Exhibit 2.1
EXECUTION COPY
SECURITIES ACQUISITION AGREEMENT
Dated as of
April 26, 0000
Xxxxxxx
XXXXX, INC.,
the Buyer,
THE SELLERS,
as named herein
and
MEMEC GROUP HOLDINGS LIMITED
TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and is not intended
to define, limit or describe the scope or intent of any provision of this
Agreement.)
Page
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ARTICLE ONE DEFINITIONS................................................ 2
SECTION 1.1 Definitions...................................... 2
SECTION 1.2. Required Sellers................................. 11
SECTION 1.3. Accession to this Agreement...................... 11
ARTICLE TWO TERMS OF THE TRANSACTION................................... 12
SECTION 2.1. Exchange of Securities........................... 12
SECTION 2.2. Closing.......................................... 13
SECTION 2.3. No Liens......................................... 16
SECTION 2.4. Issuance of Buyer Shares......................... 16
SECTION 2.5. Waiver and Release............................... 16
ARTICLE THREE REPRESENTATIONS AND WARRANTIES OF THE SELLERS............ 17
SECTION 3.1. Power and Authority.............................. 17
SECTION 3.2. The Securities................................... 17
SECTION 3.3. Securities Laws.................................. 17
SECTION 3.4. Articles......................................... 18
ARTICLE FOUR REPRESENTATIONS AND WARRANTIES OF THE COMPANY............. 18
SECTION 4.1. Power and Capacity............................... 18
SECTION 4.2. Organization and Qualification................... 19
SECTION 4.3. Conflicting Instruments; Consents................ 19
SECTION 4.4. Transfer of the Securities....................... 20
SECTION 4.5. Capitalization................................... 20
SECTION 4.6. Subsidiaries..................................... 20
SECTION 4.7. Financial Statements............................. 21
SECTION 4.8. Real Property.................................... 22
SECTION 4.9. Personal Property................................ 22
SECTION 4.10. Accounts Receivable and Inventory................ 23
SECTION 4.11. Personnel........................................ 23
SECTION 4.12. Labor Matters.................................... 23
SECTION 4.13. Environmental Matters............................ 24
SECTION 4.14. Non-ERISA Plans.................................. 25
SECTION 4.15. ERISA Plans...................................... 27
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SECTION 4.16. Compliance with Law; Export Control
Laws............................................. 29
SECTION 4.17. Litigation....................................... 30
SECTION 4.18. Material Contracts............................... 30
SECTION 4.19. Absence of Certain Changes....................... 31
SECTION 4.20. Tax Matters...................................... 33
SECTION 4.21. Insurance........................................ 35
SECTION 4.22. Intellectual Property............................ 35
SECTION 4.23. Permits.......................................... 38
SECTION 4.24. Customers and Suppliers.......................... 38
SECTION 4.25. Fees............................................. 39
SECTION 4.26. Controls and Procedures.......................... 39
ARTICLE FIVE REPRESENTATIONS AND WARRANTIES OF THE BUYER............... 39
SECTION 5.1. Organization and Qualification................... 39
SECTION 5.2. Conflicting Instruments; Consents................ 40
SECTION 5.3. SEC Filings...................................... 40
SECTION 5.4. Capitalization................................... 40
SECTION 5.5. Litigation....................................... 41
SECTION 5.6. Absence of Certain Changes....................... 41
SECTION 5.7. Brokers and Finders Fees......................... 41
SECTION 5.8. No Stockholder Vote Required..................... 41
SECTION 5.9. Buyer Environmental Matters...................... 41
SECTION 5.10. Controls and Procedures.......................... 43
SECTION 5.11. Tax Matters...................................... 43
ARTICLE SIX COVENANTS.................................................. 44
SECTION 6.1. Access........................................... 44
SECTION 6.2. Transfer of the Securities....................... 45
SECTION 6.3. Conduct of the Business of the Company........... 45
SECTION 6.4. Conduct of the Business of the Buyer............. 47
SECTION 6.5. Further Assurances; Approvals; Consents.......... 47
SECTION 6.6. Notice of Default................................ 48
SECTION 6.7. Non-Solicitation................................. 48
SECTION 6.8. Employees........................................ 49
SECTION 6.9. Restrictions on Transfer of Buyer
Shares........................................... 50
SECTION 6.10. Confidentiality.................................. 50
SECTION 6.11. Shareholder Approval............................. 51
SECTION 6.12. Tax Clearance.................................... 52
ARTICLE SEVEN CONDITIONS TO THE BUYER'S OBLIGATIONS.................... 52
SECTION 7.1. Representations and Warranties................... 52
SECTION 7.2. Legal Matters.................................... 52
SECTION 7.3. Related Party Transactions....................... 53
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SECTION 7.4. Tax Matters...................................... 53
SECTION 7.5. Other Conditions................................. 54
ARTICLE EIGHT CONDITIONS TO THE COMPANY AND THE SELLERS'
OBLIGATIONS........................................... 54
SECTION 8.1. Representations and Warranties................... 54
SECTION 8.2. Legal Matters.................................... 55
SECTION 8.3. Other Conditions................................. 55
ARTICLE NINE TERMINATION............................................... 55
SECTION 9.1. Termination...................................... 55
SECTION 9.2. Effect of Termination............................ 56
ARTICLE TEN MISCELLANEOUS.............................................. 56
SECTION 10.1. Expenses......................................... 56
SECTION 10.2. Governing Law.................................... 57
SECTION 10.3. Notices.......................................... 57
SECTION 10.4. Jurisdiction..................................... 58
SECTION 10.5. Entire Agreement................................. 58
SECTION 10.6. Binding Effect................................... 59
SECTION 10.7. Amendments; Waivers.............................. 59
SECTION 10.8. Counterparts..................................... 59
SECTION 10.9 Severability..................................... 59
SECTION 10.10. Specific Performance............................. 59
SECTION 10.11. Attorneys' Fees.................................. 60
SECTION 10.12. Survival of the Representations and
Warranties....................................... 60
CROSS REFERENCES
Agreement...............................................................Preamble
Bond Sellers............................................................Recitals
Bonds...................................................................Recitals
Buyer...................................................................Preamble
Closing...................................................................2.2(a)
Closing Date..............................................................2.2(a)
Common Shares................................................................5.4
Company.................................................................Preamble
Company Marks............................................................4.22(b)
Company Registered Marks.................................................4.22(a)
Confidential Information.................................................6.10(a)
Drop Dead Date............................................................9.1(b)
ERISA....................................................................4.15(a)
ERISA Plans..............................................................4.15(a)
Fees......................................................................7.3(b)
Financial Statements......................................................4.7(a)
Funded Plan..............................................................4.14(e)
GAAP......................................................................4.7(b)
Inbound License Agreements ..............................................4.22(e)
Key Employee.............................................................4.11(a)
Leased Real Property......................................................4.8(a)
Material Contracts.......................................................4.18(a)
Multiemployer Plan.......................................................4.15(d)
MUSH.....................................................................4.20(b)
Nondisclosure Agreement...................................................6.1(d)
Non-ERISA Plans..........................................................4.14(a)
Organizational Documents..................................................4.3(a)
Outbound License Agreements .............................................4.22(e)
iv
Owned Real Property.......................................................4.8(a)
Payments....................................................................6.11
PBGC.................................................................4.15(b)(vi)
Pension Plans............................................................4.15(a)
Permit......................................................................4.23
SEC Filing Date..............................................................5.3
SEC Filings..................................................................5.3
Section 280G................................................................6.11
Sellers.................................................................Preamble
Shares..................................................................Recitals
Subsidiaries..............................................................4.6(a)
USRPHC...................................................................4.20(d)
WARN......................................................................6.8(e)
Welfare Plans............................................................4.15(a)
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SCHEDULES
Schedule A Sellers and Bond Sellers
Schedule 3.2 Options
Schedule 4 Knowledge - Company
Schedule 4.3(a) Conflicting Instruments
Schedule 4.3(b) Filings
Schedule 4.5(a) Capitalization
Schedule 4.5(b) Options
Schedule 4.6 Subsidiaries
Schedule 4.8(a) Real Property
Schedule 4.8(b) Possession of Leased Property
Schedule 4.9 Personal Property
Schedule 4.11(a) Key Employees
Schedule 4.11(b) Powers of Attorney
Schedule 4.11(c) Directors and Officers of the Company
Schedule 4.11(d) Redundancy Payments
Schedule 4.12(a) Labor Matters
Schedule 4.12(b) Labor Disputes
Schedule 4.13 Environmental Matters
Schedule 4.14(a) Non-ERISA Plans
Schedule 4.14(b) Non-ERISA Plan Documents
Schedule 4.14(f) Additional Benefits
Schedule 4.15(a) ERISA Plans
Schedule 4.15(k) Change in Control Benefits
Schedule 4.16(b) Compliance with Export Laws
Schedule 4.17 Litigation
Schedule 4.18(a) Material Contracts
Schedule 4.18(c) Obligations under Financing Arrangements
Schedule 4.19 Absence of Certain Changes
Schedule 4.20 Tax Matters
Schedule 4.21 Insurance
Schedule 4.22(a)(1) Company Registered Marks
Schedule 4.22(a)(2) IP Noncompliance
Schedule 4.22(d) IP Ownership
Schedule 4.22(e)(1) Inbound License Agreements
Schedule 4.22(e)(2) Outbound License Agreements
Schedule 4.23 Permits
Schedule 4.24(a) Customers
Schedule 4.24(b) Suppliers
Schedule 4.25(a) Brokers and Finders - Company
Schedule 4.25(b) Fees and Expenses
Schedule 4.26 Controls and Procedures
Schedule 5 Knowledge - Buyer
Schedule 5.4 Options - Buyer
Schedule 5.6 Certain Changes
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Schedule 5.7 Brokers and Finders Fees - Buyer
Schedule 5.9 Buyer Environmental Matters
Schedule 6.3(b) Conduct of Business Between Signing and Closing
Schedule 6.8(a) Employment Agreements
Schedule 7.2 Antitrust Jurisdictions
Schedule 7.3 Related Party Transactions
EXHIBITS
Exhibit A Form of Board Nominee Agreement
Exhibit B Form of Registration Rights Agreement
Exhibit 2.2(b)(v) Form of FIRPTA Certificate
Exhibit 2.2(d)(ii) Form of Indemnity For Lost Certificate
vii
SECURITIES ACQUISITION AGREEMENT
THIS SECURITIES ACQUISITION AGREEMENT (this "Agreement") is dated as of
April 26, 2005 between Avnet, Inc., a New York corporation (the "Buyer"), on the
one hand, and the Share Sellers and the Bond Sellers (together, the "Sellers")
and Memec Group Holdings Limited, a company incorporated in England and Wales
(the "Company"), on the other hand.
R E C I T A L S
A. The Persons listed on Schedule A as holding shares either (i) own
directly, beneficially and as the registered shareholders or (ii) are the
registered shareholders and have the legal capacity to transfer the beneficial
title to, the issued shares of the Company as set forth opposite their name on
Schedule A (the "Shares").
B. The Buyer has made the Offer to acquire 100% of the share capital of
the Company. The Offer is made on the terms and conditions of this Agreement,
the Offer Document and the Form of Acceptance.
C. As the original parties to this Agreement are the Buyer, the Committed
Sellers and the Company, the provisions of Section 1.3 provide for the accession
to this Agreement of the other persons listed on Schedule A upon the execution
and delivery by any such person of the Form of Acceptance to the Buyer whereupon
such Person will become a party, as a Share Seller, to this Agreement.
D. The Buyer desires to acquire the Shares of the Share Sellers, and the
Share Sellers desire to sell their Shares to the Buyer, all upon the terms and
subject to the conditions set forth in the documents referred to in Recital B.
E. Manchester Holdings Limited, a subsidiary of the Company, issued
$403,414,000 face amount of Deep Discount Bonds and $452,212,000 face amount of
Deep Discount Mezzanine Bonds (collectively, the "Bonds") to the Sellers listed
on Schedule A (the "Bond Sellers").
F. The Bond Sellers either: (i) own directly, beneficially and of record;
or (ii) are the holders of record and have the legal capacity to transfer the
beneficial title to, 100% of the Bonds.
G. The Buyer desires to acquire the Bonds from the Bond Sellers, and the
Bond Sellers desire to sell the Bonds to the Buyer, all upon the terms and
subject to the conditions set forth in this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained in this Agreement and for other valuable consideration the Buyer, the
Company and the Sellers agree as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.1 DEFINITIONS.
"Acquisition Proposal" means any proposal for a merger or other business
combination involving the Company or any of the Subsidiaries or business units
or any proposal or offer to acquire in any manner, directly or indirectly, more
than twenty percent (20%) of the outstanding equity interests in the Company or
any of the Subsidiaries, more than twenty percent (20%) of the outstanding
voting securities of the Company or any of the Subsidiaries or more than twenty
percent (20%) of the assets of the Company or the Subsidiaries (other than sales
of the Company's or the Subsidiaries' products in the ordinary course of
business consistent with past practice or transactions contemplated by this
Agreement).
"Agreement" has the meaning set forth in the preamble.
"Ancillary Agreements" means the Registration Rights Agreement, the Board
Nominee Agreement, the Offer Document, the Framework Agreement and the Form of
Acceptance.
"B Director Consent" has the meaning set forth in the Framework Agreement.
"B Directors" has the meaning set forth in the Framework Agreement.
"B Shares" means the B Redeemable Shares of the Company, par value $0.01
per share.
"Balance Sheet" means the audited consolidated balance sheet of the
Company as at December 31, 2004, including the notes thereto.
"Balance Sheet Date" means December 31, 2004.
"Board Nominee Agreement" means the Board Nominee Agreement substantially
in the form of Exhibit A hereto.
"Bond Cash Consideration" means (i) the Outstanding Bond Obligation Amount
times the Pro Rata Cash Portion minus (ii) the Management Bonus; provided, that
in no event shall the Bond Cash Consideration exceed $53,957,003.18.
"Bond Resolutions" has the meaning set forth in the Framework Agreement.
"Bonds" has the meaning set forth in the Recitals.
"Bond Sellers" has the meaning set forth in the Recitals.
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"Bond Share Consideration" means the number of Buyer Shares calculated by
dividing (i) the Outstanding Bond Obligation Amount times the Pro Rata Share
Portion by (ii) the price of one Common Share based on the five day average
closing price of the Common Shares on the NYSE, as reported by The Wall Street
Journal, Eastern Edition, as of the end of the Business Day prior to the Closing
Date; provided, that in no event shall the Bond Share Consideration exceed the
Total Share Consideration.
"Business Day" means any day, not being a Saturday or Sunday, on which
banks are generally open for business in London and New York.
"Buyer" has the meaning set forth in the preamble.
"Buyer Environmental Losses" shall mean all Claims, losses, judgments,
damages (including damages for personal injury, or injury to property),
penalties, fines, liabilities (including strict liability), encumbrances, liens,
costs and expenses of investigation and defense of any claim, whether or not
such claim is ultimately defeated, and of any good faith settlement or judgment,
of whatever kind or nature, contingent or otherwise, matured or unmatured,
foreseeable or unforeseeable (including without limitation reasonable attorneys'
fees and disbursements and consultants' fees), any of which are incurred at any
time as a result of: (A) the existence prior to the Closing Date of Hazardous
Materials upon, about, or beneath the owned or leased real property of the Buyer
or the Buyer Former Real Property or migrating or threatening to migrate to or
from the owned or leased real property of the Buyer or the Buyer Former Real
Property; or (B) a breach of Environmental Requirements or any liability under
any Environmental Requirement relating to the Buyer or any of its subsidiaries,
the owned or leased real property of the Buyer, the Buyer Former Real Property,
or any real property or facility to which Hazardous Materials generated by the
Buyer have been sent, regardless of whether the existence of such Hazardous
Materials, liability or violation of Environmental Requirements arose prior to
the ownership or operation of the owned or leased real property of the Buyer or
the Buyer Former Real Property by the Buyer.
"Buyer Former Real Property" means real property owned by the Buyer within
the last five years.
"Buyer Material Adverse Effect" means any circumstance, change in or
effect on the Buyer and its subsidiaries that, individually or in the aggregate
with all other circumstances, changes in or effects on the Buyer and its
subsidiaries, is, or would reasonably be expected to be, materially adverse to
the business or the assets, liabilities, results of operations or financial
condition of the Buyer and its subsidiaries, taken as a whole; provided,
however, that none of the following, either alone or in combination, shall be
considered in determining whether there has been a Buyer Material Adverse Effect
or a breach of a representation, warranty, covenant or agreement that is
qualified by the term "Buyer Material Adverse Effect": (a) events,
circumstances, changes or effects that generally affect the industries in which
the Buyer and its subsidiaries operate, but that do not have a disproportionate
impact on the Buyer and its subsidiaries; (b) general economic or political
conditions or events, circumstances, changes or effects affecting the industries
in which the Buyer and its subsidiaries operate, but that do not have a
disproportionate impact on the Buyer and its subsidiaries; (c) changes arising
from the consummation of the transactions contemplated by, or the announcement
of the execution of, this
3
Agreement; (d) any change in accounting requirements or principles or change in
applicable Law; and (e) the taking of any action approved or consented to in
writing by the Company and the Required Sellers.
"Buyer Shares" means the Common Shares to be issued to the Sellers in
accordance with this Agreement and to Shareholders whose shares in the Company
are acquired by exercise of the compulsory acquisition provisions in article 6
of the articles of association of the Company (as amended from time to time)
including the application of those provisions under the Option Plan.
"Cash Escrow" means the Share Cash Consideration, any Option Exercise
Proceeds and any other funds in the escrow account maintained by the Escrow
Agent for the benefit of the Share Sellers and the Shareholders (or the Person
designated in writing by such Share Seller or Shareholder, as the case may be,
at least three Business Days prior to Closing).
"Claim" means any writ, action, injunction, decree, order, demand,
judgment, lawsuit, claim, complaint, proceeding, citation, directive, summons,
notice letter, request for information or investigation undertaken or issued
under any Environmental Requirement.
"Closing" has the meaning set forth in SECTION 2.2(a).
"Closing Date" has the meaning set forth in SECTION 2.2(a).
"Code" means the Internal Revenue Code of 1986, as amended.
"Committed Sellers" means the Sellers who have executed the Framework
Agreement.
"Common Shares" has the meaning set forth in SECTION 5.4.
"Company" has the meaning set forth in the preamble.
"Company Marks" has the meaning set forth in SECTION 4.22(b).
"Company Registered Marks" has the meaning set forth in SECTION 4.22(a).
"Confidential Information" has the meaning set forth in SECTION 6.10(a).
"Copyrights" means copyrights (whether registered or unregistered) and
registrations and applications therefor.
"Data Room" means the data rooms located in the offices of Xxxxxxx Xxxxxxx
& Xxxxxxxx LLP located in Los Angeles, California, New York, New York and
London, England and all documents therein as reflected in the data room index or
delivered to the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP.
"Disclosure Schedule" means the schedules delivered by the Company to the
Buyer concurrently herewith and identified as the "Schedules". The Disclosure
Schedules have been
4
delivered by the Company to the Buyer on the date hereof and the Disclosure
Schedules have been reviewed and accepted by the Buyer.
"Dragged Shareholder" means those persons listed in Schedule A other than
the Share Sellers.
"Drop Dead Date" has the meaning set forth in SECTION 9.1(b).
"Environment" means all or any of the following media: air (including air
within buildings or other natural or man-made structures whether above or below
ground), water (including surface waters, underground waters, groundwater,
coastal and inland waters and water within any natural or man-made structures),
and land (including soil and river beds under any waters, surface land and
sub-surfaced land).
"Environmental Losses" shall mean all Claims, losses, judgments, damages
(including damages for personal injury, or injury to property), penalties,
fines, liabilities (including strict liability), encumbrances, liens, costs and
expenses of investigation and defense of any claim, whether or not such claim is
ultimately defeated, and of any good faith settlement or judgment, of whatever
kind or nature, contingent or otherwise, matured or unmatured, foreseeable or
unforeseeable (including without limitation reasonable attorneys' fees and
disbursements and consultants' fees), any of which are incurred at any time as a
result of: (A) the existence prior to the Closing Date of Hazardous Materials
upon, about, or beneath the Real Property or Former Real Property or migrating
or threatening to migrate to or from the Real Property or Former Real Property;
or (B) a breach of Environmental Requirements or any liability under any
Environmental Requirement relating to the Company or any of the Subsidiaries,
the Real Property, the Former Real Property, or any real property or facility to
which Hazardous Materials generated by the Company have been sent, regardless of
whether the existence of such Hazardous Materials, liability or violation of
Environmental Requirements arose prior to the ownership or operation of the Real
Property or the Former Real Property by the Company or any of the Subsidiaries.
"Environmental Requirements" shall mean all and any Laws relating to: (A)
the protection of human health or the Environment; (B) the treatment, storage,
disposal, handling, release, investigation or Remediation of Hazardous
Materials; or (C) exposure of persons to Hazardous Materials.
"ERISA" has the meaning set forth in SECTION 4.15(a).
"ERISA Affiliate" means a corporation which is a member of a controlled
group of corporations with the Company or any Subsidiary within the meaning of
Section 414(b) of the Code, a trade or business (including a sole
proprietorship, partnership, trust, estate or corporation) which is under common
control with the Company or any Subsidiary within the meaning of Section 414(c)
of the Code, or a member of an affiliated service group with the Company or any
Subsidiary within the meaning of Section 414(m) or Section 414(o) of the Code.
"ERISA Plans" has the meaning set forth in SECTION 4.15(a).
5
"Escrow" means the Cash Escrow and the Share Escrow.
"Escrow Agent" means the escrow agent selected by the Buyer subject to the
approval of the Required Sellers, which may not be unreasonably withheld or
delayed.
"Escrow Agreement" means the agreement dated as of the Closing Date
between the Required Sellers, the Buyer and the Escrow Agent in a form
reasonably acceptable to the Buyer and the Required Sellers.
"Exchange Act" means the Securities and Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Fees" has the meaning set forth in SECTION 7.3(b).
"Financial Statements" has the meaning set forth in SECTION 4.7(a).
"Financing Agreement" means any loan made by any shareholder of the
Company to the Company or any of the Subsidiaries or any other agreement,
contract or arrangement under which the Company or any of the Subsidiaries have
borrowed $5,000,000 or more (other than intercompany loans).
"Form of Acceptance" has the meaning set forth in the Offer Document.
"Former Real Property" shall mean any real property or facility formerly
owned, leased, occupied or operated by the Company or any of its Subsidiaries.
"Framework Agreement" means the agreement dated the same date as this
agreement relating to the Offer between the Committed Sellers, the Buyer and the
Company.
"Funded Plan" has the meaning set forth in SECTION 4.14(e).
"GAAP" has the meaning set forth in SECTION 4.7(b).
"Governmental Authority" means any authorities, agencies, departments,
commissions, boards, bureaus, instrumentalities, courts or tribunals of any
federal, state, local or foreign governments or governmental agencies,
departments, regulators or bodies.
"Hazardous Materials" means any substance: (A) the presence of which
requires investigation or Remediation under any Environmental Requirement; (B)
that is defined as a "solid waste," "hazardous waste," "hazardous substance,"
"hazardous material," "pollutant" or "contaminant" under any Environmental
Requirement; (C) that is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is regulated by
any Governmental Authority; (D) the presence of which causes or threatens to
cause a nuisance, trespass or other tortious condition; (E) that contains
gasoline, diesel fuel, fuel oil, petroleum hydrocarbons, PCBs, toxic molds,
asbestos, or urea formaldehyde foam insulation; or (F) is otherwise regulated by
any Environmental Requirement.
6
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"Impairments" has the meaning set forth in SECTION 4.8(c).
"Inbound License Agreements" has the meaning set forth in SECTION 4.22(e).
"Intellectual Property" means all intellectual property rights arising
from or associated with the following, whether protected, created or arising
under the laws of the United States of America or any other jurisdiction: (A)
Marks; (B) Patents; (C) Copyrights; (D) Trade Secrets and (E) moral rights,
publicity rights and any other proprietary, intellectual or industrial property
rights of any kind or nature that do not comprise or are not protected by Marks,
Patents, Copyrights or Trade Secrets.
"Investment Agreement" means the investment agreement relating to the
Company dated August 4, 2000 between the Company, Manchester Holdings Limited,
the Managers (as defined therein), the Investors (as defined therein) and
Xxxxxxxx Venture Advisers.
"IRS" means the Internal Revenue Service.
"Law" means any federal, state, provincial, local or foreign statute,
subordinate legislation, law (including common law), ordinance, regulation,
directive, rule, policy, code, practice, circular, guidance and the like, or
order.
"Leased Property" has the meaning set forth SECTION 4.8(a).
"Liens" means any security interest, pledge, hypothecation, mortgage,
lien, restriction, encroachment, easement, defect of title, adverse claim,
option, lease or other claim, charge or encumbrance of any nature whatsoever.
"Majority Share Sellers" means Permira Europe II Nominees Limited, Permira
UK Ventures IV Nominees Limited, Xxxxxxxx Ventures US Fund LP1, Xxxxxxxx
Ventures US Fund LP2 and DB Industrial Holdings GmbH.
"Management Bonus" means the bonuses payable to employees of the Company
pursuant to Section 6.8(a).
"Marks" means trade names, trademarks and service marks (registered and
unregistered), domain names and other Internet addresses or identifiers, trade
dress and similar rights, and applications (including intent to use
applications) to register any of the foregoing.
"Material Adverse Effect" means any circumstance, change in or effect on
the Company and the Subsidiaries that, individually or in the aggregate with all
other circumstances, changes in or effects on the Company and the Subsidiaries,
is, or would reasonably be expected to be, materially adverse to the business or
the assets, liabilities, results of operations or financial condition of the
Company and the Subsidiaries, taken as a whole; provided, however, that none of
the following, either alone or in combination, shall be considered in
determining whether there has been a Material Adverse Effect or a breach of a
representation, warranty, covenant or
7
agreement that is qualified by the term "Material Adverse Effect": (a) events,
circumstances, changes or effects that generally affect the industries in which
the Company and the Subsidiaries operate but that do not have a disproportionate
impact on the Company and the Subsidiaries; (b) general economic or political
conditions or events, circumstances, changes or effects affecting the industries
in which the Company and the Subsidiaries operate, but that do not have a
disproportionate impact on the Company and the Subsidiaries; (c) changes arising
from the consummation of the transactions contemplated by, or the announcement
of the execution of, this Agreement; (d) any change in accounting requirements
or principles or change in applicable Law; and (e) the taking of any action
approved or consented to in writing by the Buyer.
"Material Contracts" has the meaning set forth in SECTION 4.18(a).
"Multiemployer Plan" has the meaning set forth in SECTION 4.15(d).
"MUSH" has the meaning set forth in SECTION 4.20(b).
"Nondisclosure Agreement" has the meaning set forth in SECTION 6.1(d).
"Non-ERISA Plans" has the meaning set forth in SECTION 4.14(a).
"NYSE" means the New York Stock Exchange.
"Offer" has the meaning set forth in the Offer Document.
"Offer Document" has the meaning set forth in the Framework Agreement.
"Option" shall mean any Option (as such term is defined in the Option
Plan) other than a Phantom Option (as such term is defined in any Schedule to
the Option Plan).
"Option Exercise Proceeds" means an amount equal to the aggregate exercise
price paid to the Company by holders of Options upon the exercise of Options
following the Closing Date.
"Option Plan" means the Memec Group Holdings Limited Global Share Option
Plan 2001.
"Organizational Documents" has the meaning set forth in SECTION 4.3(a).
"Outbound License Agreements" has the meaning set forth in SECTION
4.22(e).
"Outstanding Bond Obligation Amount" means $473,314,143 plus unpaid
interest and other amounts that accrue on the Bonds between the date hereof and
the Closing Date.
"Owned Real Property" has the meaning set forth in SECTION 4.8(a).
"Patents" means patents and patent applications (including continuation,
divisional, continuation-in-part, reexamination and reissue patent applications,
and any patents issuing therefrom), and rights in respect of utility models or
industrial designs.
"PBCG" has the meaning set forth in SECTION 4.15(b)(vi).
8
"Pension Plans" has the meaning set forth in SECTION 4.15(a).
"Permit" has the meaning set forth in SECTION 4.23.
"Permitted Lien" means (i) any Lien reflected on the Balance Sheet, (ii)
Liens reflected on Schedule 4.8, (iii) Liens for Taxes and other governmental
charges and assessments that are not yet due and payable, (iv) Liens for
carriers, warehousemen, mechanics and materialmen and other like Liens arising
in the ordinary course of business, (v) Liens incurred in the ordinary course of
business that are insignificant, individually or in the aggregate, to the
operation of the Company's business and (vi) easements, rights of way, title
imperfections and restrictions, zoning ordinances and other Liens affecting any
real property that do not materially interfere with the current use of the
properties affected thereby.
"Person" means any individual, partnership, firm, corporation, limited
liability company, association, trust, unincorporated organization or other
entity.
"Pro Rata Cash Portion" means the quotient of (i) the Total Cash
Consideration divided by (ii) the Total Consideration.
"Pro Rata Share Portion" means 1.00 minus the Pro Rata Cash Portion.
"Property Lease" means any agreement, including any amendments or
modifications thereto, pursuant to which the Company or the Subsidiaries is the
tenant, subtenant, or occupant and which has (i) an annual base rent of $250,000
or more or (ii) a remaining term of three years or more (excluding any extension
options) and aggregate base rental obligations of not less than $1,000,000 for
such remaining term.
"Real Property" means the Owned Real Property and the Leased Property.
"Registration Rights Agreement" means the Registration Rights Agreement
substantially in the form of Exhibit B hereto.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, dumping or disposing into the
Environment (including the abandonment or discharging of barrels, containers and
other closed receptacles containing Hazardous Materials).
"Remediation" shall mean any works or action: (A) limiting, mitigating,
remediating, preventing, removing or containing the presence or effect of any
Hazardous Substance in or on the Environment; and/or (B) any investigations,
sampling, testing or monitoring in connection with (A).
"Required Sellers" means the Share Sellers holding at least 50% in nominal
value of the Shares and the Bond Sellers holding at least 50% of the face amount
of the Bonds.
"Resolution" means Resolution numbered 1 in the Framework Agreement.
"SEC" means the Securities and Exchange Commission.
9
"SEC Filing Date" has the meaning set forth in SECTION 5.3.
"SEC Filings" has the meaning set forth in SECTION 5.3.
"Securities" means the Shares and the Bonds.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Sellers" has the meaning set forth in the preamble.
"Share Cash Consideration" means the amount, if any, equal to the Total
Cash Consideration minus: (i) the Bond Cash Consideration; and (ii) the
Management Bonus.
"Share Consideration" means the number of Buyer Shares, if any, equal to
the Total Share Consideration minus the Bond Share Consideration.
"Share Escrow" means the Buyer Shares in the escrow account maintained by
the Escrow Agent for the benefit of the Share Sellers and the Shareholders (or
the Person designated in writing by such Share Seller or Shareholder, as the
case may be, at least three Business Days prior to Closing).
"Shareholder" means any Person (other than the Buyer) who holds Shares,
but is not a Share Seller, including any Person who holds any shares in the
Company as a result of the exercise of any Option under rule 5.2 of the Option
Plan.
"Shares" has the meaning set forth in the recitals.
"Share Sellers" means (i) the Committed Sellers and (ii) those persons who
execute and deliver to the Buyer the Form of Acceptance.
"Significant Subsidiaries" means Manchester U.S. Holdings Inc. and
Manchester LLC.
"Subsidiaries" has the meaning set forth in SECTION 4.6(a).
"Tax Return" includes any material report, statement, form, return or
other document or information required to be supplied to a taxing authority in
connection with Taxes.
"Taxes" means any federal, state, local or foreign income or gross
receipts tax, alternative or add-on minimum tax, sales or use tax, customs duty
or any other tax, charge, fee, levy or other assessment including without
limitation property, transfer, occupation, service, license, payroll, value
added, franchise, excise, withholding, ad valorem, severance, stamp, premium,
windfall profit, employment, rent or other tax, governmental fee or like
assessment or charge of any kind whatsoever, together with any interest, fine or
penalty thereon, addition to tax, additional amount, deficiency, assessment or
governmental charge imposed by any federal, state, local or foreign taxing
authority.
10
"Title Documents" all deeds, title insurance policies, surveys, mortgages,
certificates of occupancy, building permits and inspection certificates,
agreements and other documents granting to the Company or any of the
Subsidiaries title to or an interest in or otherwise affecting any Real
Property, together with all amendments, modifications and supplements thereto.
"Total Cash Consideration" means $63,957,003.18.
"Total Consideration" means the Total Cash Consideration plus the dollar
value of the Total Share Consideration based on the five day average closing
price of the Common Shares on the NYSE, as reported by The Wall Street Journal,
Eastern Edition, as of the end of the Business Day prior to the Closing Date.
"Total Share Consideration" means 24,011,171 Common Shares.
"Trade Secrets" means know-how, inventions, discoveries, methods,
processes, techniques, methodologies, formulae, algorithms, technical data,
specifications, research and development information, technology, data bases and
other proprietary or confidential information, including customer lists, in each
case that derives economic value (actual or potential) from not being generally
known to other persons who can obtain economic value from its disclosure, but
excluding any Copyrights or Patents that cover or protect any of the foregoing.
"USRPHC" has the meaning set forth in SECTION 4.20(d).
"WARN" has the meaning set forth in SECTION 6.8(e).
"Welfare Plans" has the meaning set forth in SECTION 4.15(a).
SECTION 1.2. REQUIRED SELLERS.
Where this Agreement provides or requires the waiver or consent of, or
notice or information to be given to, the Sellers, each Seller agrees that such
provision or requirement shall be satisfied by the waiver or consent of, or
notice or information being given to, or the right being exercised by, the
Required Sellers.
SECTION 1.3. ACCESSION TO THIS AGREEMENT.
The rights and obligations expressed in this Agreement in respect of any
Share Seller (whether such rights and obligations are of an original party to
this Agreement or any Share Seller who accedes to it) will arise:
(a) in respect of a Share Seller who is a Committed Seller, on the
execution and delivery to the Buyer of this Agreement; and
(b) in respect of any other Share Seller, on the execution and delivery
to the Buyer of the Form of Acceptance, which will constitute the accession of
that Share Seller to this Agreement as if named in it as a Share Seller.
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ARTICLE TWO
TERMS OF THE TRANSACTION
SECTION 2.1. EXCHANGE OF SECURITIES.
(a) On the Closing Date (as defined in Section 2.2 below), (i) subject to
the satisfaction of the conditions set forth in Articles 7 and 8 of this
Agreement:
(i) Each of the Bond Sellers, severally and not jointly, shall sell
and agrees to transfer to the Buyer the number of Bonds set forth opposite
its name on Schedule A, and the Buyer shall pay to each Bond Seller an
amount of cash equal to such Bond Seller's pro rata portion of the Bond
Cash Consideration and shall deliver to each Bond Seller (or the Person
designated in writing by such Bond Seller at least three Business Days
prior to Closing) the number of Buyer Shares equal to such Bond Seller's
pro rata portion of the Bond Share Consideration.
(ii) Each of the Share Sellers, severally and not jointly, shall
sell and agrees to transfer to the Buyer the number of Shares set forth
opposite its name on Schedule A and the Buyer shall deposit in the Cash
Escrow the Share Cash Consideration and in the Share Escrow, the Share
Consideration.
(b) The Buyer shall deposit in the Cash Escrow an amount equal to any
Option Exercise Proceeds in respect of any exercise of the Options after the
Closing promptly following any such exercise.
(c) On the Business Day following the day which is 14 days after the
Closing Date, the Escrow Agent shall release to each Share Seller and
Shareholder (or the Person designated in writing by such Share Seller or
Shareholder, as the case may be, at least three Business Days prior to Closing)
the amount of cash, equal to its, his or her respective pro rata portion of the
Cash Escrow and shall deliver to each Share Seller and Shareholder (or the
Person designated in writing by such Share Seller or Shareholder, as the case
may be, at least three Business Days prior to Closing) the number of Buyer
Shares, if any, equal to its, his or her respective pro rata portion of the
Share Consideration in each case in respect of all the Shares set out opposite
their respective names on Schedule A and any shares in the Company issued as a
result of the exercise of any Options under rule 5.2 of the Option Plan. THE
BUYER EXPRESSLY AGREES THAT IT AND THE ESCROW AGENT SHALL HAVE NO RIGHT TO
OFFSET, SET OFF OR WITHHOLD ANY AMOUNT FROM THE CASH CONSIDERATION, THE SHARE
CONSIDERATION OR THE ESCROW AS A RESULT OF ANY BREACH OR ALLEGED BREACH BY ANY
SELLER OR THE COMPANY OF ANY REPRESENTATION, WARRANTY OR COVENANT SET FORTH IN
THIS AGREEMENT OR ANY ANCILLARY AGREEMENT.
(d) Notwithstanding anything to the contrary contained herein, in the
event the Share Cash Consideration would otherwise equal $0, then an amount
equal to $.001 times the number of Shares and shares in the Company the subject
of Options outstanding on the Closing Date shall be deducted from the Bond Cash
Consideration and deposited in the Cash Escrow.
(e) No certificates representing fractional shares of Buyer Shares shall
be issued to any Seller or Shareholder pursuant to this Agreement. In lieu of
receiving any such fractional share (after taking into account all of the Buyer
Shares delivered to any such Person), any such Seller or Shareholder shall
12
receive from the Buyer cash (without interest) in an amount rounded to the
nearest whole cent, determined by multiplying (i) the five day average closing
price of the Common Shares on the NYSE, as reported by the Wall Street Journal,
Eastern Edition ending on Business Day prior to the Closing Date by (ii) the
fractional share to which such holder would otherwise be entitled. The Buyer
shall make available to the Escrow Agent the cash necessary to pay any amounts
payable to the Share Sellers and Shareholders pursuant to this Section 2.1(e).
(f) All fees and expenses arising under the Escrow Agreement, including
the fees and expenses of the Escrow Agent, will be paid by the Buyer in cash and
shall not be deducted from the Escrow.
SECTION 2.2. CLOSING.
(a) Unless this Agreement shall have been terminated pursuant to the
provisions of Article Nine, the closing of the purchase and sale of the
Securities (the "Closing") shall be held at the offices of Xxxxxx, Xxxx &
Xxxxxxxx LLP located at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such
other place as the parties may agree upon, at 10:00 A.M., local time, on the
date that is three Business Days after all of the conditions set forth in
Article Seven and Article Eight have been met or at such other place, time or
date as the Buyer, the Company and the Required Sellers may agree (the "Closing
Date").
(b) At or prior to the Closing, the Company shall have furnished or made
available to the Buyer the following:
(i) the Organizational Documents of the Company and the Subsidiaries
and all amendments thereto, duly certified by the proper officials of the
jurisdiction in which such company is organized and duly certified by the
Secretary of such company as being in full force and effect on the Closing
Date;
(ii) resignations, effective on the Closing Date, of those directors
and company secretaries of the Company as the Buyer may designate in
writing to the Company no later than 3 Business Days prior to the Closing
Date and the Company shall use reasonable efforts to provide the
resignations of those directors and company secretaries of the
Subsidiaries as the Buyer may direct in writing no later than 3 Business
Days prior to the Closing Date; provided, that in each case such
resignations shall acknowledge in a legally enforceable document that,
other than any unpaid director's or secretary's fees and expenses properly
incurred up to and including the Closing Date in the exercise of their
duties as a director or company secretary (as the case may be), such
directors and company secretaries have no claim against the Company or any
Subsidiary whether for loss of office or otherwise in connection with the
resignation of such directorship or secretaryship;
(iii) the complete and correct corporate minute books, and to the
extent available, stock ledgers, stock transfer records, statutory
registers, share certificate books and corporate seals of the Company and
the Significant Subsidiaries;
13
(iv) the complete and correct (in all material respects) corporate
minute books and stock ledgers, stock transfer records, statutory
registers, share certificate books and corporate seals (if any) of the
Subsidiaries;
(v) a statement meeting the requirements of Treasury Regulation
Section 1.1445-2(c)(3) that MUSH is not a USRPHC within the meaning of
Section 897 of the Code and was not a USRPHC on any determination date (as
defined) in Treasury Regulation Section 1.897-2(c) that occurred in the
five-year period preceding the Closing Date in the form of Exhibit
2.2(b)(v) hereto;
(vi) duly executed transfers of each share in a Subsidiary which is
not registered in the name of the Company or another Subsidiary in favor
of the Buyer or as it may direct, together with the relevant share
certificate(s);
(vii) the (x) resignation of the auditors of the Company and each
Subsidiary effective on the Closing Date in each case confirming that
there are no circumstances connected with their resignation which should
be brought to the attention of the members or creditors of the Company or
a Subsidiary or (y) the removal of the auditors of the Company and each
Subsidiary, in accordance with Law, effective on the Closing Date;
(viii) the Registration Rights Agreement, duly executed by the
parties thereto other than the Buyer;
(ix) the Board Nominee Agreement, duly executed by the parties
thereto other than the Buyer;
(x) the Escrow Agreement, duly executed by the parties thereto other
than the Buyer;
(xi) certified copies of minutes of the Company authorizing the
execution and entry into of this Agreement and the Ancillary Agreements to
which it is a party; and
(xii) such other documents relating to the Company or the
Subsidiaries as the Buyer may reasonably request.
(c) At or prior to the Closing, the Buyer shall have furnished or made
available to the Required Sellers, for the benefit of the Sellers:
(i) the charter documents of the Buyer and all amendments thereto,
duly certified by the appropriate officials of the jurisdiction in which
the Buyer was organized;
(ii) the by-laws (or equivalent thereof) of the Buyer, duly
certified by the Secretary of the Buyer as being in full force and effect
on the Closing Date;
(iii) the Registration Rights Agreement duly executed by the Buyer;
(iv) the Board Nominee Agreement duly executed by the Buyer;
14
(v) the Escrow Agreement, duly executed by the Buyer; and
(vi) such other documents relating to the Buyer as the Company may
reasonably request.
(d) At the Closing:
(i) each Bond Seller shall deliver to the Buyer a duly executed
instrument of transfer in favor of the Buyer in writing as approved by the
Bond issuer's board of directors, together with the relevant bond
certificate (or an indemnity in a form reasonably acceptable to the Buyer
in respect of lost bond certificates) for all of the Bonds listed opposite
such Bond Seller's name on Schedule A and the Buyer shall deliver to or
for the benefit of such Bond Seller his, her or its pro rata portion of
the Aggregate Bond Consideration in accordance with Section 2.1;
(ii) each Share Seller shall deliver or procure the delivery to the
Buyer of a stock transfer form (duly executed by such Share Seller or by a
duly appointed attorney on behalf of such Share Seller) in favor of the
Buyer, together with the relevant share certificates (or an indemnity for
lost certificate in the form of Exhibit 2.2(d)(ii) hereto in respect of
lost share certificates) for all of the Shares listed opposite such Share
Seller's name on Schedule A and the Buyer shall deposit the Aggregate
Share Consideration in the Escrow in accordance with Section 2.1.
Notwithstanding any other terms of this Agreement, in accordance with the
Offer Document, the Buyer shall not be obligated to deliver any
consideration to any Share Seller unless and until that Share Seller shall
have delivered to the Buyer such share certificates or such an indemnity
in respect of lost share certificates); and
(iii) the Buyer is not obligated to close or purchase any Securities
if less than all of the Securities outstanding at Closing are tendered at
the Closing in accordance with the terms hereof.
(e) The Sellers shall procure that a board meeting of the Company (and
Memec Holdings Limited, but only in the case of (iii) below) is held at or prior
to the Closing at which it is resolved that, effective as of the Closing Date:
(i) such persons as the Buyer nominates (no later than 3 Business
Days prior to the Closing Date) are appointed as additional directors and
the secretary of that company effective as of the Closing Date;
(ii) its registered office is changed to such address as the Buyer
may indicate no later than 3 Business Days prior to the Closing Date;
(iii) the transfers referred to in Sections 2.2(d)(i) and 2.2(d)(ii)
(subject only to their being, in the case of the Shares, duly stamped) are
approved for registration by the Company (in the case of the Shares) and
Memec Holdings Limited (in the case of the Bonds); and
15
(iv) such auditors as the Buyer may indicate no later than 3 days
prior to Closing are appointed as auditors with effect from the Closing
Date.
SECTION 2.3. NO LIENS.
The Securities shall be sold free from all Liens and together with all
rights attaching to them at the date of this Agreement and, in the case of the
Shares, fully paid.
SECTION 2.4. ISSUANCE OF BUYER SHARES.
The Buyer Shares to be issued as the Total Stock Consideration have been
duly authorized and, when issued and delivered in accordance with the terms of
this Agreement, will be validly issued, fully paid and non-assessable and the
issuance thereof is not subject to any Liens or preemptive or similar right.
SECTION 2.5. WAIVER AND RELEASE.
Each Seller, severally and not jointly with any other Seller:
(a) covenants with the Buyer that he, she or it has the right to sell
and transfer to the Buyer the full legal and beneficial interest in those
Securities to be sold by him, her or it on the terms set out in this Agreement;
(b) waives (and shall procure the waiver by his, her or its nominee(s)
of) all rights of pre-emption and other restrictions on transfer rights which
he, she or it (or such nominee(s)) may have (whether under the Company's
articles of association or otherwise) in respect of the transfer to the Buyer or
its nominee(s) of any of the Shares;
(c) agrees and acknowledges that it has no claims against any other
Seller or any of their affiliates, advisors, agents, directors, employees or
representatives in respect of the entry into or performance of this Agreement;
and
(d) effective as of the Closing Date, upon issuance of the Buyer Shares
in accordance with the terms of this Agreement, for valuable consideration
receipt of which is hereby acknowledged, on behalf of himself, herself or itself
and such Seller's successors, heirs, executors, administrators and assigns, does
hereby remise, release and forever discharge the Company and the Subsidiaries,
and their successors, assigns, officers, directors, agents, employees and
counsel, from all manner of actions, causes of action, suits, debts, sums of
money, bonds, bills, contracts, controversies, agreements, promises, damages,
judgments, claims and demands whatsoever, which such Seller ever had, now has or
hereafter can, shall or may have, for, upon or by reason of its ownership of the
Securities arising prior to or contemporaneously with the Closing; provided,
however, that nothing in this clause (d) shall operate to release any
obligations of the Buyer arising under this Agreement or the Ancillary
Agreements.
16
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of the Sellers, severally and not jointly with any other Seller,
represents and warrants to the Buyer, as of the date hereof and as of the
Closing Date, as follows:
SECTION 3.1. POWER AND AUTHORITY.
Such Seller has all requisite power and authority or if an individual,
legal capacity, to execute and deliver this Agreement and the Ancillary
Agreements to which it is a party, to perform the obligations of such Seller
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. This Agreement and the Ancillary Agreements to which such Seller is
a party have been duly authorized, executed and delivered by such Seller,
constitute the valid and binding agreements of such Seller and are enforceable
against such Seller in accordance with their terms.
SECTION 3.2. THE SECURITIES.
Such Seller is either (i) the beneficial and registered owner of the
Securities set forth opposite such Seller's name on Schedule A or (ii) is the
registered owner of such Securities and has the legal capacity to transfer the
beneficial title to such Securities. Such Securities are held by such Seller as
the registered owner thereof, free and clear of all Liens (other than Liens
created by this Agreement) and are not subject to any restriction with respect
to their transferability (other than restrictions on transfer under applicable
federal, state and foreign securities laws). Except for this Agreement, the
Framework Agreement and as set forth on Schedule 3.2, such Seller (i) is not
party to and has not granted to any other Person, any options, warrants,
subscription rights, rights of first refusal or any other rights providing for
the acquisition or disposition of the Securities or any other equity interest in
the Company or the Subsidiaries and (ii) is not a party to any voting agreement,
voting trust, proxy or other agreement or understanding with respect to the
voting of any of the Shares.
SECTION 3.3. SECURITIES LAWS.
(a) Such Seller that is a U.S. person is an "accredited investor" as
such term is defined in Rule 501(a) promulgated under the Securities Act, and is
financially able to hold the Buyer Shares for long term investment and to suffer
a complete loss of its investment in the Buyer Shares. The Buyer Shares are
being acquired by such Seller for its own account for investment purposes, and
not with a view to any distribution thereof within the meaning of the Securities
Act. Such Seller has had the opportunity to ask questions of the Buyer and its
subsidiaries and their officers and employees and to receive to its satisfaction
such information about the business and financial condition of the Buyer and its
subsidiaries as it considers necessary or appropriate for deciding whether to
consummate the transactions contemplated hereby, and such Seller is fully
capable of understanding and evaluating the risks associated with the ownership
of the Buyer Shares.
(b) Such Seller has conducted its own diligence investigation with
respect to the merits and risks associated with its ownership of the Buyer
Shares as it deems appropriate. No
17
Seller is relying on nor has relied on (i) any representation by the Buyer or
any affiliate or representative of the Buyer, other than the representations and
warranties of the Buyer hereunder or (ii) any due diligence or other
investigation conducted by any other Seller.
(c) Such Seller acknowledges (i) except as contemplated by the
Registration Rights Agreement, that the Buyer Shares will not be registered
under the Securities Act or under the securities laws of any state and must be
held by such Seller indefinitely unless the resale of the Buyer Shares is
subsequently registered under the Securities Act and any applicable state
securities law or an exemption from such registration becomes or is available
and (ii) in addition to any legend required by law or any other agreement by
which such Seller is bound, the Buyer shall place the following legend on any
certificate representing the Buyer Shares:
"THE TRANSFERABILITY OF THESE SECURITIES IS SUBJECT TO RESTRICTION.
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY BE REOFFERED AND
SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION
IS AVAILABLE."
SECTION 3.4. ARTICLES.
Each of the Majority Share Sellers hereby represents and warrants that the
provisions set forth in Section 16 of the Articles of Association of the Company
has not been and will not be triggered as a result of the transactions
contemplated by this Agreement and the Ancillary Agreements.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Buyer, as of the date hereof
and as of the Closing Date, as set forth in this Article Four.
Any reference to a party's "knowledge" means with respect to the Company,
the actual knowledge of the persons set forth on Schedule 4; provided, that if
such persons shall have actual knowledge of facts and circumstances that would
lead a reasonably prudent person to inquire and gain actual knowledge of a
particular matter, such person shall be deemed to have actual knowledge of such
matter unless they make such further inquiry.
SECTION 4.1. POWER AND CAPACITY.
The Company has all requisite corporate power and authority to execute and
deliver this Agreement and the other Ancillary Agreements to which it is a
party, to perform the obligations of the Company hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. This Agreement and
the Ancillary Agreements to which the Company is a party have been duly
authorized, and when executed and delivered by the Company, shall constitute the
valid and binding agreement of the Company and will be enforceable against the
Company in accordance with their terms.
18
SECTION 4.2. ORGANIZATION AND QUALIFICATION.
(a) The Company is a limited company duly incorporated under English law
and has been in continuous existence since incorporation. The Company is
qualified to do business as a foreign corporation in each jurisdiction where the
nature of its business or the character or location of its properties makes such
qualification necessary, except to the extent that the failure to so qualify has
not had a Material Adverse Effect. The Company has all requisite corporate power
and authority to own or lease and operate its material properties and assets and
to carry on its business as now conducted.
(b) Accurate and complete copies of the Organizational Documents and the
minute books of the Company have been made available to the Buyer and accurate
and complete copies of the stock ledgers and stock transfer records of the
Company and the Subsidiaries have been, or prior to Closing will be, furnished
to the Buyer. Such minute books contain the minutes of all meetings of the
shareholders and the board of directors, and all committees thereof, of the
Company. All such meetings of the Company were duly called and held, and a
quorum was present and acting throughout each such meeting. Such stock ledgers
and stock transfer records reflect all issuances and registrations of transfer
of all shares of capital stock of the Company and the certificates representing
all canceled shares of capital stock have been returned to the stock ledger.
(c) The Committed Sellers either: (i) own directly, beneficially and as the
registered shareholders; or (ii) are the registered shareholders and have the
legal capacity to transfer the beneficial title to, at least 94.6% (by number)
of the Shares and the Bond Sellers either: (x) own directly, beneficially and of
record; or (y) are the holders of record and have the legal capacity to transfer
the beneficial title to, 100% of the Bonds.
SECTION 4.3. CONFLICTING INSTRUMENTS; CONSENTS.
(a) Except as set forth on Schedule 4.3(a), the execution and delivery by
the Company of this Agreement and the Ancillary Agreements to which it is a
party does not, and the consummation of the transactions contemplated hereby and
thereby will not, (i) violate any provision of the articles of incorporation or
the by-laws (or the equivalent thereof), as amended from time to time
(collectively, the "Organizational Documents") of the Company or any of the
Subsidiaries, or (ii) result in the creation of any Lien upon the Securities or,
other than any Permitted Lien or Liens created by or resulting from the
activities of the Buyer and its affiliates, any of the material properties or
assets of the Company or any of the Subsidiaries, or (iii) conflict with or
result in a material breach of, create an event of default (or event that, with
the giving of notice or lapse of time or both, would constitute an event of
default) under, or give any third party the right to accelerate any material
obligation under, any Material Contract.
(b) Except for the filings under the HSR Act and the other filings set
forth on Schedule 4.3(b), the execution and delivery by the Company of this
Agreement and the Ancillary Agreements to which it is a party do not, and the
consummation of the transactions contemplated hereby and thereby will not,
result in a violation of, or require any authorization, approval, consent or
other action by, or registration, declaration or filing with or notice to, any
court or administrative or governmental body pursuant to, any statute, law,
rule, regulation or ordinance
19
applicable to any Seller, the Company or any of the Subsidiaries, except where
the failure to obtain such consent would not, individually or in the aggregate,
have a Material Adverse Effect. There is no pending or threatened action, suit,
proceeding or investigation before or by any court or governmental body or
agency, (i) to restrain or prevent the consummation of the transactions
contemplated by this Agreement or the Ancillary Agreements, (ii) that could
reasonably be expected to prohibit the Buyer from owning or voting the Shares or
owning the Bonds or (iii) that could reasonably be expected to restrict the
right of the Buyer to operate the business of the Company or any of the
Subsidiaries.
SECTION 4.4. TRANSFER OF THE SECURITIES.
Upon the delivery of the relevant instruments of transfer for the
Securities by the Sellers and payment for the Securities as provided for in this
Agreement, the Buyer will acquire good and valid title to all of the outstanding
Securities, free and clear of all Liens.
SECTION 4.5. CAPITALIZATION.
(a) The Company has an authorized share capital consisting of (i) 2,264,680
Founder Shares, par value $0.20 per share, of which 2,264,680 shares are issued;
(ii) 9,054,987 A Ordinary Shares, par value $0.20 per share, of which 7,735,320
shares are issued; (iii) 90,000,000 B Redeemable Shares, par value $0.01 per
share, of which 90,000,000 shares are issued; and (iv) 9,288,108 C Ordinary
Shares, par value $0.20 per share, of which 180,000 shares are issued. Except as
set forth on Schedule 4.5(a), there are no outstanding or authorized options,
subscriptions, warrants, calls, rights, commitments or other agreements of any
character obligating the Company or any Subsidiary to issue, sell or transfer,
pledge or otherwise encumber any shares of its capital stock or any other
securities convertible into or exercisable for or evidencing the right to
subscribe for any shares of its capital stock. All of the outstanding equity
securities of the Company have been, and all shares of the Company that may be
issued upon exercise or conversion of options, warrants and other securities
convertible into or exercisable for shares of the Company will be, when issued,
duly authorized, validly issued, fully paid and non-assessable. To the knowledge
of the Company, all of the outstanding equity securities of the Company,
including options, warrants, and other securities convertible into or
exercisable for shares of the Company, were issued by the Company in compliance
with all applicable Laws; provided, however, that the Company does not make any
representations hereunder with respect to the "blue sky" laws of the states of
the United States or the local securities laws of any non-United States
jurisdiction.
(b) Schedule 4.5(b) sets out in relation to each option to acquire shares
of the Company (i) the name of the option holder, (ii) the number and class of
the Company's shares subject to the option, (iii) the strike price per share at
which the option may be exercised, (iv) the date on which the option was granted
and (v) the name of the share option plan or arrangement under which the option
was granted.
SECTION 4.6. SUBSIDIARIES.
(a) Set forth on Schedule 4.6 is a complete list of the corporations or
other entities (the "Subsidiaries") with respect to which the Company
beneficially owns, directly or indirectly,
20
any of the outstanding stock or other equity interests. Except for the
Subsidiaries, the Company does not have any equity interest or investment in any
Person, whether incorporated or unincorporated, direct or indirect. Set forth on
Schedule 4.6 is a complete list of each partnership or joint venture agreement
or arrangement to which the Company or any of the Subsidiaries is party and the
interest of the Company or such Subsidiary therein.
(b) Each Subsidiary is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, which
jurisdictions are set forth on Schedule 4.6. Each Subsidiary is qualified to do
business as a foreign corporation in each jurisdiction where the nature of its
business or the characters or location of its properties makes such
qualification necessary, except to the extent that the failure to so qualify has
not had a Material Adverse Effect. Each Subsidiary has the corporate power and
authority to own or lease and operate its properties and assets and to carry on
its business as it is now being conducted.
(c) Except as set forth on Schedule 4.6, the Company owns, directly or
indirectly, 100% of the outstanding shares of capital stock or other ownership
interests of each of the Subsidiaries, free and clear of any Liens, other than
Liens specified in clauses (i), (iii) or (iv) of the definition of Permitted
Liens. The shares of capital stock or other ownership interests so issued by the
Subsidiaries have been duly authorized and validly issued, are fully paid and
non-assessable. There is no outstanding or authorized option, subscription,
warrant, call, right, commitment or other agreement of any character obligating
the Company or any of the Subsidiaries to issue, sell, transfer, pledge or
otherwise encumber any share of capital stock or other ownership interest of any
of the Subsidiaries or any security or other instrument convertible into or
exercisable for or evidencing the right to subscribe for any such share of
capital stock or other ownership interest.
(d) To the Company's knowledge, the minute books, stock ledgers and stock
transfer records of the Subsidiaries furnished to the Buyer for review are
accurate and complete in all material respects.
SECTION 4.7. FINANCIAL STATEMENTS.
(a) The Company has furnished the Buyer with copies of the following
(collectively, the "Financial Statements"): (i) the audited consolidated
financial statements (including related notes) of the Company for the fiscal
years ended December 31, 2004 (in draft form as provided to the Buyer), 2003 and
2002, including balance sheets as at December 31, 2004, 2003 and 2002; and (ii)
the related statements of income and cash flows for the fiscal year then ended.
(b) The Financial Statements complied, as of the date thereof, as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, were prepared
in accordance with generally accepted accounting principles in the United States
of America ("GAAP") consistently applied throughout the periods covered (except
as may be indicated in the notes thereto) and fairly presented in all material
respects the consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal and recurring year-end adjustments and the
absence of notes).
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(c) Except as and to the extent reflected or reserved against in the
Financial Statements, as of the Balance Sheet Date, neither the Company nor any
of the Subsidiaries had any material liabilities or obligations (absolute or
contingent), of a nature required by GAAP to be reflected in a consolidated
balance sheet as of such date.
SECTION 4.8. REAL PROPERTY.
(a) Set forth on Schedule 4.8(a) is true and complete list of all real
property owned by the Company or its Subsidiaries (the "Owned Real Property") .
Also set forth on Schedule 4.8(a) is a true and complete list of all real
property leased, subleased, licensed or otherwise occupied by the Company or its
Subsidiaries pursuant to a Property Lease (collectively, including any
improvements located thereon, the "Leased Real Property"). True and complete
copies of each Property Lease have been made available to the Buyer in the Data
Room.
(b) With respect to the Property Leases, to the knowledge of the Company,
there is no material default or event of default or event that has occurred and
is continuing and, which with the giving of notice or lapse of time or both,
would constitute a material default or event of default on the part of the
Company or any of its Subsidiaries under the Property Leases, or on the part of
any other Person party to any of the Property Leases. To the knowledge of the
Company, all of the Property Leases are in full force and effect, and are valid
and enforceable against the parties thereto in accordance with their terms, and,
except as set forth in Schedule 4.8(b), the Company or its Subsidiary is in
possession, and is the only Person in possession, of the Leased Real Property.
(c) The Company and the Subsidiaries have good title to the Owned Real
Property and to all buildings, fixtures and improvements located thereon, free
and clear of all Liens other than Permitted Liens. The Company and the
Subsidiaries have good and valid leasehold estates or interests, as applicable,
in all Leased Real Property, free and clear of all Liens other than Permitted
Liens.
(d) To the knowledge of the Company, the Real Property, and the use,
operation or maintenance thereof as currently used, operated and maintained by
the Company or its Subsidiary, do not violate any applicable Law in any material
respect.
(e) (i) There is no pending or, to the knowledge of the Company, threatened
condemnation or eminent domain proceeding with respect to, or materially and
adversely affecting, any Owned Real Property and (ii) to the knowledge of the
Company, there is no pending or threatened condemnation or eminent domain
proceeding with respect to, or materially and adversely affecting any Leased
Real Property.
SECTION 4.9. PERSONAL PROPERTY.
Except as described in Schedule 4.9, the Company and the Subsidiaries have
good and marketable title to all material personal property reflected on the
Balance Sheet and all material personal property acquired by the Company or any
of the Subsidiaries since the date of the Balance Sheet (except such personal
property as has been disposed of in the ordinary course of business), free and
clear of any Impairments, except for Permitted Liens. All material items of
22
personal property are in good condition and in a reasonable state of repair,
reasonable wear and tear excepted.
SECTION 4.10. ACCOUNTS RECEIVABLE AND INVENTORY.
(a) All accounts receivable reflected in the Balance Sheet, and, to the
knowledge of the Company, all accounts receivable arising since the Balance
Sheet Date, arose from bona fide sales transactions in the ordinary course of
business consistent with past practice and do not represent obligations for
goods sold on consignment or approval or on a sale-or-return basis or subject to
any other repurchase or return arrangement, other than in the ordinary course of
business, consistent with past practice.
(b) The inventories set forth in the Balance Sheet net of reserves
consisted, and all inventory acquired since the Balance Sheet Date consists, of
a quality and quantity usable and saleable in the ordinary course of business.
SECTION 4.11. PERSONNEL.
Set forth on Schedule 4.11 is a true and complete list of:
(a) the name of each person employed by the Company or any Subsidiary
whose total compensation for services rendered, including without
limitation bonuses and deferred compensation, for the fiscal year ended
December 31, 2004 (and if determined, for December 31, 2005) was (or will
be, as applicable) in excess of the rate of $250,000 per year or who has an
employment agreement with the Company or any Subsidiary that provides for
severance benefits for, or notice of termination for a term of more than
one year (any such person, a "Key Employee"), the title or job
classification of each such person and the current compensation including
bonuses and deferred compensation of each such person;
(b) the name of each person, if any, holding tax or other powers of
attorney from the Company or any Subsidiary and a summary of the terms
thereof;
(c) the name and title or job description of each director and officer
of the Company and each of the Subsidiaries; and
(d) details of any arrangement or practice regarding redundancy
payments, whether contractual, customary, discretionary or otherwise,
applicable to any employee of the Company or any of the Subsidiaries other
than those required to be provided to such employee by applicable Law.
SECTION 4.12. LABOR MATTERS.
(a) Except as set forth on Schedule 4.12(a), neither the Company nor any
Subsidiary is a party to any contract or collective bargaining agreement with
any labor organization, union, group, works council or other employee
representative body. Other than as set forth on Schedule 4.12(a), to the
knowledge of the Company, there are no activities or proceedings by any labor
organization, union, group or association or representative thereof to organize
any
23
employees of the Company or any of the Subsidiaries, and there have been no such
activities or proceedings within the preceding three years. There are no
lockouts, strikes, slowdowns, work stoppages pending or, to the knowledge of the
Company, threatened by or with respect to any employees of the Company or any of
the Subsidiaries that could reasonably be expected to result in material
liability to the Company or any Subsidiary, nor have there been any such
lockouts, strikes, slowdowns or work stoppages in the preceding three years.
(b) To the knowledge of the Company, there is no material claim pending
between the Company or any Subsidiary and any of their respective employees.
Except as set forth in Schedule 4.12(b), there is not, and during the three
fiscal years prior to the date of this Agreement there has not occurred, any
material claim, grievance, arbitration, negotiation, suit, action or charge of
or by any employee of the Company or any Subsidiary submitted to, and no
complaint is pending against the Company or any Subsidiary before, the National
Labor Relations Board or any state or local agency or court or tribunal in any
jurisdiction. To the knowledge of the Company, the Company and the Subsidiaries
have complied in all material respects with all applicable statutes, regulations
and executive orders of the United States of America, all states and other
subdivisions thereof, all foreign jurisdictions and all agencies and
instrumentalities of the foregoing respecting employment, termination of
employment, employment practices, terms and conditions of employment and wages
and hours.
(c) To the extent permitted by applicable law, the Sellers have made
available to the Buyer copies of all material claims, complaints, reports and
other documents that have been filed with an administrative agency or court of
law against or by the Company or any Subsidiary during the past three years
pursuant to workers' compensation laws, Title VII of the Civil Rights Act of
1964, the Occupational Safety and Health Act of 1970, the National Labor
Relations Act of 1935 or any other federal or state laws (or laws of any foreign
jurisdiction) relating to employment of labor.
SECTION 4.13. ENVIRONMENTAL MATTERS.
(a) Except as has not had a Material Adverse Effect, none of the Company,
the Subsidiaries nor, to the knowledge of the Company, any previous owner,
tenant, occupant, operator or user of any Real Property or Former Real Property
or any other person has engaged in or permitted any operation or activity at or
upon, or any use or occupancy of, any Real Property or Former Real Property, or
any portion thereof, for the purpose of or in any way involving the handling,
manufacture, treatment, storage, transporting, use, generation, release,
discharge, refining, dumping, emission or disposal of any Hazardous Materials
(whether legal or illegal, accidental or intentional) on, under, in or about the
Real Property or Former Real Property, or transported any Hazardous Materials
to, from or across any Real Property or Former Real Property, nor, to the
knowledge of the Company, are any Hazardous Materials presently constructed,
deposited, stored or otherwise located on, under, in or about any Real Property
or Former Real Property, nor to the knowledge of the Company have any Hazardous
Materials migrated or threatened to migrate from the Real Property or the Former
Real Property onto, about or beneath any other properties, nor, to the knowledge
of the Company, have any Hazardous Materials migrated or threatened to migrate
from other properties onto, about or beneath the Real Property or the Former
Real Property. Except as has not had a Material Adverse Effect, no Hazardous
Materials generated by the Company or any Subsidiary or located
24
under, in or about the Real Property or Former Real Property in the past have
been transported to any waste disposal facility or other site.
(b) All existing and, to the knowledge of the Company, prior uses and
activities at the Real Property or the Former Real Property, and the operations
of the Company and the Subsidiaries materially comply and have at all times
materially complied with all applicable Environmental Requirements, and no
activity on or condition of the Real Property or the Former Real Property has
constituted or constitutes a nuisance, trespass or other tortious condition with
respect to any third party that has had a Material Adverse Effect.
(c) Except as set forth on Schedule 4.13, none of the Company, the
Subsidiaries nor, to the knowledge of the Company, any other owner, tenant,
occupant or user of the Real Property or the Former Real Property has received
any notice, Claim or other communication concerning any alleged violation of or
liability under Environmental Requirements, any alleged or potential liability
for Environmental Losses, or any Release of Hazardous Materials in connection
with the Real Property, the Former Real Property, the Company or the
Subsidiaries or any real property or facility to which the Hazardous Materials
generated by the Company or the Subsidiaries have been sent and to the knowledge
of the Company there are no circumstances likely to give rise to any such
notice, claim or other communication. To the knowledge of the Company, none of
the Company, the Subsidiaries, nor, to the knowledge of the Company, any other
owner, tenant, occupant or user of the Real Property or the Former Real Property
is the subject of any investigation or inquiry concerning Hazardous Materials by
any Governmental Authority that has resulted in or would reasonably be expected
to result in a material liability of the Company or any of the Subsidiaries in
relation to any Real Property or Former Real Property.
(d) Except as set forth on Schedule 4.13, to the knowledge of the Company,
no (A) underground improvement used for the storage or conveyance of Hazardous
Materials, including without limitation any treatment or storage tank or water,
gas or oil well or (B) above-ground storage tank used for Hazardous Materials,
is or to the knowledge of the Company ever has been located on the Real Property
or the Former Real Property.
(e) Except as set forth on Schedule 4.13, none of the Company nor any
Subsidiary has entered into or agreed to or is the subject of any consent
decree, order or settlement or other agreement in any judicial, administrative,
arbitral or similar forum relating to Environmental Requirements, Hazardous
Materials or Environmental Losses. None of the Sellers, the Company or any
Subsidiary has assumed or retained by contract any liabilities of any kind,
fixed or contingent, known or unknown, relating to Environmental Requirements,
Hazardous Materials or Environmental Losses. None of the Company, the
Subsidiaries nor, to the knowledge of the Company, any other owner, tenant,
occupier or user of the Real Property or the Former Real Property are conducting
or funding (in whole or in part) any material Remediation of Hazardous Materials
in relation to any Real Property or Former Real Property.
SECTION 4.14. NON-ERISA PLANS.
(a) Set forth on Schedule 4.14(a) is a true and complete list of each
current employment contract and consulting agreement with any Key Employee
entered into by the Company or any Subsidiary, or by which the Company or any
Subsidiary is bound, and each
25
deferred compensation, bonus, incentive compensation, restricted stock, stock
option, stock purchase, savings, profit sharing, retirement, partial retirement,
death benefit, disability, insurance, change in control, severance or
termination pay agreement or plan or any other employee benefit plan, agreement,
arrangement, policy or commitment, whether formal or informal, written or
unwritten, maintained, entered into or contributed to, or which is required to
be maintained, entered into or contributed to (other than any such agreement or
plan that is required by applicable Law to be maintained or contributed to), by
the Company or any Subsidiary for the benefit of any current or former director,
officer or employee of the Company or any Subsidiary or any predecessor in
business (collectively, the "Company Employees") or spouse, child or dependent
thereof, or with respect to which the Company or any Subsidiary has any
liability (contingent or otherwise), which is not an ERISA Plan (the "Non-ERISA
Plans"); provided, however, that there shall be no obligation hereunder to
schedule any Non-ERISA Plan that is not material. No agreement, commitment or
obligation exists to adopt any new Non-ERISA Plan.
(b) The Company has made available to the Buyer in the Data Room true and
correct copies of each of the following:
(i) the documents constituting and governing each Non-ERISA Plan
listed in Schedule 4.14(a) (including, but not limited to all notices,
announcements, details of amendments or enhancements, and explanatory
literature of current effect);
(ii) the most recent determination letter issued by the relevant
authority in the relevant jurisdiction with respect of each of the
Non-ERISA Plans where relevant, if any;
(iii) the two most recent annual reports and accounts for each
Non-ERISA Plan where required by applicable Law to be prepared; and
(iv) the most recent actuarial valuation report for each Non-ERISA
Plan where required by applicable Law to be prepared.
(c) Except for ongoing social security contributions or other payments
required to be paid under applicable Law and amounts required to be paid or
benefits required to be provided pursuant to terms of the Non-ERISA Plans or the
ERISA Plans, the Company and its Subsidiaries or any predecessor in business are
not under any obligation or commitment to pay, provide or contribute towards,
any benefit for or in respect of any Company Employee or spouse, child or
dependent thereof.
(d) Each Non-ERISA Plan currently complies and has complied in the past,
both as to form and operation, in all material respects with its terms and with
the requirements of the relevant taxation and other applicable authorities and
applicable law, and benefits under the Non-ERISA Plans are as represented in
such plan documents.
(e) In relation to each Non-ERISA Plan which has specific assets held in
trust in advance relating to any obligation to provide benefits thereunder (a
"Funded Plan"), except as would not reasonably be expected to result in any
non-de minimus liability, all contributions and other payments due from the
Company or any Subsidiary have been paid to the Funded Plan and to the knowledge
of the Company, nothing has occurred or become known since the effective
26
date of the last actuarial valuation of each of the Funded Plans disclosed
pursuant to Section 4.14(c)(iv) above which might reasonably be expected to
cause the result of a valuation carried out at the date of the Agreement,
adopting the same actuarial methods and assumptions as were adopted for the
purposes of the relevant disclosed valuation to be materially different, in an
adverse manner, from the result of the valuation.
(f) Except as set forth on Schedule 4.14(f): (i) no benefit available to
substantially all participants under any Non-ERISA Plan has been materially
increased subsequent to the date as of which documents have been provided to the
Buyer; and (ii) neither the Company nor any Subsidiary has proposed, announced
or otherwise communicated to the Company Employees (or any affected group
thereof) any plan, arrangement or commitment, whether legally binding or not, to
create any additional ERISA Plan or Non-ERISA Plan that would affect any current
or former employee of the Company or any Subsidiary. There is no action, suit or
claim, other than routine claims for benefits, pending or threatened with
respect to any Non-ERISA Plan, or against the assets of any Non-ERISA Plan of
which the Company or any Subsidiary is a trustee, the Company or any Subsidiary.
To the knowledge of the Company, there is no action, suit or claim, other than
routine claims for benefits, anticipated, pending or threatened with respect to
the fiduciaries of any Non-ERISA Plan or the assets of any Non-ERISA Plan of the
Company or any Subsidiary is not a trustee. To the knowledge of the Company,
there are no anticipated, pending or threatened investigations by any
regulatory, judicial or taxation authority into any Non-ERISA Plan.
(g) No Non-ERISA Plan provides for post-employment health, life insurance
or other welfare benefit coverage other than as may be required by applicable
Law or solely during a specified severance period.
(h) No Non-ERISA Plan subject to Section 409A of the Code has been
materially modified (as defined under Section 409A of the Code) since prior to
October 3, 2004, and all such Non-ERISA Plans have been operated and
administered in good faith compliance with Section 409A and all other applicable
Laws from the period beginning January 1, 2005, through the date hereof.
SECTION 4.15. ERISA PLANS.
(a) Set forth on Schedule 4.15(a) is a complete list of each employee
pension benefit plan (the "Pension Plans") as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974 ("ERISA") and each employee
welfare benefit plan as defined in Section 3(1) of ERISA (the "Welfare Plans")
established, maintained or contributed to by the Company or any ERISA Affiliate,
to which the Company or any Subsidiary had an obligation to contribute during
the five years preceding the date hereof, or with respect to which the Company
or any Subsidiary has any liability (contingent or otherwise) (all such plans,
collectively, the "ERISA Plans"); provided, however, that there shall be no
obligation hereunder to schedule any Non-ERISA Plan that is not material.
(b) The Company has made available to the Buyer true and correct copies of
the following:
27
(i) each ERISA Plan listed on Schedule 4.15(a) and all amendments
thereto and all summary plan descriptions;
(ii) each trust agreement, annuity contract or insurance policy (or
any other funding instrument) pertaining to any of the ERISA Plans,
including all amendments to such documents;
(iii) the most recent determination letter issued by the IRS with
respect to each of the Pension Plans, if applicable;
(iv) the most recent actuarial valuation report for each ERISA Plan
for which an actuarial valuation report is required by applicable Law or
under GAAP to be prepared;
(v) the two most recent Annual Reports (IRS Forms 5500 series),
including Schedules A and B, if applicable, required to be filed with
respect to each ERISA Plan; and
(vi) any notices to or from the Internal Revenue Service, the
Department of Labor, the Pension Benefit Guaranty Corporation (the "PBGC")
or any similar governmental entity relating to any material compliance
issues in respect of any ERISA Plan.
(c) No non-exempt prohibited transaction within the meaning of Section 406
of ERISA or Section 4975 of the Code has occurred with respect to any ERISA Plan
that is a Pension Plan that has had or would reasonably be expected to result in
a material liability.
(d) None of the Company or any of the Subsidiaries is now contributing, or
has an obligation to contribute, or has ever contributed or has had an
obligation to contribute, to a "Multiemployer Plan" (as defined in Section 3(37)
of ERISA), to the extent that there remains any unsatisfied liability with
respect thereto.
(e) No ERISA Plan that is a Pension Plan is subject to Section 302 of
ERISA, Section 412 of the Code or Title IV of ERISA. No ERISA Plan that is a
Pension Plan is a multiple employer plan as defined in Sections 4063 or 4064 of
ERISA.
(f) There is no action, suit or claim pending (other than routine claims
for benefits) or that reasonably could be expected to be asserted against any
ERISA Plan or the assets of any ERISA Plan. No civil or criminal action brought
pursuant to the provisions of Title I, Subtitle B, Part 5 of ERISA is pending
or, to the knowledge of the Company, threatened against any fiduciary of any
ERISA Plan. None of the ERISA Plans or any fiduciary thereof has been the direct
or indirect subject of an audit investigation or examination by any governmental
or quasi-governmental agency that has had or would reasonably be expected to
result in a material liability.
(g) All of the ERISA Plans currently comply, and have complied in the past,
both as to form and operation, in all material respects, with the terms of such
ERISA Plans and with the applicable provisions of ERISA, the Code and other
applicable Laws. All necessary
28
governmental approvals for the ERISA Plans have been obtained and a favorable
determination as to the qualification under Section 401(a) of the Code of each
of the ERISA Plans that are Pension Plans and of each amendment thereto has been
made by the IRS and a recognition of exemption from federal income taxation
under Section 501(a) of the Code of each of the funded ERISA Plans that are
Welfare Plans, if any, has been made by the IRS. Nothing has occurred since the
date of each such determination or recognition letter that would reasonably be
expected to adversely affect such qualification or exemption.
(h) No agreement, commitment, or obligation exists to materially increase
any benefits under any ERISA Plan or to adopt any new ERISA Plan.
(i) No ERISA Plan provides for post-employment health, life insurance or
other welfare benefit coverage, other than as may be required under "COBRA"
pursuant to Part VI of Title I of ERISA or solely during a specified severance
period.
(j) Except as would not reasonably be expected to result in a material
liability to the Company or any of its Subsidiaries, no event has occurred and
no condition exists, with respect to any Pension Plan subject to Title IV of
ERISA, that would reasonably be expected to subject the Company or its
Subsidiaries, either directly or by reason of their affiliation with any ERISA
Affiliate, to any tax, fine, lien, penalty or other liability imposed by ERISA,
the Code or other applicable Laws, rules and regulations.
(k) Except as otherwise disclosed on Schedule 4.15(k), there will be no
payment, accrual of additional benefits, acceleration of payments or vesting of
any benefit under any contract, agreement, plan or other arrangement, whether or
not an ERISA Plan, and no employee, officer or director of the Company or any of
the Subsidiaries will become entitled to severance, termination pay or similar
payments or benefits or be entitled to treat himself as redundant or otherwise
dismissed or released from any obligation, solely by reason of entering into or
in connection with the transactions contemplated by this Agreement (either alone
or in combination with any other event), other than as specifically provided for
in this Agreement. No payment, accrual of additional benefits, acceleration of
payments or vesting of any benefit under this Agreement, any ERISA Plan or
Non-ERISA Plan or similar agreement or arrangement between the Company or any of
its Affiliates and any "disqualified individual" (as such term is defined in
Section 280G of the Code) could reasonably be expected to be characterized as an
"excess parachute payment" (as such term is defined in Section 280G of the Code)
in connection with the transactions contemplated by this Agreement (alone or in
combination with any other event).
SECTION 4.16. COMPLIANCE WITH LAW; EXPORT CONTROL LAWS.
(a) To the knowledge of the Company, the Company, the Subsidiaries and
their respective officers, directors, and employees have complied with all
applicable material Laws of the United States of America, all states and other
subdivisions thereof (including federal securities Laws), all applicable foreign
jurisdictions, all agencies and instrumentalities of the foregoing and all
national and international self-regulatory bodies and authorities in respect of
the conduct of the Company's and the Subsidiaries' business and ownership of
their respective properties and the issuance of the Securities of the Company
and its Subsidiaries; provided,
29
however, that the Company does not make any representations hereunder with
respect to the "blue sky" laws of the states of the United States or the local
securities laws of any non-United States jurisdiction.
(b) Except as set forth on Schedule 4.16(b), to the knowledge of the
Company, (i) the Company and the Subsidiaries have conducted their transactions
in material compliance with applicable provisions of the export control Laws and
regulations of the United States of America and all other applicable
jurisdictions and (ii) the Company and the Subsidiaries have obtained all export
licenses and other approvals required for their exports of products, software
and technologies from the United States of America and any other relevant
jurisdiction, except in the case of this clause (ii) where the failure to obtain
such export licenses and other approvals would not subject them to penalties
other than fines not to exceed $250,000 in the aggregate. The Company and the
Subsidiaries are in material compliance with the terms of all applicable export
licenses or other approvals. Except as set forth on Schedule 4.16(b), there are
no pending, or to the knowledge of the Company, threatened material claims
against the Company or the Subsidiaries with respect to such export licenses or
other approvals. To the knowledge of the Company, there are no actions,
conditions or circumstances pertaining to the Company or the Subsidiaries export
transactions that may give rise to any future claims that are, individually or
in the aggregate, material to the Company or the Subsidiaries. To the knowledge
of the Company, no consents or approvals for the transfer of export licenses to
the Buyer are required.
SECTION 4.17. LITIGATION.
Except as set forth on Schedule 4.17, there is no material action, suit,
claim, proceeding, inquiry or investigation pending or, to the knowledge of the
Company, threatened, against or affecting the Company or any Subsidiary, or the
assets, properties, business or business prospects of the Company or any
Subsidiary or relating to or involving the transactions contemplated by this
Agreement at law or in equity, or before or by any arbitrator or Governmental
Authority. Neither the Company nor any Subsidiary is in default with respect to
any order, writ, injunction or decree known to or served upon the Company or
such Subsidiary. Except as set forth on Schedule 4.17, there is no pending
material action or suit brought by the Company or any Subsidiary against others.
SECTION 4.18. MATERIAL CONTRACTS.
(a) Except as set forth on Schedule 4.18(a) (the "Material Contracts"),
neither the Company nor any of the Subsidiaries is party to any of the
following:
(i) contract or agreement not made in the ordinary course of business
that is of a type not otherwise covered by clauses (ii) through (ix) of
this Section 4.18 and that provides for future payments by or to the
Company or any Subsidiary in excess of $250,000;
(ii) consulting agreement or contract for the employment of any Key
Employee or any agreement with an employee of the Company or any Subsidiary
that provides that a change of control, direct or indirect, of the Company
entitles the worker to treat the change of control as amounting to a breach
of the relevant contract or entitle him
30
or her to any payment, additional period of notice or other benefit
whatever or entitle him or her to treat such worker as redundant or
otherwise dismissed or released from any obligation;
(iii) agreement, mortgage, indenture, loan or credit agreement,
security agreement, guaranty or indemnity or other agreement or instrument
relating to the borrowing or lending of money or extension of credit (other
than loans or extensions of credit for the benefit of customers and
guarantees for the benefit of any of the Subsidiaries) in each case in
excess of $5,000,000 or providing for the mortgaging or pledging of, or
otherwise placing a Lien (other than a Permitted Lien) on any material
assets or properties of the Company or any Subsidiary;
(iv) option, warrant or other contract for the purchase of any debt or
equity security of any corporation, or for the issuance of any debt or
equity security, or the conversion of any obligation, instrument or
security into debt or equity securities, of the Company or any Subsidiary;
(v) settlement agreement of any administrative or judicial proceedings
within the past three years requiring a payment by or to the Company or the
Subsidiaries of $500,000 or more;
(vi) contract or agreement limiting the ability of the Company or any
Subsidiary to engage in any line of business or to compete with any person
or entity;
(vii) contract with any of the twenty (20) largest (in terms of dollar
volume) customers or suppliers of the Company and the Subsidiaries listed
on Schedule 4.24(a) and Schedule 4.24(b), respectively;
(viii) Property Leases or other agreement relating to the Leased
Property; or
(ix) agreements with any shareholder, former shareholder, affiliate,
director, officer or relative of any of the foregoing.
(b) Neither the Company nor any of the Subsidiaries is in material breach
of or in material default under any of the Material Contracts, and no event has
occurred that, with the giving of notice or lapse of time or both, would
constitute such a material breach or material default. The Company has made
available in the Data Room a true and complete copy of all written Material
Contracts set forth on Schedule 4.18(a).
(c) Set forth on Schedule 4.18(c) is a list of all amounts owing by the
Company and the Subsidiaries under any Financing Agreement.
SECTION 4.19. ABSENCE OF CERTAIN CHANGES.
Since the Balance Sheet Date and except as set forth on Schedule 4.19 or in
connection with the transactions contemplated by this Agreement, the Company and
the Subsidiaries have conducted their business in the ordinary course. Except as
set forth on Schedule 4.19, since the Balance Sheet Date through the date
hereof, neither the Company nor the Subsidiaries has:
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(a) incurred any material obligation or liability (absolute, accrued,
contingent or other), except in the ordinary course of business or in
connection with the performance of this Agreement;
(b) discharged or satisfied any Lien, or paid or satisfied any
obligation or liability (absolute, accrued, contingent or other), other
than liabilities reflected on the Balance Sheet or incurred since the
Balance Sheet Date in the ordinary course of business;
(c) increased or established any reserve for Taxes or other
liabilities on its books or otherwise provided therefor, except for Taxes
or other liabilities relating to the ordinary course operations of the
Company since the date of the Balance Sheet or otherwise in accordance with
GAAP;
(d) mortgaged, pledged or subjected to any Lien (other than a
Permitted Lien) on any of the material assets or properties of the Company
or any of the Subsidiaries;
(e) sold, assigned or transferred any material asset, property or
business or canceled any material debt or claim or waived any material
right, except in the ordinary course of business;
(f) granted any increase in the compensation (including bonuses and
deferred compensation) payable to any officer, director, consultant,
employee or agent of the Company or any of the Subsidiaries (other than (i)
in the ordinary course of business, (ii) as required by applicable Law or
any Non-ERISA Plan or ERISA Plan or (iii) as expressly described on
Schedule 4.11);
(g) made or authorized any capital expenditure for additions to plant
and equipment accounts of the Company and the Subsidiaries in excess of
$500,000 in the aggregate except as may have been necessary for ordinary
repair, maintenance and replacement or as is in accordance with the
budgeted capital expenditures previously made available to the Buyer in the
Data Room;
(h) made any loan to any shareholder or any relative or affiliate of
any shareholder, or declared, set aside or paid to any shareholder any
dividend or other distribution in respect of its capital stock, or redeemed
or purchased any of its capital stock, or agreed to take any such action,
except for repurchases of shares of the Company held by former employees of
the Company and the Subsidiaries upon the termination of their employment
and in a manner consistent with past practice;
(i) transferred any material asset or paid any commission, salary or
bonus to any shareholder or any relative or affiliate of any shareholder
other than the payment of wages or salaries to shareholder employees or
directors in the ordinary course of business and as disclosed on Schedule
4.11 or paid any rent, commission or fee to any shareholder or any relative
or affiliate of any shareholder;
32
(j) entered into, agreed to enter into or consummated any transaction
with or for the benefit of any shareholder or any relative or affiliate of
any shareholder other than the transactions contemplated by this Agreement;
(k) issued, sold or transferred, or agreed to issue, sell or transfer,
any stock, bond, debenture or other security of the Company or the
Subsidiaries, other than issuances of Shares upon the exercise of options
outstanding as of the date hereof; or
(l) suffered any Material Adverse Effect.
SECTION 4.20. TAX MATTERS.
Except as provided on Schedule 4.20,
(a) The Company and the Subsidiaries in a timely manner have filed all
material Tax Returns required of them under all Tax laws to which they are
subject and have paid all material Taxes shown due on such returns. All such Tax
Returns are true, correct and complete in all material respects. The Company and
the Subsidiaries have paid in full or set up an adequate reserve in respect of
all material Taxes for the periods covered by such Tax Returns, as well as all
other material Taxes that have become due or payable, including without
limitation all Taxes that the Company or any of the Subsidiaries is obligated to
withhold from amounts paid or payable to or benefits conferred upon employees,
creditors and third parties. Neither the Company nor any Subsidiary has any
material Tax liability for which an adequate tax reserve has not been
established on the Balance Sheet, whether or not disputed, including any
interest and penalty in connection therewith, for all periods ending on or prior
to the Balance Sheet Date. All material Taxes accrued after the Balance Sheet
Date were accrued in the ordinary course of business of the Company or its
Subsidiaries and do not exceed comparable amounts incurred in similar periods in
prior years (taking into account any changes in operating results).
(b) Set forth on Schedule 4.20 is a complete list of income and other Tax
Returns filed by Manchester US Holdings, Inc. ("MUSH") or any subsidiary of MUSH
pursuant to the Laws or regulations of any federal, state, local or foreign tax
authority that have been the subject of a material examination or audit by the
IRS or other appropriate taxing authority during the preceding five years. The
Buyer has been provided as part of its due diligence review with either a
summary of each such examination or audit or a copy of all correspondence with
the relevant taxing authority relating to each such examination or audit. All
material deficiencies proposed as a result of Tax examinations or audits with
respect to the Company or any Subsidiary have been paid, accrued on the Balance
Sheet or finally settled. No examination or audit is in progress with respect to
material Taxes of the Company or any Subsidiary. There is no outstanding
agreement or waiver made by or on behalf of the Company or any of the
Subsidiaries to extend the statutory period within which a taxing authority may
make any assessments or adjustments with respect to material Taxes, and neither
the Company nor any of the Subsidiaries has requested any extension of time in
which to file any material Tax Return. No unresolved claim has been made by any
taxing authority in any jurisdiction where the Company or any of its
Subsidiaries do not file Tax Returns that the Company or any Subsidiary is or
may be subject to Tax by that jurisdiction.
33
(c) Except for Taxes for the payment of which an adequate reserve has been
established on the Balance Sheet and for property taxes that are not delinquent,
there is no tax Lien, whether imposed by any federal, state, local or foreign
taxing authority, outstanding against any of the assets or properties of the
Company or any of the Subsidiaries.
(d) MUSH, is not a United States real property holding corporation (a
"USRPHC") within the meaning of Section 897 of the Code and was not a USRPHC on
any "determination date" (as defined in Section 1.897-2(c) of the Treasury
Regulations) that occurred in the five-year period preceding the Closing Date.
(e) Neither MUSH nor any subsidiary of MUSH has executed any closing
agreement pursuant to Section 7121 of the Code or any predecessor provision
thereof, or any similar provision of state or local law.
(f) Neither the Company nor any Subsidiary is a party to a tax sharing
agreement or similar contractual arrangement.
(g) Neither the Company nor any Subsidiary has agreed, and none is required
to make any adjustments pursuant to Section 481(a) of the Code or any similar
provision of non-United States, state or local law by reason of a change in
accounting method initiated by it or any other relevant party, none has any
knowledge that any taxing authority has proposed any such adjustment or change
in accounting method, and there is no application pending with any taxing
authority requesting permission for any changes in accounting methods that
relate to the business or assets of the Company or any Subsidiary.
(h) Neither MUSH nor any subsidiary of MUSH has been a member of an
affiliated group of corporations, within the meaning of Section 1504 of the
Code, or a member of a combined, consolidated or unitary group for state or
local Tax purposes, other than a group of which MUSH was the common parent.
(i) Neither the Company nor any of its Subsidiaries has any material
liability for Taxes of any person as transferee or successor, by contract or
otherwise. For taxable periods ending on or before December 31, 2000, to the
Company's knowledge, MUSH has no liability for Taxes of any person (other than
MUSH and its subsidiaries) under Treasury Regulations Section 1.1502-6 (or any
corresponding provision of state or local income Tax law). For taxable periods
commencing after December 31, 2000, MUSH has no liability for Taxes of any
person (other than MUSH and its subsidiaries) under Treasury Regulations Section
1.1502-6 (or any corresponding provision of state or local income Tax law).
(j) Neither MUSH nor any subsidiary of MUSH has entered into a gain
recognition agreement pursuant to Treasury Regulation Section 1.367(a)-8.
Neither MUSH nor any subsidiary of MUSH has transferred an intangible the
transfer of which would be subject to the rules of Section 367(d) of the Code.
(k) Neither the Company nor any Subsidiary that is not a United States
person is, engaged in the conduct of a trade or business within the United
States or treated as or considered to be so engaged.
34
(l) Neither MUSH nor any Subsidiary of MUSH is, subject to the dual
consolidated loss provisions of the Section 1503(d) of the Code.
(m) Neither MUSH nor any Subsidiary of MUSH is or has been a party to any
"listed transaction" as defined in Treasury Regulation Section 1.6011-4(b)(2) or
to any other transaction that is a "reportable transaction" pursuant to Treasury
Regulation Section 1.6011-4(b).
(n) Neither the Company nor any Subsidiary is the beneficiary of any
material Tax holiday, Tax concession or similar Tax exemption granted by a
governmental authority that is currently in effect and that is not generally
available to taxpayers in the relevant jurisdiction.
(o) Neither the Company nor any Subsidiary has any material Tax liability
as a result of its transfer pricing practices other than liabilities shown in
the Balance Sheet.
(p) The Company and each Subsidiary incorporated in a country that imposes
such a Tax is duly registered for the purposes of VAT or other similar Tax in
its country of incorporation.
(q) No material relief from or deferral of Tax in the UK has been claimed
or been available to the Company or any Subsidiary prior to Closing which will
be withdrawn or clawed-back as a result of the entering into of the Agreement or
Closing.
SECTION 4.21. INSURANCE.
Set forth on Schedule 4.21 is a complete list and description of all
policies of insurance, together with the premiums currently payable thereon,
covering (i) damage to goods being manufactured, shipped, held or otherwise
processed by the Company or any of the Subsidiaries; (ii) providing for fire,
property, casualty, business interruption, personal or product liability,
workers' compensation and other forms of insurance coverage for the Company or
any of its Subsidiaries; or (iii) providing for fire, property, casualty and
other forms of insurance coverage for any Leased Property. The Company will use
its commercially reasonable efforts to ensure that all such policies will be
outstanding and in full force and effect at the Closing Date. The consummation
of the transactions contemplated hereby will not cause a cancellation or
reduction in the coverage of such policies. To the knowledge of the Company,
there was no material inaccuracy in any application for any such insurance
coverage. Except as set forth on Schedule 4.21, there is no claim, action, suit
or proceeding arising out of or based upon any of such policies of insurance. To
the knowledge of the Company, there is no written notice of any pending or
threatened termination or premium increase with respect to any of such policies.
SECTION 4.22. INTELLECTUAL PROPERTY.
(a) Schedule 4.22(a)(1) sets forth a complete list of all material
registered Marks and applications for registration of Marks owned by or
exclusively licensed to the Company or any of its Subsidiaries (collectively
"Company Registered Marks"). Neither the Company nor its Subsidiaries own, or
exclusively license from any third party, either any Patents or registered
Copyrights or any pending applications for Patents or Copyrights. No Company
Registered Marks have been or are now involved in any opposition or cancellation
proceeding and, to the knowledge of the Company, no such action is or has been
threatened with respect to any of the
35
Company Registered Marks. Except as may be set forth in Schedule 4.22(a)(2), all
Company Registered Marks have been registered or obtained in accordance with all
applicable legal requirements and are currently in compliance in all material
respects with all legal requirements (including the timely post-registration
filing of affidavits of use and incontestability and renewal applications) other
than any requirement that, if not satisfied, would not result in a cancellation,
abandonment, forfeiture, or relinquishment of any such Company Registered Marks
or otherwise materially affect the priority, validity and enforceability of such
Company Registered Marks. The Company Registered Marks are valid, subsisting
and, to the knowledge of the Company, enforceable, and no notice or claim
challenging the validity or enforceability or alleging the misuse of any of the
Company Registered Marks have been received by the Company or any of its
Subsidiaries. Except as may be set forth in Schedule 4.22(a)(2), (i) neither the
Company nor any of its Subsidiaries has taken any action or failed to take any
action that could reasonably be expected to result in the abandonment,
cancellation, forfeiture, relinquishment, invalidation or unenforceability of
any of the Company Registered Marks, and (ii) all filing, examination, issuance,
post registration and maintenance fees, annuities and the like associated with
or required with respect to any of the Company Registered Marks have been timely
paid.
(b) Trademarks. To the knowledge of the Company and its Subsidiaries, there
has been no prior use of any Company Registered Xxxx or any material
unregistered Xxxx adopted by the Company and its Subsidiaries (collectively,
"Company Marks") by any third party that would prevent the Company or any of its
Subsidiaries from carrying on its business as currently conducted. All Company
Registered Marks have been continuously used by the Company and its Subsidiaries
since the initial date of use claimed in the corresponding application, in the
form appearing in, and in connection with, the goods and services listed in
their respective registration certificates and applications therefor,
respectively.
(c) Actions to Protect Trade Secrets. Each of the Company and its
Subsidiaries has taken the steps necessary to maintain the confidentiality of
all material information that at such time constituted a Trade Secret of the
Company or any of its Subsidiaries. Without limiting the generality of the
foregoing, all current and former employees, consultants and contractors of the
Company or of any of its Subsidiaries who have participated in the creation of
any material Intellectual Property of the Company or any of its Subsidiaries in
the conduct of their respective businesses have entered into proprietary
information, confidentiality and assignment agreements substantially similar to
the Company's standard forms of such agreements.
(d) Ownership. Except as may be set forth on Schedule 4.22(d), the Company
and its Subsidiaries own exclusively all right, title and interest to the
Company Registered Marks and all other Intellectual Property used by the Company
or any of its Subsidiaries (other than Intellectual Property licensed to the
Company or any of its Subsidiaries by a third party pursuant to a written
license agreement), free and clear of any Liens or other adverse claims or
interests, and neither the Company nor any of its Subsidiaries has received any
written notice or claim challenging the Company's or such Subsidiary's ownership
of any of such Intellectual Property. None of such Intellectual Property owned
by the Company or any of its Subsidiaries is subject to any outstanding order,
judgment, or stipulation restricting the use thereof by the Company or such
Subsidiary.
36
(e) License Agreements. Schedule 4.22(e)(1) sets forth a complete and
accurate list of all agreements granting to the Company or any of its
Subsidiaries any material right under or with respect to any Intellectual
Property owned by a third party that is used in connection with the business of
the Company or any such Subsidiary (other than commercially available desktop
software applications used generally in the Company's or any such Subsidiary's
operations and that are licensed for a license fee, or for which the Company
provided a budget for the year 2005, of no more than $50,000 per application in
the aggregate (collectively, the "Inbound License Agreements")), indicating for
each the title and the parties thereto, a general description of the type of
Intellectual Property licensed thereby, and the amount budgeted for such
applications for the year 2005. Schedule 4.22(e)(2) sets forth a complete and
accurate list of all license agreements under which the Company or any of its
Subsidiaries grants any rights under any Intellectual Property, excluding (i)
non-exclusive, end user licenses granted by the Company or any of its
Subsidiaries in the ordinary course of business to purchasers of products of the
Company or any of its Subsidiaries in which any software is embedded, and (ii)
those agreements for which the contracting third-party is required to pay the
Company or any Subsidiary less than $15,000 per year in licensing fees or
royalty payments (collectively, the "Outbound License Agreements"). No loss or
expiration of any material Intellectual Property licensed to the Company or any
of its Subsidiaries under any Inbound License Agreement is pending or reasonably
foreseeable or, to the knowledge of the Company, threatened. There is no
outstanding or, to the knowledge of the Company, threatened dispute or
disagreement with respect to any Inbound License Agreement or Outbound License
Agreements that could materially affect any of the respective rights and
obligations of the parties thereunder. The execution, delivery and performance
by the Company of this Agreement, and the consummation of the transactions
contemplated hereby, will not result in the loss or impairment of, or give rise
to any right of any third party to terminate or reprice or otherwise modify any
of the Company's or any of its Subsidiaries' rights or obligations under any
Inbound License Agreement or any Outbound License Agreement.
(f) No Infringement. To the knowledge of the Company and its Subsidiaries,
none of the products or services distributed, sold or offered by the Company or
any of its Subsidiaries, (excluding any third party products resold, marketed or
distributed by the Company or any of its Subsidiaries), nor any technology,
materials or other Intellectual Property used, displayed, published, sold,
distributed or otherwise commercially exploited by or for the Company or any of
its Subsidiaries has infringed upon, misappropriated, or violated, or does
infringe upon, misappropriate or violate any Intellectual Property of any third
party in any material respect, and neither the Company nor any of its
Subsidiaries has received any notice or claim asserting that any such
infringement, misappropriation or violation is occurring or has occurred. To the
knowledge of the Company and its Subsidiaries, no third party is
misappropriating or infringing any material Intellectual Property owned by the
Company or any of its Subsidiaries in any material respect.
(g) Employee Confidentiality Agreements. To the knowledge of the Company or
any of its Subsidiaries, no employee of or consultant to the Company is
obligated under any agreement or subject to any judgment, decree or order of any
court or administrative agency, or any other restriction that would interfere
with the use of his or her best efforts to carry out his or her duties for the
Company or to promote the interests of the Company or that would conflict with
the Company's business. To the knowledge of the Company or any of its
Subsidiaries, at no
37
time during the conception of or reduction to practice of any Intellectual
Property owned by the Company or its Subsidiaries was any developer, inventor or
other contributor to such Intellectual Property operating under any grants from
any Governmental Authority, performing research sponsored by any Governmental
Authority or subject to any employment agreement or invention assignment or
nondisclosure agreement or other obligation with any third party that could
adversely affect the Company's rights in such Intellectual Property. To the
knowledge of the Company or any of its Subsidiaries, there exist no inventions
by current and former employees or consultants of the Company, made or otherwise
conceived prior to their beginning employment or consultation with the Company
or any of its Subsidiaries, that have been or will be incorporated into any of
the Company's or any of its Subsidiaries' Intellectual Property or products.
SECTION 4.23. PERMITS.
The Company and the Subsidiaries have all franchises, licenses, permits,
certificates and other authorizations from any Governmental Authority that are
necessary for the conduct of their business and which, if not obtained, would
have a Material Adverse Effect (each, a "Permit"). Schedule 4.23 contains a list
of all Permits. The Company has no knowledge of any fact, error or omission
relevant to any Permit that would permit the revocation or withdrawal, or the
threatened revocation or withdrawal, thereof. The Company and the Subsidiaries
will continue to have the use and benefit thereof and the rights granted thereby
after the transactions contemplated hereby have occurred.
SECTION 4.24. CUSTOMERS AND SUPPLIERS.
(a) Set forth on Schedule 4.24(a) is a complete list of the twenty (20)
largest (in terms of dollar volume) customers of the Company and the
Subsidiaries for each of the fiscal years ended December 31, 2004 and 2003,
indicating the amount of sales to each such customer for each such fiscal year.
To the knowledge of the Company, none of the employees primarily responsible for
servicing such customers has indicated to the Company an intention or plan to
terminate his or her employment with the Company and the Subsidiaries. To the
knowledge of the Company, except as set forth on Schedule 4.24(a), as of the
date hereof none of such customers has terminated or indicated to the Company an
intention or plan to terminate all or a material part of the services performed
for or orders historically placed by such customers.
(b) Set forth on Schedule 4.24(b) is a complete list of the twenty (20)
largest (in terms of dollar volume) suppliers of the Company and the
Subsidiaries for each of the fiscal years ended December 31, 2004 and 2003,
indicating the amount of purchases from each such supplier for each such fiscal
year. To the knowledge of the Company, except as set forth on Schedule 4.24(b),
as of the date hereof none of such suppliers has terminated or indicated an
intention or plan to terminate all or a material part of the services performed
by or orders historically placed for the Company and the Subsidiaries.
(c) Except as set forth on Schedule 4.24(a) and Schedule 4.24 (b), to the
knowledge of the Company, as of the date hereof, the Company and the
Subsidiaries have satisfactory relationships with their major customers,
suppliers and contractors.
38
SECTION 4.25. FEES.
(a) Except as set forth on Schedule 4.25(a), none of the Company, any of
the Subsidiaries, any of the Sellers or any employee or agent of the foregoing
has dealt with any finder or broker in connection with any of the transactions
contemplated by this Agreement or the Ancillary Agreements or the negotiations
looking toward the consummation of such transactions who may be entitled to a
fee in connection therewith.
(b) Except as set forth on Schedule 4.25(b), neither the Company nor any
Subsidiary is obligated to pay to any Person any fees or expenses in connection
with the transactions contemplated by this Agreement or the Ancillary
Agreements.
SECTION 4.26. CONTROLS AND PROCEDURES.
Except as set forth on Schedule 4.26, since January 1, 2004, the Company's
auditors and the Audit Committee of the board of directors of the Company have
not been advised of: (i) any material deficiencies in the design or operation of
internal controls over financial reporting which could reasonably be expected to
adversely affect the Company's ability to record, process, summarize, and report
financial data or (ii) any fraud, whether or not material, that involves
management. Except as set forth on Schedule 4.26, since January 1, 2004, no
material weaknesses in internal controls have been identified by the Company's
auditors; and since the date of the most recent evaluation thereof, there have
been no significant changes in internal controls that could reasonably be
expected to materially and adversely affect internal controls.
ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers and the Company, as of the
date hereof and as of the Closing Date, as set forth in this Article Five.
Any reference in this Article Five to a party's "knowledge" means with
respect to the Buyer, the actual knowledge of the people set forth on Schedule
5; provided, that if such persons shall have actual knowledge of facts and
circumstances that would lead a reasonably prudent person to inquire and gain
actual knowledge of a particular matter, such person shall be deemed to have
actual knowledge of such matter unless they make such further inquiry.
SECTION 5.1. ORGANIZATION AND QUALIFICATION.
(a) The Buyer is a corporation duly organized and validly existing and in
good standing under the laws of the State of New York. The Buyer has all
requisite corporate power and authority to execute and deliver this Agreement
and the Ancillary Agreements to which it is a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. This Agreement and the Ancillary Agreements have been duly
authorized, and when executed and delivered by the Buyer, shall constitute the
valid and binding agreements of the Buyer and will be enforceable against the
Buyer in accordance with their terms.
39
(b) The articles of incorporation and bylaws furnished to the Company for
review are accurate and complete.
SECTION 5.2. CONFLICTING INSTRUMENTS; CONSENTS.
The execution and delivery by the Buyer of this Agreement and the other
Ancillary Agreements to which it is a party, do not, and the consummation of the
transactions contemplated hereby will not, violate any provision of the articles
of incorporation or the by-laws of the Buyer, or conflict with or result in a
breach of, or create an event of default (or event that, with the giving of
notice or lapse of time or both, would constitute an event of default) under, or
give any third party the right to accelerate any material obligation under, any
agreement, mortgage, license, lease, indenture, instrument, order, arbitration
award, judgment or decree to which the Buyer is a party.
SECTION 5.3. SEC FILINGS.
The Buyer has filed all reports required to be filed by it with the SEC
during the last three years (the "SEC Filings"). The SEC Filings (i) were
prepared in accordance with the requirements of the Exchange Act and (ii) did
not, at the time they were filed, contain any untrue statements of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. Since the date of the Buyer's last
periodic report filed with the SEC (the "SEC Filing Date"), there has been no
event that has resulted in a Buyer Material Adverse Effect. The financial
statements (including the related notes) of the Buyer included in the SEC
Filings complied, when filed, as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, were prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly presented in all material respects the consolidated
financial position of the Buyer and its consolidated subsidiaries as of the
dates thereof and their consolidated results of operations and cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
and recurring year-end adjustments and the absence of footnotes). Except as and
to the extent reflected or reserved against in such financial statements
(including the related notes), as of July 3, 2004, the Buyer did not have any
material liabilities or obligations (absolute or contingent), of a nature
required by GAAP to be reflected in a consolidated balance sheet as of such
date.
SECTION 5.4. CAPITALIZATION.
(a) The Buyer has an authorized capital consisting of 300,000,000 common
shares, par value $1.00 per share, of which 120,669,272 shares were issued and
outstanding (the "Common Shares") as of April 22, 2005, and 3,000,000 preferred
shares, par value $1.00 per share, of which no shares are issued and
outstanding. All outstanding equity securities of the Buyer have been, and all
of the Common Shares that may be issued upon exercise or conversion of options,
warrants and other securities convertible into or exercisable for capital stock
of the Buyer will be, when issued, duly authorized and validly issued, are fully
paid and non-assessable and were issued by the Buyer in compliance with all
applicable Laws. Except as set forth in Schedule 5.4, as of April 22, 2005,
there are no outstanding or authorized options, subscriptions,
40
warrants, calls, rights, commitments or other agreements of any character
obligating the Buyer to issue, sell or transfer any shares of its capital stock
or any other securities convertible into or exercisable for or evidencing the
right to subscribe for any shares of its capital stock.
(b) Set forth on Schedule 5.4 is a complete and accurate list of each
outstanding option as of April 22, 2005, to acquire Common Shares containing (i)
the number and class of the Common Shares subject to the option, (ii) the strike
price per share at which the option may be exercised, (iii) the date on which
the option was granted and (iv) the name of the share option plan or arrangement
under which the option was granted.
SECTION 5.5. LITIGATION.
There is no action, suit, claim, proceeding, inquiry or investigation
pending or, to the knowledge of the Buyer, threatened, against the Buyer at law
or in equity, or before or by any arbitrator or any federal, state, local or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, relating to or involving the transactions
contemplated by this Agreement or the Ancillary Agreements.
SECTION 5.6. ABSENCE OF CERTAIN CHANGES.
Since the SEC Filing Date and except as set forth on Schedule 5.6 or in
connection with the transactions contemplated by this Agreement and the
Ancillary Agreements, the Buyer has conducted its business in the ordinary
course and has not suffered a Buyer Material Adverse Effect.
SECTION 5.7. BROKERS AND FINDERS FEES.
Except as set forth on Schedule 5.7, none of the Buyer or any employee or
agent of the Buyer has dealt with any finder or broker in connection with any of
the transactions contemplated by this Agreement and the Ancillary Agreements or
the negotiations looking toward the consummation of such transactions who may be
entitled to a fee in connection therewith. Any fees payable to any finder or
broker listed on Schedule 5.7 shall be the sole responsibility of the Buyer.
SECTION 5.8. NO STOCKHOLDER VOTE REQUIRED.
No vote of, or consent by, the holders of any class or series of stock or
other equity issued by the Buyer is necessary to authorize the execution and
delivery by the Buyer of this Agreement or the Ancillary Agreements to which it
is a party or the consummation of the transactions contemplated hereby or
thereby.
SECTION 5.9. BUYER ENVIRONMENTAL MATTERS.
(a) Except as has not had a Buyer Material Adverse Effect, none of the
Buyer, its subsidiaries, nor, to the knowledge of the Buyer, any previous owner,
tenant, occupant, operator or user of any owned or leased real property of the
Buyer or any of its subsidiaries or the Buyer Former Real Property or any other
person has engaged in or permitted any operation or activity at or upon, or any
use or occupancy of, any owned or leased real property of the Buyer or any of
41
its subsidiaries or the Buyer Former Real Property, or any portion thereof, for
the purpose of or in any way involving the handling, manufacture, treatment,
storage, transporting, use, generation, release, discharge, refining, dumping,
emission or disposal of any Hazardous Materials (whether legal or illegal,
accidental or intentional) on, under, in or about the owned or leased real
property of the Buyer or any of its subsidiaries or the Buyer Former Real
Property, or transported any Hazardous Materials to, from or across any leased
property of the Buyer or any of its subsidiaries or the Buyer Former Real
Property, nor, to the knowledge of the Buyer, are any Hazardous Materials
presently constructed, deposited, stored or otherwise located on, under, in or
about any owned or leased real property of the Buyer or any of its subsidiaries
or the Buyer Former Real Property, nor to the knowledge of the Buyer have any
Hazardous Materials migrated or threatened to migrate from the owned or leased
real property of the Buyer or any of its subsidiaries or the Buyer Former Real
Property onto, about or beneath any other properties, nor, to the knowledge of
the Buyer, have any Hazardous Materials migrated or threatened to migrate from
other properties onto, about or beneath the owned or leased real property of the
Buyer or any of its subsidiaries or the Buyer Former Real Property. Except as
has not had a Buyer Material Adverse Effect and as set forth on Schedule 5.9, no
Hazardous Materials generated by the Buyer or located under, in or about the
owned or leased real property of the Buyer or any of its subsidiaries or the
Buyer Former Real Property in the past have been transported to any waste
disposal facility or other site.
(b) Except as set forth on Schedule 5.9, all existing and, to the knowledge
of the Buyer, prior uses and activities owned or leased real property of the
Buyer or any of its subsidiaries or the Buyer Former Real Property, and the
operations of the Buyer and its subsidiaries materially comply and have at all
times materially complied with all applicable Environmental Requirements, and no
activity on or condition of the owned or leased real property of the Buyer or
any of its subsidiaries or the Buyer Former Real Property has constituted or
constitutes a nuisance, trespass or other tortious condition with respect to any
third party that has had a Material Adverse Effect.
(c) Except as set forth on Schedule 5.9, none of the Buyer, its
subsidiaries nor, to the knowledge of the Buyer, any other owner, tenant,
occupant or user of the owned or leased real property of the Buyer or any of its
subsidiaries or the Buyer Former Real Property has received any notice, Claim or
other communication concerning any alleged violation of or liability under
Environmental Requirements, any alleged or potential liability for Buyer
Environmental Losses, or any Release of Hazardous Materials in connection with
the owned or leased real property of the Buyer or any of its subsidiaries or the
Buyer Former Real Property, the Buyer, its subsidiaries or any real property or
facility to which the Hazardous Materials generated by the Buyer or its
subsidiaries have been sent and to the knowledge of the Buyer there are no
circumstances likely to give rise to any such notice, claim or other
communication. To the knowledge of the Buyer, none of the Buyer, its
subsidiaries, nor, to the knowledge of the Buyer, any other owner, tenant,
occupant or user of the Real Property or the Former Real Property is the subject
of any investigation or inquiry concerning Hazardous Materials by any
Governmental Authority that has resulted in or would reasonably be expected to
result in a material liability of the Buyer or any of its subsidiaries in
relation to any owned or leased real property of the Buyer or its subsidiaries
or Buyer Former Real Property.
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(d) Except as set forth on Schedule 5.9, to the knowledge of the Buyer, no
(A) underground improvement used for the storage or conveyance of Hazardous
Materials, including without limitation any treatment or storage tank or water,
gas or oil well or (B) above-ground storage tank used for Hazardous Materials,
is or to the knowledge of the Buyer ever has been located on the owned or leased
real property of the Buyer or any of its subsidiaries or the Buyer Former Real
Property.
(e) Except as set forth on Schedule 5.9, none of the Buyer nor any of its
subsidiaries have entered into or agreed to or is the subject of any consent
decree, order or settlement or other agreement in any judicial, administrative,
arbitral or similar forum relating to Environmental Requirements, Hazardous
Materials or Buyer Environmental Losses. Except as set forth on Schedule 5.9,
the Buyer has no assumed or retained by contract any liabilities of any kind,
fixed or contingent, known or unknown, relating to Environmental Requirements,
Hazardous Materials or Buyer Environmental Losses. Except as set forth on
Schedule 5.9, neither the Buyer, its subsidiaries nor, to the knowledge of the
Buyer, any other owner, tenant, occupier or user of the owned or leased real
property of the Buyer or any of its subsidiaries or the Buyer Former Real
Property are conducting or funding (in whole or in part) any material
Remediation of Hazardous Materials in relation to any owned or leased real
property of the Buyer or its subsidiaries or Buyer Former Real Property.
SECTION 5.10. CONTROLS AND PROCEDURES.
The Buyer has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-14 and 15d-14 under the Exchange
Act) that are designed to ensure that material information relating to the Buyer
and its consolidated subsidiaries is made known to the Company's chief executive
officer and its chief financial officer by others within those entities, and
such disclosure controls and procedures are effective in all material respects
to perform the functions for which they were established. Since July 2, 2004,
the Buyer's auditors and the Audit Committee of the board of directors of the
Buyer have not been advised of: (i) any material deficiencies in the design or
operation of internal controls over financial reporting which could reasonably
be expected to adversely affect the Buyer's ability to record, process,
summarize, and report financial data and (ii) any fraud, whether or not
material, that involves management. As of the date hereof, no material
weaknesses in internal controls have been identified by the Buyer's auditors;
and since the date of the most recent evaluation of such disclosure controls and
procedures, there have been no significant changes in internal controls that
could reasonably be expected to materially and adversely affect internal
controls.
SECTION 5.11. TAX MATTERS.
(a) The Buyer and each of its subsidiaries have filed all material Tax
Returns required to be filed by any of them and all such Tax Returns are true
and correct in all material respects. The Buyer and each of its subsidiaries
have timely paid, or have adequately reserved (in accordance with GAAP) for the
payment of, all material Taxes required to be paid (whether or not shown on any
Tax Returns), and the most recent financial statements contained in the Buyer's
most recently filed SEC Filings reflect an adequate reserve (in accordance with
GAAP) for all material Taxes payable by the Buyer and its subsidiaries through
the date of such financial statements.
43
(b) The Buyer and its subsidiaries have each withheld (or will withhold)
from their respective employees, independent contractors, creditors,
stockholders and third parties and timely paid to the appropriate Tax authority
proper and accurate amounts in all material respects for all periods ending on
or before the Closing Date in compliance with all Tax withholding and remitting
provisions of applicable laws.
ARTICLE SIX
COVENANTS
SECTION 6.1. ACCESS.
(a) Subject to applicable Law, from the date hereof through the Closing
Date, the Company and the Subsidiaries will give to the Buyer and its respective
financial advisors, legal counsel, independent accountants and other
representatives reasonable access, upon reasonable notice and during normal
business hours to all properties, documents, contracts, employees and records of
the Company and the Subsidiaries and will furnish the Buyer with copies of such
documents (certified if so requested) and with such information with respect to
the Company and the Subsidiaries as the Buyer from time to time reasonably may
request.
(b) Subject to applicable Law, if between the date hereof and the Closing
Date any Governmental Authority shall commence any examination, review,
investigation, action, suit or proceeding against any party hereto with respect
to the transactions contemplated hereby, such party shall (i) give the other
parties prompt notice thereof, (ii) keep the other parties informed as to the
status thereof, (iii) permit the Company or the Buyer, as applicable to observe
and be present at each meeting, conference or other proceeding and provide
access to and consult with the Company or the Buyer, as applicable, in
connection with any submission or document filed or provided to such
Governmental Authority in connection with such examination, review,
investigation, action, suit or proceeding; provided, however, that if the
Company or the Buyer, as applicable, is not available upon reasonable notice, to
attend any such meeting, the other party shall be permitted to proceed with such
meeting and (iv) promptly inform the Company or the Buyer, as applicable, of any
oral communications and provide copies of written communications with such
Governmental Authority.
(c) Notwithstanding anything to the contrary herein, neither the Buyer nor
the Company nor any of their respective subsidiaries shall be required to
provide access to or disclose information to any Seller or its representatives
where such access or disclosure would violate or prejudice the rights of its
customers, jeopardize the information or contravene any Law or binding agreement
entered into prior to the date of this Agreement. The parties will make
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply, including providing copies of any
documents distributed to outside counsels to the applicable local antitrust
counsels.
(d) All information and documents obtained by the Buyer, the Company or the
Sellers under this Section 6.1 shall be subject to the terms of the
Nondisclosure Agreement, dated as of March 14, 2005 (the "Nondisclosure
Agreement"), between the Buyer and the Company or Section 6.10, as applicable.
44
SECTION 6.2. TRANSFER OF THE SECURITIES.
From the date hereof through the Closing Date, no Seller will (i) sell or
otherwise transfer or agree to sell or otherwise transfer, any interest in any
of the Securities owned by such Seller or (ii) incur or permit to exist any
Liens upon their Securities.
SECTION 6.3. CONDUCT OF THE BUSINESS OF THE COMPANY.
(a) From the date hereof through the Closing Date, the Company shall use
commercially reasonable efforts to (i) preserve the business of the Company and
the Subsidiaries, (ii) keep available to the Company and the Subsidiaries the
services of all current officers and substantially all key employees and (iii)
preserve for the Buyer the goodwill of the suppliers, customers, employees and
others having business relations with the Company and the Subsidiaries.
(b) Except as set forth on Schedule 6.3(b), from the date hereof through
the Closing Date, except as otherwise permitted by this Agreement or consented
to in writing by the Buyer (which consent may not be unreasonably withheld or
delayed and, in any event, will be granted or denied within 2 Business Days of
the request or otherwise is deemed to be given), the Company will continue the
operation of the business of the Company and the Subsidiaries in the ordinary
course, and will maintain the assets, properties and rights of the Company and
the Subsidiaries in at least as good order and condition as exists on the date
hereof, subject to ordinary wear and tear. Without limiting the generality of
the foregoing, except as otherwise permitted by this Agreement or consented to
in writing by the Buyer, neither the Company nor the Subsidiaries will:
(i) incur, discharge or satisfy any obligation or liability or any
Liens, except in the ordinary course of business or in connection with the
performance of this Agreement;
(ii) increase or establish any reserve for Taxes or other liabilities
on its books or otherwise provide therefor, except for Taxes or other
liabilities relating to the ordinary course operations of the Company since
the date of the Balance Sheet or as may be required by GAAP; write up or
down the value of inventory or determine as collectible any notes or
accounts receivable that were previously considered to be uncollectible,
except for write-ups or write-downs in accordance with GAAP in the ordinary
course of business consistent with past practice; or voluntarily make any
change in any of its methods of accounting or in any of its accounting
principles or practices;
(iii) purchase, lease, sell, assign or transfer any asset, property or
business or waive or permit to lapse any right, except in the ordinary
course of business; or make or authorize any capital expenditure for
additions to plant and equipment in excess of $500,000 in the aggregate,
except as may have been necessary for ordinary repair, maintenance and
replacement of plant or equipment or as is in accordance with the budgeted
capital expenditures previously made available to the Buyer;
(iv) make any loan to any shareholder or any relative or affiliate of
any shareholder, or declare, set aside or pay to any shareholder any
dividend or other
45
distribution in respect of its capital stock, transfer any asset or pay any
money to any shareholder or any relative or affiliate of any shareholder
other than the payment of wages or salaries to shareholders who are also
employees of the Company in the ordinary course of business and as
disclosed on Schedule 4.11 and the payment of directors' fees at rates
consistent with past practice; or enter into, agree to enter into or
consummate any transaction with or for the benefit of any shareholder of
the Company or any relative or affiliate of any shareholder other than the
transactions contemplated pursuant to this Agreement;
(v) grant any increase in the compensation payable to any officer,
director, consultant, employee or agent of the Company or any Subsidiary,
except for increases in the compensation (A) payable in the ordinary course
of business to employees (other than Key Employees) in amounts and at times
consistent with past practice, (B) required by applicable Law or (C)
required under the terms of any Non-ERISA Plan or ERISA Plan;
(vi) enter into, amend, modify, terminate or cancel any Material
Contract;
(vii) extend credit in excess of $1,000,000 to any customer who was
not a customer before the date of this Agreement or depart from the normal
and customary trade, discount and credit policies of the Company;
(viii) settle any material administrative or judicial proceedings;
(ix) make or revoke any material Tax election; or
(x) commit to do any of the foregoing.
(c) From the date hereof through the Closing Date, the Company will comply
in all material respects with all applicable statutes, regulations, orders and
restrictions of the United States of America, all states and other subdivisions
thereof, all applicable foreign jurisdictions, all agencies and
instrumentalities of the foregoing and all national and international
self-regulatory bodies and authorities.
(d) From the date hereof through the Closing Date, each of the Sellers
shall cause the Company to not: (i) reclassify, combine, split, subdivide,
redeem or otherwise change in any manner the outstanding shares of capital stock
of the Company or any Subsidiary (other than repurchases of Shares held by
former employees of the Company and the Subsidiaries upon the termination of
their employment and in a manner consistent with past practice), or issue or
agree to issue, sell, transfer, pledge, encumber or deliver any stock, bond,
debenture or other security of the Company or any Subsidiary (other than the
delivery and/or sale of Shares pursuant to the exercise of options outstanding
as of the date hereof; provided, that the Sellers shall cause the Company to
notify the Buyer of any such issuance within two Business Days following any
such exercise) or (ii) amend the certificate of incorporation or the by-laws of
the Company or any Subsidiary other than as contemplated by the Framework
Agreement, or (iii) commit to do either of (i) or (ii).
(e) The Company will not take any action that could be expected to
materially delay or have a material adverse effect on the ability of the parties
to consummate the transaction.
46
SECTION 6.4. CONDUCT OF THE BUSINESS OF THE BUYER.
(a) From the date hereof through the Closing Date, the Buyer will use
commercially reasonable efforts to (i) preserve the business of the Buyer and
its subsidiaries and (ii) continue the operation of the business of the Buyer in
the ordinary course.
(b) From the date hereof through the Closing Date, the Buyer shall not do
any of the following:
(i) amend its Certificate of Incorporation or bylaws;
(ii) will not declare or pay any dividend or make any other
distribution in respect of its capital stock;
(iii) split, combine or reclassify any shares of its capital stock or
redeem or acquire (or agree to do so) any of its equity securities, options
or warrants exercisable for equity securities, except pursuant to existing
contractual obligations or benefit plans; or
(iv) issue or agree to issue, sell, transfer, pledge or encumber any
stock or other equity security of the Buyer, other than (i) the issuance
of, delivery and/or sale of Common Shares pursuant to the exercise of
options or warrants outstanding as of the date hereof, (ii) the issuance of
options to acquire Common Shares to employees, officers and directors of
the Buyer pursuant to plans outstanding on the date hereof or (iii) the
issuance of the Buyer Shares as contemplated hereunder.
(c) The Buyer will not take any action that could be expected to materially
delay or have a material adverse effect on the ability of the parties to
consummate the transaction.
SECTION 6.5. FURTHER ASSURANCES; APPROVALS; CONSENTS.
(a) Following the Closing, each party hereto will do such further acts and
execute and deliver such further documents regarding their obligations hereunder
as may be required for the purpose of (i) accomplishing the purposes of this
Agreement or (ii) assuring and confirming unto the other the validity of any
documents of conveyance to be delivered at Closing including without limitation:
executing and doing (or procuring to be executed and done by any other necessary
party) all such deeds, documents, acts and things as a party may from time to
time reasonably request in order to effect the transactions contemplated hereby
and procure the convening of all meetings, the giving of all waivers and
consents and the passing of all resolutions as are necessary under statute,
constitutional documents or any agreement affecting it to give effect to this
Agreement; provided, that the Company shall not be obligated under this
paragraph (a) and instead each Seller, acting severally and not jointly, shall
use all reasonable endeavors in its capacity as a shareholder of the Company to
cause the Company to comply with such paragraph.
(b) For so long after Closing as any Seller or any nominee of it remains
the registered holder of any Securities (as the case may be), it shall hold (or
direct the relevant nominee to hold) that Security and any distributions,
property and rights deriving from it in trust for the Buyer and shall deal with
the Securities and any distributions, property and rights deriving from
47
it as the Buyer directs; in particular, each Seller shall exercise all voting
rights as the Buyer directs or shall execute an instrument of proxy or other
document which enables the Buyer or its representative to attend and vote at any
meeting of the Company or any meeting of the holders of Bonds.
(c) Without limiting the foregoing, each of the parties hereto will (i) use
their reasonable efforts to obtain or cause to be obtained as promptly as
practicable all consents, waivers, approvals, amendments and authorizations that
are necessary under applicable Law, agreement or otherwise to be obtained by any
party hereto in connection with the transfer of the Securities, the issuance of
the Buyer Shares and the consummation of the transactions contemplated by this
Agreement, and (ii) use their commercially reasonable best efforts to bring
about the satisfaction as promptly as practicable of all of the conditions
contained in Articles 7 or 8 and the consummation of the transactions
contemplated by this Agreement. Without limiting the generality of the
foregoing, the parties shall apply for, as promptly as practicable following the
date hereof, and diligently prosecute all applications for, and shall use their
commercially reasonable best efforts to obtain such consents, authorizations and
approvals from such third parties and Governmental Authorities as shall be
necessary or deemed necessary by the parties to permit the consummation of the
transactions contemplated by this Agreement including making the requisite
filings with the Federal Trade Commission and the Antitrust Division of the
Department of Justice under the HSR Act and with any other competition Laws;
provided, however, that nothing contained in this Agreement shall require or be
deemed to require the Buyer or any of its subsidiaries, including for these
purposes the Company and the Subsidiaries, to sell, divest, transfer, dispose of
or otherwise hold separately any of their assets, businesses, product lines or
other properties.
SECTION 6.6. NOTICE OF DEFAULT.
(a) The Company will promptly give notice to the Buyer of the occurrence of
any event, or the failure of any event to occur, known to the Company that
results in a material breach of any representation or warranty by the Company or
a failure by the Company to comply with any material covenant, condition or
agreement contained herein.
(b) The Buyer will promptly give notice to the Company of the occurrence of
any event, or the failure of any event to occur, known to the Buyer that results
in a material breach of any representation or warranty by the Buyer or a failure
by the Buyer to comply with any material covenant, condition or agreement
contained herein.
(c) Each of the Sellers will promptly give notice to the Buyer of the
occurrence of any event, or the failure of any event to occur, known to any such
Seller that results in a material breach of any representation or warranty by
such Seller or a failure by such Seller to comply with any material covenant,
condition or agreement contained herein.
SECTION 6.7. NON-SOLICITATION.
Until the earlier of the Closing Date or the termination of this Agreement,
neither the Company, any Subsidiary nor any shareholder, officer, director or
affiliate thereof shall solicit, initiate or encourage the submission of any
Acquisition Proposal, (i) enter into any agreement or
48
understanding with respect to any Acquisition Proposal or (ii) participate in
any discussions or negotiations regarding, or furnish to any Person any
information for the purpose of facilitating the making of, or take any other
action to facilitate any inquiries or the making of, any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal.
The Company shall notify the Buyer in writing and orally within 24 hours after
receipt of any Acquisition Proposal or any notice that any Person is considering
making an Acquisition Proposal, such notice to include the identity of the
Person making such proposal, offer, inquiry or contact, and the terms of such
Acquisition Proposal. The Company immediately shall cease and cause to be
terminated in all respects all existing discussions or negotiations with any
parties conducted heretofore with respect to an Acquisition Proposal. The
Company shall not release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which it or any of the Subsidiaries
is a party.
SECTION 6.8. EMPLOYEES.
(a) On the Closing Date, Manchester, LLC, a subsidiary of the Company,
shall pay to the members of the executive team (or any other employee who may be
entitled to similar bonuses) all amounts payable to such Persons (less
applicable withholding taxes) pursuant to the applicable provisions contained in
the Non-ERISA Plans set forth on Schedule 6.8(a).
(b) The parties intend that there will be continuity of employment with
respect to all of the employees of the Company and the Subsidiaries, subject to
the proviso at the end of the third sentence in this Section 6.8(b). Buyer shall
ensure that all persons who were employed by the Company and the Subsidiaries on
the day immediately preceding the Closing Date, including those on vacation,
leave of absence or disability, will be employed by the Company on and after the
Closing Date, and Buyer shall provide current employees of the Company and the
Subsidiaries with compensation and benefits that are comparable in the aggregate
to those provided to similarly situated employees of the Buyer and its
subsidiaries, subject to the proviso at the end of the third sentence in this
Section 6.8(b). On and after the Closing Date Buyer shall, or shall cause the
Company to, honor in accordance with their respective terms (as in effect on the
date of this Agreement), all of the provisions of all employment agreements in
effect with Company Employees as of the Closing Date in accordance with their
terms; provided, however, that nothing set forth in this Agreement shall
prohibit the Buyer from terminating the employment of any employee of the
Company or any of the Subsidiaries after the Closing Date, or otherwise entering
into new employment agreements with any such employee. To the extent required by
applicable Law, from and after the Closing Date, the Buyer shall (i) ensure that
the Company and the Subsidiaries will continue to be bound by the terms of the
collective bargaining agreements set forth on Schedule 4.12(a), and (ii) that
the Company and the Subsidiaries comply with their obligations under such
collective bargaining agreements and all other statutory bargaining obligations.
Notwithstanding anything set forth herein, on and after the Closing Date, the
Buyer shall, or shall cause the Company or the applicable Subsidiaries to
maintain a severance policy for the benefit of all employees of the Company or
any Subsidiary (other than those Persons whose Non-ERISA Plans are set forth on
Schedule 4.14(f)) whose employment is terminated on or after the Closing Date
(whether due to redundancy or otherwise), which severance policy shall provide
each such terminated employee with continued payment of base salary or wages for
two weeks, plus an additional week for each 12-month
49
period of service completed by the employee with the Company or any of its
Subsidiaries (or predecessor entities thereof) prior to such termination, up to
a maximum of six months.
(c) It is agreed that prior to the Closing, Buyer shall take no action to
cause the Company or the Subsidiaries to terminate the employment of any
employee of the Company or the Subsidiaries, and neither the Company nor the
Subsidiaries shall be under any obligation to terminate any employee of the
Company prior to or on the Closing Date.
(d) With respect to any United States employee benefit plan, program or
arrangement maintained by Buyer, for all purposes of determining eligibility to
participate and vesting but not for purposes of benefit accrual under any
defined benefit pension plan, service with the Company or any Subsidiary shall
be treated as service with Buyer; provided, however, that such service need not
be recognized to the extent that such recognition would result in any
duplication of benefits. With respect to any employee benefit plan of Buyer that
is a "welfare employee benefit plan" (within the meaning of Section 3(1) of
ERISA) maintained for the benefit of current employees of the Company or any of
its Subsidiaries on and after the Closing Date, the Buyer shall, to the extent
permissible under the terms of any such employee benefit plan, (i) cause there
to be waived any pre-existing condition limitations and (ii) give effect, in
determining any deductible and maximum out-of-pocket limitations for the year in
which the Closing Date occurs, to claims incurred and amounts paid by, and
amounts reimbursed to, the employees of the Company and any of its Subsidiaries
for such year under comparable ERISA Plans in which such employees participated
immediately prior to the Closing Date.
(e) The Buyer shall be responsible for any notices required to be given
under, and otherwise complying with, the Worker Adjustment and Retraining
Notification Act of 1988 ("WARN"), or any similar Law, with respect to a "plant
closing" or "mass layoff" (as those terms are defined in WARN) or similar
triggering event caused by Buyer after the Closing Date and any resulting
liability under WARN or any similar Law.
SECTION 6.9. RESTRICTIONS ON TRANSFER OF BUYER SHARES.
Each Seller hereby agrees that for a period of 180 days following the
Closing Date, such Seller will not, directly or indirectly: (i) make any offer,
sale, assignment, transfer, encumbrance, contract to sell, grant of an option to
purchase or other disposition of the Buyer Shares other than (x) if such Seller
is a natural person, a transfer to immediate family members of such Seller or a
trust established for such Seller or its immediate family members and (y) if
such Seller is an entity, a transfer to affiliates of such Seller or (ii)
exercise any registration rights with respect to the Buyer Shares. Each Seller
confirms that he, she or it understands that the Buyer may rely on the agreement
set forth in the prior sentence.
SECTION 6.10. CONFIDENTIALITY.
(a) Each of the Sellers, in their capacity as such, shall and shall cause
their respective affiliates and their respective directors, officers, employees
and agents to, keep confidential, not disclose in any manner and use only in
connection with the transactions contemplated by this Agreement all data and
information obtained by them (x) from the Buyer, any of its subsidiaries, or
their representatives regarding the Buyer and its subsidiaries in contemplation
of this
50
transaction and (y) at any time, whether before or following the Closing Date,
from the Company and its Subsidiaries, and their respective directors, officers,
employees, auditors and agents (in each case other than data or information that
(i) is or becomes generally available to the public, except as a result of
disclosure by any Seller in violation of this Section 6.10, (ii) (in the case of
the paragraph (x) above only) was in the Seller's possession prior to it being
furnished to such Seller by the Buyer or its subsidiaries or their respective
directors, officers, employees or agents, provided that the source of such
information was not known to the Seller to be bound by a confidentiality
agreement with or other contractual, legal or fiduciary obligation of
confidentiality to the Buyer with respect to such information, (iii) becomes
available to the Seller on a non-confidential basis from a source other than the
Buyer or the Company or any of their respective subsidiaries, provided that such
source is not bound by a confidentiality agreement with or other contractual,
legal or fiduciary obligation of confidentiality to any other party with respect
to such information, (iv) is independently developed by the Seller without use
or reference to confidential information or (v) is disclosed by the Seller to
others in accordance with the terms of prior written authorization of the Buyer)
("Confidential Information") and shall insure that such directors, officers,
employees and agents do not disclose Confidential Information to third parties
without the prior written consent of the Buyer, unless disclosure of
Confidential Information is required by Law.
(b) In the event of the termination of this Agreement in accordance with
Section 9.1, each Seller shall, and shall use their reasonable best efforts to
cause their respective affiliates and their respective officers, directors,
employees and agents to, (i) return or destroy promptly every document furnished
to them by the Buyer, or any officer, director, employee, auditor or agent of
the Buyer, in connection with the transactions contemplated by this Agreement
and containing Confidential Information and all copies thereof in their
possession, and cause any other parties to whom such documents may have been
furnished promptly to return such documents and all copies thereof, other than
such documents as may have been filed with the SEC or otherwise be publicly
available, and (ii) destroy promptly all documents created by them from any
Confidential Information and all copies thereof in their possession, and cause
any other parties to whom such documents may have been furnished to destroy
promptly such documents and any copies thereof.
SECTION 6.11. SHAREHOLDER APPROVAL.
Prior to the Closing, the Company shall use its commercially reasonable
best efforts to (a) provide the shareholders of the Company with adequate
disclosure, within the meaning of Section 280G(b)(5)(B)(ii) of the Code and the
Treasury Regulations promulgated thereunder (collectively, "Section 280G"), of
all material facts concerning the payment of the retention bonuses (referenced
in Section 6.8(a) and of certain severance payments and benefits pursuant to
agreements set forth in Schedule 4.15(k) to certain specified employees of the
Company (collectively the "Payments"); (b) obtain approval of such Payments, in
a manner which satisfies the requirements of Section 280G, to the extent failure
to obtain such approval would be reasonably expected, based on all facts known
to the Company as of the date hereof, to result in a failure of such Payments to
be fully tax deductible by the Company; and (c) provide evidence reasonably
satisfactory to the Buyer of its compliance with this Section 6.11.
51
SECTION 6.12. TAX CLEARANCE.
The Company shall (i) use commercially reasonable efforts to obtain as
promptly as practicable a consent from the UK Inland Revenue in terms reasonably
satisfactory to the Buyer that any interest on the Bonds payable on the
redemption of the Bonds within 28 days of Closing can be paid without
withholding of UK tax under the provisions of Article 11 of the Double Tax
Convention of 24th July 2001 between the UK and the United States of America and
(ii) provide evidence reasonably satisfactory to the Buyer of its compliance
with this Section 6.12.
ARTICLE SEVEN
CONDITIONS TO THE BUYER'S OBLIGATIONS
The obligations of the Buyer hereunder shall be subject to the
satisfaction, as of the Closing Date, of the following conditions (any of which
may be waived, in whole or in part, by the Buyer):
SECTION 7.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Sellers and the Company contained
in this Agreement shall be true and correct in all respects when made and true
and correct in all material respects as of the Closing Date (except that the
representations and warranties of the Company or the Sellers contained herein
that are qualified as to materiality or Material Adverse Effect shall be true
and correct in all respects at and as of the Closing Date) with the same effect
as though made at and as of such time (except that those representations and
warranties that are made as of a specified date shall be true and correct only
as of such date); provided, however, that this condition will be deemed to be
satisfied if such untrue or incorrect representations and warranties (without
regard to materiality or Material Adverse Effect qualifications) at and as of
the Closing Date do not, individually or in the aggregate, have or would not
reasonably be expected to have a Material Adverse Effect. Each of the Sellers
and the Company shall have duly performed and complied in all material respects
with all covenants and agreements required by this Agreement to be performed by
him, her or it at or prior to the Closing Date. The Buyer shall have been
furnished with certificates of the Company, dated the Closing Date, certifying
in such detail as the Buyer reasonably may request to the fulfillment of the
foregoing conditions.
SECTION 7.2. LEGAL MATTERS.
(a) Any waiting period (and any extension thereof) shall have expired or
shall have been terminated, and/or the relevant antitrust Governmental Authority
shall have issued or deemed to have issued an approval, clearance or
authorization under the antitrust laws of the jurisdictions identified in
Schedule 7.2, except where the failure to wait for the expiry of the waiting
period or the failure to obtain such approval, clearance or authorization would
not have a Material Adverse Effect on the Company or on the Buyer (for the
purposes of Section 7.2(a) only, Material Adverse Effect will be defined as
applying equally to the Buyer) such Material Adverse Effect being presumed with
regard to the filings in the US, the EU, Canada, Israel, and South Africa, and
would not expose any of the parties' officers or directors to criminal liability
by such Governmental Authorities; and
52
(b) No Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any Law that has the effect of permanently making the
transactions contemplated by this Agreement or the Ancillary Agreements illegal
or otherwise requiring the Buyer or any of its subsidiaries including for these
purposes the Company and the Subsidiaries to sell divest, transfer, dispose of
or otherwise hold separately any of their assets, businesses, product lines, or
other properties or any measure permanently prohibiting the consummation of such
transactions that has not been withdrawn, revoked by the Drop Dead Date, with
the exception that the parties may agree to satisfactory conditions or remedies
requested by any Governmental Authority.
SECTION 7.3. RELATED PARTY TRANSACTIONS.
(a) On the Closing Date, except for those items described on Schedule 7.3,
any of the following agreements to which any Seller, any Shareholder or the
Company is a party shall have been terminated and no longer be of any force and
effect (on terms that state there is no liability for the Company or any of the
Subsidiaries under or in respect of any such agreements or their termination):
(i) all agreements between any of the Sellers or Shareholders relating to the
Securities, (ii) any contracts or agreements between any Seller or Shareholder
on the one hand and the Company or any Subsidiary on the other and (iii) any
agreements to which the Company or any of the Subsidiaries is a party for the
benefit of any Seller or Shareholder; provided, however, that nothing in this
Section 7.3 shall require or be deemed to require the Company to terminate any
agreement with any Seller who is an employee of the Company relating to such
person's employment by the Company.
(b) Pursuant to Section 14.1 thereof, the Investment Agreement will
terminate on the Closing Date with no liability or accrued liability to the
Company or any of its Subsidiaries thereunder other than the payment of the
following fees (the "Fees"): (i) the annual fee provided for under Section 10.3
of the Investment Agreement for the period from October 16, 2004 through and
including the Closing Date (which, for the avoidance of doubt, shall not include
any fee payable by reason of a Sale) and (ii) the costs and expenses of the
parties thereto pursuant to Section 10.2 of the Investment Agreement incurred
from October 16, 2004 through and including the Closing Date. Each Seller agrees
(on behalf of itself and its affiliates) that, other than in respect of the
payment of the Fees as provided for above, no amounts are or will become due or
payable to such Seller or any of its affiliates by the Company or any of its
Subsidiaries under the Investment Agreement, whether by reason of a Sale or
otherwise, and such Seller (on behalf of itself and its affiliates) irrevocably
waives any claim or accrued right (howsoever arising) it or any of its
affiliates has or may have in relation to the Investment Agreement.
SECTION 7.4. TAX MATTERS.
(a) The Company or any Subsidiary which is resident for tax purposes in the
UK and which has control of MUSH for the purposes of Section 765 of the Income
and Corporation Taxes Act of 1988 shall have obtained HM Treasury consent under
Section 765 of the Income and Corporation Taxes Act of 1988 regarding the
transfer of MUSH and the subsidiaries of MUSH to the Buyer or a subsidiary of
the Buyer.
(b) The Company shall have obtained a confirmation from the UK Inland
Revenue in terms reasonably satisfactory to the Buyer that the disposal of the
stock of MUSH to the Buyer
53
or a subsidiary of the Buyer will qualify for the substantial shareholdings
exemption from taxation provided for by Schedule 7AC Taxation of Chargeable
Gains Xxx 0000.
SECTION 7.5. OTHER CONDITIONS.
(a) The Offer shall have been accepted in accordance with its terms in
respect of more than 75% of the issued B Shares;
(b) The Resolution shall have been duly passed as a special resolution of
the Company;
(c) The Bond Resolutions (duly executed by each of the Bond Sellers) shall
have been delivered to the Buyer;
(d) As of the Closing Date, duly executed transfers in respect of all the
Securities of the Committed Sellers (and the certificates or indemnities in lieu
of lost certificates) required to be delivered by this Agreement to the Buyer
and the certificates (and indemnities in lieu of lost certificates) in respect
of all of the Shares of all Sellers who accept the Offer shall have been
delivered to (or on behalf of) the Buyer; and
(e) The B Director Consent (duly executed by the B Directors) shall have
been delivered to the Buyer.
ARTICLE EIGHT
CONDITIONS TO THE COMPANY AND THE SELLERS' OBLIGATIONS
The obligation of the Sellers hereunder shall be subject to the
satisfaction, as of the Closing Date, of the following conditions (any of which
may be waived, in whole or in part, by the Required Sellers):
SECTION 8.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Buyer contained in this Agreement
shall be true and correct in all respects when made and true and correct in all
material respects as of the Closing Date (except that the representations and
warranties of the Buyer contained herein that are qualified as to materiality or
a Buyer Material Adverse Effect shall be true and correct in all respects at and
as of the Closing Date) with the same effect as though made at and as of such
time (except that those representations and warranties that are made as of a
specified date shall be true and correct only as of such date); provided,
however, that this condition will be deemed to be satisfied if such untrue or
incorrect representations and warranties (without regard to any materiality or
Buyer Material Adverse Effect qualifications) at and as of the Closing Date do
not, individually or in the aggregate, have or would not reasonably be expected
to have a Buyer Material Adverse Effect. The Buyer shall have duly performed and
complied in all material respects with all covenants and agreements required by
this Agreement to be performed by the Buyer at or prior to the Closing Date. The
Company shall have been furnished with certificates
54
of the Buyer, dated the Closing Date, certifying in such detail as the Company
reasonably may request to the fulfillment of the foregoing conditions.
SECTION 8.2. LEGAL MATTERS.
(a) Any waiting period (and any extension thereof) shall have expired or
shall have been terminated, and/or the relevant antitrust Governmental Authority
shall have issued or deemed to have issued an approval, clearance or
authorization under the antitrust laws of the jurisdictions identified in
Schedule 7.2, except where the failure to wait for the expiry of the waiting
period or the failure to obtain such approval, clearance or authorization would
not have a Material Adverse Effect on the Company or on the Buyer (for the
purposes of Section 8.2(a) only, Material Adverse Effect will be defined as
applying equally to the Buyer) such Material Adverse Effect being presumed with
regard to the filings in the US, the EU, Canada, Israel, and South Africa, and
would not expose any of the parties' officers or directors to criminal liability
by such Governmental Authorities; and
(b) No Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any Law that has the effect of permanently making the
transactions contemplated by this Agreement or the Ancillary Agreements illegal
or otherwise requiring the Buyer or any of its subsidiaries including for these
purposes the Company and the Subsidiaries to sell divest, transfer, dispose of
or otherwise hold separately any of their assets, businesses, product lines, or
other properties or any measure permanently prohibiting the consummation of such
transactions that has not been withdrawn, revoked by the Drop Dead Date, with
the exception that the parties may agree to satisfactory conditions or remedies
requested by any Governmental Authority.
SECTION 8.3. OTHER CONDITIONS.
(a) The Offer shall have been accepted in accordance with its terms in
respect of more than 75% of the issued B Shares; and
(b) The Resolution shall have been duly passed as a special resolution of
the Company.
ARTICLE NINE
TERMINATION
SECTION 9.1. TERMINATION.
This Agreement may be terminated at any time prior to the Closing:
(a) By mutual consent of the Required Sellers and the Buyer;
(b) By either the Required Sellers or the Buyer if (i) the Closing has
not been effected on or prior to the close of business on September 30,
2005 (the "Drop Dead Date"); provided, however, that the right to terminate
this Agreement pursuant to this clause shall not be available to any party
whose failure to fulfill any obligation of this Agreement has been the
cause of, or resulted in, the failure of the Closing to have
55
occurred on or prior to the aforesaid date, or (ii) any Governmental
Authority shall have issued an order, decree or ruling or taken any other
action permanently enjoining, restraining or otherwise prohibiting the
transactions contemplated by this Agreement or the Ancillary Agreements and
such order, decree, ruling or other action shall have become final and
nonappealable; provided, further, however, that if the Closing has not
occurred by the Drop Dead Date by reason of nonsatisfaction of the
conditions set forth in Section 7.2(a) and Section 8.2(a) and all other
conditions in Articles 7 and 8 have been satisfied or are capable of being
satisfied or, to the extent legally permissible, have been waived, the Drop
Dead Date shall be the date two months after September 30, 2005;
(c) By the Required Sellers if there has been a material breach by the
Buyer of any representation, warranty, covenant or agreement herein or in
the Ancillary Agreements, in each case which breach has not been cured
within thirty (30) days following receipt by the Buyer of notice of such
breach; provided, however, that the Required Sellers may terminate this
Agreement immediately if such breach is incapable of being cured or would
cause the conditions set forth in Article Eight to be incapable of being
satisfied; or
(d) By the Buyer if there has occurred a material breach by any Seller
or the Company of any representation, warranty or other covenant or
agreement herein or in the Ancillary Agreements, in each case which breach
has not been cured within thirty (30) days following receipt by the Company
or the relevant Seller, as the case may be, of notice of such breach;
provided, however, that the Buyer may terminate this Agreement immediately
if such breach is incapable of being cured or would cause the conditions
set forth in Article Seven to be incapable of being satisfied.
SECTION 9.2. EFFECT OF TERMINATION.
In the event of termination of this Agreement by either the Required
Sellers, the Company or the Buyer, this Agreement and the Offer shall
forthwith become void and there shall be no liability or obligation
hereunder on the part of the Buyer or the Company or their respective
shareholders, officers, employees, directors or agents; provided, however,
that nothing contained in this Section 9.2 shall relieve any party hereto
from any liability for any willful breach of this Agreement in the event of
termination pursuant to Sections 9.1(b), (c) or (d).
ARTICLE TEN
MISCELLANEOUS
SECTION 10.1. EXPENSES.
On the Closing Date the Buyer shall pay, or cause to be paid (other
than by the Company or any of the Subsidiaries), the reasonable fees and
expenses incurred by the Company and the Sellers in connection with the
preparation and performance of this Agreement and the consummation of the
transactions contemplated hereby and by the Ancillary Agreements that are
set out on Schedule 4.25(b).
56
SECTION 10.2. GOVERNING LAW.
This Agreement shall be governed by and construed and enforced in
accordance with the internal, substantive laws of the State of New York, without
giving effect to the conflict of laws rules thereof that would apply the law of
another state.
SECTION 10.3. NOTICES.
All notices, consents, requests, instructions, approvals and other
communications provided for herein shall be deemed validly given, made or served
if in writing and delivered personally or sent by certified mail, postage
prepaid, or by overnight courier, or by telex, facsimile or telegraph, charges
prepaid:
(a) if to the Buyer, addressed to:
Avnet, Inc.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
(b) if to the Company, addressed to:
Memec Group Holdings Limited
0000 Xxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx
Xxxx Xxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
1999 Avenue of the Stars
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Facsimile: (000) 000-0000
57
(c) if to a Seller, addressed to the address set forth opposite the
name of such Seller on Schedule A with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
1999 Avenue of the Stars
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Facsimile: (000) 000-0000
or such other address as shall be furnished in writing by any party to the
others.
SECTION 10.4. JURISDICTION.
Legal proceedings commenced by the Company, the Sellers or the Buyer
arising out of any of the transactions or obligations contemplated by this
Agreement shall be brought exclusively in the federal courts, or in the absence
of federal jurisdiction in state courts, in either case in the State of New
York. The Buyer, the Company and each of the Sellers irrevocably and
unconditionally submits to the jurisdiction of such courts and agrees to take
any and all future action necessary to submit to the jurisdiction of such
courts. The Buyer, the Company and each of the Seller irrevocably waives any
objection that he, she or it now has or hereafter may have to the laying of
venue of any suit, action or proceeding brought in any such court and further
irrevocably waive any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum. Final judgment against
the Company, any Seller or the Buyer in any such suit shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment, a certified or
true copy of which shall be conclusive evidence of the fact and the amount of
any indebtedness or liability of a Seller, the Company or the Buyer therein
described, or by appropriate proceedings under any applicable treaty or
otherwise.
SECTION 10.5. ENTIRE AGREEMENT.
This Agreement and the Ancillary Agreements represents the entire agreement
between the parties and supersedes and cancels any prior oral or written
agreement, letter of intent or understanding related to the subject matter
hereof and thereof, except for the Nondisclosure Agreement, which shall remain
in full force and effect and survive any termination of this Agreement.
SECTION 10.6. BINDING EFFECT.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. Neither the Company nor the Sellers may assign or transfer any right
hereunder without the prior written consent of the Buyer. The Buyer may assign
or transfer its rights hereunder to another direct or indirect affiliate of the
Buyer.
58
SECTION 10.7. AMENDMENTS; WAIVERS.
No provision of this Agreement may be terminated, amended, supplemented,
waived or modified other than by an instrument in writing signed by the Buyer,
the Company and the Required Sellers.
SECTION 10.8. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original and all of which together shall be deemed to
be one and the same instrument, and shall become effective when one or more
counterparts have been signed by each of the parties.
SECTION 10.9 SEVERABILITY.
In the event any provision, or portion thereof, of this Agreement is held
by a court having proper jurisdiction to be unenforceable in any jurisdiction,
then such portion or provision shall be deemed to be severable as to such
jurisdiction (but, to the extent permitted by law, not elsewhere) and shall not
affect the remainder of this Agreement, which shall continue in full force and
effect. If any provision of this Agreement is held to be so broad as to be
unenforceable, such provision shall be interpreted to be only so broad as is
necessary for it to be enforceable.
SECTION 10.10. SPECIFIC PERFORMANCE.
(a) Each of the Sellers and the Company acknowledges that the Company and
its business are unique and that the Buyer will have no adequate remedy at law
and may suffer irreparable damage if such Seller or the Company breach any
covenant contained herein or fails to perform any of his, her or its obligations
under this Agreement. Accordingly, each Seller and the Company agree that the
Buyer shall have the right, in addition to any other rights which they may have,
to specific performance and equitable injunctive relief if such Seller or the
Company shall fail or threatens to fail to perform any of his, her or its
obligations under this Agreement.
(b) The Buyer acknowledges that the Buyer and its business are unique and
that the Sellers and the Company will have no adequate remedy at law and may
suffer irreparable damage if the Buyer breaches any covenant contained herein or
fails to perform any of its obligations under this Agreement. Accordingly, the
Buyer agrees that the Sellers and the Company shall have the right, in addition
to any other rights which it may have, to specific performance and equitable
injunctive relief if the Buyer shall fail or threaten to fail to perform any of
its obligations under this Agreement.
SECTION 10.11. ATTORNEYS' FEES.
In the event that any action or proceeding, including arbitration, is
commenced by any party hereto for the purpose of enforcing any provision of this
Agreement, the parties to such action, proceeding or arbitration may receive as
part of any award, judgment, decision or other resolution of such action,
proceeding or arbitration their costs and reasonable attorneys' fees as
determined by the person or body making such award, judgment, decision or
resolution. Should
59
any claim hereunder be settled short of the commencement of any such action or
proceeding, including arbitration, the parties in such settlement shall be
entitled to include, as part of the damages alleged to have been incurred,
reasonable costs of attorneys or other professionals in investigating or
counseling on such claim.
SECTION 10.12. SURVIVAL OF THE REPRESENTATIONS AND WARRANTIES.
The representations and warranties contained in this Agreement shall
terminate upon the Closing. The Buyer acknowledges and represents that it has
not relied on or been induced to enter into this Agreement by any representation
or warranty given by any Seller or any of such Seller's advisors, agents or
affiliates or their respective officers, directors or employees other than the
representations and warranties expressly set out in this Agreement or the Form
of Acceptance or any of the Ancillary Agreements. Each of the Sellers and the
Company acknowledges and represents that it has not relied on or been induced to
enter into this Agreement by any representation or warranty given by the Buyer
or any of the Buyer's advisors, agents or affiliates or their respective
officers, directors or employees other than the representations and warranties
expressly set out in this Agreement or any of the Ancillary Agreements.
(The remainder of this page has been left blank intentionally.)
60
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the day and year first above written.
AVNET, INC.
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
[Signature page to Securities Acquisition Agreement]
MEMEC GROUP HOLDINGS LIMITED
By: /s/ Xxxx Xxxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxxx
Title: Director
[Signature page to Securities Acquisition Agreement]
COMMITTED SELLERS
PERMIRA EUROPE II NOMINEES LIMITED
Signed by: /s/ Xxxxxxxx XxXxxxx
----------------------------
for and on behalf of
Permira Europe II Nominees Limited
PERMIRA UK VENTURE IV
Signed on behalf of Permira UK Venture
IV Nominees
Limited:
/s/ Xxxxx Xxxx
----------------------------
Signed by: /s/ Xxxxxx Xxxxxx
----------------------------
(A) as nominee for Barings
(Guernsey) Limited as (i) Trustee of
Xxxxxxxx UK Venture Fund IV Trust,
and (ii) Custodian of Xxxxxxxx UK
Venture Fund IV LP1 and Xxxxxxxx UK
Venture Fund IV LP2, and
(B) as nominee for Xxxxxxxx Venture
Managers (Guernsey) Limited as
manager of the Xxxxxxxx UK Venture
Fund IV Co-investment Scheme
[Signature page to Securities Acquisition Agreement]
XXXXXXXX VENTURES US FUND LP1
By: /s/ Xxxx Xxxx
-------------------------------------
Name: Xxxx Xxxx
Title: Director and Vice President
For and on behalf of Xxxxxxxx
Venture Managers Inc. as General
Partner of Xxxxxxxx Ventures US
Fund LP1
By: /s/ Xxxxxxx Xxxxx
-------------------------------------
Name: Xxxxxxx Xxxxx
Title: Secretary
For and on behalf of Xxxxxxxx
Venture Managers Inc. as General
Partner of Xxxxxxxx Ventures US
Fund LP1
XXXXXXXX VENTURES US FUND LP2
By: /s/ Xxxx Xxxx
-------------------------------------
Name: Xxxx Xxxx
Title: Director and Vice President
For and on behalf of Xxxxxxxx
Venture Managers Inc. as General
Partner of Xxxxxxxx Ventures US
Fund LP2
By: /s/ Xxxxxxx Xxxxx
-------------------------------------
Name: Xxxxxxx Xxxxx
Title: Secretary
For and on behalf of Xxxxxxxx
Venture Managers Inc. as General
Partner of Xxxxxxxx Ventures US
Fund LP2
[Signature page to Securities Acquisition Agreement]
DB INDUSTRIAL HOLDINGS GMBH
By: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Director
Acting as Managing Partner in DB
Industrial Holdings Beteiligungs
AG & Co KG
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Director
Acting as Managing Partner in DB
Industrial Holdings Beteiligungs
AG & Co KG
[Signature page to Securities Acquisition Agreement]
/s/ Xxxxx Xxxxxxxx
-----------------------------------
XXXXX XXXXXXXX
[Signature page to Securities Acquisition Agreement]
/s/ Xxxx Xxxxxxxx
-----------------------------------
XXXX XXXXXXXX
[Signature page to Securities Acquisition Agreement]
/s/ Xxxxxxx Xxxxxxxxx
-----------------------------------
XXXXXXX XXXXXXXXX
[Signature page to Securities Acquisition Agreement]
XXXXXXXXXXX XXXX XXXXXXXXX TRUST
By: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxxx
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxx
[Signature page to Securities Acquisition Agreement]
XXXXXXXX XXXXXXXXX TRUST
By: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxxx
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxx
[Signature page to Securities Acquisition Agreement]
XXXXXXX XXXXXXXXX TRUST
By: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxxx
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxx
[Signature page to Securities Acquisition Agreement]
/s/ Xxxxx Xxxxxxx
-----------------------------------
XXXXX XXXXXXX
[Signature page to Securities Acquisition Agreement]
XXXX XXXX XXXXXXX TRUST
By: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxxx
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxx
[Signature page to Securities Acquisition Agreement]
XXXXX XXXXXXX XXXXXXX TRUST
By: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxxx
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxx
[Signature page to Securities Acquisition Agreement]
XXXX XXXXXXXXX XXXXXXX TRUST
By: /s/ Xxxxxxx Xxxxxxxxx
---------------------------------
XXXXXXX XXXXXXXXX
By: /s/ Xxxxx Xxxxxxx
---------------------------------
XXXXX XXXXXXX
[Signature page to Securities Acquisition Agreement]
XXXXXX XXXXXXXX XXXXXXX TRUST
By: /s/ Xxxxxxx Xxxxxxxxx
---------------------------------
XXXXXXX XXXXXXXXX
By: /s/ Xxxxx Xxxxxxx
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XXXXX XXXXXXX
[Signature page to Securities Acquisition Agreement]
/s/ Xxxxxxx X'Xxxxx
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XXXXXXX X'XXXXX
[Signature page to Securities Acquisition Agreement]
/s/ Xxxxx Xxxx
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XXXXX XXXX
[Signature page to Securities Acquisition Agreement]
/s/ Xxxxxxxx Xxxxxxxxx
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XXXXXXXX XXXXXXXXX
[Signature page to Securities Acquisition Agreement]
/s/ Xxxxx Xxxxxx
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XXXXX XXXXXX
[Signature page to Securities Acquisition Agreement]
/s/ Xxxxx Xxx
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XXXXX XXX
[Signature page to Securities Acquisition Agreement]
/s/ Xxxx Xxxxxxxxxx
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XXXX XXXXXXXXXX
/s/ Xxxx Xxxxxxxxxx
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X. XXXXXXXXXX AS TRUSTEE OF X.
XXXXXXXXXX
/s/ Xxxx Xxxxxxxxxx
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X. XXXXXXXXXX AS TRUSTEE OF X.
XXXXXXXXXX
[Signature page to Securities Acquisition Agreement]
/s/ Xxxxx Xxxxxx
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XXXXX XXXXXX
[Signature page to Securities Acquisition Agreement]
/s/ Xxx Xxxx Chiah
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XXX XXXX CHIAH
[Signature page to Securities Acquisition Agreement]
