXXX XXXXXX XXXXXXX )
in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
Executed (but not delivered until )
the date hereof) as a deed )
by XXXXXXXXXX XXXXXXX )
in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
Executed (but not delivered until )
the date hereof) as a deed )
by XXXXX XXXXX XXXXXXX )
in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
71
Executed (but not delivered until )
the date hereof) as a deed )
by XXXXX XXXXXXX in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
Executed (but not delivered until )
the date hereof) as a deed )
by XXXXXXX XXXXXX XXXXXXX, )
XXXX XXXXXXX, XXXX XXXXXX )
XXXXXXX AND XXXXXX XXXXXXX )
XXXXXXX AS TRUSTEES OF THE XXXXXX )
XXXXXXX TRUST in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
Executed (but not delivered until )
the date hereof) as a deed )
by XXXXXXX XXXXXX XXXXXXX, )
XXXX XXXXXXX, XXXX XXXXXX )
XXXXXXX AND XXXXXX XXXXXXX )
XXXXXXX AS TRUSTEES OF THE XXXX )
XXXXXXX TRUST in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
72
Executed (but not delivered until )
the date hereof) as a deed )
by XXXX XXXXXX XXXXXXX AND )
XXXXXX XXXXXXX XXXXXXX )
AS TRUSTEES OF THE XXXXXXX 1997 )
TRUST in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
Executed (but not delivered until )
the date hereof) as a deed )
by XXXXX XXXXXXX AND XXXXX XXXXX )
XXXXXXX AS TRUSTEES OF THE XXXXXXX )
1997 INTEREST IN POSSESSION TRUST )
in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
73
Executed (but not delivered until )
the date hereof) as a deed )
by XXXX XXXXXX XXXXXXX AND )
XXXXXXXXXX XXXXXXX AS TRUSTEES OF )
THE XXXX XXXXXXX TRUST )
in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
Executed (but not delivered until )
the date hereof) as a deed )
by XXXX XXXXXX XXXXXXX AND )
XXXXXXXXXX XXXXXXX AS TRUSTEES OF )
THE XXXXX XXXXXXX TRUST )
in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
Executed (but not delivered until )
the date hereof) as a deed )
by XXXX XXXXXX XXXXXXX AND )
XXXXXXXXXX XXXXXXX AS TRUSTEES OF )
THE XXXXXXX XXXXXXX TRUST )
in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
74
